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What’s wrong with individual health insurance mandates?

What’s wrong with individual health insurance mandates?

by Claudia Chaufan
San Francisco Bay Area Indymedia
Tuesday Feb 26th, 2008 5:01 PM

Individual health insurance mandates have lately been hailed as the solution to the health care crisis in America. Mandates to purchase health insurance have been included in legislative proposals at the state level — for instance, by Gov. Schwarzenegger and Speaker Nunez, in their “Health Care Security and Cost Reduction Act”, or at the federal level, by Hillary Clinton in her “American Health Choice Plan”. Can mandates achieve universal access to health care and control rising costs of medical care? This article explains why they can’t.

Lately, legislation including a universal mandate — a legal obligation that everybody purchase a health insurance policy — has been hailed as the solution to the health care crisis in America. At the state level, mandates have been included, for instance, in Gov. Schwarzenegger and Speaker Nunez’s “Health Care Security and Cost Reduction Act”, and at the federal level, by Hillary Clinton in her “American Health Choice Plan”. Yet many of us remain skeptical. Why? After all, if everybody is forced to buy a health insurance plan — maybe with a subsidy if you are “poor enough” — would this not resolve the problem of uninsurance? Maybe so. But the real question is: would mandating universal health insurance guarantee universal access to medical care? And the short answer is no.

A longer answer would include that many health reform proposals promising heaven on earth rely on fantasy numbers, not facts: for instance, there is reason to believe that Swcharzenegger’s stillborn legislation would have run out of money by the fifth year of operation (http://www.lao.ca.gov/2008/Webcasts/hcr_1-23-08/flashversion/hcr_flash.aspx). Indeed, often these proposals offer no numbers at all, fantasy or otherwise: a sound study estimating the capacity of “Hillary Care” to guarantee that those who “like” their current health insurance “will be able to keep it”, as Hillary promises (http://www.hillaryclinton.com/feature/healthcareplan), has yet to be produced. But worst of all is the tendency, popular among many health care experts, including M.I.T. professors (http://www.nber.org/papers/w13758) to commit the capital sin in health policy: confusing universal health insurance with universal access to comprehensive medical care.

Now, it could very well be that these experts are not confused, and only hope that ordinary citizens won’t be smart enough to tell the difference — that we will all be convinced if only they repeat “universal” enough times. Whichever the case may be, as political analyst Robert Kuttner recently pointed out, there is a fundamental difference between “universal” social health insurance, such as proposed by single payer health care reform, and a “universal” health insurance mandate (http://content.nejm.org/cgi/content/full/358/6/549). And it is not merely semantic, because clearly in both approaches “universal” means “everybody”. It is a difference of substance.

In a social health insurance system everybody gets insurance by virtue of being a citizen or a resident, everybody contributes to the system according to ability to pay, and everybody is guaranteed an amount and type of services. This is possible because the system, whose ultimate goal is to provide the most and best care to all participants with whatever budget it has, counts on a predictable influx of money, has as sole incentive finding the most efficient ways to spend it, is able to estimate the needs of participants, and can utilize their collective purchasing power to bargain for best prices of services and goods.

In contrast, in a system based on mandates, nobody “gets” anything, really. Rather, everybody is compelled to buy a policy, by law. Hence guaranteeing a decent amount of medical care to the population at large, that many consider a social problem, is turned into a “problem” of “every” individual or “every” family, who are forced to comparative-shop for affordable policies, while second-guessing current or future medical needs as they decide which is the best investment for their resources — a more comprehensive health policy, rent, or food.

A key assumption underlying individual mandates is that forcing an influx of “customers” into the health insurance marketplace, flooded with private insurers’ “products” made to suit a range of personal preferences will, through the powerful and reveered “invisible hand”, improve the quality of medical goods and services and bring their prices down, such that on average they will be affordable to everybody. This of course would be true, if shopping for medical services were functionally equivalent to shopping for designer shoes. Faced with an offer, you are always free to take it or leave it, depending on how good the deal is. If it is not good enough, you can always wait until the next Christmas sale. Or you can decide that you are not so crazy about those shoes after all, and shop for something else, until those recalcitrant shoe sellers realize that if they want your dollars, they have to behave reasonably, and offer the best they can at the least possible price.

But of course nobody needs a doctoral degree to understand that the need for medical care cannot be compared with the want for designer shoes. Nor does one need a doctoral degree to understand that a mandate to buy, for instance, drivers’ insurance, does not guarantee full protection against the expenses incurred if one gets into a car accident. While some policies might cover those expenses, they are unlikely to be cheap. What the current mandate to buy drivers’ insurance “guarantees”, if the word makes sense at all, is that, given the law, we won’t get in trouble with it if we are stopped by the police. Which is why nobody claims we have “universal drivers’ insurance”. Likewise, whichever health insurance policies we may afford to buy, if there is a mandate, it will only “guarantee”, aside from a steady pool of clients for private insurers, that we are in compliance with the law when we file our taxes (assuming this is how the mandate is enforced).

Under our current system, which relies heavily on private insurance, paying for medical care is insurers’ greatest “cost”. Now, like any other business, insurers’ ultimate goal is to control the costs of running their business while maximizing profits. Hence the increasingly bewildering range of “choices” of “insurance products” that make sure that insurers will not have to pay more for medical care than they collect in premiums and that there remains enough spare change to keep CEOs and shareholders happy.

And because profit is the essence of business, however much “mandate” fans boast they will force insurers to not turn people down on the basis of “pre-existing conditions”, they will not — they cannot — force them to sell policies that will not meet insurers’ profit maximizing goals. So mandate supporters remain conveniently vague whenever asked how much “consumers” will have to pay for policies offering more than minimum coverage or even what will count as minimum coverage, hoping that we won’t notice when they fail to compute out-of-pocket costs to “consumers” — deductibles, co-pays, co-insurance — as “costs”.

Or worse, they hope that by repeating scare stories backed by fanciful (and distorting) statistics Americans will end up believing that the only alternative to the current mess is a mandate’s version of “universal health coverage” and that a social insurance system will inevitably cause an invasion of alien Reds, with long lines in cold winter mornings in which everybody is given the same loaf of bread (substitute “sees the same doctor” or “receives the same medicine”), however far this scenario is from the daily reality of Canadians, Brits, Germans, Spaniards, and so forth.

Now, the point is not to force business to do business at a loss. The point is why, when it comes to health care, we should insist on a model that confuses health care with designer shoes and that has failed to deliver the goods. Because it is clear that choices that are meaningful, not of health policies but of doctors and services when and to the extent we need them are increasingly out of reach for ordinary Americans.

Which is why only a system based on the principle of social insurance, that spreads the risk over a large pool — all Californians, or even better, all Americans — to which all participants contribute an affordable proportion of their income, and where individuals are guaranteed real choice, not of policies but of medical services, constitutes meaningful universal health care reform.

And sound legislation exists: it is the single-payer model proposed by SB840, the California Universal Healthcare Act, vetoed by Schwarzenegger, who appears to dislike “big government bureaucracies” (http://www.youtube.com/watch?v=asgUP31Vf8o) but can live with the 30% mark-up of the bureaucracy of private insurers. It is also HR676, the expanded and improved Medicare for All Act, conveniently made invisible every time the major media or policy thinktanks report on the health care crisis, and disqualified by Hillary as “difficult to achieve” (http://www.democracynow.org/2008/2/8) for reasons that we are never given.

Now, will a social insurance system resolve all the problems in American medicine? Of course not. “Financing” and “delivery and organization” of medical care are different analytic categories, so securing the first will not miraculously resolve, for instance, the problems of over-reliance on expensive medical technologies, lack of uniformity of medical records, or insufficient emphasis on preventive care (or the never-settled question of whether Americans are as dutiful as others when it comes to eating our veggies). Those are internal to the system — to any health care system — and require separate attention. But a sound financial structure is a prerequisite to making improvements in the delivery and organization of a medical system possible.

