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President Obama on the individual mandate

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President Obama on the individual mandate

Letter from President Barack Obama to Senator Edward Kennedy and Senator Max Baucus

The White House
June 2, 2009

Excerpt

The meeting that we held today was very productive and I want to commend you for your leadership — and the hard work your Committees are doing on health care reform, one of the most urgent and important challenges confronting us as a Nation.

I understand the Committees are moving towards a principle of shared responsibility — making every American responsible for having health insurance coverage, and asking that employers share in the cost. I share the goal of ending lapses and gaps in coverage that make us less healthy and drive up everyone’s costs, and I am open to your ideas on shared responsibility. But I believe if we are going to make people responsible for owning health insurance, we must make health care affordable. If we do end up with a system where people are responsible for their own insurance, we need to provide a hardship waiver to exempt Americans who cannot afford it. In addition, while I believe that employers have a responsibility to support health insurance for their employees, small businesses face a number of special challenges in affording health benefits and should be exempted.

http://www.whitehouse.gov/blog/The-President-Spells-Out-His-Vision-on-Health-Care-Reform/

Comment:

By Don McCanne, MD

Numerous media reports are proclaiming that President Obama is now open to an individual mandate – a requirement that each uninsured individual purchase a basic health plan. But what did he really say?

He said that if we make people responsible for their own insurance (individual mandate), then we must grant a hardship waiver to exempt people who cannot afford it. But the primary reason that people have not purchased insurance in the individual market is that the plans are not affordable. Most of these individuals will be eligible for the hardship waiver and will remain uninsured.

What else did he say? He said that small businesses should be exempted from the responsibility of supporting health insurance for their employees since they face special challenges in affording health benefits. But for 80 percent of the uninsured, the head of the household is employed, predominantly by small businesses.

So President Obama has endorsed an individual mandate that would expand coverage to everyone – except those who cannot afford to pay for the coverage, and those whose jobs are in small businesses that cannot afford to provide employee health benefits. That is, we’ll cover everyone except most of those who are currently uninsured, nor those who will lose their health benefits as the rate of employer-sponsored coverage continues to decline, especially with a pessimistic job outlook.

The president’s letter is more than a personal communication to a couple of senators. It is a consensus statement, meant for public consumption, on the agreement between the administration and Congress on the most basic fundamentals of the reform legislation to be completed, as the president stated, in the “make-or-break window” before the August recess. Reading the full letter makes you realize how low the expectations are for the final reform product.

Sen. Baucus has expressed remorse for not giving single payer advocates an audience, but he has also stated that it is too late in the process to do so now. However, on June 10, the House Committee on Education and Labor will hold a hearing, “Examining the Single Payer Health Care Option.”

Although single payer legislation has already been introduced in both the House and the Senate, the logistics of lining up the political ducks before the August recess is nigh close to an impossibility. Nevertheless, do not let up on your efforts. In the next couple of months, while health reform is on the front burner, the flames must be stoked with our loud and clear message that we need reform that actually will accomplish the goal of affordable health care for all.

Though we may miss this one, the “make-or-break window” does not close with the August recess. The 2010 election process is already beginning. Individuals and organizations should begin immediately to use strategies and tactics to be certain that candidates understand that they will not be elected unless they support a single payer national health program. That should be the make-or-break litmus test for the 2010 elections.

Medical Bills Cause Most Bankruptcies

By Tara Parker-Pope
New York Times blog
June 4, 2009

Nearly two out of three bankruptcies stem from medical bills, and even people with health insurance face financial disaster if they experience a serious illness, a new study shows.

The study data, published online Thursday in The American Journal of Medicine, likely understate the full scope of the problem because the data were collected before the current economic crisis. In 2007, medical problems contributed to 62.1 percent of all bankruptcies. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by about 50 percent.

“The U.S. health care financing system is broken, and not only for the poor and uninsured,” the study authors wrote. “Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.”

The data on medical bankruptcy, compiled by researchers at Harvard Law School, Harvard Medical School and Ohio University, is based on a survey of 2,314 randomly selected bankruptcy filers during early 2007.

Among families who were bankrupted by illness, those with private insurance reported average medical bills of $17,749 compared to those who were uninsured, who faced an average of $26,971 in medical costs. Those who had health insurance but lost it in the course of their illness reported average medical bills of $22,568.

Hospital costs accounted for about half the expenses (48 percent), followed by prescription drugs (18.6 percent), doctor’s bills (15.1 percent) and insurance premiums (4.1 percent). Medical equipment and nursing home care rounded out the list.

