PNHP

Is "Moral Hazard" Inefficient? The Policy Implications of a New Theory

Is "Moral Hazard" Inefficient? The Policy Implications of a New Theory

By John A. Nyman
Health Affairs
September/October 2004

Excerpts:

Insurers call the change in behavior that occurs when a person becomes insured “moral hazard.” Moral hazard occurs, for example, when an insured person spends an extra day in the hospital or purchases some procedure that he or she would not otherwise have purchased. Insurers originally viewed moral hazard unfavorably because it often meant that they paid out more in benefits than expected when setting premiums – hence the negative term.

Economists also viewed moral hazard negatively because, under the conventional theory, the additional health care spending generated by insurance represents a welfare loss to society. When people become insured, insurance pays for their care. In economists’ view, insurance is reducing the price of care to zero. When the price is reduced in this way, consumers purchase more health care than they would have purchased at the normal market prices-this is the moral hazard. But because consumers purchase care when the price drops to zero that they would not have purchased at the market price, economists interpret this behavior as revealing that the value of this care to consumers is less than the market price. The additional care, however, is still costly to produce. The difference between the high cost of the resources devoted to producing this care (reflected in the high market price) and its low apparent value to insured consumers (reflected in the low insurance price) represents an inefficiency. Thus, health care spending increases with insurance, but the value of this care is less than its cost, generating an inefficiency that economists call the “moral-hazard welfare loss.”

Conventional insurance theory also provided the policy solution: Impose coinsurance payments and deductibles to increase the price of medical care to insured consumers and reduce these inefficient expenditures. In the 1970s many insurers adopted copayments to reduce health care spending. In the 1980s and 1990s economists also promoted utilization review and capitated payments to providers as further ways to reduce moral hazard. The managed health care system we have now is largely a product of this theory.

A fundamental ambiguity exists, however, in the welfare implications of moral hazard, which economists have, perhaps, always suspected but could never voice because they did not have the appropriate theory to explain it. That is, conventional theory makes sense for health care such as cosmetic surgery or drugs to improve sexual functioning or designer-style prescription sunglasses, but not for serious treatments such as coronary bypass operations or organ transplants. Clearly, insured people would purchase more of all these procedures than would uninsured people, so they would all be considered moral hazard to insurers.

Mark Pauly, one of the architects of the conventional insurance theory, recognized this ambiguity as early as 1983. He pointed out that his original theory of moral-hazard welfare loss was intended to apply only to “routine physician’s visits, prescriptions, dental care, and the like” and that “the relevant theory, empirical evidence and policy analysis for moral hazard in the case of serious illness has not been developed. This is one of the most serious omissions in the current literature.” This distinction, however, has been lost on most health economists. For example, health economics textbook writers continue to present moral hazard as being unambiguously welfare decreasing, and health policy analysts continue to use the conventional theory in developing their recommendations for optimal cost-sharing rates, managed care programs, and other policies designed to curb U.S. health care costs.

If insurers actually transferred income to an ill person in one lump-sum payment, the welfare implications of moral hazard would be unambiguous.

Health insurance policies, however, generally pay off by paying for the ill person’s care. The welfare ambiguity arises because of this payoff mechanism. …we cannot tell whether this additional moral-hazard spending represents a welfare loss or a welfare gain.

…there is some unknown portion of patients who would respond to insurance paying for their care in exactly the same way that they would respond to insurance paying them a cashier’s check for the same amount. For these patients, moral hazard is efficient and represents a welfare gain.

Implications For Policy

Cost sharing often not appropriate: Because some of the moral hazard that was considered a welfare loss under the conventional theory must now be reclassified as a welfare gain, health insurance under the new theory is generally much more valuable to consumers than economists have thought it was. Many of the more serious procedures – organ transplants; trauma care; many cancer treatments;and, indeed, a large portion of the costly, life-saving medical care that people could only afford to purchase with insurance – would now be tallied in a welfare gain column instead of a welfare loss column when determining the value of insurance. Because such a large portion of moral hazard spending represents a welfare gain, the recategorization of losses as gains dramatically changes the welfare calculations.

The new theory suggests that cost-sharing policies have been directed at problems that largely do not exist. Furthermore, it suggests instead that coinsurance is too blunt a policy instrument and that it should be refined to focus only on the inefficient moral hazard. Moral hazard that generates welfare gains should be left alone or even encouraged. That is, for those with serious illnesses, whose care might also be associated with a great deal of pain and suffering anyway, it makes little sense to apply copayments.

Subsidizing insurance premiums is beneficial: The new theory suggests that health insurance generally makes the consumer better off. Therefore, the subsidies that encourage consumers to purchase insurance voluntarily, or a national health insurance program for the entire U.S. population, would improve society’s welfare.

High prices are harmful: …under conventional theory, high health care prices are not bad. Indeed, a few economists have even argued that high prices should be encouraged because they reduce moral hazard. …according to conventional theory, any reduction of moral hazard is a welfare gain. Under the new theory, the high prices that providers charge because they have market power would again be considered harmful. With the new theory… economists would be able to revert to the standard analysis that monopoly pricing causes an undesirable reduction in use, even for the insured.

