The Roundtable

This Week, ABC News
December 27, 2009
David Brooks: I don’t oppose it (health care reform act) because I want to step on the necks of the poor, as you could say. I oppose it, and it’s a close call for me, because we used to spend 10 percent of our GNP on health care, now it’s 17, soon it’ll be 20, 22, more on health care, less on education, less on infrastructure, less on investment, less on everything else. This bill will do absolutely nothing. It will slightly increase the amount of money we spend on health care. So what could you do politically to do something about that? Well, I wouldn’t mind a single payer. Frankly I prefer a single payer to what we have now, because that actually would control costs. My preferred option though would be to give consumers choice (Enthoven, Wyden-Bennett).
http://abcnews.go.com/video/playerIndex?id=9428760

On controlling costs, conservative but credible New York Times columnist David Brooks tells us, quite accurately, that this bill will do nothing. As he says, “Frankly I prefer a single payer to what we have now because that actually would control costs.”
Admittedly it is difficult to follow him on the leap from single payer to a consumer-based approach. Single payer helps get people the care they need while controlling costs. Consumer-based health plan choices control costs by erecting financial barriers to care.
Maybe he doesn’t want to step on their necks, but a consumer directed choke collar (demand side control) does seem less humane than optimal single payer resource management (supply side control).

By Jack Hough
SmartMoney
December 22, 2009

America is getting augmented health care for Christmas, it seems. But of course, whether the changes count as reform is a matter of opinion.

Michael Cannon, director of health policy studies for the Cato Institute, a think tank that calls itself libertarian, wrote that the bill is… “a massive $450 billion bailout for private insurance companies that will drive health insurance premiums and taxes higher…”

Insurer shares, in particular, are zooming. There are three reasons. First, stripped from the Senate bill is the so-called public option — a government health plan that threatened to undersell private insurers. Second, a proposed $6.7 billion industry tax is now likely to be phased in only gradually beginning in 2011, which should give health plans enough time to raise prices accordingly. Third, individuals will be required to purchase insurance — a fine deal for insurance sellers — although critics say the penalties for noncompliance are weak, suggesting many individuals will prefer to remain uninsured.

Below are three health-care companies whose shares are soaring…

Aetna
Stock gain since end of October: 31%

Cigna
Stock gain since end of October: 29%

WellPoint
Stock gain since end of October: 28%

http://www.smartmoney.com/investing/stocks/3-stocks-soaring-on-healthcare-bill/

And…

Health Care Stocks Booming

The Kudlow Report
CNBC
December 17, 2009

Larry Kudlow:  I want health care to grow. I want government health care to be limited. I want our private health care to grow and soar with technology and baby boomers and rising incomes. I want health care to be a third of the economy. I just don’t want all this taxing and spending.

http://www.cnbc.com/id/15840232?video=1362269505

Comment: 

By Don McCanne, MD

Many individuals, including single payer supporters, disagree with the decision of PNHP’s leadership to oppose the reform bill currently before Congress. There are two basic issues that need to be sorted out: 1) the beneficial measures in the bill, and 2) the structure of the financing system.

The beneficial measures, such as expanding community health centers and reinforcing our primary infrastructure, we support. These measures, several of which were independent bills added into the omnibus package, should be taken out and immediately enacted separately.

The expansion of health care financing, based on private health plans, is quite another matter. In spite of the various pilot proposals in the legislation, health care costs are expected to continue to increase at rates well in excess of the growth of the GDP.

The only truly effective way to control the growth in government spending that would result from the subsidies used to purchase the private plans would be to allow the subsidies to increase at a slower rate than the rate of increases in the premiums (and the proposed indexing would do that). That shifts more of the premium costs to the individuals. The only truly effective way that the increase in spending on insurance premiums can be slowed is to shift more of the costs to out-of-pocket expenses for individuals who need health care (and the low actuarial values in the legislation would do that).