The health problems that left patients with the highest out-of-pocket expenses were ranked as follows:

Neurologic (i.e., multiple sclerosis): $34,167
Diabetes: $26,971
Injuries: 25,096
Stroke: $23,380
Mental illnesses: $23,178
Heart disease: $21,955

Regressive and Unaffordable

By Marcia Angell
NYTimes
June 5, 2009

There would be no need for an individual mandate in a single-payer system, since everyone would be covered automatically and it would be paid for through their income and payroll taxes. So asking me, a supporter of a single-payer health system, about mandates is a little like asking someone whether he’s stopped beating his wife.

Only a single-payer system would stop the private insurance industry from holding us hostage.

But even within our current system, I’m troubled by the notion of an individual mandate. I live in Massachusetts, where we have one. It requires people to buy private insurance at whatever price the companies choose to charge. As might be expected, this is a windfall for the insurance industry. Premiums are rising much faster than income, benefit packages are getting skimpier, and deductibles and co-payments are going up.

Many people can’t afford the premiums for the best plans, and so have to choose bare-bones, low-premium plans with high deductibles and co-payments. They are then left with insurance that they might not be able to afford to use, but have to purchase anyway.

A mandate is also extremely regressive. In Massachusetts, mandated insurance and co-payments can amount to nearly a third of income. Income taxes apportion the costs of public services more fairly, and I see no reason not to adopt that approach in paying for health care. To be sure, President Obama has said he would exempt people from the mandate who couldn’t afford to purchase their own health insurance. But aren’t these precisely the people most in need of it? Massachusetts has exempted 62,000 people from the mandate for that reason.

I would hope the President and Congress would come up with something less regressive and truly universal, and stop holding the rest of us hostage to the private insurance industry.

Marcia Angell is a senior lecturer in social medicine at Harvard Medical School and former editor-in-chief of the New England Journal of Medicine.

http://roomfordebate.blogs.nytimes.com/2009/06/04/should-health-insurance-be-mandatory/

Q&A with: Single-payer advocate Dr. Thomas Clairmont

By Michael McCord
New Hampshire Business Review
Friday, June 5, 2009

Portsmouth physician Thomas Clairmont — who has practiced medicine since 1977 and is a vocal member of Physicians for a National Health Program — considers the current health reform effort a dog-and-pony show.

As he watches the health-care reform debate in Washington — mostly with frustrated amusement — Dr. Thomas Clairmont, a primary care physician in Portsmouth, can offer his own diagnosis and prescription for what ails health care in this country in five minutes or less.

Clairmont, who has practiced medicine since 1977 and is a vocal member of Physicians for a National Health Program, considers the reform effort in Congress a dog-and-pony show produced by the health-care industry for public consumption.

“We aren’t having a debate right now. We’ve seen it before, and this usually leads to nothing significant happening,” said Clairmont, who advocates a government-run, single-payer solution — one that a bipartisan majority of politicians and President Obama are ignoring as best they can, he contends.

“Who is Senator (Max) Baucus (chair of the Senate Finance Committee, which is shepherding health-care legislation through the Senate) and how is that he will determine what kind of reform we will have?”

In May, a few PNHP doctors were arrested at a Senate hearing chaired by Baucus after they protested the exclusion of single-payer advocates from testifying. Clairmont said the Obama administration attempted a similar snub at its national health-care forum in March when it originally invited no single-payer supporters — even Rep. John Conyers, D-Mich., who has introduced single-payer legislation in Congress.

“I’m not a radical. I like taxes low and limited government spending, but health care should be a right and not a privilege,” Clairmont said. “We are hearing talk about reform and fears about socialized medicine or single-payer being politically unfeasible — but our plan is simple and it will save money because it focuses on health care and not making money for the insurance industry. And we are frustrated because it’s not being taken seriously.”

What’s at stake in health-care reform is a battle over money and how it will be allocated. According to the Centers for Medicare and Medicaid Services, health-care costs will total $2.5 trillion in 2009, or about 15.5 percent of the country’s gross domestic product. Health-care spending per person is estimated at $8,100 per person — while more than 47 million Americans have no health insurance, a statistic determined before the recession.

Clairmont concedes the fight isn’t easy but he says it’s necessary because if the latest reform effort plays out as he believes it will, they will be back to square one within the next three to five years.

Q. How long have you been a single-payer advocate?

A. In 1994, I attended the New Hampshire Medical Society meeting in which the then-AMA president from Maine debated Dr. David Himmelstein, the founder of PNHP. It wasn’t even close, as the facts Himmelstein presented were extremely persuasive and the AMA position — status quo, really — didn’t come anywhere near offering the comprehensive affordable portable coverage of single payer.

