PNHP

Prof. Kahn on cost estimates of HSAs

Prof. Kahn on cost estimates of HSAs

Prof. Kahn on cost estimates of HSAs

Response to yesterday’s message that included calculations of a hypothetical
example of how Health Savings Accounts (HSAs) might impact health care spending:

James G. Kahn, M.D., M.P.H., Professor of Health Policy & Epidemiology, Institute for Health Policy Studies at the University of California San Francisco:

I really like the approach to estimating the ridiculous cost of the health savings accounts . Really drives home how it’s actually a mechanism to force costs onto sick people who don’t have the money to afford it. A few from-the-hip technical comments:

— The scale of these effects may be much smaller — if people currently in public programs largely stay in public programs and thus are unaffected by this restructuring of private insurance markets, and their costs don’t need to be covered by the catastrophic plans.

— The low medical cost load on HSAs may be somewhat mitigated: If individuals in public programs constitute the sickest / most expensive individuals (certainly true for Medicare), then the skew that drives your analysis may be much less for the population that remains and would be affected by SAs.

These two points emphasize the importance to us of keeping people in public programs, where they’re not subject to the problems you so aptly describe, and are supported relatively efficiently via tax revenues (which remain ever so lightly progressive at least for Medicaid).

— Finally, arguably, money placed in HSAs and not used for medical care shouldn’t count in the health care spending total. It’ll be spent on a broad mix of consumption and savings (for the rich healthy people who get it). — The incentives to get care will drive down utilization and costs (for those who are poorest and sickest).

So, if I’m right on these points, HSAs may waste only billions or tens of billions, not hundreds of billions. They would represent, essentially, an odious transformation — from health from the poor and sick, into wealth for the rich and healthy. Stunningly cynical and extortionate. Compassionate conservatism indeed.

Don McCanne’s response:

Jim is absolutely correct on all of his points. In fact, as I composed the Quote of the Day message, I thought that we really need a full paper on this concept. But I wanted to keep the message relatively brief. Some of the conservatives have suggested that the poor would benefit by HSAs and perhaps we could get rid of Medicaid. And then the supporters of Medicare privatization have suggested that high deductible coverage (with HSAs) would be the preferred substitution for the government-run Medicare program. So I lumped everyone in together for the analysis to demonstrate how flawed the general concept is. Excluding groups such as those in Medicaid and in the traditional Medicare program changes the numbers, but it does not change the principle that this is clearly a flawed concept.

There are other issues that I didn’t cover. HSA advocates contend that health costs would be reduced because people would not want to spend their own money on “unnecessary” care. But I decided that this would be roughly offset by the increased use by those currently uninsured who would then gain access to care.

I didn’t mention the fact that the $5000 accounts may not be actual accounts
but might be only accounting entities. Perhaps $3000 would be the limit permitted to fund the accounts and then a $5000 deductible required to be sure that the patient remained sensitive to costs. For others there may be no account but rather only a $5000 deductible that must be met out-of-pocket. But whether it’s money in an HSA account or money that the patient is responsible for but was never spent because of lack of need, from a policy perspective it’s still $5000 that each person is responsible for up front until insurance becomes available. On the health care balance sheet, the $5000 per person would appear as a liability and it would be only partially offset with the unspent mount appearing as an asset.

Also, in making the point that, for the healthy, HSAs are savings accounts that can be used in retirement, I did not emphasize that these are retirement funds that are at risk in the event of unanticipated major medical expenses. It is terrible policy to require the 30% or so with major medical needs to pay for their health care out of what they thought would be their retirement funds.

The first lesson, as I see it, is that would should recognize the flawed policies of the HSA model. HSAs attempt to address two issues, paying for health care and funding retirement, and yet they threaten affordability for care for those with greater needs, and they increase uncertainty in retirement planning. The second and perhaps more crucial point that Jim emphasizes is that we must make every effort to protect Medicare and Medicaid until they can be replaced with an even better program that includes all of us.

Graham Walker's animated message on single payer

Graham Walker’s animated message on single payer

Single payer advocates sometimes have difficulty understanding why there
isn’t a groundswell of support for the single payer model of reform since its superiority as a method of funding health care is so clear (to us). But actually the model is fairly complex and not well understood by the majority of citizens. A brief explanation tends to be dismissed with the meme by which we have been thoroughly indoctrinated that “the government can’t do anything right.”

Graham Walker is a medical student at Stanford University and a former staff member of Physicians for a National Health Program. To no surprise, he found
that it was difficult to deliver a simple message on single payer that would
stimulate an inquisitive mind to investigate the model further. He then went
to work on creating a message that would be directed to a broad spectrum of
relatively uninformed individuals. He was especially interested in creating rhetoric that would connect with young adults who have been saturated with
the message that Social Security and Medicare will not be there when you need it (essentially the same message that is being presented this week by President Bush when he discusses the “ownership society”). Graham uses the analogy of funding “Prom Night” as an example that might resonate with a younger audience.

Graham has created an animated explanation of single payer targeted to the
larger audience that does not have a sophisticated understanding of health policy. You should view this five minute animation since you will probably find it very useful in your advocacy work. It is particularly suited to distribution over the Internet through an e-mail link that Graham has provided.

For the animation:
http://www.grahamazon.com/sp/whatissinglepayer.php

For a written explanation of single payer (The animation can be accessed on
this page by clicking “”animated version” near the top.): http://www.grahamazon.com/sp/

If you don’t have five minutes now, retain this message so that you can
view the animation during a break. I suspect that you’ll agree that we should
share this with as many people as possible (but avoid spamming those who
wouldn’t be interested).

