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The New York Times
December 17, 2001

Excerpt from the letter of David Jones, President, Community Service Society of New York:

“In New York, there have been more than 100,000 new Medicaid applicants since the state began its disaster-relief Medicaid program after the events of Sept. 11. This dramatic response brings to the fore a significant problem: the many people in need of health coverage but not enrolled in programs.”

http://www.nytimes.com/2001/12/17/opinion/L17MEDI.html

Comment: Current political approaches to the problem of the uninsured are limited to the concerns of those individuals losing coverage because the September 11 disaster and because of the recession. Attempts to expand public programs for the chronically uninsured, especially Medicaid and S-CHIP, are failing because of balanced-budget mandates at the state level.

If a publicly administered program of universal health insurance had been in place, we would not be concerned about these issues since everyone would already have coverage. Instead, the political debate would be over debt management and taxation, a debate that we already have and always will have. Wouldn’t it be better to assure health care coverage for everyone and then go back to the tables and limit our debate to tax policy?

Alliance for Health Reform

December 12, 2001
Washington, DC

During Q & A:

Edward Howard, Executive Vice President, Alliance for Health Reform:

“I do have a couple of questions that have been submitted in advance, and let me try one of those, if I can. The questioner starts by noting the inability of employers to protect themselves from rising health insurance premiums compared to, for example, their domestic competitors who provide nothing, their global competitors who have access to a universal system. Also the lack of effective cost containment in a highly fragmented system. Given that, whatever merit employer-sponsored health insurance offered to spread risk equitably through the population, isn’t this a good time to create more equitable risk pools at the state or community level? Lynn, you sort of had some notions along that line.”

Lynn Etheredge, an independent health policy consultant:

“Thanks, Ed. All I can say is that, what we’ve discovered in health insurance debates is that one person’s-when people start talking about equity, they’re talking about reallocating costs to someone else. And, while it may, for the person who’s suddenly hit with a double digit rate of increase after several years of single digit, the idea that it’s more equitable to shift that cost to someone else, to the person to whom it’s shifted, who’s already also facing a double digit rate of increase, the willingness to think it’s equitable to pay someone else’s bill on top of theirs is somewhat diminished. So I’m not sure that it’s-theoretically, it might be a good time to do it but, in practice, we-it makes it somewhat harder I think.”

And later,

Mr. Howard:

“Stuart, you were talking about a voluntary system, and I wonder if you have any current thoughts about the idea of an individual requirement for insurance purchase, in the way that many states have individual requirements for auto insurance purchased for those who want to have licenses to drive, and whether or not that idea is getting any sort of receptivity from that broad spectrum of folks that you were talking about earlier.”

Stuart Butler, Ph.D., Vice President, Heritage Foundation:

“Well, you know, the wounds I suffered when I last proposed that are only just beginning to heal now! I mean, look, in principle-I’m a conservative. In principle, I have no problem with the idea of saying that the rest of society should be protected against individuals who use our existing laws and good nature to provide them with a service that they’re not prepared to pay for. I think that we should have a requirement for at least that. Whether we should have it beyond that, is much more open to question. But I still think that there are other kinds of soft ways in which one can achieve the same kind of objective. I mean, the various tax proposals that are on the table and other subsidies basically say, unless you get at least a minimum protection, you don’t get any of these. You don’t get any subsidy for your prescriptions, for your-you know, for your visit to the doctor or anything. That’s an inducement.”

“There are proposals from, I think NCPA and others that say, okay, what-let’ s take the people who just, whatever you try to do, still don’t sign up. Well, let’s calculate some of those and give the state the equivalent money and let them deal with those people directly, which at least is better than we have today. So I think there are ways. But I certainly feel that there ought to be a requirement for at least a minimum protection, much like, as you said, third party insurance for automobiles, because I don’t see why I should pay because somebody runs into me. And, you know, those kinds of things I have no problem with.”

http://www.kaisernetwork.org/health_cast/uploaded_files/kff121201a.pdf

Comment: These unprepared responses during the question and answer session demonstrate the difficulty that those who are opposed to a program of universal insurance have with the concept of equity. It seems that achieving equity or fairness should be at the forefront in our efforts to reform health care. A suggestion for the topic of the next forum: “Health Care Equity: How Can We Achieve it?”

Tom Mainor, Pastor of Shady Grove Presbyterian Church in Memphis, responds to Jeff Huebner’s comments on the ACP-ASIM proposal:

These observations are helpful. There really seems never to have been a lucid and rational national discussion, with helpful media coverage, of what we mean by “single payer approach.” They are always side-tracked by the opponents of a universal system, and mis-characterizations by entrenched financial interests who want to get control of community-provided health resources for profit.

