PNHP

Are Americans concerned about health care costs?

Are Americans concerned about health care costs?

Understanding The American Public’s Health Priorities: A 2006 Perspective

By Robert J. Blendon, Kelly Hunt, John M. Benson, Channtal Fleischfresser, Tami Buhr
Health Affairs
October 17, 2006

Views on national health spending and health care costs.

Multiple survey results show that the public favors increased health spending in the years ahead but is concerned about the impact of rising health care costs on the financial situation of American families. In 2004,
78 percent of the public thought that national spending to improve health was too low; only 4 percent said that it was too high. Similarly, in 2006 a survey asked specifically about overall national spending on health care and national health care spending by government. The majority of respondents (57
percent) thought that the United States as a country was spending too little on health care in the aggregate, and 70 percent said that government health care spending was too low. Only 26 percent thought that the country as a whole was spending too much, and 11 percent thought that the government was spending too much. Around one-tenth of Americans thought that these spending levels were “about right” (9 percent, nation as a whole; 11 percent, government).

What concerns Americans is not aggregate spending, but the perceived negative impact on American families of their direct health care outlays (insurance premiums, copayments, deductibles, and direct payments for services and products). When asked about spending for health care by average Americans in 2006, 65 percent of respondents said that the average American spends too much, while only 17 percent said too little. (Twelve percent felt that the level of spending was “about right.”) This is what Americans mean when they list health care costs as the top health care priority for government action.

Discussion And Conclusions (excerpt)

Most U.S. news coverage about medical care issues during the past year has concentrated on Medicare’s new prescription drug benefit, while many in the research and professional community have focused on the nation’s quality-of-care problems. What is important to recognize is that these are not the American public’s top health care priorities today. Americans want their government to do something about their rising health care costs and the problems of the uninsured. When Americans talk about health care costs, however, their concern is not for the share of the nation’s gross domestic product (GDP) going toward health care, but rather the financial impact on their own families.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w508

Comment:

By Don McCanne, MD

This is an important distinction. Americans believe that aggregate health care spending should be increased, especially the contribution by the government. This is in sharp contrast to the concerns that Americans have about their own individual out-of-pocket spending for health care, including the cost of health insurance.

In evaluating reform options, the individual’s first concern is, “Does it work for me?” If individuals understand that it does, and then they see that it also works for everyone else with a negligible additional burden to the individual, then they can be supportive of that reform.

The single payer option is the reform model that would work the best for individuals. But another finding indicates that the public probably does not understand this. When asked which are the two most important problems with the nation’s health care system that the government should address, the top two responses were health care costs (43 percent spontaneous response), and uninsured/access to care (34 percent). Only one percent volunteered that organization of the system was one of the two most important problems, behind many other less pressing health care issues.

It is reassuring that our citizens understand that health care costs, and lack of insurance and access are the most important issues. But they still need to understand that reorganization of the financing of health care will be required to successfully address these issues. It’s our job to see that they do.

Moral high ground elusive to UnitedHealth and WellPoint/BlueCross

Chief Executive at Health Insurer Is Forced Out in Options Inquiry

By Eric Dash and Milt Freudenheim
The New York Times
October 16, 2006

Dr. William W. McGuire, a medical entrepreneur who built the UnitedHealth Group into a colossus in its field, was forced to resign from the company yesterday and to give up a portion of the $1.1 billion he holds in harshly criticized stock options.

At UnitedHealth, even the man named to replace Dr. McGuire as chief executive has been a beneficiary of backdated options: Stephen J. Hemsley, who has been Dr. McGuire’s top lieutenant, will lose a sizable portion of his options, the company said.

http://www.nytimes.com/2006/10/16/business/16united.html?_r=2&adxnnl=1&oref=slogin&adxnnlx=1161018912-8+gxj7+G8oF5ouY7SlJAGQ&pagewanted=all

And…

Hospital Sues Blue Cross for Payments

By Lisa Girion
Los Angeles Times
October 14, 2006

A class-action lawsuit filed Friday on behalf of all California hospitals accused Blue Cross of California of routinely violating state law by refusing to pay hundreds of hospitals statewide for patient care it authorized.

“Hospitals provided care to those Blue Cross patients in good faith,” said (Jan Emerson, a spokeswoman for the California Hospital Assn.). “In many cases that care is pre-authorized by Blue Cross. When they cancel coverage after that care has been provided, that causes a problem for the hospital.”

The suit alleges that, in many cases, such revocations are themselves illegal, triggered by a purported corporate policy to avoid expensive claims.

http://www.latimes.com/business/la-fi-hospitals14oct14,1,3867891.story?coll=la-headlines-business

Comment:

By Don McCanne, M.D.

Three questions:

(1) How many stock options would be granted to the trustees of a publicly funded and publicly administered program of national health insurance?
(Hint: No stock shares exist in a program owned by the citizens of the nation rather than by passive investors on Wall street.)