The proposal begins with a financial burden that is so great for middle and upper-middle income individuals and families that tens of millions will not be able to afford coverage. The private insurance model crafted will continue to expand that burden, adding more to the ranks of the uninsured, whereas underinsurance will have become the national standard (because of the low actuarial values). After another decade or two of this we may be ready for reform that works, but at the cost of tremendous unnecessary suffering and grief.

If you enjoy suffering and grief, then support the bill before Congress. As Larry Kudlow says, let’s make health care one-third of the economy, but without all the taxing and spending. Look how well it’s working for Aetna, Cigna and WellPoint. The private insurance-based bill will work just fine, providing we tell Tiny Tim and the others like him to go to hell.

A personal note:

Obviously I’m angry. I’m especially annoyed with our friends who should know better who keep telling us that we will have nothing if this bill fails, or that we are letting the perfect be the enemy of the good, or that our second choice is the status quo, or the rest of the crap that provides them with an excuse for being strange bedfellows with the private insurance industry.

Right now I’m especially emotional. Today is our granddaughter’s tenth birthday. She was recently in intensive care with newly diagnosed Type I diabetes. Decisions now about how birthday cake will fit into her medical regimen are hardly a glimmer of the future she faces.

When we inevitably depart, my wife and I want to know that we have in place a quality health care system that will always be there for our granddaughter when she needs it. It’s what any of us would want for our loved ones. Since she herself likely will never have to face rationing based on ability to pay, I feel comfortable that she will receive the care that she should have.

But what about the others? What about hard working American families who will not be able to afford the private insurers’ ticket to health care? What patchwork system will they have to take care of their ten year old granddaughter with newly diagnosed diabetes? I want a quality system to be there for them as well, and for everyone.

We can no longer allow the mediocre to be the enemy of the perfect. We know how to fix our dysfunctional health care system, and we can do it now. If you’re not ready to support that, then you go to hell!

And… oh yes… Merry Christmas!

3 Stocks Soaring on Health-Care Bill

By Jack Hough
SmartMoney
December 22, 2009
America is getting augmented health care for Christmas, it seems. But of course, whether the changes count as reform is a matter of opinion.
Michael Cannon, director of health policy studies for the Cato Institute, a think tank that calls itself libertarian, wrote that the bill is… “a massive $450 billion bailout for private insurance companies that will drive health insurance premiums and taxes higher…”
Insurer shares, in particular, are zooming. There are three reasons. First, stripped from the Senate bill is the so-called public option — a government health plan that threatened to undersell private insurers. Second, a proposed $6.7 billion industry tax is now likely to be phased in only gradually beginning in 2011, which should give health plans enough time to raise prices accordingly. Third, individuals will be required to purchase insurance — a fine deal for insurance sellers — although critics say the penalties for noncompliance are weak, suggesting many individuals will prefer to remain uninsured.
Below are three health-care companies whose shares are soaring…
Aetna
Stock gain since end of October: 31%
Cigna
Stock gain since end of October: 29%
WellPoint
Stock gain since end of October: 28%
http://www.smartmoney.com/investing/stocks/3-stocks-soaring-on-healthcare-bill/

And…

Health Care Stocks Booming

The Kudlow Report
CNBC
December 17, 2009
Larry Kudlow: I want health care to grow. I want government health care to be limited. I want our private health care to grow and soar with technology and baby boomers and rising incomes. I want health care to be a third of the economy. I just don’t want all this taxing and spending.
http://www.cnbc.com/id/15840232?video=1362269505

