PNHP

Illness, medical bills linked to nearly two-thirds of bankruptcies: Harvard study

Illness, medical bills linked to nearly two-thirds of bankruptcies: Harvard study

Harvard study finds 50 percent increase from 2001

Most of those bankrupted by illness were middle class and had insurance

EMBARGOED until:
June 4, 2009, 12:01 a.m. EDT

Contacts:
David Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
Elizabeth Warren, J.D.
Deborah Thorne, Ph.D.
Mark Almberg, (312) 782-6006, cell: (312) 622-0996, mark@pnhp.org

Medical problems contributed to nearly two-thirds (62.1 percent) of all bankruptcies in 2007, according to a study in the August issue of the American Journal of Medicine that will be published online Thursday. The data were collected prior to the current economic downturn and hence likely understate the current burden of financial suffering. Between 2001 and 2007, the proportion of all bankruptcies attributable to medical problems rose by 49.6 percent. The authors’ previous 2001 findings have been widely cited by policy leaders, including President Obama.

Surprisingly, most of those bankrupted by medical problems had health insurance. More than three-quarters (77.9 percent) were insured at the start of the bankrupting illness, including 60.3 percent who had private coverage. Most of the medically bankrupt were solidly middle class before financial disaster hit. Two-thirds were homeowners and three-fifths had gone to college. In many cases, high medical bills coincided with a loss of income as illness forced breadwinners to lose time from work. Often illness led to job loss, and with it the loss of health insurance.

Even apparently well-insured families often faced high out-of-pocket medical costs for co-payments, deductibles and uncovered services. Medically bankrupt families with private insurance reported medical bills that averaged $17,749 vs. $26,971 for the uninsured. High costs – averaging $22,568 – were incurred by those who initially had private coverage but lost it in the course of their illness.

Individuals with diabetes and those with neurological disorders such as multiple sclerosis had the highest costs, an average of $26,971 and $34,167 respectively. Hospital bills were the largest single expense for about half of all medically bankrupt families; prescription drugs were the largest expense for 18.6 percent.

The research, carried out jointly by researchers at Harvard Law School, Harvard Medical School and Ohio University, is the first nationwide study on medical causes of bankruptcy. The researchers surveyed a random sample of 2,314 bankruptcy filers during early 2007 and examined their bankruptcy court records. In addition, they conducted extensive telephone interviews with 1,032 of these bankruptcy filers.

Their 2001 study, which was published in 2005, surveyed debtors in only five states. In the current study, findings for those five states closely mirrored the national trends.

Subsequent to the 2001 study, Congress made it harder to file for bankruptcy, causing a sharp drop in filings. However, personal bankruptcy filings have soared as the economy has soured and are now back to the 2001 level of about 1.5 million annually.

Dr. David Himmelstein, the lead author of the study and an associate professor of medicine at Harvard, commented: “Our findings are frightening. Unless you’re Warren Buffett, your family is just one serious illness away from bankruptcy. For middle-class Americans, health insurance offers little protection. Most of us have policies with so many loopholes, co-payments and deductibles that illness can put you in the poorhouse. And even the best job-based health insurance often vanishes when prolonged illness causes job loss – precisely when families need it most. Private health insurance is a defective product, akin to an umbrella that melts in the rain.”

“For many families, bankruptcy is a deeply shameful experience,” noted Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard and a study co-author. Professor Warren, a leading expert on personal bankruptcy, went on: “People arrive at the bankruptcy courts exhausted – financially, physically and emotionally. For most, bankruptcy is a last choice to deal with unmanageable circumstances.”

According to study co-author Dr. Steffie Woolhandler, an associate professor of medicine at Harvard and primary care physician in Cambridge, Mass.: “We need to rethink health reform. Covering the uninsured isn’t enough. Reform also needs to help families who already have insurance by upgrading their coverage and assuring that they never lose it. Only single-payer national health insurance can make universal, comprehensive coverage affordable by saving the hundreds of billions we now waste on insurance overhead and bureaucracy. Unfortunately, Washington politicians seem ready to cave in to insurance firms and keep them and their counterfeit coverage at the core of our system. Reforms that expand phony insurance – stripped-down plans riddled with co-payments, deductibles and exclusions – won’t stem the rising tide of medical bankruptcy.”

Dr. Deborah Thorne, associate professor of sociology at Ohio University and study co-author, stated: “American families are confronting a panoply of social forces that make it terribly difficult to maintain financial stability – job losses and wages that have not kept pace with the cost of living, exploitation from the various lending industries, and, probably most consequential and disgraceful, a health care system that is so dysfunctional that even the most mundane illness or injury can result in bankruptcy. Families who file medical bankruptcies are overwhelmingly hard-working, middle-class families who have played by the rules of our economic system, and they deserve nothing less than affordable health care.”

*****

A copy of the study is available at https://pnhp.org/new_bankruptcy_study or through the American Journal of Medicine, ajmmedia@elsevier.com, (212) 633-3944. The authors have also prepared a supplementary “Fact Sheet” and a “Q&A” on medical bankruptcy, both of which detail the study’s methods and findings. See same link above.

“Medical bankruptcy in the United States, 2007: Results of a national study,” David U. Himmelstein, M.D; Deborah Thorne, Ph.D.; Elizabeth Warren, J.D.; Steffie Woolhandler, M.D., M.P.H. American Journal of Medicine, June 4, 2009 (online).

Physicians for a National Health Program (www.pnhp.org), a membership organization of over 16,000 physicians, supports a single-payer national health insurance program. To contact a physician-spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Will WellPoint support any reform?

