Second look: High costs and insurer interest are reviving limited benefit medical plan reputation
By Karen Lee
Employee Benefit News
May 2005

In only a few short years, limited medical benefit plans have risen in perception from a status as low-selling bare-bones programs marketed by niche vendors to potentially viable solutions to today’s health care problems, including punishing health care costs and millions of working uninsured.

Large insurance carriers certainly have noticed the turning tide, and they do not want to miss out.

Indeed, the plans themselves do not come close to covering what a standard health care plan does. For example, a sample Aetna plan might have a relatively low deductible – $250 for an in-network provider, $350 out of network, and a low premium. However, it also has a $10,000 maximum benefit and a prescription drug card that covers a monthly maximum of $35.

Now, though, things have changed. Some states are considering rollbacks of the health care mandates that many believe are largely responsible for soaring health care costs.

The truth is, as health care experts continually point out, most people — even those who do not have high salaries – generate less than $1,000 in health care expenses per year, so insurers believe limited medical plans can take care of low-wage employees’ non-catastrophic expenses.

http://www.benefitnews.com/detail.cfm?id=7432

Today’s Los Angeles Times also addressed this issue:
http://www.latimes.com/features/health/la-he-insure6jun06,1,2827471.story

And…

bizjournals
May 23, 2005

House Speaker Dennis Hastert endorsed legislation to allow individuals to buy health insurance from any state, regardless of where they live.

The legislation would lower the cost of health insurance by allowing individuals to get around their state’s coverage mandates and pick a less-comprehensive plan, says Rep. John Shadegg, R-Ariz., the bill’s sponsor (H.R.2355).

http://albuquerque.bizjournals.com/extraedge/
washingtonbureau/archive/2005/05/23/bureau2.html

And…

H.R.2355 would require the following disclosure by the health insurance issuer:

Notice

This policy is issued by (health insurer) and is governed by the laws and regulations of the State of (primary state), and it has met all the laws of that State as determined by that State’s Department of Insurance. This policy may be less expensive than others because it is not subject to all of the insurance laws and regulations of the State of (secondary state), including coverage of some services or benefits mandated by the law of the State of (secondary state). Additionally, this policy is not subject to all of the consumer protection laws or restrictions on rate changes of the State of (secondary state). As with all insurance products, before purchasing this policy, you should carefully review the policy and determine what health care services the policy covers and what benefits it provides, including any exclusions, limitations, or conditions for such services or benefits.

http://thomas.loc.gov/ (Enter H.R.2355 and check “Enter bill number”)

Comment: In the rush to provide affordable insurance options, the insurers are defeating the very purpose of coverage: providing financial security for individuals with health care needs. Aetna’s plans with a maximum benefit of $10,000 (or as little as $1000 maximum according to the Los Angeles Times) are almost worthless for catastrophic acute or chronic problems. This might provide adequate coverage for individuals who remain healthy and rarely access the health care system. But pulling large numbers of healthy individuals out of the risk pools that do cover high cost patients greatly compounds the funding problems for health care.

To cover the 20% of individuals who utilize 80% of our health care services would require an average of $26,000 per patient (a total of about $1.5 trillion just for this 20% of our population). An insurance policy providing adequate coverage for this group as an isolated entity would have to have a premium in excess of $26,000 per individual. Those who remain healthy but wish to have comprehensive coverage obviously would find these premiums to be unaffordable (the “death spiral” of health insurance premiums). Clearly the only way insurance can work is by diluting the costs by including all healthy individuals as well.

So what is Congress proposing? They would remove individual state requirements that do require that insurance pools truly dilute risk. They would do this by allowing permissive states to market worthless insurance products in restrictive states. Then comprehensive coverage would be unaffordable for almost everyone for the reasons mentioned above. So what would those with significant health care needs do? Well, that’s their problem, but at least now they would own their own health care.

