PNHP

‘Medicare Advantage’ a misnomer

‘Medicare Advantage’ a misnomer

Taxpayers foot bill for private insurance to inadequately cover seniors’ health care

Jonathan D. Walker
The Journal Gazette
November 10, 2008

America has a split personality when it comes to health care. There is recognition that the government has to provide care for the people, but there is a conflicting sense that private industry has to be involved because it can somehow be more efficient. Medicare Advantage is the upshot of this thinking — but the result has been a lot of taxpayer dollars wasted on windfall payouts to private insurance companies.

With Medicare Advantage, the government is basically paying private insurance companies more money to do what Medicare could be doing more cheaply and more efficiently in the first place — if we as citizens asked it to. A lot of this extra money is not used to help the people Medicare is supposed to be helping.

Instead, the money is wasted on administrating, marketing and generating profits for insurance companies. In other words, the government is using our tax dollars to pay for the “privilege” of bringing in all the hassles of private health insurance into Medicare.

The confusing array of plans can cause less sophisticated shoppers to get stuck with very bad plans that increase their co-pays and force them to change doctors and hospitals. Careful consumers can get what seems to be a good plan because the insurance companies can use some of the money they get from the government to offer extra benefits and services.

But even smart shoppers can get into trouble. If they get sick, they will suddenly get hit with the large deductibles that go along with these plans — often thousands of dollars. To avoid these costs, patients switch back to standard Medicare once they become ill.

This scenario turns out to be a great advantage for the private insurance companies that run the Medicare Advantage plans. They use our tax dollars to get paid to do what the government could do for less, and they make even more money by covering only the healthiest seniors.

It gets even more frustrating because the healthy seniors who are getting a great deal at taxpayer expense are understandably reluctant to modify the system (as long as they stay healthy). Whenever Congress threatens to cut back on Medicare Advantage, the insurance companies can call on these seniors to contact their representatives and halt any changes.

Multiple sources have shown that the Medicare Advantage program is a waste of money, including the Medicare Payment Advisory Commission (Congress’ advisory body on Medicare payments) and the Congressional Budget Office. According to the Government Accountability Office, Medicare Advantage plans cost taxpayers 12 percent more per recipient than standard Medicare. They estimate it will cost an extra $54 billion by 2112 — about what it would cost to provide all children in America with health insurance.

And it is not just a problem of wasted taxpayer dollars. The profit motive has resulted in terrible abuses, especially with patients who have limited abilities to understand the complexity of these plans. In a hearing in 2007, Sen. Herb Kohl, D-Wis., said, “Our investigation has revealed a disturbingly consistent picture, one which only seems to be growing. Countless seniors purchasing Medicare Advantage plans have been preyed upon and unwittingly taken advantage of by insurance agents. Seniors have been removed from traditional Medicare without their knowledge, signed onto plans they can’t afford, misled regarding coverage and told their doctors accept these plans when in reality they don’t. This is simply unacceptable.”

America’s health care system is in enough trouble without wasting resources on inefficient programs that don’t give us our money’s worth — simply because powerful lobbyists get these programs enacted and then keep the programs from being cut. When organizations like the Congressional Budget Office, the Government Accountability Office and the Medicare Payment Advisory Commission tell us that there is no advantage to Medicare Advantage, we should listen.

Jonathan D. Walker , M.D., is a member of Hoosiers for a Commonsense Health Plan. He wrote this for The Journal Gazette.

Uwe Reinhardt on why health care costs so much

Why Does U.S. Health Care Cost So Much? (Part I)

By Uwe E. Reinhardt
The New York Times
November 14, 2008
The graph (available at the link below) tells a compact story of United States health spending relative to that of other nations.
Shown on the horizontal axis is the gross domestic product per capita in 2006. The vertical axis represents 2006 health spending per capita. The data points in the graph represent two dozen developed countries that are members of the Organization for Economic Cooperation and Development (O.E.C.D.).
The data are expressed in Purchasing Parity Dollars (PPP$). This metric is designed to adjust for cross-national differences in the purchasing power of national currencies relative to the real goods and services. One can think of PPP$s as dollars that buy roughly the same basket of real goods and services in different countries.
You’ll notice that there is enormous variation in health spending per capita in different countries within the O.E.C.D. But the graph also indicates that there exists a very strong relationship between the G.D.P. per capita of these countries (roughly a measure of ability to pay) and per-capita health spending.
Just knowing the G.D.P. per capita of nations helps us explain about 86 percent of the variation in how much different countries pay for health care for the average person. Canada, for example, on average spent only PPP$3,678 on health care per person in 2006, which is about 55 percent of the amount the United States paid per person. But Canada’s G.D.P. per capita in 2006 was also smaller than the comparable United States figure, although not that much smaller (it was 84 percent of the American level).
The line helps us estimate that roughly $1,141 of the $3,036 difference between Canadian and American health spending per capita — or 38 percent — can be explained by the underlying difference in G.D.P. per capita alone.
An additional insight from the graph, however, is that even after adjustment for differences in G.D.P. per capita, the United States in 2006 spent $1,895 more on health care than would have been predicted after such an adjustment. If G.D.P. per capita were the only factor driving the difference between United States health spending and that of other nations, the United States would be expected to have spent an average of only $4,819 per capita on health care rather than the $6,714 it actually spent.
Health-services researchers call the difference between these numbers, here $1,895, “excess spending.” That term, however, is not meant to convey “excessive spending,” but merely a difference driven by factors other than G.D.P. per capita. Prominent among these other factors are:
1. higher prices for the same health care goods and services than are paid in other countries for the same goods and services;
2. significantly higher administrative overhead costs than are incurred in other countries with simpler health-insurance systems;
3. more widespread use of high-cost, high-tech equipment and procedures than are used in other countries;
4. higher treatment costs triggered by our uniquely American tort laws, which in the context of medicine can lead to “defensive medicine” — that is, the application of tests and procedures mainly as a defense against possible malpractice litigation, rather than as a clinical imperative.
There are three other explanations that are widely — but erroneously — thought among non-experts to be cost drivers in the American health spending. To wit:
1. that the aging of our population drives health spending
2. that we get better quality from our health system than do other nations, and
3. that we get better health outcomes from our system
I will comment in more detail on factors that do and do not drive health spending in subsequent posts.
http://economix.blogs.nytimes.com/2008/11/14/why-does-us-health-care-cost-so-much-part-i/

Whoa. This one’s pretty heavy, but you really don’t have to understand Purchasing Parity Dollars and the other economic lingo to be able to understand the take-home message.
There is an important reason to present the economic data, and that is that we need to approach health care reform using highly credible factual data. Many individuals have an opinion as to why heath care costs in the United States are so high, but those views are often based on nothing more than hearsay, and often are incorrect. Reform must be based on solid facts.
So what is Prof. Reindardt’s take-home message? Although somewhat repetitive, it is worth emphasizing these points again.
What does NOT increase costs:
1. Living longer does NOT contribute significantly to health care costs. Most health care spending occurs near the end of life, and we are allocated only one death apiece. That spent on chronic diseases during the additional years of life expectancy is negligible when compared to end-of-life spending.
2. Higher quality of health care in the United States is NOT a cause of increased health care costs for the simple reason that the quality of our health care is quite mediocre, on average, when compared with other nations.
3. Better health outcomes are NOT a reason for higher health care costs simply because our outcomes are not better by most measures, and on several measures we are worse.
What DOES increase costs:
1. Nations with a high GDP have more money to spend on health care, and they spend it. (The graph in the original article demonstrates this point well. It also demonstrates that the United States is the single outlier of the two dozen nations, with much higher per capita spending than would be projected by our very high GDP.)
2. The United States pays higher prices for health care services and products than do other nations for the same services and products. This was demonstrated in the Health Affairs article, “It’s the Prices, Stupid.” Our dysfunctional system of financing health care has not been capable of optimizing prices (think of pharmaceuticals). We could do much better using negotiated pricing through a single financing system.
3. Our fragmented, multi-payer system has resulted in profound administrative waste, adding significantly to our high health care costs. Proposals to limit administrative costs of private insurers to 15 percent of their revenues will have very little impact since many are already at that level, and this limit will not provide any relief for the administrative burden that our multi-payer system has placed on the health care delivery system. Administrative savings would be possible only by adopting a simpler health insurance system.
4. Our costs are higher because of our greater use of expensive, high-tech services and equipment that all too often provides no benefit and may even be detrimental. We need to identify those services not providing value so that we can redirect our resources elsewhere (a complex but doable task).
5. Our American tort system has provoked the use of flat-of-the-curve defensive medicine that wastes resources, thereby increasing costs. How we should reform the tort system remains controversial, but it must be addressed.
6. The contraction of our primary care infrastructure has contributed indirectly to our high health care costs. Primary care environments provide quality care at a lower cost. Shifting health care access to specialized environments increases costs through some of the mechanisms listed above. Overuse of emergency departments is a problem because of the strain on the capacities of the system, but it is not much of a contributor to increased costs since the marginal costs of the additional load are quite small.
Everyone agrees that health care reform must address the high costs of health care. Most current proposals merely expand the way we are already paying for care without changes that will have any major impact on these cost drivers.
Instead of expanding our current dysfunctional financing system and then attempting to transform it into a social insurance model, it would be so much easier and much less expensive to simply replace it with a single payer national health program.

