PNHP

Credit cards and the “medically indebted”

Credit cards and the “medically indebted”

Borrowing to Stay Healthy: How Credit Card Debt Is Related to Medical Expenses

By Cindy Zeldin and Mark Rukavina
Demos
The Access Project
January 16, 2007

The cost of health insurance continues to outpace overall inflation and wage growth, placing added pressure on already stretched family budgets. A family health insurance policy is now equivalent to 18 percent of median family income.

In general, the trend for health insurance policies has included higher deductibles and co-payments for hospitalizations, office visits, and prescription drugs, which, in turn, increases the financial burden for people who get sick. Medical debt can also be tied to less-comprehensive insurance. As Health Savings Accounts (HSAs) and high deductible health plans grow more common, patients face higher first-dollar expenses and may become more susceptible to medical debt.

Key findings from the report include:

* Low- and middle-income medically indebted households had higher levels of credit card debt than those without medical debt — on average 46 percent higher. ($11,623 versus $7,964).

* Low- and middle-income medically indebted households had higher debt-to-income ratios than non-medically indebted households.

* Among the medically indebted, young adults between the ages of 18 and 34 had the highest level of average credit card debt of any age group. Credit card debt levels of medically indebted young adults ($13,303) were considerably higher (79 percent higher) than credit card debt levels for non-medically indebted young adults ($7,450).

* The medically indebted are more likely to be called by bill collectors than the non-medically indebted (62 percent versus 38 percent).

Against a backdrop of declining economic stability, trends such as rising health care costs, changes in health insurance benefit design, and an ever-increasing reliance on credit cards forecast dire conditions for America’s family finances.

Policymakers must address the twin problems of health care cost and coverage in a comprehensive manner to protect American families from financial insecurity and the deleterious health outcomes that result from the current system. We believe that the ultimate solution is a system that provides universal access to comprehensive benefits.

Press release:
http://www.accessproject.org/adobe/borrowing_to_stay_healthy_release.pdf

Report “Borrowing to Stay Healthy:”
http://www.demos.org/pubs/healthy_web.pdf

Comment:

By Don McCanne, MD

We are seeing a flurry of proposals for universal coverage that depend on mandates to purchase affordable insurance options – options that are possible only by accelerating the trend to shift more costs to patients.

Affordable, stripped-down private insurance options will further compound debt problems for patients. Comprehensive private plans are not a solution either, because those plans are unaffordable. A family policy is now 18 percent of median family income!

Keep in mind that this and other studies show that medical debt is a problem for middle-income families, not just low-income. The average American can no longer pay the full pro rata tab for comprehensive health care and coverage.

Proposals that would insure everyone in essence are proposing the establishment of a de facto universal risk pool, even though fragmentation introduces complexities. Equitable risk pooling requires that funds be shifted from the healthy to the sick and from the wealthy to middle- and low-income individuals with health care needs. Average Americans now need either more money to purchase comprehensive plans, or more money to pay out-of-pocket expenses not covered by skimpier plans.

How do you do that? Do you use an administratively complex and inefficient system of means-tested insurance vouchers and health care stamps? Should we humiliate ourselves in this way merely because we want to keep the wasteful, intrusive private insurers in play? Or do you give up and decide to expand Medicaid to 70 percent of us? Has the divide become so great that average Americans should be entitled to a welfare program? (Let’s not go there.)

Assuming that the national clamor to insure everyone is genuine, we should turn to the most efficient and equitable system of doing so. That would be to establish a single, universal risk pool that is equitably funded. Then health care would be affordable for everyone.

We already have the money. All we need is the political will.

System Isn’t Healthy But Insurers’ Bottom Lines Are

Malcolm Berko
Copley News Service

Dear Mr. Berko: When you spoke at the fundraiser for our church about the future of our country, you pointedly said that we must have a single-payer health care system. You noted that there are 41 million uninsured in the country who can’t afford health care. You said they must have medical access but (and the following are your words) “the health insurance industry’s intentional high costs exclude them from participation.”

Are you nuts or something? How can you preach such socialistic ideas in a capitalistic society? They would be able to afford health care if they were worth more to their employers so they would be paid better. Do you know how much our leftist government has screwed up our country? And it would do the same without a private health care system if we allowed it to happen.

You have no idea of the wonderful things that health insurance companies like Aetna have done to help Americans. Their contributions to health care are unequaled in any other country in the world. You shouldn’t preach left-wing, pinko communist ideas to people who invite you to their homes. Shame on you.

C.S.
Elkhart, Ind.

Dear C.S.: Why do I suspect that my friend Charming Charlie, the insurance agent from Kokomo asked you to write? And why do I believe that you may be employed by one of the Big Eight (Aetna, Cigna, Coventry, Health Net, Humana, WellPoint, the Blues or United) health companies?

I’m not going to touch your comment about the federal government except to say that the voters are as much to blame as those they elect. My dad, who voted in 19 presidential elections, said, “We get what we pay for.” And your comments about the health care industry’s “wonderful things” are true because no other country in the world allows private industry to make tens of billions of dollars a year from the suffering of its citizens.

I’d like to know why you don’t “gritch” about a $30,444 hospital bill plus $3,882 in medical supplies for an appendectomy patient who had a five-day stay. And how fair is a $7,809 emergency room charge to X-ray and cast a fractured fibula? But I’d really like to know why Aetna and Blue Cross paid those outlandish charges without a peep (but nickel and dime every doctor) using our premium dollars.