The suggestion re/ modeling them after the Canadian provincial system parallels my thinking that regional health systems, globally budgeted, with regional health councils that look at everything from prevention, to trauma, to cure and rehab, nursing home care and good public health structures–such an approach can blunt the objections to universal coverage, and remind us that “government” is “we the people” working together to do what needs to be done for the commonweal. We would not suggest that only those citizens who can afford it have safe drinking water, or fire and police, or Coast Guard or a competent and ready national defense force. Why should health care be left to the vagaries of a market place whose purpose is to create more customers rather than a healthy people?

Tom Mainor

The New York Times
December 12, 2001

To the Editor:

“A New Health Plan May Raise Expenses for Sickest Workers” (front page, Dec. 5) points out the downside of a new approach to corporate expense reduction. The employers’ share of a new health care product would decrease, as would the average premium, but the burden would be shifted to sick people!

This is unwise public policy. When seriously ill, most patients are not working, and their families are burdened by additional expense already. And if the major costs of modern medicine are shifted directly to patients, they are more likely to defer diagnostic procedures and filling prescriptions, and therefore get sicker. Sooner or later, we will all get the bill.

When are we going to realize the humanity, and the wisdom, of community-wide risk pools, which would spread the burden fairly to all? When will we realize the economy and efficiency of a national insurance system?

Steven Wolfson, M.D.

New Haven, CT

http://www.nytimes.com/2001/12/12/opinion/L12HEAL.html

The Times-Standard Eureka, California
December 09, 2001
by Jennifer Morey

“When an insurance company executive has the audacity to admit to a state senator that his company doesn’t offer drug and alcohol treatment coverage because it simply doesn’t want to spend the money, it’s a clear illustration of the severity of the health care crisis. Studies have shown that treatment is cost-effective and saves companies millions of dollars, but that doesn’t matter to this executive.”

California state Sen. Wesley Chesbro, quoting the executive:

“It’s fairly simple. We are an investor-owned company. The decision is based on actuarial data. By the time the catastrophic costs are incurred, the person will no longer be employed.”

http://www.times-standard.com/Stories/0,1002,2896%7E264943,00.html

Comment: Sen. Chesbro’s hearing was held in rural Humboldt County, a region that is partially dependent on the fragile economy of the fishing and lumbering industries. Managed care plans have failed to enable affordable access to care in Humboldt County and in other rural areas of California. Rather than seeking solutions on how to make managed care plans work for rural communities, we should be advocating for equitable distribution of our resources. A publicly administered program of universal health insurance would assure rural communities that adequate health care resources would always be available to them, and to the rest of us as well.

The Times-Standard Eureka, California
December 09, 2001
by Jennifer Morey

“When an insurance company executive has the audacity to admit to a state senator that his company doesn’t offer drug and alcohol treatment coverage because it simply doesn’t want to spend the money, it’s a clear illustration of the severity of the health care crisis. Studies have shown that treatment is cost-effective and saves companies millions of dollars, but that doesn’t matter to this executive.”

California state Sen. Wesley Chesbro, quoting the executive:

“It’s fairly simple. We are an investor-owned company. The decision is based on actuarial data. By the time the catastrophic costs are incurred, the person will no longer be employed.”

http://www.times-standard.com/Stories/0,1002,2896%7E264943,00.html

Comment: Sen. Chesbro’s hearing was held in rural Humboldt County, a region that is partially dependent on the fragile economy of the fishing and lumbering industries. Managed care plans have failed to enable affordable access to care in Humboldt County and in other rural areas of California. Rather than seeking solutions on how to make managed care plans work for rural communities, we should be advocating for equitable distribution of our resources. A publicly administered program of universal health insurance would assure rural communities that adequate health care resources would always be available to them, and to the rest of us as well.

American College of Physicians American Society of Internal Medicine (ACP-ASIM)

Available at the link below is “a draft seven-year sequential plan for expanding access to health insurance for all Americans. Your review of this document is requested. The Health and Public Policy Committee of the American College of Physicians – American Society of Internal Medicine has developed this draft policy paper with the view that a sequential series of steps within a specific time frame are needed to achieve the goal of access to health insurance coverage for all Americans.”

“We would appreciate your comments by January 11, 2002, so that we may incorporate them into a final draft that will be further reviewed by our committee in February 2002 and then brought to our Board of Regents for final approval.”

