PNHP

Medi-Cal's 5 percent rate reduction

Medi-Cal's 5 percent rate reduction

Cuts to Medi-Cal threaten program’s future
By Sandy Kleffman
Contra Costa Times
January 3, 2006

Beginning this week, the state will cut by 5 percent its reimbursement rate for doctors who treat California’s poorest residents.

Some people fear this will cause even more doctors to abandon the Medi-Cal program, making it tougher for 6.8 million poor and disabled residents to find someone willing to treat them.

“Already, half of the providers in California do not take Medi-Cal,” said Anthony Wright, executive director of Health Access California, a consumer advocacy group.

“It’s a real concern in terms of access to care. For certain people, Medi-Cal coverage is in danger of becoming a false promise.”

The cut comes as an improving economy has caused the state’s budget coffers to brim again after several years of multibillion-dollar shortfalls.

http://www.contracostatimes.com/mld/cctimes/13538192.htm

Comment: Medi-Cal already has the lowest physician reimbursement rates of all fifty state Medicaid programs. Physicians accepting Medi-Cal patients must make up the losses by shifting some of the net income from their other patients to cover overhead expenses. An additional 5 percent reduction will come out the physicians’ own pockets.

In order to be able to serve their patients, physicians must also be good businesspersons. In what other business does the state ask private contractors not only to relinquish any profit, but also to personally contribute to the funding of the services and/or goods provided? Why would any contractor agree to contribute an even greater amount of his/her own funds when the state budget crisis has been eliminated?

What is unique about the business of medicine is that these are real physicians, taking care of real patients, with real health care needs. For dedicated physicians, patients really do come before profits, but, sadly, insolvency trumps all.

Low-income populations are rapidly expanding. Physician charity can no longer serve as an effective policy to meet their health care needs. As long as Medicaid remains a welfare program, it will always be underfunded. We will not resolve this problem until we agree to switch to a universal program of social insurance.

When we have a single insurance program that covers everyone, then just try to tell physicians that they must personally fund the care that they are giving. Although they may be not be astute businesspersons, they’re not stupid!

Public Employee Health Benefits to Evaporate

Note to Health Care Reform Activists: Public Employee Health Benefits to Evaporate
by Andy Coates
Monthly Review Zine
12/25/05

According to two recent articles, one in the New York Times and one in the Wall Street Journal, the federal Governmental Accounting Standards Board has begun to require municipalities — states, counties, cities — to account for how much it will cost them to provide all the health care promised to present and retired public employees. This process, to be completed over the next 3 years, has already started in states like Alaska, Delaware, and Maryland and cities like Duluth, Minnesota and Arlington, Texas.

In response, public employers have begun slashing the benefits offered to new hires. Retirees’ and current employees’ health benefits will be next. A union struggle will be enjoined, as public employee unions face an ever more defensive struggle to hold on to health benefits.

As of 2006, new hires in Arlington, Texas will have no retirement health benefits. Alaska, facing a health care cost deficit of $5.7 billion, pushed new employees into high deductible/ HSA (Health Savings Account) schemes (after some heavy lobbying from the White House). Thankfully, the state constitution protected the benefits of current state workers. In Michigan, legislation on is being prepared that will shift health care costs onto the retirees, period.

It might be tempting to imagine that this phantom emerged because of neo-conservative sorcery, as in Grover Norquist’s desire to shrink the government to a size where he might “drag it into the bathroom and drown it in the bathtub,” or George Bush’s call for an each-against-all “ownership society.” But the fact is that health care costs for all employers, public as well as private, have grown increasingly impossible as health insurance premiums and drug costs continue to escalate.

Unintentionally echoing Uwe Reinhardt’s quip that the big three auto makers are “basically social insurance systems” that sell cars, Mayor Herb Bergson says of Duluth: “The city isn’t going to function because it’s just going to be in the health care business.”

The wholesale effort on the part of employers — public as well as private — to shift costs onto individuals is under full steam because the existing non-system leaves employers no other choice. Whether employed by a large corporation or a large state, a small city or a small shopkeeper, no employee or retiree will be spared. Behind this wave will be an eddy in which the ranks of the uninsured — and the bankrupt! — drown, for individually we will simply not be able to meet the costs of our insurance, let alone our sick care.