There’s the problem: It’s not the doctors nor the government but rather the insurers themselves. Their pockets are so heavily lined with our premium dollars that paying a huge hospital bill is no more meaningful to them than would be the advent of another fly to a slaughterhouse.

Now would you please tell Charming Charlie that last year the Big Eight reported net profits of $19 billion plus free cash flow of $22 billion? Holy moly! That’s $41 billion – easily enough to pay the health care costs for all of those 41 million uninsured. And I think you ought to tell Charming Charlie that the top five officers at each of the Big Eight health insurance companies received $237 million in compensation last year. That’s a shameful use of our premium dollars. Those Big Eight health insurers employ more than 300,000 people, each of whom is paid a salary with benefits averaging $40,000. Well, that number computes to $12 billion and not a penny of that is used for health care. Certainly a shameful use of our premium dollars.

And then there are billions of dollars spent each year for desks, computers, rent, utilities, thousands of tons of paper and millions of paper clips. Those billions are not spent on health care but they are paid with your premium dollars. Can you imagine how many hundreds of thousands of telephones are owned by Aetna, Cigna, United, Health Net, Coventry, WellPoint, Humana and the Blues? Then count the myriad thousands of copy machines, computers, cubicles, pencils, legal pads and so on, all of which are shamefully paid with premium dollars that could be used for medical costs.

Finally, one must count the commissions paid to people like you who sell health insurance policies. It’s estimated that last year the Big Eight paid close to $12 billion in commissions, shamefully using premium dollars that could be used to pay doctors, hospitals, drug companies and other health care providers.

And that’s just the Big Eight. There are countless smaller companies selling health care policies, shamefully skimming billions from your premium dollars. Tell this to Charming Charlie.

So, like it or not, those tens of billions of wasted premium dollars persuasively argue for a single-payer government-controlled health care system. It’s obvious from those wasted billions that health care premiums would be less by half with a single-payer system.

Please address your financial questions to Malcolm Berko, P.O. Box 1416, Boca Raton, FL 33429 or e-mail him at malber@adelphia.net.

Copyright 2007 Copley News Service

Visit Copley News Service at www.copleynews.com.

On the Front Lines of Care: Primary Care Doctors’ Office Systems, Experiences, and Views in Seven Countries

In the article, “On the Front Lines of Care: Primary Care Doctors’ Office Systems, Experiences, and Views in Seven Countries” (Health Affairs Web Exclusive, Nov. 2, 2006), the authors report on survey results that reveal striking differences in primary care practice internationally–differences that highlight the importance of having national policies in place to support primary care. According to the survey, U.S. physicians are among the least likely to have extensive clinical information systems or quality-based payment incentives, the least likely to provide access to after-hours care, and the most likely to report that their patients often have difficulty paying for care.

The 2006 Commonwealth Fund/Harris Interactive survey included more than 6,000 PCPs in Australia, Canada, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States (including more than 1,000 U.S. physicians).

For many people, the primary care physician (PCP) is their first point of contact with the health care system, as well as their main source of preventive and essential care. Recognizing the central role of PCPs in health care, international initiatives to improve health system performance have focused on developing systems and policies to enhance the effectiveness and efficiency of primary care practice. These include the use of clinical information systems, which assist doctors in treatment decisions and enable them to provide patient-centered care; multidisciplinary care teams and disease management programs for patients with chronic illness; and enhanced access to care, such as after-hours appointments.

Use of Information Technology
The survey revealed stark differences in PCPs’ access to information systems. Only 28 percent of U.S. doctors and 23 percent of Canadian doctors said they used electronic medical records (EMRs), compared with overwhelming majorities of doctors in the Netherlands (98%), New Zealand (92%), the U.K. (89%), and Australia (79%).

Canadian and U.S. doctors are also the least likely to have systems that provide decision support, such as computerized alerts about potentially harmful drug doses or interactions. Only 10 percent of Canadian doctors and 23 percent of U.S. doctors receive computerized alerts; rates elsewhere ranged from 93 percent (Netherlands) to 40 percent (Germany). Furthermore, at least two of five U.S. and Canadian doctors find it “very difficult” or “impossible” to identify patients overdue for a test or preventive care, versus one of five or fewer in the other countries.

Patients’ Access to Care
Doctors in the U.S. were least likely to say that their practices allow patients to see a nurse or doctor after regular office hours, without going to an emergency room–just 40 percent have such arrangements. In contrast, between 95 percent and 76 percent of doctors in the other countries provide after-hours care.

U.S. doctors were the most likely to report their patients have difficulty paying for care. Half (51%) of U.S. PCPs reported that patients often have difficulty paying for medications, compared with between 7 percent and 27 percent in the other countries.

Availability of Financial Incentives
Despite growing U.S. interest in financial incentives to improve performance, U.S. primary care doctors are among the least likely to receive such incentives. Just 30 percent reported receiving, or having the potential to receive, payments for managing chronic disease, achieving clinical targets, enhancing preventive care, or other quality improvement activities. The U.K. stands out as a leader in this regard: 95 percent of its doctors receive, or are able to receive, financial incentives for improved performance.