At any rate, as Kuttner said, the “debate” about whether or not to have a mandate misses the point that the financial structure of the system, built on false assumptions and perverse incentives, is sick (http://www.democracynow.org/2008/2/8). The real issue is whether or not major presidential candidates are willing to “do it right” and use their formidable political power, social prestige, and precious media time to bring “public opinion around” (http://www.democracynow.org/2008/2/8), assuming they haven’t yet been informed about the increasing public support for single payer among the electorate (http://abcnews.go.com/images/pdf/935a3HealthCare.pdf), including physicians (http://www.philly.com/philly/business/20071204_Doctors_endorse_single-payer.html).

As Kuttner, supporters of single payer wish our politicians and opinion leaders “got it right” this time, stopped trying to reinvent the wheel, and stood for the only type of reform that can bring affordable and comprehensive health care to all Americans.

Claudia Chaufan teaches sociology of health and medicine and health policy at the University of California at Santa Cruz. She has written extensively on social inequalities in the diabetes epidemic, for general and specialized audiences, nationally and internationally. She is the Vice President of California Physicians Alliance, the Californa Chapter of Physicians for a National Health Program, an organization that supports single-payer health care reform.

Health care spending for 2008

Health Spending Projections Through 2017: The Baby-Boom Generation Is Coming To Medicare

By Sean Keehan, Andrea Sisko, et al (Centers for Medicare and Medicaid Services, Office of the Actuary, National Health Statistics Group)
Health Affairs
February 26, 2008

Projected spending for 2008

$2,394.3 billion – National Health Expenditures (NHE)

$7,867.7 – NHE per capita

16.6% – NHE as percent of GDP

Over the projection period in this paper (2007-2017), growth is anticipated to remain steady at around 6.7 percent per year, yielding an estimated $4.3 trillion in health spending in 2017.

Gross domestic product (GDP) growth is expected to average 4.7 percent per year over the projection period. Therefore, health spending growth is expected to outpace economic growth by an average of 1.9 percentage points annually.

Factors Contributing To Growth

The primary drivers of personal health care spending growth during the projection period are medical prices and utilization, followed by smaller impacts from population growth and the age-sex mix.

Since 1995, widespread selective contracting associated with the expansion of managed care has mitigated growth in medical price inflation. During that time, this output price inflation has averaged slower growth than the CMS index of medical input prices. The slower growth in medical price inflation relative to growth in input costs also reflects declines in real physician incomes relative to those of other professional and technical occupations.

Utilization, which includes both the volume and intensity of services, is primarily influenced by trends in real household income and, to a lesser extent, the substitution effect associated with relative medical price inflation and shifts in insurance coverage. …the expectation of slower disposable income growth from 2008 to 2017 is the primary driver for the slowing growth in utilization toward the end of the projection period.

The impact of the population aging is expected to account for a relatively small share of future health care spending growth on a per enrollee basis but to have a substantial influence on the public share of spending growth, as the leading edge of the baby-boom generation becomes eligible for Medicare.

Over the remainder of the period and in response to projected slowing economic growth, employers could shift more costs to employees through benefit buy-downs and increased cost sharing, resulting in a convergence of the growth rates for out-of-pocket and private insurance spending. The impact of consumer-directed health plans on out-of-pocket spending has been, and is expected to remain, minor.

http://content.healthaffairs.org/cgi/content/full/hlthaff.27.2.w145/DC1

Comment:

By Don McCanne, MD

The projected numbers for 2008, listed above, are the most reliable estimates of our current health care spending. They are the numbers you should use in your advocacy work.

There are no surprises in this projection. Heath care costs/prices continue to increase at rates well in excess of inflation, and continue to outpace GDP growth by about two percent. The latter is of concern to many since they would rather spend more in other sectors of our economy.

Much attention will be directed to the shift of Baby Boomers from private to public financing. As a result, there will be increased political pressure to halt the “unsustainable” spending growth in entitlement programs – Medicare and Medicaid. But compared to the total NHE, this shift is quite small. Over the next decade projected growth in NHE is expected to be 6.7 percent, whereas growth in public spending is expected to be 7.2 percent, and Medicare specifically, 7.4 percent. Medicare should not be singled out as an isolated problem that needs to be fixed, while ignoring the rest of our health care spending.

The pseudo-hysteria that we will see is exemplified by the statement of Rep. Paul Ryan (R-WI) posted on the Health Affairs blog simultaneously with this report. Rep. Ryan states, “…these are not signs that the health care market has failed. In fact — and it is crucial to understand this — they are the predictable results of vast distortions imposed on the market over decades. The government is the single greatest contributor to this problem…”

Obfuscation of the issues based on personal ideology is the last thing we need right now from our political leaders. The problems of our high-cost but mediocre health care system cannot be repaired without appropriate government action. We need to elect politicians who understand this, and then they need to get to work.

Mythbusting Canadian Healthcare, Part II: Debunking the Free Marketeers

By Sara Robinson
OurFuture.org
February 11th, 2008

In the previous post, I looked at ten of the most common myths that get bandied about whenever Americans drag Canada into their ongoing discussions about healthcare. In this follow-up, I’d like to address a few of the larger assumptions that Americans make about health care that are contradicted by the Canadian example; and in the process offer some more general thinking (and perhaps talking) points that may be useful in the debates ahead.

Government-run health care is inherently less efficient — because governments themselves are inherently less efficient.

If anything could finally put the lie to this old conservative canard, the disaster that is our health care system is Exhibit A.

America spends about 15% of its GDP on health care. Most other industrialized countries (all of whom have some form of universal care) spend about 11-12%. According to the WHO, Canada spends a bit over 9% — and most of the problems within their system come out of the fact that it’s chronically underfunded compared to the international average.

Any system that has people spending more and getting less is, by definition, not efficient. And these efficiency leaks are, almost entirely, due to private greed. There is no logical way that a private system can pay eight-figure CEO compensation packages, turn a handsome a profit for shareholders, and still be “efficient.” In fact, in order to deliver those profits and salaries, the American system has built up a vast, Kafkaesque administrative machinery of approval, denial, and fraud management, which inflates the US system’s administrative costs to well over double that seen in other countries — or even in our own public systems, including Medicare and the VA system.

Not incidentally: one of the benefits of single-payer health care is that it largely eliminates the entire issue of “fraud.” You can only “cheat” a system that already views its primary business as rationing and withholding care. In Canada, where the system is set up to deliver health care instead of profits, and medical access is considered a right, this whole oversight machinery is far cheaper and more compact. In general, the system trusts doctors and patients to make the right choices the first time. As a result, people generally don’t have to lie, cheat, and grovel to get the system to deliver the care they need. They just go and get it — and walk out without a moment’s dread about the bills.

Shareholder profit, inflated CEO salaries, and top-heavy administration — all of which serve to work against the delivery of care, not facilitate it — are anti-efficiencies that siphon off 20-25% of America’s total health care spending. These are huge sums; yet it’s mostly money down a gold-plated rathole. In the end, it doesn’t provide a single bed, pay a single nurse or doctor, or treat a single patient.

We’ll have rationed care

Don’t look now: but America does ration care. And it does it in the most capricious, draconian, and often dishonest way possible.

Mostly, the US system rations care by simply eliminating large numbers of people from the system due to an inability to pay. Last year, one-quarter of all Americans didn’t go to a doctor when they needed one because they couldn’t afford it. Nearly that many skipped getting a test, treatment, prescription, or follow-up appointment recommended by a doctor. In Canada, those same numbers are in the 4-5% range; in the UK, 2-3%. Also: nearly 20% of all Americans had a hard time paying a medical bill last year; and these stresses now trigger over half of all personal bankruptcies in the country.

