PNHP

A Heftier Dose To Swallow Rising Cost

A Heftier Dose To Swallow Rising Cost

A Heftier Dose To Swallow Rising Cost of Health Care in U.S. Gives Other Developed Countries an Edge in Keeping Jobs
By Kirstin Downey Washington Post Staff Writer 3/06/04

For each mid-size car DaimlerChrysler AG builds at one of its U.S. plants, the company pays about $1,300 to cover employee health care costs — more than twice the cost of the sheet metal in the vehicle. When it builds an identical car across the border in Canada, the health care cost is negligible.

In the battle for manufacturing jobs, the United States has always been at a disadvantage compared with underdeveloped countries where wages are low. But the rapidly rising cost of health care in the United States means that even developed countries sometimes have an edge when it comes to keeping jobs, according to interviews with dozens of corporate executives, legislators and health care consultants.

The United States has lost nearly 3 million manufacturing jobs since July 2001, with 43 consecutive months of manufacturing-employment decline, from about 17.3 million jobs to about 14.3 million in February 2004. During the same period, the manufacturing workforce in Canada has generally remained stable, at about 2 million jobs, even though the unemployment rate is higher there, at 7.4 percent, than in the United States, where it is 5.6 percent.

And, although both nations lost auto manufacturing jobs in 2000 and 2003, the decline was only 4 percent in Canada, compared with 14 percent in the United States.

Jim Stanford, an economist with the Canadian Auto Workers union, said employers who could operate in either country save $4 per hour per worker by choosing Canada. “That’s a reasonably significant differential. . . . It’s one of the reasons Canada’s auto industry has done a lot better,” he said.

In a joint letter circulated in Canada in November 2002, officials from Ford Motor Co., General Motors Corp. and DaimlerChrysler said “the public health system significantly reduces total labour costs . . . compared to the cost of equivalent private health insurance services purchased by U.S.-based automakers.”

High health care costs have “created a competitive gap that’s driving investment decisions away from the U.S.,” Ford Vice Chairman Allan Gilmour said in a speech at a recent auto industry conference. “If we cannot get our arms around this issue as a nation, our manufacturing base and many of our other businesses are in danger,” he said, according to a transcript of the speech.

Gilmour, who is leading a Ford study of health care, said it may be necessary to prod government officials to consider policy changes to reduce health care costs, although he declined to specify what changes should be made. “I do know that significant reform is necessary,” he said. “Right now the country is on an unsustainable track and it won’t get any better until we begin — business, labor and government in partnership — to make a pact for reform.”

But while the Big Three automakers told Canadians that their nationalized health insurance system helped preserve jobs, and lobbied the Canadian government last year to maintain the program, their corporate executives are not willing to go that far when it comes to health care in the United States.

Business trade groups here advocate small steps, such as helping workers care for themselves better, urging them to stop smoking and lose weight, and shifting costs to employees. The U.S. Chamber of Commerce, for example, backs such proposals as tort reform, electronic prescription writing and providing better information on the quality of care by doctors and hospitals.

The Bush administration has proposed some targeted efforts to help individuals pay for their care, through tax credits and health care spending accounts that officials say would lower taxes and help people pay for health care.

Most of Bush’s Democratic opponents for president would like to see more aggressive governmental action, ranging from Sen. John F. Kerry’s (D-Mass.) plan to expand care for poor children and create a federal insurance pool to help employers pay for catastrophic care to Rep. Dennis J. Kucinich’s (D-Ohio) proposal for a universal, single-payer system that would cut costs by eliminating insurance company paperwork.

Manufacturers outside the auto industry are also concerned about health care costs and employment.

“We can’t just continue to shift jobs out of the United States, not just manufacturing jobs, but all kinds of jobs, and health care is playing a role,” said William A. Rainville, chief executive of Kadant Inc., a Massachusetts-based manufacturer of papermaking equipment. “It’s like we’re in a stream with no control over it.”

