PNHP

The real Irony of the Health Care Mandate Arguments

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.

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.

State plan could work in Kansas

Letters to the Editor
The Capital-Journal (Kansas)
Friday, February 15, 2008

The Legislature has a chance to do it right on the first try.

Actuaries from Arizona presented to the Kansas Health Policy Authority a model of health care reform that provides health insurance for all Kansans and at a cost savings of $800 million over the other four plans considered by KHPA. The Legislature should study this transformative and pioneering plan.

Imagine a Kansas where mothers and fathers go to sleep at night at without the worry of how they will provide health care for their children. Imagine a Kansas where all adults know they will get the health care they need regardless of their economic status.

The plan is a single-payer plan and involves the state becoming the insurance company for all Kansans.

It is a given that many Kansans, including myself, have reservations about turning something as important as health care over to the government.

At the same time, government protects our citizens and fights our wars. It builds our highways and provides subsidies to farmers to ensure a steady supply of food. Why should health care be singled out as the one area where government shouldn’t be a partner?

Under a single-payer plan, more of the health care premium dollars go toward medical care itself. Under a state plan, premium dollars would remain in Kansas. Those dollars could serve as an important economic stimulus to Kansas during a time of recession.

IRA STAMM
Topeka, KS

Asking about single-payer for Massachusetts

By Dr. Susanne King
Berkshire Eagle
Friday, Feb 15, 2008

I often talk with people about health care reform, advocating for single-payer health care as the only answer to problems that include 47 million uninsured people in the United States, and an even greater number of underinsured; the economic pressure on businesses; and the rising costs of health care for our country, states, towns and individuals. Here are the questions people most frequently ask.

1) What is single-payer health care?

“Single-payer” refers to the administration of the health care funds by one payer, rather than the current multiple insurance companies. This payer could be either the state or the federal government. Every other industrialized country in the world has a single-payer system.

2) Is this socialized medicine?

No, because hospitals would still be privately owned, rather than owned by the government, and doctors would still be in private practice. “Single-payer” refers to the taking in and paying out of the health care dollars, which would replace the current role of private insurance companies. Traditional Medicare is a single-payer system that has been in place for many years.

3) Doesn’t Medicare have big problems?

Traditional Medicare has worked very well for patients, and they have been happy with it. However, the intrusion of private insurance companies into the administration of Medicare, first with the introduction of private HMOs in the 1980s, and then by President Bush with subsidies to the insurance companies for drug plans, has wrought havoc with the program.

The insurance companies now see Medicare as a cash cow, creating an economic burden on the program, to the tune of billions of dollars per year. Subsequently payments to doctors, the actual providers of care, have been cut.

4) Can we afford single-payer, if that means covering 47 million uninsured people?

We already pay enough for comprehensive coverage for everyone. We just don’t get coverage for everyone, because 31 percent of our health care spending goes for administration through the patchwork of private for-profit insurance companies. Potential savings from eliminating the waste and astonishing profits of insurance companies (like Massachusetts’ Blue Cross/Blue Shield’s 2006 compensation of over $16 million to its retiring CEO William Van Faasen), has been estimated at $350 billion per year.

5) Won’t there be waiting lines or rationing with single-payer?

The United States currently rations care based on ability to pay, and 18,000 Americans die every year because they lack health insurance. Canada has a single-payer system, and their waiting times for care are shorter than commonly believed. In 2005, the median wait for specialists or elective surgery was four weeks. Canadians live longer and are more satisfied with their health care than Americans, while paying half as much per person.

6) Won’t our aging population break the bank in a single-payer system?

Japan and Europe both have a higher percentage of elderly citizens, yet they spend much less on health care than we do, and have better outcomes. Universal access through a single-payer system prevents more advanced stages of illness, and will pay for long-term care rather than costly hospitalization.

7) Some people like their insurance; why should they change?

Our current system is tied to employment; people change or lose jobs, which disrupts their coverage. Others find their coverage fails when they get sick: 75 percent of the one million Americans experiencing medical bankruptcy each year were insured when they got sick. And insurance premiums go up by double digits every year, for policies that cover less and less.

8) How would single-payer be financed?

Currently about 60 percent of our health care system is financed by public money (our taxes), 20 percent by private employers, and 20 percent by individuals. With a state or national single-payer health program, the public money would be retained. There would be a payroll tax on employers (approximately 7 percent) and an income tax on individuals (approximately 2 percent). The payroll tax would replace all other employer expenses for employee health care. The income tax would take the place of all current insurance premiums, co-pays, deductibles, and any other out-of-pocket payments.

For the vast majority of people, a 2 percent income tax is less than what they now pay for insurance premiums and out-of-pocket payments such as co-pays and deductibles, particularly for anyone who has had a serious illness or has a family member with a serious illness. Many small employers now have to pay 25 percent or more of payroll for health insurance, and large employers now pay roughly 8.5 percent. Everyone would have more comprehensive coverage: in addition to medical care and drugs, benefits would include mental health care, dental care, and long-term care.

9) Who would run a single payer plan?

It is a myth that with national health insurance the government will be making the medical decisions. The government would only be the administrator of the health care funds.

In a publicly financed, universal health care system, medical decisions are left to the patient and doctor, and the public has a say in how the system is run. Cost containment measures will be publicly managed at the state level by an elected and appointed body that represents the people of that state. This body, in consultation with medical experts in all fields of medicine, will decide on the benefit package, negotiate doctor fees and hospital budgets, and be responsible for health planning and the distribution of expensive technology. Right now, insurance companies make many health care decisions behind closed doors, and their interest is in profits, not our health care.

10) Won’t doctors dislike a single-payer system?

Most doctors are very dissatisfied with the current system, because of its administrative burden, and because insurance companies create hurdles to providing care doctors think their patients need. Physicians would like to make medical decisions with their patients, without the intrusion of the profit-motivated insurance companies. In addition, doctors now provide care for which they don’t get reimbursed, when patients are unable to pay because they are uninsured or underinsured. More and more physician groups are supporting single-payer. Physicians for a National Health Program now has 14,000 members.

11) How would we get to a single payer system?

There are bills in the state legislatures and in Congress. Single-payer legislation for our state is the Massachusetts Health Care Trust, Senate bill 703. Federal legislation is HR 676, now supported by 88 congressmen, including Rep. John Olver.

In Canada, single-payer health was introduced province by province, rather than at the national level. Support for single-payer health care is increasing as people learn about the benefits of this solution for our broken health care system.

