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ABX1 1: Universal health insurance without health care

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ABX1 1: Universal health insurance without health care

by Claudia Chaufan
Indybay.org/news
Saturday, Jan 12th, 2008

The “Health Care Security and Cost Reduction Act”, also known as ABX1 1, and described by New York Times reporter Kevin Sack as a “bipartisan blueprint” conceived by Republican governor Arnold Schwarzenegger and Democratic Assembly speaker Fabian Nunez to bring “near-universal coverage to the country’s most populous state”, will neither provide health care security nor reduce costs of medical care. This article explains why.

Virtually everybody agrees that the American health care system is broken: costs are rising well in excess of the rate of inflation [1], insured and uninsured alike are often an illness away from bankruptcy [2], and too many go without medical care altogether – and roughly 18,000 die each year for this reason [3]. With over 20% of its population uninsured and growing, California exemplifies well the sorrowful state of health care in the country [4]. As a result, it has become fashionable, for politicians and corporate executives alike, including CEOs of health insurance companies, to call for universal coverage. As Jonathan Cohn noted recently in the New York Times Magazine, universal coverage is today the “one thing Big Business and the Left have in common” [5]. And Cohn must be right, because, at least in California, traditionally opposed interest groups are about to tie the knot in Assembly Bill X1 1 (ABX1 1), the “Health Care Security and Cost Reduction Act”. According to New York Times reporter Kevin Sack, this act is a “bipartisan blueprint” drawn up by Republican governor Arnold Schwarzenegger and Democratic Assembly speaker Fabian Nunez to bring “near-universal coverage to the country’s most populous state” [6]. So, should we not be raising our glasses in celebration? Not really.

However wonderful it would be for this well-meaning legislation to provide health security and reduce costs, there is little if any reason to believe it will do either.

For one, it cannot keep at least half of its promise, controlling costs of medical care, because not only does it not remove the private insurers that created the current nightmare, it actually gives them a central role in the new system and no incentive to control such costs — let us remember that the extraordinary administrative costs to private insurers, up to 34 cents out of each health care dollar [7], are for them no great burden, because they are easily offset, as they finance systems which allow insurers to never pay more in medical care than they collect in premiums. This is precisely the reason of the long-lasting love affair between private insurers and complex combinations of co-pays, cost-sharing, deductibles, exclusion clauses, and eligibility criteria, whose goal is not to control the cost of medical care in order to provide more and better of it to more people, but to control the costs of running insurers’ profit-maximizing business, while leaving enough spare change to shower high-level executives with generous salaries and compensation packages.

What is worse, ABX1 1 creates new eligibility categories — the poor, the not-so-poor, the non-poor, and several levels within each category — and imposes “fines” for misbehavior (e.g. failing to purchase health insurance) that will have to be enforced, all of which will increase administrative costs — and waste. And in its attempt to regulate industry, whether or not it succeeds, the legislation creates yet another layer of expensive bureaucracy that will divest resources from actual medical care.

Last, ABX1 1 will not control costs because it prevents Californians from using a major cost-containment mechanism: the purchasing power of large pools, which allows single payer systems like Canadian Medicare, the Veteran’s Administration, or even American Medicare (when it is not forced to outsource benefits to the private sector) to negotiate for best prices of medical goods and services through combinations of global budgets, fee schedules or drug formularies. This failure to control costs will prevent ABX1 1 from meeting the other half of its promise: providing health care security to Californians. It cannot provide “health care security” because it does not guarantee a comprehensive package of medical services at prices that are affordable for prospective patients. And in truth, it provides nothing: it merely mandates individuals to buy a policy in the market, whether or not the policies they can afford truly meet their medical needs. And we should note that the promised subsidies to individuals in certain income brackets, likely to increase as more people become impoverished by raising medical costs they cannot afford, thus becoming “eligible” for subsidies, are not gratis: they are borne collectively by all taxpayers.

If we are to go by the experience of other states, the prospects of ABX1 1, at least for those who would like to have the health care security and cost control of medical care that the legislation promises, are grim: a similar, individual mandate in Massachusetts is already running $147 million over the $472 million budgeted for fiscal year 2007, collections of fines from employers who fail to provide coverage are 80% below the original projections, and barely 7% of the uninsured who are not poor enough to receive subsidies have enrolled in any plan at all. Yet we should refrain from throwing the first stone to those who fail to comply with the law: the cheapest plan that meets the mandate’s requirement for a couple in their fifties costs $8,200 per year, with $2,000 deductible per person, so “choosing” to not enroll in any plan, even at risk of being fined, is not unreasonable [8]. Nor is it unreasonable to request, as many have done, a “compassionate exemption”, which by April of 2006 was already being granted to approximately 20% of those who failed to comply with the mandate (about 60,000 individuals) [9].

All of the above gives us reason to believe that an individual mandate such as the one proposed by ABX1 1 will no more protect individuals from financial ruin due to medical expenses than bare bones drivers’ insurance protects anybody from the the costs of a car accident. We do not count on those policies to get our cars back in shape, but we need them to comply with the law and protect ourselves against the claims of others. So for now, no reason to raise our glasses. And yet, some Californians are surely celebrating: among them are high level executives and shareholders in the private health insurance sector, which, if ABX1 1 becomes law, will count on a captive pool of clients for years to come. Indeed, Blue Shield California and colleagues must be following closely the smashing success of the Massachusetts plan. They must be particularly excited about the surplus of $1 million a day that Blue Cross Massachusetts is collecting. Or about the $16.4 million retirement bonus recently awarded its chairman, even as he continues to draw a $3 million dollar salary [8].

Which is why we do not need to think too hard to understand why this marriage of Republicans and Democrats must already be celebrated in so many places. We can only speculate, however, why health care reporters insist on calling ABX1 1 and similarly ill-conceived legislation “near-universal” or “universal” health coverage. Or why they are dismissing single payer, the only viable option for controlling costs and securing health care [10], as having “limited political support” [11], as editors in the New York Times recently did, despite evidence to the contrary among the public [12] and even among physicians [13]. Or why the same editors refer to single payer as “no panacea” as “indicated” by the “problems” of Medicare, clearly confusing the symptom — Medicare’s financial struggles — with the disease — the irrationalities forced upon Medicare by business-friendly legislation, which include, yet are not limited to, the generous subsidies Medicare has to pay to private insurers to “encourage” them to “compete”, at the same time that this legislation forbids Medicare itself to bargain for best prices of drugs for seniors [14].

