PNHP

Decline in premium increases is still an intolerable increase

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Decline in premium increases is still an intolerable increase

Health Benefits In 2007: Premium Increases Fall To An Eight-Year Low, While Offer Rates And Enrollment Remain Stable

By Gary Claxton, Jon Gabel, Bianca DiJulio, Jeremy Pickreign, Heidi Whitmore, Benjamin Finder, Paul Jacobs and Samantha Hawkins
Health Affairs
September/October 2007

Premiums for (employer-sponsored) family coverage increased an average of 6.1 percent from spring 2006 to spring 2007. This was the lowest annual increase in premiums since 1999 (when premiums rose 5.3 percent) and the fourth consecutive year in which premium increases declined from the previous year’s increase. Nonetheless, the average premium increase is 3.5 percentage points more than the increase in overall inflation as measured by the Consumer Price Index and 2.4 percentage points greater than the rise in workers’ earnings. Since 2001, premiums have increased 78 percent, while inflation rose 17 percent and workers’ wages, 19 percent.

The average annual cost for single and family coverage in 2007 is $4,479 and $12,106, including both employer and employee contributions.

http://content.healthaffairs.org/cgi/content/full/26/5/1407

Comment:

By Don McCanne, MD

Many of the media reports celebrate the fact that premium increases for this year have declined to only 6.1 percent. Stop right there!

This year’s premium will be used as the basis for next year’s increase. This year it is 3.5 percentage points more than the rate of inflation. That greater-than-inflation increase will never be recovered, and will be added to next year’s increase, and to the increase in every year thereafter. Not only this year’s increase, but the greater-than-inflation increases of each prior year and of each future year are also added. In the past six years alone, the greater-than-inflation increase has been 61 percent.

Some would say that the increase in workers’ wages is a more appropriate comparison than the rate of inflation. For the past six years, the greater-than-wage percentage increase in premiums has been only 59 percent. Only?

Some advocate lowering premiums by switching to less expensive, HSA-qualified high-deductible health plans (not less expensive health care). But, according to this report, “about two-thirds of employers offering HSA-qualified HDHPs do not make contributions to HSAs established by their workers with single coverage.” So the answer is to shift even more of the costs to the worker?

How much longer do we allow our health spending to compound at these rates? Isn’t this like… maybe… an emergency?

Immigrants and Health Care — At the Intersection of Two Broken Systems

By Susan Okie, M.D.
New England Journal of Medicine
Perspective
August 9, 2007
Volume 357:525-529

At a primary care clinic in Montgomery County, Maryland, where I volunteer, the patients are uninsured immigrants from Latin America or West Africa. Many are day laborers, house cleaners, or construction workers; most do not speak English. Several months ago, I saw a middle-aged Hispanic baker with profound weakness, fatigue, limb swelling, and severe muscle pain, who had to be hospitalized for myxedema. Fortunately, a local charity agreed to pay most of her hospital costs, and she’s now receiving thyroid hormone-replacement therapy — but with regular care, her hypothyroidism could have been diagnosed earlier and hospitalization averted. Another day, I tried to persuade a reticent West African man who had been tortured in prison that psychological counseling might help his chronic pain. However, mental health services for uninsured immigrants are sparse, and the man was reluctant to venture to a distant part of Washington, D.C., to a program for torture survivors. A third patient, a man in his 40s, came in with a nearly empty bottle of eyedrops, which he had brought from Ghana to take for glaucoma. The disease had already blinded him in one eye, and the vision in his other eye had been fluctuating. He needed a complete eye exam and visual-field testing, but arranging timely referrals to specialists is often difficult for caregivers treating the uninsured. I wrote him a prescription, and we managed to set up an appointment at a hospital-based ophthalmology clinic that accepts a limited number of uninsured patients.

For recent immigrants — especially the estimated 12 million who are here illegally — seeking health care often involves daunting encounters with a fragmented, bewildering, and hostile system. The reason most immigrants come here is to work and earn money; on average, they are younger and healthier than native-born Americans, and they tend to avoid going to the doctor. Many work for employers who don’t offer health insurance, and they can’t afford insurance premiums or medical care. They face language and cultural barriers, and many illegal immigrants fear that visiting a hospital or clinic may draw the attention of immigration officials. Although anti-immigrant sentiment is fueled by the belief that immigrants can obtain federal benefits, 1996 welfare-reform legislation greatly restricted immigrants’ access to programs such as Medicaid, shifting most health care responsibility to state and local governments. The law requires that immigrants wait 5 years after obtaining lawful permanent residency (a “green card”) to apply for federal benefits. In response, some states and localities — for instance, Illinois, New York, the District of Columbia, and certain California counties — have used their own funds to expand health insurance coverage even for undocumented immigrant children and pregnant women with low incomes. Other states, however, such as Arizona, Colorado, Georgia, and Virginia, have passed laws making it even more difficult for noncitizens to gain access to health services.

Whether or not they have health insurance, immigrants overall have much lower per capita health care expenditures than native-born Americans,1 and recent analyses indicate that they contribute more to the economy in taxes than they receive in public benefits. In a study from the RAND Corporation, researchers estimated that undocumented adult immigrants, who make up about 3.2% of the population, account for only about 1.5% of U.S. medical costs.2 Many immigrants do not seek medical treatment unless they are injured or acutely ill; at our clinic, patients with type 2 diabetes often have florid symptoms and even incipient renal damage by the time their disease is diagnosed.

One study found that annual per capita expenses for health care were 86% lower for uninsured immigrant children than for uninsured U.S.-born children — but emergency department expenditures were more than three times as high.1 Although U.S. hospitals must provide emergency care without first asking about income, insurance, or citizenship, early diagnosis and treatment in a primary care setting are both medically preferable and a better use of resources. “If people keep postponing medical care because they’re so concerned about being sent back over the border,” noted Elizabeth Benson Forer, executive director of the Venice Family Clinic, a venerable free clinic in Los Angeles that serves many immigrants, “then you can end up with some pretty horrendous health situations.”