If you wish to learn more, visit the Web sites www.pnhp.org, www.masscare.org, or www.sickocure.org

Susanne L. King, M.D., is a Lenox practitioner.

Insurers' IT innovations shift costs to patients

Probe Targets Health Insurers On Payments

By Vanessa Fuhrmans and Theo Francis
The Wall Street Journal
February 14, 2008

The New York attorney general said his office plans to sue UnitedHealth Group Inc. as part of a broader investigation into the way the health-insurance industry sets payment rates for hospitals and doctors outside of their networks.

The move takes aim at a common practice among health insurers that can result in higher medical-bill payments for many consumers. While insurers typically pay in-network hospitals and physicians a negotiated fee for medical claims, out-of-network providers are reimbursed “usual and customary” or “reasonable” charges. These charges are set according to what insurers have determined is the going rate for a given procedure or service in a specific area.

When the usual and customary payment is much lower than what the provider charged, patients are often billed for the difference. Doctors and hospitals have long complained that the methodology is opaque and sets reimbursement artificially low.

As part of the probe, Andrew Cuomo, the New York attorney general, issued subpoenas to 16 health insurers, including Aetna Inc., Cigna Corp. and Wellpoint Inc.’s Empire Blue Cross Blue Shield unit. UnitedHealth is at the center because it owns, through its unit Ingenix, the database that much of the rest of the industry uses to determine usual and customary charges.

Called the Prevailing Healthcare Charges System, the database contains price information from more than one billion medical claims collected from more than 100 health plans nationwide. Health insurers typically compare out-of-network claims against the database and automatically reduce the bill to a “reasonable” size before reimbursing the patient or doctor.

Linda Lacewell, who heads Mr. Cuomo’s health-care industry task force, characterized the Ingenix database as “garbage in, garbage out,” with insurers sometimes manipulating data and knocking out price information from doctors with higher charges.

“We believe there was an industrywide scheme perpetrated by some of the nation’s largest health insurance companies to defraud consumers,” Mr. Cuomo said at a news conference. He said he plans to sue UnitedHealth and Ingenix within five days. He added that the health insurer’s ownership of the billing-data provider was “a gross conflict of interest.”

“Real people get stuck with excessive bills and are less likely to seek the care they need,” Mr. Cuomo said.

http://online.wsj.com/article/SB120292255343965679.html.html

And…

Payment Integrity: Harnessing the power of technology to detect and deter fraudulent, erroneous and abusive claims

Ingenix
Executive Briefing

…Compounding the damage, health plans also spend millions of dollars annually on erroneous and abusive claims that do not reach the level of fraud.

Effectively utilizing advanced fraud management technology and services is the best option for striking back against those who abuse the system.

Critical Elements for Success

Claims editing software is a Web-enabled, rules-based application that allows health plans to edit professional and facility claims while responding to dynamically changing guidelines and regulations in the health care marketplace. Claims editing software is typically focused on editing professional claims.

Health care claims billing is a complex process that is highly codified. While codification promotes automation, the breadth of relationships between the many different types of billing codes adds complexity. Therefore, effective fraud and abuse management programs must address the complexity of the health care claims billing process in order to successfully reduce cost.

Health Plan Return on Investment

With an effective application of fraud and abuse detection technologies, an April 2005 Gartner report estimates that health care payers will see a return on investment of at least 5-to-1. Framed another way, research by Reden & Anders, an Ingenix company, indicates that an anti-fraud program that saves even 1 percent of medical expense can increase the profitability of a typical health plan by up to 16.7 percent.

http://www.ingenix.com/content/attachments/06-10221%20PI%20Exec%20Briefing.pdf

Comment:

By Don McCanne, MD

To better understand the out-of-network benefits of insurance products being offered, I looked up, as an example, an application form for UnitedHealthcare in California, specifically PacifiCare SignatureValue. It states, “To be considered for reimbursement, expenses must qualify as covered expenses. Expenses are also subject to usual and customary limits, unless you use a network…”

The plan brochure states, “Usual and Customary Charges (U&C) – means charges for medical services or supplies for which PacifiCare is legally liable and which do not exceed the average charged rate charged for the same or similar services or supplies in the geographic region where the services or supplies are received. Usual and Customary Charges are determined by referencing the 80th percentile of the most current survey published by Medical Data Research (MDR) for such services or supplies. The MDR survey is a product of Ingenix, Inc., formerly known as Medicode.”

Thus it appears that most of the time, the full fee for out-of-network providers should be authorized, yet hardly anyone has had that experience. This lawsuit will determine the extent to which the insurers have violated their contracts with the patients to provide full payment for usual and customary charges. Since out-of-network providers have no contracts with the insurers, the patients are responsible for the full amount denied by the insurers.

Most current proposals for reform call for an expansion of IT (information technology) services to help control health care costs. Ingenix is demonstrating just how the private insurance industry adapts IT innovations to our health care system. It is using IT to shift more costs to patients while “increasing the profitability of a typical health plan by up to 16.7 percent.”

Gad. The private insurance industry really is about profits, not patients. And all of the leading politicians want us to have more of this?

Insurers’ IT innovations shift costs to patients

Probe Targets Health Insurers On Payments

By Vanessa Fuhrmans and Theo Francis
The Wall Street Journal
February 14, 2008

The New York attorney general said his office plans to sue UnitedHealth Group Inc. as part of a broader investigation into the way the health-insurance industry sets payment rates for hospitals and doctors outside of their networks.

The move takes aim at a common practice among health insurers that can result in higher medical-bill payments for many consumers. While insurers typically pay in-network hospitals and physicians a negotiated fee for medical claims, out-of-network providers are reimbursed “usual and customary” or “reasonable” charges. These charges are set according to what insurers have determined is the going rate for a given procedure or service in a specific area.

When the usual and customary payment is much lower than what the provider charged, patients are often billed for the difference. Doctors and hospitals have long complained that the methodology is opaque and sets reimbursement artificially low.

As part of the probe, Andrew Cuomo, the New York attorney general, issued subpoenas to 16 health insurers, including Aetna Inc., Cigna Corp. and Wellpoint Inc.’s Empire Blue Cross Blue Shield unit. UnitedHealth is at the center because it owns, through its unit Ingenix, the database that much of the rest of the industry uses to determine usual and customary charges.

Called the Prevailing Healthcare Charges System, the database contains price information from more than one billion medical claims collected from more than 100 health plans nationwide. Health insurers typically compare out-of-network claims against the database and automatically reduce the bill to a “reasonable” size before reimbursing the patient or doctor.