Many individuals, including single payer supporters, disagree with the decision of PNHP’s leadership to oppose the reform bill currently before Congress. There are two basic issues that need to be sorted out: 1) the beneficial measures in the bill, and 2) the structure of the financing system.
The beneficial measures, such as expanding community health centers and reinforcing our primary infrastructure, we support. These measures, several of which were independent bills added into the omnibus package, should be taken out and immediately enacted separately.
The expansion of health care financing, based on private health plans, is quite another matter. In spite of the various pilot proposals in the legislation, health care costs are expected to continue to increase at rates well in excess of the growth of the GDP.
The only truly effective way to control the growth in government spending that would result from the subsidies used to purchase the private plans would be to allow the subsidies to increase at a slower rate than the rate of increases in the premiums (and the proposed indexing would do that). That shifts more of the premium costs to the individuals. The only truly effective way that the increase in spending on insurance premiums can be slowed is to shift more of the costs to out-of-pocket expenses for individuals who need health care (and the low actuarial values in the legislation would do that).
The proposal begins with a financial burden that is so great for middle and upper-middle income individuals and families that tens of millions will not be able to afford coverage. The private insurance model crafted will continue to expand that burden, adding more to the ranks of the uninsured, whereas underinsurance will have become the national standard (because of the low actuarial values). After another decade or two of this we may be ready for reform that works, but at the cost of tremendous unnecessary suffering and grief.
If you enjoy suffering and grief, then support the bill before Congress. As Larry Kudlow says, let’s make health care one-third of the economy, but without all the taxing and spending. Look how well it’s working for Aetna, Cigna and WellPoint. The private insurance-based bill will work just fine, providing we tell Tiny Tim and the others like him to go to hell.
A personal note:
Obviously I’m angry. I’m especially annoyed with our friends who should know better who keep telling us that we will have nothing if this bill fails, or that we are letting the perfect be the enemy of the good, or that our second choice is the status quo, or the rest of the crap that provides them with an excuse for being strange bedfellows with the private insurance industry.
Right now I’m especially emotional. Today is our granddaughter’s tenth birthday. She was recently in intensive care with newly diagnosed Type I diabetes. Decisions now about how birthday cake will fit into her medical regimen are hardly a glimmer of the future she faces.
When we inevitably depart, my wife and I want to know that we have in place a quality health care system that will always be there for our granddaughter when she needs it. It’s what any of us would want for our loved ones. Since she herself likely will never have to face rationing based on ability to pay, I feel comfortable that she will receive the care that she should have.
But what about the others? What about hard working American families who will not be able to afford the private insurers’ ticket to health care? What patchwork system will they have to take care of their ten year old granddaughter with newly diagnosed diabetes? I want a quality system to be there for them as well, and for everyone.
We can no longer allow the mediocre to be the enemy of the perfect. We know how to fix our dysfunctional health care system, and we can do it now. If you’re not ready to support that, then you go to hell!
And… oh yes… Merry Christmas!

Physicians for a National Health Program
December 22, 2009

To the Members of the U.S. Senate:

It is with great sadness that we urge you to vote against the health care reform legislation now before you. As physicians, we are acutely aware of the unnecessary suffering that our nation’s broken health care financing system inflicts on our patients. We make no common cause with the Republicans’ obstructionist tactics or alarmist rhetoric. However, we have concluded that the Senate bill’s passage would bring more harm than good.

We are fully cognizant of the salutary provisions included in the legislation, notably an expansion of Medicaid coverage, increased funds for community clinics and regulations to curtail some of private insurers’ most egregious practices. Yet these are outweighed by its central provisions – particularly the individual mandate – that would reinforce private insurers’ stranglehold on care. Those who dislike their current employer-sponsored coverage would be forced to keep it. Those without insurance would be forced to pay private insurers’ inflated premiums, often for coverage so skimpy that serious illness would bankrupt them. And the $476 billion in new public funds for premium subsidies would all go to insurance firms, buttressing their financial and political power, and rendering future reform all the more difficult.

Some paint the Senate bill as a flawed first step to reform that will be improved over time, citing historical examples such as Social Security. But where Social Security established the nidus of a public institution that grew over time, the Senate bill proscribes any such new public institution. Instead, it channels vast new resources – including funds diverted from Medicare – into the very private insurers who caused today’s health care crisis. Social Security’s first step was not a mandate that payroll taxes which fund pensions be turned over to Goldman Sachs!

While the fortification of private insurers is the most malignant aspect of the bill, several other provisions threaten harm to vulnerable patients, including:

* The bill’s anti-abortion provisions would restrict reproductive choice, compromising the health of women and adolescent girls.