Immigrants live, work, and attend school in communities throughout the country; laws and bureaucratic barriers that reduce their use of key preventive health services, such as immunizations and screenings for infectious disease, make for bad public health policy, and denying immigrants primary care ultimately increases health care costs for everyone. For example, labor and delivery costs for undocumented immigrant women are covered under the federal and state emergency Medicaid program, but most states do not cover prenatal care, and there is no coverage for family planning. Some of my patients say they would like to use oral contraceptives or an intrauterine device or undergo a tubal ligation, but they can’t afford it. And immigrants, like native-born Americans, are vulnerable to chronic diseases; as my colleague, nurse practitioner Lois Wessel, notes, “Even the 25-year-old day laborers are eventually going to become 45-year-olds, probably still undocumented, with hypertension and diabetes. . . . Life in America is going to make them become not so healthy.”

Recently, a bipartisan group of U.S. senators, with White House support, introduced an immigration bill that offered the best chance in years of achieving substantial reform of a dysfunctional system. However, the bill met with opposition from both conservatives and liberals and was killed in the Senate this past June, quashing all hope of immigration reform during the current administration. State legislatures this year are considering a record number of anti-immigrant measures, and the Senate bill’s demise heightens their chances of passage. “You will see the states and cities scrambling to pass their own laws and regulations, and you’re going to get a completely contradictory set of policies,” Senator John McCain (R-AZ) predicted in a Washington Post article on July 8. In many areas of the country, one consequence is likely to be reduced access to health care for immigrants.

Noncitizens make up about 20% of the 46 million uninsured people in the United States. Hospitals generally do not collect information on patient immigration status, and there are no reliable national figures on hospital costs for undocumented immigrants. Nevertheless, the soaring cost of uncompensated care (see graph A) has made the problem of providing care for uninsured immigrants a hot political issue, particularly in border states and those (such as the southeastern states) whose immigrant populations have grown rapidly in recent years. Some uninsured immigrants needing emergency treatment (including pregnant women, children, adults with dependent children, and elderly, blind, or disabled patients with incomes below Medicaid thresholds) qualify for emergency Medicaid coverage. In many other cases, hospitals receive no payment for their care, although in 2003 Congress appropriated $250 million per year for 4 years (starting in 2005) to partially compensate hospitals for treating undocumented immigrants.

A recent study found that although emergency Medicaid spending for immigrants in North Carolina grew by 28% between 2001 and 2004, it still represented less than 1% of the state’s Medicaid budget.3 More than 80% of that spending was for childbirth and complications of pregnancy, and major injuries accounted for nearly one third of the rest. In California, emergency Medicaid spending for uninsured immigrants for fiscal year 2007 exceeded $941 million, according to Kim Belshé, secretary of the California Health and Human Services Agency. “Clearly, there are medical needs faced by this population,” said Belshé, “and the emergency room is not the most cost-effective place for [addressing] them.” In addition, undocumented immigrants may account for as much as $750 million annually of the cost of uncompensated care in California hospitals — about 10% of the annual total — since they represent about 10% of the state’s emergency department patients, according to Jan Emerson, vice president of external affairs for the California Hospital Association. “Almost half of the hospitals in California are currently operating in the red,” she said. “It would not be fair to place the blame solely on undocumented immigrants, but certainly, they are a contributing factor.”

The chief sources of outpatient care for uninsured immigrants are public clinics and community health centers. Such clinics are often sparse in suburban and rural areas that have recently faced an influx of immigrants. Even in cities with strong community-clinic networks and a long history of serving immigrants, access to care is uneven. For example, at the Venice Family Clinic, a bilingual nurse educator runs health and exercise classes in Spanish and English for patients with diabetes, pregnant women receive free state-subsidized prenatal care, and there are regularly scheduled clinic sessions for victims of torture and human trafficking. Yet arranging specialty referrals is a constant challenge — it usually entails sending patients to outpatient clinics at county hospitals, where some have to wait as long as a year for an appointment. In the Washington, D.C., area uninsured women, including undocumented immigrants, can get free annual mammograms and Pap smears through subsidized cancer-screening programs, but follow-up treatment for abnormal findings other than cancer is usually not included, and many clients have no source of primary care, as noted by nurse practitioner Wessel, who works monthly at one such program. “Patients come in year after year” for Pap smears — “but they’ve never had their blood pressure checked,” she said. “We don’t check it, because all we’re financed to do is cervical- and breast-cancer screening.”

In states seeking to expand insurance coverage, the question of including undocumented immigrants is a thorny one. About 1 million of California’s 4.8 million uninsured residents are undocumented adults, and about 136,000 are undocumented children.4 As part of a proposal for comprehensive health care reform, Governor Arnold Schwarzenegger is seeking to provide health insurance coverage (through Medicaid and the State Children’s Health Insurance Program, or SCHIP) to all children with family incomes at or below 300% of the federal poverty level, regardless of immigration status. Although there is considerable public support for insuring undocumented immigrant children, Republican state legislators “do not believe that state general fund revenues should be invested in people who are here illegally,” said health secretary Belshé — “and that extends to children.”

The federal Medicaid program has always been restricted to U.S. citizens and legal residents, but recent federal and state laws designed to strengthen enforcement of eligibility rules have created new barriers, even for infants and children who are citizens, and have had a chilling effect on other programs providing health services for immigrants. The 2005 Deficit Reduction Act requires all persons applying for or renewing Medicaid coverage to provide proof of identity and U.S. citizenship. Since that law went into effect, at least eight states have reported dramatic declines in Medicaid enrollment, and some Medicaid-eligible infants and children have gone without immunizations and needed medical care because of delays in coverage.5

In Georgia, which last year passed a law requiring immigrants to show proof of legal residency in many situations, “we’ve started seeing a lot of kids not going to the doctor,” said Flavia Mercado, a pediatrician who runs the International Medical Center at Atlanta’s Grady Memorial Hospital. “A lot of my clients are leaving and going to other states, and a couple are even going back to their country. Everyone is very fearful.” She said that Atlanta organizations are scaling back health services for Hispanics and have stopped sponsoring Hispanic health fairs, fearing that they will be raided by police or immigration officials. Meanwhile, faced with rising health care costs and increasing numbers of uninsured persons, the state’s Medicaid program has sharply reduced benefits: it recently stopped paying for prenatal care for high-risk women and for nonemergency hemodialysis. Although immigrants make up a minority of the uninsured, Mercado said media reports regularly blame illegal immigrants for the worsening problems of the state’s health care system. Anger over high medical costs and reduced access to care no doubt contributes to anti-immigrant sentiment; the remedy, however, is not immigrant bashing, but health care reform.