Health care reform activists should heed these articles. They say something important about the tempo of change: the health care meltdown is accelerating rapidly. This disintegration will play out not in the coming years but in the coming months.

Amid this crisis our powerful idea will begin to flourish into social movement: health care should be equally available to all. National health insurance — covering prescription drugs and all necessary medical and dental care, including mental health, hospital stays, and long-term care — is the only workable solution.

Amid this crisis our powerful idea will begin to flourish into social movement: health care should be equally available to all. National health insurance — covering prescription drugs and all necessary medical and dental care, including mental health, hospital stays, and long-term care — is the only workable solution.

References

Freudenheim, Milt, and Mary Williams Walsh. “The Next Retirement Time Bomb.” New York Times 11 December 2005.

Hakim, Danny. “Carmakers Face Huge Retiree Health Care Costs.” New York Times 15 September 2005.

Solomon, Deborah. “State, Local Officials Face Looming Health-Care Tab.” Wall Street Journal 23 November 2005.

Andrew D. Coates, MD, is a member of Physicians for a National Health Progream

Health costs will cause more strikes

By David Lazarus
San Francisco Chronicle
Friday, December 23, 2005

The devastating transit strike that left New Yorkers trudging through the cold this week probably made more than a few Bay Area residents think, “Glad that’s not happening here.”

Think again. It will happen here.

Perhaps not involving BART or the Muni. Perhaps not involving transportation at all. But experts say a major strike in any of a number of vital industries is all but inevitable, and the reasons are the same as those that drove New York transit employees off the job.

Pensions and health care.

“Employee benefits are a very big deal in labor issues,” said David Cutler, a professor of economics at Harvard University. “Pensions and health are the main costs companies face, and they don’t know what to do about them.”

In fact, many companies are addressing the pension side of the equation by abandoning traditional defined-benefit plans and moving instead toward defined-contribution plans like 401(k) programs.

This may not relieve employers of their obligations to current and soon-to-be retirees, but will help limit future liabilities.

Cutler said health care is much trickier because spiraling costs are beyond the control of employers and employees.

“This is an issue that’s only going to get worse,” agreed Michael Chernew, an economist and professor of health management and policy at the University of Michigan.

“Health care costs are going to keep going up and somebody will have to pay for them,” he said. “This will be a fundamental challenge for the country for decades to come.”

While pensions emerged in recent days as the main point of contention, health care was one of several key issues at the heart of the New York transit strike.

The strike ended Thursday as workers and the Metropolitan Transportation Authority agreed to resume negotiations.

Prior to the settlement, the transit authority said it wants all employees to cover higher co-payments for prescription drugs and visits to doctors’ offices.

It also wants workers to pay a portion of their health insurance premiums. Workers now make no such contribution to their plans.

The transit agency said it wants to raise the retirement age to 62 from 55 and wants new employees to contribute more to their pensions.

It’s also offering a significantly lower wage increase than sought by workers, despite running a reported $1 billion budget surplus.

At this point, it’s unclear where the two sides stand on these matters, although reports Thursday indicated that workers are now prepared to discuss paying part of their insurance premiums.

“The big problem is that health care is getting expensive faster than wages and other compensation are going up,” said Pamela Farley Short, a professor of health policy and administration at Penn State University.

“We’re going to be using more health care, not less, in the future,” she said. “A particular difficulty is all the people who will be retiring soon who have high expectations for getting all the health care they desire.”

With medical costs rising by double digits annually, this will be increasingly hard for coverage providers to deliver. And major employers nationwide are already cutting back their health care obligations to workers and retirees.

In October, General Motors, the country’s biggest private-sector purchaser of health insurance, said it will slash its $5.6 billion annual health care spending by about $1 billion a year.

In July, a strike by BART employees was averted after workers agreed to increase their health care contributions from $25 to $75 a month starting in January. Their contributions will continue to increase by 3 percent annually.

Health care also figured prominently in the bitter strike by Southern California supermarket workers two years ago.