More than anything else, the new theory suggests that health insurance provides an economywide redistribution of income from those who remain healthy to those who become ill. Those who become ill use this income either to cover the costs of health care that they would otherwise purchase, or to purchase more care, often care that they would not be able to afford without insurance. Those who remain healthy simply pay into the system, but they do so voluntarily because everyone has a chance of becoming ill. Because people value the additional income they receive from insurance when they become ill more than they value the income they lose when they pay a premium and remain healthy, and because everyone has in theory an equal chance of becoming ill, this national redistribution of income from the healthy to the ill is efficient and increases the welfare of society. Thus, the new theory identifies efficiency as a new justification for adopting some form of national health insurance.

http://content.healthaffairs.org/cgi/content/abstract/23/5/194

Comment: Although steeped in the rhetoric of health policy economists, the concepts presented are fundamental to the health care reform movement. It is imperative that we have a solid grasp of the issues.

The decades old Rand studies are still frequently cited to show that cost sharing through deductibles, copayments and coinsurance is effective in reducing health care costs. Cost sharing has been widely adopted in response to concerns about rising health care costs. Some features of managed care were designed to further reduce utilization of health care services. Largely ignored has been the well documented fact that this reduction included a reduction in the utilization of truly beneficial services. Avoiding the “moral hazard” has proven to be too blunt of a cost containment tool, even though it is still widely supported.

Today, the consumer-directed health care (CDHC) movement expands on that concept. The supporters of CDHC and health savings accounts (HSAs) contend that the moral hazard is eliminated because individuals will not spend funds on care that they perceive to have a value less than its cost. A major flaw in this concept is that individuals with major acute or chronic problems would rapidly deplete their funds. CDHC supporters state that catastrophic coverage would then provide an umbrella to cover the losses. But these plans are high deductible, managed care PPO plans which provide protection that is about as effective as a sieve. Coverage under these plans has already proven to be inadequate to protect against significant financial loss or even bankruptcy. Again, this tool is too blunt because it prevents the delivery of welfare-increasing health care.

There are other mechanisms to reduce ineffective, welfare-reducing care that are much more precisely targeted. Pricing can be improved through negotiation with providers which takes into consideration legitimate costs and fair profits. Excess capacity which results in higher spending without a commensurate improvement in outcomes can be controlled through planning and budgeting of capital improvements. Physicians who inappropriately upcode or who provide an excessive frequency or intensity of services can be identified as outliers and provided with education opportunities or subjected to punitive measures if refractory to the educational process.

Global budgeting can slow the expansion of health care services down to levels closer to inflation and growth of the GDP. The $1.8 trillion that we are spending should be sufficient to ensure that there is adequate capacity in our system to meet our needs for beneficial services.

John Nyman has provided us with an invaluable contribution to the health policy literature. As he says, “There is a new argument for national health insurance: efficiency.”

Is “Moral Hazard” Inefficient? The Policy Implications of a New Theory

By John A. Nyman
Health Affairs
September/October 2004

Excerpts:

Insurers call the change in behavior that occurs when a person becomes insured “moral hazard.” Moral hazard occurs, for example, when an insured person spends an extra day in the hospital or purchases some procedure that he or she would not otherwise have purchased. Insurers originally viewed moral hazard unfavorably because it often meant that they paid out more in benefits than expected when setting premiums – hence the negative term.

Economists also viewed moral hazard negatively because, under the conventional theory, the additional health care spending generated by insurance represents a welfare loss to society. When people become insured, insurance pays for their care. In economists’ view, insurance is reducing the price of care to zero. When the price is reduced in this way, consumers purchase more health care than they would have purchased at the normal market prices-this is the moral hazard. But because consumers purchase care when the price drops to zero that they would not have purchased at the market price, economists interpret this behavior as revealing that the value of this care to consumers is less than the market price. The additional care, however, is still costly to produce. The difference between the high cost of the resources devoted to producing this care (reflected in the high market price) and its low apparent value to insured consumers (reflected in the low insurance price) represents an inefficiency. Thus, health care spending increases with insurance, but the value of this care is less than its cost, generating an inefficiency that economists call the “moral-hazard welfare loss.”

Conventional insurance theory also provided the policy solution: Impose coinsurance payments and deductibles to increase the price of medical care to insured consumers and reduce these inefficient expenditures. In the 1970s many insurers adopted copayments to reduce health care spending. In the 1980s and 1990s economists also promoted utilization review and capitated payments to providers as further ways to reduce moral hazard. The managed health care system we have now is largely a product of this theory.

A fundamental ambiguity exists, however, in the welfare implications of moral hazard, which economists have, perhaps, always suspected but could never voice because they did not have the appropriate theory to explain it. That is, conventional theory makes sense for health care such as cosmetic surgery or drugs to improve sexual functioning or designer-style prescription sunglasses, but not for serious treatments such as coronary bypass operations or organ transplants. Clearly, insured people would purchase more of all these procedures than would uninsured people, so they would all be considered moral hazard to insurers.

