PNHP

WHO report on private insurance and cost sharing

WHO report on private insurance and cost sharing

What are the equity, efficiency, cost containment and choice implications of private health-care funding in western Europe?

By Sarah Thomson and Elias Mossialos (London School of Economics and Political Science)
World Health Organization
Health Evidence Network
July 2004

The issue

Over the last 20 years the level of private spending on health care has risen in many western European countries, leading to concern about its impact. The main channels of private spending are private health insurance policies and cost-sharing schemes in public health systems.

Findings

Evidence shows that private sources of health care funding are often regressive and present financial barriers to access. They contribute little to efforts to contain costs and may actually encourage cost inflation.

Private health insurance

The role of private insurance in western European health systems is largely determined by the extent of statutory health insurance. The evidence shows that:

* Allowing people to opt out of statutory health insurance threatens its long-term financial stability.

* Relying on complementary private health insurance to protect people against high levels of statutory user charges can increase inequities in access to care between those who can and cannot obtain such coverage.

* Supplementary private insurance increases inequalities of access, particularly where there are no clear boundaries between public and private health care provision.

* Tax subsidies for private health insurance are inefficient – because they distort signals about the real price of insurance and generate transaction costs – and inequitable, as they tend to benefit higher income groups.

* Private health insurers lack efficiency incentives and tend to incur higher administrative costs than statutory health insurance. Publicly-funded systems are generally more successful in controlling cost inflation than mainly privately-funded systems.

* Private health insurance can increase choice for some, but not to the extent that is often suggested, and under certain circumstances it may even restrict choice.

Cost sharing

Cost sharing is widely used in western European health systems to moderate demand and/or raise revenue. However, the theoretical case for cost sharing is weak, particularly when applied to health care arising from referral or prescription. The evidence shows that:

* Cost sharing shifts costs to individuals and leads to significant reductions in the use of health care.

* Cost sharing reduces the use of both appropriate and inappropriate health care, which has negative implications for equity and efficiency.

* Cost sharing is not an effective means of containing costs.

* Differential charges can be used to encourage more cost-effective patterns of health care use.

* Because cost sharing creates financial barriers to access, it should be accompanied by mechanisms to protect heavy users of health care and lower income groups.

* Exemption systems require administrative capacity, may generate significant transaction costs and may limit cost sharing’s ability to raise revenue.

http://www.euro.who.int/document/e83334.pdf

Comment:

By Don McCanne, MD

Even though released three years ago, this primer on private health care funding of Western European countries is especially informative for the dialogue on health care reform now taking place in the United States.

The report demonstrates that both private health insurance and patient cost sharing have a negative impact on equity, efficiency and affordable access to care. Some contend that we have to accept these perversities in order to contain health care costs. But one of the most important findings in this report is that neither is effective controlling cost inflation.

I omitted the policy recommendations that were presented in this report. They recommend greater regulation of the private insurance industry, and more careful design of cost sharing. Even though they (inadvertently?) presented a very compelling case for eliminating private insurance and cost sharing, being from the London School of Economics, it appears that they would try to make private funding work.

Regardless, this is an excellent primer on the flaws of financing health care through private insurance and cost sharing. It is well worth downloading and retaining as an important resource in our national dialogue on reform.

Just ignore their policy recommendations and substitute ours: Let’s design our national health insurance program so that it provides comprehensive benefits for everyone, funded equitably, while removing financial barriers to care. Let’s contain costs through patent-friendly supply side mechanisms. Then we could send the private insurers on their way, and they can take their perversities with them.

"Speechless" ads from Iowa

Click here for Press Release.

From The Washington Post’s The Fix:

WINNERS

California Nurses Association (and Physicians for a National Health Program): The group aired two television ads during the debate — calling out Obama and Clinton in particular — that emphasized the need for real reform on health care. It was a huge platform for the group and is like to win them and their cause more notice in the coming days. Plus, The Fix is a sucker for cardboard cutouts of politicians in ads.

A great editorial from the Des Moines Register:

In search of vision on health care
Editorial | Des Moines Register
What’s needed: a president with the vision and passion to reform this country’s health-care system the way Johnson and Congress eventually did. It’s up to Iowans – who are in the unique position of being visited by droves of presidential candidates – to demand that kind of vision and passion from our visitors. [More]

Ask me about single payer guaranteed health care for everyone!

“Speechless” ads from Iowa

Click here for Press Release.

From The Washington Post’s The Fix:

WINNERS

California Nurses Association (and Physicians for a National Health Program): The group aired two television ads during the debate — calling out Obama and Clinton in particular — that emphasized the need for real reform on health care. It was a huge platform for the group and is like to win them and their cause more notice in the coming days. Plus, The Fix is a sucker for cardboard cutouts of politicians in ads.

A great editorial from the Des Moines Register:

In search of vision on health care
Editorial | Des Moines Register
What’s needed: a president with the vision and passion to reform this country’s health-care system the way Johnson and Congress eventually did. It’s up to Iowans – who are in the unique position of being visited by droves of presidential candidates – to demand that kind of vision and passion from our visitors. [More]

Ask me about single payer guaranteed health care for everyone!

For vaccines, underinsurance worse than no insurance

Gaps in Vaccine Financing for Underinsured Children in the United States

By Grace M. Lee, MD, MPH; Jeanne M. Santoli, MD; Claire Hannan, MPH; Mark L. Messonnier, PhD; James E. Sabin, MD; Donna Rusinak; Charlene Gay; Susan M. Lett, MD, MPH; Tracy A. Lieu, MD, MPH
JAMA
August 8, 2007

Children who are uninsured or who have public health insurance, such as Medicaid, can receive vaccines free of charge through the Vaccines for Children (VFC) program.

