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Health Plan Costs Come Under Fire

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Health Plan Costs Come Under Fire

At a hearing in L.A., Garamendi grills insurance company executives about why premiums have soared 60% in four years.
By Lisa Girion, Times Staff Writer
LA Times Business Section
December 2, 2005

Concerned that some health insurers may be price gouging to boost profits, California Insurance Commissioner John Garamendi said Thursday that he might seek to raise the percentage of premium dollars that, by regulation, must be spent on healthcare.

At a hearing in Los Angeles, Garamendi grilled executives of five health insurance companies about why premiums have soared 60% in four years, causing more employers and individuals to drop coverage.

“At the same time that this meltdown is occurring, many insurers continue to enjoy very healthy profit margins,” Garamendi said.

Garamendi singled out Blue Cross of California for criticism, noting that its profit margins on certain insurance plans rose from about 15% to 24% in recent years. The company’s trend on healthcare spending, he noted, was just the opposite ? declining from 80% of premiums in 2000 to 68% last year.

“It’s unconscionable,” Garamendi said.

Blue Cross executives responded that the company’s overall profit margin in California is 6% to 7% when its HMO plans, which are not regulated by Garamendi, were considered.

But some of the company’s fastest growing ? and most profitable ? plans are new ones that offer low premiums in exchange for high deductibles or limited benefits.

The most controversial among them is a plan called Tonik. Aimed at young adults who are generally healthy, Tonik does not cover maternity benefits. Garamendi said such plans amounted to “cherry-picking,” or orienting coverage to attract healthy members, who are cheaper to underwrite.

“They are looking to find individuals that do not ! get sick,” Garamendi said in an interview. The plans “are all designed to appeal to people who don’t need medical services. That increases their bottom-line profit.”

Officials with Blue Cross parent WellPoint Inc. denied the charge. Tonik is designed to serve young people who might otherwise have no insurance at all, they said.

Blue Cross regional Vice President Ann-Louise Kuhns told Garamendi at the hearing that Tonik and some of the other new plans were aimed at people who hadn’t previously bought health insurance because they couldn’t afford it or viewed it as too expensive.

The plans’ popularity, Kuhns said, showed that they were meeting a need. “If we were offering a product that people didn’t like, they don’t have to buy it,” she said.

Kuhns said rapid growth in these high-deductible plans had temporarily cut the share of premiums spent on healthcare. That share is expected to rise as those members remain longer with Blue Cross.

Garamendi said medical spending was lower in plans purchased by individuals than in employer-sponsored coverage. He said he believed that was because individuals lacked the purchasing power to drive better deals.

To change that, Garamendi said he might seek to raise the minimum share of individual-plan premiums ? currently 50% ? that insurers must spend on medical care.

But one consumer advocate accused Garamendi, who is running for lieutenant governor, of grandstanding for political gain.

Jamie Court, president of the Santa Monica-based Foundation for Taxpayer & Consumer Rights, said Garamendi should have taken such a step earlier, and that he doubted there was enough time for the commissioner to put through a new regulation before his term ended next year.

“This is an opportunity for Garamendi to score some points without landing any punches on the profiteers,” Court said.

'Medicare for All' would cure health care crisis

By Saul Friedman
Newsday
December 3, 2005

Where were we? Oh, yes. I was saying last week that it’s about time we joined the rest of the civilized and industrialized world in providing publicly financed, universal health care for the American people and their families. But I didn’t say why or how.

After all, the United States has some of the finest, most modern medical facilities in the world. I ought to know; Baltimore’s Johns Hopkins Medical Center saved my life.

Nearby, the National Cancer Institute and the National Institutes of Health, outside Washington, D.C., set the standards for American research. And patients come from abroad seeking help from many U.S. hospitals.

If you don’t have a life-threatening illness, you won’t have to wait weeks, as you might in Canada or Britain, for elective surgery on those cataracts or to repair a hernia – if you have the right insurance.

Ah, there’s the rub for nearly 46 million Americans (including 9 million children) who have no insurance. For a hacking cough bordering on pneumonia, they wait in crowded clinics or go without care. Caring for a child burning up with fever can be frightening enough, with insurance; being uninsured can end up killing that child.

A Florida study found that children who enter a hospital without insurance are more than twice as likely to die as children with insurance. Another study reported that 18,000 Americans die each year because they are uninsured.

Millions more Americans are underinsured or find that their insurance doesn’t cover what they thought. In the United States, administrative costs amount to 25 percent of health care spending, or $300 billion a year, says economics columnist Paul Krugman, partly because the huge bureaucracy is engaged in denying care to those who most need it. The rest of those costs are profits.

According to The New York Times, many of the non-Medicare insured go broke trying to keep up with co-pays for chronic illness or the bills from hospitals, for the room, surgeons, labs, anesthetists, drugs and any other white coat that drops in. A third of American patients spend more than $1,000 a year out of pocket, and 68 percent of those who declared bankruptcy because of medical bills had insurance.

The Washington Post reported weeks ago that the Blue Shield HMO in California, to save money for the company and patients, is sending members from the San Diego area to Mexico for nonemergency care because services are less expensive than in the United States.

A doctor, who performs laser eye surgery on both sides of the border, told the Post he charges in Mexico a third of what he charges in San Diego. A hysterectomy that averages $2,025 in the United States costs $810 in Mexico. Blue Shield said the services on both sides of the border are comparable. And in Mexico the doctors’ parking lots are filled with California cars.

The United States spends more than any nation on health: $5,600 for every American, or 14.6 percent of national income, compared with Germany, 10.9 percent; Canada, 9.6 percent; New Zealand, 8.5 percent; and Britain, 7.7 percent. Yet a recent study for the private, nonpartisan Commonwealth Fund, which surveyed 7,000 of the sickest patients in Australia, Canada, Germany, New Zealand, Britain and the United States, found that American medicine has the highest error rates, the most fragmented and disorganized care and highest costs.