Uwe Reinhardt on why health care costs so much

Why Does U.S. Health Care Cost So Much? (Part I)

By Uwe E. Reinhardt
The New York Times
November 14, 2008

The graph (available at the link below) tells a compact story of United States health spending relative to that of other nations.

Shown on the horizontal axis is the gross domestic product per capita in 2006. The vertical axis represents 2006 health spending per capita. The data points in the graph represent two dozen developed countries that are members of the Organization for Economic Cooperation and Development (O.E.C.D.).

The data are expressed in Purchasing Parity Dollars (PPP$). This metric is designed to adjust for cross-national differences in the purchasing power of national currencies relative to the real goods and services. One can think of PPP$s as dollars that buy roughly the same basket of real goods and services in different countries.

You’ll notice that there is enormous variation in health spending per capita in different countries within the O.E.C.D. But the graph also indicates that there exists a very strong relationship between the G.D.P. per capita of these countries (roughly a measure of ability to pay) and per-capita health spending.

Just knowing the G.D.P. per capita of nations helps us explain about 86 percent of the variation in how much different countries pay for health care for the average person. Canada, for example, on average spent only PPP$3,678 on health care per person in 2006, which is about 55 percent of the amount the United States paid per person. But Canada’s G.D.P. per capita in 2006 was also smaller than the comparable United States figure, although not that much smaller (it was 84 percent of the American level).

The line helps us estimate that roughly $1,141 of the $3,036 difference between Canadian and American health spending per capita — or 38 percent — can be explained by the underlying difference in G.D.P. per capita alone.

An additional insight from the graph, however, is that even after adjustment for differences in G.D.P. per capita, the United States in 2006 spent $1,895 more on health care than would have been predicted after such an adjustment. If G.D.P. per capita were the only factor driving the difference between United States health spending and that of other nations, the United States would be expected to have spent an average of only $4,819 per capita on health care rather than the $6,714 it actually spent.

Health-services researchers call the difference between these numbers, here $1,895, “excess spending.” That term, however, is not meant to convey “excessive spending,” but merely a difference driven by factors other than G.D.P. per capita. Prominent among these other factors are:

1. higher prices for the same health care goods and services than are paid in other countries for the same goods and services;

2. significantly higher administrative overhead costs than are incurred in other countries with simpler health-insurance systems;

3. more widespread use of high-cost, high-tech equipment and procedures than are used in other countries;

4. higher treatment costs triggered by our uniquely American tort laws, which in the context of medicine can lead to “defensive medicine” — that is, the application of tests and procedures mainly as a defense against possible malpractice litigation, rather than as a clinical imperative.

There are three other explanations that are widely — but erroneously — thought among non-experts to be cost drivers in the American health spending. To wit:

1. that the aging of our population drives health spending

2. that we get better quality from our health system than do other nations, and

3. that we get better health outcomes from our system

I will comment in more detail on factors that do and do not drive health spending in subsequent posts.

http://economix.blogs.nytimes.com/2008/11/14/why-does-us-health-care-cost-so-much-part-i/

Comment:

By Don McCanne, MD

Whoa. This one’s pretty heavy, but you really don’t have to understand Purchasing Parity Dollars and the other economic lingo to be able to understand the take-home message.

There is an important reason to present the economic data, and that is that we need to approach health care reform using highly credible factual data. Many individuals have an opinion as to why heath care costs in the United States are so high, but those views are often based on nothing more than hearsay, and often are incorrect. Reform must be based on solid facts.

So what is Prof. Reindardt’s take-home message? Although somewhat repetitive, it is worth emphasizing these points again.

What does NOT increase costs:

1. Living longer does NOT contribute significantly to health care costs. Most health care spending occurs near the end of life, and we are allocated only one death apiece. That spent on chronic diseases during the additional years of life expectancy is negligible when compared to end-of-life spending.

2. Higher quality of health care in the United States is NOT a cause of increased health care costs for the simple reason that the quality of our health care is quite mediocre, on average, when compared with other nations.

3. Better health outcomes are NOT a reason for higher health care costs simply because our outcomes are not better by most measures, and on several measures we are worse.

What DOES increase costs:

1. Nations with a high GDP have more money to spend on health care, and they spend it. (The graph in the original article demonstrates this point well. It also demonstrates that the United States is the single outlier of the two dozen nations, with much higher per capita spending than would be projected by our very high GDP.)

2. The United States pays higher prices for health care services and products than do other nations for the same services and products. This was demonstrated in the Health Affairs article, “It’s the Prices, Stupid.” Our dysfunctional system of financing health care has not been capable of optimizing prices (think of pharmaceuticals). We could do much better using negotiated pricing through a single financing system.

3. Our fragmented, multi-payer system has resulted in profound administrative waste, adding significantly to our high health care costs. Proposals to limit administrative costs of private insurers to 15 percent of their revenues will have very little impact since many are already at that level, and this limit will not provide any relief for the administrative burden that our multi-payer system has placed on the health care delivery system. Administrative savings would be possible only by adopting a simpler health insurance system.

4. Our costs are higher because of our greater use of expensive, high-tech services and equipment that all too often provides no benefit and may even be detrimental. We need to identify those services not providing value so that we can redirect our resources elsewhere (a complex but doable task).

5. Our American tort system has provoked the use of flat-of-the-curve defensive medicine that wastes resources, thereby increasing costs. How we should reform the tort system remains controversial, but it must be addressed.

6. The contraction of our primary care infrastructure has contributed indirectly to our high health care costs. Primary care environments provide quality care at a lower cost. Shifting health care access to specialized environments increases costs through some of the mechanisms listed above. Overuse of emergency departments is a problem because of the strain on the capacities of the system, but it is not much of a contributor to increased costs since the marginal costs of the additional load are quite small.

Everyone agrees that health care reform must address the high costs of health care. Most current proposals merely expand the way we are already paying for care without changes that will have any major impact on these cost drivers.

Instead of expanding our current dysfunctional financing system and then attempting to transform it into a social insurance model, it would be so much easier and much less expensive to simply replace it with a single payer national health program.

Lessons from the U.K.

Lessons from the U.K.