This is indeed a problem that’s going to get worse — much worse — before it gets better, with repercussions that will be felt throughout the economy, and by virtually all workers and consumers.

As it stands, each labor action, and each subsequent remedy, will only prolong our suffering by perpetuating a health care system that squanders billions of dollars every year in bureaucratic overhead.

About a third of the nearly $2 trillion in annual health care spending in the United States goes to clerical matters, not treatment, according to researchers at Harvard University. This is due primarily to the wide array of private insurers involved.

At the same time, U.S. census figures show that a record 45 million Americans lack health coverage of any kind — an extraordinary statistic for a nation that leads the world in medical research and technology.

I’ve written repeatedly about how a single-payer health care system, similar to Medicare, could provide universal coverage for all Americans at a long-term cost to taxpayers well below what’s now paid annually by employers and workers.

Single-payer systems are the norm in virtually all other developed democracies. They’re far from perfect, with long waits for treatment a frequent complaint.

But the state-run programs, in which tax money is allocated to medical facilities nationwide, ensure that any citizen can receive care from any doctor at any hospital.

“The devil’s in the details,” said Chernew at the University of Michigan. “It could be substantially worse than the system we have now or substantially better.”

Similarly, Penn State’s Short said the trick to making a single-payer system work in a nation as diverse as the United States is being able to accurately and fairly determine health care costs and the best allocation of medical resources.

“I don’t know if there’s anyone smart enough to do that,” she said.

My thinking is that we need an independent body similar to the Federal Reserve, which oversees U.S. monetary policy.

The health care system would be monitored and guided by an Alan Greenspan-like figure who is beholden to no special interests or political parties and who could innovate as required to keep the standard of treatment in the United States second to none.

These are tough issues, to be sure, requiring heretofore unimagined depths of political courage to make a reality.

On the other hand, if such a system currently existed in this country, it’s a fair bet that a whole lot of New Yorkers wouldn’t now be soaking their tired tootsies in hot baths.

Medicine: Who Decides?

By Paul Krugman
The New York Times
December 26, 2005

Health care seems to be heading back to the top of the political agenda, and not a moment too soon. Employer-based health insurance is unraveling, Medicaid is under severe pressure, and vast Medicare costs loom on the horizon. Something must be done.

But to get health reform right, we’ll have to overcome wrongheaded ideas as well as powerful special interests. For decades we’ve been lectured on the evils of big government and the glories of the private sector. Yet health reform is a job for the public sector, which already pays most of the bills directly or indirectly and sooner or later will have to make key decisions about medical treatment.

That’s the conclusion of an important new study from the Brookings Institution, “Can We Say No?” I’ll write more about that study another time, but for now let me give my own take on the issue.

Consider what happens when a new drug or other therapy becomes available. Let’s assume that the new therapy is more effective in some cases than existing therapies – that is, it isn’t just a me-too drug that duplicates what we already have – but that the advantage isn’t overwhelming. On the other hand, it’s a lot more expensive than current treatments. Who decides whether patients receive the new therapy?

We’ve traditionally relied on doctors to make such decisions. But the rise of medical technology means that there are far more ways to spend money on health care than there were in the past. This makes so-called “flat of the curve” medicine, in which doctors call for every procedure that might be of medical benefit, increasingly expensive.

Moreover, the high-technology nature of modern medical spending has given rise to a powerful medical-industrial complex that seeks to influence doctors’ decisions. Let’s hope that extreme cases like the one reported in The Times a few months ago, in which surgeons systematically used the devices of companies that paid them consulting fees, are exceptions. Still, the drug companies in particular spend more marketing their products to doctors than they do developing those products in the first place. They wouldn’t do that if doctors were immune to persuasion.

So if costs are to be controlled, someone has to act as a referee on doctors’ medical decisions. During the 1990’s it seemed, briefly, as if private H.M.O.’s could play that role. But then there was a public backlash. It turns out that even in America, with its faith in the free market, people don’t trust for-profit corporations to make decisions about their health.