Are we getting our money’s worth?

Infant mortality – the number of deaths of children under one year, probably the best measure of the level of health of any country – actually increased from 6.6 to 7 per thousand live U.S. births. That’s higher than 41 nations, including Italy (6.07), Canada (4.82), Germany (4.2) and Japan, which has the lowest rate in the world at 3.28. The percentage of live births classified as low birth weight, an indication of the mother’s health and prenatal care, is 7.8 percent for the United States, behind Canada (5.6), the Netherlands (4.7), Australia (6.2) and all of Europe.

The United States boasts a life expectancy for men of 77.3 years, but we’re behind 34 other nations, including New Zealand (79), Germany (79), Britain (79), Canada (80), Australia (81) and Japan (82). Need I add that all these countries provide universal health care – the ability to walk into a doctor’s office without worrying about cost? What are we waiting for?

Polls indicate most Americans (75 percent) would support universal health care. And leading newspapers, commentators, economists, lawmakers, 13,000 doctors, former surgeons general, businessmen and a few conservatives have come to the same, obvious conclusion: If we were to pay in taxes just a fraction of what health care now costs us, we could afford it.

But universal health care is much easier said than done. How to deal with the entrenched insurance-medical-hospital complex? How to make the transition relatively painless for medical professionals and patients?

The answer is also obvious: Medicare for every American, or what I proposed years ago, “Medicare for All.” A distinguished panel of health care experts, Democrats, Republicans, financiers, insurance executives and academics concluded in an open letter to the journal Health Affairs, that Medicare must be empowered as the vehicle “to make pay-for-performance a national strategy for better quality.” Lawmakers, medical journals, a couple of former surgeons general and 13,000 doctors have proposed phasing in “Medicare for All.”

And if this administration doesn’t trash the rest of Medicare before it leaves the scene, it remains the most obvious, affordable and doable way to providing universal coverage.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY 11747-4250, or by e-mail at saulfriedman@comcast.net.

Copyright (c) 2005, Newsday, Inc.

——————–

This article originally appeared at:
http://www.newsday.com/business/custom/retirement/ny-bzsaul4535330dec03,0,1158012.column?coll=ny-retirement-headlines

‘Medicare for All’ would cure health care crisis

By Saul Friedman
Newsday
December 3, 2005

Where were we? Oh, yes. I was saying last week that it’s about time we joined the rest of the civilized and industrialized world in providing publicly financed, universal health care for the American people and their families. But I didn’t say why or how.

After all, the United States has some of the finest, most modern medical facilities in the world. I ought to know; Baltimore’s Johns Hopkins Medical Center saved my life.

Nearby, the National Cancer Institute and the National Institutes of Health, outside Washington, D.C., set the standards for American research. And patients come from abroad seeking help from many U.S. hospitals.

If you don’t have a life-threatening illness, you won’t have to wait weeks, as you might in Canada or Britain, for elective surgery on those cataracts or to repair a hernia – if you have the right insurance.

Ah, there’s the rub for nearly 46 million Americans (including 9 million children) who have no insurance. For a hacking cough bordering on pneumonia, they wait in crowded clinics or go without care. Caring for a child burning up with fever can be frightening enough, with insurance; being uninsured can end up killing that child.

A Florida study found that children who enter a hospital without insurance are more than twice as likely to die as children with insurance. Another study reported that 18,000 Americans die each year because they are uninsured.

Millions more Americans are underinsured or find that their insurance doesn’t cover what they thought. In the United States, administrative costs amount to 25 percent of health care spending, or $300 billion a year, says economics columnist Paul Krugman, partly because the huge bureaucracy is engaged in denying care to those who most need it. The rest of those costs are profits.

According to The New York Times, many of the non-Medicare insured go broke trying to keep up with co-pays for chronic illness or the bills from hospitals, for the room, surgeons, labs, anesthetists, drugs and any other white coat that drops in. A third of American patients spend more than $1,000 a year out of pocket, and 68 percent of those who declared bankruptcy because of medical bills had insurance.

The Washington Post reported weeks ago that the Blue Shield HMO in California, to save money for the company and patients, is sending members from the San Diego area to Mexico for nonemergency care because services are less expensive than in the United States.

A doctor, who performs laser eye surgery on both sides of the border, told the Post he charges in Mexico a third of what he charges in San Diego. A hysterectomy that averages $2,025 in the United States costs $810 in Mexico. Blue Shield said the services on both sides of the border are comparable. And in Mexico the doctors’ parking lots are filled with California cars.

The United States spends more than any nation on health: $5,600 for every American, or 14.6 percent of national income, compared with Germany, 10.9 percent; Canada, 9.6 percent; New Zealand, 8.5 percent; and Britain, 7.7 percent. Yet a recent study for the private, nonpartisan Commonwealth Fund, which surveyed 7,000 of the sickest patients in Australia, Canada, Germany, New Zealand, Britain and the United States, found that American medicine has the highest error rates, the most fragmented and disorganized care and highest costs.

Are we getting our money’s worth?

Infant mortality – the number of deaths of children under one year, probably the best measure of the level of health of any country – actually increased from 6.6 to 7 per thousand live U.S. births. That’s higher than 41 nations, including Italy (6.07), Canada (4.82), Germany (4.2) and Japan, which has the lowest rate in the world at 3.28. The percentage of live births classified as low birth weight, an indication of the mother’s health and prenatal care, is 7.8 percent for the United States, behind Canada (5.6), the Netherlands (4.7), Australia (6.2) and all of Europe.

The United States boasts a life expectancy for men of 77.3 years, but we’re behind 34 other nations, including New Zealand (79), Germany (79), Britain (79), Canada (80), Australia (81) and Japan (82). Need I add that all these countries provide universal health care – the ability to walk into a doctor’s office without worrying about cost? What are we waiting for?

