PNHP

A Health Care Plan So Simple, Even Stephen Colbert Couldn’t Simplify It

A Health Care Plan So Simple, Even Stephen Colbert Couldn’t Simplify It

By ROBERT H. FRANK
New York Times
Published: February 15, 2007

In his State of the Union address, President Bush proposed tax cuts to make health insurance more affordable for the uninsured. The next day, Stephen Colbert had this to say on his show on Comedy Central: “It’s so simple. Most people who can’t afford health insurance also are too poor to owe taxes. But if you give them a deduction from the taxes they don’t owe, they can use the money they’re not getting back from what they haven’t given to buy the health care they can’t afford.”

Just so. As health economists have long known, market incentives induce private insurers to spend vast sums to avoid people who may actually require health care. This problem is mitigated (though not eliminated) by employer-provided group policies. Because Mr. Bush’s proposal would steer people toward individual policies, it would actually strengthen the incentive to shun unhealthy people. Such people can now keep their insurance by not changing jobs. But no private company would want them as individual policyholders at a price anyone could afford.

That Mr. Bush’s proposal will not shrink the ranks of the uninsured is not its most serious problem. Far more troubling is its embrace of a system under which we spend more than twice as much on health care, on average, as the 21 countries in which life expectancy exceeds ours. American costs are so high in part because the reliance on private insurance multiplies administrative expenses, currently about 31 percent of total outlays.

Most health economists agree that government-financed reimbursement is the only practical way to control these expenses, many of them stemming from insurers’ efforts to identify and avoid unhealthy people. Canada’s single-payer health system, which covers everyone, spends less than 17 percent on administrative expenses.

Annual health spending in the United States currently exceeds $2 trillion. A single-payer system that did nothing more than reduce administrative expenses to the levels of other countries would save roughly $300 billion annually.

Some critics worry that expensive but ineffective medical interventions may proliferate if health care becomes a federal responsibility. But Victor Fuchs, a respected health economist at Stanford University, and Dr. Ezekiel Emanuel, chairman of the department of clinical bioethics at the National Institutes of Health, have outlined a single-payer plan that would limit such interventions far more effectively than the current system. (A copy of their plan is on the links page of my Web site, www.robert-h-frank.com.)

If the single-payer system embraced by virtually all other developed countries is clearly the best solution, why doesn’t the United States adopt it? Some analysts concede its merits, but characterize it as either unaffordable or politically unrealistic. But why should a policy that promises better results for less money be considered a nonstarter?

There are two obstacles, which could both be overcome by intelligent political leadership. One is that the single-payer system would require additional tax revenue. In the current climate, that’s a tough political hurdle, to be sure. Yet how complicated would it be to explain to voters that because the single-payer plan would reduce costs substantially, every additional tax dollar would be offset by an even larger reduction in private insurance spending? Given that such a system is so much cheaper over all, calling it unaffordable makes no sense.

The second obstacle is opposition from private insurers, who would be understandably reluctant to abandon multibillion-dollar annual profit streams. Those who stand to lose from policy changes always battle harder than those who stand to gain — an asymmetry that is exaggerated when losses would be concentrated and gains diffuse. So, yes, the insurance industry would bitterly resist.

But intelligent leadership could overcome that resistance. Whenever a pie gets bigger, everyone can get a larger slice than before. Because moving to a single-payer system would make the economic pie bigger, it should be possible for everyone, including the insurance industry, to come out ahead.

The first step is to acknowledge that insurance companies are not evil, that they invested in good faith under tax laws that favored employer-provided private health insurance. To put them out of business with an overnight switch would be unjust.

Even so, they are not entitled to a permanent license to operate a system that has become economically unsustainable. The move to a single-payer plan would save far more than enough to compensate insurance companies for lost profits. Compensation for losses could start at 100 percent, then be gradually phased out as companies shifted investments elsewhere.

Selling this argument in an era of 15-second sound bites would be challenging, but hardly impossible. Indeed, forceful advocacy of the single-payer approach offers a golden opportunity for any serious presidential candidate. Voters are fed up with rising insurance costs and dwindling coverage. On the merits, single-payer coverage is an unassailable solution to both problems. Its rationale is simple enough to articulate clearly during a long campaign. And if the proposal were devised so that everyone stood to win, corporate interests would have little reason to attack it.

Critics of the single-payer plan have long railed against the specter of socialized medicine, suggesting that it means being treated by government functionaries. Yet people who have experienced single-payer coverage firsthand seem unconcerned. When one of my sons needed surgery for a broken arm during a sabbatical in Paris, for example, the medical system we encountered was just as professional as the American one and far less bureaucratic. And in France, which spends half as much on health care as the United States and has more doctors and hospital beds per capita, everyone is covered.

We live in challenging times. Does a candidate who couldn’t persuade voters to embrace the single-payer approach deserve to be president?

Robert H. Frank, an economist at the Johnson School of Cornell University, is the author of “The Economic Naturalist,” which will be published this spring. Contact: www.robert-h-frank.com

Note from PNHP: The Fuchs Plan is actually not a single-payer plan. It is a quite regressive proposal that involves vouchers and maintaining the private insurance industry. A side from this error, Frank’s article is right on.

“The Year of Health Reform” in California Gets Another Boost From New Group

Congress of California Seniors Joins New Coalition, “It’s OUR Healthcare!”

