PNHP

CAHI's claim of Medicare's hidden administrative costs

CAHI's claim of Medicare's hidden administrative costs

Medicare’s Hidden Administrative Costs: A Comparison of Medicare and the Private Sector
By Merrill Matthews, Ph.D.
The Council for Affordable Health Insurance
January 10, 2006

Executive Summary

One of the most common, and least challenged, assertions in the debate over U.S. health care policy is that Medicare administrative costs are about 2 percent of claims costs, while private insurance companies’ administrative costs are in the 20 to 25 percent range.

It is very difficult to do a real apples-to-apples comparison of Medicare’s true costs with those of the insurance industry. The primary problem is that private sector insurers must track and divulge their administrative costs, while most of Medicare’s administrative costs are hidden or completely ignored by the complex and bureaucratic reporting and tracking systems used by the government.

This study, based in part on a technical paper by Mark Litow of Milliman, Inc., finds that Medicare’s actual administrative costs are 5.2 percent, when the hidden costs are included.

In addition, the technical paper shows that average private sector administrative costs, about 8.9 percent – and 16.7 percent when commission, premium tax, and profit are included – are significantly lower than the numbers frequently cited. But even though the private sector’s administrative costs are higher than Medicare’s, that isn’t “wasted money” that could go to insuring the uninsured. In fact, consumers receive significant value for those additional dollars.

We also raise an important, although heretofore unrecognized, issue that gives Medicare an inherent advantage on administrative costs. Because of the higher cost per beneficiary, Medicare administrative costs appear lower than they really are. If the numbers were adequately “handicapped” for comparison with the private sector, they would be in the 6 to 8 percent range.

Finally, like the private sector, Medicare also has to obtain funds to pay claims. But the cost of raising that money, or borrowing it if the government doesn’t collect it from taxpayers, is excluded from Medicare administrative cost calculations. While we don’t in this paper draw any conclusions about what we shall call the “cost of capital” and its impact on Medicare’s administrative costs, we do want to highlight that those costs exist and that taxpayers, both today and in the future, must bear those costs.

http://www.cahi.org/cahi_contents/resources/pdf/
CAHI_Medicare_Admin_Final_Publication.pdf

Comment: The Council for Affordable Health Insurance (CAHI) is an association of insurance carriers advocating for market-oriented solutions to the problems of our health care system. Their bias for affordable private health insurance is at odds with our bias for affordable publicly-funded health care for everyone. They have now released a report “exposing” Medicare’s hidden administrative costs.

It is important to be aware of this report and the paper of Mark Litow of Milliman, Inc. on which this report is based. Opponents of single payer reform will use the concepts presented to dismiss the charge that private insurers are responsible for much more administrative waste than is our Medicare program.

When we are challenged, our best quick response would be to use their own numbers. After they have adjusted the numbers by applying their biased assumptions, the percent of private sector administrative costs is still over three times the administrative costs of Medicare (16.7 percent and 5.2 percent, respectively). The actuality of the administrative excesses is not in dispute – only the degree of the egregiousness of the excesses.

The opponents will also point out that the percent of administrative costs for Medicare beneficiaries is lower because the per person health care costs are higher than in the relatively healthy private insurance sector. But shouldn’t the administrative spending be directed primarily toward claims processing, especially since Medicare enrollment is a low-cost, once-in-a-lifetime event? Why should a greater percentage of health care dollars be used to administer private insurance programs with a much lower rate of claims processing? The administrative costs of claims processing is related much more to the volume of claims and much less to the number of beneficiaries. Thus their “handicapped” numbers are specious.

In another section of their report they claim that administrative costs “add value.” Most of us have difficulty recognizing the value of marketing costs, medical underwriting, brokers’ fees, excessive executive compensation packages, insurer profits, and other such administrative excesses. This claim alone, that these excesses add value, should destroy the credibility of this report.

The most important component of administrative waste was totally left out of this report – the administrative burden placed on the providers of health care. The recent Health Affairs report by J. Kahn and his colleagues demonstrated that just the billing and insurance related costs of private insurance consume about 21 percent of premium dollars, in a large part due to the administrative burden of physicians and hospitals. A single, administratively-streamlined system of claims management would dramatically reduce the waste of our current fragmented system.

And what is their conclusion?

“However, the issue is not and should not be which segment, private sector insurers or government-run plans, has the lowest administrative costs. The issue should be which does the best job of providing quality health insurance coverage for the best price. When one looks at all of the money pouring into Medicare, even with the price controls imposed by the government, the answer has to be the private sector.”

And we’re leaving these guys in charge? It almost makes you want to cry.

Health spending up, but who pays?

National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending
By Cynthia Smith, Cathy Cowan, Stephen Heffler, Aaron Catlin the National Health Accounts Team (Office of the Actuary, Centers for Medicare and Medicaid Services)
Health Affairs
January/February 2006

U.S. health care spending rose 7.9 percent to $1.9 trillion in 2004, or $6,280 per person. Health spending accounted for 16 percent of gross domestic product (GDP).

Medicare spending rose 8.9 percent to $309 billion in 2004.

Total Medicaid spending (federal plus state and local) reached $290.9 billion in 2004.

Private health insurance premiums amounted to $658.5 billion in 2004, compared with $563.5 billion in benefits paid.

The employee share of employer-sponsored and individually purchased coverage rose to $206.4 billion in 2004, while out-of-pocket spending for copayments and deductibles and for noncovered goods and services reached $235.7 billion. When payroll taxes and premiums associated with government-subsidized care such as Medicare and Medicaid are added in, aggregate household spending totaled $557.2 billion-more than one-third of PHC (personal health care) spending in 2004. Aggregate private business spending was $448.3 billion.

