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AHIP's Guarantee Access Plans

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AHIP's Guarantee Access Plans

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.

Scrap the California victory celebration

2007-2008 First Extraordinary Session

California Legislature
Assembly Bill No. 1 (ABx1 1)

SEC. 2. It is the intent of the Legislature to accomplish the goal of universal health care for all California residents. To accomplish this goal, the Legislature proposes to take all of the following steps:

a) Ensure that all Californians have access to affordable, comprehensive health care.

b) Leverage available federal funds to the greatest extent possible through existing federal programs.

c) Maintain and strengthen the health insurance system and improve availability and affordability of private health care coverage for all purchasers through
(1) insurance market reforms;
(2) enhanced access to effective primary and preventive services, including management of chronic illnesses;
(3) promotion of cost-effective health technologies; and
(4) implementation of meaningful, systemwide cost containment strategies.

(d) Engage in early and systematic evaluation at each step of the implementation process to identify the impacts on state costs, the costs of coverage, employment and insurance markets, health delivery systems, quality of care, and overall progress in moving toward universal coverage.

If any provision of this act is held to be invalid, as determined by a final judgment of a court of competent jurisdiction, the entire act shall become inoperative, and those provisions of law amended by this act that were in effect and operative immediately prior to the operative date of this act shall again be operative.

Full text of bill (210 pages; Legislative Counsel’s Digest in first 13 pages):
http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_0001-0050/abx1_1_bill_20071217_amended_asm_v96.pdf

Comment:

By Don McCanne, MD

Last evening, Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez celebrated the Assembly’s approval of their compromise universal health care reform for California. Hold the celebration.

ABx1 1 is an employer pay or play, combined with an individual mandate. It calls for five tiers of insurance coverage, allowing the wealthy to have the best, and, well, you know (and we thought that two tiers were inhumane). Much of the 210 pages of the bill is dedicated to tortuous, complex administrative machinations designed to keep the private insurers in play, at a cost in greatly diminished health care justice, compared to what we could have had.

California currently has 6.6 million uninsured residents; 5.1 million are considered “permanently uninsured.” If this proposal works as designed (a highly unlikely scenario), it would bring medical coverage to about 3.6 million Californians.

And who are these millions of people who would be exempt from having coverage? “12739.501. (a) A person or family who has an income at or below 250 percent of the federal poverty level shall be exempt from the requirements established in Section 8899.50 of the Government Code if the person’s or family’s share of the premium for 8899.50 minimum creditable coverage exceeds 5 percent of his or her family’s income.”

Of all of the policy tradeoffs to achieve compromise, this is the sickest. The millions who do not qualify for the medical welfare programs, and don’t have enough income to pay the premium for the “minimum creditable coverage” are excused from being included in our universal health care program.

Sick. Sick.

It is interesting that a clause was included that declares that if any single provision is invalidated, then the entire measure implodes. (Could this whole thing really be just a practical joke?)

As you know, the legislature already passed a bill that would achieve our goals of affordable, comprehensive care for everyone: Sen Sheila Kuehl’s single payer bill, SB 840. It was vetoed by the governor to make way for his highly flawed version of reform. Following is Sen. Kuehl’s response today to the Assembly approval of ABx1 1.

Sen. Sheila Kuehl:

“Giant Leap” for Health Coverage? Or for premiums…

The press has described the bill in breathless prose as a “giant leap” for health coverage. Unfortunately, this is not quite the case, depending on who you are and how and where you work. Each of the sections below will explain some of the provisions of the bill actually harmful to regular, working-class and middle-class families. And it provides less help than advertised for poor families, as well.

Coverage for everyone?

The press characterizes the bill as “providing” or “extending” coverage to all but a few Californians.

This is a mischaracterization, nothing is “provided”. Instead, all Californians would be required to buy insurance with no caps on premiums, no regulation of the cost of insurance or medical expense, no maximum deductibles, and no floor on how little coverage you can buy and satisfy the legal requirement. If you do not buy insurance within 62 days after the requirement kicks in, the Franchise Tax Board is authorized to collect premiums determined by the Managed Risk Medical Insurance Board by garnishment of wages or mortgage liens.

Your employer would be required to spend from 1% to 6.5% of payroll (depending on the size of the payroll) to buy insurance policies for employees. Employees would be required to take the insurance and to pay whatever supplemental premiums, co-pays and out of pocket costs are not paid by the employer. There are no caps on what the employee would pay, only for the employer. There is a vague term about “hardship” letting people out of the mandate, but no definition is offered and, as in Massachusetts, if you are excused from the mandatory purchase of insurance, you simply have no insurance!

If your employer does not wish to spend 1% to 6.5% of payroll on your insurance, he or she must pay the same amount into a state fund, and employees of those employers will be required to buy their insurance through the state fund, again with no cap on premiums and no floor on coverage.

Is there at least minimum coverage required in the bill?

No. For the State Fund, for those employers who choose to pay into it, the Managed Risk Medical Insurance Board will set the minimum coverage (what you get for your premiums, what conditions, services, treatments, are covered by your insurance), which will not appear in statute. For those who buy insurance on the open, private market, and those whose employers pay total or partial premiums for insurance chosen by the employer, as well as for self-employed folks, there is no minimum coverage in the bill. One woman reported to me that she had a bare-bones, catastrophic policy and, upon being rushed to the hospital, received the bill for the ambulance ride that got her there, placed on her chest, as she was carried into the hospital.

How is the bill to be financed?

