Member Resource – Page 1005

The Sacramento Bee on pooling risk

Editorial: Coverage for all

The Sacramento Bee
March 25, 2007

The state regulator of HMOs has fined one of the largest, Blue Cross, $1 million for canceling health policies of enrollees who, among other things, got pregnant. Cancellations like these weren’t isolated, according to the California Department of Managed Health Care. Rather, they were systematic, right down to a computer program that scours the system for enrollees seeking certain kinds of care.

Blue Cross denies wrongdoing. That’s fine. There is a larger lesson here: This health insurance market, the one for individuals or families who don’t automatically get covered through their jobs, is sick. Insurers try to avoid covering people who need care. And many Californians avoid getting insurance until it is in their financial interest to do so. It’s a game, and the game must end somehow. That can only happen by blowing up the individual health insurance market that exists today and replacing it with something that makes more sense. And that can only happen with the California Legislature and Gov. Arnold Schwarzenegger.

There are two basic choices here when it comes to health insurance. One is to get rid of private health insurance altogether and replace it with a program in which the government directly pays doctors and hospitals to provide care. That’s known as single-payer. It is championed by some Democrats, but opposed by the governor. Single-
payer isn’t a likely short-term compromise, but the more we look at this mess, single-payer seems to be an increasingly likely long-term solution because of the many ills of the private insurance market.

The second choice is to fix the insurance market. How? Bottom line: It means that health insurers such as Blue Cross have to cover all who apply, even those who are eight months pregnant. On the flipside, everyone — or just about everyone — has to have insurance. It can be through his or her company. It can be through a government-
sponsored program. What is important is to throw everyone into the pool. Insurance, when it works, is all about spreading risks.

Either the governor and the Legislature somehow create this pool, or they don’t. All of the solutions by necessity would impose various mandates — either on employers, on individual Californians or in some combination. And any solution will require money. Why? If the state were to require everyone to have coverage and require insurance companies to cover anyone who signs up, that would include many low-
income Californians who don’t have insurance today. Those Californians can’t be expected to pay full freight. And they can’t be left out of the equation, only to wander later into emergency rooms and expect care.

In any sane health care system, getting pregnant should never be a cause to lose health care.

http://www.sacbee.com/110/story/143154.html

Comment:

By Don McCanne, MD

The Bee’s editorial board understands: “What is important is to throw everyone into the pool.”

Segregated pools of healthy individuals won’t do it. Yet that is the specialty of the private insurance industry – pooling risks of the healthy workforce and their healthy families.

If we are to effectively spread the risk, we would have to transfer funds from the segregated pools insuring the healthy, to pools that include those with high-cost needs. But that creates an actuarial nightmare that invites the inequities of gaming the system. It would be much easier and much more efficient to establish one single universal risk pool. It would also finally make the financing of health care equitable since contributions would be based on ability to pay.

Once we remove the requirement for the private plans to pool risk, what is left for them to do for us? Think hard. We’re sure paying them a lot for whatever it is they do.

Maybe it is time for us to tell those in the health insurance industry to go get a real job.

Gray Matters

Staying with Medicare will help keep it alive

By Saul Friedman
Family & Relationships
Newsday
March 24, 2007

Regular reader Martin Selig of Carle Place reminded me of a warning I had intended to convey about the problems with so-called Medicare Advantage plans.

The deadline for enrollment is March 31. He wondered whether an advertisement for one such plan – Liberty Advantage – isn’t intended to “lure people away from government controlled Medicare and put them in the hands of private HMOs.” The short answer, of course, is yes.

Beginning in 1997, the Congress pressured President Bill Clinton to further open Medicare to private plans, Medicare HMOs. Despite government subsidies, the HMOs abandoned the Medicare business and subscribers when they failed to make the profits they expected. But it was the opening wedge to Medicare privatization.

Then, under the Bush administrations, the HMOs got renewed life as “Medicare Plus” plans. With the passage of the privatized Part D drug plan, Republicans gave the insurance companies a huge “stabilization fund” to cushion them against possible losses and renamed the plans “Medicare Advantage.” And with the administration starving traditional Medicare, the Medicare Advantage plans are gaining subscribers because they seem to cost no more than Medicare but provide more coverage.

