Cigna to allow consumers to customize their health plans
By Jonathan G. Bethely
American Medical News
April 3, 2006

Cigna’s Custom Benefit Builder allows members to personalize various aspects of their coverage, from co-payment and coinsurance levels to deductibles and out-of-pocket maximums, to whether the plan includes a health savings account. Once the appropriate selections are made, the Web-based tool then calculates how much the plan will cost and allows the member to enroll in what is essentially a traditional PPO or HMO plan.

http://www.ama-assn.org/amednews/2006/04/03/bisd0403.htm

Cigna’s Custom Benefit Builder:
http://www.cigna.com/health/employer/medical/cbb/basics.html
http://www.cigna.com/health/employer/medical/cbb/cbb_fact_sheet.pdf

Comment: By Don McCanne, M.D.

What a great way to bring down the high cost of health insurance. The healthy family with negligible health care needs can choose the highest deductible ($50,000?), maximum coinsurance (50%?), and maximum out-of-pocket maximum ($250,000?). Cigna could probably offer that at a premium that a family living at 400% of the poverty level could afford. What a wonderful program. Cigna is finally offering a product that has made health insurance affordable.

But what about the future? Suppose the family develops significant medical needs. Although they have an affordable insurance product, health care itself would not be affordable.

Not to worry. Our health insurance innovators can come up with a new product. They can sell you an insurance product that will guarantee you the right to purchase insurance that would actually pay for health care should the need arise. Obviously the premiums would be very low because it would not be providing any coverage at all until a decision were to be made to enact the plan. Instead of health insurance, this plan would be “insurance insurance.”

So why haven’t the insurance innovators come up with this plan? The problem is that the care for the family with needs will have to be funded. There are two options of doing this. One option would be to step up the premium to cover the services required, once the need arises, replacing “insurance insurance” with truly comprehensive insurance. Since these plans would be enacted only by families with significant needs, this concentration of high-risk, high-cost individuals would require premiums that might consume the families’ entire incomes. That won’t work.

The other option would be to adjust the premium for “insurance insurance’ to cover the needs of every family that would eventually develop significant problems. Uh oh! Since these costs have not been covered by the affordable Custom Benefit Builder plan, the premium for “insurance insurance” would have to cover it. How ironic. To make these programs work, the innovators would have to come up with an “insurance insurance” plan that provides no benefits, but has a premium that covers the losses for all high-cost patients. If all Custom Benefit Builder participants were mandated also to purchase “insurance insurance” then the premium would be close to current comprehensive plans. If Custom Benefit Builder participants were allowed to decline “insurance insurance” then the premiums would be even higher for those who do purchase it, plus the family without “insurance insurance” would be bankrupt if faced with significant medical costs.

Of course, all of this is silly. But new insurance innovations that dramatically shift the costs of health care precisely to those in need are much more than silly; they’re tragic!

But at least the Cigna executives would have a good laugh on the way to the bank.

Broder on Politics
Live Discussion with Post Columnist David S. Broder
washingtonpost.com
March 24, 2006

San Juan Capistrano, Calif. (Don McCanne): Do you believe that the report to be produced by the Citizens’ Health Care Working Group (Wyden and Hatch legislation in the MMA) and submitted to the President and Congress will have any impact in moving forward the process of health care reform?

David S. Broder: I would like to think so. The crisis in the health care system is obvious when you look at what it is doing to family budgets, to business’s bottom line and to the budgets of state and local government–let alone the fact that we have millions living uninsured. The need for action is obvious–but so are the difficulties of finding a comprehensive solution. I hope this report will be a spur to action.

http://www.washingtonpost.com/wp-dyn/content/discussion/2006/03/16/DI2006031601132.html

Comment: By Don McCanne, M.D.

If you have not already provided your input into the Citizens’ Health Care Working Group survey, you should do so ASAP. Your preferences on health care reform will be included in the report to be submitted to President Bush and to Congress. Several committees in Congress will hold hearings on this report.

If you do not have time to respond now, keep this link to access the site at the very next moment that you do have time to respond. Do not put it off.
http://www.citizenshealthcare.gov/

Particularly important is the Public Comment Center, especially the Health Care Poll, and What’s Important to You?
http://www.citizenshealthcare.gov/speak_out/comment.php

Below are my answers (Don McCanne) to the four questions in What’s Important to You? If you disagree, you should respond to be certain that your views are also represented. If you agree, you should state your views in your own terms since they are more interested in individual responses rather than an orchestrated campaign.

What’s Important to You?

Question: What concerns you most about health care in America today?

Answer: The failure to provide comprehensive, high quality health care services for everyone when we are already spending enough to do so.