But maybe we are missing something?

Claudia Chaufan received her medical degree from the University in Buenos Aires and her PhD from the University of California at Santa Cruz, where she currently teaches sociology of health and medicine and health policy. She is the Vice President of California Physicians Alliance, the Californa Chapter of Physicians for a National Health Program, and an active member of the national group.

References
1. Anderson, G.F., et al., It’s The Price, Stupid: Why The United States Is So Different From Other Countries. Health Affairs, 2003. 22(3): p. 89-105.
2. Woolhandler, S. and D.U. Himmelstein, Paying for health insurance-and not getting it. Health Affairs, 2002. 21(4): p. 88-98.
3. Institute of Medicine, Hidden Costs, Value Lost: Uninsurance in America. 2003, National Academies Press: Washington D.C.
4. California Health Care Foundation, Snapshot: California’s Uninsured. 2004, California Health Care Foundation: Oakland. p. 1-18.
5. Cohn, J., What’s the One Thing Big Business and the Left Have in Common?, in The New York Times Magazine. 2007.
6. Sack, K., States’ Widening of Health Care Hits Roadblocks, in The New York Times. 2007: New York. p. 1, 16.
7. Kahn, J.G., et al., The Cost Of Health Insurance Administration In California: Estimates For Insurers, Physicians, And Hospitals. Health Affairs, 2005. 24(6): p. 1629-1639.
8. Woolhandler, S. and D.U. Himmelstein, An Open Letter to the Nation from Massachusetts Physicians: Early Outcomes from Massachussetts’ Health Care Plan. 2008, https://pnhp.org.
9. Center for Studying Health Systems’ Change, Massachusetts Health Reform: Employers, Lower-Wage Workers, and Universal Coverage (Issues Brief). 2007, Center for Studying Health Systems’ Change: Washington D.C. p. Report No113 p. 1-6.
10. Sheils, J.F. and R.A. Haught, The Health Care for All Californians Act: A Cost and Economic Impacts Analysis: Executive Summary. 2005, The Lewin Group. p. 1-10.
11. Editorial, The High Cost of Health Care, in The New York Times. 2007: New York. p. 9.
12. Kuhnhenn, J. and T. Tompson, Pocketbook worries outweigh voters’ concerns over war in Iraq, in http://news.yahoo.com/page/election-2008-political-pulse-voter-worries. 2007, Associated Press.
13. Trapp, D., Internist society sees single-payer as option. 2007 December 24/31, Amednews.com.
14. Baker, D., Waste in the Medicare Drug Benefit: Why the Doughnut Hole is Unnecessary. 2006, Center for Economic and Policy Research: Washington, DC. p. 1-10.

Doctors Give Massachusetts Health Reform a Failing Grade – Poor Early Outcomes Raise Red Flags, Only Private Insurers Profit

For Immediate Release

Contacts:
Dr. Rachel Nardin, 617.667.4382
Dr. David Himmelstein, 617.665.1032
Todd Main, 312.782.6006

Over 250 Massachusetts doctors have signed an open letter to the country warning that the health reform model enacted by Massachusetts is failing and that a single payer program is the only alternative.

“It is urgent that the rest of the country know that Massachusetts is a living laboratory for the health care reforms being pushed in California and by the Obama/Clinton/Edwards campaigns. Right now the Gov. Romney/Massachusetts’ plan gets a failing grade on the ground,” said Dr.Rachel Nardin, Assistant Professor of neurology at Harvard Medical School.

An Open Letter to the Nation from Massachusetts Physicians:
Early Outcomes from Massachusetts’ Health Care Reform

We write to alert colleagues and the nation to the disturbing early outcomes of Massachusetts’ widely-heralded approach to health care reform. Although we wish that the current reform could secure health insurance for all, its failings reinforce our conviction that only a single payer program can assure patients the care they need.

In 2006, our state enacted a law designed to extend health coverage to virtually all state residents. Political leaders in other states as well as several Democratic presidential candidates have embraced this model.

Massachusetts’ law mandates that uninsured individuals must purchase private insurance or pay a fine. The law established a new state agency to ensure that affordable plans were available; offered low income residents subsidies to help them buy coverage; and expanded Medicaid coverage for the very poor. (Immigrants are mostly excluded from these subsidized programs.) Moneys that previously funded free care for the uninsured were shifted to the new insurance program, along with revenues from new fines on employers who fail to offer health benefits to their workers. In addition, the federal government provided extra funds for the program’s first two years.

Starting January 1, 2008 Massachusetts residents face fines if they cannot offer proof of insurance. Yet as of December 1, 2007 only 37% of the 657,000 uninsured had gained coverage under the new program. These individuals often feel well served by the reform in that they now have health insurance. However, 79% of these newly insured individuals are very poor people enrolled in Medicaid or similar free plans. Virtually all of them were previously eligible for completely free care funded by the state, but face co-payments under the new plan. In effect, public funds for care of the poor that previously flowed directly to hospitals and clinics now flow through insurers with their higher administrative costs.

Among the near poor uninsured (who are eligible for partial premium subsidies) only 16% had enrolled in the new coverage. And barely 7% of the uninsured individuals with incomes too high to qualify for subsidies had enrolled according to the official state figures. Few can afford premiums for even the skimpiest coverage; the lowest cost plan offered for a couple in their fifties costs $8,200 annually, and carries a $2,000 per person deductible.

Moreover, the state’s cost for subsidies is running $147 million over the $472 million budgeted for fiscal year 2007. Meanwhile, collections from fines on employers who fail to provide coverage are 80% below the original projections. The funding gap will widen in future years as health care costs escalate and insurers raise premiums. Already, state officials speak of making up the shortfall by forcing patients to pay sharply higher co-pays and deductibles, and by slashing funds promised to safety net hospitals.