“As an American citizen, I understand that you want to make sure the resources are there for the right people,” Mercado said. “Yet how can you deny someone health access? If we don’t treat and prevent illness . . . our whole community is going to suffer.”

Source Information

Dr. Okie is a contributing editor of the Journal.

References

1. Mohanty SA, Woolhandler S, Himmelstein DU, Pati S, Carrasquillo O, Bor DH. Health care expenditures of immigrants in the United States: a nationally representative analysis. Am J Public Health 2005;95:1431-1438. [Free Full Text]
2. Goldman DP, Smith JP, Sood N. Immigrants and the cost of medical care. Health Aff (Millwood) 2006;25:1700-1711. [Free Full Text]
3. DuBard CA, Massing MW. Trends in emergency Medicaid expenditures for recent and undocumented immigrants. JAMA 2007;297:1085-1092. [Erratum, JAMA 2007;297:1774.] [Free Full Text]
4. Brown ER, Pourat N, Wallace SP. Undocumented residents make up small share of California’s uninsured population. Los Angeles: UCLA Center for Health Policy Research, March 2007.
5. Pear R. Lacking papers, citizens are cut from Medicaid. New York Times. March 12, 2007:A1.

Cost of Uncompensated Care (Panel A), Number of Unauthorized Immigrants (Panel B), and Number of Uninsured People (Panel C) in the United States.

The annual cost to U.S. hospitals of uncompensated care (charity care plus bad debt) has been rising, although the fraction of total hospital expenses represented by such care has remained relatively constant at about 5 to 6% since 1980. The number of unauthorized immigrants present in the United States has also been increasing, although the estimates are uncertain. Treatment of unauthorized immigrants contributes to uncompensated care costs, but the main reason such costs are increasing is the rise in the number of people who lack health insurance. Immigrants represent only about 20% of the uninsured. Data on uncompensated care are from the American Hospital Association; data on unauthorized immigrants are from the Pew Hispanic Center; data on the uninsured are from the U.S. Census Bureau.

Militants in tennis shoes

Nurses Association won’t bend on health reform

By Timm Herdt
Ventura County Star
Wednesday, September 12, 2007

John Graham, a hulking man with sad eyes, wearing a shirt only half buttoned, looked the part Tuesday of a man who had not slept well.

“It was not an easy night,” he said.

There have been many such nights over the last six years, but Monday had been particularly bad, knowing dawn would deliver the anniversary of the date that painted the sadness in his eyes.

He had been a volunteer emergency medical technician six years earlier, working at a job site in Manhattan near the World Trade Center.

“I was looking up at the second plane that hit the tower just like I’m looking at you,” he said, staring intently at his interviewer.

His immediate response was to start looking for the injured and to help.

We spoke in the lobby of the Sacramento Convention Center, where Graham was an honored guest of more than 1,000 union nurses. Later in the day, he would speak at a rally on the Capitol lawn.

His message: America’s healthcare system is such a mess it has failed even those whose illnesses spring from patriotic heroism.

Oct. 10, 2001, Graham was diagnosed with asthma and “five or six other” respiratory ailments. Since, he says, “It’s gotten progressively worse.” He quit his job as a safety officer for the Carpenters’ Union in 2004 after having battled pneumonia three times in a year.

His health insurance ran out a year later. These days, he’s got an oxygen tank and other paraphernalia at home. “When I have an asthma attack, I give myself my own emergency respiratory treatment.”

Graham’s story may by now sound familiar. He was featured in Michael Moore’s film, “Sicko,” and has become a crusader for universal healthcare.

“There are 18,000 people dying every year in the United States because they don’t have healthcare,” he says. “That’s six 9/11’s a year.”

Listening to Graham’s story is an uncomfortable experience. The Nurses Association knows that; it’s why it brought him to California at a time when legislators and Gov. Arnold Schwarzenegger are negotiating health insurance reform the nurses believe falls short of an authentic solution.

Alone among interest groups in Sacramento, the California Nurses Association opposes any healthcare reform that falls short of blowing up the private insurance-based system and replacing it with a Medicare-style system in which everyone would be insured by the government.

It’s not this union’s style to play nice or to compromise. Whether it’s organizing, negotiating, advocating for patients’ rights or fighting for political change, the CNA engages in what it calls “intelligent, focused, strategic militancy.”

Judging from the results of late, it’s hard to argue with the strategy.

The CNA has grown from 18,000 members in 1992 to 75,000 today. It has become a national force in recent years, picking up bargaining units in Illinois and Maine, and adding to its name: It’s now the California Nurses Association/National Nurses Organizing Committee.

Earlier this year, it affiliated with the AFL-CIO — an action that was not coincidentally followed by the national union’s decision to make healthcare its top priority in the 2008 election year.

MSNBC last year named CNA Executive Director Rose Ann DeMoro to its list of the “10 most influential women in America,” alongside such heavyweights as Hillary Clinton, Condoleezza Rice and Nancy Pelosi.

In the political arena, the CNA in 2004 hound Schwarzenegger to such distraction, he famously blurted that line about “kicking their butts.” Nurse protesters continued to disrupt every Schwarzenegger fundraiser in 2005, and if they weren’t solely responsible for defeating his special-election ballot measures, they certainly softened him up.

Polling at the time showed that nurses, by virtue of their profession and reputation, had more credibility with voters than any other group.

These days, it’s Democratic Assembly Speaker Fabian Nuñez who’s feeling the heat. Nurses denounce his compromises on healthcare reform as a sellout, and assert he’s become way too friendly with Schwarzenegger.

To look at those at the union convention and listen to their speeches is an exercise in cognitive dissonance. The women on the stage are gentile and grandmotherly, but their rhetoric is steely and defiant.

They say they won’t rest until California has a single-payer, universal healthcare system in place. Believe that.

Not this year, probably not next and maybe not the year after, but eventually there will be a showdown in this state over the issue. The nurses may not win, but you can be certain of this: They’ll make their opponents very uncomfortable.

— Timm Herdt is chief of The Star’s state bureau. His e-mail address is therdt@VenturaCountyStar.com.

California legislation set for veto and special session

Recap and Analysis of Yesterday's Legislative Floor Debates on California Health Care

By Hanh Kim Quach, Health Care Policy Coordinator, Health Access California
California Progress Report
September 11, 2007

The California Senate and Assembly passed historic health care reform legislation Monday… AB 8 (Nunez/Perata).

