End of the Private New Deal
As Republicans loudly threaten the public New Deal, the corporate version quietly slips away
By Paul Starr
The American Prospect
Online Edition
June 20, 2005

The old corporate America that took responsibility for workers’ pensions and health care is dying, and the nation’s political leadership has hardly taken notice of the implications.

The rise of corporate social protection had a huge impact, and so will its decline. Conservatives long touted employer-provided pensions and health plans as the private alternative to big government — the very epitome, supposedly, of the American way. Liberals were ambivalent: Although employer benefits provided security for many workers, especially in unionized industries, corporate America’s New Deal left out millions of other Americans and weakened support for national health insurance.

Now corporate social protection is shrinking — for many Americans, simply disappearing — and there is no immediate prospect of public programs filling the void.

The conservatives’ remedy is to take privatization one degree further by transferring obligations for retirement and health insurance from corporations to individual employees.

Health insurance works only because the healthy subsidize the sick; individual accounts enable those who are lucky enough to stay healthy to accumulate their own insurance money, separate from the pool. But just for that reason, the unlucky who get sick have to pay more out of their own pockets, or go without care. If your idea of health-care reform is to shift costs from the healthy to the sick, the health savings accounts are for you.

The individual-account model has had one great success: It has enabled conservatives to pretend to be reformers. But, amid the decline of employer-provided benefits, there is little chance this approach will provide a genuine, long-term solution to the problems of health-care costs and retirement security.

The decline of corporate social provision, however, is also a problem for liberal reformers who have sought to build on private-employer plans. It is one thing to propose building on a stable employer-based system, but quite a different thing when that system is failing, as it is in health care. Many companies have given up hope of controlling health costs and want a way out of their intermediary role; 5 million fewer jobs brought health coverage in
2004 compared with three years earlier. The Detroit automakers have long said they spend more on health care than on steel, and that the expense is a big competitive disadvantage. It’s not all their fault: The U.S. health system is by far the world’s most expensive, and firms that provide full family coverage pay for those that don’t (for example, when a GM employee’s spouse works at Wal-Mart).

Ironically, the private corporations that provided their own New Deal in health care would have been better off with the public one that Democrats offered years ago. Without governmental action to control costs and spread them fairly, the generous social benefits once provided by corporate America are unsustainable.

For the complete article:
http://www.prospect.org/web/page.ww?section=root&name=ViewWeb&articleId=9882

Comment: Mere words can have much more meaning when they carry the weight of their noted creator. Many readers will recognize Paul Starr’s name as the author of one of the most important contributions in the past half century to the body of the health policy literature: “The Social Transformation of American Medicine,” recipient of the 1984 Pulitzer Prize. Recently, a special issue of the Journal of Health Politics, Policy and Law was dedicated exclusively to Transforming American Medicine: A Twenty-Year Retrospective on The Social Transformation of American Medicine.

Paul Starr’s words are now more prescient than ever.

The Social Transformation Of American Medicine, by Paul Starr:
http://www.perseusbooksgroup.com/basic/book_detail.jsp?isbn=0465079350

Transforming American Medicine: A Twenty-Year Retrospective on The Social Transformation of American Medicine
http://www.dukeupress.edu/books.php3?isbn=8223-6606-1

The New York Times/CBS News Poll
June 10-15, 2005

15. If you had to say, which of these domestic issues do you think is MOST important right now — 1) the budget deficit, 2) health care, 3) education, 4) social security, OR 5) jobs? (Rotate answer categories)

14% Deficit
28% Health care
22% Education
14% Social Security
20% Jobs
02% DK/NA

http://www.nytimes.com/2005/06/19/national/19poll.html (Click on “Complete Results: The New York Times/CBS News Poll”)

Comment: Right now, all of these are very important domestic issues. The fact that health care ranked # 1 as the most important issue doesn’t mean that the poll respondents are not very concerned about the other issues as well. But with all of the hype about Social Security and the deficit, it is interesting to see that twice as many selected health care as being even more important than either of these two issues.

The point is that Americans are truly very concerned about our health care system. But we will not see significant change until we translate our concerns into political activism.

