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Costly medical bills can bury families under a mountain of debt

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Costly medical bills can bury families under a mountain of debt

By Elizabeth Ziegler – Journal Writer

Two winters ago, Cheryl Alvarez received a phone call from her son telling her that he had been in a car crash. Now Alvarez lives in a nightmare of debt that she won’t be able to escape for years.

The brain trauma and liver damage suffered by her son, Miguel Luna, eventually healed. But Alvarez, a single mother of five, has $200 taken from every paycheck for medical debt. And even with her wages garnisheed, Alvarez still earns too much to qualify for assistance from the state.

The bills from two area hospitals that treated her son’s injuries forced her to declare bankruptcy and rely upon the charity of friends. “It’s been a struggle. Any time you’re raising five kids on your own with no child support, it’s hard to prepare for things like this,” she said. “It is hard asking for help, but there are so many people who have been so good to us -that’s how you get through medical bankruptcy.”

Miguel dropped out of school at age 17 and took a full-time job to help. Now, at 18, he has a GED along with a family of his own to support. He plans to attend Idaho State University in the fall. “When I look at him with his three little kids, I am so thankful. I am so proud of him,” she said. “He’s fine now … it’s a miracle.”

Alvarez’s story is common among the roughly 4,500 personal bankruptcies resulting from unpaid medical bills in Idaho last year. That’s just over half of the personal bankruptcies filed in 2004 in the state. According to a Harvard Medical School Study released two weeks ago, Idaho’s statistics are in line with national figures. The study found that half of all personal bankruptcies in the United States are caused, at least in part, by unpaid medical bills.

Because Alvarez had medical insurance coverage for her son through her job as a clinical assistant and lactation educator for the health department, her story further parallels the study’s findings. According to the Harvard researchers, three-quarters, or 75.7 percent, of the medically bankrupt actually have insurance at the onset of the bankrupting illness or accident. Sixty-eight percent still had medical insurance when they filed for bankruptcy and 62 percent had continuous coverage, as did Alvarez.

But her medical plan had a high deductible and co-pay and she ended up thousands of dollars in debt. “The people out there who are middle-class and have health insurance believe that it will keep them from financial ruin if they should get sick. The reality is that ain’t so,” said Dr. Bill Woodhouse, a physician for Pocatello Family Medicine and a member of Physicians for a National Health Program.

Health West Director Stephen Weeg said often, unexpected medical expenses propel a family into poverty. “An emergency health issue is always an unplanned expense,” Weeg said. “Especially if you are middle to lower income, most folks end up with their budgets pretty tight, so there’s not a lot of discretionary money available.”

The cost of the illness is complicated by lost wages and the fact that many people live paycheck to paycheck. And when you’re maxed out already, Weeg said medical bills can tip you over the edge into bankruptcy. “For a lot of people, going bankrupt is only a matter of a few thousand dollars,” said Scott Greaves, director of the Bannock County Indigent Office. “If you go into the hospital and spend one night, the bill comes out to be $3,000 to $4,000. One night can put some people over the edge.”

For many who are insured and wind up bankrupt, high co-pays and deductibles in addition to paying the costs that exceed coverage limits often are the culprits.
“You are looking at insurance covering $30,000 of the bill, but then you are still owing thousands of dollars,” Greaves said. “Some insurances are 50 percent co-pay, and a lot of deductibles are up to the $2,000 to $3,000 range. And depending on your financial situation, just the deductible can put you over.”

When people can’t pay medical bills, they often end up in the Bannock County Indigent Office, where Greaves sees 400 to 450 cases a year. In Idaho, a state law makes counties responsible for the medical expenses of people unable to pay medical bills. The county pays the bills, a lien is put on the person’s property and eventually the cost of the bills is repaid to the county.

The indigent wear a lot of different faces, Greaves said. They are the unemployed, the working poor and increasingly, middle-class people. “That is who we see in our office -average, middle-class people who don’t have insurance,” Greaves said.

Because the cost of medical insurance rises incessantly, many healthy, middle-class people are opting out of medical insurance and many employers are priced out of offering comprehensive coverage to employees.

“The number of uninsured people is increasing, and nationally, one of the fastest growing segments of uninsured are those who have an income of over $50,000,” said Georganne Benjamin, spokesperson for Regence BlueShield of Idaho.”When people say uninsured, they think of the poverty-stricken, but they might be a college student who just graduated, who is uninsured short-term until he or she is employed.”

Idaho has one of the highest uninsured rates in the nation. Eighteen to 20 percent of Idahoans have no health insurance, compared to 16 percent nationally. The increase in uninsured people adversely affects the cost of medical insurance, Benjamin said, because in order for insurance companies to keep costs down, they need to have virtually everyone share the costs.

“We are trying to raise the number of people who have insurance, because the last thing we want is more uninsured,” Benjamin said. “The more people we have covered, the better it is for everyone overall.” But for many, paying for insurance seems like a waste of money. Benjamin said increasing numbers of typically younger, healthy people are opting to go without insurance. “They are opting out of the insurance market, because to them, it is not worth paying for the services. They don’t see the value,” Benjamin said. “But in order for the system to work appropriately, everyone needs to pay in preparation for a catastrophic event that may happen later down the road.”

People with chronic diseases know better than to opt out of the system, Greaves said, because insurance saves them thousands of dollars. With the pool of insured people growing increasingly sicker, and more expensive to cover, insurance companies raise their premiums, which causes even more healthy people to drop out. At this time last year, Greaves said medical insurance premiums increased about 45 percent.