Yet even before the debate on AB 8 (Nunez/Perata) was finished in the Assembly, Gov. Arnold Schwarzenegger announced — though not unexpectedly — that he would veto the bill and call the Legislature back to work in a “special session” to “keep working until we achieve the kind of historic solution that all of us and the people of California want.”

Sen. Sam Aanestad and other Republican legislators attempted to disparage AB 8 by comparing it with the Massachusetts plan, pointing out that Governor Romney in “running from it.” While AB 8 certainly shares certain features with the Massachusetts plan, one missing provision is glaringly obvious: the absence of any mandate to buy coverage in the individual market. Even for group coverage, AB 8 does not require anyone to have coverage if they can’t afford it. Affordability is explicitly defined in the bill — unlike in Massachusetts. No worker would have to take up coverage if their health care costs — premiums and out-of-pocket costs –would exceed 5 percent of a person’s wages.

Many lawmakers, including Assembly Speaker Fabian Nunez, said AB 8 was California’s opportunity to provide a model for the federal government to implement health care reform. “We have a broken health care system in California and we must do something to fix it now… This health care package will deliver what the federal government has failed to do: to provide all Americans with affordable health care coverage,” Nunez said.

As part of a special session, (Sen. Don Perata said), “we would continue where we left off…”

http://www.californiaprogressreport.com/2007/09/recap_and_analy.html

Comment:

By Don McCanne, MD

This article from Health Access California, a supporter of AB 8, provides an overview of the legislation and the political activity taking place around it. For those interested, it is worth reading.

In a classic example of political irony, Democrats are abandoning their preferred option, single payer reform, in order to reach a compromise with the Republicans and the private insurance industry. They have crafted a model that they believe does not repeat the mistake of the Massachusetts reform program. California Democrats proudly proclaim that they will not require individuals who cannot afford private insurance to be covered by a program that is being inappropriately characterized as universal.

Not one Republican voted for this compromise, and Blue Cross of California is spending a couple million dollars in an advertising campaign opposing reform. So much for compromise. The Democrats have violated the first rule of negotiation. Before they even seriously sit down with the governor, they have removed from the table the most important polices that would bring comprehensive, affordable, high quality care to everyone.

When you read through AB 8, perhaps the most glaring defect is that the authors craft reform around the private insurance model – a model that served us fairly well in the last century, but one that has now become obsolete. Individual private insurance plans that are reasonably comprehensive and include everyone are no longer affordable for the majority of us. The model for this century is a universal risk pool that is equitably funded.

A report released today in Health Affairs stated that the average annual premium for family coverage is now $12,106. With a median household income of $48,200, those numbers no longer work. Do we provide large government subsidies for a majority of us to purchase administratively-inefficient private plans, or do we reduce the benefits of the plans so that the premiums become affordable? The current anti-tax political environment makes the former highly unlikely.

AB 8 will result in an explosion of the fastest growing problem in health care today: underinsurance. Private plans with affordable premiums but inadequate coverage will create financial hardships for precisely those individuals who should be protected – those who need health care.

Most of us who continue to advocate for a single payer national health insurance program have also supported incremental improvements as temporary measures until we can achieve the reform that we really need. But the line must be drawn with AB 8. We need health care financing reform that enables patients to access the health care system without being exposed to financial hardship.

We need a universal risk pool that is equitably funded and efficiently administered so that funds can be redirected to the health care that we need. What we don’t need is false pride in having protected the private insurance industry at the cost of leaving millions of Californians without coverage.

Worker-friendly candidates needed in November

Mansfield News Journal
Mansfield, Ohio
September 10, 2007

After a wonderful Labor Day weekend I got to wondering what would happen if all workers would demand something be done about the health care crisis we face in this country. How long would it take for our elected leaders to fix this problem if faced with the possibility of losing their positions?

I would like everyone to call or write their elected representatives about co-sponsoring a bill brought forth by Congressman John Conyers of Michigan. It is H.R. 676-The United States National Health Insurance Act. It is Medicare for all. It would streamline payments through a single, nonprofit payer. We would save more than enough to provide comprehensive, high quality coverage for all Americans.

Did you know the U.S. spends twice as much as other industrialized nations on health care? Yet our system leaves more than 46 million people without health coverage, and millions more inadequately covered.
Ladies and gentlemen, it is time that we all get involved and do something about this and other problems facing the American worker today. We all need to register to vote, and to vote at election time. We need to encourage our friends, neighbors and co-workers to do likewise. We need to find and elect American-worker friendly candidates.

Mike Carroll
Mansfield, Ohio

Audit Cites Overpaid Medicare Insurers

Click here to read the full GAO report.

By ROBERT PEAR
New York Times
Published: September 10, 2007

WASHINGTON, Sept. 9 — Private insurance companies participating in Medicare have been allowed to keep tens of millions of dollars that should have gone to consumers, and the Bush administration did not properly audit the companies or try to recover money paid in error, Congressional investigators say in a new report.

The investigators, from the Government Accountability Office, said the money could have been used to reduce premiums or provide additional benefits to older Americans.

Under federal law, Medicare officials are supposed to audit the financial records of at least one-third of the insurance companies each year. But the investigators said the Bush administration had fallen far short of that goal and had never met the “statutory requirement.”

Indeed, they said, the proportion of companies audited by Medicare declined steadily — to 14 percent in 2006 from 24 percent in 2001 — despite a steady growth in Medicare payments to the plans. Those payments now total $75 billion a year, about one-fifth of all Medicare spending.

The Bush administration did not take issue with the findings.

“We welcome constructive suggestions for improving the audit process,” said Tim Hill, chief financial officer at the Centers for Medicare and Medicaid Services. An agency spokesman said it might need additional legislative authority to clarify its power to recoup money from insurers.

Administration officials have strongly encouraged insurance companies to participate in Medicare and have urged beneficiaries to enroll in private plans. Some plans, known as Medicare Advantage plans, cover a wide range of services, including doctor’s visits and hospital care. Others provide only prescription drug benefits.

The purpose of the audits is to determine whether insurers correctly calculated their costs and premiums and delivered the services promised to Medicare beneficiaries. Insurers typically receive fixed monthly payments, set in advance, for serving Medicare patients. Drug plans can receive extra payments if their costs exceed their expectations.