The trajectory of health care spending continues to be driven by new medical treatments, rising prices, and growing utilization. Medical progress has improved health care for many families, but rising costs are also a growing burden for households, businesses, and governments. Medical spending continues to rise faster than wages and faster than economic growth, and workers are paying much more in health care premiums than just a few years ago. As costs rise, the efficiency of health care spending is increasingly scrutinized, which has led to greater interest in paying for improved quality or outcomes, disease management, and consumer-directed health care. Although much of health spending may be highly valued, continued spending growth will require difficult trade-offs for businesses, households, and governments as other spending also rises. These trade-offs are more stringent for those with fewer resources.

http://content.healthaffairs.org/cgi/content/abstract/25/1/186

Comment: Although presented as a “slowdown” in spending, the 7.9 percent increase is significantly greater than the increase in cost of living, and now constitutes 16 percent of the GDP.

In looking at the source of funds, it is important to recognize a principle accepted by virtually all economists. The employer component of the Medicare payroll tax is part of the total employee compensation package; employees fund that tax through a non-itemized reduction in take-home pay. Thus the $67.4 billion Medicare tax listed as a private business source of funds should really be listed as part of the aggregate household spending. (Actually, the entire employee benefit package is a business expense, but this principle acknowledges the fact that the source of payroll taxes for social insurance programs – Medicare and Social Security – is the employee-beneficiary of the program.)

Adjusting for the employer component of Medicare payroll taxes, private business is a source of $380.9 billion of the funds for health services and supplies, and the aggregate household spending is $624.6 billion. Although employer-sponsored coverage remains a very important source of health care funding, the out-of-pocket spending by households represents a significantly greater burden imposed by health cost escalation. In addition, taxpayers fund the public portion of health spending which is $682.7 billion.

So what are we doing about the increasing burden of rising health care costs? We are shifting more of the costs to the households. Although we all feel the pain, those with health care needs who can’t afford care will feel it the most.

The tragedy is that we know how to fix our system. But… we’re not doing it. What a shame.

Medicare Reality Check

Christian Science Monitor
January 6, 2006

(CBS) It was a very tough week for low income seniors who were supposed to be covered by the new Medicare drug benefit.

“It’s not covered!”

Time after time seniors were told they indeed have insurance under the system, just not for the specific drugs they use, CBS News correspondent Wyatt Andrews reports.

“And this particular plan does not cover this drug,” pharmacist Michael Kim said.

“But I am disabled,” said Joyce Thomas.

Thomas has her new Medicare drug card. But payment was still refused.

Did they automatically enroll Thomas in the plan?

“Yes they did, yes they did,” Thomas said.

And does your new plan cover her drug?

“No it don’t,” she said.

This also happened to Doris Strong. And to Robert Elum.

“This plan doesn’t cover my prescription,” Elum said.

When we visited Grubbs pharmacy, two blocks from the U.S. Capitol, not one senior citizen we tracked had a prescription filled smoothly. The problem is that many low-income seniors who used to be on Medicaid got randomly switched to the new Medicare system — a system of private insurance companies that may or may not cover their drugs.

Pharmacist Michael Kim also blames was insurance company meltdowns that brought denial after denial.

“There are several companies that we tried calling and the message on their machine just says: we’re so overloaded, please call back at another time,” Kim said.

So if you’re a senior citizen having trouble with your prescriptions, the best thing you can do right now is come to the pharmacy prepared.

Here’s what to do. If you have your new Medicare card, be sure to bring it. If not, bring the letter that confirmed your coverage. If, like Joyce, your drugs aren’t covered, call 1-800-MEDICARE and ask the counselor to switch you to a better plan.

Medicare officials tell CBS News these are all first-week shakedown problems that should be solved soon.

States Intervene After [Medicare] Drug Plan Hits Snags

By Robert Pear
New York Times
January 8, 2006

WASHINGTON, Jan. 7 – Low-income Medicare beneficiaries around the country were often overcharged, and some were turned away from pharmacies without getting their medications, in the first week of Medicare’s new drug benefit. The problems have prompted emergency action by some states to protect their citizens.

Although there are no hard numbers, concerns expressed by state officials and complaints from pharmacists suggest a widespread pattern of problems.

At least four states – Maine, New Hampshire, North Dakota and Vermont – acted this week to make sure poor people received the drugs they were promised but could not obtain through the federal Medicare program.

Gov. Jim Douglas of Vermont, a Republican, said the state would pay drug claims for low-income people until the federal government fixed problems in the new program, known as Part D of Medicare. Michael K. Smith, the state’s secretary of human services, said, “The federal system simply is not working.”

On Thursday, the Vermont Legislature passed a bill declaring, “There is a public health emergency due to the federal implementation of Medicare Part D, which has resulted in serious operational problems, causing Vermonters to be turned away at the pharmacy without the drugs they need.”

Many factors contributed to the initial chaos. Some people who enrolled in Medicare drug plans did not have any proof of coverage. Pharmacists could not get the information needed to verify eligibility for drug benefits and low-income subsidies. Insurance companies and their pharmacy benefit managers were swamped with calls, so pharmacists often had to wait an hour or more on telephone help lines.

Federal officials promised improvements, but state officials were growing impatient.

In Maine, Gov. John Baldacci, a Democrat, agreed to pay drug claims to provide medications for those in need. Since Tuesday, the state has incurred $2 million of expenses for Medicare beneficiaries.

On Friday, Gov. John Hoeven of North Dakota, a Republican, said he had to act because “some low-income elderly and disabled individuals can’t get their prescriptions filled through their Medicare drug plans.”