To compensate, employers and individuals are stuck with a difficult decision: Either pay higher premiums, or pay the same amount for a skimpier policy. For those people who can’t pay more, the policy they can afford is essentially an umbrella with a hole in it, and they are depending on luck. The situation has representatives from both sides of the political divide re-evaluating medical care in the United States.

Some say a national health care system is the answer, and others say medical savings accounts can salvage the present system. “Rising health care costs are a critical concern for us,” Benjamin said, speaking on behalf of Regence BlueShield. “We have to look at product options for our members that still allows them to have insurance at an affordable price, and so, the newest thing is health savings accounts.”

Health savings accounts work, Benjamin said, because money put into the account that isn’t needed one year, rolls over into the next. Over the years, people would save enough money to provide a safety net in case of a medical emergency.

The savings account would work in conjunction with a health insurance policy, she said, to help pay off the deductible, co-pay or the cost of services above a coverage limit.

But critics of the system claim that would not help the growing number of people who cannot afford medical insurance. “I think that is an excellent idea for people who can afford that and take that risk upon themselves,” Woodhouse said. “But we know already that one in five people cannot afford health insurance.” And, it’s not just liberal/progressives who doubt that medical savings accounts can save the current health care system.

Woodhouse is a self-proclaimed conservative, and represents a number of people in the medical field who advocate for a single-payer national health program. “While many claim that we have the best health care system in the world, I know of nobody who believes we have the best way of paying for health care, as evidenced by the high number of the uninsured and medical bankruptcies,” Woodhouse said. “I feel our health care financing system has failed everyone, including the providers. It’s an extractive industry right now. I’ve very reluctantly come to believe in the single payer national health program. I am a pretty conservative person, but this is one thing in which the free market has failed.”

Failure to cover eligible children

Health Services Research
February 2005
From Medicaid to Uninsured: Drop-Out among Children in Public Insurance Programs
By Benjamin D. Sommers

Of the children enrolled in Medicaid or CHIP, 27.7 percent were no longer enrolled 12 months later. Of those, 45.4 percent dropped out despite apparently remaining eligible and having no other insurance-corresponding to 3.0 million children annually.

Drop-out from Medicaid and CHIP is a significant policy concern and helps explain the persistence of uninsurance among millions of eligible children.

http://www.ingentaconnect.com/content/bpl/hesr/2005/00000040/00000001/art00006

Comment: We have a fragmented system of health care coverage that depends on multiple factors such as income, age, employment status, dependent status, disability, military service, incarceration, Native American heritage, union membership, employers’ dedication to the welfare of their employees, and innumerable other factors which result in instability in the adequacy of health care coverage and whether it will even be there when needed.

If we had a single, universal, cradle-to-grave program of health care coverage, we would not have to be worrying about these three million eligible but uninsured children who have dropped out of Medicaid or CHIP.Nor would we have to worry about health care coverage for anyone else.

Now isn’t it ludicrous that we are still talking about this very simple concept and not doing anything about it? Well, no. If it were ludicrous, it would be laughable. This isn’t.

Taming the Medicaid monster

By Robert Kuttner  

AT DINNER, two sets of parents of college seniors are discussing their dreams for their soon-to-be newly minted graduates. Doctor? Lawyer? Scientist? Entrepreneur?

”I just hope she gets a job with health insurance,” says one mom, breaking the spell. ”The insurance cuts off the day they graduate.” A dad chimes in: ”COBRA coverage costs over $400 a month.” (COBRA is an acronym for a consolidated budget act that allows you to keep your coverage by paying the premium costs out of pocket. It is well named.)

In a country with a rational system of health insurance, your coverage would not be subject to the quirks of when you graduated college, where you worked, or whether you had been sick earlier in your life. But the American system is a patchwork mess of coverage, noncoverage, and inadequate coverage, slightly tempered by well-intentioned efforts to fill in the cracks, which only add to the fragmentation and cost.

Meanwhile, President Bush’s budget proposes to cut some $45 billion out of Medicaid funding over 10 years. The Massachusetts share of the loss would be $1.26 billion.

Medicaid is becoming the monster that’s devouring the rest of state budgets. In recent years, Medicaid costs have been rising at between 9 and 12 percent while state budgets are just about keeping pace with inflation.

But Medicaid costs are rising not because states are becoming more generous with what they cover or because states are liberalizing Medicaid eligibility rules. On the contrary, rules are being tightened and coverage restricted. The Urban Institute finds that actual Medicaid per-patient costs are growing at only about half the rate of private insurance, and a study by the Kaiser Family Foundation reports that 23 states have already taken actions to freeze enrollment or cut benefits.

So why is Medicaid such a drain on state treasuries? Because it is the health insurance of last resort. As fewer employers provide coverage that employees can afford, more and more people are being dumped into the Medicaid pool, leaving states holding the bag.

Not content to cut the federal share, Bush also proposes to turn the program into a capped block grant, which would pass even more of the costs to the states. This, in turn, would lead to even further benefit cuts and more people going without basic medical care or flooding emergency rooms.

Another government health program, the State Children’s Health Insurance Program, was intended to cover kids whose parents made a little too much money to qualify for Medicaid. There are millions of families where one or both parents have inadequate employer-provided insurance or no insurance and the kids are covered under SCHIP. And because parents’ income fluctuates, kids can be bounced from program to program — SCHIP, Medicaid, private insurance — with different eligibility rules and different doctors.