While patients, the state and safety net providers struggle, private insurers have prospered under the new law, and the costs of bureaucracy have risen. Blue Cross, the state’s largest insurer, is reaping a surplus of more than $1 million each day, and awarded its chairman a $16.4 million retirement bonus even as he continues to draw a $3 million salary. All of the major insurers in our state continue to charge overhead costs five times higher than Medicare and eleven-fold higher than Canada’s single payer system. Moreover, the new state agency that brokers private coverage adds its own surcharge of 4.5% to each policy it sells.

A single payer program could save Massachusetts more than $9 billion annually on health care bureaucracy, making universal coverage affordable. But because the 2006 law deepened our dependence on private insurance, it can only add coverage by adding costs. Though politically feasible, this approach is already proving fiscally unsustainable. The next economic downturn will push up the number of uninsured just as the tax revenues needed to fund subsidies fall.

The lesson from Massachusetts is that we still need real health care reform: single payer, non-profit national health insurance.

High burden hits middle-income America

Financial Burden Of Health Care, 2001-2004

The same affordability issues that low-income families experienced a decade ago have begun to affect middle-income families today

By Jessica S. Banthin, Peter Cunningham and Didem M. Bernard
Health Affairs
January/February 2008

In the first part of this decade, health care costs continued to increase at rates far above general inflation, and employers increasingly shifted these higher costs to workers in the form of higher out-of-pocket payments for premiums, deductibles, and copayments. Adding to the pressure on families was slower economic growth during 2001-2004, which resulted in increases in poverty rates and the number of uninsured people.

Families’ health care burden

We define health care burden as the ratio of total family out-of-pocket spending for health care services and premiums over total family income.

High-burden individuals

People who live in families that spend more than 10 percent of family income on health care are defined as individuals with high burdens.

Study Results

Financial burden of health care

The financial burden of health care increased for American families during the first part of this decade as a result of rising out-of-pocket spending for health care and stagnant family incomes. Between 2001 and 2004, the percentage of the nonelderly population living in families with high out-of-pocket health care burdens rose from 15.9 percent to 17.7 percent. By 2004, 45.4 million people lived in families with high burdens—an increase of almost six million from 2001.

Increases in out-of-pocket spending between 2001 and 2004 were driven by both increases in health insurance premium payments and spending on health care services. Even after general inflation is accounted for, total out-of-pocket spending on health care rose by $373 to $2,656 in 2004, an increase of about 16 percent over the three-year period. In contrast, average family incomes not only failed to keep pace with rising out-of-pocket spending during this period but were largely unchanged after general inflation was accounted for.

Health insurance coverage and financial burden

The increase in families’ financial burdens was driven entirely by people with private (employer-sponsored) insurance: 17 percent (or twenty-nine million people) faced high burdens in 2004, an increase of 2.3 percentage points from 2001. Together, out-of-pocket spending for premiums and services rose $553 to $3,211, a 21 percent increase over the period.

Although relatively small in number, people covered by private policies purchased in the nongroup market were much more likely than those in any other insurance group to bear high financial burdens during 2001-2004. This was because people with private nongroup insurance must pay the entire premium, and benefits in such plans are often less generous than those in employer-sponsored plans. Moreover, the percentage of people with nongroup plans experiencing high out-of-pocket burdens rose dramatically, from 39 percent in 2001 to 52.7 percent in 2004.

Financial burden and income

The burdens were highest among poor (less than 100 percent of the federal poverty level) and low-income (100-199 percent of poverty) people with private insurance, a subgroup of particular policy concern. We found that 53.5 percent of poor and 37.4 percent of low-income people with private insurance faced high financial burdens in 2004, about two times as high as middle-income people faced and four times as high as high-income people faced. Moreover, financial burdens increased between 2001 and 2004 for low-income people, which indicates that private coverage was becoming less affordable for this group. At the same time, one out of five privately insured people with incomes of 200-399 percent of poverty (middle income) spent more than 10 percent of their income on health care, a rate that is twice as high as that for higher-income people.

Discussion

Compared to poor and low-income people, the prevalence of high financial burdens during our study period was much lower for privately insured people in middle-income families. Still, one out of five privately insured people in middle-income families faced high financial burdens, and this number is likely to increase in future years as health care costs continue to outpace growth in family incomes. Thus, the same affordability issues that low-income families experienced a decade ago might affect middle-income families in the future.

http://content.healthaffairs.org/cgi/content/full/27/1/188

Comment:

By Don McCanne, MD

The policy lesson? One-fifth of privately insured, middle-income people are already classified as “high-burden individuals” because they live in families that spend more than ten percent of their family income on health care, “and this number is likely to increase in future years as health care costs continue to outpace growth in family incomes.”

The failure of private insurance to provide affordable health care has already become a crisis for middle-income America. Current proposals to provide us with even more deteriorating private insurance plans amount to no more than a cruel joke by the policy/political community. But who’s laughing? Listen carefully. It sounds like sobbing to me.

Make that 22,000 uninsured deaths

Uninsured and Dying Because of It:

Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality

By Stan Dorn
Urban Institute
January 2008

The absence of health insurance creates a range of consequences, including lower quality of life, increased morbidity and mortality, and higher financial burdens. This paper focuses on just one aspect of this harm–namely, greater risk of death–and seeks to illustrate its general order of magnitude.

In 2002, the Institute of Medicine (IOM) estimated that 18,000 Americans died in 2000 because they were uninsured. Since then, the number of uninsured has grown. Based on the IOM’s methodology and subsequent Census Bureau estimates of insurance coverage, 137,000 people died from 2000 through 2006 because they lacked health insurance, including 22,000 people in 2006.

Much subsequent research has continued to confirm the link between insurance and mortality risk described by IOM. In fact, subsequent studies and analysis suggest that, if anything, the IOM methodology may underestimate the number of deaths that result from a lack of insurance coverage.

More broadly, these estimates should be viewed as reasonable indicators of the general magnitude of excess mortality that results from lack of insurance, not as precise “body counts.” The true number of deaths resulting from uninsurance may be somewhat higher or lower than the estimates in this paper, but that number is surely significant.

http://www.urban.org/UploadedPDF/411588_uninsured_dying.pdf

Comment:

By Don McCanne, MD

More numbers…

Is this what the health care reform movement is all about?

