PNHP

Wrenching Changes on the Line

Wrenching Changes on the Line

New York Times, editorial
June 14, 2006

The road back to prosperity will be a long and hard one for American automakers. Companies like Ford and General Motors groan under the weight of their history, manifested in the legacy costs that are a result of decades of promises to support workers and provide them with health care in their old age.

Foreign companies like Honda and Toyota have a double advantage. In the United States, their much newer manufacturing plants have hardly any retirees. Overseas, their workers can rely on national health care systems. Meanwhile, for American automakers, the costs are going only in one direction. In 1999, General Motors spent $3.6 billion to provide health benefits to 1.2 million workers, retirees and dependents. By 2005 the cost had ballooned to $5.3 billion for 1.1 million.

At the same time, vehicle production has been falling. G.M., Ford and the parts maker Delphi have all offered thousands of buyouts as part of efforts to restructure their inefficient manufacturing businesses, trimming payrolls to become more competitive. But that means fewer workers supporting armies of retirees, a demographic challenge not unlike the one facing the Social Security system.

The United Automobile Workers union has already made concessions on the superior health insurance its members receive. But slashing benefits is a short-term approach, and an insufficient answer when G.M. lost $10.6 billion in 2005.

In an ideal world, America would join the overwhelming majority of developed countries and hammer out some kind of national health care system. Failing such a sudden and unlikely onset of sanity, creative solutions are needed.

Sen. Barack Obama has proposed striking a bargain with American automakers to help them with retiree health care costs in exchange for higher fuel efficiency standards. While we have some questions about how to make such a system work, it is at least a worthy new idea — one of a very few in a field desperately in need of them.

Pittsburgh Columnist on How Health Care Profits Starve the Patients

Feed the beast, starve the patient:
Too much money in the health-care system isn’t going to health care
Pittsburgh Post-Gazette
Sunday, June 04, 2006

I write this as a cancer survivor who has benefited from excellent medical care in Pittsburgh, all of it covered by employer-provided health insurance. Without these, I would likely be very sick, dying or dead, and my family might be bankrupt or close to it.

My continued existence makes me a tiny contributor to Allegheny County’s lowest mortality rate in 15 years. The drop, mirroring national trends, is attributed by experts to healthier living habits and improved therapies.

Of course I am grateful to be part of this good-news statistic, and for the coverage that paid for it. And yet, I still blow a gasket when I see what hospital and health insurance executives are being paid, even as premium hikes are bleeding the nation. And I do mean bleeding.

Since 2000, employer-based health premiums have increased a staggering 73 percent, far outstripping increases in wages (15 percent) and inflation (14 percent). In 2004, this country spent $1.9 trillion on health costs, or 16 percent of the gross national product.

If the rise in health costs correlated to the nation’s actual health, our death rate wouldn’t just be the lowest in 15 years, it would be zero. And I wouldn’t just be a survivor, I’d be immortal.

Administrative costs, accounting for about 20 percent of each health-care dollar, aren’t the cause of this cost spiral, they’re a symptom. But they cannot be ignored. Let’s connect the dots of some recent reports in this newspaper.

Item: The 10 highest-paid executives of Highmark, the region’s biggest health insurer, received 41 percent pay increases last year. That includes Kenneth Melani, the CEO, whose compensation went from $1.7 million to $2.5 million. Combined, the executives’ pay went from $8 million to $11.3 million — a $3.3 million hike in a single year.

Item: Meanwhile, Highmark was moving to raise its average premium by 6.6 to 7.6 percent for small businesses that can least afford it. This was less than its double-digit hike the previous year, but added on top of previous increases, it looks and quacks like price gouging — especially considering that the company is sitting atop a surplus of $2.8 billion.

Item: Hospital CEOs in this region are doing even better than their counterparts elsewhere. The University of Pittsburgh Medical Center’s Jeffrey Romoff was paid $2.88 million last year — $480,000 more than the year before. Elizabeth Concordia at UPMC Presbyterian Shadyside went from $649,500 to $927,800; Jerry Fedele at West Penn Allegheny Health System from $534,400 to $834,400; and James Collins at West Penn Hospital from $360,400 to $542,300.

These figures demonstrate the system’s central dysfunction: It is awash in money that is not going to health care. That might be just great for the executives, but it translates into unconscionable inequities for consumers and health-care workers, even as costs are killing American business, driving outsourcing and layoffs, gutting retiree benefits.