Mark Pauly, one of the architects of the conventional insurance theory, recognized this ambiguity as early as 1983. He pointed out that his original theory of moral-hazard welfare loss was intended to apply only to “routine physician’s visits, prescriptions, dental care, and the like” and that “the relevant theory, empirical evidence and policy analysis for moral hazard in the case of serious illness has not been developed. This is one of the most serious omissions in the current literature.” This distinction, however, has been lost on most health economists. For example, health economics textbook writers continue to present moral hazard as being unambiguously welfare decreasing, and health policy analysts continue to use the conventional theory in developing their recommendations for optimal cost-sharing rates, managed care programs, and other policies designed to curb U.S. health care costs.

If insurers actually transferred income to an ill person in one lump-sum payment, the welfare implications of moral hazard would be unambiguous.

Health insurance policies, however, generally pay off by paying for the ill person’s care. The welfare ambiguity arises because of this payoff mechanism. …we cannot tell whether this additional moral-hazard spending represents a welfare loss or a welfare gain.

…there is some unknown portion of patients who would respond to insurance paying for their care in exactly the same way that they would respond to insurance paying them a cashier’s check for the same amount. For these patients, moral hazard is efficient and represents a welfare gain.

Implications For Policy

Cost sharing often not appropriate: Because some of the moral hazard that was considered a welfare loss under the conventional theory must now be reclassified as a welfare gain, health insurance under the new theory is generally much more valuable to consumers than economists have thought it was. Many of the more serious procedures – organ transplants; trauma care; many cancer treatments;and, indeed, a large portion of the costly, life-saving medical care that people could only afford to purchase with insurance – would now be tallied in a welfare gain column instead of a welfare loss column when determining the value of insurance. Because such a large portion of moral hazard spending represents a welfare gain, the recategorization of losses as gains dramatically changes the welfare calculations.

The new theory suggests that cost-sharing policies have been directed at problems that largely do not exist. Furthermore, it suggests instead that coinsurance is too blunt a policy instrument and that it should be refined to focus only on the inefficient moral hazard. Moral hazard that generates welfare gains should be left alone or even encouraged. That is, for those with serious illnesses, whose care might also be associated with a great deal of pain and suffering anyway, it makes little sense to apply copayments.

Subsidizing insurance premiums is beneficial: The new theory suggests that health insurance generally makes the consumer better off. Therefore, the subsidies that encourage consumers to purchase insurance voluntarily, or a national health insurance program for the entire U.S. population, would improve society’s welfare.

High prices are harmful: …under conventional theory, high health care prices are not bad. Indeed, a few economists have even argued that high prices should be encouraged because they reduce moral hazard. …according to conventional theory, any reduction of moral hazard is a welfare gain. Under the new theory, the high prices that providers charge because they have market power would again be considered harmful. With the new theory… economists would be able to revert to the standard analysis that monopoly pricing causes an undesirable reduction in use, even for the insured.

More than anything else, the new theory suggests that health insurance provides an economywide redistribution of income from those who remain healthy to those who become ill. Those who become ill use this income either to cover the costs of health care that they would otherwise purchase, or to purchase more care, often care that they would not be able to afford without insurance. Those who remain healthy simply pay into the system, but they do so voluntarily because everyone has a chance of becoming ill. Because people value the additional income they receive from insurance when they become ill more than they value the income they lose when they pay a premium and remain healthy, and because everyone has in theory an equal chance of becoming ill, this national redistribution of income from the healthy to the ill is efficient and increases the welfare of society. Thus, the new theory identifies efficiency as a new justification for adopting some form of national health insurance.

http://content.healthaffairs.org/cgi/content/abstract/23/5/194

Comment: Although steeped in the rhetoric of health policy economists, the concepts presented are fundamental to the health care reform movement. It is imperative that we have a solid grasp of the issues.

The decades old Rand studies are still frequently cited to show that cost sharing through deductibles, copayments and coinsurance is effective in reducing health care costs. Cost sharing has been widely adopted in response to concerns about rising health care costs. Some features of managed care were designed to further reduce utilization of health care services. Largely ignored has been the well documented fact that this reduction included a reduction in the utilization of truly beneficial services. Avoiding the “moral hazard” has proven to be too blunt of a cost containment tool, even though it is still widely supported.

Today, the consumer-directed health care (CDHC) movement expands on that concept. The supporters of CDHC and health savings accounts (HSAs) contend that the moral hazard is eliminated because individuals will not spend funds on care that they perceive to have a value less than its cost. A major flaw in this concept is that individuals with major acute or chronic problems would rapidly deplete their funds. CDHC supporters state that catastrophic coverage would then provide an umbrella to cover the losses. But these plans are high deductible, managed care PPO plans which provide protection that is about as effective as a sieve. Coverage under these plans has already proven to be inadequate to protect against significant financial loss or even bankruptcy. Again, this tool is too blunt because it prevents the delivery of welfare-increasing health care.

There are other mechanisms to reduce ineffective, welfare-reducing care that are much more precisely targeted. Pricing can be improved through negotiation with providers which takes into consideration legitimate costs and fair profits. Excess capacity which results in higher spending without a commensurate improvement in outcomes can be controlled through planning and budgeting of capital improvements. Physicians who inappropriately upcode or who provide an excessive frequency or intensity of services can be identified as outliers and provided with education opportunities or subjected to punitive measures if refractory to the educational process.