Q. How do you describe a single-payer system?

A. Usually I can explain it in seconds. It will cost 4.5 percent in taxes, and there will be no premiums, no pre-existing condition restriction and no tying health care to employment. Because we eliminate health insurance companies and the system is administered by the federal government, we can save $360 billion to $400 billion a year in administrative costs.

Q. How do you counter arguments that the single-payer approach is “socialized medicine?”

A. I have two responses to “socialized medicine.” The usual one that doctors are not employed by the government and the hospitals are independent as well. Also, patients have free choice in our system of doctor and hospital. And they can see doctors here in Portsmouth, go to a specialist in Boston, or if in Florida they can get care there by other private doctors.

Socialized systems employ doctors and they own the hospitals like the VA here or the U.K.

I often ask the question as to whether Medicare is socialized medicine, and the response is usually no. But if they say no, I ask why they wouldn’t want to expand such a wonderful system for seniors to everyone else. And I ask, can you imagine if Medicare didn’t exist today what would seniors do?

If they say yes, then I ask if they would propose eliminating such a ‘socialized’ system and replace it with something else — usually there is not much for them to say.

Q. As a physician, do you see any rationale need for health insurance companies as part of the health-care system?

A. No. People care about their health-care coverage and how much they are paying for it. They don’t care about their health insurance company.

What bothers me is listening to stories like I did at the 2007 Obama health-care forum in Portsmouth — or reading stories everywhere about patients not able to afford care, tests, medicines, or in severe debt because of medical problems.

I contrast that data with the exorbitant profits and multimillion-dollar salaries of some health-care system executives. I often contrast those salaries with the salary of Health and Human Services Secretary (Kathleen) Sibelius — $191,500, for taking care of over 40 million Medicare recipients and over 400,000 patients with renal failure (which makes anyone eligible for Medicare at any age) and anyone with Lou Gehrig’s disease — that is a lot of patients with serious illnesses.

One of the main questions I always come back to is this: Why are our premiums paying for the bonuses of health insurance industry executives? Also, I tell people we are heading for single-payer anyway, and what matters is if we want the government to administer it or for-profit insurance companies running the show, even more than they already are?

Q. What do you hope to accomplish?

A. We should be able to do side-by-side comparisons to see what’s best for the country. If our plan falls short, then fine, and at least we’ve had a debate. But so far Congress has mostly been doing the work of the health-care industry.

For example, a few weeks ago the health-care industry announced it could come up with $2 trillion in savings over 10 years. But a single-payer plan would conservatively save more than $3.5 trillion over 10 years. Why aren’t more politicians giving it (single-payer) further study if cost savings are a top priority?

We are seeing more support across the country as people become aware of what’s happening.

Q. What is your minimum hope for this round of health-care reform?

A. At a minimum, I would like to see Medicare expanded to cover the spouse of a person who is turning 65 and entering the Medicare system. Commonly, a spouse who is several years younger can have medical issues which do not allow them to buy into the individual market. I would give them the choice of buying into the Medicare program at that time of enrollment at the current per capita cost of Medicare. Retirement and a lifetime of savings can be quickly destroyed by a medical illness.

http://nhbr.com/apps/pbcs.dll/article?AID=/20090605/PEOPLE/906039958

Medical bankruptcies increasing

Medical Bankruptcy in the United States, 2007: Results of a National Study

By David U. Himmelstein, MD, Deborah Thorne, PhD, Elizabeth Warren, JD, Steffie Woolhandler, MD, MPH
The American Journal of Medicine
June 4, 2009

Abstract

Background: Our 2001 study in 5 states found that medical problems contributed to at least 46.2% of all bankruptcies. Since then, health costs and the numbers of un- and underinsured have increased, and bankruptcy laws have tightened.

Methods: We surveyed a random national sample of 2314 bankruptcy filers in 2007, abstracted their court records, and interviewed 1032 of them. We designated bankruptcies as “medical” based on debtors’ stated reasons for filing, income loss due to illness, and the magnitude of their medical debts.

Results: Using a conservative definition, 62.1% of all bankruptcies in 2007 were medical; 92% of these medical debtors had medical debts over $5000, or 10% of pretax family income. The rest met criteria for medical bankruptcy because they had lost significant income due to illness or mortgaged a home to pay medical bills. Most medical debtors were well educated, owned homes, and had middle-class occupations. Three quarters had health insurance. Using identical definitions in 2001 and 2007, the share of bankruptcies attributed to medical problems rose by 49.6%. In logistic regression analysis controlling for demographic factors, the odds that a bankruptcy had a medical cause was 2.38-fold higher in 2007 than in 2001.

Conclusions: Illness and medical bills contribute to a large and increasing share of US bankruptcies.