The Kaiser Family Foundation says there are 8.3 million subscribers to Medicare Advantage plans, up from 5.5 million since 2004. That’s because, in addition to the stabilization fund, they are further subsidized by the government, paid on average 12 percent more than the cost of traditional fee-for-service Medicare for each subscriber.

Thus, the first problem: Each new subscriber to a Medicare Advantage plan means another of the thousands of cuts that are bleeding Medicare to death, which explains why Medicare advocates in the Congress want to reduce the subsidy. You’d help by staying with Medicare.

Also, in addition to the advertising campaigns, the Medicare Rights Center and newspapers report that brokers and agents, some of them claiming to be from Medicare, are convincing beneficiaries to switch from traditional Medicare and sign up for Medicare Advantage plans. They claim, falsely, that beneficiaries may use doctors of their choice. Or they claim what they’re selling is “just like Original Medicare,” said the Medicare Rights Center.

It isn’t, of course, but the salespeople, who are paid commissions, pick on the more vulnerable elderly who live alone. No one from Medicare is authorized to call or visit you to sell you anything. People are being switched without fully understanding what is happening, and when you sign up for a Medicare Advantage plan, despite what you may be told, you must use doctors, labs and hospitals in the plan’s network. You’re no longer in traditional Medicare. And you may not be covered when you visit out of town. Also you’re locked into a Medicare Advantage plan for at least a year.

Third, although you may be told that you need pay only your monthly Part B premium ($93.50 for most people), the drug premiums and drug costs and co- pays for doctor and lab visits can add up.

And the Medicare Advantage premiums (in addition to the Part B premiums) vary wildly depending on where you live. Government subsidies differ from county to county.

For example, in New York, HIP and Empire Blue Cross offer Medicare Advantage plans in Nassau County for no premiums (in addition to the Part B premium) for the health or drug coverage, and they pay for generic drugs in the doughnut hole coverage gap. For comparable coverage in adjoining Suffolk County, HIP charges a $99 monthly premium (in addition to Part B) for the health care, $33.90 monthly for the drugs, with generic coverage in the hole; Empire charges a $116 monthly health premium plus $21.90 a month for drug coverage.

The Medicare Advantage HMOs remain notoriously slow in paying claims, refusing at first an average of 40 percent, according to New York Times columnist Paul Krugman, who reports that angry doctors and hospitals are hiring companies to challenge the insurers. Some insurers are “cherry pickers” seeking to cover the youngest and healthiest clients; others are “lemon droppers,” companies that refuse or drop coverage for the chronically ill.

Depending on your situation (if you travel or need certain doctors and hospitals), a better course is to have a trio of plans good anywhere in the U.S.: Traditional Medicare; a supplemental policy, such as Medigap, and a relatively inexpensive Part D drugs-only plan.

For help in deciding, call the health insurance counseling hotline, 800-701- 0501; Medicare Rights Center, medicare rights.org at 800-333-4114.

Here’s another piece of evidence that this administration is out to kill Medicare. Because the Congress imposed an arbitrary cap on Medicare – premiums must always pay for 15 percent of Medicare’s budget – the Part B premiums are expected to rise by a record 17 percent next year, from $93.50 to $109.40, according to the nonpartisan TREA Senior Citizens League.

For most beneficiaries, that means Medicare premiums next year will have increased 77 percent in six years, wiping out the Social Security cost-of- living increases of 15 percent for the same period. The league estimated that 22 million Social Security recipients will see no cost-of-living increase because of the greater deductions from their checks for Medicare.

More affluent beneficiaries will be socked with premiums approaching $200 a month. That’s certain to drive many people away from Medicare and leave it as a program for the low-income elderly. I believe that has been the administration’s plan.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY, 11747-4250,

Candidates Outline Ideas for Universal Health Care

By ROBERT PEAR
The New York Times
March 25, 2007

LAS VEGAS, March 24 — Seven Democratic candidates for president promised Saturday to guarantee health insurance for all, but they disagreed over how to pay for it and how fast it could be achieved.