The New York Times/CBS News Poll
June 10-15, 2005

15. If you had to say, which of these domestic issues do you think is MOST important right now — 1) the budget deficit, 2) health care, 3) education, 4) social security, OR 5) jobs? (Rotate answer categories)

14% Deficit
28% Health care
22% Education
14% Social Security
20% Jobs
02% DK/NA

http://www.nytimes.com/2005/06/19/national/19poll.html (Click on “Complete Results: The New York Times/CBS News Poll”)

Comment: Right now, all of these are very important domestic issues. The fact that health care ranked # 1 as the most important issue doesn’t mean that the poll respondents are not very concerned about the other issues as well. But with all of the hype about Social Security and the deficit, it is interesting to see that twice as many selected health care as being even more important than either of these two issues.

The point is that Americans are truly very concerned about our health care system. But we will not see significant change until we translate our concerns into political activism.

Consumer-Directed Health Plan Report – Early Evidence Is Promising
By Vishal Agrawal, Tilman Ehrbeck, Kimberly O’Neill Packard, and Paul Mango
McKinsey & Company
June 2005

To gain early insights into what is, arguably, the most important development in health insurance since the widespread introduction of HMOs in the 1980s, McKinsey & Company recently completed extensive primary research on Consumer-Directed Health Plans (CDHPs). To our knowledge, this is the first research of its type to eliminate the possibility of major adverse selection bias because it studied the behavior of consumers whose employers had made the bold move of offering only a CDHP to their employees (i.e., they offered full replacement accounts). Overall, this research demonstrates the potential for CDHPs to alter consumer behavior in ways that could fundamentally change how consumers think about their health – and how they utilize health care resources.

Value consciousness:

Because our findings are based on consumers’ self-reported behavior, we cannot determine whether their decisions to forgo care or to select less extensive treatments were medically appropriate.

Satisfaction:

Less than half of the CDHP consumers we studied reported that they were at least as satisfied with their current plan as they had been with their previous forms of health insurance. (Specifically, the report states that 44% were “more” or “equally” satisfied with their CDHP than they were with their previous health plan. Although not specifically stated, presumably 56% were less satisfied with their CDHP than with their previous plan.)

Concluding remarks:

Our early research findings are surprisingly consistent with many of the arguments that CDHP proponents make. These findings suggest that the plans once again realign health insurance with the important insurance principles of avoiding (or discouraging) moral hazard. In doing so, CDHPs could begin to return health care coverage to the role of covering random, infrequent, and financially consequential events that are beyond the control of the individual. Under these plans, many types of medical expenses would revert to the control of market forces and consumer behavior. As a result, CDHPs could mitigate the seemingly inexorable increases in health care expenses – and health insurance premiums – while improving health outcomes.

Nevertheless, implementation will require a great deal of thoughtfulness, as we have shown. The design and implementation of CDHPs are still evolving, and several factors that could significantly influence the success of the plans are still under active debate. The key challenges will be to achieve the benefits demonstrated in our research while minimizing adverse affects on vulnerable groups, to ensure that CDHPs encourage clinically appropriate behavior, and to provide the right support that enables consumers to manage their increased responsibility for making health care decisions.

We believe the magnitude of the impact that CDHPs had on the behavior of the consumers we studied resulted from each employer’s bold decision to offer only a CDHP product to its employees. The question of how effective these plans will be if employers continue to allow their sickest employees to opt for traditional insurance remains open. We would hypothesize that this type of “slice” introduction would fail to achieve the true promise of fuller consumer engagement and medical expense trend mitigation. If CDHPs are widely adopted, there could be major changes in how consumers think about their health, how they use health care resources, how they seek value, and the basis on which they make their consumption decisions. In fact, we believe that our research findings and similarly encouraging early evidence will stimulate broader uptake. Stakeholders need to watch closely and prepare for the potential sea-change ahead.

http://www.mckinsey.com/clientservice/payorprovider/Health_Plan_Report.pdf

Comment: This report, from an industry consulting firm, makes the agenda of the CDHP movement very clear: “…mitigating the seemingly inexorable increases in health care expenses and health insurance premiums” by “avoiding moral hazard.”

Moral hazard refers to health care services that are utilized that would not have been had the individual been required to pay for them rather than having them covered by insurance. Policies designed to reduce moral hazard, such as creating CDHPs, are designed specifically to reduce health care spending without regard to whether or not that spending is for beneficial services. The policy literature is replete with studies that confirm that such policies do impair access to beneficial health care services, especially for individuals with limited income and/or poor health. Further studies on moral hazard are not needed to determine whether detrimental health outcomes would occur, but rather only to determine the severity of the negative impact on health.