Continue the tour of our absurdly fragmented health system. As part of the same 2005 budget proposal, the president admits that his crown-jewel program, drug coverage under Medicare, will cost not the $400 billion over 10 years that he projected when he jammed the bill through Congress in 2003 but $1.2 billion. Bush officials helpfully explain that with changes in various formulas — in other words, benefit cuts — the cost can be held to a mere $720 billion.

The Medicare drug law, which doesn’t even become effective until 2006, is so outlandishly expensive because it was written to drug industry specifications. The law explicitly prohibits the government from negotiating bulk discounts with drug companies the way VA hospitals and the Canadian national health insurance program do. Seniors covered by Bush’s Medicare drug program and their partner, the American taxpayer, will pay sticker price.

Gentle reader, this is all insane. We have the world’s most expensive medical system and the least reliable insurance coverage. Yes, I know Clinton-care was a political disaster, but it wasn’t true national health insurance. Clinton naively tried to give the insurance companies a big piece of the action, and they gratefully responded by spitting in his eye.

Ordinary people are absolutely sick of the health insecurity and the endless and wasteful paper chase. So, by the way, are doctors. We have what the political scientist Walter Dean Burnham calls a ”politics of excluded alternatives.” If some nervy politician, or group of politicians, called for true universal national health insurance, they would get broad public support. It’s called leadership.

Robert Kuttner is co-editor of The American Prospect. His column appears regularly in the Globe.

Insurance premiums a burden in retirement

The Urban Institute
January 2005
Understanding Expenditure Patterns in Retirement
By Barbara A. Butrica, Joshua H. Goldwyn and Richard W. Johnson

Health Care Expenditures
For typical older adults, budget shares for health care expenses are second to housing costs. However, health care expenditures warrant special attention because they tend to be much more unpredictable than housing costs, especially for those without private supplemental health insurance.

In this section, we break out the health care expenditures of older adults. Health insurance premiums represent the largest health care spending category (8 percent of total expenditures) for married individuals. Additionally, they spend 6 percent on prescription drugs, 4 percent on health services, and 1 percent on medical supplies. This finding is consistent with Rubin and Nieswiadomy (1997) who found that the increase in health care expenditures between the 1980s and 1990s was driven primarily by insurance premiums, followed by drugs and medical supplies, and health services.

Older married adults in poor health allocate twice as much of their overall spending to prescription drugs than those in excellent or very good health. As expected, individuals with nongroup insurance spend a larger-than-average share of their overall expenditures on health insurance premiums, but they also spend a larger-than-average share on prescription drugs. These patterns are very similar for nonmarried adults.

http://www.urban.org/UploadedPDF/411130_expenditure_patterns.pdf

Comment: It is important to realize that health insurance premiums represent the largest health care spending category in retirement. For many individuals, the premium paid is for Medicare supplemental insurance (Medigap). With the decline in employer-sponsored group coverage for retired individuals, the need for Medigap coverage is increasing.

It is instructive to look closely at the actual benefits provided by the Medigap plans. For most individuals, the amount of claims payment for which the insurer is obligated is nominal. That is because, by Medicare regulations, most of the balance of the medical charges must be adjusted off by the provider of services. Medigap pays only that small amount which is the difference between the Medicare payment and the Medicare allowed charges, an amount far less than the charges billed.

With typical PPO plans, such as those offered by Blue Cross and Blue Shield, the premium pays not only for the allowed charges, but it also pays for the insurer’s administrative costs in contracting with providers for lower rates. With Medigap plans the allowed charges are set by Medicare, so the insurer is providing almost no additional value when it offers lists of contracted providers. And since the primary payment is made by Medicare, the Medigap plan is paying only the very modest coinsurance and deductible.

This Urban Institute study confirms that health insurance premiums in retirement are very significant. Yet the Medigap policies offer amongst the poorest values in health care coverage. Using my own coverage as a typical example, the Senior Classic F Medigap policy of Blue Cross of California had a loss ratio of 62% (2001). That means that they kept 38% of the premium.

That administrative waste is on top of the administrative burden that our fragmented system places on the providers of care. The combined administrative waste amounts to over one-half of the Medigap premium!

Medigap policies are only one more example of the private insurance industry fulfilling its mission to sell us excessive, wasteful administrative services, in this instance placing a major financial burden on retired seniors (and anger each time the premium notice arrives). We can do far better financially by throwing out the private plans, fixing Medicare so it works better, and then establishing Medicare for All.

1,700 Doctors: "Bankruptcy Bill Threatens Patients"

EMBARGOED UNTIL 12:01 a.m. EST
February 14, 2005

Contact: David Himmelstein, MD
Steffie Woolhandler, MD
(617) 497-1268
(617) 312-0970
Nicholas Skala (312) 781-6006
nick@pnhp.org

1,700 Doctors: “Bankruptcy Bill Threatens Patients”

Harvard Study Shows Legislation a Danger to Millions Bankrupted by Medical Bills
Physicians Urge Congress to Reject S. 256

On the heels of a major Harvard University study showing that half of all personal bankruptcies are due to illness or medical bills, more than 1,700 American physicians signed a letter released today opposing legislation that would remove protection from patients financially ruined by medical costs.