By Martin Roland, D.M.
The New England Journal of Medicine
November 13, 2008
The United Kingdom takes the importance of primary care for granted. The U.K. government is effectively the country’s single payer, and successive administrations have been convinced by mounting evidence that primary care promotes high-quality, cost-effective, and equitable health care. If anything, the U.K. government has become more convinced over the past 15 years that strong primary care needs to be at the heart of the country’s health care system — quite the reverse of the situation in the United States. U.K. primary care physicians now have average earnings of $220,000 (in U.S. dollars), which is more than many specialists earn.
Having a single-payer system helps a great deal in terms of organizing quality-improvement activities.
U.K. primary care physicians increasingly work in multidisciplinary teams, with nurses taking on an increasing proportion of the work. Nurses see patients with minor illnesses and assume responsibility for the routine management of chronic diseases.
Having a single-payer system also means that U.K. primary care physicians hold each patient’s lifelong record, which includes a letter regarding every visit to a specialist. Virtually all primary care physicians use electronic medical records, and laboratories now generally download lab results directly into family practitioners’ computer systems. Again, the government took advantage of having a single-payer system to define common standards to which all suppliers of electronic medical records must adhere.
It is hard to discuss U.K. medical care without mentioning universal coverage. Although it may not be politically achievable in the United States, universal access to care is probably the key factor behind findings that U.K. citizens have better health outcomes than their U.S. counterparts despite having health care costs that are a fraction of those in the United States.
http://content.nejm.org/cgi/content/full/359/20/2087-b

What can we learn from the U.K.? Through a single payer system the U.K. has been able to build a strong primary care infrastructure with teams organized to provide high-quality coordinated care for everyone. They have done this at a fraction of the costs of U.S. health care, while compensating their primary care physicians very generously.
And how is the U.S. going to use this information? We are going to reject it because it is not a uniquely American solution. Instead, we are about to expand our dysfunctional, fragmented, wasteful, costly system of financing health care, simply because it is uniquely American!?
The U.K. system, like that of many other nations, uses their power as a monopsony to purchase much greater value in health care. The United States now wants to use our tax dollars as credits to help us purchase individual plans that do not cooperate but compete. That competition not only results in tremendous administrative waste, it also destroys any prospect of creating an effective monopsony.
So we are going to tax ourselves to provide even more funds to our unique, corporate-model private insurers to allow them to burn up more resources while establishing a barrier to much needed delivery system reform (a barrier because the financing is fragmented).
We do have a very weak monopsony in the form of Medicare. Can’t we learn lessons from Medicare, and then project the improvements that we could make if it were converted into a strong monopsony? Maybe as a single payer that wouldn’t be uniquely American, but couldn’t we pretend it is until we achieve the structural reform that we desperately need?

Lessons from the U.K.

Lessons from the U.K.

By Martin Roland, D.M.
The New England Journal of Medicine
November 13, 2008

The United Kingdom takes the importance of primary care for granted. The U.K. government is effectively the country’s single payer, and successive administrations have been convinced by mounting evidence that primary care promotes high-quality, cost-effective, and equitable health care. If anything, the U.K. government has become more convinced over the past 15 years that strong primary care needs to be at the heart of the country’s health care system — quite the reverse of the situation in the United States. U.K. primary care physicians now have average earnings of $220,000 (in U.S. dollars), which is more than many specialists earn.

Having a single-payer system helps a great deal in terms of organizing quality-improvement activities.

U.K. primary care physicians increasingly work in multidisciplinary teams, with nurses taking on an increasing proportion of the work. Nurses see patients with minor illnesses and assume responsibility for the routine management of chronic diseases.

Having a single-payer system also means that U.K. primary care physicians hold each patient’s lifelong record, which includes a letter regarding every visit to a specialist. Virtually all primary care physicians use electronic medical records, and laboratories now generally download lab results directly into family practitioners’ computer systems. Again, the government took advantage of having a single-payer system to define common standards to which all suppliers of electronic medical records must adhere.

It is hard to discuss U.K. medical care without mentioning universal coverage. Although it may not be politically achievable in the United States, universal access to care is probably the key factor behind findings that U.K. citizens have better health outcomes than their U.S. counterparts despite having health care costs that are a fraction of those in the United States.

http://content.nejm.org/cgi/content/full/359/20/2087-b

Comment:

By Don McCanne, MD

What can we learn from the U.K.? Through a single payer system the U.K. has been able to build a strong primary care infrastructure with teams organized to provide high-quality coordinated care for everyone. They have done this at a fraction of the costs of U.S. health care, while compensating their primary care physicians very generously.

And how is the U.S. going to use this information? We are going to reject it because it is not a uniquely American solution. Instead, we are about to expand our dysfunctional, fragmented, wasteful, costly system of financing health care, simply because it is uniquely American!?

The U.K. system, like that of many other nations, uses their power as a monopsony to purchase much greater value in health care. The United States now wants to use our tax dollars as credits to help us purchase individual plans that do not cooperate but compete. That competition not only results in tremendous administrative waste, it also destroys any prospect of creating an effective monopsony.

So we are going to tax ourselves to provide even more funds to our unique, corporate-model private insurers to allow them to burn up more resources while establishing a barrier to much needed delivery system reform (a barrier because the financing is fragmented).

We do have a very weak monopsony in the form of Medicare. Can’t we learn lessons from Medicare, and then project the improvements that we could make if it were converted into a strong monopsony? Maybe as a single payer that wouldn’t be uniquely American, but couldn’t we pretend it is until we achieve the structural reform that we desperately need?

Reform proposal of Sen. Baucus

Senator Takes Initiative on Health Care

By Robert Pear
The New york Times
November 11, 2008
Without waiting for President-elect Barack Obama, Senator Max Baucus, the chairman of the Finance Committee, will unveil a detailed blueprint on Wednesday to guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for health benefits.
… would eventually require everyone to have health insurance coverage, with federal subsidies for those who could not otherwise afford it.
… broadly compatible with Mr. Obama’s campaign promises. But Mr. Baucus’s 35,000-word plan would go further than Mr. Obama’s in one respect, eventually requiring all people — not just children — to have coverage.
… create a nationwide marketplace, a “health insurance exchange,” where people could compare and buy insurance policies. The options would include private insurance policies and a new public plan similar to Medicare.
Insurers could no longer deny coverage to people who had been sick. Congress would also limit insurers’ ability to charge higher premiums because of a person’s age or prior illness.
People would have a duty to obtain coverage when affordable options were available to all through employers or through the insurance exchange. This obligation “would be enforced, possibly through the tax system,” the plan says.
People age 55 to 64 should be able to buy Medicare coverage if they do not have access to a public insurance program or a group health plan.
Medicaid would be available to everyone below the poverty level…
The State Children’s Health Insurance Program would be expanded to cover all uninsured youngsters in families with incomes at or below 250 percent of the poverty level …
He would offer tax credits to small businesses to help them defray the costs of providing health benefits to employees.
To make insurance more affordable for those who buy coverage on their own, Mr. Baucus would offer tax credits to individuals and families with incomes at or below four times the poverty level…
http://www.nytimes.com/2008/11/12/washington/12health.html

And…

Call to Action, Health Reform 2009

Senator Max Baucus, Chairman, Senate Finance Committee
November 12, 2008
Individual Responsibility
Once affordable, high-quality, and meaningful health insurance options are available to all Americans, it will be each individual’s responsibility to have coverage. This step is necessary to make the entire health care system function properly.
Premium Subsidies
In order to make health coverage affordable for all Americans, refundable tax credits would be available to individuals and families with incomes at or below four times the Federal poverty level. These tax subsidies would be available to individuals and families who purchased coverage through the Health Insurance Exchange. The Independent Health Coverage Council would define what an “affordable” premium is, taking into account the reasonable percent of income to be spent on health care coverage. The premium subsidy would make up the difference between the amount suggested by the Council and the premium amount charged by the plan. The amount of the subsidy could be based on a benchmark that would be equal to a locally adjusted, average premium in the Exchange. This construct would encourage individuals to be prudent purchasers of health care policies.
Conclusion
Each of the key challenges facing our health care system — lack of access to care, the cost of care, and the need for better-quality care — must be addressed in concert. Covering millions of uninsured through a broken health system will be fiscally unsustainable. Attempting to address the inefficiencies plaguing our system and the perverse incentives in the delivery system without covering the uninsured will fail to alleviate the burden of uncompensated care and cost shifting. The time for incremental improvements has passed; health care reform must be comprehensive in scope.
This Call to Action provides a starting point for the upcoming health care reform debate. It is a vision and not a legislative proposal. It is comprehensive but not an exhaustive exploration of every health care issue that can or should be considered.
The next crucial step is a constructive dialog on policy priorities among policymakers, stakeholders, health policy thought leaders and the public. Consensus will be difficult to achieve, but common ground from which to build can and must be found.
Call to Action, Health Reform 2009 (98 pages):
http://finance.senate.gov/healthreform2009/finalwhitepaper.pdf

And…

2009 Health Reform Plan

Sen. Max Baucus
C-SPAN
November 12, 2008
News Conference
Sen. Baucus: “Some people suggest the United States should have a single payer system. I disagree. I don’t think a single payer system makes sense in this country.”
http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=282373-1

As the powerful chairman of the Senate Finance Committee, and as a person passionately dedicated to comprehensive health care reform, we need to listen to what Sen. Max Baucus has to say. “Call to Action, Health Reform 2009” is his white paper describing serious problems with our health care system, and includes a collection of legislative proposals to address those problems. It is an important report because it does represent what seems to be the prevailing views in Washington, D.C. on the direction for reform.
There are many valuable recommendations in this report. Some of them should be enacted soon as possible as urgent measures to hold us over while we are pressing forward with comprehensive reform. Others can be enacted independently of the comprehensive legislative package. But some represent flawed policy concepts and should never be enacted.
Only one of the major flaws will be touched on here: the mandate for individuals to purchase their own health plans should they not be covered under their employers’ plans.
Under this proposal, a family of four will have to fully fund their own coverage if their income is over $84,800 (four times the poverty level). According to the 2008 Milliman Medical Index, a family of four is already paying an average of $15,600 for health care. That means that this family would be paying over 18 percent of their income for health care. Since this is average, many families would be paying a much higher percentage.
Many in the policy community believe that health care expenditures over 10 percent of income expose individuals or families to the potential of financial hardship. To keep expenditures at 10 percent, a family of four with average medical expenses would require an income over $156,000. Those with above average expenses would require even greater incomes.
Financing health care with private health plans no longer makes sense. We need a single universal risk pool that is funded equitably using progressive tax policies. Sen. Baucus says that he doesn’t think that a single payer system makes sense in this country, but it’s the only system that does.