By Gary Passmore
Director, Congress of California Seniors
February 14, 2007
CaliforniaProgressReport.com

At the instigation of our state political leadership, 2007 is shaping up to be the year of health reform in California. The central issue is how to provide quality, affordable coverage to more than six million Californians who are not covered by employer-based health insurance, public insurance programs (such as Medicare, Medi-Cal, or Healthy Families), or who purchase their own coverage.

In addition to expanded access, there are other key goals which are important to millions of Californians such as controlling costs that threaten the coverage of people with insurance, expanding prevention programs, and improving the quality and safety of health services.

Although most seniors are covered by Medicare, we have a huge stake in the reforms being advanced. Of course we care deeply about people under age 65, but we also recognize the need to control health inflation to preserve the level of benefits under Medicare…and we are vitally concerned about quality care and consumer protections. Because of these concerns, we will speak out in the public debate which lies ahead. That is why the Congress of California Seniors has joined a broad-based consumer coalition to speak out on the needs of California families. The group is called “It’s OUR Healthcare!” and we will engage in a vigorous advocacy campaign to educate people and push policymakers for an effective solution…not a band-aid approach.

Very different ideas for dealing with health reform have been advanced, ranging from Senator Sheila Kuehl’s expansive single-payer universal coverage proposal to Senate President pro Tem Don Perata’s plan to create a large state pool for the uninsured combined with employer and individual mandates, and House Speaker Fabian Nunez’s call for insuring all California children and creating a public insurance pool for the uninsured to the Governor’s broad proposal to force greater shared responsibility, place closer restrictions on private health insurers, and expand public coverage. There are other legislative proposals to fix specific pieces of the problem.

In this mix are some ideas that are bad. Health savings accounts don’t help the vast number of uninsured people…they only drain resources needed to fix the access problem. Cutting back on existing consumer protections (such as hospital safety and HMO regulation) to lower costs would be a setback rather than an advance. And high deductible coverage or individual mandates that shift responsibility to families that cannot afford coverage accomplishes nothing.

The goal is not to pretend to solve the problem, but rather to guarantee that everyone gets the health care they need when they need it and at a price they can afford.

Last November, voters made clear that they expect bipartisan problem solving in Sacramento, and health coverage reform will test the capacity of our system to find workable compromises. Ultimately, political leaders may have to turn to the voters to make some of the decisions.

Whatever happens, we believe that the effective, lasting reforms will recognize that we must eventually move from an employer-based health insurance model to a broader tax-based model to keep American business competitive, to allow people to move between jobs or to change careers, and to allow families to live with greater security and peace of mind.

Background Information on Where We Stand

Principles of Concern to the Congress of California Seniors in the Implementation of Health Care Reform

1. Avoid actions that may negatively impact on Medicare or MediCal…cost structure, access, or quality.
2. Encourage cost controls to rein in health care inflation that threatens benefits to people already insured, including Medicare recipients. Focus especially on overhead costs and excess profits.
3. If single payer, universal health insurance is not immediately achievable, develop a system which begins to blend coverage into a few options and marshals all possible financial resources so that a reformed model can eventually “morph” into broad-based Medicare type universal coverage system with less disruption in the future.
4. Recognize that, in the not too distant future, health insurance must shift from an employer-based model to some form of broad tax-based model if the United States is to remain economically competitive.
5. Use public insurance programs to promote information technology (electronic medical records) and to force standardization of forms and reports.
6. Do not further restrict access to the courts or the legal system as a means of reducing costs.
7. Avoid repeal or diminution of consumer protections in HMO regulations, hospital staffing ratios and the like.
8. Maximize federal funding for coverage expansion and improved services through Medicare, Medicaid and Healthy Families.
9. Recognize that solutions such as health savings accounts rarely help the majority of those who are uninsured because of income tax liability disparities, and they reduce public revenues needed to expand access for those who cannot afford health coverage.
10. Don’t simply “cherry pick” easy-to-cover populations such as children or healthy young adults.
11. Develop different coverage options which recognize that people with diagnosed chronic diseases need access to special plans providing more services and are unlikely to get coverage in the private market.
12. Make any coverage as inclusive as possible by including chronic disease management, health prevention, mental health, oral health and vision care.
13. Recognize that good nutrition and quality home and community-based care giving for elderly and dependent adults can lower costs by reducing reliance on high cost in-patient hospital care, doctor visits and remedial therapy.
14. Build incentives into the funding system to promote robust discharge planning and stronger transition to long term care.
15. Avoid creating the appearance of a solution with limited coverage or high deductible plans that technically give people insurance but do not provide them with needed health care.

Gary Passmore has been the Director of the Congress of California Seniors, a nonprofit advocacy/education organization with over 500,000 members, whose goal is to advance the interests of seniors and their families since January of 2003. He is retired from active employment. In the 1970’s and 80’s, before coming to California, he served as the Chief Executive Assistant to the Governor of Missouri and was the State Budget Director for Missouri.

Instability of federal employees' premiums

Health fees pain federal workers

By Gilbert Chan
The Sacramento Bee
February 11, 2007

Wayne Forbess did a double take after seeing that his monthly premium for health insurance from Kaiser Permanente would shoot up by 50 percent this year.

The 78-year-old Folsom resident and thousands of other federal workers and retirees in Northern California are coping with double-digit increases in the monthly payments for HMO coverage. Federal workers enrolled in three other plans have seen their monthly payments increase by more than 20 percent.

