PNHP

Schwarzenegger’s Health Plan Unaffordable for California, Nurses Charge

Schwarzenegger’s Health Plan Unaffordable for California, Nurses Charge

Healthcare Costs Could Hit $12,320–or 25% of Income–on Premiums and Deductible Before Insurers Pay for Any Care

Total Out-of-Pocket Costs Could Exceed 36% of Household Income

California Nurses Association
Press Release
March 15, 2007

Gov. Arnold Schwarzenegger’s health plan could cost the typical California household from 25% to 36 percent of their family income, according to data released today by the California Nurses Association.

Schwarzenegger’s health proposal, based on a new Massachusetts law, would require all California residents to purchase health insurance. But with no controls on rising premiums — which have risen 87 percent this decade — most Californians are likely to opt for bare bones plans that carry a heavy price tag and limited benefits.

Under the Governor’s minimum plan, the typical California resident would likely be expected to pay $12,320 per year in medical expenses and premiums—before any medical care is paid for by their insurance company.

Schwarzenegger has proposed that the minimum, cheapest plans include a $5,000 deductible prior to an insurance payment. The deductible is on top of the insurance company’s premium charges, which are likely to cost up to $7,320 per household, the amount established in eastern Massachusetts for those required to buy health insurance.

For the typical California household, that means being forced to spend 25 percent of their income on medical costs—before any care is paid for by the insurance they are forced to buy (based on the median household income of $48,440 as of 2003 U.S. Census Bureau data).

The real costs could be far more. Schwarzenegger’s proposal further says that out-of-pocket costs could rise to $10,000 per household if more extensive care is needed — which would drive out of pocket costs up to 35 percent of the median family income. (Any hospital stay would expose a family to the $10,000 cost quickly; the average hospital charge per discharge in California is nearly $33,000.)

And since the Governor’s projected costs are for the least expensive coverage, it is likely that most families would have to spend extra for dental, vision, mental health, long-term care, and other care.

“Many families may end up having to make the terrible choice of assuming more medical debt which can lead to financial ruin, or foregoing needed care,” said CNA President Deborah Burger, RN. “Schwarzenegger’s healthcare plan could lead to financial ruin and bankruptcy, instead of nursing them back to health.”

Health care experts say health costs constitute a “financial burden” if they exceed 10 percent of a family’s post-tax income. In testimony to the House Ways and Means Committee in January, Diane Rowland, vice president of the Kaiser Family Foundation, noted that one in six adults who are privately insured “report having substantial problems paying their medical bills” and that two-thirds of the privately insured who have medical debt have family incomes of up to $75,000.

Additionally, a recent study by the American Academy of Pediatrics found that high-cost, high-deductible insurance plans are a hazard to patient health, because they provide parents and other patients with an incentive to skip or delay preventive care, immunizations, compliance with recommended treatment, and other needed care.

SB 840 Would Provide Affordable Care to Californians:

CNA has long advocated for a universal, single-payer healthcare plan as the only affordable and fair way to ensure that every patient receives a single standard of high-quality care. Governor Schwarzenegger vetoed just such a plan, Sen. Sheila Kuehl’s SB 840, last year.

Upon reintroducing her bill this year, Senator Kuehl remarked, “SB 840 works by pooling our health care resources so everyone — state and federal government, income earners and employers – contributes something and we all get coverage. This allows us to consolidate the administrative functions of thousands of different insurance companies and plans into one comprehensive insurance plan, saving businesses and consumers, as well as the state, billions of dollars in the first year alone.”

CNA is the principal sponsor of SB 840 and is engaging in an active campaign to ensure its passage, including direct mail to households, a radio ad, and a new web site, www.SinglePayer.com.

Representing 75,000 RNs from California to Maine, the California Nurses Association/National Nurses Organizing Committee is the fastest-growing association of direct-care RNs in the nation. Learn more at www.CalNurses.org

Bush administration rejects citizens' health care recommendations

President Rejects Health Care Proposal

By Kevin Freking, Associated Press
The Herald-Sun
March 14, 2007

The Bush administration on Wednesday rejected key recommendations from a citizens’ group (Citizens’ Health Care Working Group) asked by Congress to find out people’s health care wishes.

The group released its report Sept. 29 after hearing from about 6,500 people at 84 meetings.

The task force called for a guaranteed package of health benefits for everyone. It urged creation of an independent, nonpartisan group to select those benefits, such as an annual breast cancer exam or physical.

The group did not answer the hard question of how the government should pay for the benefits, but said people believe that there is enough money to make the changes. The group said the government should first transfer money from other programs to pay for the benefits.

(Health and Human Services Secretary Michael) Leavitt said the administration agrees it is important to make health care more affordable and expand insurance coverage. But he disagreed with the concept of a national commission to define coverage.

“A nationally determined set of core health benefits would place important decision-making about a person’s health care in the control of federal appointees, rather than allowing the consumer to choose the benefits that best meet their needs,” Leavitt said.

The group “chose an approach based on mandates and government intervention rather than an approach emphasizing consumer choice and options,” Leavitt said.

http://www.heraldsun.com/nationworld/14-829396.cfm

Comment:

By Don McCanne, MD

Quoting from the final report of the Working Group: “The overriding message was consistent across every venue we explored: Americans should have a health care system where everyone participates, regardless of their financial resources or health status, with benefits that are sufficiently comprehensive to ensure access to appropriate, high-quality care without endangering individual or family financial security.”

The Working Group recommended defining the core benefits and services that will be assured to all Americans: “To define core benefits and services for all Americans, the best methods must be applied in a transparent process. Consumer participation is critical to ensuring public trust in the process and essential for ensuring that personal values and preferences are taken into consideration in coverage decisions. The group making decisions should be established as a public/private entity to insulate it from both political and financial influence. The group should be an ongoing entity with stable funding, to guarantee its independence and to assure that the benefits continue to reflect advances in medical research and practice. Evidence used to make decisions about coverage can contribute to improvements in the overall efficiency of health care delivery and help patients and providers make informed decisions. Identifying core benefits can help make all health care more effective and efficient, helping to control health care costs overall.”