Time to Level the Playing Field for American Business: The One-Payer Advantage

By Ron Cohen, special to Workday Minnesota – September 1, 2004

ST. PAUL – Employers will reduce or eliminate drug coverage for 3.8 million retirees when the new Medicare prescription drug benefit starts in 2006, according to one U.S. government estimate. This will happen despite the fact companies – and supposedly even unions which offer prescription drug coverage – are eligible for $71 billion in federal subsidies between 2006 to 2012. But payment requires they offer substantially the same inadequate drug benefits specified in the new Medicare law.

However, it is a mistake to blame the new law for the continuing sharp decline in retiree health coverage. Employers already are slashing retiree health benefits. Goaded by rapid increases in medical costs, employers also shift premium hikes to their current workforce, increase their co-payments and drop some benefits.

Between 1993 and 2001, firms with 500 or more workers reduced health coverage for early retirees from 46% to 29% and for Medicare eligible retirees from 40% to 23%, the Washington Post reported. The AFL-CIO stresses that employers with 200 or more workers who offer retiree health care fell from 66% in 1988 to 38% in 2003.

The extra pressure on private business came in 1990 when a law was changed to include immediate accounting of future health care costs in publicly held corporate balance sheets.

This year that accounting standard was extended to state and local governments who now will be required to estimate the full cost of health benefits promised to future retirees. This will generate intense pressure to reduce liabilities by scaling back or eliminating future retiree benefits or shifting costs to public employees, including teachers.

Handwriting On The Wall

Look at the cold hard facts. Larger established firms, both union and non-union, have so-called “legacy costs”, long established pensions and retiree health benefits. Estimates are that the price of every truck and car built by General Motors last year included $1,900 in pension and retiree health benefits, up from $1,300 the previous year. The newer auto transplant companies in the U.S. have no such comparable costs.

Major airlines, like Northwest, with long-standing pensions and health benefits are reeling under price wars with low-fare start up airlines without these costs. Steelworkers found how hollow claims are for pensions and retiree health benefits promised by firms that no longer exist or file for bankruptcy to shed a union contract.

The Foreign Competitive Advantage

Worse yet is the situation regarding competition from foreign firms! Canadian, Japanese and European companies have the competitive advantage of government-paid health and/or pension systems. Even China provides manufacturing workers with health care and lodging, a holdover from pure communism.

When the nation’s governors met this spring, they heard testimony that U.S. workers had average benefit costs amounting to $5.50 an hour—before wage rates are even considered. How can American companies compete? Governors asked. Apparently, the corporate answer is to outsource white-collar jobs along with blue-collar work.

A recent article in the New York Times warns the Chinese have excess capacity in nine key manufacturing categories. Since President Bush took office in 2001, America has lost 2.6 million manufacturing jobs. The U.S. trade deficit runs a staggering $600 billion a year, Bush’s new record.

Against this background, it makes no economic sense for the United States to fragment health care among a hodgepodge of systems with separate administrative structures and regulations: Medicare, Medicaid, the Veterans Administration, the Defense Department, the Federal Employees Plan, Federal-State programs to cover children, a flock of state and local government employee plans and finally private insurance plans often top-heavy with administrative costs. Add to this 44 million persons without health insurance who seek treatment at expensive hospital emergency rooms often with costs left for hospitals and local governments to pay. What a tangled mess! Clearly we lack a rational, cost effective health care system.

The One-Payer Necessity

Health care in the richest nation on earth is broken. It is obvious the United States needs one-payer, national health insurance to level the playing field for all employers and employees!

Bush now offers $9 billion a year in new tax incentives for individuals who set up Health Savings Accounts. This is on top of his enacted tax cuts: 36 percent gone into the pockets of the richest one percent of Americans with average incomes of $1.2 million, according to the nonpartisan Congressional Budget Office.

Brace yourselves for what was by far the worst feature of the new Medicare law — a section that doesn’t apply to retirees 65 and older — the creation of tax-free Health Savings Accounts. You qualify for up to a $5,150 a year tax deduction if you’re covered by a catastrophic health plan with at least a $1,000 deductible for an individual, $2,000 for a family. The larger the deductible, the lower the employer’s cost.

Brothers and sisters, this is not the proverbial camel’s nose under the tent. This is the whole animal in your tent chewing its cud. It’s the ultimate conservative fantasy, the richer you are, the bigger the tax break. And naturally employers would love to shuck ever-costlier comprehensive health benefits in favor of cheap catastrophic plans that appeal to the wealthy and the healthy. Non-union employers will flock to this option leaving unionized employers exposed to devastating cost competition!

According to Business Week, May 24, 2004, “Conservatives would require workers to pay taxes on some of the value of employer-provided insurance but give them tax breaks for buying insurance on their own. That’s a far more controversial step than Bush is likely to propose in a tight re-election campaign.” Be warned this is what the President means when he talks about giving workers and their families “ownership” of health care in America: you’re on your own. Also never forget, if re-elected, Bush is on record to compel future retirees to “own” their Social Security Accounts and play the yo-yo stock market.

As President Bush proclaimed on a recent campaign stop, “I need four more years to complete the work.”

This is the reason to vote Nov. 2 for John Kerry, the AFL-CIO’s endorsed candidate for president. It’s up to each of us to mobilize current and retired union members, family and friends to block a second term for Bush and his risky privatization schemes.

This commentary is reprinted from “Gopher Retiree”, the newsletter of the Minnesota State Retiree Council, AFL-CIO. Last month, the Minnesota AFL-CIO convention adopted a resolution sponsored by the Retirees Council, “supporting a not-for-profit, single-payer, national health care plan for all Americans.”