In New Hampshire, Gov. John Lynch, a Democrat, signed an executive order authorizing the state to pay drug claims that he said should have been covered by Medicare. Republican leaders of the state legislature called a special session to provide the money. The start of the Medicare drug program “has been a nightmare for many of our citizens,” Governor Lynch said.

“Many are being charged unaffordable co-payments for prescription drugs – co-pays much higher than they are supposed to be. Too many of them are leaving pharmacies without their prescriptions.”

Thomas T. Noland Jr., a spokesman for Humana Inc., a major national insurer, said that some problems were “to be expected in a new program with lots of new enrollment taking effect all at once.”

Cynthia G. Tudor, a senior Medicare official, told insurers on Wednesday that they must “immediately make improvements” to “ensure that all beneficiaries get their prescriptions filled at the point of sale.”

In a memorandum to insurers, Ms. Tudor said she had received “numerous reports” that they were “inappropriately denying some scripts,” or claims. In many cases, she said, insurers are not providing the data that pharmacies need to file claims and get paid.

Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said on Saturday that he was working closely with states to address their concerns and to help individual patients. “We are filling close to a million prescriptions a day, including hundreds of thousands for low-income beneficiaries,” Dr. McClellan said. “Many, many people are getting the prescriptions they need.”

But in an interview on Friday, Stan Rosenstein, the Medicaid director in California, said: “We are hearing more and more complaints. A significant number of people are not getting their prescriptions. That has us very troubled.”

Drug benefits are delivered by private insurers under contract to Medicare. The federal government is supposed to compute the subsidy available to each low-income beneficiary. But Michael Polzin, a spokesman for Walgreens drug stores, said that, in many cases, that information had not been shared with insurers or pharmacists.

Under Medicare rules, each drug plan is supposed to have a transition policy, providing a temporary supply – typically 30 days – of any prescription that a person was previously taking. But customer service representatives at Medicare’s toll-free telephone number said they knew nothing of this requirement, and beneficiaries said it had been virtually impossible to take advantage of it.

Nationwide, 6.2 million low-income people receive both Medicare and Medicaid. About 1.1 million of them live in California. They tend to have many chronic illnesses and high drug costs. Cheryl Meronk, manager of the health insurance counseling program in Orange County, Calif., said she was referring people to hospital emergency rooms because they had been unable to get urgently needed medications through Medicare.

Under the standard Medicare drug benefit, which took effect on Jan. 1, the patient pays a $250 deductible and 25 percent of the next $2,000 in annual drug costs.

Over the last year, Medicare officials repeatedly assured poor people that they would receive extra help, so they would not have to pay any deductible and their co-payments would not exceed $5 a prescription.

But Carol A. Herrmann-Steckel, commissioner of the Alabama Medicaid Agency, said that Medicare beneficiaries with very low incomes had often been required to pay the full $250 deductible and co-payments far exceeding $5. “One beneficiary borrowed the money,” she said. “Another charged the $250 on a credit card because she was in such dire need of the medicine.”

Beverly R. Churchwell, an aide to the Alabama commissioner, said: “Some Medicare beneficiaries have not been able to get their medications. They are being turned away at the pharmacy.”

John J. Morris, 42, of Ware, Mass., who has diabetes and multiple sclerosis, signed up for a Medicare drug plan on Nov. 16. The insurer told him his co-payments would not exceed $5, he said, but at the pharmacy this week, he was told he had to pay $23 for each of three drugs.

“I could not afford it,” Mr. Morris said, “so I was not able to get my insulin or my M.S. drug.”

In Oregon, Sandy K. Hata, a field manager for the State Department of Human Services, said: “We’ve had calls from people in tears who could not get their medications. These people were being asked to pay a $250 deductible and hundreds of dollars in co-payments.”

Jane-ellen A. Weidanz, the Medicare project manager at the Oregon Department of Human Services, said, the $250 deductible “is hitting people very hard,” adding: “People are very angry and very upset. They are yelling at us. They feel that we lied to them. They feel Medicare lied to them. They feel they cannot trust anything we say about this program.”

Texas reported a similar problem. Low-income beneficiaries are “being charged incorrect (high) co-payments,” the state’s Health and Human Services Commission said in an e-mail message to the Dallas office of the federal Medicare agency.

In Oklahoma, low-income Medicare beneficiaries were often charged the $250 deductible. “They are being treated as if they were in a higher income bracket,” said Mike Fogarty, chief executive of the Oklahoma Health Care Authority. “It’s a common problem.”

Steven E. Hahn, a spokesman for AARP, which offers a drug plan insured by UnitedHealth Group, said he knew that some low-income people had had difficulty getting medications. “We are taking this very seriously,” he said. “This is a global problem, a systemwide problem, for all plan sponsors.”

Elizabeth L. Stone, 86, who lives alone in an apartment in Manchester, N.H., is enrolled in both Medicare and Medicaid, has arthritis and a thyroid ailment and is in a wheelchair. She tried to use the new Medicare benefit to fill a prescription this week, but failed.

“I did not get any medication,” Ms. Stone said. “People at the pharmacy would not give it to me because they do not know how they will be reimbursed.”

Another low-income beneficiary, Terence J. Stevens, 65, of Lakeland, Fla., said he signed up for the drug plan on Nov. 15, the first day on which enrollment was allowed. His plan tried to charge him a $47 co-payment for a drug to treat irregular heartbeats and high blood pressure. Mr. Stevens said he was unable to pay and did not get the drug.

In Alabama, William M. Beasley, a pharmacist and a Democratic member of the State House of Representatives, said, “I have had more difficulty trying to process claims for Medicare recipients than I’ve had with any other insurer in 43 years as a pharmacist.”