Defining core benefits is controversial. What beneficial services would you omit? Presumably the purpose would be to control the costs of the insurance product, whether a private plan or public program. There are far better mechanisms for controlling spending, for instance those embodied in the single payer model, that would not necessitate the exclusion of any reasonable beneficial health care services.

The Bush administration is correct to object to a federal process that incidentally might lead to the exclusion of beneficial health services for those with needs. But where they are clearly wrong is that they used this technicality as an excuse to walk away from the overriding message in this report: appropriate, high-quality care for everyone without endangering individual or family financial security.

That goal cannot be accomplished without government playing some role. We are now at a point that the political process is primed to define precisely what that role should be. Those politicians who would walk away from this process should. We need real leaders who want to bring an end to the suffering and death caused by our dysfunctional system.

What we need: single payer, a single plan

When it comes to genuine reform of the health care system, a band-aid solution won't do.

Lisa Nilles
Star Tribune
Opinion
March 15, 2007

The universal health insurance plan introduced last week by Healthy Minnesota (a coalition of providers, legislators and insurers) is nothing more than a band-aid on a system in need of a much bigger fix.

It promises universal access to health care by requiring all Minnesotans to “own” health insurance (called individual mandate). On the surface, it may look good, momentarily, to claim that Minnesota has a universal health care plan, but without underlying repair of our overly complex and outrageously expensive health care system, the satisfaction won’t last long.

Healthy Minnesota’s proposal is similar to the universal-health-care-by-individual-mandate plan passed in Massachusetts last year. This is somewhat surprising, since the Massachusetts plan is already failing in its promise to make “affordable” health insurance available to all.

We need repair of the broken system to achieve universal health care. It’s that simple, and it’s that hard. Band-aid solutions are “politically possible.” Genuine reform, which replaces our fragmented, failed system of multiple private insurers with a single payer and one single plan for all, is considered “politically impossible.” But it is what we need to do.

It is not un-American to suggest that we work together to solve the health care crisis. It is a huge social and economic problem that affects each and every one of us. Eighty-six percent of Minnesota physicians believe “it is the responsibility of society, through the government, to ensure that everyone has access to good medical care.” We can’t expect the private market to solve this problem: Entrusting it to manage health care just fractures the system and drives up cost. We need to work together on this one, and the only institution that represents all of us is government.

We don’t want to waste any more time or money on band-aid solutions. We are ready for real reform: single-payer with universal coverage.

Lisa Nilles, M.D., of Minneapolis, is a graduate student in theology and a member of Physicians for a National Health Program.

Bush administration rejects citizens’ health care recommendations

President Rejects Health Care Proposal

By Kevin Freking, Associated Press
The Herald-Sun
March 14, 2007

The Bush administration on Wednesday rejected key recommendations from a citizens’ group (Citizens’ Health Care Working Group) asked by Congress to find out people’s health care wishes.

The group released its report Sept. 29 after hearing from about 6,500 people at 84 meetings.

The task force called for a guaranteed package of health benefits for everyone. It urged creation of an independent, nonpartisan group to select those benefits, such as an annual breast cancer exam or physical.

The group did not answer the hard question of how the government should pay for the benefits, but said people believe that there is enough money to make the changes. The group said the government should first transfer money from other programs to pay for the benefits.

(Health and Human Services Secretary Michael) Leavitt said the administration agrees it is important to make health care more affordable and expand insurance coverage. But he disagreed with the concept of a national commission to define coverage.

“A nationally determined set of core health benefits would place important decision-making about a person’s health care in the control of federal appointees, rather than allowing the consumer to choose the benefits that best meet their needs,” Leavitt said.

The group “chose an approach based on mandates and government intervention rather than an approach emphasizing consumer choice and options,” Leavitt said.

http://www.heraldsun.com/nationworld/14-829396.cfm

Comment:

By Don McCanne, MD

Quoting from the final report of the Working Group: “The overriding message was consistent across every venue we explored: Americans should have a health care system where everyone participates, regardless of their financial resources or health status, with benefits that are sufficiently comprehensive to ensure access to appropriate, high-quality care without endangering individual or family financial security.”

The Working Group recommended defining the core benefits and services that will be assured to all Americans: “To define core benefits and services for all Americans, the best methods must be applied in a transparent process. Consumer participation is critical to ensuring public trust in the process and essential for ensuring that personal values and preferences are taken into consideration in coverage decisions. The group making decisions should be established as a public/private entity to insulate it from both political and financial influence. The group should be an ongoing entity with stable funding, to guarantee its independence and to assure that the benefits continue to reflect advances in medical research and practice. Evidence used to make decisions about coverage can contribute to improvements in the overall efficiency of health care delivery and help patients and providers make informed decisions. Identifying core benefits can help make all health care more effective and efficient, helping to control health care costs overall.”

Defining core benefits is controversial. What beneficial services would you omit? Presumably the purpose would be to control the costs of the insurance product, whether a private plan or public program. There are far better mechanisms for controlling spending, for instance those embodied in the single payer model, that would not necessitate the exclusion of any reasonable beneficial health care services.

The Bush administration is correct to object to a federal process that incidentally might lead to the exclusion of beneficial health services for those with needs. But where they are clearly wrong is that they used this technicality as an excuse to walk away from the overriding message in this report: appropriate, high-quality care for everyone without endangering individual or family financial security.

That goal cannot be accomplished without government playing some role. We are now at a point that the political process is primed to define precisely what that role should be. Those politicians who would walk away from this process should. We need real leaders who want to bring an end to the suffering and death caused by our dysfunctional system.