(2) Under what circumstances would a publicly funded and publicly administered program of national health insurance retroactively deny payment for legitimate health services already provided?
(Hint: The mission of a publicly owned national health insurance program is to prevent financial hardship for individuals requiring health care, whereas the mission of a for-profit health insurance corporation requires the adoption of policies that would maximize investor return.)

(3) Must the moral high ground remain elusive?
(Hint: As long as we leave the private insurance industry in charge… )

Alan Maynard on Porter and Teisberg's reinvention of the wheel

HEALTH REFORM: Reinventing The Wheel

by Alan Maynard
Health Affairs Blog
October 12th, 2006

The American health care systems perform impressively, producing what they are designed to deliver: cost inflation, inefficiency, and inequity. At regular intervals, local pundits declare that the outcomes of the incentive structures in the constituent parts of the systems are unacceptable, usually emphasising that “the nation cannot afford to spend 16 percent of GDP on health care.” Such “insights” ignore the fact that inflation is a consequence of the systems’ perverse incentives and that improved control of expenditure inflation would oblige physicians, nurses, hospitals, and the pharmaceutical industry to moderate their lifestyles.

Michael Porter, a management guru at Harvard, along with colleague Elizabeth Olmstead Teisberg, has now decided to switch his attention to the health care industry, no doubt in part because he has recognised that it is big and remunerative. The extent to which the lessons of Enron and the “successes” of other capitalist enterprises can inform health care policy can and should be debated carefully.

Any cure for the malaise of U.S. health care, or the British NHS to which Porter has also offered his vision of a New Jerusalem, is dependent on diagnostic skills and the evidence base for the treatments offered. Like many gurus before him, Porter makes an adequate job of the diagnostics, offering insights very reminiscent of the Jackson Hole proposals over a decade ago.

However when he gets to cures, there is nothing new to break the logjam of inertia and self-interest that stabilizes the inefficiency of the health care system, be it public or private. He rightly indicates that the industry needs a measure of value added and that instead of focusing on cost and activity, it is necessary to measure patient-reported outcomes – i.e., measures of whether patients feel better. Such a conclusion is welcome but ignores the forces that have prevented the use of outcome measures in health care for centuries. Another Bostonian, Ernest Codman, suggested systematic management for Massachusetts General Hospital – in particular, plans for evaluating the competence of surgeons in the early twentieth century – and, as a consequence of the unpopularity of his proposals, he lost his staff privileges in 1914.

Insurers and Governments Fixated on Failure

The RAND Insurance Experiment produced a generic health profile, Short Form 36. Work in Europe has produced a generic health index, EQ5D. These have been translated into dozens of languages and used in thousands of clinical trials. But with physicians and policy makers fixated with the measurement and management of failure (e.g. mortality), these measures of success have been ignored by insurers and governments alike as a means of measuring success and of bringing to account those providers failing to make their customers “better,” in terms of physical and mental functioning.

Porter’s lack of specificity about the outcome measures needed to improve the performance of the U.S. health care systems, and his glib reliance on “competition” to institute change, flies in the face of international evidence: Nowhere has any public or private institution managed to curb the excesses of powerful providers more interested in their wallets than demonstrably improving patients’ health. Porter adds little new to the debate, but he is a welcome and potentially powerful addition to the chorus advocating change.

A. Maynard, HEALTH REFORM: Reinventing The Wheel, Health Affairs Blog, October 12th, 2006, http://healthaffairs.org/blog/2006/10/12/health-reform-reinventing-the-wheel/,
Copyright ©2006 Health Affairs by Project HOPE – The People-to-People Health Foundation, Inc.

Comment:

By Don McCanne, MD

Health Affairs has initiated a blog and has begun with comments on Michael Porter and Elizabeth Teisberg’s “Redefining Health Care.” Comments by James Robinson, Uwe Reinhardt, Alain Enthoven, and Alan Maynard have been posted, along with responses from readers.

Besides Alan Maynard’s comments above, I would also recommend reading Uwe Reinhardt’s take. An excerpt: “Unfortunately, (Porter and Teisberg’s) book offers few practical hints on how the U.S. health system would transit from its current, allegedly negative-sum game to the allegedly positive-sum utopia (Porter and Teisberg) envision. That transition would vastly rearrange the distribution of economic power and clinical autonomy in our health system. It is naive to assume that the potential losers in that transition would simply roll over and accept their fate.”
http://healthaffairs.org/blog/2006/10/10/health-reform-porter-and-teisbergs-utopian-vision/#more-63

Regular readers of the Quote of the Day will know that I am not a fan of Porter and Teisberg’s concepts. An excerpt from an earlier comment of mine: “Imagine a system in which care is delivered based on teams, without geographical limitations, organized around medical conditions, competing with other teams organized around the same conditions. Imagine your community hospital and its specialists providing care for a very limited list of medical conditions selected on the basis of providing better outcomes and lower prices. Your community hospital may very well lack a team that is dedicated to your particular problem, requiring you to travel to the next county, or maybe the next state, for care. Then allegedly to create transparency in pricing, you receive a single bill that totally obscures any understanding as to where your payment goes. You really have to read the book to understand the extent to which this line of reasoning is carried.” https://pnhp.org/news/2006/june/porter_and_teisberg.php

“The American health care systems perform impressively, producing what they are designed to deliver: cost inflation, inefficiency, and inequity.” This first line in Alan Maynard’s comment leads us to our bottom line. The United States needs a new design that would address cost inflation, inefficiency, and inequity. The first step would be to establish an equitable, efficient national health insurance program that could begin to tackle the rapidly rising costs of health care. That won’t be easy, but it’s impossible under the status quo.