Global budgeting can slow the expansion of health care services down to levels closer to inflation and growth of the GDP. The $1.8 trillion that we are spending should be sufficient to ensure that there is adequate capacity in our system to meet our needs for beneficial services.

John Nyman has provided us with an invaluable contribution to the health policy literature. As he says, “There is a new argument for national health insurance: efficiency.”

Lifespan Crisis Hits Supersize America

Robin McKie, science editor
The Observer – Sunday September 19, 2004
http://observer.guardian.co.uk/international/story/
0,6903,1307825,00.html

Bloated, blue-collar Americans – gorged on diets of fries and burgers, but denied their share of US riches – are bringing the nation’s steady rise in life expectancy to a grinding halt.

Twenty years ago, the US, the richest nation on the planet, led the world’s longevity league. Today, American women rank only 19th, while males can manage only 28th place, alongside men from Brunei.

These startling figures are blamed by researchers on two key factors: obesity, and inequality of health care. A man born in a poor area of Washington can have a life expectancy that is 40 years less than a woman in a prosperous neighbourhood only a few blocks away, for example.

‘A look at the Americans’ health reveals astonishing inequalities in our society,’ state Professor Lawrence Jacobs of Minnesota University and Professor James Morone, of Brown University, Rhode Island, in the journal American Prospect .

Their paper is one of a recent swathe of studies that have uncovered a shocking truth: America, once the home of the world’s best-fed, longest-lived people, is now a divided nation made up of a rich elite and a large underclass of poor, ill-fed, often obese, men and women who are dying early.

In another newly published paper, statisticians at Boston College reveal that in France, Japan and Switzerland, men and women aged 65 now live several years longer than they do in the US. Indeed, America only just scrapes above Mexico and most East European nations.

This decline is astonishing given America’s wealth. Not only is it Earth’s richest nation, it devotes more gross domestic product – 13 per cent – to health care than any other developed nation. Switzerland comes next with 10 per cent; Britain spends 7 per cent. As the Boston group – Alicia Munnell, Robert Hatch and James Lee – point out: ‘The richer a country is, the more resources it can dedicate to education, medical and other goods and services associated with great longevity.’ The result in every other developed country has been an unbroken rise in life expectancy since 1960.

But this formula no longer applies to America, where life expectancy’s rise has slowed but not yet stopped, because resources are now so unevenly distributed. When the Boston College group compared men and women in America’s top 10 per cent wage bracket with those in the bottom ten per cent, they found the former group earned 17 times more than the latter. In Japan, Switzerland and Norway, this ratio is only five-to-one.

Jacobs and Morone state: ‘Check-ups, screenings and vaccinations save lives, improve well-being, and are shockingly uneven [in America]. Well-insured people get assigned hospital beds; the uninsured get patched up and sent back to the streets.’ For poor Americans, health service provision is little better than that in third world nations. ‘People die younger in Harlem than in Bangladesh,’ report Jacobs and Morone.

Consumption of alcohol, tobacco and food can also have a huge impact on life expectancy. The first two factors are not involved with America’s longevity crisis. Smoking and drinking are modest compared with Europe. Food consumption is a different matter, however, for the US has experienced an explosion in obesity rates in the past 20 years. As a result, 34 per cent of all women in the US are obese compared with 4 per cent in Japan. For men, the figures are 28 and 2 per cent respectively.

‘US obesity rates jumped in the 1980s and 1990s, and the vast majority of the population affected by obesity had not yet reached age 65 by 2000,’ state the Boston group. ‘As the large baby boom cohort begins to turn 65 in coming years, a stronger connection between obesity rates and life expectancy may emerge.’

In other words, as the nation’s middle-aged fatties reach retirement age, more and more will start to die out. Life expectancy in the US could then actually go into decline.

Wasting resources leaves us with Band-Aids

The Inquirer
Sep. 17, 2004
Waiting list for health care surges in Pa.
By Marian Uhlman

The waiting list for adults trying to get cheap government health coverage in Pennsylvania has jumped by a third since February, and in July topped 100,000 people for the first time, setting a record for the two-year-old program.

Experts see the surge as indicating a further decline of health insurance paid by businesses, which have been gradually cutting back benefits and raising costs for workers for several years.

The Pennsylvania Insurance Department launched the adultBasic insurance program two years ago in response to the growing ranks of uninsured adults.

The program dwindled to 37,000 people in August – the lowest number since November 2002 – because of budget uncertainties earlier this year.

The enrollees make too much money for the government’s medical assistance
program, but their income is too modest to pay for private insurance.

About 97,000 people are… on the waiting list, according to the state Insurance Department. The wait has been about 16 months. About 10,000 more people apply each month.

AdultBasic “is a Band-Aid,” said Kate Sorensen, health organizer for the Philadelphia Unemployment Project. “There has to be a more concerted effort
to deal with health care.”

http://www.philly.com/mld/philly/living/health/9684191.htm

Comment: Innumerable incremental measures, such as Pennsylvania’s adultBasic, have not been effective in even stabilizing the level of insurance coverage as the numbers of uninsured continue to increase. Other nations may struggle with queues for non-urgent services, but none of them condone queues for any health care coverage whatsoever. Our queues are criminally negligent, or at least they should be illegal.