Do we just keep tallying casualties? Body counts that aren’t real body counts? Policy studies from statistical tables that are devoid of any references to real human beings that we knew and loved?

Well, yes. This is work that has to be done to better understand the flaws in our health care system. The Institute of Medicine and the Urban Institute are to be commended for quantifying the consequences of lack of insurance in terms of the lethality of that health care financing deficiency. We now know that the 18,000 deaths per year due to lack of insurance has become 22,000 – a new number for us to use in our advocacy work.

But what are we doing with these studies? Since the IOM study was designed to isolate the single factor of uninsurance as a cause of mortality, it is clear that these lives would not have been lost had the individuals been insured. But is that true? Our response has been to attempt to cover more individuals by expanding the use of underinsurance, even though other studies are now showing that underinsurance is resulting in many of the same adverse outcomes as uninsurance. So simply being insured is no longer enough.

So where is the momentum on reform currently headed? State efforts and the proposals of leading candidates for president would have us all covered by individual private health plans, even though premiums for comprehensive plans are no longer affordable for average-income individuals. But instead of supporting financing systems that would provide comprehensive coverage for everyone (i.e., single payer), the policy/political community is supporting the shift to affordable private plans. The policy challenge has been to design underinsurance plans that are still comprehensive enough to avoid adverse outcomes because of financial barriers to care. It is a challenge they cannot meet. In order to make the premiums affordable for average-income individuals, the plans must be stripped of their function of removing financial barriers to care.

Do we really have to go through another decade or two of sterile examination of the statistical tables to calculate the mortality rates of the consequences of uninsurance and now underinsurance? Will the body counts that aren’t real body counts because they’re devoid of any references to real human beings provide us with any more motivation for honest reform? The numbers will be much larger, but will that really induce change?

Forgive me for being personal for a moment, but my current career as a full-time volunteer activist in the health care reform movement has a basis in my prior career. For over three decades, as a family physician, I saw real people who were uninsured and died merely because they didn’t have insurance. They died primarily because they delayed accessing the system because they didn’t have the money to pay for health care. I also saw many “underinsured” patients in the form of Medicaid, a program with such low reimbursement rates in California that it resulted in a lack of willing providers, with consequent impaired access and outcomes for the patients.

Was my practice about body counts? These were real people…

(I’m sorry. I can’t finish this…)

150 rally for health care bill

By Daniel Barlow
The Barre Montpelier Times Argus
Vermont Press Bureau
January 10, 2008

MONTPELIER — Doctors, nurses and other health professionals led a rally of more than 150 people at the Statehouse on Wednesday in support of a once under-the-radar bill that would create a “single-payer” system for covering hospital care in Vermont.

Support for the Vermont Hospital Security Plan was clearly felt during the second day of the new legislative session as advocates for a single-payer system packed rooms for rambunctious rallies and pressured their local lawmakers to support the bill.

Wearing white stickers reading “I support H.304,” activists described the bill sponsored by Rep. Francis “Topper” McFaun, R-Barre Town, as surgery for the health care industry, as opposed to what they see as a series of band-aids sponsored by other Statehouse lawmakers.

Dr. Deb Richter, the lead organizer of Wednesday’s rally, told a standing-room-only crowd that high premium costs for health insurance is bankrupting Vermonters and hurting businesses.

“This has become a huge problem for everyone,” Richter said. “It’s costing us all at this point. We are paying more and more and every year getting less and less.”

Under the plan, Vermont would establish a state budget for its network of hospitals that would fund all inpatient and outpatient trips for state residents to these facilities. Vermonters would still need insurance for their primary care and medications, but all visits to the hospital would be free.

Vermont now spends about $776 million annually on hospital care, according to Richter, and this shift to a single-payer system would cost $66 million less and cut insurance premiums by 40 percent.

“I’m not from planet Mars and I know this will not be free,” Richter said, explaining that there would be a cost shift for Vermonters away from insurance premiums and to a new state tax. “We have to raise the money to put it in a fund for hospital care.”

Wednesday’s rally focused heavily on health insurance horror stories.

Kate Youngdahl of Granville, who said she is self-employed, said that her health insurance is so inefficient that three medical procedures for family members three years ago resulted in $13,000 in out-of-pocket medical costs.

“We’re not wealthy people and that is a significant portion of our annual income,” she said. “It has pushed us into debt that we are only now coming out of.”

Despite the outpouring of support Wednesday, the single-payer hospital legislation faces an uphill battle. The House Health Care Committee has agreed to discuss the proposal this year, although the Democratic leaders of the Vermont House and Senate are putting their efforts instead toward an expansion of Catamount Health for small businesses.

McFaun said the strong support from Vermonters for the bill has led to the committee agreeing to “take a look at the principles” of the proposal. If enacted, Vermonters could rest up and heal after a hospital visit instead of worrying out to pay the bills, he said.

Rep. Hilda Ojbiway, D-Hartford, who along with Rep. Michael Obuchowski, D-Rockingham are also sponsoring McFaun’s bill, told supporters to keep the pressure on their lawmakers throughout the year.

“Letters and e-mails are nice, but face-to-face works better. Find a page and then rage and engage,” she said, referring to the Statehouse’s system of legislative pages who track down lawmakers during the session.

As Gov. James Douglas gave his weekly press conference in his ceremonial office at the Statehouse, the crowd gathering in support of the single-payer hospital plan could clearly be heard just around the corner.

Douglas said he is interested in lowering premium costs for Vermonters and would listen to any idea, although he said he is “skeptical of capping hospital costs.” He added that he has serious concerns about the funding mechanism for the single-payer hospital plan.

“We can’t continue going to the well,” Douglas said, referring to the burden Vermonters are feeling from state taxes.

The Vermont Hospital Security Plan does not come with a suggested funding source. Richter said that detail would be worked on in committee, but she suggested one way would be a $225 annual fee on all Vermonters and a 5.5 percent payroll tax.

Paul Millman, the CEO of Rockingham’s Chroma Technology, said he supports the bill because he is already paying about $11,000 per employee each year in health care costs. Under the payroll tax funding scenario, that cost would drop down to less than $3,000.

The health care system now in place is a “drag on business development,” he added. He said Douglas should keep that in mind as he considers the proposal.