* The new 40 percent tax on high-cost health plans – deceptively labeled a “Cadillac tax” – would hit many middle-income families. The costs of group insurance are driven largely by regional health costs and the demography of the covered group. Hence, the tax targets workers in firms that employ more women (whose costs of care are higher than men’s), and older and sicker employees, particularly those in high-cost regions such as Maine and New York.

* The bill would drain $43 billion from Medicare payments to safety-net hospitals, threatening the care of the 23 million who will remain uninsured even if the bill works as planned. These threatened hospitals are also a key resource for emergency care, mental health care and other services that are unprofitable for hospitals under current payment regimes. In many communities, severely ill patients will be left with no place to go – a human rights abuse.

* The bill would leave hundreds of millions of Americans with inadequate insurance – an “actuarial value” as low as 60 percent of actual health costs. Predictably, as health costs continue to grow, more families will face co-payments and deductibles so high that they preclude adequate access to care. Such coverage is more akin to a hospital gown than to a warm winter coat.

Congress’ capitulation to insurers – along with concessions to the pharmaceutical industry – fatally undermines the economic viability of reform. The bill would inflate the already crushing burden of insurance-related paperwork that currently siphons $400 billion from care annually. According to CMS’ own projections, the bill will cause U.S. health costs to increase even more rapidly than presently, and budget neutrality is to be achieved by draining funds from Medicare and an accounting trick – front-loading the new revenues while delaying most new coverage until 2014. As homeowners seduced into balloon mortgages have learned, pushing costs off to the future is neither prudent nor sustainable.

We ask that you defeat the bill currently under debate, and immediately move to consider the single-payer approach – an expanded and improved Medicare-for-All program – which prioritizes the advancement of our nation’s health over the enhancement of private, profit-seeking interests.

Oliver Fein, M.D., President
David U. Himmelstein, M.D., Co-founder
Steffie Woolhandler, M.D., M.P.H., Co-founder
Physicians for a National Health Program

https://www.pnhp.org/news/2009/december/pro-single-payer-physicians-call-for-defeat-of-senate-health-bill

Comment:

By Don McCanne, MD

reform (noun): 1) amendment of what is defective, vicious, corrupt, or depraved, 2) a removal or correction of an abuse, a wrong, or errors (Merriam-Webster)

In this day when cognitive processes are often displaced by political sound bites, we are likely to hear that PNHP IS AGAINST REFORM!

That is the exact opposite of the truth. PNHP has long advocated for reform that will bring everyone the health care that they need without being exposed to financial hardship.

But we want real reform. We want to replace the “defective, vicious, corrupt, and depraved” private insurance industry with a proven model that will work: an expanded and improved Medicare-for-All program.

For those who say that there are too many beneficial features in this bill that we can’t afford to pass up, our response is that we can pull those out and enact them immediately.

For those who say that we can’t do it because of politics, our response is that then we must change the politics.

Absolutely everyone agrees that the legislation before Congress falls far short of what we need. On the other hand, a great many agree that an expanded and improved Medicare-for-All program is precisely what we need. If it were already in place, Americans would be aggressively protecting it, just as our seniors are protecting our current Medicare program.

So when people grumble that PNHP is not a team player, you can respond by saying that’s because PNHP DEMANDS REFORM!