Graham Walker’s animated message on single payer

Graham Walker’s animated message on single payer

Single payer advocates sometimes have difficulty understanding why there
isn’t a groundswell of support for the single payer model of reform since its superiority as a method of funding health care is so clear (to us). But actually the model is fairly complex and not well understood by the majority of citizens. A brief explanation tends to be dismissed with the meme by which we have been thoroughly indoctrinated that “the government can’t do anything right.”

Graham Walker is a medical student at Stanford University and a former staff member of Physicians for a National Health Program. To no surprise, he found
that it was difficult to deliver a simple message on single payer that would
stimulate an inquisitive mind to investigate the model further. He then went
to work on creating a message that would be directed to a broad spectrum of
relatively uninformed individuals. He was especially interested in creating rhetoric that would connect with young adults who have been saturated with
the message that Social Security and Medicare will not be there when you need it (essentially the same message that is being presented this week by President Bush when he discusses the “ownership society”). Graham uses the analogy of funding “Prom Night” as an example that might resonate with a younger audience.

Graham has created an animated explanation of single payer targeted to the
larger audience that does not have a sophisticated understanding of health policy. You should view this five minute animation since you will probably find it very useful in your advocacy work. It is particularly suited to distribution over the Internet through an e-mail link that Graham has provided.

For the animation:
http://www.grahamazon.com/sp/whatissinglepayer.php

For a written explanation of single payer (The animation can be accessed on
this page by clicking “”animated version” near the top.): http://www.grahamazon.com/sp/

If you don’t have five minutes now, retain this message so that you can
view the animation during a break. I suspect that you’ll agree that we should
share this with as many people as possible (but avoid spamming those who
wouldn’t be interested).

Sen. Frist's compassion for empowered patients

The New York Times
August 31, 2004
Full Text of the Remarks of Senate Majority Leader Bill Frist

This victory for our Party (2003 Medicare legislation)– and above all for Seniors — is part of a larger battle we’re fighting on behalf of every American. How we do so is crucial. Our opponents have a way of confusing compassion with dependency. We believe true compassion encourages and empowers Americans to be responsible and take control of their own lives.

That’s what President Bush and the Republican Congress did when we made Health Savings Accounts — HSAs — the law of the land. With an HSA you can
invest tax-free in a personal savings account. You can roll it over year to year or withdraw funds if you get sick … without paying a penny of tax. YOU own it. YOU invest it. YOU grow it. YOU control it. It is YOURS.

So here’s the choice: do we grow the bureaucracy and gouge you with higher
taxes, as Mr. Kerry will do? Or, do we let the American people grow their own HSAs and own their health care, as George Bush wants to do? We’ve made
our choice.

http://www.nytimes.com/2004/08/31/politics/campaign/01TEXT-FRIST.html

Comment: My comments here are about policy. They are partisan only in the
respect that politicians have staked out their policy positions, as they clearly should. The democratic process is at its best when we vote based on an understanding of the policy stances of the candidates.

Tomorrow evening, President Bush will advocate for the “ownership society.” This concept supports individual responsibility and opposes dependency. In his speech, Sen. Frist quite explicitly expresses the view that Americans should take responsibility for their own health care through mechanisms such as Health Savings Accounts (HSAs), while avoiding dependency on others. Quite implicit in this is the fact that funding for health care should come primarily from an individual’s own funds rather than from a pool of funds to which everyone contributes, whether that be private insurance or a public program such as Medicare.

What would happen if each American funded a separate account for his or her
own health care? About 70% of our population uses only about 10% of the health care delivered in this nation. The other 30% utilizes 90% of the care
(5% utilize over half of all care). If you split up the risk pool into individual accounts then 10% of care will be funded by 70% of the population, whereas 90% of health care costs would be funded by the other 30%. For that 30%, that would average over $18,000 per individual per year (90% of the $1.79 trillion 2004 health expenditure divided by 30% of 290 million population). Conversely, for the healthy 70%, their annual contribution would average less than $900. This does not include the consideration that there would be winners and losers within each group, depending on amount of need. Clearly most individuals with significant health care needs could not afford to fund personal accounts that would be adequate for their needs.

To be realistic, the Republican leadership does not entirely dismiss dependency on others in that they recognize the necessity of high deductible (catastrophic) insurance to cover those who do have major losses. But how well would that work? They claim that catastrophic plans are very affordable and they prove this by citing the premium for healthy young individuals with no preexisting disorders which may be about $1000/year. But what would the premium actually be? Let’s say that we ask each individual to place $5000 in an individual account (though a mechanism would need to be in place to fund the accounts of those with no disposable income). You have now pulled $1.45 trillion out of the contribution to the risk pool ($5000 times 290 million population), leaving $340 billion ($1.79 trillion minus 1.45 trillion) to fund the $1.18 trillion worth of care (an amount that we are already spending) that would fall under the catastrophic coverage for the 30% with needs (90% of $1.79 trillion less the $5000 times 30% of the 290 million population that is the patients’ share of the contribution from their own accounts). That “low cost” high deductible plan actually would cost $4000 per each man, woman and child. Add that to the $5000 for each and
suddenly protection from financial loss costs close to $9000 per capita or
$36,000 for a family of four! That $9000 per capita adds up to a national health
care bill of $2.6 trillion ($9000 times 290 million population) rather than the $1.79 trillion we are currently paying. That extra $800 billion exposes the fraud behind the concept of individual accounts. Those extra funds are inequitable, regressively funded personal savings – nothing more, nothing less.

Perhaps high deductible insurance doesn’t really fit in with the ownership society, and we should just allow those with health care needs to do the best that they can. We can provide them with compassion as they struggle with their needs. Or maybe, just maybe, we should accept the concept that we need to take care of those with needs by paying for their care out of a pool that we all fund on an equitable basis.

Naw… those with needs would be abandoning their personal responsibility to
take care of themselves and their loved ones, and really wouldn’t be worthy of our compassion. I’ve “confused compassion with dependency,” and Dr. Frist
understands the difference.