Bankruptcy law currently offers some protection to the millions of Americans affected by medical bankruptcies each year. If passed, the bill would effectively close bankruptcy as an option and allow creditors to take the homes, cars and other assets of families who suffer a serious illness or injury.

“It’s a sad fact that bankruptcy courts have become the last line of defense for the victims of our broken health system,” said Dr. David Himmelstein, an Associate Professor of Medicine at Harvard Medical School and lead author of the study. “For many families affected by a costly illness, the limited protections of bankruptcy are the only chance to get back on their feet.”

In the letter to the leaders of the Senate Judiciary Committee, which is currently considering the bill, the doctors expressed concern that the new bankruptcy rules would further restrict the ability of patients suffering from medical costs to get needed care for themselves and their families.

“Medical debtors’ access to care is already severely compromised: more than 60 percent go without a needed doctor visit and half don’t fill a prescription because of the costs,” said Dr. Steffie Woolhandler, who is also an Associate Professor of Medicine at Harvard and co-author of the study. “For those unable to seek relief from their debts, the situation will undoubtedly get worse,” she said.

The epidemic of medical bankruptcies, which affect 2 million Americans (including 700,000 children) every year, emphasizes the need for comprehensive health insurance coverage under a national health insurance plan according to the signers, who include former U.S. Surgeon General Julius Richmond.

“Current insurance policies offer paltry protection for the average American,” said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. “Most of those who are bankrupted by medical bills are middle class people who had coverage but were ruined by the massive holes in their policies. Rejecting this new bankruptcy legislation is just the first step we need to take in healing our sick health system. We need a system of universal, comprehensive Medicare for all.”

A full list of signers of the letter can be viewed at: www.pnhp.org/signers

###

Physicians for a National Health Program is an organization of 13,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call (312) 782-6006

1,700 Doctors: “Bankruptcy Bill Threatens Patients”

EMBARGOED UNTIL 12:01 a.m. EST
February 14, 2005

Contact: David Himmelstein, MD
Steffie Woolhandler, MD
(617) 497-1268
(617) 312-0970
Nicholas Skala (312) 781-6006
nick@pnhp.org

1,700 Doctors: “Bankruptcy Bill Threatens Patients”

Harvard Study Shows Legislation a Danger to Millions Bankrupted by Medical Bills
Physicians Urge Congress to Reject S. 256

On the heels of a major Harvard University study showing that half of all personal bankruptcies are due to illness or medical bills, more than 1,700 American physicians signed a letter released today opposing legislation that would remove protection from patients financially ruined by medical costs.

Bankruptcy law currently offers some protection to the millions of Americans affected by medical bankruptcies each year. If passed, the bill would effectively close bankruptcy as an option and allow creditors to take the homes, cars and other assets of families who suffer a serious illness or injury.

“It’s a sad fact that bankruptcy courts have become the last line of defense for the victims of our broken health system,” said Dr. David Himmelstein, an Associate Professor of Medicine at Harvard Medical School and lead author of the study. “For many families affected by a costly illness, the limited protections of bankruptcy are the only chance to get back on their feet.”

In the letter to the leaders of the Senate Judiciary Committee, which is currently considering the bill, the doctors expressed concern that the new bankruptcy rules would further restrict the ability of patients suffering from medical costs to get needed care for themselves and their families.

“Medical debtors’ access to care is already severely compromised: more than 60 percent go without a needed doctor visit and half don’t fill a prescription because of the costs,” said Dr. Steffie Woolhandler, who is also an Associate Professor of Medicine at Harvard and co-author of the study. “For those unable to seek relief from their debts, the situation will undoubtedly get worse,” she said.

The epidemic of medical bankruptcies, which affect 2 million Americans (including 700,000 children) every year, emphasizes the need for comprehensive health insurance coverage under a national health insurance plan according to the signers, who include former U.S. Surgeon General Julius Richmond.

“Current insurance policies offer paltry protection for the average American,” said Dr. Quentin Young, National Coordinator of Physicians for a National Health Program. “Most of those who are bankrupted by medical bills are middle class people who had coverage but were ruined by the massive holes in their policies. Rejecting this new bankruptcy legislation is just the first step we need to take in healing our sick health system. We need a system of universal, comprehensive Medicare for all.”

A full list of signers of the letter can be viewed at: www.pnhp.org/signers

###

Physicians for a National Health Program is an organization of 13,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call (312) 782-6006

Private coverage can harm people with diabetes and other chronic disease

American Diabetes Association
February 8, 2005
Gaps found in all components of private health insurance coverage for people with diabetes

The American Diabetes Association in conjunction with the Georgetown University Health Policy Institute today announced the results of a 14-month study examining barriers to accessible, affordable and adequate health insurance for Americans with diabetes.

Common problems highlighted by the report document serious flaws in the private and publicly financed health insurance system in America. These flaws include health insurance policies that did not cover basic diabetes needs; high risk pools with pre-existing condition exclusions that deterred people from enrolling; health insurance premium surcharges for diabetes that drove premiums above what individuals and small businesses could afford; medical underwriting practices that designated diabetes as “uninsurable;” Medicaid eligibility limits that left many low income people unable to access this safety net; cumbersome insurance processes that fail to help people navigate complex rules and deadlines; and application procedures that drove many to give up on seeking coverage altogether.

