PNHP

Left behind: Stories from Obamacare’s 31 million uninsured

Left behind: Stories from Obamacare’s 31 million uninsured

By Sarah Kliff and Lena H. Sun
Washington Post, Wonkblog, September 8, 2013

Every month, a hundred or so people crowd the lobby of the Arlington Free Clinic, clutching blue tickets to enter a health-care lottery. Uninsured and ailing, they hope to be among the two dozen who hit the jackpot and are given free care.

Some might think the lottery’s days are numbered, given that the insurance expansion under President Obama’s health-care law is taking effect in January. But clinic officials say the lottery will stay because demand for their services is likely to be as high as ever. “We will be business as usual,” said Nancy Sanger Pallesen, the clinic’s executive director.

The Affordable Care Act, the most sweeping health care program created in a half century, is expected to extend coverage to 25 million Americans over the next decade, according to the most recent government estimates. But that will still leave a projected 31 million people without insurance by 2023. Those left out include undocumented workers and poor people living in the 21 states, such as Virginia, that have so far declined to expand Medicaid under the statute, commonly called Obamacare.

“The law will cut the number of the uninsured in half,” said Matthew Buettgens of the Urban Institute. “This is an important development, but it certainly isn’t the definition of universal.”

As a result, while hospitals and other providers gear up to handle an influx of Americans who will be newly insured as of Jan. 1, many of the nation’s 1,000 free clinics, which cater to the uninsured and are financed mostly by private donations, are redoubling efforts to help those bypassed by the law. The trend shows both the limits of the law and the way it is affecting nearly every corner of the health-care system, sometimes in little-noticed ways.

Some of the free clinics are planning to step up their focus on undocumented workers, who won’t be permitted to buy insurance on the new online marketplaces and are expected to become a larger share of the uninsured. Other clinics, seeking to fill what they see as a major gap in the law, are considering offering free dental care.

Andre Sokol, a 59-year-old unemployed carpenter, is an example of someone who won’t be helped by the law and will continue to rely on the Arlington clinic, which, at an given time, provides care to about 1,600 people. He lost his health-care benefits when he left his job in the construction industry several years ago to care for his longtime girlfriend, who was diagnosed with ALS, and his mother, who was battling dementia. Two years ago, the women died within two months of each other. Sokol had no job, no income and no place to live.

In January, Sokol had quadruple bypass surgery at Virginia Hospital Center, which absorbed the costs. He didn’t qualify for Medicaid because Virginia doesn’t allow single men, no matter how poor, on Medicaid, unless they’re disabled. The state has one of the strictest eligibility standards in the country. That would change if the state expanded its program under the health law.

At the same time, Sokol’s income is too low to allow him to get federal subsidies to help pay for a private policy on the exchange. (The law assumed people with incomes below 100 percent of the poverty level, or about $11,500, would be covered by Medicaid, but many states balked at enlarging their programs after the Supreme Court said the expansions were optional.) Arlington Free Clinic officials said about half of their patients are in the same situation: They are below the poverty line but aren’t eligible either for Medicaid or subsidies to buy insurance.

After Sokol had surgery, the Arlington clinic agreed to take him on as a patient, as part of an agreement with Virginia Hospital Center. That agreement is one way people can become patients at the clinic; other patients come in by way of the lottery or via referrals from homeless and domestic-abuse shelters.

“Most of our members would love to go out of business and close their doors if there was a program that ended uninsurance,” Nicole Lamoureux Busby, executive director of the National Association of Free and Charitable Clinics, said. “But this isn’t universal health care. We’re not planning to see a dramatic decrease in our patients.”

Busby said that many of the clinics she works with are facing an additional hurdle with the health law: Convincing private donors that they will still play a crucial role after millions gain coverage.

“So many listen to the news and hear a 24-second sound bite that says everyone is getting coverage,” she said. “The donors may think we don’t need their funds.”

An analysis by the Kaiser Family Foundation predicted that the uninsured rate in Arlington County would fall from 12.4 to 7.4 percent after the health law is fully implemented in 2022. The foundation estimated that 14,000 people would remain without insurance, down from the 24,000 people currently lacking coverage.

The Arlington Free Clinic, which was founded in 1994, is staffed by doctors who volunteer their time when they aren’t at their regular jobs. To be eligible for the clinic, individuals must be over 18, live in Arlington County and earn less than 200 percent of the poverty line, or about $23,000 for an individual. They must also have been in the United States for at least a year.

On a recent Tuesday, the line for the lottery went around the block. It included a wide range of patients, including young children and the middle-aged who spoke English, Spanish, Arabic and Mandarin and other languages.

“I need a doctor for a lot of things,” said Ebtsam Ibrahim, a 46-year-old Egyptian woman and mother of four. She said she has had a toothache for two years but hasn’t seen a dentist because of the cost. She was trying for the third time to win the lottery.

Nazmun Nahar, a 33-year-old mother of three, arrived cradling her one-year-old daughter in her arms. She and her husband are Bangladeshi immigrants who became American citizens over a decade ago.

Because Nahar’s husband makes about $30,000 a year working at Subway, the family of five would likely qualify for generous subsidies to buy private health coverage under Obamacare. But like many of the lottery hopefuls, Nahar knew little about the law or how it would work.

“I just heard a little about it, but nobody explained it to me,” she said.

Jan Strucker, 59, was one of the few people who was aware of the new insurance marketplaces. A retired nurse, she lives on about $20,000 a year in worker’s compensation. She has serious health issues, and may soon need surgery. She figures she would be eligible for subsidies under the law. But that means she needs to wait until October to enroll, and coverage won’t kick in until January.

“This is ridiculous. This is shameful,” Strucker said. “And we’re only seven minutes from the White House.”

By mid-morning, the winning lottery tickets had been selected for 28 participants. A beaming Ibrahim, the Egyptian mother, was among the winners. A husband and wife from Russia also won one ticket that day. Each insisted that the other be the first to take advantage of the free health care, moving some clinic staff members to tears.

Lottery winners must go through an eligibility screening before their first appointment with a doctor, typically weeks later.

The other people who took par
t in the lottery, including Nahar and Strucker, went home empty-handed. Some will qualify for benefits under the health law. Others will likely return to the lottery, hoping to land a slot at the clinic.

Vidal Grajeda, 68, a retired painter and landscaper who previously won a spot through the lottery, was with his wife, Nicolasa Grajeda, 64, who took part in the lottery but did not win.

“I’m a patient and very grateful to the clinic,” he said. He doesn’t qualify for Medicare because he didn’t work long enough in the United States. At the clinic, he receives treatment for diabetes, high cholesterol, high blood pressure and knee problems. He asked the clinic’s director of clinical administration, Jody Steiner Kelly, whether the clinic will be open and working after Oct. 1, when people can start enrolling in coverage offered under Obamacare.

“Yes, the clinic will be here,” replied Kelly.

Luz Lazo contributed to this story.

http://www.washingtonpost.com/blogs/wonkblog/wp/2013/09/08/left-behind-stories-from-obamacares-31-million-uninsured/

For the health of each and all

By Andrew D. Coates, M.D., F.A.C.P.
WAMC Northeast Public Radio, Sept. 6, 2013

We physicians earn a place in society that yields great scientific and human insight, the impact of illness upon individual lives. Yet we are encouraged by forces inside and outside our profession to look away from the big picture.

Over the last year I have been struck by the force and magnitude – and the health consequences – of the pressures upon working people to make ends meet.

