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Budget blind to disaster in health care

Budget blind to disaster in health care

York Dispatch
Editorial
February 9, 2006

President Bush’s 2007 budget, with its target of reducing Medicare spending by $36 billion over the next five years, could be the proverbial straw that breaks the back of the nation’s health care system. It also could drive states and their voters to the wall, forcing a new look at universal health care.

Squalls tearing through the current system — including the latest round of bureaucratic chaos, the messy Medicare Part D Prescription Drug Program — have the potential to form a political storm that the Republican-dominated Congress had best heed in their own interest.

No, the American Medical Association doesn’t like the concept, nor do most state medical associations, for-profit hospitals and institutions — especially the pharmaceutical industry.

But there comes a time in the history of any business when, through arrogance or favorable legislation, it gets priced out of business. The nation’s health-care industry is leaping to that precipice.

It seems the president’s budget advisors are slow to get the message about the nation’s health-care crisis. Witness the fiscal 2007 Budget that:

Cuts $36 billion in Medicare over the next five years and reduces funding for the National Institutes of Health, the Centers for Disease Control and Prevention — the folks responsible for seeing we don’t get avian flu — and slashes aid to children’s hospitals.

In an election year, every Republican member of the U.S. House and every GOP senator up for re-election (note here Rick Santorum) must be choking a bit on how this will play in the hustings.

Add to that the general unpopularity of the Medicare Prescription Drug Program — an excellent example of institutional confusion and a windfall for pharmaceutical companies — and you have a nightmare for any politician trying to sell such goods to senior voters or their children.

Time for universal health care? One would think. In Arizona last week, there was a hopeful ripple. Physicians gathered on the capitol lawn to urge state passage of a single-payer health care system covering every resident.

The plan would use funds from employers, Medicare and Medicaid for universal coverage in the state, regardless of age or income level.

In Arizona, in Pennsylvania and across the nation, the system is broken. And it’s obvious from the latest federal budget proposal that the government doesn’t know how to fix it.

To do so would require a sense of political will absent in a Congress clearly beholden to market interests instead of to the health care needs of the country as a whole.

The Bush administration’s health-care cuts are bottom-line economics in a system that cries out for drastic reform. It’s ill-advised and a further recipe for disaster.

Medicare: Rich HMOs, Sick Patients

FOR IMMEDIATE RELEASE
FEBRUARY 9, 2006
1:04 PM

CONTACT: Institute for Public Accuracy
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167

Medicare: Rich HMOs, Sick Patients

WASHINGTON – February 9 –

STEFFIE WOOLHANDLER
Associate professor of medicine at Harvard University, Woolhandler said today: “The Bush health agenda is to privatize Medicare — to shift the taxpapers’ money away from sick patients and toward the drug and insurance industries. The Medicare Part D bill included over $40 billion in excess payments to HMOs. Because the Medicare Part D bill prohibits the government from negotiating with the drug companies for lower prices, it will provide a windfall to the drug industry — a windfall worth at least another $40 billion. Now Bush announces major cutbacks to hospitals and home care agencies that actually provide care to Medicare patients, and plans to make poor Medicaid patients reach into their own pockets to pay for health care. Bush is determined to redistribute health care dollars upward — away from the sick and poor, and towards his friends in corporate America. We need real health reform, a non-profit national health insurance system covering everyone.” Woolhandler is co-director of the Harvard Medical School General Internal Medicine Fellowship Program and a co-founder of Physicians for a National Health Program.
More Information

REESE ERLICH
Freelance journalist Erlich investigated the Medicare drug program for The California Report, a statewide news program airing on National Public Radio stations. He said today: “Many people are aware of the bureaucratic problems with implementing Medicare Plan D. But even after those are settled, tremendous problems remain. Six million people in the U.S. are enrolled in both Medicare and Medicaid. They were forcibly enrolled into Plan D, and the vast majority now must pay more for their drugs. Co-payments may range from a few dollars to over one hundred dollars per month. People who are HIV-positive, receiving assistance through the AIDS Drugs Assistance Program, are hit even harder. I interviewed one woman who will have to pay over 40 percent of her monthly disability income for health expenses — which were free before Plan D.”

###

Group seeks health care remedies

By Hilary Corrigan
Coast Press Reporter
February 8, 2006

It’s an ambitious goal, Lewes resident Lloyd Mills admits.

Installing a long-term, universal health care coverage system in Delaware — probably with the state government collecting money through a new tax and serving as a single-payer entity — doesn’t sound like an easy project.