Furthermore, nominally having health insurance is no guarantee against financial ruin, as Sicko amply illustrated. Being cut off or denied by your insurance company is rationing, too. And there are vast numbers of fairly well-off Americans — many of them middle-aged, and too young for Medicare — who have pre-existing conditions that render them uninsurable at any price. They’re one heart attack, one diabetic event, or one bad turn away from financial disaster. Please don’t insult these people by telling them that the American system doesn’t ration care.

Another persistent (and ridiculously mendacious) rationing myth about the Canadian system is that old people are cut off from treatment and left to die. I’ve never heard about a single case of this in Canada; but it happens routinely to Americans on Medicare and many private policies, which have strict limits on how long you can stay in the hospital with an acute illness. When the benefits run out, ready or not, they send you home. If you die, you die. The Canadian plan has no such limits: you stay for as long as you need to. But in the US, these limits fit the very definition of “rationed care.”

Effectively shutting one-quarter of the population out of the medical system entirely, and putting many of the rest on short rations, certainly does make things so much nicer for those happy few who are still in it. In fact, Americans have these missing millions to thank for their system’s impressively short wait times. Only 4% of American have to wait more than six months for non-elective surgeries, while 14-15% of Canadian and Britons do. (Don’t blame this on government care, though: in Germany and the Netherlands, the number is closer to 2%.) When conservatives start bellowing about Canada’s terrifying wait times (which, by the way, are carefully triaged: it’s rare for people to die waiting, though it happens), we need to remind them that there are 75 million Americans who have been wait-listed forever. If my friend’s Aunt Millie gets her emergency hip surgery today because I’m willing to hobble along for an extra couple months before getting my knee surgery — well, for any morally serious person, that choice should be a complete no-brainer.

You can’t have medical innovation without the incentives provided by the free market.

As in the US, Canada’s government funds major medical research that has led to a continuous stream of new medical breakthroughs. (And as this link shows, the rate of innovation didn’t slow down in the least when Canada moved to single-payer in the 1960s.) All of the country’s medical schools are located within public research universities. The university that houses my local medical school, the University of British Columbia, ranked ninth in North America last year — in league with UC, Stanford, and other powerhouses — in total public and private research grants received by its labs. Among other things, it leads the way in genetics (David Suzuki is emeritus faculty), and stem-cell research (having attracted a handsome roster of American scientists whose research was thwarted by the political situation at home).

Because the Canadian health care system is driven by delivering care instead of profits, the focus of research is sometimes different — and often wider-ranging. While there’s plenty of pursuit of patents and innovations, there’s also considerable research put into questioning whether new treatments are really more effective than older ones; and in pursuing possible treatments that may not be patentable by anyone. The system is focused first on what works; and after that, on what might make someone some money.

Single-payer health care will make America less competitive.

I can’t believe people still have the gall to argue this point, but apparently, they do. There are several reasons this is flat-out wrong:

Jobs, Jobs, Jobs — It’s no secret that public health care is making Canada a more attractive business environment for large manufacturers, who typically have very high insurance overhead. Toyota and GM have both moved plants to Canada in recent years, in large part to avoid the spiraling costs of insuring American workers. (Toyota also cited Canada’s better-educated workers, but that’s another issue for another day.) As long as $900 of every car GM makes is going to supply health care to the people who make it, the US’s current system of employer-based health care is going to continue to drive skilled jobs out of the country.

A Smarter, More Entreprenurial Workforce — Being relieved of insurance worries also makes individual citizens more competitive. How would your life choices change if you didn’t have to worry about health care? Would you go back to school and get your PhD in lepidoptery? Start a blog — or a small business? Work part-time and travel? Tell your boss where he can stick it? Spend a few years at home with your kids?

Countries with universal coverage free up their citizens to take advantage of personal development opportunities that, in the long run, stimulate the economy and create a more skilled, traveled, educated, and fulfilled workforce. Americans, on the other hand, routinely stay chained to jobs they hate — and are forced to pass up on chances to expand their horizons and their fortunes — because they can’t afford to jeopardize their health care coverage. Our health care mess has reached a point where it jeopardizes not only our lives, but also our liberty and our ability to pursue happiness — as well as the long-term strength of the economy as a whole.

Increased Financial and Social Capital — When families are bankrupted by medical bills, or are thrown into poverty when a working member is disabled because they can’t afford proper care, or simply break down and fall apart under the stress of debt and illness, it’s not long before the country’s entire social fabric begins to show the wear and tear — along with the sense of optimism and the common good required for a democracy to function.

Part of what makes a country competitive is its own commitment to the common good. I’ve often been impressed by the very tangible sense of civic pride and shared effort my Canadian neighbors have in the fact that they’re taking the best possible care of their own, regardless of status, age, or ethnicity. Every encounter with the medical system reminds them that they’re all in this together. A medical system that routinely drives families into bankruptcy or divorce court is actively destroying, rather than adding to, the essential social capital that makes the whole society function.

No Deferred Maintenance — Decades of foregone medical care are starting to catch up with Americans. We’re seeing serious declines on many fronts: infant mortality, lifespan, cancer rates, heart disease rates, and increased diabetes. On most of the major markers of public health, America is nowhere near the top tier anymore. In some areas, there are a few small former Communist countries doing better than we are.

Business relies on healthy workers who aren’t distracted by their own illness or that of a family member. America’s uninsured, increasingly unhealthy workforce is in no position to compete on equal terms with the strong, healthy workers of other countries who are getting the care they deserve.

We have more important matters to tend to — like national security and the war.

Getting everyone insured is, unequivocally, a clear matter of national security.

Our every-man-for-himself attitude toward health care is a security threat on a par with unsecured ports. In Canada, people go see the doctor if they’re sick for more than a day or two. It was this easy access to early treatment, along with the much tighter public health matrix that enables doctors to share information quickly, that allowed the country’s health care system to detect the 2003 SARS epidemics in Toronto and Vancouver while they were still very localized, act within hours to stop them before the disease spread any further, and track down and treat exposed people before they got too sick to be helped. In both cases, the system worked flawlessly. The epidemic was stopped within days and quashed entirely in under a month, potentially saving of millions of lives.

In the U.S., that same epidemic might easily have gone unnoticed for critical days and weeks. If the first people to get sick were among those 75 million without adequate insurance, they probably would have toughed it out a few extra days before finally dragging their half-dead carcasses into an ER somewhere. Not only would they be much farther along in the course of the disease — and thus at greater risk of death themselves — every one of them could have infected dozens or even hundreds of other people in the meantime, accelerating the spread of the epidemic.

Worse: America’s underfunded public health system might have taken several days to piece together the whole picture of an epidemic; and perhaps another week or two might have passed before the E. Coli conservatives in charge (having thrown out the science-based management plans thoughtfully developed by the bureaucracy) cooked up some kind of half-assed ideology-driven decision about how to proceed. (It would, of course, involve spectacular amounts of lying to the public.) By that point, tens of millions could have been infected, leading to a death toll that would make 9/11 and Katrina look like minor statistical blips.

Think about superbugs and the ongoing waves of immunological imports from the world’s swamps and jungles. Think about terrorists with bioweapons. And then think again about the undeniable fact that every single underinsured American is a gaping hole in the safety net that protects us all from a catastrophic epidemic. This really is one of those cases in which none of us are safe as long as even one of us is left at risk. And from a purely economic standpoint: would you want to invest in a country where there was a significant risk that an epidemic or a bio-attack, managed by incompetent officials, might force you to shut down your business at a moment’s notice?

