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Jacob Hacker, PhD
National Conference on the Un and Underinsured
December 12, 2007 (Day 3)

Now I have one big point… and it is that although we are all for the most part health policy wonks, we read Health Affairs, we love to talk about the billions that will be saved doing this and the fine-tuning of mandates and the like, the bottom line is that health care reform is about politics. If real estate is about location, location, location, health care reform is about politics, politics, and politics.

So when the rhetoric heats up reformers are going to have to fight fear with fear. The fear of losing coverage against the fear of government, the fear of medical bankruptcy and debt against the fear of taxes, but they’re also going to have to be able to fight fear with hope. With a clear, simple and unthreatening vision that builds on what exists and meets public concerns head on, a vision that may lack the intellectual satisfaction of a fine-tuned policy blueprint, but which provides the political satisfaction of actually having a chance of passage. Now I think there’s some evidence the reformers have taken this message to heart, though simplicity and clarity still remain pretty elusive in the discussion.

…as we learned this morning, all the top tier Democratic candidates… would include some kind of shared financing requirement with employers either being required to pay or play, and these proposals would all, either eventually or immediately, have some kind of mandate.

Now I think this approach lacks much in terms of conceptual and policy clarity or the inspiration that David Himmelstein provided us earlier today about the sort of large scale reforms we need, but it does have some pretty big political virtues. And I should say I guess in the interests of full disclosure that I’ve been peddling an idea largely along these lines for the last few years. For one thing it means that the vast majority of people who now have private health insurance coverage through their employer would continue to have it.

This time the fight is going to take place on the scorched earth of partisan warfare and that means that we’re going to have to adopt strategies that reflect new political realities. In my view that means a much stronger clarity about ends but much greater willingness to compromise on means, a much greater attention to coalition building from the very beginning, well before a sympathetic President enters office…

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=2283

Transcript (Jacob Hacker’s comments begin on page 39):
http://www.kaisernetwork.org/health_cast/uploaded_files/121207-underinsured%20part%202.pdf

Comment:

By Don McCanne, MD

The final Quote of the Day for 2007 discussed the disconnect between a new poll indicating strong support (65%) for “a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers,” and a rapidly growing movement within the progressive community to support a model based on allowing you to keep the insurance you have.

Although the policies discussed in that message were on target, the tone was quite negative and detracted from the important thrust of the policies behind the message. The message included inappropriate cynical misdirections of my obvious anger. I decided that in the first message of 2008 I should clarify and expand on the important message in my last qotd, but in a less pejorative manner.

Jacob Hacker has described very accurately the politics of health care reform. He has suggested an approach that, on surface, would appear to lead to affordable coverage for everyone, while passing the crucial test of political feasibility. His political message is very sound – in fact, so sound that the leading Democratic candidates have adopted his suggestions. He has stressed the importance of coalition building well in advance of the installation of a new government one year from now.

So what coalition activities are we seeing within the progressive community? Many respected, influential leaders state that it is time to set aside the policy debate and proceed with a political strategy that will achieve our reform goals. There is one major problem with this approach: most of the difficult policy issues have yet to be addressed. But several of these coalition leaders have told the policy community quite bluntly that the policy debate is over, and all of the activities now must be about unity. We are commanded to unify behind health care reform that promises that you can keep the insurance you have or have the option to buy into a public program.

That’s it. That’s the policy behind which we are to unify. For the sake of unity, we are not to talk about the inability of the private insurance industry to provide us with affordable health plans that are comprehensive enough to meet our health care needs. We are not to talk about a public insurance program that must provide a premium that is competitive with private plans insuring the healthy, when the public plan is weighted down with high-cost patients (adverse selection).

Even though the policy debate is swept under the table, let’s suppose that the political strategy is effective. When we have a Congress and a president who support an individual mandate with a public option, what process will be used to resolve the policy issues? How will they require the private insurance industry to provide reasonably comprehensive plans that are still affordable? How will they create an optional public program with a concentration of the most expensive patients without a massive taxpayer subsidy? What will the voter response be to a program costing far more in taxes than any of the candidates would acknowledge during the campaign?

The policy issues do matter. The politically motivated promise of an affordable individual mandate and an affordable public option cannot be met. Fundamental structural reform is essential. Unless the politicians are able to engage successfully in bait and switch strategies, the gridlock that has prevented reform will be perpetuated.