“We’re going to have to do it. There’s no choice,” Mills said, adding that health care has grown unaffordable for middle-class residents and such a cover-all approach remains possible. “There are countries that have done it.”

Mills is a committee member with the Delaware Health Care Commission, a state body seeking plans on designing a universal health care coverage system in Delaware. On Feb. 10, the group will consider proposalsfor such a blueprint and select an applicant to draft it by the end of summer.

“We’re embarking into relatively new territory,” said Paula Roy, the commission’s executive director.

But to Roy, it’s part of the stated mission to craft “basic, affordable health care for all Delawareans” that led the state’s general assembly to form the commission in 1990.

“Our job isn’t done until there are strategies in place to cover everyone,” Roy said.

The commission came up with a similar universal coverage idea a decade ago, but took a different action route, reviewing ways to tweak the existing health care system in order to cover more people.

“It’s come full-circle,” Mills said of a universal plan. “We’re tired of tinkering. Tinkering has gotten us nowhere.”

‘Same boat’

In Delaware, about 100,000 remain uninsured and just as many are under-insured, Mills said. That leads to emergency room visits after people who can’t afford pricey medical attention let health care problems fester. Most of those with insurance have it through luck, since their employers offer it, he said.

“We’re all in the same boat,” Mills said of health care coverage needs, but that stance hasn’t improved what he describes as a failing system. “I’ve given up the moral argument. It doesn’t get anywhere.”

Instead, he focuses on the current system’s costs, what he calls a “patchwork of revenue sources” made up of co-payments, deductibles, premiums and other charges.

“There’s no good reason why it should be as complicated as it is, except a lot of people get paid a lot of money for pushing paper around,” Mills said.

He expects the draft plan to replace that with a new health services tax based on citizens’ ability to pay.

“Everybody in and everybody paying a fair share of the cost,” he said, adding that a single payer system would streamline financing. “One person paying and one person receiving all the bills.”

Mills expects that someone to be the state, possibly contracting an experienced insurance company to process claims and collections.

Such logistics present the problem, according to Beebe Medical Center President Jeffrey Fried.

“The devil is in the details,” Fried said.

Jim Bartle, Beebe’s vice president of finance, likes the idea of streamlining the hospital’s current administrative and financial burden associated with billing, insurance forms and claims to many different payers who all use different rules.

But crafting a single-payer system would need to include the federal government’s Medicare and Medicaid programs for senior citizens and those with low incomes. In an area full of retirees, more than half of Beebe’s business comes from those programs’ users, Fried said, and any new state plan would need to align federal plans for a fair process.

“What’s the role of the federal government?” Fried wondered. “That’s the big issue.”

He also wonders about Medicare’s financial future as the large baby-boomer generation retires and taps it.

“What are the alternatives?” Fried said, adding that he would support a universal coverage system, depending on details. “I think it’s good that people are looking at alternatives.”

Processing

Roy expects to receive most applications to the commission’s proposal request, advertised last month, on the Feb. 10 deadline.

“What we’re all really after is a way to cover everybody,” she said of the goal.

A federal grant allowed the commission to seek proposals outlining what such a system would resemble and how to install it.

“We will at least have a roadmap,” she said.

She finds more people willing to consider the possibility now than she found even five years ago. A 2004 report from the commission outlined a single-payer system possibility, but this approach takes a closer, more detailed look at it.

“The question is whether the challenges can be overcome,” she said. “Is it possible?”

Progs hit Dems over healthcare

By John Zicconi
Vermont Press Bureau
February 8, 2006

MONTPELIER — Vermont’s Progressive caucus on Tuesday harshly criticized the Democrat-controlled Legislature for not conducting studies that could show a single-payer, publicly-financed health care system is the most cost-effective way to provide universal health coverage for all Vermonters.

Led by radio talk show host Anthony Pollina — who is considering a run for lieutenant governor — Progressives accused Democrats of being too quick to compromise with Republican Gov. James Douglas, who last year vetoed a health care reform bill that called for broad public financing and raised taxes.

“What we are seeing is politics as usual,” Pollina said. “We want what is best for the people.”

Progressives are angry that legislative consultant Kenneth Thorpe was instructed not to do a cost analysis of a single-payer system.

Thorpe did a similar study for Massachusetts that concluded a universal health care system paid for through broad public financing would save that state billions more than other reforms, Progressives said.

“For some reason the Legislature has decided not to study that option,” Pollina said. “But we need that information. … We want that position put back on the table.”

House Speaker Gaye Symington, D-Jericho, said Thorpe was instructed not to pursue a single-payer system because it has no Republican support, which is needed to pass health care reform.