As if the failure to adequately address the problem of increasing numbers of
uninsured were not enough, a Zogby poll last week revealed that 56% of Americans are now “personally affected” by health care costs. The 84% who do
have insurance now believe that health care costs are the number health care
concern. Middle America has been impacted.

Cost is an issue. Most current proposals for reform do not really address costs, in spite of the rhetoric, but rather only infuse more funds into our flawed system. The only approach currently under serious consideration that would work to reduce costs is to expand consumer-directed models of reform. The tragedy of this approach is that these models work by making essential health care services unaffordable, especially for those who have the greatest needs. That is the most inhumane policy approach that can be devised to contain costs.

There is tremendous waste in our system that is recoverable, but only if we adopt structural reforms that will improve our resource allocation. Prices in the United States are much higher than in other nations, pharmaceuticals being only one obvious example. Prices can be negotiated to ensure that only legitimate costs and fair profits are funded.

The well documented administrative excesses due to our fragmented system of
funding care are enormous and could be recovered by changing to a single
payer.

The tremendous technological excesses that are not beneficial, and sometimes
even detrimental, could be reduced by two measures. A strong primary care
base has been demonstrated to provide higher quality at lower cost. Providing incentives to strengthen the primary care base while reducing excessive rewards for high tech care would improve resource utilization. Excess capacity has also been demonstrated to increase the frequency and intensity of services without a commensurate benefit in health care outcomes. Planning and budgeting of capital improvements would reduce waste while ensuring adequate capacity to prevent excessive queues.

This is not rocket science. Through our tax system we’re already paying enough to fund the finest health care system in the world. But by international standards our health care delivery system is characterized by mediocrity, and affordable access to care is the worst of all industrialized nations. We are providing our government with the health care funds needed, but we are not demanding accountability for the use of those funds. We should hang our heads in shame.

Don McCanne
(Please share this message with others.)

Most Back Health Care Regulation

By Randi F. Marshall

Rising health care costs and shrinking coverage have prompted a significant majority of Americans to support government regulation – or even universal health care, according to a survey released yesterday.

Two-thirds of those surveyed said they supported a health care “guarantee,” similar to the Canadian or British systems, according to the survey, which was issued by Results for America, a division of the Civil Society Institute, a think tank based in Newtown, Mass.

Additionally, 78 percent of Americans advocate government regulation of health care, similar to utilities such as gas and water, the survey found.

“What this survey shows is a nation in the grips of a health care crisis,” said Civil Society Institute president Pam Solo. “Americans are now prepared to embrace some tough ideas.”

That’s certainly true for Plainview resident Jeffrey Rosen. As a vice president for a retail company, Rosen, who is married and has two children, watched his employer’s health care costs rise 18 percent in the past year. As a result, Rosen is seeing fewer benefits, higher deductibles and a co-payment that has gone from $10 to $25 in the past five years.

“It just gets harder and harder and harder,” Rosen said. “But it doesn’t matter what it costs; I have to spend it.”

He said he expects the United States to head toward a socialized medicine system within 10 to 15 years.

“You have no choice,” he said. “You can’t deprive people of medical coverage.”

The Civil Society Institute says it is a nonprofit, independent organization that attempts to focus on social issues such as health care, education and the environment. Solo is a social activist and grassroots advocate who has focused on issues such as national health care, stem cell research and global warming.

The institute’s survey of 1,020 adults showed that while 85 percent of respondents have health insurance, the majority of them either have seen their coverage cut or their costs rise. That represents about 100 million Americans, according to the institute.

The survey’s results, particularly on the rising cost of health care, have been echoed by other experts and research groups. The Kaiser Family Foundation just announced its findings that health care premiums rose by double digits for the fourth year in a row in 2004.

“Health insurance is becoming increasingly unaffordable in our country, especially for small employers,” said Kaiser president Drew Altman at a Washington, D.C., news conference last week. “We unfortunately should expect the ranks of the uninsured to continue to pick up.”

Nearly 20 percent said they skip or reduce dosages of their medications because they cannot afford their prescription drugs.

That translates into more than 20 million Americans, said Wayne Russum, senior researcher with Opinion Research Corp., which conducted and analyzed the survey.

As a result, more and more Americans are turning to Canada and other countries to buy their medications. More than a third are either purchasing or would consider purchasing their prescription drugs from Canada or elsewhere, the survey found. Russum said 6 percent – or as many as 10 million Americans – have bought their medications abroad. Among them are Rosen’s parents, who live in Florida and order their prescription drugs via mail-order, at a third of what it would cost here, Rosen said.

Solo said the American public was ahead of Washington politicians in their concern for health care costs.

She said, “The longer our leaders fail to take steps … the more millions of Americans will be squeezed out of our health care system and left out in the cold.”

Women business owners say it's time to put single payer on the table

The Albuquerque Tribune
September 13, 2004
Women: Health care is in crisis
By J. D. Bullington

The National Association of Women Business Owners (NAWBO) has become increasingly outspoken on health care policy…

The NAWBO position doesn’t address whether a government-run, single-payer health care system should be studied. However, several prominent NAWBO members, including past presidents, say it’s time for universal, government-run health care to be put on the table as an option for consideration.