Reform proposal of Sen. Baucus

Senator Takes Initiative on Health Care

By Robert Pear
The New york Times
November 11, 2008

Without waiting for President-elect Barack Obama, Senator Max Baucus, the chairman of the Finance Committee, will unveil a detailed blueprint on Wednesday to guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for health benefits.

… would eventually require everyone to have health insurance coverage, with federal subsidies for those who could not otherwise afford it.

… broadly compatible with Mr. Obama’s campaign promises. But Mr. Baucus’s 35,000-word plan would go further than Mr. Obama’s in one respect, eventually requiring all people — not just children — to have coverage.

… create a nationwide marketplace, a “health insurance exchange,” where people could compare and buy insurance policies. The options would include private insurance policies and a new public plan similar to Medicare.

Insurers could no longer deny coverage to people who had been sick. Congress would also limit insurers’ ability to charge higher premiums because of a person’s age or prior illness.

People would have a duty to obtain coverage when affordable options were available to all through employers or through the insurance exchange. This obligation “would be enforced, possibly through the tax system,” the plan says.

People age 55 to 64 should be able to buy Medicare coverage if they do not have access to a public insurance program or a group health plan.

Medicaid would be available to everyone below the poverty level…

The State Children’s Health Insurance Program would be expanded to cover all uninsured youngsters in families with incomes at or below 250 percent of the poverty level …

He would offer tax credits to small businesses to help them defray the costs of providing health benefits to employees.

To make insurance more affordable for those who buy coverage on their own, Mr. Baucus would offer tax credits to individuals and families with incomes at or below four times the poverty level…

http://www.nytimes.com/2008/11/12/washington/12health.html

And…

Call to Action, Health Reform 2009

Senator Max Baucus, Chairman, Senate Finance Committee
November 12, 2008

Individual Responsibility

Once affordable, high-quality, and meaningful health insurance options are available to all Americans, it will be each individual’s responsibility to have coverage. This step is necessary to make the entire health care system function properly.

Premium Subsidies

In order to make health coverage affordable for all Americans, refundable tax credits would be available to individuals and families with incomes at or below four times the Federal poverty level. These tax subsidies would be available to individuals and families who purchased coverage through the Health Insurance Exchange. The Independent Health Coverage Council would define what an “affordable” premium is, taking into account the reasonable percent of income to be spent on health care coverage. The premium subsidy would make up the difference between the amount suggested by the Council and the premium amount charged by the plan. The amount of the subsidy could be based on a benchmark that would be equal to a locally adjusted, average premium in the Exchange. This construct would encourage individuals to be prudent purchasers of health care policies.

Conclusion

Each of the key challenges facing our health care system — lack of access to care, the cost of care, and the need for better-quality care — must be addressed in concert. Covering millions of uninsured through a broken health system will be fiscally unsustainable. Attempting to address the inefficiencies plaguing our system and the perverse incentives in the delivery system without covering the uninsured will fail to alleviate the burden of uncompensated care and cost shifting. The time for incremental improvements has passed; health care reform must be comprehensive in scope.

This Call to Action provides a starting point for the upcoming health care reform debate. It is a vision and not a legislative proposal. It is comprehensive but not an exhaustive exploration of every health care issue that can or should be considered.

The next crucial step is a constructive dialog on policy priorities among policymakers, stakeholders, health policy thought leaders and the public. Consensus will be difficult to achieve, but common ground from which to build can and must be found.

Call to Action, Health Reform 2009 (98 pages):
http://finance.senate.gov/healthreform2009/finalwhitepaper.pdf

And…

2009 Health Reform Plan

Sen. Max Baucus
C-SPAN
November 12, 2008
News Conference

Sen. Baucus: “Some people suggest the United States should have a single payer system. I disagree. I don’t think a single payer system makes sense in this country.”

http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=282373-1

Comment:

By Don McCanne, MD

As the powerful chairman of the Senate Finance Committee, and as a person passionately dedicated to comprehensive health care reform, we need to listen to what Sen. Max Baucus has to say. “Call to Action, Health Reform 2009” is his white paper describing serious problems with our health care system, and includes a collection of legislative proposals to address those problems. It is an important report because it does represent what seems to be the prevailing views in Washington, D.C. on the direction for reform.

There are many valuable recommendations in this report. Some of them should be enacted soon as possible as urgent measures to hold us over while we are pressing forward with comprehensive reform. Others can be enacted independently of the comprehensive legislative package. But some represent flawed policy concepts and should never be enacted.

Only one of the major flaws will be touched on here: the mandate for individuals to purchase their own health plans should they not be covered under their employers’ plans.

Under this proposal, a family of four will have to fully fund their own coverage if their income is over $84,800 (four times the poverty level). According to the 2008 Milliman Medical Index, a family of four is already paying an average of $15,600 for health care. That means that this family would be paying over 18 percent of their income for health care. Since this is average, many families would be paying a much higher percentage.

Many in the policy community believe that health care expenditures over 10 percent of income expose individuals or families to the potential of financial hardship. To keep expenditures at 10 percent, a family of four with average medical expenses would require an income over $156,000. Those with above average expenses would require even greater incomes.

Financing health care with private health plans no longer makes sense. We need a single universal risk pool that is funded equitably using progressive tax policies. Sen. Baucus says that he doesn’t think that a single payer system makes sense in this country, but it’s the only system that does.

Buoyed by election, U.S. doctor group calls for single-payer system

By Mike Shields
Kansas Health Institute
KHI News Service
Nov. 6, 2008

KANSAS CITY, KAN. — More than 15,000 U.S. physicians, including some in Kansas, are calling on President-elect Barack Obama and the new Congress to enact a single-payer, national health insurance plan.

The plan, embodied in proposed federal legislation as HR 676, is sometimes referred to as “improved Medicare for all.” Medicare is the federal program that provides health insurance to those ages 65 and older. It was created in 1965.

Physicians for a National Health Program, which is headquartered in Chicago, sent a letter to Obama and congressional leaders urging them “to do the right thing” and enact a new national program they say would save the nation more than $350 billion a year.

“In large measure Sen. Obama’s victory and the victories of his allies in the House and Senate were propelled by mounting public worries about health care,” said Dr. Quentin Young, the group’s national coordinator. “Yet the prescription offered during the campaign by the president-elect and most Democratic policy makers — a hybrid of private health insurance plans and government subsidies — will not resolve the problems of our dangerously dysfunctional system.”

HR 676 has more than 90 co-sponsors, but has gained little traction since it was first introduced in 2003 by U.S. Rep. John Conyers, a Michigan Democrat.

One of those who signed the letter calling for a single-payer system was Dr. Sharon Lee, director of Family Health Care, a Kansas City clinic that serves the poor.

“The idea is to expand Medicare to cover everyone,” she said, “and by consolidating all the various government (health) programs under one administrative section it would significantly reduce cost and be able to cover the 48 million Americans currently uninsured.”

Dr. Joshua Freeman, chairman of the department of family medicine at the University of Kansas School of Medicine, also supports HR 676.

“I think it is absolutely critical that we have a universal coverage system,” Freeman said. “Every other industrialized country does and even some non-industrialized countries. Just like a fire department, a police department, health care is a core role of society.”

