PNHP

National Health Care? We're Halfway There

National Health Care? We're Halfway There

By DANIEL GROSS
The New York Times, Economic View, December 3, 2006

WHEN Democrats assume control of Congress next month, they may be dusting off some long-dormant proposals on how to deal with the growing disconnect between health insurance and employment. From 2000 to 2005, the proportion of workers aged 18 to 64 with employment-based health benefits fell to 70.6 percent from 74.5 percent, according to the Employee Benefits Research Institute. A record 46.6 million Americans lacked health insurance last year; of them, more than 82 percent lived in households headed by someone holding a job.

Any efforts to expand government’s role in providing insurance will likely be opposed by the Bush administration, which says it opposes excessive direct government involvement in an industry that constitutes about 14 percent of the gross domestic product. Michael O. Leavitt , the secretary of health and human services, recently dismissed a proposal to have the government negotiate drug prices for the Medicare benefit, arguing that “it’s a surrogate for a much larger issue, which is really government-run health care.”

While the administration may oppose government-run health care in principle, the government’s role in the vast health industry has been expanding. By various measures, the United States is about halfway toward a system in which the government and taxpayers fully fund health care. And trends are pushing the government to become more involved each year.

Out of a total population of about 300 million, 35.6 million elderly Americans were on Medicare in 2005. Of the working-age population, which reached 257.8 million in 2005, some 45.5 million were covered by Medicare, Medicaid or military health programs, according to the benefits institute. An additional 18.2 million workers had health insurance through jobs in the public sector, which includes state, federal and local governments, public schools and state universities, according to Paul Fronstin, director of the institute’s health research and education program. Millions of those workers’ dependents are covered as well. Even if those dependents are not included in the tally, taxpayers paid the bill for almost two-fifths of all Americans with insurance in 2005.

But that’s not the full extent of government and taxpayer involvement. Employer-provided health insurance premiums are a form of compensation, yet are not subject to federal payroll or income taxes and are exempt from many state and local taxes. Economists consider these exemptions a form of subsidy. Thomas M. Selden, economist at the federal Agency for Healthcare Research and Quality, estimates that the tax subsidy for employment-related coverage at $208.6 billion in 2006, or 35.4 percent of the amount spent on premiums.

“The tax subsidy is one of the largest public expenditures on health care,” Mr. Selden said. In fiscal 2006, by comparison, spending on Medicare was $378.7 billion and federal spending on Medicaid was $180.6 billion.

Viewed strictly in terms of dollars and cents, the government already accounts for more than half of the nation’s health care spending. Mining data from the National Health Expenditures Accounts, Mr. Selden found that public expenditures on health care — Medicare, Medicaid, military health care and federal employee benefits — accounted for $888 billion of the $1.96 trillion spent on health care in 2004. Adding in the aforementioned subsidies, and premiums paid for public-sector employees, the total comes to $1.2 trillion, or 61 percent.

Uwe E. Reinhardt, the James Madison professor of political economy at Princeton, suggests adding 5 percent for the federal mandate that hospitals provide free health care to the uninsured. “So government accounts for about two-thirds of health care spending,” Mr. Reinhardt said.

The government spends money as if there were a national health insurance program. In 2004, government spending on health care equaled 9.6 percent of the gross domestic product, compared with 6.9 percent in Canada, which has a single-payer universal health care program, said David Himmelstein, associate professor of medicine at Harvard Medical School. And yet some significant components of federal support are not efficient methods of providing health insurance to the people who most need it. Higher-income workers are likely to have higher rates of coverage, higher premiums and higher taxes, all of which means that the tax break for compensation disproportionately helps the well-off.

“We’re paying for national health insurance, but we’re not getting it,” Dr. Himmelstein added.

Taxpayers also don’t get as much bang for their bucks because the government guarantees coverage for the elderly and the poor, groups that account for a disproportionately large amount of expenditures.

“A rough rule holds that private insurance covers two-thirds of the population and pays for only one-third of all health care,” Mr. Reinhardt said.

THE raw figures may be worrisome, but the trends behind the data are clearly troubling. Despite five consecutive years of economic growth, the private sector has continued to reduce its role in providing insurance. As the population ages, the ranks of Medicare recipients grow. And if the price of health insurance keeps rising at a much faster rate than the average earnings of lower-income people, more and more of the working poor will be priced out of the market.

So even as politicians rail against the pernicious effects of government-run health care, taxpayers, one way or another, are likely to be footing more of the nation’s huge and mounting medical bills.

Daniel Gross writes the “Moneybox” column for Slate.com.

Public Citizen’s Response to CHCWG Interim Recommendations

Here is Public Citizen‘s Response to the Citizens’ Health Care Working Group Interim Recommendations.

For the original version from Public Citizen, please click here. (pdf)

Health Care Reform in the United States: Arguments for a Single Payer System

Health services in the United States aren’t good enough, cost too much, and leave too many people out: those are the conclusions voiced by participants in a two-year federally mandated and funded process that produced The Health Report to the American People.i Public Citizen is pleased to submit its comments to the Citizen’s Health Care Working Group, and looks forward to continuing to participate in the discussion aimed at providing better quality, more affordable care for the country as a whole.

We are gratified that the recent efforts at tapping into public opinion reveal significant agreement on key issues in health care:

  • An overwhelming majority (96.8%) of the persons attending the community meetings felt that the health care system is in crisis or constitutes a major problem;
  • Over 94% thought that affordable health care should be part of national public policy; and
  • When faced with different priorities competing for public spending, respondents ranked “Guaranteeing that all Americans have health coverage/insurance” as the highest. Similarly, when asked to evaluate different proposals for expanding access to care, respondents ranked “Create a national health insurance program, financed by taxpayers, in which all Americans would get their insurance” as the highest.

Given the emerging consensus on health care reform, we are surprised and extremely disappointed that the Interim Recommendations of the Citizens’ Health Care Working Group did not address the issue of payment under a national health program. Yet many of those who took part in the town meetings or submitted comments to the Working Group advocated for a single payer, and, among the 1,814 respondents who expressed a desire for a “single health care system,” fully 46 % recommended a single-payer system.

Public Citizen supports single payer, universal health care. The rationale for single-payer has become increasingly compelling right now, when US businesses are increasingly feeling the pinch of rising health care costs, the number of uninsured continues to rise, the nation is losing its comparative advantage in world markets, hospitals are eager to shed the burden of their “bad debt and charity” pool, and consumers are increasingly baffled by an array of insurers who offer confusion in the guise of ‘choice.’

The arguments in favor of having a single payer are summarized below. These reasons are in addition to the most overwhelming reason, namely that such a system is the only way we can realistically afford to end the dangerous, 2 embarrassing, and worsening situation wherein about 45 million people in this country lack health insurance and tens of millions more are seriously uninsured.

Single Payer is good for business. Publicly financed but privately run health care for all would cost employers far less in taxes than their costs for insurance.ii With universal coverage, employers would no longer have to pay for medical care as part of the compensation package offered to workers. And with health care outlays expected to increase between 14% and 18% between now and 2010, employers can expect no relief from the already unsustainable situation they are facing at present. A survey of senior-level executive in Detroit found that 75% consider employee health insurance “unaffordable,” while the remaining 25% consider it “very unaffordable.”