“If this governor really wants to build up business in the state, he should stop thinking ideologically and start thinking practically,” Millman said.

Supporters of the single-payer hospital system will return to the Statehouse on Feb. 7 to again lobby lawmakers to support the proposal, Richter said. Another rally is also planned for March to keep the pressure going.

Contact Daniel Barlow at Daniel.Barlow@rutlandherald.com.

United States has worst rate of amenable mortality

Measuring The Health Of Nations: Updating An Earlier Analysis

By Ellen Nolte and C. Martin McKee
Health Affairs
January/February 2008

We compared trends in deaths considered amenable to health care before age seventy-five between 1997-98 and 2002-03 in the United States and in eighteen other industrialized countries. Such deaths account, on average, for 23 percent of total mortality under age seventy-five among males and 32 percent among females. The decline in amenable mortality in all countries averaged 16 percent over this period. The United States was an outlier, with a decline of only 4 percent. If the United States could reduce amenable mortality to the average rate achieved in the three top-performing countries, there would have been 101,000 fewer deaths per year by the end of the study period.

… although ranking fifteenth in 1997-98 and performing considerably better than Ireland, the United Kingdom, and Portugal, by 2002-03 the United States had the highest rate of amenable mortality, just above Ireland and the United Kingdom but far above countries such as France, Japan, and Australia.

The concept of amenable mortality captures the potential impact of health care on population health only; thus, assessment of overall health system performance also requires analyses of indicators that measure the relative success of policies outside the direct control of the health care sector that also affect the public’s health, such as tobacco and alcohol policies. Although such an analysis would enrich the picture painted here, it clearly goes beyond the scope of this paper. Even in the absence of such an analysis, it is important to highlight the comparatively slow U.S. progress in reducing mortality from IHD and other circulatory diseases, largely stroke. Further interpretation of these observations must remain speculative. It is, however, difficult to disregard the observation that the slow decline in U.S. amenable mortality has coincided with an increase in the uninsured population, an issue that is now receiving renewed attention in several states and among potential presidential candidates from both parties.

http://content.healthaffairs.org/cgi/content/full/27/1/58

Comment:

By Don McCanne, MD

Amenable mortality is defined in this study as “deaths from certain causes that should not occur in the presence of timely and effective health care.”

Those who still claim that the United States has the best health care system in the world need a reality check. Of the nineteen OECD nations studied, the United States has the highest rate of deaths that “should not occur in the presence of timely and effective health care.”

Further, in the time interval studied, the United States ranked last in the reduction of amenable mortality. The other eighteen nations were more effective in reducing these preventable premature deaths.

The opponents of reform will provide alternative explanations for these numbers, likely blaming a lack of personal responsibility (poor nutrition, smoking, lack of exercise, etc.). But what they will suppress is the fact that these are amenable death rates. Interventions through public health services and personal health care can prevent many of these deaths.

In the United States we are spending more than enough to accomplish these goals. The other eighteen nations have done so with far less health care spending, but with financing systems that are more efficient, more effective, and more equitable.

When the reform process is disrupted by those who wish to shift the topic to individual responsibility, we can agree that individuals should be encouraged to adhere to optimal health habits, and that we should use our abundant resources to help accomplish that. But we cannot digress from our advocacy for an efficient, effective, equitable financing system that is the essential first step toward providing timely, effective health care for everyone. One hundred thousand lives depend on it.

Single-payer system is best option

By Tom Linnell, EdD
The Coloradoan
January 9, 2008

I am starting to see why all of us – liberals, conservatives and independents – might really like single-payer health insurance.

No, I am not joking.

Here are some principles that I believe most of us can agree on: (one) the least possible amount of government involvement in our lives, (two) efficient delivery of services and, (three) freedom of choice for individuals.

Single-payer health insurance offers the best value on all three of those principles. It really does.

Here’s why:

First, in a single-payer plan, the role of the government would be extremely minimal. It would consist of collecting health insurance premiums through the income tax mechanism and turning it over to a publicly owned and managed agency to reimburse health-care providers.

Second, single-payer plans are models of efficiency. Medicare, a successful single-payer plan, runs on 3 percent overhead. Private insurance companies hit close to 20 percent overhead, and by the time doctors hire extra staff to manage the paperwork, the total overhead runs to 30 percent.

Third, single-payer systems guarantee freedom of choice. You and I could see any doctor we would like. In the current “market-based” system, our choices are severely limited. Our insurance plan administrators tell us what doctors we can see and what hospitals we can use.

There is another feature of single-payer plans to like even more.

A single-payer plan will save money.

Save!? You might not believe me. I have proof.

The Colorado Legislature is about to hear from its 208 Commission that has spent two years studying health-care reform in Colorado and developing a range of proposals. The commission farmed out the top five proposals to The Lewin Group for a nonpartisan analysis. The results can be viewed at www.colorado.gov/208commission.

One of the proposals that the 208 Commission selected for study was a single-payer proposal. That proposal could cover everyone in the state and produce a savings estimated at $1.4 billion a year.

That’s not rumor or exaggeration. And I really meant billion.

The other four proposals considered by the 208 Commission, unfortunately, would leave tens of thousands of citizens still uninsured and cost the state hundreds of millions of dollars more than we currently spend.

It is not rocket science to appreciate the difference.

What’s next? As always: think, study, ask questions.

The 208 Commission will present its recommendations to the Legislature on Jan. 31.

Our legislators will hold hearings, meet in committees and listen to any of us who want them to know what we think.

You might want to know what your neighbors think, first.

An Associated Press-Yahoo Poll (Dec.14-20, 2007) found that 65 percent of Americans agreed with the statement, “The United States should adopt a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by the taxpayers.”

Only 34 percent agreed with keeping the current system.

So, if you have begun to think single-payer plans make sense, you may now count yourself among the majority of Americans.

For more information, go to www.healthcareforallcolorado.org.

Tom Linnell, EdD, lives in Fort Collins.

