PNHP

Health care system is weighing down America

Health care system is weighing down America

By J. Mark Ryan, M.D.
Letters, The Newport (R.I.) Daily News, Dec. 10, 2011

An article in the Dec. 1 Daily News stated that Newport Hospital provided more than $16 million in uncompensated care in the past fiscal year. The report concluded this crucial community hospital continues to operate in large part due to the charity of wealthy donors.

What I was surprised not to see was mention of the fact that this problem is a nationwide crisis and is due not to Rhode Island’s struggling economy, but to the fact that the funding of American health care is fatally flawed.

Hospitals like Newport provide free care because so many in the community lack health insurance. More than 50 million people nationally and 10 percent of all Rhode Islanders are uninsured, and a larger number are “underinsured,” meaning that because of the high deductibles, co-pays and caps on their insurance policies, a single critical illness such as cancer will bankrupt them. Nationally, more than 50 percent of all bankruptcies in 2010 were due to medical bills, and of those bankrupted, more than 60 percent had insurance at the onset of their illness. America pays roughly $7,800 annually per person in health care costs. For a little more than half that amount, Canada and Europe insure every citizen and medical bankruptcies do not occur. Why? Because private insurance bureaucracy and paperwork consumes about one-third of all U.S. health care dollars. Even worse, it is estimated that 48,000 Americans die each year due to a lack of health insurance.

In 2003, the New England Journal of Medicine, using the government’s own data, found that the U.S. could save $350 billion annually by changing from our current wasteful private-insurance system to a national single-payer system — enough savings to provide all necessary health care coverage for every American. One might ask, if the facts are so obvious, why does the government not enact these changes? The answer is: lobbyists.

In the summer of 2010, the health insurance industry spent $170 million per month to kill the Affordable Care Act (“Obamacare”), and succeeded in stripping it of the public option and earlier Medicare eligibility. The weakened bill will not save money or fix the problem.

However, there is a bill in the House of Representatives, HR 676, the Medicare for All Act, which would create a single-payer system with the savings mentioned above. The bill has 72 sponsors in the House; unfortunately, they do not include Reps. David Cicilline or Jim Langevin. I would urge all Daily News readers to write to our congressmen to do the right thing for Rhode Islanders and our health care system and sign on as co-sponsors of this bill.

We cannot afford the current system.

It is literally killing us and bankrupting our country.

Dr. J. Mark Ryan resides in Portsmouth, R.I.

http://www.newportdailynews.com/ee/newportdailynews/index.php?pSetup=newportdailynews&curDate=20111210&pageToLoad=showFreeArticle.php&type=art&index=03

Who is essential? Insurers or consumers?

Behind-the-scenes battle raging over just what health benefits will be required by the Obama administration

By Wendell Potter
iWatch News, Dec. 12, 2011

The money that patients’ rights advocates have to spend trying to convince the Obama administration that Americans should have decent health care benefits pales in comparison to the boatloads of cash insurers and their corporate allies have on hand to do largely the opposite. But at least the advocates are now in the game.

Last week a broad coalition of patient-focused groups launched its “I Am Essential” campaign in an effort to make sure that when all of us have to buy health insurance in 2014, we will be getting good value.

When Congress passed the Affordable Care Act last year, it included a provision requiring that all health insurance plans sold a little more than two years from now must contain “essential health benefits.” It established 10 categories of required coverage: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management and pediatric services, including oral and vision care.

The Department of Health and Human Services has the responsibility of determining, with input from the respected nonprofit Institute of Medicine, just how comprehensive the coverage will have to be in each of those categories.

Insurers and employers who offer coverage to workers have been lobbying both the IOM and HHS to make the coverage requirements as narrow as possible. They want to continue marketing plans with skimpy benefits because they are less costly to employers and potentially more profitable to insurers. The problem with that approach, of course, is that millions of Americans will be forced to the join the ranks of the underinsured — already estimated at 30 million — if coverage they must buy is inadequate to meet their needs.

That would not only be a nightmare for many American citizens but, I’m betting, for any politician who is on the record supporting “Obamacare.” If people find out that the coverage they have to buy is of limited value to them when they get sick, they’re not going to be very inclined to vote for Democrats come 2016, especially if insurance firms continue their long-running streak of record-setting profits.

I wrote last month that an insurance industry-backed group called the Essential Health Benefits Coalition had been formed to persuade Obama administration officials to consider “affordability” first and foremost — not comprehensiveness — as they flesh out the benefit requirements. As is typical of such industry groups, this one was set up and is being run out of a big PR firm, Ogilvy Washington. The budget for it is ample enough to pay the salary of its executive director and spokesman, Brendan Daly, a former aide to former House Speaker Nancy Pelosi.

In contrast, the “I Am Essential” coalition doesn’t have a budget. 

“Oh, no, no, we don’t have any money at all,” I was told by Carl Schmid, deputy executive director of The Aids Institute, one of the coalition members. “This is all pro bono.”

Other members of the group, which last week sent a letter to HHS Secretary Kathleen Sebelius, include the Lupus Foundation of America, the Men’s Health Network, Mental Health America, the National Association of Nutrition and Aging Services Programs and the National Minority Quality Forum. The only other action the coalition has taken so far is to send out a news release announcing the group and its letter to Sebelius.