Sen. Frist’s compassion for empowered patients

The New York Times
August 31, 2004
Full Text of the Remarks of Senate Majority Leader Bill Frist

This victory for our Party (2003 Medicare legislation)– and above all for Seniors — is part of a larger battle we’re fighting on behalf of every American. How we do so is crucial. Our opponents have a way of confusing compassion with dependency. We believe true compassion encourages and empowers Americans to be responsible and take control of their own lives.

That’s what President Bush and the Republican Congress did when we made Health Savings Accounts — HSAs — the law of the land. With an HSA you can
invest tax-free in a personal savings account. You can roll it over year to year or withdraw funds if you get sick … without paying a penny of tax. YOU own it. YOU invest it. YOU grow it. YOU control it. It is YOURS.

So here’s the choice: do we grow the bureaucracy and gouge you with higher
taxes, as Mr. Kerry will do? Or, do we let the American people grow their own HSAs and own their health care, as George Bush wants to do? We’ve made
our choice.

http://www.nytimes.com/2004/08/31/politics/campaign/01TEXT-FRIST.html

Comment: My comments here are about policy. They are partisan only in the
respect that politicians have staked out their policy positions, as they clearly should. The democratic process is at its best when we vote based on an understanding of the policy stances of the candidates.

Tomorrow evening, President Bush will advocate for the “ownership society.” This concept supports individual responsibility and opposes dependency. In his speech, Sen. Frist quite explicitly expresses the view that Americans should take responsibility for their own health care through mechanisms such as Health Savings Accounts (HSAs), while avoiding dependency on others. Quite implicit in this is the fact that funding for health care should come primarily from an individual’s own funds rather than from a pool of funds to which everyone contributes, whether that be private insurance or a public program such as Medicare.

What would happen if each American funded a separate account for his or her
own health care? About 70% of our population uses only about 10% of the health care delivered in this nation. The other 30% utilizes 90% of the care
(5% utilize over half of all care). If you split up the risk pool into individual accounts then 10% of care will be funded by 70% of the population, whereas 90% of health care costs would be funded by the other 30%. For that 30%, that would average over $18,000 per individual per year (90% of the $1.79 trillion 2004 health expenditure divided by 30% of 290 million population). Conversely, for the healthy 70%, their annual contribution would average less than $900. This does not include the consideration that there would be winners and losers within each group, depending on amount of need. Clearly most individuals with significant health care needs could not afford to fund personal accounts that would be adequate for their needs.

To be realistic, the Republican leadership does not entirely dismiss dependency on others in that they recognize the necessity of high deductible (catastrophic) insurance to cover those who do have major losses. But how well would that work? They claim that catastrophic plans are very affordable and they prove this by citing the premium for healthy young individuals with no preexisting disorders which may be about $1000/year. But what would the premium actually be? Let’s say that we ask each individual to place $5000 in an individual account (though a mechanism would need to be in place to fund the accounts of those with no disposable income). You have now pulled $1.45 trillion out of the contribution to the risk pool ($5000 times 290 million population), leaving $340 billion ($1.79 trillion minus 1.45 trillion) to fund the $1.18 trillion worth of care (an amount that we are already spending) that would fall under the catastrophic coverage for the 30% with needs (90% of $1.79 trillion less the $5000 times 30% of the 290 million population that is the patients’ share of the contribution from their own accounts). That “low cost” high deductible plan actually would cost $4000 per each man, woman and child. Add that to the $5000 for each and
suddenly protection from financial loss costs close to $9000 per capita or
$36,000 for a family of four! That $9000 per capita adds up to a national health
care bill of $2.6 trillion ($9000 times 290 million population) rather than the $1.79 trillion we are currently paying. That extra $800 billion exposes the fraud behind the concept of individual accounts. Those extra funds are inequitable, regressively funded personal savings – nothing more, nothing less.

Perhaps high deductible insurance doesn’t really fit in with the ownership society, and we should just allow those with health care needs to do the best that they can. We can provide them with compassion as they struggle with their needs. Or maybe, just maybe, we should accept the concept that we need to take care of those with needs by paying for their care out of a pool that we all fund on an equitable basis.

Naw… those with needs would be abandoning their personal responsibility to
take care of themselves and their loved ones, and really wouldn’t be worthy of our compassion. I’ve “confused compassion with dependency,” and Dr. Frist
understands the difference.

PLoS – Open access to taxpayer-funded research

USA TODAY
Posted 8/29/2004
Scientists want research papers freely available
By Dan Vergano

Twenty-five Nobel Prize-winning scientists today are calling for the government to make all taxpayer-funded research papers freely available.

Signers include DNA co-discoverer James Watson and former National Institutes of Health chief Harold Varmus, a longtime supporter of open access.

“As scientists and taxpayers, too, we therefore object to barriers that hinder, delay or block the spread of scientific knowledge supported by federal tax dollars – including our own works.”

Science is driven by researchers publishing results to communicate findings, collect funding and gain tenure. About 25,000 scientific and scholarly journals worldwide publish studies. Most hold copyrights to papers, charging single-paper access fees as high as $28. Yearly subscription fees rose 226% from 1986 to 2000 and averaged $840 this year (though for one journal, Brain Research, the subscription runs $18,856), says the Association of Research Libraries. Publishers say the fees are necessary for journals to survive, even for taxpayer-funded studies.

Taxpayers pay for researchers to prepare, review and edit manuscripts, the says, while scientific societies and large publishing firms reap the profits.

Over the past three years, calls from scientists and research librarians for open access to studies have grown louder, spurred by rising Internet use and higher costs for subscriptions. About 1,200 open-access journals now exist, up from five in 1992. Open-access publishers charge study authors a printing fee and release the information freely. For example, the publication fee for PLoS Biology is $1,500.