Likewise, if private plans hold down costs, they are supposed to share some of the savings with beneficiaries and the government.

In 2003, Medicare audited 49 of the 220 organizations participating in the program. Auditors found significant errors at 41 companies, but Medicare officials took no action on the findings. As a result of the errors, the auditors said, insurers kept “$59 million that beneficiaries could have received in additional benefits, lower co-payments or lower premiums.” The report did not identify the companies.

Paul Caban, assistant director of the financial management team at the Government Accountability Office, said the Medicare agency’s response was puzzling. “What is the value of conducting these audits if you do not act on the findings?” Mr. Caban asked.

Two influential members of Congress expressed dismay.

“Congress required audits for good reason,” said Senator Charles E. Grassley of Iowa, the senior Republican on the Finance Committee. “There’s a lot of taxpayer money being spent, and we need to know where it goes. We also need consequences for spending that isn’t proven to serve beneficiaries.”

Mr. Grassley said Medicare officials had done “a poor job of bringing accountability here,” and he added, “I want to see concrete action to fix this.”

Representative Pete Stark, the California Democrat who is chairman of the Ways and Means Subcommittee on Health, said the Medicare agency “is not doing its job to protect beneficiaries.”

In separate action, the Bush administration is vigorously pursuing money that it says is owed to insurance companies by Medicare beneficiaries. The Medicare agency has sent letters to more than 135,000 people saying they still owe premiums for prescription drug coverage provided in 2006. In most cases, the premiums were supposed to have been withheld from monthly Social Security checks, but the government withheld the wrong amounts or nothing at all.

Kerry Weems, acting administrator of the Centers for Medicare and Medicaid Services, said, “I am intently focused on this matter and will make it a priority to correct the errors and minimize them in the future.”

Insurers submit bids to Medicare each year, saying how much they expect to be paid to provide specified benefits. If the government accepts these proposals, it signs contracts with the insurers.

The Medicare agency contends that it does not have the legal authority to force insurers to return money to beneficiaries or to the Medicare trust fund when auditors find “errors, incorrect or unreasonable assumptions or other misstatements” in company bids.

The Government Accountability Office insisted that Medicare officials “had the authority to pursue financial recoveries,” but did not use it.

Medicare hires private firms to conduct many audits. Insurers said that in many cases the auditors were not well versed in the intricacies of Medicare. Moreover, they said, Medicare has not provided clear guidance on how to define important items like administrative costs.

Medicare officials said they found significant errors in bids from 18 of the 80 organizations audited last year. But the Government Accountability Office said “there is a low probability of the audits identifying intentional misrepresentations,” because Medicare relies heavily on actuaries who prepare the bids to certify their accuracy.

Under a 2001 law, every federal agency is supposed to have a program for “recovering any amounts erroneously paid to contractors.”

The Bush administration told the Government Accountability Office that “general federal contract laws do not apply to the payments made under Medicare contracts.”

AHIP/Milliman report on guaranteed issue and community rating

New AHIP Report Takes a Ten Year Look at the Unintended Consequences of State Efforts to Change the Insurance Market

America’s Health Insurance Plans (AHIP)
September 7, 2007

As states consider proposals to expand access to health care coverage, a new study assesses the impact of prior efforts in states across the country. The study by Milliman, Inc. on behalf of America’s Health Insurance Plans (AHIP) examined what happened.

Specifically, the report examined eight states that enacted various forms of “guarantee issue” and “community rating” in the 1990’s, including Kentucky, Maine, Massachusetts, New Hampshire, New Jersey, New York, Vermont, and Washington.

Guarantee issue requires insurers to sell an individual health insurance policy without regard to a person’s health and community rating requires that all consumers pay the same or similar premiums without regard to age or gender. According to the report, these initiatives have the potential to cause individuals to wait until they have health problems to buy insurance. This could cause premiums to increase for all policyholders, increasing the likelihood that lower-risk individuals leave the market, which could lead to further rate increases. If this continues, the pool or market could essentially collapse or shrink to include only the high risk population.

Overall, the report found that states that implemented guarantee issue and community rating saw a rise in insurance premiums, a reduction of individual insurance enrollment, and an exodus of health insurers from the individual insurance market. In addition, the report found no significant decrease in the uninsured population in states that implemented these initiatives, often a stated goal of legislators.

Consequently, several states that initially implemented guarantee issue and community rating have since repealed or modified their laws with the intent of stabilizing the insurance marketplace and providing consumers more choice and access to coverage.

AHIP press release:
http://www.ahip.org/content/pressrelease.aspx?docid=20794

The Milliman report, “The Impact of Guaranteed Issue and Community Rating Reforms on Individual Insurance Markets:”
http://www.ahip.org/content/default.aspx?docid=20736

Comment:

By Don McCanne, MD

Everyone in the policy community understands that requiring insurers in the individual market to accept all applicants (guaranteed issue) and moderating the variation in premiums by more effectively pooling risk (community rating) result in higher insurance premiums than would be characteristic of insurance pools that exclude individuals with health care needs. It is also understood that the higher premiums result in both a lower rate of initial enrollment and a lower rate of renewals, further concentrating higher cost individuals in the risk pools. This upward pressure on premiums is known as antiselection or the death spiral since insurers eventually withdraw these unaffordable products from the market.

So why did AHIP decide to commission yet another study of these well understood phenomena? Simply because there is now enough experience with these policies that they could take the study one step further. They show what can happen when these policies are modified or reversed. To no surprise, the upward pressure on premiums diminishes and the private health insurance market improves.

The implicit conclusion presented is that guaranteed issue and community rating should be rejected in order to “stabilize the insurance marketplace and provide consumers more choice and access to coverage.” The problem is that this stabilizes the market only for healthy consumers.

If you’re sick, you’re on your own. If you don’t like that, try for a government handout or look for relief in the bankruptcy courts. But don’t destabilize the insurance marketplace by expecting your health care needs to be met. What do you think private health insurance is for, anyway?

Medicare-for-all would keep everyone covered

Aaron E. Carroll, M.D.
The Indianapolis Star
Sunday, September 9 2007

One year ago, when the U.S. Census Bureau released its figures on Americans lacking health insurance in 2005, I wrote a piece here describing the sad state of the health care system in America. Recently, the 2006 numbers were released, and things have only gotten worse.