There is no funding in the bill. Instead, there is the promise of an initiative, no language available yet, to tax cigarettes at an additional $1, $1.50 or $2 a pack, tax hospitals in order to draw down federal money which would then go back, to a great extent, to the public hospitals, and require employers to pay a portion of their employees premiums, as indicated above. There is also a hope that the federal government will provide more money for children’s insurance. Instead, of course, the federal government is cutting children’s insurance such that the California Legislature will meet in emergency session in January to disenroll children from Healthy Families. Everything else would be paid for by premiums, co-pays and deductibles.

In addition, if the Director of Finance finds that the state cannot afford all the promises made in the bill, the bill goes away. Or does it? There needs to be clarification that, if the initiative fails, we’re not still stuck with an individual mandate to buy insurance.

But how do poor people fare…..today’s uninsured?

Better, but still a hardship. Healthy Families coverage for children would allow those whose families who earn up to $40,500 for one adult and one child to be covered (children only) by state or federal money. (federal cuts mean we already have to kick kids off this program, see above). Since the bill allows all children, even those with undocumented parents, to be covered, but the feds won’t pay for those children, there will be increased state costs in Healthy Families. (see budget discussion below)

Families whose income is at or less than $43,000 for a family of three would be “subsidized” for their premiums only. This means they would be required to pay an unspecified amount for premiums and receive an unspecified amount from the state budget to help. There is no subsidy for co-pays, deductibles or out of pocket (uninsured) expenses associated with their policies, which could be sizeable if they bought a minimal policy.

Families who earn between $43,000 and $68,680 for a family of three would be allowed to pay full boat for their uncapped premiums and then deduct any part of the premium that exceeds 5.5% of their income as a tax credit, refunded dollar for dollar by state money. (again, see budget discussion, below). There is no tax credit for their required co-pays, deductibles or out of pocket (uninsured) expenses, which could be big if they purchased a minimal policy.

But insurance companies would be required to take everyone

That is correct. However, they are allowed to offer minimal coverage set by the Managed Risk Medical Insurance Board (minimum coverage that may be offered is not specified in the bill) and there is no control over their premiums or deductibles.

In addition, they are allowed to adjust their premiums, not by medical condition, but by age and other demographic factors.

The companies are required to spend 85% of premiums on care, but they maintain they do that now, and count marketing, information technology and other kinds of administrative overhead as “care”. The bill would allow this characterization to continue.

Unions seem to like the bill, don’t they?

Well, some of them. SEIU, who has organized and hopes to organize healthcare workers is positively salivating over the bill, to the extent that their national leader, Andy Stern, is engineering moving out the current state leader, who has questioned the bill, in favor of a new leader who will go along with it. AFSCME has also come on board with the bill, thinking that public employees will benefit. (However, with all the hits the bill brings on the state budget, this may be short sighted). About half of the unions in the California Labor Federation are with it, and half are against it but not taking a firm position. The California Nurses, the California School Employees and the Teamsters, among others, are strongly in opposition.

Many other troubling sections in the bill. (1) rescission

While we are struggling to keep insurance companies from rescinding policies of beneficiaries who do nothing wrong except try to use their insurance, the bill takes a step backward by applying the “no retroactive rescission” language only to HMO’s and not to all insurers.

Troubling (2), no choice of doctors or hospitals

Your insurance company tells you who is in their provider network. Employers are not required to give a range of choices. The state fund would give a range of choices, as soon as they are determined by the Managed Risk Medical Insurance Board.

Troubling (3), more unsupervised healthcare workers

Nurse Practitioners and Physician’s Assistants would be allowed, by the bill, to give written instructions (not personal supervision) to medical assistants in retail clinics, such as those proposed for Wal Mart, and the assistants would be allowed to give medication. Currently they can do so in specific clinic settings. The bill removes this requirement.

So, what’s next?

The bill goes over to the Senate, into the Senate Rules Committee, which then refers it to the Senate Health Committee and any other committees that should hear it before it goes to the Floor. There may be a hearing on the bill in Senate Health on January 16th, but only if the language of the bill is in its final form according to its author, the Speaker, the requested analysis of the impact of the State Budget by the Legislative Analyst’s Office is complete, and the Committee also has the language of the proposed initiative that will, supposedly, fund the bill. Any organizations wishing to support or oppose the bill may send their letters to the Senate Health Committee in Sacramento. The bill may be read online at www.leginfo.ca.gov. Press the button for Bill Information and type in ABX1 1 and click on what comes up. The author is Speaker Nunez.

Yet another administrative siphon

Health Care

By Jason Roberson
The Dallas Morning News
December 6, 2007

(Health Management Systems, a New York-based company) that works to recover health insurance benefits in child support cases and cut states’ medical bills has opened a branch in Irving.

HMS already does business in Texas from its offices in other states, operating like a medical debt collector for the government.

If a person who applies for Medicaid is already covered under a private insurance policy, HMS will work to collect money from the insurance company.

In child-support cases, HMS uses its databases to see if a child is covered under a noncustodial parent’s employer-provided insurance.

Since the late 1990s, HMS has helped the Texas attorney general’s office collect nearly $80 million in medical child support and has recovered more than $200 million from private insurers for the Texas Medicaid and Health Partnership, according to the company.

HMS serves Medicaid programs in 40 states.

In 2006, the company recovered more than $1 billion for its clients, and provided data that helped them save billions more, according to HMS.