Our last great experiment in containing health care costs, managed care, proved to be quite unpopular with patients. What will be the response to CDHPs? This preliminary study can give us a clue. This group, covered by employer-sponsored CDHPs, is a relatively healthy subset of our population, with less than average need to access the health care system. Yet 56% of these relatively healthy individuals were less satisfied with their CDHPs than with their previous coverage (presumably managed care).

Is our goal really to have patients who are both unhappy and unhealthy? Why continue with this inane, inhumane experiment?

CalPERS gives OK to HMO increase
By Victoria Colliver
San Francisco Chronicle
June 16, 2005

It’s a sign of the times when the state pension fund approves HMO rate increases roughly three times the rate of inflation and that’s considered a victory.

As expected, the California Public Employees’ Retirement System on Wednesday approved 2006 HMO rate increases averaging 8.7 percent (and 9.5% increase for PPOs, Los Angeles Times).

The single-digit increase for 2006 was the lowest rate increase since 1999, except for 2002, when there were major increases in co-payments and other out-of-pocket costs.

CalPERS is the nation’s third-largest purchaser of health care and is considered a leading indicator of future coverage trends.

Larry Levitt, a vice president with the Kaiser Family Foundation, said smaller employers are likely to be hit significantly harder than giant CalPERS.

“If I were a small employer with little bargaining leverage, I think I would have hoped CalPERS premiums would have come down even more,” he said. “It’s always good to be moving in the right direction, but I don’t think anyone believes an 8.7 percent increase is good news or even sustainable.”

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/06/16/BUGMDD97Q01.DTL

Comment: Think of it. The third largest purchaser of health care has increased patient cost sharing in order to slow the rate of premium increases, and this slowing still results in premium increases that are three times the rate of inflation!

All nations with universal insurance programs have been more successful in moderating cost increases than has the United States.

The tradeoff is not necessarily the formation of excessive queues since many nations have prevented such queues by attending to capacity needs.

The other common counter-argument advanced is that slowing costs would stifle technological innovation. Yet Great Britain, spending half as much of its GDP on health care, shared in the Nobel prizes for both CT imaging and MRI imaging. Their level of health care spending did not stop innovation.

Besides, what technological or pharmaceutical firm would walk away from trying to get their share of the $1.9 trillion that we are already spending on health care?

Much of the increase in spending is feeding administrative waste and non-beneficial technological excesses. Private plans already have proven their inability to control these excesses, and actually contribute to them.

By establishing our own monopsonistic, universal insurance program, we would be in a position to reduce this waste while being certain that new spending is providing us with value. If new advances are worth it, we can pay for them.

PNHP Statement on the Canadian Supreme Court Decision on Private Insurance

On June 9, 2005, the Supreme Court of Canada ruled that the Quebec government cannot ban private insurance that duplicates the coverage under Canada’s national health insurance system (known as Medicare) when clearly excessive waiting lists delay timely access to care and may impair health.

In both the United States and Canada, opponents of universal public programs of health insurance have used this decision to argue that private insurance provides a superior alternative to public insurance. Such arguments are fallacious and entirely unwarranted.

Long queues (waiting lists for health care services) result from inadequate capacity of the health care delivery system, not from the method of paying for care. Canada suffers from an inadequate supply of MRI machines and a shortage of specialists and technicians in some fields. These shortages have resulted in queues for a few high technology interventions. The appropriate remedy is to increase capital investment in the capacity of the system, both in physical plants and equipment, and in human resources.

In the effort to reduce queues to reasonable levels, it is crucial to avoid creating excess capacity in the system. Excess capacity results in over-utilization, which dramatically increases costs without a commensurate improvement in outcomes. Excessive interventions are sometimes even detrimental to health. Because of the dynamic nature of health care, not all capacity problems can be anticipated, and some queues are inevitable. An effective health care system monitors utilization and reacts with appropriate adjustments in capacity.

This has nothing whatsoever to do with whether insurance payments are made by a public or by a private insurance system. It defies logic to suggest that private insurance will correct the capacity deficiencies that result in queues. When a public health care delivery system has deficient capacity, the role of private insurance, as defined by this decision, is to authorize a larger payment for the services than the public insurance provides. This merely jumps those with private coverage to the front of the queue. Since the private coverage will not change the capacity of the delivery system, it will result in further delays for everyone else in the queue. Private insurance effectively offers providers a bribe if they are willing to place wealthy people at the front of the line.