“We have a governor who will not move on a single payer health care bill,” Symington said. “We focused on areas that we thought were more useful.”

The House Health Care Committee is expected to propose a reform measure this week that calls on both public and private methods to provide health care.

The proposal is expected to call for those who are now insured through their employer to remain that way. A separate public system will likely be proposed to cover the 64,000 Vermonters who now lack coverage.

Symington said the Legislature’s joint Health Care Commission, which employs Thorpe, has a four-year charge. A single-payer study could be conducted in the future, but with no chance of such a system becoming law in 2006 the information was not a priority.

“First things first,” Symington said.

She then chided Progressives for calling a press conference to publicly complain rather than working with Democrats to reform Vermont’s health care system in a way that can gain broad political support.

“That shows there is a partisan agenda behind this rather than working constructively to get things done,” Symington said. “I’m hoping we can get back on track.”

Progressives said it is impossible to debate what is best for Vermont if information is purposely withheld. They encouraged Democrats to have Thorpe conduct a single-payer financial study, which they believe can be completed in a month.

“How will we know it won’t work if they won’t do the study?” Pollina said.

“The real issue with health care is cost,” he added. “Legislators should be focusing on ways to lower costs for families and employers and move to a rational system not tied to employment. That should be the center of debate.”

Contact John Zicconi at john.zicconi@rutlandherald.com

Reform languishes

Editorial
Times Argus (Barre-Montpelier, VT)
February 2, 2006

One of the leading advocates of health care reform has given members of the Legislature, Democrats and Republicans, a failing grade for addressing reform in a meaningful way.

Dr. Deborah Richter told a labor gathering in Barre on Sunday that plans proposed by Gov. James Douglas and by Democrats in the Legislature fail to take on the health care system as a system. Instead they are tinkering around the margins.

Richter is the co-author, along with former Human Services Secretary Cornelius Hogan, of a book called “At the Crossroads: The Future of Health Care in Vermont.” She and Hogan are leading advocates of an integrated, publicly financed health care system, and their thinking helped shape the health care debate as it got under way last year.

In her recent speech she was critical of Democratic legislators for accepting Douglas’ “reality” regarding health care. That reality is characterized mainly by a fear of new taxes. Democrats have backed away from plans for the use of broad-based taxes to pay for health care, knowing that Douglas would veto such a scheme.

Richter describes a different reality. She says that Vermonters presently pay a variety of taxes for health care — some visible, some invisible. We pay through property taxes, taxes for worker’s compensation, premiums paid by employees and employers, a higher cost of doing business, bankruptcies, and taxes that already go to government programs.

This system remains enormously costly and out of control because care remains separate from financing. Health care providers at present have little incentive for keeping people well. Insurance companies have little incentive for paying out money. Because providers and payers are separate, they work at cross-purposes.

Richter makes the point that most of what is paid out for health care is fixed costs — nurses’ salaries, hospital expenses, dialysis units. The nurse’s salary does not disappear if no one shows up at the emergency room on a given night. We pay her salary because we want her in the emergency room in case our spouse has a heart attack.

These fixed costs can be budgeted, Richter says, and doing so is the best way of containing costs. No other sector of the economy — certainly, no major business — operates without a budget. But the health care sector does.

Douglas opposes a broad-based tax, saying it would hurt the economy. Richter counters that Douglas portrays a broad-based tax for health care as a new tax. Instead, she views it as a replacement tax. It would replace a host of visible and invisible taxes that we are already paying but over which we have no control.

She says the Democrats in the Legislature have failed to come through with the studies that they promised on the financing of health care reform and its effect on the economy. She urges the Democrats to pursue these studies in order to provide a base line for discussion of meaningful reform.

The Legislature and governor have talked about a variety of constructive measures, such as improvements to the care of chronic illnesses and more sophisticated information technology. We are still waiting for information about whether broader reform would be possible. There are many questions about whether it would be, but there is no hope for progress until we have some answers.

Catching the health-reform bug

By Lance Dickie
The Seattle Times
February 10, 2006

The nation’s health-care system has not gotten bad enough yet for real change to occur. Just wait.

An increasingly anxious middle class is seeing skimpy insurance coverage, higher costs, diminished quality, fragmented service and the choking feeling no one is in charge. Those frustrations eventually will build enough pressure for change.

Seemingly ages ago, President Clinton banged a drum for a national health-care overhaul, and the state Legislature passed a bold package of reforms. The efforts went nowhere. Hillary Clinton was pilloried and local changes were repealed in a stampede. A smug, comfortable swath of citizens did not believe they had a stake in the debate.