Health: Italians Pay for the Doctor, Not for Private Insurance
Agenzia Giornalistica Italia (AGI)
June 2, 2005

Between 1991 and 2002 the trend towards private insurance among Italian families has been steadily growing but they still remain “under-insured” compared to the international standards. Mainly families with higher income from central and northern Italy tend to stipulate insurance policies, their family head often has a university degree or equivalent and is a manager or autonomous professional and his financial portfolio comprises stocks and life insurance. These are the results of a recent Ania study analysing Bank of Italy surveys on the finances of Italian families. In 2003 the ratio between insurance policies and GDP in Italy equalled 2.6 pct., about one percentage point less compared to the major European countries. The difference results to be even higher excluding car insurance policies from this comparison. The ratio then hardly reaches 1 pct. in Italy, whereas other countries have a ratio twice as high. Particularly low the demand of families for health insurance, despite the fact that Italians, notwithstanding coverage by the national health system, spend large amounts in private health services. Only a very small part of private expenses (about 1 pct. of the total) is attributable to the subscription of insurance policies, funds or other schemes. The main part of private expenses is directly goes into specialised medical exams and diagnosis for which the public health system often foresees very long waiting times.

http://www.agi.it/english/news.pl?doc=200506021550-1142-RT1-CRO-0-NF30&page=0&id=agionline-eng.bnessitaly

Comment: No national health system covers 100% of health care costs. Italy is no exception. But the adequacy of the public system may be reflected by the size of the market for private health insurance.

It appears that a major purpose of private coverage in Italy is to purchase a place at the front of the queues for specialized care. The low uptake of private insurance suggests that queues are not at a crisis level in Italy. Of course, this is not to say that excessive queues can be ignored. Public efforts must continue to ensure the funding of adequate capacity in the health care delivery system.

What about the United States? We do have a program of social insurance: Medicare. Do we supplement Medicare for the purpose of bypassing queues? Not really. Although there may be patchy areas of deficient capacity, in general our high rate of health care spending has ensured a generous capacity in our system, in fact, often an excess capacity that results in over-utilization.

Although excessive queues are not a major issue in the United States, over two-thirds of Medicare beneficiaries have some form of supplemental insurance. Why is that? It is because Medicare covers only about 45% of the beneficiaries’ total health care services. Thus our reason for a private supplemental insurance market is not to circumvent queues, but it is to provide the financial capability for accessing beneficial health care services.

Many suggest that we should expand Medicare coverage to include everyone. But if we do, we need to increase the benefits to cover closer to 70% of health care services if we are to provide adequate financial security in the face of health care needs. But that 70% is not quite as bad as it would seem. With a universal system we would dramatically reduce administrative waste and non-beneficial high-tech excesses.

We are almost there since 60% of our total health care spending is already funded through the tax system. But what waste! If we bump that up to 70% and demand that we replace our wasteful fragmented system of funding care with an efficient single payer, then, like the Italians, we could reject the efforts of private insurers to displace our own public system of funding health care.

When it comes down to who is going to handle our pooled health care funds, I’ll trust our own public administrators long before I’d trust the private bureaucrats.

For an April 2005 Medicare fact sheet from KFF:
http://www.kff.org/medicare/loader.cfm?url=/commonspot/security/getfile.cfm&PageID=52974

Volunteers will staff facility in El Cajon
By Anne Krueger
San Diego Union-Tribune
May 2, 2005

Almost four years after Dr. Gresham Bayne of Point Loma heard the pitch for a clinic staffed by volunteer physicians, the medical facility is close to becoming a reality.

Bayne said the clinic will serve thousands of El Cajon residents who can’t afford medical insurance but earn too much to qualify for low-income medical programs such as Medi-Cal.

The clinic will be the first in California to be opened by Volunteers in Medicine, a national organization that works to bring together retired health professionals and patients who don’t have medical insurance. Since 1993, when the group opened its first clinic in Hilton Head Island, S.C., 31 clinics have been set up nationwide.