Stable physician Medicare participation may represent anunstable system

Physician Acceptance of New Medicare Patients Stabilizes in 2004-05
By Peter J. Cunningham, Andrea Staiti, Paul B. Ginsburg
Center for Studying Health System Change
January 2006

Despite an earlier Medicare payment rate reduction, the proportion of U.S. physicians accepting Medicare patients stabilized in 2004-05, with nearly three-quarters saying their practices were open to all new Medicare patients, according to a new study by the Center for Studying Health System Change (HSC).

Only 3.4 percent of physicians reported that their practices were completely closed to new Medicare patients in 2004-05, also statistically unchanged from 2000-01.

In fact, Medicare beneficiaries’ access to primary care physicians increased between 2000-01 and 2004-05, reversing an earlier decline. Among privately insured patients, trends in physician access are similar to those for Medicare patients, suggesting that overall health system dynamics have played a larger role in physician decisions about accepting Medicare patients than have Medicare payment policies.

Implications

… physicians likely consider Medicare payment rates in the context of what they receive from other payers, especially private insurers. In this context, Medicare payment as a percentage of private insurer payments has increased substantially in the past 10 years, from about 71 percent on average in 1996 to 81 percent in 2003. And Medicare fees are still much more generous than Medicaid fees, despite the fact that Medicaid fees increased relative to Medicare between 1998 and 2003-from 64 percent of Medicare in
1998 to 69 percent in 2003.

Given rapidly rising private insurance premiums, private payers’ pressure to keep physician payment rate increases to a minimum is likely to continue. In addition, continued decreases in the number of privately insured Americans, along with increases in the number of people with Medicaid or who are uninsured, may make it increasingly difficult for physicians to substitute higher paying privately insured patients for Medicare patients.

Perhaps the greater risk is not that stagnant Medicare payment levels will reduce Medicare beneficiaries’ access to physicians, but that continued financial pressure from all payers and declining incomes will compel physicians to limit patients that generate the least revenue, especially Medicaid and uninsured patients.

http://www.hschange.org/CONTENT/811/#ib5

Comment: We frequently hear that we will see a mass exodus of physicians from the Medicare program because of the failure of Medicare rates to keep up with the increase in overhead expenses (and expected profits) for physician practices. We haven’t seen that exodus, and that may be due to the fact that private insurers have slowed their rate increases even more than Medicare, reducing the price differential that might motivate physicians to replace Medicare patients with privately insured patients. Also, with the decline in employer-sponsored coverage, there are fewer privately insured patients to fill the void that would be created by eliminating Medicare patients.

Ironically, the market response of the private insurance industry has protected access for patients in the public Medicare program, obviously benefiting Medicare patients. So how could this be bad news? With both Medicare and the private insurers placing greater restraints on the profit potential of patients, physicians must maximize the utilization of their time and resources. That would normally be desirable except for one major factor. They are forced to reduce their time allotment for charitable services provided to uninsured patients and for the uncompensated portion of costs of providing care to Medicaid patients. Access for these individuals is already significantly impaired and can only grow worse with current trends.

Under a single payer system, physicians would be granted the right to negotiate adequate rates that would cover their costs and provide fair profits. As a transparent process, it would be fair for physicians and fair for taxpayers who fund the system.

Why would taxpayers agree to fair compensation for physicians? When they are sick, they don’t want to try to obtain care from an overworked, underpaid malcontent who doesn’t have the time to see them. They want the field of medicine to continue to attract some of the most qualified candidates that society has to offer. Our fragmented system of funding care has placed that goal at risk.

Is state by state Fair Share Health Care the answer?

AFL-CIO President John Sweeney Remarks on Fair Share Health Care Campaign
AFL-CIO
January 5, 2006

…AFL-CIO unions are taking bold steps and paving the way — state-by-state and piece-by-piece — towards health care reform through our landmark Fair Share Health Care campaign in some 30 states.

AFL-CIO unions have been working hard on this landmark legislation since early last summer. And we are proud to announce our final product.

Our Fair Share Health Care legislation would set a minimum standard for health care; it requires large employers to pay their fair share for health care (defined as a percentage of total wages) or pay into a state fair share health care fund that can be used to provide or subsidize health care for uninsured workers in the state.

The bottom line is that our health care system is broken — but it didn’t just split open. Big companies like Wal-Mart are pulling it apart and profiting at taxpayers’ expense.

Health care is a basic need of every family. It’s nothing short of immoral that big, rich companies are shirking their responsibilities to their employees — we’re talking about mothers and fathers who are pushed to tears because they can’t take their children to the doctor. And it’s happening every day.

To make matters worse, those companies that DO provide insurance are increasingly shifting the cost onto workers and cutting back on the benefits they provide…

http://www.aflcio.org/mediacenter/prsptm/sp01052006.cfm

And…

Governor Schwarzenegger’s 2006 State of the State Address
Office of the Governor of the State of California
January 5, 2006

His complete, unedited comments on health care reform in California:

Health care. I ask myself, what’s the quickest way that we can help the greatest number of people with the spiraling health care costs? I believe in the free market. I believe in free trade. I mean we buy food from overseas. We buy cars from overseas. Why not prescription drugs? So I call upon the federal government to permit the safe importation of prescription drugs. I say, let the free market work.

http://www.governor.ca.gov/state/govsite/gov_htmldisplay.jsp?sCatTitle=Speeches&sFilePath=/govsite/selected_speeches/
20060105_StateoftheState.html&sTitle=2006&iOID=73545

Comment: This year we will surpass $2 trillion in health care expenditures – more than enough to provide high quality, comprehensive health care services for absolutely everyone. We already know that we can easily accomplish this by dumping our fragmented, highly flawed system of funding health care and adopting a single-payer national health insurance program. Yet we listen to others when they tell us that this might be the ideal, but we can’t do it because it’s not feasible. So we turn to incremental measures.