The United States has served as a laboratory for private insurance. We spend far more than nations with public insurance. We have allowed the private insurance industry to profit by providing coverage primarily to the healthy.

We continue to tolerate tens of millions with no coverage, and tens of millions more have such inadequate coverage that a serious illness would lead to bankruptcy. Tens of thousands of Americans are suffering because of the lack of access to affordable coverage. At least 18,000 American adults die each year because of our failure to adopt rational policies for health care coverage.

The Canadian Supreme Court decision on queues and private insurance ignores a vast body of research data and demonstrates a total disconnect in logic.

The justices’ decision threatens to undermine the very foundations of Canada’s health care system, and would place Canadians at grave risk of unnecessary suffering and death. What Canada’s health care system needs is more money, not more private insurance and the rising inequities that would surely follow.

Physicians for a National Health Program www.pnhp.org

PNHP Statement on the Canadian Supreme Court Decision on Private Insurance

On June 9, 2005, the Supreme Court of Canada ruled that the Quebec government cannot ban private insurance that duplicates the coverage under Canada’s national health insurance system (known as Medicare) when clearly excessive waiting lists delay timely access to care and may impair health.

In both the United States and Canada, opponents of universal public programs of health insurance have used this decision to argue that private insurance provides a superior alternative to public insurance. Such arguments are fallacious and entirely unwarranted.

Long queues (waiting lists for health care services) result from inadequate capacity of the health care delivery system, not from the method of paying for care. Canada suffers from an inadequate supply of MRI machines and a shortage of specialists and technicians in some fields. These shortages have resulted in queues for a few high technology interventions. The appropriate remedy is to increase capital investment in the capacity of the system, both in physical plants and equipment, and in human resources.

In the effort to reduce queues to reasonable levels, it is crucial to avoid creating excess capacity in the system. Excess capacity results in over-utilization, which dramatically increases costs without a commensurate improvement in outcomes. Excessive interventions are sometimes even detrimental to health. Because of the dynamic nature of health care, not all capacity problems can be anticipated, and some queues are inevitable. An effective health care system monitors utilization and reacts with appropriate adjustments in capacity.

This has nothing whatsoever to do with whether insurance payments are made by a public or by a private insurance system. It defies logic to suggest that private insurance will correct the capacity deficiencies that result in queues. When a public health care delivery system has deficient capacity, the role of private insurance, as defined by this decision, is to authorize a larger payment for the services than the public insurance provides. This merely jumps those with private coverage to the front of the queue. Since the private coverage will not change the capacity of the delivery system, it will result in further delays for everyone else in the queue. Private insurance effectively offers providers a bribe if they are willing to place wealthy people at the front of the line.

The United States has served as a laboratory for private insurance. We spend far more than nations with public insurance. We have allowed the private insurance industry to profit by providing coverage primarily to the healthy.

We continue to tolerate tens of millions with no coverage, and tens of millions more have such inadequate coverage that a serious illness would lead to bankruptcy. Tens of thousands of Americans are suffering because of the lack of access to affordable coverage. At least 18,000 American adults die each year because of our failure to adopt rational policies for health care coverage.

The Canadian Supreme Court decision on queues and private insurance ignores a vast body of research data and demonstrates a total disconnect in logic.

The justices’ decision threatens to undermine the very foundations of Canada’s health care system, and would place Canadians at grave risk of unnecessary suffering and death. What Canada’s health care system needs is more money, not more private insurance and the rising inequities that would surely follow.

Physicians for a National Health Program www.pnhp.org

Insured But Not Protected: How Many Adults Are Underinsured?
The experiences of adults with inadequate coverage mirror those of their uninsured peers, especially among the chronically ill.
By Cathy Schoen, Michelle M. Doty, Sara R. Collins, Alyssa L. Holmgren(Commonwealth Fund)
Health Affairs
June 14, 2005

Abstract: Health insurance is in the midst of a design shift toward greater financial risk for patients. Where medical cost exposure is high relative to income, the shift will increase the numbers of underinsured people. This study estimates that nearly sixteen million people ages 19-64 were underinsured in 2003. Underinsured adults were more likely to forgo needed care than those with more adequate coverage and had rates of financial stress similar to those of the uninsured. Including adults uninsured during the year, 35 percent (sixty-one million) were under- or uninsured. These findings highlight the need for policy attention to insurance design that considers the adequacy of coverage.

From the article:

Defining “underinsured.”