Samantha Lapin, former NAWBO president and CEO of POD Inc., an Albuquerque computer services company, says: “I’m the last person that would have ever considered looking at universal health care, single-payer, socialized medicine – call it what you want. But the more I learn about the health care system, and the more I hear the health care industry say costs will keep rising, and there is no end in sight, then I think we’ve gotten to the position where we have to keep all of our options open and every proposal on the table.”

Another former NAWBO president, Karen Urbieliewicz, principal of her own accounting firm, largely agrees with Lapin’s assessment of the health care industry and the growing financial burden on small businesses.

“The rising costs of the medical system are out of control,” she said. “I’ve shopped for alternatives like catastrophic coverage and health savings accounts, but these products are priced higher than regular health insurance coverage. We need to look at and reevaluate the entire health care system.”

Another active NAWBO member is Edna Lopez, CEO and president of COMPA Industries, a staff augmentation and program management company with 168 employees. Lopez is also president of the Hispanic Women’s Council.

“A single-payer system used to be unattractive and ridiculous to us. But we’re in a desperate situation, where health premium increases are hurting our businesses. We’re at a point now where we have to look at all other options.”

Lapin, who was named New Mexico’s 2004 Small Business Person of the Year by
the U.S. Small Business Administration, sums up the frustration many women
in business feel toward health care: “Maybe a single-payer system isn’t viable, but we don’t know, because we haven’t discussed it.”

“Is there an alternative? What is the alternative? I can’t find it. Can you?”

http://www.abqtrib.com/archives/business04/091304_business_jdcol.shtml

Comment: It is time to put all options on the table. But that is what is feared the most by the vested interests that are diverting our health care dollars into their own coffers. These vested interests can’t find an alternative to single payer that makes any sense if the goal is to provide everyone with affordable access to comprehensive care.

Go ahead and put all options on the table and then study them. I’ve done that. And, as Ms. Lapin says, I can’t find the alternative either.

Don McCanne

A Wonderful Country – If Only We Had Universal Health Care

America is wonderful – a mixture of Disney World and Lake Woebegone. You remember Garrison Keilor’s home where all the men are good looking and all the children are above average. In a recent poll review in Provider (Sep. 2004) – a majority of baby boomers believe they are not going to need ongoing health care during their retirement years . Fact: Only 1/3 will drop dead during their first heart attack. Even Bill Clinton got caught needing health care.

Only 14 % of adults between the ages of 50 and 65 believe they will ever need day to day assistance or long term care (nursing home). Fact: Forty three percent will wind up in a nursing home – even when you go to assisted living there is probably a 50 % chance you will graduate to a nursing home – often correlated with when you run out of funds.

Sixty two percent plan to use medicare to pay for long term care services. Fact: – medicare does not pay for nursing home care other than brief rehabilitation programs. Forty per cent expect to use health insurance for their extended care – described as a total misconception of those resources – even if you were lucky enough to have insurance.

Not convinced about Lake Woebegone yet, try this! Twenty percent of the U.S. population believes they are in the top 1 % of income tax brackets. No wonder it does not bother many people when it is mentioned that nearly 50 % of the tax cut went to the upper 1%.

The poll described at the beginning of this note was done by computer on line – suggesting that the group might be above average in education and resources and are much less likely to be in the 45 million who have no health care and the 83 million who have inadequate health care or were without insurance for considerable time during the last two years.

The nation watched survival and reality shows during the conventions, just as big media predicted. This decade will decide how your children and grand children will live – even if they will live. Isn’t 18,000 deaths from lack of health care enough reality? Enough survival? These dramas are playing out every day in our non affluent homes, on the streets and in the emergency rooms. If physicians do not help the public to understand this and even remain uninformed themselves, who will help? Please remember that we pay for universal health care and do not get it! Get it?? Jerry Earll M.D.

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Number of Uninsured Americans Rises to 45 Million

For Immediate Release:
September 14, 2004

Contacts:
Dr. Jerry Earll
Phone:(202) 895-0122
Email: jearll@thewashingtonhome.org
Nick Skala
(312) 782-6006

1.6 Million More Americans Uninsured, Millions More �Underinsured�
Statement of Dr. Jerry Earll on the Uninsured

Washington, DC. — The recent report by the U.S. Census Bureau on the uninsured brought sad news. The number of uninsured Americans climbed dramatically to 45.0 million (15.6 percent of the population) in 2003, an increase of 1.4 million. The increase would have been much greater if Medicaid enrollment had not been expanded to an additional 2.4 million Americans. Children make up 8.4 million of the uninsured, a number that has not budged despite the expansion of the Children’s Health Insurance Program. In the state of Texas, a shocking one-fourth of the population has no health care insurance.

Businesses are dropping health coverage as a benefit for their workers in response to continually escalating costs, up 60 percent since 2001. A fall in the percentage of Americans with employer-sponsored insurance (from 65 percent in 2001 to 60.4 percent this year) accounted for most of the increase in uninsured. Health insurance premiums are now so high that they often exceed a family’s mortgage payments. Family coverage averages almost $10,000 a year.