Freeman noted that an economist’s report on various health reform proposals considered last year by the Kansas Health Policy Authority showed that a state-based, single-payer system would save Kansans more than $1.2 billion a year on health spending because it would essentially eliminate insurance companies and the accompanying administrative costs.

The health policy authority did not present that proposal to the Kansas Legislature because its board members considered it politically unfeasible.

But Freeman said the idea of a single-payer system is the only reform proposal with genuine grassroots support.

“There’s only one movement for health reform and that’s for single payer,” he said. “There’s some support out there for premium assistance, tax credits, employer mandates, or some combination of all the above. But that all comes from politicians, policy wonks, academics. There’s no grassroots movement for any of those things and there is a grassroots movement for single payer. There is no other proposal out there that actually has people behind it.”

Freeman recently spoke to a Lawrence group that supports the passage of HR 676.

Lee is a member of a group formed about a year ago, Heartland Health Care for All. She said it is a citizens’ group that includes medical students, doctors, nurses, social workers, church members and others, “organized around the concept that everyone in the U.S. should have health care.”

She said the group is “strongly supportive” of HR 676.

A spokesman for the national physicians’ group said the election this week changed the political equation in ways that could help a single-payer system go forward.

Young, the group’s national coordinator, said at least five additional supporters of single-payer health reform were elected to Congress this week. U.S. Rep. Tom Udall, a New Mexico Democrat and co-sponsor of HR 676, was elected to the U.S. Senate. Young also noted that pro-single-payer ballot initiatives in 10 Massachusetts legislative districts “won by a landslide, on average receiving 73 percent of the vote.”

“A solid majority of physicians endorse such an approach,” Young said. “An April 2008 study in the Annals of Internal Medicine shows 59 percent of U.S. physicians support national health insurance. Opinion polls show two-thirds of the public also supports such a remedy. Now, with strong political leadership, this reform is within reach.”

Critics of a national, single-payer system say it would stymie innovation and competition.

Obama has said that a single-payer system might be a good idea, if the U.S. were starting with a blank slate. But since it isn’t, that solution would be problematic, though “over time it might be that we end up transitioning to such a system.”

His campaign Web site also includes these remarks by him quoted in The New Yorker magazine last year.

“‘If you’re starting from scratch,” Obama said, “then a single-payer system — a government-managed system like Canada’s, which disconnects health insurance from employment — would probably make sense. But we’ve got all these legacy systems in place, and managing the transition, as well as adjusting the culture to a different system, would be difficult to pull off. So we may need a system that’s not so disruptive that people feel like suddenly what they’ve known for most of their lives is thrown by the wayside.”

During the campaign, Obama proposed a plan that would build on the current employer-based health insurance system.

Meanwhile, top congressional leaders aren’t talking about a single-payer system.

U.S. House Speaker Nancy Pelosi has said the first health care bills likely from Congress now that Democrats have a stronger hand in Washington are an expansion of the State Children’s Health Insurance Program and funding for stem cell research.

But Freeman said the mood of the country might be such that the single-payer idea could finally come to pass.

“I’m never the greatest optimist,” he said. “But it’s a pretty amazing thing; this country just elected a Democrat, a black man. This is quite remarkable. Five years ago, if you’d asked me what would come first, a black president or national health insurance, I would have said national health insurance.”

Mike Shields is a staff writer for KHI News Service, which specializes in coverage of health issues facing Kansans. He can be reached at mshields@khi.org or at 785-233-5443, ext. 123.

Why We Would Benefit

Single Payer Health Care

By Don McCanne, MD
California Family Physician
Fall 2008

An efficient health care financing system should ensure that everyone receives the health care they need without facing undue financial hardship. Because of the millions of uninsured and the rapid expansion of inadequate underinsurance products, the burden of medical debt has become commonplace for all too many Americans.

Since affordability has become a major concern for most Americans, it is important to look at the true cost drivers that can be improved: deterioration in our primary care infrastructure, the overuse of non-beneficial, high-tech services, failure to establish a rational system of health care pricing, and the profound administrative excesses that waste financial resources that could be better spent on health care.

Our fragmented system of using a multitude of private and public payers is responsible for much of the administrative waste. Private insurers waste far more on administration than do public programs, but they all contribute to the costly administrative burden placed on the health care delivery system. Simply replacing this dysfunctional financing system with a single public insurance program would free up enough funds to expand reasonably comprehensive coverage to everyone.

Our fragmented system has also made it difficult to get our health care pricing right. Just think of what we pay for one MRI scan compared to what we pay for the initiation of a management program for a newly diagnosed diabetic. Or consider how we price pharmaceuticals compared to other nations. The administrators of a single, publicly administered financing system would have the ability to negotiate proper prices — high enough to cover legitimate costs and provide fair profits, yet restricting coverage for services without value, such as marketing or copycat drug research.

We will never be able to eliminate all non-beneficial high-tech excesses, but we are beginning to identify them more precisely. A single payer financing system could be used to realign incentives to discourage the excesses while making sure that appropriate high-tech services are delivered. Britian’s National Institute for Health and Clinical Excellence (NICE) program is a good start in that direction.

The most important affect that single payer financing would have on our health care delivery system would be to use incentives to reinforce our primary care infrastructure, thereby providing a medical home for everyone. There is no single step that would do more to bring us higher quality care while moderating spending excesses.

The private insurance industry wants to cover only the healthiest — primarily the healthy workforce and their young, healthy families — and turn those with significant health needs over to publicly financed programs. Acknowledging that their administrative services are expensive, they propose providing value by expanding their disease management programs. What could be worse than an intrusion into the medical home by a private insurance bureaucracy that siphons off health care funds that should be used for patient care?

A single payer national health program would provide all necessary care for everyone through a universal risk pool that is equitably funded through the tax system, without creating a financial hardship for anyone. It also very effectively addresses the problem of escalating health care costs, ensuring much greater value in our health care spending, beginning with providing each of us with a medical home.

Why County Administrators Should Advocate for Single-Payer Health Care

Paul Clay Sorum, MD

In my previous two articles,1 I pointed out that universal access to adequate health care would be beneficial to society as well as to patients; that we currently spend far more than other countries for a health care system that leaves millions un- or underinsured; and that the counties, in particular, must pay for the failures of our system. I also pointed out that private insurers generate billions of wasted dollars–on salaries for their millionaire executives and armies of employees; on marketing and profits; and on the costs to providers (and patients) of coping with the multiplicity of regulations, the denials and delays, and the barriers to getting reimbursed–that should have been spent on patient care. I argued that, driven by market forces to avoid enrolling sick people and to deny as much care as possible, private insurers can only exacerbate the problem, not solve it; and I concluded that the best solution would be to institute a single-payer system, an expansion of traditional Medicare, in which health care would be, for the most part, publicly financed but privately delivered. Single payer is exemplified by the Congressional bill HR 676, the US National Health Insurance Act, introduced by Representative John Conyers and co-sponsored, currently, by 91 others.2

Nine New Developments

In recent months, nine developments have taken place that mandate immediate action in support of HR 676 by county administrators.

First, health care expenses continue to rise. The projection by actuaries of the Centers for Medicare and Medicaid Services is that the health share of the gross domestic product will increase from 16.3% in 2007 to 19.5% by 2017.3 The current strategy of increasing cost-sharing by patients through deductibles and co-payments cannot prevent this rise. As Schoen and colleagues of the Commonwealth Fund point out, the 10% of the sickest patients, whose spending is not optional and far exceeds the limits of most costsharing agreements, account for 64% of all spending, while the healthiest half, whose health care spending can safely be deferred, account for only 3%. They conclude: “To the extent that higher cost sharing, particularly deductibles, is intended to create more prudent care decisions, the skewed distribution suggests that such a strategy will have little overall impact on spending.”4

Second, as health expenses and insurance premiums rise faster than incomes,5 the numbers of uninsured and, more importantly, of “underinsured” people also rise. The number of uninsured has increased because the decline in employer-sponsored insurance has exceeded the rise in publicly-sponsored insurance (Medicare, Medicaid, and SCHIP [the State Children’s Health Insurance Program]). Most Americans continue, nonetheless, to have employer-sponsored plans. In 2006, excluding those over age 65 (covered by Medicare) and those in the Armed Forces, 63.0% of people had employer-sponsored insurance (versus 67.8% in 2000), 13.6% public insurance (mostly Medicaid) (versus 10.9% in 2000), 5.5% private nongroup insurance (versus 5.1% in 2000), and17.9% no insurance (versus 16.1% in 2000).6