Chronic Care Management
Regarding the highly important dimension of managing chronic disease, a high proportion of doctors in all countries (25% to 30% or more), except Germany (7%), said they are not well-prepared to care for patients with multiple chronic conditions. There are wide variations in the use of care teams and systems known to improve outcomes for such patients.

Conclusions
Primary care physicians in the seven countries share many common challenges, among them improving coordination of care for patients with chronic disease. Yet, the survey highlights sharp differences in the availability of incentives, IT capacity, use of care teams, and patient access to care. These divergent experiences often reflect their country’s underlying policy choices, and the extent to which policies in place are national in scope. As physicians’ responses suggest, national policies in support of primary care matter. The U.S.–which lags well behind in use of health IT–appears to be the only country without a national IT plan. Moreover, the difficulty U.S. patients experience in paying for care signify a failure of the U.S. health insurance system to support primary care. “Cohesive, broad-based policy changes in the United States,” the authors conclude, “could lead to improved absolute and relative performance.”

Facts and Figures:

* Of 14 health information system functions assessed in the survey (e.g., automated alerts/reminders, electronic prescribing), fewer than one of five U.S. and Canadian physicians reported their offices supported seven or more of these functions. In the other countries, 59% to 83% of doctors reported such multifunctional capacity.

* Use of clinical teams to manage chronically ill patients varies widely, ranging from 73% in the U.K. to 25% to 38% in Canada, the U.S., and Australia.

* The U.K. stands out for their ability to track medical errors: 79% of U.K. doctors have systems to document all adverse events, compared with 7% to 41% in other countries (37% in the U.S.).

Citation: C. Schoen, R. Osborn, P. Trang Huynh, M. Doty, J. Peugh, K. Zapert, On The Front Lines of Care: Primary Care Doctors’ Office Systems, Experiences, and Views in Seven Countries, Health Affairs Web Exclusive (Nov. 2, 2006):w555–w571.

Healthcare packages all inferior, except for one

By Deborah Burger, RN
January 10, 2007

With Gov. Arnold Schwarzenegger unwrapping his long-anticipated healthcare package Monday and talk about reform building in Sacramento, Californians may well be wonder if our long healthcare nightmare is finally coming to an end.

Sadly, virtually none of the proposals now being touted in the Capitol is universal, strengthens quality of care or reduces rising costs to consumers.

The sole exception is a single-payer approach, as contained in a bill by state Sen. Sheila Kuehl, D-Santa Monica, that was vetoed by Schwarzenegger in September, but will be reintroduced soon.

Under single-payer, one public entity collects all the financing and pays for all medical services through the existing private-care delivery system, with adequate funding for our doctors, hospitals, clinics and other care.

All the other approaches are fundamentally flawed. They continue to rely on a wasteful insurance industry whose focus is on making money by denying care to those who need it the most and other market-based mechanisms that created the current mess.

Californians should be especially wary of legislation requiring individuals to buy insurance. The likely result is to criminalize the uninsured, and saddle far too many with cut-rate plans with huge out-of-pocket costs and caps on payments that expose you to financial ruin in the event of a serious illness or major accident.

There’s a better way, the course charted by every industrialized nation in the world. That’s the main reason why the U.S. spends more than the 21 other wealthiest countries on healthcare yet Americans trail them all in life expectancy, infant mortality and a host of other health barometers.

Here’s 10 ways a similar, single-payer-type system, would benefit all Californians, not only those who profit in healthcare:

1. Everybody in, nobody out. Universal means access to healthcare for everyone, period — the desire of 81 percent of all Californians, as reported in a recent Field Poll.

2. Portability. Even if you are unemployed or lose or change your job, your health coverage goes with you.

3. Uniform benefits. No Cadillac plans for the wealthy and Moped plans for everyone else, with high deductibles, limited services and no protection in the event of a catastrophe. One standardized level of comprehensive care no matter what size your wallet.

4. Prevention. By removing financial roadblocks, a single-payer system encourages preventive care that lowers an individual’s ultimate cost and pain and suffering when problems are neglected, and societal cost in the overutilization of emergency rooms or the spread of communicable diseases.

5. Choice of physician. Most private plans restrict what doctors, other caregivers or hospital you can use. Under a single-payer system, patients have a choice and the provider is assured a fair reimbursement.

6. Ending insurance industry interference with care. Caregivers and patients regain the autonomy to make decisions on what’s best for a patient’s health, not what’s dictated by the billing department or the bean counters. No denial of coverage due to pre-existing conditions or cancellation of policies for “unreported” minor health problems.

7. Reducing administrative waste. One third of every healthcare dollar in California goes for paperwork, such as denying you care, and profits, compared to about 3 percent under Medicare, a single-payer, universal system.

8. Cost savings. Numerous studies suggest a single-payer system would produce the savings needed to cover everyone, largely by using existing resources without the waste. Taiwan adopted a single-payer system in 1995, boosting health coverage from 57 percent to 97 percent with little if any increase in overall healthcare spending.

9. Common sense budgeting. The public system sets fair reimbursements applied equally to all providers while assuring all comprehensive and appropriate healthcare is delivered, and uses its clout to negotiate volume discounts for prescription drugs and medical equipment.

10. Public oversight. The public sets the policies and administers the system, not high-priced CEOs meeting in secret and making decisions based on what inflates their compensation packages or stocks.