Rainville said his company will spend about $6,500 on health care for each of its 525 U.S.-based employees this year, while health care costs for its 45 Canada-based workers are minimal. “Our U.S. workers are the most productive, but it doesn’t make up for the health care,” he said.

Rainville said he has considered moving production to Canada. “As an American it concerns me, but as a businessman, I don’t have much of a choice. You need to do what’s right for the business.”

The cost difference is striking. Employers in Canada pay only about $50 a month, or $600 a year, mostly for optional items such as eyeglasses and orthopedic shoes, said Elaine Bernard, executive director of the labor and worklife program at Harvard Law School. “Health care is significantly cheaper for corporations in Canada,” she said. U.S. employers pay more than 10 times as much — an average $552 a month per employee for health insurance, according to the Kaiser Family Foundation.

In the United States, General Motors spent $4.5 billion on health care last year for its 1.2 million American workers and retirees, at a cost of about $1,200 per car, said Tom Wickham, a GM spokesman. Ford spent $2.8 billion last year on health care, a Ford spokeswoman said. DaimlerChrysler spent $1.4 billion on health care for its 97,000 U.S. workers and 107,000 retirees last year, for an average cost of $1,300 per mid-range car priced at $18,600, said Thomas J. Hadrych, the company’s vice president of compensation, benefits and corporate services. “The reality is it is a significant cost element we struggle with on a year-over-year basis,” Hadrych said.

Meanwhile, the number of people insured by their employers is shrinking, which means that employers who continue to pay for employee health care must pay more. Employer health care costs rose 12 percent in the past year, on top of a 16 percent increase the previous year, according to Towers, Perrin, Forster & Crosby Inc., a human resources consulting firm.

“This is the seventh straight year of double-digit price inflation,” said Helen Darling, a former Xerox Corp. executive who heads the National Business Group on Health, an association of 182 companies. “Prices started climbing in the bubble economy, but companies then were making a lot of money, everybody was living like they made a lot of money,” and the escalation was relatively unnoticed at first, she said.

After the economy began to slump, however, executives began to worry. They shifted some of the growing cost to employees by raising insurance premiums and co-payments. Other companies have stopped offering health insurance or have raised premiums so high that some workers can’t afford them.

Most other industrialized countries — Canada, Japan and those in Europe — have government-funded health care systems with universal coverage. Canadians, for example, pay higher income taxes and a 15 percent sales tax to support the nationalized health care system.

“Suffice it to say Canada and Germany have a socialized form of health care” that delivers quality care at a lower cost for a larger number of people, without placing all the expense on employers, said Hadrych, of DaimlerChrysler. “The burden of it falls on the government, not just on employers,” he said. In the United States, “we carry the full brunt of it.”

Hadrych said political pressure on the health care system a decade ago, when the Clinton administration proposed changes, helped keep prices down for several years, but when the political pressure eased, companies began increasing their prices again. He said he believed the country was moving toward what he called a “more comprehensive” solution to the problem in 2001, but that the Sept. 11, 2001, terrorist attacks diverted everyone’s attention.

“Prior to 9/11, we saw a lot of interest on the Hill with respect to the health care issues,” he said. “After 9/11, it all shifted,” and, he said, momentum for a bigger solution was “not there.”

“A lot of people think a single-payer system is better,” he said.

© 2004 The Washington Post Company

*****
Center for American Progress 3/03/04
Keep America Working: Restoring Jobs to Ensure American Prosperity
An Address by Sen. Hillary Rodham Clinton

American companies that continue to try to keep up with health care and pension costs find it increasingly difficult to do so. We are seeing now double-digit increases in health care, and we’re seeing the collapse of many of our pension systems that are basically being held aloft by a lot of accounting and prayers.

So how do we deal with this? Well, we can deal with it in a patchwork, incremental fashion, but eventually we’re going to have to decide. We’re going to have to decide, are we going to provide a more level playing field for our manufacturers by figuring out a way to deal with those legacy costs which were, remember, built up because they thought they were doing the right thing for American workers and their families? Are we going to figure out a more sensible way to deal with health care and pension costs? Or are we going to continue to try to shift those burdens so that more and more is put on the employee and the employer and we have no end in sight of the increase in cost.