As the scientists make their case to Congress and to NIH chief Elias Zerhouni, Zerhouni meets today and Tuesday with scientists to discuss a June House Appropriations Committee directive to make electronic copies of NIH-funded research available for free within six months of publication, beginning next year. He met with publishers in July and endorsed the committee’s idea in principle. “We need a balanced policy that preserves the ability of journals and publishers to play a major role,” he says.

Alan Leshner, chief of the American Association for the Advancement of Science, which publishes Science magazine, says, “I think all the problems are workable” for the free-access publishing plan. “The question is how to do it so we can still pay our bills.”

NIH is the big dog of basic research funding with a $28 billion budget, making it a focus of the open-access debate. The federal government funds about 59% of all academic research and development, followed by universities (20%) and state and local government (7.1%), according to the National Research Council.

“The whole discussion of how we share research results is a very productive one,” Leshner says. “Science is about communicating results to serve society.”

http://www.usatoday.com/news/science/2004-08-29-free-research_x.htm

Comment: Harold Varmus and colleagues initiated a movement toward open
access publication of scientific research by establishing PLoS (Public Library of Science). Last year PLoS introduced its first publication: PLoS Biology. Next month, the inaugural issue of their new publication, PLoS Medicine, will be released.

This is a historic moment in medicine. PLoS Medicine is an open access, peer-reviewed medical journal. Open access is explained on the PLoS Medicine website:

“All works published in PLoS Medicine are open access, licensed under the Creative Commons Attribution License. Everything is immediately available online without cost to anyone, anywhere – to read, download, redistribute, include in databases, and otherwise use – subject only to the condition that the original authorship is properly attributed. Copyright is retained by the author.”

One of the most exciting aspects is that poor nations will have free access to the very latest in medical thought and research, no longer hindered by the current high cost of obtaining access to the medical literature.

I encourage you to peruse the website of PLoS Medicine:
http://www.plosmedicine.org/medicine/

Record Level of Americans Not Insured on Health

Record Level of Americans Not Insured on Health
By MILT FREUDENHEIM

Published: August 27, 2004

Rising costs for health coverage and a continuing fall-off in the number of workers in employer-sponsored health plans are among the reasons that a greater number of people did not have health insurance last year, experts say.

The increase in uninsured people last year, as reported by the United States Census Bureau yesterday, was 1.4 million, to a record 45 million.

More than 10 million of those without insurance were young people, 25 to 34 years old, government officials said, an increase of 576,000 from 2002. “Young adults got hammered,” said John F. Holahan, a health economist at the Urban Institute, a nonprofit research center in Washington.

In 2002, there were 43.6 million people without insurance, or 15.2 percent of the census estimate of 288.3 million Americans. The proportion of people who were uninsured grew only slightly last year, to 15.6 percent. That reflected growth in the total population and 3.2 million more people added to government health programs including Medicare, Medicaid and state coverage for children. More than one in four Americans is in a public program.

As the population grew, the number of people who had insurance also increased, by one million, to 243.3 million last year, also a record, the Census Bureau said.

Health insurance is a hotly debated campaign issue. Senator John Kerry has promised new subsidies to extend coverage to more people. The Bush campaign points to a feature of the new Medicare law that provides tax breaks for special savings accounts to help people pay for care.

Senator Judd Gregg of New Hampshire, who led a recent Republican panel that studied health insurance issues, said the “uptick” in the number of uninsured “reflects the still sluggish economy” in 2003. He said one million new jobs had been added since then.

Bill Frist of Tennessee, the Senate majority leader, said the numbers also reflected “a decade-long downward trend in the proportion of Americans who receive health insurance through their employers.”

Len M. Nichols, vice president of the nonprofit Center for Studying Health Systems Change in Washington, said, “The question is whether the recovery will be strong enough to generate good jobs with health insurance to counter the fact that health insurance is more costly now.”

Surveys by research groups show that health costs continue to rise much faster than wages and other costs borne by employers. Economists say the employment trend is still moving away from jobs that provide generous coverage.

Employers are already planning for steep increases in health costs for 2005. A separate survey of 916 employers released yesterday by Mercer Human Resource Consulting, a benefits consulting firm, said costs of current coverage would rise about 13 percent next year. Many employers plan to cut back on benefits and shift more of the costs to their workers to slow the increase to 9.6 percent, on average, Mercer said.

The cuts will “increase the pressure on small employers to discontinue coverage or increase their employees’ share of premiums,” said Blaine Bos, a Mercer survey spokesman. The upshot will be “more employees saying, ‘I don’t see the value of that’ and going without insurance,” he said.

There were 20.6 million uninsured full-time workers last year, the Census Bureau said, an increase of 1.6 million over the last two years.

The Census Bureau said that 12.1 million people without insurance were members of families with annual incomes of $50,000 or more, including 6 million in families that made at least $75,000 a year. Some conservative economists contend that these people could afford to pay for insurance.

“Households that earn $50,000 per year or more account for about 90 percent of the increase in the number of uninsured over the past 10 years,” according to the National Center for Policy Analysis, a research center based in Dallas that says it opposes government solutions to public policy problems.

Health policy experts who advocate a greater government role say a family with $50,000 in total income has trouble affording family coverage, which typically costs more than $9,000 annually, unless it obtains help from an employer or the government. They say many of these people are self-employed or work for small businesses that find health costs daunting.

This year the number of uninsured people in families with incomes of $50,000 or more increased by 704,000, the census report said. It also said there were 619,000 people without insurance in families with incomes of less than $25,000.