The letter pointed out that the organizations comprising “I Am Essential” serve many of the nation’s most vulnerable patient groups. “There are tens of millions of Americans who, like the people we advocate for, live with chronic disease and disability,” they told Sebelius. “We are writing to urge you to make certain that the Essential Health Benefits package fully meets the needs of American health care consumers, particularly those who have chronic health conditions… A benefit package too narrowly drawn runs the risk of not adequately covering patient needs.”

The group’s letter came a few days after another group of patient advocates—doctors and nurses—sent a letter to Sebelius making the same plea. Sent by Physicians for a National Health Program, a group that supports a single-payer health care system for the U.S., the letter also blasted the IOM panel for siding with the insurers suggesting that HHS consider affordability first.

“We protest the Institute of Medicine’s recommendation that cost rather than medical need be the basis for defining the ‘essential benefits’ that insurance policies must cover,” the doctors and nurses wrote. “The IOM proposal would base the required coverage on the benefits typical of plans currently offered by small businesses – enshrining these skimpy plans as the new standard. These bare-bones policies come with a long list of uncovered services and saddle enrollees with unaffordable co-payments and deductibles… If adopted by the Department of Health and Human Services, this recommendation will sacrifice many lives and cause much suffering. We call on Secretary Sebelius and President Obama to reject them.”

The group went on to suggest that IOM recommendations would shift costs from corporate and government payers onto families already burdened by illness, a strategy it contends will not lower costs because it would result in patients delaying or foregoing needed care. “Delaying care often creates even higher costs,” they wrote.

When HHS will make a decision is not clear, although there is speculation that the department might already have sent at least preliminary rules to the Office of Management and Budget to review.  If that proves to be true, we probably will find out before the end of the year which coalitions — those representing insurers and corporate America or those representing patients and consumers — will have had the greatest influence on the administration.

http://www.iwatchnews.org/2011/12/12/7628/analysis-who-essential-insurers-or-consumers

PNHP response to Rick Ungar's "Obamacare Bomb"

The Bomb Buried In Obamacare Explodes Today-Hallelujah!

By Rick Ungar
Forbes, December 2, 2011

I have long argued that the impact of the Affordable Care Act is not nearly as big of a deal as opponents would have you believe. At the end of the day, the law is – in the main – little more than a successful effort to put an end to some of the more egregious health insurer abuses while creating an environment that should bring more Americans into programs that will give them at least some of the health care coverage they need.

There is, however, one notable exception – and it’s one that should have a long lasting and powerful impact on the future of health care in our country.

That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect – 85% for large group insurers – on actual medical care rather than overhead, marketing expenses and profit. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.

This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time. Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare – but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.

Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.

Today, that bomb goes off.

Today, the Department of Health & Human Services issues the rules of what insurer expenditures will – and will not – qualify as a medical expense for purposes of meeting the requirement.

As it turns out, HHS isn’t screwing around. They actually mean to see to it that the insurance companies spend what they should taking care of their customers.

Here’s an example: For months, health insurance brokers and salespeople have been lobbying to have the commissions they earn for selling an insurer’s program to consumers be included as a ‘medical expense’ for purposes of the rules. HHS has, today, given them the official thumbs down, as well they should have. Selling me a health insurance policy is simply not the same as providing me with the medical care I am entitled to under the policy. Sales is clearly an overhead cost in any business and had HHS included this as a medical cost, it would have signaled that they are not at all serious about enforcing the concept of the medical loss ratio.

So, can private health insurance companies manage to make a profit when they actually have to spend premium receipts taking care of their customers’ health needs as promised?

Not a chance – and they know it. Indeed, we are already seeing the parent companies who own these insurance operations fleeing into other types of investments. They know what we should all know – we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it.

http://www.forbes.com/sites/rickungar/2011/12/02/the-bomb-buried-in-obamacare-explodes-today-halleluja/

Ungar responds to criticism of this article:
http://www.forbes.com/sites/rickungar/2011/12/05/the-obamacare-bomb-is-very-real-even-if-washington-post-doesnt-quite-get-it/

****

PNHP co-founders David Himmelstein and Steffie Woolhandler respond to Rick Ungar’s “The Bomb Buried in Obamacare…”:

“Limiting overhead to 15%-20% is far from the stringent regulation that Ungar implies. Private insurers’ overhead currently averages about 14% nationwide, and they will probably be able to reclassify some items currently classified as overhead into the patient care expense category (despite regulations that attempt to stop this). Moreover, some current sales expenses will be offloaded to the insurance exchanges, which are likely to have overhead of 3-4%, and the exchanges’ expenses will not count as part of insurers’ overhead. Finally, ACOs will take over many of insurers’ administrative tasks and expenses, but these ACO overhead expenditures will not count toward the 15%-20% overhead limit. In sum, total insurance overhead (and profit) is likely to grow, not fall in the years ahead.”

Comment:

By Don McCanne, MD

Never have we received as many requests to comment on an article as we have on Rick Ungar’s “The Bomb Buried in Obamacare…” He is to be highly commended for his enthusiastic support of single payer, but his analysis that the insurers’ requirement to comply with the statutory medical loss ratios is an Obamacare bomb that will cause so much damage that we’ll be on an inescapable path to single payer might represent… well, perhaps a touch of hyperbole, intended or not.

In the response above, David Himmelstein and Steffie Woolhandler explain how the medical loss ratio will have very little impact on reducing total insurance overhead and profit, although some recategorization will likely take place. Thus it isn’t quite the bomb that will relieve us of their excesses and intrusions, nor relieve the health care providers of the administrative burdens that are placed upon them by the insurers and by the general complexity of our fragmented, dysfunctional health care financing system.