“We are proud to have a new Texas location from which to help our government clients manage and save money,” said HMS president Bill Lucia.

http://www.dallasnews.com/sharedcontent/dws/bus/casual/stories/DN-HealthManagment_05bus.ART.State.Edition1.2ac5f65.html

Comment:

By Don McCanne, MD

Yes, but how much medical care do they finance? None? You mean that this is yet one more innovative administrative service that the industry sells us because of our insistence on perpetuating our inefficient, inequitable, fragmented system of financing care?

What we do not need is more administrators that find innovative ways to move health dollars around while taking their percentage of every dollar they touch. HMS wouldn’t even exist if we had a single payer national health program.

Giving Back

By Nelson Bradshaw
Catskill Mountain Foundation

Excerpts from http://www.catskillmtn.org/publications/articles/2007-12-giving-back.html

The Oneonta Free Clinic will make a valiant effort meet the medical needs of these people. But small, private clinics are not the real answer to the nation’s mounting health care crisis, according to Doctor Friedell. “A free clinic is just a band-aid,” says the physician. “It’s a way of getting care to people in a hurry. My personal belief is that we need a single-payer health insurance system in this country. A simple name for the program might be Medicare for Everybody. Medicare is the Federally funded system that pays for everybody who is over 65-years-old or who is disabled. It is a single-payer system. All the bills go to the Federal government. It works very well. The customers are quite satisfied. Nevertheless, there has been a tremendous amount of resistance to establishing a similar program for the whole country.”

Friedell notes that the existence of a one-payer, national system would mean that just by virtue of being a citizen of this country, you would be insured from the time of your birth to the time of your death. Friedell expands, “You would never have to worry about that, no matter how many times you changed your job or college or your status in the military.”

Most opponents of a proposed national system say that the country can’t afford it. Dr. Friedell argues that, first, a patient wouldn’t be able to get just any treatment or an infinite amount of care under a national plan. “There would be a cut-off point,” Friedell asserts. “Medicare, Medicaid and the Veteran’s Administration are all examples of government-run, single-payer systems. They have cut-offs.”

Second, a single-payer system would save a lot on administrative costs, the doctor points out. “The advantage of using a single-payer program is that it eliminates bureaucracy and expense,” he says. “If you come to my office now for treatment, for example, you have to show your insurance card. My staff has to get on the phone or a Web site and verify that you still have coverage. There is a plethora of insurance companies in our area alone, and they all have different rules and different measures of membership and services covered.It is really very frustrating.”

Friedell concedes that one point frequently raised by national health care plan critics is valid–some procedures would have to be rationed. “If we go to a single-payer system, certainly if you want an elective procedure like having a cataract removed or a hip replaced, you’re going to have wait a few months,” says the doctor. “These things are not emergencies. However, if you come into a hospital with a true emergency, if will get taken care of that day or the next day.

Doctor Friedell also points out that health care is rationed under the current system. “If you live in New York City, you can get in to see a gastroenterologist quickly,” he states. “But, if you live up here and you want to see one, you’ve got a long wait ahead of you. If you have the money or insurance and you live in an urban area or can travel, you can get whatever medical care you want. But, you can’t if you lack insurance or if you reside upstate or in a poor part of town. We’re doing de facto rationing right now. We’re limiting medical care on an economic basis.”

Another fear raised by the critics of a proposed national care system is idea that the government would make a mess of it. “They talk about the idea that you can’t trust government to run health care,” Doctor Friedell notes. “But, the government’s been doing it very effectively for over 40 years. Medicare and Medicaid have been in existence since the mid ’60s. Medicare spends a very small percentage of its funding on administration. That allows more money to be spent on doctors, nurses and medicine.”

After the next presidential election, there could be a public debate on a national scale about the single-payer idea. But a small, determined group in Oneonta is ready to do what it can right now.

A public health system defeated at the hands of ideology

By Susan F. Wood
The Boston Globe
December 17, 2007

The State Children’s Health Insurance Program, which provides working families with low-cost health insurance coverage, is now in limbo – on short term extensions by Congress and just vetoed again by the president. This confronts states with difficult choices on how to continue providing health coverage for kids when the funding from Washington just isn’t enough.

This latest affront to public health also comes at the same time that the price of birth control pills on colleges campuses has skyrocketed from $5-10 a month to $40 a month or more as an unintended consequence of a recent change in federal law. There is an easy and free technical fix that Congress or the Department of Health and Human Services could make, but this administration does not support allowing companies to sell birth control pills at a discount to colleges, universities, and other safety net programs.

These are just two of the more visible defeats that healthcare has suffered during this administration. At a deeper level, the low priority healthcare gets from President Bush is reflected in his failure to staff important health-related positions with qualified individuals willing to provide science-based advice.

Currently, the Department of Health and Human Services, the lead department that includes all of our national health agencies, lacks a permanent assistant secretary for health, assistant secretary for children and families and a surgeon general. All of these key senior positions are held by temporary appointees, some highly qualified, others not, but none with the ability to truly move us forward by providing sound advice and having the ear of decision-makers.

The Food and Drug Administration lacked a permanent commissioner for over half of the current administration, and currently the Centers for Medicare and Medicaid – which runs the State Children’s Health Insurance Program – also has no permanent leader.

Over two years ago, I resigned my post as assistant commissioner of women’s health at the FDA because of the agency leadership’s disregard for scientific decision-making regarding emergency contraception.

Unfortunately, since then, I have only seen mounting evidence of this administration putting politics before science. Key leadership positions in our health agencies are left vacant for unacceptable time periods or filled with individuals who advance an ideological agenda and show a disregard for scientific integrity. This pattern is troubling because it threatens the objectivity that guarantees the health and safety of American families.