Here’s one example of how too much money in the wrong places affects the system. Hospitals don’t hire enough nurses even when they can afford to because they’d rather put the money elsewhere. So overtaxed nurses who are holding down the fort wind up laboring under terrible stress, which drives more members of the profession into non-hospital jobs and makes nursing unattractive to young people in search of a career, which contributes to the nursing shortage.

Clearly, we are treating health care as a commodity in a system geared as much or more to a profit (or, in the case of “nonprofits” like Highmark and UPMC, a “margin”) as it is to providing service. And as with any product that prices itself out of the market, its customer base is falling away — or, more accurately, being squeezed out. Some 50 million Americans are currently uninsured; many of them are working, and increasingly they are members of the middle class.

The problem with this commodity approach is self-evident. Health care is not the automobile market, where you can buy a cheaper model or take a bus. It’s life and death.

“All this talk about medical consumerism is a red herring,” said Pat Schoeni, executive director of the National Coalition on Health Care, a nonpartisan organization in Washington, whose 80 members represent a broad spectrum of interests.

“When you call 911 in a medical emergency, you aren’t researching which hospital is the cheapest. And God help you if you go to the hospital without health insurance and have any type of resources, because they’re going to eat you alive.”

The great paradox of this picture is that the health care “system” is acting like a cancer on health care. Excessive administrative expense, combined with inefficiencies, inflated prices, poor management, inappropriate care, waste and fraud are eating up the resources that the body needs elsewhere in order to survive.

“That’s a fair analogy,” said Ms. Schoeni. “There’s certainly enough money, but how is it being spent?”

An excellent question for American businesses and consumers to put front and center this election season. We have allowed our elected officials to recoil from reform for far too long. It has to happen, and I, for one, would like to be employed, insured and alive to see it.

(Sally Kalson is a Post-Gazette columnist (skalson@post-gazette.com, 412-263-1610). )

We can address our health care crisis, or we can outsource it

June 19, 2006
Asheville Citizen Times, North Carolina

Economics is sort of like water; when it comes to cost, things tend to flow toward the lowest point.

Regarding health care, the water is beginning to flow to the other side of the world.

Rising costs for health care have been a major concern for families and businesses for years. Solutions to address the problem from the business side have included higher premiums, higher deductibles and in some cases elimination of insurance programs.

Even given this backdrop, it was still somewhat of a shock to see a solution being considered by Blue Ridge Paper Products in Canton: An option that would allow their employees to travel to India for medical care.

A look at the raw numbers shows there is the potential for huge savings. For example, a hip operation that costs $50,000 stateside checks in at $18,000 when performed in India – and that cost includes travel expenses for two people.

We can’t fault Blue Ridge for looking at the plan. And we can’t fault entrepreneurs like Tom Keesling, President of IndUShealth, for commenting that his company, which coordinates health care in India for American patients, that “We’re not exporting health care to India as much as importing competition in the United States.”

In our opinion the jury is still out regarding whether this will import competition, but this tale out of Canton starkly illustrates the reality of the state of health care in this country and around the industrialized world.

The reality is there is now only one significant difference in health care in America and health care abroad:

We pay more for it.

A lot more.

Recent data from the Organization for Economic Cooperation and Development that compared health care spending in 30 industrialized nations put the annual average health bill for an American is $5,267. That’s more than double the world median of $2,193.

Now, the U.S. has the best doctors, nurses and health care professionals on the planet. But we are nowhere near having the best health care system. Despite the aforementioned lavish spending, millions of our citizens are underinsured and a growing number – 46 million – have no insurance at all.

Further, we’re toward the bottom on infant mortality, life expectancy and a host of other measures among industrialized nations.

What’s more, a relatively new phenomenon, medical debt, is reaching alarming levels. A study by the Commonwealth Fund showed nearly 20 percent of Americans are paying off medical debts. Among middle class Americans who are underinsured, according to a survey conducted by Reader’s Digest, almost half have refused or delayed medical treatments for serious conditions, or put off or didn’t renew prescriptions for drugs. Half had used credit cards to pay health costs.

This is despite health spending in this nation that represents 14.6 percent of the Gross National Product (compared to 7.7 percent in the United Kingdom).

We’re spending plenty. We’re not spending wisely.

There are really only two roads we can see in our future. Down one road there is rising spending, more uninsured, more debt and the occasional innovative approach such as Blue Ridge Paper is looking at.

The other is a serious discussion of single-payer national health insurance.

Actually, that brings our attention to a statement we made earlier that we need to correct. There are actually two major differences between the state of U.S. healthcare and the state of healthcare in other industrialized nations.

One, we pay a lot more, and two, they all have national health insurance.