Physicians for a National Health Program
December 22, 2009
To the Members of the U.S. Senate:
It is with great sadness that we urge you to vote against the health care reform legislation now before you. As physicians, we are acutely aware of the unnecessary suffering that our nation’s broken health care financing system inflicts on our patients. We make no common cause with the Republicans’ obstructionist tactics or alarmist rhetoric. However, we have concluded that the Senate bill’s passage would bring more harm than good.
We are fully cognizant of the salutary provisions included in the legislation, notably an expansion of Medicaid coverage, increased funds for community clinics and regulations to curtail some of private insurers’ most egregious practices. Yet these are outweighed by its central provisions – particularly the individual mandate – that would reinforce private insurers’ stranglehold on care. Those who dislike their current employer-sponsored coverage would be forced to keep it. Those without insurance would be forced to pay private insurers’ inflated premiums, often for coverage so skimpy that serious illness would bankrupt them. And the $476 billion in new public funds for premium subsidies would all go to insurance firms, buttressing their financial and political power, and rendering future reform all the more difficult.
Some paint the Senate bill as a flawed first step to reform that will be improved over time, citing historical examples such as Social Security. But where Social Security established the nidus of a public institution that grew over time, the Senate bill proscribes any such new public institution. Instead, it channels vast new resources – including funds diverted from Medicare – into the very private insurers who caused today’s health care crisis. Social Security’s first step was not a mandate that payroll taxes which fund pensions be turned over to Goldman Sachs!
While the fortification of private insurers is the most malignant aspect of the bill, several other provisions threaten harm to vulnerable patients, including:
* The bill’s anti-abortion provisions would restrict reproductive choice, compromising the health of women and adolescent girls.
* The new 40 percent tax on high-cost health plans – deceptively labeled a “Cadillac tax” – would hit many middle-income families. The costs of group insurance are driven largely by regional health costs and the demography of the covered group. Hence, the tax targets workers in firms that employ more women (whose costs of care are higher than men’s), and older and sicker employees, particularly those in high-cost regions such as Maine and New York.
* The bill would drain $43 billion from Medicare payments to safety-net hospitals, threatening the care of the 23 million who will remain uninsured even if the bill works as planned. These threatened hospitals are also a key resource for emergency care, mental health care and other services that are unprofitable for hospitals under current payment regimes. In many communities, severely ill patients will be left with no place to go – a human rights abuse.
* The bill would leave hundreds of millions of Americans with inadequate insurance – an “actuarial value” as low as 60 percent of actual health costs. Predictably, as health costs continue to grow, more families will face co-payments and deductibles so high that they preclude adequate access to care. Such coverage is more akin to a hospital gown than to a warm winter coat.
Congress’ capitulation to insurers – along with concessions to the pharmaceutical industry – fatally undermines the economic viability of reform. The bill would inflate the already crushing burden of insurance-related paperwork that currently siphons $400 billion from care annually. According to CMS’ own projections, the bill will cause U.S. health costs to increase even more rapidly than presently, and budget neutrality is to be achieved by draining funds from Medicare and an accounting trick – front-loading the new revenues while delaying most new coverage until 2014. As homeowners seduced into balloon mortgages have learned, pushing costs off to the future is neither prudent nor sustainable.
We ask that you defeat the bill currently under debate, and immediately move to consider the single-payer approach – an expanded and improved Medicare-for-All program – which prioritizes the advancement of our nation’s health over the enhancement of private, profit-seeking interests.
Oliver Fein, M.D., President
David U. Himmelstein, M.D., Co-founder
Steffie Woolhandler, M.D., M.P.H., Co-founder
Physicians for a National Health Program
https://pnhp.org/news/2009/december/pro-single-payer-physicians-call-for-defeat-of-senate-health-bill

reform (noun): 1) amendment of what is defective, vicious, corrupt, or depraved, 2) a removal or correction of an abuse, a wrong, or errors (Merriam-Webster)
In this day when cognitive processes are often displaced by political sound bites, we are likely to hear that PNHP IS AGAINST REFORM!
That is the exact opposite of the truth. PNHP has long advocated for reform that will bring everyone the health care that they need without being exposed to financial hardship.
But we want real reform. We want to replace the “defective, vicious, corrupt, and depraved” private insurance industry with a proven model that will work: an expanded and improved Medicare-for-All program.
For those who say that there are too many beneficial features in this bill that we can’t afford to pass up, our response is that we can pull those out and enact them immediately.
For those who say that we can’t do it because of politics, our response is that then we must change the politics.
Absolutely everyone agrees that the legislation before Congress falls far short of what we need. On the other hand, a great many agree that an expanded and improved Medicare-for-All program is precisely what we need. If it were already in place, Americans would be aggressively protecting it, just as our seniors are protecting our current Medicare program.
So when people grumble that PNHP is not a team player, you can respond by saying that’s because PNHP DEMANDS REFORM!