Polls indicate most Americans (75 percent) would support universal health care. And leading newspapers, commentators, economists, lawmakers, 13,000 doctors, former surgeons general, businessmen and a few conservatives have come to the same, obvious conclusion: If we were to pay in taxes just a fraction of what health care now costs us, we could afford it.

But universal health care is much easier said than done. How to deal with the entrenched insurance-medical-hospital complex? How to make the transition relatively painless for medical professionals and patients?

The answer is also obvious: Medicare for every American, or what I proposed years ago, “Medicare for All.” A distinguished panel of health care experts, Democrats, Republicans, financiers, insurance executives and academics concluded in an open letter to the journal Health Affairs, that Medicare must be empowered as the vehicle “to make pay-for-performance a national strategy for better quality.” Lawmakers, medical journals, a couple of former surgeons general and 13,000 doctors have proposed phasing in “Medicare for All.”

And if this administration doesn’t trash the rest of Medicare before it leaves the scene, it remains the most obvious, affordable and doable way to providing universal coverage.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY 11747-4250, or by e-mail at saulfriedman@comcast.net.

Copyright (c) 2005, Newsday, Inc.

——————–

This article originally appeared at:
http://www.newsday.com/business/custom/retirement/ny-bzsaul4535330dec03,0,1158012.column?coll=ny-retirement-headlines

Widening rift in health-care access

A Widening Rift In Access And Quality: Growing Evidence Of Economic Disparities
By Robert E. Hurley, Hoangmai H. Pham, Gary Claxton
Health Affairs
December 6, 2005

Data from the Community Tracking Study provide a valuable perspective from which to observe how economic disparities–largely a function of different sources of coverage–influence access to medical care in the United States. Many recent investments and initiatives are focused on affluent communities and are accessible mainly to people with employer-based or Medicare coverage. For people with Medicaid or no coverage at all, access to basic care is worsening, as a result of stalled coverage expansions and service cutbacks. An improving economy could forestall further cuts and permit reversal of earlier ones, but progress in closing this rift does not appear imminent.

Coverage And The Hierarchy Of Access To High-Quality Care

A clear hierarchy of access to care is apparent in many communities, which closely corresponds to insurance coverage and its sponsorship. Long-standing anxiety about prospects for a “two-tier” health care system has, in fact, given way to a three-tier reality in the CTS markets:

* Employer-sponsored and Medicare coverage.
* Medicaid and other state and local programs.
* Unsponsored and unfortunate.

There is every reason to expect that Americans will demand and receive more and better health care, shifting more resources into the health care sector. However, not all will be able to afford this care, and there is growing evidence that U.S. society is prepared to tolerate trading off pursuing excellence for some, at the expense of deteriorating care for others.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.566v1

Comment: It is a gross understatement to say that individuals who have dedicated their lives to health care reform will be dismayed by this report.

The lowest tier of the unfortunate provides perhaps the greatest angst for us as we watch their problems grow ever greater. The middle tier compounds our angst as we recognize that this sector is shifting from having access to basic services to a lower level that could only be described as “unsatisfactory.” And the first tier? We are pouring resources into their affluent communities to provide them not the best, but the highest tech care available. Innumerable studies have shown that the overall quality of care for this first tier would actually improve if we would moderate the infusion of excessive high-tech resources into these communities.

We can get it right. This study confirms that the maldistribution of resources is directly related to the adequacy of coverage of the three tiers. Establishing a single, universal, equitable system of coverage would dramatically improve the allocation of our health care resources. It is not the only factor, but it is the most important one.

But will we get it right? We seem to be captivated by the high-tech glitz of the “greatest health care system on earth.” Those in the first tier seem to be unwilling to exchange some of the unnecessary glitz for greater equity in health care. Maybe we’ll have an awakening when the expansion of cost sharing moves many from the first tier to the second. Then those few remaining in the first tier may not be able to tolerate the cacophony of the masses. But even then, noise cancellation technology has become much more advanced.

BC of California loses 68% of premiums to health care

Health Plan Costs Come Under Fire
At a hearing in L.A., Garamendi grills insurance company executives about why premiums have soared 60% in four years.
By Lisa Girion
Los Angeles Times
December 2, 2005

(California Insurance Commissioner John) Garamendi singled out Blue Cross of California for criticism, noting that its profit margins on certain insurance plans rose from about 15% to 24% in recent years. The company’s trend on healthcare spending, he noted, was just the opposite – declining from 80% of premiums in 2000 to 68% last year.

“It’s unconscionable,” Garamendi said.

… some of the company’s fastest growing – and most profitable – plans are new ones that offer low premiums in exchange for high deductibles or limited benefits.

The most controversial among them is a plan called Tonik. Aimed at young adults who are generally healthy, Tonik does not cover maternity benefits. Garamendi said such plans amounted to “cherry-picking,” or orienting coverage to attract healthy members, who are cheaper to underwrite.

“They are looking to find individuals that do not get sick,” Garamendi said in an interview. The plans “are all designed to appeal to people who don’t need medical services. That increases their bottom-line profit.”

Officials with Blue Cross parent WellPoint Inc. denied the charge. Tonik is designed to serve young people who might otherwise have no insurance at all, they said.

Blue Cross regional Vice President Ann-Louise Kuhns told Garamendi at the hearing that Tonik and some of the other new plans were aimed at people who hadn’t previously bought health insurance because they couldn’t afford it or viewed it as too expensive.

The plans’ popularity, Kuhns said, showed that they were meeting a need. “If we were offering a product that people didn’t like, they don’t have to buy it,” she said.

http://www.latimes.com/business/la-fi-profits2dec02,1,630081.story?coll=la-headlines-business

Comment: This is great news for Wall Street. The best insurance stock investments are in those companies that have the lowest medical loss ratios – the companies that spend the lowest percentage of their premium income on health care services for their beneficiaries. The medical loss ratio for for-profit Blue Cross of California, a major subsidiary of WellPoint Inc., is only 68%. They keep one-third of the premium dollar!