Medical impoverishment, although common in poor nations, is almost unheard of in wealthy countries other than the US. Most provide a stronger safety net of disability income support. All have some form of national health insurance.

The US health care financing system is broken, and not only for the poor and uninsured. Middle-class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.

https://pnhp.org/new_bankruptcy_study/Bankruptcy-2009.pdf

Comment:

By Don McCanne, MD

In the United States, medical bankruptcy is very real, it is common, and it impacts primarily the insured middle class. And Congress is going to fix it with more of the same broken financing system?

Medical bills underlie 60 percent of U.S. bankruptcies: study

By Maggie Fox
Health and Science Editor
Reuters
Thu Jun 4, 2009

WASHINGTON (Reuters) – Medical bills are involved in more than 60 percent of U.S. personal bankruptcies, an increase of 50 percent in just six years, U.S. researchers reported on Thursday.

More than 75 percent of these bankrupt families had health insurance but still were overwhelmed by their medical debts, the team at Harvard Law School, Harvard Medical School and Ohio University reported in the American Journal of Medicine.

“Using a conservative definition, 62.1 percent of all bankruptcies in 2007 were medical; 92 percent of these medical debtors had medical debts over $5,000, or 10 percent of pretax family income,” the researchers wrote.

“Most medical debtors were well-educated, owned homes and had middle-class occupations.”

The researchers, whose work was paid for by the Robert Wood Johnson Foundation, said the share of bankruptcies that could be blamed on medical problems rose by 50 percent from 2001 to 2007.

“Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy,” Harvard’s Dr. David Himmelstein, an advocate for a single-payer health insurance program for the United States, said in a statement.

“For middle-class Americans, health insurance offers little protection,” he added.

The United States is embarking on an overhaul of its healthcare system, which is now a patchwork of public programs such as Medicare and employer-sponsored health insurance that leaves 15 percent of the population — 46 million people — with no coverage.

About 170 million people get health insurance through an employer but President Barack Obama says soaring healthcare costs are hurting the economy and forcing businesses to drop medical insurance for their workers.

CANCELED COVERAGE

“Nationally, a quarter of firms cancel coverage immediately when an employee suffers a disabling illness; another quarter do so within a year,” the report reads.

Obama told Congress on Wednesday he was open to making mandatory health insurance part of the overhaul but only with exemptions for the poor and for small businesses.

Neither Congress nor Obama are considering the kind of single-payer plan advocated by Himmelstein and his colleague Dr. Steffie Woolhandler.

“We need to rethink health reform,” Woolhandler said. “Covering the uninsured isn’t enough.

“Only single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy.”

The researchers surveyed 2,134 random families who filed for bankruptcy between January and April in 2007, before the current recession began.

They used public bankruptcy court records and survey 1,032 respondents by telephone.

While only 29 percent directly blamed medical bills for their bankruptcy, 62 percent had medical bills that totaled more than 10 percent of family income, said an illness was responsible, had lost income due to illness or some other medical factor.

“Among common diagnoses, nonstroke neurologic illnesses such as multiple sclerosis were associated with the highest out-of-pocket expenditures (mean $34,167), followed by diabetes ($26,971), injuries ($25,096), stroke ($23,380), mental illnesses ($23,178), and heart disease ($21,955),” the researchers wrote.

(Editing by Bill Trott)

Medical bills play a role in 62% of bankruptcies, study says

By Lisa Girion
Los Angeles Times
June 4, 2009

President Obama’s push for healthcare reforms gets a boost today from a new study by Harvard University researchers that shows a sizable increase over six years in bankruptcies caused in part by ever-higher medical expenses.

The study found that medical bills, plus related problems such as lost wages for the ill and their caregivers, contributed to 62% of all bankruptcies filed in 2007. On the campaign trail last year and in the White House this year, Obama had cited an earlier study by the same authors showing that such expenses played a part in 55% of bankruptcies in 2001.

Medical insurance isn’t much help, either. About 78% of bankruptcy filers burdened by healthcare expenses were insured, according to the survey, to be published in the August issue of the American Journal of Medicine.

“Health insurance is not a guarantee that illness won’t bankrupt you,” said Steffie Woolhandler, one of the authors, a practicing physician and an associate medical professor at Harvard.

“Lots of health insurance comes with big co-payments, deductibles and uncovered services,” she said. “So you can be insured and still end up with big bills. At the same time, even if you have good insurance through your employer, you can lose it if you get sick and can’t work.”

Most people who filed medical-related bankruptcies “were solidly middle class before financial disaster hit,” the study says. Two-thirds were homeowners, and most had gone to college.

The study does not suggest that medical expenses were the sole cause for these bankruptcies, but it does identify them as a contributing factor. The increase in such filings occurred despite a 2005 law aimed at making it more difficult for individuals to seek court protection from creditors.