A great deal has been made about how rich the wealthy have become. Less attention has been paid to fact that the poor in America have gotten poorer, in their tens of millions. Consider, for instance, that in New York state 52 percent of seniors live at the edge of poverty or that those living in poverty has grown, not diminished, since 1980, and in New York households in the bottom 20 percent of earnings have seen no gain in income for two decades.

Day to day, the strain of impoverishment, even as the official culture celebrates opulence and waste, creates conditions for the ravages of drug and alcohol abuse and addiction, for domestic violence, child abuse and neglect, as the repercussions of mass incarceration and the stress and strain of temporary and part-time employment weigh down upon us all.

I could insert here several shocking stories of patients I have cared for, often in the intensive care unit. The patients I have in mind suffered illnesses potentially catastrophic but completely avoidable – if only the social or family circumstances been but slightly different. I know my colleagues in other specialties see avoidable illness, often the consequences of untreated chronic illness and disastrous delays in obtaining care.

Although we all have grown accustomed, after decades of loud mainstream pronouncements, to the idea that a dog-eat-dog, every-man-for-himself ethos always leads to the best and fairest outcome, we caregivers know how silly these notions really are. Human beings do not deserve, let alone seek, their illnesses.

Could we really believe that some of us live lives not in pursuit of happiness, but seeking misery? At the end of the day we are all in this together. If the purpose of a democratic society is to support the chance for each individual to realize our potential, then an injury to one is truly an injury to all.

We doctors can tell you about the injuries. About the social conditions that create them, we don’t often have much to say.

The daily practice of medicine over recent decades has taken us farther away from the profession’s tradition of advocating for the health of everyone in our society. Over recent decades the practice of medicine has been steadily besieged by commercialization and corporatization.

In response, we physicians often struggle to remain focused narrowly upon the clinical question at hand. This can further separate the patient’s medical problem from its human context.

Clinging to our expertise one patient at a time has acquired its own urgency and momentum thanks to a blizzard of perverse financial incentives that undermine science, and a progressive intrusion of assembly-line management techniques that undermine caregiving. As a result, although we may see a big picture, we too often feel powerless to act upon our scientific and human understanding.

It is time we took a stand as a profession and as professionals that we care about the health of the entire society. That the conditions for health and personal development for each of us depend upon a society that cares for all us.

Dr. Andrew Coates practices internal medicine in upstate New York. He is president of Physicians for a National Health Program.

You can listen to Dr. Coates’ radio broadcast here: http://wamc.org/post/andrew-coates-health-each-and-all

IRS reporting requirements for managing ACA subsidies and penalties

Treasury Issues Proposed Rules for Information Reporting by Employers and Insurers Under the Affordable Care Act

U.S. Department of the Treasury
September 5, 2013

The ACA provides for information reporting (under Internal Revenue Code section 6055) by insurers, self-insuring employers, and other parties that provide health coverage.  It also provides for information reporting (under Code section 6056) by employers that are large enough to be subject to the employer shared responsibility provisions regarding the health coverage they offer their full-time employees. These proposed regulations reflect comments received and an ongoing dialogue with stakeholders, including plan sponsors, many of whom already offer their full-time workforce coverage far exceeding the minimum employer shared responsibility requirements. Nearly 95 percent of employers with more than 50 full-time employees already offer coverage to their employees.

The proposed rules issued today describe a variety of options to potentially reduce or streamline information reporting, such as:

* Replacing section 6056 employee statements with Form W-2 reporting on offers of employer-sponsored coverage to employees, spouses, and dependents.

* Eliminating the need to determine whether particular employees are full-time if adequate coverage is offered to all potentially full-time employees.

* Allowing employers to report the specific cost to an employee of purchasing employer-sponsored coverage only if the cost is above a specified dollar amount.

* Allowing self-insured group health plans to avoid furnishing employee statements under both section 6055 and section 6056 by furnishing a single substitute statement.

* Limited reporting for certain self-insured employers offering no-cost coverage to employees and their families.

* Permitting health insurance issuers to forgo reporting under section 6055 on individual coverage offered through a Marketplace because that information will be provided by the Marketplace.

* Permitting health insurance issuers, employers, and other reporting entities under section 6055 to forgo reporting the specific dates of coverage (instead reporting only the months of coverage), the amount of any cost-sharing reductions, or the portion of the premium paid by an employer.

The statute calls for employers, insurers, and other reporting entities to report, among other things:

For section 6055:

* Information about the entity providing coverage, including contact information.

* A list of individuals with identifying information and the months they were covered.

For section 6056:

* Information about the applicable large employer offering coverage (including contact information for the employer and the number of full-time employees).

* A list of full-time employees and information about the coverage offered to each, by month, including the cost of self-only coverage.

Once the final rules have been published, reporting entities will be encouraged to voluntarily implement information reporting in 2014 (when reporting will be optional), in preparation for the full application of the reporting provisions in 2015.  Real-world testing of reporting systems in 2014 will contribute to a smoother transition to full implementation in 2015.

Press Release:
http://www.treasury.gov/press-center/press-releases/Pages/jl2157.aspx

Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans:
http://federalregister.gov/a/2013-21791

Information Reporting of Minimum Essential Coverage:
http://federalregister.gov/a/2013-21783

Comment:

By Don McCanne, M.D.

Here it is folks. These are the proposed ACA rules on reports that insurers and employers must file with the IRS – rules that proved to be so complex that the Obama administration deferred for a year the requirement that these reports be filed. Without these reports, the employer mandate could not be enforced. Though this announcement is about the simplification of the rules, that’s not the real story here.

When the Act was crafted, it was recognized that health insurance and health care was now so expensive that a majority would require subsidies for insurance premiums and out-of-pocket expenses. It was also recognized that plans would have to provide a defined set of minimal “essential health benefits.” It was also recognized that many individuals would not buy health plans for themselves unless they were threatened with a financial penalty for failing to do so.

It was decided that the Internal Revenue Service was best suited to administer these subsidies and penalties since they already had income information that would establish eligibility for the income-indexed subsidies. They were also in a position to use the tax system to assess penalties for non-compliance. But there are so many variables that the rule making process was overwhelmed. Even these new rules issued yesterday are not yet final and are open to public comment.

If you just glance at the few changes to simplify the rules (listed above), you will see that even they are quite complex. By the time that the multitude of variables for each individual are taken into consideration, you will see that the bureaucracy is living up to its reputation for complexity that induces intolerable frustrations. This isn’t even necessary. This system is yet another administrative nightmare in a health care system that is unique in all the world for its profound administrative waste.

If you are masochistic and want to research this yourself, here are some resources. Sec. 1502 of the Affordable Care Act amends Part III of Subchapter A of Chapter 61 of the Internal Revenue Code of 1986 by adding Subpart D – Sec. 6055 on the reporting of health insurance coverage. Sec. 1514 of the Affordable Care Act amends Subpart D that was just added by Sec. 1502, by inserting after Sec. 6055 the new section – Sec. 6056. So look up Sec. 1502 and Sec. 1514 in the Affordable Care Act. The newest proposed rules, which are the subject of the Department of the Treasury release on simplification of the rules (reported above), are available now online and will be formally published in the Federal Register on September 9, 2013. The proposed rules, “Information Reporting by Applicable Large Employers on Health Insurance Coverage Offered Under Employer-Sponsored Plans,” are 72 pages (link above). The proposed rules, “Information Reporting of Minimum Essential Coverage,” are 42 pages (link above).

