PNHP

PNHP Annual Meeting, Nov. 6, Denver

pnhpf3a

PNHP Annual Meeting, Nov. 6, Denver

August 26, 2010

Dear Colleague,

We write to invite you to attend the Annual Meeting of Physicians for a National Health Program on Saturday, November 6, in Denver, Colorado. It will be preceded by our popular Leadership Training course, starting at 1 p.m. on Friday, November 5.

Both events will be held at the Sheraton Denver Downtown Hotel, 1550 Court Place, Denver. Reserve a room directly by calling the hotel at 800-325-3535 and mentioning PNHP ($149 single/double, $125 senior rate) by October 5.

Registration for the Annual Meeting is now available online here. Alternatively, you can print out a copy of the registration form here and mail or fax it in. To register for leadership training (space is limited) please call Matt Petty at 312-782-6006.

The theme of the meeting is “From PPACA to Single Payer: Next Steps for Single Payer Activists in the Wake of the Obama Health Plan” with talks by Amy Goodman, host of Democracy Now; PNHP co-founders Drs. David Himmelstein and Steffie Woolhandler; pharmaceutical industry critics Donald Light, Ph.D., and Dr. Joel Lexchin; Canadian surgeon Dr. Sherif Emil; labor activist Rose Roach; journalist T.R. Reid (“Sick Around the World”); Dr. Claudia Fegan (“Universal health care: What the U.S. can learn from the Canadian experience”); Dr. Margaret Flowers, arrested for protesting the exclusion of single payer by Sen. Baucus; PNHP state single-payer leaders and more.

Help us chart a course for effective single-payer activism in the states and nationally. Last year PNHPers testified before House and Senate committees, spoke at town hall and other meetings on reform from coast to coast, and made numerous media appearances, including on Bill Moyers, Bill Maher, Fox News, CNN, Colbert, Ed Schultz, Democracy Now and more.

Today, state single-payer movements from California to Vermont are taking the lead, even as PNHPers continue to turn up the heat nationally for reform, such as with the recent publication of op-eds calling for expanding and improving Medicare on its 45th birthday, July 30.

With the passage of PPACA, the surge of national media and congressional interest has ebbed, even as the need for fundamental reform continues to grow. As health care costs continue to escalate, it will become increasingly clear that our single-payer proposal is the only effective remedy for the crisis afflicting our health system.

Please join us as we assess the status of the new health law and plan PNHP’s policy and strategy going forward. Feel free to forward this message to your colleagues, as well.

Yours truly,

Quentin Young, M.D.
National Coordinator    

Ida Hellander, M.D.
Executive Director

P.S. If you can’t join us in Denver, please consider becoming a meeting supporter. Simply go to our donation page and indicate that you’d like to make a donation to support the Annual Meeting. Your name will be listed in the program book along with other supporters and your tax-deductible donation to PNHP will help assure that the meeting is a success. A donation of $100 or more will entitle you to a free copy of Dr. John Geyman’s excellent new book about the recent health reform “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform” (available mid-September).

Rx for Medicare’s birthday: Expand it

By Quentin Young
Chicago Tribune, August 5, 2010

Medicare, one of our nation’s most cherished social programs, turned 45 last week.

I was in active medical practice on July 30, 1965, when Medicare was signed into law by President Lyndon B. Johnson. Its impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

That was only the beginning. Through the years, Medicare dramatically reduced poverty among the elderly. It added new benefits like preventive care. It reduced racial and income-based disparities. It extended its coverage to the severely disabled. It laid the basis for nationwide, comparative health studies that have improved the quality of care for everyone.

In short, Medicare, a government-sponsored program that now covers over 45 million Americans, has been a triumphant success.

However, instead of celebrating, Medicare is facing ominous rumblings from President Obama’s debt commission and not-so-veiled threats from other quarters.

“Medicare’s going broke,” its market-obsessed critics say. “It’s dragging down the economy.”

Such alarms have been sounded about every six or seven years since Medicare began, but in real life it continues to thrive. Either the economy prospers, yielding greater tax revenues, or Congress tweaks the payroll tax by a tiny fraction of a percentage point, and immediately the projected shortfall disappears. (The last adjustment was in 1985, when the rate was increased to 1.45 percent from 1.30 percent.)

While it’s true aging baby boomers will make bigger demands on Medicare, again, modest adjustments today will assure its financial solvency tomorrow.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It lacks authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems – and to bring down skyrocketing health care costs at the same time – is to improve the program and, most important, to expand it to cover every person in the United States.

That’s right: Extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on u
nnecessary paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

Conventional wisdom suggests we should wait and see how the new health law plays out. But we’ve seen how comparable reforms have fared on the state level: They’ve invariably failed after only a few years, chiefly because they can’t control costs. Meanwhile more millions suffer.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them to ask Congress to enhance Medicare and to extend it to all.

http://www.chicagotribune.com/news/ct-oped-0805-pro-20100804,0,2770491.story

Happy birthday, Medicare

By Susanne L. King
The Berkshire (Mass.) Eagle, Friday July 30, 2010

Say “Happy Birthday” to Medicare, signed into law by President Lyndon Johnson 45 years ago, on July 30, 1965.

This national program provides health insurance coverage for everyone 65 years and older, regardless of income or health status, as well as covering people with disabilities. Our senior citizens love Medicare, which, along with Social Security, has substantially lowered poverty among the elderly, providing a secure safety net for our most vulnerable citizens.

Medicare is an example of a “single payer” health insurance program, in which health care dollars are administered by only one payer, the federal government. Medicare patients love the program for a number of reasons. Their premiums, deductibles and co-payments are reasonably priced. No one 65 and older can be denied coverage due to pre-existing conditions. Patients have their choice of doctors and hospitals, and are able to make decisions with their doctors about the care they need.

This safety net is now being threatened. President Obama has appointed a committee, the “National Commission on Fiscal Responsibility and Reform,” to make recommendations to Congress for reducing our federal deficit. Unfortunately, some members of this commission are already considering cuts to Medicare and Social Security benefits. Other solutions for reducing the deficit, like cutting the military budget, taxing the rich, negotiating drug costs, and eliminating the waste of the private health insurance industry by enacting a single-payer health insurance program, are not being considered. The commission is expected to make its recommendations to the House of Representatives after the fall elections, with a vote anticipated in December during a lame duck period of Congress.

Instead of cutting Medicare benefits, a better solution is to eliminate the failed and very costly for-profit “multiple payer” model, that includes hundreds of private health insurance companies with their high administrative costs and exorbitant CEO salaries, as well as their intrusion into the doctor-patient relationship. A much more cost-effective insurance approach would be to improve and expand Medicare to include everyone. At a time when our nation faces high unemployment, and fiscal crises, an expanded Medicare program would be a boon for individuals, small businesses, towns and states.