The ACP-ASIM request for comments is available at: http://www.acponline.org/hpp/seq_plan01.htm?hp

And from the draft of the proposal:

“We recognize that some will argue that the College’s proposed reforms don’t go far enough… Others will likely argue that they go too far… Some will question the political feasibility… ”

“ACP-ASIM welcomes such comments, but requests that those who disagree with some or all of the steps recommended in this paper present an alternative plan of action that would achieve affordable coverage for all Americans within the next seven years. Debate should no longer center on whether all Americans should have access to affordable coverage, but on the means to achieve that end within a reasonable period of time.”

“ACP-ASIM also recommends that the ideas in this paper, as well as alternative proposals to achieve the same objective, be discussed in community forums throughout the country. History has shown that health care reform cannot be a top down proposal emanating from Washington, D.C. Rather, the changes that are needed must be understood, guided, and supported by citizens in communities throughout the country.”

The full draft of the proposal is available at: http://www.acponline.org/hpp/seq_plan01.pdf

Comment: ACP-ASIM proposes a seven year sequential path to reform as follows: (1) A sense of the Congress resolution, (2) Expansion of Medicaid to all below 100% of poverty, and premium subsidies for public or private programs for those up to 200% of poverty, (3) Covering all remaining uninsured through premium subsidies of plans offered and approved by purchasing groups, using FEHBP as the model, and, finally, (4) Enacting legislation “to discourage individuals from voluntarily choosing not to obtain coverage” (individual mandates enforced by financial penalties).

ACP-ASIM is very serious about leading the charge to universal coverage. Although they previously supported a single payer approach, they are now adopting the Clinton approach that we must bring all parties together, including the health plans. This approach can only perpetuate the waste and inequities that are inherent in our fragmented system.

It is easy to respond to the ACP-ASIM proposal with a critique of the flawed health policies perpetuated by their plan. The ACP-ASIM policy committee already fully understands the implications of its proposals, both positive and negative. They need to hear much more from us than a mere critique. They have challenged us to provide “an alternative plan of action that would achieve affordable coverage for all Americans,” a plan that “must be understood, guided, and supported by citizens in communities throughout the country.”

The challenge is ours. We have the policy. We understand the policy applications that would bring equity to health care, while maintaining affordability. We now need to create a specific action-plan document that we can present to the ACP-ASIM, and, more importantly, to the nation. The alternative is sequential incrementalism that will address only the issue of coverage while perpetuating and solidifying the inequities and flawed policies of our current system. For us to accept sequential incrementalism by default would be a greater moral transgression than that of those that are merely manipulating our system for their own personal gain.

United States House of Representatives
Committee on Ways and Means
December 4, 2001

Representative Pete Stark (D-CA):

“I’d say, Madam Chair, that it’s perhaps time that we recognize that less than 15 percent of the seniors have signed up for these Plus Choice plans. They have caused more problems than all the rest of Medicare put together. The premium support plan that the Medicare Commission came up with is a blatant attempt to shove people into these Medicare Plus Choice plans. So when you don’t have one in eight people who like them, why don’t we just can them, use the money to support the Medicare system, provide perhaps a federal Medigap policy that would cover all of our beneficiaries fairly? And, one of these days, we might even get around to a drug benefit, if we stop giving big tax breaks to wealthy people.”

http://www.kaisernetwork.org/health_cast/uploaded_files/ACF2D.pdf

The New York Times
December 5, 2001
by Milt Freudenheim

“Pressed by employers, some of the nation’s biggest insurers are introducing a new kind of health plan that would significantly change the way employees are reimbursed for ordinary medical expenses.”

“Most working families, who have relatively low medical bills, could save money under the plans. But those with several thousand dollars in medical expenses could wind up paying much more.”

“The new plans typically require a family to pay an annual premium of $1,000 to $1,400, slightly lower than the cost of traditional managed care. Families then receive an allowance of $2,000 to $3,000 each year to spend on medical expenses, including drugs.”

“But after they have spent that, they have to cover every cost above that cap, sometimes up to $5,000 or more. After the higher amount is reached, the employer picks up most of the bills.”

“A family that keeps its medical bills lower than the allowance can roll over any unspent money to pay medical bills in future years.”

“But for a family that uses up the allowance, the plans stop paying entirely until a ceiling is reached… If they go to doctors outside the network, their deductible could rise even higher.”

“Insurance and insurance rates are usually designed around the idea of a pool of risk – the chance that a few members of a group will have high claims that can be covered by the premiums paid by everyone else. But the new plans move away from that notion, effectively penalizing people with higher medical costs and rewarding those with lower expenses.”