Only 34% of states had a health insurance mandate that required insurers to follow current ACIP or American Academy of Pediatrics recommendations for children and adolescents. Seventeen percent of states had a health insurance mandate that did not require insurers to cover all recommended vaccines and 49% of states did not have any health insurance mandate.

Limitations in both federal (section 317) and state vaccine financing were reported as the dominant barriers to states’ providing vaccines to underinsured children. Lack of section 317 funding was cited as a barrier for 81% (Tdap) to 100% (pneumococcal conjugate) of state immunization programs that were not able to provide vaccines to underinsured children. State funding was either limited or unavailable for vaccine purchase for 94% or more of programs that were not able to provide vaccines to underinsured children.

The public sector safety net for offering vaccine to underinsured children seems to be under considerable strain. Past studies have suggested that many private clinicians refer underinsured children to public health clinics for vaccination. Unfortunately, a growing number of states are no longer able to provide expensive vaccines, such as the meningococcal conjugate vaccine, to underinsured children in the public sector. Furthermore, the proportion of vulnerable US children whose insurance plans either do not cover vaccines or require families to pay out-of-pocket for preventive care is likely to grow. A recent article by the American Academy of Pediatrics found that 20% of employers are offering catastrophic health insurance plans (high-deductible health plans), up from only 5% in 2003, and only 30% of these plans covered preventive care before the deductible was met. These trends are of concern because inadequate insurance coverage has been associated with forgone health care among families who lack resources.

Despite the ability of vaccines to prevent illness and death, our current system of vaccine financing has resulted in a gap for underinsured children.

http://jama.ama-assn.org/cgi/content/full/298/6/638

Comment:

By Don McCanne, MD

The crisis in the affordability of private health insurance can only result in an expansion in the current epidemic of underinsurance. If insurers are to maintain a market for their products, they must continue to find innovative methods of not paying for health care.

Vaccines for children are so important that we have in place public policies that ensure that children covered by public insurance programs and children without any health insurance at all will still receive their immunizations. Our public policies also presume that vaccines will be provided on a private basis for privately insured children. The response of the private insurers confirms that this latter assumption is not valid, especially considering that the cost to fully vaccinate a child in the public sector is $1170.

There is a fundamental difference between public insurance and private insurance. Public insurance is founded on policies that help to ensure that people receive the health care that they need, when they need it. That includes vaccines for children. Private insurance is founded on policies that ensure success in a competitive marketplace that trades off lower insurance premiums for limiting access to care that people need. That includes limiting affordable access to childhood vaccines.

Leaving policy decisions under the control of the private stewards of a competitive market of underinsurance will result in adverse outcomes such as the preventable deaths of untold numbers of children for lack of vaccines. Isn’t it time for us to dismiss the private stewards and hire our own public stewards who really do care about the health of our children, and the health of the rest of us?

See SICKO! And Learn about Private Health Insurance

by Paul Sorum, MD
Daily Gazette (Schenectady, NY)
July 29, 2007

You should see Michael Moore’s SICKO. You will both laugh and cry. You will feel disgusted both with our health care system and with Moore. It is, in Moore’s typical style, outrageous, one-sided, and contrived.

But its fundamental message–that the private health insurance industry is dangerous to our health–will resonate loudly with patients and physicians. Here is why:

* Private insurers impose on medical practitioners and their patients a huge financial and psychological burden of rules, paperwork, delays, and denials. Even their attempts to improve “quality” scores increase this burden.

* Private insurers add enormous extra costs to our already skyrocketing medical expenditures. These include both insurers’ administrative costs–the salaries of their highly-paid executives and armies of employees, their marketing expenses, and (in the case of for-profit insurers) their profits–and the billing-related costs imposed on providers. In 2001, we spent $351 per capita on administrative costs, while the Canadians spent only $54 and the French only $48.

* Soaring health premiums–caused in part by private insurers’ administrative waste–are causing employers to reduce or drop health insurance benefits and preventing individuals from purchasing adequate insurance. Not only are 47 million (15% of the population) currently uninsured and many more millions inadequately insured, but these numbers are rising inexorably.

* As long as health insurance is a market commodity, private insurers must reduce their costs as much as possible, i.e., must spend as little as possible of their premiums on actual health care. Even if individual medical directors and other employees are virtuous and well-meaning, they must avoid sick patients and deny care if their companies are to survive in the market.

* Private insurers cannot make the health of the population their top priority. They must, like other businesses, focus on short-term results, not on the long-term health of their enrollees (especially since these people are likely to change insurers and eventually switch to Medicare). Moreover, in marketing their products to select groups, they fragment the population and undermine our already-fragile sense of social solidarity: they reinforce people’s short-sighted inclination to refuse to pay for those with more health needs, and fewer means, than themselves. They encourage healthy people to forget that they might one day suffer major illness and injury and that they and society as a whole benefit if all people are as healthy as possible.

So what does Moore offer us as a solution? He takes us to other developed countries–Canada, Britain, France–where private insurers have greatly reduced roles. These countries have, of course, more problems than Moore shows us; no system can be perfect. But they provide high-quality health care to all residents, at half our cost. They have high levels of patient satisfaction (yes, in spite of complaints in Canada and Britain about waiting lines). They interfere in patient-physician decision-making less than do US managed care companies. Their health systems are based on the principle that all residents should have the health care they need.

But would a publicly-financed system be, in some way, un-American? As Moore points out, we already use public funding for other social goods like schools and fire protection. And we already have in this country a health program that is publicly funded, liked by patients, and efficient: Medicare. Recently, for-profit Blues spent 26.5% of premiums on administrative costs, commercial carriers 19.9%, not-for-profit Blues 16.3%, and Medicare only 3.1%. If we expand Medicare to provide comprehensive coverage for everyone, we will, therefore, not only improve the health of our population and eliminate the scandal of the uninsured, but also end up saving money!