The number of uninsured Americans has jumped by 2.2 million to 47 million. This rise in the number of people without health insurance is the biggest jump reported by the Census Bureau since 1992. There are now more uninsured people in the United States than at any time since the passage of Medicare and Medicaid in the mid-1960s.

Amazingly, this deplorable situation has not been met with righteous anger or shock. It barely made a splash in the news. Yet, these numbers represent extraordinary suffering, unnecessary disability and premature deaths — at least 18,000 deaths per year, according to the Institute of Medicine.

Before we jump to conclusions about who is uninsured in America, some of the facts in the Census Bureau’s report deserve closer attention.

More than 90 percent of the newly uninsured are families with middle or high incomes. Some 1.4 million of the newly uninsured, accounting for 64 percent of the increase, are in families making more than $75,000 per year. An additional 633,000 new uninsured, 29 percent of the increase, are in families earning between $50,000 and $75,000. More than half the newly uninsured are full-time workers.

This divergence between poverty and uninsurance is relatively new and striking. Until now, as poverty went down, uninsurance fell. Now this has changed. Health insurance is so expensive (more than $11,000 for a family policy) that even middle-class families potentially face financial ruin along with illness and injury.

Do not be fooled into thinking any of the incremental changes we have been making are going to solve this problem. They are Band-aids on a gaping wound. In Massachusetts, often cited as a model for reform, the number of uninsured increased from 583,000 in 2005 to 657,000 in 2006. In Indiana, with a population less than that of Massachusetts, 12 percent, or 748,000 people, went a whole year without health insurance in 2006.

As those in Washington dither over the expansion of programs like State Children’s Health Insurance Program (SCHIP) to nip at the edges of this problem, the number of uninsured children rose by 611,000 between 2005 and 2006. As the president decries an SCHIP expansion as harmful to private insurers, the percentage of people covered by employment-based insurance actually decreased from 60.2 percent to 59.7 percent. As he claims that SCHIP expansion will encourage people to abandon private insurance for government programs, the number of Americans covered by such public programs actually decreased. Private health coverage is deteriorating rapidly, and the safety net, or what is left of it, cannot keep up.

In fact, the Bush administration wants to scale back the SCHIP program by insisting that states must enroll 95 percent of the lowest-income, and therefore eligible, children before more can be added. Nearly all state administrators have insisted that this goal is impossible to achieve. Make no mistake — this is an admission that incremental programs can never achieve universal coverage.

There is one sure-fire way to make these numbers come down. It worked for seniors in the 1960s and it still works for them today. You may hear politicians demonizing government-run health insurance, but you will hear none run on a platform of eradicating Medicare; nor will any turn it down for themselves when they turn 65. Call it whatever you want: National health insurance, Medicare-for-all, “single-payer” or socialized health insurance; it doesn’t matter. Research shows that Medicare-for-all could save enough on administrative waste ($350 billion) to cover all the 47 million uninsured and improve coverage for everyone else. A single-payer national health insurance system is the only way to drop the number of people lacking health insurance to zero.

Wouldn’t that be nice to read in next year’s Census statistics?

The Health Care America Wants

To the Editor:

David Brooks (“The New Social Contract,” column, Sept. 7) dismisses a single-payer health insurance system on the grounds that Americans “will not likely embrace a system that forces them to defer to the central government when it comes to making fundamental health care choices.”

Yet the federal government’s Medicare program has strong political support.

In 2003, even a conservative Republican president and Congress found it politically advantageous to expand Medicare significantly by adding prescription drug benefits.

Extending Medicare to cover all Americans would strengthen America’s economy in three ways.

It would reduce administrative expenses, replace costly emergency room visits for those now lacking insurance with more cost-effective preventive care, and improve the global competitiveness of American manufacturers, who now bear much higher health care costs than do their foreign rivals.

Gregory M. Saltzman
Ann Arbor, Mich., Sept. 7, 2007
The writer is a professor of economics and management at Albion College.

To the Editor:

According to David Brooks, single-payer health care is a bust, since Americans are too individualistic to embrace “a system that forces them to defer to the central government.”

But most Americans are now forced either to defer to the profit-seeking H.M.O. their employer chooses, or to switch jobs (which is certainly not as easy as switching brands of toothpaste) and be beholden to the H.M.O. one’s new employer has chosen.

Many other Americans are not lucky enough to be offered health insurance at work at all, and are forced to use the emergency room as their site of primary care. Hence, I doubt whether Americans, if there were a truly informative national discussion on the issue, would take the bogus threat of single-payer serfdom seriously, especially if the single-payer system is pitched as “Medicare for all.”

Craig Duncan
Ithaca, N.Y., Sept. 7, 2007

To the Editor:

David Brooks does not recognize that a single payer system based upon expanding Medicare, a proven system, to universal coverage does not mean “free” health care and would not place a burden on future generations.

Of course, premiums would be paid, perhaps adjusted for income.

The difference would be that the not-for-profit single payer system would be dedicated solely to using premiums for paying for medical treatment rather than a cash cow used to maximize profit through investment, limiting benefits and denying claims.

Medical providers and consumers as well as small and large businesses would all benefit from this approach. The system of relegating a nation’s health care to those interested only in profit is uncaring and in many ways, abusive.

Herb Wild
Punta Gorda, Fla., Sept. 7, 2007

To the Editor:

David Brooks seems favorably disposed to Stuart Butler’s health care reform plan for Americans.

While Mr. Butler’s plan may be an excellent plan, it is both innovative and untried. I propose a health care plan for all Americans that is in place and is presently in use and has a high satisfaction rating albeit slightly controversial because it is a single-payer program.

I am speaking of the health care package that the United States government provides our president, vice president, senators, members of the House, Supreme Court justices, secretaries of state, defense and so on.

I am confident that this health care package that our government offers to our leaders would be acceptable to the overwhelming majority of our citizens. It’s worth a try.

Isaac Comerchero
New York, Sept. 7, 2007

To the Editor:

David Brooks makes what he imagines to be two salient points explaining why single-payer health systems are not right for America: they are “European” and invariably centralized.

He is mistaken on both counts. Canada has just such a system but is distinctly North American.

Canadian health care, moreover, is delivered by 10 provincial and several territorial governments, not the government of Canada. Almost all of these jurisdictions use highly regionalized delivery systems.