Although a number of states, including Texas, have cut back on children’s health programs, the number of uninsured children declined slightly, to 8.4 million, but remained at 11.4 percent of all children, last year. The proportion of poor children without insurance was 19.2 percent.

The proportion of uninsured people held steady among Hispanic, Asian and black Americans. About 18.5 percent of blacks, 18.7 percent of Asian-Americans and 32.7 percent of Hispanics did not have insurance.

With large numbers of Hispanic residents, Texas and New Mexico have the highest proportions of uninsured people, the Census Bureau said. Both had average uninsured rates of more than 20 percent over the three years from 2001 to 2003. The three-year average was 19.4 percent in Louisiana, 18.7 percent each in California and Oklahoma, and 17.8 percent in Alaska.

The states with the lowest three-year averages were Minnesota, at 8.2 percent; Rhode Island, at 9.3 percent; and Iowa and Wisconsin, at 9.5 percent each. Massachusetts, New Hampshire and Vermont were also at the low end, with 9.9 percent.

The uninsured rate was 15.5 percent in New York, 13.7 percent in New Jersey and 10.4 percent in Connecticut.

The true colors of the partisan divide on health care

The true colors of the partisan divide on health care

Background for today’s Quote of the Day: California has served as a unique laboratory for the application of health care policies in the reform movement. The process is handicapped by the fact that a two-thirds vote is required in both the Assembly and the Senate if a measure would result in a tax increase. Since the Republicans control over one-third of each chamber, and they vote as a block against any tax increase, reform measures have been limited to those that do not require significant additional state spending.

Although in this environment it would be almost impossible to enact a state-funded system of universal coverage, it is truly remarkable what the legislators have been able to accomplish with the support of dedicated advocates such as the leadership of California’s Health Access.

Today’s message discusses one small but important issue: the excessive fees charged uninsured patients who have no choice when they must access the health care system on an emergency basis. The debate over this legislation
is very instructive because it reveals the true colors of those on each side of the partisan divide.

I am especially indebted to Anthony Wright, Executive Director of Health Access, who granted me permission to distribute excerpts from his message for today.

Quote of the Day:

HEALTH ACCESS UPDATE
Tuesday, August 24, 2004

CA ASSEMBLY VOTES TO PROHIBIT HOSPITAL OVERCHARGING OF UNINSURED

On Monday, August 23rd, the California Assembly passed SB379 (Ortiz) to
prohibit hospitals from overcharging uninsured patients, and provide other consumer protections. Both SB379, and a similar bill, AB232 (Chan) are expected to be voted on in the Senate and, if successful, be sent to Governor Schwarzenegger’s desk by the end of the week. Both bills would provide first-in-the-nation consumer protections for self-pay hospital patients.

SPECIFIC PROTECTIONS FOR HOSPITAL PATIENTS: The bills that address aggressive hospital billing and collections, SB 379 and AB232, are similar. They address an issue raised by dozens of “uninsured and overcharged” patients that have been sent to collections, court, or bankruptcy for the simple act of seeking needed care. Both bills ensure that self-pay hospital patients:

Are informed of their consumer rights and financial options; Have at least 120 days before being sent to collections; If they are under 400% of the federal poverty level (under $60,000 for a family of three), don’t pay more than the Medicare, Medi-Cal or worker’s compensation rate for treatment.

A fact sheet on the bill is available at:
http://www.health-access.org/ab232_fact_sheet.htm

The text for AB232 (Chan) is at: http://www.leginfo.ca.gov/pub/bill/asm/ab_0201-0250/ab_232_bill_20040817_amended_sen.html

The text for SB379 (Ortiz) is at: http://www.leginfo.ca.gov/pub/bill/sen/sb_0351-0400/sb_379_bill_20040817_amended_asm.html

ASSEMBLY DEBATE: Assemblywoman Wilma Chan, the author of AB232 (sponsored by Health Access California), served as the floor manager on the debate on SB379, by Senator Deborah Ortiz. She started the discussion by talking about a specific patient who, when her health insurance ran out, was forced to pay four times the amount that her insurance had paid for a similar treatment. Chan made the point that hospital debt is a leading cause of personal bankruptcy.

REPUBLICAN OPPOSITION: Several Republicans rose to argue against the bill,including Assemblymen Tim Leslie, Tom Harman, Dennis Mountjoy, Ray Haynes, and at the end of the discussion, Tony Strickland.

Leslie questioned why “Democrats want to attack hospitals, and they are continuing to make hospital operations more difficult.”

Harman made several points in his objections. “Hospitals are businesses.They are run like any other business, whether it is a manufacturing business, a service business, a barber shop, a beauty salon.” He mistakenly stated that, “this bill simply says, well, you’ve got to provide free medical care to certain types of patients… that you can’t use wage garnishment or a collections agency…. Well, how else are they going to collect it if they don’t pay it?” He admitted that “we need to have a plan where everyone can get the necessary medical treatment that they need.

I support that in some fashion, I don’t know exactly what it would be.” Finally, he referenced the individual story that Chan cited in her opening: “I’m sorry, but maybe that person should have had better health coverage, maybe that person should have thought about this problem. That’s what we have bankruptcy court for…. Is it any different than a contract debt? How is it different from any other kind of debt? I submit to you that it is not.”

Mountjoy also misrepresented the bill, stating that it said that “if you are a hospital that is serving a patient, and if they are low-income, you gotta give it to them. Well, why don’t we do that for plumbers?… And the electrician, he ought to give you a break, too. Where in the Constitution does it say that we owe folks health care?… We don’t own them health care.” He continued, “why should we put the burden on a business like hospitals?… They are a business not unlike any other. They are there to make a profit, they have a board of directors that looks for that every month.”