California legitimizes health discount card parasites

State to Set Rules on Health Cards

By Daniel Yi
Los Angeles Times
October 11, 2006

California on Tuesday joined a rising number of states imposing regulations on healthcare discount cards, a fast-growing product that has generated debate amid allegations of fraud or exaggerated claims.

The California Department of Managed Healthcare, which oversees health plans in the state, announced Tuesday that it would license the cards.

Discounts are no substitute for health insurance, Department of Managed Healthcare Director Cindy Ehnes said at a news conference in Sacramento. But “for many uninsured Californians, discount healthcare cards have become a growing alternative to traditional healthcare plans,” she said.

“The fundamental question is, ‘What is the discount?’ ” said Beth Capell, a lobbyist for Health Access California, a consumer group. “There is no sticker price in healthcare, so what is the discount from?”

Discount cards are a “new middleman who’s found a way to make money,” said Jack Lewin, chief executive of the California Medical Assn. “Most doctors would be willing to give uninsured people a break anyway.”

http://www.latimes.com/business/la-fi-discount11oct11,1,1206161.story

Comment:

By Don McCanne, MD

One of the most unique characteristics of health care financing in the United States has been our acceptance of a middleman industry that diverts hundreds of billions of dollars from health care to profoundly wasteful administrative services.

Health care discount cards are marketed as an affordable substitute for those who cannot afford health insurance, but they have a medical loss ratio of zero percent since they do not pay for health care. That means that 100 percent of their costs add to the administrative waste of our system.

Since most health care is paid for by public and private insurers, the “retail price” of health care is set by these third party payers. The “rack price” of health care services is rarely paid, though it is the price presented to uninsured patients. The discount card merely reduces rack fees down to the actual retail level.

These card companies are parasites sucking resources out of our health care system. What is astounding is that California and other states want to legitimize them by giving them a seal of approval through state licensing.
Instead they should be eliminating these thieves, which they could do easily by establishing a universal, publicly-administered health insurance program.

HSAs are not an option for low-income families

Health Savings Accounts and High Deductible Health Plans: Are They An Option for Low-Income Families?

By Catherine Hoffman and Jennifer Tolbert
Kaiser Commission on Medicaid and the Uninsured
October 2006

Key Findings:

* Premiums for HSA-qualified health plans may be lower than for traditional insurance, but these plans shift more of the financial risk to individuals and families through higher deductibles.

* Premiums and out-of-pocket costs for HSA-qualified health plans would consume a substantial portion of a low-income family’s budget.

* Most low-income individuals and families do not face high enough tax liability to benefit in a significant way from tax deductions associated with HSAs.

* People with chronic conditions, disabilities, and others with high-cost medical needs may face even greater out-of-pocket costs under HSA-qualified health plans.

* Cost-sharing reduces the use of health care, especially primary and preventive services, and low-income individuals and those who are sicker are particularly sensitive to cost-sharing increases.

* Health savings accounts and high deductible plans are unlikely to substantially increase health insurance coverage among the uninsured.

For low-income families in particular, HSAs and HDHPs may exacerbate, rather than alleviate, the problems they currently face in affording and accessing needed health care.

http://www.kff.org/uninsured/upload/7568.pdf

Comment:

By Don McCanne, MD

Any student of health policy already fully understands the message in this report: Health savings accounts and high-deductible health plans do not work for lower-income individuals with significant health problems. So why belabor this point? Why shouldn’t we support current legislation that would expand the HSA/HDHP benefits for healthy, higher-income individuals, for whom they work well, and find other solutions for those with lower incomes and greater needs?

The problem is that HSAs remove funds from the risk pools that pay for health care, and convert them into tax-subsidized retirement funds for wealthier individuals. Social insurance programs depend on the healthy to help fund the care of the sick, and the wealthy to help fund the care of the poor. HSAs allow the healthy and wealthy to avoid sharing risk with the sick and poor who are already facing affordability issues. Not very egalitarian, but that seems to be the American way.

Marie Cocco on the Citizens' Working Group report

Jittery about the health system

By Marie Cocco
The Sacramento Bee
October 8, 2006

More than a dozen years after Hillary Rodham Clinton’s grand experiment in reshaping the health insurance system died in a pyre of overheated political argument and hysterical claims, it turns out the public wants pretty much what Clinton tried to deliver: coverage for all Americans in the form of a nationally mandated, guaranteed set of core benefits to replace the current patchwork that leaves even many people who have insurance with inadequate coverage for some illnesses and treatments. In short, it should be a national policy that refuses to let a family be crushed financially if someone becomes very ill.

