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The New York Times
January 9, 2004
Sick State Budgets, Sick Kids
By Bob Herbert

While headlines continue to tell us how great the economy is doing, states across the U.S. are pulling the plug on desperately needed health coverage for low-income Americans, including about a half-million children.

Even as the Bush administration continues its bizarre quest for ever more tax cuts, the states, which by law have to balance their budgets, are cutting vital social programs so deeply that tragic consequences are inevitable.

It seems extremely strange that in the United States of America, the richest, most powerful nation in the history of the world, we are going backward in the 21st century in our ability to provide the most fundamental kinds of health care to ordinary people, including children.

Maybe the nation itself needs a doctor. Shoving low-income people, including children, off the health care rolls at a time when the economy is allegedly booming is a sure sign of some kind of sickness in the society.

Health Affairs
January/February 2004
Health Spending Rebound Continues In 2002
By Katharine Levit (and colleagues from the Office of the Actuary, Centers for Medicare and Medicaid Services)

U.S. health care spending climbed to $1.6 trillion in 2002, or $5,440 per person. Health spending rose 8.5 percent in 2001 and 9.3 percent in 2002, contributing to a spike of 1.6 percentage points in the health share of across domestic product (GDP) since 2000 (to 14.9% in 2002).

The continued acceleration in health care spending growth has posed financial challenges for government, businesses, and individuals alike. Compared with economic growth of 3.6 percent, growth in health spending of 9.3 percent pressures employers to cut other spending increases, possibly through reducing jobs, wage gains, or health benefits or through Shifting more costs to employees. State and federal governments face the same dilemma of costs rising more rapidly than revenues, leading every state to scrutinize discretionary Medicaid benefits as the number eligible for coverage continues to grow.

Factors fueling growth in health spending are already showing signs of dissipating in 2003. Preliminary data indicate that hospital use has eased and that wage growth in the health sector has decelerated slightly. Furthermore, Medicare givebacks have expired, and states have begun plans to curtail Medicaid spending growth. Finally, as consumers share more of the increases in cost, the value of health services will be more closely weighed against other purchases, underscoring the considerable value of some services and the discretionary nature of others.

http://content.healthaffairs.org/cgi/content/full/23/1/147

Comment: Can the health care consumer really distinguish between services that are of considerable value and those that are more discretionary? In a life-threatening emergency, services are rendered without significant consumer input, even though the financial consequences for the patient may be severe.

But what about decisions regarding management of serious chronic disorders such as diabetes, hypertension, congestive heart failure, or hyperlipidemia? For the great multitude of individuals who have negligible disposable income, the consumer decisions become a choice of essentials such as housing and food, versus adequately managing a disorder that may have minimal symptoms at present, but, in time, may have a major detrimental impact on the individual’s health status. The health care consumer may perceive these expenses to be discretionary, when, in reality, reducing spending now may result in disability and premature death. No truly humane policymaker for health care provider can ever consider these expenses to be being discretionary.

Perhaps the most common example of an “unnecessary” discretionary service is the C-T or MRI scan “demanded” by the patient. Even though medical decisions are ultimately made by the patient, it is the responsibility for the physician to see that the patient’s decision is an informed one. If the scan is unnecessary, the physician has an obligation to inform the patient of that fact in explaining why he or she is not ordering it. Sometimes the claim is made that a scan may be necessary to “prevent a lawsuit.” But if the patient’s symptoms indicate that a scan could detect a problem that might have adverse consequences, then it is an indicated test. But if the test is clearly not indicated, that alone is adequate evidence to defend against accusations of malpractice for not ordering the test. It is the physician’s obligation to avoid wasting resources on services that are not indicated.

Nevertheless, excessive discretionary services are a problem. But they are related to excess capacity and to a dependence on use of specialized services for problems that would be more appropriately provided on a primary care level. Rather than being left to a flawed decision process of patient-consumers, reduction of this waste will need to be made by comprehensive planning decisions, both controlling capacity and allocating our resources appropriately, thereby ensuring an adequate primary care Base with an appropriate level of high-tech care.

The other important method of improving spending is to eliminate the profound administrative waste by reforming our method of funding care. We need structural reform that will improve health care spending, rather than consumer-directed financial barriers to necessary services.

Reducing spending on essential health services through policies that create the deception that these costs are “discretionary,” and unaffordable anyway, is simply inhumane.