John Hughes, who heads social service programs for San Diego County Methodist churches, said patients at the clinic will receive “Nordstrom-quality care.” When they arrive, they will be welcomed by a greeter. All services, including medications, are provided at no cost.

Bayne said opponents were concerned the clinic would attract homeless people to the area. He said all new patients will be screened by a social worker to determine whether they are eligible for care, and homeless people will be referred to community clinics.

“We don’t anticipate seeing homeless people except once by mistake,” he said.

http://www.signonsandiego.com/news/metro/20050502-9999-1m2vols.html

Comment: What was that again? Free Nordstrom-quality care but not for those as needy as the homeless?

Apparently the founders of this clinic acknowledge that community clinics should fulfill the role of providing services to the needy, as long as they’re the homeless type. Also they would probably agree that higher-income individuals, insured or not, should receive their care in the private sector. So what is their targeted patient population? Nordstrom-quality health care shoppers who happen to be uninsured? Is there really a sector of individuals who cannot afford private care, but who are of a social class that shouldn’t stoop to utilizing community clinics when private charity can enable access to Nordstrom-quality care?

As with so many other well intentioned efforts, it appears that these individuals have designed a solution without adequately defining the problems. Community clinics already exist and provide a safety-net access to at least basic care for the uninsured who cannot afford private services. We do not need special clinics that are designed to serve an elite sector of the uninsured. Instead, we need to enact policies that would ensure that everyone has insurance.

A proper framing of the problem would lead to solutions that would restructure the way that we fund health care. The obvious solution is universal health insurance. This would not only address the problems of the elite uninsured, it would also ensure that community clinics are adequately funded so that they can provide more comprehensive services in those communities that fail to attract an adequate number of private sector providers.

Let’s get real about fixing our broken system of funding health care. We can begin by first understanding the problems.

Wells Shoemaker, M.D., responds on the Nordstrom-quality care proposal by San Diego ‘Volunteers in Medicine’

Wow.

Nordstrom sells a lot of overpriced merchandise to people who don’t need another jacket, dress, hat, or pair of shoes, and then makes them feel comfortable about their choices, if not a little superior to the Chevrolet-driving masses in the process. We have a bit of that in health care, too.

My old question would be–what happens if you get abdominal pain when the cute clinic isn’t open? What happens when the retired professional isn’t up to date, or uses the same practice principles which we know led to legion safety risks, omissions, and misjudgments?

My last dig relates to doctors who go on charity service junkets to third world countries, but who refuse to accept referrals of patients with poorly-reimbursing coverage here in their home communities. These tend to be the best heeled of American specialists, to boot.

You’re right, Don. We need a single, logical system.

Wells

Volunteers will staff facility in El Cajon
By Anne Krueger
San Diego Union-Tribune
May 2, 2005

Almost four years after Dr. Gresham Bayne of Point Loma heard the pitch for a clinic staffed by volunteer physicians, the medical facility is close to becoming a reality.

Bayne said the clinic will serve thousands of El Cajon residents who can’t afford medical insurance but earn too much to qualify for low-income medical programs such as Medi-Cal.

The clinic will be the first in California to be opened by Volunteers in Medicine, a national organization that works to bring together retired health professionals and patients who don’t have medical insurance. Since 1993, when the group opened its first clinic in Hilton Head Island, S.C., 31 clinics have been set up nationwide.

John Hughes, who heads social service programs for San Diego County Methodist churches, said patients at the clinic will receive “Nordstrom-quality care.” When they arrive, they will be welcomed by a greeter. All services, including medications, are provided at no cost.

Bayne said opponents were concerned the clinic would attract homeless people to the area. He said all new patients will be screened by a social worker to determine whether they are eligible for care, and homeless people will be referred to community clinics.

“We don’t anticipate seeing homeless people except once by mistake,” he said.

http://www.signonsandiego.com/news/metro/20050502-9999-1m2vols.html

Comment: What was that again? Free Nordstrom-quality care but not for those as needy as the homeless?