And the latest study probably understates the current burden of medical expenses because it is based on bankruptcies filed before the recession hit.

The findings by a team of Harvard researchers from the law and medical schools are expected to help fuel the debate over what type of healthcare system is right for the U.S.

In a letter Wednesday, Obama made another push for a healthcare overhaul, reiterating his concern about the financial burden the current system places on families and businesses.

“Soaring healthcare costs make our current course unsustainable,” he wrote in the letter to Sens. Edward M. Kennedy (D-Mass.) and Max Baucus (D-Mont.), who are leading efforts to develop healthcare legislation. “It is unsustainable for our families, whose spiraling premiums and out-of-pocket expenses are pushing them into bankruptcy and forcing them to go without the checkups and prescriptions they need.”

Momentum has been growing in Congress for healthcare reform. Such change can’t come soon enough for Mary McCurnin.

She and her husband, Ron, filed for bankruptcy and nearly lost their home near Sacramento after a series of medical crises, including her breast cancer and his open-heart surgery. Ron, 63, lost his insurance coverage when the company providing it lost its California license after paying 10% of his hospital bills. Mary, 59, managed to get on Medi-Cal after they “went broke.”

Despite the ordeal, she said, the self-employed illustrators feel fortunate that they survived and managed to hang on to their home. “The healthcare industry is killing people,” she said. “There’s no other way to put it. We just got lucky.”

Linda and Jeffrey Somach pay $800 a month for health insurance. But the Staten Island, N.Y., couple filed for bankruptcy a month ago when their out-of-pocket medical expenses surpassed $40,000.

Linda Somach, a psychologist, can earn $80,000 a year if she sees patients full time. But she had to scale back to care for Jeffrey, who has terminal brain cancer. That reduced their income. At the same time, she is constantly getting bills for out-of-network charges, deductibles and medical care that their insurance doesn’t cover.

“We put so much of the medical stuff on credit cards,” she said. “My patients do it too.”

The study suggests that such plights are routine.

Woolhandler is on the board of Physicians for a National Health Program, a group that advocates for a single-payer system, in which government, not private insurers, brokers healthcare. She said the study showed that private insurers had failed in their core mission: protecting consumers from financial ruin in the event of a medical crisis.

“We need to rethink health reform,” Woolhandler said. “Covering the uninsured isn’t enough. Reform also needs to help families who already have insurance by upgrading their coverage and assuring they never lose it.”

A spokesman for private insurers said the industry recognized that uncovered and expensive medical care imposed a burden on families and businesses. But he said that private insurers were in a better position to rein in spiraling medical costs and that the industry had a plan for protecting people from being forced into bankruptcy over medical expenses not covered by insurance.

“In fact, in our comprehensive reform proposal we recommended in December that Congress should look at an out-of-pocket spending cap and a system of tax credits for low-income people,” Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, a Washington, D.C.-based trade group.

“If an individual’s health expenses reached a certain level, there could be tax credits or other assistance to help those individuals,” he said.

The study found that medical-related bankruptcy filers with private insurance reported average medical bills of $17,749. By comparison, people who filed for bankruptcy without insurance reported average medical expenses of $26,971.

Individuals with diabetes and neurological disorders, such as multiple sclerosis, had the highest medical bills, averaging $26,971 for those with insurance and $34,167 for those without. Hospital bills were the largest expense for about half the families that filed health-related bankruptcies.

Grass-roots groups must test President mettle on health care reform

By Errol Lewis
New York Daily News
Thursday, June 4th 2009, 4:00 AM

WASHINGTON – As the White House launches its bid to reform health care, the big questions bedeviling the activist base of the Democratic Party are how and when to nudge President Obama to the left on key issues.

The recent three-day conference of the Campaign for America’s Future – an amalgamation of hundreds of unions, advocacy groups, student organizations, liberal think tanks and anti-war organizations whose turnout helped elect Democrats from coast to coast – featured a vow to get behind Obama’s push to reform health care this year.

But the frenetic energy of last year’s conference and about 500 attendees were missing. So was a hoped-for cameo appearance by Obama, who as a candidate dazzled the crowd at past conferences.

Many progressives have concluded correctly that Obama’s penchant for compromise and consensus could lead to a complex, unworkable, hybrid public-private health care proposal that will be an easy target for pharmaceutical industry lobbyists and other entrenched interests to demonize, weaken and possibly kill.

The stakes could not be higher. Tens of millions of Americans lack coverage, and the cost of health care continues to soar by double-digit percentages, causing an estimated half of all personal bankruptcies.