Health Insurers Balk at Some Changes

By Reed Abelson
The New York Times
June 2, 2009
The insurance industry says it wholeheartedly embraces a health care overhaul, promising Congress and the president that it will make it much easier for individuals to buy insurance on their own.
Insurers, for example, have agreed to sell policies even to people with pre-existing medical conditions, and to stop basing prices on how healthy or sick someone is.
But so far, the industry has made no such promises about another segment of the health insurance market, one responsible for many people being uninsured in the first place: the market for small employers. By some estimates, about half of the nationā€™s uninsured are people who are self-employed or work for a small business.
Employer-provided medical insurance remains the bedrock of the nationā€™s health care system. And yet, while most big employers still provide health benefits, soaring premiums have meant many small businesses can no longer afford to cover their workers. But the small-employer market remains one of the most profitable segments of health insurance, which may be why the industry is not eager to overhaul this lucrative part of the business.
… one of the biggest insurers, WellPoint, opposes changing the way coverage is sold to small employers.
“Those markets generally work today,” said Bradley M. Fluegel, the chief strategy officer for WellPoint, which is a big operator of Blue Cross plans and a major player in the small-business market.
Much of the Congressional talk about health care has not yet focused on what federal oversight, if any, might be necessary for the small-business market. Proposals before the Senate Finance Committee seem to envision the same kind of rules for both the individual and small-business markets.
Mr. Fluegel, the WellPoint executive, warned that if the federal government intervened in the small-business market so that insurance companies could no longer assign the highest premiums to employers with the highest medical costs, insurers would be forced to spread the costs over all their small-business customers.
http://www.nytimes.com/2009/06/03/business/smallbusiness/03insure.html?ref=business&pagewanted=all

WellPoint/Anthem/Blue Cross has become the largest provider of private health plans through its highly successful business model that has kept their premiums very competitive. How have they done that? In the individual market, they have limited their exposure to risk by medical underwriting – not selling policies to individuals who might need health care. In the small-business market, they also limit loss by increasing premiums to unaffordable levels for any business that has an unfavorable claims experience, causing those firms to drop coverage.
The insurance industry’s offer to agree to guaranteed issue in the individual market is dependent on a mandate to require every uninsured individual to purchase insurance. That would distribute risk broadly even if it doesn’t specify how such coverage could be paid for. Guaranteed issue has been opposed by WellPoint since it is not compatible with its business strategy of selling only to the healthy.
What about guaranteed issue in the small-business market? Since current proposals also would permit the continuation of the employer-sponsored market, insurers such as WellPoint would remain successful only if they could continue to use underwriting and premium flexibility in the small-business market. If they were required to issue coverage to every small business that applied, then they would have to have a mandate for all small businesses to purchase coverage. Though that would distribute risk more evenly in the small-business market, it still would defeat WellPoint’s successful strategy of keeping premiums competitive by selling their products to healthy individuals and only to small businesses with healthy employees.
WellPoint worked very hard to defeat reform efforts in California since it would have destroyed its dominance as the insurer of the healthy. There is every reason to believe that WellPoint likewise will oppose reform on a national level if Congress includes measures that would require private insurers to participate in a regulated social insurance program.
Yesterday President Obama told Democratic Senators that he would like Congress to take broad action before the August recess. Can you imagine Congress creating a program of private sector social insurance by then? Right now I’d rate WellPoint stock a very strong BUY!

Will WellPoint support any reform?

Health Insurers Balk at Some Changes

By Reed Abelson
The New York Times
June 2, 2009

The insurance industry says it wholeheartedly embraces a health care overhaul, promising Congress and the president that it will make it much easier for individuals to buy insurance on their own.

Insurers, for example, have agreed to sell policies even to people with pre-existing medical conditions, and to stop basing prices on how healthy or sick someone is.

But so far, the industry has made no such promises about another segment of the health insurance market, one responsible for many people being uninsured in the first place: the market for small employers. By some estimates, about half of the nationĆ¢ā‚¬ā„¢s uninsured are people who are self-employed or work for a small business.

Employer-provided medical insurance remains the bedrock of the nationĆ¢ā‚¬ā„¢s health care system. And yet, while most big employers still provide health benefits, soaring premiums have meant many small businesses can no longer afford to cover their workers. But the small-employer market remains one of the most profitable segments of health insurance, which may be why the industry is not eager to overhaul this lucrative part of the business.

… one of the biggest insurers, WellPoint, opposes changing the way coverage is sold to small employers.

“Those markets generally work today,” said Bradley M. Fluegel, the chief strategy officer for WellPoint, which is a big operator of Blue Cross plans and a major player in the small-business market.

Much of the Congressional talk about health care has not yet focused on what federal oversight, if any, might be necessary for the small-business market. Proposals before the Senate Finance Committee seem to envision the same kind of rules for both the individual and small-business markets.

Mr. Fluegel, the WellPoint executive, warned that if the federal government intervened in the small-business market so that insurance companies could no longer assign the highest premiums to employers with the highest medical costs, insurers would be forced to spread the costs over all their small-business customers.

http://www.nytimes.com/2009/06/03/business/smallbusiness/03insure.html?ref=business&pagewanted=all

Comment:

By Don McCanne, MD

WellPoint/Anthem/Blue Cross has become the largest provider of private health plans through its highly successful business model that has kept their premiums very competitive. How have they done that? In the individual market, they have limited their exposure to risk by medical underwriting – not selling policies to individuals who might need health care. In the small-business market, they also limit loss by increasing premiums to unaffordable levels for any business that has an unfavorable claims experience, causing those firms to drop coverage.

The insurance industry’s offer to agree to guaranteed issue in the individual market is dependent on a mandate to require every uninsured individual to purchase insurance. That would distribute risk broadly even if it doesn’t specify how such coverage could be paid for. Guaranteed issue has been opposed by WellPoint since it is not compatible with its business strategy of selling only to the healthy.

What about guaranteed issue in the small-business market? Since current proposals also would permit the continuation of the employer-sponsored market, insurers such as WellPoint would remain successful only if they could continue to use underwriting and premium flexibility in the small-business market. If they were required to issue coverage to every small business that applied, then they would have to have a mandate for all small businesses to purchase coverage. Though that would distribute risk more evenly in the small-business market, it still would defeat WellPoint’s successful strategy of keeping premiums competitive by selling their products to healthy individuals and only to small businesses with healthy employees.