Financial Burden of Health Care, 2001-2004

Jessica S. Banthin, Ph.D., Peter Cunningham, Ph.D., Didem M. Bernard, Ph.D.
Health Affairs
January 8, 2008

In the Literature

Rising health care costs, combined with slowed economic growth, have created greater financial burdens for U.S. families in recent years–and raised the likelihood that they will face problems paying bills, accumulate medical debt, and even forgo needed medical care. In a Commonwealth Fund–supported study examining families’ financial burdens and out-of-pocket spending between 2001 and 2004, researchers found that by 2004, more than 45 million Americans lived in families with high financial burdens–spending more than 10 percent of their after-tax income on health care. That represents an increase of nearly 6 million people over 2001.

The authors of “Financial Burden of Health Care, 2001-2004” (Health Affairs, Jan./Feb. 2008) found that the overwhelming majority of people who face such high financial burdens had private health insurance. “Financial burdens have increased to the point at which private insurance is no longer able to provide financial protection for an increasing number of families,” say the authors. “[T]he same affordability issues that low-income families experienced a decade ago might affect middle-class families in the future.”

Health Care Costs Continue to Outpace Wage Growth

In the first part of this decade, with health care costs continuing to grow faster than inflation, employers shifted more of their expenses to workers through higher premiums, deductibles, and copayments. At the same time, families faced economic pressures because of slower income growth, which resulted in increased poverty rates and a swelling of the ranks of the uninsured. To assess the effect of the health care cost burden during these years, the researchers analyzed data from the Medical Expenditure Panel Survey.

Between 2001 and 2004, the percentage of the nonelderly population living in families with high out-of-pocket health care burdens rose from 16 percent to 18 percent. After adjusting for inflation, total out-of-pocket spending rose by $373, from $2,283 to $2,656, a 16 percent increase over the three-year period. In that time, health care costs increased an average of 8.3 percent, while average family income rose only 1.6 percent.

Individual Market Policyholders at Risk

The increase in families’ financial burdens was driven by people with private employer-sponsored insurance. By 2004, 17 percent of people with such coverage, or 29 million people, faced high burdens, a 2.3-percentage-point increase from 2001. Although relatively small in number, people covered by private policies purchased in the individual market were far more likely than those covered by any other type of insurance to bear high financial risks. The number in this group who had high out-of-pocket burdens rose from 39 percent in 2001 to 53 percent in 2004.

The uninsured and those with public coverage did not see their financial burdens change between 2001 and 2004. About one-sixth of individuals with public coverage, or 6.4 million people, faced high financial burdens in 2004. Particularly for the uninsured, high cost burdens translate into obstacles to care. Only about 55 percent of the uninsured used any health services in 2004, compared with 88 percent of individuals with employer-sponsored coverage.

Financial burdens were highest among poor and low-income people with private insurance. Fifty-four percent of poor and 37 percent of low-income people with private insurance faced high financial burdens in 2004. At the same time, one of five privately insured middle-income people spent more than 10 percent of their income on health care, a rate twice as high as that for higher-income individuals.

Conclusions

“Private health insurance, as structured today, does not completely protect many poor and low-income individuals and families from the high cost of health care,” the authors say. “This group is of particular concern because these trends indicate that many Americans are underinsured and going without needed medical care.”

Although poor and low-income people faced a greater prevalence of high financial burdens, middle-income families are at risk going forward. The authors suggest that premium assistance programs, which help individuals pay for monthly premium costs, are an effective way to target public dollars. “Subsidizing out-of-pocket premiums for low- and moderate-income workers who have access to employer-sponsored coverage is an alternative way to increase the affordability of private coverage.”

Facts and Figures

* People with nongroup private insurance paid a much higher share of their total health care bill out-of-pocket (55.3%) than did those with employer-sponsored coverage (31.9%).

* Health insurance premiums alone were the source of high financial burdens for 30.1 percent of poor and 21.9 percent of low-income privately insured people in 2004.

* Despite the overall increase in financial burden, the share of total health spending paid for out-of-pocket actually decreased slightly, from 35 percent in 2001 to 34 percent in 2004.

Citation: J. S. Banthin, P. Cunningham, and D. M. Bernard, Financial Burden of Health Care, 2001-2004, Health Affairs, January/February 2008, 27(1):188-95

Canadian health care better and cheaper than U.S., says research

Joanne Laucius
CanWest News Service
Ottawa Citizen
Tuesday, January 08, 2008

OTTAWA – Canada’s health care system offers “excellent value for the money” says a British researcher who has studied preventable deaths in 19 industrialized nations.

The study, to be released today in Health Affairs, looks at “amenable mortality” – deaths that would not have occurred if effective health care had been available.

Conditions that caused these deaths included bacterial infections, treatable cancers, diabetes, some cardiovascular disease and the complications of common surgical procedures. The study, which looked at figures from 2002-03, updated a similar report based on 1997-98 figures. Its goal was to compare amenable deaths in the United States with 14 western European nations, plus Canada, Australia, New Zealand and Japan.

The study also tracked whether gaps in these countries had narrowed or widened. The figures were computed according to amenable deaths per 100,000 population under the age of 75. In the first study, the researchers found that amenable deaths in the U.S. stood at 114.74 per 100,000 population, exceeded only by Ireland, Portugal, Finland and the United Kingdom.

In that time period, Canada’s amenable mortality rate was 88.77 – the seventh-lowest rate after France, Japan, Spain, Australia, Sweden and Italy. In the most recent study, Canada’s amenable death rate had dropped to 76.83, putting Canada sixth after France, Japan, Australia, Spain and Italy.

Meanwhile, amenable mortality rates in the U.S. have barely budged from 114.74 to 109.65 in 2002-03, taking the U.S. from 15th place to last place among the 19 countries.

“This study shows that Canada’s health system has performed very well in its ability to prevent people from dying from treatable conditions,” said Martin McKee, a researcher at the London School of Hygiene and Tropical Medicine, and co-author of the study. “While everyone has to die from something, sometime, in an ideal world, no-one would die from the causes we have looked at, in the age groups we have included.” Of course, we don’t live in an ideal world, said said McKee. “However, the bottom line is that the Canadian health system delivers outcomes that are substantially better than those in its southern neighbour.”

More importantly, outcomes in Canada are improving more quickly than those in the U.S., he said. “Given that the U.S health care system is far more expensive, this suggests that Canadians are getting excellent value for money.”

The researchers expect there will be further improvements in amenable mortality rates in industrialized countries, but the rate will slow down.