That said, it is political season. We can thank Rick Ungar for providing us with well-meaning hyperbole that that is appropriately provocative and makes people want to look once again at single payer as an answer to our health care mess. As Ungar says, “we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it,” even if the medical loss ratio bomb won’t really budge us in that direction.

Although PNHP will remain meticulous with the facts, upholding our reputation as a highly credible resource on single payer reform, it would be great if Rick Ungar and many others would continue with passionate pro-single payer advocacy, though perhaps fine tuning the hyperbole in order to ensure credibility.

PNHP response to Rick Ungar’s “Obamacare Bomb”

The Bomb Buried In Obamacare Explodes Today-Hallelujah!

By Rick Ungar
Forbes, December 2, 2011

I have long argued that the impact of the Affordable Care Act is not nearly as big of a deal as opponents would have you believe. At the end of the day, the law is – in the main – little more than a successful effort to put an end to some of the more egregious health insurer abuses while creating an environment that should bring more Americans into programs that will give them at least some of the health care coverage they need.

There is, however, one notable exception – and it’s one that should have a long lasting and powerful impact on the future of health care in our country.

That would be the provision of the law, called the medical loss ratio, that requires health insurance companies to spend 80% of the consumers’ premium dollars they collect – 85% for large group insurers – on actual medical care rather than overhead, marketing expenses and profit. Failure on the part of insurers to meet this requirement will result in the insurers having to send their customers a rebate check representing the amount in which they underspend on actual medical care.

This is the true ‘bomb’ contained in Obamacare and the one item that will have more impact on the future of how medical care is paid for in this country than anything we’ve seen in quite some time. Indeed, it is this aspect of the law that represents the true ‘death panel’ found in Obamacare – but not one that is going to lead to the death of American consumers. Rather, the medical loss ratio will, ultimately, lead to the death of large parts of the private, for-profit health insurance industry.

Why? Because there is absolutely no way for-profit health insurers are going to be able to learn how to get by and still make a profit while being forced to spend at least 80 percent of their receipts providing their customers with the coverage for which they paid. If they could, we likely would never have seen the extraordinary efforts made by these companies to avoid paying benefits to their customers at the very moment they need it the most.

Today, that bomb goes off.

Today, the Department of Health & Human Services issues the rules of what insurer expenditures will – and will not – qualify as a medical expense for purposes of meeting the requirement.

As it turns out, HHS isn’t screwing around. They actually mean to see to it that the insurance companies spend what they should taking care of their customers.

Here’s an example: For months, health insurance brokers and salespeople have been lobbying to have the commissions they earn for selling an insurer’s program to consumers be included as a ‘medical expense’ for purposes of the rules. HHS has, today, given them the official thumbs down, as well they should have. Selling me a health insurance policy is simply not the same as providing me with the medical care I am entitled to under the policy. Sales is clearly an overhead cost in any business and had HHS included this as a medical cost, it would have signaled that they are not at all serious about enforcing the concept of the medical loss ratio.

So, can private health insurance companies manage to make a profit when they actually have to spend premium receipts taking care of their customers’ health needs as promised?

Not a chance – and they know it. Indeed, we are already seeing the parent companies who own these insurance operations fleeing into other types of investments. They know what we should all know – we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it.

http://www.forbes.com/sites/rickungar/2011/12/02/the-bomb-buried-in-obamacare-explodes-today-halleluja/

Ungar responds to criticism of this article:
http://www.forbes.com/sites/rickungar/2011/12/05/the-obamacare-bomb-is-very-real-even-if-washington-post-doesnt-quite-get-it/

PNHP co-founders David Himmelstein and Steffie Woolhandler respond to Rick Ungar’s “The Bomb Buried in Obamacare…”:

“Limiting overhead to 15%-20% is far from the stringent regulation that Ungar implies. Private insurers’ overhead currently averages about 14% nationwide, and they will probably be able to reclassify some items currently classified as overhead into the patient care expense category (despite regulations that attempt to stop this). Moreover, some current sales expenses will be offloaded to the insurance exchanges, which are likely to have overhead of 3-4%, and the exchanges’ expenses will not count as part of insurers’ overhead. Finally, ACOs will take over many of insurers’ administrative tasks and expenses, but these ACO overhead expenditures will not count toward the 15%-20% overhead limit. In sum, total insurance overhead (and profit) is likely to grow, not fall in the years ahead.”

Never have we received as many requests to comment on an article as we have on Rick Ungar’s “The Bomb Buried in Obamacare…” He is to be highly commended for his enthusiastic support of single payer, but his analysis that the insurers’ requirement to comply with the statutory medical loss ratios is an Obamacare bomb that will cause so much damage that we’ll be on an inescapable path to single payer might represent… well, perhaps a touch of hyperbole, intended or not.

In the response above, David Himmelstein and Steffie Woolhandler explain how the medical loss ratio will have very little impact on reducing total insurance overhead and profit, although some recategorization will likely take place. Thus it isn’t quite the bomb that will relieve us of their excesses and intrusions, nor relieve the health care providers of the administrative burdens that are placed upon them by the insurers and by the general complexity of our fragmented, dysfunctional health care financing system.