Apparently the founders of this clinic acknowledge that community clinics should fulfill the role of providing services to the needy, as long as they’re the homeless type. Also they would probably agree that higher-income individuals, insured or not, should receive their care in the private sector. So what is their targeted patient population? Nordstrom-quality health care shoppers who happen to be uninsured? Is there really a sector of individuals who cannot afford private care, but who are of a social class that shouldn’t stoop to utilizing community clinics when private charity can enable access to Nordstrom-quality care?

As with so many other well intentioned efforts, it appears that these individuals have designed a solution without adequately defining the problems. Community clinics already exist and provide a safety-net access to at least basic care for the uninsured who cannot afford private services. We do not need special clinics that are designed to serve an elite sector of the uninsured. Instead, we need to enact policies that would ensure that everyone has insurance.

A proper framing of the problem would lead to solutions that would restructure the way that we fund health care. The obvious solution is universal health insurance. This would not only address the problems of the elite uninsured, it would also ensure that community clinics are adequately funded so that they can provide more comprehensive services in those communities that fail to attract an adequate number of private sector providers.

Let’s get real about fixing our broken system of funding health care. We can begin by first understanding the problems.

New Study Finds Poor Medicaid Beneficiaries Face Growing Out-Of-Pocket Medical Costs
Center on Budget and Policy Priorities
May 31, 2005

A new Center report finds that out-of-pocket medical expenses for poor adult Medicaid beneficiaries have grown twice as fast as their incomes in recent years. These individuals spend more than three times as much of their income on health care as middle-class adults with private insurance, the study finds.

Increasing cost-sharing, such as through higher copayments or premiums or the elimination of certain benefits (such as dental or vision coverage), has been suggested as a way to reduce Medicaid costs and promote “personal responsibility.” As a second new Center report shows, however, a substantial body of research finds that increased copayments cause low-income beneficiaries to cut back on essential care, and higher premiums lead to fewer people being covered by health insurance.

The risks of increased cost-sharing are greatest for those with serious or chronic health conditions, such as diabetes, cancer, or mental illness, since they need the most health care services and thus would face more copayment charges or the loss of more services. Moreover, the consequences of going without a needed service can be especially severe for individuals who are in poor health.

News Release:
http://www.cbpp.org/5-31-05health-pr.pdf

Report: “Out-Of-Pocket Medical Expenses for Medicaid Beneficiaries Are Substantial and Growing” By Leighton Ku and Matthew Broaddus http://www.cbpp.org/5-31-05health.pdf

Report: “The Effect of Increased Cost-Sharing in Medicaid: A Summary of Research Findings” By Leighton Ku http://www.cbpp.org/5-31-05health2.pdf

Comment: Shifting health care costs to individuals who need health care is a seriously flawed policy in that it impairs access and outcomes. A universal, public insurance system can contain costs without the necessity of imposing financial barriers to needed care. But until we have a universal system, it is crucial that we protect access for the most vulnerable patients by reversing this trend of shifting more costs to Medicaid patients in need.

Address by Prime Minister Paul Martin to the Empire Club and Toronto Board of Trade
May 26, 2005

“I believe in a Canada that values and protects its publicly funded medical system, so care requires a health card, not a credit card.”

http://pm.gc.ca/eng/news.asp?id=501

Health Leaders Seek Consensus Over Uninsured
By Robert Pear
The New York Times
May 29, 2005

At a time when Congress has been torn by partisan battles, 24 ideologically disparate leaders representing the health care industry, corporations and unions, and conservative and liberal groups have been meeting secretly for months to seek a consensus on proposals to provide coverage for the growing number of people with no health insurance.

The participants, ranging from the liberal Families USA to the conservative Heritage Foundation and the United States Chamber of Commerce, said they had made progress in trying to overcome the ideological impasse that has stymied action on the problem for eight years.