All this would, naturally, be financed in a way the body politic considers “fair” — without creating an undue burden on sick people and in a way that’s related to a family’s ability to pay. The most popular means of raising additional funds is through “some form of progressive, or ‘sliding scale’ income or payroll tax (like the Medicare payroll tax) specifically dedicated to supporting health care for all.”

No, this isn’t a script for a Democratic candidate’s campaign commercial. And they’re not talking points for an interest group pushing this health care solution or that.

These are the conclusions of an official, nonpartisan government commission set up by Congress as part of the Medicare prescription-drug legislation. What the commission now tells us — after taking soundings in 37 states, collecting tens of thousands of responses to polls and written questionnaires and listening at 98 community meetings — is that Americans see clearly what is wrong with the health care system, and have on their own achieved a remarkable degree of consensus on how to fix it.

More than 90 percent of those who participated in community meetings or responded to the commission’s questions and polls said they believed every American should have affordable coverage. A clear majority wants a mandated, basic benefit for everyone and is “not comfortable with bare-bones benefit packages.” There’s agreement, as well, that if doing things more efficiently and reshuffling current government subsidies don’t generate enough money for expanding coverage then — ahem — people are willing to pay higher taxes.

http://www.sacbee.com/110/story/35162.html

Comment:

By Don McCanne, MD

In a previous Quote-of-the-Day, I condemned the recommendations of the Citizens’ Health Care Working Group as being the product of a partisan hack job. What I did not emphasize in that message (but had stated in previous messages) was the overwhelming consensus of the public participants on what should be done about improving our health care system. Americans want a system that provides reasonably comprehensive coverage for absolutely everyone, that prevents financial hardship and is funded in an equitable manner.

My objection is that there was a disconnect between the findings of the Working Group and the recommendations that were advanced. The recommendations can be summarized as follows: VERY high deductible coverage (reinsurance without coverage of primary benefits); support for integration of systems; contemplating the definition of core benefits; admiring quality; and encouraging humane end-of-life care. These are the recommendations that have been presented to the President and will be forwarded to Congress. No serious person can contend that these recommendations represented the comprehensive reform that Americans seek.

The fact that I condemn the process that resulted in grossly deficient recommendations does not mean that we should discard this report. We should continue to speak up loud and clear on the expressed wishes of the American people. But we should not allow Congress and the President to act on these recommendations and then pretend that they have provided the comprehensive reform we want.

If ever there was a time for citizen activism, it is now.

"Citizens' Health Care Working Group" Ignores Citizens

Congressional Task Force Disregards Public’s Call for National Health Insurance

EMBARGOED UNTIL:
September 27, 2006

Contacts:
David McLanahan, M.D. – (206) 937-7154
Garrett Adams, M.D. – (502) 895-8847
Nick Skala – (312)782-6006

The group created by Congress to listen to Americans’ ideas for improving the health system has ignored their overwhelming advice to create a national health insurance program. Although a national health program was by far the most favored option at 86 percent (25 of 29) of the meetings of the Citizens’ Health Care Working Group (CHCWG), the group’s recommendations avoid the clear public preference for government-guaranteed health coverage.

When given a choice of ten reform options at public hearings held by the CHCWG, participants clearly favored a national health program by a margin of at least 3 to 1. At meetings where participants were asked to rank the 10 options, national health insurance was ranked first 16 of 19 times (Billings, MT; Denver; Des Moines; Detroit; Eugene, OR; Jackson, MS; Kansas City, MO; Memphis; Miami; New York, NY; Philadelphia; Phoenix; Providence, RI; Sacramento; and Seattle). At two meetings participants were neither polled nor options ranked.

Despite the clear public mandate, the CHCWG’s report makes no mention of the vast support for a national health program. Instead, the group’s official recommendations include only generic suggestions such as promoting “efforts to improve quality of care and efficiency.” and finding a way to protect “against very high health costs.”

“The structure of the meeting and the way the questions were presented were obviously geared toward producing recommendations that would fall far short national health insurance.” said Dr. David McLanahan, a surgeon who attended the Seattle hearing. “It was very clear, however, that a national program was what the vast majority of people at the hearing wanted.”

Dr. Garrett Adams, a pediatrician from Louisville, participated in a CHCWG-sponsored teleconference at which he complained about the questions’ bias in writing. “I felt that the questions were written in such a way as to require you to acknowledge premises with which I disagreed,” Dr. Adams said. “Even so, the Working Group’s own data shows that most of the participants at the public hearing in Lexington supported a national health program. I think it was incredibly brave, here in the home state of Humana, for citizens to speak out on behalf of a program that would threaten the profits of huge insurance and drug firms.”

Most supporters of a national health program favor a single-payer system, which retain the private delivery of health care by physicians and hospitals, but organizes payment under a single public agency. A 2003 study in the New England Journal of Medicine found that a single-payer national health insurance program would save enough on administrative costs — more than $300 billion per year — to cover all of the uninsured and provide full benefits for everyone else.