Linda Lacewell, who heads Mr. Cuomo’s health-care industry task force, characterized the Ingenix database as “garbage in, garbage out,” with insurers sometimes manipulating data and knocking out price information from doctors with higher charges.

“We believe there was an industrywide scheme perpetrated by some of the nation’s largest health insurance companies to defraud consumers,” Mr. Cuomo said at a news conference. He said he plans to sue UnitedHealth and Ingenix within five days. He added that the health insurer’s ownership of the billing-data provider was “a gross conflict of interest.”

“Real people get stuck with excessive bills and are less likely to seek the care they need,” Mr. Cuomo said.

http://online.wsj.com/article/SB120292255343965679.html.html

And…

Payment Integrity: Harnessing the power of technology to detect and deter fraudulent, erroneous and abusive claims

Ingenix
Executive Briefing

…Compounding the damage, health plans also spend millions of dollars annually on erroneous and abusive claims that do not reach the level of fraud.

Effectively utilizing advanced fraud management technology and services is the best option for striking back against those who abuse the system.

Critical Elements for Success

Claims editing software is a Web-enabled, rules-based application that allows health plans to edit professional and facility claims while responding to dynamically changing guidelines and regulations in the health care marketplace. Claims editing software is typically focused on editing professional claims.

Health care claims billing is a complex process that is highly codified. While codification promotes automation, the breadth of relationships between the many different types of billing codes adds complexity. Therefore, effective fraud and abuse management programs must address the complexity of the health care claims billing process in order to successfully reduce cost.

Health Plan Return on Investment

With an effective application of fraud and abuse detection technologies, an April 2005 Gartner report estimates that health care payers will see a return on investment of at least 5-to-1. Framed another way, research by Reden & Anders, an Ingenix company, indicates that an anti-fraud program that saves even 1 percent of medical expense can increase the profitability of a typical health plan by up to 16.7 percent.

http://www.ingenix.com/content/attachments/06-10221%20PI%20Exec%20Briefing.pdf

Comment:

By Don McCanne, MD

To better understand the out-of-network benefits of insurance products being offered, I looked up, as an example, an application form for UnitedHealthcare in California, specifically PacifiCare SignatureValue. It states, “To be considered for reimbursement, expenses must qualify as covered expenses. Expenses are also subject to usual and customary limits, unless you use a network…”

The plan brochure states, “Usual and Customary Charges (U&C) – means charges for medical services or supplies for which PacifiCare is legally liable and which do not exceed the average charged rate charged for the same or similar services or supplies in the geographic region where the services or supplies are received. Usual and Customary Charges are determined by referencing the 80th percentile of the most current survey published by Medical Data Research (MDR) for such services or supplies. The MDR survey is a product of Ingenix, Inc., formerly known as Medicode.”

Thus it appears that most of the time, the full fee for out-of-network providers should be authorized, yet hardly anyone has had that experience. This lawsuit will determine the extent to which the insurers have violated their contracts with the patients to provide full payment for usual and customary charges. Since out-of-network providers have no contracts with the insurers, the patients are responsible for the full amount denied by the insurers.

Most current proposals for reform call for an expansion of IT (information technology) services to help control health care costs. Ingenix is demonstrating just how the private insurance industry adapts IT innovations to our health care system. It is using IT to shift more costs to patients while “increasing the profitability of a typical health plan by up to 16.7 percent.”

Gad. The private insurance industry really is about profits, not patients. And all of the leading politicians want us to have more of this?

Grumbach and GAO on primary care crisis

Senate Committee on Health, Education, Labor and Pensions
February 12, 2008

Recent Supply Trends, Projections, and Valuation of Services

Testimony of A. Bruce Steinwald, Director, Health Care
United States Government Accountability Office (GAO)
Primary Care Professionals

Health professional workforce projections that are mostly silent on the future supply of and demand for primary care services are symptomatic of an ongoing decline in the nation’s financial support for primary care medicine. Ample research in recent years concludes that the nation’s over reliance on specialty care services at the expense of primary care leads to a health care system that is less efficient. At the same time, research shows that preventive care, care coordination for the chronically ill, and continuity of care – all hallmarks of primary care medicine – can achieve improved outcomes and costs savings. Conventional payment systems tend to undervalue primary care services relative to specialty services. Some physician organizations are proposing payment system refinements that place a new emphasis on primary care services.

http://help.senate.gov/Hearings/2008_02_12/Steinwald.pdf

And…

The Crisis in the Primary Care Physician Workforce

Testimony of Kevin Grumbach, MD, Professor and Chair of the Department of Family and Community Medicine at the University of California, San Francisco

There are three main points I would like to emphasize:

1. Primary care is the essential foundation of a well-performing health system

2. The primary care infrastructure in the United States is crumbling, and patient access to primary care is suffering throughout the nation.

3. The federal government can address the crisis in primary care through:

a. Targeted health professions primary care training programs such as Title VII programs,
b. Reform of Medicare Graduate Medical Education funding,
c. The National Health Services Corps, and
d. Medicare physician payment reform.

Conclusion

Primary care is essential, and it is in crisis. Decisive action is required by the federal government to avert the collapse of primary care and its catastrophic consequences for the public. Many leaders in the private sector, such as large employers, are already taking action on issues such as physician payment reform to support new models of primary care.

Research provides evidence of strategies that are of proven effectiveness in strengthening the primary care workforce and providing incentives for primary care practice. Some of these strategies, such as implementing a split SGR for Medicare physician payment or reforming Medicare GME payments, do not require new funds but rather a reconsideration of how existing funds are allocated. Other strategies, such as a reasonable level of funding for the Section 747 Title VII Primary Care Training Grants Program, require small investments. For example, restoring Title VII Section 747 funding to its 2003 level of $92.4 million would represent an annual investment equivalent to 0.02% of the annual Medicare budget. Such investments in the future of the nation’s primary care physician workforce are a cost-effective investment in the nation’s health care infrastructure and in the health of the public.

http://help.senate.gov/Hearings/2008_02_12/Grumbach.pdf

Comment:

By Don McCanne, MD

The current dialogue on reform is often more narrowly focused on topics such as disease management and electronic medical records. More attention needs to be directed to reform that would put all of this together: reinforcing our primary care infrastructure.