“This study observed many instances in which having diabetes can make it harder to get and keep health insurance — a profound irony given the purpose of health insurance is to protect people when they are sick,” said Karen Pollitz, MPP, Project Director, Georgetown University Health Policy Institute. “People in transition following a job loss or change in family status often could not obtain new health coverage. Safety net options created to help in these circumstances often didn’t work because the help they offer is incomplete. People with stable coverage also had problems when they were underinsured, lacking coverage for blood glucose test strips and prescriptions or burdened by high deductibles. The people we talked to needed coverage that was available, affordable and adequate. Two out of three just didn’t work…”

R. Stewart Perry, Chair, Advocacy Committee of the American Diabetes Association added, “…most of the policy solutions currently being considered by our state and federal policymakers do little to fix the problems identified by the report.” “…it is time for policymakers to seriously rethink the flawed health insurance solutions up for debate that harm as opposed to benefit people…”

Press release:
http://www.diabetes.org/for-media/2005-press-releases/insurance-coverage.jsp

Executive Summary of the report:
http://www.healthinsuranceinfo.net/diabetes_and_health_ins_Exec_Summ.pdf

The full report:
http://web.diabetes.org/Advocacy/healthresearchreport.pdf

And some numbers from the study:
Problems studied were resolved when people could find health coverage that was simultaneously available, affordable and adequate. For most, however, health insurance and other safety net protections – such as COBRA and high-risk pools – often met only one or two of these three requirements, and so did not help. In particular:

* Individual health insurance – 395 people needed coverage in this market but only 15 could buy policies
* COBRA – 377 people lost or were losing job based coverage but only 31 took
COBRA
* HIPAA – 87 people were HIPAA eligible but only 11 bought HIPAA coverage
* High-risk pools – 344 people needed coverage and lived in high-risk pool states but only 7 enrolled

http://www.healthinsuranceinfo.net/newsyoucanuse/08.html

Comment: More recent policy developments have placed a much greater emphasis on the importance of adequate coverage for ever expanding problems
of chronic disease. In the report above, if you merely replace the term “diabetes” with “chronic disease” you would have an inkling of the enormity of the problem that we are facing.

Current policy trends are to make health premiums more affordable and to reduce the responsibility of employers and the government for financing health care. The tragedy of these approaches is that they will only compound the problems of availability, affordability and adequacy of access and coverage presented in this report.

When our policymakers tell us that we can cover these problems with tax credits for individual plans, COBRA coverage, HIPAA coverage, high risk pools, Medicaid or any other “incremental” program, then stick this report in their face. With these programs, affordable access to comprehensive care is WORSE, not better! If we don’t take action now, the next incremental program will be “Friendly Universal Consumer Kare” (forgive the acronym).

Well we’ve been (same acronym)’d over enough! Let’s throw out our policymakers and bring in some people who care and will do the job right!

Don McCanne

(Disclaimer: The acronym was used without the knowledge or consent of the
PNHP leadership but is simply an expression of my profound, personal outrage
at our failure to introduce health care justice to the United States. Please feel free to share my vituperation with others.)

Coalition seeks statewide insurance plan

By Winthrop Quigley Albuquerque Journal Staff Writer

A coalition of more than 75 organizations are asking the state Legislature to replace conventional health insurance with a single statewide insurance plan that bases premiums on the insured’s income.

The Health Security for New Mexicans Campaign argues that health care financing is too badly broken to be repaired and should be replaced. The campaign contends that millions of dollars can be saved on administrative costs if a single health insurance plan replaces the variety of products offered by health insurance companies.

The plan faces tough sledding in the state Legislature. Similar bills have been defeated in the past, and Gov. Bill Richardson has consistently said he opposes a single-payer health system.

Richardson prefers allowing uninsured New Mexicans to voluntarily join state-supported insurance plans already in place, including the plan covering state employees. He has also proposed tax credits to help small businesses afford health insurance for employees.

However, the Health Security for New Mexicans Campaign boasts a number of marquee names among its members, including the League of Women Voters in New Mexico, Albuquerque Health Care for the Homeless, several labor unions, the New Mexico Public Health Association, and several health policy and social policy advocacy groups.

Jerry Montoya, health promotion specialist in Valencia County for the New Mexico Department of Health, said Valencia County residents are especially hurt by the high costs of health insurance because of the county’s high poverty level. Montoya said the response the coalition has received in Valencia County has been very positive.

“We are a poor community,” he said. “We’re impacted even more. … One of the things that the Health Securities Campaign has been doing here in Valencia County is going out and doing presentations to various groups. Those presentations have been very well-received, because people are actually wanting to talk about health care reform, because they know there is a problem. They are eager to hear solutions.”

In two Journal-sponsored public opinion polls, a majority of New Mexicans have said they support a single taxpayer-funded health plan.

The campaign’s proposal faces almost certain opposition from the statewide business lobby, the Association of Commerce and Industry, according to J.D. Bullington, the group’s lobbyist.

The basics of the proposal have been offered off and on over the years by former Sen. Manny Aragon, D-Albuquerque, and former Rep. Max Coll, D-Santa Fe. The 2005 legislation is expected to be introduced by Santa Fe Democratic Rep. Luciano “Lucky” Varela, according to the Health Security for New Mexicans Campaign.

“I haven’t read the latest proposal,” Bullington said. “However, our organization is adamantly opposed to a government-run, single-payer health care system.”

The Health Security for New Mexicans Campaign would pool public and private monies, including Medicaid funding and health insurance premiums paid by individuals and employers, into a single fund. The health plan would be required to provide insurance at least as good as that offered to state employees. The coverage offered each insured would be identical, regardless of the member’s age, income, employment or health status would be based on income, not health status or age.