Senator Hillary Rodham Clinton of New York assailed the health insurance industry and said she would prohibit insurers from denying coverage or charging much higher premiums to people with medical problems.

John Edwards, the former senator from North Carolina, offered the most detailed plan for universal coverage, saying he would raise taxes to help pay the cost, which he estimated at $90 billion to $120 billion a year.

Senator Barack Obama of Illinois appeared less conversant with the details of health policy and sometimes found himself on the defensive, trying to explain why he had yet to offer a detailed plan to cover all Americans.

“The most important challenge is to build a political consensus around the need to solve this problem,” Mr. Obama said.

Gov. Bill Richardson of New Mexico offered a potpourri of ideas to achieve universal coverage, including tax credits to help people buy insurance and an option to let people ages 55 to 64 buy coverage through Medicare.

To help pay for his proposals, Mr. Richardson said, he would “get out of Iraq” and redirect money from the military to health care.

The candidates spoke at a forum on health care at the University of Nevada, Las Vegas, sponsored by the Service Employees International Union and the Center for American Progress Action Fund, a liberal advocacy group. Sponsors of the forum said they had also invited Republican candidates, but none attended.

Health care is emerging as a top issue in the 2008 presidential race, as businesses join consumers in demanding action to curb costs and cover the uninsured.

Nevada has gained new prominence in the political calendar. It will provide an early test of voter sentiment in a Sunbelt state with a large Hispanic population, and the results here could help create momentum for a Democratic candidate going into New Hampshire. Nevada Democrats are scheduled to hold presidential caucuses on Jan. 19 next year, five days after the Iowa caucuses and three days before the first-in-the-nation primary in New Hampshire.

Mrs. Clinton said she hoped to make health care “the No. 1 voting issue in the 2008 election.”

Her remarks were reminiscent of a speech she gave to the service employees union in May 1993, when she attacked “price gouging, cost shifting and unconscionable profiteering” in health care and the insurance industry.

On Saturday, she said that the failure of her proposal for universal coverage in 1994 made her more determined to achieve the goal now.

“It also makes me understand what we are up against,” Mrs. Clinton said. “We have to modernize and reform the way we deliver health care. But we have to change the way we finance it. That’s going to mean taking money away from people who make out really well right now.”

Mrs. Clinton complained that “insurance companies make money by spending a lot of money, and employing a lot of people, to avoid insuring you, and then if you’re insured, they try to avoid paying for the health care you receive.”

To deal with such problems, Mrs. Clinton said, “we could require that every insurance company had to insure everybody, with no exclusion for pre-existing conditions.”

Mr. Edwards, who disclosed on Thursday that his wife’s cancer had returned in an incurable form, reaffirmed that he was “definitely in the race for the duration.”

He said that he and his wife, Elizabeth, were getting “too much credit” for their courage and determination. Millions of women have had to struggle with cancer “without what we have, without great health care coverage, without knowing they can get all the medications they need,” he said.

“One of the reasons that I want to be president of the United States,” Mr. Edwards said, “is to make sure that every woman and every person in America gets the same kind of things we have.”

Under the Edwards plan, employers would have to cover their employees or pay into a fund that would finance coverage. Senators Clinton and Obama also expressed interest in this idea.

Mr. Edwards said he would help pay for his plan by “rolling back George Bush’s tax cuts for people making more than $200,000 a year.”

Mr. Richardson said universal coverage “could be achieved in my first year as president,” if voters sent more Democrats to Congress.

As president, he said, he would duplicate the steps he has taken as governor, to “cut junk food out of schools” and to ban smoking in most workplaces, including bars, restaurants and stores.

Mr. Obama said that he would be issuing a detailed plan “over the next couple of months” to achieve universal coverage by the end of the first term of the next president, in January 2013.

When asked why he did not have such a plan, he said, “Our campaign now is a little over eight weeks old.”

While most people get coverage through employers, Mr. Obama said, he wants to foster federal and state purchasing pools. Employers would still have the option of providing coverage, he said, but after 10 or 20 years, “many people may find that they get better coverage,” or better value, outside their employers.