What then should you do? See SICKO and bring our elected officials with you. Convince them that Americans’ health is too important to leave in the hands of the private insurance industry. Convince them that, like the Canadians, British, and French, we should provide our people with the health care they need, not what they can pay for.

Paul Sorum lives in Schenectady, is a primary care physician in Latham, and chairs the Capital District chapter of Physicians for a National Health Program.

Consumer Reports Health Care Survey

Consumer Reports
August 6, 2007

Summary of Key Findings

A survey of the health care experiences of 2,905 nationally representative respondents was conducted in May, 2007. We focused on respondents’ experiences of the past 12 months. The population sampled was U.S. residents between the ages of 18 to 64 who were covered by neither Medicare nor Medicaid.

Our findings indicate that there are three tiers of health care consumers in the United States: the adequately-insured, who account for 59% of all Americans in the population sampled; the underinsured, who represent 24% of all Americans sampled; and the uninsured, who comprise 16% of our sample.

From a list of possible complaints about their health plans, respondents were asked to indicate which characterized their plans. Our initial factor analysis identified 6 specific, highly-correlated items that collectively defined our scope of coverage dimension. An additive scale was constructed from these items. We found that at the plateau of two complaints, the health care experiences of insured respondents diverged sharply. Those insured respondents with two or more complaints have been identified as the underinsured. To illustrate the depths of these concerns, 63% of the underinsured indicated their health plan does not adequately cover prescription drug costs.

Our principal finding is that the underinsured represent a large segment of the American population between the ages of 18 to 64: 29% of all persons with health plans, and 24% of the population as a whole. Although the travails of the uninsured have been widely-documented, our observation is that the uninsured represent only one segment of those lacking adequate health insurance. When we add together the uninsured (16%) with the underinsured (24%), we find two-fifths of a nation burdened by health care jitters.

Here is a sample of the experiences of the underinsured in the past 12 months:

56% postponed needed medical care because of costs

33% had to dig deep into their savings to pay medical expenses

34% of those 50+ said decisions about retirement were adversely affected by health care expenses

21% made job-related decisions based _mainly _on health care needs.

27% had outstanding medical debts still owed doctors or hospitals, and 17% were carrying medical debts of $5,000 +

38% postponed home or car maintenance or repairs due to medical expenses

71% indicated they were dissatisfied with their household’s share of out-of-pocket medical expenses

37% said they were at all prepared to financially handle unexpected major medical expenses they might face in the next 12 months.

In short, these data warrant a more expansive discussion about health care policy in the U.S. Recognition of the problems of the 16% who are uninsured acknowledges only part of the story. Respecting the burdens of an additional 24% with inadequate health plans compels a more thorough assessment of what ails the health care system.

Unlike the uninsured, who stand out as distinctly less affluent, less educated, and less white than the insured population, the underinsured are not demographically distinct from their adequately-insured compatriots. Their median income of $58,000 is about twice as great as the median incomes of the uninsured. They are just as white, and nearly as well-educated, just as likely to work full-time and to work in large or medium-sized companies. They could well be the neighbors of the adequately insured.

There is luck-of-the draw eeriness about these findings. Most riveting are the responses to a survey item asking respondents whether their current health plan is better or worse than the plan they had prior to it. One-quarter of the underinsured qualified to answer. Only 30% of them rated their current plan as better, and 51% worse, than their previous plan. These are disturbing findings consistent with our knowledge of the persistent pressure on employers to offer less comprehensive benefits to meet the rising costs of their health insurance premium payments.

Children harmed by static SCHIP eligibility

Dynamics In Medicaid And SCHIP Eligibility Among Children In SCHIP's Early Years: Implications For Reauthorization

By Anna S. Sommers, Lisa Dubay, Linda J. Blumberg, Fredric E. Blavin, and John L. Czajka
Health Affairs
August 7, 2007

In 2004 approximately six million children were eligible for public health insurance through Medicaid or the State Children’s Health Insurance Program (SCHIP) but remained uninsured at least part of the year. These numbers reflect one of the biggest challenges facing the public health insurance system for children today: how to reduce the number of uninsured eligible children and increase continuous coverage for children enrolled. These issues are a major policy concern because the uninsured are more severely ill when diagnosed and receive less therapeutic care than the insured, resulting in higher mortality. Parents of uninsured children report worrying all the time that their children will get hurt and need medical care. Children with discontinuous coverage are more than thirteen times as likely to delay care as are children who are continuously insured.

Only nine states and the District of Columbia administer SCHIP solely as a Medicaid expansion, relying on the same benefits and provider networks but applying different eligibility rules. In all other states, certain populations are enrolled in a separate SCHIP program, with more limited benefits and a different provider network, and some families are required to pay copayments and premiums.

Churning in and out of public coverage is a well-documented burden in Medicaid. In addition, about two million children move between Medicaid and SCHIP each year. Less well understood is the underlying eligibility dynamics of children, which could be of a much larger magnitude than is apparent from studying enrolled populations. In 2002, thirty-six million children were eligible for either program during the year. Because eligibility depends on a child’s age, family income, and assets, and, in SCHIP, access to private coverage, a change in any of these factors can trigger changes in eligibility.

In this study we analyze eligibility dynamics in Medicaid and SCHIP for children over the period 1996-2000. (Changes in the Census Bureau’s Survey of Income and Program Participation after 2000 made it impossible to continue tracking past that date.)