Although polls suggest that a thin majority of Americans would support a single, Medicare-style health insurance plan that covers everybody, Obama is playing it safe politically by going for a hybrid proposal in which those who are happy with their current coverage could keep it without any changes. That option, according to the polls, brings public support to 77%.

That leaves single-payer supporters in the tricky position of wanting to put pressure on Obama without providing ammunition to his (and their) conservative adversaries.

There’s a fine art, and long history, of Presidents being pressured by the social movements that helped elect them. “Obama’s Challenge,” a book making the rounds in progressive circles for months, describes how movement pressure made Abraham Lincoln, Franklin Roosevelt, Lyndon Johnson and Ronald Reagan into great, transformational Presidents.

According to this reading of history, the abolitionists pushed Lincoln from the goal of saving the union to the more radical move of ending slavery. Labor activism moved FDR from halting the Depression to enacting the New Deal, and civil rights activism forced Johnson to pass the Civil Rights Act of 1964 and Voting Rights Act of 1965, breaking the back of legalized segregation.

Presidents need outside grass-roots heat to help move the national consensus. The dreaded scenario for progressives is the arm’s-length treatment the anti-abortion movement got from Reagan.

Every year, the anti-abortion forces would gather on the National Mall, and every year Reagan would address them via a phone link and promise action on a constitutional amendment to ban abortion that never got to first base.

“We’ve seen little evidence of a progressive movement that can challenge the limits of Obama’s agenda and rouse an aggrieved citizenry to open up the space for the President to act far more boldly,” is how Robert Borosage, co-director of the Campaign for America’s Future, put it in a recent blog post. “But anyone building that movement will have to understand that they might earn respect, but they won’t be loved in the White House.”

The question is whether progressive health care advocates want to make friends with Obama, or make history. We shall see.

Study: Most Personal Bankruptcies Caused By Medical Bills, Illness

By DIANE LEVICK
The Hartford Courant
June 4, 2009

Medical bills or illness contributed to more than 62 percent of personal bankruptcies in 2007, a new study says, showing a nearly 50 percent increase from 2001 and not even reflecting the growing number of people who are losing their jobs and insurance in the recession.

The national study by researchers at Harvard University and Ohio University follows their five-state 2005 study that found medical problems contributed to at least 46.2 percent of bankruptcies in 2001. When identical definitions are applied, the share of bankruptcies involving medical issues has risen 49.6 percent since then.

“The U.S. health care financing system is broken, and not only for the poor and uninsured,” said the new report, which will appear in the August issue of the American Journal of Medicine and online today. “Middle class families frequently collapse under the strain of a health care system that treats physical wounds, but often inflicts fiscal ones.”

Medical bankruptcies will total an estimated 866,000 this year and involve 2.3 million Americans, based on the current bankruptcy filing rate, the report says.

Most medically bankrupt families were middle class. About 60 percent attended college and more than 66 percent owned a home.

Out-of-pocket medical expenses averaged $17,943 for medically bankrupt families — $26,971 for uninsured patients and $17,749 for those who had private insurance — at least initially. Some lose coverage when they became too sick to work, the report says.

The researchers voiced disdain for private insurance and support for a single-payer national health insurance system.

“Private health insurance is a defective product, akin to an umbrella that melts in the rain,” said lead author Dr. David Himmelstein, associate professor of medicine at Harvard. “Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy.”

The study surveyed a random national sample of 2,314 bankruptcy filers in 2007, examined their court records, and interviewed 1,032 of them.

The research was done by researchers at Harvard Law School, Harvard Medical School and Ohio University, and supported by a grant from the Robert Wood Johnson Foundation.

http://www.courant.com/business/hc-bankruptcies-medical-bills-study-0604,0,6923001.story

How Much Do Life Insurers Profit from Tobacco?

By Kathleen Kingsbury
Time Magazine
Thursday, Jun. 04, 2009

In an era of corporate wellness programs and socially screened investment funds, some of the world’s largest life-insurance companies still own billions of dollars in tobacco-industry stocks, Harvard physicians assert in a new report.

These latest findings, published this week in a letter to the New England Journal of Medicine (NEJM), suggest that several life and disability insurers, both in the U.S. and abroad, have yet to acquiesce to calls from the American Medical Association and others to divest their holdings in companies such as Reynolds American, Lorillard and Philip Morris. Many insurers cited in the letter say the study wildly overstates their investments, but the authors disagree. “Insurers continue to put their profits above people’s health,” said Dr. J. Wesley Boyd, the lead author of the report. “It’s clear their top priority is making money, not safeguarding people’s well-being.” (See pictures of vintage cigarette ads touting their “healthiness.”)