While our politicians debate inferior alternatives, it’s up to all of us to insist that Californians deserve the best.

Deborah Burger is president of the California Nurses Association.

Comparison between Schwarzenegger Health Plan and Single Payer for California

Distributed by the California Universal Health Care Organizing Project
For more information, email dbechler@value.net

The best way to analyze the Governor’s plan is to compare it to SB 840.

Today we celebrate the birthday of Dr. Martin Luther King, Jr. Health care was one of Dr. King’s greatest concerns. All Californians desperately want to solve the health care crisis. Various solutions are being debated in Sacramento. This educational leaflet compares the proposed solution of Governor Schwarzenegger to SB 840 the California Health Insurance Reliability Act, which he vetoed last August. In August 2006, the California Legislature passed SB 840 in both the Assembly and the Senate. This sent a message across America that Californians want a great health insurance system minus the bureaucratic nightmare of the insurance industry.

Cost

SB 840 would save Californians 12 billion dollars in 2007, Arnold’s plan would cost an extra 12 billion dollars.

SB 840 savings would occur by removing the middle man insurance industry from health care and bargaining vigorously with the drug companies. The 12 billion dollar figure is from the Lewin analysis of Kuehl’s legislation. That report can be found at http://singlepayernow.net/sb840/summary.pdf

Arnold’s plan will use state funds to subsidize the insurance industry. We do not want welfare for the insurance industry which has always tried to avoid the sick and insure only the healthy. The insurance industry should be removed from healthcare.

Bureaucracy

Arnold maintains the current bureaucratic nightmare of over 6000 health insurance plans and 69 government programs.

SB 840 is a bureaucracy buster as it reduces the bureaucracy from 6000 to 1. Most politicians want to cut bureaucracy. But not Arnold. SB 840 is the biggest bureaucracy buster in history.

Comprehensiveness

SB 840 is extremely comprehensive and includes full coverage for mental health, dental, vision, and prescription drugs.

Arnold’s program does not require employers to offer any minimum benefit.

Deductibles and Copays.

Arnold’s minimum required coverage has $7500 out of pocket costs for individuals and $10,000 out of pocket costs for families.

SB 840 has no out of pocket costs or deductibles. We think it is bad health policy to set up barriers to care.

Racial, gender, and class inequalities

SB 840 delivers great health care to everyone.

Arnold’s plan maintains the current system in which different classes of people receive different classes of care.

Labor

Arnold’s plan does nothing to remove the contentiousness at the bargaining table. All labor negotiations today revolve around health care. Arnold’s plan leaves individuals on their own to bargain with insurance companies.

SB 840 removes health care from the bargaining table. SB 840 uses the collective bargaining of 37 million Californians to bargain for lower drug prices.

Business

SB 840 levels the playing for all business. Costs are known.

Arnold’s plan maintains an uneven playing field. And Arnold’s plan sets a new low bar for what business should pay. Businesses that currently provide health care spend slightly over 10% of payroll on health care. Wal-Mart spends 7%. Arnold calls for a minimum of a 4% payroll fee on some employers. This is a plan that Wal-Mart would love and should be called the Wal-Mart plan. Arnold’s projected income from the 4% fee amounts to one billion dollars in a state that is projected to spend $200 billion on health care in 2007.

Who pays?

Studies on SB 840 project an employer payroll tax of 8.1% of payroll after the first $7000 per employee and a employee payroll tax of 3.8% after the first $7000 of income. These figures reflect the current relationship between employers and employees.

Arnold’s plan lowers the bar on employers to 4% with no capped rate for employees.

Arnold’s plan is in line with the three decades long shift of wealth from working families to the rich.

Choice of health care provider.

Arnold’s plan allows insurance companies to limit choice.

SB 840 allows full choice of provider.

Cost controls

SB 840 uses an annual budget to pay for health care.

Arnold’s plan allows insurance companies to raise rates. Insurance companies have no incentive to control costs in California. They actually have an incentive to have Californians spend more money on health care. Arnold proposes limiting the insurance industry’s overhead and profits to 15 cents of every premium dollar. Ask yourself, would insurance companies want 15% of 200 billion dollars or $300 billion dollars? The more money that Arnold directs to the insurance industry, the better for them.

On the hidden tax

Arnold talks of a hidden tax on current insurance premiums to cover the uninsured. Don’t hold your breath for a rebate check from your insurance company.

SB 840 takes on the real hidden tax on health care which is the existence of the middle man insurance industry. Medicare has about a 3% percent administrative costs versus the proposed 15% administrative and profit cost of private insurance. I will take the government efficiencies any day over the insurance industry’s, especially when the insurance costs 5 times as much.

Insurance Industry and Individual Mandates

SB 840 uses government to remove this bureaucratic, wasteful middleman.

Arnold’s plan uses government to enforce citizen funded subsidies (individual mandates) for the insurance industry. You could label Arnold’s plan “Leave no insurance company behind”.

SB 840 is health care for Californians. Schwarzenegger’s plan is welfare for his needy friends in the insurance industry.

If you like how Wal-Mart’s CEO Lee Scott treats his workforce, you will love how Arnold treats the health care of Californians.

SB 840 was co-authored by 45 of the 73 Democratic legislators. It was endorsed by over 500 organizations, including the California State Federation of Labor, AFL-CIO and the California State Council of the Service Employees International Union.