Jacob Hacker is correct when he states that we need to intensify our coalition building. But he also states that “this approach lacks much in terms of conceptual and policy clarity or the inspiration that David Himmelstein provided us earlier today about the sort of large scale reforms we need.” Also, “In my view that means a much stronger clarity about ends but much greater willingness to compromise on means.”

Those who insist on unity behind political means while suppressing clarity about policy ends will not be successful in coalition building, and clearly that is not Jacob Hacker’s intent. Those of us who insist on clarity about policy ends will be there to be certain that efforts to compromise on means will be an honest, transparent, and fully informed process.

Families USA
December 2007

Health care costs have become a growing burden for America’s families, as premiums and out-of-pocket expenses continue to rise at alarming rates.

Families USA commissioned The Lewin Group to analyze data from the U.S. Department of Health and Human Services and the Census Bureau.

Millions of Insured Americans Are Affected

* More than four out of five people (82.4 percent) in families spending more than 10 percent of their pre-tax income on health care costs are insured.

* 50.7 million non-elderly Americans with insurance are in families that will spend more than 10 percent of their pre-tax income on health care costs in 2008.

* More than three out of four people (75.8 percent) in families spending more than 25 percent of their pre-tax income on health care costs are insured.

* 13.5 million Americans with insurance are in families that will spend more than 25 percent of their pre-tax income on health care costs in 2008.

http://www.familiesusa.org/assets/pdfs/too-great-a-burden.pdf

Comment:

By Don McCanne, MD

For health reform advocates, this report is well worth downloading. It confirms not only the enormity of the financial burdens of health care, but also the alarming rate of increase in those burdens.

Since most reform proposals would build on our private insurance system, the numbers above were extracted from this report to demonstrate just how ineffective insurance is in protecting the finances of non-elderly Americans who are fortunate enough to be insured.

I won’t repeat the numbers here, but read them again. Now read them once more, and absorb them.

Our insurance industry has failed miserably to protect us from financial hardship and even personal bankruptcy. No amount of insurer regulation can reverse these trends because the private insurance industry cannot provide insurance products with premiums plus out-of-pocket expenses that have a stop-loss of 10 percent of income. More than fifty million non-elderly, insured Americans can already attest to that.

The neoliberal view expressed by the leading Democratic candidates for president is that those healthy individuals who would rather keep the insurance they have should be able to. But those individuals need to understand that insurance that works well while you’re healthy and don’t need it, has not worked for fifty million others in our nation. Over a lifetime, those odds can catch up with almost everyone.

So why can other nations such as Switzerland and the Netherlands rely on private plans (albeit highly regulated) to finance health care? The answer is simple. Over $2.2 trillion is what we’re already spending on health care. On a pro rata basis, that is $7500 per person. That requires an income of over $75,000 to limit an individual’s pro rata share to under 10 percent of income. For a family of four, an income of $300,000 would be required.

Health care is too expensive. Segregated private insurance risk pools no longer work. If we want everyone to have affordable access to health care, we are going to have to establish a universal risk pool, and ask the wealthy to step up and return to us, in the form of health care, just a small amount (for them) of the great rewards they have received from our entrepreneurial system. If they are not willing to do that (by supporting health care financing through progressive taxes) then we are going to have to continue to sit back and watch people suffer needlessly and die prematurely. The rest of us simply do not have the funds to prevent that.

American Cancer Society
December 20, 2007

Uninsured Americans are less likely to get screened for cancer, more likely to be diagnosed with an advanced stage of the disease, and less likely to survive that diagnosis than their privately insured counterparts, according to a new American Cancer Society report examining the impact of health insurance status on cancer treatment and survival.

American Cancer Society researchers analyzed 598,635 cases using the most recent data from the National Cancer Data Base (NCDB), a hospital-based registry held by ACS and the Commission on Cancer of the American College of Surgeons. The NCDB tracks approximately 70% of the cancer cases in the United States and collects data from about 1,500 hospitals. The patients included had either private insurance, Medicaid, or no insurance. The researchers also examined data from the 2005 and 2006 National Health Interview Survey (NHIS), a nationwide in-person survey of approximately 40,000 U.S. households conducted by the National Center for Health Statistics (NCHS) of the Centers for Disease Control and Prevention (CDC).

For all cancers combined, the ACS researchers found that uninsured patients were 1.6 times as likely to die within 5 years compared to individuals with private insurance.