Despite the failure of the attempt to control costs with H.M.O.’s, conservatives continue to believe that the magic of the private sector will provide the answer. (There must be a pony in there somewhere.) Their latest big idea is health savings accounts, which are supposed to induce “cost sharing” – that is, individuals will rely less on insurance, pay a larger share of their medical costs out of pocket and make their own decisions about care.

In practice, the health savings accounts created by the 2003 Medicare law will serve primarily as tax shelters for the wealthy. But let’s put justified cynicism about Bush administration policies aside: is giving individuals responsibility for their own health spending really the answer to rising costs? No.

For one thing, insurance will always cover the really big expenses. We’re not going to have a system in which people pay for heart surgery out of their health savings accounts and save money by choosing cheaper procedures. And that’s not an unfair example. The Brookings study puts it this way: “Most health costs are incurred by a small proportion of the population whose expenses greatly exceed plausible limits on out-of-pocket spending.”

Moreover, it’s neither fair nor realistic to expect ordinary citizens to have enough medical expertise to make life-or-death decisions about their own treatment. A well-known experiment with alternative health insurance schemes, carried out by the RAND Corporation, found that when individuals pay a higher share of medical costs out of pocket, they cut back on necessary as well as unnecessary health spending.

So cost-sharing, like H.M.O.’s, is a detour from real health care reform. Eventually, we’ll have to accept the fact that there’s no magic in the private sector, and that health care – including the decision about what treatment is provided – is a public responsibility.

Public system in Alberta reduces queues

Public system achieved health-care success
Letter by Doris Grinspun, RN, Executive Director, Registered Nurses’
Association of Ontario, Toronto
Toronto Star
Dec. 30, 2005

… in Alberta, health-care success has come through much-needed reforms within the public system, not through privatization. Indeed, profit plays no role and is actually detrimental. The recipe for success in Alberta was based on establishing specialized teams of surgeons, nurses and physical therapists working together to move patients quickly through the system, performing surgeries according to well-managed waiting lists based on medical priorities.

In this pilot project in Alberta – which has seen wait times for hip and knee replacements reduced from an average of 47 weeks to 4.7 weeks – surgeons work consistently with the same team of nurses, focusing only on hip and knee replacements. The result: They are performing almost double the number of surgeries they used to perform.

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&call_pageid=
971358637177&c=Article&cid=1135896621824

Comment: We continue to hear the charge that single-payer public insurance programs inevitably result in rationing, primarily in the form of excessive delays (queues) for elective surgeries. What is not said is that responsible stewards of a well monitored public system can easily make adjustments in capacity that would eliminate excessive queues.

The problem is that vested interests from the more lucrative private sector will use the political process to sabotage the public system by blocking capacity adjustments, thereby creating excessive queues. The unhappy patients then become both a source of political support and a market for their private medical enterprises. Under such a scenario, the vested interests are motivated to expand further the queues within the public system. Privatization makes public queues worse, not better.

The orthopedic experiment in Alberta demonstrates that responsible public stewards can eliminate unnecessary queues for everyone, rather than merely for the more affluent who can jump the queue by moving into the private sector for care. The supporters of privatization are being dishonest when they contend that they have the solution for excessive queues when, in fact, they are deliberately attempting to prolong queues within the public sector.

Romanow has the last word for 2005

For-profit health care costly, inefficient
Toronto Star
Sep. 19, 2005

An edited excerpt of a speech by former Saskatchewan premier Roy Romanow about the June 9 Supreme Court decision that quashed Quebec’s ban on private health insurance. Romanow conducted a royal commission into health care in
2001-2002:

Let’s consider a few of the major studies that have chronicled the health-care system in the United States, a system which, according to 2003 data compiled by the OECD, spends 15 per cent of its GDP on health care. In Canada, by contrast, this figure amounts to 9.9 per cent …

In a study on medical bankruptcies in the United States, which accounts for half of all bankruptcies in that country, it was reported that in 2001, between 1.9 and 2.2 million Americans filed for bankruptcy because of medical causes. Moreover, another study reveals that, in 1999, the cost of paperwork for health care in the United States amounted to $1,059 (U.S.) per capita, per year while in Canada, the figure was $307 (U.S.) per capita, per year.