Blue Cross of California has been an innovative leader in setting health insurance trends throughout the nation. For those who still believe that private health plans must be a major player in any future model of health care reform, just imagine what it would be like if Blue Cross’ innovations were to dominate the scene. In 2006, we’ll be spending $2 trillion on health care. Under these latest Blue Cross policies, insurers would keep $640 billion of that.

So you say that we would never allow that. But what are we allowing now? We are permitting Blue Cross of California to use nefarious chicanery to segregate out the most healthy sector of our society and sell them a profoundly inadequate product that merely masquerades as health insurance. Again, those of you who have believed that we should keep this industry in charge of health care spending should realize that it’s now time for an epiphany.

We will never get it right until we agree that we need a universal, publicly-funded and publicly-administered national health insurance program. The plundering pirates of the insurance industry will never do it right for us.

Our health-care system is not what the best minds woulddevise

Editorial: Fractured system hurts everyone
By Register Editorial Board
The Des Moines Register
December 4, 2005

If the best minds in the world gathered to devise a health-care system for the United States, it would look nothing like what we have today.

No one would create a fragmented system that provides taxpayer-funded care for some and not for others. A system that leaves 45 million people, about 15 percent of the population, uninsured. That wastes billions on administrative costs. That burdens business. That relegates the United States behind other industrialized countries in life expectancy, infant mortality and immunization rates.

No one would intentionally create a model of health care that was unfair, inefficient and nearly impossible for an average person to navigate.

Yet that is exactly what the United States has. And it hurts everyone.

Reforming (the U.S. health-care system) will take leadership in Washington, pressure from individuals and businesses across the nation and a hard look at what other countries are doing better.

America’s hodgepodge of health care isn’t the best system for this country. It’s not what the brightest minds would choose now. Americans don’t have to accept it just because it’s the only thing they know.

http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20051204/OPINION03/512040307/1001/NEWS

Today’s edition of The Des Moines Register has a several articles on “Condition Critical,” focusing on “worries about soaring health care costs.”
http://desmoinesregister.com/apps/pbcs.dll/section?Category=NEWS&theme=condition_critical&template=theme

We're almost there with three single payer bills

H.R.676, H.R.1200, and SB 840

Do not waste your time studying these bill summaries, but merely skim through them rapidly. You will see how a fairly simple concept, single payer reform, can become quite complex when reduced to legislative language. The summaries of H.R.676 and H.R.1200 were prepared by the Congressional Research Service, and the summary of SB 840 was prepared by the California Legislative Counsel.

H.R.676
Title: To provide for comprehensive health insurance coverage for all United States residents, and for other purposes.
Sponsor: Rep Conyers, John, Jr.

SUMMARY AS OF:
2/8/2005–Introduced.

United States National Health Insurance Act (or the Expanded and Improved Medicare for All Act) – Establishes the United States National Health Insurance Program (the Program) to provide all individuals residing in the United States and in U.S. territories with free health care that includes all medically necessary care, such as primary care and prevention, prescription drugs, emergency care, and mental health services.

Prohibits an institution from participating in the Program unless it is a public or nonprofit institution. Allows nonprofit health maintenance organizations (HMOs) that actually deliver care in their own facilities to participate in the Program.

Gives patients the freedom to choose from participating physicians and institutions.

Prohibits a private health insurer from selling health insurance coverage that duplicates the benefits provided under this Act. Allows such insurers to sell benefits that are not medically necessary, such as cosmetic surgery benefits.

Sets forth methods to pay hospitals and health professionals for services. Prohibits financial incentives between HMOs and physicians based on utilization.

Authorizes appropriations and provides for appropriated sums to be paid for: (1) by vastly reducing paperwork; (2) by requiring a rational bulk procurement of medications; (3) from existing sources of Government revenues for health care; (4) by increasing personal income taxes on the top five percent income earners; (5) by instituting a modest payroll tax; and (6) by instituting a small tax on stock and bond transactions.

Requires the Program to give first priority in retraining and job placement to individuals whose jobs are eliminated due to reduced administration.

Establishes a National Board of Universal Quality and Access to advise the Secretary and the Director to ensure quality, access, and affordability.

Provides for the eventual integration of the health programs of the Department of Veterans’ Affairs and the Indian Health Service into the Program.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00676:@@@D&summ2=m&

H.R.1200
Title: To provide for health care for every American and to control the cost and enhance the quality of the health care system.
Sponsor: Rep McDermott, Jim

SUMMARY AS OF:
3/9/2005–Introduced.

American Health Security Act of 2005 – Establishes the State-Based American Health Security Program to provide every U.S. resident who is a U.S. citizen, national, or lawful resident alien with health care services. Requires each participating State to establish a State health security program.

Eliminates benefits under: (1) titles XVIII (Medicare), XIX (Medicaid), and XXI (State Children’s Health Insurance) (SCHIP) of the Social Security Act; (2) the Federal Employees Health Benefits Program; and (3) the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

Requires each State health security program to prohibit the sale of health insurance in that State that duplicates benefits provided under the program.

Establishes the American Health Security Standards Board to: (1) develop policies, procedures, guidelines and requirements to carry out this Act; (2) establish uniform reporting requirements; (3) provide for an American Health Security Advisory Council and an Advisory Committee on Health Professional Education; and (4) establish a national health security budget specifying the total Federal and State expenditures to be made for covered health care services.

Establishes the American Health Security Quality Council to: (1) review and evaluate practice guidelines, standards of quality, performance measures, and medical review criteria; and (2) develop minimum competence criteria.

Establishes the Office of Primary Care and Prevention Research within the Office of the Director of the National Institutes of Health (NIH).