The 15-member CHCWG was created as a part of the 2003 Medicare drug bill to hold public hearings on health care and make recommendations to the President and Congress on “ways to improve and strengthen the health care system based on the information and preferences expressed at the community meetings.”

To see the meeting data from the CHCWG report, follow this link:

https://pnhp.org/PDF_files/Last_Page_from_appendix_b.pdf

Summary and data reports from individual community meetings can be found at: http://govinfo.library.unt.edu/chc/

###

PNHP has physicians and citizens who attended the CHCWG community meetings and are available for comment. To request an interview, contact Nicholas Skala at 312-782-6006.

Physicians for a National Health Program is an organization of 14,000 physicians that support single-payer national health insurance. PNHP is headquartered in Chicago and has chapters and spokespeople across the U.S. To contact a physician-spokesperson in your area, contact nick@pnhp.org or call 312-782-6006. www.pnhp.org.

Spending for privately insured Americans remains high

Center for Studying Health System Change October 2006 Tracking Health Care Costs: Spending Growth Remains Stable at High Rate in 2005

By Paul B. Ginsburg, Bradley C. Strunk, Michelle I. Banker, John P. Cookson

Health care spending per privately insured American increased 7.4 percent in 2005, marking the third year that the cost trend hovered below 8 percent, following a peak increase of 10.4 percent in 2001. Spending data for the first quarter of 2006 suggest continued stability–albeit at a relatively high rate of growth (7.7%). In 2005, health spending growth continued to outpace overall economic growth, despite a robust 5.4 percent increase in the overall U.S. economy as measured by per capita gross domestic product.

Trends in three of the five spending categories–inpatient hospital care, physician services, and other services–accelerated in 2005, while prescription drug spending grew at a slower rate for the sixth year in a row and hospital outpatient care spending growth slowed slightly.

Two key factors will tend to drive cost trends higher. One is the rapid expansion of specialty facilities, including hospital inpatient and outpatient facilities, freestanding centers and additional ancillary service capability in physician offices. The combination of supply creating demand and the effects of increased physician self-referral could mean that these expansions will increase spending. The continuing growth of obesity in this country is also a major cost driver. Kenneth Thorpe and colleagues estimate that 27 percent of real per capita growth in spending from 1987 to 2001 is attributable to increasing rates of obesity and increasing relative spending by those who are obese.

When listening to discussions in policy circles about the potential for a slowing of health care cost trends, one does not hear much about the factors outlined above. Instead, political leaders extol the potential for health information technology to save money by increasing quality of care and curbing duplication of diagnostic procedures, the potential of medical liability reform to reduce defensive medicine, the potential of quality improvements motivated by pay for performance to reduce costs and the potential for increased price transparency to lower health services’ prices substantially.

All or some of these scenarios may come to pass, but the most likely outcome over the next few years is costs continuing to outpace incomes and private health insurance becoming increasingly unaffordable for more people.

http://www.hschange.org/CONTENT/879/

Comment:

By Don McCanne, MD

There are many more factors involved in the increase in health care spending besides the two listed, especially obvious when the problems are framed more appropriately. Of most concern are the flaws that result in a very large amount of wasteful spending, well described in the policy literature.

We need solutions that specifically address these flaws. As this article indicates, current political efforts are neglecting the fundamental defects, but instead are diverting reform efforts by tinkering at the periphery with measures that will have negligible impact compared to the enormity of the problems.

When we know what is wrong and what needs to be done, it is tragic that we merely sit back and watch the tinkerers tinker.

Major surgery is the only cure

By David Lazarus
San Francisco Chronicle
October 1, 2006

Our health care system is a shambles. Here’s yet more proof:

* Insurance premiums paid by employers and workers have nearly doubled since 2000, according to a new report from Menlo Park’s Kaiser Family Foundation. The 7.7 percent increase this year is more than twice the rate of inflation.

* San Pablo’s Doctors Medical Center says it expects to file for bankruptcy protection this week after losing about $1 million a month for the past two years. The obstetrics department is scheduled to close today and the hospital’s 11 emergency-room physicians have given notice that they’ll quit by the end of the month.

* Gov. Arnold Schwarzenegger has vetoed state legislation that would have established universal health coverage for all Californians. He offered no alternative plan to help the state’s roughly 7 million uninsured.

“We’re watching the health care system collapse around us,” said James Kahn, a professor of health policy at UCSF.

The Kaiser report issued last week serves as a frightening reminder for all families that health insurance in the United States is an increasingly costly and, for many, unobtainable goal.

Premiums have increased 87 percent during the past six years, the report shows. Family health coverage now costs an average $11,480 annually, with employers paying the bulk of that amount and workers paying an average $2,973. That’s about $1,354 more than the typical worker had to pay in 2000.

This year’s 7.7 percent hike in premiums is the slowest growth rate in six years but it’s still more than double the annual increase in wages (3.8 percent) and the overall cost of living (3.5 percent).