The OPM administers 284 insurance choices for 8 million federal workers and retirees and their family members, spending more than $31 billion a year. About 25 percent of the members are signed up in one of the 209 health maintenance organization programs.

Most of the remaining 75 percent are enrolled in major national fee-for-service plans such as Blue Cross and Blue Shield, according to the Government Accountability Office.

Moving to turn around six straight years of increases in these PPO plans, the government opted to pull $500 million from reserves to reduce premiums. But the government did not make a similar buy-down with HMO rates.

Under the government premium formula, those who prefer richer benefits have to pay more. The formula is aimed at directing workers into the plans with less expensive rates. In general, these plans often offer smaller premiums but require larger co-payments or fewer benefits.

At the same time, the law limits how much of the premium the government will have to pick up. The employee’s share is at least 28 percent — and much more if the insurer’s rates take a leap, as Kaiser’s did this year in Northern California.

“The idea is to keep the government share the same from year to year. The enrollee is stuck paying the difference,” said Mark Merlis, a health-care consultant and expert on federal health benefits.

“There is a cap on what the government pays. But there’s no cap on what the employee pays. We pay a bigger share every year,” said Jacqueline Simon public policy director of the American Federation of Government Employees, the largest federal employee union, representing 600,000 members.

http://www.sacbee.com/103/story/121316.html

Comment:

By Don McCanne, MD

So you would like to have the health care coverage that members of Congress have – even if that means that your premium could increase 50 percent in one year?

It’s important to understand the Federal Employees Health Benefit Program (FEHBP) since many reform proposals recommend using similar private plans to expand coverage to everyone. The plans are mostly PPOs and HMOs. They do vary in their benefits and in their required cost sharing. Consequently, premiums vary considerably.

PPOs have had greater flexibility in keeping their premiums competitive by reducing benefits and increasing cost sharing, especially through large increases in the deductible. HMOs, such as Kaiser, have had less flexibility in that they are not only insurers but also health care delivery systems. As such, their benefits tend to be more comprehensive, now requiring higher premiums than the less comprehensive PPO plans. FEHBP requires the beneficiaries to pay much of the premium difference, allowing them to buy up to richer plans if they so desire.

But there is a political purpose that may not be so obvious at first glance. The administration wants federal employees to select plans with fewer benefits and with more of the costs shifted to the employees. Obviously that reduces the government’s funding of health care for federal employees.

This year they went one step further. They used reserves to minimize premium increases for low-cost PPO plans while allowing full premium increases for high-cost HMO plans. This advances the Bush “ownership society” agenda of having federal employees own more of their own medical debt.

The FEHBP program perpetuates inequitable access to health benefits, inequitable funding of health care, profound administrative waste, and, in so doing, takes away choice of health care providers, limiting access to the insurers’ network providers. And now the FEHBP program is increasing the financial burden of those who do need health care, limiting access because of the lack of affordability.

Why would we ever adopt the highly flawed FEHBP model for reform of our health care system when a single payer national health insurance program would dump this wasteful, middleman industry and provide all of us with affordable, comprehensive coverage?

The next congressperson who says that we should all have the same coverage that they now have, tell him or her that they can keep their lousy program for themselves, but let the rest of us have our own comprehensive national health insurance program that would let us access the care we need without creating unnecessary financial burdens.

Assessing a Plan for Universal Care

New York Times
Published: February 12, 2007

To the Editor:

Paul Krugman lauds former Senator John Edwards’s health care proposal, claiming that it would trim insurance bureaucracy. But Mr. Edwards’s plan forgoes at least 90 percent of the $350 billion in potential administrative savings available through single-payer reform.

Insurance overhead accounts for only a quarter of the bureaucratic waste. The rest is useless paperwork imposed on hospitals and physicians by insurers trying to avoid payment.

Moreover, marketing costs would not melt away as Mr. Krugman suggests. Medicare pays H.M.O.’s using Mr. Edwards’s proposed community rating system, but H.M.O.’s still market heavily to healthy, profitable seniors.

Finally, Mr. Edwards’s “Health Markets” (middlemen between enrollees and insurers) add bureaucracy. Under Massachusetts’ new reform, our health market imposes a 4 percent surcharge on premiums.

Mr. Edwards assumes that public plans and private insurers will compete on a level playing field. Yet Mr. Krugman has previously shown how H.M.O.’s undermine competition in Medicare, lobbying for and winning huge overpayments.

Absent savings, universal coverage won’t happen.

David U. Himmelstein, M.D.
Steffie Woolhandler, M.D.
Cambridge, Mass., Feb. 9, 2007

The writers are associate professors of medicine at Harvard Medical School and founders of Physicians for a National Health Program.

Supporters at forum push for state health-care system

The plan would attract business to the state, officials said.

By WILLIAM K. ALCORN
VINDICATOR STAFF WRITER
Friday, February 9, 2007

NORTH JACKSON — Supporters of a single-payer health-care system that would cover all Ohio residents say they hope it is adopted here and becomes a model for a national health-care system.

The Mahoning Valley Chapter of the Single-Payer Action Network Ohio, or SPAN-OHIO, conducted a health-care forum Thursday at United Autoworkers Local 1112’s hall to explain the plan and to get input from government officials and business representatives.

A single-payer system means that one fund, administered by a nonprofit government agency accountable to the public, would make payments for all medical services. In Ohio, it would be called the Ohio Health Care Fund.