Haynes decried the “Orwellian state” he was in. “When you order somebody to give stuff away for free, or you order somebody to work for free, that is what is known in the parlance as slavery. We are basically ordering hospitals to be our slaves.”

Later, Strickland stated that “part of the reason why costs have gone up in the hospital is that the hospitals are providing a lot of charity care. The uninsured are not paying their hospital bills…. The hospitals are shutting down their emergency rooms because they are providing too much charity care.”

DEMOCRATIC REBUTTALS:. Democrats that rebutted these claims include Assemblymembers Lloyd Levine, Hannah-Beth Jackson, and Jackie Goldberg. Levine responded, “more and more people are going without health care in California. And frankly, I actually… resent the implication that they should have had thought of this sooner, and gee, they should have had health insurance. The cost of health insurance is continuing to skyrocket…, many families cannot afford health insurance, and to say ‘oh, it is their fault,’ really misses the point…. We need to pass this bill and do everything we can to make sure people have access to health care when they need it.”

Jackson brought the discussion back to the question that the bill addresses:
“Is it correct that many hospitals charge uninsured people higher rates than what they charge and are willing to receive from insurance companies and Medicare?” She continued: “This is a bill that tells hospitals that you can’t take advantage of poor people who don’t have insurance… Let’s be fair to the people that are least able to pay by not forcing them to pay more than you and I who have the benefit of having health insurance. It is a sad state of affairs when anybody takes a predatory practice to charge the least able to pay more money for any service because they can… The goal is to give everybody, whether they are rich or poor, a chance to have quality health care at a fair and reasonable price.”

Goldberg also clarified that the bill “asks that the hospitals require nothing more than the higher of Medi-Cal, Medicare, or worker’s comp.So it is not free. And why is this business different than any other business? Well, this business you can’t live without, in some cases.” She also cited statistics that showed that while the uninsured are a small percentage of the patients in many hospital chains, they account for a disproportionate share of the profits. “The only way that could be true is to be gouging those folks as compared to people who have insurance…”

Chan closed by rebutting the arguments: “This does not in any way call for free care. Back in the 80s, I believe, there were strict limits on what a hospital could charge. This does not even go that far… It just says,if you go to the hospital, there should be some ceiling on what you can be charged. Collection agencies can be called in, but this bill gives the person a chance.” She concluded: “We are not talking about something free here, we are talking about basic fairness.”

The bill passed with an unofficial vote of 41-31, along party lines.

Health Access California:

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Comment: Although there is certainly a partisan divide over concepts of the appropriate roles of government and the marketplace in addressing problematic social issues, in general many Americans believe market forces must be allowed the freedom to address these issues without significant government intervention. But most also believe that when the market is unable correct significant social injustices then the government should enter to provide policies that will satisfy our quest for simple fairness.

I find it difficult to believe that most politically conservative individuals personally identify with the comments made by the Republican legislators in this debate on price gouging of the insured for emergency care. I believe that if Republicans knew what their own elected legislators were doing they would replace them with conservatives who were, in fact, truly compassionate. They need to prove that Compassionate Conservatism is not the Big Lie.

Mike Luff on Canada's vacillating solidarity

Mike Luff on Canada’s vacillating solidarity

In the last Quote of the Day message, a Globe and Mail article on Canadian solidarity and the right to health care ended with: “When they came to take away the rights of the destitute, I was not destitute, so I did not speak out. Then they came to take the rights of the ill.”

My comment following the quote posed the question: “Whether in the United States or Canada, is it solidarity that is vacillating, or is it merely due to our all too feeble efforts to involve ourselves in the political process?”

Mike Luff, National Representative for Canada’s National Union of Public and General Employees (NUPGE) responds:

With respect to your question (above), I would submit the following response: it’s not an “either/or” issue. The problem is both diminishing solidarity and confidence in the political process. But I believe we can change this. By honestly answering two deceptively simple questions: If not us, who? If not now, when? Allow me to elaborate, please.

Conviction and courage are almost nonexistent in politics in Canada and the US. It’s so bad we even tell jokes about it. One I heard goes like this.

Question: Why is a politician like a banana?
Answer: Because he starts out green, turns yellow and then goes rotten. But it is no laughing matter. The problem is not that politicians don’t live up to our expectations – the problem is that they too often do live up to our expectations and behave like politicians. They too often show no conviction and courage. They too often play us for suckers. This is what we’ve come to expect from the “people’s representatives” in Ottawa and Washington. It’s very dangerous. Because it pushes most people to give up on politics. To throw our hands up and follow the famous bumper sticker advice: “Don’t vote. It only encourages ’em.” That’s the real danger. Because the more people give up on politics the closer we edge to giving up on democracy itself.

But we do have the power to stop the drift to democratic despair. To do this we must come on strong. Remind people that to give up on politics is to give up on ourselves – and that we are not about to do that. We must rally regular, everyday people with the conviction they can hold out for themselves and we must give them the courage to use their ballots to finally do it. We must state and restate our conviction that it is regular, everyday folks who make history every day when we shut off the alarm clock, get the kids off to school and go into work. We must have the courage to say this is our world and we are not about to throw up our hands and lose it by default to the fools in Ottawa and Washington – elections will be won and lost until we get what we want.

The example of how we got Medicare in Canada in the first place should give us strength. The people that thought up and fought for Canada’s Medicare didn’t put their faith in politics or politicians. They put their faith in people, in each other. There were 105 people at the founding meeting of the movement to fight for Canada’s Medicare. There were 20 construction workers; 19 unemployed men and women; 15 farmers; 12 members of Parliament; six housewives; six teachers; six railway workers; six nurses; three journalists; two lawyers; two union leaders; two steam engineers; one miner; one professor; one hotel keeper; one retired minister; one merchant; and one motion picture operator. And not one stuffed shirt in the lot. They were all regular folks. They had nothing much going for them except their belief in themselves, their common desire to make the world into a better place and their faith in the power of ordinary people to do extraordinary things.