Just a year after my resignation, Dr. Richard H. Carmona resigned as surgeon general. He later revealed that the administration asked him to censor his reporting on embryonic stem cell research, contraception, and the unrealistic proposition of abstinence-only sex education. This position has been vacant for over a year and in October Dr. Steven K. Galson – who was one of those at FDA who initially blocked the provision of emergency contraception over-the-counter – was given the temporary appointment of acting surgeon general.

More recently, President Bush appointed Dr. Susan Orr, an opponent of family planning, as acting deputy assistant secretary for population affairs where she is charged with advising on issues regarding population affairs and overseeing the only federal grant program dedicated solely to providing individuals with comprehensive family planning and preventive health services.

By appointing a leader who clearly does not support contraception, the administration is once again neglecting the health needs of millions of Americans, particularly those who are low income and rely on public programs to get access to preventive healthcare, including contraception and pap tests.

To ensure the health of our families we need strong, consistent leaders who value the integrity of science, make decisions on the best available information, and support prevention. Without that leadership, we will not succeed in promoting the health of all Americans. We shouldn’t have to wait for a change in presidential leadership.

Susan F. Wood is research professor at the George Washington University School of Public Health and Health Services. She served as assistant commissioner for women’s health at the Food and Drug Administration from 2000 to 2005 and is advising Hillary Clinton on health issues.

Internist society sees single-payer as option

A new American College of Physicians paper says the government should guarantee a basic level of health care as part of larger reforms

By Doug Trapp
American Medical News
Dec. 24/31, 2007

Washington — The American College of Physicians has endorsed the concept of a single-payer health care system for the first time.

In a new position paper, the organization, which represents 124,000 physicians in internal medicine and related subspecialties, identified a system in which the federal government is the sole third-party payer as one of two reform vehicles to achieve universal coverage. The other is a public-private system that includes a legal guarantee that everyone has access to coverage and that offers health care subsidies to low-income residents.

The ACP likely was influenced by the general deterioration of the U.S. health system, with its 47 million uninsured and decreasing affordability of health care, said David Dale, MD, the organization’s president.

The 31-page paper, published Dec. 4 on the Annals of Internal Medicine Web site and in the Jan. 1, 2008, print issue, compares the U.S. health care system to systems in 12 other industrialized countries and offers eight major health reform recommendations based on that review. One proposal calls for adoption of a single-payer or pluralistic system, while the others tackle everything from electronic health records to physician training.

The paper is part of the college’s ongoing effort to effect changes to the U.S. health care system that would support patient-centered medical homes, in which a primary care physician coordinates care. The ACP endorsed guidelines for establishing medical homes in March.

“I think there’s a consensus that our system is not working very well, and when we compare it with others, that brings it into the spotlight,” Dr. Dale said. The paper highlights how the U.S. system, compared with others, underemphasizes primary care, in part, by not covering everyone.

Dr. Dale said the heart of the reform proposal is making sure that everyone has access to primary and preventive care.

ACP leadership reviewed the paper for about six months. “What we have is a consensus document,” he said. Dr. Dale said he received only a few e-mails — all positive — about the paper in the first few days after it was published online. He had anticipated receiving some negative comments from members questioning why the ACP didn’t ask for their opinion, but Dr. Dale said he senses that support for single-payer is growing among younger physicians.

That consensus does not extend to the American Medical Association or the American Academy of Family Physicians. The AMA opposes a single-payer health system, and the AAFP has not taken a position on the issue.

But a co-founder of Physicians for a National Health Program welcomed the ACP position. “It says that the mainstream is ready for [single payer],” said David Himmelstein, MD. “It doesn’t go as far as we’d like to see, but it’s a big step forward.”

Dr. Dale said the U.S. already has more than 40 years’ experience with single-payer health care — in the Medicare program. “So single-payer hasn’t failed in America. It’s actually succeeded.”

But AMA President Ron Davis, MD, takes a different lesson from Medicare. Both Medicare and Medicaid sometimes pay physicians less than it costs doctors to provide care. Inadequate payment leads physicians to limit the number of elderly, disabled and poor patients they see.

“While other nations’ experiences with single-payer health care provide important information, we need look no further than our own experiment with government-run health care to see the flaws with this approach,” Dr. Davis said.

AAFP President Jim King, MD, said many of his members wouldn’t support the organization endorsing a single-payer system. AAFP membership is divided on the issue much in the way America is split between urban and rural, and Democratic- and Republican-leaning areas, he said.

Instead, the AMA and AAFP have proposals that would expand health care access and call for patient protections, choice and responsibility.

The 26-page AMA plan, promoted in its Voice for the Uninsured campaign, recommends increasing individual access to health insurance by offering refundable tax credits or vouchers, with larger subsidies for low-income people, who could get their credits in advance. The Association also calls for increasing individual choice by standardizing health insurance regulations to help broaden insurance markets.

“Our pluralistic approach to covering the uninsured focuses on tax credits to individuals and families, individual ownership and choice of health insurance, and market reforms,” Dr. Davis said.

The seven-page AAFP plan, “Health Care Coverage for All,” recommends creating patient-centered medical homes and offering incentives for patients to seek care through those entities.

It also would safeguard patients against excessive medical costs by capping out-of-pocket spending at a fixed amount per household, possibly $5,000, and offering a free, basic set of mostly primary and preventive health care services.

The AAFP proposal doesn’t delve into how the U.S. should pay for health care. Dr King said it’s more important for the organization to focus on the kind of health care delivery system the country should have.