That said, it is political season. We can thank Rick Ungar for providing us with well-meaning hyperbole that that is appropriately provocative and makes people want to look once again at single payer as an answer to our health care mess. As Ungar says, “we are now on an inescapable path to a single-payer system for most Americans and thank goodness for it,” even if the medical loss ratio bomb won’t really budge us in that direction.

Although PNHP will remain meticulous with the facts, upholding our reputation as a highly credible resource on single payer reform, it would be great if Rick Ungar and many others would continue with passionate pro-single payer advocacy, though perhaps fine tuning the hyperbole in order to ensure credibility.

Why Competition Among Health Plans Can't Help Us

By Stephen Kemble, M.D.
OpEdNews, Nov. 17, 2011

With or without with the Affordable Care Act (ACA), the total national cost of U.S. health care is rising unsustainably, with an increasingly unaffordable share pushed onto patients.1,2 CMS projections of total national health expenditures show a rise from 17.8% of gross domestic product in 2010 to 21% in 2019 under the ACA, compared to 20.8% in 2019 under prior law, both far higher than any other country.2 Problems with access to care are widespread and increasing. Doctors and hospitals are seeing reimbursement cut while administrative burdens escalate. Unwarranted regional variations in health spending point to large amounts of money wasted on unnecessary care.3

Even with advanced planning via a health savings account, expecting individuals to pay for modern health care out of pocket is only possible for the relatively healthy and wealthy. If we are to have health care financing that can cover those with serious or chronic illnesses, we must choose between the private health insurance industry and government-funded health care. We are inclined to believe that government is always inefficient and that the solution to problems with excessive cost and waste is to use competition to bring fiscal discipline and efficiency to an otherwise dysfunctional “market.” However, there are fundamental structural reasons why this assumption does not apply to U.S. health care.

Private Health Insurance Industry

The U.S. private insurance business model aligns economic incentives against providers and recipients of health care, rewarding denial of care. Accountability is first to the fiscal health of the plan, and only secondarily to quality health care.4 Medicare has obvious administrative problems, but competing private insurance plans still carry approximately six times higher administrative costs than non-privatized government health care programs.5

Risk Pooling

The core idea of insurance is risk pooling. We must have some mechanism for the younger and healthier to subsidize the cost of health care for the elderly and chronically ill. Insurance is a system to manage risk, and it works best in the case of risks that are infrequent, expensive, and unpredictable, in which case risk pooling is the primary means of risk management.

Adverse Selection and Underwriting

What happens when the risk is predictable? When those purchasing insurance know their risk is higher than average, then insurance plans are exposed to adverse selection, and they counter this with underwriting.

A high proportion of the population knows their health risk because they have pre-existing conditions. Without an individual mandate, those with health problems are highly motivated to purchase insurance, but the healthy will often decide to save their money and take their chances. This leaves a sicker than average pool of subscribers, driving the cost of insurance up. With higher cost, more of the relatively healthy will forego insurance, leaving an even sicker insured pool, and even higher costs, until almost no one can afford health insurance and the advantages of risk pooling are lost.

Underwriting is the analysis of risk for the purpose of pricing or determination of coverage. Use of underwriting strategies means denial of coverage or care, especially for those with serious or chronic illness, which runs counter to the whole purpose of health insurance. Underwriting also carries substantial administrative costs.

Competition among Health Plans

The private insurance model assumes competition among plans. No competition means an unaccountable monopoly, or a government controlled plan. However, when plans are allowed to compete for the best risk pool, then competition rewards covering the healthy and avoiding the sick, and does not work to improve health care quality or reduce its cost.

The Individual Insurance Market

Individuals often know their own health risk, so the individual health insurance market has a severe adverse selection problem. Under the ACA, an individual mandate requiring everyone to purchase insurance and restrictions on underwriting mitigate adverse selection, but since some differential pricing of risk pools is still allowed, plans still have an incentive to compete for the healthiest risk pools and to minimize covering those with chronic illnesses.

Adverse selection gives a competitive advantage to plans with poorer benefits, lower provider reimbursement, and minimal customer service. Those with chronic health conditions will choose plans based on quality of coverage and doctor recommendations, but the healthy will often choose on price alone. Bad plans therefore get the healthiest risk pool, and good plans will be stuck with a sicker risk pool and forced to raise prices. Under the ACA, they will be penalized for this. This will create a “race to the bottom” among insurance plans.

The Group Insurance Market

Employers and groups provide a basis for choice of plan based on group membership, rather than risk status. This reduces but does not eliminate adverse selection, which remains problematic for small groups or employers with older work forces. The group insurance market actually works best with an employer mandate, minimal competition, and non-profit plans, as in Hawaii, allowing maximum risk pooling and minimizing heavy-handed underwriting. However, group insurance leaves too many out, including part-time workers and the unemployed.

More competition forces plans, for their fiscal survival, to try to avoid sicker risk pools. As in the individual market, use of underwriting by health plans means smaller businesses whose employees have chronic illnesses may be priced out of the insurance market, or offered deficient plans that fail to protect against financial devastation in the event of serious or chronic illness. Individuals with chronic illness often become unemployable and are pushed into medical bankruptcy, disability, and government plans (Medicaid and Medicare), driving up the cost of these programs.