People with lower incomes were less likely to have insurance, the report found. And those without insurance were less likely to use certain health services. About 54% of uninsured patients aged 18 to 64 did not have a usual source of health care. About 26% delayed care due to cost, while nearly 23% did not get care because of cost. An estimated 23% did not get prescription drugs because of the expense.

Individuals with health insurance were about twice as likely as those without to have had a recent mammogram or colorectal cancer screening. People with insurance were also more likely to be diagnosed with early stage disease and less likely to be diagnosed with advanced stage disease than the uninsured.

The researchers saw a survival difference in breast and colorectal cancer, too. About 89% of privately insured white women with breast cancer survived at least 5 years, compared to 76% of white women with Medicaid or no insurance. Among African-American women, 81% of breast cancer patients with private insurance survived 5 years, compared to 65% of those on Medicaid and 63% of those without insurance. A similar pattern emerged in colorectal cancer. Among white patients with private insurance, 66% survived 5 years, compared to 50% of those with no insurance and 46% of those on Medicaid. Among African Americans, 60% with private insurance survived 5 years compared to 41% of the uninsured and Medicaid patients.

The risk of being uninsured or underinsured varies.

Almost anyone can be underinsured in the event of a major illness. The underinsured, commonly defined as people who spend more than 10% of their after-tax household income on out-of-pocket expenses in the event of a serious illness, often don’t realize the gravity of their situation until faced with high premiums and deductibles, limits on terms for covered services, and caps on monthly, lifetime, or disease-specific coverage.

According to a 2003 study sponsored by the Agency for Health Care Research and Quality, the prevalence of being underinsured increased from 6.7% to 8.5% among nonelderly adults between 1996 and 2003. These numbers shot up when the costs of health insurance premiums were factored in. Among people with cancer, 29% had out-of-pocket expenses that exceeded 10% of their family’s income and about 11% exceeded it by 20%.

http://www.cancer.org/docroot/NWS/content/NWS_1_1x_Report_Links_Health_Insurance_Status_With_Cancer_Care.asp

“Association of Insurance with Cancer Care Utilization and Outcomes” January/February 2008 issue of CA: A Cancer Journal for Clinicians, published by the American Cancer Society:
http://caonline.amcancersoc.org/

Comment:

By Don McCanne, MD

There are many factors that influence access and outcomes for cancer patients. This comprehensive study confirms that insurance status is one of the most important factors. The uninsured are screened less frequently; they are diagnosed at a later stage, and they have a lower survival rate.

Because of socioeconomic and other factors, insuring everyone will not eliminate these disparities. But financial barriers perpetuate and intensify the disparities. The crucial first step to improve health care for cancer patients (and for all other patients) is to remove financial barriers by including everyone in a comprehensive national health insurance program.

This study raises another important issue. Not only is insurance coverage crucial, the nature of that coverage counts as well.

Somewhat shocking is that the survival of Medicaid patients in this study was no better than that of the uninsured. Part of this is likely due to the reality that Medicaid is a chronically underfunded medical welfare program. Many health care providers refuse to accept Medicaid patients. Using Medicaid to reduce financial barriers is of little help when the health care delivery system has shut its doors to those enrolled in the program.

Another factor that may result in a lower survival rate for Medicaid patients is that many were previously uninsured or lost the coverage they had, so they use Medicaid as rescue coverage, inevitably entering the system at a later stage of their disease. But this only further confirms that it is not an adequate substitute for continuous comprehensive coverage that provides sufficient funding for the health care delivery system.

Another important reason that universal insurance coverage alone is not enough is that underinsurance has become a source of financial hardship, precisely for those with significant health care needs such as cancer patients. Not only does underinsurance create a hardship, it also is a barrier to care when the patient cannot afford his/her expensive chemotherapy because it isn’t covered by the plan.

Medical welfare programs and inadequate coverage can never patch the vast holes in our health care system. Again, there is much to be done, but all other efforts will be relatively feeble until we remove financial barriers to care for everyone by enacting a single payer national health insurance program. That’s the easy step. Then we need to go to work.

Guaranteeing Access to Coverage for All Americans

America’s Health Insurance Plans (AHIP)
(Released December 19, 2007)

Our Commitment

The members of America’s Health Insurance Plans (AHIP) believe that all Americans — regardless of health status or income — should have access to affordable health care coverage. We also believe that it is our responsibility to offer solutions to help the nation meet its health care challenges.