Think of how much simpler it would be if we established a single national fund to pay for all reasonable health care for everyone and then funded it with progressive taxes. The tax system is already in place. We could tweak it so that it is even more equitable. Just think of the administrative simplification that we could have, as opposed to the exceedingly meager changes announced yesterday in the highly complex system established by ACA.

Yes, the more we see of the implementation of the Affordable Care Act, the more we realize that a single payer national health program is an imperative. All we have to do is fix Medicare so it works better, and then include everyone.

The right’s health care 'revolution' is a scam

Conservatives like to trumpet 'consumer-driven' health care plans. Here’s what they’re not telling you about them

By Adam Gaffney. M.D.
Salon, Sept. 6, 2013

“The consumer-driven health care revolution,” trumpeted one conservative think tank a few years back, “has only just begun.”

Now, for anyone who has ever been inconvenienced by an encounter with the health care system – or even worse, been on the receiving end of poor quality care, a medical error, or a misdiagnosis – a greater focus on “consumer” satisfaction might sound like just the right medicine for American health care.

So should we celebrate the recent rise of “consumer-driven” or “consumer-directed” health care plans (CDHPs)?  The premise of CDHPs – essentially high-deductible plans, with an option for a health savings account – is straight-forward enough: if you shop for services with your “own money,” you’ll use less health care and hunt for better bargains, in the process forcing providers to improve quality.

CDHPs have grown rapidly in recent years.  From a trivial 4 percent in 2006, CDHPs now account for a full 20 percent of all employer-based insurance plans.  The trend seems set to continue in 2014: a survey from the National Business Group on Health last month found that CDHPs were considered “the most effective tactic to control rising costs” by large employers, with 72 percent already offering a CDHP, and 22 percent planning to offer only CDHPs in 2014.

I’d wait to break out the bubbly, for, despite the utopian claims of its enthusiasts, CDHPs are more about cash than quality, more about cost shifting than consumer empowerment.

The “consumer-driven health care revolution,” it turns out, is likely to be neither revolutionary nor consumer-driven, but instead will only manage – somehow – to make the misfortune of getting sick an even worse experience.

One irony of the current craze with “consumer-driven” care is that its adherents seem surprisingly unaware that we already had an experiment with true market medicine in this country – in the nineteenth century.

“From the beginning,” argues the legal professor T. S. Jost in hiscritique of the consumer-driven movement, Health Care At Risk, ”there was only consumer-directed health care in the United States.”  Patients paid out of pocket, there was no health insurance, and there were an impressive variety of equally ineffective practitioners, frequently engaged in brutal competition.

The system (if it can be called that) was basically a disaster, with the presence of a health care marketplace doing little to encourage “quality” in that golden age of quackery.  What ultimately did improve quality – at least to some extent – was good old-fashioned regulation: medical licensure laws, the closure of low-quality medical schools, the Pure Food and Drugs Act, and so on.

Meanwhile, the poor of that era were generally left at the mercy of scattered and frequently inadequate charitable facilities – if they were lucky.  In later years, hospitals would not infrequently reject or otherwise “dump” sick patients deemed poor financial investments, a notorious practice that wasn’t really addressed – again, with regulation – until the Emergency Medical Treatment and Active Labor Act of 1986.

The second irony of the current consumer-driven movement is the degree to which it diverges from the last major health care “consumerism” movement of the 1960s and 1970s, when progressive activists and consumer advocates like Ralph Nader sought to advance the rights of patients in an age when medical paternalism was the rule of the land.

“The major element in all of this activity,” commented an editorial in one medical journal in 1971, “has been the unyielding insistence that the people who are to use the product or who are to be recipients of a service are entitled to an important voice in how that … service is dispensed.”  Reforms to defend the mentally ill and disabled, to protect the privacy of health information, to open free clinics for the poor, and to increase the use of “informed consent” prior to medical interventions were achieved, in part, in the name of “consumer” rights.

If the current consumer movement sought similar goals – to give patients more of a voice in the health care system – who would be opposed?

Enter “Consumer-Driven Health Care.” Unfortunately, the current consumer-driven movement represents something altogether different from these earlier efforts to advance the rights of patients.

Consumer-driven health care arose from the ashes of yet another allegedly “consumer” based-model: “managed competition” among health maintenance organizations (HMOs) that was at the heart of Bill Clinton’s health care plan.  The essence of such a type of plan – dubbed a “Consumer-Choice Health Plan” by the health economist Alain Enthoven in 1978 – was that competition among insurance companies for health care consumers would drive down costs and increase quality.  Clinton’s plan famously failed, but the HMO-model was rapidly ascendant – to the dismay of both patients and physicians, neither of whom appreciated profit-taking insurance companies dictating or denying care.

As the HMO paradigm began to disintegrate, a variety of academic, business, and political thinkers began promoting a “consumer-driven” alternative.  Their ideas, it should be noted, were not particularly original.  At the center of the new ideology was the longstanding idea of health care “moral hazard,” which as I recently discussed, is the idea that because insurance makes our medical expenses “free,” we will use health care haphazardly and indiscriminately, without regard for cost (and apparently without regard to the fact that we are subjecting our bodies to unnecessary incisions and intrusions).

But it was only in the late 1990s when the term “consumer-driven health care” arrived on the scene, a coinage courtesy of Harvard Business School professor Regina Herzlinger, dubbed the “unofficial godmother” of the movement by Money magazine.  “In this system people would newly consider the costs of the health care products and services they use,” she wrote in her 1997 book, Market-Driven Health Care.  “A consumer-controlled system would allow Americans to decide how to spend their money… they would shop carefully for the health services for which they themselves paid.”  Herzlinger coupled this notion of a free health care mar
ketplace, however, with a legal requirement that everybody buy catastrophic health insurance – i.e. an individual mandate, the initially conservative idea that today’s conservatives are oddly outraged by.

Herzlinger’s influence should not be underestimated.  The former CEO of Aetna called her ideas “the most important trend to hit health care – and Regi [as she is known] is a beacon for us practitioners.”  This was not idle talk, with Aetna being described in one policy journal as a “first mover” in the move towards consumer-driven health insurance.

The more-or-less same idea keeps popping up everywhere.  Rand Paul made the argument for market-medicine a few weeks back on the Daily Show. In the book, Catastrophic Care – How American Health Care Killed My Father, published earlier this year,the business executive David Goldhill similarly argues that the only solution to quality problems in American health care is consumer-driven care, with universal catastrophic insurance for all, but with all other expenses paid for out-of-pocket.  “We are less likely to be skeptical of benefits when we are paying little or nothing for them,” Goldhill argues.  “So the plague of unnecessary cesarean deliveries, spinal fusion surgeries, and cardiac bypasses …”

Exactly. It would be simply foolish not to have your abdomen, spine, and/or thoracic cavity surgically opened and unnecessarily manipulated, assuming – and this is crucial – that it was free.

The failure of such individuals to imagine that some things in life are not mere commodities underscores the inherent failure of the consumer-driven ideology.  But the ideology remains appealing to many because it promises things we all value – choice, quality, knowledge, respect, individualized-attention – with something that no one wants: skimpy, low-quality health insurance that pushes us to avoid needed care when we need it (sometimes even in emergencies), while leaving us at the end of the day with a big bill.

None of this is to deny that American health care has serious quality problems, that as physicians we need to be much more cognizant of the costs and utility of the interventions we prescribe, and that all health care providers need to work towards making the experience of health care more convenient and humane.