Study Results

Over the full course of the four-year panel, 66 percent of all children (fifty-nine million) were eligible for either Medicaid or SCHIP at some point during the panel. By comparison, point-in-time estimates are much lower and show that 33 percent of all children in the first wave of the panel and 46 percent in the last wave were eligible for either program.

More than one-third of all children who were ever eligible for Medicaid during the panel were also eligible for SCHIP in other waves, while nearly three-fourths of all children who were ever eligible for SCHIP during the panel were also eligible for Medicaid in other waves.

Overall, 32 percent of all eligible children were eligible for both Medicaid and SCHIP during the course of the panel, representing about one-fifth of all children, or almost nineteen million children. Another 57 percent were eligible only for Medicaid, and 12 percent were eligible only for SCHIP. About one in five children (18 percent) were always eligible for either Medicaid or SCHIP in every wave of the panel, while 48 percent of all children were eligible for only some waves, and the remaining third were never eligible.

The sometimes eligible children represent 73 percent of children who were eligible at any point, while the always eligible constitute 27 percent. About half of the sometimes eligible became SCHIP-eligible, compared with 29 percent of the always eligible. Eligibility for public coverage is often characterized by interruptions in eligibility. All of the sometimes eligible were ineligible for both programs in at least one wave, and 56 percent had two or more distinct spells of eligibility. Overall, 41 percent of all eligible children had multiple spells of eligibility.

Many eligible children–42 percent–faced at least some period of uninsurance while eligible, although only 7 percent remained uninsured for the entire period they were eligible. Forty-four percent of eligible children were covered by Medicaid or SCHIP during at least one eligible wave, while 66 percent were covered by private insurance.

Churning in and out of public coverage has historically been blamed on administrative barriers; however, fluidity in eligibility is an important contributor that affects a broader population of children.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.26.5.w598v1

Comment:

By Don McCanne, MD

Let’s see. What is it they keep telling us? We don’t want to disrupt what is working by throwing out our existing private insurance plans and public programs, but instead we to need to fix what isn’t working. And we should begin by getting all children insured.

As we consider using our current financing system to expand coverage to everyone, the children are the easy part of that problem. Children are a relatively healthy subset of our population with a low incidence of chronic disease and catastrophic medical events (though they do occur and that, plus preventive services, are why coverage for children is so important). But the fact remains that children are very inexpensive to insure.

So what is the debate taking place in Washington right now? The politicians agree that the State Children’s Health Insurance Program (SCHIP) should be renewed, but the debate is over whether only very poor children should be included, or should children from moderately-low income families who might be eligible for private, employer-sponsored coverage also be allowed to participate?

So why don’t we just use SCHIP and/or Medicaid to insure only low-income children, and then mandate parents or their employers to purchase private insurance for the rest of the children?

This study confirms once again that arbitrary standards of eligibility are not static, but are a dynamic. Though federal and state legislators can change the eligibility requirements, creating some instability in program enrollment, much greater instability results from the changing status of the participants. Eligibility related to personal circumstances continues to change not only for the Medicaid and SCHIP programs, but also for employer-sponsored plans and for compliance with underwriting standards in the individual market. Being above the threshold for public program qualification, ineligible for employer-sponsored coverage (if offered at all), and not having the income to pay premiums in the individual market inevitably results in the additional category of uninsurance.

Further, the dynamic of changing eligibility results in fragmentation of care because of variations in the networks of approved providers under the multiple public and private programs. This denies these children of the crucial benefit of having a stable medical home.

If the politicians are serious about initiating comprehensive reform by covering all children, they must come up with a proposal that enrolls all children automatically and permanently. Watching them stumble around with the SCHIP program proves that building on our public and private plans will never get us there, and unfortunately most seemed resigned to that fact that we can’t do it.

But what about Medicare? For that sector of our population isn’t that a program that covers essentially everyone, automatically and permanently? Why can’t we do that for children? For that matter, why can’t we do that for everyone?

Oh, that’s right. We can’t do that because we would have to throw out what is working for some, even though it means that we can never fix our system so that it works for everyone. It’s too bad that the way we frame our political rhetoric is much more important to us than adopting policies that actually would prevent suffering and death.

More Than a Prayer for Single Payer

The American Prospect talks to the co-founder of Physicians for a National Health Program about why a single-payer system remains not only the most desirable reform goal in the United States, but an achievable one.

Roger Bybee
The American Prospect
August 6, 2007

The notion of a Canadian-style “single-payer” health system — essentially, replacing costly private insurers with a government body or bodies to pay for healthcare — has long been dismissed by elite politicians and pundits. But the popular response to Michael Moore’s new documentary “Sicko” is adding fuel to an already-smoldering fire of resentment over the domination of the current health system by for-profit insurers, in addition to that system’s high cost (double any other nation’s) and poor performance (37th overall in quality, according to the World Health Organization).

Dr. Steffie Woolhandler, with her partner, Dr. David Himmelstein, co-founded Physicians for a National Health Program. Both are practicing physicians as well as professors at Harvard Medical School. They have written widely on issues of health care reform, including the book Bleeding the Patient: The Consequences of Corporate Health Care (with Dr. Ida Hellander). A native of Shreveport, Louisiana, Dr. Woolhandler earned her medical degree at the LSU-New Orleans Medical School.

As the debate over American healthcare heats up in anticipation of the 2008 presidential race (in which health reform is widely expected to be one of the central issues), Dr. Woolhandler reflects on the flawed U.S. health system, various reform proposals, and the prospects of enacting a system in the single-payer mold.

Roger Bybee: What drew you into fighting for universal healthcare as a doctor?

Steffie Woolhandler: It became obvious that there was a lot we could do for patients in terms of helping them live longer and preventing disease, but we couldn’t do any of it if they didn’t come into our offices. It became really clear that the financing system was an obvious barrier to care for our patients. Tens of millions lack insurance or have poor insurance.