In an interview, campaign executive director Mary Feldblum said she could not estimate how much administrative costs would be cut, but she cited studies by The Lewin Group in several states, including a 1994 study in New Mexico, that show large state-sponsored insurance pools could offer meaningful savings.

John Sheils, a Lewin Group vice president, said in a telephone interview, “What we’ve generally shown is that a carefully designed single-payer plan can result in covering more people for more services for a tad less money. There is not a lot of money saved.”

Savings in most states Lewin Group has studied would pay for providing “most of the care you’d provide to the uninsured or underinsured.” But Sheils cautioned, “It’s going to be harder to achieve that result in New Mexico because you have lots of uninsured people.”

An estimated 414,000 New Mexicans are without health insurance.

Local health insurance plans say their own administrative costs are about 10 percent or less of total spending.

A single risk pool containing most of the state’s residents “will have some market clout” when negotiating with providers and drug companies, Feldblum said. “We have too many tiny pools,” which increases the insurance company’s risks, she said.

Sheils agreed, saying, “If you put everyone in one program with one benefit package, you probably could generate some sizable administrative savings.”

But when plans include spending constraints, technology isn’t upgraded as rapidly, providers stop offering some services, and quality of care and access to care can erode.

“There are more MRI (machines) in San Francisco than in the entire nation of Canada,” which operates a single-payer health plan and restricts spending, Sheils said. “If you are 68 years old in Britain and need kidney dialysis, you’re going to die.”

“I think as a nation, we’re really strange about this,” Sheils said. “We don’t seem to make the connection that to have the miracle of modern medicine coming our way, we have to pay for it.”

Under the coalition proposal, health care providers would operate the same way they do today. Patients could choose which providers to use. Providers would negotiate payment with a 15-member commission that would run the health plan. Premiums could be changed only with approval of the state Legislature.

The plan’s commissioners, appointed by the governor, would also have authority to review providers’ budgets to “ensure that resource allocation is based on the health care needs of different communities.”

Capital spending by providers such as hospitals would have to be certified.

The campaign in its literature promises unspecified “cost containment measures” that will produce “savings that can be invested in needed health care services.”

Federal retirees and active and retired military health plan members could not join the pool because of federal legal restrictions. Indian tribes could choose to join the pool. Plan members could choose to buy additional commercial insurance.

Bullington said the experience of Tennessee, which expanded its Medicaid program to encompass adults without health insurance, and the problems New Mexico has affording its own, more limited Medicaid program demonstrate the campaign’s ideas won’t work.

The Tennessee program “is imploding,” Bullington said. “It will bankrupt and fail.”

The Tennessee program in 1994 extended Medicaid benefits to cover the working poor, uninsurable adults and traditional Medicaid-eligible populations. The program eventually consumed one of three state tax dollars. Last year, Gov. Phil Bredesen began dismantling it and reinstating traditional Medicaid.

“We still steadfastly believe that we have not exhausted market solutions,” Bullington said. “We believe the existing structure can be salvaged and improved to provide affordable health care without overhauling the entire system and increasing the role of government.”

Medical bankruptcy(Kansas City Star Website)

Upon reading about Lisa Adams’ bankruptcy (2/3, A-1, “Medical bankruptcies: Double dose of trouble”), we were reminded again of the grim prognosis of the current U.S. health-care system.

More than 45 million Americans are uninsured, yet Americans continue to spend more per capita on health care than most of our world community. Despite these exorbitant expenditures, the United States performs poorly on leading World Health Organization health indicators (37th among the developed world). We propose that a single-payer national health-care plan is a solution to this crisis.
A national health-care plan would ensure quality coverage for all, would redirect excessive administrative costs into directly serving patient needs, and would establish health care as a basic human right.

Real solutions to medical bankruptcies and rising health-care costs are within our reach. Let’s start by supporting bipartisan proposals of Gov. Kathleen Sebelius and Insurance Commissioner Sandy Praeger to provide health care to low-income, uninsured Kansans.

Blair Thedinger, Abby Snavely and Lindsay Rome: KU Medical Center Students for a National Health Program
Jonathan Jacobs, Andrea Charbonneau, Kathryn Ellerbeck, Allen Greiner, Stephen Lauer, Joshua Freeman and Dan Swagerty: Mid-America Physicians for a National Health Program ( www.pnhp.org)

General Motors CEO's position on health care reform

The Wall Street Journal
February 9, 2005
Health-Care Overhaul: GM CEO Weighs In
By Alan Murray

General Motors Chief Executive Rick Wagoner… runs not only the world’s largest auto maker (a position threatened by Toyota Motor), but also the nation’s largest private health-care purchaser (a position threatened by no one.) He’s responsible for the health of some 1.1 million people, most of them retirees and their families, and paid $5.2 billion last year for the privilege. The cost of health care now adds more than $1,500 to every vehicle sold, and is rising at double-digit rates.

So it’s no surprise that health care has become Mr. Wagoner’s obsession. He’s taken the maxim attributed to Charlie Wilson — “What’s good for General Motors is good for America” — and turned it inside out. To cure what ails General Motors, he has to cure what ails America: a very sick health-care system.