To cap it off, more competition does not bring the price of health insurance down. There is no correlation between the competitiveness of health insurance markets by state, and the average cost of health insurance by state.6,7

Privatization of Government Programs

Government already pays for over half of U.S. health care from tax revenues.8 Efforts to break up government programs into competing plans have led to higher cost (Medicare Advantage), or much more restricted benefits and provider participation (Medicaid managed care), or senseless administrative complexity (Medicare D), and have not added any actual value to health care delivery.9

Therefore, more competition among plans will not reduce total health care costs, but will push plans to exclude the sick from coverage, reduce benefits, and increase administrative burdens, all of which are destructive to health care.

References
1.      Chernew ME, Baiker K, Hsu J. The Specter of Financial Armageddon — Health Care and Federal Debt in the United States . N Engl J Med 2010;362;13:1166-1168.
2.      Foster RS. Estimated Financial Effects of the “Patient Protection and Affordable Care Act,” as Amended. Office of the Actuary, Centers for Medicare and Medicaid Services. April 22, 2010.
3.      Fisher ES, Bynum JP, Skinner JS. Slowing the Growt
h of Health Care Costs – Lessons from Regional Variation . N Engl J Med 2009;360;9:849-852.
4.      Kuttner R. Market-Based Failure – A Second Opinion on U.S. Health Care Costs . N Eng J Med 2008;358:549-551.
5.      Woolhandler S, Campbell T, Himmelstein D. Costs of Health Care Administration in the United States and Canada. N Engl J Med 2003;349:768-75.
6.      C. Schoen, J. L. Nicholson, and S. D. Rustgi, Paying the Price: How Health Insurance Premiums Are Eating Up Middle-Class Incomes–State Health Insurance Premium Trends and the Potential of National Reform. The Commonwealth Fund, August 2009.
7.      American Medical Association, “Competition in Health Insurance, A Comprehensive Study of US Markets: 2008 Update.”
8.      Woolhandler S and Himmelstein D. Paying for National Health Insurance and Not Getting It. Health Affairs 2002;21;4:88-98.
9.      Woolhandler S and Himmelstein DU. Competition in a publicly funded healthcare system. BMJ 2007;335:1126-1129.

Uwe Reinhardt on social insurance and individual freedom

Social Insurance and Individual Freedom

By Uwe E. Reinhardt
The New York Times, December 9, 2011

The continuing debate over the Affordable Care Act and the commentary on this blog have convinced me that nothing can ever unite Americans on their vision of an ideal health system.

We need different health insurance systems for different Americans. I mean by this not Americans who differ by age or ability to pay but Americans with different notions of a just society.

Closing the Door to Statutory Insurance

By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.

Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.

It is this feature that intrigues me, as it has my colleague Paul Starr, in his proposed alternative to an individual mandate to be insured.

What if Americans at, say, age 26 (beyond which they can no longer be included on their parents’ insurance policy) or even as late as age 30 were offered the choice of:

1. joining the community-rated health insurance offered through the insurance exchanges called for in the Affordable Care Act;

2. remaining in a private insurance system that is free to charge in any year “actuarially fair” premiums, that is, premiums that reflect the applicant’s projected health status and spending for that year and is free to refuse issuing a policy altogether;

3. simply self-insuring, by remaining uninsured?

For want of better terms, we might call the exchange system the “social insurance track” (because it leans heavily toward social insurance) and the second and third options the “rugged individualist tracks,” because they cater to Americans with individualist preferences.

For people choosing the rugged individualist tracks, Professor Starr proposes to shut the door to the social insurance track for only five years.

I believe his stricture is too weak and propose instead to follow the German example by shutting the door permanently to social insurance to any individual who chose one of the two rugged individualist tracks, unless such individuals were truly pauperized. A return then would have to be allowed, because, for better or for worse, our civic sentiments preclude letting anyone – even a myopic rugged individualist — die for want of critically needed health care.

Admittedly, this approach would confront young Americans with a serious life-cycle choice. But life-cycle choices are made all the time, and choices do have consequences that people in their mid-20s should be mature enough to think about. Adults must realize that individual freedom has its price.

The American health insurance system now is structured as a paradise for clever adolescents, inviting gaming of many sorts that makes sensible health policy almost impossible. It is time to move away from such a system.

http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/

Published comment:

Don McCanne, San Juan Capistrano, CA

Those of us who have great admiration for Paul Starr were disappointed by his recommendation to require anyone who opted out of coverage to be prohibited from having coverage for the next five years.

Under this policy, many of these very healthy young people will decide to take the chance that they will not need expensive care, and most will win that bet.

There are two problems with this. Some will have major trauma, some will develop serious disorders such as cancer, and some will develop severe chronic problems such as type I diabetes. These people should receive the care that they need regardless of the fact that they made the unwise decision to decline insurance. Who pays for that care?

The other problem is that we do need the many who are healthy to pay into the risk pools to cover the fewer with greater health care needs. Otherwise those pools end up with a death spiral of ever higher premiums.

Just as our nation does not allow me, a pacifist, to not pay through my taxes the costs of our ill-considered wars, our nation should also prohibit the rugged individualists from not paying their share of our collective national health expenditures.

The nation will continue to disagree on this, which is precisely Professor Reinhardt’s point. But that won’t stop some of us from continuing to advocate for what is right.

http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/?comments#permid=1

Uwe Reinhardt on social insurance and individual freedom

Social Insurance and Individual Freedom

By Uwe E. Reinhardt
The New York Times, December 9, 2011

The continuing debate over the Affordable Care Act and the commentary on this blog have convinced me that nothing can ever unite Americans on their vision of an ideal health system.