By Julie Appleby
Kaiser Health News
December 20, 2009

Both the House measure and the newly recast Senate bill would force insurers to spend the vast majority of premium revenue on medical care for their customers, reducing the amount available for profits, executive salaries, sales and administration. The Senate bill would require insurers to spend at least 80 percent on medical care and quality improvements (85 percent minimum for plans sold to large groups), while the House bill specifies 85 percent.

Congressional supporters say those provisions would pressure insurance companies to be more efficient and help restrain price increases. But even some advocates say companies could game the system by broadly defining medical costs, for example. And spending limits alone may not stop insurers from raising rates. When New York State tried to limit non-medical care spending, many insurers companies complied – but still instituted double-digit rate increases.

http://www.kaiserhealthnews.org/Stories/2009/December/20/insurers.aspx

Comment: 

By Don McCanne, MD

If we are serious about providing everyone with health care while controlling costs, it is imperative that we reduce the profound administrative waste of our current fragmented system of financing health care.

Insurers consume typically about 18 percent of premium dollars (range 8 to 30 percent or sometimes even 50 percent), and they place an administrative burden on physicians and hospitals that consumes another 12 percent or so of the premium dollar. Thus about one-fourth to one-third of premiums paid to private insurers are largely wasted on just the administration of the health care finances. A single, universal, publicly-administered program can provide the same or better financing services for a small fraction of that level of administrative spending.

Congress and the Obama administration understand this waste, so what do they propose? They are going to limit the private insurers take of the premium to 15 to 20 percent, not much different from the typical 18 percent they are already consuming. And they will do very little to reduce the administrative burden placed on physicians and hospitals (suggesting that they use computers for billing, which they already do). Change we can believe in? Not much change here.

At our nearly intolerable level of health care spending, reducing this waste should have been one of the highest priorities during the reform process. It is unthinkable that we would allow the private insurance industry to continue to skim off a major portion of our health care dollars while inflicting this costly burden on the health care delivery system. Unthinkable, but that’s exactly what Congress is doing.

Think a moment about the irony of Congress’s decision to set in stone a medical loss ratio of 80 to 85 percent, meaning that they must spend that amount on patient care. That means that they have an ironclad guarantee, written into law, that they can keep 15 to 20 percent of the premiums they receive – our health care dollars.

Think of what that means. Though a public financing program is designed to use our dollars efficiently through a public service model, private insurer financing is designed on a business model. That business model dictates that they do everything possible to maximize revenues and, of course, profits for the investor-owned companies.

By fixing the insurers’ cut at a percentage of gross premium revenues, they can no longer reach down into the funds allocated for patient care, preventing medical loss ratios in the 50 to 80 percent range. The actual net revenues for the insurers would be the 15 to 20 percent that they keep.

If they can’t glom on to more of the health care dollars actually spend on care, then how do they increase their revenues? Since their revenues are limited to a percentage based on how much is spent on health care, to increase their own net revenues they are highly incentivized to dramatically increase spending on health care! The more dollars they throw at health care, the more their net revenues grow since they receive a fixed percentage of all dollars spent.

Just imagine entrepreneurial innovation at work. They will encourage every imaginable program that they can label as patient care because they will receive a fixed percentage of the spending on those programs. Think of it: more expensive electronic medical records and information technology systems, more home health services with a motorized scooter for each level in the home, more costly high-tech services regardless of demonstrated value, higher-priced brand drugs instead of generics, six-figure biologics and cancer drugs, rewarding increased frequency and intensity of services, and, the clincher, blinders to the massive fraud that would be rewarded under this system!

The hurdle cleared by the Senate reform bill in the early morning hours today has made it quite likely that President Obama will be signing the bill within the next several weeks. This should not be construed as a signal for supporters of health care justice to go into hibernation!