WellPoint worked very hard to defeat reform efforts in California since it would have destroyed its dominance as the insurer of the healthy. There is every reason to believe that WellPoint likewise will oppose reform on a national level if Congress includes measures that would require private insurers to participate in a regulated social insurance program.

Yesterday President Obama told Democratic Senators that he would like Congress to take broad action before the August recess. Can you imagine Congress creating a program of private sector social insurance by then? Right now I’d rate WellPoint stock a very strong BUY!

The Massachusetts Model: Massive Spending On Nonbenefit Costs

by Merton Bernstein
Health Affairs Blog
June 2nd, 2009

Plummeting coverage and soaring costs characterize the nation’s health insurance crisis. With much coverage for the nonelderly based on employment, job loss contributes to this misfortune. In response, Congress seems headed to emulate the 2006 Massachusetts “reform.” That’s an unpromising prescription because it seriously increases costs — just the opposite of what President Barack Obama cogently and correctly asserts that we need.

The “reform” requires all adult residents to obtain medical care insurance through individual purchase if they are not covered by an employer-provided plan, Medicaid — called MassHealth and limited to those with very low incomes — or CommonwealthCare, a means-tested subsidized program for those with income above MassHealth’s limit but below 300% of the poverty line.

The Massachusetts Reform Model: Increasing Costs, Not Reducing Them

None of these programs produces efficiencies. The design does not reduce total health insurance outlays. Rather, CommonwealthCare adds massive costs to determine eligibility and then the amount of subsidy due, on top of the subsidies themselves. Those individualized determinations must be done hundreds of thousands of times in Massachusetts (many million times if applied nationally), not once but again and again because incomes don’t hold still.

Moreover, the “reform” does nothing to reduce the untamed costs of matching hundreds of thousands of billings with thousands of plans containing differing, confusing rate schedules. Hordes of provider personnel must generate the billings, and then hordes of insurer administrators process them and pay — or often reject — billed items and then frequently wrangle over them with providers and patients. These procedures consume hundreds of billions of nonbenefit dollars a year. CommonwealthCare imposes not only premiums, but also deductibles and copays, which further complicate and add costs to processing bills. Those features often prevent the “insured” from using their insurance.

Individuals and families with incomes above 300% of the poverty level get no subsidy, but they must participate in their employer’s insurance plan, if there is one. Many employees have declined employment-based insurance because they could not afford the premiums, deductibles, and copays required. Under the “reform,” with those costs rising, they must participate or incur a penalty — over $1,000 in 2009. They can obtain an exemption only by persuading the Commonwealth Connector, the entity administering the program, that they cannot afford the least costly available policy. Success means no penalty — and no insurance.

The Connector, which solicits policies from private insurers, rejected all of the initial proposals as unaffordable. The insurers responded with policies with lower premiums but higher deductibles and copays. The law permits annual deductibles up to $2,000 for an individual or $4,000 for a family. Little wonder that the Connector has so far exempted more than 62,000 employees.

So the “reform” increases nonbenefit costs by the tens of billions (that would be hundreds of billions if used nationally) to ascertain eligibility, more tens of billions to ascertain how much subsidy each applicant qualifies for, plus the tens of billions for those subsidies. Then add the estimated 4 percentage points of cost to operate the Connector.

Subsidies Through Tax Credits: Dishonest And Inefficient

Reportedly the Senate Finance Committee favors providing the subsidies through tax credits, a favorite legislative dodge to hide the costs. (Tax expenditures, the government revenue lost through targeted favorable tax treatment, are the functional equivalent of direct government expenditures for purposes of determining deficits but are much less efficient.) And they require people to apply. Many people simply do not know what’s available and how to navigate the bureaucratic maze. So the tax dodge incurs costs and discourages participation.

On top of these obvious inadequacies, the cost of medical care insurance continues to rise for employers and employees. State and local governments see increased costs for their own employees and for government programs. The Massachusetts individual mandate does not reduce the second major factor in our crisis – out-of-control costs. It does just the opposite.

President Obama sensibly proposes that we build our economy on rock, not sand. But few programs are so shifting as means-tested programs, as the history of Medicaid demonstrates. State governments repeatedly downsize such plans when the economy worsens, demand for benefits increases, and tax revenues to pay for them shrink.

If Massachusetts Can’t Afford Its Reforms, Who Can?

As candidate Obama pointed out repeatedly, individual mandates are costly and hard to enforce. The commonwealth is struggling to meet the costs of the program, which are running higher than originally projected. Massachusetts has a high-wage economy that generates above average-tax revenues. But that income is proving insufficient to pay for the “reform”; as a result, the state is poaching on the funding for other health programs. If wealthy Massachusetts is in a bind to pay for this brand of reform, what can we expect of less fortunate states?

Massachusetts provides subsidized coverage to individuals and families with incomes up to 300% of the federal poverty level. Only nine other states have equally generous limits. With state budgets now stressed by falling income and property tax revenues and increased outlays caused by growing unemployment, it is dubious that other states could afford to match Massachusetts’ level of subsidies even if they wanted to. Nevertheless, the House reportedly is fashioning a Massachusetts-like measure with subsidies available up to 400% of the federal poverty level.

The Massachusetts “reform” that congressional committee chairs seem about to advocate will neither provide universal coverage nor rein in costs. Nor will the toothless “pledge” by the “health care industry” to save two trillion dollars “voluntarily.” Announced by President Obama on a Monday, the pledge had been disowned by hospital, insurer, pharmacy, and doctor participants by Thursday.

Until we confront the billions wasted by matching hundreds of thousands of bills with thousands of differing plans, we will not achieve the savings needed to pay for covering everyone comprehensively. Our present course seems headed for reform in name only.

A Better Way: Medicare For All

There is a better, easier way: simply expand Medicare to non-aged and non-disabled Americans. Medicare has been up and running for over four decades, has a better cost-restraint record than both private insurance and public means-tested programs, and actually put reasonable limits on provider payments. It would cover everyone without the huge costs of means-testing. Medicare uses private insurers for administration and should continue to employ thousands of their experienced employees. Eliminating the nonbenefit costs of private insurance — commissions, Wall-Street-size executive compensation, and advertising — would save tens of billions of dollars. Simplifying billing — by using one payment schedule instead of thousands — would save hundreds of billions.