We need different health insurance systems for different Americans. I mean by this not Americans who differ by age or ability to pay but Americans with different notions of a just society.

Closing the Door to Statutory Insurance

By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.

Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.

It is this feature that intrigues me, as it has my colleague Paul Starr, in his proposed alternative to an individual mandate to be insured.

What if Americans at, say, age 26 (beyond which they can no longer be included on their parents’ insurance policy) or even as late as age 30 were offered the choice of:

1. joining the community-rated health insurance offered through the insurance exchanges called for in the Affordable Care Act;

2. remaining in a private insurance system that is free to charge in any year “actuarially fair” premiums, that is, premiums that reflect the applicant’s projected health status and spending for that year and is free to refuse issuing a policy altogether;

3. simply self-insuring, by remaining uninsured?

For want of better terms, we might call the exchange system the “social insurance track” (because it leans heavily toward social insurance) and the second and third options the “rugged individualist tracks,” because they cater to Americans with individualist preferences.

For people choosing the rugged individualist tracks, Professor Starr proposes to shut the door to the social insurance track for only five years.

I believe his stricture is too weak and propose instead to follow the German example by shutting the door permanently to social insurance to any individual who chose one of the two rugged individualist tracks, unless such individuals were truly pauperized. A return then would have to be allowed, because, for better or for worse, our civic sentiments preclude letting anyone – even a myopic rugged individualist — die for want of critically needed health care.

Admittedly, this approach would confront young Americans with a serious life-cycle choice. But life-cycle choices are made all the time, and choices do have consequences that people in their mid-20s should be mature enough to think about. Adults must realize that individual freedom has its price.

The American health insurance system now is structured as a paradise for clever adolescents, inviting gaming of many sorts that makes sensible health policy almost impossible. It is time to move away from such a system.

http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/

Those of us who have great admiration for Paul Starr were disappointed by his recommendation to require anyone who opted out of coverage to be prohibited from having coverage for the next five years.

Under this policy, many of these very healthy young people will decide to take the chance that they will not need expensive care, and most will win that bet.

There are two problems with this. Some will have major trauma, some will develop serious disorders such as cancer, and some will develop severe chronic problems such as type I diabetes. These people should receive the care that they need regardless of the fact that they made the unwise decision to decline insurance. Who pays for that care?

The other problem is that we do need the many who are healthy to pay into the risk pools to cover the fewer with greater health care needs. Otherwise those pools end up with a death spiral of ever higher premiums.

Just as our nation does not allow me, a pacifist, to not pay through my taxes the costs of our ill-considered wars, our nation should also prohibit the rugged individualists from not paying their share of our collective national health expenditures.

The nation will continue to disagree on this, which is precisely Professor Reinhardt’s point. But that won’t stop some of us from continuing to advocate for what is right.

Comment originally published on the NYTimes Blog: http://economix.blogs.nytimes.com/2011/12/09/social-insurance-and-individual-freedom/?comments#permid=1

Students Occupy for Health Justice

By Danielle Alexander
AMSA On Call blog, Dec. 7, 2011

I met a patient last week who stopped taking her antidepressant medications because she had been denied long-term health insurance and thought it would improve her chances of eligibility. Unfortunately this obviously wasn’t in the best interest of her health.

I had another patient who presented to the emergency department with metastatic lung cancer. He had not been to the doctor in over 30 years because he couldn’t afford it. If he had sought treatment earlier he may have been cured.

Everywhere I look private health insurance companies are making our patients sicker.

I was proud to be at in Lafayette Park in Albany, N.Y., last Sunday for the Health Professional Students Day of Action for the 99%. We carried a banner that said “Health Professional Students Occupy for Health Justice and Single Payer.”

I support the occupy movement because I feel that powerful and profiting insurance companies get in the way of my practice of medicine. Treatment should be the same high quality for everyone; instead, we have to consider what someone can afford.

It too often becomes treatment for the “haves” and neglect for the “have nots.” But the thing is, these days you may not know which group you fall into. Insurance plans are so spotty, with major gaps in coverage, that you don’t even realize it until you need medical attention, and you find your plan does not cover it.

I see it every day in the clinic – treatment is designed around what the insurance will pay (or not) instead of what is best for the patient first and foremost. It’s no fault of the medical team; we want to give the patients the best care, but the insurance industry has our hands tied.

Today’s future doctors realize that health care is more than physical health, social determinants of health are equally as important. The schools our kids attend, the neighborhoods we grow up in, the cleanliness of the environment, joblessness, and poverty all deeply impact our health.

A classmate said today, “There is so much inequity and injustice, it cuts into everything, including caring for patients. If you really want to care for patients you’ve got to care about everything, not just their liver.”

I asked some of the other attendees why they support the Occupy movement. “Health care is a fundamental human right and by increasing access to health care we can reduce some of the inequality,” said one medical student. Another classmate agreed: “We’re here for health care because you can’t do anything if you’re not healthy.” Yet another: “As a future physician, it’s disconcerting that patients can’t get into my exam room, and I want to change that.”

Even early in their medical careers, these students see that there are major problems with the health of our nation.

As I talked with my classmates, I found that we were all there for slightly different reasons. “I feel like too much of our country’s infrastructure has been diverted away from the important stuff like health and well-being,” said another student. His peer believes “the system is broken and change needs to start somewhere.”

The United States is the only industrialized country that does not provide health care to all its citizens regardless of employment status or economic class. Our profit-driven health care industry raises costs and inequality.