It’s also clear that this set of issues is politically volatile, as I can attest from my efforts ten years ago. And perhaps, though, the time is slowly coming. We weren’t ready ten years ago, we didn’t really understand the full cost of what we were up against, but it’s becoming more and more difficult to ignore the implications of these policies for the economy, and there have to be some attempts to reach a consensus that begins to solve these problems…

http://www.americanprogress.org/site/pp.asp?c=biJRJ8OVF&b=35989

Don McCanne’s Comment: “… patchwork, incremental fashion…”? “… eventually we’re going to have to decide.” “… the time is slowly coming.”

The time has come. The question is no longer whether we need changes but what those changes will be.

Although Sen. Clinton will not be able to lead the charge since she spent most of her political capital on her prior attempt at reform, at least she is venturing out with guarded rhetoric revealing that she does understand that incremental patches simply will not do it.

Taxpayers fund health care for the rich

Health Affairs
February 25, 2004
The Cost Of Tax-Exempt Health Benefits In 2004
By John Sheils and Randall Haught

It is important to understand that the tax expenditure for health benefits accrues to workers rather than employers.

We have defined “tax expenditure” as the additional taxes that would be paid
if these benefits were included in taxable income. This depends on the marginal tax rate of the workers receiving these benefits (which varies with personal income and filer type) rather than that of the employer providing them.

We estimate that the average health benefit tax expenditure will be about
$1,482 per family in 2004. However, it is heavily skewed toward high-income
groups. The average will be $2,780 for families with incomes of $100,000 or
more per year, but only $102 for families with incomes of less than $10,000
per year. This reflects the fact that families with relatively higher incomes are more likely to have employer coverage and are in higher tax brackets.

Proposals have emerged that would replace the current health benefit tax
expenditure with a refundable tax credit. Workers would be required to count
the value of employer-sponsored health benefits as income when computing
their taxes, which would increase their incentives to enroll in less costly
health plans. A refundable tax credit of perhaps $1,500 for individuals and
$3,500 for families would be provided to all Americans and would be phased
out as income rises. This would refocus the health benefit tax expenditure
on lower-income people to help the uninsured obtain coverage. The tax credit
also would be available for all health insurance including nongroup coverage
(excluding Medigap), which does not now qualify for tax preferences.

However, these proposals raise several concerns. For example, eliminating the relative tax advantages of employer coverage could cause some employers
to stop offering coverage, assuming that their workers will purchase their
own nongroup coverage with the help of the tax credit. Without a mandate for
all to offer coverage, this could result in a partially offsetting increase
in the number of uninsured people, as the convenience and economy of employer-group coverage disappears. Also, nongroup insurance,which is difficult to obtain in many areas, is much more costly to administer than group coverage, so overall costs would increase. These problems must be addressed before these types of tax credit models can be a viable alternative.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.106

The full report:
http://content.healthaffairs.org/cgi/reprint/hlthaff.w4.106v1.pdf

Comment: Taxpayers currently are paying for health care for higher income
individuals, which is a benefit that lower income individuals do not receive. Current tax preferences for employer-sponsored plans are highly inequitable because of their regressive nature.

Several policy analysts have suggested discontinuing this inequitable tax
treatment of employer-sponsored plans, and replacing it with refundable tax
credits. Employers would welcome this opportunity to shift the responsibility for obtaining coverage to the employee who would then have to turn to the individual market. But the inequities of the individual market are much more profound than is the current tax injustice. And it is highly unlikely that standard policies could ever be established that would ensure equitable coverage and affordability within the private plan marketplace.

Why do we keep considering all of these other deficient schemes when an
equitably-funded universal system of social insurance would work just
fine?

Health-care critic battles on Doctor featured in film says system can be improved

Health-care critic battles on Doctor featured in film says system can be improved

BY ARZA BARNETT, THE COURIER-JOURNAL

Dr. Linda Peeno, center, talked with Dr. Betty Straub, left, as Sister Mary Rhoads Buckler listened before the showing of the film “Damaged Care.” Peeno and Buckler were portrayed in the film.