But let’s work to improve American health care in ways that actually have a basis in solid evidence, before selling it off to the highest bidder in the name of a market ideology better suited to the interests of industry than to the needs of the sick.

Adam Gaffney is a physician and writer in Massachusetts.

http://www.salon.com/2013/09/06/the_rights_health_care_revolution_is_a_scam/

Private insurers allow hospitals too much market power

High and Varying Prices for Privately Insured Patients Underscore Hospital Market Power

By Chapin White, Amelia M. Bond, James D. Reschovsky
Center for Studying Health System Change, HSC Research Brief No. 27, September 2013

Across 13 selected U.S. metropolitan areas, hospital prices for privately insured patients are much higher than Medicare payment rates and vary widely across and within markets, according to a study by the Center for Studying Health System Change (HSC) based on claims data for about 590,000 active and retired nonelderly autoworkers and their dependents. Across the 13 communities, average hospital prices for privately insured patients are about one-and-a-half times Medicare rates for inpatient care and two times what Medicare pays for outpatient care. Within individual communities, prices vary widely, with the highest-priced hospital typically paid 60 percent more for inpatient services than the lowest-priced hospital. The price gap within markets is even greater for hospital outpatient care, with the highest-priced hospital typically paid nearly double the lowest-priced hospital. In contrast to the wide variation in hospital prices for privately insured patients across and within markets, prices for primary care physician services generally are close to Medicare rates and vary little within markets. Prices for specialist physician services, however, are higher relative to Medicare and vary more across and within markets.

Making Sense of Price Variation Within Markets

Several factors can be ruled out as explanations for the wide price variation within markets, including:

* the costs of doing business—labor costs within each market are about the same;

* the complexity of the services being provided—differences in service complexity are taken into account by benchmarking to Medicare prices, which are adjusted for complexity; and

* the type of coverage—all enrollees are in private plans with similar benefits.

What, then, can explain the price variation? The hospital industry has argued that higher-priced hospitals treat the most complex patients and have higher costs because of their teaching programs and capital investments. While this may explain some variation within a market as riskier patients seek care at tertiary hospitals, benchmarking to Medicare should mitigate this influence. Indeed, many analysts believe that Medicare’s additional payments to hospitals for medical education exceed the additional costs.

The more likely culprit is variation among providers and private insurers in negotiating leverage. Negotiating leverage depends on the ability to walk away if an agreement cannot be reached. In terms of negotiating leverage, primary care practices fall at the bottom of the heap. Primary care physicians tend to practice solo or in smaller groups, and they are more numerous than specialists and more substitutable, making them the least able to dictate prices to health plans. Primary care physicians are, in economics jargon, price-takers. A private insurer does not need the participation of all primary care physicians in a market. Instead, an insurer needs only enough primary care physicians to provide access to enrollees, and no single primary care practice is needed to reach that threshold. As a result, few, if any, primary care practices can command prices that significantly exceed their competitors’.

The specialty physician market is generally more concentrated, with fewer specialist practices in each specialty than primary care physicians. Moreover, specialty practices tend to be larger. Studies have found that many specialty practices have become larger in recent years to gain negotiating clout, among other reasons. Many of these practices are large enough that insurers would be unable to offer adequate local access to the specialty without them, giving them substantial leverage with insurers.

Hospitals are in an even stronger negotiating position than specialist physicians. Hospitals typically are large entities that provide a high volume of patient care, giving a hospital or hospital system leverage that physician practices rarely, if ever, have. At the top of the negotiating heap are the must-have hospitals that offer some unique combination of reputation, location and services. Private insurers understand that employers will not continue to offer their products if must-have hospitals are excluded from the provider network. Even in metropolitan areas with many competing hospitals and hospital systems, these must-have hospitals can command unusually high prices. Also, hospitals increasingly have merged into systems, which may allow affiliated hospitals in a market to negotiate collectively with insurers. And, many hospitals are employing physicians and purchasing physician practices and then including physicians in their negotiations with insurers, which may result in more leverage for both the hospitals and the physicians.

Potential Savings

Given the growing evidence of significant intramarket price variation, especially for hospitals, purchasing strategies designed to guide patients to high-value providers clearly offer potential savings. Approaches such as reference pricing, where the payer sets a maximum allowed amount for a specific procedure in a specific market, have produced savings and put downward pressure on prices of outlier providers in some markets. Other innovations in benefit design, when accompanied by information to enrollees about differences in what they will have to pay when using different providers, clearly have roles to play in such approaches.

To get a very rough sense of the magnitude of potential savings from such purchasing strategies, actual plan spending was compared with hypothetical spending with a price ceiling equal to the 50th percentile of the current price distribution in each market. The 50th percentile price, or median, for a given market represents the price at which half of the services in that market were provided by higher-priced providers and half were provided by lower-priced providers. The second set of hypothetical price ceilings are multiples of Medicare prices: 1.0 and 1.5.

The potential savings from capping prices at the 50th percentile scenarios only represent 5.5 percent of physician and hospital spending in the plans. To put the savings in perspective, the average annual growth in per capita spending for employer-sponsored health insurance has been between 7 percent and 8 percent per year. So, the savings from rolling out an aggressive program of active purchasing might only slow trend by less than a year. However, even small percentage gains can make a significant difference given the enormous amount many large employers spend on health care. Additionally, active purchasing may begin to give large purchasers a more direct role in health care payment and delivery decisions. Active purchasing strategies will face challenges, including resistance to change from providers, insurers and enrollees.

More significant savings are possible if prices are limited to a level below what is now considered normal. By far the biggest opportunity for savings appears in the hospital outpatient setting, where setting a ceiling on prices equal to Medicare would reduce spending by 48 percent and a ceiling equal to 1.5 times Medicare would reduce spending by 26 percent. But, such a dramatic change might require governmental rate setting and force hospitals and specialist physician practices to cope with significantly constrained revenue.

Looking Ahead

Even though overall U.S. health spending has grown more slowly in recent years, premiums for employer-sponsored health insurance have continued to rise at an unsustainable rate. And, increases in provider prices explain most if not all of the increase in premiums. If this trend continues, employers will face increa
sing pressure to restrain spending growth, either reducing benefits, shifting costs to employees, or using some form of active purchasing to mitigate price increases. Insurers are consolidating and becoming more adept and experienced in implementing active purchasing. But, at the same time, consolidation continues apace on the provider side, recently including the employment of many physicians by hospitals. As a result, health plans may face only stiffening resistance to attempts to rein in high prices.

http://www.hschange.org/CONTENT/1375/

Comment:

By Don McCanne, M.D.

This study confirms once again that health care prices for privately insured patients vary widely across and within health care markets. This study is particularly helpful because it shows where most of the problem is.

It is not with the primary care physicians. They are “price-takers.” They have very little negotiating clout with the insurers. They are forced to accept the insurers rates if they want to be in the insurers’ networks. Thus prices for primary care physicians tend to be uniformly low.

Specialists tend to be more concentrated and thus have greater clout with the insurers. In the more concentrated markets, specialists can command higher prices, resulting in regional variations in pricing depending on their market power.

But the biggest problem is with the hospitals and their outpatient services. They have an even stronger negotiating position than the specialists. This is especially true of the “must-have” hospitals that are in great demand. With increasing merger activity, ever more hospitals are becoming must-have.

Suppose the insurers insisted that hospital prices were capped at the 50th percentile of current spending, bringing down the high prices commanded by the must-have hospitals. This study shows that would still not be enough to meet the average annual growth in per capita spending.