How would such a program produce savings and control health care costs? First, with Medicare, administrative costs are much lower than for private insurance companies. Administrative savings would be about $400 billion/year, enough money to provide coverage for everyone. Second, prescription drug prices would be negotiated, and drug costs could be lowered by 40 percent, bringing U.S prices in line with other developed countries. Third, an expanded Medicare system could establish global budgets for health care facilities.

The majority of Americans support Medicare and an expansion of this program to provide single-payer health insurance for everyone. Last week this was demonstrated again when participants in town meetings sponsored by “America Speaks” demanded single-payer as the option to solve the health care crisis, and 71 percent voted to not cut Medicare and Medicaid.

Our public and private dollars are flowing into the coffers of the private health insurance industry. These insurance companies continue to squeeze patients and health care providers financially, while paying their executives enormous salaries and bonuses. In 2009, the United Health Group, one of the biggest health insurance companies, paid CEO Stephen Helmsley a compensation package of over $107. 5 million. A recent conference of health economists in Chicago concluded that increasing consolidation in the health insurance industry has led to higher premiums, fewer jobs for health care workers, and reduced physician earnings.

Obama’s commission should not recommend cutting Medicare benefits. Write to your senators and representatives, and let them know how you feel about preserving, and expanding Medicare. Ask them to improve and strengthen Medicare by making it available to everyone, so that in coming years we will all be able to enjoy and celebrate the birthday of this life-saving health insurance program.

Susanne L. King, M. D., is a Lenox-based practitioner.

http://www.berkshireeagle.com/columnists/ci_15636458

For a model health care system, how about Australia's?

‘Medicare for all’ isn’t just an expression in Australia, it’s a reality, and there aren’t any death panels or government intervention in the choice of doctors or treatment. Bill Claiborne, a longtime Washington Post reporter now living in Australia, describes the system.

By William Claiborne
Nieman Watchdog, Aug. 24, 2010

MELBOURNE–During the long, rancorous public debate over American health care reform I heard and read quite a bit of incendiary rhetoric in the media about “socialized medicine” in countries like Australia, where I have lived for the last decade as an American immigrant (and now dual national). But I don’t recall reading very much about how public-option universal health care systems like Australia’s actually work, from the perspective of someone who is able, from personal experience, to compare the health care systems in both countries.

What I remember from the debate in the U.S. Senate late last year and early this year was quite a bit of reporting of allegations of “death panels,” the imminent “Europeanization” of the United States, the exaggerated fears of a “government takeover” of medicine and of perceived threats to freedom of choice in selecting doctors. Okay, I appreciate the fact that conflict and controversy are the engines of journalism when covering emotive stories like health care reform. But I believe that the debate would have been better served if more reporters had come down to Australia and asked us, “How, exactly, does your health care system work?”

The discussion in America hasn’t been settled; some are urging repeal of what was enacted; some want a much stronger plan. So a look at health care in Australia is still appropriate. Here are a few questions I’d ask:

Q. Is Australia’s universal health care system socialized medicine?

No, not by any reasonable definition. The 35-year-old universal health care system is a hybrid of public and private plans. Every permanent resident or citizen in Australia — that’s everyone, regardless of age — is covered by the government’s Medicare program and is entitled to highly-subsidized, or even free, treatment by doctors in their offices, and fully-covered treatment and care in public hospitals. I go to a primary care physician who charges the maximum-allowable $60 (all currency figures in this report are in U.S. dollars at the current exchange rate) per visit, half of which is automatically refunded into my bank account by Medicare after I pay the fee with my debit card. Many doctors, like the one my wife sees,”bulk bill” their patients’ fees to Medicare and no money changes hands at the office. We each chose our own doctor for our own personal reasons. The only “government takeover” is in the refunding of half of my doctor’s fee, thereby making health care more affordable.

When I recently underwent cataract surgery in both eyes, I chose one of Melbourne’s top retina and cataract surgeons (on my GP’s recommendation). Because I supplement Medicare with an eminently affordable private insurance policy, I had virtually no waiting period, and a week later when I had the surgery my only expense was a $250 co-pay (tax deductible) for everything — surgeon, anesthetist, hospital costs, prescription drugs, follow-up visits, the works. Moreover, over the years my primary care doctor has from time to time sent me to specialists for various examinations and in-hospital procedures, such as a colonoscopy and an angiogram, and the costs have always been minimal or nonexistent. He didn’t have to consult any government body before referring me. He just sent me to the specialists. That doesn’t sound like “socialized medicine” or “government intrusion” to me.

The system isn’t perfect; what health care system is? Yes, occasionally there are published reports of people waiting long periods for admittance to public hospitals, or put on gurneys for hours in an emergency ward of an overcrowded public hospital. That happens anywhere, even in the United States. But overall I think any objective person would have to say that Australia’s health care system is pretty damned good. I speak from experience on that question.

Q. How does private health insurance blend with public Medicare?

As I’ve said, everyone is covered by Medicare. But if someone whose income exceeds $62,000 cannot or will not join a supplemental privare health plan, he/she pays a 1 per cent surcharge over the 1-1/2 per cent Medicare levy that everyone (except low-income earners) pays in income taxes. This is a carrot-and-stick approach, and consequently nearly half of Australians opt in for private health insurance, which not only reimburses coverage gaps in physician and hospital fees, but entitles the purchaser to avoid long waiting periods at public hospitals and obtain private rooms in private hospitals. For obvious reasons touching on class distinctions there’s a bit of ongoing controversy over this two-tier system, but its supporters say it alleviates the pressure on free public hospitals and helps keep health coverage affordable for all.

To encourage people to take up private coverage, the government subsidizes 30 per cent of their insurance premiums, increasing to up to 40 per cent in rebates for people over 65. My wife and I each pay an annual premium of $750, after the rebate, for private insurance. We think that’s quite affordable.

Q. Is there a safety net for blow-out medical costs?

Yes. Medicare covers all of any fee gaps once a family reaches an annual threshold of total gap costs. For my wife and me the threshold is $1,000. For low-income earners it is $500. If we pay more than $1,000 in a year in out-of-pocket medical expenses, we have no co-pays for the rest of the year.

Q. Does Medicare provide prescription coverage?

Yes. The Pharmaceutical Benefits Scheme not only subsidizes prescribed drugs but controls the retail prices through negotiations between a Pharmaceutical Pricing Authority and the pharmaceutical companies. Regardless of the cost of a drug, my co-pay per monthly prescription is $30. If my family’s total co-pay gap reaches a threshold of $1,140 (which it hasn’t yet) my co-pay virtually disappears. For low-income (under $62,000 a year) earners there is no gap threshold and the co-pay never exceeds $4.80.