Underinsurance is bad for your heart

Financial Barriers to Health Care and Outcomes After Acute Myocardial Infarction

Ali R. Rahimi, MD, MPH; John A. Spertus, MD, MPH; Kimberly J. Reid, MS; Susannah M. Bernheim, MD, MHS; Harlan M. Krumholz, MD, SM
JAMA
March 14, 2007

Objective: To measure the baseline prevalence of self-reported financial barriers to health care services or medication (as defined by avoidance due to cost) among individuals following AMI (acute myocardial infarction) and their association with subsequent health care outcomes.

Results: The prevalence of self-reported financial barriers to health care services or medication was 18.1% and 12.9%, respectively. Among individuals who reported financial barriers to health care services or medication, 68.9% and 68.5%, respectively, were insured. At 1-year follow-up, individuals with financial barriers to health care services were more likely to have lower SAQ (Seattle Angina Questionnaire) quality-of-life score (77.9 vs 86.2), and increased rates of all-cause rehospitalization (49.3% vs 38.1%) and cardiac rehospitalization (25.7% vs 17.7%). At 1-year follow-up, individuals with financial barriers to medication were more likely to have angina (34.9% vs 17.9%), lower SAQ quality-of-life score (74.0 vs 86.1), and increased rates of all-cause rehospitalization (57.0% vs 37.8%) and cardiac rehospitalization (33.7% vs 17.3%).

Conclusion: Financial barriers to health care services and medications are associated with worse recovery after AMI, manifested as more angina, poorer quality of life, and higher risk of rehospitalization.

http://jama.ama-assn.org/cgi/content/abstract/297/10/1063

Comment:

By Don McCanne

Many in the policy community insist that we must build on our existing system of private health plans and public programs. They do not perceive the elimination of private plans and substitution of a single public program to be a politically viable option.

The problem with these multi-payer models is that the private insurance industry has been unable to offer products with affordable premiums that are effective in eliminating financial barriers to beneficial health care services. Since the reform proposals require affordable premiums, the insurance industry has responded with products that deliberately erect greater financial barriers for the purpose of reducing health care utilization.

Do these barriers make a difference? Emphatically, yes. As an example, this study confirms that victims of heart attacks have worse outcomes when they have financial barriers to followup care and medications.

The policy community should be particularly concerned about the fact that two-thirds of the individuals with financial barriers and impaired outcomes were insured! At a time when efforts should be made to remove financial barriers that impair outcomes, the policy community is supporting measures that will increase those barriers.

Private plans that would remove financial barriers to beneficial services cannot serve as the vehicle for coverage for average-income individuals. The reason is that the health care that they must fund through a guaranteed-issue program and the administrative excesses that they require are so great that the premiums they must charge could never be affordable. Since the private plans are no longer able to function as equitable insurance risk pools, why would we want to design reform that merely perpetuates their administrative excesses?

There is another very important policy lesson from this study. Of those reporting financial barriers to health services and medications, 47.6 percent had Medicare coverage and 42.4 percent were on Medicaid. We can only speculate that Medicare patients had inadequate access to affordable drugs and that Medicaid patients had inadequate access because of a lack of willing providers. Regardless, it is important that reform efforts be directed toward taking down these financial barriers that prevent patients from getting the care they need.

For the “but we can’t afford it” crowd, there are many other mechanisms in the single payer model that would reduce waste to a level that would allow us to provide comprehensive care for everyone without spending more than we already do.

'Single-Payer' Idea Stays Afloat

Legislative Committee Clears Two Differing Approaches To Health Care Reform

By DIANE LEVICK
Hartford Courant Staff Writer
March 14 2007

A bill to create a single health insurer in Connecticut – an anathema to the industry – won half-hearted approval Tuesday from a legislative panel, which also passed a reform bill the industry favors.

The Insurance and Real Estate Committee, in a 12-7 vote, approved a bill aimed at creating a “single-payer” system to ensure coverage for all Connecticut residents not on Medicare.

Several Democrats on the committee, including committee Co-chairman Brian J. O’Connor, said they were voting for the Connecticut Saves Health Care bill simply to keep reform debate going despite misgivings about potential job loss in the insurance industry.

State Rep. Christopher R. Stone, D-East Hartford, who voted yes Tuesday, said he wouldn’t support the bill on the House floor.

The bill’s proponents, though, scored the vote a victory because it showed a major shift in the climate for universal health care and keeps the single-payer idea afloat.

The Connecticut Saves Health Care program would replace the current system of employer-based and individually purchased policies, taking away much of the role of private health insurers. However, they wouldn’t be prevented from selling supplemental coverage.

The insurance committee is known for preserving the role of insurance companies in health care, but “what they’ve said today with their vote is the system is broken and we need to change it,” said Phil Sherwood, legislative director of the Connecticut Citizen Action Group. “I think that rang loud and clear.”

Legislators of both parties, however, voiced worries about insurance industry jobs in Connecticut, should there be a switch to a single-payer system.

State Sen. Louis C. Deluca, R-Woodbury, the committee’s ranking member, said Iowa has become as big or bigger a mecca for insurers than Connecticut because of legislators’ actions here over the years.

“We continually give them reasons not to be here,” he said. “I believe this would be another one.”

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, warned that “If Connecticut wants to maintain its pre-eminence as an insurance state, I would think that passage of single-payer would be about the worst possible message you could send to the industry.

“It’s a lot of families that are supported by the insurance industry, a lot of mouths are fed, a lot of children put through college, and the idea that people are willing to just chuck that is extremely disturbing.”

But state Rep. John C. Geragosian, D-New Britain, praised the single-payer concept, saying, “Insurance companies don’t add any value in this [current] system” and that “it’s time to take some bold action” to solve the health care crisis.

Stover blanched at that, saying after the meeting that “essentially every innovation in health insurance, from chronic disease management to consumer-driven health plans, etc., all come from the minds here in Hartford, in Connecticut.”