Why is healthcare such an intense issue right now, following a long hiatus after the defeat of the Clintons’ plan in 1994?

There are two main factors. First, health costs have been rising for a while — they slowed down a bit in the late 90s, but have been averaging about 8 percent in increases a year in the 2000s. These cost increases are now much less tolerable because of globalization. U.S. manufacturers in particular have to compete in world markets, and they can’t just pass on higher costs to consumers via higher prices. So globalization has really made health costs a big concern for American business, and that’s one major part of the renewed interest.

The other part is that the quality of insurance coverage is going down even for the middle-class Americans, in terms of co-pays, deductibles, and uncovered services. When a middle-class family faces a major illness, they also face the danger of bankruptcy. So there’s been a shrinkage of coverage for the middle-class even as prices have increased sharply.

What pushed it off the national radar screen — or at least the elites’ political agenda — for the past 13 years?

Business was hoping managed care would solve this problem for them. Business went completely in the direction of managed care, and managed care companies promised they would take care of costs. But after a brief period where costs slowed down, costs are now rising just as fast as before managed care.

Why have HMOs and rising deductibles for workers failed to rein in costs?

What happens with HMOs is that they’re interested in making money, and the easiest way is the cherry-picking of enrollees and seeking subsidies from Congress. Holding down costs just isn’t their priority. Besides, they got a lot of pushback from hospitals and doctors over bossing them around on costs. Managed care is kaput. History has shown managed care doesn’t work.

Neither do Health Savings Accounts. Health spending works on kind of an “80/20” rule, where most spending is on a minority of people with chronic or crisis needs. So most health spending is for a relatively small group of people within a given year. With Health Savings Accounts, the front-end costs are paid, but you can’t control the costs of people who are really injured or really sick.

Also, the high-deductible Health Savings Account plan will force sicker people out of the workforce. For example, Wal-Mart and other employers are using a strategy to push older, chronically ill people out of the workforce. From a social point of view, it’s completely backward to push people with diabetes and high blood pressure out of being covered.

There’s tremendous ferment going on at the state level in terms of reform. How do you evaluate these plans that, for example, require individuals to purchase insurance policies, as in Massachusetts under Mitt Romney?

I think the Massachusetts bill, the Romney plan, is a hoax. It won’t get us to universal coverage. The fundamental assumption is that the uninsured have enough money to buy insurance policies, that they can buy their way out of the predicament. If they had the money, they’d already have insurance! They don’t have money in the first place. Someone my age, in their 50s, and making over $29,400 a year, would get no subsidy. The cost of that premium would be $4,200 a year, but along with that there’s a $2,000 deductible before any coverage begins, co-pays, and co-insurance after that first $2,000.

That kind of coverage is worthless to a low-income person. They don’t have money for the premium, and they can’t pay the $2000 out of pocket. I don’t call that insurance, I call it a hoax. You’re not going to be able to cover everyone with those kinds of premiums. And expansion of Medicaid won’t get us to universal coverage, either. We’ve had 10-plus years of experience with that.

In Illinois, Governor Rod Blagoevich is proposing a tax on business to pay for private insurance. What’s your take on that?

There is a fundamental problem with going through private insurance plans with high overhead costs. It’s not unusual for a private insurer to have 20 percent devoted to overhead and profit. So of every dollar you pay out in insurance premiums, only about 80 cents ever makes its way to a hospital or doctor.

When you put insurance companies in the middle of any kind of coverage you can engineer, you must realize that 20 percent is frittered away in overhead and profits. Quite apart from denials, it’s tremendously costly to doctors and hospitals.

You performed a study showing that about 31 percent of health spending in America goes to administrative overhead and profit. If 20 percent is accounted for by the insurance companies, what explains the rest? Is it, as critics like Paul Krugman say, the strategy of “denial management” followed by insurance companies, where they’ve bloated their staffs so that they can challenge more claims by both providers and patients?

The remainder of the overhead comes from doctors and hospitals. Part of it is in response to “denial management,” but the big portion is just needing a high baseline level of paperwork and administrative support to deal with all the different insurers. In my little practice, you have to deal with all the different insurance companies, different co-payments, different deductibles, and different formularies [listings of approved prescriptions].

While the single-payer approach fares extremely well in polling (67 percent of Americans in a 2005 BusinessWeek poll supported a system akin to Canada’s or Britain’s), policymakers and pundits dismiss this option out of hand. Even some progressives like Ron Pollack of Families USA and SEIU President Andrew Stern have depicted the single-payer plan as being utterly out of reach. How do you respond to that perspective?

There’s not another plan that will work. All of the other proposals lack feasibility in terms of economics. The other plans simply won’t get you to universal healthcare. The key to the economic feasibility of the single-payer plan is administrative savings. We shouldn’t be pouring more money into the insurance system, but saving money on administration in order to cover everyone and provide better coverage.

There’s a fundamental problem with going to private insurers that makes universal coverage unaffordable. It doesn’t matter what the “political feasibility” is. You must start with a plan that will work.

How vital is it to unify progressives behind a single-payer plan in the coming years? How can we avoid the fracturing of progressive and liberal forces that occurred in 1993-94?

I frankly haven’t seen much fragmentation now, because a lot of people are very knowledgeable about single-payer. I’m not really that worried about fragmentation. There will be a lot of debate, but when people fully understand the economics of healthcare, there will be more support for single-payer.

John Edwards and the political scientist Jacob Hacker are advocating plans that would give all Americans a choice of traditional private insurance or enrolling in a regional single-payer plan.