Q. How does the government pay for all of this?

The Medicare program currently costs about $17.8 billion a year, and is rising about 4 per cent annually in real terms. That doesn’t sound like much in American terms, but for a country with a population of only 22 million it is fairly hefty. It is about 35 per cent of the total federal health budget ($50.5 billion), which includes the cost of running all public hospitals as well as Medicare. The health budget, in turn, is about 16 per cent of the total federal spending for the current fiscal year ($313.2 billion).

The government pays for universal, publicly-funded health care because historically Australian governments — conservative and liberal alike — have cared for the health and well being of its people. The only spending item in the federal budget larger than health costs is social security and welfare, at $102.3 billion. Defense spending is at $18.7 billion. That says something about Australian values, I think.

When my Australian friends hear or read that our Medicare system is dismissed by a fair number of American politicians and their constituents as “socialism” they laugh.

And, after nearly a decade of enjoying the benefits of a benevolent — and efficient — health care policy, I laugh right along with them. All the way to the bank.

Bill Claiborne, now living in Australia, was a Washington Post reporter for 32 years, mostly in foreign and national news positions.

For a model health care system, how about Australia’s?

‘Medicare for all’ isn’t just an expression in Australia, it’s a reality, and there aren’t any death panels or government intervention in the choice of doctors or treatment. Bill Claiborne, a longtime Washington Post reporter now living in Australia, describes the system.

By William Claiborne
Nieman Watchdog, Aug. 24, 2010

MELBOURNE–During the long, rancorous public debate over American health care reform I heard and read quite a bit of incendiary rhetoric in the media about “socialized medicine” in countries like Australia, where I have lived for the last decade as an American immigrant (and now dual national). But I don’t recall reading very much about how public-option universal health care systems like Australia’s actually work, from the perspective of someone who is able, from personal experience, to compare the health care systems in both countries.

What I remember from the debate in the U.S. Senate late last year and early this year was quite a bit of reporting of allegations of “death panels,” the imminent “Europeanization” of the United States, the exaggerated fears of a “government takeover” of medicine and of perceived threats to freedom of choice in selecting doctors. Okay, I appreciate the fact that conflict and controversy are the engines of journalism when covering emotive stories like health care reform. But I believe that the debate would have been better served if more reporters had come down to Australia and asked us, “How, exactly, does your health care system work?”

The discussion in America hasn’t been settled; some are urging repeal of what was enacted; some want a much stronger plan. So a look at health care in Australia is still appropriate. Here are a few questions I’d ask:

Q. Is Australia’s universal health care system socialized medicine?

No, not by any reasonable definition. The 35-year-old universal health care system is a hybrid of public and private plans. Every permanent resident or citizen in Australia — that’s everyone, regardless of age — is covered by the government’s Medicare program and is entitled to highly-subsidized, or even free, treatment by doctors in their offices, and fully-covered treatment and care in public hospitals. I go to a primary care physician who charges the maximum-allowable $60 (all currency figures in this report are in U.S. dollars at the current exchange rate) per visit, half of which is automatically refunded into my bank account by Medicare after I pay the fee with my debit card. Many doctors, like the one my wife sees,”bulk bill” their patients’ fees to Medicare and no money changes hands at the office. We each chose our own doctor for our own personal reasons. The only “government takeover” is in the refunding of half of my doctor’s fee, thereby making health care more affordable.

When I recently underwent cataract surgery in both eyes, I chose one of Melbourne’s top retina and cataract surgeons (on my GP’s recommendation). Because I supplement Medicare with an eminently affordable private insurance policy, I had virtually no waiting period, and a week later when I had the surgery my only expense was a $250 co-pay (tax deductible) for everything — surgeon, anesthetist, hospital costs, prescription drugs, follow-up visits, the works. Moreover, over the years my primary care doctor has from time to time sent me to specialists for various examinations and in-hospital procedures, such as a colonoscopy and an angiogram, and the costs have always been minimal or nonexistent. He didn’t have to consult any government body before referring me. He just sent me to the specialists. That doesn’t sound like “socialized medicine” or “government intrusion” to me.

The system isn’t perfect; what health care system is? Yes, occasionally there are published reports of people waiting long periods for admittance to public hospitals, or put on gurneys for hours in an emergency ward of an overcrowded public hospital. That happens anywhere, even in the United States. But overall I think any objective person would have to say that Australia’s health care system is pretty damned good. I speak from experience on that question.

Q. How does private health insurance blend with public Medicare?

As I’ve said, everyone is covered by Medicare. But if someone whose income exceeds $62,000 cannot or will not join a supplemental privare health plan, he/she pays a 1 per cent surcharge over the 1-1/2 per cent Medicare levy that everyone (except low-income earners) pays in income taxes. This is a carrot-and-stick approach, and consequently nearly half of Australians opt in for private health insurance, which not only reimburses coverage gaps in physician and hospital fees, but entitles the purchaser to avoid long waiting periods at public hospitals and obtain private rooms in private hospitals. For obvious reasons touching on class distinctions there’s a bit of ongoing controversy over this two-tier system, but its supporters say it alleviates the pressure on free public hospitals and helps keep health coverage affordable for all.

To encourage people to take up private coverage, the government subsidizes 30 per cent of their insurance premiums, increasing to up to 40 per cent in rebates for people over 65. My wife and I each pay an annual premium of $750, after the rebate, for private insurance. We think that’s quite affordable.

Q. Is there a safety net for blow-out medical costs?

Yes. Medicare covers all of any fee gaps once a family reaches an annual threshold of total gap costs. For my wife and me the threshold is $1,000. For low-income earners it is $500. If we pay more than $1,000 in a year in out-of-pocket medical expenses, we have no co-pays for the rest of the year.

Q. Does Medicare provide prescription coverage?

Yes. The Pharmaceutical Benefits Scheme not only subsidizes prescribed drugs but controls the retail prices through negotiations between a Pharmaceutical Pricing Authority and the pharmaceutical companies. Regardless of the cost of a drug, my co-pay per monthly prescription is $30. If my family’s total co-pay gap reaches a threshold of $1,140 (which it hasn’t yet) my co-pay virtually disappears. For low-income (under $62,000 a year) earners there is no gap threshold and the co-pay never exceeds $4.80.

Q. How does the government pay for all of this?

The Medicare program currently costs about $17.8 billion a year, and is rising about 4 per cent annually in real terms. That doesn’t sound like much in American terms, but for a country with a population of only 22 million it is fairly hefty. It is about 35 per cent of the total federal health budget ($50.5 billion), which includes the cost of running all public hospitals as well as Medicare. The health budget, in turn, is about 16 per cent of the total federal spending for the current fiscal year ($313.2 billion).