Medicare, the federal health-care system for the elderly, is an example of a single-payer plan, says SPAN-OHIO literature.

The UAW has been fighting for 50 years for national health care, said Jim Graham, president of Local 1112 at General Motors in Lordstown and master of ceremonies for the forum.

“Just imagine how easy it would be for GM and other companies to locate in Ohio if they didn’t have to pay huge health insurance bills,” said Graham, emphasizing one of the selling points of the SPAN-OHIO plan.

Need for action

The health-care system in the United States is in such a mess that virtually everyone agrees something has to be done, and that everyone should have access to health care, said Dr. Johnathon Ross, forum moderator.

Ross is director of ambulatory internal medicine at St. Vincent Mercy Medical Center and associate clinical professor of internal medicine at the Toledo School of Medicine.

Where there is disagreement, he said, is on how to deliver the health care and how to fund it.

Ross said he knows the single-payer plan proposed for Ohio will work and not cost more money than is currently being spent on health care in the state because it has worked in other nations.

The doctor admitted that “we are going to soak the rich” to pay for the system “because we don’t think they are paying enough.”

SPAN-OHIO literature says Medicare operates with just 3 percent overhead, compared to 15 percent to 25 percent for the typical health maintenance organization.

Thomas M. Humphries, president and chief executive officer of the Regional Chamber, a business organization, agrees that something has to be done about the health-care system.

“Is this [single payer] the right plan. I don’t know yet,” Humphries said at the forum.

He said there are 1,340 people in the health insurance business in this region with a $43 million annual payroll.

“My concern … is what do we do with these people? How do we transition them. I suggest we don’t hurry” into a plan, Humphries said.

Ross said the Ohio plan would take care of workers employed by health insurance companies and others who lose jobs as a result of changes brought about by the Health Care For All Ohioans Act.

They would receive, at public expense, retraining and financial assistance for up to two years in an amount not to exceed $60,000 per year, he said.

The main question asked by panel members was about how the Ohio plan would guarantee accessibility to quality care.

Ross said the public commission that would design the benefits package would not only be accountable to the public, but would have the same insurance. “I think the benefits will be good,” he said.

The bottom line, Ross said, is that the Ohio plan includes public accountability, would not cost more money than currently is being spent and would attract business to the state.

Slow start for health coalition

By David Lazarus
San Francisco Chronicle
Friday, February 9, 2007

It caused quite a stir when some of the biggest names in the business world came together this week to declare that they want nothing less than” a new American health care system by 2012.”

Among those seeking this revolutionary change are Wal-Mart, the country’s biggest private employer, and the Service Employees International Union, the country’s biggest labor union.

“What unites us here today is our shared belief that it will be a far greater America when we get affordable health care for all Americans,” Andy Stern, president of the union, said at a news conference Wednesday.

And no one would dispute that. But what precisely are these powerful economic forces seeking?

At this point, not even they seem to know.

“It’s symbolic — all these people coming together,” Dave Tovar, a Wal-Mart spokesman, told me Thursday. “Now we need to get some ideas on paper and figure out how we’re going to do this.”

Yeah, that’d be a good start.

Health care experts are reluctant to dismiss this private-sector initiative as a headline-grabbing publicity stunt. Any discussion of health care reform is better than none, they say.

But they point out that everyone knows the health care system is broken. What’s lacking now is a serious plan to fix things.

“Unless they’re actually willing to give us a plan, they’re being dishonest,” said Steffie Woolhandler, an associate professor at Harvard Medical School and longtime advocate of overhauling the U.S. health care system.

“They’re saying that they want to give us an omelet but they don’t want to break any eggs,” she said.

Wal-Mart and SEIU are being joined in the “Better Health Care Together” campaign by AT&T, Intel, Kelly Services, the Howard H. Baker Jr. Center for Public Policy, the Center for American Progress, the Committee for Economic Development and Communications Workers of America.

(Many Chronicle employees, including me, are represented by the Newspaper
Guild, a CWA labor group.)

Here, in their words, are the “four common sense principles” that the coalition partners announced this week as the cornerstone of their efforts:

* We believe every person in America must have quality, affordable health insurance coverage.

* We believe individuals have a responsibility to maintain and protect their health.

* We believe that America must dramatically improve the value it receives for every health care dollar.

* We believe that businesses, governments and individuals all should contribute to managing and financing a new American health care system.

The first principle is a commitment to universal coverage, but it doesn’t say how this can be achieved. The second points to a need for greater personal accountability in limiting health care costs, but once again avoids saying how this can be accomplished.

The third principle reflects statistics from the Organization for Economic Development and Cooperation showing that the United States spent an average $6,102 per person on health care in 2004 (the latest year for which figures are available). By contrast, Canada spent $3,165 per person, France $3,159, Australia $3,120 and Britain a mere $2,508.

At the same time, life expectancy in the United States was lower than in each of these other countries as of 2004, and infant mortality was higher.

And the fourth principle, well, it doesn’t say anything at all, except that nobody should be off the hook when it comes to paying for any of the changes that the group hasn’t actually called for.

“We want better health care for all Americans,” said Wal-Mart’s Tovar. “If that were simple, it would have been accomplished already.”

True, but there are no shortage of proposals already on the table, ranging from expansion of our current employer-based insurance system to switching to a government-run system similar to programs that exist in all other industrialized democracies.