We already have experience with Medicare Plus. These plans are supposed to compete on equal footing with Medicare, but private HMOs have used selective recruiting of healthier people and gone to Congress and gotten embedded into the Medicare Advantage Drug plan, and they get huge over-payments of 11 to 13 percent. The private plans won’t let Medicare compete.

It’s incumbent upon those who favor competition to show how this won’t happen if single-payer is competing with traditional insurance.

If you have two groups trying to enroll people in health plans, the bad guys will drive the good guys out of business. The bad guys will selectively recruit healthier people, and push sicker people onto the single-payer plan. Competition is not something that works with healthcare.

How do you envision closing the gap between big firms like Wal-Mart making vague commitments to universal healthcare and actual recognition that only a single-payer system can hold down costs, reach all citizens, and provide free choice of doctors?

If companies want to hold down costs, they need to support universal healthcare. Otherwise, it won’t solve the problem of healthcare for low-wage workers. The good news is that no one would miss the administrative burden that accounts for such high costs in the U.S. However, we would have to provide retraining and income support to displaced health insurance workers.

Polls of doctors in Minnesota (Feb., 2007) and Massachusetts (2004) both show a remarkable 64 percent favoring a single-payer plan. What accounts for this historic shift in the sentiment of doctors, when you think back to how the American Medical Association successfully mobilized doctors in every community to block Harry Truman’s health reform effort? This new polling seems extraordinary; both because doctors’ support for single-payer is just slightly below the general public’s and because doctors are presumably much more knowledgeable about health systems than the average citizen. How do you see things developing among doctors and the health industry?

The opposition in Truman’s era was the medical profession, and the AMA still is opposed even though a high percentage of doctors support a single-payer plan.

But now there are two other powerful forces: the health insurance industry [that emerged since the Truman plan] and the pharmaceutical companies. Under a single-payer plan, the government steps into the pharmaceutical pricing picture with a lot of bargaining power, so both of these forces feel threatened.

It’s ironic that hospitals aren’t more supportive. The health insurance industry would be put out of business, so it’s life or death for them. But hospitals would still be there. Some for-profit hospitals oppose national health insurance, and our plan calls for reconversion to non-profit status. With the non-profit hospitals, I think opposition to single-payer is mostly fear of change. I think that they can live with a single-payer national health insurance plan, so I don’t see them as our biggest enemy.

Given the power of the insurers, hospitals, and the rest of the medical-industrial complex, how optimistic do you feel about reaching the goal of universal care, free choice of doctors, and cost containment?

I’m really optimistic, because the current system can’t keep going. There will be increasing pressures from employers and state and federal governments for change because of the soaring costs. The American people do have the power to make change, and private interests cannot hold back change forever and for all time. So I’m optimistic!

Roger Bybee is a Milwaukee-based writer and progressive activist, who formerly edited the official labor weekly Racine Labor. He has written for a number of state and national publications and websites on issues such as health care reform and corporate globalization.

Single-payer care deserves debate

Expanding Medicare best alternative to current system

Drew Richardson
The News Leader
Columnist

The last time I wrote about filmmaker Michael Moore’s latest opus, “Sicko,” I stated that I believed the documentary succeeded in characterizing the dire circumstance of our broken health care system. Between the approximately 45 million uninsured Americans, the underinsured and the insecurely insured, most of our citizens are at some financial risk stemming from a medical catastrophe. This is in spite of America’s present large health care expenditures, costs that are rapidly outpacing general inflation and employee income. Even the business community has come to realize that it cannot support the interests of one business–the health insurance and broader health care industry–to the detriment of all other businesses. But what of proposed solutions?

Let’s look for a minute at the broad implications of various proposed plans for promulgating health care change in this country.

Although many plans on the table boast of universal health care, some merely have all citizens having some form of mandated health insurance. Only one piece of currently proposed federal legislation advocates universal and unrestricted access to health care. There is a big difference between having health insurance and having universal access to health care. The latter is what is referred to as a single-payer health care system and is essentially what Canada, Great Britain, France and Cuba (depicted in Moore’s film) have. Examples of the former category include such domestic plans as the Wyden Healthy Americans Act, the Stark/Edwards/Hackler Plan, and the Kennedy/Dingell Medicare for all (this latter is largely public with an optional private plan). Proponents of such plans talk of reasoned transition, shared responsibility, efficiency and consumer choice. Critics suggest that these plans suffer most importantly from offering no real structural change and therefore no reform to the present system. They leave the bureaucracy and upwardly spiraling costs of the insurance/health care industry largely intact. To add insult to injury, the hated complexities and downsides of means testing, co-pays, deductibles, exclusions, denials and appeals are all still there. Furthermore, these critics argue that, from a tactical and practical point of view, that the Rush Limbaughs of the world and the powerful and inflexible pharmaceutical and health insurance industries will not see these plans as any more acceptable than fully developed and pure single-payer health care.

So what is single-payer health care? Essentially it involves expanding the present Medicare system to cover everyone and eliminating private insurance (with the claimed accompanying savings of hundreds of billions of dollars). Additional features would include the absence of means testing, no concern for pre-existing conditions, the restoration of independent doctors and hospitals who negotiate with Medicare and would be chosen freely by consumers and one public agency processing and paying bills.

Because it would be unneeded with this system in place, the present Medicaid program for the indigent and its associated administrative costs would be eliminated. Proponents suggest that costs could be contained and quality maintained through more efficient review by the single insurer. Costs would be financed through a progressive income tax. Such a plan is represented in proposed legislation contained in House Resolution 676 that currently has 73 cosponsors in the House of Representatives.

Unfortunately, an opinion column is really no more satisfactory a vehicle than a movie for defining and contrasting health care proposals. Although I hope the former serves to challenge the mind and instill enthusiasm for more detailed consideration, my commentary must end with a recommendation for formal debate to occur at the Valley’s major universities. These would include large audiences and participating proponents representing notions ranging from a defense of the status quo to the most far-reaching plan of change. Representatives from the communities of consuming individuals and businesses should be included.