Establish Guarantee Access Plans

Guarantee Access Plans can ensure that everyone — including individuals with pre-existing medical conditions — has access to health care coverage. Uninsured individuals with the highest expected medical costs would be eligible to enroll in the new plans.

How Guarantee Access Plans Will Ensure Access to Affordable Coverage

Individuals would be eligible for coverage through the Guarantee Access Plan if their health care claims costs — based on objective, independent underwriting criteria — are expected to be more than twice the statewide average. Premium rates for Guarantee Access Plan coverage would be limited to one-and-one-half times standard market rates.

How Health Insurance Plans Will Provide a Coverage Safety Net

Health plans would guarantee coverage to individuals who are not eligible for coverage through the Guarantee Access Plan. Each health insurance plan would guarantee issue policies to these individuals up to a predetermined level of participation (for example, 0.5 percent of the health plan’s insured population in the individual market). This cap would need to be reset if all health plans reach that level. Health plans would limit the premium for these guarantee issue policies to one-and-one-half times standard market rates.

Maintaining Affordability

As part of their efforts to keep coverage as affordable as possible, states will need to:

* Create a sliding-scale premium subsidy program with additional assistance for those with high health care costs.

* Fund the Guarantee Access Plans from a broad base of sources, so that coverage remains affordable for those who are currently insured.

http://www.ahip.org/content/default.aspx?docid=21727

Press release

AHIP
December 19, 2007

“Health plans from across the country came together to address the unique challenges facing the individual health insurance market. We believe that plans and the states, working together, can guarantee access to affordable insurance for everyone in the individual market,” said Jay Gellert, President and CEO of Health Net, Inc. and Co-Chairman of the Individual Market Task Force.

“This initiative is a fundamental repositioning,” said Karen Ignagni, President and CEO of AHIP. “Our Board is committed to ensuring that no American falls between the cracks of public and private programs.”

http://www.ahip.org/content/pressrelease.aspx?docid=21728

Comment:

By Don McCanne, MD

It does not take very many high-cost patients in an insurance risk pool to drive up to unaffordable levels the premiums required to fund that pool. In fact, health care costs are now so high that premiums for a risk pool limited to healthy individuals are now unaffordable for many. The private insurance industry understands that their business model breaks down if they have to start paying for the health care of individuals with greater needs.

The private insurance industry has long supported the establishment of state high-risk pools, funded with very high premiums and subsidies from the taxpayers. This has allowed the private insurers to pass this problem of adverse selection off onto the taxpayers. But it hasn’t been particularly successful. Only about 180,000 people in the nation (0.06 percent of our population) are covered by these programs. You can understand how ineffective that has been when you consider that about 60,000,000 high-needs people use about 80 percent of our national health expenditures.

So now what are they proposing? Keep in mind that private insurers sell their products primarily to the 80 percent of people with minimal health care needs. AHIP is proposing that they be relieved of covering any individual that the actuaries predict might cost twice the average of claims in this very low cost group. Everyone who might actually need care is transferred to the Guarantee Access Plans managed by the state. These plans would be funded by a premium with a 50 percent penalty added, plus financing that the state obtains from “a broad base of sources.” That broad base, of course, is the taxpayers.

You would think that this would solve the problems for the insurers. But no. They also are concerned about individuals who have had yeast infections, or hay fever, or migraine headaches, or thousands of other disorders that fall below the actuarially determined threshold of twice the anticipated average of claims. These are the individuals in the upper half of the healthy population. They know, based on claims experience, that these individuals, on average, may use up to twice the care as the median insured. Although this is still a very low cost group, AHIP is recommending that they be allowed to assess a 50 percent penalty to their premiums. Not only that, they also want the right to cut off enrollment of these individuals once their risk pools have met a threshold of a fraction of one percent of them. They want a risk pool that is 99 and 44/100’s percent pure, but someone needs to tell them that this isn’t soap that they’re selling.

AHIP’s proposal is a response to the threat they face if individual mandates become the mainstream policy solution for achieving universal coverage. If they are forced to actually cover those with even modest health care needs, their business model is dead.

AHIP has made it very clear they they do not want to pay for health care. They simply want to sell administrative products to only the healthiest of us. What we need instead is an equitable system to pay for health care, so that we can prevent financial hardship for those who do need care.

Since the private insurance industry doesn’t want to do that, it’s time for us to show them the door.