In 2006, people are paying attention as their health insurance erodes with higher premiums, growing copayments, soaring deductibles and unstoppable medical costs. Health-savings accounts and tax sheltering cash for medical coverage? They sound like a cruel joke.

Big corporations bitterly complain about the legacy expense of health care for retired workers. They are potential allies with the middle class for national changes. Yet, other employers watch to see if the brazen parsimony of retail giant Wal-Mart becomes the new operating model.

A frightened middle class makes things happen.

Legislators in Olympia, disgusted by Wal-Mart’s cynical willingness to point its employees toward tax-supported health coverage, want a bill that sets a “fair share” minimum health-care contribution for large employers. If employers do not spend a required percentage on health care, they would pay into the state’s health-service account.

“In a sense, they’ve figured out that they can outsource their benefits (at no cost) to government and the taxpayer,” Craig W. Cole told legislators last month. “And, by so doing, they have created a very low competitive cost structure that punishes ‘good’ employers.”

Who is this troublemaker? His Bellingham-area supermarket chain was founded in 1909 and has 1,500 employees. He is also a University of Washington regent.

But even solid citizens such as Cole sound too radical for skittish legislators who recall the health-care upheavals of a dozen years ago. Fair share is not likely to get a fair shake this session. Even state Senate legislation to study access to insurance and health costs and develop a five-year plan has been pulled in favor of an under-the-radar budget proviso to accomplish the same thing. A list of recommendations would be due back by December before the next session.

Health-care reform is not going away in Olympia.

Pressure builds from another direction. King County Executive Ron Sims heads the Puget Sound Health Alliance, which has attracted national attention with efforts to improve health-care quality and lower costs.

Sims leads a five-county, independent, nonprofit, nonpartisan effort to identify the best medical practices in five initial priority areas: diabetes, heart disease, low back pain, depression and pharmacy issues. This ambitious consortium of providers, consumers and insurers wants to learn how to get medical care done right the first time.

More pressure for change. U.S. Rep. Jim McDermott, D-Seattle, has steadfastly introduced legislation in Congress to create a single-payer health system financed with a broad national tax. Health care stays private and local, but Uncle Sam does the paperwork and pays the bills.

The tenacity and ideas of this lawmaker and physician stirred a rousing ovation from doctors and medical students at a standing-room-only inaugural meeting of the Seattle chapter of Chicago-based Physicians for a National Health Program. Hundreds braved a Sunday-night downpour to hear McDermott and a panel discuss reforms.

Physicians across the country see the system not serving their patients. Health-care providers are driven to distraction by the time and expense of working with 1,200 insurance companies.

Good people with a commitment to the local delivery of health care are leading efforts to find solutions very close to home.

Put it all together. Legislative stirrings. Nation-leading explorations of evidence-based medical savings. Leadership for a national single-payer insurance plan. Pressure builds as middle-class confidence and coverage erode.

Lance Dickie’s column appears regularly on editorial pages of The Times. His e-mail address is ldickie@seattletimes.com

Change health care for uninsured

By Kay Lapp James
Portage Daily Register
November 9, 2005

Monday’s e-mail contained a surprising press release from Attorney General Peg Lautenschlager. She announced that her office was taking actions against two Milwaukee-area hospitals for unfair trade practices.

The complaints, which are to be filed with the Department of Agriculture, Trade and Consumer Protection, say the hospitals charged uninsured patients higher prices than they charged the vast majority of patients who have either Medicare or private insurance. The complaints, according to the press release, seek orders prohibiting hospitals from continuing to charge excessive prices to uninsured patients.

One complaint involves a man who had a stent implanted in his heart and stayed less than 24 hours in the hospital. He supposedly received a 20 percent discount because he did not have insurance. His bill was $33,646. Medicare would pay $15,000 for the same procedure.

In the other case, a woman had emergency gallbladder surgery and was billed $31,614. Medicare would have paid $5,000 for the operation, and the hospital would give an insurance company an average discount of 37 percent.

The difference in prices, or that uninsured people pay the highest prices for medical care, did not surprise me. I heard similar figures when I covered a talk by Drs. Linda and Gene Farley. The Farleys spoke of the need for a national single-payer health plan and discussed the costs and inequities in the current system.

The Farleys spoke at a meeting of the Dells Progressive Voices and their talk was greeted enthusiastically. Most politicians, businesses and the health care establishment have not greeted talk of a single payer or national health care system enthusiastically.