Medicare for All offers the most practical way to achieve universal coverage and reduce per capita costs. Now that’s reform we can believe in.

Baucus soothes single-payer backers

By Carrie Budoff Brown
Politico
June 3, 2009 02:36 PM EST

Senate Finance Committee Chairman Max Baucus (D-Mont.) told leading advocates of a government-financed health care system that he made a mistake by not giving their proposals more consideration in the reform debate, according to participants in a meeting Wednesday.

He also vowed to use the “power of his office” to make sure charges are dropped against about a dozen people who protested after advocates of a government-backed plan were excluded from recent Finance Committee hearings, the participants said.

“That was concrete movement. Unfortunately, there was not very much in the way of other concrete movement,” said Dr. David Himmelstein, co-founder of Physicians for a National Health Program and associate professor medicine at Harvard Medical School.

“While he did say it was probably a mistake not to have given a full hearing to single payer in the past, he announced no intention of opening up the hearings on single payer in the future and we will therefore need to continue to press him,” Himmelstein said.

Baucus has faced sustained pressure from advocates of so-called single-payer health care, a system in which government is the sole provider of health insurance. And concession that it was a mistake not to include single payers is notable shift for the lead Senate negotiator on health care.

Baucus spokeswoman Erin Shields did not address the participants’ take on the meeting in a statement.

“Senator Baucus met privately with single-payer advocates today and discussed their shared goals of providing quality, affordable health care to every American,” the statement read. “Senator Baucus asked them to work together with him to pursue that goal this year.”

Baucus has often said every proposal is on the table — except single payer health care because there is no way Congress would go for it. President Barack Obama, who said in 2003 that a single payer system is “what I would like to see,” has also said the option isn’t politically feasible.

Those involved in the health care negotiations say single payers have been elevated precisely because Baucus excluded them. Baucus has been able keep almost every interest group involved in the process from speaking out against the ideas under consideration. But because they are not involved, single payers have been one of the only vocal constituencies hammering away at Baucus.

The virtual shut-out has emboldened the movement.

After being left off the invite list for the White House health care forum in March, single payer advocates alerted the media and won a seat at the table. They disrupted each of the Finance Committee’s three roundtables on health care in April and May.
And last week in Montana, single-payer advocates flooded town halls arranged by his Senate office, earning significant local media attention. Baucus did not attend the meetings, and sent staff and a videotaped message instead.

“Senator Baucus was working and had commitments that prevented him from attending the town halls,” Baucus spokesman Tyler Matsdorf said.

Wednesday’s meeting was arranged by Sen. Bernie Sanders (I-Vt.), who supports single-payer health care, and included representatives from the California Nurses Association and Physicians for a National Health Program.

(c) 2009 Capitol News Company, LLC

Health, life insurers hold billions in tobacco stocks: NEJM article

Harvard researchers say insurers put profits over health

Embargoed until:
June 3, 2009
5 p.m. EDT

Contacts:
J. Wesley Boyd, M.D., Ph.D.
David Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
Mark Almberg, (312) 782-6006, cell: (312) 622-0996, mark@pnhp.org

More than a decade after Harvard researchers first revealed that life and health insurance companies were major investors in tobacco stocks – prompting calls upon them to divest – the insurance industry has yet to kick the habit, they say.

A new article on insurance company holdings, published in today’s New England Journal of Medicine, shows that U.S., Canadian and U.K.-based insurance firms hold at least $4.4 billion of investments in companies whose subsidiaries manufacture cigarettes, cigars, chewing tobacco and related products.

Tobacco products currently contribute to the deaths of 5.4 million people worldwide annually, according to the World Health Organization. Tobacco use is a major risk factor for stroke, heart attack, lung disease and cancer.

“Despite calls upon the insurance industry to get out of the tobacco business by physicians and others, insurers continue to put their profits above people’s health,” said Dr. J. Wesley Boyd, the lead author of the article. “It’s clear their top priority is making money, not safeguarding people’s well-being.”

To illustrate their point, Boyd and his colleagues point to Newark, N.J.-based Prudential Financial Inc., which sells life insurance and long-term disability coverage. With total tobacco holdings of $264.3 million, Prudential Financial is a major investor in three tobacco firms, including Reynolds American, whose subsidiary R.J. Reynolds manufactures Camel and Pall Mall cigarettes, and Philip Morris, maker of the popular Marlboro brand.

Sun Life Financial Inc., based in Toronto, sells life, health, disability and long-term care insurance. It also owns slightly over $1 billion in stock in two tobacco companies, including $890 million in Philip Morris.

London-based Prudential Plc, which offers health, disability, and long-term care insurance, has holdings of $1.38 billion in two tobacco companies, including British American Tobacco, which markets Kent and Lucky Strike cigarettes.

The researchers also itemize the substantial tobacco holdings of Northwestern Mutual of Milwaukee and Massachusetts Mutual Life of Springfield, Mass., along with those of Standard Life Plc, a health and life insurer based in Edinburgh, Scotland. (See table; all data current as of March 26.)

Boyd and his co-authors, Drs. David Himmelstein and Steffie Woolhandler at the Cambridge Health Alliance and Harvard Medical School, culled their data from Osiris, a proprietary database of industrial, banking and insurance companies. Osiris draws upon Securities and Exchange Commission filings and news reports from providers like Dow Jones and Reuters.

“Although investing in tobacco while selling life or health insurance may seem self-defeating,” the authors write, “insurance firms have figured out ways to profit from both. Insurers exclude smokers from coverage or, more commonly, charge them higher premiums. Insurers profit – and smokers lose – twice over.”

The same researchers, all of whom are affiliated with Physicians for a National Health Program, first published data about the “tobacco-insurance company connection” in 1995 in the medical journal Lancet. They say that because private, for-profit insurers have repeatedly put their own financial gain over the public’s health, readers in the United States, Canada and the United Kingdom should be wary about insurance firms’ participation in care.