Note, that’s “national health insurance,’’ not “socialized medicine.’’ Every time the subject of single-payer health insurance comes up, there will be those who want to paint it as some sort of communist plot, a system that will be incredibly expensive, that will force patients to go through bureaucratic labyrinths to receive care and will be cumbersome and time-consuming.

Actually, that sounds a lot like our current system, which doesn’t even cover everyone.

A nationwide plan could work – Medicare, despite some faults, has been an effective single-payer program for 40 years. The other solutions being put forth, like the wildly expensive and complex prescription drug plan, do not appear to be long-term solutions at all.

It’s worth discussing.

Otherwise, we’re going to be seeing a lot more things like people from Bethel headed to Bangalore.

Can’t we do better?

CalPERS rejects copays, but at a cost

CalPERS Rejects Co-Pay Increase
By Marc Lifsher
Los Angeles Times
June 21, 2006

A California Public Employees’ Retirement System committee on Tuesday rejected a proposal to increase healthcare co-payments for more than one million members.

Facing solid opposition from powerful public employee unions, the CalPERS health benefits committee turned down all staff proposals to hike co-payments for visits to doctors, emergency rooms, outpatient surgical centers and hospital stays.

As a result, the CalPERS committee was forced to approve rate increases of 11.6% for health maintenance organization participants and 12.9% for members who opt for preferred provider networks.

Most of the increase — 80% in the case of state workers — will be picked up by state and local government employers and ultimately taxpayers, based on collective bargaining agreements between state and public employee unions. The rest is paid by employees through higher payroll deductions.

The decision against increasing co-payments shows how CalPERS, the nation’s largest public pension fund, is subject to far greater political and union pressures than many private sector employers that have been more aggressive in forcing workers to pay a higher proportion of rising health benefit costs.

http://www.latimes.com/business/la-fi-calpers21jun21,1,2411053.story

Comments: The CalPERS health benefits committee is to be commended for accepting the union position that shifting more costs to patients in the form of copays is unacceptable because of its negative impact on access and outcomes. Erecting financial barriers to care is a potentially injurious method of controlling costs.

The unfortunate dilemma faced by CalPERS is that it must pay higher, much higher, premiums for health insurance because it is no longer able to control health care spending by methods other than making care unaffordable for precisely those individuals with needs.

The actual excessive cost drivers include non-beneficial high-tech excesses, profound administrative inefficiencies, high prices, and the lack of an adequate primary care infrastructure. The ineffectual, fragmented system of private insurers sit between CalPERS and the health care delivery system, effectively blocking reform efforts. Limited price moderation is about the only impact they can claim, but even that results in higher prices for others through cost shifting, especially for the uninsured.

The useless and wasteful middlemen, the private insurers, need to be eliminated. Also there are reasons that we should not fragment the representation of patients through organizations such as CalPERS for public employees and Pacific Business Group on Health for a portion of private industry employees. We need only one agency, our own, with a publicly-administered and publicly-funded universal risk pool. We need a single payer system.

Remedy for insurers' actions that resulted in racketeeringallegations

Filed June 19, 2006)

United States District Court for the Southern District of Florida Miami Division

Master File No. 00-1334-MD-Moreno
(U.S. District Judge Federico Moreno)

IN RE: MANAGED CARE LITIGATION

Order Granting Summary Judgment in Favor of Remaining Defendants United and Coventry on All Claims

Presently before the Court is the Omnibus Motion for Summary Judgment (D.E.No. 3922) filed by Defendants United Healthcare, Inc., United Health Group, Inc. (collectively, “United”) and Coventry Health Care, Inc. Since the Defendants filed their motion for summary judgment, the Court has provided the Plaintiffs with multiple opportunities to demonstrate a triable issue of fact regarding whether the Defendants conspired to defraud doctors by manipulating their claims processing systems. The Plaintiffs and Defendants have filed numerous briefs regarding conspiracy, and the Court has heard oral argument several times, most recently on March 14, 2006. As explained below, because no reasonable juror could return a verdict in the Plaintiffs’ favor, the Defendants’ motion for summary judgment is GRANTED as to all remaining claims.