Legislators who co-authored State Senator Kuehl’s bill last year are Senators Alarcon, Alquist, Cedillo, Chesbro, Escutia, Figueroa, Florez, Lowenthal, Migden, Murray, Ortiz, Perata, Romero & Soto and Assembly Members Bass, Berg, Bermudez, Chan, Chavez, Chu, Coto, Dymally, Evans, Goldberg, Hancock, J Horton, Jones, Klehs, Koretz, Laird, Leno, Levine, Lieber, Lieu, Montanez, Mullin, Nava, Oropeza, Pavley, Ridley-Thomas, Salinas, Torrico, Vargas, & Yee.

The central question to ask Arnold Schwarzenegger is why would he veto a bill that removes racial, gender, and class inequalities and instead support a plan that gives preferential treatment to the parasitic middle man insurance companies?

“Of all the forms of inequality, injustice in health care is the most shocking and inhumane” MLK

Opposing views: State plans miss the point

Neither state goes far enough. People will still lack care.

By Don McCanne
USA Today

Americans need more than affordable insurance; they need affordable health care. California Gov. Arnold Schwarzenegger plans to copy the Massachusetts reform in shrinking the numbers of uninsured people by forcing them to buy stripped down, bare-bones policies.

With premiums for family coverage now averaging $10,000 a year, the only way that states can make premiums affordable is to strip down the plans, which then forces policyholders to pay out of pocket when they get sick. High deductibles, co-payments and benefit reductions are destroying the financial protection that insurance should provide.

Half of U.S. bankruptcies are a result, in part, of medical illness or medical bills. Three-quarters of Americans who are forced into medical bankruptcy had health insurance at the onset of the illness that bankrupted them. Worse, suffering and death can occur when patients cannot afford the care that their private insurance does not cover.

The big winners in the Schwarzenegger and Massachusetts health plans are private health insurance firms. The new insurance mandates will hand them billions in wasteful administrative fees that do not occur in government insurance programs such as Medicare. Private insurers will continue their cream-skimming, enrolling primarily the low cost, healthy workforce and their families, while leaving the costs of the unprofitable sick and elderly to the taxpayers.

State health programs are interdependent on federal programs such as Medicare, Medicaid and the Veterans Affairs’ system, and are regulated by federal laws. The states alone cannot enact the structural changes that would be required to cover everyone and control costs. They are limited to building on the existing system by tweaking it to nominally expand coverage to the uninsured.

Money is not the problem. We already are spending enough on health care to provide high-quality, comprehensive services for everyone. But our inefficient, private-sector insurance bureaucracies have failed and need to be replaced with single-payer national health insurance. Every other developed nation has covered its citizens through some form of non-profit national health insurance.

Don McCanne, M.D., is a senior health policy fellow of Physicians for a National Health Program.

Paul Krugman on Schwartzenegger's State Health Plan

Golden State Gamble

By PAUL KRUGMAN
Published: January 12, 2007
New York Times

A few days ago. Gov. Arnold Schwarzenegger unveiled an ambitious plan to bring universal health insurance to California. And I’m of two minds about it.

On one side, it’s very encouraging to see another Republican governor endorse the principle that all Americans are entitled to essential health care. Not long ago we were wondering whether the Bush administration would succeed in dismantling Social Security. Now we’re discussing proposals for universal health care. What a difference two years makes!

And if California – America’s biggest state, with a higher-than-average percentage of uninsured residents – can achieve universal coverage, so can the nation as a whole.

On the other side, Mr. Schwarzenegger’s plan has serious flaws. Maybe those flaws could be fixed once the principle of universal coverage was established – but there’s also the chance that we would end up stuck with those flaws, the way we ended up stuck with a dysfunctional system of insurance tied to employment.

Furthermore, in the end health care should be a federal responsibility. State-level plans should be seen as pilot projects, not substitutes for a national system. Otherwise, some states just won’t do the right thing. Remember, almost 25 percent of Texans are uninsured.

To understand both what’s right and what’s wrong with Mr. Schwarzenegger’s plan, let’s compare what he’s proposing with the plan he rejected. Last summer, the California Legislature passed a bill that would have created a single-payer health insurance system for the state – that is, a system similar to Medicare, under which residents would have paid fees into a state fund, which would then have provided insurance to everyone.

But the governor vetoed that bill, which would have bypassed private insurance companies. He appears to sincerely want universal coverage, but he also wants to keep insurance companies in the loop. As a result, he came up with a plan that, like the failed Clinton health care plan of the early 1990s, is best described as a Rube Goldberg device – a complicated, indirect way of achieving what a single-payer system would accomplish simply and directly.

There are three main reasons why many Americans lack health insurance. Some healthy people decide to save money and take their chances (and end up being treated in emergency rooms, at the public’s expense, if their luck runs out); some people are too poor to afford coverage; some people can’t get coverage, at least without paying exorbitant rates, because of pre-existing
conditions.

Single-payer insurance solves all three problems at a stroke. The Schwarzenegger plan, by contrast, is a series of patches. It forces everyone to buy health insurance, whether they think they need it or not; it provides financial aid to low-income families, to help them bear the cost; and it imposes “community rating” on insurance companies, basically requiring them to sell insurance to everyone at the same price.