They add, “These data raise a red flag about the prospects of opening up vast new markets for private insurers at public expense, as has happened in our state of Massachusetts, whose recent health care reform is often cited as a model for national reform.”

Insurance Company

Reynolds American

Imperial Tobacco

British American Tobacco

Lorillard

Philip Morris

Total
In millions of dollars

Prudential PLC

 

513.2

871.4

 

 

1,384.6

Prudential Financial

69.4

 

 

8.8

186.1

264.3

Mass Mutual

17.3

 

 

155.4

412.6

585.3

New York Life

13.0

 

 

0

 

13.0

Northwestern Mutual

22.8

 

 

10.8

202.2

235.8

Standard Life

 

307.0

641.2

 

 

948.2

Sun Life

 

 

 

125.7

889.9

1,015.6

Total

122.5

820.2

1,512.6

300.7

1,690.8

4,446.8

Download table: https://pnhp.org/tobacco/Insurance-Company-Tobacco-Investments.doc

********

Copies of the study are available at https://pnhp.org/tobacco/tobacco_article.pdf

“Insurance industry investments in tobacco,” J. Wesley Boyd, M.D., Ph.D.; David U. Himmelstein, M.D; Steffie Woolhandler, M.D., M.P.H. New England Journal of Medicine, June 4, 2009.

Physicians for a National Health Program (www.pnhp.org), a membership organization of over 16,000 physicians, supports a single-payer national health insurance program. To contact a physician-spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

Growth of employer-sponsored underinsurance

Trends In Underinsurance And The Affordability Of Employer Coverage, 2004-2007

Employer coverage helps, but it does not shield workers from health care costs deemed “unaffordable” as a percentage of their incomes.
by Jon R. Gabel, Roland McDevitt, Ryan Lore, Jeremy Pickreign, Heidi Whitmore, and Tina Ding
Health Affairs
June 2, 2009
Based on simulated bill paying, this paper examines trends in comprehensiveness of coverage, out-of-pocket spending for medical services, underinsurance, and the affordability of employer-based insurance from 2004 to 2007. Data are from MarketScan medical claims and an annual survey of employer health benefits. Health plans covered slightly fewer expenses in 2007 than in 2004, but out-of-pocket spending grew more than one-third because of growth in overall health spending. For people at 200 percent of poverty, the percentage spending more than 10 percent of their income out of pocket on premiums plus services increased from 13 percent to 18 percent.
In the United States, if you are sick and earn a modest income, then you are probably underinsured – even if you have employer-based health coverage. In 2007, among people at 200 percent of poverty ($41,300 for a family of four in 2007) who were among the top 25 percent of spenders on health care services, 71 percent were underinsured.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w595v1

And…

Cost Sharing In Medicaid And CHIP: How Does It Affect Out-Of-Pocket Spending?

by Thomas M. Selden, Genevieve M. Kenney, Matthew S. Pantell, and Joel Ruhter
Health Affairs
June 2, 2009
Rapidly rising spending has prompted debate about increasing cost sharing in Medicaid and the Children’s Health Insurance Program (CHIP). In this paper we assess the role of cost sharing in Medicaid and the CHIP and its potential financial burden on low-income families with children. We find that many families would face high health spending burdens even with minimal cost sharing for their publicly insured children. Adding even modest cost sharing for such children could greatly increase high financial burdens.
Our survey of state policies reveals that a growing number of states are using cost sharing in the form of premiums or copayments, or both, for services in their public coverage programs for children. Premiums and copayments vary greatly across states and generally increase with family income level. Most states have provisions that specify caps on family spending – generally at 5 percent of family income – and premiums are capped in most states for families with more than three children. Yet our analysis of state policies suggests that systems to track family spending and to ensure free access once caps have been reached are generally not well developed.
Higher cost sharing in public programs may reduce public spending. However, half of all publicly insured children in our analysis were poor, and even modest cost sharing can be burdensome for many poor families. Exempting poor children reduces budgetary savings unless much larger cost-sharing burdens are imposed on the remaining families. Optimal targeting of cost sharing is difficult, moreover, when family incomes fluctuate from month to month and when health needs, such as the presence of a an SHCN (Special Health Care Needs) child or a parent in poor health, vary so widely across families.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w607v1

With the reform debate having been diverted to issues such as offering a public option, changing the tax status of employer-sponsored coverage, or mandating individuals to purchase insurance, little attention is being paid to some of the most fundamental flaws in our dysfunctional system of financing health care. One of the most important has been the ever-increasing incidence of underinsurance that has created financial hardship for individuals and families who do have health insurance coverage.
Underinsurance has long been a prime feature of the individual insurance market as insurers have continued to introduce innovations in an effort to keep their premiums competitive. These innovations inevitably shift more costs to individuals and families that actually have health care needs. In fact, one of the purposes of the proposed insurance exchanges would be to reduce underinsurance by offering individuals plans that are more comparable to the group plans of the employer-sponsored market. Is this an adequate response to this problem?
The Health Affairs article on underinsurance in the employer market answers that question. As the authors state, “In the United States, if you are sick and earn a modest income, then you are probably underinsured – even if you have employer-based health coverage.” The emphasis on slowing the cost of insurance (as opposed to the costs of health care) has extended from the individual market to the employer-sponsored market.
The perversity of this strategy is well exemplified by the expansion of cost-sharing policies in the programs designed to protect lower-income families – Medicaid and CHIP. As the authors of the Health Affairs article on cost sharing in these public programs state, “even modest cost sharing can be burdensome for many poor families.” To minimize the negative financial impact on families, it has been suggested that caps be placed on the total out-of-pocket spending for these families. The problem is that “systems to track family spending and to ensure free access once caps have been reached are generally not well developed.” Furthermore, “Optimal targeting of cost sharing is difficult, moreover, when family incomes fluctuate from month to month and when health needs… vary so widely across families.”
The latter is also true of employer-sponsored coverage. Now that underinsurance is a problem for the workforce, some system of capping out-of-pocket spending would be necessary. But because of ever-changing variables, an equitable and efficient system of caps would be almost impossible to design – not to mention the additional administrative efforts that would be required in our system already over-burdened with costly administrative excesses.
Is cost sharing really necessary? How much impact would it have on our total national health expenditures (NHE)? Keep in mind that 80 percent of health care is consumed by about 20 percent of the population. Most of that 80 percent of spending would fall into the category of catastrophic, and almost everyone agrees that catastrophic costs should be fully covered.
Cost sharing policies impact primarily the remaining 80 percent of us who have comparatively few health care needs. Even if cost sharing were fully effective in eliminating non-beneficial health care (it isn’t), how much would that save? Cost sharing might reduce spending by as much as 30 percent (a number in dispute), but at least half of that is for beneficial services. The 15 percent of marginal or non-beneficial services as a portion of the 20 percent of NHE spent on the 80 percent who are healthy would produce a savings of about 3 percent of our NHE.
Since cost sharing is a very imperfect policy, the net benefit would be no where near this ideal. Not only would cost sharing continue to pose barriers to beneficial health care services, it would continue to perpetuate the plague of underinsurance now permeating the employer-sponsored market. The net cost of eliminating cost sharing, thereby ensuring that everyone has the health care that they need without facing financial hardship, would be very small indeed.
But let’s not digress into policies that would impact our health and our finances. Let’s go back to the cat fight over a public option. The private insurance industry must be popping the champagne corks now that they have deceived us into thinking this non-issue is the reform debate that we must be engaged in. They won again, and this time they didn’t even need to bring out Harry and Louise.