It can be argued, of course, that life- and disability-insurance companies have everything to gain from customers who live long and healthy lives — and continue to pay their premiums. So it would not be in the insurers’ interest to support tobacco use. But the authors argue that in fact, insurers profit both ways. “Although investing in tobacco while selling life or health insurance may seem self-defeating,” the authors write, “insurance firms have figured out ways to profit from both. Insurers exclude smokers or, more commonly, charge them higher premiums. Insurers profit — and smokers lose — twice over.”

The new study is a follow-up to a similar one conducted in 1995. For the new report, Boyd and his Harvard colleagues used a proprietary database called Osiris, which updates its financial data daily, to cull information on the major shareholders of tobacco-related equities. The researchers cite New Jersey–based insurer Prudential Financial as a typical example of what they discovered. Prudential, which sells both life and long-term-disability insurance, owned about $264 million in the stocks of Reynolds American, which makes Camel cigarettes, and Philip Morris International, which manufactures the Marlboro brand.

A Prudential spokesperson acknowledged that this figure is “reasonably accurate.” But other insurers named in the study strongly dispute its claims. The NEJM letter states that, for instance, Canadian firm Sun Life Financial, which offers life, health and disability insurance, holds just over $1 billion in tobacco investments. In an e-mail to TIME, however, Sun Life spokesman Michel Leduc called this number “categorically incorrect.” Although he would not disclose specific holdings, Leduc said that of the company’s $100 billion investment portfolio, less than 0.005% was exposure to tobacco stocks. “Sun Life’s investments in renewable-energy projects are over $1.2 billion. We also invested about $1 billion in the last three years to help build or renovate about 20 hospitals and long-term-care facilities,” Leduc added. “Together, these two categories alone amount to nearly 500 times the size of tobacco stocks.”

Two other U.S.-based insurers, Northwestern Mutual and MassMutual, also question the study’s data. The NEJM letter places Milwaukee-based Northwestern’s tobacco-stock holdings at $235 million in Reynolds, Philip Morris and Lorillard, which produces Newport cigarettes. But spokeswoman Jean Towell says the insurer’s investments are actually one-tenth that figure, less than $24 million.

At MassMutual, the gap is even bigger. The study claims the firm’s tobacco holdings to be $585 million. That is “absolutely incorrect,” says Mark Cybulski, a MassMutual spokesman. “Massachusetts Mutual Life Insurance Company has virtually no equity holdings in companies whose offerings include tobacco-related products. As of December 31, 2008, MassMutual’s holdings of tobacco-related equities are approximately $548,000, representing less than 0.001% of consolidated statutory cash and invested assets of $86.2 billion.”

Such discrepancies are hard to explain. The Harvard researchers’ data, gathered from the Osiris database, was reviewed by both NEJM and TIME and found to be accurate as of March 26, 2009. Osiris, for its part, collects financial information from yet another financial database, FactSet Research Systems, which sources its records directly from public filings by the tobacco firms and the insurers to the Security and Exchange Commission. “I think the numbers in the Osiris database are aggregate numbers from every division of a company like Northwestern, whereas Northwestern might be looking at a subset of their total holdings,” Boyd says. Similar questions arose from his 1995 findings, which were ultimately substantiated.

All the insurers in question also sell mutual funds and other retirement products alongside their insurance businesses. That means at least some of their exposure to tobacco stocks stems from client assets in index funds, such as those pegged to the S&P 500, which, of course, includes firms like Philip Morris and Lorillard. Many of the insurers contacted by TIME declined to outline the specifics of their investment portfolios, but a Prudential spokesman, Darrell Oliver, noted that as a policy, Prudential does not invest in tobacco stocks for its own portfolios: “Some Prudential entities hold tobacco stocks. Those stocks are primarily part of index-related strategies managed for separate accounts or other portfolios managed for third parties.”

Another life insurer, TIAA-CREF, the largest U.S. education retirement fund, has long been criticized for its billion-dollar investments in tobacco stocks. It now allows clients to opt to avoid such equities through special socially conscious funds. This is an option nearly all insurers now include in their portfolios. “As a TIAA-CREF participant, you do not have to own shares in tobacco companies if you choose not to,” says spokesman Chad Peterson.

Purely from an investor’s standpoint, however, buying tobacco stocks is a solid long-term bet that historically pays regular dividends. “We ultimately have a fiduciary responsibility to our clients,” says Towell, who puts about 5% of Northwestern’s tobacco equities in index funds.

Yet that profit-making duty is what troubles the Harvard doctors. Boyd and his colleagues believe that their findings call into question whether insurers ought to have a voice in the ongoing debate in Washington over health-care reform. “These data raise a red flag about the prospects of opening up vast new markets for private insurers at public expense, as has happened in our state of Massachusetts, an oft-cited model for national health reform,” the researchers write in their NEJM letter.