Tuesday’s vote was a “victorious first step toward comprehensive change,” said Juan A. Figueroa, president of the Universal Health Care Foundation of Connecticut, which had pushed the single-payer bill.

The vote, he said, “acknowledges that incremental steps are not the way to fix our state’s broken health care system.”

The vote for a single-payer system also drew praise from Council 4 of the American Federation of State, County and Municipal Employees, the largest AFL-CIO union in the state, and from Citizens for Economic Opportunity, a labor-community coalition.

But a single-payer system is “potentially unsustainable” from a funding standpoint, said Eric George, associate counsel at the Connecticut Business and Industry Association, which has “grave concerns” about the idea.

The state already under-funds Medicaid payments to hospitals, driving hospitals to make up a part of the shortfall through reimbursements from private insurers, George said. In a single-payer system, health care providers wouldn’t have private insurers to fall back on, he said.

The insurance committee removed funding provisions from the bill because there was no consensus, measures that would have levied a 50 percent surcharge on the state income tax and an 8 percent payroll tax on employers of a certain size. The bill now goes to the Senate.

The committee also passed a revised version of the Healthy Steps bill, which Stover said “provides the most rational framework for ongoing discussion” and relies on a market-based system.

The bill, which now heads to the House, would create a new Health Care Reform Commission to develop a more affordable health plan for small employers of 50 or fewer employees.

The state would contract with a private nonprofit organization that would serve as an insurance purchasing pool for previously uninsured individuals and small employers to buy coverage.

The Connecticut Connector program would offer three kinds of health plans, including a high-deductible plan linked with a health savings account.

Legislators removed from the bill a proposed 3 percent tax on revenue of health care providers in Connecticut that would have helped to fund some of the provisions. Doctors protested the tax at a committee hearing last week.

The bill would provide tax credits at varying levels to small employers that provide health insurance that meets or exceeds the standards set for the affordable plan to be developed.

The measure also calls for expansion of the state’s Husky insurance program, and increased reimbursement to doctors, dentists and hospitals from insurers serving Medicaid members.

Contact Diane Levick at dlevick@courant.com.

Copyright 2007, Hartford Courant

‘Single-Payer’ Idea Stays Afloat

Legislative Committee Clears Two Differing Approaches To Health Care Reform

By DIANE LEVICK
Hartford Courant Staff Writer
March 14 2007

A bill to create a single health insurer in Connecticut – an anathema to the industry – won half-hearted approval Tuesday from a legislative panel, which also passed a reform bill the industry favors.

The Insurance and Real Estate Committee, in a 12-7 vote, approved a bill aimed at creating a “single-payer” system to ensure coverage for all Connecticut residents not on Medicare.

Several Democrats on the committee, including committee Co-chairman Brian J. O’Connor, said they were voting for the Connecticut Saves Health Care bill simply to keep reform debate going despite misgivings about potential job loss in the insurance industry.

State Rep. Christopher R. Stone, D-East Hartford, who voted yes Tuesday, said he wouldn’t support the bill on the House floor.

The bill’s proponents, though, scored the vote a victory because it showed a major shift in the climate for universal health care and keeps the single-payer idea afloat.

The Connecticut Saves Health Care program would replace the current system of employer-based and individually purchased policies, taking away much of the role of private health insurers. However, they wouldn’t be prevented from selling supplemental coverage.

The insurance committee is known for preserving the role of insurance companies in health care, but “what they’ve said today with their vote is the system is broken and we need to change it,” said Phil Sherwood, legislative director of the Connecticut Citizen Action Group. “I think that rang loud and clear.”

Legislators of both parties, however, voiced worries about insurance industry jobs in Connecticut, should there be a switch to a single-payer system.

State Sen. Louis C. Deluca, R-Woodbury, the committee’s ranking member, said Iowa has become as big or bigger a mecca for insurers than Connecticut because of legislators’ actions here over the years.

“We continually give them reasons not to be here,” he said. “I believe this would be another one.”

Keith Stover, a lobbyist for the Connecticut Association of Health Plans, warned that “If Connecticut wants to maintain its pre-eminence as an insurance state, I would think that passage of single-payer would be about the worst possible message you could send to the industry.

“It’s a lot of families that are supported by the insurance industry, a lot of mouths are fed, a lot of children put through college, and the idea that people are willing to just chuck that is extremely disturbing.”

But state Rep. John C. Geragosian, D-New Britain, praised the single-payer concept, saying, “Insurance companies don’t add any value in this [current] system” and that “it’s time to take some bold action” to solve the health care crisis.

Stover blanched at that, saying after the meeting that “essentially every innovation in health insurance, from chronic disease management to consumer-driven health plans, etc., all come from the minds here in Hartford, in Connecticut.”

Tuesday’s vote was a “victorious first step toward comprehensive change,” said Juan A. Figueroa, president of the Universal Health Care Foundation of Connecticut, which had pushed the single-payer bill.

The vote, he said, “acknowledges that incremental steps are not the way to fix our state’s broken health care system.”

The vote for a single-payer system also drew praise from Council 4 of the American Federation of State, County and Municipal Employees, the largest AFL-CIO union in the state, and from Citizens for Economic Opportunity, a labor-community coalition.

But a single-payer system is “potentially unsustainable” from a funding standpoint, said Eric George, associate counsel at the Connecticut Business and Industry Association, which has “grave concerns” about the idea.

The state already under-funds Medicaid payments to hospitals, driving hospitals to make up a part of the shortfall through reimbursements from private insurers, George said. In a single-payer system, health care providers wouldn’t have private insurers to fall back on, he said.

The insurance committee removed funding provisions from the bill because there was no consensus, measures that would have levied a 50 percent surcharge on the state income tax and an 8 percent payroll tax on employers of a certain size. The bill now goes to the Senate.

The committee also passed a revised version of the Healthy Steps bill, which Stover said “provides the most rational framework for ongoing discussion” and relies on a market-based system.