January 7, 2004

William Schwied, MD, MPH, founder of People for a National Health Program (PNHP), in his acceptance speech as Leisure Worlder of the Month:

“I will close with a global approach to dreams and goals: Nurturing and enriching the lives of all peoples in need; and creating a world without poverty, greed, human suffering, inequality, and war.”

Comment: I am personally eternally grateful to Bill, initially for his presentation of the single payer proposal in grand rounds at our hospital a decade ago, and for his continuing support since. He has provided inspiration to me, encouraging me to continue to pursue a life of activism on behalf of health care for everyone.

Don McCanne

Orlando Sentinel
January 5, 2004
Editorial
Give green light to fines

A legislative proposal to provide badly needed money to hospital trauma centers by increasing the traffic fine for red-light runners deserves support.

This approach could be a winner for Orlando Regional Medical Center and other hospitals that are struggling to come up with money to keep their trauma centers running.

http://www.orlandosentinel.com/news/opinion/orl-edped053010504jan05,1,2446659.story?coll=orl-opinion-headlines

Comment: Let’s get serious! We desperately need a rational system of funding all health care. Negligible tweaks just won’t do it.

The Argus
January 2, 2004
Sign ups for health insurance scheduled

OAKLAND — If you’re low-income and need no- to low-cost health insurance for both children and adults, mark Jan. 10 on your calendar.

That’s the day the Alameda County Social Services Agency will sign up children, families and senior citizens 65 and older for state and county health plan programs.

(Medi-Cal program specialist Belinda) Llaguno said applicants should bring a
birth certificate, marriage certificate or valid picture identification; proof of immigration status, Social Security card, proof of address (such as a utility bill), proof of income (such as wage stubs), child care receipts, vehicle registration, current bank statement and proof of other assets (such as life insurance).

http://www.theargusonline.com/Stories/0,1413,83~1971~1866160,00.html

Comment: Could you imagine being asked for this amount of documentation before being enrolled in either an employer-sponsored plan or an individual
private health plan? Yet those least able to afford health care coverage are
being subjected to this humiliating and burdensome process that denies these
individuals the right to privacy that the rest of us expect.

The obvious reason for extensive documentation is to establish that income and assets meet a level of poverty that would warrant public assistance for health care. Yet the rest of us are not required to establish a level of income and assets that would qualify us as being able to afford the payments for private insurance.

Health care coverage should be automatic for everyone, from the moment of birth, regardless of income or assets. Adopting a universal program of social insurance would end this unnecessary, humiliating process by including everyone in an equitably-funded system.

shreveporttimes.com
December 26, 2003
Health care eats up parish pay raises
By Don Walker

Caddo Parish employees will receive an across-the-board 2.2 percent pay raise at the start of the new year that, for many, will be swallowed by a 32.7 percent increase in the amount they pay in monthly premiums for health care insurance.

Caddo Administrator Bill Hanna said the increase is unfortunate, yet unavoidable.

“All of this started back with 9/11. Home insurance, auto insurance went up, too. I don’t think there’s a person in the country who hasn’t been affected, and what caused this to escalate was a terrorist attack.”

http://www.shreveporttimes.com/html/E16C8335-645D-4C76-A4CC-22302D6CBB95.shtml

Comment:  The rhetoric of the Bush administration certainly has been very effective, but apparently we need to work on ours.

_______________________________________________

The Wall Street Journal
December 23, 2003
Teddy’s Nightmare

The new year will bring something of a revolution in American health care. Insurance companies such as Golden Rule, Fortis and Aetna will soon be marketing Health Savings Accounts (HSAs), which promise a new era of individual choice for health insurance.

HSAs, the saving grace of the Medicare prescription drug bill, are the new and improved version of Medical Savings Accounts. They promise individuals and employers relief from spiraling health costs, and without the need for restrictive HMOs.

The basic idea is to pair an inexpensive insurance policy that has a high deductible — $1,000 or more for an individual, $2,000 for a family — with a tax-free savings account.

After the Mandela government deregulated South Africa’s private insurance market in 1994, HSA-type plans quickly captured about two-thirds of it.

That’s precisely the kind of success that Senator Kennedy and friends fear could happen here. Democrats know that a reinvigorated private health insurance market will end their dream of a Canadian-style health system.