The financial structure can be worked out later, he said. “The problem at this particular stage is when you start mentioning a specific plan and how it’s going to be paid for, it closes so many doors,” he added.

Could be influential later

The ACP position paper won’t cause the 2008 presidential candidates to change their health plans, which already have been issued, but it could influence health reform after the election, said Robert Blendon, ScD, professor of health policy and political analysis at Harvard School of Public Health.

A large physician organization like the ACP hasn’t endorsed single-payer before. Once the election is over, the paper could gain political traction.

“[The paper is] important for sort of setting an agenda for the future,” Dr. Blendon said.

That assumes, however, that Congress tackles health system reform. “The country is concerned about things now other than redoing the health care system,” he said.

Mandate model repeatedly tested in U.S. and always fails

I Am Not a Health Reform

By David U. Himmelstein and Steffie Woolhandler
The New York Times
December 15, 2007
Cambridge, Mass.

IN 1971, President Nixon sought to forestall single-payer national health insurance by proposing an alternative. He wanted to combine a mandate, which would require that employers cover their workers, with a Medicaid-like program for poor families, which all Americans would be able to join by paying sliding-scale premiums based on their income.

Nixon’s plan, though never passed, refuses to stay dead. Now Hillary Clinton, John Edwards and Barack Obama all propose Nixon-like reforms. Their plans resemble measures that were passed and then failed in several states over the past two decades.

In 1988, Massachusetts became the first state to pass a version of Nixon’s employer mandate — and it added an individual mandate for students and the self-employed, much as Mrs. Clinton and Mr. Edwards (but not Mr. Obama) would do today. Michael Dukakis, then the state’s governor, announced that “Massachusetts will be the first state in the country to enact universal health insurance.” But the mandate was never fully put into effect. In 1988, 494,000 people were uninsured in Massachusetts. The number had increased to 657,000 by 2006.

Oregon, in 1989, combined an employer mandate with an expansion of Medicaid and the rationing of expensive care. When the federal government granted the waivers needed to carry out the program, Gov. Barbara Roberts said, “Today our dreams of providing effective and affordable health care to all Oregonians have come true.” The number of uninsured Oregonians did not budge.

In 1992 and ’93, similar bills passed in Minnesota, Tennessee and Vermont. Minnesota’s plan called for universal coverage by July 1, 1997. Instead, by then the number of uninsured people in the state had increased by 88,000.

Tennessee’s Democratic governor, Ned McWherter, declared that “Tennessee will cover at least 95 percent of its citizens.” Yet the number of uninsured Tennesseans dipped for only two years before rising higher than ever.

Vermont’s plan, passed under Gov. Howard Dean, called for universal health care by 1995. But the number of uninsured people in the state has grown modestly since then.

The State of Washington’s 1993 law included the major planks of recent Nixon-like plans: an employer mandate, an individual mandate for the self-employed and expanded public coverage for the poor. Over the next six years, the number of uninsured people in the state rose about 35 percent, from 661,000 to 898,000.

As governor, Mitt Romney tweaked the Nixon formula in 2006 when he helped devise a second round of Massachusetts health care reform: employers in the state that do not offer health coverage face only paltry fines, but fines on uninsured individuals will escalate to about $2,000 in 2008. On signing the bill, Mr. Romney declared, “Every uninsured citizen in Massachusetts will soon have affordable health insurance.” Yet even under threat of fines, only 7 percent of the 244,000 uninsured people in the state who are required to buy unsubsidized coverage had signed up by Dec. 1. Few can afford the sky-high premiums.

Each of these reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

The “mandate model” for reform rests on impeccable political logic: avoid challenging insurance firms’ stranglehold on health care. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

With the exception of Dennis Kucinich, the Democratic presidential hopefuls sidestep an inconvenient truth: only a single-payer system of national health care can save what we estimate is the $350 billion wasted annually on medical bureaucracy and redirect those funds to expanded coverage. Mrs. Clinton, Mr. Edwards and Mr. Obama tout cost savings through computerization and improved care management, but Congressional Budget Office studies have found no evidence for these claims.

In 1971, New Brunswick became the last Canadian province to institute that nation’s single-payer plan. Back then, the relative merits of single-payer versus Nixon’s mandate were debatable. Almost four decades later, the debate should be over. How sad that the leading Democrats are still kicking around Nixon’s discredited ideas for health reform.

David U. Himmelstein and Steffie Woolhandler are professors of medicine at Harvard and the co-founders of Physicians for a National Health Program.

Comment:

By Don McCanne, MD

Again, proven repeatedly, the “mandate model” for reform is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

I Am Not a Health Reform

By DAVID U. HIMMELSTEIN and STEFFIE WOOLHANDLER
The New York Times | Op-Ed
December 15, 2007

IN 1971, President Nixon sought to forestall single-payer national health insurance by proposing an alternative. He wanted to combine a mandate, which would require that employers cover their workers, with a Medicaid-like program for poor families, which all Americans would be able to join by paying sliding-scale premiums based on their income.

Nixon’s plan, though never passed, refuses to stay dead. Now Hillary Clinton, John Edwards and Barack Obama all propose Nixon-like reforms. Their plans resemble measures that were passed and then failed in several states over the past two decades.

In 1988, Massachusetts became the first state to pass a version of Nixon’s employer mandate — and it added an individual mandate for students and the self-employed, much as Mrs. Clinton and Mr. Edwards (but not Mr. Obama) would do today. Michael Dukakis, then the state’s governor, announced that “Massachusetts will be the first state in the country to enact universal health insurance.” But the mandate was never fully put into effect. In 1988, 494,000 people were uninsured in Massachusetts. The number had increased to 657,000 by 2006.