It is difficult to see how this could be accomplished without significant federal support through expanded policies and public financing. As an example, Kevin Grumbach discusses the very important role that Medicare could play in this process. Those changes alone could arrest the downward spiral of the primary care base. Just imagine what we could do if we were all covered by a single, Medicare-like program.

Reforming health care the right way – who is it that keeps saying this isn’t feasible?

10 Myths About Canadian Health Care, Busted

By Sara Robinson
TomPaine.com
February 5, 2008

2008 is shaping up to be the election year that we finally get to have the Great American Healthcare Debate again. Harry and Louise are back with a vengeance. Conservatives are rumbling around the talk show circuit bellowing about the socialist threat to the (literal) American body politic. And, as usual, Canada is once again getting dragged into the fracas, shoved around by both sides as either an exemplar or a warning — and, along the way, getting coated with the obfuscating dust of so many willful misconceptions that the actual facts about How Canada Does It are completely lost in the melee.

I’m both a health-care-card-carrying Canadian resident and an uninsured American citizen who regularly sees doctors on both sides of the border. As such, I’m in a unique position to address the pros and cons of both systems first-hand. If we’re going to have this conversation, it would be great if we could start out (for once) with actual facts, instead of ideological posturing, wishful thinking, hearsay, and random guessing about how things get done up here.

To that end, here’s the first of a two-part series aimed at busting the common myths Americans routinely tell each other about Canadian health care. When the right-wing hysterics drag out these hoary old bogeymen, this time, we need to be armed and ready to blast them into straw. Because, mostly, straw is all they’re made of.

1. Canada’s health care system is “socialized medicine.”
False. In socialized medical systems, the doctors work directly for the state. In Canada (and many other countries with universal care), doctors run their own private practices, just like they do in the US. The only difference is that every doctor deals with one insurer, instead of 150. And that insurer is the provincial government, which is accountable to the legislature and the voters if the quality of coverage is allowed to slide.

The proper term for this is “single-payer insurance.” In talking to Americans about it, the better phrase is “Medicare for all.”

2. Doctors are hurt financially by single-payer health care.
True and False. Doctors in Canada do make less than their US counterparts. But they also have lower overhead, and usually much better working conditions. A few reasons for this:

First, as noted, they don’t have to charge higher fees to cover the salary of a full-time staffer to deal with over a hundred different insurers, all of whom are bent on denying care whenever possible. In fact, most Canadian doctors get by quite nicely with just one assistant, who cheerfully handles the phones, mail, scheduling, patient reception, stocking, filing, and billing all by herself in the course of a standard workday.

Second, they don’t have to spend several hours every day on the phone cajoling insurance company bean counters into doing the right thing by their patients. My doctor in California worked a 70-hour week: 35 hours seeing patients, and another 35 hours on the phone arguing with insurance companies. My Canadian doctor, on the other hand, works a 35-hour week, period. She files her invoices online, and the vast majority are simply paid — quietly, quickly, and without hassle. There is no runaround. There are no fights. Appointments aren’t interrupted by vexing phone calls. Care is seldom denied (because everybody knows the rules). She gets her checks on time, sees her patients on schedule, takes Thursdays off, and gets home in time for dinner.

One unsurprising side effect of all this is that the doctors I see here are, to a person, more focused, more relaxed, more generous with their time, more up-to-date in their specialties, and overall much less distracted from the real work of doctoring. You don’t realize how much stress the American doctor-insurer fights put on the day-to-day quality of care until you see doctors who don’t operate under that stress, because they never have to fight those battles at all. Amazingly: they seem to enjoy their jobs.

Third: The average American medical student graduates $140,000 in hock. The average Canadian doctor’s debt is roughly half that.

Finally, Canadian doctors pay lower malpractice insurance fees. When paying for health care constitutes a one of a family’s major expenses, expectations tend to run very high. A doctor’s mistake not only damages the body; it may very well throw a middle-class family permanently into the ranks of the working poor, and render the victim uninsurable for life. With so much at stake, it’s no wonder people are quick to rush to court for redress.

Canadians are far less likely to sue in the first place, since they’re not having to absorb devastating financial losses in addition to any physical losses when something goes awry. The cost of the damaging treatment will be covered. So will the cost of fixing it. And, no matter what happens, the victim will remain insured for life. When lawsuits do occur, the awards don’t have to include coverage for future medical costs, which reduces the insurance company’s liability.

3. Wait times in Canada are horrendous.
True and False again — it depends on which province you live in, and what’s wrong with you. Canada’s health care system runs on federal guidelines that ensure uniform standards of care, but each territory and province administers its own program. Some provinces don’t plan their facilities well enough; in those, you can have waits. Some do better. As a general rule, the farther north you live, the harder it is to get to care, simply because the doctors and hospitals are concentrated in the south. But that’s just as true in any rural county in the U.S.

You can hear the bitching about it no matter where you live, though. The percentage of Canadians who’d consider giving up their beloved system consistently languishes in the single digits. A few years ago, a TV show asked Canadians to name the Greatest Canadian in history; and in a broad national consensus, they gave the honor to Tommy Douglas, the Saskatchewan premier who is considered the father of the country’s health care system. (And no, it had nothing to do with the fact that he was also Kiefer Sutherland’s grandfather.). In spite of that, though, grousing about health care is still unofficially Canada’s third national sport after curling and hockey.

And for the country’s newspapers, it’s a prime watchdogging opportunity. Any little thing goes sideways at the local hospital, and it’s on the front pages the next day. Those kinds of stories sell papers, because everyone is invested in that system and has a personal stake in how well it functions. The American system might benefit from this kind of constant scrutiny, because it’s certainly one of the things that keeps the quality high. But it also makes people think it’s far worse than it is.

Critics should be reminded that the American system is not exactly instant-on, either. When I lived in California, I had excellent insurance, and got my care through one of the best university-based systems in the nation. Yet I routinely had to wait anywhere from six to twelve weeks to get in to see a specialist. Non-emergency surgical waits could be anywhere from four weeks to four months. After two years in the BC system, I’m finding the experience to be pretty much comparable, and often better. The notable exception is MRIs, which were easy in California, but can take many months to get here. (It’s the number one thing people go over the border for.) Other than that, urban Canadians get care about as fast as urban Americans do.

4. You have to wait forever to get a family doctor.
False for the vast majority of Canadians, but True for a few. Again, it all depends on where you live. I live in suburban Vancouver, and there are any number of first-rate GPs in my neighborhood who are taking new patients. If you don’t have a working relationship with one, but need to see a doctor now, there are 24-hour urgent care clinics in most neighborhoods that will usually get you in and out on the minor stuff in under an hour.