The plight of the uninsured has been ignored since the Clinton administration’s national health care plan got a decidedly chilly reception and defeat. People, corporations and even unions complain of health care’s increasing costs, but like the weather, nobody does anything.

The Farleys said a bill establishing a single payer system in Wisconsin had been introduced, but I doubt it will pass. It has been introduced several times in the past.

My surprise at the press release stems from seeing a politician taking aim at the healthcare establishment. I also learned 22 states have initiated similar moves.

Whether or not Lautenschlager is successful with the complaints, I wonder what the effect will be. Will this bring attention to the problem of not having insurance? Will it focus attention on the mishmash that constitutes the healthcare payment system?

I know people who live without health insurance who fear being sick or having an accident. The Farleys said people die because they don’t have insurance. I know at least one person who declared bankruptcy because of medical bills — common for the uninsured.

The uninsured are not the only ones concerned with the cost of healthcare. Wal-Mart announced new insurance plans for its employees and then an internal memo surfaced. The memo suggests the company hire only healthy, young people and get rid of workers who have health problems. This is from a company that has a large percentage of workers receiving Badger Care.

Wal-Mart is not unique. Other companies may have plans for cutting health care costs. They don’t put them in writing. Because of healthcare costs, I may live in an environment in which those who are not being perfectly healthy won’t be able to work.

Insurance, or the lack there of, concerns more than the uninsured. Employed people do not dare change jobs because a spouse or child has a chronic health concern. I wonder how many people don’t start a business because they cannot start one and afford insurance.

Health care in this country is a mess, and we need changes. Maybe our state can be a leader and start changing the system before it consumes us.

Kay Lapp James is editor of the Dells Events. She can be reached at kjames@capitalnewspapers.com or (608) 745-3567.

Bush's Rx for insurance: Buy your own

By John McCarron
Chicago Tribune
February 10, 2006
Additional material published Feb. 11, 2006

CORRECTIONS AND CLARIFICATIONS
In his Commentary column Friday, John McCarron stated that General Motors recently announced it will cap spending on health insurance premiums for salaried employees at 2006 levels. In fact, the announced cap applies only to retired salaried employees.

Say good-bye to your group health insurance.

OK, maybe not right away. Your employer may stick with your plan for a few more years. Don’t toss out that health-care card just yet.

But if you’ve been following the business news lately, and if you paid close attention–very close attention–to President Bush’s State of the Union address, you may hear a distant knell for the way most Americans get their health insurance.

General Motors, which spends more on health care for its workers than on steel, announced that it will cap spending on health insurance for salaried employees. Any future cost increases–and costs have been rising by double digits–will be borne by paying higher premiums, deductibles and co-pays.

That’s not so drastic, really, when you consider big outfits like GM, where labor contracts set a high standard, have offered employees some of the nation’s best benefits. But it does signal that the cost-sharing arrangement between employers and employees–you pay half, we pay half (or some such split)–is going the way of the defined-benefit pension. Remember the defined-benefit pension?

Then again, GM had little choice but to unhook from the great medical money machine here in Viagra Nation. The company must compete globally, as must all U.S. manufacturers. Compete for investors, too, in a world where you can buy the stock of Honda or Toyota as easily as Ford or GM.

So the race is on to limit corporate exposure to runaway health insurance costs. And sure enough, President Bush has a plan.

In his address, the president said government has a responsibility to “help people afford the insurance coverage they need.” The way to do that, his aides later explained, is to “level the playing field” so folks who buy their own insurance get as good a deal as folks who join their company’s plan.

Sounds reasonable. But details of the proposal, released by the Treasury Department, are causing quite a stir among the fraternity of insurance wonks who understand the implications.

Bush proposes a supercharged version of the health savings accounts, or HSAs, that Congress first authorized in 2003. Think of HSAs as an individual retirement account for health-care expenses. The way it works now, workers who choose “high-deductible” plans–plans that require patients to pay the first $1,500 or more out-of-pocket–are eligible to make tax-deductible contributions–up to $5,450 a year in a family plan–to an HSA and later use that money to pay uncovered medical expenses.

Bush would let that family sock away $10,500 per year tax-free. Moreover, they could claim a tax credit equal to 15.3 percent of the amount they deposited. But it gets sweeter. If the worker buys his own high-deductible insurance policy, rather than one offered at work, the premiums he pays would be fully tax-deductible and eligible for the 15.3 percent tax credit.