The government pays for universal, publicly-funded health care because historically Australian governments — conservative and liberal alike — have cared for the health and well being of its people. The only spending item in the federal budget larger than health costs is social security and welfare, at $102.3 billion. Defense spending is at $18.7 billion. That says something about Australian values, I think.

When my Australian friends hear or read that our Medicare system is dismissed by a fair number of American politicians and their constituents as “socialism” they laugh.

And, after nearly a decade of enjoying the benefits of a benevolent — and efficient — health care policy, I laugh right along with them. All the way to the bank.

Bill Claiborne, now living in Australia, was a Washington Post reporter for 32 years, mostly in foreign and national news positions.

Affordable Care Act is wrong framework to fix adverse selection

States Should Structure Insurance Exchanges to Minimize Adverse Selection

By Sarah Lueck
Center on Budget and Policy Priorities
August 17, 2010

The health reform law (the Affordable Care Act) relies primarily on states to establish health insurance exchanges — marketplaces that provide affordable, good-quality coverage options to individuals and small businesses. But it gives states substantial flexibility in how they structure the exchanges.

Adverse selection — the separation of healthier and less-healthy people into different insurance arrangements — will occur if a disproportionate number of people who are in poorer health and have high health expenses enroll in coverage through the insurance exchanges, while healthier, lower-cost people disproportionately enroll in plans offered through the individual and small-business markets outside the exchanges. If that occurs, the cost of exchange coverage will be higher than the cost of plans offered in outside markets. That would drive up costs not only for consumers and small firms purchasing coverage through the exchanges, but also for the federal government, which must provide premium subsidies to enable low- and moderate-income people to afford coverage in the exchanges.

Higher premiums would depress participation in the exchanges by individuals and small businesses, particularly by those people and firms that can obtain better deals in outside markets. That, in turn, could raise premiums even higher in the exchanges and could ultimately result in their failure over time.

Risk Adjustment and Risk Pooling Will Reduce But Not Prevent Adverse Selection

The law also requires use of a risk-adjustment system, in which plans with sicker-than-average overall enrollments receive payments to compensate them for their resulting higher costs. The payments would come from plans that enroll healthier-than-average people that do not cost as much to cover.

As CBO has warned, the inability of current risk-adjustment systems to fully adjust for differences in health care costs between low- and high-cost groups means that, among plans in the same risk-adjustment system, “premiums for enrollees in plans that attract higher-cost beneficiaries [could] rise substantially over time.”

Another potentially helpful provision of the Affordable Care Act requires a “single risk pool,” meaning that each insurer operating inside and outside of an exchange will be required to treat all of its enrollees as a single group when setting premiums.

These pooling requirements, however, have significant limitations — for example, the risk-pooling requirement would apply only to insurers that choose to sell products both inside and outside an exchange. And as noted below, even in cases when insurers do sell products in both markets, it is likely to be difficult to enforce the requirement and ensure that risk is actually being pooled. In addition, the requirement that insurers offering identical plans in both markets charge the same premium in both places is weakened by the fact that the Affordable Care Act does not require insurers participating in both markets to offer the same plans inside and outside the exchange.

Some Elements of the Affordable Care Act Leave Exchanges at Risk for Adverse Selection

Under the Affordable Care Act, the existing individual and small-group markets can continue to operate outside the exchanges. Many of the law’s requirements relating to individual and small-group insurance plans will apply regardless of whether the plans are offered inside or outside the exchanges. For example, all new plans offered — whether through the exchanges or through outside markets — will have to provide a package of “essential benefits” and a minimum level of coverage (as measured by actuarial value). In addition, the law’s new “rating rules,” including those that prevent insurers from charging different prices based on a person’s health status, will apply to new individual-market and small-group plans regardless of whether the plans are offered inside or outside the exchanges.

But various other Affordable Care Act requirements apply only to health plans offered through an exchange, such as requirements related to the adequacy of provider networks, reporting on health care quality, grievance procedures, marketing practices, and benefit design. In addition, the law allows the Secretary of the U.S. Department of Health and Human Services to set additional standards for plans offered through the exchange, which plans sold outside an exchange are not required by federal law to meet.

This leaves substantial opportunity for adverse selection because insurers in these external markets will effectively be competing for enrollees against the exchange plans, but will not have to comply with standards that are as strict. Insurers operating outside the exchanges could seek to take advantage of these looser rules to attract healthier people and businesses, while leaving sicker people to enroll in coverage through the exchanges. As a result, the differences in rules would likely create an unlevel playing field and thereby increase the likelihood of adverse selection against the exchanges unless states institute protective measures.

In addition, under the Affordable Care Act, states have the option of setting up two separate exchanges — one for individuals and another for small businesses. States that do so may find that the exchanges lack the necessary volume to attract a sufficient number of insurers, ensure a large enough pool of enrollees that is well-balanced between the healthy and the sick, and achieve the economies of scale that can keep an exchange’s administrative costs low.

(This paper focuses on the risk of adverse selection between a health insurance exchange and outside health insurance markets. Another type of adverse selection could occur among plans within an exchange; this will be the subject of a future analysis.)

http://www.cbpp.org/cms/index.cfm?fa=view&id=3267

Comment: 

By Don McCanne, MD

Any health care financing system that divides health care funds into separate risk pools inevitably experiences adverse selection. In fact, private insurers do all that they can to see that their own risk pools contain low-cost healthier individuals while shifting higher-cost individuals into other public or private risk pools. As this article indicates, numerous regulations can be introduced that may reduce the magnitude of these differences, but they can never be eliminated.

When Medicare was financed using a single risk pool, adverse selection did not exist. Once private insurers were allowed to offer options to the traditional Medicare program (Medicare + Choice and then Medicare Advantage), multiple risk pools were established providing an opening for private insurers to game the system – and game it they did. They skirted the rules to selectively market the healthier sector of the Medicare population. They further pushed up their overpayments by upcoding the diagnoses – creating the deception that their enrollees were sicker than they actually were so that they wouldn’t be subject to risk adjustment (adjusting payments to reflect the health status of those in the pool).

Who suffers? Individuals, employers, taxpayers, health care providers. Who benefits? The private insurers.

Adverse selection was not simply an inconvenient policy problem that the legislators had to fiddle with merely because they rejected the concept of a single universal risk pool that eliminates the problem of adverse selection. Far worse, it was a deliberate policy decision supported by the leadership of the private insurance industry who held the hands of the legislators as they led them down the primrose path to the everlasting bonfire
that they call reform.