The most significant gains were made in the 1970s and 1980s, when drugs to treat common conditions such as hypertension became widely available, said McKee. That raises questions about whether the U.S. will be able to narrow the gap between itself and countries with much lower amenable mortality rates, he said. “Other research shows that many Americans are unable to afford the prescription drugs they need,” said McKee.

“So, if some future administration can tackle this then we could see real improvements there.” In countries like Canada, he expects the main gains will be less in amenable mortality and more the the quality of life, especially for older people.

Health spending growth slower than what?

National Health Spending In 2006: A Year Of Change For Prescription Drugs

By Aaron Catlin, Cathy Cowan, Micah Hartman, Stephen Heffler the National Health Expenditure Accounts Team
Health Affairs
January/February 2008

Health care spending in the United States grew 6.7 percent to $2.1 trillion, or $7,026 per person, in 2006. This rate of growth was slightly faster than the 6.5 percent rate in 2005, which marked the slowest growth since 1999. Health spending accounted for 16.0 percent of gross domestic product (GDP) in 2006. In 2006, health spending growth outpaced nominal GDP growth by 0.6 percentage point.

http://content.healthaffairs.org/cgi/content/full/27/1/14

And…

Don’t Break Out The Champagne: Continued Slowing Of Health Care Spending Growth Unlikely To Last

By Paul B. Ginsburg

Aaron Catlin and colleagues report a fourth year of slowing of the rate of growth of personal health care spending. But many factors indicate that relief for purchasers and consumers will be short-lived. Research on local health care markets suggests that rapid expansion of provider capacity and incentives to increase volume of care are continuing. Increasing incidence of obesity is a major factor behind rising costs. The influence of the economic cycle on health spending, which has lowered the trend in recent years, is likely to reverse its impact shortly.

Hospital activity

Hospitals have been expanding capacity, not predominantly by adding new beds but by expanding specialized facilities (such as operating rooms and imaging facilities) needed to serve patients with the latest technology. When hospitals do increase inpatient beds, the new construction typically occurs in rapidly growing suburbs, where well-insured patients live. Competing hospital systems also have expanded into some communities where hospital systems have already established dominance, raising concerns about overcapacity.

HSC researchers have documented the hospital “specialty-service line” strategy, and such strategies are continuing. Hospitals have identified the types of services that are most profitable–under a mix of diagnosis-related group (DRG), per diem, and discounted charge reimbursement–and are expanding capacity to provide those services. Interviews with hospital executives suggest that the profitability of the services is the key to developing a service line, with cardiac procedures often topping the list. As one hospital chief executive officer (CEO) told me in response to a question about capital spending priorities: “We just list the specialty lines by profitability and go down the list.” We found no hospitals developing a mental health service line; such admissions generally are considered money losers.

Physician activity

More entrepreneurial physicians have recognized the opportunities for particularly high returns from facility, as opposed to professional, payments for procedures such as imaging, endoscopies, and cardiac tests, which are performed in outpatient settings, as well as outpatient surgery. They have formed ventures to open facilities to perform these services, either jointly with hospitals or to compete with hospitals. Physicians also have brought capabilities to perform profitable ancillary services into their offices, sometimes forming larger single-specialty group practices to achieve the scale needed.

“Medical arms race”

Before the managed care era, many health policy researchers concluded that increased capacity led to greater use of services. With extensive authorization requirements and use of capitation in the early 1990s, concerns about the “medical arms race” receded. But with the loosening of managed care restrictions, the medical arms race has resurfaced.

Self-referral incentives

Today, as more physicians have an increased financial stake in the provision of services, self-referral incentives apply to a much larger portion of health care spending than in the past.

Two other macro factors

Two macro factors tend to discourage optimism about continued slowing in cost growth. Research by the CMS National Health Expenditures group and by outside economists and actuaries has established the role of the economic cycle in health spending trends. As mentioned in last year’s paper on spending trends, a portion of the slowing in trends over the past few years may in fact be the lagged impact of the 2001 recession, indicating that the impact of recent years of economic recovery and rapid growth on health spending trends is likely to be ahead of us.

The other factor is trends in obesity prevalence.

The reduction in the trend of spending has been a welcome development to those who pay for health care. But it would be a stretch to conclude that the corner has been turned in dealing with the long-term gap between growth in health spending and growth in income and the resulting financial pressures. This diminishing trend has already led to a reduced intensity in efforts to address costs on the part of employers and may be contributing to more-aggressive activities by providers to boost their revenues. With GDP growth starting to slow and most forecasters predicting further slowing, concerns about cost trends are likely to only increase.

http://content.healthaffairs.org/cgi/content/full/27/1/30

Comment:

By Don McCanne, MD

Increases in health care spending continue to outpace increases in wages, and it is only going to get much worse. Paul Ginsburg tells us why. The players in the health care delivery system are busy chasing the buck with ever more excessive high-tech services and facilities, while only cursory attention is being given to actual health care needs (or sometimes no attention, as in mental health).

That we continue to tolerate such a system, we should hang our heads in shame.

Add Insurance Industry to the Iowa Loss Column

Rose Ann DeMoro
The Huffington Post
January 4, 2008

As the scorecard in Iowa is tallied, add insurance companies to the loser camp along with the disgraceful, rhetorical sham that forcing individuals to buy insurance is universal healthcare.

Individual mandate, the policy wonk lingo for requiring the uninsured to purchase private insurance premiums, was the key talking point of Sen. Hillary Clinton’s attack on Sen. Barack Obama in Iowa.

In speech after speech Clinton lambasted Obama for “leaving out” millions because his health plan does not include individual mandate. In the final days leading up to the caucuses, Iowans were barraged with robo calls reinforcing that theme.

While many Iowans, like other Americans yearn for genuine, comprehensive healthcare reform, it’s safe to conclude the tactic did not work. Volunteers on the ground report that healthcare was increasingly the main issue for many Iowans, and numerous voters echoed Obama’s response, as noted in one of his ads opposing the proposal to “force those who can not afford health insurance to buy it, punishing those who don’t fall in line.”

Simply put, the mandate doesn’t solve the problem; it just pads the pockets of insurance corporations who are not exactly scrapping for cash. Indentured servitude to the insurance pirates is hardly a humane or sound healthcare policy.