In our nation’s capital, the uninsured scramble for health care since the closure of the public hospital, DC General. It is not only the indigent. Middle class Americans make up a growing share of the uninsured, and tens of millions more are “underinsured.” We regularly see patients who refuse to go to the emergency room for needed evaluation because of the cost. 18,000 Americans die every year because of lack of health care, and one million middle class families go bankrupt for medical bills. Death and bankruptcy — that is real terror for any family!

David Broder’s recent description of the American health care system in a “downward death spiral” remains accurate. Americans are being offered tea cups to bail out the Titanic. Proposals for “consumer directed health care,” “health savings accounts” and “taking ownership” will neither help the uninsured nor control rising costs: They are cruel hoaxes when you do not own anything. Americans already pay the highest out-of-pocket costs in the world, so shifting more costs onto “consumers” will simply add to the heavy financial burden faced by the ill. Our nation is already spending more than enough money to pay for health care for all, but nearly one-third of every dollar is squandered on private insurance paperwork and overhead.

It is time for all physicians to become active in health policy and the movement for single payer national health insurance. Single payer could save enough on administrative costs to cover all the uninsured and upgrade benefits for everyone, including prescription medications. It is our duty as physicians to promote an effective remedy to the crisis and wise stewardship of health resources. Please join me in this effort.

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Dr. Jerry Earll is a Professor in the Department of Medicine at Georgetown University and the Director of the Washington Home and Hospice in Washington, DC. He served as a Colonel in the US Medical Corps (1958-1979).

Physicians for a National Health Program was founded in 1987 and has over 12,000 physician members in every specialty and state. For information or additional contacts, please call Nick Skala at (312) 782-6006.

Women business owners say it’s time to put single payer on the table

The Albuquerque Tribune
September 13, 2004
Women: Health care is in crisis
By J. D. Bullington

The National Association of Women Business Owners (NAWBO) has become increasingly outspoken on health care policy…

The NAWBO position doesn’t address whether a government-run, single-payer health care system should be studied. However, several prominent NAWBO members, including past presidents, say it’s time for universal, government-run health care to be put on the table as an option for consideration.

Samantha Lapin, former NAWBO president and CEO of POD Inc., an Albuquerque computer services company, says: “I’m the last person that would have ever considered looking at universal health care, single-payer, socialized medicine – call it what you want. But the more I learn about the health care system, and the more I hear the health care industry say costs will keep rising, and there is no end in sight, then I think we’ve gotten to the position where we have to keep all of our options open and every proposal on the table.”

Another former NAWBO president, Karen Urbieliewicz, principal of her own accounting firm, largely agrees with Lapin’s assessment of the health care industry and the growing financial burden on small businesses.

“The rising costs of the medical system are out of control,” she said. “I’ve shopped for alternatives like catastrophic coverage and health savings accounts, but these products are priced higher than regular health insurance coverage. We need to look at and reevaluate the entire health care system.”

Another active NAWBO member is Edna Lopez, CEO and president of COMPA Industries, a staff augmentation and program management company with 168 employees. Lopez is also president of the Hispanic Women’s Council.

“A single-payer system used to be unattractive and ridiculous to us. But we’re in a desperate situation, where health premium increases are hurting our businesses. We’re at a point now where we have to look at all other options.”

Lapin, who was named New Mexico’s 2004 Small Business Person of the Year by
the U.S. Small Business Administration, sums up the frustration many women
in business feel toward health care: “Maybe a single-payer system isn’t viable, but we don’t know, because we haven’t discussed it.”

“Is there an alternative? What is the alternative? I can’t find it. Can you?”

http://www.abqtrib.com/archives/business04/091304_business_jdcol.shtml

Comment: It is time to put all options on the table. But that is what is feared the most by the vested interests that are diverting our health care dollars into their own coffers. These vested interests can’t find an alternative to single payer that makes any sense if the goal is to provide everyone with affordable access to comprehensive care.

Go ahead and put all options on the table and then study them. I’ve done that. And, as Ms. Lapin says, I can’t find the alternative either.

Don McCanne

Women: Health Care is in Crisis

The Albuquerque Tribune
September 13, 2004
By J. D. Bullington

The National Association of Women Business Owners (NAWBO) has become increasingly outspoken on health care policy…

The NAWBO position doesn’t address whether a government-run, single-payer health care system should be studied. However, several prominent NAWBO members, including past presidents, say it’s time for universal, government-run health care to be put on the table as an option for consideration.

Samantha Lapin, former NAWBO president and CEO of POD Inc., an Albuquerque computer services company, says: “I’m the last person that would have ever considered looking at universal health care, single-payer, socialized medicine – call it what you want. But the more I learn about the health care system, and the more I hear the health care industry say costs will keep rising, and there is no end in sight, then I think we’ve gotten to the position where we have to keep all of our options open and every proposal on the table.”

Another former NAWBO president, Karen Urbieliewicz, principal of her own accounting firm, largely agrees with Lapin’s assessment of the health care industry and the growing financial burden on small businesses.

“The rising costs of the medical system are out of control,” she said. “I’ve shopped for alternatives like catastrophic coverage and health savings accounts, but these products are priced higher than regular health insurance coverage. We need to look at and reevaluate the entire health care system.”

Another active NAWBO member is Edna Lopez, CEO and president of COMPA Industries, a staff augmentation and program management company with 168 employees. Lopez is also president of the Hispanic Women’s Council.