It’s all very complicated, but the bottom line is that relatively healthy people who can afford to set aside 10 grand a year would come out ahead by opening an HSA and buying their own insurance. After all, most employees cannot deduct the premiums they pay for their group plans, much less claim a refundable credit.

So what’s wrong with this picture? What’s wrong with encouraging workers, and their employers, to opt out of group insurance and go it alone … with large amounts of help from Uncle Sam?

Plenty, according to the Center on Budget and Policy Priorities, a Washington-based think tank. You can read its analysis online (www.cbpp.org), but an abbreviated list of horribles goes like this:

– If, as expected, the healthiest and wealthiest leave the group insurance pool, premiums will shoot up for the not-so-healthy and not-so-wealthy. That’s if they can find a plan that will take them. What insurance company is going to want your diabetic wife or disabled child?

– If, as expected, small-business owners, many of whom earn too much to qualify for a tax-deductible IRA, opt for the Bush HSA, which has no income limits, won’t many owners simply do away with their company’s group plan altogether? What’s good for the boss must be good for the workers, right?

– If, as the free-market theorists predict, people with high deductibles “shop around” for bargain health care and forgo “unnecessary” care, how are folks to decide what and when care is necessary, much less where they’ll get the most for their money? Surf the Internet? Thumb the Yellow Pages? So much for your primary-care physician and his or her trusted referral network of specialists.

No, what we have here is another Texas “two-fer,” a combo better than $3 gasoline and lower taxes on capital gains. What we have here is the fig leaf behind which corporate America will walk away from group health insurance, along with the sweetest tax shelter ever invented for the fortunate few with six-figure incomes.

RIP, group health insurance.

John McCarron writes, teaches and consults on urban affairs.

Former NEJM editor Relman supports single-payer in New York Times

New York Times
February 11, 2006

To the Editor:

Your Feb. 3 editorial “The Lopsided Bush Health Plan” nicely summarizes all the reasons why health savings accounts are a very bad idea and will not help solve the nation’s health crisis. But it disappoints at the end by failing to suggest what kinds of reforms might really work.

The evidence seems clear: Market-based policies cannot produce the system we need. Isn’t it time to consider a unified “single payer” insurance arrangement (“Medicare for all”) coupled with thoroughgoing reform of the delivery side as well?

Arnold S. Relman, M.D.
Boston, Feb. 3, 2006

The writer, professor emeritus of medicine and social medicine at Harvard Medical School, was editor of The New England Journal of Medicine, 1977-91.

Ownership Society Redux: New Name, Same Policy

By Sebastian Mallaby
Washington Post
February 13, 2006

The president likes to be consistent. Loves Laura; sticks to Laura. Kicks drink; keeps kicking it. First inaugural address: blue tie, white shirt. Second inaugural address: blue tie, white shirt. Weight in 2001: 190 pounds. Weight in 2005: 192 pounds. Hair length: same. Mood: same. No Clintonian gyrations.

Same deal when it comes to politics. Fights terrorists; keeps fighting them. Cuts taxes; keeps cutting them. Trusted Karl in Texas; still trusts him. Simple man. Straightforward man. How many policy moods and political gurus did Bill Clinton go through?

Same deal with the “ownership society.” First used the term in 2002. Went big with it at the Republican convention in 2004. Pretty much taped the slogan to his head in 2005, when he campaigned for personal Social Security accounts all across the country. You think George Bush would let go of this stuff just because Social Security reform failed? Fuhgedaboutit.

The ownership society is back, though it’s got a new label. Bush may not be pushing individual Social Security accounts these days. But he is pushing things called health savings accounts, which turn out to be similar.

Health savings accounts are ostensibly supposed to fix the health system. Right now, tax rules subsidize company-provided health insurance, but they’re less generous toward out-of-pocket medical payments; as a result, company health plans pay most bills and patients have no incentive to shop around for the best bargain. Health savings accounts end this tax bias. Anyone who buys an insurance policy with a deductible of $1,050 or more can open an account and save $5,250 a year toward out-of-pocket health costs, tax-free. This will shift control of medical spending into the hands of consumers, who will discipline overpriced hospitals and clinics.

Or so goes the theory. In practice, probably less than half of all health spending outside Medicaid and Medicare would be affected by the new consumer-driven discipline. Many hospital stays cost more than any deductible, so consumers would have no incentive to bargain; emergency-room patients aren’t in a fit state to negotiate prices with their doctors. But consider an even more basic question: Is the ostensible reason for health savings accounts the real one?

If the administration’s goal were merely to remove the tax bias against out-of-pocket health payments, it could simply make these tax-deductible. No need for health savings accounts to accomplish that — just tell people to count out-of-pocket payments against taxable income.