The problem isn’t a shortage of ideas. The problem is finding the political will to make changes that would reinvent how medical coverage is delivered in this country and, in so doing, potentially devastate the powerful insurance and pharmaceutical industries.

Colin Evans, director of policy and standards for Santa Clara’s Intel, said members of the coalition deliberately avoided making any specific proposals in their news conference this week.

“We want to have a discussion about health care, and we want to have the right discussion about health care,” he said.

By that, Evans said he means that people shouldn’t just focus on the financial aspects of health care reform.

“That’s the wrong question,” he said. “The real question is why does health care in America cost twice as much per capita as it does in any other country with running water?”

Not much of a mystery. According to researchers at Harvard, about a third of the $2 trillion spent each year on health care in the United States is squandered on bureaucratic overhead — the result of having a wide variety of insurance plans and a wide variety of clerical procedures.

Yet despite the vast amount of money devoted to medical coverage annually, 47 million Americans remain uninsured.

“The burden of paying for health care can’t just be placed on individuals, and it can’t just be placed on business, and it can’t just be placed on the government,” said Sara Howard, a spokeswoman for SEIU. “We need to figure out a way to get all these sectors together.”

Again, not much of a mystery. A government-run insurance system funded by individual and business taxes could serve as the basis of a universal-coverage program, with private insurance plans providing additional coverage for anyone who desires it.

In 2005, the Lewin Group, a health care consulting firm, was commissioned to study the economic impact of a government-run insurance system proposed for California.

It determined that if such a system had been in place in 2006, the state would have saved about $8 billion in health care spending. From 2006 to 2015, the group concluded, total savings would run as high as $343 billion.

Nationwide, of course, the savings would be even greater, thus allowing for coverage of all uninsured Americans without an additional cost to taxpayers.

As it happens, a government-run system is one of four proposals already put forward by the National Coalition on Health Care, a separate grouping of business, financial and labor entities that for years has been calling for change in the U.S. system.

However, the National Coalition on Health Care (which includes the California Public Employees’ Retirement System but not Wal-Mart, SEIU and most other members of the new coalition) has yet to place its collective weight behind a single proposal.

Therefore, like the new coalition, it isn’t advocating anything specific — just change.

But Henry Simmons, president of the National Coalition on Health Care, said his group is already out front in seeking reform. The implication is that another business coalition will only muddy the health care waters on Capitol Hill.

“I’m not sure what their principles are,” Simmons said of the new group. “It’s not enough to just say that we ought to work on this problem.”

No, it’s not.

David Lazarus’ column appears Wednesdays, Fridays and Sundays. He also can be heard Saturdays, 4 to 7 p.m., on KGO Radio. Send tips or feedback to dlazarus@sfchronicle.com.

Copyright 2007 SF Chronicle

The problems with private health care plans

Letter to the Editor
The Gainsville Sun
Article published Feb 9, 2007

It is time to dispel the myth that only the uninsured have problems with our health care system. My wife and I worked for over 25 years and had medical insurance all that time. We retired recently and sought health insurance coverage with two major companies. We were both in good health but, much to our dismay, were denied coverage on the pretext of “pre-existing medical conditions.”

Letters from our doctors documenting non-existence of the alleged conditions were of no avail. To illustrate the absurdity of the insurance companies, I allegedly had a pre-existing condition of nodules of the lung and thyroid when, in fact, the nodules were harmless as shown by multiple follow-up CAT scans. My wife allegedly had chronic back problems when, in fact, she had a minor, temporary back strain totally corrected by simple chiropractic care.

The insurance companies gave us other fabricated “conditions.” Evidently, any history of use of the health care system tags an individual as a poor insurance risk. The fact we paid premiums for decades and had no chronic or major health problem carried no weight.

What is wrong is a profit-driven health care industry whereby the guiding principle is: Pay for coverage but don’t use it. I strongly support a single-payer health care system, as provided in Rep. John Conyers’ proposed bill H.R. 676 – The United States National Health Insurance Act.

It will provide everyone with health care, without exclusion and less cost to taxpayers.

Because a single-payer system benefits the people, not the insurance companies, H.R. 676 faces formidable opposition from our corporate-driven politicians.

Larry Thompson,
Gainesville

Instability of federal employees’ premiums

Health fees pain federal workers

By Gilbert Chan
The Sacramento Bee
February 11, 2007

Wayne Forbess did a double take after seeing that his monthly premium for health insurance from Kaiser Permanente would shoot up by 50 percent this year.

The 78-year-old Folsom resident and thousands of other federal workers and retirees in Northern California are coping with double-digit increases in the monthly payments for HMO coverage. Federal workers enrolled in three other plans have seen their monthly payments increase by more than 20 percent.

The OPM administers 284 insurance choices for 8 million federal workers and retirees and their family members, spending more than $31 billion a year. About 25 percent of the members are signed up in one of the 209 health maintenance organization programs.

Most of the remaining 75 percent are enrolled in major national fee-for-service plans such as Blue Cross and Blue Shield, according to the Government Accountability Office.

Moving to turn around six straight years of increases in these PPO plans, the government opted to pull $500 million from reserves to reduce premiums. But the government did not make a similar buy-down with HMO rates.

Under the government premium formula, those who prefer richer benefits have to pay more. The formula is aimed at directing workers into the plans with less expensive rates. In general, these plans often offer smaller premiums but require larger co-payments or fewer benefits.