Amends the Internal Revenue Code to create the American Health Security Trust Fund and appropriates to the Fund specified tax liabilities and current health program receipts.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR01200:@@@D&summ2=m&

SB 840
Single-payer health care coverage.
Introduced by Sen. Sheila Kuehl

Existing law does not provide a system of universal health care coverage for California residents. Existing law provides for the creation of various programs to provide health care services to persons who have limited incomes and meet various eligibility requirements. These programs include the Healthy Families Program administered by the Managed Risk Medical Insurance Board, and the Medi-Cal program administered by the State Department of Health Services. Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and health insurers by the Department of Insurance.

This bill would establish the California Health Insurance System to be administered by the newly created California Health Insurance Agency under the control of an elected Health Insurance Commissioner. The bill would make all California residents eligible for specified health care benefits under the California Health Insurance System, which would, on a single-payer basis, negotiate for or set fees for health care services provided through the system and pay claims for those services. The bill would require the health care system to be operational within 2 years of enactment, and would enact various transition provisions. The bill would require the commissioner to seek all necessary waivers, exemptions, agreements, or legislation to allow various existing federal, state, and local health care payments to be paid to the California Health Insurance System, which would then assume responsibility for all benefits and services previously paid for with those funds.

The bill would create a health insurance policy board to establish policy on medical issues and various other matters relating to the health care system. The bill would create the Office of Consumer Advocacy within the agency to represent the interests of health care consumers relative to the health care system. The bill would create within the agency the Office of Health Planning to plan for the health care needs of the population, and the Office of Health Care Quality, headed by the chief medical officer, to support the delivery of high quality care and promote provider and patient satisfaction.

The bill would create the Office of Inspector General for the California Health Insurance System within the Attorney General’s office, which would have various oversight powers. The bill would prohibit health care service plan contracts or health insurance policies from being issued for services covered by the California Health Insurance System. The bill would create the Health Insurance Fund and the Payments Board to administer the finances of the California Health Insurance System. The bill would extend the application of certain insurance fraud laws to providers of services and products under the health care system, thereby imposing a state-mandated local program by revising the definition of a crime. The bill would enact other related provisions relative to budgeting, regional entities, federal preemption, subrogation, collective bargaining agreements, compensation of health care providers, conflict of interest, patient grievances, independent medical review,and associated matters.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

http://info.sen.ca.gov/pub/bill/sen/sb_0801-0850/sb_840_bill_20050712_amended_asm.html

(If you are interested in the details of the bills, they can be downloaded at http://thomas.loc.gov/ and
http://info.sen.ca.gov/cgi-bin/pagequery?type=sen_bilinfo&site=sen&title=Bill+Information.)

Comment: We are truly at a transition in the health care reform movement. Everyone understands that we can no longer accept a system that is failing to deliver high-quality comprehensive care to everyone when we are already spending more than enough to have such a system. It is clear that incremental tweaking has increased costs while providing only modest gains that are more than offset by the large losses. The consumer-directed health care movement will soon fizzle as more people realize that you cannot control costs by making health care less affordable for those with significant needs.

All policymakers now understand the single payer model. They understand that it does have the power to fund comprehensive care for everyone while controlling health care costs. Although uncaring, anti-government ideologues will always remain opposed, those who really do care about the health of our people are ready to look at fleshed-out legislative proposals. We are now at that stage of the process.

The process will require the participation of legislators and their staffs on both the federal and state levels. Even if a state established its own single payer system, federal legislation would be required to transfer the funding of federal programs such as Medicare and Medicaid to the state(s). Although federal funding is essential, the federal government is too unwieldy to administer the program as one mega-bureaucracy, so administration needs to be established on a state or regional level.

It is time for federal and state legislators to unify the process. Participants should include those who believe that our health care system must be universal, equitable, accessible, and affordable, while providing high-quality services. The only special interests that should be represented are the patients and those who provide their care. Special interests with other agendas should be dismissed from the process. This is not a time to compromise with powerful, moneyed interests. Rather it is the time to craft single-payer proposals that best serve the health care needs of the people of each of our states and the nation as a whole.

We already understand the policies that would be effective. We don’t need any more study commissions. It is time for federal and state legislators and their health policy staff members to join together to draft the American Health Care Act. Congressmen Conyers and McDermott and Senator Kuehl, amongst others, have given us a great start towards that goal.

Okay. Who is going to convene this unified effort? (I’m serious!)

We’re almost there with three single payer bills

H.R.676, H.R.1200, and SB 840

Do not waste your time studying these bill summaries, but merely skim through them rapidly. You will see how a fairly simple concept, single payer reform, can become quite complex when reduced to legislative language. The summaries of H.R.676 and H.R.1200 were prepared by the Congressional Research Service, and the summary of SB 840 was prepared by the California Legislative Counsel.

H.R.676
Title: To provide for comprehensive health insurance coverage for all United States residents, and for other purposes.
Sponsor: Rep Conyers, John, Jr.

SUMMARY AS OF:
2/8/2005–Introduced.

United States National Health Insurance Act (or the Expanded and Improved Medicare for All Act) – Establishes the United States National Health Insurance Program (the Program) to provide all individuals residing in the United States and in U.S. territories with free health care that includes all medically necessary care, such as primary care and prevention, prescription drugs, emergency care, and mental health services.

Prohibits an institution from participating in the Program unless it is a public or nonprofit institution. Allows nonprofit health maintenance organizations (HMOs) that actually deliver care in their own facilities to participate in the Program.

Gives patients the freedom to choose from participating physicians and institutions.

Prohibits a private health insurer from selling health insurance coverage that duplicates the benefits provided under this Act. Allows such insurers to sell benefits that are not medically necessary, such as cosmetic surgery benefits.

Sets forth methods to pay hospitals and health professionals for services. Prohibits financial incentives between HMOs and physicians based on utilization.

Authorizes appropriations and provides for appropriated sums to be paid for: (1) by vastly reducing paperwork; (2) by requiring a rational bulk procurement of medications; (3) from existing sources of Government revenues for health care; (4) by increasing personal income taxes on the top five percent income earners; (5) by instituting a modest payroll tax; and (6) by instituting a small tax on stock and bond transactions.