In granting judgment in favor of the remaining defendants, this court is reminded of the Eleventh Circuit’s opinion affirming class certification in this very case. See Klay v. Humana, Inc., 382 F.3d 1242 (11th Cir. 2004).
The appellate court indicated that “(i)t would be unjust to allow corporations to engage in rampant and systemic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous.” Klay, 382 F.3d at 1274. As such, based on the allegations of conspiracy with each other to program their computer systems to systematically underpay physicians for their services, the class was certified. After reviewing thousands of documents, there simply is insufficient evidence of the wrongdoing claimed – i.e. agreeing with their competitors to defraud doctors. The evidence submitted here falls short of that needed to trigger the Racketeer Influenced and Corrupt Organizations Act’s remedial scheme described as “the litigation equivalent of a thermonuclear device.” See Miranda v. Ponce Federal Bank, 948 F.2d 41, 44 (1st Cir. 1991). In so holding, the Court is not giving its imprimatur to the Defendants’ actions or to the tremendous amounts of compensation received by their executives, described by some as exorbitant. But any reform related to executive compensation or individual practices by health maintenance organizations is beyond the power of this court. Those desiring changes in the way health care is provided in America must either look for remedies before Congress or allow the free market to dictate the results.

http://www.flsd.uscourts.gov/default.asp?file=cases/index.html (Under “00-MD-1334-MORENO-In Re Managed Care Litigation” click “”Order granting summary judgment in favor of remaining defendants United and Coventry on all claims”)

Comment:

By Don McCanne, M.D.

Although this insurance company racketeering lawsuit was dismissed because of the failure of the plaintiffs to demonstrate a joint conspiracy between the insurers, Judge Moreno did not rule that the insurers were blameless. In fact, he specifically stated that “the Court is not giving its imprimatur to the Defendants’ actions.” If the insurers had done no wrong, it is unlikely that the other defendant companies would have previously settled. These included, alphabetically, Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Net, Humana, Prudential Financial Services, and WellPoint Health Networks (though PacifiCare Health Systems also escaped by holding out for a summary judgment).

The primary allegation was that the insurers used claims processing software that was designed to reduce or deny payment to physicians for legitimate services provided and billed, using agreed-upon, standard CPT coding.
Physicians understandably felt that they were being cheated, and were particularly incensed by the outrageous executive compensation being granted with what seemed to be funds that rightfully belonged to the physicians.
(The reality of stock options is another story that won’t be covered here.)

In my opinion, the actions of the insurers were blatantly dishonest and should disqualify them from their role as managers of our health care funds.
Leaving crooks in charge merely because they manage to barely fall short of being criminals is not sound policy.

Judge Moreno states that, if we desire change, we should look to Congress or the free market. By continuing to leave control in the hands of private insurers, we have already selected the market approach. In the face of overwhelming evidence that this distorted market is not working to the benefit of patients or providers, we continue to do nothing. Well, we do something. Some of us whine. Some of us pay more. Some of us die!

Congress must provide us with the remedy. We desperately need a publicly-funded and publicly-administered program of national health insurance.

Why copays?

Retail clinics: The competition heats up
By Ken Terry
Medical Economics
June 16, 2006

“Retail” walk-in clinics, located in supermarkets and stores like CVS and Target, are already competing with physicians in many communities. Now Blue Cross and Blue Shield of Minnesota has added a new twist: It’s waiving copayments for patients who go to these in-store clinics.

Copayments for office visits are on the rise everywhere. So if there were no copays in retail clinics, an increasing number of patients would have an incentive to go there. Blue Cross sees this as a matter of saving money for its customers and for itself.

FP Michael J. Morris of Willmar, MN, thinks the insurer’s approach to this issue works against its efforts (and those of other plans) to encourage primary care doctors to manage patients’ overall health.

FP David D. Luehr, president of the Minnesota Medical Association, agrees.

“It’s important for physicians to see patients in their offices, where they have their medical records,” he says. “This type of approach starts to disrupt that continuity.”

Rick Kellerman, president-elect of the AAFP, says the Blue Cross initiative is “a bit shortsighted. If they’re going to waive copays on visits to retail clinics, why don’t they waive them for a similar service in a physician’s office? They should try to encourage people to have a personal medical home, where cost can be better controlled and quality better assured.”

So why not give patients the same incentive to visit primary care physicians for minor problems that the plan gives them to go to retail clinics? It’s mainly a matter of price, replies (internist David W. Plocher, senior vice president and medical director of Blue Cross and Blue Shield of Michigan).

If a nurse practitioner can provide the same service at half the cost, Blue Cross wants patients to use the NP.

http://www.memag.com/memag/article/articleDetail.jsp?id=333253

And…

CalPERS to Weigh Cutting Health Benefits The proposed changes, including some higher co-pays, are designed to give patients incentives to choose cheaper medical care.
By Daniel Yi
Los Angeles Times
June 19, 2006

The California Public Employees’ Retirement System, once a benchmark of generous employer-sponsored health plans, is proposing to trim benefits for hundreds of thousands of its members in a bid to rein in runaway healthcare costs.