The health-insurance industry, by contrast, has largely divested tobacco holdings since the 1990s and has offered to compromise with lawmakers in the health-care debate. In a letter to Congress on March 24, several health insurers indicated they would be willing to stop charging higher premiums to people with a history of medical problems if all Americans were required to purchase health plans. Perhaps the next step will be for life and disability insurers to look at their tobacco stocks and, as they say, kick the habit.

Life, health insurers invest big in tobacco

Agence France-Presse (AFP)
June 4, 2009

WASHINGTON (AFP) — Major US, Canadian and British life and health insurance companies have billions of dollars invested in tobacco companies, a study published Wednesday in the New England Journal of Medicine said.

Wesley Boyd, the study’s lead author, found that at least 4.4 billion dollars in insurance company funds are invested in companies whose affiliates produce cigarettes, cigars and chewing tobacco.

“Despite calls upon the insurance industry to get out of the tobacco business by physicians and others, insurers continue to put their profits above people’s health,” said Boyd, a faculty member of Harvard Medical School.

“It’s clear their top priority is making money, not safeguarding people’s well-being,” he wrote.

Tobacco is considered the leading cause of lung cancer and a major risk factor for heart attack, stroke, pulmonary disease and cancer.

According to the World Health Organization, it is a contributing factor in 5.4 million deaths a year.

Researchers first revealed that health and life insurance companies had major investments in tobacco companies in 1995 in an article in the British medical journal Lancet.

“Although investing in tobacco while selling life or health insurance may seem self-defeating, insurance firms have figured out ways to profit from both,” Boyd wrote.

“Insurers exclude smokers from coverage or, more commonly, charge them higher premiums. Insurers profit — and smokers lose — twice over.”

According to the study, US insurer Prudential Financial Inc. has 264.3 million dollars invested among three US tobacco companies, including Reynolds America and Philip Morris.

Canadian insurer Sun Life Financial Inc., which sells life, disability and health insurance, has a stock portfolio with more than one billion dollars in two tobacco companies, including 890 million dollars in Philip Morris.

Prudential Plc, which sells health and disability insurance, has 1.38 billion dollars in two tobacco companies, including British American Tobacco.

The study also details the substantial tobacco investments of the US firms Northwestern Mutual and Massachusetts Mutual Life, and the Scottish firm Standard Life Plc.

Charity care not answer, doctor says

Judy Dasovich says reformed system wouldn't be socialist

Mike Penprase
News-Leader (Springfield, MO)
May 31, 2009

Dr. Judy Dasovich got national attention with her arrest during a recent Senate hearing in Washington, but she was more intent at a Saturday rally on getting attention paid to others.

Go talk to the family who had a mountain of medical bills that wasn’t covered by their insurance, the volunteer physician at The Kitchen told reporters during a “High Noon for National Health Care” rally.

The rally might have been impromptu and involved fewer than two dozen people, but Dasovich said she was pleased.

“We started organizing this in the middle of the week,” she said.

The Physicians for a National Health Program that Dasovich belongs to and other groups have advocated adoption of a single-payer or Medicare-for-all system, but Dasovich said she tells the curious there’s a simpler explanation.

Americans should pay for health insurance like they pay for interstate highways, she said.

Money that now goes for insurance premiums and co-payments should go to a nationwide tax that would support a health insurance system, she contends.

Instead of health insurance premiums going to insurance company profits and outright waste, the money would go for treating people, she said.

Dasovich said critics who contend such a system would be socialized medicine are mistaken because reform she wants to see would change the way money is spent and wouldn’t affect how doctors treat patients or how patients select doctors.

Anyone who has fought an insurance company over a bill or who has been forced to move from one physician to another because an employer changed health care coverage would understand, she said.

Her stance — and her trip to Washington that resulted in a misdemeanor arrest — didn’t come after one case of seeing someone needing health care who didn’t have insurance, she said.

Along with several other health insurance reform advocates, Dasovich was held for several hours after they demonstrated during a session of the Senate Finance Committee headed by Sen. Max Baucus.

“Charity care is not a solution,” she said. “I’ve seen that firsthand. This is the next step that needs to be taken.”

People attending the rally said they appreciate Dasovich’s commitment to reform.

“She’s wonderful,” Vicki Chapman said while holding baby daughter Kylie. “Judy is Kylie’s hero.”

As for her Washington arrest, Dasovich said she’s ready to deal with that soon.

Dasovich said she’s scheduled to return to Washington to respond the misdemeanor charge next week and expects a hearing to be held in another month.