The Center on Budget and Policy Priorities (CBPP) report lists a few policy tweaks that are an attempt to patch some of the loopholes, but there are two major problems with their recommendations.

First, since the insurance exchanges are established on a state by state basis, each and every state must have its own enlightened and caring leadership that would oversee the intensive oversight efforts that will be required to reduce (but not eliminate) these injustices. That will never happen in most states.

The greater problem with the CBPP analysis and recommendations is that they completely excluded any consideration of the solution that really would work – a single universal risk pool through a single payer national health program, such as an improved Medicare for all.

Bill Moyers on John Geyman's "HIJACKED"

Bill Moyers on John Geyman's "HIJACKED"

“You think the battle for real health care reform is over? John Geyman says ‘Not on your life!’ And, by the way, your life is what’s at stake. This former Republican country doctor and long-time respected scholar, editor, and advocate for reform that puts the patient, not the industry, first, has issued an informed, convincing, and passionate account of why the battle has just begun, and how we, the people, can win.”

Bill Moyers, author of “Moyers on Democracy”

Comment:

By Don McCanne, MD

HIGHJACKED – The Road to Single Payer in the Aftermath of Stolen Health Care Reform
by John Geyman

Everyone needs to read this book. Order your copy now. (I’m ordering ten copies – to share with others.):

To order:
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402

Bill Moyers on John Geyman’s “HIJACKED”

Bill Moyers on John Geyman’s “HIJACKED”

“You think the battle for real health care reform is over? John Geyman says ‘Not on your life!’ And, by the way, your life is what’s at stake. This former Republican country doctor and long-time respected scholar, editor, and advocate for reform that puts the patient, not the industry, first, has issued an informed, convincing, and passionate account of why the battle has just begun, and how we, the people, can win.”

Bill Moyers, author of “Moyers on Democracy”

Comment:

By Don McCanne, MD

HIGHJACKED – The Road to Single Payer in the Aftermath of Stolen Health Care Reform
by John Geyman

Everyone needs to read this book. Order your copy now. (I’m ordering ten copies – to share with others.):

To order:
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402

Soft-pedaling reform

Dems retreat on health care cost pitch

By Ben Smith
Politico
August 19, 2010

Key White House allies are dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and the deficit and instead stressing a promise to “improve it.”

The messaging shift was circulated this afternoon on a conference call and PowerPoint presentation organized by FamiliesUSA.

The Herndon Alliance, which presented the research, is a low-profile group that  coordinated liberal messaging in favor of the public option in health care.

http://www.politico.com/news/stories/0810/41271.html

And…

Implementing Health Reform: A Communications Perspective

By Lake Research Partners, Greenberg Quinlan Rosner Research, and The Herndon Alliance
August 19, 2010

Challenging Environment (Slide 4):

Straightforward “policy” defenses fail to be moving voters’ opinions about the law.

Public is disappointed, anxious, and depressed by current direction of country – not trusting.

Voters are concerned about rising health care costs and believe costs will continue to rise.

Women in particular are concerned that health law will mean less provider availability – scarcity an issue.

Many don’t believe health reform will help the economy.

Strategic Recommendations: The “Do Nots” (Slide 24):

Don’t assume public knows the  health reform law passed or if they know it passed understand how it will affect them

Don’t list benefits outside of any personal context

Don’t barrage voters with a long list of benefits

Don’t use complex language or insider jargon

Don’t use heated political rhetoric or congratulatory language

Don’t say the law will reduce costs and deficit

PowerPoint presentation
http://www.politico.com/static/PPM153_pp.html

And…

Herndon Alliance Statement on Politico Story

Herndon Alliance

Our research reaffirms that the more the public hears about the specific reforms in the law, the more they like it. The strategy of informing and educating the public about the law continues to be the right strategy.  The Politico story (Aug 19, 2010)  is wrong when it says groups supporting affordable health care for the American people are dramatically changing their strategy.  There is no reason to do so — our research reaffirms that the more the public hears about the specific reforms in the law, the more they like it.  And our research finds that there is a need to cut the political flak and give real information to the public.  Americans are tired of the partisan spin that many opponents continue to throw at the health reform law. Hard-working people are thinking about the economy and just want to know how the law will help them and their families. That is what the President and the administration have been doing — it is the approach we support.

http://herndonalliance.org/

Comment: 

By Don McCanne, MD

The conclusions and recommendations presented during the Families USA conference call were based on polls and focus groups conducted by Herndon’s research partners. In spite of Herndon’s positive spin, the research confirms that the Obama administration and the Democrats in Congress face a very “challenging environment” as they attempt to sell the benefits of the Patient Protection and Affordable Care Act.

Their recommendations for communicating the benefits of reform might best be characterized as “keep it simple, stupid,” relying heavily on personal anecdotes. Don’t confuse the public with the actual policies that are now law, and certainly don’t claim that the law will reduce costs or the deficit.

Many will remember that these are the same partners that pushed the message of choosing your own health plan, while actively suppressing any references to single payer or Medicare for all. They seemed to have the view that the message was of prime importance and policy be damned. Obviously they haven’t changed.

This next time, let’s first define optimal policy (single payer) and then develop a message that fits. As Herndon states, we “need to cut the political flak and give real information to the public.”

Medicare for All is the most Cost-Effective Health Care Option for America

Washington D.C. (July 29, 2010) – Representative John Conyers, Jr. (D-MI), Representative Dennis Kucinich (D-OH), and Senator Bernie Sanders (I-VT) are today reaffirming their efforts to provide all Americans with health care that would allow access to the doctor of choice without premiums, co-pays or deductibles.
 
The three Congressional leaders on Medicare for All health care sent an open letter calling on Americans to build on the momentum created by debate and passage of the Patient Protection and Affordable Care Act to make Medicare for All a reality.  They also renewed the call for states to take the lead on passing Medicare for All legislation.   
 
“As we honor Medicare’s 45th birthday today, I am proud to say that the movement for Medicare for All remains strong and vibrant.  I look forward to working with my colleagues, activists, and my other friends in the single payer community to improve H.R. 676 over the next few months, before reintroducing it in the 112th Congress.        
 
While we must continue to work for the passage of a true universal health care bill, we must also be vigilant in our efforts to protect the health care benefits many Americans count on today.  Over 47 million older adults and people with disabilities look to Medicare as a source of health and financial security.  During this period of increased concern over the size of the federal deficit, Medicare and other social insurance programs are increasingly at risk of being targeted for benefit cuts. I pledge to work with my colleagues in the Congress to defeat any proposal that threatens any of these critically important programs,” said Conyers.
 