The major cause of underinsurance–not having enough insurance and other resources to cover health care needs–is the cost sharing imposed on those with employer-sponsored health insurance. Looking now only at adults ages 19-64, the number of people uninsured some or all of the year increased from 26% in 2003 to 28% in 2007, and the number of underinsured increased from 9% to 14%; i.e., those with adequate insurance decreased from 65% to 58%. The hardest hit are the sick and the poor. People who were sicker were less likely to be adequately insured than those who were healthier: in 2003, 30% of the sicker people were uninsured and 13% underinsured, while in 2007, 32% were uninsured and 18% underinsured. Among people wit incomes under 100% of the federal poverty line, the percentage with adequate insurance decreased from 31% to 24% and among those at 100-199%, from 35% to 33%; and even among those with incomes equal to 200-299% of the poverty line, only 53% had adequate insurance in 2007.7 Americans’ widespread vulnerability is revealed by analyses showing that, after taking debts into account, the average net financial assets of the uninsured below 300% of the poverty line were 0, of the insured below 300% of the poverty line were minus $600, of the uninsured above 300% of the poverty line were still only $100, and of the insured above 300% of poverty were $5,700.8

Third, recent studies continue to demonstrate the adverse consequences of both underinsurance and uninsurance. In 2007, Schoen and colleagues found that among adults ages 19-64:

* 68% of uninsured, 53% of underinsured, and 31% of adequately insured reported a problem in accessing needed care because of cost

* 38% of uninsured, 17% of underinsured, and 9% of adequately insured delayed preventive care screening because of cost

* 55% of uninsured with chronic disease, 39% of underinsured, and 19% of adequately insured skilled doses or did not fill a prescription for a chronic condition because of cost

* 45% of uninsured, 36% of uninsured, and 15% of underinsurance had problems paying medical bills.9

Schoen and colleagues conclude that “having a policy with substantial cost-sharing relative to incomes, including benefit limits, can undermine access to care and erode family finances in ways similar to having no insurance.” No wonder, therefore, that the US scored lower in 2008 than in 2006 on the Commonwealth Fund’s National Scorecard on U.S. Health System Performance.10

Fourth, public programs have been shown to be less expensive, in terms of overall costs, than private insurance. Society as a whole benefits from providing everyone with health insurance. In New York State, for example, the Fiscal Policy Institute calculated in 2007 that the additional cost of insuring everyone, $4.1 billion, would be less than the costs to society of having so many uninsured, $4.6-9.2 billion.11 In California, the plan for universal coverage through a state single payer system, which The Lewin Group found in 2003 to be cost-saving for the state, was in 2007 felt by the legislature’s analysts no longer to be cost-saving because of the interim rise in health care costs.12 Even if true, single payer has been consistently shown to be less expensive than other ways of achieving universal coverage.13 More evidence of the wastefulness of private insurance comes from recent calculations that total medical spending is much lower when coverage for people with low incomes is provided by public programs (such as Medicaid or SCHIP) than by private insurers.14

Fifth, the interim outcomes of the Massachusetts reform, which is the current, widely-imitated model of health reform, are mixed. It seeks to achieve universal coverage by requiring residents to obtain insurance and by setting up an agency to help them either enroll in public plans (if poor) or find an affordable private plan. The number of uninsured has subsequently decreased, and the public is still positive about the plan. But the private insurance companies are planning to raise their premiums and costs to the state are higher than anticipated.15 Furthermore, the nation has entered a recession from which Massachusetts cannot be exempt. The lesson of states such as Oregon that tried in the 1990s to expand public plans to cover the uninsured is worrisome. As the costs of the public plans increased, and especially when economic growth slowed, the voters refused to pay, and coverage returned to pre-reform levels.16

Sixth, primary care providers, who will be needed to care for the people who obtain adequate insurance when coverage becomes universal, are already in short supply. This is one of the current problems in Massachusetts.17 Colwill and colleagues estimate a deficit of 35,000-44,000 adult care generalists by 2025 if current policies continue.18 This shortfall is not likely to be prevented, in spite of recent decisions by US medical schools to increase their class sizes, as long as hospitals, who train US and international residents with reimbursement from Medicare, are not allowed to increase their numbers of reimbursed positions and as long as the financial and other disincentives to entering primary care are not rectified. These are public policy decisions that a splintered health care system is unlikely to make.

Seventh, support for single payer (or more specifically for HR 676) is growing. To be sure, the voters continue to be divided on health reform according to party affiliation. The Kaiser Family Foundation’s June 2008 poll19 found that 56% of registered voters (71% of Democrats and 34% of Republicans) indicated that the main goal of health reform efforts should be “to make sure that EVERYONE is covered by health insurance,” while 41% (26% of Democrats and 64% of Republicans) said that it should be “to make health insurance more available and affordable in the private marketplace, even if everyone doesn’t get covered.” When asked further about health insurance, 59% of the registered voters (74% of the Democrats and 39% of the Republicans) agreed that “We need to get everyone into the same insurance pool so that we can spread the costs of the sick and healthy over the whole population,” whereas 32% (20% of the Democrats and 50% of the Republicans) declared that “Healthier people should not be asked to pay more to subsidize sicker people by being in the same insurance pool with them.”

At the same time, certain key groups–including organized labor, physicians, and mayors–have recently spoken out in support of HR 676. As of July 28, 2008, HR 676 had been endorsed by 445 union organizations in 49 states including 110 Central Labor Councils and Area Labor Federations and 36 state AFL-CIO’s (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC, MO, MN, ME, AR, MD-DC, TX, IA, AZ, TN, OR, GA, OK, KS, CO, IN, AL, CA, AK, MI, MT, and NE).20 Meanwhile, a survey of US physicians found that support for “government legislation to establish national health insurance” increased from 49% in 2002 to 59% in 2008.21 Furthermore, the United States Conference of Mayors endorsed HR 676 at its national meeting at the end of June.22

Eighth, in July the US Congress reaffirmed its commitment to traditional Medicare. In recent years, the Republicans have worked to privatize Medicare through Part C (enrolling Medicare beneficiaries in private insurance plans, Medicare “Advantage”) and through Part D (adding coverage of medications but through the intermediary of private benefit managers). At the same time, they have tried to discredit Medicare by claiming it was going bankrupt (even though the eventual shortfall in funds can be prevented by an increase in payroll contributions) and by threatening physicians each year with a decrease in payments for their services, a consequence of the Balanced Budget Act of 1997 and the Medicare Modernization Act of 2003. This decrease, which has always been prevented by Congress, was this year to be 10.6% immediately and another 5.4% in January, jeopardizing physicians’ continued willingness to accept Medicare patients. Congress voted again to prevent the planned reduction and, in addition, to expand Medicare’s mental health and prevention benefits. Because these measures were to be financed by reducing the subsidies given to private insurance companies for participating in Medicare Advantage, President Bush vetoed the bill. But Congress overrode the veto by resounding votes of 383 to 41 in the House and 70 to 26 in the Senate.23

Ninth, at the same time, however, a broad coalition of health reformers has formed, under the rubric of Health Care for America Now, to support a plan intermediate between McCain’s proposal to help people buy private insurance24 and the single-payer plans. This intermediate plan aims to achieve universal access to comprehensive and affordable health care by expanding both public and private insurance.25 This is the type of solution exemplified by the Massachusetts plan and favored, with minor variations, by both Hilary Clinton and Barack Obama.26

The enthusiasm for this middle way is fueled, as explained in the earlier articles, by three factors. First is the perception that the voters want choice among insurance options, fear change and losing what they have, distrust government, and do not want to pay more taxes (even, apparently, if their total expenses would go down). This is a matter of voter education. Second is the conviction that such a radical change would be too disruptive. Obama, for example, stated in the New Yorker magazine in spring 2007: “If you’re starting from scratch, then a single-payer system would probably make sense. But we’ve got all these legacy systems in place, and managing the transition, as well as adjusting the culture to a different system, would be difficult to pull off. So we may need a system that’s not so disruptive that people feel like suddenly what they’ve known for most of their lives is thrown by the wayside.”27 This is a matter of realizing that a switch to a single payer system would build on the established and familiar, Medicare, and would not be disruptive to patients or providers but only to insurance companies. Third is the belief that the adoption of a single payer system would be politically impossible because of the power of the insurance lobbies and the resistance to change of our political system, namely the difficulty of getting Congress to pass and the President to sign any major reform. This is a matter for political witnessing and action. As Dr. Steffie Woolhandler, one of the founders of Physicians for a National Health Program, responded recently to a similar criticism by a member of the President’s Council on Bioethics, “I think that the argument you’re making is politics is the art of the possible. But I actually disagree with that. I actually think politics is the art of creating the possible, and what’s possible is what people believe is possible.”28

Moreover, we must recognize that this reliance on a mixture of private and public insurance to insure everyone will not only be more expensive29 and cumbersome than a single-payer system but is highly likely to fail. As demonstrated by all previous state reforms, the attempt to cover everyone through a mixed private-public system results in an inexorable death spiral for the public plans because of adverse selection. As the private insurers avoid and the public plans attract the sick and the poor, the voters, most of whom have private insurance, refuse to pay the rising costs of the public plans. It appears, therefore, that so-called political “realism” is leading health reformers to eschew or abandon single payer and espouse a reform plan that will end up as a reaffirmation of the status quo.