With the pressure to slow the increase in insurance premiums insurers are likely to find other ways to shift more of the costs to patients when costs are already intolerable.

What can we do? We can put the hospitals and their outpatient services on global budgets, just as we do with our police and fire departments. This is what a well designed single payer system would do. Fair rates would be negotiated with physicians which would include correcting the the primary care underpayments and specialist overpayments that result from our current flawed approach of allowing market concentration to artificially move rates away from optimum value.

Note that the reference standards for this study are the much lower Medicare rates – rates that private insurers pay only for primary care physicians. Instead of market power, we should be using people power through our representative government by enacting a publicly-financed and publicly-administered national health program – an improved Medicare for everyone – ensuring payment of legitimate costs and fair margins for the health care delivery system.

Brunswick lawmaker touts single-payer bill at Augusta health care rally

By Mario Moretto
Bangor (Maine) Daily News, Sept. 3, 2013

AUGUSTA, Maine — Activists assembled at the State House on Tuesday to kick off an eight-state tour of the Northeast in support of health care reform.

The group, called Drive for Universal Healthcare, or “DUH,” bills itself as a “rolling demonstration” of activists in their vehicles, visiting states with pending legislation that would expand health care coverage by instituting some version of single-payer health care.

In Maine, that’s LD 1345, sponsored by Rep. Charlie Priest, D-Brunswick. His bill would transition the state slowly toward a state-run insurance system similar to those established in Canada and much of Europe.

Priest has introduced similar bills in previous legislatures. This time, he said he took his cues from Vermont, which in 2011 approved a law to slowly establish a single-payer system, and is working today toward implementing the law by 2017.

He said single-payer — which proponents say would drastically reduce the cost of health care by eliminating the private profit motivation and overhead costs associated with tracking the myriad insurance payments — was established piecemeal in Canada, and should be approached the same way in the United States.

“It’s going to happen state by state by state until there’s enough momentum for Congress to act,” he told the small group of supporters at the State House Welcome Center.

Proponents of Priest’s bill — it has 51 co-sponsors in the House — will surely be watching as Vermont attempts to implement its law. The state is attempting to bring companies that operate their own insurance plans under the single-payer system.

The U.S. Employee Retirement Income Security Act, or ERISA, says companies operating their own plans are exempt from state health care laws. Vermont needs a waiver to make those companies opt in to the single-payer system. No state has ever obtained an ERISA waiver before.

The outcome of that process will provide crucial precedent for Maine’s single-payer efforts, said Trish Riley, a senior fellow for health policy at the Muskie School.

“The biggest difference between Vermont and Maine is we have far more businesses that are self-insured,” Riley said. There’s also the question of whether a “single” payer could ever be established, she said.

“If you try to do single payer [in Maine], the question is whether Medicare will play along, because we’re the oldest state. And what do you do about self-insurers if you can’t get a waiver?” she said.

It’s feasible that even under a single-payer plan — where private health insurance companies were kicked out of the system — health care providers still could end up dealing with multiple state and federal agencies, plus the large companies that operate under ERISA, such as Bath Iron Works, the University of Maine and the Maine State Employees Union.

Rep. Richard Malaby, R-Hancock, who sits on the Health and Human Services Committee, said he opposes Priest’s plan for health care.

“Single-payer has a lot of allure in that it could minimize overhead costs, which is good, but it does not address a key component of the health care system, which is that we need more competition,” he said.

Malaby said that even though there are more than 1,000 health insurance companies in the country, only a handful operate in Maine’s small group market. Easing regulations, he said, would make Maine’s market more attractive and drive prices down.

He also said that while it’s true that Europeans operating under a single-payer system pay dramatically less for health care than Americans, that’s not necessarily a function of their payment scheme.

“I think it’s a lot to do with technology and lifestyle choices. They also make rationing choices in those countries that we are not willing to make. We spend a lot of money on end-of-life services, for example,” he said.

Malaby and other Republicans also responded to Tuesday’s event at the State House by touting Public Law 90, a GOP-supported insurance reform package approved during the Republican-controlled 125th Legislature. The law decreased regulation on insurance companies by making it easier for them to offer new plans and by allowing small businesses to band together and negotiate more favorable rates.

The bill also created a high-risk pool — or reinsurance program — to protect insurance companies from the high costs of covering patients who require the most medical care. In addition, the law allowed insurers to charge different rates based on patients’ age, place of residence and health status. Proponents have said that part of the bill is an attempt to woo more young, healthy patients into the marketplace by allowing insurers to charge them less.

Democrats and lawmakers from northern Maine have criticized PL 90 for allowing rate hikes on older and rural customers. Republicans have countered by pointing out that more Mainers have seen rate decreases since PL 90 was enacted.

Malaby said that the geographic fluctuations were rough in the first year since PL 90 but that they are leveling off and that the Republican reform bill has been a success.

“You’re getting more and more young people who can stay in Maine and afford insurance,” he said. “It used to be we never saw rate decreases at all, and now we are.”

Regardless of the political battles over PL 90 or a single-payer bill — which Gov. Paul LePage opposes — Priest said there’s always a Plan B.

“If we can’t get it through the Legislature, which is a possibility, Maine has a wonderful citizen referendum system,” he said.

http://bangordailynews.com/2013/09/03/health/brunswick-lawmaker-touts-single-payer-bill-at-augusta-health-care-rally/?ref=latest

Some big insurers leery of exchanges

Big US health insurers wary of ‘Obamacare’ exchanges

By Stephanie Kirchgaessner
Financial Times, September 3, 2013

Some big US health insurers, including Cigna, Aetna and UnitedHealthcare, are steering clear of most of the new state healthcare exchanges amid uncertainty about the kinds of customers they might attract: namely sick ones.

The three companies have said they are taking a cautious approach because they need to evaluate how the markets – set up under the “Obamacare” reforms – will work. They add that they are specialised in providing insurance to big employers, not the individuals and small businesses that will be served by the exchanges.

An Obama administration official said risk adjustment and reinsurance programmes under the law were designed to offer incentives to health insurers to make sure they do not avoid enrolling customers with the greatest needs.

A spokesman for Cigna, which is participating in five of 50 new exchanges, agreed that the provisions would help the company manage risk.

UnitedHealthcare said it would participate in about 12 exchanges initially, but said the exchanges had the “potential to be a growth market” over time.

A spokesman for Aetna said it would participate in up to 14 exchanges. It emphasised that it planned to position itself “for the future”.

http://www.ft.com/cms/s/0/f17b5ea4-10a4-11e3-b291-00144feabdc0.html#ixzz2dwahA63N

Comment:

By Don McCanne, M.D.

UnitedHealthcare, Aetna, and Cigna – three of the largest private insurers in the nation – have decided to not participate in most of the state exchanges being established under Obamacare. Obama and his health care architects had told us that it was better to build on the system we had, expanding the prevalence of private insurance. With this gift of a ready-made market for the private insurers, why are they sneaking away?

America’s private insurers have always welcomed the healthy and shunned the sick. The greatest example is the largest insurance market of all – America’s workers and their families – not only the largest market in the nation but also the healthiest.

In contrast, the individual and small group markets exposed insurers to greater risks, so they countered by using underwriting to select only the healthy while rejecting those who needed health care. In turn, Obamacare now prohibits selective enrollment – cherry picking and lemon dropping. Insurers rightfully fear that those with greater health care needs will rush into the exchanges, creating high cost risk pools that would price premiums out of the market.