Requires the Program to give first priority in retraining and job placement to individuals whose jobs are eliminated due to reduced administration.

Establishes a National Board of Universal Quality and Access to advise the Secretary and the Director to ensure quality, access, and affordability.

Provides for the eventual integration of the health programs of the Department of Veterans’ Affairs and the Indian Health Service into the Program.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00676:@@@D&summ2=m&

H.R.1200
Title: To provide for health care for every American and to control the cost and enhance the quality of the health care system.
Sponsor: Rep McDermott, Jim

SUMMARY AS OF:
3/9/2005–Introduced.

American Health Security Act of 2005 – Establishes the State-Based American Health Security Program to provide every U.S. resident who is a U.S. citizen, national, or lawful resident alien with health care services. Requires each participating State to establish a State health security program.

Eliminates benefits under: (1) titles XVIII (Medicare), XIX (Medicaid), and XXI (State Children’s Health Insurance) (SCHIP) of the Social Security Act; (2) the Federal Employees Health Benefits Program; and (3) the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

Requires each State health security program to prohibit the sale of health insurance in that State that duplicates benefits provided under the program.

Establishes the American Health Security Standards Board to: (1) develop policies, procedures, guidelines and requirements to carry out this Act; (2) establish uniform reporting requirements; (3) provide for an American Health Security Advisory Council and an Advisory Committee on Health Professional Education; and (4) establish a national health security budget specifying the total Federal and State expenditures to be made for covered health care services.

Establishes the American Health Security Quality Council to: (1) review and evaluate practice guidelines, standards of quality, performance measures, and medical review criteria; and (2) develop minimum competence criteria.

Establishes the Office of Primary Care and Prevention Research within the Office of the Director of the National Institutes of Health (NIH).

Amends the Internal Revenue Code to create the American Health Security Trust Fund and appropriates to the Fund specified tax liabilities and current health program receipts.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR01200:@@@D&summ2=m&

SB 840
Single-payer health care coverage.
Introduced by Sen. Sheila Kuehl

Existing law does not provide a system of universal health care coverage for California residents. Existing law provides for the creation of various programs to provide health care services to persons who have limited incomes and meet various eligibility requirements. These programs include the Healthy Families Program administered by the Managed Risk Medical Insurance Board, and the Medi-Cal program administered by the State Department of Health Services. Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and health insurers by the Department of Insurance.

This bill would establish the California Health Insurance System to be administered by the newly created California Health Insurance Agency under the control of an elected Health Insurance Commissioner. The bill would make all California residents eligible for specified health care benefits under the California Health Insurance System, which would, on a single-payer basis, negotiate for or set fees for health care services provided through the system and pay claims for those services. The bill would require the health care system to be operational within 2 years of enactment, and would enact various transition provisions. The bill would require the commissioner to seek all necessary waivers, exemptions, agreements, or legislation to allow various existing federal, state, and local health care payments to be paid to the California Health Insurance System, which would then assume responsibility for all benefits and services previously paid for with those funds.

The bill would create a health insurance policy board to establish policy on medical issues and various other matters relating to the health care system. The bill would create the Office of Consumer Advocacy within the agency to represent the interests of health care consumers relative to the health care system. The bill would create within the agency the Office of Health Planning to plan for the health care needs of the population, and the Office of Health Care Quality, headed by the chief medical officer, to support the delivery of high quality care and promote provider and patient satisfaction.

The bill would create the Office of Inspector General for the California Health Insurance System within the Attorney General’s office, which would have various oversight powers. The bill would prohibit health care service plan contracts or health insurance policies from being issued for services covered by the California Health Insurance System. The bill would create the Health Insurance Fund and the Payments Board to administer the finances of the California Health Insurance System. The bill would extend the application of certain insurance fraud laws to providers of services and products under the health care system, thereby imposing a state-mandated local program by revising the definition of a crime. The bill would enact other related provisions relative to budgeting, regional entities, federal preemption, subrogation, collective bargaining agreements, compensation of health care providers, conflict of interest, patient grievances, independent medical review,and associated matters.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

http://info.sen.ca.gov/pub/bill/sen/sb_0801-0850/sb_840_bill_20050712_amended_asm.html

(If you are interested in the details of the bills, they can be downloaded at http://thomas.loc.gov/ and
http://info.sen.ca.gov/cgi-bin/pagequery?type=sen_bilinfo&site=sen&title=Bill+Information.)

Comment: We are truly at a transition in the health care reform movement. Everyone understands that we can no longer accept a system that is failing to deliver high-quality comprehensive care to everyone when we are already spending more than enough to have such a system. It is clear that incremental tweaking has increased costs while providing only modest gains that are more than offset by the large losses. The consumer-directed health care movement will soon fizzle as more people realize that you cannot control costs by making health care less affordable for those with significant needs.

All policymakers now understand the single payer model. They understand that it does have the power to fund comprehensive care for everyone while controlling health care costs. Although uncaring, anti-government ideologues will always remain opposed, those who really do care about the health of our people are ready to look at fleshed-out legislative proposals. We are now at that stage of the process.

The process will require the participation of legislators and their staffs on both the federal and state levels. Even if a state established its own single payer system, federal legislation would be required to transfer the funding of federal programs such as Medicare and Medicaid to the state(s). Although federal funding is essential, the federal government is too unwieldy to administer the program as one mega-bureaucracy, so administration needs to be established on a state or regional level.

It is time for federal and state legislators to unify the process. Participants should include those who believe that our health care system must be universal, equitable, accessible, and affordable, while providing high-quality services. The only special interests that should be represented are the patients and those who provide their care. Special interests with other agendas should be dismissed from the process. This is not a time to compromise with powerful, moneyed interests. Rather it is the time to craft single-payer proposals that best serve the health care needs of the people of each of our states and the nation as a whole.