There are, in fact, substantial variations in structure, procedures, coverage and financing, and these mirror and accommodate many local realities. Canadian health care already is the continent-spanning flexible web of networks Mr. Brooks so admires.

Ronald Hikel
Stratford, Ontario, Sept. 7, 2007
The writer was deputy minister of health for the province of Manitoba, 2000-1, and co-chairman of the federal-provincial council of deputy ministers of health.

To the Editor:

David Brooks espouses a new, complex health care plan redolent of the costly Medicare replacement plans in effect since the beginning of 2007. The federal government is now spending additional overhead to finance plans that are partly public and partly private and that have replaced, for some of us, traditional Medicare.

Two local medical groups my wife and I have tried to use this year will not accept our Medicare replacement insurance, even though both accept traditional Medicare.

Mr. Brooks writes that Americans “will not likely embrace a system that forces them to defer to the central government when it comes to making fundamental health care choices.”

He is manifestly wrong.

Millions find traditional Medicare more than satisfactory, and I lament that my wife and I are presently covered by an inadequate replacement plan rather than the excellent central government plan known as Medicare.

Robbins Winslow
Naples, Fla., Sept. 7, 2007

Age related burden of out-of-pocket health spending

The Burden of Out-of-Pocket Health Spending Among Older Versus Younger Adults: Analysis from the Consumer Expenditure Survey, 1998-2003

By Katherien A. Desmond, M.S., Thomas Rice, Ph.D., Juliette Cubanski, Ph.D. and Patricia Newman, Sc.D.
The Henry J. Kaiser Family Foundation
September 2007

Research has shown that older people spend more out of pocket on health care expenses than younger adults, but there have been only a few comparisons over the past 15 years of the magnitude of this difference or analyses of how the spending burden for younger and older adults may have changed over time. Understanding the extent to which younger and older adults are affected by rising out-of-pocket costs as a share of income may be important in the coming years as policymakers grapple with the challenge of maintaining or improving coverage for the rising numbers of younger adults without health insurance in the U.S., the rising number of people of all ages who are under-insured, and the challenge of making health care affordable for seniors on Medicare. In this paper, we analyze the extent to which health care spending as a share of income has differed among younger adults versus people ages 65 and older, both at a point in time (2003) and over the six-year period from 1998-2003.

Findings

The clear pattern that emerges in both sets of results is that people over age 65 spend far more of their income out of pocket on health care costs than younger adults. Older individuals, on average, spend over 12% of income, compared to only 2% for younger individuals. The pattern for households with two or more people is nearly identical, except that spending in relation to income is slightly higher — 14% for seniors and 3% for younger adults.

Among people age 65 and older, median out-of-pocket spending as a share of income rises with age. Those with Medigap to supplement Medicare spend more on health as a share of income than any other group of seniors, including those with no supplemental coverage at all, which may be driven by high premiums for private Medigap policies.

The figures show clearly that prescription drug spending was a relatively small portion of out-of-pocket health spending for younger and older adults alike. Thus, reductions in out-of-pocket spending that may occur among people over age 65 as a result of the Medicare drug benefit, although helpful, will do little to narrow the gap between the share of income spent out of pocket on health care costs for seniors versus younger people.

Discussion

Our findings document a persistent gap in financial burden between young and old which could have important implications for ongoing policy discussions in several areas, including the generosity of coverage for working age adults, rising health care costs, entitlements and more fundamental questions about the appropriateness of shifting more costs onto consumers.

If, in the future, out-of-pocket spending on health care continues to rise at a substantially faster rate than income, then the burden of health care spending will only increase over time, raising serious concerns about the affordability of medical care, particularly for seniors.

http://www.kff.org/medicare/upload/7686.pdf

Comment:

By Don McCanne, MD

The results of this study are intuitive. Older individuals with greater health care needs and lower incomes spend a greater percentage of their incomes on health care than do younger, healthier individuals with higher incomes. But there are a couple of other extrapolations from this study that are also important.

A significant part of the higher out-of-pocket spending for seniors is the premium paid for Medigap coverage. Medigap policies are perhaps the worst value in the private insurance market. Medical loss ratios (amount spent on health care) are typically 70 percent. Since out-of-pocket spending is a problem for seniors, it would be far better to fold the benefits offered by the Medigap plans into the Medicare program, saving that 30 percent lost to the private insurers. This would not change the incentives to use services since the total coverage would still be the same, except for the very few who have no supplemental coverage of any type. But it would have the benefit of reducing the out-of-pocket expenses which are clearly too high. This is particularly important for the half of the individuals above the median percentages reported in this study.

Also we should not be complacent because the median percent of out-of-pocket spending for younger individuals is relatively low. Most younger individuals are healthy and thus the median value would be expected to be quite low. The problem is that the median is not shifted by the very high skew of the costs of the unfortunate few with major medical problems. It is precisely those individuals with greater medical needs that are being battered by the high out-of-pocket costs in health care.

The out-of-pocket burden is a problem for individuals with significant health care needs, regardless of age. Why do we continue to listen to those who insist that the secret to controlling costs is to make people feel the pain by paying more out-of-pocket for the health care that they actually need? Out-of-pocket spending is already too high and will only get worse under current trends.

Guest Commentary: Get rid of the for-profits

Healthcare can no longer be a commodity for sale to those who can afford it

By Rep. Dennis Kucinich
Modern Healthcare
Sep 4, 2007

In a way and with an emphasis never before seen in political discourse and debate in the U.S., the issue of healthcare reform has taken center stage as one of the top priorities among Democratic presidential candidates.

At every debate and every forum, at every town hall meeting and union hall gathering, the question comes up: “What are your plans to reform our healthcare system?”

Not surprisingly, every candidate has a plan. The kindest observation that can be made regarding those plans is that they reflect an acknowledgement by the candidates that something is terribly wrong and that something needs to be done to solve the problem. For the most part, they define the problem in terms of the 47 million Americans who are uninsured, the estimated 50 million Americans who are underinsured or the millions of others who are at risk of losing whatever insurance they have because of circumstances beyond their control, such as job loss or changes in employer-paid benefits.

Those candidates are wrong. What they see as the problem is merely a sad, sometimes tragic, litany of symptoms. The real problem, I submit, is that healthcare in the U.S. is delivered by a system that is controlled and directed by for-profit insurance and pharmaceutical companies whose financial prosperity depends on providing as little healthcare as possible. We can no longer treat healthcare as a marketplace commodity for sale to those who can afford it. We must recognize that the U.S. stands alone among major industrialized nations in its failure to ensure adequate healthcare for its citizens is the problem.