About 31 million people will remain uninsured. They are healthier than average since they will include young invincibles who would rather take a chance, hard working immigrants and their families, many of whom are prohibited from participating, lower-income workers who are exempt because of lack of affordable plans for them, and families with incomes high enough to disqualify them from subsidies yet low enough that they will find the premiums to be unaffordable, especially for plans that still leave them exposed to the out-of-pocket expenses of high deductibles and other cost sharing.

These big insurers aren’t dumb. If they are going to sell plans in the exchanges, they want most of these low-cost individuals included in order to dilute the high costs of the sick who will enroll, thereby allowing the insurers to offer competitive premiums. Quite clearly, they are not convinced that will happen.

Will delaying a year result in an influx of some of these healthy individuals into the plans? Look at the list again. Likely some of the previously healthy who develop medical problems will want in. But that will increase the costs of the pools even more, causing the healthier to disenroll because the premiums are driven up further – the classic problem of the death spiral of skyrocketing health insurance premiums.

We should listen to UnitedHealthcare, Aetna, and Cigna. This is a highly flawed method of financing health care. It just doesn’t make sense from a business perspective. But also we should give some thought to this ourselves. Does it really make sense to to insert an administratively wasteful insurance intermediary that has found great success in manipulating the markets so that they can welcome the healthy and shun the sick? Medicare Advantage has already proven to us that private insurers will always find a way around risk adjustment and other regulations in order to shift costs away from them and onto taxpayers.

Obama and friends crafted this program to take good care of the insurers while depriving us of a less costly, more efficient and more effective social insurance program – an improved Medicare for all – and yet the insurers are still not satisfied. It’s too bad that we are going to have to wait until 2015 and 2016 to see premiums skyrocket and insurers bail out.

What will be our response then? Will we let the insurers continue to cover the healthy while accepting for the rest of us the fact that financial hardship is simply an inevitable consequence of facing serious illness? Based on the lack of public engagement to this date, it seems like that is where we are headed.

How Obamacare compounds inadequacies

By Marc Landry
News and Observer (Raleigh, N.C.), Sept. 3, 2013

With the imminent rollout of open enrollment under Obamacare, we are all going to read and hear a great deal about health care and health insurance in the weeks and months to come.

To gain some international perspective on these issues, I highly recommend reading “The Healing of America” by T.R. Reid.

Reid, a correspondent for The Washington Post, writes of his journey around the world to experience the health care and insurance regimens of other countries. Citing a study from the National Academy of Sciences that claims 22,000 Americans die prematurely each year from treatable medical problems because they cannot afford to see a doctor, he asks the essential question:

“Should our country provide health care to all of its citizens who need it?”

To date, the United States is alone in the developed world to have answered with an emphatic “no.”

It is disgraceful that we allow tens of thousands of our fellow citizens to die prematurely because our decision-makers will not say “yes” to what is essentially a moral question.

Will Obamacare provide all Americans with the access to health care they need? Again, emphatically no. It will extend coverage to many who are now uninsured, but millions will continue to do without.

Obamacare extends coverage in the most inefficient way possible, building on the hodgepodge of health insurance regimes that already exist. And because Obamacare subsidizes the purchase of insurance coverage, it is essentially nothing more than a pipeline from taxpayer pockets to the coffers of the health insurance industry.

There are four health care delivery models, and the United States is the only country where all co-exist.

Americans are well-acquainted with the Bismarck model, which uses private health insurance plans and providers and is paid for by employers and employees through the payroll system. There are variations of the Bismarck model in Germany, France, Japan, Belgium, Switzerland and many parts of Latin America. Most working Americans under 65 get their health coverage this way.

In the Beveridge model – the inspiration for the National Health Service introduced in the United Kingdom in 1946 – the government pays for health care from general tax revenue. Medical treatment is a public service, and the government owns and operates the hospitals and clinics. The Beveridge model is what most Americans have in mind when they think of “socialized medicine.” Variations are found in Italy, Spain, Scandinavia and Hong Kong. Americans who get their health care this way are members of the military, veterans and American Indians.

The third model is national health insurance, which incorporates elements of both Bismarck and Beveridge. In countries using this model, every citizen pays premiums to the government, which in turn pays all medical bills. The medical providers are private, but the single-payer system gives the government considerable power to negotiate on price. Canada adopted its “Medicare” system in the 1960s, and newly industrialized countries such as Taiwan and South Korea have adopted variations. Americans over 65 should be familiar with this model as our own Medicare is an example.

Lastly, you have the out-of-pocket model found in most of the poorer countries where the rule is you get the health care you can afford. Think Burma and Rwanda – and the United States, where 45 million Americans are well-acquainted with this model.

Reid’s book concludes with a chapter that tries to answer the question: “Which are the best health care systems in the world?”

The United States ranks No. 1 in terms of absolute spending, per capita spending and spending as a percentage of GDP. The World Health Organization gathered all of the factors on which health care systems can be rated, synthesized the data and ranked the health care systems of 191 countries. We came in 38, just behind Costa Rica.

When you go to a Target store, banners proclaim, “Expect more. Pay less.” When it comes to health care, we in the United States have turned that around: “Pay more. Expect less.”

Marc Landry is a contributing columnist. He can be reached at marclandry49@gmail.com.

Read more here: http://www.newsobserver.com/2013/09/03/3161455/how-obamacare-compounds-inefficiencies.html#storylink=cpy

National group launches universal health care drive in Augusta

By Paul Koenig
Kennebec (Maine) Journal, Sept. 4, 2013

AUGUSTA, Maine — Supporters of a government-funded universal health care system rallied on Tuesday outside the State House for the launch of a 10-day tour of eight cities considering legislation for their cause.

About 10 people gathered along Capitol Street held signs bearing messages such as “People Over Profits,” encouraging passing drivers to honk if they supported universal health care.

Representatives from Maine AllCare, the Maine chapter of Physicians for a National Health Program — a national organization advocating for single-payer health care — joined the Chicago-based Drive for Universal Healthcare at its stop at the State House.

Rep. Charlie Priest, D-Brunswick, who is co-sponsoring a bill to establish a single-payer health care system in Maine by 2017, spoke at a news conference about the proposed legislation before the demonstration outside.

The bill, L.D. 1345, eventually would transition a state exchange under the federal Affordable Care Act into a state-funded health care system, Priest said. He expects the Health and Human Services Committee to take up the bill in February or March.

The legislation’s goal is to provide affordable, quality health care to all Maine people and try to take the burden of employees’ health insurance away from employers, Priest said.

He thinks it’s possible the bill will pass in the Legislature, but it could face a veto from Gov. Paul LePage, who vetoed a bill to expand Medicaid under the Affordable Care Act last session and opted to not take part in the state health insurance exchanges that are part of the federal law.

LePage described the Affordable Care Act as a stepping stone to a single-payer system in a November letter to the Obama administration.

However, some supporters of a single-payer system say the federal law shows why the country needs a different approach to health care because not everyone will be guaranteed insurance under it.

Priest said he thinks the Affordable Care Act will be expensive, and people in the middle class who don’t qualify for the subsidies to buy insurance on the exchanges will find costs increasing.

He also said congressional Republicans’ repeated attempts to repeal the law increase its uncertainty.

The hope with starting a universal health care system in the state is that federal government eventually will adopt a national system if enough states show their support for it, Priest said, calling such a development similar to what happened in Canada.

Fred Horch, a member of Maine AllCare, said it’s not an ideal course, but it may be the only realistic way to make universal health care a reality in the United States.

