Consumer Confidential

By David Lazarus
LA Times Staff Writer
11:26 AM PDT, August 26, 2007

The American Medical Assn. says it’s going to spend millions of dollars to highlight the plight of the uninsured in general — and the organization’s own remedies in particular.

What the AMA isn’t saying is that its plan would steer about 47 million people into the health insurance industry’s most expensive form of coverage. And it would probably leave taxpayers holding the bag.

“Under the AMA plan, the vast majority of Americans would have the means to purchase healthcare coverage,” the group’s president-elect, Nancy Nielsen, said in a statement last week while unveiling the “Voice for the Uninsured” campaign.

“It would give individuals choices, so they can select the appropriate coverage for them and their families, and would promote market reforms in the insurance industry,” she said.

That sounds appealing. But let’s take a look under the hood.

The AMA plan would maintain the current employer-based insurance system that covers most working families but is a growing headache for U.S. businesses. Insurance premiums continue rising and, increasingly, workers are being forced to pay a greater share of the costs.

Meanwhile, the AMA plan would extend tax credits to uninsured people that could be used to purchase coverage in the individual insurance market.

One problem is that tax credits in effect represent a government subsidy for purchasing insurance. That money would have to come from somewhere: higher taxes most likely, or funds cut from other federal programs.

The AMA says most of the money could come from reallocating existing tax credits provided to employers and high-income people. But it acknowledges that additional taxpayer funds could be required.

The other key problem with the plan is that individual insurance policies are typically the most expensive coverage available to consumers, at least if they’re comprehensive enough to match the coverage provided by many employers.

And that’s assuming an insurer will grant coverage to a particular individual. If that person has a preexisting condition, qualifying for coverage can be tough.

“It’s a flawed plan because it’s the most expensive way that we could extend health coverage to everyone,” said Don McCanne, a senior health policy fellow with Physicians for a National Health Program, a group of 14,000 doctors who advocate a government-run insurance system similar to programs found in all other industrialized democracies.

“It’s a ridiculous approach because you’re supporting this terribly inefficient industry,” he said.

According to the nonprofit California HealthCare Foundation, a single person making about $30,000 a year would have to spend 16% of his or her income on healthcare if covered by the average individual policy. That’s $4,800.

That same person would spend 3.5% of his or her income ($1,050) on health expenses under coverage provided through the typical plan offered by California companies with 50 or fewer employees, the foundation determined.

The big gap is mostly caused by the higher deductible that usually accompanies individual policies. In other words, the individual policyholder agrees to shoulder a greater burden of healthcare costs in return for lower annual premiums.

The foundation concluded that an individual insurance plan covers only about 55% of the average policyholder’s medical bills, while a small-group plan typically covers 83% of such costs.

The AMA says its plan would require “a number of regulatory reforms” to ensure that individual policies are affordable and that people with preexisting conditions aren’t denied coverage. But it doesn’t say how such reforms can be achieved.

“We think lawmakers ought to do the right thing for the American people,” said Jeremy Lazarus, a Denver psychiatrist and member of the AMA’s board of trustees (and no relation to a certain columnist).

Whatever else, the AMA is to be commended for attempting to raise the political profile of the uninsured and for seeking to make this a priority issue for presidential candidates.

But if your goal is universal coverage, expanding our dysfunctional system isn’t the answer. In fact, it might only make things worse over the long run.

The United States already spends about twice as much per person on healthcare as most other developed nations. However, the average American doesn’t live as long as people in countries that guarantee medical coverage to their citizens, and infant mortality is higher.

The AMA opposes a national single-payer insurance system because, the organization says, it could limit the types of treatment provided and stifle innovation. But the AMA isn’t opposed to trying out such a system at the state level.

A bill, SB 840, from state Sen. Sheila Kuehl (D-Santa Monica) would do just this in California. It’s an experiment worth doing.Having taxpayers help purchase very expensive coverage for potentially high-risk people? That’s an idea that should never limp out of the emergency room.

Consumer Confidential runs Wednesdays and Sundays. Send tips or feedback to david.lazarus@latimes.com.

Consumer Confidential

By David Lazarus
LA Times Staff Writer
11:26 AM PDT, August 26, 2007

The American Medical Assn. says it’s going to spend millions of dollars to highlight the plight of the uninsured in general — and the organization’s own remedies in particular.