If the situation is untenable for individual employers, it is even worse for the economy as a whole. Increases in health care costs are a drag on economic growth: they thwart job growth, suppress increases for current workers, weaken the viability of pension funds, and depress the quality of jobs. Rising health care costs are also causing budgetary problems for federal and state governments, who are currently paying over 50% of the US health care bill.

Universal health coverage would also have a salutary effect on labor-management relations. Many if not most strikes in the past five years have involved conflicts over health benefits. Universal coverage would defuse this contentious issue, provide benefits independent of employment status, and allow business greater flexibility in whom to hire.

Single Payer will enhance the comparative position of the US in the global market. President Bush has repeatedly said that the United States is not reluctant to compete on the international market as long as there is an even playing field. At present, the lack of universal health insurance places the US at a disadvantage vis-à-vis other countries. Companies such as General Motors that have factories in both the US and other countries have learned this lesson well; for example, in 2003 the costs of manufacturing a midsize care in Canada were $1,400 less than that of manufacturing the identical car in the US, primarily because of much higher health costs in this country.iii

Single Payer builds on the existing experience. Those who fear that single payer is new and foreign, and therefore untested, need to be reminded that Medicare is, in essence, a single-payer system. For those who are eligible, Medicare is universal and identical, not means-tested, and administered by the government, which acts as a single-payer for hospital and outpatient physician services. Because it did not have to sift and sort the population or cope with a layer of insurers, the rollout of Medicare in 1966 was amazingly smooth.iv Practically overnight–and without computers–the program covered services 3 provided by 6,600 hospitals, 250,000 physicians, 1,300 home health agencies, and hundred of nursing homes. By the end of its first year, Medicare had enrolled more than 90% of eligible Americans, a feat that cemented its popularity and redeemed President Johnson’s faith in the efficacy of government.

In contrast, Part D of Medicare, which departed from the single-payer model and introduced private insurers, encountered the wrath of consumers who were unable to maneuver the complicated choices required to obtain prescription drug benefits.

Single Payer has significantly lower administrative costs. Studies by both the Congressional Budget Office and the General Accounting Office have repeatedly shown that single-payer universal health care would save significant dollars in administrative costs. As early as 1991, the GAO concluded that if the universal coverage and single-payer features of the Canadian system had been applied in the United States that year, the total savings (then estimated at $66.9 billion) “would have been more than enough to finance insurance coverage for the millions of American who are currently uninsured.”v More recently, estimates published in the International Journal of Health Services conclude that “streamlining administrative overhead to Canadian levels would save approximately $286 billion in 2002, $6,940 for each of the 41.2 million Americans who were insured as of 2001. This is substantially more than would be needed to provide full insurance coverage.” vi At present, the US spends 50% to 100% more on administration than countries with single-payer systems.

Single Payer facilitates quality control. Having a single-payer system would create for the United States a comprehensive, accurate, and timely national data base on health service utilization and health outcomes. This would provide information on gaps and disparities or duplication of care, thereby serving as valuable intelligence for decision-making and resource allocation. At present, the closest analogy to this is the Veterans Health Administration (VHA), which has been highly successful in containing costs while providing excellent care. The key to its success is that it is a universal, integrated system: “Because it covers all veterans, the system doesn’t need to employ legions of administrative staff to check patients’ coverage and demand payment from their insurance companies. Because it’s integrated, providing all forms of medical care, it has been able to take the lead in electronic record-keeping and other innovations that reduce costs, ensure effective treatment and help prevent medical errors.”vii

Single Payer gives the government greater leverage to control costs. A single payer would be able to take advantage of economies of scale and exert greater leverage in bargaining with providers, thereby controlling costs. Recent experiences with both the VHA system and that of Medicare Part D indicate the difference exerting such leverage can make. The Department of Veterans Affairs 4 uses its power as a major purchaser to negotiate prices with pharmaceutical makers. But when the legislation leading to the drug prescription plan (better known as Medicare Part D) was passed, Congress explicitly barred negotiating prices with drug makers. The results of this are now becoming evident: at present, the VA is paying 46% less for the most popular brand-name drugs than the average prices posted by the Medicare plans for the same drugs.viii Because Part D increased the effective demand for drugs without controlling costs, prescription drug prices have risen sharply: during the first quarter of 2006, prices for brand-name pharmaceuticals “jumped 3.9%, four times the general inflation rate …and the largest quarterly price increase in six years.”ix

If this trend is allowed to continue unchecked, it could jeopardize the fiscal viability of the Medicare drug program and seriously undermine whatever political and public support it now has. In addition, this could have significant repercussions on the program as a whole. In the words of economist Stephen W. Schondelmeyer, who specializes in drug industry issues, “Higher drug prices may lead to higher premiums next year, which may discourage enrollees from joining or staying in the program, and fewer enrollees could drive premiums even higher.”x

Single Payer promotes greater accountability to the public. One of the key features of the US health care system is its fragmentation. When every player is responsible for only part of the care of part of the population part of the time, there is no overall accountability for how the system functions as whole. Consumers are therefore left wondering who is in charge, and whom they can appeal to when their knowledge is incomplete or their care is inadequate. The most recent report to Congress of the Medicare Advisory Commission recognizes this: “…perverse payment system incentives, lack of information, and fragmented delivery systems are barriers for full accountability.” Xi

The creation of a single payer would provide an opportunity for creating a system run by a public trust. Benefits and payments would be decided by the insurer which would be under the control of a diverse board representing consumers, providers, business and government.

Single Payer fosters transparency in coverage decisions. Single-payer plans have been criticized for “making all sorts of unbearable trade-offs explicit government policy, rather than obscuring them in complexities.” Given finite resources, it may not be possible to cover every single treatment, device or pharmaceutical a patient may require or desire. Priorities must be set, and the criteria for these should be transparent and consistently applied.

The practice of “obscuring trade-offs” is irresponsible and demeaning to the American public. Medical care decisions are too important and affect everyone 5 too directly to be made surreptitiously. Moreover, forcing policy-makers to make decisions concerning what to cover will ensure their confronting issues of safety, efficacy, and value-for-money that are often circumvented or overlooked. Tradeoffs that are transparent to health care consumers will therefore be in the public’s interest.

In sum, the reasons for supporting single payer are practical as well as principled, based on values of openness, equity, and social responsibility. We therefore urge the Citizens Health Care Working Group to adopt the creation of a single payer as an essential pillar without which the guiding values underpinning the Interim Recommendations will not be fulfilled.