Mr. Obama said he did not know how much it would cost to achieve universal coverage. In response to a question, he said, “I have not foreclosed the possibility that we might need additional revenue” to reach that goal.

“We should not underestimate the amount of money that could be saved in the existing system,” Mr. Obama said. But he opposed cuts in payments to hospitals, doctors and nurses.

Another candidate, Senator Christopher J. Dodd of Connecticut, emphasized his experience, saying that as president he could immediately begin work with Senate committee chairmen to forge a consensus on legislation to cover all Americans.

Mr. Dodd said he would push for legislation making it easier for nurses to form unions, even if they performed some supervisory duties.

Among the candidates at the forum, Representative Dennis J. Kucinich of Ohio offered the most sweeping proposal, to create “a universal, single-payer not-for-profit health care system providing Medicare for all.”

“Health care is a right, not a privilege,” Mr. Kucinich said.

Another candidate, former Senator Mike Gravel of Alaska, called for “a universal single-payer plan.” He said he would give people vouchers, which could be used to pay doctors and hospitals, and a choice of five or six health plans.

(Note by PNHP – Gravel’s plan is not a single payer plan. It is a variant of “managed competition” as proposed by right-wing Stanford economist Victor Fuchs)

Blog postings from the Campaign for America's Future

SEIU Candidate Debate, Las Vegas, 3/24/07

Universal Care: Getting The Right Mix

Submitted by Roger Hickey on Mon, 2007-03-26 15:22.

At Saturday’s health care forum for presidential candidates, John Edwards was bold, detailed and specific–but didn’t diagnose the problem.

Barack Obama was vague–but stressed that no president can do it without the people.

Dennis Kucinich diagnosed the problem, and pushed immediate transformation.

Hillary Clinton, surprisingly, forcefully adopted Kucinich’s diagnosis (before he spoke).

Put them all together–in the right way–and you have a winning health care plan.

I was at the forum in Las Vegas where the Center for American Progress and SEIU made a real contribution to the political debate by getting seven Democratic candidates together to discuss health care.

In a political system where presidential candidates, not party committees, formulate policy for the parties, forcing the candidates to refine their views early–before a crowd of party and union activists–is not a bad thing. Irresponsibly, CSPAN didn’t cover it live, but CAP streamed the event live on the web, and will soon have a transcript available.

Everyone expected former senator Edwards to stress the specifics of his plan for health care for all, and he did. The audience was not so prepared for Obama’s vagueness, but the Illinois senator stuck to principles on the grounds that he was still working on his plan.

But the real surprise was Clinton’s forceful diagnosis of the health care problem–and of her failure to win coverage for all in her husband’s administration.

The New York senator pointed to the power and greed of the insurance industry. She told the Nevada crowd that the failure of her proposal for universal coverage in 1994 made her more determined to achieve the goal now.

As reported by Robert Pear in Sunday’s New York Times, Clinton declared, “[My experience] also makes me understand what we are up against. We have to modernize and reform the way we deliver health care. But we have to change the way we finance it. That’s going to mean taking money away from people who make out really well right now.”

Pressed to explain what she meant by moderator Karen Tumulty of Time, she complained that:

…Insurance companies make money by spending a lot of money, and employing a lot of people, to avoid insuring you, and then if you’re insured, they try to avoid paying for the health care you receive.

(Monday’s front-page story in The New York Times offers a particularly vivid example of that in the long-term care industry.)

With that, Clinton established a strong starting point for an explanation that most Americans can understand about why health care is in crisis. She also announced she would soon introduce legislation to “require that every insurance company had to insure everybody, with no exclusion for pre-existing conditions.”

And with that, Hillary left open the question each of the major candidates need to answer: If the insurance industry is the problem, do we want them to be the centerpiece of an expanded system of subsidies and regulations to try to “incentivize” or force them to cover everyone? And if we go down that road, will we ever get health care costs under control?