Question: Our current way of paying for health care includes payments by individuals, employers, and government. Are there any changes you think should be made to this system?

Answer: We should replace our highly inefficient, fragmented method of funding health care with a single, public system of social insurance.

Question: What trade-offs do you think the American public is willing to make in either benefits or financing to ensure access to affordable, high quality health care?

Answer: Since we are already spending enough, we don’t have to exclude reasonable, beneficial services from coverage. The primary trade-off for a public insurance program is that we would have to be diligent in preventing perverse political attacks on the system.

Question: What is your single most important recommendation to make to improve health care for all Americans?

Answer: Adopt a single-payer system of national health insurance.

A Growing Hole in the Safety Net: Physician Charity Care Declines Again
By Peter J. Cunningham and Jessica H. May
Center for Studying Health System Change
March 2006

Continuing a decade-long trend, the proportion of U.S. physicians providing charity care dropped to 68 percent in 2004-05 from 76 percent in 1996-97, according to a national study from the Center for Studying Health System Change (HSC). The ongoing decline in physician charity care is alarming given the increase in the number of uninsured people, particularly during the first half of the decade. Declines in charity care were observed across most major specialties, practice types, practice income levels and geographic regions. Increasing financial pressures and changes in practice arrangements may account in part for the continuing decrease in physician charity care.

http://www.hschange.com/CONTENT/826/

Comment: By Don McCanne, M.D.

Grocery stores do not provide free food for those unable to pay. Landlords do not provide free housing for those unable to pay. Department stores do not provide free clothing for those unable to pay. Health insurers do not provide free insurance for those unable to pay. Yet physicians often do provide free health care to those unable to pay. It is one of the reasons why practitioners of the healing arts are held in high esteem.

The decline in physician charity care is very troubling news, but does this mean that there is a decline in physician altruism? Though altruism stems from within, it is molded by externalities. The health care environment is evolving.

Physicians within integrated health systems are offered little opportunity to provide charity care within their systems. Physicians in larger group practices have less influence in decisions over the level of charity care to be provided by their group. The growth in community health centers offers a release valve allowing primary care physicians to rely more heavily on paying patients to meet their ever-increasing overhead expenses. The health care environment has become less conducive to germinating the seeds of altruism.

Changing the health care environment would be more effective than trying to manipulate physician ethics. A national health insurance program would eliminate the need for physician charity care. Need we say more?

America’s Health Insurance Plans
2006 National Policy Forum
3/7/2006

Prospects and Implications of Tax Policy for the Health Care Industry Jonathan Gruber, Ph.D., professor of economics, Massachusetts Institute of Technology; co-editor, Journal of Health Economics; and associate editor, Journal of Public Economics

Carlton Dennis: Just a follow-up question, a different question on rationing. You mentioned that, and earlier speakers talked about universal health care. What’s your view on that? I know at the end of your talk you mentioned that we probably would have to go to some type of rationing.

Jonathan Gruber, Ph.D.: There are two questions there. Let me start with the second one, which is: do we need to do rationing? I don’t actually believe we do. Basically, I think what health economists have really concluded is two things which at first seem contradictory but in fact aren’t, which is: first of all – and this conclusion is most associated with the work of my colleague David Cutler at Harvard – first of all, over time, our health care dollars have been effective spent on average. That is, no one wants to have 1950s health care at 1950s prices. The health care we’re buying today is much better than it used to be. And if you use typical values of quality of life years and things like that, on net, we’re better off now than we were, even though we’re spending more. At the same time, I could, today, look back and say, “Of the 15 percent of GDP we spend on health care, I bet we could knock five percent of it out and people would be no less healthy.”

Now, how are those two things consistent? They’re consistent because it’s easy to look backwards. It’s hard to look forward. So it’s consistent because looking backwards, we can say, “Gee, a lot of this stuff we do is wasteful. Let’s get rid of it.” But we don’t know, of the new innovations, which are going to be wasteful and which aren’t. Rationing, putting a cap on, is just as likely to cut out the positive innovations as it is the negative innovations. And that’s the problem. In other words, if we rationed in 1950 and said, “Health care should not be more than five percent of GDP,” we would be much worse off as a country today. Likewise, if we today said, “Health care should not be more than 15 percent of GDP,” I predict we’d be much worse off as a country in 2100. I think we need to find another solution, other ways to try to get at this than rationing because I think rationing is just too blunt an instrument, given the overall positive advances.

Now, that said, universal national health insurance, there are two components to that. One is universal coverage. Universal coverage can be done making all of you happy. You can have universal coverage for the private health insurance industry. That’s what we’re proposing in Massachusetts. There would be a central pool through which private insurers would offer policies. But, we would mandate that everyone in the state be covered. Okay? So that’s universal coverage with the private insurance sector.