NOTES
i Citizens’ Health Care Working Group. Health Care That Works for All Americans. October 2005.
ii Mintz, Morton. Single Payer: Good for Business. The Nation. November 15, 2004.
iii Ibid.
iv Friedman, Saul. A tale of two Medicare plan rollouts. Newsday, May 27, 2006.
v Quoted in Mintz, Op cit.
vi Himmelstein DU, Woolhander S, and Wolfe SM. “Administrative Waste in the US Health Care System in 2003: The Cost to the Nation, The States, and the District of Columbia, with State-Specific Estimates of Potential Savings. International Journal of Health Services. Vol. 34, No. 1, 2004: 79-86.
vii Krugman Paul. “Health Care Confidential.” The New York Times, January 27, 2006.
viii Freudenheim M. “Drug Prices Up Sharply This Year.” The New York Times, June 21, 2006.
ix Ibid.
x Quoted in Ibid.
xi Report to the Congress: Increasing the Value of Medicare. Washington, DC: Medicare Payment Advisory Commission. June 2006: xv.

Reforma de los Servicios de Salud en los Estados Unidos: El Argumento a Favor de un Pagador Único

En agosto de 2006, la organización sin fines de lucro Public Citizen sometió la siguiente ponencia al Group de Trabajo creado por el gobierno para auscultar las opiniones sobre los servicios de salud en los Estados Unidos. A continuación presentamos una traducción de un resumen de la ponencia.

La creación de un seguro universal de salud ha sido tema de debate en los Estados Unidos desde 1912, cuando un grupo laboral estableció un comité sobre seguridad social. Aunque el concepto de servicios de salud para todos fue discutido, la idea no prosperó. Pero el tema ha suscitado interés esporádicamente desde entonces, y actualmente ha vuelto a surgir como tema de interés social y politico.

El caso a favor de un pagador único ha cobrado vigencia en días recientes, cuando las empresas están sintiendo las presiones de un alza en el costo de los seguros de salud, el país está perdiendo su ventaja comparada en los mercados globales, los hospitales están buscando alivio contra la atención no remunerada, y los consumidores están confusos debido a la variedad de aseguradores que ofrecen confusión disfrazada como selección.

Actualmente la razón principal a favor de un reforma al sistema es el creciente número de personas — unos 47 millones — que no tienen seguro médico y los millones adicionales que tienen una cubierta tan escasa que no pueden contar con su seguro para protegerlos contra el riesgo de una condición grave. Pero también hay muchas razones prácticas a favor de un seguro universal con un pagador único. A continuación las resumimos.

El pagador único es conveniente para las empresas. Un seguro financiado por el sector público pero operado por el sector privado le costaría menos a los patronos en impuestos de lo que pagan actualmente para cubrir el seguro de salud. Con un seguro universal, los patronos no tendrían que ofrecer seguros médicos como parte de la compensación a sus empleados. Y, con el costo de servicios estimado a aumentar entre 14 a 18 por ciento entre ahora y el 2010, en ausencia de un seguro, los empleados no tendrían ningún alivio contra la situación intolerable en que se encuentran al presente. Una encuesta de ejecutivos llevada a cabo en Detroit reveló que un 75 por ciento considera que los costos de los seguros de salud que ofrecen los patronos son “no sufragables” y el 25 por ciento restante los considera “altamente intolerables.”

Si ésta es la situación para los patronos individuales, el cuadro es aún peor para la economía en general. Los aumentos en los costos de los servicios de salud tienden a rezagar el crecimiento económico: obstaculizan la creación de nuevos empleos, impiden los aumentos salariales, debilitan la viabilidad de los fondos de pensiones, y deprimen la calidad de los empleos. Los aumentos en los servicios de salud también tienen un impacto nocivo sobre los gobiernos federales y estatales, los cuales cubren la mitad del gasto nacional por concepto de servicios de salud.

Un seguro universal de salud también beneficiaría las relaciones obrero-patronales. Una gran parte de las huelgas que se han llevado a cabo en los últimos 5 años han concernido disputas sobre los beneficios de salud. La cobertura de toda la población eliminaría estas disputas, proveería beneficios independientemente del estado laboral del individuo, y el darían al patrono mayor flexibilidad en cuanto a quién emplear.

El pagador único fortacelería las ventajas comparadas de los Estados Unidos en el mercado mundial. El Presidente Bush ha indicado en repetidas ocasiones que los Estados Unidos no está renuente a competir en el mercado internacional siempre que sea en igualdad de condiciones. Al presente, la carencia de un seguro nacional pone al país en desventaja en comparación con otros países desarrollados. Compañías tales como General Motors que tienen fábricas tanto en los Estados Unidos como en otros países han aprendido bien esta lección. Por ejemplo, en 2003 el costo de manufacturar un carro mediano en Canadá era $1400 menor que el costo de fabricar el mismo carro en los Estados Unidos; la diferencia se debía principalmente a lo que gasta la compañía por concepto de servicios de salud.

El pagador único se basa en la experiencia ya vivida. Hay quienes alegan que el pagador único es algo nuevo y foráneo, y por lo tanto representa un concepto experimental. A éstos, hay que recordarles que el programa Medicare funciona como pagador único. Para las personas cubiertas por este programa en su forma original, Medicare es universal y uniforme, y no depende de la capacidad de pago de cada cual. El programa es administrado por el gobierno, y éste funciona como pagador único para los servicios médicos y de hospital. Debido a que el gobierno cubrió a toda la población mayor de 65 y no tuvo que clasificar a la población por nivel de riesgos ni lidiar con una multiplicidad de aseguradores, la inauguración del programa fue increíblemente sencilla y libre de escollos. Prácticamente de la noche a la mañana — y sin el uso de computadoras — el programa cubrió los servicios provistos por 6,600 hospitales, 250,000 médicos, 1,300 agencias de salud en el hogar, y cientos de casas de salud. Para fines del primer año de operaciones, Medicare había inscrito a un 90 por ciento de la población elegible, un logro que afianzó la popularidad del programa y vindicó la confianza del Presidente Johnson en el gobierno.

En contraste, la parte D de Medicare, que adoptó un modelo diferente e introdujo a las compañías aseguradoras en la administración del programa, tuvo un despegue difícil, incurriendo así la ira de muchos consumidores que tuvieron dificultad en descifrar los beneficios de los productos farmaceúticos a los cuales tendrían derecho.

El pagador único acarrea gastos administrativos mucho menores. Los estudios llevados a cabo tanto por la Oficina de Presupuesto del Congreso como por la Oficina de Contabilidad Gubernamental (GAO, por sus siglas en inglés) concluyen que la utilización de un pagador único bajo un seguro universal ahoraría mucho dinero en gastos administrativos. En 1991, el GAO calculó que, si Estados Unidos hubiese adoptado la cubierta ofrecida por el sistema de salud de Canadá junto con un pagador único ese año, el ahorro total (estimado en ese momento en $66.9 billones) “hubiese sido más que suficiente para financiar la cobertura de los millones de americanos que no tenían seguro de salud” en ese momento. Más recientemente, estimados publicados en el International Journal of Health Services demuestran que, extrapolando los gastos administrativos de Canadá a los Estados Unidos hubiese ahorrado unos $286 billones en 2002, suma que alcanzaría a $6,940 por cada uno de los 41.2 millones de personas que no tenían seguro médico para esa fecha. Al presente, los gastos administrativos de los Estados Unidos son entre 50 y 100 porciento más altos de lo que son en los países que usan un pagador único.