It is, absolutely, harder to get to a doctor if you live out in a small town, or up in the territories. But that’s just as true in the U.S. — and in America, the government won’t cover the airfare for rural folk to come down to the city for needed treatment, which all the provincial plans do.

5. You don’t get to choose your own doctor.
Scurrilously False. Somebody, somewhere, is getting paid a lot of money to make this kind of stuff up. The cons love to scare the kids with stories about the government picking your doctor for you, and you don’t get a choice. Be afraid! Be very afraid!

For the record: Canadians pick their own doctors, just like Americans do. And not only that: since it all pays the same, poor Canadians have exactly the same access to the country’s top specialists that rich ones do.

6. Canada’s care plan only covers the basics. You’re still on your own for any extras, including prescription drugs. And you still have to pay for it.
True — but not as big an issue as you might think. The province does charge a small monthly premium (ours is $108/month for a family of four) for the basic coverage. However, most people never even have to write that check: almost all employers pick up the tab for their employees’ premiums as part of the standard benefits package; and the province covers it for people on public assistance or disability.

“The basics” covered by this plan include 100% of all doctor’s fees, ambulance fares, tests, and everything that happens in a hospital — in other words, the really big-ticket items that routinely drive American families into bankruptcy. In BC, it doesn’t include “extras” like medical equipment, prescriptions, physical therapy or chiropractic care, dental, vision, and so on; and if you want a private or semi-private room with TV and phone, that costs extra (about what you’d pay for a room in a middling hotel). That other stuff does add up; but it’s far easier to afford if you’re not having to cover the big expenses, too. Furthermore: you can deduct any out-of-pocket health expenses you do have to pay off your income taxes. And, as every American knows by now, drugs aren’t nearly as expensive here, either.

Filling the gap between the basics and the extras is the job of the country’s remaining private health insurers. Since they’re off the hook for the ruinously expensive big-ticket items that can put their own profits at risk, the insurance companies make a tidy business out of offering inexpensive policies that cover all those smaller, more predictable expenses. Top-quality add-on policies typically run in the ballpark of $75 per person in a family per month — about $300 for a family of four — if you’re stuck buying an individual plan. Group plans are cheap enough that even small employers can afford to offer them as a routine benefit. An average working Canadian with employer-paid basic care and supplemental insurance gets free coverage equal to the best policies now only offered at a few of America’s largest corporations. And that employer is probably only paying a couple hundred dollars a month to provide that benefit.

7. Canadian drugs are not the same.
More preposterious bogosity. They are exactly the same drugs, made by the same pharmaceutical companies, often in the same factories. The Canadian drug distribution system, however, has much tighter oversight; and pharmacies and pharmacists are more closely regulated. If there is a difference in Canadian drugs at all, they’re actually likely to be safer.

Also: pharmacists here dispense what the doctors tell them to dispense, the first time, without moralizing. I know. It’s amazing.

8. Publicly-funded programs will inevitably lead to rationed health care, particularly for the elderly.
False. And bogglingly so. The papers would have a field day if there was the barest hint that this might be true.

One of the things that constantly amazes me here is how well-cared-for the elderly and disabled you see on the streets here are. No, these people are not being thrown out on the curb. In fact, they live longer, healthier, and more productive lives because they’re getting a constant level of care that ensures small things get treated before they become big problems.

The health care system also makes it easier on their caregiving adult children, who have more time to look in on Mom and take her on outings because they aren’t working 60-hour weeks trying to hold onto a job that gives them insurance.

9. People won’t be responsible for their own health if they’re not being forced to pay for the consequences.
False. The philosophical basis of America’s privatized health care system might best be characterized as medical Calvinism. It’s fascinating to watch well-educated secularists who recoil at the Protestant obsession with personal virtue, prosperity as a cardinal sign of election by God, and total responsibility for one’s own salvation turn into fire-eyed, moralizing True Believers when it comes to the subject of Taking Responsibility For One’s Own Health.

They’ll insist that health, like salvation, is entirely in our own hands. If you just have the character and self-discipline to stick to an abstemious regime of careful diet, clean living, and frequent sweat offerings to the Great Treadmill God, you’ll never get sick. (Like all good theologies, there’s even an unspoken promise of immortality: f you do it really really right, they imply, you might even live forever.) The virtuous Elect can be discerned by their svelte figures and low cholesterol numbers. From here, it’s a short leap to the conviction that those who suffer from chronic conditions are victims of their own weaknesses, and simply getting what they deserve. Part of their punishment is being forced to pay for the expensive, heavily marketed pharmaceuticals needed to alleviate these avoidable illnesses. They can’t complain. It was their own damned fault; and it’s not our responsibility to pay for their sins. In fact, it’s recently been suggested that they be shunned, lest they lead the virtuous into sin.

Of course, this is bad theology whether you’re applying it to the state of one’s soul or one’s arteries. The fact is that bad genes, bad luck, and the ravages of age eventually take their toll on all of us — even the most careful of us. The economics of the Canadian system reflect this very different philosophy: it’s built on the belief that maintaining health is not an individual responsibility, but a collective one. Since none of us controls fate, the least we can do is be there for each other as our numbers come up.

This difference is expressed in a few different ways. First: Canadians tend to think of tending to one’s health as one of your duties as a citizen. You do what’s right because you don’t want to take up space in the system, or put that burden on your fellow taxpayers. Second, “taking care of yourself” has a slightly expanded definition here, which includes a greater emphasis on public health. Canadians are serious about not coming to work if you’re contagious, and seeing a doctor ASAP if you need to. Staying healthy includes not only diet and exercise; but also taking care to keep your germs to yourself, avoiding stress, and getting things treated while they’re still small and cheap to fix.

Third, there’s a somewhat larger awareness that stress leads to big-ticket illnesses — and a somewhat lower cultural tolerance for employers who put people in high-stress situations. Nobody wants to pick up the tab for their greed. And finally, there’s a generally greater acceptance on the part of both the elderly and their families that end-of-life heroics may be drawing resources away from people who might put them to better use. You can have them if you want them; but reasonable and compassionate people should be able to take the larger view.

The bottom line: When it comes to getting people to make healthy choices, appealing to their sense of the common good seems to work at least as well as Calvinist moralizing.