“It’s not that manufacturing cars and trucks, and quality and productivity, are not important,” Mr. Wagoner said in an interview this week. “But we have processes in place to deal with those.” The health-care system, on the other hand, reminds him of the General Motors of old, with pockets of excellence but also wastelands of inefficiency. “We can do better as a country than we are doing,” he says. “We can have higher-quality services supplied at a lower cost.”

Mr. Wagoner opposes the ultimate bailout, a government-run national health-insurance system, which would take the cost off the back of big business but put control in the hands of a government bureaucracy. Instead, he favors a consumer-driven, competitive marketplace, with better health-care information systems, better research on the clinical effectiveness of different drugs and therapies, and better information on the quality of care available to consumers. He also favors curbs on malpractice suits, and a “bipartisan national strategy to address catastrophic health-care expenses.”

http://online.wsj.com/public/article/0,,SB110790726260549399,00.html?mod=todays%5Ffree%5Ffeature

Comment: Advocates of an equitable system of universal, comprehensive health care coverage have recently become enthused over statements from executives of the auto industry that we need a national solution for our health care problems.

But is the industry ready to join advocates of national health insurance in supporting an equitable, universal, comprehensive system? If you believe that we are close to bridging that divide, you also may believe that you can cross the Grand Canyon in a single leap.

U.S. firms losing health care battle, GM Chairman says

By Ceci Connolly
Washington Post Staff Writer
Friday, February 11, 2005; Page E01

American manufacturers are losing their ability to compete in the global marketplace in large measure because of the crushing burden of health care costs, General Motors Corp. chairman and chief executive G. Richard Wagoner Jr. said yesterday as he called on corporate and government leaders to find “some serious medicine” for the nation’s ailing health system.

In a speech at the Economic Club of Chicago, the auto executive, who is responsible for providing health insurance for more people than any other private employer in the nation, graphically detailed how rising medical bills are eating into his company’s bottom line and ultimately threatening the viability of most U.S. firms”The cost of health care in the U.S. is making American businesses extremely uncompetitive versus our global counterparts,” he said. “In the U.S., health care costs have been rising at double-digit rates for many years. In 2003, they were about 15 percent of GDP, at least 30 percent higher than the next-most-expensive country.”

“Failing to address the health care crisis would be the worst kind of procrastination,” Wagoner said, “the kind that places our children and our grandchildren at risk and threatens the health and global competitiveness of our nation’s economy.”

After spending several years on the health policy sidelines, Wagoner is launching a mini media blitz, hoping the competitiveness argument will be the one that finally prompts lawmakers to take on an increasingly expensive system rife with inefficiencies and inequities. Wagoner said he intends to press his case personally in Washington and with the nation’s governors.

Though self-interest may be at the heart of Wagoner’s crusade, he and a range of corporate leaders and policy analysts warned that GM’s woes are a harbinger of what lies ahead.

“GM is the canary in the coal mine for Medicare and everyone else,” said Sean P. McAlinden, chief economist at the nonprofit Center for Automotive Research. “There are many, many more companies out there in trouble because of health care costs than just the auto, steel and airline industries.”

McAlinden, a labor expert sympathetic to union views, said many in Washington have mistakenly concluded that GM and other carmakers are simply whining about costly union contracts.

“GM and the United Auto Workers didn’t cause this double-digit inflation in health care,” he said. And if GM pushed for sharp reductions in health benefits, the powerful union would likely strike and send the company into Chapter 11 bankruptcy protection, he predicted.

Last year the automaker, known for its innovative approach to health care, spent $5.2 billion to cover 1.1 million retirees, employees and their families. Prescription drugs cost GM $1.9 billion, and the company projects overall medical spending will increase by $400 million this year. That could be offset by a provision in the Medicare drug benefit to pick up a portion of firms’ retiree drug costs.

But the figure that prompted Wagoner to raise his voice is $1,500. That is the amount of money added to the price of every single vehicle to cover health care, a cost that his foreign competitors do not bear.

Paul Hughes-Cromwick, senior analyst at the nonprofit Altarum Institute in Ann Arbor, Mich., said executives are alarmed that benefit costs are rising far more rapidly than wages. Total compensation costs for U.S. firms rose about 3.7 percent in 2004, mirroring previous years, he said, citing Bureau of Labor Statistics data. But salaries increased just 2.4 percent, while benefit costs rose 6.9 percent. The gap is the largest he has seen in two decades.

“That huge benefit hit is chewing up the salaries and wages we would be receiving,” he said. “That’s the key.”

Yesterday, Wagoner broke his silence on an idea proposed by Sen. John F. Kerry (D-Mass.) in the 2004 presidential campaign, saying he supports some type of national catastrophic reinsurance program. Senate Majority Leader Bill Frist (R-Tenn.) has also endorsed the concept of a separate government-backed insurance pool to cover the most expensive medical cases.

“If we can create a comprehensive insurance model to better share these catastrophic costs among all consumers, then we can take a big step toward providing affordable health care coverage for all our citizens,” Wagoner said.

Wagoner and fellow executives find much to be frustrated with in the health care system.

“It’s simply not acceptable for over 45 million Americans to be without health care coverage,” he said, echoing a point made recently by Jack O. Bovender Jr., chief executive of health care giant HCA Inc. “And it’s unfair for those of us who do provide health care benefits to have to pay higher bills to cover the costs of the uninsured. Talk about ‘no good deed goes unpunished.’ ”

The business leaders cannot understand why the health care industry has been slow to institute the sort of technological changes that helped them improve quality and reduce costs.