What will the Fair Share Health Care approach do to improve health care coverage and access? Targeting large employers in thirty states sounds like a massive expansion, but the large target actually is comparatively small: Wal-Mart. Wal-Mart employs about 1.2 million individuals, and many of them are already insured. Even if Fair Share legislation passed in every state, the net impact on covering the 46 million uninsured would be almost negligible.

There is another very serious flaw in this proposal. Our fragmented system of funding care has left us incapable of controlling the seemingly-eternal explosion in health care costs. Legislators and the policy community have thrown in the towel and instead have turned to efforts to make health care premiums affordable. Without a lid on actual costs, premiums can be controlled only by reducing coverage, increasing cost sharing through patient access fees, and using devious methods to exclude from coverage those with greater health care needs.

It can be anticipated that the compromise with Wal-Mart will be to allow consumer-directed products, with affordable premiums, that fail to provide financial security for those who will need to access the health care system. Other employers are looking for a way out, and they’ll gladly jump on that train. The only losers will be the patients who need care and the health care providers whom they can no longer afford.

While waiting for comprehensive reform to become politically feasible, we generally have supported incremental measures that do expand affordable access and coverage. We are now staring at a runaway locomotive heading toward us. Although a few more may be covered, the increasing momentum of cost shifting to those with needs will further diminish affordable access for average-income Americans. The Fair Share campaign will merely stoke the fires, driving us to the cliff. Once we’re over the cliff, the feasibility of comprehensive reform will be obvious, but do so many really have to suffer for us to finally act?

If the AFL-CIO continues to support inadequate incremental measures, the day of reckoning will be delayed further. Will the AFL-CIO help take control of that runaway locomotive by supporting national health insurance, or would they prefer to sit down with Gov. Schwarzenegger and other state governors and discuss measures that would allow the free market to work?

Many in poll want feds, state to step up in health care

By Amanda J. Crawford
The Arizona Republic
Jan. 4, 2006

Jessa Johnson was sick for a couple of weeks. She figured it was probably some kind of virus. But without health insurance, the 23-year-old Gilbert resident could not afford to see a doctor and find out.

“I need to be healthy,” Johnson said as she recovered by spending a pleasant afternoon at the Phoenix Zoo with her boyfriend. “But I need money to live.”

Johnson is not alone in her concerns about the cost of health care and the American health care system. The Arizona Republic poll completed in mid-December indicated that 39 percent of registered voters surveyed statewide worry about their ability to afford the health care or prescription drugs they need this year. Many more, 81 percent, believe it is time that the state or federal government step in and create a universal health care system that ensures everyone has access to medical care.

Chris Philbin, 26, of southeast Phoenix, like many of the voters surveyed, is not concerned about his ability to afford health care in the next year because he has health insurance through his job at Lowe’s Home Improvement. But Philbin strongly believes the nation needs to find a way to insure everyone even if it means he would personally have to chip in for it.

“I would gladly give up 10 percent of my paycheck to have free health care like they do in Canada – free prescriptions, everything,” Philbin said as he strolled through the zoo with his fiancée and their 2-year-old son. Philbin, a registered Republican, said it’s not right that Americans without insurance sometimes have to skip care and could die due to not having access to medical care. “We should take care of them,” he said.

In Arizona, nearly 1 million residents were without health insurance in 2004, according to the Census Bureau. And more than 1 million residents now get their health insurance through the Arizona Health Care Cost Containment System, or AHCCCS, the state Medicaid program that provides free or low-cost health insurance to low-income families at a cost to state and federal taxpayers of more than $5 billion per year.

With health care costs soaring and many employers scaling back job-based benefits, health insurance has, by many accounts, become one of the most significant issues facing Arizona and the nation as a whole. When the Arizona Legislature reconvenes next week, health care is anticipated to be the subject of several bills.

Rep. Phil Lopes, a Tucson Democrat, for example, plans to introduce a bill to create a universal health care system in Arizona. The legislation would lay out a plan to provide public insurance coverage for all residents who have been here longer than a year, funded by employers, Medicaid, Medicare and other payers in the current system. Modeled after a plan that has been pursued in New Mexico for more than a decade, the legislation would lay out the basic structure of the program, which would keep doctors, hospitals and other providers private, Lopes said. And it would establish a commission to iron out the details and implement the program.

“I think it is government’s role to step in when the private market fails to provide basic necessities that our residents need,” Lopes said. He said that many health insurance innovations that relied on the private market over the past few decades, including the move toward managed care, have failed to keep costs in check in the long run or expand coverage. Lopes, House minority leader, acknowledges that such an unusual and ambitious plan could be hard sell to Arizona’s conservative Legislature.

Still, he said: “I am committed to doing what I can. And I am convinced this is the best way to go.” Noting the support for universal coverage in The Republic’s poll, he added, “How often is it that 81 percent of people say that we need to do something?”

On the other side of the aisle, Rep. Russell Pearce, a Mesa Republican who is chairman of the House Appropriations Committee, said he wants to curb the amount of money that the state spends on health care. He wants to eliminate some public programs that provide low-cost insurance for the working poor, such as KidsCare Parents, and make all AHCCCS recipients pay significant co-pays to get care, which he said would put accountability in the system. He also wants to lower the income limits so that fewer people qualify for AHCCCS. That would require a ballot referendum to overturn Proposition 204, the measure passed by voters in 2000 to open AHCCCS to all residents below the poverty line.