The group’s overarching goal is to agree, by the end of this year, on proposals that expand coverage to as many people as possible as quickly as possible. By meeting in secret, the group has tried to shield itself from political pressures.

“This effort holds as much promise as any I’ve participated in over the last decade, probably more,” said Kate Sullivan Hare, the executive director of health care policy at the United States Chamber of Commerce.

“People are uninsured for different reasons,” said Dr. Mary E. Frank, the president of the American Academy of Family Physicians and a participant in the talks. “No one solution will work for everyone. We need different solutions for different groups of the uninsured.”

E. Neil Trautwein, assistant vice president of the National Association of Manufacturers, said the consensus group was “not biased in favor of big government solutions,” and assumed that health care would continue to be provided through a mix of private insurers and public programs.

The group is applying lessons learned in the battle over the Clinton health plan. Members said they were listening carefully to one another, trying to build the trust. They are not trying to remake the health care system or guarantee insurance for every American through one big program, they said.

http://www.nytimes.com/2005/05/29/national/29insure.html?ei=5094&en=4ee7fc0aa141bf73&hp=&ex=1117339200& partner=homepage&pagewanted=print

Comment: And the options that they are considering? (My comments in
parentheses)

* Individual mandate for children (criminalizing parents who cannot afford
coverage?)

* Voluntary payroll contributions made by employees not covered by employer-sponsored plans (causing employers to drop coverage now that it is the employees’ responsibility, even if unaffordable to them)

* Tax credits sent to insurers to help pay for a portion of coverage for low-income individuals and small businesses (a direct subsidy for the flawed private plans, but which would be inadequate for these sectors surviving on very limited budgets)

* Voluntary action on the part of states to expand Medicaid to adults under the poverty level ($9600) (with the budget crises the states are facing, they would be looking for a voluntary way to go deeper in debt?)

* Small federal grants to states to establish insurance purchasing pools (funding a portion of administrative costs only, but not funding health
care)

Everyone recognizes the political ineptitude of the Clinton attempt at reform. Their process could never have ended in a consensus.

Now we are presented with a process that allegedly is firmly based on consensus. But what are they proposing? They have gone to the bottom of the health policy barrel and scraped off the stinky, slimy scum and presented that to us as politically feasible, incremental reform. These policies will increase the numbers of uninsured, reduce the effectiveness of coverage already in place, and fail to control costs. Millions of Americans will suffer and tens of thousands will die as a result of these policies.

Why does Kate Sullivan Hare of the U.S. Chamber of Commerce say that “this effort holds as much promise as any I’ve participated in over the last decade”? It’s because these policies will reduce employers’ responsibilities for requiring coverage; they will enhance business opportunities and profits for insurers; they will maximize the flow of tax dollars towards private interests while ensuring that public programs will remain profoundly underfunded; and they will shift more of the responsibility and burden of paying for care to the individual, regardless of affordability.

But this process has accomplished their unstated primary goal. They were successful in keeping single payer supporters out of this secret process.
And their greatest fear is that Americans might actually demand a program that would provide affordable, comprehensive care for everyone, if Americans only understood that we could have it merely by enacting a single payer system.

By redefining incrementalism as a process that gradually reduces comprehensive coverage, affordability and access, this group has lost all credibility as advocates of reform that would be for the benefit of patients. That’s tragic, because several of these individuals know better and should have been a part of a legitimate process. But their ******* egos got in the way!

And, oh yes, some were there to make sure that the enablement of greed was a defining element in their model of reform. Those individuals need to be banned from the bargaining table forever. But those who know better and really do care should be welcomed back into the process once they have had their personal epiphanies.

Health Leaders Seek Consensus Over Uninsured
By Robert Pear
The New York Times
May 29, 2005

At a time when Congress has been torn by partisan battles, 24 ideologically disparate leaders representing the health care industry, corporations and unions, and conservative and liberal groups have been meeting secretly for months to seek a consensus on proposals to provide coverage for the growing number of people with no health insurance.