What the AMA isn’t saying is that its plan would steer about 47 million people into the health insurance industry’s most expensive form of coverage. And it would probably leave taxpayers holding the bag.

“Under the AMA plan, the vast majority of Americans would have the means to purchase healthcare coverage,” the group’s president-elect, Nancy Nielsen, said in a statement last week while unveiling the “Voice for the Uninsured” campaign.

“It would give individuals choices, so they can select the appropriate coverage for them and their families, and would promote market reforms in the insurance industry,” she said.

That sounds appealing. But let’s take a look under the hood.

The AMA plan would maintain the current employer-based insurance system that covers most working families but is a growing headache for U.S. businesses. Insurance premiums continue rising and, increasingly, workers are being forced to pay a greater share of the costs.

Meanwhile, the AMA plan would extend tax credits to uninsured people that could be used to purchase coverage in the individual insurance market.

One problem is that tax credits in effect represent a government subsidy for purchasing insurance. That money would have to come from somewhere: higher taxes most likely, or funds cut from other federal programs.

The AMA says most of the money could come from reallocating existing tax credits provided to employers and high-income people. But it acknowledges that additional taxpayer funds could be required.

The other key problem with the plan is that individual insurance policies are typically the most expensive coverage available to consumers, at least if they’re comprehensive enough to match the coverage provided by many employers.

And that’s assuming an insurer will grant coverage to a particular individual. If that person has a preexisting condition, qualifying for coverage can be tough.

“It’s a flawed plan because it’s the most expensive way that we could extend health coverage to everyone,” said Don McCanne, a senior health policy fellow with Physicians for a National Health Program, a group of 14,000 doctors who advocate a government-run insurance system similar to programs found in all other industrialized democracies.

“It’s a ridiculous approach because you’re supporting this terribly inefficient industry,” he said.

According to the nonprofit California HealthCare Foundation, a single person making about $30,000 a year would have to spend 16% of his or her income on healthcare if covered by the average individual policy. That’s $4,800.

That same person would spend 3.5% of his or her income ($1,050) on health expenses under coverage provided through the typical plan offered by California companies with 50 or fewer employees, the foundation determined.

The big gap is mostly caused by the higher deductible that usually accompanies individual policies. In other words, the individual policyholder agrees to shoulder a greater burden of healthcare costs in return for lower annual premiums.

The foundation concluded that an individual insurance plan covers only about 55% of the average policyholder’s medical bills, while a small-group plan typically covers 83% of such costs.

The AMA says its plan would require “a number of regulatory reforms” to ensure that individual policies are affordable and that people with preexisting conditions aren’t denied coverage. But it doesn’t say how such reforms can be achieved.

“We think lawmakers ought to do the right thing for the American people,” said Jeremy Lazarus, a Denver psychiatrist and member of the AMA’s board of trustees (and no relation to a certain columnist).

Whatever else, the AMA is to be commended for attempting to raise the political profile of the uninsured and for seeking to make this a priority issue for presidential candidates.

But if your goal is universal coverage, expanding our dysfunctional system isn’t the answer. In fact, it might only make things worse over the long run.

The United States already spends about twice as much per person on healthcare as most other developed nations. However, the average American doesn’t live as long as people in countries that guarantee medical coverage to their citizens, and infant mortality is higher.

The AMA opposes a national single-payer insurance system because, the organization says, it could limit the types of treatment provided and stifle innovation. But the AMA isn’t opposed to trying out such a system at the state level.

A bill, SB 840, from state Sen. Sheila Kuehl (D-Santa Monica) would do just this in California. It’s an experiment worth doing.Having taxpayers help purchase very expensive coverage for potentially high-risk people? That’s an idea that should never limp out of the emergency room.

Consumer Confidential runs Wednesdays and Sundays. Send tips or feedback to david.lazarus@latimes.com.

By Kenneth Brummel-Smith
Tallahassee Democrat
August 23, 2007

Michael Moore’s recent documentary, “Sicko,” has increased the heat on the discussion of health care. It’s high time Americans and their representatives took a hard look. If we did a physical on our health care system, we’d have to say it is not doing too well. And the prognosis is grim.

The United States has some of the poorest measures of health in the world, and often we are among the worst. Among developed countries, we trail those with national health systems in almost every way health care is measured.