Even if the administration were determined to shelter out-of-pocket payments using health savings accounts, why make them so generous? It proposes both a tax deduction and a tax credit when money goes into the accounts; savings would accumulate tax-free and could be withdrawn tax-free also. As Jason Furman points out in a paper for the Center on Budget and Policy Priorities, no other savings vehicle enjoys so many privileges. And then there’s the size of these accounts. If the aim is to discipline health spending below the deductible, why subsidize savings up to $5,250 a year — five times more than the deductible?

In sum, health savings accounts are not just about ending the tax bias in favor of traditional company health plans. The administration is proposing a new kind of 401(k), and using it as an inducement to quit low-deductible insurance. Rich people, who gain most from the tax breaks on saving, will be first to sign on; healthy people, who subsidize sicker people in company health plans, will be right behind them. Their exit may force traditional health plans into a death spiral. The loss of the subsidy from healthy workers will drive premiums up, which will drive more healthy people into health savings accounts, which will drive premiums up further.

The State of the Union address (blue tie, white shirt) contained barely a mention of health savings accounts, but don’t let that fool you. Because these accounts are being pushed modestly, with no grand Social Security-style talk of remaking the social contract, there’s a chance that they’ll be seen as just one of various bewildering tax tweaks and slip quietly through Congress. But the proposal cries out for a debate very much like last year’s — a debate about personal saving vs. collective insurance.

A rerun of last year’s debate would show that health savings accounts are harder to defend than personal retirement ones. They are shockingly regressive: Furman’s study shows how a poor family might get a subsidy of $150 while a rich one might get more than $4,000. They have not just a transition cost but a real cost: The tax breaks could widen the deficit by at least $132 billion over 10 years and a lot more after that. And health savings accounts pose a more formidable threat to traditional corporate health plans than personal accounts posed to Social Security. Market forces are already dislodging company health plans; an extra shove could cause an avalanche.

The limited consumer discipline that would come from health savings accounts could not justify these disadvantages. But when you talk to administration officials, they express remarkably few doubts. They believed in the ownership society last year; they still believe in it this year. They believe in individual choice; they distrust collective programs. They don’t worry too much about the risks to the budget. Or to distributional justice. Or to existing safety nets.

Simple administration. Straightforward administration. The Clinton team would never have proposed such a clunker of a policy.

mallabys@washpost.com

Make state health insurance plan available to small firms

By Joseph Q. Jarvis
Salt Lake Tribune
February 12, 2006

Two days ago a bill, HB122, intended to provide Utah’s small-business owners with a new option for employee health benefits, was eviscerated by the Utah Health Insurance Association.

HB122, as originally written, authorized Public Employees Health Plan (PEHP) to organize a health benefit plan for employees of Utah’s small businesses. Written into the bill were planning steps which were adequate to identify and solve all problems and concerns related to cost, outreach and risk management.

A survey of more than 200 small-business owners in Utah found that their average employee age is 10 years younger than the average age of PEHP’s current beneficiaries. It is therefore possible that a PEHP small-business plan could be good both for small businesses and for the taxpayers who buy PEHP benefits for state, county and municipal employees.

Now, instead of providing a plausible solution to a critical problem, the bill merely proposes that a health insurance-dominated commission study the issue.

Recently, a Goldman-Sachs financial analyst observed that the Big Three U.S. automakers are “HMOs with wheels” that only happen to make cars. A well-known Princeton health economist added: “It’s insane to think that a company embedded in a fierce global competition can function as an insurance system.”

Yet U.S. health policy continues that insanity: American employers outspend Canadian employers 13-to-1 for the purchase of employee health benefits and 8-to-1 for the internal costs of arranging for and supervising benefits.

Nowhere do those costs hit harder than for small businesses. While 95 percent of the more than 600,000 Utahns working for businesses with 50 or more employees have a health benefit, only approximately half of the 250,000 Utahns working for small businesses do. Approximately 25,000 Utah small-business employees have lost their health insurance since 2000.

The vast majority of the 300,000 uninsured in Utah are small-business employees or their dependents. Unquestionably, the loss of health benefits can be attributed to the rapid rise of health premiums, which have risen five times faster than earnings over the past five years and double the national rate.

Health costs are making it difficult for Utah small businesses to compete either in the market for their goods and services or in attracting skilled workers. Ninety percent of Utah’s small-business owners indicate that health benefit costs negatively impact their profitability and employee retention.