10. This all sounds great — but the taxes to cover it are just unaffordable. And besides, isn’t the system in bad financial shape?
False. On one hand, our annual Canadian tax bite runs about 10% higher than our U.S. taxes did. On the other, we’re not paying out the equivalent of two new car payments every month to keep the family insured here. When you balance out the difference, we’re actually money ahead. When you factor in the greatly increased social stability that follows when everybody’s getting their necessary health care, the impact on our quality of life becomes even more signficant.

And True — but only because this is a universal truth that we need to make our peace with. Yes, the provincial plans are always struggling. So is every single publicly-funded health care system in the world, including the VA and Medicare. There’s always tension between what the users of the system want, and what the taxpayers are willing to pay. The balance of power ebbs and flows between them; but no matter where it lies at any given moment, at least one of the pair is always going to be at least somewhat unhappy.

But, as many of us know all too well, there’s also constant tension between what patients want and what private insurers are willing to pay. At least when it’s in government hands, we can demand some accountability. And my experience in Canada has convinced me that this accountability is what makes all the difference between the two systems.

It is true that Canada’s system is not the same as the U.S. system. It’s designed to deliver a somewhat different product, to a population that has somewhat different expectations. But the end result is that the vast majority of Canadians get the vast majority of what they need the vast majority of the time. It’ll be a good day when when Americans can hold their heads high and proudly make that same declaration.

Next week: More mythbusting on common conservative canards about efficiency, innovation, and competitiveness.

Blue Cross asks doctors to rat on patients

Doctors balk at request for data

By Lisa Girion
Los Angeles Times
February 12, 2008

The state’s largest for-profit health insurer is asking California physicians to look for conditions it can use to cancel their new patients’ medical coverage.

Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose “material medical history,” including “pre-existing pregnancies.”

“Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately,” the letters say. The Times obtained a copy of a letter that was aimed at physicians in large medical groups.

(WellPoint spokeswoman Shannon) Troughton said Blue Cross sent the letters to medical groups that operate, in effect, as health maintenance organizations. Blue Cross pays such groups a set amount per patient each month. With a few exceptions, the groups are then responsible for arranging and providing patients’ medical care and take on a substantial piece of the risk.

Troughton said “in the past” physicians in such medical groups had requested information on patients’ pre-existing medical conditions because anything that had not been disclosed could affect the medical group’s finances.

It was important, Troughton added, “to note that participation in this outreach effort is voluntary on the part of the physicians.”

“We’re outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality,” said Dr. Richard Frankenstein, president of the California Medical Assn.

Anthony Wright, executive director of HealthAccess California, a healthcare advocacy organization, said the letter had put physicians in the “disturbing” position of having to weigh their patients’ interests against a directive from the company that, in many cases, pays most of their bills.

“They are playing a game of ‘gotcha’ where they are trying to use their doctors against their patients’ health interests,” Wright said. “That’s about as ugly as it gets.”

http://www.latimes.com/business/la-fi-bluecross12feb12,0,4319662.story

Comment:

By Don McCanne, MD

WellPoint’s Blue Cross of California remains a leader in introducing innovations that reduce expenditures for health care. By limiting spending on health care they have been able to market their insurance products at highly competitive premiums, thereby reaping profits on this large, very healthy sector of our population.

As we have seen before, Blue Cross’s very successful business model is often in conflict with the mission of physicians and other professionals to provide the health care that patients need. This letter to physicians has a particularly nefarious intent.

Since Blue Cross is paying these physicians a set amount per patient per month (capitation), the physicians themselves are providing an insurance function of assuming risk. Patients with greater health care needs result in a loss since the expenses required to care for them are greater, sometimes much greater, than the capitation payment made by Blue Cross.

So now we see why a physician might consider “ratting” on his or her own patient even though it would result in a rescission of the patient’s insurance policy. Blue Cross does not have to put in print the very strong message of this letter, even though it will jump out between the lines.

“Doctor, your dishonest patient who lied on the insurance application will result in a financial loss for you, not to mention the need to provide additional professional services for which you will not be compensated. Fortunately, you can prevent this loss by notifying us of any medical condition that will allow us to rescind this unfair insurance contract.”

To enhance profits, the private insurance industry is destroying the sacred relationship between the patient and his or her health care professional.

And the politicians are campaigning with the message that we can keep the private insurance we have. Who would want to?

Wyden's "Healthy Americans Act" is Wrong Model for Health Reform

Personal communication, Dr. Walter Tsou
February 12, 2008

The bipartisan authors of the Healthy Americans Act, Senators Ron Wyden (D-OR) and Bob Bennett (R-UT) were in Philadelphia today for a two hour session to explain their bill. Their purpose was to build public support for their bill with the goal of having most of the disagreements worked out by the time a new president takes office in January 2009. The bill depends on the “mandate” model of private insurance. The potential problems with this approach have been extensively written about by PNHP.

Nevertheless, it was a unique meeting to have both Senators explain their bill and to sit with an audience for an hour to answer questions. The first tip off was that the forum was sponsored by AmeriHealth, a large Medicaid HMO. The Mayor of Philadelphia (who will be featured this Wednesday on ABC News with Charles Gibson) came to thank them for coming and stating his gratitude that someone in Washington was working on this problem. He came short of actually endorsing the bill however and conveniently left.

This left the program to Wyden and Bennett.

Wyden and Bennett said there were five major goals in their plan which was a piece in progress. Those goals were choice of plans to fit each family’s needs, portability which is tied to individual insurance supposedly with a lifetime guarantee of coverage as good as members of Congress (a term he used repeatedly), tax reform to support the same tax benefits that large employers get, healthy behavior to promote personal responsibility by giving premium discounts for controlling your blood pressure or diabetes (hard to imagine the kind of gaming that occurs here), and the Republican favorite – market forces, based on transparency in prices and quality and individuals presumably shopping around for cheaper and better care. Bennett says that many Republicans have a hard time even agreeing on universal health coverage.

Wyden mentioned that we spend $2.3 trillion on health care, but were not getting enough value for our money. In order to pay for the premiums to go to private insurers, they would require all employers to give all American workers the actual value of their health care benefits in higher wages but that they then turn around and require you to take those wages and purchase individual insurance. (This idea is something of value to single payer advocates but instead of paying premiums, you would pay taxes to fund a single payer plan. ) There would be three large private insurance risk pools. The first would be all employees who would basically buy into a program like the federal employee health benefit plans. The second would be all individual self employed and uninsured who would be in another big risk pool. In order to avoid adverse risk selection, they would require community rating by insurers and no preexisting condition exclusions. The third risk pool would be all Medicaid patients who could buy their insurance from Medicaid HMOs like AmeriHealth, but if the benefits were not as good as what members of Congress get, the federal government would subsidize these plans to ensure complete benefits. (actually, Medicaid benefits are generally much more comprehensive than private insurance, but because they pay so poorly, few providers accept Medicaid payments).