“(Medicaid) is a runaway train and absolutely cannot be sustained the way it is going. It is a drain on taxpayers,” Pearce said, noting that the program eats away at the state’s General Fund. “I was raised poor, and we never took a penny from government. . . . This is not about being coldhearted but recognizing that moms and dads that work hard are paying for someone else’s health care. These bleeding-heart socialists have no respect for taxpayers.”

But Pearce may have trouble finding voter support for his plans. Only 8 percent of poll respondents agreed that the state should save money by lowering the income limits of AHCCCS and excluding more families from coverage.

On the contrary, nearly half (46 percent) of respondents said they thought that the state should spend more money on AHCCCS, raise the income limits and open up the program to more families without insurance. One-third of respondents thought it should be left as it is.

Carnelina Vaccaro, 62, of Tucson, has good benefits herself because she is a federal government retiree. But she says that she knows many people aren’t so lucky, and she worries about people who are uninsured or have trouble affording health care.

“There are so many people who need assistance,” Vaccaro said while having lunch at La Cocina restaurant in downtown Tucson. She said she thinks the United States needs to “take a look at the kind of coverage they have in Europe.”

In the meantime, she thinks expanding existing programs like AHCCCS to more low-income workers could help, especially because the state is anticipating a budget surplus this year.

“I think it should be expanded,” she said. “There are too many people who don’t have health care. Help out Arizona families.”

U.K. Conservative Party reverses stand on health policy?

U.K. Conservative Party Reverses Health-Care Policy
Bloomberg.com
January 4, 2006

U.K. Conservative leader David Cameron reversed his party’s policy on health care, abandoning a pledge to help fund private treatment and promising to support the state-funded National Health Service.

Cameron’s pledge to keep the National Health Service free at the point of need challenges Prime Minister Tony Blair for the center ground on a core area of public services.

http://www.bloomberg.com/apps/news?pid=10000102&sid=ag.F7kpdlHls&refer=uk

And..

David Cameron’s speech on the NHS
Speech delivered today by the Conservative party leader to the King’s Fund January 4, 2006

Conservative commitment to the NHS

Some people think that we Conservatives want to change the NHS into something that it isn’t. Well, they’re right. We do.

We want to change the NHS into a more efficient, more effective and more patient-centred service. We want to change it into something of which we can be even more proud.

Other people – some of them in my own party – urge me to go much further. They want me to promise that under the Conservatives, the NHS will be transformed beyond recognition into a system based on medical insurance.

I will never go down that route.

Under a Conservative government, the NHS will remain free at the point of need and available to everyone, regardless of how much money they have in the bank.

From the Conclusion

Instead of helping a few to leave the NHS and go private, we want the private sector to come and help improve the NHS for everyone.

We will investigate the crucial questions; how would the NHS use greater freedoms? How can we harness the vitality and innovation of the social enterprise sector to improve the NHS? Is competition essential to deliver more efficient care? How can choice be made real and responsive to patient needs?

Full text of David Cameron’s speech:
http://politics.guardian.co.uk/conservatives/
story/0,9061,1677802,00.html

Comment: The American Heritage Dictionary defines rhetoric as “the art or study of using language effectively and persuasively.” It would be refreshing if politicians would become masters of this art, effectively communicating the policies for which they stand. Unfortunately, it is the politicians who have abused this art, necessitating an alternative definition of rhetoric: “Language that is elaborate, pretentious, insincere, or intellectually vacuous” (American Heritage Dictionary)

What does it mean to say “harness the social enterprise sector”? It is difficult to deduce any other meaning than “privatize.” If that’s what he means then why doesn’t he say it?

Big Labor's Big Secret

By Robert Fitch
The New York Times
December 28, 2005

AS most Americans are aware, our auto industry is in a crisis.

Workers’ wages are falling, and hundreds of thousands of jobs are being sent offshore. America’s largest parts supplier, Delphi, filed for bankruptcy protection, and General Motors, Delphi’s main customer, may too, if a threatened United Auto Workers strike occurs next month. Meanwhile, Ford and its main parts supplier, Visteon, seem to be skidding down the same road.

How did we get here? There are many causes: poor car designs, high pension costs, increased foreign competition. But much of it comes down to the overwhelming health insurance costs borne by the auto makers. This is why the union’s president, Ron Gettelfinger, has urged Congress to enact sweeping health insurance reforms.

If the government paid everyone’s health insurance bills, as those in Canada and most of Europe do, Detroit’s Big Three could save at least $1,300 per vehicle. Profitability would return. With deeper pockets, the auto makers could afford to pay their suppliers. Communities would be spared layoffs.

Of course, there are a lot of other compelling reasons to support a single-payer plan besides helping the auto industry. Although it is by far the most costly in the world, our health care system still leaves 43 million people uncovered. The latest World Health Organization rankings listed America’s system 33rd, below Costa Rica and only two notches above Cuba.

Most advocates of universal health care focus on the opposition of Republicans and insurance companies. But perhaps the most important factor keeping an overhaul off the national agenda is one that few Democrats acknowledge: most of Mr. Gettelfinger’s fellow labor leaders don’t support a single-payer system either.

The reason comes down to simple self-interest. The United Auto Workers is one of the few private-sector unions that doesn’t run its own health plan. Rather, most have created huge companies to administer their workers’ plans, giving them a large and often corrupt stake in the current system.