As for the war: Bush’s Folly will generate upwards of half a million veterans, many of whom will require some kind of sustaining care for the rest of their lives. VA funding ebbs and flows with the national political will, and veterans often fall behind other priorities. But if they can enter the same health care system every other American depends on, then we can only forget their interests by forgetting our own as well.

I feel a lot better knowing my taxes are taking care of my fellow Canadians rather than buying bombs to drop on Iraqi towns, supporting a fully-equipped CIA gulag, or funding Baghdad pizza deliveries via Halliburton. It’s hard to become a worldwide empire when you’re putting half your tax revenue into hospitals and doctors, as Canada does. But, on the other hand, it’s hard to insure your citizens when half your tax revenue is going to feed your war machine.

In a very real sense, America has chosen to secure its oil supply at the cost of its own citizens’ health. The more we spend on the former, the less we have for the latter. And our own relative health — both physical and economic — is starting to show the consequences of that choice. Ultimately, all these things are connected: by making ourselves energy independent, we might not only make ourselves more secure, we’ll also finally be able to invest in the kind of health care that will make us truly competitive in the world community.

The Bottom Line

In America, a lucky employee with gold-plated employer-based coverage may well get access to A-level care (though that level of coverage becoming rarer by the month, even among the professional classes). On the other hand, about 50 million under-insured Americans are barely scraping by with C or D-level care; and the nearly 50 million with no insurance at all get next to no care whatsoever. Worst of all: 18,000 Americans die every year due to lack of access to healthcare. That’s one every 30 minutes, around the clock, every day of the year — the equivalent death toll of six 9/11s every single year that passes.

In Canada, everybody gets at least B-level care, pretty consistently across the board — and, on occasion, quite a bit better than that. You might not like those odds if you’re one of the shrinking handful of Americans who’s used to A-level care; but if that’s not you, you’d be getting a much better deal in Canada.

The private sector has had 20 years to prove that it could deliver low-cost, quality care using those vaunted business-style efficiencies; and it has failed us utterly and completely. This fact should be the ultimate nail in the coffin of the old conservative canard that “the free market always does it better.” If that was true, privatizing health care would have been the shining example that proved it once and for all. Instead, all we got was a colossally expensive national disaster that’s denying full coverage to a third of the country — and putting our health, competitiveness, financial and social capital, and national security at risk in the process. It’s also devastating the aspirations of our entire middle class, which is being hollowed out by our current health policies.

A famous Hebrew prophet once advised his followers to take the log out of their own eyes before trying to remove the splinter from someone else’s. As much as it hurts American pride to admit it, Canada and the rest of the industrialized world has us roundly beat on this one. Those who are so quick to criticize the Canadian system might be better off holding their fire until they’ve shown us they can do better. America, and the world, is waiting.

Bush's privatization agenda for Medicare

By LAURA S. BOYLAN
Sacramento Bee
Wednesday, February 13, 2008

The Bush administration is eating away at the heart of Medicare.

The first assault was the Medicare Modernization Act of 2003. And the second assault is the budget that President Bush just submitted to Congress.

Before looking at these two, we should recognize that Medicare is one of our nation’s most efficient, successful and popular public programs. Under this single-payer program for the elderly, people report less hassle, easier access, lower out-of-pocket expenses and more satisfaction than those with private insurance.

Let’s face it: Medicare is a public oasis in the private desert that is the health care marketplace in America. We spend more than twice as much on health care, on average, as other developed nations, all of which provide universal coverage through predominantly public financing. What’s more, their health outcomes are usually superior to ours.

Market-based health care is a minefield of “perverse incentives:” Procedures are rewarded over prevention and administrative costs are enormous. It is estimated that one-third to one-fifth of U.S. medical expense outlays don’t improve health.

As a doctor, I know that my time with patients is at the core of a humanistic practice of medicine. And it’s also the most cost-effective way to deliver primary care. It is, however, the least reimbursable of all medical events. Physicians are more likely to order questionable tests and specialty referrals when in a rush. It provides a sense of thoroughness, a hedge of bets and, frankly, a patient-pleasing way to close the visit when the lines are getting too long. But it adds immensely to the costs of health care.

The waste and inefficiency are, well, un-American.

In a triumph of ideology over fiscal sobriety, of special interests over public health, the Bush administration is trying to privatize Medicare rather than expand it.

The Medicare Modernization Act of 2003 offered prescription drug coverage, but exclusively through private companies. Bizarrely, it prohibited the government from negotiating price discounts from the drug companies. As a result, Medicare Part D drug prices are more than 80 percent higher than the prices negotiated by Medicaid and Veterans Affairs.

One important but obscure component of the Medicare Modernization Act will soon come to haunt us. And that is the creation of an arbitrary 45 percent general revenue cap, which, when reached, will trigger program cutbacks, higher premiums or further privatization. Medicare financing comes from various sources including general revenue, payroll taxes, trust fund interest, and beneficiary premiums. The cap has yet to kick in, but the drug company giveaway was funded mostly through general revenue, so it will come soon.

Then there’s the current Bush budget. It proposes reducing payments to doctors and hospitals while preserving subsidies to inefficient and sometimes corrupt private insurance middlemen, who offer plans through the Medicare Advantage program. These middlemen cost up to 19 percent more per beneficiary than traditional Medicare despite selective enrollment of the healthy.

Fiscal sobriety and public health demand that Medicare be kept affordable by getting rid of inefficient subsidies and giveaways to industry, which add cost but not value to health care.

Don’t let the Bush Administration fool you: We can afford Medicare. The $6 billion it would cut next year from public Medicare is less than the cost of two weeks of the war in Iraq.

Medicare is the proud kernel of a single-payer America, where health care is a right and not a commodity, and everyone has the same health care coverage as their president.

We can’t let the Bush administration continue to gouge it.

About the writer: Dr. Laura S. Boylan is an assistant professor of neurology at New York University and a board member of Physicians for a National Health Program (www.pnhp.org).

Bush’s privatization agenda for Medicare

By LAURA S. BOYLAN
Sacramento Bee
Wednesday, February 13, 2008

The Bush administration is eating away at the heart of Medicare.

The first assault was the Medicare Modernization Act of 2003. And the second assault is the budget that President Bush just submitted to Congress.

Before looking at these two, we should recognize that Medicare is one of our nation’s most efficient, successful and popular public programs. Under this single-payer program for the elderly, people report less hassle, easier access, lower out-of-pocket expenses and more satisfaction than those with private insurance.

Let’s face it: Medicare is a public oasis in the private desert that is the health care marketplace in America. We spend more than twice as much on health care, on average, as other developed nations, all of which provide universal coverage through predominantly public financing. What’s more, their health outcomes are usually superior to ours.

Market-based health care is a minefield of “perverse incentives:” Procedures are rewarded over prevention and administrative costs are enormous. It is estimated that one-third to one-fifth of U.S. medical expense outlays don’t improve health.

As a doctor, I know that my time with patients is at the core of a humanistic practice of medicine. And it’s also the most cost-effective way to deliver primary care. It is, however, the least reimbursable of all medical events. Physicians are more likely to order questionable tests and specialty referrals when in a rush. It provides a sense of thoroughness, a hedge of bets and, frankly, a patient-pleasing way to close the visit when the lines are getting too long. But it adds immensely to the costs of health care.

The waste and inefficiency are, well, un-American.

In a triumph of ideology over fiscal sobriety, of special interests over public health, the Bush administration is trying to privatize Medicare rather than expand it.

The Medicare Modernization Act of 2003 offered prescription drug coverage, but exclusively through private companies. Bizarrely, it prohibited the government from negotiating price discounts from the drug companies. As a result, Medicare Part D drug prices are more than 80 percent higher than the prices negotiated by Medicaid and Veterans Affairs.