“Once millions of HSAs are established, it will be almost impossible to reverse this program,” says the Web site for Physicians for a National Health Program, which also urges visitors to “CONTACT YOUR REPRESENTATIVES AND SENATORS IMMEDIATELY AND DEMAND THE URGENT REPEAL OF TITLE XII OF THE MEDICARE ACT!” Good to see they’re calm about the whole thing.

Critics have been making a number of dire predictions about the effects of
HSAs, none of which stand up to scrutiny. The most common is that HSAs would
attract a disproportionate number of “healthy and wealthy” individuals, “fragment the risk pool,” and drive up the cost of insurance for those who need it most.

http://online.wsj.com/article_email/0,,SB107214365174988600-H9jeoNmlah2op2vZ32Ib6iBm4,00.html

And…

eHealthInsurance.com
Frequently Asked Questions

What is an Indemnity Plan?

An indemnity plan is commonly known as a fee for service or traditional plan. If you select an Indemnity plan you have the freedom to visit any medical provider. You do not need referrals or authorizations; however, some plans may require you to precertify for certain procedures.Most indemnity plans require you to pay a deductible. After you have paid your deductible, indemnity policies typically pay a percentage of “usual and customary” charges for covered services; often the insurance company pays 80% and you pay 20%. Most plans have an annual out of pocket maximum and once you’ve reached this they will pay 100% of all “usual and customary” charges for covered services.

Many health insurance companies have moved away from indemnity plans and are instead offering managed care plans such as HMOs and PPOs. You may have few or no indemnity plan choices in your area.

http://www.ehealthinsurance.com/ehealthinsurance/FrequentlyAskedQuestions_1.html

And…

Internal Revenue Service
Notice 2004-2

This notice provides guidance on Health Savings Accounts.

Q-3. What is a “high-deductible health plan” (HDHP)?

A-3. Generally, an HDHP is a health plan that satisfies certain requirements
with respect to deductibles and out-of-pocket expenses. Specifically, for
self-only coverage, an HDHP has an annual deductible of at least $1,000 and
annual out-of-pocket expenses required to be paid (deductibles, co-payments
and other amounts, but not premiums) not exceeding $5,000. For family coverage, an HDHP has an annual deductible of at least $2,000 and annual
out-of-pocket expenses required to be paid not exceeding $10,000.

Q-4. What are the special rules for determining whether a health plan that
is a network plan meets the requirements of an HDHP (high-deductible health
plan)?

A-4. A network plan is a plan that generally provides more favorable benefits for services provided by its network of providers than for services provided outside of the network. In the case of a plan using a network of providers, the plan does not fail to be an HDHP (if it would otherwise meet the requirements of an HDHP) solely because the out-of-pocket expense limits for services provided outside of the network exceeds the maximum annual out-of-pocket expense limits allowed for an HDHP. In addition, the plan’s annual deductible for out-of-network services is not taken into account in determining the annual contribution limit. Rather, the annual contribution limit is determined by reference to the deductible for services within the network.

http://www.irs.gov/pub/irs-drop/n-04-2.pdf

Comment: The health policy literature is replete with studies describing the “death spiral” of skyrocketing premiums that result from drawing healthier beneficiaries out of risk pools, leaving higher-cost patients behind. The WSJ editors have exceeded their editorial prerogative when they state that the “dire prediction” of fragmenting the risk pool “fails to stand up to scrutiny.” The editors are entitled to their opinions, but not to their facts.

But it is not only those with current needs who will be exposed by widespread use of HSAs. Healthy individuals purchasing the high-deductible plans will find that they do not provide adequate financial protection should they later have major health care needs. It is important to realize that the traditional high-deductible indemnity plans essentially no longer exist, as indicated on the HealthInsurance.com website. No longer can you buy a plan that has only a 20% coinsurance for all services, and full, 100% coverage after an out-of-pocket maximum.

Currently available and HSA-qualified high-deductible plans are primarily PPO plans with restricted benefits, significant coinsurance, and limited provider lists. Current trends suggest that these restrictions will increase as efforts are made to keep the premiums affordable.

The IRS notice confirms that the maximum out-of-pocket expense of $5000 for individuals and $10,000 for families applies only to care provided under the plan. There is no stop-loss protection for care obtained from non-contracted physicians and hospitals, not to mention the very heavy financial penalties that are assessed for receiving care out of the network of providers.