Growth of employer-sponsored underinsurance

Trends In Underinsurance And The Affordability Of Employer Coverage, 2004-2007

Employer coverage helps, but it does not shield workers from health care costs deemed “unaffordable” as a percentage of their incomes.

by Jon R. Gabel, Roland McDevitt, Ryan Lore, Jeremy Pickreign, Heidi Whitmore, and Tina Ding
Health Affairs
June 2, 2009

Based on simulated bill paying, this paper examines trends in comprehensiveness of coverage, out-of-pocket spending for medical services, underinsurance, and the affordability of employer-based insurance from 2004 to 2007. Data are from MarketScan medical claims and an annual survey of employer health benefits. Health plans covered slightly fewer expenses in 2007 than in 2004, but out-of-pocket spending grew more than one-third because of growth in overall health spending. For people at 200 percent of poverty, the percentage spending more than 10 percent of their income out of pocket on premiums plus services increased from 13 percent to 18 percent.

In the United States, if you are sick and earn a modest income, then you are probably underinsured – even if you have employer-based health coverage. In 2007, among people at 200 percent of poverty ($41,300 for a family of four in 2007) who were among the top 25 percent of spenders on health care services, 71 percent were underinsured.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w595v1

And…

Cost Sharing In Medicaid And CHIP: How Does It Affect Out-Of-Pocket Spending?

by Thomas M. Selden, Genevieve M. Kenney, Matthew S. Pantell, and Joel Ruhter
Health Affairs
June 2, 2009

Rapidly rising spending has prompted debate about increasing cost sharing in Medicaid and the Children’s Health Insurance Program (CHIP). In this paper we assess the role of cost sharing in Medicaid and the CHIP and its potential financial burden on low-income families with children. We find that many families would face high health spending burdens even with minimal cost sharing for their publicly insured children. Adding even modest cost sharing for such children could greatly increase high financial burdens.

Our survey of state policies reveals that a growing number of states are using cost sharing in the form of premiums or copayments, or both, for services in their public coverage programs for children. Premiums and copayments vary greatly across states and generally increase with family income level. Most states have provisions that specify caps on family spending – generally at 5 percent of family income – and premiums are capped in most states for families with more than three children. Yet our analysis of state policies suggests that systems to track family spending and to ensure free access once caps have been reached are generally not well developed.

Higher cost sharing in public programs may reduce public spending. However, half of all publicly insured children in our analysis were poor, and even modest cost sharing can be burdensome for many poor families. Exempting poor children reduces budgetary savings unless much larger cost-sharing burdens are imposed on the remaining families. Optimal targeting of cost sharing is difficult, moreover, when family incomes fluctuate from month to month and when health needs, such as the presence of a an SHCN (Special Health Care Needs) child or a parent in poor health, vary so widely across families.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.4.w607v1

Comment:

By Don McCanne, MD

With the reform debate having been diverted to issues such as offering a public option, changing the tax status of employer-sponsored coverage, or mandating individuals to purchase insurance, little attention is being paid to some of the most fundamental flaws in our dysfunctional system of financing health care. One of the most important has been the ever-increasing incidence of underinsurance that has created financial hardship for individuals and families who do have health insurance coverage.

Underinsurance has long been a prime feature of the individual insurance market as insurers have continued to introduce innovations in an effort to keep their premiums competitive. These innovations inevitably shift more costs to individuals and families that actually have health care needs. In fact, one of the purposes of the proposed insurance exchanges would be to reduce underinsurance by offering individuals plans that are more comparable to the group plans of the employer-sponsored market. Is this an adequate response to this problem?

The Health Affairs article on underinsurance in the employer market answers that question. As the authors state, “In the United States, if you are sick and earn a modest income, then you are probably underinsured – even if you have employer-based health coverage.” The emphasis on slowing the cost of insurance (as opposed to the costs of health care) has extended from the individual market to the employer-sponsored market.

The perversity of this strategy is well exemplified by the expansion of cost-sharing policies in the programs designed to protect lower-income families – Medicaid and CHIP. As the authors of the Health Affairs article on cost sharing in these public programs state, “even modest cost sharing can be burdensome for many poor families.” To minimize the negative financial impact on families, it has been suggested that caps be placed on the total out-of-pocket spending for these families. The problem is that “systems to track family spending and to ensure free access once caps have been reached are generally not well developed.” Furthermore, “Optimal targeting of cost sharing is difficult, moreover, when family incomes fluctuate from month to month and when health needs… vary so widely across families.”