National health insurance means wiping you all out. I just personally don’t see that as even worth discussing, for political reasons. As well, I think there are some real economic arguments. At least I think there are economic cases to be made on either side. But the truth is, I just don’t think, politically, we’re just ever going to be in a place where we can seriously consider national health insurance, Canadian-style health insurance. I just don’t think it’s worth our brain cells worrying about it.

Dan Leonard: Thank you for that, by the way.

Jonathan Gruber, Ph.D.: Well, I’ve made enough enemies today.

Dan Leonard: Yeah, right.

Jonathan Gruber, Ph.D.: I figured I’d make a few friends. [Laughter]

Dan Leonard: Redeeming yourself.

http://www.kaisernetwork.org/health_cast/uploaded_files/
030706_ahip_taxpolicy_transcript.pdf

Comment: By Don McCanne, M.D.

On rationing:

In yesterday’s Quote of the Day, Marmor and Mashaw stated, “…social insurance programs have been and can be adjusted over time to meet fiscal, demographic, and technological challenges. They are not dinosaurs from another age, but evolving programs whose core principles can be expressed through a number of adaptations.”

Gruber stated, “I think we need to find another solution, other ways to try to get at this than rationing because I think rationing is just too blunt an instrument, given the overall positive advances.”

In the single payer model, the global budget for health care is adjusted for inflation, demographic changes, and the introduction of reasonable, beneficial technological innovations. One of the more important reasons that we want to continue to support technological innovation is that new technology theoretically promises higher quality at a lower cost, often replacing out-dated and more expensive technology. A major problem is that some of the technology is new, and, instead of replacing old technology, it expands the range of diagnostic and therapeutic possibilities.

This is precisely why we need a monopsonistic, single-payer purchaser of health care. We would be in a position to demand value for new technology. If it increases the health care budget, then we would want to be certain that it is worth the increased spending. Another reason is that a monopsonistic purchaser would be in a position to finally address the “Wennberg variations,” by reducing allocations for non-beneficial excesses in technological services that have been well documented.

In framing the debate on reform, we should walk away from arguments over the “blunt instrument of rationing,” and begin to discuss how we can better spend our health care dollars.

On the politics of national health insurance:

Professor Gruber was certainly an audience pleaser at this national meeting of the private insurance industry. He reassured them that they will continue to thrive, using the stale political-feasibility argument. He may be protecting the insurers’ brain cells by telling them not to worry about it, but we can assure them that they have plenty to worry about. The Quote of the Day two days ago on medical-loss ratios led to this conclusion: “You would think that anyone with a modicum of business sense would believe that keeping (the private insurance industry) in charge is no longer feasible.”

For those interested, previous Quote of the Day messages are posted at https://pnhp.org/news/quote_of_the_day.php

Understanding Social Insurance: Fairness, Affordability, and the ‘Modernization’ of Social Security and Medicare
By Theodore R. Marmor and Jerry L. Mashaw
Health Affairs
March 21, 2006

In our view, the fate of Social Security and Medicare should be neither stasis because of political gridlock nor transformative change because of anxieties about the future. Both are crucial parts of the U.S. social contract and respond to deeply held notions of fairness and collective responsibility. But they should not be immune to sensible adjustment to reflect changed circumstances. To see why, we need to understand why basic social insurance arrangements have been so remarkably durable both in the United States and elsewhere.

The short answer is, first, that the core features of social insurance arrangements are both economically sensible and socially and politically acceptable. Social insurance is part of the essential social glue that holds an individualistic polity together and that makes the economic risks of a market economy tolerable. Second, however fundamental to the U.S. social fabric, social insurance programs have been and can be adjusted over time to meet fiscal, demographic, and technological challenges. They are not dinosaurs from another age, but evolving programs whose core principles can be expressed through a number of adaptations.

But some mutations are species-altering. In our view, much of the current enthusiasm for “modernizing” Social Security and Medicare has precisely that species-altering ambition. These reforms emphasize not protection against common economic risks in a changing world, but individualized risk bearing through increased responsibility and rewards for personal choice and increased “marketization” of social provision. We do not deny for a moment the value of personal choice, individual responsibility, and market competition. Indeed, supporting a society based on a viable vision of those values is the fundamental function of social insurance. But social insurance programs designed to maximize personal choice and promote market competition will simply not deliver adequate social insurance protections. To see why, we need to explore the basic structure of social insurance and its capacity to face contemporary challenges-that is, its capacity to modernize while continuing to play its fundamental social role.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.25.w114

Comment: By Don McCanne, M.D.