…we classified them as underinsured if they were insured all year but reported at least one of three indicators: (1) Medical expenses amounted to 10 percent of income or more; (2) among low-income adults (below 200 percent of the federal poverty level), medical expenses amounted to at least 5 percent of income; and (3) health plan deductibles equaled or exceeded 5 percent of income.

Two of three indicators (with deductibles as the exception) relied on current-year out-of-pocket costs and medical bills. As a result, unlike methods that simulate expenses based on analysis of insurance plans, age, and health, this “snapshot” approach will miss healthier adults with inadequate coverage who had little need for medical care during the year. The methodology thus likely underestimates the number of underinsured people.

Shifting trends.

The findings are likely to be symptoms of more to come. Given the public policy push and market trends toward higher deductibles, it will be important to track coverage adequacy and related care patterns over time.
The United States may well be on a path to where it becomes harder to distinguish the insured from the uninsured if insurance no longer provides either access or financial protection.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.289

Comment: The definition of underinsured used in this study was stringent enough to select out nearly 16 million individuals whose coverage left them almost as exposed to impaired access and medical debt as are the uninsured. One obvious conclusion is that health policy improvements must apply not only to the 45 million uninsured but also to these 16 million underinsured, or a total of 35% of the U.S. population.

Besides the uninsured and underinsured, there is another important category that we’ll call, for want of a better term, the “subinsured.” This is a very large group of individuals of moderate means who are healthy and have relatively infrequent needs to access the health care system. But the very reason that we have insurance is that anyone is vulnerable and could develop major health care problems.

And what could constitute subinsurance? Suppose an individual with an income of $52,000 had a significant medical event or developed a chronic problem and had to pay $5,000 in out-of-pocket medical expenses. That is under 10% of income, and therefore the individual is not underinsured by the criteria of this study. But most of us would believe that our coverage is not adequate under similar circumstances. Such a dent in our budgets would create difficulties in paying our bills, not to mention wiping out considerations such as voluntary contributions to our pension plans or replacement of that old clunker that you’re afraid to take out on the highway.

Insurance should prevent impairment to health care access, and it should prevent financial stress. Therefore we need policies that protect not only the uninsured and underinsured, but also the subinsured. Combined, that’s the majority of us. But at the cost of health care today, how could we fund the insurance pool without including the more affluent individuals who can easily accept the burden of contributing more to cover those who cannot fund their own share? We need the affluent as well.

We desperately need policies that would equitably fund an insurance pool that ensures affordable access for everyone, covering all important beneficial services. Is there really any other option than national health insurance?

One Nation, Uninsured
By Paul Krugman
The New York Times
June 13, 2005

Harry Truman tried to create a national health insurance system. Public opinion was initially on his side: Jill Quadagno’s book “One Nation, Uninsured” tells us that in 1945, 75 percent of Americans favored national health insurance. If Truman had succeeded, universal coverage for everyone, not just the elderly, would today be an accepted part of the social contract.

But Truman failed. Special interests, especially the American Medical Association and Southern politicians who feared that national insurance would lead to racially integrated hospitals, triumphed.

Sixty years later, the patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.

So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.

But special interests will, once again, stand in the way. And the big debate among would-be reformers is how to deal with those interests, especially the insurance companies. These companies played a secondary role in Truman’s failure but have since become a seemingly invincible lobby.

Let’s ignore those who believe that private medical accounts – basically tax shelters for the healthy and wealthy – can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.

A system in which the government provides universal health insurance is often referred to as “single payer,” but I like Ted Kennedy’s slogan “Medicare for all.” It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly. It shows that we’re talking about government insurance, not government-provided health care. And it makes it clear that like Medicare (but unlike Canada’s system), a U.S. national health insurance system would allow individuals with the means and inclination to buy their own medical care.

The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don’t devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured.

Nonetheless, most reform proposals out there – even proposals from liberal groups like the Century Foundation and the Center for American Progress – reject a simple single-payer approach. Instead, they call for some combination of mandates and subsidies to help everyone buy insurance from private insurers.

Some people, not all of them right-wingers, fear that a single-payer system would hurt innovation. But the main reason these proposals give private insurers a big role is the belief that the insurers must be appeased.

That belief is rooted in recent history. Bill Clinton’s health care plan failed in large part because of a dishonest but devastating lobbying and advertising campaign financed by the health insurance industry – remember Harry and Louise? And the lesson many people took from that defeat is that any future health care proposal must buy off the insurance lobby.