The latter is also true of employer-sponsored coverage. Now that underinsurance is a problem for the workforce, some system of capping out-of-pocket spending would be necessary. But because of ever-changing variables, an equitable and efficient system of caps would be almost impossible to design – not to mention the additional administrative efforts that would be required in our system already over-burdened with costly administrative excesses.

Is cost sharing really necessary? How much impact would it have on our total national health expenditures (NHE)? Keep in mind that 80 percent of health care is consumed by about 20 percent of the population. Most of that 80 percent of spending would fall into the category of catastrophic, and almost everyone agrees that catastrophic costs should be fully covered.

Cost sharing policies impact primarily the remaining 80 percent of us who have comparatively few health care needs. Even if cost sharing were fully effective in eliminating non-beneficial health care (it isn’t), how much would that save? Cost sharing might reduce spending by as much as 30 percent (a number in dispute), but at least half of that is for beneficial services. The 15 percent of marginal or non-beneficial services as a portion of the 20 percent of NHE spent on the 80 percent who are healthy would produce a savings of about 3 percent of our NHE.

Since cost sharing is a very imperfect policy, the net benefit would be no where near this ideal. Not only would cost sharing continue to pose barriers to beneficial health care services, it would continue to perpetuate the plague of underinsurance now permeating the employer-sponsored market. The net cost of eliminating cost sharing, thereby ensuring that everyone has the health care that they need without facing financial hardship, would be very small indeed.

But let’s not digress into policies that would impact our health and our finances. Let’s go back to the cat fight over a public option. The private insurance industry must be popping the champagne corks now that they have deceived us into thinking this non-issue is the reform debate that we must be engaged in. They won again, and this time they didn’t even need to bring out Harry and Louise.

Baucus to meet with single-payer health care advocates

By JOHN S. ADAMS
Great Falls Tribune
June 1, 2009

HELENA — Sen. Max Baucus is set to meet with five single-payer health care advocates in Washington, D.C. this week.

Baucus, as chair of the powerful Senate Finance Committee, has made health care reform his top priority this session. However, Baucus has consistently said single-payer–a system in which the federal government acts as the nation’s sole health insurance provider–is of the table.

“For more than a year, Sen. Baucus has met with thousands of people, representing hundreds of views on how to reform our health care system,” Baucus spokesman Ty Matsdorf stated in an e-mail. “This meeting is no different. Max hopes to talk, and listen, to these folks to try and find the best way to make sure every Montanan has access to quality, affordable health care.”

Dr. Marcia Angell, former editor of the New England Journal of Medicine and a prominent single-payer advocate, is scheduled to attend the meeting.

Angell said the group plans to urge Baucus to give serious consideration to Congress’ two primary single-payer bills, S. 703, by Sen. Bernie Sanders, I-Vt., and H.R. 676, by Rep. John Conyers, D-Mich.

“We will make a case that there should be full hearings on Sanders’ bill and we’ll make the case that the (Congressional Budget Office) should cost-out the Sanders and Conyers bills,” Angell said in an interview Monday. “We’ll make the case that single-payer advocates should have a chance to meet with the president. We will argue for holding public hearings on health reform that include single payer witnesses.”

Thousands of Americans turn out to support single-payer healthcare!

Tim Carpenter, National Director
Progressive Democrats of America

Reports from the single-payer events, which took place on May 30 and the days leading up to it, are still rolling in, but we couldn’t wait to share the news with you. Read about the events in Seattle and Tacoma, Ohio, Rochester and Indiana. We’ll be posting more and invite you to send us your story, as well.

One thing is clear: more and more people are turning out in support of single-payer healthcare at rallies, marches, and forums–big and small. Pat yourself on the back! We’re seeing the fruits of our labor playing out in communities across the country.

The next step is for each of us to take the single-payer message to the Obama for America (OFA) “kickoff” meetings on June 6. Click here to find one near you. And, order your free professionally printed flyers–shipping charges apply–to take with you.

Polls show the strong support for single-payer, and the folks attending these events are friendly to the cause of real healthcare reform. This is a great opportunity to build support and send our message to President Obama.

I’m looking forward to reading more of your May 30 Single-payer Day of Action reports. Let us know about the June 6 OFA kickoff meetings, too.

In Solidarity.

Write Baucus to Hold Fair Hearings on Single Payer

ProsperityAgenda.US
Monday, June 1, 2009

Senator Max Baucus and the Finance Committee are feeling the pressure.

This Wednesday Sen. Baucus will meet with a delegation of leading single payer national health plan advocates.

The delegation includes: Dr. David Himmelstein, Associate Professor of Medicine at Harvard Medical School and co-founder of Physicians for a National Health Program (PNHP), Dr. Marcia Angell, Senior Lecturer, Harvard Medical School and former editor-in-chief of the New England Journal of Medicine, Dr. Oliver Fein, Associate Dean, Cornell Weill Medical School, and President of PNHP, Rose Ann DeMoro, executive director of the California Nurses Association, and Geri Jenkins, president of California Nurses Association.

But we know that a private meeting with single payer advocates does not mean that single payer is on the table or will get a fair hearing.

We are pleased Sen. Baucus is feeling the pressure and reacting but an off-the-record meeting is not enough. We want single payer on the table and really being considered. We know that on every measure: cost, patient choice, improved health care and covering all people — single payer wins every argument. It isn’t even a close question which is why a super majority of Americans support single payer — improved Medicare for all.

Please take action and write Senator Baucus and the Senate Finance Committee today. Tell them that while we appreciate a private meeting for single payer — that is not good enough. Single payer needs to be on the table, because with fair consideration single payer will be the health care plan adopted by the nation. Click here to send a letter now.

The multi-payer system that Senator Baucus is pushing will be a gift to the insurance industry that has so generously supported him throughout his political career. It will push, perhaps even force, people to buy insurance, it will subsidize the industry even more than it already is, it will not control costs indeed it will increase taxes to pay for insurance subsidies, and, if there is a public insurance option it will have so many strings attached that it will fail. This is not reform that provide health care to all at a price the nation can afford.