Even if you are already an authority on social insurance, this article is well worth reading. Marmor and Mashaw provide an effective framework on which to have a rational dialogue on social insurance. You will not only be able to explain why we should and how we can preserve the social insurance roles of Social Security and Medicare, but you will also be able to extrapolate the principles and thereby be able to explain why we need a program of social insurance to cover health care for everyone.

Even if you are not a subscriber to Health Affairs, for the next two weeks this article can be downloaded free of charge. You should do so now.

Health plans make more, spend less in 2005
By Jonathan G. Bethely
American Medical News
March 6, 2006

If physicians needed any more indication of tightening reimbursement, how about this – not only did profits for the biggest health plans go up last year, but those plans also continued to cut the percentage of revenue they spend on care.

The medical-cost ratio – also called the medical-loss ratio or medical-care ratio – is the key number for health plans in terms of their level of profitability. That ratio, simply, is the percentage of dollars the companies spend on health care.

Whereas 10 years ago many plans had medical-cost ratios in the high 80s or 90s, now the highest percentage among large, publicly traded health insurers is Health Net, at 83.9%. Aetna, which had a medical-cost ratio well into the 90s when CEO John Rowe, MD, took over in 2000, recorded a ratio of 76.9% in 2005, Dr. Rowe’s final full year before his retirement. That was the lowest medical-cost ratio for the nation’s largest publicly traded plans.

Medical-loss ratios for 2005 (Source: Company 10-K, year-end filings with the Securities and Exchange Commission):

76.9% – Aetna
82.3% – Cigna
83.9% – Health Net
83.2% – Humana
78.6% – UnitedHealth Group
80.6% – WellPoint

http://www.ama-assn.org/amednews/2006/03/06/bisd0306.htm

Comment: By Don McCanne, M.D.

Clearly, one-fifth of health insurance premium dollars are not being spent on health care, but are consumed by the insurers. What does not show up in these numbers is the cost of the administrative burden that these insurers place on the health care delivery system. The billing and insurance related functions for physicians and hospitals burn up another 12 percent or so of the premium dollar (Kahn et al, Health Affairs, Nov/Dec 2005). Add these together, and that is about one-third of the premium dollar.

We are very concerned about the continued escalation of health care costs. New technology and pharmaceuticals are adding to the spending on physicians, hospitals, laboratories and other health care services. We fret about these expenditures within the two-thirds of the insurance premium that actually makes it down to the health care system, yet we are ignoring the one-third that is wasted on administrative services that provide no health benefit for the patient.

We are enriching this industry for providing coverage for the healthy workforce and their young, healthy families, and for covering the healthy sub-sector of the individual insurance market. We taxpayers are footing the bill for the population subgroups with greater health care needs.

We certainly are not receiving much value from the insurers – letting them have the easy stuff at a very high cost. Wouldn’t it be more logical to target their waste, rather than slowing spending growth by making health care unaffordable for those who do have needs?

Why do we keep hearing that eliminating this industry isn’t feasible? You would think that anyone with a modicum of business sense would believe that keeping them in charge is no longer feasible.

Before We Go ‘Single Payer’: Insurance Reforms We Should Try
By Michael Kinsley
The Washington Post
March 17, 2006

The small fraction of people involved in auto accidents in any year is responsible for almost all of the cost of auto insurance. You insure against the risk of being in that group.

What’s different about health insurance is the opposite: Much of it isn’t insurance at all but a subsidy. The value of the subsidy is the difference between what the individual pays and what the insurance would cost in the free market. If people were buying health care or insurance with their own money, they might or might not spend too much — whatever “too much” is — but no one else would need to care if they did.

A subsidy has to take from someone and give to someone else. Everybody can’t subsidize everybody. Or, to put it another way, society cannot give the average citizen better health care than the average citizen would choose to buy on his or her own.

There are the makings of a deal here. Better-off or better-insured people could be told, individually or as a group: Give up your health care subsidy and you may opt out of any rationing-type restrictions that the system imposes. And if a few smaller reforms like that don’t work, maybe it will be time for single-payer.

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/16/AR2006031601311.html

Comment: By Don McCanne, M.D.

What are the policy issues behind Kinsley’s proposed reforms? The wealthy are already free of rationing-type restrictions since they can purchase whatever care they want. The only real substance in his proposal seems to be that tax policy should not be used to subsidize the purchase of insurance. That would partially address only one flaw in our current system of funding health care: the regressive tax policies of employer-sponsored plans.

We don’t need to rehash here all of the flawed policies of our current system, which Kinsley fails to address, to understand that the $2.1 trillion that we are already spending is more than enough to provide comprehensive health care benefits for everyone.