At the same time, the law limits how much of the premium the government will have to pick up. The employee’s share is at least 28 percent — and much more if the insurer’s rates take a leap, as Kaiser’s did this year in Northern California.

“The idea is to keep the government share the same from year to year. The enrollee is stuck paying the difference,” said Mark Merlis, a health-care consultant and expert on federal health benefits.

“There is a cap on what the government pays. But there’s no cap on what the employee pays. We pay a bigger share every year,” said Jacqueline Simon public policy director of the American Federation of Government Employees, the largest federal employee union, representing 600,000 members.

http://www.sacbee.com/103/story/121316.html

Comment:

By Don McCanne, MD

So you would like to have the health care coverage that members of Congress have – even if that means that your premium could increase 50 percent in one year?

It’s important to understand the Federal Employees Health Benefit Program (FEHBP) since many reform proposals recommend using similar private plans to expand coverage to everyone. The plans are mostly PPOs and HMOs. They do vary in their benefits and in their required cost sharing. Consequently, premiums vary considerably.

PPOs have had greater flexibility in keeping their premiums competitive by reducing benefits and increasing cost sharing, especially through large increases in the deductible. HMOs, such as Kaiser, have had less flexibility in that they are not only insurers but also health care delivery systems. As such, their benefits tend to be more comprehensive, now requiring higher premiums than the less comprehensive PPO plans. FEHBP requires the beneficiaries to pay much of the premium difference, allowing them to buy up to richer plans if they so desire.

But there is a political purpose that may not be so obvious at first glance. The administration wants federal employees to select plans with fewer benefits and with more of the costs shifted to the employees. Obviously that reduces the government’s funding of health care for federal employees.

This year they went one step further. They used reserves to minimize premium increases for low-cost PPO plans while allowing full premium increases for high-cost HMO plans. This advances the Bush “ownership society” agenda of having federal employees own more of their own medical debt.

The FEHBP program perpetuates inequitable access to health benefits, inequitable funding of health care, profound administrative waste, and, in so doing, takes away choice of health care providers, limiting access to the insurers’ network providers. And now the FEHBP program is increasing the financial burden of those who do need health care, limiting access because of the lack of affordability.

Why would we ever adopt the highly flawed FEHBP model for reform of our health care system when a single payer national health insurance program would dump this wasteful, middleman industry and provide all of us with affordable, comprehensive coverage?

The next congressperson who says that we should all have the same coverage that they now have, tell him or her that they can keep their lousy program for themselves, but let the rest of us have our own comprehensive national health insurance program that would let us access the care we need without creating unnecessary financial burdens.

Genetic discrimination by insurers

Individuals with Genetic Conditions Twice as Likely to Report Denial of Health Insurance than Individuals with Other Chronic Illnesses

Johns Hopkins Berman Institute of Bioethics
February 12, 2007

A new study published in the February 2007 issue of the American Journal of Medical Genetics reveals that individuals with genetic conditions are twice as likely to report having been denied health insurance than individuals with other chronic illnesses.

In the study, more than a quarter (27 percent) of individuals with genetic conditions and serious medical conditions reported having been denied health insurance or offered it at a prohibitive rate.

Almost all of the individuals in the study (89.7 percent) said they obtained their health insurance through either their employer (59.4 percent) or their spouse’s employer (30.8 percent). Nearly half of employed individuals (48.9 percent) said they felt they could not leave their jobs because they would lose their health insurance.

At the federal level, the Americans with Disabilities Act proscribes discrimination against persons with disabilities which includes those with genetically-related conditions. The Health Insurance Portability and Accountability Act (HIPAA) expressly forbids a group health insurance plan from using genetic information to establish rules for eligibility or continued eligibility. HIPAA also prohibits insurance companies from treating genetic information as a “pre-existing condition in the absence of the diagnosis of the condition related to such information.” Individuals cannot be denied health care coverage for a medical condition as a result of a genetic marker for the condition. However, individuals can be denied if they have symptoms of genetic disease. As such, HIPAA provides no protection for the vast majority of respondents in the new study.

Brandi Braud Scully, MD

And…

Genetic anti-bias bill is back

By Doug Trapp
American Medical News
February 19, 2007

The seventh time may be the charm for backers of a bill to ban genetic discrimination in health insurance plans and the workplace.

The Genetic Information Nondiscrimination Act (HR 493) would make it illegal for insurers to deny coverage to a healthy individual based solely on a genetic predisposition to a specific disease and for employers to use individuals’ genetic information in personnel decisions.

President Bush also supports the measure.

The U.S. Chamber of Commerce has been a key opponent of the bill because the organization feels it goes too far, according to Michael Eastman, executive director for labor policy.

Employers shouldn’t have to face potential compensatory and punitive damages for accidental disclosures of genetic information.

“Ultimately, it will be difficult to separate genetic information from medical information,” Eastman said.

http://www.ama-assn.org/amednews/2007/02/19/gvsa0219.htm

Comment:

By Don McCanne, MD

Should genetic information ever be used to deny an otherwise healthy person health care coverage? Should actual genetic disease ever be used to deny a person health care coverage? Is there any reason at all to separate genetic information from medical information in making decisions about health care coverage?

Although the Genetic Information Nondiscrimination Act certainly should be supported, shouldn’t we also be supporting legislation that would ensure that everyone has genuinely effective health care coverage?