But our political system has been corrupted by corporate money and power, and the 1% have rejected evidence-based health policy that save lives and money, namely expanded and improved Medicare for all. We support Occupy Wall Street because economic and social inequality makes our patients sick.

Danielle Alexander is a medical student in Albany, N.Y.

http://www.amsa.org/AMSA/Homepage/TakeAction/AMSAOnCall/11-12-07/Students_Occupy_for_Health_Justice.aspx

Occupying the health care industry

By Jordan Green
Yes! Weekly (Greensboro, N.C.), Dec. 7, 2011

The Cone Health Family Medicine Center on North Church Street in Greensboro might seem an unlikely place for a revolt to stir, but that’s exactly what was happening as Health Care for All North Carolina gathered for its annual meeting on a recent Saturday afternoon.

At the 1 p.m., about nine people — mostly physicians — had assembled.

Their number more than doubled when organization president Dr. Jonathan Kotch escorted Dr. Steve Auerbach, the keynote speaker, into the room. They were running late because Auerbach’s meeting with Occupy Durham had run over.

Auerbach fiddled with an overhead projector and showed some footage of New York City health care workers marching with Occupy Wall Street, but couldn’t get the audio to work, so he went right to his slide show.

“It’s really, really bad right now,” said Auerbach, a pediatrician who is a member of the N.Y. board of directors of Physicians for a National Health Program. “Also, it’s gotten worse. It’s gotten worse for awhile, and in the past couple of years it’s been getting worse a lot faster. It used to be better, which suggests it doesn’t have to be this way.”

Auerbach, who wore a blue dress shirt, tie and blue jeans, spoke in a raspy, direct manner, conveying by turns outrage, compassion and flashes of black humor with wit and occasional profanity, in contrast to the more reserved docs from North Carolina.

“What’s the it?” he asked. “Anything you want: Income, income inequality … hollowing out of the middle class….”

Auerbach has been presenting a slide show about single-payer health care to Occupy groups. Explicit in Health Care for All NC’s name is advocacy for the idea that “health care is an essential safeguard of human life and dignity,” and that the state has an obligation to ensure that everyone has access to it. This audience was already pretty well versed in the fine points of single-payer, so Auerbach focused his remarks on income inequality.

The tea party pinpoints the historical moment when everything went wrong to 1913, when Congress ratified the 16th Amendment, allowing the federal government to collect income tax.

For Auerbach, it goes back to 1971, when the so-called “Powell Memo” was drafted. Charting economic history, Auerbach told the North Carolina physicians that prior to his confirmation to the U.S. Supreme Court, a corporate lawyer who worked for the tobacco industry named Lewis Powell drafted a secret memo to the U.S. Chamber of Commerce arguing for an aggressive effort to shape public opinion to counteract mainstream support for regulation.

Auerbach displayed a line graph representing the share of national income commanded by the wealthiest 10 percent beginning in 1917. The line lurched upward through the 1920s. “We still have the gilded era,” Auerbach said, noting that the wealthiest 10 percent received more than 50 percent of income at that time. Then, around the time of World War II, the line plunged into the 30s – “the great moderation,” as Auerbach described it – where it remained through the 1960s.

“Starting in the early ’70s, we go right back up to the gilded era – plutocracy,” he said. Now, based on widely published statistics, wealth distribution is back to 1920s levels, with the richest 10 percent earning almost half of the national income.

Among the policy decisions of the past 30 years cited by Auerbach and other progressives as responsible for the widening income gap are deregulation, reductions of the effective tax rate on the wealthy including capital gains and attacks on unionization.

“If you want to talk about a sin, it’s a sin that you work for minimum wage, and you do all the right things, and you still can’t make ends meet,” Auerbach said. “That doesn’t even include waitresses and farm workers, who are exempt from minimum wage. You know, you have to earn at least $12 per hour to live above the official poverty level.”

Auerbach, who describes himself as part of the “2 percent,” told his fellow physicians, “We’re doctors; we make a lot of money.”

For Auerbach, that means a home in the Upper West Side of Manhattan with ample square footage. It means his kids are enrolled in good schools, and “a certain high lifestyle.” He added that he makes his money through earned income, and his earnings are taxed at 33 percent of his income, as opposed to those whose income from capital gains is taxed at 15 percent.

Auerbach’s animated presence conveyed a conviction that not only is change desirable but also attainable as a matter of citizens taking responsibility for shaping the course of human events. And he seemed pretty confident in sizing up the opposition.

“I think this is where the anger of the pretty well to do is coming from,” he said. “That may be where the anger of the tea party is coming from, to the extent that it’s not a phony, cooked-up thing completely.”

Tax policy is not typically the domain of the medical establishment, but Wayne A. Hale, coordinator of geriatrics at Cone Health’s family medicine residency program, seemed willing to grapple with it.

“This reminds me of the obesity epidemic,” Hale said. “We’re trying to change individual behavior, but we have so much advertising money stacked against us.”

Auerbach presented a set of statistics indicating that poor people pay a higher share of their income to health care than other cohorts and that the portion of their income eaten up by sickness and disease is creeping up.

“Before the 2007 meltdown, 62 percent of personal bankruptcies were due to medical causes,” Auerbach told me after his presentation. “Of those, 78 percent had medical insurance but they ran into trouble because of high co-pays and benefit caps. That doesn’t happen in other countries. It’s unimaginable. It can’t happen.”