These differences demonstrate the inefficiencies associated with private for-profit delivery and, more precisely, how it would impact on, in the words of some of the justices, on “human reactions.” … Simply put, single-payer systems offering universal coverage obviate the need of thousands of hours being spent designing employee health benefit plans, selecting which HMO or provider to contract with and for what basket of services, variable deductibles, eligibility of family members for benefits, the costs of signing people on – and off – benefit plans based on their employment, and on and on. And that’s before we get to the unique challenges of insuring those who frequently change employer or who go from job to job, or who are simply too ill to work.

The implied conclusion that timely access to health-care services will be improved with the establishment of a parallel private scheme flies in the face of all of the evidence with which I grappled for 18 months as royal commissioner …

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=
1127054226181&call_pageid=968256290204&col=968350116795

Comment: Thanks to the work of David Himmelstein, Steffie Woolhandler, Elizabeth Warren and others, Romanow’s statement could be modified for the United States as follows:

The implied conclusion that timely, universal access to affordable health-care services will not be improved with the establishment of a single payer system flies in the face of all of the evidence with which Himmelstein, Woolhandler and Warren grappled for the past decade as health policy researchers…

Health Affairs most-read article, and two women with cancer

2005 Year in Review: Health Affairs’ 25 Most-Read Articles
Health Affairs
December 28, 2005 (e-mail)

In 2005, Health Affairs’ Web readership topped 9 million pageviews. The article on medical bankruptcy by David Himmelstein and colleagues of Harvard University tops the list with nearly 70,000 viewings. Each of the top 10 papers were viewed over 20,000 times during the time period.

1. David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler, Illness And Injury As Contributors To Bankruptcy Health Affairs 24 (2005): w63-w73 (published online 2 February 2005; 10.1377/hlthaff.w5.63).
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.
w5.63v1
(article accessible for two weeks)

Top 25 Papers for 2005:
http://www.healthaffairs.org/Top25_2005.php

Comment: The bankruptcy article has redefined the most important flaw in our system of funding health care in the United States. Until now, the problem has been framed largely as an impairment of affordability and access for the 46 million without insurance coverage, but the remaining 85% of us with coverage were not thought to be directly affected. This article showed that average-income individuals who develop medical problems (potentially anyone) may suffer severe financial hardship in spite of having health insurance.

Thus the flaw we must address is not merely the failure to expand our insurance products to cover the uninsured; the fundamental flaw is in the structure of our insurance system which fails to provide financial security and ensure affordable access for each and every individual with medical needs, insured or not.

Medical bills do not have to be an additional burden for those with medical needs. The following describes two insured individuals, in two different systems.

Two women, two cancers, two health-care systems
By Tom O’Brien
San Francisco Chronicle
December 29, 2005

I moved back to the United States with my Canadian wife and two small boys after living 15 years in Toronto and Ottawa. U.S. health care now looks both expensive and scary, leading me to conclude that we’d do better with an entirely different system.

Nowhere has this been put in sharper relief than in the story of two colleagues. Struck in March with cancer, an American colleague worried about death, insurance loss and bankruptcy. In contrast, a Canadian colleague and cancer victim had only her disease to fight.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/12/29/EDGG6GDPDA1.DTL
(This short article is well worth downloading.)

Swiss government rejects single payer

Government turns down national health scheme Swissinfo
NZZ Online
December 10, 2005

The cabinet has come out against a proposal to set up a national health insurance scheme, saying that it would not help to reduce spiraling health costs.

The proposal, which was launched by the centre-left Social Democrats, wants to set up a single non-profit insurance system based on an individual’s income.

The plan is still expected to be put to a nationwide vote next year.

The interior ministry said on Friday that the cabinet would rather stick with the status quo, where more than 100 private insurers compete against each other.

The government believes that a system which relies on different insurers – where people can switch companies without any restrictions – offers better perspectives than a state-run monopoly.

It adds that competition slows rising costs and presents a wealth of choice.

The government rejects the proposed structure of a single health scheme.