One important but obscure component of the Medicare Modernization Act will soon come to haunt us. And that is the creation of an arbitrary 45 percent general revenue cap, which, when reached, will trigger program cutbacks, higher premiums or further privatization. Medicare financing comes from various sources including general revenue, payroll taxes, trust fund interest, and beneficiary premiums. The cap has yet to kick in, but the drug company giveaway was funded mostly through general revenue, so it will come soon.

Then there’s the current Bush budget. It proposes reducing payments to doctors and hospitals while preserving subsidies to inefficient and sometimes corrupt private insurance middlemen, who offer plans through the Medicare Advantage program. These middlemen cost up to 19 percent more per beneficiary than traditional Medicare despite selective enrollment of the healthy.

Fiscal sobriety and public health demand that Medicare be kept affordable by getting rid of inefficient subsidies and giveaways to industry, which add cost but not value to health care.

Don’t let the Bush Administration fool you: We can afford Medicare. The $6 billion it would cut next year from public Medicare is less than the cost of two weeks of the war in Iraq.

Medicare is the proud kernel of a single-payer America, where health care is a right and not a commodity, and everyone has the same health care coverage as their president.

We can’t let the Bush administration continue to gouge it.

About the writer: Dr. Laura S. Boylan is an assistant professor of neurology at New York University and a board member of Physicians for a National Health Program (www.pnhp.org).

Making Medicaid patients better shoppers

CMS Proposes New Rules for Redesigning Medicaid

States Have Greater Flexibility in Benefits, Cost Sharing

Centers for Medicare and Medicaid Services (CMS)
February 21, 2008

Two new proposed rules that would give states unprecedented flexibility in designing their own Medicaid programs, including adjusting their benefit package to more closely align with beneficiary needs and requiring increased cost sharing by enrollees, were announced today by the Centers for Medicare and Medicaid Services (CMS).

The proposed rules would implement provisions of the Deficit Reduction Act of 2005 and the Tax Relief and Health Care Act of 2006. The rules are the latest in a series of regulations to implement the Administration’s goals of aligning Medicaid more closely with private market insurance and giving states more control over their Medicaid benefits packages.

“These new rules recognize that states are in the best position to design plans that provide Medicaid beneficiaries better health care for the same or even lower cost,” Health and Human Services Secretary Mike Leavitt said. “The proposed rules will result in patients having more choices and greater control over their health care decisions.”

Individuals with family incomes between 100 and 150 percent of the FPL may see some cost sharing while monthly premiums can be charged to individuals with incomes above 150 percent of the FPL. As in SCHIP, all cost sharing must be limited to no more than five percent of the family’s income. The 2008 FPL for a family of four is $21,200.

“Until passage of the DRA, states had few options, other than through waivers, to update the health benefit packages offered through their Medicaid programs to meet the needs of the people they serve,” CMS Acting Administrator Kerry Weems said. “These proposed changes allow states to use modern methods of providing health insurance coverage and encourage families to participate in their own health care decisions.”

http://www.cms.hhs.gov/apps/media/press/release.asp
(Click release for February 21, 2008)

Comment:

By Don McCanne, MD

So under the new rules, a family of four living at the federal poverty level ($21,200) can be granted “greater control over their health care decisions” by being granted the opportunity to use $1060 of their own income in order to make them better health care shoppers.

These are families who are not facing foreclosure on their homes (since they could never qualify to purchase them in the first place). They are not facing repossession of their automobiles (since they have, at best, a clunker, or they use public transportation). They are not impacted by a mandate to buy insurance on their clunker (since they have no funds to purchase the required coverage anyway). These are families who will not have to face additional credit card debt (since any cards they have are already maxed out, and they cannot qualify for new cards). These are families who are able to regularly experience new living environments (each time they are evicted for failing to pay their past due rent). These are families who have become very adept at budgeting (since they must stretch their $407 per week to cover their rent, food, clothing, utilities, transportation, school supplies, etc., etc.).

Many studies have shown that cost sharing in health care literally can be a death sentence, especially for those living at or near the poverty level. Secretary Leavitt and Administrator Weems already know this.

What kind of nation have we become?

The Corrosion of Medicine

The Corrosion of Medicine

Can the Profession Reclaim its Moral Legacy?

By John Geyman, M.D.

Medicine can no longer deny the extent to which unbridled self-interest has eroded its professionalism. As documented in earlier chapters, these excesses are pervasive throughout the profession, for all to see, involving patient care, education and research as well as academic medical centers and many of the profession’s organizations. The extent of deprofessionalization makes clear that the cause extends well beyond a few “bad apples.” If medicine is to restore its professionalism, the profession must accept responsibility for letting down the public trust, recommit itself to service over self-interest, and build effective mechanisms of self-regulation which can gain the public’s confidence.

Whether medicine will give up its customary defensive mode and respond positively to its moral and professional challenges is an open question. Despite its long struggle to maintain its independence, the profession has lost much of its autonomy as it increasingly serves corporate interests. In a more proactive stance, medicine may recognize a larger role of government as a potential force to support the context within which it can restore its professionalism. Business as usual will not serve the profession or the public well. The profession now has a window of opportunity to expand its vision and lead toward better health care for all Americans. To do so, it must involve itself with rebuilding the capability of public health and with advocacy for real health care reform, which leads us to the last chapters.

http://www.commoncouragepress.com/index.cfm?action=book&bookid=384

Comment:

By Don McCanne, MD

This book was very difficult to read, not because of the complexity of the topic, but rather because of the anguish felt over what has happened to our profession.

Although physicians have been complicit in the processes leading to the corrosion of medicine, their blame lies not with an active role in commercializing health care, but rather with passive acceptance of their role in our current model of health care that is controlled by business and market interests.

When you ask a physician what his/her occupation is, he/she does not say that I am a businessperson in the health care industry. Almost without exception, the response is, “I’m a physician.” That has much greater meaning than merely being engaged in an occupation that takes care of sick people. It is difficult to put into words, but every health care professional knows what I mean.

Although it was painful to be reminded of the compromises being made on behalf of the business of medicine, there is also real hope in the message in this book. You realize that it doesn’t have to be this way. We do not have to passively accept the role of being workers in an industry controlled by market entrepreneurs.

We can become active advocates of reform that places our patients first. If we take health care financing out of the hands of the MBAs and place it under the control of our own universal public financing system, the patients and physicians will be able partner together in achieving the best health care possible within the confines of our finite resources.

Financing reform is only the first step, but it makes the other necessary reforms possible. Not only will we restore our pride in ourselves when we say, “I am a physician,” our patients will once again understand the special meaning of medicine as a profession rather than as a mere business.

Will targeted policies work for the uninsured?

The U.S. Economy And Changes In Health Insurance Coverage, 2000-2006

Americans continued to lose their health insurance even as the economy improved.

by John Holahan and Allison Cook
Health Affairs
February 20, 2008

The number of uninsured Americans increased by 3.4 million between 2004 and 2006, despite improving economic conditions. In the first four years of the decade, during a period of economic recession, the number increased by 6.0 million. The dominant factor in both periods was a decline in employer-sponsored insurance coverage. Although the recent decline was less than that experienced from 2000 to 2004, growth in public coverage was small, and the number of uninsured people increased by 1.0 million children and 2.4 million adults. Employer coverage declined most for self-employed or small-firm workers, in the South, and among noncitizens.

The decline was much greater in the first period, reflecting poor economic conditions. But the rate of employer coverage continued to decline even when the economy improved.

For children, the decline in employer coverage was offset by large growth in Medicaid and SCHIP in the first four years of the decade. As states experienced deteriorating fiscal conditions, they adopted policies that restricted growth in these programs. As a result, the number of uninsured children increased by 1.0 million between 2004 and 2006, after having fallen by 400,000 between 2000 and 2004.