In the two years since the release of a movie depicting her battles with the managed health-care industry, Dr. Linda Peeno has heard a lot from the companies involved, she said last night.

What surprised the Louisville physician, though, was hearing from many industry employees who say they know that denying care for financial reasons is wrong.

“I hear this over and over and over again,” Peeno said after a showing of the 2002 movie, “Damaged Care,” at an event at Central High School, 1130 W. Chestnut St.

“I’ve been able to be the voice for a lot of people who haven’t been able to speak up,” Peeno told an audience of about 60 people who identified themselves as doctors, nurses, teachers, labor and religious leaders, and “citizens.”

The event was organized by Kentuckians for Single Payer Healthcare, a group that advocates national health insurance, including a bill before Congress.

The Showtime cable-television movie, which was critical of corporate managed care, starred Laura Dern as Peeno. It tells the story of Peeno’s difficult personal and professional life, including a failed marriage and her battle with Humana Inc.

Peeno, a native of Hodgenville, Ky., has a medical degree from the University of Louisville specializing in internal medicine and infectious diseases. She worked in the 1980s as a medical reviewer for Humana Inc. and as medical director at Blue Cross/Blue Shield Health Plans.

The film shows how she became disillusioned with managed-care systems and eventually left to serve as an expert witness in cases involving insurance companies accused of denying care.

Peeno said that one of the lessons of the movie — and a theme she still advocates — is the need to change the corporate system of health care in the United States.

“We hear constantly that we have to allocate resources,” Peeno said, describing those who want to let the free market solve the nation’s growing health-care crisis. “But there is more than enough money in our health-care system to have quality care.”

She cited what she said were high salaries and profits in the industry. At the time of the movie’s debut, Humana officials said that it was inaccurate and that the company is dedicated to the health and welfare of patients.

Asked what impact she has had on the managed-care system, Peeno paused, then answered, “I like to think that at least part of what I have done was begin to articulate what an ethical health-care system is.”

Peeno has traveled widely around the country in recent years on court cases and for other health-care related events, she said.

“One of the effects I’ve seen is of the complete dispiriting — almost a gutting of the spirit — of health-care professionals, from doctors all the way down,” she said.

Peeno said she didn’t necessarily blame the workers in the managed-care system.

“We’re not talking about evil people, bad people,” she said. “At the basis of it, it’s the way we’re organizing the system.”

Asked about whether managed-care corporations had changed since the years depicted in the movie, Peeno said she had once thought they would “magically straighten up” after a few years of public exposure of their flaws, through lawsuits and other public actions.

But that hasn’t happened, she said.

Instead, industry representatives have argued that practices like those in the movie were “the old way,” she said.

That achieves the same effect of putting profits before people, “but doing so more subtly” by using “layers of organization” and “various ways of eluding responsibility and accountability,” Peeno said.

Event organizers called for support of the Medicare for All Act, proposed by Rep. John Conyers Jr., D-Mich. The bill would provide for a single-payer national health-care system with universal coverage.

Peeno said she supported the bill but added, “No single piece of legislation is going to solve the larger problem of this system and how we all live together in this society.”

Fly in the small business ointment: Health care

Daily Herald
3/2/2004
Optimism in key sector
By Mike Comerford

Large scale layoffs in the last three years have been headline grabbers but keeping the local economy afloat has been the steady strength of area small
and mid-sized businesses.

An optimism index compiled by the National Federation of Independent Business indicates optimism in the small business sector in the first quarter of this year was higher than any quarter of the go-go 1990s and near an all-time record.

An eyebrow raising 17 percent of small businesses said they plan to hire employees in the next three months. Banks are vying to capture growing smaller companies, 25 percent of whom said this quarter they intend to expand their businesses. That’s near a pace not seen since the mid- 1980s.