Suggestions that premiums could be paid according to a person’s income as part of a national health scheme were also rejected.

http://www.nzz.ch/2005/12/10/eng/article6303166.html

Comment: Advocates of consumer-directed health care (CDHC) in the United States have used the Swiss example of competition between private health plans as being close to a model that we should emulate, but there are serious problems with their system.

Global health care costs in Switzerland are very high, exceeded only by the costs in the United States. CDHC advocates admire the very high out-of-pocket health-care spending in Switzerland, much higher than most OECD nations, since that theoretically makes the Swiss more value-oriented health-care shoppers. Contrary to their view, having higher access costs (cost sharing) has not been effective in controlling health-care spending. Also, Switzerland’s system is quite inequitable since it is one of the most regressively funded systems of OECD nations.

In spite of its deficiencies, Switzerland’s system functions much more effectively than ours, but it is not because of the impact of CDHC. Switzerland’s insurance industry is very tightly regulated, causing it to have more features in common with a single payer system than does our fragmented system here in the United States. It is not market competition but rather government oversight that has made their system more effective.

Although their regulatory environment reduces some of their administrative waste, they could achieve greater efficiencies by switching to a single, non-profit insurance system as proposed by the Social Democrats. With a single system, funding could be made much more equitable, and the ineffectual and detrimental out-of-pocket cost sharing could be eliminated. As a monopsony, the single payer insurer could address the real causes of high health-care spending, such as non-beneficial high-tech excesses.

Will the Swiss support a change to a single-payer system? That depends on whether they have enough solidarity to support a more egalitarian system. Just don’t look to the United States; we won’t even spring for a crutch for Tiny Tim.

Urban Institute's view of incrementalism

Lowering Financial Burdens and Increasing Health Insurance Coverage for Those with High Medical Costs
By Linda J. Blumberg, Lisa Clemans-Cope, and Fredric Blavin
The Urban Institute
December 2005

Health care expenses associated with high-cost medical cases in the United States are increasingly being shifted to the individual, a phenomenon exacerbated by recent trends in product design.

As the costs of medical care are spread less broadly, financial burdens for seriously ill individuals with high medical costs can increase dramatically. This brief identifies evidence of the severity of these problems and presents policy options designed to address them.

Policy Options

While the government can subsidize those with high health care needs in many ways, we categorize those options into two general groups: (1) approaches that subsidize coverage obtained through existing private insurance carriers; and (2) approaches that subsidize coverage in an insurance context distinct from existing markets and open only to individuals (and possibly their dependents) that qualify based on health status. In this brief, we outline one policy option in each general category as examples of initiatives that can improve the coverage and access to care of those with high-cost illnesses. Both options discussed here specifically target individuals whose health care costs constitute a large share of income and minimize disruption of existing private insurance systems.

Option 1. Assignment of Risk to Existing Insurance Carriers Combined with Government Subsidies

Option 2. Federal Financing of State High-Risk Pools Combined with Federal Guidelines on Benefits and Eligibility

Neither policy option described in this brief would be considered a minor, incremental reform. Either would lead to a significant redistribution of private costs and would increase public spending on health care. However, both approaches can be implemented incrementally, for example, by initially targeting even one chronic disease or condition, such as diabetes.

Regardless of the approach taken, the need is clear. Mounting empirical evidence, policy research, and reports in the popular press attest that the U.S. health care system is currently inadequate to ensure access to care for those with the greatest health care needs. Many insured as well as uninsured high-cost individuals are at financial risk and at risk for poor health outcomes as a result.

http://www.urban.org/UploadedPDF/311261_financial_burdens.pdf

Comment: This health policy brief describes well the financial burdens and impaired access to care faced by those with significant medical needs, including those who are insured. Unfortunately, the policy recommendations fall woefully short and will never ensure affordable access and coverage.

It is not as if we have no experience with their recommendations. Previous efforts to risk adjust the Medicare + Choice (Medicare Advantage) options have been deferred indefinitely because of technical difficulties and insurer resistance, even though the concept remains in play as a desirable goal. Likewise, high-risk pools already exist but have been successful in insuring only about 180,000 individuals nationally, hardly a policy triumph.

It is amazing that the authors of this report consider these failed policy approaches to be much more than minor, incremental approaches. To appease the incrementalists, they suggest that these policies could be adopted for a single disease!?