Between 2004 and 2006, employer coverage fell by 6.2 percent for those below 200 percent of the poverty level and by 0.6 percent for those at or above 400 percent of poverty. Thus, the data show that employer coverage is clearly declining at all income levels, but primarily among those with the lowest incomes.

The decline in employer coverage can be traced to greater increases in health insurance premiums than in wages. As health insurance becomes more and more expensive, it adds more to the cost of a worker’s total compensation package. To the extent that firms cannot shift this back to workers in the form of lower wages, they become less likely to offer coverage.

It is striking that the rate of employer coverage declined and the number of uninsured people increased even after the U.S economy rebounded from the recent recession. This erosion will likely continue, particularly for low-income workers, because the basic factors underlying it seem unlikely to change.

http://content.healthaffairs.org/cgi/content/full/hlthaff.27.2.w135/DC1

Comment:

By Don McCanne, MD

The fact that the number of uninsured continues to increase is certainly not news. But there are a couple of points in this article that should alarm us.

A rebounding economy was unable to stop the decline in coverage. In spite of favorable economic trends, employers found their health benefit programs to be less affordable, and more dropped their employees from coverage. Clearly we will not be able to rely on improvements in the economy alone to expand coverage to more individuals.

This report demonstrates that the decline in coverage is impacting all sectors of our society, though some more than others. This indicates that targeted programs cannot eliminate the problem since some sectors inevitably will be left out. Also alarming is the fact that incremental reforms more narrowly targeting selected populations is not working either.

As an example, the greatest “success” in recent years has been insuring more children through the SCHIP and Medicaid programs. Yet the gain of 400,000 insured children during 2000-2004 was more than offset by a loss of 1.0 million during 2004-2006 (years of economic recovery). That certainly cannot be classified as a health policy success, yet that is the best we can show for all of our incremental efforts.

When you look at the leading comprehensive proposals, policies are included to target the more vulnerable populations. Yet they are very weak on policies that will help the largest vulnerable group of all: middle-income individuals and families.

Relying on improvements in the economy for most of us, with safety-net welfare programs for the poor, will never get us to a program that guarantees reasonably comprehensive care for all of us. It will require the adoption of a health care financing system that automatically includes all of us, for our entire lives.

A Single-Payer Health System

The New York Times
Letter to the Editor
February 16, 2008

To the Editor:

Re “Growing Pains of Universal Coverage” (editorial, Feb. 9):

Employer-provided health insurance is seen as necessary in contributing to a state plan, but over the long term it creates more problems than it solves.

Almost everything else a state does to ensure that its citizens have insurance tends to undermine the need for, and the willingness of, employers to continue bearing the burden of providing it.

And by adding 20 percent or more in overhead in the form of marketing, processing enrollments and collecting premiums, private insurance makes costs even more unaffordable.

Both kinds of insurance must be seen for what they are: the Trojan horses of the American health care nonsystem. To be sustainable over the long term, a plan requires structural change in how health care is financed and delivered, and states simply don’t have the power to do this.

Nothing less than a single-payer public system administered nationally will do so.

John Steen
Meadville, Pa.
The writer is the former president of the American Health Planning Association.

Myths and Memes About Single-Payer Health Iinsurance in the United States: A Rebutal to Conservative Claims

By John P. Geyman
International Journal of Health Services
Vol. 35, Num. 1, Pages 63-90, 2005

Recent years have seen the rapid growth of private think tanks within the neoconservative movement that conduct “policy research” biased to their own agenda. This article provides an evidence-based rebuttal to a 2002 report by one such think tank, the Dallas-based National Center for Policy Analysis (NCPA), which was intended to discredit 20 alleged myths about single-payer national health insurance as a policy option for the United States. Eleven “myths” are rebutted under eight categories: access, cost containment, quality, efficiency, single-payer as solution, control of drug prices, ability to compete abroad (the “business case”), and public support for a single-payer system. Six memes (self-replicating ideas that are promulgated without regard to their merits) are identified in the NCPA report. Myths and memes should have no place in the national debate now underway over the future of a failing health care system, and need to be recognized as such and countered by experience and unbiased evidence.

Click here to download the entire article.

Lewin Group analysis of "Health Care for America"

Cost Impact Analysis for the "Health Care for America" Proposal

Prepared for The Economic Policy Institute
The Lewin Group (an Ingenix company)
February 15, 2008

Executive Summary

Under the Health Care for America Proposal, employers would be required to provide coverage or pay a payroll tax to have their workers covered under a newly created national health insurance pool called Health Care for America (HCA). Modeled on Medicare, Health Care for America would offer a single Medicare-like fee-for-service option (public HCA plan) and a selection of Health Maintenance Organizations (HMOs) or other private managed care plans (private HCA plans). People who do not have employer-sponsored insurance (ESI) would be covered under HCA, including those now covered under Medicaid and the State’s Children’s Health Insurance Program (SCHIP). The Proposal would provide subsidies for worker HCA premiums for those living below 300 percent of the Federal Poverty Level (FPL), and premium subsidies for non-workers enrolled in HCA who are living below 400 percent of the FPL.

We estimate that there were about 47.8 million uninsured people in the country in 2007. The Health Care for America (HCA) Proposal would reduce the number of uninsured by 46.5 million people (i.e., 97.3 percent of the uninsured), leaving only about 1.3 million people uninsured. Coverage under the proposal would be as follows:

* We estimate that 122.2 million people would be covered under ESI, compared with 157.0 million people under current law;

* About 128.6 million people would be covered through the newly created HCA pool; and

* Enrollment in Medicare and the TRICARE program (i.e., military retirees and dependents) would remain the same as under current law.

The Health Care for America Proposal would cover 46.5 million uninsured people without increasing national spending for health care, largely through lower provider reimbursement, administrative simplification and other features of the proposal. The spending effects of the Proposal include:

* Spending for health care services and prescription drugs nationally would increase by $53.2 billion in 2007 as the uninsured become covered;

* Administrative simplification would reduce administrative costs by about $25.4 billion in 2007;

* There would be additional savings of $27.9 billion due to changes in provider payments, requiring people to have and use a medical home, and government negotiation of prescription drug prices for people covered through HCA.

Federal government health spending would increase under the Health Care for America Proposal by $49.3 billion, after accounting for all offsets. Total program spending under HCA would be $417.7 billion in 2007 including benefits and administration. These costs would be offset by the following:

* Employer payroll taxes for firms that do not provide coverage ($106.8 billion);

* Premiums for individuals covered through HCA ($80.3 billion);

* Federal and state government savings to Medicaid and SCHIP that would be transferred to HCA ($160.1 billion); and

* Other savings and new federal revenues under the Proposal ($21.2 billion).

We estimate that state and local governments would save $21.2 billion as a result of savings to programs that traditionally serve the uninsured (i.e., safety net programs). There would be no immediate net savings to Medicaid and SCHIP for states because they are required to pay the amount saved to HCA to help fund the program (i.e., maintenance of effort for Medicaid SCHIP only). Over time, however, savings achieved by HCA would be shared with the states.

Overall we estimate that private employers spent about $442.7 billion on health care for workers and retirees in 2007 (excludes employee contribution). Under the Health Care for America Proposal, private employer health spending would decrease by $10 billion, reflecting that many firms will find it less costly to discontinue their health plans and pay a six percent payroll tax to enroll their workers in HCA. Changes in private employer spending include:

* Private employers who currently offer coverage would save $65.6 billion by discontinuing their insurance and enroll their workers in HCA by paying the tax;

* Private employers that currently do not offer coverage would spend $55.6 billion more due to the requirement that they either provide coverage or enroll their workers in HCA by paying the payroll tax;

* On average, firms that currently offer coverage would save $809 per worker and those that do not currently offer coverage would spend $1,568 more per worker.