CalPERS’ plans include raising co-pays for more expensive treatments and lowering premiums for those willing to use a smaller network of doctors.

Health plans and large employers have been dropping more-expensive doctors and hospitals from their provider networks to save money, but such measures are reaching their limits. Increasing patients’ financial stakes may be unpopular but does drive down costs.

CalPERS currently offers two Blue Cross of California PPO plans. Among the measures being considered Tuesday is the creation of a third PPO that would have about half the number of doctors in the network compared with the other two plans, but premiums would be 7.5% cheaper.

“My problem with these proposals is that they don’t address the underlying problem of lack of affordable healthcare,” said Yvonne Walker, a bargaining official with Service Employees International Union Local 1000, which represents 90,000 state employees. “You have gas going up, the overall cost of living going up, and you want to put people in a position where they have to make financial decisions about their healthcare. I don’t think that is the direction we want to go.”

But that is the direction most are already headed, said Peter Lee, chief executive of the Pacific Business Group on Health, a coalition of employers.

If the system is not made more efficient, rising healthcare costs will drive more employers to drop benefits, leaving workers unprotected, Lee said.

“Costs will be shared one way or the other,” he said, either through co-pays or “taxes going up to treat more uninsured people.”

http://www.latimes.com/business/la-fi-calpers19jun19,1,5491259.story?coll=la-headlines-business

Comment:

By Don McCanne, M.D.

Copayments have continued to grow in popularity because they have been proven to reduce health care utilization, and, therefore, health care spending. The problem with copays is that they are a very blunt instrument.

They reduce utilization of beneficial health care services and result in impaired health outcomes. Clearly we should be looking for policies that contain costs while improving health care quality.

It has been well established that improving the primary care infrastructure, establishing a medical home for everyone, improves quality while reducing spending. It seems that the private insurers would want to establish policies that would promote primary care. But what are they doing?

BC/BS of Minnesota is now adopting a policy of discouraging use of primary care by requiring copays, but waiving them when the patient fragments their own care by using discount, walk-in, retail clinics. When insurers adopt policies to discourage efficient, higher-quality care in exchange for a cheaper, instant fix, it’s clearly not about encouraging better health consumer shopping; it’s purely “a matter of price.”

CalPERS’ new Blue Cross PPO raises similar flags. In order to reduce premiums, they are slashing the list of contracted providers. Insurers should be adopting policies that improve access to primary care providers, rather than disrupting the medical home of those whose primary care providers are deleted from the approved lists.

Blue Cross already uses coinsurance to limit patients’ choices of a medical home. Coinsurance is a percentage of the fee that the patient must pay. Like copays, coinsurance is a disincentive to obtaining care, but even more so since the out-of-pocket payments are often much higher than with copays.

Coinsurance can also be very disruptive when it heavily penalizes the patient for staying with his or her non-contracted primary care provider.

Affordability of health care concerns everyone today, but policies designed to reduce use of beneficial services are the wrong way to go.

Peter Lee says that we will share costs either through copays or taxes.

Clearly our current copay policies are detrimental to health care. What about taxes? Not only are they much more equitable, but the public stewards of a single payer system would ensure that each and every one of us has affordable access to a medical home.

APA President Urges Support For Single-Payer InsuranceSystem

APA President Urges Support For Single-Payer Insurance System
American Psychiatric Association
Psychiatric News
June 16, 2006

The events that (APA President Steven) Sharfstein weathered this past year underscored the importance of the advocacy mission in which he had challenged his fellow APA members to join him. He left them with this simple but weighty message:

“We must tirelessly advocate for [single-payer universal health reform]. As the health care crisis extends and mushrooms, with more and more Americans without adequate coverage, the opportunity for such change will come at national, state, and local levels. And we must be there as advocates for our patients.”

http://pn.psychiatryonline.org/cgi/content/short/41/12/1-a

Is the NBT an individual mandate?

State health law could be template
By Bob Kievra
Worcester Telegram & Gazette
June 16, 2006

The state’s 65-day-old health care law could have national significance – legislation that might alter presidential politics in 2008 and shift the vexing topic out of the “hopeless” category for the first time in a generation, a Harvard University professor said last night.

Robert J. Blendon, professor of health policy and political analysis at the Harvard University of Public Health and the John F. Kennedy School of Government, said the new Massachusetts law – if it can be made to work – offers hope that the problems of the uninsured can be tackled in a thoughtful, bipartisan manner.