As I have said before, I believe we must move forward with ready dispatch, but I also believe we need serious thought replete with all the components of rigorous and open debate allowing for a full defense and critique of all ideas put forth. I believe voters in 2008’s presidential and congressional elections will demand such.

Dr. Drew Richardson is a retired FBI agent and cardiovascular physiologist. He teaches forensic science at James Madison University. Contact him at dr0404@hotmail.com.

Consumer Reports on the underinsured

Are you really covered?

Why 4 in 10 Americans can’t depend on their health insurance

Consumer Reports
September 2007

You might think that you don’t have to worry about paying for medical care if you have health insurance. But you would be wrong.

From escalating medical debt to postponed retirement, our exclusive national survey of working-age adults shows the depth of jitters even for those lucky enough to have insurance through their jobs or families:

* 29 percent of people who had health insurance were “underinsured,” with coverage so meager they often postponed medical care because of costs.

* 49 percent overall, and 43 percent of people with insurance, said they were “somewhat” to “completely” unprepared to cope with a costly medical emergency over the coming year.

* 20 percent of people said they were so disappointed with their HMO or PPO that they wanted to switch plans.

* 16 percent had no health plan at all, including many working respondents whose jobs didn’t offer insurance, or who couldn’t afford the premiums or deductibles of the available plan.

Insured but not covered

Our survey found evidence of the increasing frailty of our system of health insurance almost everywhere we looked.

Between 2001 and 2005, the percentage of middle-income families – those who earn between $40,000 and $80,000 for a family of four – who had job-based health coverage dropped by 4 percentage points. Half lost benefits because their employers dropped health insurance altogether or quit offering dependent coverage. But 15 percent gave up their employer-based insurance because they could no longer afford the premiums.

But even those who have managed to hang on to insurance have found it more difficult to pay their medical bills.

In our survey, the median household income of respondents who were underinsured was $58,950, well above the U.S. median; 22 percent lived in households making more than $100,000 per year.

An explanation isn’t difficult to find: Health plans are offloading more and more expenses onto consumers. Co-pays and deductibles have risen steadily in the past several years.

This combination of deductibles and co-pays can quickly add up to serious bills in the case of a major illness. A 2006 study found that 10 percent of insured patients with cancer had out-of-pocket expenses of more than $18,500.

How to pay?

Consumers faced with higher health costs have to find the money somewhere, and many in our survey found that tough to do. Overall, 37 percent said their health insurance and checking accounts together weren’t enough to pay for their medical expenses over the previous year. But 59 percent of underinsured respondents fell in that category. They had to raid their retirement accounts, run up credit-card balances, and borrow from friends and family to pay their medical bills. Twenty-seven percent said they were still in debt to doctors and hospitals, and 3 percent said medical bills had forced them to declare bankruptcy.

Almost 4 in 10 underinsured respondents deferred needed auto or home repairs. Almost 3 in 10 said they made decisions such as changing jobs, postponing retirement, or changing their marital status mainly to preserve access to health insurance.

But the most worrisome result of underinsurance is reduced access the health care itself. Forty-three percent of underinsured respondents said they had postponed going to the doctor because they couldn’t afford it, and 28 percent had put off filling prescriptions.

http://www.consumerreports.org/cro/index.htm (subscription required)

Comment:

By Don McCanne, MD

Private health plans work for people who do not and never will need health care. But what if medical needs arise? How well do they work?

Thirty-seven percent of privately-insured consumers with higher health costs found that their insurance plus their checking accounts were not enough to pay for their medical expenses over the previous year. And for the underinsured, that rose to fifty-nine percent.

Yet most of our politicians want to build on private insurance plans to provide coverage for everyone, but they do recognize that premiums are no longer affordable for average-income individuals. So what do they recommend? Let’s make premiums affordable by reducing further the coverage provided by the private plans.

What will happen then? Health care will remain affordable for those with insurance plus very large balances in their checking accounts. The rest of us with insurance will have to “raid our retirement accounts, run up credit-card balances, and borrow from friends and family.”

Listen up, Politicians! PRIVATE PLANS WON’T WORK! Get over it!

H.R. 676 would tax rich, give health care to all

Saul Friedman | Gray Matters
Newsday
August 4, 2007

The middle-aged fellow who takes care of my yard had a stroke some weeks ago, but he doesn’t know how it affected him or whether another one may be coming.

That’s because he hasn’t had the $1,600 cash for the MRI he needs. He could not get health insurance, even if he could afford the huge premium, because he was not in the best of shape, and he can’t get it now because of his pre-existing condition – the stroke. So he hopes for the best.

That is not an unusual story. I haven’t yet seen “Sicko,” but I don’t need filmmaker Michael Moore to tell me (and most of us) that while American health care can be the best if you can get it, the health care distribution system is also the most backward, costly, unfair and inequitable in the civilized world.

The single most important reason: The multibillion dollar power of the private insurance industry stands in the way of genuine change.

The facts are well known, and unique to the United States. More than 43 million Americans, most with jobs, have no health insurance and no protection against illness or accident. More than nine million children are without health care coverage. People who are under 65 and have been laid off from jobs cannot get coverage unless they pay outrageous premiums.

Personal bankruptcies are increasing because of medical debt. And as Moore’s documentary shows, the 250 million Americans with insurance can’t count on coverage when they’re really and expensively sick. Any of these facts would be considered outrageous almost anywhere else in the world.