But I think that’s the wrong lesson. The Clinton plan actually preserved a big role for private insurers; the industry attacked it all the same. And the plan’s complexity, which was largely a result of attempts to placate interest groups, made it hard to sell to the public. So I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained.

We need to do this one right. If reform fails again, we’ll be on the way to a radically unequal society, in which all but the most affluent Americans face the constant risk of financial ruin and even premature death because they can’t pay their medical bills.

http://www.nytimes.com/2005/06/13/opinion/13krugman.html?hp

Comment: Rather than distributing a couple of excerpts from Paul Krugman’s article, I’ve sent it out in its entirety, for a very important reason.

The debate on comprehensive health care reform is somewhat muddled, and that is because there are two debates taking place: one on consumer-directed health care, and the other on universal coverage.

The noisy but counter-productive debate is on consumer-directed health care. The proposals, such as high-deductible health plans, individual health savings accounts, and Spartan plans stripped of benefits, all move away from the concept of health insurance in that they shift the financial responsibility from a common pool in which we all share risk, transferring much of that risk to each individual. Although we hear much about these concepts, this debate is really very unimportant because it can never lead to a rational system of ensuring access to affordable care. In fact, the opposite would occur.

The opponents of egalitarianism and solidarity may have a few victories, such as the insertion of the HSA legislation into the Medicare bill, but it will soon become evident that we will not be able to tolerate the financial vulnerability of precisely those individuals most in need of health care. Even most of the libertarian health policy analysts concede that reform must pool risk in some manner (even if a conglomeration of various tightly and loosely structured pools), and that the government will have to be involved at least to the extent of ensuring coverage for those who cannot possibly fund their own share of their risk pool(s).

It is ironic that the lunatic element of the consumer-directed movement is proposing not only privatization of health care coverage, but they are already engaged in a process that weakens the protection afforded by private health plans. The majority of average-income Americans are already financially vulnerable in the face of significant medical needs because of the deteriorating coverage marketed by the private insurance industry.

Some speak kindly of the advocates of consumer-directed health care, suggesting that they are well motivated even if ill-advised, but I disagree. “Let them eat cake” policies can be conjured up only by the most uncaring, cruel, heartless advocates of class stratification with the few “haves” insulating themselves from any societal responsibility to ensure that the basic needs of the masses of “have nots” are met. (In this paragraph, I find my own rhetoric to be highly offensive, but not nearly as offensive as the attitude of those who don’t give a rat’s a** about their fellow man/woman.)

There is really only one genuine debate on reform. Do we continue to waste resources and perpetuate profound inequities in our health care system by building on our highly flawed, fragmented model of private health plans and public programs, or do we adopt an efficient, equitable, affordable system of funding coverage for everyone? Paul Krugman has provided a concise answer in his article.

You should delete my emotional and ill-advised tirade and then reproduce Krugman’s article and distribute it as widely as possible. It’s time for us to get real about health care reform.

And be sure that the debate is properly framed. In Paul Krugman’s words:

“Let’s ignore those who believe that private medical accounts – basically tax shelters for the healthy and wealthy – can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.”

Beth Capell, Ph.D. on the RAND conclusions on CDHPs:

Don:

There is a rather substantial literature (about 12 inches deep on my desk) demonstrating that people with high out of pocket costs fail to seek necessary and appropriate care.

To quote Health Access California:

Deductibles of $1000, $1500 or even $5000 per person exist. Out of pocket costs may be capped at several thousand dollars-or not at all. Numerous studies have shown that high deductible policies deter necessary care and put at risk the credit and solvency of average families. People with high deductible plans were:

· Twice as likely to skip medications,

· Twice as likely to fail to fill prescriptions,

· Twice as likely to avoid visiting a doctor for a problem, and

· Twice as likely to fail to get physician-prescribed care.

A deductible of only $1,000 caused a third of patients to spend more than 10% of income on out of pocket costs. Not surprisingly, patients with higher deductibles had more financial problems. Medical costs are involved in over half of bankruptcies–and most of those with medical bankruptcies were initially insured.

Beth Capell, Ph.D., for Health Access California

Comment: Dr. Capell is certainly correct. The RAND report is actually incorrect when it states that there is “mixed evidence on whether the financial incentives in the new plan designs will decrease use of necessary and desirable services.” The evidence is very clear. Financial disincentives do decrease access to beneficial health care products and services.