Oregon, in 1989, combined an employer mandate with an expansion of Medicaid and the rationing of expensive care. When the federal government granted the waivers needed to carry out the program, Gov. Barbara Roberts said, “Today our dreams of providing effective and affordable health care to all Oregonians have come true.” The number of uninsured Oregonians did not budge.

In 1992 and ’93, similar bills passed in Minnesota, Tennessee and Vermont. Minnesota’s plan called for universal coverage by July 1, 1997. Instead, by then the number of uninsured people in the state had increased by 88,000.

Tennessee’s Democratic governor, Ned McWherter, declared that “Tennessee will cover at least 95 percent of its citizens.” Yet the number of uninsured Tennesseans dipped for only two years before rising higher than ever.

Vermont’s plan, passed under Gov. Howard Dean, called for universal health care by 1995. But the number of uninsured people in the state has grown modestly since then.

The State of Washington’s 1993 law included the major planks of recent Nixon-like plans: an employer mandate, an individual mandate for the self-employed and expanded public coverage for the poor. Over the next six years, the number of uninsured people in the state rose about 35 percent, from 661,000 to 898,000.

As governor, Mitt Romney tweaked the Nixon formula in 2006 when he helped devise a second round of Massachusetts health care reform: employers in the state that do not offer health coverage face only paltry fines, but fines on uninsured individuals will escalate to about $2,000 in 2008. On signing the bill, Mr. Romney declared, “Every uninsured citizen in Massachusetts will soon have affordable health insurance.” Yet even under threat of fines, only 7 percent of the 244,000 uninsured people in the state who are required to buy unsubsidized coverage had signed up by Dec. 1. Few can afford the sky-high premiums.

Each of these reform efforts promised cost savings, but none included real cost controls. As the cost of health care soared, legislators backed off from enforcing the mandates or from financing new coverage for the poor. Just last month, Massachusetts projected that its costs for subsidized coverage may run $147 million over budget.

The “mandate model” for reform rests on impeccable political logic: avoid challenging insurance firms’ stranglehold on health care. But it is economic nonsense. The reliance on private insurers makes universal coverage unaffordable.

With the exception of Dennis Kucinich, the Democratic presidential hopefuls sidestep an inconvenient truth: only a single-payer system of national health care can save what we estimate is the $350 billion wasted annually on medical bureaucracy and redirect those funds to expanded coverage. Mrs. Clinton, Mr. Edwards and Mr. Obama tout cost savings through computerization and improved care management, but Congressional Budget Office studies have found no evidence for these claims.

In 1971, New Brunswick became the last Canadian province to institute that nation’s single-payer plan. Back then, the relative merits of single-payer versus Nixon’s mandate were debatable. Almost four decades later, the debate should be over. How sad that the leading Democrats are still kicking around Nixon’s discredited ideas for health reform.

David U. Himmelstein and Steffie Woolhandler are professors of medicine at Harvard and the co-founders of Physicians for a National Health Program.

Copyright 2007 The New York Times Company

David Himmelstein speaks

Why Not Universal National Health Insurance?

David Himmelstein, M.D.

kaisernetwork.org
National Congress on the Un and Underinsured
December 10-12, 2007

The conference is sponsored by the California HealthCare Foundation, the Commonwealth Fund, Harvard Health Policy Review, Health Affairs, the Journal of Health Politics, Policy and Law, Inquiry and the Milbank Fund.

If you ask Americans what they want, 64 percent of us say we want national health insurance. If you ask Canadians… would they like a U.S. system, 3 percent would prefer it, which is their illiteracy rate.

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=2283
(For David Himmelstein’s 35 minute presentation, fast forward the video to 1 hour and 45 minutes. For those preferring a transcript, it will be available at this link in the near future.)

Comment:

By Don McCanne, MD

Harvard professor and PNHP cofounder David Himmelstein presented his remarks following a roundtable discussion by the health policy representatives of the leading Republican and Democratic candidates for president (also included in the video at the link above).

Listening to the political roundtable, the issues were framed as if there were two fundamental proposals for reform – either build on our multipayer system primarily by expanding the use of private plans (Democrats), or allow market forces to resolve the issues (Republicans). But listening to them, you realize that the Republican proposals are those of inaction, so there seems to be only one choice and that is the Democratic plan.

But then David Himmelstein defines the actual problems that we are facing. At first blush it would seem that the two real options are either to expand our multipayer system, or to adopt a national health insurance program. But, by listening to him, it becomes clear that the Democratic proposal is also one of inaction – leaving in place all of the flaws that are impairing access, affordability and quality, pretending that our problems are solved by requiring the purchase of plans that we cannot afford with coverage that won’t prevent financial hardship.

He shows us that we really do have only one choice – adopt a universal national health insurance program. Any other choice brings us more hardship, suffering and even death.

(A positive note for advocates of health care justice: David received an enthusiastic standing ovation for his presentation.)

The new Dutch health insurance system

Health insurance reform in the Netherlands

By Yvette Bartholomée and Hans Maarse
Eurohealth
Volume 12 Number 2, 2006

On 1 January 2006, a major reform of the Dutch health insurance system came into effect. The former system, a combination of a statutory sickness fund scheme for the majority of the population and private health insurance for the rest, was replaced with a single universal scheme.