“Indeed, when employers offer both the new plans and traditional managed care, the new savings accounts may attract largely young, healthy members, while sicker people stick with plans that cover more of their medical costs. Eventually, however, consultants expect many employers to offer only the new type of plan.”

Uwe E. Reinhardt, an economist at Princeton University:

“The effect will be to shift more of the costs into the pockets of the sick people. The insurance industry has decided that if you are sick, you ought to eat the costs. It’s a very dubious social policy.”

http://www.nytimes.com/2001/12/05/business/05CARE.html

Comment: These new health plans represent a convergence of ideas. Employers want lower health care costs and now are quite willing to shift those costs to their employees. The insurance companies want lower risk and now are shifting risk to their beneficiaries. Both trends are being touted as a method of empowering the patient-employee-beneficiary-consumer. By becoming sensitive to health care costs, patients will reduce their utilization of “unnecessary” services (but, more importantly, also will reduce utilization of beneficial services).

A highly touted model that would accomplish these goals is the medical savings account (MSA) combined with catastrophic insurance. But the insurance industry really didn’t want to hold on to the catastrophic business while the Wall Street money managers walked away with the bread and butter funds in the MSAs.

And so they came up with the perfect solution, that is, perfect for them and for the employer-purchasers of their plans. Instead of medical saving accounts, they have developed the “health savings account product” as Aetna has labeled it. Let’s call it “Health SAP.” The Health SAP functions like an MSA, but it leaves the funds under the control of the health plan. To understand the implications of the Health SAP, we should look at the winners and the losers.

The insurance industry is the big winner. Shifting the bulk of up-front costs to the beneficiaries reduces both medical losses and administrative costs. Up-front costs are paid by fund accounts already delegated for care, or by the patients’ own personal funds. In essence, for the bulk of routine expenses, the insurance companies are paying nothing except modest administrative costs. The savings more than offset the reduction in “premiums” collected. Yet, for catastrophic losses, the plans still benefit by controlling rates for contracted panels or providers. By paying a portion of the first dollar out of the fund accounts, the health plans create a perception of “full coverage with deductibles,” when, in reality, patients really have only catastrophic coverage.

Employers are also winners. Because a large amount of the up-front costs are shifted to the patients, the costs to the employers are limited to the catastrophic coverage and the funding of the accounts, an amount that is less than the costs of the more comprehensive plans now dominating the market. There is risk that the catastrophic costs will increase significantly, but employers may well increase the deductible threshold, especially once the average amount retained in the savings accounts increases. (This would compound the difficulties for those that must spend down their accounts.)

The greatest losers are the patients. The healthy, who do not require much care, will be fine. The wealthy will have no financial barriers to care. But the moderate and low income individuals who do require care for chronic or catastrophic disorders will rapidly deplete their disposable income. This will erect financial barriers to access. For those with the greatest needs, Health SAPs will ration care based strictly on the ability to pay, the most inhumane form of rationing.

The providers are losers. Physicians have been in strong support of MSAs with catastrophic indemnity coverage. Although they claim that they support this model because it empowers consumers, their interest actually has been quite self-serving. With cash pools of MSAs and a backup of indemnity-type catastrophic plans, physicians believe that they would be free to charge any rates and provide unlimited services, returning to the “Golden Age of Medicine.”

But instead of MSAs, physicians are going to be the saps of Health SAPs. Their fees will still be rigidly controlled, and a much larger number of their patients will no longer be able to pay their up-front expenses. Physicians will find that many of their routine services will no longer be paid for by the insurance plans, and will be uncollectable from patients that have no disposable income. In supporting MSAs, physicians had no grasp of the astute business ingenuity of the MBAs in the health plans. Doctors, you’ve been snookered again.

The government and taxpayers are losers. The pool of patients unable to afford needed care will be significantly larger than it already is. In health care, the government always is the payer of last resort. Taxpayers will be forced to fund necessary care through a fragmented system of various public programs that lack the efficiency and equity that would be inherent in a unified program of universal health insurance.

What will be the response of the patients to this? The majority, who will remain relatively healthy, will believe that they have the security of health care coverage. But, more significantly, they will watch their health savings accounts grow and, with their new found wealth, will become avid supporters of the Health SAPs.

Individuals that do require health services will be relieved to see that the health plans are no longer intruding into their care. The more traditional physician-patient relationship will be renewed. But they will not understand why they are broke at the end of the month, with unpaid bills stacking ever higher.

Sadly, the majority will be smugly satisfied, and the vulnerable will be dejected, not realizing that they should be outraged instead. The insurance industry wins again, but this time at a terrible cost in health care equity and justice.