We already understand the policies that would be effective. We don’t need any more study commissions. It is time for federal and state legislators and their health policy staff members to join together to draft the American Health Care Act. Congressmen Conyers and McDermott and Senator Kuehl, amongst others, have given us a great start towards that goal.

Okay. Who is going to convene this unified effort? (I’m serious!)

No problem – Just set up an insurance purchasing pool

What Health Insurance Pools Can and Can’t Do
By Rick Curtis and Ed Neuschler
California HealthCare Foundation
November 2005

Introduction

Policymakers are often attracted to purchasing pools as a way to make health insurance less expensive for small employers and individual purchasers. The common assumption is that pools could aggregate a large number of small purchasers and thus realize administrative economies of scale and negotiate favorable rates with health plans. For small-firm workers, purchasing pools could also offer something not normally available in the small-employer market – choice of competing health plans. For individual purchasers, who can already choose among health plans, pools could help to simplify comparison shopping.

Unfortunately, establishing a purchasing pool does not automatically produce the same “market clout” as a large employer. RAND studied the three largest small-group health insurance purchasing “alliances” begun in the mid-1990s and found that they did not reduce small-group market health insurance premiums, nor did they raise small-business health insurance offer rates. Other kinds of voluntary pools are more prevalent, but they generally have not functioned as assertive purchasers and have not reduced costs.

For example, The Health Insurance Plan of California (now operated by the Pacific Business Group on Health as “PacAdvantage”) negotiated and offered lower rates than had been available in the outside market at its inception in the early 1990s. Yet by 1998, analysts found no evidence that its rates were still lower than the outside market. Rather, the data suggested that they were slightly higher.

Conclusion

Health insurance pools can be useful as vehicles to help achieve coverage and cost goals. Yet merely establishing or designating pools holds no hope for reducing the number of uninsured or the costs of coverage available to individuals or small employers. Unless a pool has the necessary cohesion to attract and retain a large enrollment base, it will not be in a position to achieve economies of scale and negotiate effectively with health plans.

However, these goals can be achieved if the pool represents a large natural group that health plans can effectively reach only through the pool, making it similar to a very large employer. One way to create such a group would be to channel subsidies for low-income workers and families, or low-wage employer groups, exclusively into coverage through the pool. In turn, a stable pool can efficiently perform a number of administrative roles that meet the needs of both its participants and the state.

http://www.chcf.org/documents/insurance/
WhatHealthInsurancePoolsCanAndCantDo.pdf

Comment: If you want to understand why a health insurance purchasing pool can never deliver on the promise of lower insurance costs through the economies of scale, you really need to read this report to understand the complexities of purchasing pools.

The authors suggest that pools could work if they were truly cohesive and could attract and retain a large enrollment base. But the only mechanism they suggest that would do this would be to “channel subsidies… exclusively into coverage through the pool.” In other words, purchasing pools can compete with other coverage only if employers and/or the government subsidize the pools while prohibiting subsidies for plans outside of the pools. And for this, the purchasing pools add the expense of an additional administrative layer on top of the health plan bureaucracies. So much for the magic of the economies of scale!

Purchasing pools using private health plans only perpetuate the waste and inequities of our current system. Instead of pools of health plans, we need a single pool of our health care funds. Then we could eliminate the administrative excesses, while establishing equitable access and coverage for everyone.

Why do the policymakers keep going back to the drawing boards to keep crafting more flawed proposals? Why don’t they finally give up and admit that we really do need a single-payer system?

Is targeting subsidies to small business the answer?

Is Small Business the Key to Insuring More Californians?
By Richard Kronick
California HealthCare Foundation
November 2005
Coverage Expansion

Introduction

There is substantial interest among policy analysts and politicians in increasing health insurance coverage among Californians who work for small business. Such firms are far less likely to offer health benefits than large companies, leading some to suggest that persuading more small employers to provide health coverage could substantially reduce the number of uninsured people in the state.

This issue brief examines the potential to expand health insurance among California’s uninsured through policies aimed at increasing the number of small employers that offer coverage. It provides information about the insurance status of employees in small businesses, the rate at which small employers offer health benefits, and the expected effect of policies designed to increase coverage within this group. As part of this analysis, it reviews the results of a recent experiment in San Diego in which small employers were offered the opportunity to purchase health insurance from a local HMO at reduced rates, a study designed to test the effectiveness of targeted subsidies.

Conclusion

The evidence from the experiment conducted in San Diego, from earlier demonstration programs in a dozen sites around the country, and from a wide range of observational studies suggests that small employers that do not offer insurance are not very responsive to reductions in the price of coverage. While the evidence from any of these studies can be criticized, and none of the work provides a definitive basis to estimate the likely response to some of the tax credit proposals that have been made by politicians of both parties, the breadth and depth of the evidence is enough to convince most health services researchers that employer response to health insurance subsidies would not be large.

http://www.chcf.org/documents/insurance/
IsSmallBusinessTheKeyToInsuringCalifornians.pdf

Comment: This nine page issue brief provides enough details to demonstrate that the conclusion is clearly warranted. Insurance subsidies targeted to uninsured employees of small businesses would have very little impact on reducing the total percentage of uninsured.

Most targeted programs fall far short of covering 100 percent of the targeted populations. Numerous studies confirm that the Medicaid and SCHIP programs fail to enroll a large portion of those eligible, in spite of the establishment of programs specifically designed to increase enrollment rates.

In sharp contrast, the Medicare Part A program enrolls virtually 100 percent of eligible individuals. What is the difference? Enrollment in Medicare Part A is automatic once eligibility status is achieved. Also, Part A does not require the payment of any premiums as it is funded through the tax system as a program of social insurance. There is no reason for the individual to not accept automatic enrollment. (The flawed policies behind Part B, Part D, and Medicare Advantage are another matter that will not be addressed here. Suffice it to say that they do not result in 100 percent enrollment.)

There is a policy lesson here. If we really do want to provide health care coverage for everyone, we need to establish a properly structured program of universal social insurance. Targeted programs added to our highly flawed, wasteful, fragmented system will never get us there.