Several questions were asked, but my question basically challenged why they did not choose single payer since private insurers have much higher administrative costs, that single payer would be a much better negotiator of health prices and quality than Mrs. Jones down the street, and what kind of fines would they envision to enforce their mandate. Wyden stated that whenever he has a public forum, some single payer advocate explains the advantages of single payer and there is cheering in the audience. Then there is someone in the back of the room who denounces government. And finally, someone says “we want what you have”. Wyden pulls out his health card and says that he has private health insurance and explains that his plan would give Americans “what members of Congress have”. This seems to quiet the audience from his perspective. (I have no doubt that members of Congress do not face the denials so nicely outlined in Sicko.) In terms of transparency in prices and quality, Bennett said repeatedly that Utah’s Intermountain Healthcare delivers much better health care for less money and that presumably his state would benefit if there was more transparency in cost since they presumably would choose Intermountain Health. Bennett also seemed to believe that the risk pools were so huge that they could drop the private insurance overhead to “3-4 percent”, (which is sheer fantasy). They dodged the question about “fines” for enforcing the mandate, basically saying that terms like “garnish your wages” were words that opponents use and that basically the plan would deduct premiums from our paychecks in order to fund the plan. (Why deducting premiums from our paychecks to fund private insurance companies is acceptable but deducting a smaller amount using taxes to fund single payer was not acceptable seems an important question, but I wasn’t given a chance to debate them because so many others had questions.)

Others asked about malpractice, about whether states would be allowed to experiment with health care reform (they would), assurance of quality of care, etc.

They believe that since they have a bipartisan bill with six Republicans (Judd, Gregg, Grassley, Coleman, Crapo, Alexander) and six Democrats (Stabenow, Nelson, Lieberman (no surprise here), Carper, and Landrieu) plus the National Federation of Independent Businesses, the CEO of Safeway, and SEIU, they have a good shot at setting the framework for the next president. Add to that that Obama and Clinton are basically using the framework of private insurance in their plans and you have the basis to worry about another 4-8 years of a costly failed experiment in health care reform.

Despite these rumblings, I think it is pretty clear that the American people want single payer. It is the politicians who are out of tune with this. We will need to do a lot more educating about this. The impending recession may cause millions more Americans to lose their health insurance. Simply requiring them to buy insurance is not a solution in the face of a recession and we should demand that Congress create a real safety net, not one based on the fantasy that everyone buy overpriced for profit private insurance with huge deductibles.

Doctors balk at request for data

Physicians object to a letter from Blue Cross seeking information that could lead to policy cancellations.

By Lisa Girion
Los Angeles Times
February 12, 2008

Click here for a pdf of the Blue Cross Letter to health-care providers.

The state’s largest for-profit health insurer is asking California physicians to look for conditions it can use to cancel their new patients’ medical coverage.

Blue Cross of California is sending physicians copies of health insurance applications filled out by new patients, along with a letter advising them that the company has a right to drop members who fail to disclose “material medical history,” including “pre-existing pregnancies.”

“Any condition not listed on the application that is discovered to be pre-existing should be reported to Blue Cross immediately,” the letters say. The Times obtained a copy of a letter that was aimed at physicians in large medical groups.

The letter wasn’t going down well with physicians.

“We’re outraged that they are asking doctors to violate the sacred trust of patients to rat them out for medical information that patients would expect their doctors to handle with the utmost secrecy and confidentiality,” said Dr. Richard Frankenstein, president of the California Medical Assn.

Patients “will stop telling their doctors anything they think might be a problem for their insurance and they don’t think matters for their current health situation,” he said. “But they didn’t go to medical school, and there are all kinds of obscure things that could be very helpful to a doctor.”

WellPoint Inc., the Indianapolis-based company that operates Blue Cross of California, said Monday that it was sending out the letters in an effort to hold down costs.

“Enrolling an applicant who did not disclose their true condition (and the condition is chronic or acute), will quickly drive increased utilization of services, which drives up costs for all members,” WellPoint spokeswoman Shannon Troughton said in an e-mail.

“Blue Cross feels it is our responsibility to assure all records are accurate and up to date for HMO providers,” she said. “We send these letters to identify members early on in the process who may not have been honest in their application.”

Blue Cross is one of several California insurers that have come under fire for issuing policies without checking applications and then canceling coverage after individuals incur major medical costs. The practice of canceling coverage, known in the industry as rescission, is under scrutiny by state regulators, lawmakers and the courts.

Patients in a raft of lawsuits accuse the insurers of canceling coverage over honest mistakes and minor inconsistencies on applications that they contend are purposely confusing. Victims of cancer and other serious medical problems often are unable to get new coverage once their insurance has been rescinded and they may go without treatment when they need it most. Suddenly swamped by medical debt, some people have lost homes and businesses.

Insurers say the cancellations are an important weapon against fraud and occur rarely.

Physician groups and doctors who received the letter told The Times they never had seen anything like it. Also unfamiliar with such letters was Don Crane, executive director of the California Assn. of Physician Groups, which represents many of the large HMO-style medical groups.

“I have not heard any dialogue on this business of underwriting or ferreting out existing” conditions, Crane said.

But WellPoint’s Troughton said this was nothing new. “This is something that has been in place for several years and to date we have not received any calls or letters of concern for this service,” she said.

It was important, Troughton added, “to note that participation in this outreach effort is voluntary on the part of the physicians.”

The California Medical Assn. sent a letter to state regulators Friday urging them to order Blue Cross to stop asking doctors for the patient information, saying it was “deeply disturbing, unlawful, and interferes with the physician-patient relationship.”

The letters go out to some physicians who care for Blue Cross’ share of the state’s estimated 3 million people with individual policies.

Troughton said Blue Cross sent the letters to medical groups that operate, in effect, as health maintenance organizations. Blue Cross pays such groups a set amount per patient each month. With a few exceptions, the groups are then responsible for arranging and providing patients’ medical care and take on a substantial piece of the risk.

Troughton said “in the past” physicians in such medical groups had requested information on patients’ pre-existing medical conditions because anything that had not been disclosed could affect the medical group’s finances.