It is what made them strong then. It is what makes us strong now. It is what will keep us strong in the future.

It’s just a fact that civilization doesn’t happen because we leave it to other people. We have to stand up and fight for it – as if the cause depends on each one of us, because it really does! We must make it plain that we are going to hold out for what is right and just and ours. We must do this because we owe it to ourselves and to all the other women and men of good will who came before us and all those who will follow. We must be, as they were and will be, the change we wish to see in the world. Let us together openly declare that we are the ones who will lead by example, with conviction and courage, and we will do it now!

Mike Luff
National Representative
National Union of Public and General Employees (NUPGE)
NUPGE is Canada’s second largest union.)

HMO workers strike over health benefits

HMO workers strike over health benefits

SEATTLE (AP) — About 1,700 nurses and other health care workers formed picket lines to start a five-day strike against Group Health Cooperative — one of the nation’s oldest HMOs — over the cost of their own health benefits. Nurses, medical assistants, therapists and others represented by Service Employees International Union Local 1199 began striking at 18 clinics in western Washington, union spokesman Carter Wright said Monday. Negotiations between the two sides ended last week.

Before the walkout began, Group Health transferred an undisclosed number of maternity patients, rescheduled outpatient surgery and postponed back-to-school physical exams. Nonstriking employees and outside replacement workers filled in for the union members. The walkout is scheduled to end at midnight Friday. Group Health, a nonprofit health maintenance organization begun in 1947, says it needs its employees to pay more for health benefits to save money and prevent the HMO from passing on costs to members in the form of higher premiums.

Union workers now get benefits with no premiums or deductibles. They make $5 co-payments for office visits and prescriptions. Group Health wants to raise co-payments to $15, institute deductibles and charge premiums on a sliding scale. Union members say they are willing to contribute more but not as much as Group Health has sought, adding that some employees could not afford health coverage under the cooperative’s proposal. Union members range from nurses making $70,000 a year to custodians making $24,000. Group Health is the second largest consumer-governed HMO in the nation

Mike Luff on Canada’s vacillating solidarity

Mike Luff on Canada’s vacillating solidarity

In the last Quote of the Day message, a Globe and Mail article on Canadian solidarity and the right to health care ended with: “When they came to take away the rights of the destitute, I was not destitute, so I did not speak out. Then they came to take the rights of the ill.”

My comment following the quote posed the question: “Whether in the United States or Canada, is it solidarity that is vacillating, or is it merely due to our all too feeble efforts to involve ourselves in the political process?”

Mike Luff, National Representative for Canada’s National Union of Public and General Employees (NUPGE) responds:

With respect to your question (above), I would submit the following response: it’s not an “either/or” issue. The problem is both diminishing solidarity and confidence in the political process. But I believe we can change this. By honestly answering two deceptively simple questions: If not us, who? If not now, when? Allow me to elaborate, please.

Conviction and courage are almost nonexistent in politics in Canada and the US. It’s so bad we even tell jokes about it. One I heard goes like this.

Question: Why is a politician like a banana?
Answer: Because he starts out green, turns yellow and then goes rotten. But it is no laughing matter. The problem is not that politicians don’t live up to our expectations – the problem is that they too often do live up to our expectations and behave like politicians. They too often show no conviction and courage. They too often play us for suckers. This is what we’ve come to expect from the “people’s representatives” in Ottawa and Washington. It’s very dangerous. Because it pushes most people to give up on politics. To throw our hands up and follow the famous bumper sticker advice: “Don’t vote. It only encourages ’em.” That’s the real danger. Because the more people give up on politics the closer we edge to giving up on democracy itself.

But we do have the power to stop the drift to democratic despair. To do this we must come on strong. Remind people that to give up on politics is to give up on ourselves – and that we are not about to do that. We must rally regular, everyday people with the conviction they can hold out for themselves and we must give them the courage to use their ballots to finally do it. We must state and restate our conviction that it is regular, everyday folks who make history every day when we shut off the alarm clock, get the kids off to school and go into work. We must have the courage to say this is our world and we are not about to throw up our hands and lose it by default to the fools in Ottawa and Washington – elections will be won and lost until we get what we want.

The example of how we got Medicare in Canada in the first place should give us strength. The people that thought up and fought for Canada’s Medicare didn’t put their faith in politics or politicians. They put their faith in people, in each other. There were 105 people at the founding meeting of the movement to fight for Canada’s Medicare. There were 20 construction workers; 19 unemployed men and women; 15 farmers; 12 members of Parliament; six housewives; six teachers; six railway workers; six nurses; three journalists; two lawyers; two union leaders; two steam engineers; one miner; one professor; one hotel keeper; one retired minister; one merchant; and one motion picture operator. And not one stuffed shirt in the lot. They were all regular folks. They had nothing much going for them except their belief in themselves, their common desire to make the world into a better place and their faith in the power of ordinary people to do extraordinary things.

It is what made them strong then. It is what makes us strong now. It is what will keep us strong in the future.

It’s just a fact that civilization doesn’t happen because we leave it to other people. We have to stand up and fight for it – as if the cause depends on each one of us, because it really does! We must make it plain that we are going to hold out for what is right and just and ours. We must do this because we owe it to ourselves and to all the other women and men of good will who came before us and all those who will follow. We must be, as they were and will be, the change we wish to see in the world. Let us together openly declare that we are the ones who will lead by example, with conviction and courage, and we will do it now!

Mike Luff
National Representative
National Union of Public and General Employees (NUPGE)
NUPGE is Canada’s second largest union.)