Small businesses, according to the National Federation of Independent Business, also say they are re-building their inventories. Historically, taxes have been the biggest worry on the minds of managers at small businesses. But this year, health insurance costs were the single-biggest problem, they told the business association.

“The only fly in the ointment is health insurance,” said Bill Dunkelberg, chief economist, National Federation of Independent Business. “Consequently, about 40 percent of small businesses don’t offer health-care insurance.”

http://www.dailyherald.com/search/main_story.asp?intid=38048121

Comment: Small businesses are thriving, thank goodness. But the escalating cost of health insurance has driven small businesses to look for solutions such as association health plans and consumer-directed products. Although these approaches would provide relief for the business owner, they shift costs to the employee-patient, making essential care unaffordable for many. And close to half of the employers have already abandoned any attempt to provide health care coverage.

It really is time to end our inadequate and wasteful system of employer-sponsored private plans, but not until we have in place a better alternative.

Small businesses should join with us in advocating for a more affordable and
more equitable system of universal social insurance. It’s good for business.
It’s good for employees. And it’s good for all of us.

Implementing a health care information exchange would save ~$87 billion

Center for Information Technology Leadership
February 23, 2004
New Findings Show that Investment in Standardized Healthcare Information Exchange Would Deliver $87 billion in Annual Healthcare Savings

“Our research shows conclusively that there are strong financial reasons for the nation to invest in standardized healthcare information exchange,” said Blackford Middleton, MD, Chairman of CITL. “Standardized information exchange would save the nation $86.8 billion each year. Clearly, we must accelerate efforts to focus national policy discussions on implementing standardized healthcare information exchange and interoperability.”

Dr. Middleton announced the results of CITL’s research into the value of Healthcare Information Exchange and Interoperability (HIEI) at the HIMSS
Annual Conference, February 23, in Orlando, Fla. The study considered four
levels of interoperability, but the conclusions focused on the financial value of moving to nonstandardized, machine-organizable data and standardized, machine-interpretable data. CITL found that the value of standardized HIEI far exceeds the value of non-standardized HIEI. The research concludes that it is not cost effective to invest in non-standardized HIEI.

HIEI generates savings by enabling automated sharing of data among the computers of participants involved in clinical treatment. Currently, 90% of data is shared manually via telephone, fax, and mail, and one study found that pertinent patient data were unavailable in 81% of patient visits to an outpatient clinic.

CITL calculated that savings would come from fewer tests and improved efficiency. CITL projected less redundancy and decreased labor costs from reduced administrative tasks. The results should be viewed as conservative estimates of the value of HIEI, since CITL considered only transactions that involve providers. In addition, it assumed that all providers would purchase new systems. Overall, CITL believes that actual financial benefits would be even higher than its projections.

http://www.citl.org/news/HIEI_Findings.pdf

Comment: One of the advantages of a single, universal system of funding health care is that it would be simpler and less costly to include an integrated information technology system. Although the benefits are not disputed there has been some concern about the costs of such a system. This report allays those fears.

The precise amount of savings would vary under different specific models, but the savings would be real if the health care information exchange and interoperability (HIEI) is standardized. In contrast, our current non-standardized approach is clearly not cost effective.

A single, universal program of social insurance is the ideal framework within which to establish a standardized HIEI. Let’s go to the drawing boards now.

The Medicare Road Show

Families USA launched its Medicare Road Show, a nationwide senior awareness campaign about the new Medicare prescription drug law. The launch featured the premiere showing of a new Families USA video, hosted by Walter Cronkite, to a group of D.C. area seniors. The video was produced to help seniors understand the new Medicare law. The launch also featured appearances by two seniors — Mildred Fruhling of New Jersey and Sydney Bild of Illinois — who were interviewed for the video. Mildred and Sydney talked candidly about the difficult time they’ve had finding the drugs they need at prices they can afford and how they expect the drug coverage offered by the new Medicare law will affect their out-of-pocket drug costs.