As evidence that income inequality is affecting health, Auerbach told me the greatest predictor of health is family income and wealth, followed by race. Poor people are sicker, he said, and they have less money to pay for it.

“As a physician, I have an oath to do no harm,” Auerbach said. “Corporations are doing harm. My patients are people. Corporations are not people. My duty is to my patients.”

http://www.yesweekly.com/triad/article-13217-occupying-the-healthcare-industry.html

Don McCanne on "unaffordable under-insurance"

Health Reform Devolves Into 'Unaffordable Under-Insurance'

By Roger Bybee
In These Times, December 7, 2011

Healthcare reform in the shape of the 2010 Affordable Care Act (aka “Obamacare”) was supposed to relieve working Americans of the burdens of rising healthcare costs as they struggle to survive the jobless recovery.

Instead, working Americans are being confronted with the emergence of a new stage in America’s downward slide on healthcare. “‘Unaffordable under-insurance’ is rapidly becoming the new standard in the United States,” Dr. Don McCanne, senior health policy fellow for Physicians for a National Health Program (PNHP), told In These Times.

For McCanne and fellow health professionals in PNHP, the downward spiral in healthcare will finally end only with the United States installing a Canadian-style “Medicare for all” single-payer system that puts a halt to the machinations of for-profit insurers.

http://inthesetimes.com/working/entry/12348/health_reform_runs_into_unaffordable_under-insurance

Comment: 

By Don McCanne, MD

This brief article from In These Times, available at the link above, explains how the Affordable Care Act is bringing us a new national standard of “unaffordable under-insurance.” It’s not simply that we can do better, we have to do better.

Don McCanne on “unaffordable under-insurance”

Health Reform Devolves Into ‘Unaffordable Under-Insurance’

By Roger Bybee
In These Times, December 7, 2011

Healthcare reform in the shape of the 2010 Affordable Care Act (aka “Obamacare”) was supposed to relieve working Americans of the burdens of rising healthcare costs as they struggle to survive the jobless recovery.

Instead, working Americans are being confronted with the emergence of a new stage in America’s downward slide on healthcare. “‘Unaffordable under-insurance’ is rapidly becoming the new standard in the United States,” Dr. Don McCanne, senior health policy fellow for Physicians for a National Health Program (PNHP), told In These Times.

For McCanne and fellow health professionals in PNHP, the downward spiral in healthcare will finally end only with the United States installing a Canadian-style “Medicare for all” single-payer system that puts a halt to the machinations of for-profit insurers.

http://inthesetimes.com/working/entry/12348/health_reform_runs_into_unaffordable_under-insurance

This brief article from In These Times, available at the link above, explains how the Affordable Care Act is bringing us a new national standard of “unaffordable under-insurance.” It’s not simply that we can do better, we have to do better.

British physicians to government: ‘Withdraw the health bill’

British Medical Association
Press release, Dec. 7, 2011

Chaotic and poorly coordinated structural change currently taking place throughout the National Health Service in England before the Health and Social Care Bill is even law continues to threaten service stability, the British Medical Association said Wednesday in its latest briefing for peers currently debating the legislation.

At its November meeting, the BMA Council voted to change its position to outright opposition to the bill in its entirety. The briefing paper sets out why doctors have hardened their position on the bill in the context of the wider NHS reform agenda.

Commenting, Dr. Hamish Meldrum, chairman of the BMA Council, said:

“There has been a growing level of unease about how the reforms are panning out – we hear repeated concerns from doctors about mounting chaos on the ground. For example, Clinical Commissioning Groups (CCGs), that had initially been told they’d have freedom to form to suit their local communities, are now being told they’re too small and have to re-form. People are still unclear how primary care will be managed as we don’t yet know where staff currently working in Primary Care Trust ‘clusters’ will eventually be based or if they’ll have jobs at all. Even at this stage, there are still unanswered questions about what statutory functions some bodies will have, making planning very difficult.

“Guidance is being issued that is overly restrictive and more and more bureaucracy is being created to try to deal with issues which should have been dealt with at the beginning. A huge amount of time, energy, money and commitment has been wasted because of a lack of a clear plan from the outset.”

The BMA’s main concerns with the current approach include:

· An overambitious timetable: although the legislation has not yet been agreed, changes are already taking place both nationally and locally and assumptions are having to be made about the final architecture. The end result has been chaos on the ground.

· Complexity: the stated aim of reducing bureaucracy now looks meaningless as new bodies and structures are being created, all with complex interrelationships.

· Knock-on effects: much greater thought needs to be given to how the knock-on [secondary, often unintended] effects from the structural changes in the bill will impact on other strands in the Government’s wider NHS reform plans.

· Rhetoric not matching the reality: the Government has said it wants to empower clinicians to commission on behalf of patients, however many of the powers of the NHS Commissioning Board set out in the bill seem overly restrictive.

Dr. Meldrum added:

“We want the Government to rethink its reform package and withdraw the bill. It should be focusing on delivering high-quality, coordinated and integrated health care, not sidetracking staff with major structural reform. Continuing with this legislation, especially in a period of huge financial constraint, is an enormous risk.”

Read the briefing paper here: http://www.bma.org.uk/images/nhsreformbriefingbmaopposesbilldec2011_tcm41-210946.pdf

Related press release of 24 November: http://web2.bma.org.uk/pressrel.nsf/wlu/SGOY-8NWPUQ?OpenDocument&vw=wfmm