The 145-page law, intended to provide health care coverage to the state’s 550,000 uninsured adults, imposes an individual mandate for everyone in Massachusetts to obtain health insurance by July 1, 2007.

http://www.telegram.com/apps/pbcs.dll/article?AID=/20060616/NEWS/606160517/1002/BUSINESS

And…

AMA: Penalize some uninsured Americans
By Bruce Japsen
Chicago Tribune
June 13, 2006

The AMA’s policy-making House of Delegates vote in favor of what it called “individual responsibility” comes as state and federal lawmakers are weighing similar ideas in the form of legislation in Congress and state houses across the country.

In the past, the Republican-leaning AMA has shied away from government mandates as a way to provide health insurance coverage for more Americans.
In this instance, the group acknowledged Tuesday at a press briefing that its support of tax penalties to incentivize people to buy coverage would be a “significant shift” in the organization’s thinking on matters of covering the uninsured.

http://www.chicagotribune.com/business/chi-060613ama,1,3515691.story?coll=chi-news-hed

And…

Can Massachusetts Lead the Way in Health Care Reform?
By Stuart H. Altman, Ph.D., and Michael Doonan, Ph.D.
The New England Journal of Medicine
May 18, 2006

Massachusetts will require everyone who can afford health insurance to buy it – an individual mandate.

We don’t know exactly what the new insurance plans will look like, how much they will cost, and whether government subsidies will prove adequate. The cost of the reform will be contingent on the actual price of available plans and subsidy levels, which will not be known until regulations are drafted and insurers and health plans offer new products for this market.

http://content.nejm.org/cgi/content/full/354/20/2093

And…

Editorial
Los Angeles Times
June 14, 2006

…the real solution to the nation’s healthcare problems will have to come from a Washington ZIP Code. If it’s smart, Congress will study some of the states’ innovative ideas to determine whether they could work on a national level.

Requiring all citizens to have health insurance, for instance, is an interesting idea that could gain bipartisan traction.

http://www.latimes.com/news/opinion/editorials/la-ed-vermont14jun14,0,4682219.story?coll=la-news-comment-editorials

And…

Cheers and jeers for Mass. insurance mandate By Leah Carlson Shepherd
Employee Benefit News
June 1, 2006

In a groundbreaking move with far-reaching implications, Massachusetts adopted a law in April to require state residents to obtain medical insurance by July 1, 2007. Previously, no state had required people to carry medical insurance.

U.S. Sen. Edward Kennedy (D-Mass.): “Massachusetts once again leads the nation with an innovative plan that will achieve our longstanding goal of expanding health care for all.”

http://www.benefitnews.com/detail.cfm?id=9026

Comment:

By Don McCanne, M.D.

There has been a dramatic surge in media reports that there is a developing consensus that the individual mandate, requiring each individual to purchase his or her own insurance, is the common ground which will bridge the partisan divide on health care reform. It is rumored that even the leading candidate for the 2008 Democratic Party presidential nomination is currently working with consultants to develop an individual mandate model.

The individual mandate does not displace consumer-directed health care as the leading right-wing proposal for reform. On the contrary, it would greatly expand the market for consumer-directed products such as HSAs and high-deductible health plans. It merely reframes the rhetoric, making the individual mandate appear to be the politically feasible compromise. But do the politicians really understand what they are supporting?

The fundamental flaw with the individual mandate model is that insurance plans will have a new responsibility. They will have to cover not only the relatively healthy: healthy employees, their healthy families, and those who pass underwriting standards in the individual market. Since the individual mandate means that everyone must be covered, the plans will have to cover those with higher health care costs as well. Pooling everyone together is expensive. This year we are already spending $7110 per person for health care. Can a middle-income family of four really afford to pay nearly $30,000 for their share of the health care spending pool? Of course not.

A universal individual mandate can work only if the insurance product is affordable. By mandating that everyone be included, there are only two ways of keeping premiums affordable.

The current consumer-directed trend is to strip benefits out of the plans, and to increase out-of-pocket spending through high-deductibles, co-payments and coinsurance. That way, the health insurance premium is affordable, but access to care is not affordable for those who have needs. This totally defeats the purpose of insurance: providing financial protection against the losses of adverse medical events.

The other way to keep premiums affordable would be to shift the bulk of health care costs to the government. Very large tax credits would help, but that would add even more to the current, relatively-opaque taxpayer burden that is already funding 60 percent of our health care. Another government role would be to provide re-insurance, protecting the insurance companies from major losses (i.e., that 20 percent of individuals who use 80 percent of our health care). But then what good are insurers if they are not going to insure us against loss?