“I celebrate Medicare’s birthday by pledging to continue the fight to implement Medicare for All nationally and at the state level, where there is so much promise” said Kucinich.
 
“In my view, the single-payer approach is the only way we will ever have a cost-effective, comprehensive health care system in this country,” said Sanders. “One of the reasons our current health care system is so expensive, so wasteful, so bureaucratic, so inefficient is that it is heavily dominated by private health insurance companies whose only goal in life is to make as much money as they can.”

Getting Personal: Without Medicare I'd Be Broke or Dead

By Saul Friedman
The Huffington Post, Aug. 17, 2010

It’s not too late to observe and celebrate the 45th anniversary of Medicare, for it’s a good occasion to wonder, in this time of economic distress, what life would have been like without it for the 45 million of us who are eligible because we are disabled or over 65.

One reason I ask is I suspect those deficit crazies have not thought about the consequences for Medicare if, as Republicans suggest, the Social Security retirement age is raised from 66 to 70 on the grounds that we’re all living longer. It does not occur to these loonies that Social Security and Medicare are among the reasons for the increase in longevity. But then members of Congress will always have all the coverage they need for themselves and their families, subsidized by your taxes and mine.

Nevertheless, by putting aside the human issues for a phony bottom line and a deficit that matters little to most of us, it would not be long before these lawmakers on Barack Obama’s deficit commission would raise the Medicare age eligibility. That, of course would sharply increase by at least a few million, the nearly 50 million Americans under 65, including 10 million children and babies, who are without adequate health coverage and are dependent on emergency rooms or free clinics.

If I may get personal, let me tell you what Medicare has meant for me, for my experience has not been unusual, although I’m lucky to have supplementary coverage through my wife’s former employer, which used to be free but now costs a bundle. Most other Medicare beneficiaries have similar secondary coverage through former employers or one of several Medigap policies sold by several insurers to cover some or all of the costs not covered by Medicare. I don’t mean to get too basic, but Medicare Part A, which pays for hospitalization, has rather high deductibles; Medicare Part B covers 80 percent of the cost of physician and lab services. Secondary insurance covers those Medicare gaps, and some may provide drug coverage.

Anyway, in 2003 I had a serious stroke, which partly paralyzed my right side and necessitated hundreds of hours of inpatient and outpatient rehabilitation at several of the nation’s finest facilities. The stroke was caused by a heart malfunction, which was cured with minor surgery. In 2005, after too many years as a smoker (I had quit in 1976), I was diagnosed with cancer of the esophagus, which is usually fatal. But chemotherapy, radiation and radical surgery at Johns Hopkins in Baltimore saved my life.

For all this, plus frequent checkups, Ct-Scans, routine doctor visits and a recent prostate procedure, I have paid nothing aside from the reasonable Medicare Part B premiums and the cost of secondary coverage. In short, I can say what millions of Medicare beneficiaries say — without Medicare, I’d be broke, bankrupt or dead. But that, alas, has been the experience of the millions, who because they are too young, have been denied Medicare. Nor do they yet have decent, dependable and affordable health care because a compromising president and a spineless Congress, mostly Republicans and conservative Democrats, have declined to give the rest of the nation what they and the rest of the world have, universal health coverage like Medicare.

The anniversary of Medicare’s adoption, by a liberal Democratic Congress and President (Lyndon B. Johnson), has give advocates an opportunity to list its lesser known accomplishments. While most of the new health reforms won’t become effective until 2014 (the Part D doughnut hole won’t close until six years later), Medicare was serving 19 million Americans a year after passage. In a paper written by June Eichner and Medicare’s first director, Bruce Vladek, they point out that beginning in 1966, as the nation’s largest purchaser of health care Medicare desegregated most hospitals as a condition for receiving Medicare reimbursement. Since then, they wrote, Medicare has contributed not only to the improvements to the lives and health of the disabled and older populations, but has gone far in erasing disparities between blacks and whites. More than 25 percent of Medicare beneficiaries were living in poverty in 1965.

The passage of Medicare came just after the Civil Rights Act of 1964. Which is why southern Democrats joined Republicans in resisting Medicare. But because of those two landmark pieces of legislation, the National Bureau of Economic Research found that “the gains in black access to hospitals (in Mississippi) coincide with a striking reduction in black post-neonatal deaths for causes considered preventable.” The cost for these improvement were borne by Medicaid, also passed, along with Medicare, to provide care for the very poor.

Another study noted that Medicare played a significant role in the education of today’s physicians. According to an April Wall Street Journal, there are about 110,000 resident positions in teaching hospitals that rely heavily on Medicare funding. Medicare pays $9.1 billion a year to teaching hospitals, which pays residents’ salaries as well as the higher operating costs associated with teaching hospitals, which tend to see the sickest, most costly and uninsured patients. Unfortunately conservative diehards kept out of the health reforms any increase in the number of funded residencies.

There are, too, a few glitches that have shown up lately in Medicare that need fixing. Under current law, persons over 65 who end their employment and employer health coverage must apply for Medicare during a “special enrollment period,” up to eight month after that coverage ceases. But if the workers chooses to get COBRA coverage, which usually lasts 18 months, they may not realize that they will be disqualified from the special enrollment period and will have to wait until the regular open enrollment period, from January through March 31. In that case, their Medicare coverage won’t begin until July 1. This rule is 24 years old, but because it’s happening frequently, legislation is pending to permit signing up for Medicare when COBRA runs out.

Here’s another glitch, discovered by Bloomberg News. Under current law, a person (who suffered a stroke or was injured) is entitled to skilled nursing care and rehabilitation, after three days in a hospital. But lately some hospitals, to save money, are keeping patients “under observation” and not admitting them, thus depriving them of the rehabilitation they need. Medicare auditors are challenging this practice, which should be reported as fraud to Medicare.

Finally the biggest necessary fix is the one Obama said he was for, before he became president; Medicare For All. It is the subject of a new appeal to the Congress by Reps. Dennis Kucinich (D, Ohio), John Conyers (D, Mich.), and Independent Sen. Bernie Sanders of Vermont. If Congress won’t pass it, they asked that states be permitted to adopt it. It would be better, of course, if Medicare for All was federal law. If Obama led the way, he could be in the same leagues as LBJ. But our president for change, who has yet to speak forcefully against cutting or tampering with Social Security benefits, is too busy to listen. Maybe it’s possible in a second term, if he gets one.

Write to saulfriedman@comcast.net Friedman also writes for www.timegoesby.net

http://www.huffingtonpost.com/saul-friedman/getting-personal-without_b_685665.html

Getting Personal: Without Medicare I’d Be Broke or Dead

By Saul Friedman
The Huffington Post, Aug. 17, 2010

It’s not too late to observe and celebrate the 45th anniversary of Medicare, for it’s a good occasion to wonder, in this time of economic distress, what life would have been like without it for the 45 million of us who are eligible because we are disabled or over 65.