Compared to European countries we have the highest infant mortality. The average in the U.S. is worst than the infant-death rate among the poorest of Canada. Mothers don’t do well here, either – we have a maternal death rate that is between two and three times that of the Europeans. At the other end of the age spectrum, we have the shortest life expectancy when compared to all European countries, Australia and Japan.

And even for those lucky enough to have insurance, 28 percent report having difficulty getting needed care. Of course, we know they all have to wait in long lines to get care in those European countries, right?

Wrong – the percent of people in the other countries report having to wait at much lower rates than we do – only about 15 percent report difficulty getting care.

But we all know they control health care spending in those countries by rationing health care, right? Wrong again!

Take a look at high cost procedures and compare how we do:

Bone marrow transplants – we’re just average, Australia, France and Italy have higher rates;

hospital stays – everyone is higher than us (anybody in your family forced out of the hospital because insurance isn’t going to pay for more days?);

Denmark, Italy and Japan have more MRI units per capita than we do;

everyone of the European countries, Canada and Australia have more nurses per patient than we do;

and the mentally ill get more services in the other countries than citizens of the U.S. get here.

These facts have been published in respectable medical journals and are all available for anyone who wants to check them on the Physicians for a National Health Plan Website (www.pnhp.org).

The fact that really angers us is that in spite of these woeful statistics, we end up paying more than anybody else in the world for health care. Health care costs per person are as much as double other developed countries. The average cost of health care in America is more than $7,000 per year. Most European countries spend $3,000 to $4,000 per year. In fact, the portion of annual cost of health care in America that is paid by public funds (Medicare, Medicaid, Veterans, government employees) is more than half of our costs and exceeds most other countries total expense.

Where does all this money go?

Profit. To those who say we can’t let the “government run health care” and we should let the market solve our problem: “Wake up. The market is the problem.” For-profit health care has been shown in numerous studies to be excessively costly, prone to abuse and fraud, and poorer quality. For-profit HMO patients get fewer preventive services. For-profit HMO patients with stroke get less rehabilitation and end up in nursing homes more than fee-for-service patients. For-profit hospitals have a 2 percent higher death rate and yet cost 19 percent more. For-profit hospitals hire fewer nurses and having fewer nurses has been shown to lead to poorer outcomes. The fee-for-service environment promotes the use of unnecessary treatments and surgeries. As many as one-third of all hospital admissions are preventable and one-fifth of many surgeries are unnecessary.

But wouldn’t a government-run insurance plan be wasteful and expensive? Medicare spends 3 percent on overhead. For-profit health plans spend 14 to 21 percent. In fact, the insurance companies call what they spend on actual medical care for patients a “medical loss.” All European countries have overhead margins in the 3 to 7 percent range, meaning 93 to 97 percent of their money is spent on health care.

A national health insurance plan is the only workable solution to our dire situation. A single payer would allow us to control health care costs by having one system that measures quality. In countries with national health insurance you never even see a bill. A physician’s office never has to check to see if your insurance covers what you need, in fact, the office usually has only one person working on bills because there is only one form to use.

With almost 50 million people uninsured, and tens of millions more underinsured, the reality is that those of us with insurance pay for the others anyway. As the president said, patients can get emergency care in our system. Hospitals negotiate higher rates to pay for the uninsured with the insurance companies. But emergency care is very expensive and the costs would be significantly reduced if everyone was insured.

Two governmental agencies, the General Accounting Office and the Congressional Budget Office, have estimated that the cost savings in having a universally insured population would pay for the uninsured. Malpractice costs would decrease because one never need sue for future medical costs. Companies would become more competitive on the global market because they wouldn’t have to worry about health care for their employees. Americans would be healthier because they would get preventive services plus all needed health care. Maybe we’d even catch up to the Europeans and Canada in health measures!

There would be losers, though – for-profit HMOs and some hospitals would disappear, pharmaceuticals would have to start charging fair prices, television stations would have to stop advertising so many drugs and some very rich medical specialists would have to stop doing unnecessary surgeries. Do you see the tears running down our faces?

Kenneth Brummel-Smith, M.D., is the Charlotte Edwards Maguire professor and chair, Department of Geriatrics, Florida State University College of Medicine. Contact him at ken.brummel-smith@med.fsu.edu.