“Dr. Sidney Bild is a member of Physicians for a National Health Program and a retired pediatrician in Chicago. He is also the President of Metro Seniors in Action, where he has worked tirelessly for improvements in Medicare and for a single-payer national health insurance program.”

click here to view the article

Conservatives using HSAs to prevent a "socialized system"

Mon, 1 Mar 2004
Conservatives using HSAs to prevent a “socialized system”

MotherJones.com
March/April 2004
Medicare’s Hidden Bonanza
By Michael Scherer

For conservative leaders, the best part of the Medicare bill President Bush signed in December had absolutely nothing to do with Medicare. Rather, the provision that House Speaker Dennis Hastert calls “the most important piece in the bill” and former Speaker Newt Gingrich considers “the single most important change in health care policy in 60 years” is a little-noticed tax rebate set to cost the Treasury $6.4 billion over the next decade. The measure allows Americans to open tax-free “health savings accounts,” which can be used to pay medical bills-in effect removing their owners from the shared risk that has been the core of the health-insurance system since World War II.

For conservatives, a key selling point of health savings accounts is the potential effect on the future of health care: In making their case to lawmakers, (Golden Rule Insurance Co.’s Chairman Emeritus J. Patrick) Rooney’s allies cited polls showing that two-thirds of Americans support government-run, universal health care. By giving a large segment of the population the option to withdraw from the health-insurance system, they argued, health savings accounts could serve as a poison pill preventing another “Hillarycare” debate. “It’s going to be real hard to socialize the system if everybody has their own account,” explains John Goodman, head of the conservative National Center for Policy Analysis.

http://www.motherjones.com/news/outfront/2004/03/02_401.html

Comment: There is no question that the agenda of the conservatives is to shift the responsibility for funding health care away from collective pools, whether public or private, and onto the individual patient. They correctly perceive that health savings accounts will create a formidable political body of individuals who will have been able to reduce their health insurance premiums, funds which would otherwise be lost forever, and deposit the savings into their own personal accounts.

Because of the regressive tax policies of HSAs, higher income individuals will even receive taxpayer assistance in paying for their health costs. And if they remain healthy, they can eventually use their own accounts as a retirement plan. For the large sector of our society composed of relatively young, healthy individuals who have decent incomes, HSAs are a very good deal, providing adverse medical events do not occur.

But is this really a formidable force that will inevitably oppose universal coverage? HSAs that are not depleted become almost identical to individual
retirement accounts (IRAs) at age 65. What would be the response of this group if we adopted a universal health insurance program and told these individuals that their HSAs would no longer be exposed to the risk of medical bills but would be converted into permanent IRAs? The mere establishment of HSAs does not preclude political support for universalinsurance.

In the interim, funds that will be diverted into these accounts will have been removed from the collective risk pools. Funds to provide care for those with health care needs will be even less available. The crisis in health care funding will increase in intensity. More suffering will occur as health care becomes less and less affordable for individuals with needs.

We really do need to fix the funding of our health care system now.

Conservatives using HSAs to prevent a “socialized system”

Mon, 1 Mar 2004
Conservatives using HSAs to prevent a “socialized system”

MotherJones.com
March/April 2004
Medicare’s Hidden Bonanza
By Michael Scherer

For conservative leaders, the best part of the Medicare bill President Bush signed in December had absolutely nothing to do with Medicare. Rather, the provision that House Speaker Dennis Hastert calls “the most important piece in the bill” and former Speaker Newt Gingrich considers “the single most important change in health care policy in 60 years” is a little-noticed tax rebate set to cost the Treasury $6.4 billion over the next decade. The measure allows Americans to open tax-free “health savings accounts,” which can be used to pay medical bills-in effect removing their owners from the shared risk that has been the core of the health-insurance system since World War II.