Thus the only individuals who will be exposed to financial disaster are those with health care needs who are left with the death spiral of premiums, or those with needs who will find that their high-deductible PPO will leave them financially exposed. But those of us who are healthy and who will remain healthy will do just fine. Just don’t get sick.

At least the WSJ editors were correct when they facetiously noted that I was
not calm in my response to Title XII, the HSA provision of the Medicare bill. My histrionics are still applicable:

“CONTACT YOUR REPRESENTATIVES AND SENATORS IMMEDIATELY AND DEMAND THE URGENT REPEAL OF TITLE XII OF THE MEDICARE ACT!”

Don McCanne

The Washington Post
December 21, 2003
Dean’s Care For All, Built Part by Part
By Ceci Connolly

(In 1994, Vermont Governor Howard) Dean, a doctor by training, would be the nation’s first governor to guarantee health coverage to every state resident. And he would do it in a single legislative session, with one enormous bill.

It was ambitious, bold — and an utter failure.

But it wasn’t the end. Like a pragmatic physician who tries a new therapy when the first fails, Dean devoted much of the next decade to smaller, incremental changes aimed at filling the state’s health care gaps.

It was a slower strategy, but by the close of his tenure, Dean came very close to achieving universal health coverage. Vermont now has one of the nation’s highest rates of health insurance coverage, providing care to virtually every child and more than 90 percent of adults. The national average is 83.7 percent.

As some Democratic presidential rivals are quick to note, Dean’s embrace of
balanced budgets led him to flirt with the Medicare-reduction plans of then-U.S. House Speaker Newt Gingrich (R-Ga.), and Dean sometimes trimmed his own state health programs.

These opponents also said that his policies have exacerbated the financial problems for Vermont hospitals, and despite Dean’s efforts to expand health
care coverage, there remains a yawning insurance gap for residents ages 18
to 29. Most important, Dean’s heavy emphasis on government-run programs,
with their low reimbursement rates, has saddled the business community with
higher costs, according to some health care officials.

“Gov. Howard Dean has presided over a constant expansion in government health programs, without a commensurate increase in funding,” the Burlington Free Press editorialized in December 2000.

Another criticism of Dean’s health care record is that his heavy reliance on
government programs hurt the private sector. Because government reimbursement rates are so low, doctors and hospitals in Vermont have been forced to charge more to private clients — individuals and businesses — to make up the difference. As Dean encouraged families to enroll their children in Dr.Dynasaur, corporate insurance pools were left with a larger proportion of high-risk, more expensive adults.

Dean’s tactics and style could inflame tensions, lawmakers said. On several
occasions, he proposed trimming the very health benefits he instituted, including dental, foot and eye care for Vermont’s low- and moderate-income adults. He fiercely defends this approach.

“I promised the people of Vermont I would not take one person off the program,” he said. “So we did eliminate certain benefits. But that’s better than cutting people.”

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A17383-2003Dec20¬Found=true

Comment: The current emphasis on reducing the numbers of uninsured has created an explosion in the rate of under-insurance. Reducing benefits, increasing cost sharing, inequitably funding risk pools, shifting public program costs to providers which drives up fees for private payers, concentrating high-cost patients in separate risk pools making the premiums unaffordable, are only a few of the problems exacerbated by implementing a policy of incremental expansions of program enrollment without ensuring adequate funding of those programs.

Being insured may not mean much if care remains unaffordable because necessary benefits are not covered or the out-of-pocket expenses are too high. But limited insurance is better than none at all. Is there an alternative? Of course. Comprehensive coverage can be provided for everyone at no significant increase in cost if we were to eliminate the administrative inefficiencies of our multi-payer and non-payer system, and establish a single, universal health program.

Dr. Dean initially supported single payer reform but found that it wasn’t politically feasible. He then demonstrated that a pragmatic, incremental approach was feasible, even though it falls short on many goals. Dr.Dean has said that, as president, he would sign a single payer bill if it made it to his desk. But whoever is president, a single payer bill will never pass Congress without overwhelming public support. That won’t happen until the public really understands the various options. We have a lot of work to do.

There is risk for us. We may discover that the real reason for the lack of reform is that the United States is a nation that does, in fact, uniquely reject egalitarianism. Are you prepared to accept that possibility?