One reason I ask is I suspect those deficit crazies have not thought about the consequences for Medicare if, as Republicans suggest, the Social Security retirement age is raised from 66 to 70 on the grounds that we’re all living longer. It does not occur to these loonies that Social Security and Medicare are among the reasons for the increase in longevity. But then members of Congress will always have all the coverage they need for themselves and their families, subsidized by your taxes and mine.

Nevertheless, by putting aside the human issues for a phony bottom line and a deficit that matters little to most of us, it would not be long before these lawmakers on Barack Obama’s deficit commission would raise the Medicare age eligibility. That, of course would sharply increase by at least a few million, the nearly 50 million Americans under 65, including 10 million children and babies, who are without adequate health coverage and are dependent on emergency rooms or free clinics.

If I may get personal, let me tell you what Medicare has meant for me, for my experience has not been unusual, although I’m lucky to have supplementary coverage through my wife’s former employer, which used to be free but now costs a bundle. Most other Medicare beneficiaries have similar secondary coverage through former employers or one of several Medigap policies sold by several insurers to cover some or all of the costs not covered by Medicare. I don’t mean to get too basic, but Medicare Part A, which pays for hospitalization, has rather high deductibles; Medicare Part B covers 80 percent of the cost of physician and lab services. Secondary insurance covers those Medicare gaps, and some may provide drug coverage.

Anyway, in 2003 I had a serious stroke, which partly paralyzed my right side and necessitated hundreds of hours of inpatient and outpatient rehabilitation at several of the nation’s finest facilities. The stroke was caused by a heart malfunction, which was cured with minor surgery. In 2005, after too many years as a smoker (I had quit in 1976), I was diagnosed with cancer of the esophagus, which is usually fatal. But chemotherapy, radiation and radical surgery at Johns Hopkins in Baltimore saved my life.

For all this, plus frequent checkups, Ct-Scans, routine doctor visits and a recent prostate procedure, I have paid nothing aside from the reasonable Medicare Part B premiums and the cost of secondary coverage. In short, I can say what millions of Medicare beneficiaries say — without Medicare, I’d be broke, bankrupt or dead. But that, alas, has been the experience of the millions, who because they are too young, have been denied Medicare. Nor do they yet have decent, dependable and affordable health care because a compromising president and a spineless Congress, mostly Republicans and conservative Democrats, have declined to give the rest of the nation what they and the rest of the world have, universal health coverage like Medicare.

The anniversary of Medicare’s adoption, by a liberal Democratic Congress and President (Lyndon B. Johnson), has give advocates an opportunity to list its lesser known accomplishments. While most of the new health reforms won’t become effective until 2014 (the Part D doughnut hole won’t close until six years later), Medicare was serving 19 million Americans a year after passage. In a paper written by June Eichner and Medicare’s first director, Bruce Vladek, they point out that beginning in 1966, as the nation’s largest purchaser of health care Medicare desegregated most hospitals as a condition for receiving Medicare reimbursement. Since then, they wrote, Medicare has contributed not only to the improvements to the lives and health of the disabled and older populations, but has gone far in erasing disparities between blacks and whites. More than 25 percent of Medicare beneficiaries were living in poverty in 1965.

The passage of Medicare came just after the Civil Rights Act of 1964. Which is why southern Democrats joined Republicans in resisting Medicare. But because of those two landmark pieces of legislation, the National Bureau of Economic Research found that “the gains in black access to hospitals (in Mississippi) coincide with a striking reduction in black post-neonatal deaths for causes considered preventable.” The cost for these improvement were borne by Medicaid, also passed, along with Medicare, to provide care for the very poor.

Another study noted that Medicare played a significant role in the education of today’s physicians. According to an April Wall Street Journal, there are about 110,000 resident positions in teaching hospitals that rely heavily on Medicare funding. Medicare pays $9.1 billion a year to teaching hospitals, which pays residents’ salaries as well as the higher operating costs associated with teaching hospitals, which tend to see the sickest, most costly and uninsured patients. Unfortunately conservative diehards kept out of the health reforms any increase in the number of funded residencies.

There are, too, a few glitches that have shown up lately in Medicare that need fixing. Under current law, persons over 65 who end their employment and employer health coverage must apply for Medicare during a “special enrollment period,” up to eight month after that coverage ceases. But if the workers chooses to get COBRA coverage, which usually lasts 18 months, they may not realize that they will be disqualified from the special enrollment period and will have to wait until the regular open enrollment period, from January through March 31. In that case, their Medicare coverage won’t begin until July 1. This rule is 24 years old, but because it’s happening frequently, legislation is pending to permit signing up for Medicare when COBRA runs out.

Here’s another glitch, discovered by Bloomberg News. Under current law, a person (who suffered a stroke or was injured) is entitled to skilled nursing care and rehabilitation, after three days in a hospital. But lately some hospitals, to save money, are keeping patients “under observation” and not admitting them, thus depriving them of the rehabilitation they need. Medicare auditors are challenging this practice, which should be reported as fraud to Medicare.

Finally the biggest necessary fix is the one Obama said he was for, before he became president; Medicare For All. It is the subject of a new appeal to the Congress by Reps. Dennis Kucinich (D, Ohio), John Conyers (D, Mich.), and Independent Sen. Bernie Sanders of Vermont. If Congress won’t pass it, they asked that states be permitted to adopt it. It would be better, of course, if Medicare for All was federal law. If Obama led the way, he could be in the same leagues as LBJ. But our president for change, who has yet to speak forcefully against cutting or tampering with Social Security benefits, is too busy to listen. Maybe it’s possible in a second term, if he gets one.

Write to saulfriedman@comcast.net Friedman also writes for www.timegoesby.net

http://www.huffingtonpost.com/saul-friedman/getting-personal-without_b_685665.html

Insurance trade group sues to protect rescissions

Trade group sues over new Calif. insurance rules

By Shaya Tayefe Mohajer
San Francisco Chronicle
August 19, 2010

A new regulation that makes it harder for health insurance companies to drop individual policyholders in California is being challenged in court by an industry trade group.

The California Department of Insurance’s new regulations, which took effect Wednesday, require insurers to investigate the medical histories of those seeking individual policies before accepting any premiums.

The Association of California Life and Health Insurance Companies sued to stop the rules on Monday, accusing the state of acting “in excess of its jurisdiction and authority” by creating regulation that conflicts with the state’s insurance code.

Insurance Commissioner Steve Poizner on Thursday called the lawsuit “shortsighted and morally wrong.”