El pagador único facilita el control de calidad. Teniendo un pagador único, los Estados Unidos tendría un banco de datos abarcador, confiable y al día sobre la utilización de los servicios de salud y la eficacia de los mismos. Esto proveería datos sobre lagunas o duplicación en los servicios y disparidades en el acceso, suminstrando así información útil en la toma de decisiones y en la asignación de recursos.

El pagador único le da al gobierno mayor poder de regateo en el control de costos. Un pagador único podría beneficiarse de las economías de escala que conlleva un mayor volumen de servicios. Además, aumentaría el poder de regateo que tendría el gobierno al negociar con proveedores, abaratando así los costos. Experiencias recientes con el Departamento de Veteranos y la Parte D de Medicare indican la diferencia que puede hacer el poder de regateo. El Departamento de Veteranos utiliza su poder adquisitivo como comprador para negociar mejores precios cuando compra drogas y medicamentos. Pero cuando el Congreso pasó la ley que autorizó el Plan de Drogas (mejor conocido como Medicare, Parte D), el Congreso explícitamente prohibió la negociación de precios con los manufactureros de productos farmaceúticos. Los resultados de esto son obvios: al presente, el Depto. de Veteranos paga un 46 por ciento menos por las marcas más populares de medicinas de lo que paga Medicare por las mismas drogas.

El pagador único promueve una mayor responsabilidad de los servicios hacia el público. Una de las características claves del sistema de salud estadounidense es su fragmentación. Cuando cada parte es responsable de sólo parte del problema de parte de la población parte del tiempo, no hay nadie responsable por el funcionamiento del sistema en su totalidad. Los consumidores terminan confusos, y no saben a quién apelar cuando carecen de información o los servicios son deficientes.

La creación de un pagador único proveería una oportunidad para crear un sistema operado por un fideicomiso público. Los beneficios y los pagos los decidiría una entidad que operaría bajo el liderato de una junta diversa con representación de consumidores, proveedores, empresarios, y el gobierno.

El pagador único promueve la transparencia en las decisiones de qué cubrir. Dado que los recursos no son infinitos, puede que no sea posible cubrir todo la gama de servicios y tratamientos que un paciente requiera o desee. Habrá que establecer prioridades, y los criterios para éstas deben de ser explícitos y consistentemente aplicados. Las decisiones sobre qué servicios o terapias cubrir deberán basarse en criterios de seguridad, eficacia, y economía. Los consumidores necesitan saber qué juicios imperaron en el momento de seleccionar entre distintas terapias o servicios.

Resumiendo, las razones para seleccionar un pagador único se basan en consideraciones prácticas así como morales y éticas, basadas en valores de información compartida y responsabilidad social.

Private plans pay so little for so many

National Health Care? We're Halfway There

By Daniel Gross
The New York Times
December 3, 2006

Out of a total population of about 300 million, 35.6 million elderly Americans were on Medicare in 2005. Of the working-age population, which reached 257.8 million in 2005, some 45.5 million were covered by Medicare, Medicaid or military health programs, according to (Employee Benefits Research Institute). An additional 18.2 million workers had health insurance through jobs in the public sector, which includes state, federal and local governments, public schools and state universities, according to Paul Fronstin, director of the institutes’s health research and education program. Millions of those workers’ dependents are covered as well. Even if those dependents are not included in the tally, taxpayers paid the bill for almost two-fifths of all Americans with insurance in 2005.

But that’s not the full extent of government and taxpayer involvement. Employer-provided health insurance premiums are a form of compensation, yet are not subject to federal payroll or income taxes and are exempt from many state and local taxes. Economists consider these exemptions a form of subsidy. Thomas M. Selden, economist at the federal Agency for Healthcare Research and Quality, estimates that the tax subsidy for employment-related coverage at $208.6 billion in 2006, or 35.4 percent of the amount spent on premiums.

Mining data from the National Health Expenditures Accounts, Mr. Selden found that public expenditures on health care — Medicare, Medicaid, military health care and federal employee benefits — accounted for $888 billion of the $1.96 trillion spent on health care in 2004. Adding in the aforementioned subsidies, and premiums paid for public-sector employees, the total comes to $1.2 trillion, or 61 percent.

Uwe E. Reinhardt, the James Madison professor of political economy at Princeton, suggests adding 5 percent for the federal mandate that hospitals provide free health care to the uninsured. “So government accounts for about two-thirds of health care spending,” Mr. Reinhardt said.

“A rough rule holds that private insurance covers two-thirds of the population and pays for only one-third of all health care,” Mr. Reinhardt said.

The government spends money as if there were a national health insurance program. In 2004, government spending on health care equaled 9.6 percent of the gross domestic product, compared with 6.9 percent in Canada, which has a single-payer universal health care program, said David Himmelstein, associate professor of medicine at Harvard Medical School.

“We’re paying for national health insurance, but we’re not getting it,” Dr. Himmelstein added.

http://www.nytimes.com/2006/12/03/business/yourmoney/03view.html

For the landmark Health Affairs article by Steffie Woolhandler and David Himmelstein, “Paying for national health insurance–and not getting it”: http://content.healthaffairs.org/cgi/content/abstract/21/4/88

Comment:

By Don McCanne, MD

So two-thirds of health care spending already is through our tax system. Percentage-wise that is close to what most other nations with universal systems pay in public funds. Thus the contention that we cannot afford the taxes to pay for a universal system is untrue; we are already paying them. We merely need to establish a financing system that would spend these same funds much more efficiently so that we can include everyone.

What role should private insurers have in an efficient system of health care financing? The inefficiencies of our fragmented system are due in a large part to the participation of the multitude of private insurers, but we should look carefully at the service they do provide us under our current system before we decide that they should be dismissed.

Uwe Reinhardt offers the rough rule that “private insurance covers two-thirds of the population and pays for only one-third of all health care.” Simply stated, the private insurance industry has avoided its purpose of pooling risk by skimming off the healthy sector of our population while leaving the risk of the high-cost individuals with us – the taxpayers. Paying the high costs is the purpose of insurance, yet the insurers have evaded their fiduciary responsibility.

The private insurers’ primary product is not insurance; it is administrative services, and more and more of them, which have contributed significantly to the waste in health care spending.

Just imagine the prospect of the private insurers covering two-thirds of our population and fulfilling their risk pooling responsibilities by paying for two-thirds (instead of one-third) of our health care costs. If you think that private insurance premiums are unaffordable now, just wait until they double!

The private insurers have had their day. They have been ineffective in expanding coverage and affordability, while being the greatest cause of the expanding inefficiency of our system.

Since the taxpayers are already paying enough for an efficient and effective program of national health insurance, it’s time to demand that our public stewards produce the program we need, or we should replace them with leaders who would.

The 'Show Me' State AFL-CIO Endorses HR 676

Hugh McVey, President of the Missouri AFL-CIO, reports that this state labor federation has endorsed HR 676, single payer health care legislation introduced by Congressman John Conyers (D-MI). Missouri is the sixteenth state AFL-CIO to take this action. The endorsement was made at the states recent convention when Resolution # 14, introduced by the Executive Board, passed.