“The bottom line here is that health care costs are increasing dramatically faster than wages, and that’s why people are feeling pain,” said Drew Altman, president of the Kaiser Family Foundation. “We’re seeing a slow unraveling of the employment-based health insurance system.”

Nationwide, about 47 million Americans lack health coverage — a number that’s steadily rising as more companies abandon health programs for workers. (About 61 percent of businesses now offer coverage to at least some employees, according to Kaiser. That’s down from 69 percent in 2000.)

“Health insurance is becoming increasingly unaffordable for businesses and working people,” Altman said.

The financial woes plaguing Doctors Medical Center in the East Bay illustrate how dysfunctional the U.S. health care system has become.

The hospital, which serves some of the more economically challenged communities of Contra Costa County, was run by Tenet Healthcare until 2004. It lost $24 million that year alone.

The facility was taken over by the West Contra County Healthcare District, which cut the deficit to $15 million in 2005 but now foresees even more red ink due to lower-than-expected patient volume, technology upgrades and other factors.

Perhaps the biggest problem faced by the hospital is the fact that about a third of ER patients have no insurance and can’t pay their bills. About 10 percent of all patients arriving at the facility lack health coverage.

To help turn things around, the hospital’s board last week approved a contract for up to $84 million to treat at least eight San Quentin inmates every day for the next few years.

“The prison contract offsets some of the losses we’re seeing in other areas,” said Gisela Hernandez, a hospital spokeswoman. “But it’s not the entire solution.”

For this reason, she said a bankruptcy filing is all but certain this week. And even then, the future of Doctors Medical Center remains uncertain. “Without an immediate infusion of cash, it’s going to be tough,” Hernandez said.

ER doctors gave notice last week because they say they haven’t been paid for six months.

Hernandez said universal coverage would go a long way toward keeping hospitals like Doctors afloat. “If everyone had health insurance,” she observed, “we wouldn’t have any uninsured people in the emergency room.”

However, it looks like that won’t be happening anytime soon. The governor recently vetoed legislation — SB840 — that would have used taxpayer funds to establish a universal health insurance system for all Californians.

Independent analysts say such a system would be cheaper than existing insurance payments for most businesses and workers. But Schwarzenegger, bowing to pressure from the insurance industry, said the system envisioned by the bill would be tantamount to socialism.

“Socialized medicine is not the solution to our state’s health care problems,” he said in a statement, adding that the proposed system would be “a serious and expensive mistake.”

UCSF’s Kahn countered that the governor has it wrong.

“SB840 is not about socialized medicine,” he said. “You would still have public and private health care providers. What this is really about is simplifying the finances of health care.”

According to researchers at Harvard Medical School, about a third of all health care spending nationwide is squandered on bureaucratic overhead — the result of a vast array of insurance forms and procedures.

“All the evidence suggests that the current system doesn’t work,” Kahn said.

And gradually, business leaders are reaching the same conclusion.

“The (health care) system is out of control, it’s unstable, it’s basically bankrupt, it gets worse each year and all we do is tinker around the edges when what we need are major fixes,” Craig Barrett, chairman of chipmaker Intel Corp., said in a speech last week.

He didn’t call specifically for universal coverage, but he said that employers should demand that hospitals use standardized record systems to keep costs under control.

“The current health care system is economically unsustainable and negatively impacting our nation’s ability to compete globally,” Barrett said. “It’s time for a systemic transformation, and U.S. employers must lead.”

Unless, that is, our politicians can find the courage to do so.

David Lazarus’ column appears Wednesdays, Fridays and Sundays. Send tips or feedback to dlazarus@sfchronicle.com.

ID Theft Infects Medical Records

Victims face bogus bills and risk injury or death. Privacy laws make such fraud hard to pursue

By Joseph Menn
Los Angeles Times Staff Writer
September 25, 2006

After shoulder surgery last year, Lind Weaver was stunned when hospital bill collectors demanded that she pay for the amputation of her right foot.

“Either you didn’t do the surgery, or you did a really [shoddy] job of it,” Weaver told them, sending along notarized photos of her toes, all still attached. “Either way, I’m not paying.”

But the 56-year-old retired schoolteacher quickly discovered she was dealing with something more nefarious than a simple clerical error: An identity thief had obtained medical care under Weaver’s name and had the bill sent to her insurer.

A year later, Weaver is still trying to catch errors in her medical records and clear the hospital bills fraudulently run up in her name.

“It became a 40-hour-a-week job,” Weaver said. “I put my phone to my ear and sat there listening to elevator music.”

Although the most typical of the millions of identity theft cases in the U.S. each year involve credit cards, a 2003 federal report estimated that at least 200,000 instances involved medical identity fraud. Experts believe that the rising cost of healthcare is driving more identity theft, and that many people are unaware they have become victims unless they receive a hospital bill or query from their insurer.

“There’s no reason to assume the patients ever find out,” said Harvard University management professor Malcolm Sparrow, an expert on regulatory agencies who has written books on healthcare fraud. “The bulk presumably remain invisible.”