At this pace of incremental reform, global warming will get us before we can ever hope for comprehensive health reform.

Restructured health insurance for So. California grocery workers

Declining Health Coverage in the Southern California Grocery Industry

By Ken Jacobs, Arindrajit Dube and Felix Su
UC Berkeley Center for Labor Research and Education
January 2007

In March 2004, after a four-and-a-half month strike and lockout, the United Food and Commercial Workers (UFCW) and three major grocery chains signed a contract that significantly restructured health insurance coverage for grocery workers in Southern California.

Among other provisions, the new contract in Southern California:

* Increased waiting periods from four months to twelve months for individual coverage (18 months for clerks) and 30 months for family coverage.

* Increased co-pays, co-insurance and deductibles under the new plan, while restricting plan options.

In addition to the changes in health benefits, wages rates for new hires were reduced.

Our central findings were as follows:

* In September 2003, prior to the strike, 94 percent of the union grocery workers in Southern California had health coverage through their employer; by September 2006 that number had fallen to 54 percent. Coverage for workers hired under the new contract was a mere 7 percent.

* As of September 2006, 66 percent of all workers and 29 percent of the workers hired under the new contract were eligible for health benefits in Southern California. The low eligibility rate is a result of longer waiting periods combined with increased worker turnover.

* Prior to the strike, the annual turnover rate for grocery workers in Los Angeles was 19 percent; after the new contract went into effect, annual turnover rose to 32 percent. Turnover of grocery workers in their first year of employment rose from 30 percent to 52 percent.

* Our survey of union members found important impacts on health care utilization due to the reduction in coverage. Of workers with a chronic health condition hired under the new contract, 20 percent fewer of were receiving treatment as compared to their co-workers who were eligible for the higher tier plan. This controls for differences in age, gender and health status between the two groups of workers. All things equal, 20 percent more of the workers hired under the new contract reported to have delayed care when they needed it compared to their coworkers.

Conclusion:

Unionized groceries in Southern California have long been a source of family supporting jobs with full family benefits. The changes in grocery health plans and reduction in starting wages in April 2004 has dramatically reduced health coverage in the grocery industry in the Southern half of the state. Jobs that once provided full time work and full family benefits are now much more likely to be part-time and un-benefited.

The member survey confirms what we would expect from the literature about health care utilization. Workers without health insurance are more likely to delay needed care and less likely to receive treatment for chronic health conditions. Treatment delays may have long term adverse effects on both health and health costs.

http://laborcenter.berkeley.edu/healthcare/grocery_industry07.pdf

Comment:

By Don McCanne, MD

In this age of two-worker households, employment as a grocery worker provided a very important benefit. Not only was the job a good second income source, it also provided the family with generous, union-negotiated, employer-sponsored health benefits coverage. This allowed the spouse greater options in employment, including self-employment, as quality and availability of employer-sponsored coverage continued to decline.

Faced with ever-rising health care costs, the grocery industry decided that it would no longer be the source of this important benefit for many Southern California families. Most of you remember the very painful strike and lockout of three years ago that ended in an agreement which achieved this goal of the grocery industry.

This study confirms the fully predictable results of that settlement. Family breadwinners are being replaced with an unstable part-time workforce with high turnover and no benefits. Employment as a grocery worker is no longer suitable for an individual looking for family health coverage. Also, the lack of coverage for this part-time workforce has predictably impaired health care access.

This study is presented not so much to decry the Walmartization of the grocery industry (though certainly an important issue), but more to point out that private group plans and private individual coverage are no longer effective in ensuring affordability and access of adequate coverage. It has taken only three years for coverage to fall from 94 percent to 54 percent of grocery workers.

Reasonably comprehensive coverage must be 100 percent automatic for everyone. Regardless of employer mandates, individual mandates, tax credits, or whatever, private group and individual plans will never get us there. We truly do need a single payer program of national health insurance.

Timid ideas won't fix health mess

By Marie Cocco
Columnist
Sacramento Bee
Published 12:00 am PST Saturday, February 10, 2007

John Edwards is trying to get ahead of the political curve, but he would send us back to the future. To 1993, to be exact.

Edwards would repeat the mistake that was at the heart of Hillary Rodham Clinton’s misadventure in trying to fix a health insurance system that was then, and is now, so out of whack that it manages to cover fewer and fewer Americans at higher and higher cost.

Like Clinton did, Edwards seems to believe that you can get the private insurance industry to do something it refuses to do because, in essence, doing what Edwards wants would put the industry out of business. He wants insurers to cover everyone, no matter how sick and expensive they are. He wants employers to continue to carry on their ledgers a cost that is ever more burdensome to them and to their workers, onto whose shoulders more of the health-insurance tab is being shifted.

The 2004 Democratic vice presidential nominee and 2008 presidential hopeful knows that no matter how many times our health insurance crazy quilt is ripped up and stitched back together, it still will fail to cover millions of Americans.

So Edwards wants them to be able to buy a new public insurance plan that would be like Medicare, but not exactly. And he wants affluent people to pay more taxes to support coverage of the less fortunate, but not directly.

Instead of simply asking for a straightforward tax to pay for covering the uninsured, Edwards falls back on that popular circumlocution, the tax credit. The credits are indirect subsidies that would be given to individuals so they could then purchase insurance. The political virtue of tax credits is that their cost is always half-hidden beneath a pile of budget documents — unlike tax hikes that show up as money withheld from paychecks, but pay directly for a government service. Because of this obfuscation, politicians in both parties love tax credits.