The Missouri AFL-CIO resolution notes that two thirds of the uninsured are in families in which at least one family member works full time and that infant mortality is much worse in the U. S. than in most industrialized countries. The resolution states: “H.R. 676 also restores free choice of physicians and provides comprehensive prescription drug coverage to seniors.” The resolution calls upon the Missouri delegation of the United States Congress to work with Congressman Conyers to enact H. R. 676.

The Missouri AFL-CIO represents over 500,000 union members and retirees in approximately 391 unions. HR 676 had already been endorsed by several of the states central labor councils, building & construction trades councils, and local unions.

#30#

HR 676 now has 77 congressional co-sponsors in addition to John Conyers. It would institute a single payer health care system in the U.S. by expanding a greatly improved Medicare system to every resident.

HR 676 would cover every person in the U. S. for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, chiropractic and long term care. HR 676 ends deductibles and co-payments. HR 676 would save billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

HR 676 has been endorsed by 212 union organizations including 53 Central Labor Councils and Area Labor Federations and 16 state AFL-CIOs (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC & MO).

For further information, a complete list of union endorsers, or a sample endorsement resolution, contact:
Kay Tillow
All Unions Committee For Single Payer Health Care-HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551
Email: nursenpo@aol.com
12/4/06

Is San Francisco's reform a model for the nation?

San Francisco Health plan touted as U.S. model

By Rachel Gordon
San Francisco Chronicle
November 30, 2006

San Francisco’s groundbreaking plan to provide access to affordable medical coverage for an estimated 82,000 uninsured residents is an opportunity to create a system from top to bottom that could serve as a model of basic care for the rest of the nation.

The Health Access Program, approved by the Board of Supervisors and signed into law by Mayor Gavin Newsom, is intended for adults without health insurance who earn too much to qualify for a federal or state health care plan.

The program will cost an estimated $200 million a year, and will be funded with a combination of public funds, employer contributions and copayments by those enrolled in the program.

(Steve Falk, who heads the San Francisco Chamber of Commerce) said making sure that people have health care is a noble cause — but forcing San Francisco businesses to spend up to $1.60 per hour per employee to fund it isn’t fair.

San Francisco’s program is not like a traditional insurance plan.
Patients will be able to get care only within San Francisco, and most of that care will be delivered at the city-run San Francisco General Hospital and at the vast network of city and community clinics.

http://www.sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/11/30/BAGJNMMG3L19.DTL

Comment:

By Don McCanne, MD

San Francisco’s intent to bring health care to everyone is certainly admirable. That said, there are so many complex policy flaws in our current system of financing health care that it is impossible to address them on a city-county basis (San Francisco’s unique form of government).

In a town saturated with small businesses with marginal profits, you can question the wisdom of an employer mandate. For many of these businesses, a payroll tax/premium is a financial hardship. Most policy analysts believe that the health insurance link to employment should be terminated anyway, but only after a universal program is enacted.

Another unusual feature is that this is not a safety-net public insurance program in the traditional sense; rather the safety-net coverage provided is the actual safety-net delivery system, comprised of the county hospital and a network of city and community clinics. Many of the uninsured already receive their care from these institutions.

There are many other issues not adequately addressed such as lack of coverage outside of the city, compliance with ERISA regulations, explicit two-tiered care, and, most importantly, a failure to address the true drivers of health care costs and the failure to establish a monopsonistic payer that would demand value in health care purchasing.

San Francisco’s effort is not so much health care reform as it is tax legislation. The health care delivery system remains much as it is, with only negligible changes in access. The uninsured will still have the public institutions as their source of health care. The primary change with this program is that businesses will contribute more, through taxes, to the funding of the public safety net, and individuals accessing the system will be assessed explicit cost-sharing contributions. It is unfortunate that this revenue and budgeting measure designed to benefit the city-county government is being passed off as health care reform.

The next two years presents another window of opportunity for comprehensive reform. San Francisco could accomplish much more in improving the health care of its residents by becoming a very active, high-profile, national advocate of a publicly-funded, universal program of social insurance. And the San Francisco’s throughout the nation need to join in.

HMO-Founder Calls System a Failure, Calls for Medicare for All

Book Details Health Care System Crisis

By Amy Bentley-Smith
Long Beach News, November 30, 2006
Features Editor

Dr. Robert Gumbiner, a leader in the field of managed health care in the United States, lays out his remedy for the nation’s ailing health care system in a new book he penned with his daughter, editor Alis Gumbiner.

From 3 to 4 p.m. this Saturday, Dec. 2, the Gumbiners will be signing copies of “Curing Our Sick Health Care System: A Solution to America’s Health Care Crisis” at Shore Books, 4817 E. Second St.

A longtime Long Beach resident, Gumbiner founded what would become one of the largest pre-paid Health Management Organizations (HMO) practices in the United States, FHP, in 1961. FHP would lead the way in establishing prepaid health care for the state’s Medi-Cal/Medicaid program for the low-income individuals and families, and received the first contract for federal Medicare service on the west coast.

In “Curing Our Health Care System,” Gumbiner argues that the country needs a single payer, Medicare-type system that is available to all.

“If you’re over 65 you get covered by Medicare, but if you’re under 65 you don’t. We all pay taxes,” he said, adding that giving coverage to a select group is a form of discrimination.

Such a universal system is not out of reach and could be financed with the amount of money spent on health care today, Gumbiner contends.

“I’m a firm believer that there’s enough money being spent right now with employeremployee contributions and the federal government that everyone can be covered,” Gumbiner said.

In the book, Gumbiner offers a history of the current health care system and why it is dysfunctional — mainly a result of it being too profit driven at all levels — before offering his suggestions for fixing it. He said he’s not re-inventing the wheel.

“We’ve already done most of these things,” he said of his solutions. “We just need a white knight, some politician who has the courage to go up against the prescription drug companies and for-profit hospitals and stand firm….

“I wrote it… to help the decision makers, the policy makers be better informed. There are not too many out there offering solutions.”

Available at Shore Books and online at amazon.com, “Curing Our Sick Health Care System” is Gumbiner’s third book. He previously wrote “HMO: Putting it All Together” in 1975 and “FHP: The Evolution of A Managed Care Health Maintenance Organization 1955-1992” in 1994.

Can the uninsured afford insurance?

The Uninsured And The Affordability Of Health Insurance Coverage

By Lisa Dubay, John Holahan, Allison Cook
Health Affairs
November 30, 2006

We found that 24.7 percent of the uninsured are eligible for public health insurance programs, 55.7 percent are in the “need (financial) assistance” category, and 19.6 percent are likely to be able to afford coverage on their own. There is much variation in this distribution across population groups, with 74 percent of uninsured children being eligible for existing public programs and 57 percent and 69 percent of uninsured parents and childless adults, respectively, being in the “need assistance” category. Consequently, absent a universal coverage solution, a range of policies will be needed to address the problem of uninsurance.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.1.w22

Comment:

By Don McCanne, MD

Studies such as this have been used by conservatives to suggest that the problem of the uninsured is not a major issue, and therefore does not require comprehensive reform. They contend that most uninsured children are technically insured because they are eligible for the Medicaid and SCHIP programs. They also contend that many uninsured adults actually can afford coverage so they should be considered as being insured even though they opt not to purchase insurance.