What Should County Administrators Do?

The time has come, therefore, for county administrators to act! A new Congress and new President are about to be elected, and it is highly likely that the Democrats will win the Presidency, maintain control of both houses of Congress, and increase their majority in the Senate. The politicians must be convinced, as they are writing a health reform bill, that the model should be HR 676, not the current Obama plan. County administrators have great credibility as professional public servants who are familiar with all the concrete problems caused by our current health care system. It is time for them not only to persuade their own county legislators to pass resolutions in support of HR 676, but more importantly to persuade the politicians in Washington to have the courage and foresight to institute truly universal coverage through a single-payer health care system.

1 Sorum P. Why a single-payer health care system would be good for counties. Parts 1 and 2. J County Administration, October 2007 and February 2008. See also the editorials by Bob McEvoy: Medicare: Cost effective capitalism, October 2007; and Medicare for All: Now is the time to act, and Medicare for All: A large city’s perspective, February 2008. In addition, the articles by Costes Toregas: Health care: Leveling the field with technology, October 2007; and The role of county technology in making single-payer health care work, February 2008. Also the article by Peter Salgo: The doctor will see you for exactly seven minutes, February 2008 (reprinted from April 2006).

2 The sponsors and text are available at http://thomas.loc.gov/. Accessed on 29 July 2008 by searching for bill number HR 676. Information on single-payer health care can be obtained from the website of Physicians for a National Health Program at www.pnhp.org.

3 Keehan S, Sisko A, Truffer C, Smith S, Cowan C, Poisal J, Clements MK, and the National Health Expenditure Accounts Projection Team. Health spending projections through 2017: The baby-boom generation is coming to Medicare. Health Aff 2008;27:w145-w155. The web and print articles in Health Affairs, the major health policy journal, are available, mostly by subscription, at www.healthaffairs.org.

4 Schoen C, Collins SR, Kriss JL, Doty MM. How many are underinsured? Trends among U.S. adults, 2003 and 2007. Health Aff 2008;27:w298-w309.

5 According to the Kaiser Family Foundation, between 2001 and 2007, family premiums for employersponsored insurance increased 78 percent–to an average of $12,106–while wages went up 19 percent and inflation went up 17 percent. The Employer Benefits 2007 Annual Survey is available at http://www.kff.org/insurance/7672/. Accessed on 28 July 2008.

6 Holahan J, Cook A. The U.S. economy and changes in health insurance coverage, 2000-2006. Health Aff 2008;27:w135-w144. The numbers is best interpreted, according to the authors, as the estimates at any point in time during the year.

7 Schoen et al. How many are underinsured? They define “underinsurance” as insured people with at least one of three indicators of financial exposure relative to income: 1) out-of-pocket medical expenses for care amounted to 10% of income or more; 2) among low-income adults (below 200 percent of federal poverty level), medical expenses amounted to at least 5% of income; 3) deductibles equaled or exceeded 5% of income. In this case, “insured” meant insured all the year (not just at one point in time), and “uninsured” (28% in 2007) meant insured when surveyed (18%) or at some time during the past 12 months (10%).

8 Jacobs PD, Claxton G. Comparing the assets of uninsured households to cost sharing under highdeductible health plans. Health Aff 2008;27:w214-w221.

9 Schoen, et al. How many are underinsured? They define access problems as not filling a prescription; skipping a recommended test, treatment, or follow-up care; not visiting a doctor even when the person had a medical problem; or not getting needed specialist care. See also Greene J, Hibbard J, Murray JF, Teutsch SM. Berger ML. The impact of consumer-directed health plans on prescription drug use. Health Aff 2008;27:1111-1119. In addition, Dixon A, Greene J, Hibbard J. Do consumer-directed health plans drive change in enrollees’ health care behavior? Health Aff 2008;27:1120-1131. Also Hoffman C, Schwartz K. Eroding access among nonelderly U.S. adults with chronic conditions: Ten years of change. Health Aff 2008;27:w340-w348. The Kaiser Family Foundation’s Commission on Medicaid and the Uninsured presented a similar analysis in December 2007: Schwartz K. How trends in the health care system affect low-income adults: identifying access problems and financial burdens. Available at www.kff.org. Accessed on 28 July 2008. See also the NPR/Kaiser Family Foundation/Harvard School of Public Health poll in Florida and Ohio in July 2008, available at www.kff.org/kaiserpolls/upload/7793.pdf (accessed on 30 July 2008).

10 The Commonwealth Fund Commission on a High Performance Health System. Why not the best? Results from the National Scorecard on U.S. Health System Performance, 2008. Available at www.commonweatlhfund.org (accessed on 25 July 2008). In 2007 the Fund compared the U.S. with five other countries (Australia, Canada, Germany, New Zealand, and the United Kingdom): Davis K, Schoen C, Schoenbaum SC, Doty MM, Holmgren AL, Kriss JL, Shea KK. Mirror, mirror on the wall: An international update on the comparative performance of American health care. Commonwealth Fund, May 2007. Available at www.commonwealthfund.org (accessed on 28 July 2008).

11 Fiscal Policy Institute. The Health Care and Social Costs of the Uninsured in New York State. Report prepared for BALCONY in December 2007. Available at www.fiscalpolicy.org (accessed 28 July 2008). The calculation of social costs was based on the Institute of Medicine’s report in June 2003: Hidden Costs, Value Lost: Uninsurance in America.

12 The legislative reanalysis is available at www.lao.ca.gov/2008/hlth/sb840/SB840_analysis.pdf. The 2004 Lewin analysis is available at http://www.healthcareforall.org/lewin.pdf. Both were accessed on 28 July 2008.

13 The clearest example is the Lewin Group’s analysis of competing health care plans for the California legislature in 2002. The report is available at www.health-access.org/expanding/hcop.htm (accessed on 28 July 2008).

14 Ku L, Broaddus M. Public and private health insurance: Stacking up the costs. Health Aff 2008;27:w318-w327.

15 Long SK. On the road to universal coverage: impacts of reform in Massachusetts at one year. Health Aff 2008;27:w270-w284. Also McDonough JE, Rosman B, Butt M, Tucker L, Howe LK. Massachusetts health reform implementation: major progress and future challenges. Health Aff 2008;27:w285-w297. In addition, the May 2008 report by the Kaiser Commission on Medicaid and the Uninsured, Massachusetts health reform: Two years later. May 2008, is available at www.kff.org (accessed 30 July 2008).

16 Wilson JF. Oregon surpasses struggles of early reform and develops a road map for future success. Ann Intern Med 2008;149:149-152.

17 Long. On the road to universal coverage.

18 Colwill JM, Cultice JM, Kruse RL. Will generalist physician supply meet demands of an increasing and aging population? Health Aff 2008;27:w232-w241.

19 The Kaiser Family Foundation polls are available at www.kff.org (accessed on 30 July 2008). See also the poll in July 2008 in Florida and Ohio, conducted with NPR and the Harvard School of Public Health, in which 55% in Florida and 53% in Ohio agreed that the government should guarantee health insurance for all Americans (referenced in endnote #9).