If we care about economic development in Utah, we must find a way to make health benefits sustainably affordable for small-business employees.

High health care costs in the United States are not caused by Americans overutilizing health services, as some claim. International comparisons document that physician visits and hospital bed days by American patients are at or below the per capita average of other nations.

Rather, high American health care costs are caused by the related failures of efficiency and economies of scale. American health financing has a bureaucratic burden five times that of other industrialized nations.

Health insurance companies pay to deny health care. In response, providers of health care hire staff to extract payment from insurers.

Because insurers fail to aggregate people into large risk pools, they fail both to spread and manage risk optimally and to maximize group purchasing power to moderate prices.

It stands to reason that a search for sustainable health financing for small-business employees in Utah should begin by identifying the most efficient health financing system in the state and making that available to small-business owners.

Unquestionably, the Public Employee Health Plan is Utah’s most efficient payer for health services. At 3.8 percent, PEHP administrative costs are about one-fourth of the average similar costs for the state’s commercial carriers.

Unfortunately, by state statute, PEHP is currently unable to offer a small-business health plan, which means that while the state’s commercial carriers are apparently increasingly unable to meet the needs of small business, PEHP is not allowed to even try.

The only opposition to the bill came from commercial insurance carriers. It is apparently not in their interest to allow small businesses to experience sustainably affordable health benefits through the state’s most efficient payer.

If you support the interests of small-business owners, employees and taxpayers over health insurance carriers, call Gov. Jon Huntsman Jr. and your legislators and tell them to reinstate the original intent of HB122.

Joseph Q. Jarvis is a physician and president of the Utah Health Alliance.

Trusted Rx for Ill Nation

By Dan Carpenter
Indianapolis Star
February 12, 2006

To prescribe health savings accounts for a medical system that’s the most overpriced, overcomplicated, underperforming and unfair in the developed world is an artless dodge that denies the possibility the real cure may already be in hand.

It’s called Medicare. It’s run by the government at an overhead rate of roughly 5 percent, compared to upwards of 25 percent for private insurance companies. It doesn’t waste a lot of resources evading payment of claims or driving undesirably sick people off the rolls. It offers pretty much all the choices anybody else does and boasts a high satisfaction rate. You don’t lose it when you lose your job or your employer loses market share.

Medicare, or single-payer insurance by its generic label, is so good that other capitalist nations offer it to everybody. And no, heart attack victims don’t die waiting for a cot. The industrialized world’s average per-capita spending on health care is less than half ours, and their results are better in category after category, from infant mortality to life expectancy to doctor visits.

Why does it work so well? Because it works differently from health savings accounts. Single-payer insurance operates with the widest possible risk pool, meaning the wealthiest and healthiest chip in to pick up the poorest and potentially sickest.

This means there’s enough money to provide routine/preventive attention to everyone, instead of leaving scores of millions to put off care until they die or seek highly expensive emergency care as welfare cases.

This means no wasting billions on advertising to compete for the least needy customers. This means fewer clerks getting paid to cull out the cancer patients and more funds to hire cancer treatment personnel. Not to mention fewer eight-figure bonuses to executives for raising rates and reducing claims.

It has to happen, says retired Indianapolis surgeon Chris Stack, who works with a single-payer advocacy group called Physicians for a National Health Program. “You have GM, Wal-Mart, plus the average guy making $50,000 working his (deleted) off with two kids — he’s getting screwed. This cuts across ideological lines.”

So why is President Bush proposing not to expand Medicare but to cut it, while offering tax incentives to those who can go out and buy their own health care with high premiums and high deductibles, thus shrinking the risk pool?

Vested interests, of course. That’s why they made a labyrinth of the Medicare drug component with Plan D, an epochal transfer of national wealth to corporations, which waste more than $100 million of our health resources a year in lobbying.

So, you have top-heavy politics abetting a top-heavy health care system. Why isn’t the public pushing back?

“It’s such a puzzle,” says Matthew Gutwein, president of Wishard Memorial Hospital. “There is general skepticism about government as a better alternative to the private market. It’s not true of health care that private is better.”

While Gutwein doesn’t oppose health savings accounts, he calls them a Band-Aid and sees signs all about that single-payer is inevitable. The United States, he says, can’t compete globally and remain the only nation that ties health care to the workplace and marketplace.

So husband your money and try a hospital-tested home remedy. “We love Medicare,” the Wishard head man says. The question grows ever more pressing: What’s not to love?

Carpenter is Star op-ed columnist. Contact him at (317) 444-6172 or at dan.carpenter@indystar.com.