The conservatives imply that the only real problem is the modest number of low-income adults, mostly without children, who cannot afford coverage. They suggest that all we need to do is to make available refundable tax credits limited to the poor, and the problem of the uninsured would largely vanish.

What is the reality?

Even though many children are eligible for Medicaid and the SCHIP programs, 100 percent enrollment can never be achieved because of financial, administrative, and logistical barriers. Attrition is also inevitable because of these same barriers plus fluctuations in eligibility. The only effective way to ensure that all children are covered is to enroll them at birth in a program that is permanent and not subject to any eligibility requirement such as the payment of premiums. That is not possible as long as we continue to segregate children from low-income families into separate medical welfare programs.

What about the 20 percent of uninsured individuals who can afford coverage? In this study, the threshold of affordability was defined as 300 percent of the poverty level. At this level, a family policy would cost 17.2 percent of family income, and that does not include out-of-pocket expenses for deductibles, coinsurance and non-covered services. It also ignores those who are uninsurable because of preexisting medical problems. In considering reform, this group should not be cast aside based on the dubious claim that they have the resources to make it on their own. They should automatically be included as well.

And tax credits for the poor? Much has been written about the deficiencies of tax credit proposals, but perhaps the most important is that the credits would be used to purchase plans with affordable premiums, which equates with plans that prevent access to care because of the lack of affordability of out-of-pocket costs. We don’t need affordable insurance premiums; we need affordable health care.

All of the uninsured need to have comprehensive health care coverage. Moreover, all of the underinsured need to have their coverage brought up to a level that removes significant financial barriers to care. That leaves out one group: the wealthy. But we really need to include them as well since they would be crucial to a system of equitably financing a universal health insurance program.

Instead of a range of policies that collectively fall far short of reform goals, we need an effective, one-size-fits-all national health insurance program that makes comprehensive care affordable for all of us.

Advocates reject privatized coverage

Healthcare for Children: Will the HMOs leave them uncovered?

by KIP SULLIVAN
Pulse of the Twin Cities

The last election affected Governor Tim Pawlenty the way Marley’s ghost affected Scrooge. Pawlenty–the governor who cut 38,000 people from MinnesotaCare in 2003, who early in 2005 referred to MinnesotaCare as “welfare health care” and demanded that 40,000 more Minnesotans be kicked off it, and who shut down the state in the summer of 2005 to enforce that demand–that governor announced one week after his narrow re-election that he wanted to “chart a path toward universal health insurance.”

Image by Mark Limvere-Robinson “We should start with covering all kids,” he said. Pawlenty’s U-turn on this issue, coupled with the DFL takeover of the House and the recent endorsements of universal coverage by the insurance industry, has raised the odds that the Legislature will conduct a serious debate about universal health insurance in 2007.

Amid the good news, there is some bad news: A trap awaits proponents of universal coverage. The trap works like this: Politicians who normally oppose expansion of government-financed health insurance agree to support expansion of existing programs or the creation of new ones, but only on the condition that the expanded or new program be privatized; that is, that the tax dollars going into the program go directly to HMOs, not to doctors and hospitals.

Funneling the money through HMOs raises the total cost of the program by roughly 15 percent. After they cut patient spending by 5 percent, the HMOs add 20 percent in administrative costs, including advertising, lobbying executive salaries and, in the case of for-profit insurers, profit.

Some liberals, thinking it’s more important to take the money being offered by the conservatives than to argue about whether it is spent efficiently, bite on the offer. President George Bush deployed this trap to enact the horribly complex Medicare Part D program, which began on Jan. 1, 2006. Early in 2003 Bush proposed adding drug coverage to Medicare but only on the condition that it be privatized; that is, that seniors pay premiums to insurance companies if they wanted the extra drug coverage. AARP and some Democrats fell into the trap.

The result was the deplorable Medicare Part D program. It offers meager drug coverage. The worst defect is that the coverage punks out at $2,250 and does not resume until annual drug expenses reach $5,100. This scrawny coverage is costing the taxpayer twice as much as it would have if the drug coverage had been simply added to the traditional, “unprivatized” Medicare program. Not surprisingly, fixing the huge defects in the program is turning out to be difficult. The sole reform the Democrats are talking about now that they’ve taken control of Congress, is giving Medicare the authority to negotiate drug prices with the drug manufacturers. They are not talking about ousting the insurance companies from Part D.

Setting the trap in Minnesota
The insurance industry has spent much of the last six months setting a similar trap for universal-coverage advocates. Last July the CEO of HealthPartners, Minnesota’s third largest plan, announced in an op-ed for the Star Tribune that HealthPartners supported universal coverage as long as it was privatized. Last September two Blue Cross Blue Shield executives made similar announcements. On Nov. 13, the day before Governor Pawlenty announced his conversion, America’s Health Insurance Plans (AHIP, the trade group for the national insurance industry) released a proposal in Washington, D.C., calling for universal coverage of children within three years and 95 percent coverage of adults within 10 years, all to be paid for with tax dollars funneled through insurance companies (see AHIP’s Web site at www.ahipbelieves.com). Then, on Nov. 25, the Star Tribune published an op-ed by the Minnesota Council of Health Plans, which represents Blue Cross and seven of the more tightly managed health insurance companies in Minnesota, announcing they too support universal coverage, starting with kids.

CartoonThe insurance industry has not explained why it chose 2006 to bait the trap, but it’s a good bet the timing is explained by the enactment of a Massachusetts law last April that its advocates claim will halve that state’s uninsured rate, from 11 percent in 2004 to about 5 percent by 2010. That law, which requires that Massachusetts residents buy health insurance by July 1, 2007, and which provides tax-financed subsidies to lower-income residents so they can afford to obey the new law, was showered with favorable publicity across the country largely because it was passed by a Democrat-controlled legislature and signed by a Republican governor.

Although the law is going to fail because it is so costly (that’s what you get when you funnel tax dollars through insurance companies), the fact that it passed with bipartisan support has been interpreted by pundits and many politicians as a sign that the pressure for universal coverage is higher than ever and significant expansion of coverage, if not universal insurance, is coming soon.

In fact, Governor Pawlenty’s Nov. 14 announcement of his new-found belief in universal health insurance was delivered during his keynote address at a conference at the University of St. Thomas, sponsored by David Durenberger’s National Institute of Health Policy, at which the main topic of discussion was the Massachusetts law (see the Institute’s website, nihp.org, for details). Pawlenty invited Massachusetts Gov. Mitt Romney to speak at that conference with him. Romney could not come but was represented by Timothy Murphy, Massachusetts’ Secretary of Health and Human Services, the agency that oversees implementation of the new law. By participating in this event and inviting Romney, and by mentioning during his speech his support for a requirement that individuals buy health insurance, Pawlenty made it clear the Massachusetts model appeals to him.