As a result, the plan requires a much more intrusive government role than a single-payer system. Instead of reducing paperwork, the plan adds three new bureaucracies: one to police individuals to make sure they buy insurance, one to determine if they’re poor enough to receive aid, and one to police insurers to make sure they don’t discriminate against the unwell.

The plan’s supporters say that it would save money all the same. Those who are currently uninsured would receive preventive care, which is often cheaper than waiting until they show up in emergency rooms. Insurers would spend less money trying to weed out high-risk clients and more money actually paying for health care: the plan would require that insurers spend at least 85 percent of premiums on health care, considerably more than most of them do now.

Still, why all the complexity? The smart, well-intentioned economists who devised the plan think they’re being more politically realistic than single-payer advocates – that it’s necessary to placate the insurers. But that’s what Bill and Hillary Clinton thought, too – only to find that their plan’s complexity confused the public, while the insurance industry went all-out to defeat it anyway.

So am I for or against the Schwarzenegger plan? That’s a tough question. As a practical matter, however, I suspect that the real question is what to do after the plan founders from its own complexity. And the answer is, damn the insurers – full speed ahead.

Paul Krugman on Schwartzenegger’s State Health Plan

Golden State Gamble

By PAUL KRUGMAN
Published: January 12, 2007
New York Times

A few days ago. Gov. Arnold Schwarzenegger unveiled an ambitious plan to bring universal health insurance to California. And I’m of two minds about it.

On one side, it’s very encouraging to see another Republican governor endorse the principle that all Americans are entitled to essential health care. Not long ago we were wondering whether the Bush administration would succeed in dismantling Social Security. Now we’re discussing proposals for universal health care. What a difference two years makes!

And if California – America’s biggest state, with a higher-than-average percentage of uninsured residents – can achieve universal coverage, so can the nation as a whole.

On the other side, Mr. Schwarzenegger’s plan has serious flaws. Maybe those flaws could be fixed once the principle of universal coverage was established – but there’s also the chance that we would end up stuck with those flaws, the way we ended up stuck with a dysfunctional system of insurance tied to employment.

Furthermore, in the end health care should be a federal responsibility. State-level plans should be seen as pilot projects, not substitutes for a national system. Otherwise, some states just won’t do the right thing. Remember, almost 25 percent of Texans are uninsured.

To understand both what’s right and what’s wrong with Mr. Schwarzenegger’s plan, let’s compare what he’s proposing with the plan he rejected. Last summer, the California Legislature passed a bill that would have created a single-payer health insurance system for the state – that is, a system similar to Medicare, under which residents would have paid fees into a state fund, which would then have provided insurance to everyone.

But the governor vetoed that bill, which would have bypassed private insurance companies. He appears to sincerely want universal coverage, but he also wants to keep insurance companies in the loop. As a result, he came up with a plan that, like the failed Clinton health care plan of the early 1990s, is best described as a Rube Goldberg device – a complicated, indirect way of achieving what a single-payer system would accomplish simply and directly.

There are three main reasons why many Americans lack health insurance. Some healthy people decide to save money and take their chances (and end up being treated in emergency rooms, at the public’s expense, if their luck runs out); some people are too poor to afford coverage; some people can’t get coverage, at least without paying exorbitant rates, because of pre-existing
conditions.

Single-payer insurance solves all three problems at a stroke. The Schwarzenegger plan, by contrast, is a series of patches. It forces everyone to buy health insurance, whether they think they need it or not; it provides financial aid to low-income families, to help them bear the cost; and it imposes “community rating” on insurance companies, basically requiring them to sell insurance to everyone at the same price.

As a result, the plan requires a much more intrusive government role than a single-payer system. Instead of reducing paperwork, the plan adds three new bureaucracies: one to police individuals to make sure they buy insurance, one to determine if they’re poor enough to receive aid, and one to police insurers to make sure they don’t discriminate against the unwell.

The plan’s supporters say that it would save money all the same. Those who are currently uninsured would receive preventive care, which is often cheaper than waiting until they show up in emergency rooms. Insurers would spend less money trying to weed out high-risk clients and more money actually paying for health care: the plan would require that insurers spend at least 85 percent of premiums on health care, considerably more than most of them do now.

Still, why all the complexity? The smart, well-intentioned economists who devised the plan think they’re being more politically realistic than single-payer advocates – that it’s necessary to placate the insurers. But that’s what Bill and Hillary Clinton thought, too – only to find that their plan’s complexity confused the public, while the insurance industry went all-out to defeat it anyway.

So am I for or against the Schwarzenegger plan? That’s a tough question. As a practical matter, however, I suspect that the real question is what to do after the plan founders from its own complexity. And the answer is, damn the insurers – full speed ahead.

AHRQ Disparities Report

2006 National Healthcare Disparities Report

U.S. Department of Health and Human Services
Agency for Healthcare Research and Quality
December 2006

Being uninsured has a large negative impact on almost all aspects of health care quality and access. In fact, among adults, the negative effects of being uninsured are typically larger than the effects of race, ethnicity, income, and education. Multivariate analyses suggest that uninsurance is an important mediator of racial, ethnic, and socioeconomic disparities, although race, ethnicity, and socioeconomic position often have independent effects as well.

http://www.ahrq.gov/qual/nhdr06/nhdr06report.pdf

Comment:

By Don McCanne, MD

Martin Luther King Jr said it:

“Of all the forms of inequality, injustice in health care is the most
shocking and inhumane.”