“Sometimes I think representatives in this industry have their heads permanently stuck in the sand. Illegal rescissions are a repugnant industry practice,” said Poizner.

http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2010/08/19/financial/f132925D03.DTL

Comment: 

By Don McCanne, MD

One of the most egregious offenses of the health insurance industry has been to retroactively revoke an insurance policy after the insured individual files a medical claim, a process known as rescission. Public outrage over this injustice helped to drive the process that brought us the Patient Protection and Affordable Care Act (PPACA).

Apparently the insurance industry has learned nothing. Their trade organization in California has the gall to infuriate all of us by suing to protect their right to do their underwriting after a claim is filed rather than before the policy is issued, whacking the patients when they are down.

Since PPACA will make rescissions more difficult, you would think that the industry would be quiet and accept the inevitable. No. Instead they reveal that they are not simply an amoral industry but rather a truly immoral one by insisting on their right to retroactively deny payment of medical bills run up by the hapless patient, merely to save the costs of timely underwriting.

This is not the industry that should be managing our health care financing. We need our own public financing entity – a single payer national health program.

Why are large employers unable to control their costs?

Large Employers’ 2011 Health Plan Design Changes

By Karen Marlo, Dannel Dan, and Craig Lykens
National Business Group on Health
August 2010

The National Business Group on Health conducted its annual plan design survey with members in the spring/summer of 2010.

Changes as a Result of Health Care Legislation

While there was uncertainty about the regulations determining grandfathered plan status, the majority of employers (53%) were still planning to make changes to their plan designs.

Medical Plan Costs

Employers estimated an average increase in health care costs of 7.0% for 2010, with reported estimates ranging from a 2.7% decrease to a 14.0% increase. For 2011, employers are estimating a slightly larger increase, an average trend of 8.9%.

In 2011, 63% of employers will be increasing the employee percentage contribution to premium costs, and 46% will increase out-of-pocket maximums, while 44% will increase in-network deductibles.

Consumer-Directed Health Care

Of the respondents, 61% will offer a CDHP in 2011. Of those offering a CDHP, 20% indicated that they will or have moved to a full replacement plan (i.e., no other option), up from 10% in 2010. The most common type of CDHP employers will offer in 2011 is a high-deductible health plan (HDHP) with a health savings account (HSA) (64%).

Pharmacy Benefits

To manage pharmacy benefits, the techniques employers are most likely to use are prior authorization (73%), followed by step therapy (63%), three-tier design (63%), and mandatory mail order for maintenance medications (47%).

Retiree Health

Very few employers offer retiree health benefits for new hires, with 18% offering coverage to pre-65 retirees and 11% offering post-65 supplemental coverage to new hires.

The top strategies being used to control retiree health care costs are caps on company contributions (46%), increasing employee contributions (37%), and eliminating coverage for future retirees (33%).

http://www.businessgrouphealth.org/pdfs/Plan%20Design%20Survey%20Report%20Public.pdf

Comment:

By Don McCanne, MD

The National Business Group on Health represents primarily Fortune 500 companies and large public-sector employers with self-insured health benefit programs. Because of their market power and their ability to eliminate the risk pooling function of private insurer intermediaries, you would think that these large employers would be immune from the high health care costs inflicted on the rest of us by our dysfunctional system of financing health care, but you would be wrong.

This report shows that escalating health care costs continue to plague our nation’s largest employers, so much so they they are turning to some of the same ill-advised cost containment measures used throughout our system. Amongst the most perverse is that they are shifting ever more costs to those individuals who most need to be protected by the benefit programs – their employees and family members who have health care needs. It is bad enough to have health problems, but it is even worse to be financially penalized for having them.

Why is it that these large employers, with their tremendous purchasing power and ability to bypass the extortion of risk-bearing private insurers, have been unable to control their health care costs? The reason is quite simple. Our fragmented, dysfunctional, multi-payer system permeates the entire health care delivery system, and these employers are unable to function in an isolated delivery system that has not been damaged by the financing perversities.

Let’s look at some of the excess costs that they face. First, U.S. health care prices are the highest in the world. Even with their purchasing clout, the employers are not able to slow the unrelenting escalation in health care prices; they still have to pay prices close to those negotiated by the private insurance industry. In fact, most of them use private insurers for administrative functions such as claims processing, so they’re playing the same ball game.

Second, and most importantly, the health care delivery system has built into it very high administrative costs due to the necessity of interacting with a multitude of payers, each with different contract requirements. There is no way that large employers can avoid paying these excess costs because they are fixed costs built into the delivery system.

It is true that large employers escape some of the costs of private insurance, such as the expense of marketing health plans, or the necessity of paying profits to investor-owned insurance companies. However they are exposed not only to the massive indirect administrative costs imposed on the health care delivery system, they also have their own excessive administrative costs.

The U.S. model of health care financing depends on provider networks, and these large employers must either establish their own networks, or, much more likely, rent these networks from the private insurers. It defies logic that they should pay extra to take choice away from patients, but they do. (Keep in mind that Medicare controls prices without the need of establishing restrictive provider networks.)

They also must either establish their own claims processing system, or again more likely, use private insurers or claims processing managers which profit from the services they are selling to the employers.

With the increase in consumer-directed health care plans employers have increased administrative responsibility for managing the various cost sharing provisions, ranging from tallying services before the deductible is met to management of payments from health savings accounts.

It is easy to see why being self-insured has not protected these large businesses. Their direct insurance-type administrative costs may be comparatively low, but the costly burden of our dysfunctional financing infrastructure has been placed upon the entire health care delivery system, and they must pay for that. (Yes, I repeat myself, but this is the crucial take-home message.)

Although some might want to give the private insurers a pass because the employers are not dependent on them for risk pooling, that would be a mistake. The private insurers and their political supporters are very much to blame because they have perpetuated this dysfunctional financing system that the large employers have been unable to penetrate. The politicians perhaps bear the greatest blame because they have supported the private insurance industry at a great cost to the rest of us.

What the United States lacks that all other industrialized nations have is a monopsony (single purchaser) to purchase health care. Even in those nations with multiple payers, government oversight pulls them together as a de facto single purchasing entity. In the private sector, a monopsony can be as evil as a monopoly, but a public monopsony is different because it purchases health care for the benefit of the nation’s patients.

Our nation’s largest employers, with all of their purchasing power, still lack the strength of a monopsony. They are making a tragic mistake in trying to solve their problems by passing more of the health care burden onto their workers.

If the leadership of the business community had just a little bit more vision, they would realize that it is time to establish a monopsony that would not only control their costs, but would work for all of us. The ideal monopsony for this nation, of course, would be an improv
ed Medicare that covers everyone.