Aren’t you growing weary of the before-we-go-to-single-payer-let’s-try-(insert-deficient-policy-here) approach to reform?

Who Is at Greatest Risk for Receiving Poor-Quality Health Care?
By Steven M. Asch, M.D., M.P.H., Eve A. Kerr, M.D., M.P.H., Joan Keesey, B.A., John L. Adams, Ph.D., Claude M. Setodji, Ph.D., Shaista Malik, M.D., M.P.H., and Elizabeth A. McGlynn, Ph.D.
The New England Journal of Medicine
March 16, 2006

We have previously reported that Americans receive about half of recommended health care and that there is remarkably little geographic variation in this rate. The present study demonstrates that the differences among population subgroups in the quality of health care, even when they are statistically significant, are small in relation to the gap between actual and optimal performance. These results underscore the profound and systemic nature of the quality-of-care problem.

We found that health insurance status was largely unrelated to the quality of care among those with at least minimal access to care. Although having insurance increases the ease of access to the health care system, it is not sufficient to ensure appropriate use of services or content of care. Indeed, within systems where access to care is more equitable, disparities in quality due to race or ethnic group or to other characteristics are often reduced or even reversed, but substantial gaps between observed and optimal quality remain.

To make substantial improvements in the quality of health care available to all patients, we must focus on large-scale, system-wide changes. Our previous study of the quality of care delivered in the Veterans Affairs health system illustrates some of the potential for improvement. In that system, with one of the country’s most mature electronic medical-record systems, decision-support tools at the point of care, automated order entry, routine measurement of and reporting on quality, and financial incentives for performance, we found that participants received 67 percent of recommended care, a considerably better rate than the 55 percent observed in the current study.

We have previously shown substantial deficits in the quality of care nationally and in metropolitan areas with very different market profiles. In this study, we have now shown that individual characteristics that often have a protective effect do not shield most people from deficits in the quality of care. As the Institute of Medicine has concluded, problems with the quality of care are indeed widespread and systemic and require a system-wide approach.

http://content.nejm.org/cgi/content/full/354/11/1147

Working Paper (technical appendix to “Who Is at Greatest Risk for Receiving Poor-Quality Health Care?”): http://www.rand.org/pubs/working_papers/2006/RAND_WR174-1.pdf

And…

Medical Care Lacking but Equal
By Rob Stein
The Washington Post
March 16, 2006

Blacks and Hispanics tend to receive slightly better day-to-day medical care than whites when they see a doctor, a large and surprising study has found, sparking new debate about the impact of race on health in America.

The study, the most comprehensive examination of the quality of primary care in the United States, found no significant differences among patients from different ethnic groups or incomes once they get to see a doctor, but a slight trend toward better care for blacks and Hispanics.

The researchers stressed, however, that other disparities in health care do exist. Poor people and minorities, for example, are less likely to see a doctor in the first place and they receive far less expensive care. In addition, the minor variations among racial groups found in the study are swamped by the low level of care everyone gets, they said.

“The obsession with racial disparities is a distraction from what we really need to do, which is improve health care for everyone,” said Sally Satel, who studies health care at the American Enterprise Institute, a conservative think tank. “This shows us that, if anything, minority groups actually have even somewhat better outcomes.”

http://www.washingtonpost.com/wp-dyn/content/article/2006/03/15/AR2006031502120.html

Comment: By Don McCanne, M.D.

To understand what was measured in this study, you should glance at the technical appendix at the link above. Some of the quality indicators listed are clearly high priority items and most of those do have a very high mean score for compliance. Some items are low priority, and it would be unreasonable to expect them to be included in every medical record for the given clinical event. Some are controversial and should not be included as arbitrary measures of quality. Many others may be addressed during the clinical interaction but might be included in the record only if the clinician were compulsive about detailed charting even though the item is of only nominal significance.

If you were to go through the list and weight the relative importance and effectiveness of each quality indicator, the scores would be much higher than the 55 percent reported. Nevertheless, we can do better, and we should attempt to do so.

A major concern about this study is that the overestimation of quality impairment was used to demonstrate that the lack of insurance or the presence of unfavorable sociodemographic factors had little bearing on these quality parameters. Thus, Sally Satel of AEI makes the outrageous statement that “minority groups actually have even somewhat better outcomes.” In fact, their broad sweep of what they define as recommended care was so broad, and so bluntly focused, that it obliterated well documented differences in access and outcomes.

Innumerable studies have proven that health disparities and the lack of insurance maim and kill people. This study should not deter us in the least from continuing our fight for health care justice.