Key elements of the new system

The extension of market competition is one of the key features of the new health insurance system. Health insurers, which may operate on a for-profit basis, are required to compete on premiums, types of health plan and service levels. Consumers are free to choose any health insurer and type of health plan (for example, with or without deductibles, with or without preferred provider networks) and are able to change to an alternative insurer or plan once a year. All legal residents of the Netherlands are obliged to purchase a basic health plan, but are free to purchase a complementary voluntary plan covering additional health services such as physiotherapy, dental care for adults, psychotherapy and various forms of preventive care (there is an enormous variety of complementary plans). The basic insurance package covering essential health care is defined by the government and is more or less the same as the package of the former statutory health insurance scheme. However, health insurers have some freedom to decide, for instance, which providers to contract, what types of care to cover and whether or not to offer benefits in kind or reimburse subscribers. Thus, the new health insurance legislation allows for some differentiation among health plans in order to give consumers choice.

Another element of the new system concerns premium-setting. The new system retains the nominal fee, so insurers must set a single flat rate premium for each type of health plan they offer. They are forbidden to vary premiums with age, sex or specific health risks. The government pays the premium for those under eighteen. Low-income groups receive an income-related government subsidy (a ‘health care allowance’) to purchase a health plan. Furthermore, each employed person pays a contribution of 6.5% of his/her income (up to an income ceiling of € 30,000 per year). Employers do not pay any contributions. For the selfemployed, retired persons and some other specific categories the contribution rate is set at 4.4%.

A further element of the health insurance reform relates to what the government terms ‘public constraints’. The new system is mandatory and covers the entire population. Pivotal in the new legislation is that health insurers must accept every applicant (open enrolment). They are not permitted to deny access to applicants with preexisting medical conditions or to charge them a higher premium. The ban on risk selection by insurers can only be enforced when insurers have no financial incentive to select risks. Therefore, a risk equalisation scheme has been developed to avoid risk selection by insurers and to facilitate fair competition. Insurers receive risk-adjusted capitation payments from a risk equalisation fund adjusted for age, sex, pharmaceutical consumption and major diagnostic groups. The risk equalisation fund pools income-related contributions and government contributions for those under eighteen.

A final element of the new health insurance scheme concerns its private character, as the government has presented it as an arrangement under private law.

Policy goals of the new legislation

…the preservation of risk and income solidarity can be regarded as a cornerstone of the new legislation. Health insurers must accept all applicants and premiums cannot vary based on individual characteristics. However, this regulation only applies to the basic health insurance scheme and not to complementary voluntary health insurance. In the future, health insurers may use the latter as a new instrument for risk selection (an insurer can do this by denying an applicant access to a complementary plan to discourage him/her from purchasing a basic health plan). The low-income groups health insurance subsidy system also aims to preserve income solidarity.

The key question, however, is how these arrangements will work in practice, particularly in the long-run? To what extent will market competition be compatible with solidarity arrangements? Markets tend to call for variation by differentiated packages and price-setting to enhance consumer choice. Health insurers and provider organisations may call for less restrictive government regulation to create more room for ‘private solutions’. One scenario therefore is that market competition will eventually lead to a redefinition of the solidarity arrangements. It is not simply a neutral policy instrument to achieve better the goals of health care policy but will impact upon how these goals are stated. Market competition is not only the outcome of a neo-liberal model of health care policymaking but also reinforces that model.

Preliminary results

First, since the new legislation has come into effect, many more people than expected have changed insurer. According the latest data available, about 18% of the insured have switched from one insurer to another. While some insurers have grown significantly larger, one insurer has lost almost a quarter of its subscribers. Changing insurers has also caused a huge amount of administrative work.

Second, further consolidation in the health insurance market is expected if insurers are to survive and build up bargaining power in negotiations with providers.

Third, the new system creates administrative problems for providers.

Fourth, the government has had to concede that the new legislation may have unfair distributive effects for some groups of people and is looking for ways to compensate them (albeit reluctantly).

Beyond receiving reduced premiums, groups can also choose a plan that is optimally geared to their specific needs. The latter possibility in particular has provided the incentive for patients’ associations to form groups, but it remains to be seen how attractive the arrangement will be for insurers and patients with chronic illnesses. There are already signs that health insurers are not interested in signing a contract with patient groups, which cause a predictable loss to them. Another interesting observation is that it has been estimated that € 70 million has been spent on advertising.

Conclusion

In spite of preliminary results (of which the high proportion of people changing insurer is the most remarkable and unexpected), it is too early to determine whether or not the reform has been a success. Success would imply that the competitive changes enhance value and efficiency in purchasing health care. This is the real test of the reform.

http://www.euro.who.int/Document/Obs/Eurohealth12_2.pdf

And…

The changing Dutch healthcare system

By Maud Rommers and Jeroen Breen
Watson Wyatt Europe
Healthcare Market Review

Under the new system, age or health risks cannot play a role in determining the premium to be charged. Therefore, to ‘compensate’ the insurer for the less healthy risks in their portfolios, the government will operate a ‘risk and claims settlement’ (risk equalisation) system along similar lines to that used by the former Dutch public health insurance funds.

Introduction of this system (vereveneningssysteem) means that, for an insurer, keeping a healthy, profitable portfolio will not be equated with the youthfulness of the policyholders, as was the case for private insurance portfolios previously. Now, policyholders who are older, and even ill, can be equally profitable risks. This, however, makes it a much more complex situation for the insurance companies to manage.