Clinton made individual mandate a national referendum in Iowa with a stance parroted by several national columnists and supposed healthcare experts who have also embraced it as the deceptive synonym for universal care. And Iowans responded.

It’s not confined to Clinton, of course. Individual mandate is also the centerpiece of Sen. John Edwards’ health plan, Mitt Romney’s law in Massachusetts, and the bill proposed for California by Gov. Arnold Schwarzenegger and state Assembly Speaker Fabian Nunez. Thus the significance of the Iowa vote.

To be clear, Sen. Obama’s health plan shares much in common with Clinton and Edwards in an ongoing reliance on private insurers, and a failure to crack down on insurance denials of care or price gouging.

But Obama deserves credit for not jumping on a bandwagon that plunged off a cliff in Iowa and whose wheels are already coming off in Massachusetts.

In Massachusetts the deadline in that state for buying insurance was December 31. According to national census figures only 44 percent of the state’s uninsured had purchased the mandated policies. And most of those who have enrolled – 79 percent – get full or public subsidies; in other words, the state is using public money to enrich the insurance industry.

But Massachusetts officials are apparently also ignoring the evidence. Their response was to quadruple the tax penalties for those who fail to buy insurance, even while acknowledging that premiums may go up as much as 14 percent next year.

In his election night speech, Edwards described the poignant case of Nataline Sarkisyan, the 17-year old California teenager who died in late December after her insurer, CIGNA, denied a liver transplant until it was too late, even though the transplant had been recommended by her doctors. CIGNA, which like all insurers terms payments for care a “medical loss ratio,” only changed its stance after public humiliation prompted by protests largely organized by the California Nurses Association/National Nurses Organizing Committee.

Los Angeles Times columnist Steve Lopez this week told the story of 10-year-old Preston afflicted with cystic fibrosis whose insurer Blue Cross has just raised his bills for vital medication he needs to keep breathing from $30 a month to $784.

These are the corporations we want to reward by giving them tens of millions of new customers marched into their offices under threat of tax penalties, or as proposed in California, garnishing their wages?

It’s long past time to wrench control of our health out of the hands of CIGNA and Blue Cross and return it to where it belongs, to the medical professionals at the bedside in consultation with patients and their families.

There’s only one way to accomplish that, with a fundamental overhaul that gets insurance companies out of the way. The day of the Iowa vote, columnist Robert Novak, of all people, reported in the Washington Post that “one longtime Democratic consultant, not involved in any campaign this time, suggested that Clinton propose a genuine universal health-care scheme” which Novak conceded was “a simplified, though far-reaching, health-care plan” – having “everybody covered by Medicare.”

Clinton and her advisers rejected that advice. In the wake of Iowa, she might want to re-consider. There is such a proposal now in Congress, HR 676. All the leading candidates should endorse it. In the meantime, let’s heed the call of Iowa, discard the notion of forced mandates, and tear off the yoke of the insurance industry once and for all.

U.S. Has Most Preventable Deaths Among 19 Nations

Nearly 100,000 excess deaths annually in United States

Measuring the Health of Nations: Updating an Earlier Analysis

Ellen Nolte, Ph.D., and C. Martin McKee, M.D., D.Sc.
Health Affairs
January 8, 2008 | Volume 98

In the Literature

In a Commonwealth Fund-supported study comparing preventable deaths in 19 industrialized countries, researchers found that the United States placed last. While the other nations improved dramatically between the two study periods — 1997-98 and 2002-03 — the U.S. improved only slightly on the measure.

In “Measuring the Health of Nations: Updating an Earlier Analysis” (Health Affairs, Jan./Feb. 2008), Ellen Nolte, Ph.D., and C. Martin McKee, M.D., D.Sc., both of the London School of Hygiene and Tropical Medicine, compared international rates of “amenable mortality”–that is, deaths from certain causes before age 75 that are potentially preventable with timely and effective health care. In addition to the U.S., the study included 14 Western European countries, Canada, Australia, New Zealand, and Japan. According to the authors, if the U.S. had been able reduce amenable mortality to the average rate achieved by the three top-performing countries, there would have been 101,000 fewer deaths annually by the end of the study period.

The concept of amenable mortality was developed in the 1970s to assess the quality and performance of health systems and to track changes over time. For this study, the researchers used data from the World Health Organization on deaths from conditions considered amenable to health care, such as treatable cancers, diabetes, and cardiovascular disease.

U.S. Ranks Last

Between 1997–98 and 2002–03, amenable mortality fell by an average of 16 percent in all countries except the U.S., where the decline was only 4 percent. In 1997–98, the U.S. ranked 15th out of the 19 countries on this measure–ahead of only Finland, Portugal, the United Kingdom, and Ireland–with a rate of 114.7 deaths per 100,000 people. By 2002–03, the U.S. fell to last place, with 109.7 per 100,000. In the leading countries, mortality rates per 100,000 people were 64.8 in France, 71.2 in Japan, and 71.3 in Australia.

The largest reductions in amenable mortality were seen in countries with the highest initial levels, including Portugal, Finland, Ireland, and the U.K, but also in some higher-performing countries, like Australia and Italy. In contrast, the U.S. started from a relatively high level of amenable mortality but experienced smaller reductions.

Many Lives in U.S. Could Be Saved

The researchers estimated the number of lives that could have been saved in 2002 if the U.S. had achieved either the average of all countries analyzed (except the U.S.) or the average of the three top-performing countries. Using this formula, the authors estimated that approximately 75,000 to 101,00 preventable deaths could be averted in the U.S. “[E]ven the more conservative estimate of 75,000 deaths is almost twice the Institute of Medicine’s (lower) estimate of the number of deaths attributable to medical errors in the United States each year,” the authors say.

Future Implications

The rate of amenable mortality is a valuable indicator of health care performance, say the authors–one that can point to potential weaknesses in a nation’s health system that require attention. “[T]he findings presented here are consistent with other cross-national analyses, demonstrating the relative underperformance of the U.S. health care system in several key indicators compared with other industrialized countries,” they say.

Citation: E. Nolte and C. M. McKee, Health Affairs, January/February 2008, 27(1):58-71