For conservatives, a key selling point of health savings accounts is the potential effect on the future of health care: In making their case to lawmakers, (Golden Rule Insurance Co.’s Chairman Emeritus J. Patrick) Rooney’s allies cited polls showing that two-thirds of Americans support government-run, universal health care. By giving a large segment of the population the option to withdraw from the health-insurance system, they argued, health savings accounts could serve as a poison pill preventing another “Hillarycare” debate. “It’s going to be real hard to socialize the system if everybody has their own account,” explains John Goodman, head of the conservative National Center for Policy Analysis.

http://www.motherjones.com/news/outfront/2004/03/02_401.html

Comment: There is no question that the agenda of the conservatives is to shift the responsibility for funding health care away from collective pools, whether public or private, and onto the individual patient. They correctly perceive that health savings accounts will create a formidable political body of individuals who will have been able to reduce their health insurance premiums, funds which would otherwise be lost forever, and deposit the savings into their own personal accounts.

Because of the regressive tax policies of HSAs, higher income individuals will even receive taxpayer assistance in paying for their health costs. And if they remain healthy, they can eventually use their own accounts as a retirement plan. For the large sector of our society composed of relatively young, healthy individuals who have decent incomes, HSAs are a very good deal, providing adverse medical events do not occur.

But is this really a formidable force that will inevitably oppose universal coverage? HSAs that are not depleted become almost identical to individual
retirement accounts (IRAs) at age 65. What would be the response of this group if we adopted a universal health insurance program and told these individuals that their HSAs would no longer be exposed to the risk of medical bills but would be converted into permanent IRAs? The mere establishment of HSAs does not preclude political support for universalinsurance.

In the interim, funds that will be diverted into these accounts will have been removed from the collective risk pools. Funds to provide care for those with health care needs will be even less available. The crisis in health care funding will increase in intensity. More suffering will occur as health care becomes less and less affordable for individuals with needs.

We really do need to fix the funding of our health care system now.

UFCW President Dority on the strike and health care reform

TheBakersfieldChannel.com
February 27, 2004
UFCW International President’s Statement

Excerpts from the statement of United Food and Commercial Workers international President Doug Dority on the Southern California Strike/Lockout:

Today, I am pleased to join with the officers of the seven Southern California UFCW local unions in their announcement of a tentative agreement in the longest major strike in the history of the UFCW, the largest and longest strike in the history of the supermarket industry, and the first major strike of the 21st century.

The men and women on the picket lines are genuine heroes. Their sacrifice
for affordable family health care has motivated and activated workers across
the nation. I am honored to be part of their union, and I am humbled as well
as inspired by their dedication, strength and selflessness.

Through their struggle, the striking and locked out workers have performed a
service for the whole country. They have sounded the alarm for all of America — your health care benefits at work are at risk. If the supermarket giants profitable, growing Fortune 50 mega-corporations can launch an attack on health care benefits, then every employer is sure to follow. They have sounded the alarm that the American health care system is ready to collapse.

In one year, over 2 million lost health insurance. That’s over 6,000 workers
a day. The fight here has given us a national call to action. We must have national health care reform. No one company, no one union, no industry or group of workers alone can fix the health care system. We can patch it up. We can protect our members for another contract term, but the system continues to falter, exacting an increasing cost on both workers and employers and leaving more and more families without health care.

Now is the time for action. 2004 is the year to put health care reform on the political agenda and demand that every candidate for office commits to comprehensive, affordable health insurance for every working family.

No worker should ever again be forced to choose between a paycheck and health care benefits. No worker should ever again be forced into the streets for five months to protect health care for their families.

The UFCW will lead the fight for health care reform. And, I believe, with members like our Southern California members, the UFCW will win that fight.

http://www.thebakersfieldchannel.com/news/2881620/detail.html

Comment: The UFCW can’t do it alone. Let’s all join in the effort. Each of us should use our individual talents to motivate action in our communities, religious organizations, service clubs, political parties, professional societies, and any other milieu that can move the cause forward.

Stop what you are doing right now and set aside five minutes (time it) to think of nothing else other than what you can do to support the movement for universal, comprehensive, affordable care for everyone.

Check the time. You have five minutes… Go!

Grocery strike settlement is a death knell for employer-sponsored coverage

Los Angeles Times
February 27, 2004
Union, Stores Reach a Deal to End Strike
By James F. Peltz, Melinda Fulmer and Ronald D. White

Negotiators reached a deal Thursday night that could end the California supermarket strike and lockout, a bitter fight that highlighted the national
debate over how much companies should pay for workers’ healthcare coverage.