The bill, which now heads to the House, would create a new Health Care Reform Commission to develop a more affordable health plan for small employers of 50 or fewer employees.

The state would contract with a private nonprofit organization that would serve as an insurance purchasing pool for previously uninsured individuals and small employers to buy coverage.

The Connecticut Connector program would offer three kinds of health plans, including a high-deductible plan linked with a health savings account.

Legislators removed from the bill a proposed 3 percent tax on revenue of health care providers in Connecticut that would have helped to fund some of the provisions. Doctors protested the tax at a committee hearing last week.

The bill would provide tax credits at varying levels to small employers that provide health insurance that meets or exceeds the standards set for the affordable plan to be developed.

The measure also calls for expansion of the state’s Husky insurance program, and increased reimbursement to doctors, dentists and hospitals from insurers serving Medicaid members.

Contact Diane Levick at dlevick@courant.com.

Copyright 2007, Hartford Courant

High deductibles are bad for children's health

High-Deductible Health Plans and the New Risks of Consumer-Driven Health Insurance Products

Committee on Child Health Financing

Pediatrics (Official Journal of the American Academy of Pediatrics)
March 2007
Policy Statement

Abstract

Consumer-driven health care is the most noteworthy development in health insurance since the widespread adoption of health maintenance organizations and preferred provider organizations in the 1980s. The most common consumer-driven health plan is the high-deductible health plan, which is essentially a catastrophic health insurance plan, often linked with tax-advantaged spending accounts, with very high deductibles, fewer benefits, and higher cost-sharing than conventional health maintenance organization or preferred provider organization plans. The financial risks are significant under high-deductible health plans, especially for low- to moderate-income families and for families whose children have special health care needs. Of concern for pediatricians are the potential quality risks that are predictable in high-deductible health plans, in which families are likely to delay or avoid seeking care, especially preventive care (if it is not exempted from the deductible), when they are faced with paying for care before the deductible is met. This policy statement provides background information on the most common consumer-driven health plan model, discusses the implications for pediatricians and families, and offers recommendations pertaining to health plan product design, education, practice administration, and research.

http://pediatrics.aappublications.org/cgi/content/full/119/3/622

Comment:

By Don McCanne, MD

The American Academy of Pediatrics is to be commended for stressing the importance of protecting preventive services from the negative impact of high-deductible health plans.

Unfortunately, many of their specific recommendations are self-serving for pediatricians (full up-front payment of billed charges, debit cards, payment for telephone consultations, etc.). Conspicuously absent were specific recommendations to prevent the negative impact of high-deductibles on acute and chronic care. It is not as if they didn’t understand this in that a specific recommendation under practice management was to “prepare for greater administration/collection burdens and bad debts.”

High-deductible health plans are bad for children’s health. The Academy should be condemning these plans and supporting comprehensive solutions that would enhance the health of the nation’s children. A national health insurance program would not only cover preventive services, but it would also remove financial barriers to beneficial acute and chronic health care services.

It’s time for physicians to quit whining about how badly they’re being treated by our dysfunctional system, and start advocating for change that will meet the needs of their patients. A practice environment that works well for patients is one that works well for physicians as well.

Time to Fix Healthcare

The Nation
[from the March 26, 2007 issue]

Editorial

The need to expand access to affordable healthcare is rapidly emerging as the top domestic policy issue in the 2008 presidential race. And no wonder: With the number of uninsured now up to nearly 47 million, and more than one-third of that total consisting of households with family incomes of $40,000 or more, lack of health insurance has become a concern not just of the poor but also of the middle class. Moreover, soaring medical costs–increasing in large part because at least one of every five healthcare dollars goes to administrative costs and insurance company profits–are a worry even to those who have some form of insurance. More than half of personal bankruptcies today are caused by illness or medical debts.

There’s no mystery about the fix Americans want: Nearly two-thirds of those surveyed in a recent New York Times/CBS poll say the government should guarantee health coverage for all Americans. Half said they’d willingly pay as much as $500 a year more in taxes to pay for universal coverage. To do that, this country needs to establish a single-payer system–one inspired by Canada and other developed countries but distinctly American in approach. There’s already legislation, with seventy-eight co-sponsors–the United States National Health Insurance Act (HR 676)–that would accomplish this by expanding and improving the existing Medicare system. The popularity of such an approach, endorsed March 6 by the AFL-CIO executive council, is illustrated by the ease with which California legislators passed a single-payer plan last year–only to have Governor Schwarzenegger veto it. In late February, the plan was introduced again, as part of a reform-from-below push that is seeing states tackle the healthcare crisis.

Ultimately, however, America needs a national fix.

Americans have lost hope that the Bush Administration will do anything to address the national healthcare crisis. Only 24 percent of those in the New York Times/CBS poll said they were satisfied with Bush’s handling of the issue. And that number will surely shrink with recent revelations about the deplorable conditions at the Army’s Walter Reed Hospital–another reminder of this Administration’s incompetence. But so far most of the major presidential candidates have failed to take advantage of Bush’s low standing to advance bold proposals.

Among the candidates, Congressman Dennis Kucinich has a long record of embracing single-payer proposals. Unfortunately, he is a lonely leader. The front-running Democratic contenders remain vague and cautious. Senator Barack Obama says, “I am absolutely determined that by the end of the first term of the next President, we should have universal healthcare in this country.” Senator Hillary Clinton says she would enact “health insurance for every child and universal healthcare for every American”–with specifics “yet to come.” Former Senator John Edwards moves beyond rhetoric to a plan: He would require everyone to have insurance and require employers either to provide coverage or pay into a fund to provide it. But although he reaches out to labor on other issues, Edwards is unwilling to embrace HR 676, which has earned support from nine international unions, seventeen state federations and sixty-three central labor councils.