Opposition to a national health care plan is as much a part of the American trade union tradition as the picket line. It goes back to Samuel Gompers, the founder of the American Federation of Labor, who railed at early Congressional efforts to pass a law mandating employer coverage as Britain had done, which he said had “taken much of the virility out of the British unions.”

This line of thinking led to the notorious decision in 1991 by the A.F.L.-C.I.O.’s health care committee to reject a proposal that the federation support a single-payer plan. The majority said a national system simply had no chance in Congress, but others saw a conflict of interest: government-supplied health care would put union-run plans out of business.

The deciding vote was cast by Robert Georgine, chief executive of Ullico, a huge insurance provider created by the unions. A decade later, Mr. Georgine, who was paid $3 million a year by Ullico, and several other company directors – all heads of major A.F.L.-C.I.O. unions – were investigated by a federal panel for insider trading involving Ullico stock. Mr. Georgine and several directors resigned, and this year he agreed to pay back $13 million to the company.

Let’s face it: union-administered health insurance funds provide irresistible opportunities for labor leaders. First there’s patronage: hiring friends and relatives. Then there are the conventions, junkets and retreats provided by the plans and the providers. And for those willing to cross the line of legality, there’s the chance to take kickbacks from health care vendors.

Many officials are charged, but few go to prison, even when money allegedly winds up in Mafia hands. Last month federal prosecutors lost a criminal case in Brooklyn in which they charged that the Genovese crime family leaned on two International Longshoremen’s Association local presidents to, among other things, choose a favored health vendor.

Evidently, the jury was convinced by the defense’s argument that the union leaders were under duress. Even Lawrence Ricci, the principal accused Genovese figure, was acquitted, although he disappeared during the trial and never testified. (His body was found last month in the trunk of a car in Union, N.J.)

Despite shrinking membership, organized labor still has enough money and muscle to get behind a campaign for national health insurance. Last month, public-sector unions in California came up with tens of millions of dollars in a successful campaign to defeat a ballot measure that challenged their right to use union dues for political purposes.

The problem is getting American unions to fight for common concerns as opposed to narrow institutional interests. It may just be that a broad-scale union overhaul will have to precede one in American health care.

Robert Fitch is the author of the forthcoming “Solidarity for Sale: How Corruption Destroyed the Labor Movement and Undermined America’s Promise.”

Quick, someone call a doc

It’s time to start a conversation about national health care. We should talk health to death, plan it out and then find a way to go for it
By Charles Madigan
Chicago Tribune
December 28, 2005

(A note: Your response to the request last week to write your own “Contract with America” was impressive. We will be publishing many of your suggestions in Perspective and at chicagotribune.com early in the new year. Thanks for your thoughts and your help.)

I had an unusual vacation this fall that I’m not going to say much about. I went to a cabin in the woods of Pennsylvania. I got the flu, with all the consequences. A tornado came. (It did, indeed, sound like a freight train.) It took out the electricity. There was no heat. No light. Worse, no water pressure. It was the first week of deer hunting season, so the woods sounded like a war zone.

I slipped into a fever-induced delirium.

That’s when I concluded it’s time for the nation to start having a serious conversation about national health care. I don’t know why that hit me, because I never thought of going to a doctor. Jeez luweez, it was just the flu. So it must have been the lingering effects of the high fever, or dealing with the trots in a waterless cabin in the woods.

Or was it just the news?

Word mysteriously reached the Micheau State Forest that General Motors was looking to slash something like 30,000 jobs. Among other things, it cited the high cost of health benefits as a great burden on its profits.

Unspoken in the announcement was this: Who wants a sport-utility vehicle the size of a house trailer?

We have this stalwart of American industry trapped between high costs and products that aren’t selling well, even as wily foreigners eat up market share by obsessively emphasizing quality, efficiency and giving people what they want.

It’s not that we don’t want cars, we just don’t want those GM cars.

I haven’t been able to get this health care thought out of my mind for weeks. I’m not going to hop up and say it’s clearly the time for national health care, because that would be easy and would diminish the complexity of the subject.

Instead I mean, quite literally, it’s time to start a conversation about national health care. It should be part of the 2006 congressional race. It should be at the heart of the 2008 presidential contest.

We should talk health to death, plan it out and then find a way to go for it.

What surprises me at this point is that this isn’t at the top of the legislative agenda of every manufacturer, every significant employer from coffee shop chains to assembly plants all over America. Can ideological opposition to something like national health care be so strong that employers are even willing to overlook the impact on their bottom line?

Somehow, one would think they would see the logic of a conversation to address this growing problem.

And what is the problem?

The way the system operates now, a lot of people are not covered, a lot of people are not covered very well and those who are covered very well are covered at costs that are becoming prohibitive for employers.

Why?

There are a couple of answers.

My own would be the unpopular conclusion that we go to the doctor way too often, from birth until we shuffle off. I would hope that as my inevitable decline continues, I will view it as inevitable decline and not something that can be fixed by medical science at great expense.

Something big comes along, then I would need health care, preferably covered by insurance.

But it would have to be big. Either big or bleeding a lot. That would be my rule.

On top of that, the system’s appetite for money expands to eat up what is available, and then some, just like a teenager. That has to be addressed.

On the business side, something else is at work. The simple explanation is globalization.

America’s manufacturing muscle, and a wonderful muscle it has been, is now pitted against a whole world full of low-cost operators who don’t have to sweat the cost of health insurance in union negotiations, either because they don’t deal with unions, have national health care, or simply don’t have an iota of concern about the health of their employees because there are always so many more waiting for jobs.

Here in America, we don’t think that way.

Many manufacturers have stepped up over time and provided excellent health benefits for most of their workers. But now they are getting pinched.