In the early years of the new system, there will be many uncertain factors which will make it difficult for insurers to balance competitive product pricing and securing distribution with the risks of unacceptable financial results. Some of this is purely technical and focused on suitable monitoring of claim progression at appropriate levels of detail. It will also be important to find out if there are groups of insured persons who are structurally worse off within the equalisation system.

http://www.watsonwyatt.com/europe/pubs/healthcare/render2.asp?ID=16652

And…

Going Dutch — Managed-Competition Health Insurance in the Netherlands

By Alain C. Enthoven, Ph.D., and Wynand P.M.M. van de Ven, Ph.D.
The New England Journal of Medicine
December 13, 2007

The Dutch system is still a work in progress, and substantial problems remain. First, the risk-equalization model requires further improvement and continuing adjustment. Second, since the Dutch combine income-related subsidies for health insurance with similar payments for housing, child care, and scholarships, a high percentage of each extra euro earned reduces the earner’s subsidy, leaving people with little incentive to earn more money. Third, the existence of supplemental insurance with risk rating and without open enrollment may leave too large an opportunity for insurers to profit from risk selection. Finally, the current focus is on insurers, but the promise of this model lies in competition among delivery systems — which the insurers are now creating.

A U.S. version of the Dutch model would provide an opportunity for U.S. physician organizations to form their own health plans and present themselves directly to the consumer market, freeing them from control by large, remote, third-party insurance carriers and from the maddening complexity of having to deal with 15 to 30 different insurance companies and self-insured employers, each with its own payment criteria and plan designs. Medical groups could build their own customer base and loyalties. They could design their own coverage criteria, incentive schemes, utilization management, and other features.

http://content.nejm.org/cgi/content/full/357/24/2421

And…

Can “Regulated Competition” for Health Insurance Control Health Care Costs, Preserve Access, and Serve Society? The New Dutch Health System

By Pauline Vaillancourt Rosenau, PhD, Management, Policy and Community Health, University of Texas School of Public Health, and Christiaan J. Lako, dr, Public Administration, Radboud University Nijmegen, Netherlands
American Public Health Association
Scientific Session
November 6, 2007

Health services experts note that, in isolation, health insurance reforms such as guaranteed issue, mandatory coverage, price competition for a standard health insurance package, and community rating, have limited potential. But if they are implemented together, with governmental sliding-scale subsidies based on income, might they form an integrated set of checks against gaming, promote cost containment, and serve society? The Health Insurance Act implemented in January 2006 in the Netherlands, is testing exactly this proposition. The first-year performance of new Dutch health system suggests that cost-containment has not yet been achieved, and that while insurance companies reported losses, consumers perceive the new health insurance policies to be more expensive than the old ones. Access is not compromised but the information made available to consumers to compare insurance plans is inadequate. Half find it more difficult to choose a health insurance plan now and a large percentage of the population distrusts the new health system (43%). On quality, more consumers perceive that quality has been reduced (41%) than find it improved (8%). Overall, with about 6 months of experience with the new system, only about 18% like it better than the old one. The Dutch experiment in health insurance reform indicates that efforts to both control health care costs and preserve access remain elusive. These conclusions are based on results of a poll by the Dutch Consumers Union and the financial assessment of the Dutch Central Bank. Results may change in the future because the experiment goes forward largely unmodified.

http://apha.confex.com/apha/135am/techprogram/paper_145775.htm

Comment:

By Don McCanne, MD

The recently adopted financing reform for health care in the Netherlands has received considerable attention in the United States, and is being proposed as a private sector model that would be especially compatible with American ideals. The Dutch have discontinued their public insurance program and replaced it with an individual mandate to purchase private health plans competing in the marketplace.

Harvard Professor of Business Regina Herzlinger, as an advocate of consumer-directed health care, supports the Dutch system, but with the proviso that government oversight be removed so that the free market can improve quality and control costs. Stanford Professor of Management Alain Enthoven lauds the Dutch program, but only as a step towards his concept of managed competition in which physicians organize themselves into plans that compete with each other in the health care marketplace. Sen. Ron Wyden touts the success of the Dutch system as an example of how his proposal for a universal individual mandate is just what the United States needs. The neoliberals who support the proposal of the leading Democratic candidates – an individual mandate with an option to purchase a public, Medicare-like plan – also use the Dutch model as an example that their proposal not only would work, but would have strong public support. Even HHS Secretary Michael Leavitt recently visited the Netherlands to learn from a system that traded their public-private insurance mix for a market of competing private insurance plans – an ideal from the perspective of our conservative administration.

In reality, it seems that each interested party is projecting their individual and institutional ideologies on their perceptions of the Dutch reform. If you step back and look objectively at what the Dutch have done, their reform falls far short of many of the goals of each interest.

Just look at the way they have achieved the goal of pooling risk and funding health care equitably. Private plans competing on the basis of their premiums have absolutely no meaning when financing is readjusted based on an administratively-complex risk equalization system that will surely fail to equitably compensate for the private insurers’ skills at gaming the system.

Further, the Dutch have granted to the private insurers the right to control health markets in a manner that we are finding to be offensive. Consolidation of insurers is taking place, creating oligopolies. They are allowed to use their complementary plans to leverage risk selection, benefit packages, and to implement restricted choice of providers. The insurers have a highly leveraged advantage over the providers, controlling their fees and services while increasing their administrative burdens.

It is unbelievable the number of people who should know better that are suggesting that we should try their system. You would think that they might first want to review the reports of the Dutch Consumers Union and Dutch Central Bank. With 43 percent of the Dutch population already distrusting the new health system we really should look elsewhere for reform models.

But, wait. We’ve already found single payer. Why do we have to keep looking?