“A single-payer system used to be unattractive and ridiculous to us. But we’re in a desperate situation, where health premium increases are hurting our businesses. We’re at a point now where we have to look at all other options.”

Lapin, who was named New Mexico’s 2004 Small Business Person of the Year by the U.S. Small Business Administration, sums up the frustration many women in business feel toward health care: “Maybe a single-payer system isn’t viable, but we don’t know, because we haven’t discussed it.”

“Is there an alternative? What is the alternative? I can’t find it. Can you?”

Comment: It is time to put all options on the table. But that is what is feared the most by the vested interests that are diverting our health care dollars into their own coffers. These vested interests can’t find an alternative to single payer that makes any sense if the goal is to provide everyone with affordable access to comprehensive care.

Go ahead and put all options on the table and then study them. I’ve done that. And, as Ms. Lapin says, I can’t find the alternative either.

Teamsters President Calls for National Health Insurance

Teamsters President Calls for National Health Insurance
Speech to Detroit Economic Club Focuses on Taxes, Health Care, Trade, Pensions
Press Release, Teamsters web site September 13, 2004

(Detroit, MI) – International Brotherhood of Teamsters General President Jim Hoffa today outlined a four-point plan to restore the American economy in a speech to the Detroit Economic Club.

“It is based upon my experience in reaching out and talking to American workers that I come today to speak about the crisis our nation faces,” Hoffa stated. “It’s a multi-faced economic crisis that is hurting millions of Americans. It is a crisis that is destroying the unity that our nation needs in this time of global terrorism. It’s a tax policy crisis. It’s a health care crisis. It’s a trade crisis. It’s a crisis of retirement security. And, it’s a crisis of wages and jobs.”

Hoffa outlined policy solutions in each crisis area culminating with a call for the American business community to join with organized labor to change the tax system, create a national healthcare plan, revamp our trade policy and support government intervention to protect pensions and retirement security.

“It’s time to create a nationwide business-labor coalition to solve the healthcare crisis once and for all,” Hoffa said. “We need a national healthcare system and we need it now. We can’t afford to wait any longer.”

Hoffa continued on trade, “We are destroying the markets that are necessary to sustain demand. And the biggest market, we are destroying is right here in the United States where the middle class has less and less disposable income. Our trade crisis demands that labor and business forge a solution that puts the American economy first.”

“There’s too much at stake to ignore these issues. We have a responsibility as leaders to keep America strong and safe for future generations,” Hoffa concluded. “Together, we must put America back to work and secure our economic future. I call on you to join me in restoring the American Dream.”

The International Brotherhood of Teamsters represents more than 1.4 million hardworking men and women throughout North America.

Further erosion of the tattered employer-based system

Health Affairs
September 9, 2004
Health Benefits In 2004: Four Years Of Double-Digit Premium Increases Take Their Toll On Coverage Five million fewer jobs provided health insurance in 2004 than in 2001, this new analysis finds.
By Jon Gabel, Gary Claxton, Isadora Gil, Jeremy Pickreign, Heidi Whitmore,Erin Holve, Benjamin Finder, Samantha Hawkins, and Diane Rowland

Health insurance premium increases:
Premiums increased 11.2 percent from spring 2003 to 2004, making 2004 the fourth consecutive year of double-digit premium increases. Premium increases outpaced the economy-wide rate of inflation and increase in workers’ hourly earnings by almost nine percentage points. During the past four years,the cost of health insurance has increased 59 percent.

Cost of coverage:
The average monthly cost of single coverage rose to $308 ($3,695 annually) for single coverage and to $829 ($9,950 annually) for family coverage in 2004.

Employee cost sharing:
Contributions for family coverage rose from $201 in 2003 to $222 in 2004, an increase of 10 percent.

Interest in new plan arrangements:
There has been considerable interest in “consumer-driven health plans” over the past few years. A common approach pairs a plan with a relatively high deductible (such as $1,000) with a savings account option.

Availability of coverage:
The offer rate among small employers continues to drift downward, with just 63 percent of small firms offering coverage in 2004, compared with 65 percent in 2003 and 68 percent in 2000 and 2001. The offer rate among large employers remains high at 99 percent.

Employers’ attitudes and views about the future:
Although it appears that relatively few employers are engaged in explicit practices that could discourage the take-up of family coverage, more than 40 percent of all firms, including more than 72 percent of large firms, reported that they are very or somewhat likely to increase the percentage of the premium that employees must contribute for family coverage.

Outlook for the future:
More employers are familiar with and offer consumer-driven health plans In 2004 than in 2003. A growing number of workers are employed in firms with the option to enroll in such a plan. Increased interest in high-deductible plans suggests that this trend will continue.

…monthly contributions for health insurance, deductibles, and copayments have risen in absolute dollars over the past four years. Most importantly, after four years of double-digit premium increases, the cost of health coverage has risen to levels that have further eroded the already tattered employer-based system.

http://content.healthaffairs.org/cgi/content/full/hlthaff.23.5.200/DC1

Comment: How much more erosion of the tattered employer-based system are we going to accept before we decide that must enact structural changes that could ensure that everyone would have affordable access to comprehensive health care?