The rest of the world makes an abundance of stuff for a fraction of the price it would cost to make here. Then low-cost sellers buy it up and sell it back to Americans.

It would be so easy to point the finger and blame manufacturing for being cheap, for trying to squeeze dollars out of their employees by cutting jobs and benefits.

But I think we should cut manufacturers a break. They are competing in a changing, demanding global game. They don’t need chiding or criticism. They need some help.

Should national health care be part of that package?

Two women, two cancers, two health-care systems

By Tom O’Brien
San Francisco Chronicle
Thursday, December 29, 2005

After a long time away, you see with new eyes.

I moved back to the United States with my Canadian wife and two small boys after living 15 years in Toronto and Ottawa. U.S. health care now looks both expensive and scary, leading me to conclude that we’d do better with an entirely different system.

Nowhere has this been put in sharper relief than in the story of two colleagues. Struck in March with cancer, an American colleague worried about death, insurance loss and bankruptcy. In contrast, a Canadian colleague and cancer victim had only her disease to fight.

Susan was on sick leave when I came to work at my new job in August. She was middle-aged and single with a grown family and well liked in my office. She was undergoing chemotherapy to treat breast cancer and not able to work. Our employer supported her beyond the normal period of sick days and vacation.

But the scary question for anyone but the rich hit with a catastrophic illness in the U.S. health-care system is: How long will an employer’s support go on if the battle goes far beyond the time allotted for sickness and vacation? Susan worried about the loss of health-care coverage and what ensues — second-rate care, bankruptcy, choosing between timely drug therapies and even modest necessities. She died this month before those fears were realized. But had she lived, she and her family would have confronted the excruciating battle survivors have to fight with insurance companies, employers and health-care providers over cost, length and quality of treatment.

In contrast, my former colleague Kathleen back in Canada was gripped by uterine cancer, which had spread to her intestines. While she was locked in a life-and-death battle for 18 months, she didn’t have to worry about losing her health care and choosing which bills to pay. Canadian Medicare covers everyone for everything in hospitals and doctors’ offices, including some elective procedures. This means no health care-caused bankruptcies. No fights with insurers. No insurance-driven financial worries. Kathleen could save her energy for battling her cancer instead. She did recover, and while her recovery was not necessarily the direct result of differences in care systems, there is no question that she would have suffered more with the burden of financial worries related to her health-care needs.

I hear stories here about Canadians lining up for basic medical care. But despite plenty of doctor appointments, occasionally bringing my children to the ER, and having had a heart procedure myself, I didn’t witness any delays for necessary (let alone emergency) care. In survey after survey, Canadians support public, nonprofit health care by a wide margin.

And why not? Compared to the United States, Canada has much lower infant-mortality rates and a longer life expectancy, according to data from the World Health Organization. Canadian women get just as many mammograms, for example, as do American women. This is achieved despite spending far less per person on health care — 10 percent of per capita GDP in Canada goes to health care versus 15-plus percent in the United States, according to WHO research.

After 40 years of private health care in America and 15 years of Canada’s Medicare, I’ll take the latter. But of course, I can’t; it’s not available here. I love my country but not the private health-care system that abandons many people and worries even more.

Few Americans know that every other industrial country in the world has a health-care system more or less like Canada’s. I think even fewer realize that we do, too — it’s called (U.S.) Medicare. The system that boosted the health of Americans 65 and older is similar to Canada’s system for everyone. They’re both “public, not-for-profit, single-payer” systems with low overhead costs. So why not extend Medicare to every American?

Our seniors like it. Sure, it will raise the cost of this government program by billions of dollars, according to even the most conservative estimates. But it will save money for both individuals and employers who now purchase private health insurance. After all, it’s not how much of your income you pay, it’s how much you keep. You’ll keep more under Medicare-for-all, and every child, woman and man would get the timely health care they need.

Give people the opportunity to face and fight their illnesses, not their insurance companies.

To avoid the cruelest cut of all

By Glenn Hameroff
Community Voices
Daytona Beach News-Journal
January 04, 2006

I was dismayed to read in The News-Journal on Saturday that as many as 65,000 local residents may be denied access to Flagler Hospital. This recent episode, coupled with the estimated 45 million Americans without health insurance, causes me to wonder why our government permits health care to be rationed based upon wealth. When health-care emergencies occur, a few extra minutes can mean the difference between life and death. It is particularly disturbing that this accident waiting to happen is the result of squabbling over money between two health insurance entities.

The significant issue, in this threat to reduce access to Flagler Hospital, is the rate of reimbursement that the Florida Health Care managed care plan pays to the Flagler hospital. On the surface this conflict seems to be waged by accountants employed by the hospital and the health-care insurer. The reality is that our health insurance edifice is hampered by the waste created by having more than 1,200 private health insurance companies in the United States. The conventional wisdom that competition ensures efficient use of scarce resources does not hold sway in the health-care delivery system.

A logical analysis of the realities of our health-care delivery system results in the conclusion that we would be better served by a single payer health-care insurer. Health care is a human right, not a battle between an insurance company and a hospital. The efficiencies achieved by employing economies of scale could go a long way to reducing the number of uninsured Americans.

According to popular belief, the existence of hundreds of companies ensures greater competition and lower costs. A fundamental tenet of the conventional wisdom alleges that if you really want to screw things up, let the government run the industry. References are made to the post office as an example of the chaos and inefficiencies that would result. Yet when you examine the facts regarding the costs of handling a medical claim, Medicare is the most efficient health-care insurer. Private insurance providers cost anywhere from five to 20 times Medicare’s per unit expenses. This fact should be widely revealed to the American people.

Hameroff, a retired history teacher, lives in Palm Coast.