Even Edwards, with his admirably frank and detailed plan, does not really answer that question. He builds his coverage-for-all plan around both private insurers and a public, Medicare-like system, claiming that the public’s choices could eventually lead to the private companies losing the competition.

Kucinich was very clear in his response: Even if you set up a public program to compete with private insurers–and even if you regulate the private insurers (as Clinton and Schwarzenegger want to do)–the private insurance companies will find ways to “cherry pick” and cover only the youngest, healthiest and richest parts of the population. And, the representative from Ohio warned, you will end up with only the oldest, sickest and poorest people in the public system–and that is not level competition.

Kucinich’s other warning: Private insurance, with its advertising and administrative costs (necessary to do their “cherry picking” and claims-denying) can never be the basis for an efficient health care system that can get overall costs stabilized.

Kucinich’s problem is the public’s resistance to rapidly imposing his “single-payer” system on everyone–even those (represented memorably by Harry and Louise) who are happy with their current health plan and don’t want to change.

But Clinton’s diagnosis of the health care problem could lead her (or Obama or Edwards) to embracing a gradual shift to a Medicare-style public plan for everyone (individuals and corporations) for whom private insurance is not working.

There was a lot of agreement on important fundamentals at the debate: Edwards, Clinton and Obama all agreed that requiring employers to either insure their workers or pay into a fund to cover them (“pay or play”) is probably the way to go.

So if you put them all together in the right way, you just might come up with a winning health care plan, a winner for the candidate and for the American people.

P.S. — I’m glad I went out to Las Vegas rather than trying to get the streaming video to work. Being there made me realize how for the Democratic Party this health care vision is very much a work in progress. People need to understand that we have the power–though our tough questions, through the lines we chose to applaud and through our own strong advocacy of what kind of health program the candidates should adopt. We have the power to shape the program and the message, and the winning strategy.

P.P.S — I told the taxi driver who took me to the Cox Center at the University of Nevada at Las Vegas about the debate about to take place inside. He hadn’t heard about it but thought a health care solution was really needed. Hospitalized with a serious illness–and no health insurance–he ended up with $250,000 in medical debts and had to declare bankruptcy.

After he got well, he tried to get a job (one with health insurance) at one of the big unionized hotels on the Vegas strip, but the hotel turned him down for the job because his credit records indicated he had declared bankruptcy!

This kind of Catch-22 health care system is undermining everyone’s economic security and Americans are looking to us for an alternative.

The Health Care Questions I Still Have

Submitted by Bill Scher on Mon, 2007-03-26 18:05.

After watching Saturday’s presidential candidate forum on health care, and judging the candidates using Roger Hickey’s five health care questions, I’m left with key questions for each Oval Office aspirant.

To former Sen. John Edwards: your plan sets up competition between private insurers and a new “Medicare-style” government plans for everyone under 65. You argue that with competition, we will see if Americans want public or private plans. But what will you do to ensure the plans compete on a level playing field?

To Sen. Hillary Clinton: You accurately identified the problem with private insurers, how they make a profit by either trying to “avoid insuring you” or “try[ing] to avoid paying for the health care you receive.” But the 1993 health care plan you supported solely relied on private insurers to deliver health care coverage. Will you commit to offering some sort of public plan so we can reduce our reliance on private insurers?

To Sen. Barack Obama: The principles you laid out appear to track the plan that John Edwards has offered. In fact, you called Edwards’ plan “very credible.” What can you propose that would improve upon the Edwards plan?

To Gov. Bill Richardson and Sen. Chris Dodd: Are you actually pledging to achieve universal coverage, or are you only offering universal “access” to coverage, which will allow some to fall through the cracks?

To Rep. Dennis Kucinich: You make a compelling case for an immediate move to a single-payer system, but how do you convince those Americans who are content with their coverage that such a system won’t take away what they have?

To Sen. Joe Biden: The Nevada Caucus 2008 blog checks your past statements and concludes you chose not the attend the forum because you’re not really for universal coverage. Is that true?

To the Republican candidates, who all skipped the forum: Do you really think you can win the White House if you won’t take public questions on what you’re going to do about our health care crisis?

Blog postings from the Campaign for America’s Future