Enough kowtowing to the incrementalists! The deterioration in affordability, coverage, and access is accelerating so rapidly that the incremental tweaks cannot possibly keep up with the rapid decline in security afforded by our private health plans.

What’s the next step? Do we apply two failed policies to diabetics, or shall we skip the incremental steps and adopt policies that would ensure affordable access to comprehensive coverage for everyone? Incremental steps increase health care spending whereas comprehensive single payer reform wouldn’t. Why are we still debating this?

Urban Institute’s view of incrementalism

Lowering Financial Burdens and Increasing Health Insurance Coverage for Those with High Medical Costs
By Linda J. Blumberg, Lisa Clemans-Cope, and Fredric Blavin
The Urban Institute
December 2005

Health care expenses associated with high-cost medical cases in the United States are increasingly being shifted to the individual, a phenomenon exacerbated by recent trends in product design.

As the costs of medical care are spread less broadly, financial burdens for seriously ill individuals with high medical costs can increase dramatically. This brief identifies evidence of the severity of these problems and presents policy options designed to address them.

Policy Options

While the government can subsidize those with high health care needs in many ways, we categorize those options into two general groups: (1) approaches that subsidize coverage obtained through existing private insurance carriers; and (2) approaches that subsidize coverage in an insurance context distinct from existing markets and open only to individuals (and possibly their dependents) that qualify based on health status. In this brief, we outline one policy option in each general category as examples of initiatives that can improve the coverage and access to care of those with high-cost illnesses. Both options discussed here specifically target individuals whose health care costs constitute a large share of income and minimize disruption of existing private insurance systems.

Option 1. Assignment of Risk to Existing Insurance Carriers Combined with Government Subsidies

Option 2. Federal Financing of State High-Risk Pools Combined with Federal Guidelines on Benefits and Eligibility

Neither policy option described in this brief would be considered a minor, incremental reform. Either would lead to a significant redistribution of private costs and would increase public spending on health care. However, both approaches can be implemented incrementally, for example, by initially targeting even one chronic disease or condition, such as diabetes.

Regardless of the approach taken, the need is clear. Mounting empirical evidence, policy research, and reports in the popular press attest that the U.S. health care system is currently inadequate to ensure access to care for those with the greatest health care needs. Many insured as well as uninsured high-cost individuals are at financial risk and at risk for poor health outcomes as a result.

http://www.urban.org/UploadedPDF/311261_financial_burdens.pdf

Comment: This health policy brief describes well the financial burdens and impaired access to care faced by those with significant medical needs, including those who are insured. Unfortunately, the policy recommendations fall woefully short and will never ensure affordable access and coverage.

It is not as if we have no experience with their recommendations. Previous efforts to risk adjust the Medicare + Choice (Medicare Advantage) options have been deferred indefinitely because of technical difficulties and insurer resistance, even though the concept remains in play as a desirable goal. Likewise, high-risk pools already exist but have been successful in insuring only about 180,000 individuals nationally, hardly a policy triumph.

It is amazing that the authors of this report consider these failed policy approaches to be much more than minor, incremental approaches. To appease the incrementalists, they suggest that these policies could be adopted for a single disease!?

Enough kowtowing to the incrementalists! The deterioration in affordability, coverage, and access is accelerating so rapidly that the incremental tweaks cannot possibly keep up with the rapid decline in security afforded by our private health plans.

What’s the next step? Do we apply two failed policies to diabetics, or shall we skip the incremental steps and adopt policies that would ensure affordable access to comprehensive coverage for everyone? Incremental steps increase health care spending whereas comprehensive single payer reform wouldn’t. Why are we still debating this?

GM's Wagoner and single payer

In G.M.’s Sight Lines: Washington and Tokyo
By William J. Holstein
The New York Times
December 18, 2005

An interview with Rick Wagoner, the chairman and chief executive of General Motors

Q. Were your problems caused by internal decisions, or external forces?

A. Well, it’s obviously a combination of both. I think it would be disingenuous for us to point to things like U.S. health care policy or trade policy and the exchange rates, things like that, and say they are the whole cause of the problem. The flip side, though, is that anybody who says they are not part of the problem just doesn’t have their feet placed in reality.