In sum, the favorable response to the Massachusetts legislation from the media and many politicians signified that the universal coverage train might at long last be leaving the station. It is reasonable to infer that the insurance industry decided, probably around the spring of this year, that if they wanted to influence the train’s direction they had better jump on board with some proposals of their own. And, not surprisingly, their proposals promise universal coverage but only on the condition that those who want it accept a privatized version.

Insurers promote the Massachusetts law
The HealthPartners and Blue Cross proposals closely resemble the new Massachusetts law. Both insurers propose to treat health insurance like auto insurance–you have to buy it or pay a fine. This requirement, known as an “individual mandate” (to be distinguished from an “employer mandate” which makes employers buy health insurance for their employees), would be enforced with annual financial penalties. In Massachusetts, the penalty is on the order of $1,500 to $2,000 per person.

Recognizing that the average working stiff cannot afford to fork over $11,000 and up per family per year to the insurance industry, the Massachusetts law and the HealthPartners and Blue Cross proposals call for tax-financed subsidies for residents who make less than three times the federal poverty level (about $60,000 for a family of four and about $30,000 for an individual). Blue Cross estimates these subsidies will cost $1 billion a year in Minnesota.

The insurance industry and its allies are going out of their way to make sure Minnesotans understand they are not promoting a single-payer system. (Under such a system, tax dollars bypass insurance companies and flow directly to clinics and hospitals. See sidebar for a definition of “single-payer”). “Please know that universal coverage does not mean ‘single-payer,'” said Blue Cross’ CEO, Mark Banks, in his speech to the St Paul Chamber of Commerce on Sept. 13. “I’m going to repeat that statement,” he continued, “because too many people instantly reject the idea of universal coverage because they reject the idea of a single-payer system. Universal coverage does not mean single payer.”

Governor Pawlenty’s office has likewise issued statements distinguishing Pawlenty’s interest in expanding coverage from interest in a single-payer system.

Unfortunately, Pawlenty and the health insurance industry are not the only powerful players in this debate who are insisting that any significant expansion of tax-financed health insurance be privatized. The Minnesota Medical Association (which represents a majority of Minnesota doctors) took that position in a report published in January 2005. “Pawlenty aligns policy with MMA” said the MMA website (www.mmaonline.net) on Nov. 15, 2006, the day after Pawlenty’s announcement. The Children’s Defense Fund, which has been fighting for better coverage for children for two decades, is lobbying for legislation to insure all kids but on the condition that the parents of these children enroll them in HMOs.

DFL leadership has been part of the problem
In addition to the insurance industry, the MMA, some advocates for children, and Governor Pawlenty, the forces demanding that any new tax dollars for expanded coverage be routed through HMOs includes the handful of DFL legislators who have set health care policy for their party as chairs of the health policy and health finance committees in the House and Senate over the last two decades. The influence of these DFLers can be seen in Minnesota’s three public health insurance programs–MinnesotaCare, Medical Assistance (MA), and General Assistance Medical Care (GAMC). All three programs were privatized during periods when the DFL controlled the Legislature. MA and GAMC were privatized gradually beginning in 1985; MinnesotaCare was privatized overnight in 1996. That’s right. Thanks to the support of DFL “leaders” on health policy, HMOs have been inserted into all three of these programs.

When Blue Cross and HealthPartners come to the Legislature next year to propose universal coverage (either for the entire population or for kids only) on the condition that the coverage is privatized, they will come with the backing of some powerful groups and some powerful politicians, notably Gov. Pawlenty and some senior DFL legislators. If you were a betting person and knew nothing about the grassroots movement for a single-payer, you’d bet that the Blue-Cross-HealthPartners-MMA-Pawlenty alliance, with help from DFL “leaders,” will succeed in embedding insurance companies in any program to expand health insurance coverage, if not next year, then over the long haul.

The single-payer movement grows
But two developments over the last two years have placed speed bumps, and perhaps serious barriers, in the path of the privatization juggernaut. First, two single-payer coalitions have geared up to prevent the growing momentum for universal health insurance from being parlayed by the insurance industry into momentum for privatization. These coalitions–the Minnesota Universal Health Care Coalition (MUHCC) and the Greater Minnesota Health Care Coalition (GMHCC)–have undertaken a campaign to “deprivatize” MinnesotaCare, MA and GAMC. Their research indicates Minnesota could cut the cost of those three programs by 10 to 20 percent if the HMOs were booted from those programs. The arguments presented by the MUHCC-GMHCC campaign to roll back privatization will obviously apply as well to any proposal to expand privatized coverage, either to all children or to all Minnesotans.

The second development that will impede the privatization freight train is the election results. The November election not only gave the DFL greater control over the Legislature, it brought into office new legislators who support single-payer or who, at minimum, do not accept the HMO propaganda that privatization of state programs is a good idea. Several of these new legislators have been appointed to the health committees.

The MUHCC-GMHCC deprivatization campaign began formally in August 2004 with a meeting between MUHCC representatives and then-DFL House Minority Leader Matt Entenza (St. Paul). MUHCC asked Entenza for help determining whether any research existed indicating that the privatization of state programs had worked as the HMOs and their DFL and Republican allies had said it would. Entenza agreed to write a letter posing that question to Kevin Goodno who at that time was the commissioner of the Department of Human Services (DHS), the agency that runs MinnesotaCare, MA and GAMC. In December 2004, Goodno replied that DHS had never done any research to address that question.

With Commissioner Goodno’s admission in hand, MUHCC and GMHCC, with help from Rep. Entenza, drafted legislation to remove Medica, HealthPartners, Blue Plus and the other HMOs from the three state health insurance programs. The bill was introduced in the House by Rep. Neva Walker (DFL-Minneapolis) (Keith Ellison was among the five co-authors) and in the Senate by Senator Leo Foley (DFL-Anoka). The House bill got a short hearing in the House health committee last March. When Rep. Walker and two speakers (including the author of this article) were done testifying, Goodno and three HMO representatives testified against the bill. Not one of the four opponents of the bill attempted to rebut Rep. Walker’s evidence that privatization had raised the cost of state programs by 10 to 20 percent.

But thanks to opposition to the bill by the Republicans and the senior Democrat on the committee, Rep. Walker did not ask for a vote. Because of similar opposition on the Senate health committee (including the senior Democrat), MUHCC and GMHCC did not ask for a hearing in the Senate.

MUHCC’s and GMHCC’s expectations for the 2007 legislative session are higher than they were for the 2006 session largely because the pro-HMO, pro-privatization DFL leadership in both houses has been diluted by legislators who are single-payer advocates or, at minimum, supportive of single-payer and deprivatization and skeptical of the claims made for HMOs. This is especially true in the Senate where Senator John Marty (DFL-Roseville) will chair the Senate Health Policy Committee. Marty authored legislation to create a single-payer health care system in the mid-1990s when most of his colleagues were swept up in the mania for HMOs, and he spoke openly about his support for a single-payer system during his 1994 campaign for governor.