Realtors face health care crisis

Realtors, Other Small-Business People Face Health Care Crisis

National Association of Realtors
January 10, 2007

Small business employers and the self-employed, including real estate firms and agents, are facing a growing challenge in accessing and providing affordable health insurance, Pat Vredevoogd Combs, president of the National Association of Realtors, told a congressional panel today (U.S. Senate Health, Education, Labor and Pension Committee – Senator Edward Kennedy (D-Mass.), chairman and Senator Michael Enzi (R-Wyo.), ranking member).

“As we sit here, 28 percent of the nation’s 1.3 million Realtors do not have any health insurance. This is nearly double the percentage of uninsured members in 1996. If we add family members to the total, the final estimate for the Realtor family is close to 886,000 individuals,” stated Combs. “We are ready to work with you to fix an insurance delivery system that is not meeting the needs of working Americans,” she pledged.

Making health care insurance available and affordable for Realtors and for all Americans employed by small businesses is a top priority of NAR. “We believe it is important to find a solution to the health insurance crisis that has plagued small businesses. We don’t have all the answers on how to do it, but we do know it must be done,” said Combs.

http://www.realtor.org/press_room/news_releases/2007/realtors_other_small_business_people.html

Comment:

By Don McCanne, MD

How to do it? Sen. Kennedy supports Medicare for all, while Sen. Enzi supports offering lowest-common-denominator, stripped-down coverage through association health plans. One would provide everyone with affordable health care, and the other would provide the right to purchase affordable health insurance that leaves health care unaffordable.

Which do the Realtors really want?

Jacob Hacker's "Health Care for America"

Health Care for America

A proposal for guaranteed, affordable health care for all Americans building on Medicare and employment-based insurance

by Jacob S. Hacker
The Economic Policy Institute
EPI Briefing Paper #180
January 11, 2007

As health care costs have skyrocketed and the proportion of Americans with stable benefits has eroded, health insecurity has become a shared American experience, felt by those who thought they had it made as well as those just struggling to get by.

This growing problem is pushing health care reform back onto the agenda of American politics after more than a decade of neglect. And yet, nothing guarantees that this debate will end differently than previous battles.

To avoid the dismal fate of previous reform campaigns, a successful agenda must take seriously the political constraints and organizational realities that have hamstrung reform efforts in the past. Limits on public budgets, resistance to measures that might be seen as taking away what Americans already have, and the embedded realities of the present system all stand squarely in the path of grand policy redesigns–from single-payer national health insurance, to individual mandates requiring that everyone purchase private coverage, to a universe of individualized Health Savings Accounts. Instead, the most promising route forward is to build on the most popular elements of the present structure–Medicare and employment-based health insurance for well-compensated workers–through a series of large-scale changes that are straightforward, politically doable, self-reinforcing, and guaranteed to produce expanded health security.

Health Care for America embodies this strategy. It would extend insurance to all non-elderly Americans through a new Medicare-like program and workplace health insurance, while creating an effective framework for controlling medical costs and improving health outcomes to guarantee affordable, quality care to all. It is at once comprehensive, realistic, consistent with American values and beliefs, and grounded in the best elements of the present system. It combines employer and personal responsibility with a strong public commitment to ensuring that American workers and their families and American employers can afford coverage. It promises better care, lower costs, more choice, healthier citizens, and immensely stronger guarantees for workers and their families. And it promises real savings for employers and state governments–without unraveling existing sources of health security, without forcing workers to obtain coverage on their own, and without pressuring patients into Health Savings Accounts or tightly managed health maintenance organizations (HMOs).

What Health Care for America would do is simple: every legal resident of the United States who lacks access to Medicare or good workplace coverage would be able to buy into the “Health Care for America Plan,” a new public insurance pool modeled after Medicare. This new program would team up with Medicare to bargain for lower prices and upgrade the quality of care so that every enrollee would have access to either an affordable Medicare-like plan with free choice of providers or to a selection of comprehensive private plans.

At the same time, employers would be asked to either provide coverage as good as this new plan or, failing that, make a relatively modest payroll-based contribution to the Health Care for America Plan to help finance coverage for their workers. At a stroke, then, no one with a direct or family tie to the workforce would remain uninsured. The self-employed could buy into the plan by paying the same payroll-based contribution; those without workplace ties would be able to buy into Health Care for America by paying an income-related premium. The states would be given powerful incentives to enroll any remaining uninsured.

http://www.sharedprosperity.org/bp180.html

For the PDF version of “Health Care for America:”
http://www.sharedprosperity.org/bp180/bp180.pdf

Comment:

By Don McCanne, MD

Jacob Hacker is gifted, really (though some might contend that “gifted political scientist” is an oxymoron). Jacob Hacker cares about people. He knows that we must do something to make health care accessible and affordable for everyone.

His proposal does not break new ground in health policy. He has merely combined various concepts that have been under consideration for some time. What is very different about this proposal is that the design features comply with the perceptions of most Americans as to how they want our health care to be financed. It is just possible that he may have crossed the threshold of political feasibility.