Edwards wants congratulations for being the first serious presidential candidate to offer a comprehensive idea for universal health insurance coverage, something every Democratic aspirant is bound to do eventually. Edwards is a smart man and a cunning politician. But his health insurance plan suffers from an odd combination of ailments.

One is political amnesia. This Clinton-like plan that would have both individuals and employers buy into closely regulated health insurance pools failed more than a decade ago — in part because it was so complicated as to be incomprehensible. Another is timidity.

Edwards won’t acknowledge that the current system of private insurance is irreparably broken.

It has failed to expand coverage to millions of workers who are employed by small business, or who work part time, or who toil at low wages — companies with high proportions of low-wage workers are far less likely to offer insurance than those whose employees earn more, according to research by the Kaiser Family Foundation. Since 2000, the portion of businesses that offer any insurance to even part of their work force has fallen from 69 percent to 61 percent.

Over the past year, a solid majority of those who do have coverage — 60 percent — experienced an increase in the amount they are responsible for paying under their plan, the Employee Benefit Research Institute says. Almost a third of covered workers reported difficulty in paying for basic necessities such as food, heat and housing because of rising health-care costs.

This isn’t much of a foundation upon which to construct a new system. In the years since Clinton tried to build on this inhospitable terrain, the ground has eroded further. It makes no sense to try to shore it up with an awkward hybrid of public requirements and private insurance that would keep in place unnecessary complexity and bureaucratic expense.

Edwards’ advisers say the candidate didn’t push public, single-payer insurance — like Medicare — because the employer-based system is what we have today and therefore, it would provide the quickest way to cover the uninsured.

But we also have Medicare today. The elderly still get care from private doctors and hospitals, and administrative costs are a fraction of what they are in the private insurance industry. And people tend to like it.

It would be just as easy — and certainly simpler — to use Medicare as the foundation for a new insurance system to eventually cover everyone. But that would require candidates to be leaders — and show more courage than those politicians who simply say they have a plan.

Candidates need to speak out now on health care

Portsmouth Herald Editorial
Sunday, February 11, 2007

Major health-care reform has become an urgent political and economic issue that, along with energy policy, likely will dominate the domestic agenda battle in the 2008 electoral campaign.

Of course, there is no news here. Major health-care reform has been an endless headline loop stretching back for more than five decades. What is different in 2007 is the culmination of evidence that the 20th-century innovation of an employer-based health-care system has reached its latest exhaustion point.

According to a variety of government and private nonprofit reports, between 44 million and 47 million Americans are without health care. More revealing, according to the U.S. Census bureau, in New Hampshire an estimated 135,000 people, including 17,000 children, are without health insurance. According to government estimates, in 2005 some 41 percent of moderate and middle income Americans went without health care for part of the year — while 53 percent of those earning less than $20,000 went without insurance for all of 2005. And the number of uninsured full-time workers has continued to grow across the country, either because insurance premium costs have become too expensive for employers or their employees.

Not unlike the recent call by some major energy companies for federal mandates on carbon dioxide emissions to combat global warming, a newly formed coalition of major corporations, labor unions and bipartisan activists has set a goal for universal health care because the current system is proving to be a competitive economic drain on American business.

In an era of rapid globalization, this matters to businesses small and large and it crosses all state borders. The United States is ranked 37th in the world for health system performance by the World Health Organization and pays twice as much for health care than are the other developed countries while getting fewer benefits.

The oddity of our system is that if one has a comprehensive and economically viable insurance plan, the system works just fine. But for those on the financial edge, the scenario is less pleasant — which is why medical-related bankruptcies continue to rise at an alarming rate. We can no longer afford to fit a predominant free market solution circle into the complicated square peg of health care — or allow entrenched financial interests such as insurance companies to determine health-care cost and access.

We all pay one way or another for the massive inefficiencies in the system through higher premiums and higher costs.

“The path we’re on now is not sustainable,” said Thomas Clairmont, a physician at Portsmouth Regional Hospital, at a local health-care reform presentation last month.

Clairmont is a member of Physicians for a National Health Program, a group that advocates a publicly financed, privately delivered health-care program available to all U.S. residents.

This is but one of many plans being debated across the country among doctors, citizens, health-care industry experts, insurance companies and elected leaders in Congress.

Some plans take an incremental approach and others call for bolder reform. President Bush’s latest reform plan calls for using the tax code to broaden access to health care. Democratic presidential candidate and former Sen John Edwards of North Carolina told the Herald recently of his plan to enact “transformational change” to create universal health care for all Americans with competing public and private insurance plans as a foundation.

We expect all the presidential candidates will present their own comprehensive plans to voters as the New Hampshire primary campaign unfolds. While we withhold advocating a specific approach, we encourage our readers to use the unique access we have to the primary candidates and not let them off the hook.

We need to engage — or “grill,” as Dr. Clairmont said — the candidates and our congressional delegation with specific questions. What is their plan? Their philosophy? How will they finance it? What sacrifices will be asked of every individual and their families?

Acting and speaking out now does not insure necessary reforms to a dysfunctional system. Not speaking out guarantees an unaffordable and unhealthy path to more of the same.

— Herald Sunday