She disputed the notion that the letters could improperly breach patient confidentiality. She said the sharing of medical information with medical groups was within federal law because it fell under “patient, treatment and operations” guidelines.

Blue Cross doesn’t always cancel the policies of patients with discrepancies in their applications, Troughton noted. Sometimes it may offer them another plan, she said.

Lynne Randolph, a spokeswoman for the state Department of Managed Health Care, said the agency would review the letter. Blue Cross is fighting a $1-million fine the department imposed in March over alleged systemic problems the agency identified in the way the company rescinds coverage.

A spokesman for state Insurance Commissioner Steve Poizner said the Insurance Department had not received any complaints about Blue Cross’ letter. But because the medical association had sent a copy of its complaint to the department, the letter is “on our radar now,” spokesman Byron Tucker said.

The letter is “extremely troubling on several fronts,” Tucker said. “It really obliterates the line between underwriting and medical care. It is the insurer’s job to underwrite their policies, not the doctors’. Doctors deliver medical care. Their job is not to underwrite policies for insurers.”

Anthony Wright, executive director of HealthAccess California, a healthcare advocacy organization, said the letter had put physicians in the “disturbing” position of having to weigh their patients’ interests against a directive from the company that, in many cases, pays most of their bills.

“They are playing a game of ‘gotcha’ where they are trying to use their doctors against their patients’ health interests,” Wright said. “That’s about as ugly as it gets.”

lisa.girion@latimes.com

Wyden’s “Healthy Americans Act” is Wrong Model for Health Reform

Personal communication, Dr. Walter Tsou
February 12, 2008

The bipartisan authors of the Healthy Americans Act, Senators Ron Wyden (D-OR) and Bob Bennett (R-UT) were in Philadelphia today for a two hour session to explain their bill. Their purpose was to build public support for their bill with the goal of having most of the disagreements worked out by the time a new president takes office in January 2009. The bill depends on the “mandate” model of private insurance. The potential problems with this approach have been extensively written about by PNHP.

Nevertheless, it was a unique meeting to have both Senators explain their bill and to sit with an audience for an hour to answer questions. The first tip off was that the forum was sponsored by AmeriHealth, a large Medicaid HMO. The Mayor of Philadelphia (who will be featured this Wednesday on ABC News with Charles Gibson) came to thank them for coming and stating his gratitude that someone in Washington was working on this problem. He came short of actually endorsing the bill however and conveniently left.

This left the program to Wyden and Bennett.

Wyden and Bennett said there were five major goals in their plan which was a piece in progress. Those goals were choice of plans to fit each family’s needs, portability which is tied to individual insurance supposedly with a lifetime guarantee of coverage as good as members of Congress (a term he used repeatedly), tax reform to support the same tax benefits that large employers get, healthy behavior to promote personal responsibility by giving premium discounts for controlling your blood pressure or diabetes (hard to imagine the kind of gaming that occurs here), and the Republican favorite – market forces, based on transparency in prices and quality and individuals presumably shopping around for cheaper and better care. Bennett says that many Republicans have a hard time even agreeing on universal health coverage.

Wyden mentioned that we spend $2.3 trillion on health care, but were not getting enough value for our money. In order to pay for the premiums to go to private insurers, they would require all employers to give all American workers the actual value of their health care benefits in higher wages but that they then turn around and require you to take those wages and purchase individual insurance. (This idea is something of value to single payer advocates but instead of paying premiums, you would pay taxes to fund a single payer plan. ) There would be three large private insurance risk pools. The first would be all employees who would basically buy into a program like the federal employee health benefit plans. The second would be all individual self employed and uninsured who would be in another big risk pool. In order to avoid adverse risk selection, they would require community rating by insurers and no preexisting condition exclusions. The third risk pool would be all Medicaid patients who could buy their insurance from Medicaid HMOs like AmeriHealth, but if the benefits were not as good as what members of Congress get, the federal government would subsidize these plans to ensure complete benefits. (actually, Medicaid benefits are generally much more comprehensive than private insurance, but because they pay so poorly, few providers accept Medicaid payments).

Several questions were asked, but my question basically challenged why they did not choose single payer since private insurers have much higher administrative costs, that single payer would be a much better negotiator of health prices and quality than Mrs. Jones down the street, and what kind of fines would they envision to enforce their mandate. Wyden stated that whenever he has a public forum, some single payer advocate explains the advantages of single payer and there is cheering in the audience. Then there is someone in the back of the room who denounces government. And finally, someone says “we want what you have”. Wyden pulls out his health card and says that he has private health insurance and explains that his plan would give Americans “what members of Congress have”. This seems to quiet the audience from his perspective. (I have no doubt that members of Congress do not face the denials so nicely outlined in Sicko.) In terms of transparency in prices and quality, Bennett said repeatedly that Utah’s Intermountain Healthcare delivers much better health care for less money and that presumably his state would benefit if there was more transparency in cost since they presumably would choose Intermountain Health. Bennett also seemed to believe that the risk pools were so huge that they could drop the private insurance overhead to “3-4 percent”, (which is sheer fantasy). They dodged the question about “fines” for enforcing the mandate, basically saying that terms like “garnish your wages” were words that opponents use and that basically the plan would deduct premiums from our paychecks in order to fund the plan. (Why deducting premiums from our paychecks to fund private insurance companies is acceptable but deducting a smaller amount using taxes to fund single payer was not acceptable seems an important question, but I wasn’t given a chance to debate them because so many others had questions.)

Others asked about malpractice, about whether states would be allowed to experiment with health care reform (they would), assurance of quality of care, etc.

They believe that since they have a bipartisan bill with six Republicans (Judd, Gregg, Grassley, Coleman, Crapo, Alexander) and six Democrats (Stabenow, Nelson, Lieberman (no surprise here), Carper, and Landrieu) plus the National Federation of Independent Businesses, the CEO of Safeway, and SEIU, they have a good shot at setting the framework for the next president. Add to that that Obama and Clinton are basically using the framework of private insurance in their plans and you have the basis to worry about another 4-8 years of a costly failed experiment in health care reform.

Despite these rumblings, I think it is pretty clear that the American people want single payer. It is the politicians who are out of tune with this. We will need to do a lot more educating about this. The impending recession may cause millions more Americans to lose their health insurance. Simply requiring them to buy insurance is not a solution in the face of a recession and we should demand that Congress create a real safety net, not one based on the fantasy that everyone buy overpriced for profit private insurance with huge deductibles.