There are many measures in this bill that will benefit the nation, but the fundamental structure of a dysfunctional, fragmented financing system based on private insurance plans is a disaster and cannot possibly achieve the goal of affordable, high quality care for everyone.

The mandate for individuals to purchase private health plans will not begin until 2014. We still have a window of opportunity to educate, intensify grassroots efforts, intensify coalition efforts, and get this thing fixed! But we can’t wait for four more years to recharge our activism. Get off your duffs now!

Democrats Move To Regulate How Insurers’ Spend Customers’ Money

By Julie Appleby
Kaiser Health News
December 20, 2009
Both the House measure and the newly recast Senate bill would force insurers to spend the vast majority of premium revenue on medical care for their customers, reducing the amount available for profits, executive salaries, sales and administration. The Senate bill would require insurers to spend at least 80 percent on medical care and quality improvements (85 percent minimum for plans sold to large groups), while the House bill specifies 85 percent.
Congressional supporters say those provisions would pressure insurance companies to be more efficient and help restrain price increases. But even some advocates say companies could game the system by broadly defining medical costs, for example. And spending limits alone may not stop insurers from raising rates. When New York State tried to limit non-medical care spending, many insurers companies complied – but still instituted double-digit rate increases.
http://www.kaiserhealthnews.org/Stories/2009/December/20/insurers.aspx

If we are serious about providing everyone with health care while controlling costs, it is imperative that we reduce the profound administrative waste of our current fragmented system of financing health care.
Insurers consume typically about 18 percent of premium dollars (range 8 to 30 percent or sometimes even 50 percent), and they place an administrative burden on physicians and hospitals that consumes another 12 percent or so of the premium dollar. Thus about one-fourth to one-third of premiums paid to private insurers are largely wasted on just the administration of the health care finances. A single, universal, publicly-administered program can provide the same or better financing services for a small fraction of that level of administrative spending.
Congress and the Obama administration understand this waste, so what do they propose? They are going to limit the private insurers take of the premium to 15 to 20 percent, not much different from the typical 18 percent they are already consuming. And they will do very little to reduce the administrative burden placed on physicians and hospitals (suggesting that they use computers for billing, which they already do). Change we can believe in? Not much change here.
At our nearly intolerable level of health care spending, reducing this waste should have been one of the highest priorities during the reform process. It is unthinkable that we would allow the private insurance industry to continue to skim off a major portion of our health care dollars while inflicting this costly burden on the health care delivery system. Unthinkable, but that’s exactly what Congress is doing.
Think a moment about the irony of Congress’s decision to set in stone a medical loss ratio of 80 to 85 percent, meaning that they must spend that amount on patient care. That means that they have an ironclad guarantee, written into law, that they can keep 15 to 20 percent of the premiums they receive – our health care dollars.
Think of what that means. Though a public financing program is designed to use our dollars efficiently through a public service model, private insurer financing is designed on a business model. That business model dictates that they do everything possible to maximize revenues and, of course, profits for the investor-owned companies.
By fixing the insurers’ cut at a percentage of gross premium revenues, they can no longer reach down into the funds allocated for patient care, preventing medical loss ratios in the 50 to 80 percent range. The actual net revenues for the insurers would be the 15 to 20 percent that they keep.
If they can’t glom on to more of the health care dollars actually spend on care, then how do they increase their revenues? Since their revenues are limited to a percentage based on how much is spent on health care, to increase their own net revenues they are highly incentivized to dramatically increase spending on health care! The more dollars they throw at health care, the more their net revenues grow since they receive a fixed percentage of all dollars spent.
Just imagine entrepreneurial innovation at work. They will encourage every imaginable program that they can label as patient care because they will receive a fixed percentage of the spending on those programs. Think of it: more expensive electronic medical records and information technology systems, more home health services with a motorized scooter for each level in the home, more costly high-tech services regardless of demonstrated value, higher-priced brand drugs instead of generics, six-figure biologics and cancer drugs, rewarding increased frequency and intensity of services, and, the clincher, blinders to the massive fraud that would be rewarded under this system!
The hurdle cleared by the Senate reform bill in the early morning hours today has made it quite likely that President Obama will be signing the bill within the next several weeks. This should not be construed as a signal for supporters of health care justice to go into hibernation!
There are many measures in this bill that will benefit the nation, but the fundamental structure of a dysfunctional, fragmented financing system based on private insurance plans is a disaster and cannot possibly achieve the goal of affordable, high quality care for everyone.
The mandate for individuals to purchase private health plans will not begin until 2014. We still have a window of opportunity to educate, intensify grassroots efforts, intensify coalition efforts, and get this thing fixed! But we can’t wait for four more years to recharge our activism. Get off your duffs now!