Horch, the former owner of a sustainable supply store in Brunswick, said he doesn’t think health insurance should be tied to employment status. If people with health insurance through their employers lose their jobs, they may end up uninsured when they’re most vulnerable, Horch said.

Health insurance also adds a burden on small-business owners, he said.

Horch, who didn’t pay for health insurance for his employees at F.W. Horch Sustainable Goods & Supplies, said he sometimes struggled to hire people because some were looking for a job that provided it. By not offering insurance, his store was at a disadvantage compared to large retail chains that could afford it, Horch said.

“It’s making it so hard for our small businesses to stay in business,” he said.

Rep. Richard Malaby, R-Hancock, a small-business owner himself, said he agrees that health insurance shouldn’t be tied to employment and thinks it’s one reason for rising health care costs.

Even so, he said he doesn’t think a single-payer system is the answer. Instead, Malaby, a member of the Health and Human Services Committee, said he wants to see greater competition among insurance companies and more openness about pricing in the medical industry to allow people to shop around for medical care.

Another reason Malaby said he’s against single-payer health care is that people wouldn’t have “skin in the game” if the government was footing the bill.

“Then they don’t shop for a good value for prices, and they don’t always make decisions based on it,” Malaby said.

He also said he sees health care as a personal responsibility, not a human right. He said people can help ensure they stay healthy through a healthy diet, exercise and good lifestyle choices.

“I’m not of the mind that the government should be paying,” Malaby said. “When other people pay, you don’t care as much about how much you spend.”

http://www.kjonline.com/news/National-group-launches-universal-health-care-drive-in-Augusta.html

Single-payer health care supporters kick-off nationwide drive

By A.J. Higgins
Maine Public Broadcasting Network, Sept. 3, 2013

AUGUSTA, Maine — Supporters of a single payer national health care system kicked off an eight-city tour in Augusta today. Members of the Drive for Universal Healthcare organization also expressed support for a bill that will be taken up next year at the State House that would establish a single payer system in Maine modeled after a similar program in Vermont. Both plans face opposition from critics who say Maine can’t afford universal health care.

Even Sue Saltmarsh, the founder of the Drive for Universal Healthcare organization, admits that promoting a group with the acronym of D-U-H ‘spell out the letters’ may not evoke admiration and respect ‘does raise some eyebrows and cause a few snickers?’. But then again, the Chicago resident also sees its value.

“It’s sort of a universal word that people understand for universal healthcare,” Saltmarsh said. Does America need a new healthcare system? Duuh-uhh.”

During a State House press conference, Saltmarsh recounted her own personal healthcare crisis that left her $30,000 dollars in debt. Realizing that a national health care plan similar to the government sponsored program in Canada is a difficult sell in Washington, Saltmarsh says she now wants to build new support at the local level.

“I can’t change the world, but I’m determined to change all the towns I’m going to and I’m hoping that along the way, people will get in their cars and drive for an hour or two, go home and talk about it to their neighbors and get encouraged and energized to be a part of the movement actively,” Saltmarsh said.

Saltmarsh is being supported in her universal health care effort by Maine AllCare spokesman, Fred Horch, of Brunswick. A former businessman, Horch says the essential problem with the American healthcare system is that it is TIED to individual employment — rather than perceived as a business expense that should be underwritten by the state or federal government.

“In our country — in contrast to other developed countries, we have tied health insurance to employment status,” Horch said. “This puts an enormous burden on our small business community and of course magnifies the impact of losing your job, putting enormous and unnecessary stress and strain on our peoples and family,” Horch said.

That’s why Horch and DUH support LD 1345, a bill to establish a single payer plan in Maine sponsored by state Rep. Charles Priest. a Brunswick Democrat. He says his bill — which was carried over last spring to next year’s legislative session — has been revamped to resemble a more measured approach currently being undertaken in Vermont.

“It builds off the Affordable Care Act which we think needs to be implemented statewide and not federally, but it also provides for a Maine health plan which is set up with the advice of an advisory com
mittee which helps to plan this health plan,” Priest said.

“Maine simply can’t afford it — it’s as simple as that,” said former state Rep. Jon McKane.

Former Republican state representative — and longtime universal health care foe — Jon McKane of Newcastle says the costs associated with a universal plan would be prohibitively expensive for Maine to go it alone. Dan Bernier, a lobbyist for the Maine Insurance Agents Association agrees. He says there are darker consequences for those in countries with national health care plans.

When you make health care free, people will consume more of it and when people consume more of it you then need to find a way to control consumption,” Bernier said. “So a government run system ultimately leads to government rationing.”

Members of the Drive for Universal Healthcare organization plan to visit with supporters tomorrow in Vermont.

http://www.mpbn.net/Home/tabid/36/ctl/ViewItem/mid/5347/ItemId/29768/Default.aspx

Uwe Reinhardt on household income and health care costs

The Central Challenge in U.S. Health Policy

By Uwe E. Reinhardt
The New York Times, Economix, August 30, 2013

“Health Care Costs Climb Moderately, Survey Says” read the headline in The New York Times last week. It appears that health insurance premiums for job-based family coverage rose “only” 4 percent between 2012 and 2013, although still twice as fast as did wages.

The survey in question is the Kaiser Family Foundation’s annual survey of employment-based health insurance, widely viewed as a gold mine for anyone seeking information on that part of the American health system.

For example, 21 percent of the companies in the Kaiser survey paid premiums in excess of $19,387 for families and in excess of $7,062 for singles in 2013 — a hefty amount. At the other end, about a fifth of the companies in the sample paid less than $13,225 for family coverage and less than $4,708 for single coverage.

The benefit consulting firm Milliman annually publishes its Milliman Medical Index on the average total cost of health care for a typical American family of four under age 65, covered by a preferred provider plan, or P.P.O. That index includes not only the employment-based health insurance premium paid by employer and employee but also an estimate of the family’s out-of-pocket spending. In other words, if estimates total annual health spending for the hypothetical family.

According to Milliman’s report, the total cost of $22,030 in 2013 is composed of a total premium for insurance coverage of $18,430, of which the employer is estimated to contribute $12,886 and the employee $5,544. The rest represents out-of-pocket spending of $3,600.

Although not directly comparable, taken together these two data series raise the question of how many American families could afford this kind of health spending strictly with their own financial resources, if one took the extreme position that health care is a private consumption good for which American households themselves should be financially responsible. I hasten to add that I do not know anyone who actually holds that extreme position; the argument is and always has been only over how extensive such support should be.

But the numbers are daunting just the same, if one contrasts them with data on the distribution of household money income (after taxes and transfers) by income group.

It is seen that in 2011, 20 percent of American households had incomes below $20,262. Although the figure includes households of various sizes, including singles, it is nevertheless a small sum to absorb even Kaiser’s premium numbers for single coverage. Median household income in 2011 was $50,054, meaning that close to 50 percent of households had an income below that number.

While the nominal median household income (in current dollars, not adjusted for inflation) in the United States has increased substantially since 1975, in constant-dollar terms of 2011 it has been remarkably and disappointingly flat.

Most of the growth in real gross domestic product in the last several decades has actually accrued to households in the top quintile of the income distribution and, within that quintile, to the top 1 percent.

The gist of the preceding array of data is that even under what we now call “moderate” growth in health care costs, stagnating incomes for millions of American households will put American health care as we have come to know it out of their financial reach, unless they receive substantial help from households in the upper third or so of the household income distribution.