The Health Care for America Proposal requires that individuals obtain coverage and automatically enrolls people who do not have insurance into the public HCA plan. It also provides subsidies to help low-income people pay premiums. Overall, families would save $23.3 billion primarily from lower out-of-pocket payments. However, other financing mechanisms that would be needed to fully fund the proposal (i.e., $49.3 billion) would reduce these savings to families.

The Health Care for America Proposal would control the growth in health spending as enrollment increases, by restricting provider payment increases, negotiating deeper drug discounts, and simplified administration. Thus, national health spending under the HCA Proposal will be lower than under current law. We estimate that under these cost controls, total national health spending over the 2008 through 2017 period would be about $1.04 trillion less than under current law over that same period.

http://www.sharedprosperity.org/hcfa/lewin.pdf

Health Care for America:
http://www.sharedprosperity.org/bp180.html

Comment:

By Don McCanne, MD

Why is this important? The “Health Care for America” proposal of Jacob Hacker provides the general basis for the health care reform proposals of the leading Democratic candidates.

Since this report was just released I have not had time to do an analysis of it. But I did take a quick look to see what it said about one of our most important concerns. How would the proposal make reasonably comprehensive health insurance affordable for average income families?

Regarding benefits covered: “Covered services under Health Care for America would include the services under the current Medicare program as well as comprehensive mental health, maternal and child health services and comprehensive prescription drug coverage, subject to a formulary.” So the benefits are better than Medicare.

What about family costs? The monthly HCA premium for a two-parent family at 400 percent of the federal poverty level ($84,800 for a family of four) would be $670 ($8040 for the year). A 6 percent payroll tax (nominally paid by the employer, but as a reduction in the employee’s income) paid into the HCA pool would be $5088. The maximum out-of-pocket spending ($500 deductible and 20 percent coinsurance) would be $5000.

If the family used no medical care, they would be responsible, directly and indirectly, for $13,128 just for their share of the coverage. That’s 14.6 percent of their income. If they also had $5000 in out-of-pocket spending, that would total $18,128 or 20.2 percent of their income. (The percentages would be worse if I hadn’t calculated the total income as $84,800 plus the $5088 payroll tax.)

Many policy experts consider 15 to 20 percent of income for health care to constitute a financial hardship. A single payer national health program could do better than that.

CORRECTION for the Quote of the Day, February 15, 2008, “Lewin Group Analysis of ‘Health Care for America'”

As I mentioned in my last comment, I had not done an analysis of the full Lewin Group report but had taken only a quick look to pull out some of the numbers to see whether insurance under the proposal would be affordable.

In the calculation I added to the 6 percent payroll tax a premium of $670 per month (for a two-parent family at 400 percent of the federal poverty level). That was incorrect since that is the premium that non-workers would pay. The correct premium for a worker whose employer is paying the payroll tax would be $200 for a two-parent family at 300 percent of the federal poverty level. Obviously my quick look was too quick.

The calculations are revised for a two-parent family at 300 percent of the federal poverty level or $63,600 (the income level at which the premium is fully phased in). A family that used no medical care would be directly responsible for the $2400 premium plus indirectly responsible for $3816 in payroll taxes, or a total of $6216. That is 9.2 percent of their total income of $67,416 ($63,600 plus the employer payment of $3816 on the employee’s behalf). If they also had out-of-pocket expenses of $4770 (capped at 7.5 percent of $63,600 in direct income) that would be 16.3 percent of their total income of $67,416.

For non-workers, premiums are fully phased in at 400 percent of the federal poverty level or $84,800. For a two-parent family the annual premium would be $8040 or 9.5 percent of their income. If they too had out-of-pocket expenses of $5000 (plan cap on cost sharing) that would total 15.4 percent of their income.

When the average premium for employer-sponsored coverage is already over $12,000 per year, these family payments of $6216 and $8040 seem low. In fact, for an individual, the report states, “We estimate average enrollee costs in Health Care for America would be about $3250 compared to $4230 under a private insurance product in 2007.”

Does that seem reasonable? They state, “Health Care for America premiums would be lower than comparable private insurance due to lower provider payment rates, administrative costs and low-income subsidies.” The low-income subsidies do not apply to the two examples above, both middle-income families. Although they do discuss administrative savings in the report, it is likely that the amount is much smaller than they suggest because they fail to recover much of the waste inherent in a multi-payer system. And the lower provider payment rates? I’ll let you think about that one.

I do wish to express my profound apologies for having used incorrect numbers in my last message. It is important that we make every effort to maintain full credibility in our dialogue. But even the corrected numbers still pose significant problems.

It reminds me of the mathematician, the accountant and the economist who were each asked to solve the problem of two plus two. The mathematician said four, the accountant said four, plus or minus ten percent, and the economist asked, “What do you want it to be?”

Rather than crafting health care financing based on individual plans, whether public or private, it would be far more efficient and equitable to totally separate health care financing from the delivery of health care services. Establish a single, universal risk pool, funded equitably through the tax system, and then use that common pool to fund health care.

Then we would no longer have to tell the economists that we want a plan that provides comprehensive benefits, but it has to have a premium that’s affordable. That may be what we want the plan to be, but we can’t ignore the simple math behind the program.

Finally, I wish to express my profound admiration and respect for the individuals supporting the “Health Care for America” proposal. They share precisely the same goal as ours – comprehensive, high-quality, affordable health care for everyone. With the most noble of intentions, they have crafted a proposal that they believe meets the test of political feasibility while accepting what they would hope to be only temporary, modest compromises on the path to reform.

Our only substantial difference is that we believe that we should not begin from a position of compromise. The private insurance industry has to go.

The real Irony of the Health Care Mandate Arguments

by DrSteveB
DailyKos
Thu Feb 14, 2008 at 08:19:11 PM PST

The real irony of the Obama vs. Hillary (and Krugman and Baker & Hacker et al) argument over individual mandates for purchasing health insurance, is even more fundamental then they are both right and they are both wrong.

The argument against individual mandates is both political and practical. They can’t really be enforced, and they are political poison.

The joke, the irony, is that individual mandates have been promoted, in part — by the oh so moderate and well minded people on our side who should know better — exactly because they thought this approach was more policically practical then Single Payer (which they actually do know is the only plan that actually, you know, works)!

The lesson of 1993-1994, already learned by some of us, is that no matter what is proposed, it will be attacked by the Health Insurance industry, Pharma, the Right.

It does not matter what compromies you make ahead of time.

It will be attacked afterwards, regardless.

If it can provide affordable and universal coverage and access to care — which at the very least requires accepting all applicants (guaranteed issue) and moderating the variation in premiums by more effectively pooling risk (larger universal insurance pools and community rating) AND somehow controlling costs including excess profit and overhead (15-18% for the privates, 4% for Medicare) it will be attacked. If it reduces Health Insurance and Pharma corporate profits and control it will be attacked.

And, as Newt Gingrich and Bill Kristol famously pointed out back in 1993-94, if it looks like it might result in a success, it has to be attacked.

So yes… as analyzed by Clinton’s advisor and respected MIT health economics Jonathan Gruber and also by our friends at the Urban Institute (and endlessly reiterated by Krugman)… in principle

absent a single payer system, it is not possible to achieve universal coverage without an individual mandate. The evidence is strong that voluntary measures alone would leave large numbers of people uninsured. Voluntary measures would tend to enroll disproportionate numbers of individuals with higher cost health problems, creating high premiums and instability in the insurance pools in which they are enrolled, unless further significant government subsidization is provided. The government would also have difficulty redirecting current spending on the uninsured to offset some of the cost associated with a new program without universal coverage.