With their medical records compromised, victims of this kind of fraud face a greater risk of injury or even death if doctors make treatment decisions based on bad information. Files might list incorrect prescriptions or the wrong blood type. Or, as in Weaver’s case, an erroneous diagnosis of diabetes.

Bad information can also put careers and insurance at risk. Many employers, including more than a third of the Fortune 500 companies, demand access to medical records when making hiring, promotion or benefits decisions, according to the nonprofit Patient Privacy Rights Foundation. Health and life insurance companies routinely scan medical files or payout reports before issuing new policies.

Victims, though, often find that clearing their medical records of bad information is much more difficult than fixing credit reports, which are centralized in three major credit bureaus.

Consumers have the right to obtain one free credit report annually, and to demand an investigation of information they believe is fraudulent or incorrect. Unverified reports must be removed promptly.

Medical records, in contrast, can be scattered across dozens of doctors’ offices, hospitals and clinics. And federal privacy rules intended to protect private information can make it difficult for patients to even obtain their own records when identity theft is suspected.

“These privacy rules might put you in a situation where you can’t even investigate,” said Wilma Kidd, chief privacy officer at WellPoint Inc., the largest U.S. health insurer for employees and other groups.

A big reason most people never find out about erroneous records is the Health Insurance Portability and Accountability Act of 1996. The law can make it difficult for patients to see their own medical records, since the penalties for improper disclosure prompt some hospitals to set up roadblocks including demands for multiple forms of identification.

The bitter twist on medical identity theft is that once a person tells a keeper of records that someone else’s data might be intermingled, the file becomes even harder to obtain. Why? Because it includes another person’s medical history, which many hospitals argue can’t be turned over without consent.

Even when patients do see their records, they have no automatic right to fix errors they find.

As she battled collection agencies last year, Weaver fought to see her medical files. She suspected that someone had used her identity to obtain a foot amputation, but hospital officials wouldn’t help.

Weaver marched into the hospital waiting room in Bunnell, Fla., and started shouting that the doctors didn’t know who their patients were.
That got her service in a hurry. After she was shown to a consulting room and given the file, she soon thought she had weeded out her impostor’s medical history.

In May, Weaver suffered a heart attack at her home in Palm Coast, Fla., and was in and out of consciousness.

When she awoke in her hospital room two days later, a nurse asked Weaver what drugs she had been taking to treat her diabetes. Weaver has never had diabetes, a disease that can lead to foot problems severe enough to require amputation.

“They could have given me insulin,” Weaver said. “There’s a whole different heart procedure that covers people with diabetes.”

Diabetes experts said those procedures would have been unlikely to threaten Weaver’s life. A hospital spokeswoman declined to answer questions about Weaver’s case.

Weaver doesn’t know how her identity was compromised, but identity fraud is easy when so many in the medical field have access to intimate records and patients are admitted without having to prove who they are.

At New York homeless shelters, state Medicaid identification cards once could be rented for as little as $2 a day, said Harvard’s Sparrow, who has seen overlapping pregnancies claimed under the same name. In Veterans Affairs hospitals, some eligible veterans have their identities assumed by brothers or cousins who have easy access to their documents, said Richard Ehrlichman, the department’s assistant inspector general.

Sometimes it’s the doctors who commit identity fraud to collect insurance payments for work they didn’t perform.

A Boston-area psychiatrist, Richard Skodnek, was convicted a decade ago of fraud after falsifying diagnoses, treatment sessions and entire patient histories. His victims, some of whom discovered that their insurance benefits had been exhausted, had to struggle to clear their records.

In perhaps the most sensational case, a Chicago podiatrist under grand jury investigation for exaggerating the work he performed shot and killed one of his patients in 2002 when she refused to lie on his behalf. Ronald Mikos was convicted of the murder last year.

Many insurance companies have hotlines for reporting fraud against them, and they sometimes refuse to pay suspicious hospital bills. But that often doesn’t do the identity theft victims any good: They still have to make their own cases to the hospitals, the bill collectors and the credit agencies.

In Weaver’s case, getting the insurance company involved made things worse.

After Weaver realized she was being billed for an amputation she never had, she told her insurance company, which refused to pay as well. In the hospital’s eyes, that left Weaver responsible for the whole $66,000 surgery bill, instead of just her deductible.

Collection agencies didn’t care about her explanation. Each tacked on a fee and resold the collection contract to the next agency down the line. That made correcting Weaver’s credit report especially difficult, because after she established that she wasn’t responsible for one amount billed on a certain day, the credit bureau would receive notice of a new amount with a different date, even though it was based on the same bogus debt.

Even when identity theft victims avoid health complications, the legal side effects can be terrible.

Anndorie Sachs of Salt Lake City found that out in April during a phone call from Utah’s social services department. The social worker told Sachs that her hospitalized infant had tested positive for methamphetamine. The state planned to take away the baby, along with her siblings at home.

Sachs, a mother of four, said that she hadn’t delivered a baby in two years.