Forget the silly and mostly inaccurate nitpicking about Moore’s facts. We know from personal experience and from all we’ve read that his and our diagnosis of the American health care distribution system is correct. According to every poll, more than 70 percent of us know it needs to be fixed with a system that covers every American if they need it – whether it’s for the flu, a broken bone or a long battle with cancer.

How do we do this? So far, most of the Democratic presidential candidates favor giving most of the role of providing health care to insurance companies in partnership with employers and the federal government. How much government would be involved remains an issue. (The Republican candidates would provide tax breaks to buy insurance with little or no government involvement.)

The most important reason the candidates involve insurance companies is the fear that their power, along with other financial interests of the medical-industrial complex, would kill any universal coverage that doesn’t include a major role for the insurance industry.

But “Sicko” calls for an end to private health insurance (except for such services as cosmetic surgery) because, Moore says, insurance companies have an inherent conflict of interest. Their first obligation, under law, is to earn as much as possible for their shareholders. And that means they are obligated to spend as little as possible on health care, by limiting coverage to younger, healthy people or refusing as many claims as they can get away with, or restricting the services doctors and hospitals may provide. If your doctor can’t spend time with you, there’s an insurer in the room.

That’s why Moore was able to find 25,000 people with tales of insurance denials, some of them fatal. And that’s why Moore favors a publicly financed “single-payer” system, run by the government and with no role for the insurance companies.

But as my mail shows, there are misconceptions about what a “single-payer” system is. It is not the British model, in which health care providers work for the health service. That is not what advocates of single-payer system envision for the United States.

Indeed, the United States already has a couple of government-run, taxpayer-supported single-payer systems – Medicare, for persons over 65 and the disabled, and the Veterans Affairs health system, which provides doctors, hospitals, drugs and even long-term care for eligible veterans. Doctors and other medical personnel work for themselves. And both systems work remarkably well, despite this administration’s efforts to undermine them.

You would think, then, that a single-payer system that expands Medicare to cover every American, and not just the old and disabled, would be logical and reasonable. But Rep. Dennis Kucinich of Ohio is the only Democratic candidate to endorse the idea.

In addition, while surveying the possibilities for universal health coverage, most of the press and even the authoritative Kaiser Family Foundation’s new health care Web site, have failed to mention the only legislative proposal, endorsed by Kucinich and Moore, for a single-payer universal health plan: H.R. 676, the National Health Insurance Act, or “the Expanded and Improved Medicare for All Act.”

But one of the most influential voices for seniors, Jane Bryant Quinn, has endorsed what she called, in Newsweek, “an excellent template for universal care right under our noses; good old American Medicare. When you think of reform, think ‘Medicare for all.'”

That’s the intent of H.R. 676, introduced in 2005 by Rep. John Conyers (D-Mich.), with nearly 80 co-sponsors. It would be financed by tax increases on the wealthiest Americans plus appropriations and premiums to guarantee free medically necessary health care, drugs, and long-term care to every American. But most of the cost would be offset by the end of private insurance costs. Like Medicare before HMOs were permitted, insurance companies would be prohibited from selling policies that duplicated the benefits provided under the act.

The cost would be much less than the $12 billion a month we’re spending on Iraq because it would eliminate the need for employer contributions, Medicaid, the State Children’s Health Insurance Program and other state programs.

Radical? Judge for yourself. Medicare for All, which could be phased in gradually and administered within states as Medicare is, has been endorsed by 15,000 doctors, even more nurses and 20 state labor federations. If you have access to a computer, visit the Web site of Physicians for a National Health Plan (pnhp.org) and see what it says about a single-payer plan. And read Conyers’ bill by searching on your computer or at the library for H.R. 676.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY, 11747-4250, or by e-mail at saulfriedman@comcast.net.

Medicare for all would help America

Judy Dasovich, M.D
The Springfield News-Leader
Ozarks Opinions
Saturday, August 4, 2007

In your 7/25 article, Jordan Valley Community Health Center Executive Director Brooks Miller stated that “We believe we all need to pay something.” At the Kitchen Medical and Dental Clinic we see patients every week who start out at Jordan Valley but cannot afford the minimum $30 per visit. Even patients who can afford the initial fee bring us their prescriptions, which they cannot afford. This $30 doesn’t cover specialty care or testing, such as a treadmill or a CAT scan or a visit to the cardiologist.

Here is the typical scenario: People get sick, then they can’t work so they lose their jobs and their medical insurance. They have a hard time paying their bills. Under these circumstances, $30 per visit for only the basics becomes prohibitive. These are the patients who come to us after finding that the Jordan Valley safety net is full of large holes. They may not have money but they’re still sick.

We believe people should receive health care based on need, not ability to pay. As many leaders in the Springfield health care community pointed out, this problem is too big for any one group to handle alone. I believe that Medicare for all will be the most effective and affordable solution. In this form of universal care, the delivery system (hospitals, doctors, etc.) stays in the hands of private business. It is the insurance piece that is handled by the government. Currently, Medicare overhead is less than 3 percent, while private insurance averages about 12-15 percent and can be higher. Patient satisfaction with Medicare insurance is higher than it is with private insurance. Traditional Medicare doesn’t exclude people for pre-existing conditions or cancel their insurance once people become ill. Medicare insurance also allows patients the freedom of choice advocated by Donald Tucker in his 7/28 News-Leader article. They can choose any doctor or hospital they want. Medicare for all is similar to the system that gets interstate highways built — federal tax dollars pay private business to produce a common good.

It’s time to put aside reliance on incomplete safety nets like emergency rooms, free clinics, and taxpayer-funded health care centers like Jordan Valley that turn sick people away. Contact the people that work for you in Washington today.

Judy Dasovich, M.D., is volunteer medical director at the Kitchen Medical and Dental Clinic.