Even if we did adopt a government-funded individual mandate, we would perpetuate the tremendous losses that we are already experiencing due to profound administrative excesses, and due to a highly wasteful and even harmful maldistribution of our health care resources. Now that’s what’s not affordable!

So the NBT (Next Big Thing) is the individual mandate? Single payer advocates – get on your horses!

HMO rate increases decline to a mere 11.7 percent

HMO Rate Increases Continue to Decline for Fourth Consecutive Year, According to Hewitt Associates U.S. Employers Remain Focused on Managing Costs
Hewitt Associates LLC
Press Release
June 13, 2006

Preliminary information from Hewitt Associates, a global human resources services company, shows that 2007 HMO rates will increase approximately 11.7 percent — representing the fourth consecutive year of declining rate increases.

“Although there has been a steady decline in the level of HMO rate increases over the past several years, double-digit increases are still very difficult for employers to absorb,” said Paul Harris, senior health care strategist, Hewitt Associates. “The good news is that there do not appear to be market pressures that might cause rates to begin increasing again.”

Although increases are moderating, companies are still facing double-digit increases and, as a result, continue to make plan design changes and share more of the cost with employees.

http://was4.hewitt.com/hewitt/resource/newsroom/pressrel/2006/06-13-06.htm

Comment:

By Don McCanne, M.D.

This is good news? Rates are stabilizing at low double digit increases? Employers are managing costs by sharing more of the costs with employees?

These rate increases are well in excess of inflation, and costs are being shifted to employees at a time when their wages are failing to keep up with the rest of the economy. Patients are bearing much of the brunt of our failed health care funding policies.

It’s not that we don’t understand how to control health care costs. We do. The single payer model does precisely that (with the not insignificant additional advantage that it also provides truly comprehensive coverage for absolutely everyone).

The problem is that we continue to depend on private sector plans to manage costs, which now means that they manage to shift more of the costs to patients. Their model doesn’t work and it needs to be dumped. It’s time for single payer.

AMA supports individual mandate for higher-income individuals

2006 Annual Meeting of the House of Delegates Reference Committee highlights
AMA

The AMA voted to support a requirement that individuals and families earning greater than 500 percent of the federal poverty level obtain, at a minimum, coverage for catastrophic health care and evidence-based preventive health care, using the tax structure to achieve compliance. Upon implementation of a system of refundable tax credits or other subsidies to obtain health care coverage, this requirement would apply to individuals and families earning less than 500 percent of the federal poverty level.

http://www.ama-assn.org/ama1/pub/upload/mm/471/refcom_highlights.pdf

Comment:

By Don McCanne, M.D.

For 2006, an income of 500 percent of the federal poverty level is about $50,000 for an individual and about $100,000 for a family of four. Only about one-tenth of the uninsured have incomes at that level or higher. This is obviously only a tiny step towards universal coverage.

What is important is that the AMA is now officially on record as supporting an individual mandate to purchase health coverage in the private insurance market. They would eventually expand that to cover all of the uninsured through a system of refundable tax credits. The good news is that the AMA is explicitly supporting universal health care coverage.

The bad news is that individual mandates for private plans is the most expensive method of achieving universal coverage, and it leaves patients vulnerable to medical debt because of the deterioration in the quality of plans available in the private market.

Let’s not simply settle for universal coverage. Let’s also make it efficient, affordable and comprehensive through a single payer program of national health insurance.

How Hillary Clinton could work with the Republicans on health care reform

The Huffington Post
The Blog
(Accessed June 13, 2006)

In today’s NY Times (June 10), Hillary Clinton states, “I think you should cover all children who don’t have other access to coverage. We shouldn’t have any uninsured children. But we have to take that step by step.”

For decades, we have been reforming health care “step by step.” These steps have resulted only in more uninsured and in an explosion in medical debt due to deteriorating coverage. These financial barriers to care have resulted in impaired health outcomes.

John Conyers’ HR 676 would replace our inefficient, inequitable, fragmented system with an affordable national health insurance program providing comprehensive benefits for everyone. For those concerned about skyrocketing costs, this is the only effective proposal (which expands coverage) that actually brings costs under control. It should appeal to progressives who want access and coverage for everyone, and to the business community which wants relief from unrelenting cost escalation while ensuring adequate coverage for employees.