“Only in health care does bad service and bad quality get paid for in the same manner as good service and good quality,” said Humana Inc. chief executive Michael B. McCallister, chairman of the Business Roundtable’s health care task force.

The CEOs agree that the double-digit premium increases will continue as long as individuals are sheltered from the true cost of health care.

“Companies, to manage health care costs, are going to have to have employees who understand that this is something you are consuming and you have a responsibility for,” Wal-Mart Stores Inc. chief executive H. Lee Scott Jr. said in an interview.

Staff writer Michael Barbaro contributed to this report.

New tack for health insurance(SF Chronicle)

By
David Lazarus
  
So we learned from President Bush’s budget this week that the new-and-improved Medicare prescription drug benefit won’t cost Americans less than $400 billion over 10 years as originally proposed, but instead nearly twice that amount.

A pig in a poke? Quite possibly.
A lousy health care system? Definitely.

Boston University researchers released a study this week concluding that about half of all health care spending in the country is squandered on administrative waste, excessive pricing and fraud. Yet Californians may soon have an alternative, at least if a state lawmaker succeeds in her latest effort to introduce universal health care.

State Sen. Sheila Kuehl, D-Santa Monica, told me Thursday that she plans to unveil her California Health Insurance Reliability Act on Feb. 23. It will be Kuehl’s third stab at getting a universal-care bill through the Legislature. But this time things are a little different.

For one thing, disenchantment with the existing health care system continues to grow among both ordinary people and businesses saddled with skyrocketing insurance premiums.

Meanwhile, advocates of universal coverage have brought a new level of seriousness to their cause by hiring a prominent political operative, Andrew McGuire, to spearhead fund-raising and lobbying efforts. Less money, more coverage. And most importantly, a new report by the Lewin Group, a well-regarded health care consulting firm, finds that a system along the lines of what
Kuehl is proposing would reduce health care spending in California by $8 billion next year alone.

It also would provide coverage for the nearly 6 million uninsured people statewide and result in lower costs for virtually all California companies now providing insurance to employees. “This is an independent report proving that we can achieve universal coverage in California while reducing health spending,” Kuehl said. “It’s a very important development.”

It’s not a slam dunk, though. Kuehl acknowledged that almost as soon as she introduces her legislation this month, the insurance and drug industries will unleash all their political firepower to protect their interests.
  
“When they do, I plan to raise questions about the obscene profits these companies are making,” Kuehl said. “I love a good fight.” Her bill would create a so-called single-payer health system in California– the first in the nation (although similar efforts are under way in other states). Single-payer systems have existed in Canada and other nations for decades.

Under a single-payer system, any California resident could be treated by any doctor at any hospital anywhere in the state. Commissioner to oversee. The state’s medical resources would be overseen by a newly created health commissioner, who would ensure that money is spent wisely.

According to the report issued last month by Virginia’s Lewin Group, funding for a California single-payer system could come in part from an 8.2 percent payroll tax for employers. The tax would replace all current health care benefits paid for workers, dependents and retirees. Lewin estimates that this change would result in a 16 percent average saving in 2006 for all employers now offering health
benefits.

Meanwhile, salaried workers would pay a 3.8 percent payroll tax that would replace all existing insurance premiums, deductibles and co-pays. According to Lewin’s projections, this would reduce the $2,788 expected to be paid by the average California family next year for health services and insurance by about $340 per family.

Exact funding breakdowns in Kuehl’s legislation are still being tinkered with. Industry likely to oppose “If people can get past industry’s propaganda, I think they’ll see that this is really good for them,” said McGuire, who was hired several weeks ago to serve as executive director of Health Care for All — California, a
grassroots organization backing universal coverage.

McGuire’s past political efforts have included campaigns for gun control and safer cigarettes. He also serves as head of San Francisco General Hospital’s Trauma Foundation, which seeks to prevent serious injuries. “If people in the corporate world get religion and realize this is in their best interest, we could really have a chance,” McGuire said of Kuehl’s bill.

That may be true for many companies, but not for the health insurance business, which would be effectively decimated by creation of a single-payer system. Bill Wehrle, acting president of the California Association of Health Plans, which represents about three dozen HMOs statewide, said people should be wary of single payer.

“There could be some amount of administrative savings under a single-payer system,” he acknowledged. “It all depends on what trade-offs people are prepared to make to get savings.”

Long waits in Canada
In Canada, for example, Wehrle said the country’s single-payer plan has resulted in longer waits for treatment and lower pay for doctors. “We think higher quality at lower cost is achieved when you have competition in the private sector,” he said.

Perhaps, but a poll this week by Research America, a Virginia nonprofit organization focusing on medical issues, found that nearly two-thirds of respondents believe most Americans are not getting the health care they need.
And a study last month by the Kaiser Family Foundation revealed that 63
percent of adults believe that lowering the cost of health care and insurance should be a top priority for political leaders.

Kuehl said her bill stands a good chance of passage in the state Senate. The Assembly might be rougher sledding as the legislation’s tax components are scrutinized by various committees. As for what California’s unabashedly pro-business governor might do when presented with a single-payer bill to sign, that’s a whole other matter.

“We have to show him the data on who would save money here,” Kuehl said.
“Eight billion in savings is a lot.” It is. And with the stakes this high, an open mind on everyone’s part isn’t too much to ask for.
  
David Lazarus’ column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU’s “Mornings on 2.” Send tips or feedback to
dlazarus@sfchronicle.com.