There are some very good features in his proposal. It establishes a new and improved Medicare that competes with the existing private plans in the employer-sponsored and individual markets. Employers and individuals who are concerned about replacing their private plans with a government-run program would have the option of continuing with their current standard coverage. It is estimated that about half would switch to the Health Care for America program. It is likely that, with time, the public program would establish its superiority resulting in a massive shift in enrollment. That would bring us very close to a single payer system without having to dump it on the nation all at once. When you read his report, you will recognize that there are many other features that would help to ensure an equitable and affordable system for all.

From the perspective of a single payer advocate, there are some problems. Leaving the private insurers in place perpetuates the administrative waste of those insurers and the administrative burden on the providers. Intense regulatory oversight of the private insurers would be even more imperative since they would increase their efforts to game the system through surreptitious favorable selection and other clandestine market expediencies. The public program would likely concentrate lower-income individuals initially, risking a political transformation into a welfare program. Also his plan includes features of both an employer mandate and an individual mandate, each with its own policy problems, though he does ameliorate the impact to a certain extent with some of the other features of his plan. From a single payer perspective, it would be far better to totally cut the link between financing and coverage. A system of equitable tax funding of the entire risk pool is more efficient than a system of premiums linked to the individual. Other potential problems are evident in the report.

This is a very important contribution to the national dialogue on reform. The report should be downloaded since it will surely become a prominent part of our debate.

Since PNHP’s mission is to inform rather than to negotiate compromise, we will continue to point out specific policies in his model that could be improved. That said, Jacob Hacker’s proposal is a very welcome addition at a time that all options should be on the table. It is such a compelling model that it may shove all others off of the table – except single payer – then we can get down to a serious discussion about reform that really works.

On the Governor's Health-Care Plan

More insurance is not the answer

By Deborah Burger
San Francisco Chronicle
Thursday, January 11, 2007

While Gov. Arnold Schwarzenegger deserves credit for finally responding to the state’s imploding health-care crisis, his plan as designed has major flaws, most notably forcing the uninsured to buy what for many will mostly likely be substandard, unaffordable health plans that primarily serve to further enrich big insurers.

Some provisions in the governor’s package are welcome — notably the intent to end the disgraceful denials of coverage based on age or health status, and his pledge to assure access to health services for the undocumented.

However a plan that begins by criminalizing the uninsured with no controls on skyrocketing premiums and, at this point, no standards on what those health plans will include, is a train wreck waiting to happen. Let us hope that the state would establish uniform and comprehensive benefits for all.

In a state where health insurance typically runs up to $12,000 a year for a family of four, it’s a safe bet that many will gamble with their health and opt for the cheapest plan available. As defined by the governor’s proposal, those plans would require families to spend up to $10,000 a year in out-of-pocket medical costs. In other words, the average consumer will have to pay for presumably all of their health services in addition to the premiums the law will force them to pay.

If it sounds as if someone is making out like a bandit, that bandit has a name – the insurance industry. Insurers will gain millions while consumers will receive little in return. A mandate on individuals to buy insurance is the centerpiece of the Massachusetts health plan as well. The experience there to date does not recommend this approach. Many people are choosing not to sign up, even with the tax penalties, because they cannot afford the plans, and due to funding problems, the state has cut back on public education about the program. That’s in a state with 500,000 uninsured as compared to California’s 6.5 million uninsured.

A second area of concern is the proposal to shift some $2 billion in tax funds that now goes to hospitals to cover indigent care and use it to buy coverage for the uninsured. It takes money used for direct delivery of care, and hands it to insurance companies, which take 25 percent to 30 percent off the top for wasteful administrative expenses.

Moreover, the proposal has an ugly underside: Because 70 percent of those funds go to public hospitals and clinics, the proposal will starve the public sector of desperately needed revenue, hastening the closure or privatization of more public facilities. This could have a particularly deleterious effect on low-income communities where most public hospitals are located.

That demonstrates the biggest fundamental problem with the governor’s entire package: A market-based system always puts increased revenues and profits over the health and well-being of those patients it is supposed to serve. As was the clear intent of a number of the free-market architects of the plan, it reinforces and expands the role of the market in health care, the very source of the present crisis. If the governor’s goal is truly universal health coverage, improved quality and effective cost controls, the state should embark on the same tried-and-true course taken by every other industrialized nation, either a national health system, or a single-payer approach as embodied in the single-payer bill, SB840 authored by state Sen. Sheila Kuehl. Kuehl’s bill was vetoed by the governor last year. It will be reintroduced this year.

Under a single-payer system, such as Medicare, one public entity collects all the financing and pays for all medical services through the existing private-care delivery system, with adequate funding for our doctors, hospitals, clinics, and other care.

It’s the only plan that assures everyone is covered with one high standard of benefits and care, as opposed to good care for the wealthy only. It assures choice of physician, reduces administrative waste, provides commonsense budgeting, and ends insurance industry interference in the form of high premiums, high deductibles and denials of care.

Americans spend twice as much per person on health care as the other 21 wealthiest countries, yet World Health Organization data shows Americans live the shortest time in good health and have poorer patient outcomes in category after category from infant mortality to life expectancy to doctor visits.

Being number 21 is hardly good enough. By enacting the single-payer Kuehl bill this year, we could finally have the plan Californians need and deserve.

Deborah Burger, R.N., is the president of the California Nurses Association.