“I was freaking out,” said Sachs, 27. “She was not going to believe a word. She said: ‘You’re Anndorie Sachs. You’re on the birth certificate. We know your other kids are being exposed to this too.’ ”

After the social worker grilled Sachs’ 7-year-old about whether her mother had been to the hospital lately, the agency relented.

Months earlier, Sachs’ driver’s license was stolen from her husband’s car. It eventually emerged that a woman named Dorothy Bell Moran had used that license when she checked into the hospital to give birth.
Already wanted on other charges related to identity theft, authorities said, Moran hadn’t wanted to use her own name for fear of getting caught. (She was later arrested on the earlier charges.)

Sachs had to hire a lawyer to disentangle the legal and medical records, and she is still fighting a collection agency over the medical bill.

As with Weaver and other victims interviewed, the Utah hospital cited the health insurance law and refused to show Sachs her files after she told them someone else’s paperwork was included. After Sachs went to the local media, officials agreed to delete both women’s records.

Just to be safe, when Sachs contracted a kidney infection, she chose a hospital that neither she nor the impostor had used. But some records had been shared electronically, and the hospital had the impostor’s blood type down as Sachs’ — setting up a possible fatal error.
Fortunately, staffers had drawn blood and double-checked. When they reviewed other data with Sachs, she found they also had the wrong emergency contact name and number.

The increased use of electronic records such as the ones that dogged Sachs could worsen the spread of medical errors caused by identity theft.

In the last year, the Senate and the House have passed broad bills pushing for wider use of electronic health records. Supporters, including many big technology firms and insurers, said the plan would increase efficiency, reduce error rates and provide earlier warnings about public health problems.

Such a system could also make correcting medical errors easier — but only if patients catch them beforehand, and only if the service providers agree to change them.

As the web of electronic distribution expands beyond the current pilot projects, more people will see medical records. That could increase identity theft while making existing errors harder to resolve, said Joanne McNabb, chief of the California Office of Privacy Protection.

“There is added risk that we’ve seen all over the place with electronic data,” McNabb said. “It can go to the wrong place at the wrong time very easily.”

joseph.menn@latimes.com

Keeping tabs on health records

Under the federal law known as the Health Insurance Portability and Accountability Act of 1996, medical providers have wide latitude to disclose records to others in the field, as long as they tell the patient they are doing so. They are also supposed to show the patient most of those files, with limited exceptions such as the notes of mental health professionals. But hospitals worried about fraud often demand multiple forms of identification and set up other bureaucratic hurdles to patient viewing. They can refuse patient access altogether if someone else’s records are intertwined with the patient’s.

To guard against identity theft, patients should:

* Ask to see their medical files from each provider on a regular basis;

* Scan medical and insurance bills for services, medicine and equipment they didn’t receive;

* Demand an annual list from their health insurance company of benefits that have been provided.

If medical records have been compromised:

* Ask the healthcare providers to delete the incorrect information and contact everyone they have shared that information with, as required by the health insurance act;

* Ask the providers for a list of those recipients, and follow up with them;

* Clean up records with the health insurer and make sure the provider has not passed along improper benefit reports to insurance databases;

* Scrutinize credit reports for unpaid medical bills;

* File a police report;

* Contact the Federal Trade Commission and state health and insurance departments.

Sources: World Privacy Forum, Times research

Copyright 2006 Los Angeles Times

America's uninsured children

No Shelter from the Storm: America’s Uninsured Children

Campaign for Children’s Health Care
September 2006

Findings

There were more than 9 million uninsured children (ages 0-18 years) in the U.S. in 2005. One out of every nine children is uninsured.

The majority of uninsured children-88.3 percent-come from families where at least one parent works.

Among uninsured children living with a parent, more than half-59 percent-live in two-parent households.

In more than half of all two-parent families with uninsured children, both parents work.

Overall, uninsured children are nearly five times more likely than insured children to have at least one delayed or unmet health care need.

Over the past 10 years, the advent of the State Children’s Health Insurance Program (SCHIP) and the increased push for children’s coverage that the new program created have led to marked declines in the number of uninsured children. Nevertheless, a great deal of work remains to be done. The most recent Census data show that, for the first time since 1998, the rate of uninsured children increased, from 10.8 percent to 11.2 percent.

Failure to ensure that all children in this country have health coverage is shortsighted and harmful. Children are the future of this country, and the policy choices the nation makes now can have long-term effects on who today’s children grow up to be. At the very least, we must ensure that each child gets the best possible start, which includes high-quality, affordable health coverage.

http://www.childrenshealthcampaign.org/tools/reports/Uninsured-Kids-report.PDF

Comment:

By Don McCanne, MD

Incrementalists have been touting the one health care reform “success” of the past few decades: the State Children’s Health Insurance Program (SCHIP). Yet, after a decade under the program, 9 million children remain uninsured and the numbers are increasing, and those children have five times the amount of unmet health care needs as insured children. If this is the definition of success, then how would they define failure?

We will never have health care coverage for everyone until we establish policies that ensure that it is automatic, life long, and universal. Nothing short of national health insurance will do.