Like it or not, if we pay $1,500 per car for health care and our cheap global competitors pay $200, that’s a disadvantage. And we don’t have that situation because we’re stupid – it’s been the U.S. government policy for us to pay that bill and we’ve been doing it.

Q. What should the government do?

A. I don’t understand why the U.S. government isn’t more proactive on health care. Regardless of whether one believes in sort of the individual-responsibility model or single-payer system, there’s a lot of things that can be done to get the cost of health care and the quality of health care moving in the right direction. I think this is an area where strong leadership from the government could play a key role. Information technology is one possibility. Another is leveraging the buying power of the government, which is the biggest purchaser of health care under Medicare and things of that sort.

http://www.nytimes.com/2005/12/18/business/yourmoney/
18advi.html?pagewanted=all

Comment: Leaders of all three major U.S. auto corporations have been calling for a “national solution” to the burden caused by the escalating costs of employer-sponsored health plans, but they have been hesitant to endorse a single-payer national health insurance program.

One advantage of an interview is that it is frequently possible to extract more candid views from the person being interviewed. Wagoner’s statement that “regardless of whether one believes in sort of the individual-responsibility model or single-payer system” certainly indicates that Wagoner does acknowledge the credibility of the single payer model, without the necessity of actually endorsing it. More importantly, his use of “sort of” in the phrase “sort of the individual-responsibility model,” indicates that he has not been convinced that this is a clearly defined model that would effectively resolve the health care crisis issues.

Although Wagoner may not be ready to risk offending his friends who oppose social insurance by leading the charge to single payer, he has telegraphed that he has no intention of standing in the way of comprehensive reform. In fact, he continues to plead that the U.S. government must be more proactive on health care.

GM’s Wagoner and single payer

In G.M.’s Sight Lines: Washington and Tokyo
By William J. Holstein
The New York Times
December 18, 2005

An interview with Rick Wagoner, the chairman and chief executive of General Motors

Q. Were your problems caused by internal decisions, or external forces?

A. Well, it’s obviously a combination of both. I think it would be disingenuous for us to point to things like U.S. health care policy or trade policy and the exchange rates, things like that, and say they are the whole cause of the problem. The flip side, though, is that anybody who says they are not part of the problem just doesn’t have their feet placed in reality.

Like it or not, if we pay $1,500 per car for health care and our cheap global competitors pay $200, that’s a disadvantage. And we don’t have that situation because we’re stupid – it’s been the U.S. government policy for us to pay that bill and we’ve been doing it.

Q. What should the government do?

A. I don’t understand why the U.S. government isn’t more proactive on health care. Regardless of whether one believes in sort of the individual-responsibility model or single-payer system, there’s a lot of things that can be done to get the cost of health care and the quality of health care moving in the right direction. I think this is an area where strong leadership from the government could play a key role. Information technology is one possibility. Another is leveraging the buying power of the government, which is the biggest purchaser of health care under Medicare and things of that sort.

http://www.nytimes.com/2005/12/18/business/yourmoney/
18advi.html?pagewanted=all

Comment: Leaders of all three major U.S. auto corporations have been calling for a “national solution” to the burden caused by the escalating costs of employer-sponsored health plans, but they have been hesitant to endorse a single-payer national health insurance program.

One advantage of an interview is that it is frequently possible to extract more candid views from the person being interviewed. Wagoner’s statement that “regardless of whether one believes in sort of the individual-responsibility model or single-payer system” certainly indicates that Wagoner does acknowledge the credibility of the single payer model, without the necessity of actually endorsing it. More importantly, his use of “sort of” in the phrase “sort of the individual-responsibility model,” indicates that he has not been convinced that this is a clearly defined model that would effectively resolve the health care crisis issues.

Although Wagoner may not be ready to risk offending his friends who oppose social insurance by leading the charge to single payer, he has telegraphed that he has no intention of standing in the way of comprehensive reform. In fact, he continues to plead that the U.S. government must be more proactive on health care.