Voters have to demand more if they want more. Obama at least recognizes the frustration of Americans for whom meaningful healthcare reform has been a dream deferred at least since the collapse of the Clinton Administration’s bureaucratic proposals of the mid-1990s. The Clinton plan rejected single-payer and embraced a complicated hybrid that relied too heavily on the same insurance companies that had failed to make healthcare affordable and accessible. “We can’t afford another disappointing charade in 2008, 2009 and 2010,” says Obama. He’s right. But he and his fellow front-runners should recognize that as long as they avoid talking about single-payer and continue to tinker around the edges of the current system, they are players in the charade.

High deductibles are bad for children’s health

High-Deductible Health Plans and the New Risks of Consumer-Driven Health Insurance Products

Committee on Child Health Financing

Pediatrics (Official Journal of the American Academy of Pediatrics)
March 2007
Policy Statement

Abstract

Consumer-driven health care is the most noteworthy development in health insurance since the widespread adoption of health maintenance organizations and preferred provider organizations in the 1980s. The most common consumer-driven health plan is the high-deductible health plan, which is essentially a catastrophic health insurance plan, often linked with tax-advantaged spending accounts, with very high deductibles, fewer benefits, and higher cost-sharing than conventional health maintenance organization or preferred provider organization plans. The financial risks are significant under high-deductible health plans, especially for low- to moderate-income families and for families whose children have special health care needs. Of concern for pediatricians are the potential quality risks that are predictable in high-deductible health plans, in which families are likely to delay or avoid seeking care, especially preventive care (if it is not exempted from the deductible), when they are faced with paying for care before the deductible is met. This policy statement provides background information on the most common consumer-driven health plan model, discusses the implications for pediatricians and families, and offers recommendations pertaining to health plan product design, education, practice administration, and research.

http://pediatrics.aappublications.org/cgi/content/full/119/3/622

Comment:

By Don McCanne, MD

The American Academy of Pediatrics is to be commended for stressing the importance of protecting preventive services from the negative impact of high-deductible health plans.

Unfortunately, many of their specific recommendations are self-serving for pediatricians (full up-front payment of billed charges, debit cards, payment for telephone consultations, etc.). Conspicuously absent were specific recommendations to prevent the negative impact of high-deductibles on acute and chronic care. It is not as if they didn’t understand this in that a specific recommendation under practice management was to “prepare for greater administration/collection burdens and bad debts.”

High-deductible health plans are bad for children’s health. The Academy should be condemning these plans and supporting comprehensive solutions that would enhance the health of the nation’s children. A national health insurance program would not only cover preventive services, but it would also remove financial barriers to beneficial acute and chronic health care services.

It’s time for physicians to quit whining about how badly they’re being treated by our dysfunctional system, and start advocating for change that will meet the needs of their patients. A practice environment that works well for patients is one that works well for physicians as well.

Swiss voters reject single payer

Health reform flops at the ballot box

NZZ Online
March 11, 2007

An overwhelming majority of voters have thrown out a proposal for a single health insurance company in Switzerland, with premiums based on income and wealth.

Final results showed 71 per cent of voters rejected the reform. Turnout was close to 46 per cent, slightly above average.

There are currently 87 private insurers providing mandatory basic health care coverage for Swiss residents under a 1996 law. But health premiums have soared over the past decade.

More than 100,000 people are no longer covered because they haven’t paid their premiums.

Switzerland has the most expensive health system in Europe, according to an international comparison. It spent 11.6 per cent on health in 2005, ahead of Germany and France but behind the United States.

http://www.nzz.ch/2007/03/11/eng/article7609812.html

And…

Costs dominate health insurance debate

swissinfo
March 6, 2007

Supporters and opponents of a single health insurance company – to come to a nationwide vote next Sunday – are at odds over the financial impact of the proposal.

The initiative, backed by the political centre-left but opposed by the government and business world, wants parliament to determine the funding model. But costs have become a sore point.

In 2003 voters rejected a plan for health insurance to be funded by a rise in VAT with premiums set according to income and wealth. This would have replaced the current system of obligatory private health insurance as offered by 87 firms.

Mindful of this, the authors of this latest initiative were careful to leave the financing issue to parliament. The only requirement is that premiums are set according to a person’s “economic capacity”.

“The vote is about deciding on a radical change to the basic insurance, not about voting for a precise financial model,” Hans-Jürg Fehr, president of the centre-left Social Democratic Party, has said.

But this has led to some uncertainty about the sums involved — a situation that santésuisse, the umbrella organisation of Swiss health insurers, has been quick to exploit.

It has drawn up its own financing model, which shows that the middle class is most likely to lose out under the single insurance plan.

Earlier this year, santésuisse put its model online on the Comparis website, a comparison service which, among other things, allows the public to compare health insurance prices.

Santésuisse based its model on several hypotheses. The first was that there would be no premium rise for those on an income of more than SFr120,000 ($96,000) — to avoid health insurance acting as a form of tax on the rich. The lower limit for paying premiums was set at SFr20,000.

According to santésuisse, the new system would be mostly funded by people with incomes in between these two sums — basically the middle classes.

Secondly, it projected that costs assumed by basic health insurance would rise by ten per cent because savings options, such as excesses (i.e., deductibles), would no longer be available under a single insurance.

An excess is what an insured person decides to pay for health services before the insurance reimburses. The higher the excess, the lower the monthly premium — and the less paid out by insurers.

Santésuisse’s move caused temperatures to run high among the initiative’s supporters on the left. Whereas the Green Party wanted to keep income-based premiums, the Social Democrats drew up a model that increased the number of people eligible for premium reductions (60 per cent compared with the current 30 per cent).

Financing would come from a three per cent rise on premiums for those with incomes above SFr100,000, with no top limit. This would bring in an estimated SFr1.2 billion a year, said the party. Excesses would still be valid.

An additional SFr500 million would come from the lower administration costs arising from a single health insurance, it added.