Me… I reject the false premise.

In fact, plans depending on forced purchase of private insurance via individual mandates don’t really work either. As Don McCanne, PNHP’s Senior Health Policy Fellow, pointed out:

It is important to understand Professor Gruber’s framing and modeling since he is an advisor for various reform efforts such as those in Massachusetts and California, and he is also providing support for the proposals of leading Democratic candidates for president.

Although this paper presents modeling of “the impact of alternative interventions to increase insurance coverage,” he begins with assumptions that significantly limit the variety of options studied.
He limits his options based on “two political constraints.”

“First, it is difficult to envision a solution to the problem of the uninsured which does not involve in some way the private insurance industry… The health insurance industry in the United States has revenues of over $500 billion per year, making it a very concentrated interest that would have to be defeated to move to nationally provided health insurance.”

“The second constraint is the fiscal situation of the U.S.
government. Except for a brief window at the end of the 20th century, the U.S. government budget has been in significant deficit for thirty years, and this deficit shows no sign of abating… Given these pressures, major new expenditures to cover the uninsured are likely to engender a major political battle.”

Before he has even begun his analysis, he eliminates a single payer national health program because we must involve the private insurance industry, in spite of his acknowledgment of the high administrative costs.

Also, his modeling does not look at the impact on our total health care costs, but rather he models the impact on taxpayer costs. In so doing, he has placed a very high priority on keeping the costs of the expansions of health care coverage out of our government budgets, demonstrating that the biggest “bang for the buck” is attained by those alternatives that result in the lowest taxpayer cost per each additional individual obtaining coverage, ignoring the fact that the difference must be paid by individuals and/or employers.

He discusses two “modest reforms”: public insurance expansion, and non-group tax credits, which are quite inadequate compared to the need.

Then, for “more fundamental reform,” he states that issues to be addressed include pooling, affordability, and mandates. He considers three options, “given the constraint that private insurance provision must be a centerpiece of any reform plan.”

His first option is to ensure universal access of individuals to an affordable insurance product. He describes state-specific pools that are community rated with guaranteed issue. Voluntary participation would be encouraged by sliding scale subsidies based on income. By his modeling, this would cover about one-half of the uninsured, at a high taxpayer cost of $4500 per individual (Obama plan – per Krugman).

His second option is to add an individual mandate to this universal access approach. He makes the assumption, without supporting evidence (theorizing that strong penalties would be effective), that “95% of those who would not voluntarily choose to insure are forced to insure through the mandate.” By his modeling, this would cover about 97% of the uninsured at a lower taxpayer cost of $2732 per newly insured (Clinton plan – per Krugman).

His third option is to remove the tax subsidy (regressive) for employer-sponsored insurance and use those funds for the pools in the individual mandate approach. The tax subsidy is so great ($200 billion) that this would result in a negative cost per dollar of insurance provided (individual mandate cost of $120 billion). But once again, this is a reduction in government spending (a government subsidy not granted) with a redistributive shift between employers and individuals of varying incomes.

Professor Gruber concludes, “To fundamentally control health care costs we need to actually be willing to deny care that does little for health – but which consumers now want. This would be accomplished either through government technology policy, medical standards, or global provider budgets… The fundamental insight of this round of reform is therefore to not hold the attainable goal (universal coverage) hostage to the (currently) unattainable goal, fundamental health care cost control.”

But isn’t that the problem? Health care costs are now so high that private insurers can no longer provide us with reasonably comprehensive plans at premiums that are affordable for middle-income individuals.

His first option of pooling (community rating and guaranteed issue) cannot make the plans affordable. His second option of an individual mandate can’t work simply because the plans are not affordable, especially when he has made keeping government budgets in check a major priority. His third option corrects a tax policy injustice, but, in itself, is hardly a reason to perpetuate the inefficiencies and injustices of the private health plans.

Jonathan Gruber and Paul Krugman deserve their reputations as being amongst the most respected economists in the nation. But their fixation on individual mandates provides about the same level of insight as to what we need in the way of health financing reform as does the insight provided by the proctologist who tries to tell us our general state of health from his perspective.

But as we have seen with the relative political success of Obama’s (gentle compared to what the Repugs will bring) critique, individual mandates are neither implementable and enforceable in the real world, nor somehow an a priori compromise that is politically viable.

An Overview Introduction to What We Mean By Single Payer:

Single-payer national health insurance is a system in which a single public or quasi-public agency organizes health financing, but delivery of care remains largely private.

Currently, the U.S. health care system is outrageously expensive, yet inadequate. Despite spending more than twice as much as the rest of the industrialized nations ($7,129 per capita), the United States performs poorly in comparison on major health indicators such as life expectancy, infant mortality and immunization rates. Moreover, the other advanced nations provide comprehensive coverage to their entire populations, while the U.S. leaves 46 million completely uninsured and millions more inadequately covered.

The reason we spend more and get less than the rest of the world is because we have a patchwork system of for-profit payers. Private insurers necessarily waste health dollars on things that have nothing to do with care: overhead, underwriting, billing, sales and marketing departments as well as huge profits and exorbitant executive pay. Doctors and hospitals must maintain costly administrative staffs to deal with the bureaucracy. Combined, this needless administration consumes one-third (31 percent) of Americans’ health dollars.

Single-payer financing is the only way to recapture this wasted money. The potential savings on paperwork, more than $350 billion per year, are enough to provide comprehensive coverage to everyone without paying any more than we already do.

Under a single-payer system, all Americans would be covered for all medically necessary services, including: doctor, hospital, long-term care, mental health, dental vision, prescription drug and medical supply costs. Patients would regain free choice of doctor and hospital, and doctors would regain autonomy over patient care.

Physicians would be paid fee-for-service according to a negotiated formulary or receive salary from a hospital or nonprofit HMO or other group practice. Hospitals would receive a global budget for operating expenses. Health facilities and expensive equipment purchases would be managed by regional health planning boards.

A single-payer system would be financed by eliminating private insurers and recapturing their administrative waste. Modest new taxes would replace premiums and out-of-pocket payments currently paid by individuals and business. Costs would be controlled though negotiated fees, global budgeting and bulk purchasing.

Key Features of “Pure” Single-Payer:

· Universal, Comprehensive Coverage:
Only this ensures access, avoids a 2-class system & minimizes expense

· No out-of-pocket payments:
Co-payments and deductibles are barriers to access, administratively unwieldy, and unnecessary for cost containment

· A single insurance plan, administered by a public or quasi-public agency:
A fragmentary payment system that entrusts private firms with administration ensures the waste of billions of dollars on useless paper pushing and profits. Private insurance duplicating public coverage fosters two-class care and drives up costs; such duplication should be prohibited

· Global operating budgets for hospitals, nursing homes, HMOs and other providers with separate allocation of capital funds:
Billing on a per-patient basis creates unnecessary administrative complexity and expense. Allowing diversion of operating funds for capital investments or profits undermines health planning and intensifies incentives for unnecessary care (under fee for service) or understatement (in HMOs)

· Free Choice of Providers:
Patients should be free to seek care from any licensed health care provider, without financial incentives or penalties

· Public Accountability, Not Corporate Dictates:
The public has an absolute right to democratically set overall health policies and priorities, but medical decisions must be made by patients and providers rather than dictated from afar. Market mechanisms principally empower employers and insurance bureaucrats pursuing narrow financial interests

· Ban on For-Profit Health Care Providers:
Profit seeking inevitably distorts care and diverts resources from patients to investors

· Protection of the rights of health care and insurance workers:
A single-payer national health program would eliminate the jobs of hundreds of thousands of people who currently perform billing, advertising, eligibility determination, and other superfluous tasks. These workers must be guaranteed retraining and placement in meaningful jobs.