This central political dilemma in American health policy — leave health care to those who can afford it or increase tax revenues to broaden coverage — will continue as far as the eye can see. A good part of the current shouting match over the Affordable Care Act expresses anger over this dilemma, and it will not subside even after the act has been fully put in place.

NYT Reader Comments:

Don McCanne, San Juan Capistrano, CA

With typical family health costs at $22,000 and median household income at $50,000, clearly there must be a transfer from wealthier, higher-income individuals if everyone is to have the health care that they should have.

Although the Affordable Care Act moves in that direction by providing income based subsidies for exchange plans and expands Medicaid for low-income individuals, most people still obtain their health coverage through their employment. Since employer-sponsored insurance is paid for through forgone wage increases, health care costs contribute to the failure of most of us to share in the gains that the very wealthy have made.

The easiest solution is to end individual plans with their premiums based on average pooled costs and set up a single pool for our entire health care system that is funded based on ability to pay – automatically resulting in that transfer that we need.

That’s easiest except for one thing. Those who have fared so well in our economy must decide that a transfer that improves the health of the nation is worth pursuing. So far, we haven’t heard much from them.

Virginia, Boston

The ‘Medicare for all’ proposed by Physicians for National Health Program at pnhp.org has been in place for twenty years. The program is reflected in a current bill in the House, HR 676, brought by D-MI Rep. John Conyers. How likely is it that our corrupt and paid-for-by-lobbyist congress will honor that attempt to right the wrong of for-profit health “care”, and pass such a bill. Please take a look.

http://economix.blogs.nytimes.com/2013/08/30/the-central-challenge-in-u-s-health-policy/

Comment:

By Don McCanne, M.D.

The reports cited and the conclusions drawn by Uwe Reinhardt have been covered in our prior messages, but they bear repeating because, as Professor Reinhardt writes, this represents the “central political dilemma in American health policy — leave health care to those who can afford it or increase tax revenues to broaden coverage.”

Typical health care costs for a worker with a family of four – a relatively healthy subset of our society – are now about $22,000, when median household income (not identical to the worker’s family, but still instructive) is now about $50,000. Try pooling that. The numbers don’t work.

Use the link to Reinhardt’s article and check out Figure 4. The bottom one-fifth of households (bottom quintile) has incomes below $20,000. That doesn’t even pay for health care, much less all other essential living expenses. So we have Medicaid for some of them.

Then look at the three middle quintiles – the bulk of working American families. Household income ranges from $20,000 to $100,000, with the median at $50,000. Even at the high end, reducing income from $100,000 to $78,000 because of health care costs puts a strain on budgets that hopefully include retirement plans, tuition expenses, ensuring housing and transportation expenses, perhaps modest vacations, plus the living expenses that would be reasonable for a middle-income family. Even this family needs help with their share of evenly allocated health care costs.

The Affordable Care Act did include a few measures to facilitate a transfer from the wealthy, including income-indexed subsidies for mediocre, low-actuarial-value exchange plans, an expansion of the tax-payer financed, underfunded Medicaid program, and some modest tax increases on higher incomes. But there isn’t really much new help for most middle-income Americans who pay for employer-sponsored plans through forgone wage increases (and at that using inequitable regressive tax expenditures). The Affordable Care Act falls far short of the transfer that will be needed if everyone is to have the health care that they should have.

Single payer advocates already
understand the obvious solution. Do not allocate costs to individuals based on the average costs of their risk categories, which is what individual and group insurance does. Instead, eliminate the insurance plan vehicle of funding and replace it with a universal health care funding pool that is financed based on ability to pay – that is, financed through progressive taxes (and not simply through payroll taxes alone that would hit middle-income workers too heavily).

Single payer calls for not equal but equitable financing, and progressive taxes are the epitome of equitable. Now if only we can get the magnates to agree that improving the health of the nation would be worth their equitable contributions.

Single-payer health care system saves money, time

By Jamie Tobias Neely
The Spokesman-Review (Spokane, Wash.), Sept. 1, 2013

Contrast the following emergency room visits:

One evening a couple of years ago, my husband and I were attending the movie “The Social Network” in downtown Spokane when suddenly I looked over to see my husband’s eye bulging out of its socket.

He couldn’t blink, and he seemed so disoriented that I thought he might be having a stroke. We left the theater before Mark Zuckerberg could make his first million, zipped to a nearby hospital and handed over his insurance card.

After a quick evaluation, the ER doc ruled out anything serious. The diagnosis: sudden onset conjunctivitis or pinkeye, a common childhood malady. He put a few drops in the eye and the muscle relaxed. The bill: $662.24.

When Jill Williams’ husband was snorkeling in New Zealand recently, he dislocated his shoulder. She helped drag him to shore. They traveled to a hospital two hours away. There the hospital staff focused solely on his recovery. The cost to the patient: not a penny.

Williams, who has helped organize a Spokane advocacy group for single-payer insurance, was already convinced other Western countries have better health care systems than ours. The New Zealand experience simply reinforced her conviction.

Today, as rancor continues over the Affordable Care Act, or Obamacare, a number of quiet but determined Washington citizens are pushing for stronger reforms. Like Williams, they’re convinced that Washington should request a waiver from the Affordable Care Act and create the country’s first innovative single-payer system in our state.

It would be similar to Medicare, in which government finances the system but private doctors provide the care. Advocates calculate that by cutting paperwork costs (now estimated to be 31 percent of total health care spending in the U.S.) and forming a huge pool for negotiating drug prices, this new approach could save enough money to cover all of the state’s uninsured residents.

Williams’ book club read “The Healing of America” by journalist T.R. Reid and was inspired by his descriptions of health care systems around the world that are fairer, more effective and considerably more affordable than ours. They helped bring Reid to Spokane for two large community discussions, and they’ve continued to sponsor presentations here. They’ve met with state legislators, partnered with retired physicians and connected with a statewide advocacy group, Health Care for All – Washington.

They’re undaunted by the opposition to Obamacare. One of them worries about her daughter, a single mother who lacks health insurance. “My husband and I are always waiting for the other shoe to drop,” she says.

Another feels frustrated by her insurance company’s “deny first, pay later,” strategy. A third grew up in Canada, where her extended family still can’t believe U.S. residents actually make one another go into bankruptcy when they get sick. That’s 700,000 of us annually, according to a joint study by Harvard Law School and Harvard Medical School.

The women quote Reid’s book. “Those Americans who die or go broke because they happened to get sick represent a fundamental moral decision our country has made,” Reid writes.

How can we not, like citizens in other developed countries, believe it’s only right to take care of one another? “I just don’t get it,” Williams says.

Economically, middle- and upper-class Americans already pay the costs of treating the poor. We and our insurance companies wind up paying $662.24 for a simple eye infection – primarily because hospitals need to charge us exorbitant rates to offset the cost of treating the uninsured.

Williams’ group is forming a speaker’s bureau, and they can be contacted at spokanehealthcare @gmail.com. They want Spokane residents to become well informed on the topic, to contact their legislators and to support smart, strong candidates for public office.

They know it could be a long fight. But these midlife women have watched many impossible battles. At one time, civil rights, laws against sex discrimination and gay rights were all unthinkable in this country. Hopelessly divisive. Polarizing.

And, in the end, all of them came to pass.

So, too, should a single-payer system for the state of Washington.

Jamie Tobias Neely, a former member of The Spokesman-Review’s editorial board, is an associate professor of journalism at Eastern Washington University. Her e-mail address is jamietobiasneely @comcast.net.

http://www.spokesman.com/stories/2013/sep/01/neely-single-payer-health-care-system-saves-money/