After some resistance, the supporters of the initiative finally put their figures on Comparis as well. The public can now consult both models, but with rather different results.

According to santésuisse, a family of four from Lausanne with a taxable income of SFr90,000 would pay SFr100-SFr200 more per month. But the initiative’s model claims the same family would save around SFr300.

The differences become even larger for incomes of SFr100,000-SFr120,000.

http://www.swissinfo.org/eng/front/detail/Costs_dominate_health_insurance_debate.html?siteSect=105&sid=7525010&cKey=1173182383000

And…

Swiss spurn health insurance plan

BBC News
March 12, 2007

A row over costs in the last few days before the vote caused confusion. Supporters of the plan claimed an average family of four would save about 300 Swiss francs ($250) a month under the new scheme.

Using the same figures, Switzerland’s health insurers said the family would actually pay up to 200 francs ($150) more.

One reason (explaining the election results) may be the power of the insurance sector, and of the big pharmaceutical companies in Switzerland – both are important to the Swiss economy and both have strong lobby groups, our correspondent reports.

http://news.bbc.co.uk/2/hi/europe/6436995.stm

Comment:

By Don McCanne, MD

In evaluating health care reform proposals, one of the first questions individuals ask is, “What is it going to cost me?”

The Swiss organization representing Switzerland’s private health insurers, santésuisse, was ready with an answer. Although the measure would require that premiums would be set according to a person’s economic capacity (means tested premiums), santésuisse made the assumption that lower-income individuals would have smaller premiums or no premiums, whereas the wealthy would not have an increase in premiums. The impact of that would be to shift most of the cost of reduced premiums to the middle-income citizens.

Some would contend that this analysis was dishonest since the intent of the measure was to have means testing apply throughout the income scale. Others would contend that this analysis was appropriate because it would be unfair to require the wealthy to pay more than the full premium. Although it was a measure calling for progressive funding of health care, santésuisse found that modeling it as a welfare program provided results that supported their political agenda.

After considerable delay, the proponents of the initiative finally provided an analysis compliant with the intent of this measure, but it was too little, too late. The polls demonstrated increasing opposition, and by the time of the election, most of those who had been undecided voted against it.

As in the United States, the insurance and pharmaceutical lobbies played a major role in fending off this reform effort. But it would be a mistake to accept the results as simply a buy off of an election by vested interests with too much money and too much power.

The voters did hear the message of the proponents. The voters did understand that everyone would be covered. Middle-income individuals did hear that they would pay less if they were willing to increase taxes on the rich.

But the clearest message of all was that a government-run program would replace their private insurance plan. 71 percent of the voters didn’t like that message.

Many reading this will dispute that conclusion and contend that the polls in the United States prove that we do want to replace private plans with a single payer program of national health insurance. If that is true, then why haven’t we already enacted Medicare for All? Have the insurers and pharmaceutical firms really bought us off?

If you want to change the dynamics in the United States, then you are going to have to show the healthy workforce that their employer-sponsored coverage is bad for their finances and bad for their health. It’s true, but that’s going to be a hard sell. But that’s what you have to do.

Jonathan Gruber on the RAND HIE

What is Insurance?

by Jonathan Gruber

wbur.org (Boston’s NPR)
Commonhealth (a blog)
March 9, 2007

The debate over health care reform implementation in Massachusetts has become focused on the critical issue of defining the level of “minimum creditable coverage”, the minimum level of insurance generosity that will satisfy the individual mandate. This is not a decision that can be avoided; without such a definition, the mandate has no teeth.

But this decision has become needlessly controversial because the debate has moved away from the fundamental goal of insurance: to insure individuals against unexpected medical risk.

This definition of insurance has nothing to do with the typical American conception of health insurance. Most Americans think of health insurance as medical prepayment: you pay an up-front premium and in return all of your medical expenses are covered (what experts refer to as “first dollar coverage”). But such a system has an inherent flaw: any time something is free, it will be overused. This should not be a controversial statement to anyone who has ever gone to an all-you-can-eat buffet. Having paid at the door, you always end up eating more than if you were paying for each item your ordered.

But isn’t medical care different from food? Don’t individuals only use medical care when they really need it? The answer to this question is clearly no. There is substantial evidence of overuse of medical care by the insured. The classic piece of evidence for this proposition is the famous RAND Health Insurance Experiment (HIE) in the 1970s. In this experiment, individuals were randomly assigned to insurance plans that were more or less generous, ranging from first dollar coverage to policies where indivduials paid 95% of the cost of their medical utilization. Once individuals had spent $1000 (about $4000 in today’s dollars), however, they were fully insured — so no one was going uninsured in these plans.

The lessons of the HIE are clear, yet have been conveniently misinterpreted by parties on both sides of the debate. I review these lessons in a paper prepared for the Kaiser Family Foundation, available at http://www.kff.org/insurance/7566.cfm. First, medical care is price sensitive: those who paid nothing for their care used about one-third more than those who paid almost the full cost at the point of service. Second, on average, the extra medical care consumed by those who received care for free had no beneficial impact on health: individuals in the first dollar coverage plan were no more healthy, on average, than those in the full cost plan. Third, there is some evidence (although it is not very precise) that there were some health benefits for low-income, chronically ill populations; most of this benefit was found in screening for chronic illness and maintaining treatments for that illness. The 25 years of research since the results of the HIE were reported have done nothing to overturn these central conclusions, although no study has so carefully studied the health impacts of insurance generosity.

At the same time, there is a large literature in health services research which shows that having insurance, relative to having none, is important for health outcomes. The resolution between these seemingly conflicting results is that it matters whether individuals have some insurance, but, given insurance coverage, for the typical person it does not really matter how generous that insurance is. Once again, coming back to the buffet analogy, it is clearly harmful to not allow individuals to eat — but less critical that you allow them to eat as much as they want.