There is only one “real” solution for the problem, and that solution is to remove “for-profit” from the healthcare equation. And I am the only candidate who has proposed that solution.

House Resolution 676, introduced in January and co-authored by Rep. John Conyers (D-Mich.) and myself, would establish a national, not-for-profit, single-payer insurance program that would cover all Americans for all necessary medical care. This bill, also known as the U.S. National Health Insurance Act, would provide coverage for prescription drugs, inpatient and outpatient care, primary and preventive care, emergency services, vision and dental care, mental health, home health, physical therapy, rehabilitation (including for substance abuse), chiropractic services and long-term care. There would be no premiums, no deductible and no copays.

The bill has 76 co-sponsors in the House of Representatives and has been endorsed by the California Nurses Association, National Nurses Organizing Committee, Physicians for a National Health Program, hundreds of labor union locals, and a number of local and state governmental bodies across the country. It also is the only healthcare plan endorsed by filmmaker Michael Moore, whose courageous, landmark documentary “Sicko” was a blistering expose of the for-profit healthcare system in America.

HR 676 represents a fundamental change, not only in how healthcare is financed and delivered, but in our national philosophical and moral definition of what healthcare is: a basic right of the people in an enlightened society, and a social and moral obligation of the government to its citizens.

And it is eminently affordable.

We spend more than $2.2 trillion a year on our current for-profit healthcare system. More than 30 cents of every dollar go to cover costs and expenses that have nothing to do with delivering healthcare: profits, dividends, executive salaries, stock options, bonuses, advertising, marketing, paperwork, and a host of duplicative and redundant services among legions of separate, independent, for-profit insurance and pharmaceutical companies. That’s more than $660 billion per year that doesn’t go directly to pay for healthcare.

Clearly, we are already paying for a national healthcare insurance system. We’re just not getting it. Instead, we’re paying for a ridiculously inefficient and scandalously discriminatory patchwork system that prospers more and more only when it provides less and less care. Physicians, nurses and other medical professionals who are in the best position to collaborate with patients to make healthcare decisions are at the mercy of insurance companies’ profit-driven decisions.

At the same time, while other candidates assert with seemingly zealous rhetoric that their plans will help those tens of millions of Americans who are being denied coverage or are paying too much for it, they propose no fundamental change in the current system. Rather than removing for-profit insurance companies from the system, they propose subsidizing those companies as a means of reducing premiums and costs. Some propose incentives (subsidies) to employers to help cover employees’ healthcare costs. Some propose more aggressive negotiations with insurance and pharmaceutical companies to make coverage more affordable for more people.

But the seldom-spoken reality is that every plan except mine would keep the for-profit companies in place and in control. Every plan except mine would still leave millions of Americans uninsured or underinsured. Every plan except mine reflects an unwillingness to challenge the politically and financially powerful insurance and pharmaceutical industries.

I am not afraid to challenge those interests. My campaign is not funded by them. My personal investment portfolio will not increase in value if the government begins pouring billions of dollars in subsidies into the for-profit healthcare industry. My loyalty and my commitment is to the American people. A universal, not-for-profit, single-payer health insurance plan for America is a moral and economic imperative. It is the No. 1 domestic policy issue, and reform requires more than rhetorical bandaging. It requires major surgery.

Rep. Dennis Kucinich of Ohio is a Democratic candidate for president.

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Taking care of our own: Health care in Spain has Lessons for the U.S.

By Pius Kamau
The Denver Post
9/5/07

We watched the running of the bulls in Pamplona from the safety of a balcony off a physician’s office. A crashing crowd of thousands and half a dozen bulls ran down the narrow street below us.

Then we saw a bull make an about-turn and attack several people, among them Lawrence and Michael Lenahan, brothers from Philadelphia. One suffered a deep wound to his buttocks; the other a less serious leg wound. Both required hospitalization.

I visited the ultra-modern University Hospital where the Lenahans were taken, a facility where heart and kidney transplants are routinely performed. I believe their care was as good as that offered in many American trauma centers.

Considering the current debate about health care reform in the U.S., I wondered what the Lenahans’ care would cost in Spain. All Spaniards’ health care is covered by Seguro Social, the state’s medical insurance, I learned. Hospital physicians told me that emergency care for all patients — regardless of citizenship — is provided without charge.

“Why would they do so?,” I asked. “Es lo justo,” I was told. It’s the right thing to do.

Until Francisco Franco’s death in 1975, fascist Spain was “the sick man” of Europe. After democracy and capitalism took root, the country’s economic fortunes reversed. Like other European countries, Spain has universal health care. Part of its success results from the fact that employers, industry and businesses are not shackled to their employees’ health care.

Most Spaniards I talked to are very happy that everyone is saved from being uninsured. They also were quick to point out that there is also private medical insurance for those who want it or can afford it. They consider our health care system a travesty and can’t understand why we can’t devise a system that works for all.

In Spain, France and the United Kingdom, illness condemns no one to penury. Every child is guaranteed immunization and basic health care. Every citizen in the European Union has the one thing 47 million Americans lack: universal health insurance. Contrary to what one hears, I found medical care in Europe to be as good as in the U.S.

In his book, “The United States of Europe,” T.R. Reid — a Colorado resident and former London bureau chief of The Washington Post — shows that health care in Europe is economically and socially a much better system than our own. Unburdened by a top-heavy health care system, Europe, he says, is bound to overtake the U.S. economically.

Americans don’t know that we can quite economically cover everyone without raising taxes or jeopardizing the quality of care. Furthermore, we can copy those parts of the Canadian and European systems that best suit us, to attain universal coverage.

What we need is a Medicare-like health care for all Americans, something similar to the federal system used by our senators and congressmen, a system divorced of the profit-seeking middlemen.

What’s abhorrent is the travesty of Americans losing their savings and livelihoods from illness because they are uninsured, of children dying from easily preventable conditions. The number of the uninsured in America has risen to 47 million as we argue about semantics, and our people are dying unnecessarily. Surely we can take care of our own citizens.

Pius Kamau of Aurora is a thoracic and general surgeon. He was born and raised in Kenya and immigrated to the U.S. in 1971.