This should no longer be a partisan issue. If the Republicans would begin to discuss the business rationale of single payer, then Sen. Clinton should be willing to concede that comprehensive reform really is feasible. But we do need to sit down with our Republican friends to be sure that they understand the single payer business model.

By: dmccanne on June 10, 2006 at 01:05pm

http://www.huffingtonpost.com/deborah-burger/a-walking-tour-of-america_b_22478.html

Wounds Salved, Clinton Returns to Health Care (NY Times, June 10):
http://www.nytimes.com/2006/06/10/washington/10hillary.html?pagewanted=all

Comment:

By Don McCanne, M.D.

Seriously. Let’s make every effort to be certain that the Republicans and the business community clearly understand the single payer business model. The efficiencies and cost containment mechanisms should appeal to anyone who is struggling with budgets.

Kevin Drum and Uwe Reinhardt on social insurance

Washington Monthly
Political Animal

By Kevin Drum
June 11, 2006

THE S-WORD….Ezra Klein, practicing for his career as a TV talking head, responds to a question about whether national healthcare is “socialist”:

“We should stop running from that moniker. If we’re going to call what Canada, France, Germany, England, Japan, and essentially every – actually, not essentially, just every – other industrialized nation offers socialized health care, but they cover all of their citizens with better outcomes and lower costs than we do, then I’m happy to associate myself with that.”

OK, it was only a training session. But still. Can I suggest something a wee bit different?

“Socialist” is a scare word conservatives use when they’ve run out of serious arguments. But national healthcare isn’t socialism any more than Medicare is. It’s just a practical and efficient way of providing medical treatment for everyone in the country, the same way that interstate highways are a practical and efficient way of providing roads for everyone in the country.

The facts are simple: A well-designed national healthcare plan gives you greater choice of doctors, it’s less expensive than private insurance, it helps rein in spiraling costs, it keeps you covered even if you temporarily lose your job or have a preexisting condition, it helps out small companies that can’t afford to provide health coverage for their employees, it helps out big companies like GM and Ford that are nearly bankrupt because they do provide health coverage, and it covers everyone all the time.

And best of all, it gets rid of the bureaucratic hodgepodge we have now:
Medicare for the old, employer coverage for people who work for big companies, 50 different versions of Medicaid for the poor, emergency rooms for the destitute, and no coverage at all for people who are unlucky enough to work for Wal-Mart. It’s an expensive mess that drives doctors nuts and provides most of us with mediocre care.

Or something like that. In any case, the basic answer to “Is national healthcare socialist?” should always be no, not yes. We are not in favor of command economies, ownership of the means of production, or state control of doctors, and that’s what most people think of when you say “socialist.”

And that’s Kevin’s media training for the day.

-Kevin Drum

http://www.washingtonmonthly.com/archives/monthly/2006_06.php

Uwe E. Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University, responds:

“Socialism” is an arrangement under which the means of production are owned by the state. Government-run health insurance is not “socialism,”and only an ignoramus would call it that. Rather, government-run health insurance is a form of “social insurance,” that can be coupled with privately owned for-profit or not-for-profit health care delivery systems.

Conservative critics of “social insurance” often forget that they benefit from many other forms of “social insurance” — e.g., the principle of limited liability of shareholders, which is the rockbed of capitalism. In a real sense, the national defense system also is a form of “social insurance” against threats from abroad. People in the farmbelt may never rail against “socialized medicine,” because so much of their income is protected by another form of social insurance, agricultural price supports and import restrictions (like the sugar quota.)

In fact, none other than Hank Greenberg, former CEO of the huge AIG insurance company, asked for government help to protect insurance companies from catastrophic losses such as those following 9/11. That, too, is “social insurance.”

I have gotten tired of ignoramuses who call social insurance “socialism,”
all the while being beneficiaries of it. One has the right to argue with them quite aggressively and ad hominem (or ad feminam), if the case fits.

Republican Governors think nothing of going to Washington, hat in hand, demanding federal emergency funds after a natural disaster has struck their state. Well, breast cancer or severe neonatal illness is a natural disaster too, and there is nothing socialist about an individual in Texas or Mississippi asking her fellow Americans for helping financially with coping with that natural disaster as well.

Perhaps I am wrong, of course, in my assumption that this is a nation, and not just a bunch of people sharing a geography, and that the “national” flag we may not burn actually means something. I grew up in nations — Germany and Canada — where the idea of nationhood and the national flag do mean something (even though there one may burn the flags, I believe). I haven’t a clue what Americans actually think of that big blob of land south of Canada and north of Mexico.

-Uwe Reinhardt