These results have two clear implications for health policy. First, it is vital that we provide health insurance coverage to the uninsured as a means of improving their health. Second, that insurance need not be as generous as first dollar coverage. There is no clear benefit to covering all medical costs, and a clear cost in terms of encouraging excessive use of medical care. Insured individuals should therefore bear some of the costs of their medical care utilization, but with a limit when costs rise to a sizeable share of income. In addition, insurance should provide reduced cost sharing for prevention and maintenance of chronic illness.

This suggests that the structure of the minimum creditable coverage plans that are being discussed makes a lot of sense. All of the plans being considered provide some up front medical care that individuals can use to get preventative care and be evaluated for more serious medical disease. If individual are found to be chronically ill, they can then buy up to more generous plans that are more appropriate to their health status.

Ideally, insurance plans would be more flexibly designed to accommodate the lessons of the HIE, for example offering different levels of out-of-pocket costs by income level or by illness level. There is some exciting work being done now on designing such “value-based insurance plans”, whereby co-payments are targeted to the needs of the particular individual being insured. But such plans are still in their infancy, so that today the choice remains between offering first-dollar coverage or a plan where individuals pay more of their costs up front. The evidence is clear that the latter design provides real insurance, in the true sense of the word.

Jonathan Gruber, Professor of Economics at MIT and member of the Connector Board

http://blogs.wbur.org/commonhealth/?p=23#comments

Comment:

By Don McCanne, MD

Dr. Gruber states that the RAND Health Insurance Experiment (RAND HIE) has been “conveniently misinterpreted by parties on both sides of the debate.” He then takes one side, stating that the lessons are that “medical care is price sensitive,” that “on average, the extra medical care consumed by those who received care for free had no beneficial impact on health, but that “there were some health benefits for low-income, chronically ill populations.” It would be incorrect to characterize this as a misinterpretation, because these statements are, “on average,” true.

But there is another side as to the importance of the findings of the RAND HIE, which also should not be characterized as a misinterpretation.

It is crucial to understand the nature of the population studied. The subjects were a gainfully employed workforce and their families, who were observed for a few years. Thus this was a study of relatively healthy workers and their healthy families during healthy years of their lives. Being employed, they had discretionary income sources that could be used for health care cost sharing.

The intrinsic validity of this study can be applied to similar healthy populations with reliable incomes, but it does not have extrinsic validity in a system of “universal coverage.” A system that would cover everyone must take into consideration the entire market basket of health problems, from conception to death. Even if sectors are segregated based on age (Medicare), income (Medicaid), employment (employer-sponsored coverage), or whatever, the remaining uninsured have a multitude of problems which result in their being uninsured in the first place. The RAND HIE conclusions would apply “on average” only to the employer-sponsored group, but not to these others, and certainly not to the uninsured.

There is also considerable question as to the overall impact on total health care spending. Although the 80 percent of us who are healthy would reduce utilization, we consume only 20 percent of health care. A modest reduction of only one-fifth of our health care bill would not have a major impact. The 20 percent of individuals who use 80 percent of health care, the group that was not studied in the RAND HIE, have little opportunity to selectively decline health care that seems necessary because of their health care problems.

Besides, is the RAND HIE “on average” conclusion satisfactory? Individuals in the RAND HIE with hypertension had a 10 percent higher death rate when cost sharing was required. The families of those who died receive little consolation in the fact that these deaths did not change the statistics of the overall beneficial outcomes of this healthy population.

Is health care about the majority of us who are healthy, or is it about prevention and management of disorders that can lead to disability or death?

Since we are not static beings, how can we possibly determine which of us will remain healthy and be well served by a private insurance plan which has an affordable premium because it doesn’t cover expenses that we won’t be facing anyway? But the real question is the reciprocal. Which of us will develop major medical problems that will require affordable access to health care made possible only by selecting a more comprehensive plan, but with premiums that we can’t afford?

So what is the real lesson of the RAND HIE? Cheap insurance works for healthy people. Period.

Since the RAND HIE was completed in the 1970s, there has been a plethora of studies in the health policy arena. The studies on cost sharing have clearly indicated that erecting financial barriers to care maim and kill people with health care needs.

The fundamental flaw with using private health plans to expand coverage to everyone is that private plans work only for healthy subsets such as employer-sponsored group plans. If those with health care needs are to be included with reasonable levels of coverage, the premiums become unaffordable.

Healthy individuals are now segregated into low risk pools (e.g., employer-sponsored) which, regardless, have become so expensive that they are now barely affordable. If we are to have universal coverage, these healthy individuals must also contribute to the pools covering the high-cost, high-risk individuals, even though that isn’t affordable either. Rather than compounding the nightmare of administrative inefficiencies, it would be much simpler to combine everyone into a single risk pool that is equitably funded and therefore affordable for everyone.

Single payer would do it. But in his efforts to make the antiquated private plans work, Dr. Gruber states, “… we can’t insist everyone who has no insurance get the policy that optimizes their health.” Further, “Let’s get them into the system and get them real insurance, and then maybe they’ll be interested in buying something better.” (The Boston Globe, March 5)

Why don’t we start out with something better? Real insurance. Single payer.

Additional Comment:

By Leonard Rodberg, PhD, Chair, Department of Urban Studies, Queens College/CUNY, responds to the comments on the RAND HIE made by Jonathan Gruber, Professor of Economics, MIT:

Prof. Gruber, like many other American economists, should remove his chauvinist blinders and take a look at the rest of the world where there has been a real world “experiment” going on for years, one that is far more extensive than the very limited Rand HIE. Countries around the world offer what we would call “first dollar coverage”, that is, little or no financial barrier to seeing a doctor. The results: (i) no overuse of medical services and (ii) lower spending than the US. The conclusion might be that eliminating cost-sharing would actually save us money!

For Dr. Gruber’s original statement and our responses:
http://blogs.wbur.org/commonhealth/?p=23#comments