Labor's Lost Story

By E. J. Dionne Jr.
Washington Post
Tuesday, November 29, 2005

Decades ago, Walter Reuther, the storied head of the United Auto Workers union, was taken on a tour of an automated factory by a Ford Motor Co. executive.

Somewhat gleefully, the Ford honcho told the legendary union leader: “You know, not one of these machines pays dues to the UAW.”To which Reuther snapped: “And not one of them buys new Ford cars, either.”

The historian William L. O’Neill tells this story in “American High,” his fine and appropriately titled book about the 1950s, a time when “autoworkers were the best-paid production line operatives in the world.” It helps explain why General Motors’ layoffs of 30,000 workers, announced last week, have become a new litmus test in American politics.

Almost everybody right of center sees the job losses as inevitable, the result of the American auto industry’s failure to meet foreign competition and the “excessively” generous wages, health benefits and, especially, retirement programs negotiated by Reuther’s union.

The believers in inevitability inevitably cite the economist Joseph Schumpeter to the effect that capitalism “is by nature a form or method of economic change and not only never is, but never can be, stationary.” It is capitalism’s gift for “creative destruction,” Schumpeter argued, that guaranteed new consumer goods, new methods of production and new forms of organization.

A different story is told left of center, though it will come as no shock that progressives can’t quite agree on a single narrative. The left is united in talking about rising health care costs and the fact that most of our foreign competitors have government-run health insurance systems that take the burden of health care off employers. The iconic number: providing health care for workers and retirees accounts for $1,500 in the cost of each American-made car.

Critics of globalization tell an additional story of how free trade is sending many of our best-paying blue-collar jobs offshore. There is also the decline of union membership, a chicken-and-egg tale, since private-sector unions historically were strongest in the older manufacturing industries such as steel and cars. The UAW’s numbers tell the story: 1,619,000 members in 1970, 1,446,000 in 1980, 952,000 in 1990, 623,000 in 2004. Where have you gone, Walter Reuther?

The contrast between these two accounts explains why economic conservatives currently hold the upper hand in America’s political debate. The conservatives have a single, coherent story and stick to it: Economic change is good for everyone, especially for consumers, who get better stuff at lower prices. The fact that “producer groups” (such as those unions) are losing their “monopolies” and their capacity for “rent seeking” is cheered as progress.

The left’s narrative is less compelling not only because there is no single story but also because few on the left attack the current system with the same gusto the right brings to defending it. Gone, for good reason, is the time when significant parts of the left called for “government ownership of the means of production.” Much of the left accepts a certain amount of creative destruction because, in Margaret Thatcher’s famous phrase, there is no alternative.

But this muddle reflects a default on parts of the left and, especially, within the Democratic Party. Because so many Democrats fear that they might sound like — God forbid! — socialists, they are unwilling to challenge the right’s core story. Capitalism, all by itself, would never have achieved the rising living standards that were the pride of the United States in O’Neill’s 1950s and still are today. The rules enforced by the National Labor Relations Board made it possible for Reuther’s union to organize by protecting workers’ rights. Cheap 30-year mortgages, which became the norm because of Federal Housing Administration guarantees, created a nation of homeowners.

As medical costs rise, more Americans will need government help. More employers will need to offload the costs of medical insurance to avoid bankruptcy. Yes, that’s “socialized medicine,” just like Medicare. But don’t tell anyone. The phrase plays terribly in focus groups.

For 60 years New Dealers and social democrats, liberals and progressives, turned Schumpeter on his head. They insisted that few would embrace capitalism’s innovations if the system’s tendency toward creative destruction was not balanced by public innovations to spread the bounty and protect millions from being injured by change. It’s a compelling story. Walter Reuther knew it well. Too bad it isn’t told very often anymore.

Senate candidates agree that health care system needs change

By Janet Kubat Willette
Agri News staff writer
Tuesday, November 29, 2005

MINNEAPOLIS — Health care costs are out of control, three Democratic Senate candidates agreed.

The nation’s health care system is unsustainable, said Ford Bell, president of the Minneapolis Heart Institute Foundation. There are 46 million uninsured in this country.

People say they don’t want a big government bureaucracy in charge of their health care, Bell said. Instead, the U.S. has a private bureaucracy.

He advocates single-payer universal health care coverage for everyone.

Amy Klobuchar agreed. Klobuchar is Hennepin County Attorney.

Universal health care should start with children, Klobuchar said. The government also needs to crack down on costs by negotiating with prescription drug companies for Medicare recipients. The federal government also needs to evaluate how it does Medicare reimbursements, she said.

Child and family advocate Patty Wetterling said it simply boils down to health care for every man, woman and child in this country.

The trio answered questions from Minnesota Farmers Union members during a panel discussion at the annual meeting Nov. 19.

Rep. Mark Kennedy, R-Watertown, who is also running for the seat Sen. Mark Dayton is vacating in 2006, was unable to attend, according to a MFU spokesman.

Klobuchar said it’s time for results and leadership in Washington, D.C. That means Social Security is a guarantee and not a gamble. That means implementing Country of Origin Labeling for beef, not just seafood. It means investing in energy cooperatives in the Midwest instead of oil cartels in the Mid East.

Wetterling said the nation is in a war against competing values. She’s seen the casualties of low prices at any cost. Ways of life disappear if they aren’t defended, she said. How much progress will the nation make if greed is the only guidepost and companies are allowed to pollute and take advantage of striped-down human rights abroad?

Bell said the nation’s farm programs are outdated and need to be refocused for family farmers. He supports a $250,000 subsidy cap, adopting COOL, allowing 1031 dollars to be invested in rural projects that create jobs and supporting rural renewable fuel development.

On the Web: Ford Bell, www.fordbell.com; Amy Klobuchar, www.amyklobuchar.com; Patty Wetterling, www.pattywetterling.com