20 Unions for Single Payer H.R. 676 will make the updated list available at www.unionsforsinglepayerhr676.org/.

21 Of great significance as well was the change in policy by the American College of Physicians, the specialty organization of US internists. In a position paper issued in December 2007, single payer was presented as one of the two acceptable ways to achieve universal access (the other being a mixed publicprivate system): American College of Physicians. Achieving a high-performance health care system with universal access: What the United States can learn from other countries. Ann Intern Med 2008;148:1-21.

22 The resolution is available at www.usmayors.org/resolutions/76th_conference/chhs_03.asp (accessed on 28 July 2008). Other groups supporting HR 676 are listed at www.pnhp.org/action/organizations_and_government_bodies_endorsing_hr_676.php (accessed on 29 July 2008).

23 The text of HR 6331, the Medicare Improvements for Patients and Providers Act of 2008, is available at http://thomas.loc.gov/ (accessed on 29 July 2008).

24 McCain’s plan is available at his website: www.johnmccain.com/Informing/Issues/19ba2f1c-c03f-4ac2-8cd5-5cf2edb527cf.htm (accessed on 1 August 2008). The proposed tax credits of $2,500 for individuals and $5,000 for families are far below the cost of any insurance except high-deductible plans with limited benefits.

25 Health Care for American Now (HCAN) (www.healthcareforamericanow.org), should be distinguished from the single payer organization, Healthcare-NOW (http://www.healthcare-now.org). HCAN is attackedby single payer supporters such as Miles Mogulescu at, for example, www.huffingtonpost.com/milesmogulescu/why-not-single-payer-part_b_111718.html; HCAN’s director Richard Kirsch defends his shift away from single payer at www.huffingtonpost.com/richard-kirsch/why-not-single-payer_b_113089.html (both accessed on 1 August 2008).

26 Obama’s health reform plan is outlined at http://www.barackobama.com/issues/healthcare/ (accessed on 29 July 2008).

27 MacFarquhar L. The conciliator: Where is Barack Obama coming from? The New Yorker, May 7, 2007.

28 Steffie Woolhandler’s testimony is available at www.bioethics.gov/transcripts/june08/session4.html. (accessed on 29 July 2008).

29 Skepticism about the ability of Obama’s plan to generate savings, especially in the short term, is summarized in: Sack K. Health plan from Obama spurs debate. NY Times, July 23, 2008. He does not even refer to the preserved expenses of billing, marketing, profits, and hassle generated by the private insurers.

Senator Takes Initiative on Health Care

By ROBERT PEAR
New York Times
Wednesday, November 12, 2008

WASHINGTON – Without waiting for President-elect Barack Obama, Senator Max Baucus, the chairman of the Finance Committee, will unveil a detailed blueprint on Wednesday to guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for health benefits.

Aides to Mr. Obama said they welcomed the Congressional efforts, had encouraged Congress to take the lead and still considered health care a top priority, despite the urgent need to address huge problems afflicting the economy.

The plan proposed by Mr. Baucus, Democrat of Montana, would eventually require everyone to have health insurance coverage, with federal subsidies for those who could not otherwise afford it.

Other Democrats with deep experience in health care are also drafting proposals to expand coverage and slow the growth of health costs. These lawmakers include Senator Edward M. Kennedy of Massachusetts and Representatives John D. Dingell of Michigan and Pete Stark of California.

The proposals are all broadly compatible with Mr. Obama’s campaign promises. But Mr. Baucus’s 35,000-word plan would go further than Mr. Obama’s in one respect, eventually requiring all people – not just children – to have coverage.

“Every American has a right to affordable, high-quality health care,” Mr. Baucus said. “Americans cannot wait any longer.” Far from being a distraction from efforts to revive the economy, he said, “health reform is an essential part of restoring America’s economy and maintaining our competitiveness.”

Mr. Baucus would create a nationwide marketplace, a “health insurance exchange,” where people could compare and buy insurance policies. The options would include private insurance policies and a new public plan similar to Medicare. Insurers could no longer deny coverage to people who had been sick. Congress would also limit insurers’ ability to charge higher premiums because of a person’s age or prior illness.

People would have a duty to obtain coverage when affordable options were available to all through employers or through the insurance exchange. This obligation “would be enforced, possibly through the tax system,” the plan says.

In an interview with CNN just four days before the election, Mr. Obama said his top priorities would be fixing the economy and promoting energy independence. But he added: “Priority No. 3 would be health care reform. I think the time is right to do it.”

Advisers to Mr. Obama said they expected him to take swift action on two fronts. First, they said, he will probably revoke a Bush administration directive that sharply restricted states’ ability to expand the State Children’s Health Insurance Program. In addition, they said, he will support Congressional efforts to expand the program before March 31, 2009, when at least 42 states are projected to exhaust their allotments of federal money.

Ronald F. Pollack, the executive director of Families USA, a liberal-leaning consumer group that has worked closely with Congress and the Obama team, said, “The prospects for meaningful health care reform have never looked better.” Among Mr. Obama’s health care strategists, Mr. Pollack said, are former Senator Tom Daschle; Jeanne M. Lambrew, a former Clinton aide; Neera Tanden, who was director of domestic policy for the Obama campaign; and Representative Rahm Emanuel, who will be White House chief of staff.

In his plan, Mr. Baucus makes these proposals:

* People age 55 to 64 should be able to buy Medicare coverage if they do not have access to a public insurance program or a group health plan. More than four million people in this age group are uninsured.

* Medicaid would be available to everyone below the poverty level, providing at least seven million more people with access to the program. In many states, adults with incomes well below the poverty level – $17,600 for a family of three – are ineligible for Medicaid.

* The State Children’s Health Insurance Program would be expanded to cover all uninsured youngsters in families with incomes at or below 250 percent of the poverty level ($44,000 for a family of three). This would raise the income limit in about half the states.

Mr. Baucus would also make it easier for many legal immigrants to qualify for Medicaid and the children’s health program. Under current law, such immigrants are generally barred from the programs in their first five years in the United States. He would lift that ban.

More than half of all Americans receive coverage through employers, and Mr. Baucus said he wanted to halt the erosion of such coverage. He would offer tax credits to small businesses to help them defray the costs of providing health benefits to employees.

To make insurance more affordable for those who buy coverage on their own, Mr. Baucus would offer tax credits to individuals and families with incomes at or below four times the poverty level ($70,400 for a family of three). Only 10 percent of the uninsured have incomes above that level, he said.

Medical group challenge of getting paid

Bottom line blues

By Karen Caffarini
American Medical News
November 17, 2008
Medical Group Management Assn. members were asked to name the tasks their practices found most challenging.
50.1% Collect from self-pay, high deductible and/or health savings account patients
28.7% Collect from commercial payers
14.5% Collect from Medicare
http://www.ama-assn.org/amednews/2008/11/17/bisa1117.htm

Medical groups certainly have many challenges, but one of the more important is getting paid. This survey of Medical Group Management Association members provides some important lessons.
Twice as many groups found that collecting from private health insurers was very challenging compared to the challenge of collecting from Medicare. This is not a surprise. Previous studies have confirmed that private insurers do place a significant administrative burden on the health care delivery system. It is difficult to comply with the various rules and procedures of a multitude of private plans, especially when those plans use innovative methods to delay (work the float) or avoid altogether paying claims for legitimate services.
Medicare does contribute to a lesser degree to this burden. Medicare is much more consistent in applying their rules, and they do not engage in behavior designed to avoid paying for services rendered in good faith. But Medicare does add to the complexity by using rules and administrative procedures that differ from those of the private plans. If Medicare were the only payer, the one set of rules designed to pay for legitimate services would greatly simplify the process for the providers of health care.
Much has been written about how out-of-pocket expenses have impaired access to beneficial health care products and services. Although cost sharing has caused some patients to decline services that they perceive to be of marginal value, many have also declined services that they know they should have. Many in the policy community oppose cost sharing because it is a blunt instrument that impairs access, and because it has only a negligible impact on our total health care spending.
This survey reveals another problem with patient cost sharing. Medical groups have found that collecting the patients’ share of the payments has been even more challenging. About twice as many groups find that this is a challenge compared to that of collecting from private insurers, and almost four times as many as that of collecting from Medicare. Cost sharing represents another excessive, inappropriate administrative burden placed on the health care delivery system.
The solution? A single payer national health program. (Yes, this is repetitive, but isn’t anyone listening?)