The participants, ranging from the liberal Families USA to the conservative Heritage Foundation and the United States Chamber of Commerce, said they had made progress in trying to overcome the ideological impasse that has stymied action on the problem for eight years.

The group’s overarching goal is to agree, by the end of this year, on proposals that expand coverage to as many people as possible as quickly as possible. By meeting in secret, the group has tried to shield itself from political pressures.

“This effort holds as much promise as any I’ve participated in over the last decade, probably more,” said Kate Sullivan Hare, the executive director of health care policy at the United States Chamber of Commerce.

“People are uninsured for different reasons,” said Dr. Mary E. Frank, the president of the American Academy of Family Physicians and a participant in the talks. “No one solution will work for everyone. We need different solutions for different groups of the uninsured.”

E. Neil Trautwein, assistant vice president of the National Association of Manufacturers, said the consensus group was “not biased in favor of big government solutions,” and assumed that health care would continue to be provided through a mix of private insurers and public programs.

The group is applying lessons learned in the battle over the Clinton health plan. Members said they were listening carefully to one another, trying to build the trust. They are not trying to remake the health care system or guarantee insurance for every American through one big program, they said.

http://www.nytimes.com/2005/05/29/national/29insure.html?ei=5094&en=4ee7fc0aa141bf73&hp=&ex=1117339200& partner=homepage&pagewanted=print

Comment: And the options that they are considering? (My comments in
parentheses)

* Individual mandate for children (criminalizing parents who cannot afford
coverage?)

* Voluntary payroll contributions made by employees not covered by employer-sponsored plans (causing employers to drop coverage now that it is the employees’ responsibility, even if unaffordable to them)

* Tax credits sent to insurers to help pay for a portion of coverage for low-income individuals and small businesses (a direct subsidy for the flawed private plans, but which would be inadequate for these sectors surviving on very limited budgets)

* Voluntary action on the part of states to expand Medicaid to adults under the poverty level ($9600) (with the budget crises the states are facing, they would be looking for a voluntary way to go deeper in debt?)

* Small federal grants to states to establish insurance purchasing pools (funding a portion of administrative costs only, but not funding health
care)

Everyone recognizes the political ineptitude of the Clinton attempt at reform. Their process could never have ended in a consensus.

Now we are presented with a process that allegedly is firmly based on consensus. But what are they proposing? They have gone to the bottom of the health policy barrel and scraped off the stinky, slimy scum and presented that to us as politically feasible, incremental reform. These policies will increase the numbers of uninsured, reduce the effectiveness of coverage already in place, and fail to control costs. Millions of Americans will suffer and tens of thousands will die as a result of these policies.

Why does Kate Sullivan Hare of the U.S. Chamber of Commerce say that “this effort holds as much promise as any I’ve participated in over the last decade”? It’s because these policies will reduce employers’ responsibilities for requiring coverage; they will enhance business opportunities and profits for insurers; they will maximize the flow of tax dollars towards private interests while ensuring that public programs will remain profoundly underfunded; and they will shift more of the responsibility and burden of paying for care to the individual, regardless of affordability.

But this process has accomplished their unstated primary goal. They were successful in keeping single payer supporters out of this secret process.
And their greatest fear is that Americans might actually demand a program that would provide affordable, comprehensive care for everyone, if Americans only understood that we could have it merely by enacting a single payer system.

By redefining incrementalism as a process that gradually reduces comprehensive coverage, affordability and access, this group has lost all credibility as advocates of reform that would be for the benefit of patients. That’s tragic, because several of these individuals know better and should have been a part of a legitimate process. But their ******* egos got in the way!

And, oh yes, some were there to make sure that the enablement of greed was a defining element in their model of reform. Those individuals need to be banned from the bargaining table forever. But those who know better and really do care should be welcomed back into the process once they have had their personal epiphanies.