We’re making progress. Please take action now to keep the pressure on. Click here to take action.

It is time to put single payer on the table, indeed it is time to make it America’s national health policy. A private meeting should spur our movement to increase the pressure senators are feeling. We want real change not symbolic meetings.

Sincerely,

Kevin Zeese
Executive Director
ProsperityAgenda.US

ProsperityAgenda.US is a project of Campaign for Fresh Air and Clean Politics

ProsperityAgenda.US
2842 N. Calvert St.
Baltimore, MD 21218
443-708-8360

Health care activists lament single-payer snub

Victoria Colliver
San Francisco Chronicle
Saturday, May 30, 2009

Frustrated by the exclusion of government-financed medical care from the debate to revamp the nation’s troubled health system, advocates of a “single-payer” plan are increasingly turning to demonstrations and civil disobedience as a way to get their message across.

During Senate Finance Committee hearings May 5 and 12 on health reform, 13 doctors, nurses, lawyers and activists stood up to complain that no single-payer proponent had been invited to take part and were arrested for disrupting the proceedings.

On Friday in San Francisco, about 200 single-payer proponents held a rally in front of the Federal Building and headed in small groups to Rep. Nancy Pelosi’s office to urge the speaker of the House, who was in China, to back single-payer legislation and give its supporters a seat at the table of the health reform debate. The public appeals were part of a series of demonstrations being held in more than 50 U.S. cities over the next few days to encourage lawmakers to enact a single-payer plan.

Some advocates of a nationalized health plan are calling for activists to become even more militant.

“It’s the only way – direct confrontation with the people who are blocking what the majority of the American people want,” said Russell Mokhiber, the founder of the newly formed Single Payer Action.

“It’s about getting in people’s faces and being serious about the fact that 60 Americans are dying every day because of lack of health insurance,” said Mokhiber, who was arrested at the May 5 hearing and arraigned earlier this week in Washington.

Single payer unlikely

Reforming health care has become a focus of the Obama administration, with the president urging Congress to get legislation to his desk by the end of the year that would cover most of the nation’s 47 million uninsured. Whether that will happen remains to be seen, but whatever Congress passes is not likely to come in the form of a single-payer plan.

In a single-payer system, as envisioned by most advocates, the federal government would pay for basic medical care delivered by public and private health professionals. The money would come from taxes, and medical bills would go directly to a government insurance plan, similar to Medicare.

President Obama and lawmakers have proposed a form of “single-payer lite” – a government-administered plan people could buy into as an alternative to purchasing an individual policy offered by insurers. But single-payer supporters say this option doesn’t go far enough. They want private insurers completely out of the business of covering basic care, which they say could save nearly 30 percent in administrative costs.

That’s clearly not something the health insurance industry supports. Many of the nation’s largest insurers prefer a form of “universal” health care that would cover all Americans, while keeping them in business. They tend to avoid discussing the single-payer option largely because it hasn’t been included in the national debate.

Some statistics show the single-payer concept has grown in popularity as problems in the nation’s health care system have worsened. A CBS News/New York Times poll conducted in January found 59 percent of the 1,112 people surveyed said they supported government-provided national health insurance.

Physician support

Several groups, including the California Nurses Association and Physicians for a National Health Program, call for a single-payer option. While not supported by the American Medical Association, a nationalized health system got the backing of 59 percent of physicians in a poll published last year in the Annals of Internal Medicine.

The California Legislature has twice passed a state-level single-payer bill – in 2006 and 2008 – making it the first state to do so, but both times the effort was vetoed by Gov. Arnold Schwarzenegger. The legislation, authored by former state Sen. Sheila Kuehl, D-Santa Monica, has been reintroduced as by Sen. Mark Leno, D-San Francisco. Leno’s version is expected to meet the same fate as its predecessors.

Still, single payer has been largely dismissed from serious discussion on the national level as politically infeasible.

“It’s off the table in Washington because of the politics,” said Laurence Baker, associate professor of health research and policy at Stanford University.

Health insurers and drugmakers have contributed millions of dollars to members of Congress. One of the top recipients of that money, said Consumer Watchdog, an advocacy group based in Santa Monica, was Sen. Max Baucus, D-Montana, chairman of the Senate Finance Committee, who was running the hearings when the arrests took place this month. He accepted $413,000 in drug and health insurance campaign contributions during that time.

Many single-payer supporters interpret the resistance to the single-payer idea to be simply the result of a formidable lobbying effort by the health insurance and pharmaceutical industries, but Stanford’s Baker said the hurdles are more nuanced.

Distrust for government

Americans are clearly frustrated by the health care system. While some polls indicate that a majority of Americans favor single payer, some polls show a distrust of government’s ability to take over health care, he said. In a Kaiser Family Foundation poll released in April, just 35 percent of those surveyed expressed support for a government-run health system like Medicare.

As the debate continues, single-payer supporters have clearly ramped up their activity and tactics. The 50 demonstrations have been organized by a variety of groups including Healthcare-NOW!, Progressive Democrats of America and the Green Party.

But not all single-payer groups promote civil disobedience as a way to draw attention to the cause. Don Bechler, chairman and founder of Single Payer Now, a statewide advocacy group in San Francisco that helped organize the demonstrations, said he is more interested in drawing in more supporters than seeing people get arrested.

California nurse DeAnn McEwen didn’t set out to become one of the “Baucus 13,” the 13 arrested at the Senate Finance Committee hearings. She happened to be in Washington for a nurses’ union organizing committee meeting when she learned about the hearings.

McEwen, of Long Beach, a nurse for 35 years, said she felt compelled to speak out about the lack of a single-payer voice at the table.

“At that point, I felt I couldn’t be silent anymore because it was like I was seeing a gag, a hand covering the mouth of a victim,” McEwen said. “There’s therapy for the broken health care system, and any other reform that includes the insurance companies is not going to get us where we need to go in terms of providing equitable and fair coverage.”

E-mail Victoria Colliver at vcolliver@sfchronicle.com.