by Michael E. Martinez, M.P.H., M.H.S.A., and Robin A. Cohen, Ph.D., Division of Health Interview Statistics, National Center for Health Statistics
Centers for Disease Control and Prevention (CDC)
National Center for Health Statistics (NCHS)

From January to June 2009, 45.4 million persons of all ages (15.1%) were uninsured at the time of interview, 58.4 million (19.4%) had been uninsured for at least part of the year prior to interview, and 31.9 million (10.6%) had been uninsured for more than a year at the time of interview.

From January to June 2009, 60.6% of unemployed adults aged 18-64 years and 21.8% of employed adults in this age group had been uninsured for at least part of the past year. Also, 32.9% of unemployed adults aged 18-64 and 13.3% of employed adults in this age group had been uninsured for more than a year.

Estimates of enrollment in HDHPs, CDHPs

Based on data from the January to June 2009 NHIS, 22.7% of persons under age 65 years with private health insurance were enrolled in a HDHP (high-deductible health plan), including 6.4% who were enrolled in a CDHP (consumer-directed health plan) and 16.4 % who were enrolled in a HDHP without a health savings account (HSA). Enrollment in HDHPs increased from 17.5% in 2007 to 22.7% in the first 6 months of 2009. There was a significant increase in enrollment in HDHPs without HSAs and in CDHPs between 2007 (when NHIS started collecting this information) and June 2009.

Based on data from the first 6 months of 2009, among persons under age 65 with private health insurance, 20.3% with employer-based coverage were enrolled in a HDHP, compared with 48.7% of those with a private plan that was directly purchased or obtained through means other than an employer. The percentage of persons covered by employer-based private plans that are HDHPs increased from 15.6% in 2007 to 20.3% in the first 6 months of 2009. The percentage of persons covered by directly purchased private health plans that are HDHPs increased from 39.2% in 2007 to 48.7% in the first 6 months of 2009. HDHPs constitute a growing share of both employment-based and directly purchased health plans.

http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur200912.htm

Comment: 

By Don McCanne, MD

One-fifth of the nation has been uninsured for at least a part of the past year. What makes that number even more alarming is that, at the beginning of the reform process, President Obama and the Congress decided, in deference to the private insurance industry, that they wouldn’t even begin to try to insure everyone. Instead they decided to include just those who would fit in under under their model that is designed to nurture the private insurance industry.

Still even more alarming is the insurance coverage that they propose. The standard policies for middle-income Americans will have an actuarial value of 60% to 70%, which provides much less financial protection than did more traditional employer-sponsored plans. But look what is already happening. Employers are shifting more workers to high-deductible health plans (HDHPs), and in the individual insurance market, almost half of the plans purchased are HDHPs. Furthermore, almost three-fourths of these do not have the backup of a health savings account (HSA).

Except for relatively wealthy individuals, these HDHPs are underinsurance products. They do not provide adequate financial security for those who do develop health care needs.

So President Obama and the Congress are bailing on not only on the tens of millions who will remain uninsured, but also the ever growing number of us who will be underinsured, whether through individual or employer-sponsored plans.

The status quo is unacceptable, but so is this legislation. Dump it and move on immediately with reform that protects the financial well-being of absolutely everyone who needs medical care.