Massachusetts: The Ghost of Christmas Future
The heightened interest in universal health insurance, the takeover of the Minnesota House by DFLers, and Pawlenty’s ostensible conversion from opponent of public programs to supporter has created a more promising climate for all advocates of universal health insurance. The issue is not whether universal coverage will be discussed seriously in the 2007 session, but whether universal coverage advocates inside and outside the Legislature will fall into the privatization trap.

The issue is whether they’ll endorse privatization in exchange for a significant step toward universal coverage thereby making maintenance of existing coverage more difficult, because coverage will be so costly and render any future expansions of coverage more difficult.

The struggle Massachusetts now is going through to implement its new “universal health insurance” law serves as a warning to universal coverage advocates in Minnesota who believe that expanding access to health insurance is so important it is worth sacrificing real cost containment to get it. The comments of Massachusetts Governor Romney after he signed the law on April 12 illustrate this risk. Romney, who will probably announce his presidential ambitions soon, told the New York Times, “This is really a landmark for our state because this proves … that we can get health insurance for all our citizens without raising taxes ….

The old single-payer canard is gone.” Romney is a healthy man in his 50s. He will live to eat his words. The law Romney signed will not provide “health insurance for all [Massachusetts] citizens … without raising taxes.” Even the law’s most delirious supporters were saying during the debate over the bill in the Legislature that it would cut Massachusetts’ uninsured rate from 11 percent in 2004 to 1 percent by 2010. Shortly after it was enacted, its proponents were saying the uninsured rate would fall to 5 percent by 2010.

The fundamental reason the Massachusetts law will never come close to insuring all citizens is that it cannot contain cost. It is just flat out impossible to insure more people for the same amount of money if you don’t cut costs somewhere. The Massachusetts law promises to cut costs by issuing “report cards” on clinics and hospitals, which is supposed to cause quality to go up and costs to go down. For several reasons, including the difficulty of measuring quality of medical care and the high cost of doing so repeatedly for numerous medical services, this promise is going to fail. Since Romney and his Democratic allies ruled out a deprivatized system, and since their so-called cost containment strategy can’t work, they have no way to reduce costs other than to reduce coverage and/or encourage the insurance companies to ration health care. Given the average citizen’s hostility to HMO attempts to ration care, it is unlikely (although by no means impossible) that costs will be cut substantially through HMO rationing. That leaves reduced coverage as the path of least resistance.

Reduced coverage appears to be the strategy Massachusetts is adopting, willy-nilly. According to a blog maintained by Health Care For All (the citizen group in Massachusetts that led the campaign for the law Romney is so proud of and that Minnesota insurers find so attractive), the agency that is implementing the Massachusetts plan is now discussing allowing insurance companies to sell policies with very high deductibles and scrawny coverage. Moreover, that agency is now discussing permitting residents who buy these stripped down policies to offer them as proof of having obeyed the individual mandate. To be specific, the agency is considering letting insurers sell policies with deductibles of $2,500 to $3,000 for individuals (presumably these numbers are much higher for families) and limited coverage (for example, generic drugs only) (see http://blog.jcfama.org?p-648#comments). As bad as this coverage is, agency staff predict the premium will be $2,500 to $3,000 a year.

In short, Massachusetts appears to be moving toward a system in which only 95 percent and perhaps fewer of its people are insured, and many of these will be “insured” with very leaky coverage. Even so, whether this can be done without raising taxes remains to be seen. The tax-financed subsidies are going to have to be high if all residents are going to be able to afford their $2,500-$3,000 per person premium.

Health Care for All and other advocates of universal coverage in Massachusetts have paid a high price for “universal” coverage. Advocates of universal coverage in Minnesota should think long and hard before they cut a similar deal here. Let’s insure all kids as a first step toward universal coverage. But let’s leave insurance companies out of the loop. Let’s then insure all other Minnesotans with a single-payer system.

Make corporate executives sensitive to their own health carecosts?

The Wall Street Journal
November 28, 2006
Letters

Should Corporate Chiefs Get Lifetime Health Care?

In your Nov. 20 editorial “AHIP Hop” on the health-insurance proposal recently unveiled by America’s Health Insurance Plans (AHIP), you lament the fact that “individuals generally aren’t sensitive to the price of their treatment decisions.” For that reason, you have long supported high-deductible health insurance that puts patients’ “skin in the game,” to use the colorful metaphor for “high deductibles.”

Economists, who generally believe that fiscal incentives drive human behavior, can resonate with this prescription, but as one such I would ask: What does it tell us about the health-insurance coverage of highly paid corporate executives? Does it not imply that these executives should never have the corporation buy health insurance of any sort for them, lest these executives become too insensitive to the cost of their health care?

Instead, we find that corporate executives routinely insist that their companies purchase for them and their spouses generous health insurance for life, and many of them even insist that the company cover all out-of-pocket expenses built into such policies.

Is that at all defensible on the “skin in the game” theory you espouse?

Uwe E. Reinhardt
Professor of Political Economy
Princeton University
Princeton, N.J.

http://online.wsj.com/public/us

Comment:

By Don McCanne, MD

Corporate executives, of course, are sensitive to health care costs – of their employees. But the question they should be asking themselves is, “Should we be controlling health care spending by making beneficial services for our employees unaffordable, or should we act like the businessmen we are and support structural reform of health care financing that would make the comprehensive health benefits that we receive affordable for everyone?”

Corporate executives are businessmen, aren’t they?

Three More CLC's in Two states Endorse HR 676

Two labor councils in northern New Jersey, and one in central Indiana, have endorsed HR 676, national single payer healthcare legislation, introduced by Congressman John Conyers (D-MI). Fifty-three central labor councils, including six in New Jersey, have now endorsed HR 676.

After the White River Central Labor Council in Bloomington, IN endorsed HR 676, Jackie Yenna, council president said, “The time has come for all Americans to be able to have health care. I trust our newly elected congress will work with us to pass HR 676”.

The Passaic County Central Labor Council in Clifton, NJ endorsed HR 676 at its October meeting.

In Jersey City the Hudson County Central Labor Council, whose members include more than a thousand health care workers in 8 hospitals, acted at its November meeting. Its resolution states: “The system of managed care…has proven itself detrimental to the health of the patients it serves…and damaging to the United States’ healthcare system.” The resolution also declares: “That the Hudson County Central Labor Council AFL-CIO when endorsing a candidate for public office will look to said candidate to endorse HR 676…”

#30#

HR 676 now has 77 congressional co-sponsors in addition to John Conyers. It would institute a single payer health care system in the U.S. by expanding a greatly improved Medicare system to every resident.

HR 676 would cover every person in the U. S. for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, chiropractic and long term care. HR 676 ends deductibles and co-payments. HR 676 would save billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

HR 676 has been endorsed by 212 union organizations including 53 Central Labor Councils and Area Labor Federations and 15 state AFL-CIO’s (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, & NC).

For further information, a complete list of union endorsers, or a sample endorsement resolution, contact:
Kay Tillow
All Unions Committee For Single Payer Health Care-HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551
Email: nursenpo@aol.com
11/29/06