… in a victory for the supermarket companies’ bid to stem rising healthcare costs, their regular per-employee contributions to the healthcare program would be capped at a set dollar limit…

http://www.latimes.com/business/la-fi-upermain27feb27,1,2819295.story?coll=la-home-headlines

Comment: Although there will be considerable diversionary discussion about
the other issues, this strike and lockout was really about only one issue. Management wanted to change to a defined contribution program in order to
cap the companies’ health care costs. Future cost increases will be the responsibility of the employees. With continuing health care cost escalation, the financial burden will be unbearable for these employees who earn less than $30,000 per year.

The past decade has witnessed an unrelenting effort to shift the costs of employer-sponsored coverage to the employees. This settlement is a landmark,
pivotal point in the history of employer-sponsored coverage.

With the success in shifting low income employees into a defined contribution system, there is no doubt that higher income employees, who can currently afford the costs, also will be shifted rapidly into defined contribution programs. We can anticipate an accelerated growth in high-deductible, managed care PPO plans because of the lower premiums offered. Use of health savings accounts (HSAs) will increase, but they are not insurance. HSAs are merely a vehicle to subsidize the health care of wealthier individuals with taxpayer funds. We are witnessing the end of the era of employer-sponsored coverage.

The healthy and wealthy will continue to do fine in this health care environment. But both moderate and low income individuals who have significant health care needs will face financial disaster along with impaired access to care because of lack of affordability.

Actually, there is some good news in this disaster. This transformation of the health care system will be extremely unstable and intolerable. It cannot last long. It will become clear to all that we will need to shift our abundant health care resources into an equitable, affordable system of social insurance.

It remains to be seen how long we will tolerate a rapidly deteriorating system and how much suffering we have to witness before we adopt a system of social insurance.

The grocery workers stuck it out for nearly five months and then lost. Can we show the nation a much better option in the next five months? Taking longer will only increase the privation and suffering.

The FDA Huffs, but Canadian Drugs are OK

The Food and Drug Administration would have consumers believe they’re taking a huge risk when they send their prescriptions to pharmacies north of the border, where the same drugs cost far less than they do here.

Hogwash. The fact is, drugs purchased through the Canadian health care system are every bit as safe as those available in the United States.

The FDA’s warning is a smokescreen thrown up to conceal the agency’s – and Congress’ – unseemly coziness with the drug industry.

The FDA warns that Canadian drugs may be outdated, subpotent, contaminated or counterfeit. The agency says that Canadian pharmacists might dispense the wrong or a contraindicated product, an incorrect dose, or a medication that isn’t accompanied by adequate directions for use.

But the agency has no justification for its cautions. To the contrary, a recent report by the Congressional Research Service supports the safety of drugs from Canada. It found that medications manufactured and distributed there meet or surpass quality-control guidelines set by the FDA.

According to this report, prepared at the request of Rep. Bernard Sanders (I-Vt.), the two countries regulate prescription drugs in virtually identical ways – from manufacturing and importation to labeling, distribution and sales. The report found that Canada’s pharmaceutical controls mimic those in the United States, with Canada tracking drugs through each distribution step.

The proof is in the pudding. Are people really being hurt by taking prescriptions filled in Canada? When asked to give examples of people who have been harmed, Tom McGinnis, the FDA’s director of pharmacy affairs, said late last year, “We don’t have that. I can’t think of one thing off the top of my head where somebody died or somebody got put in the hospital because of these medications. I just don’t know if there’s anything like that.”

Meanwhile, it’s clear that there are major problems in the drug regulatory arena right here in the United States. People were shocked to learn recently that counterfeit versions of the cholesterol-lowering drug Lipitor were surfacing in large U.S. pharmacies. Other instances of counterfeit drugs entering U.S. commerce have led to further questions about the safety of the drug supply.

The real issue, of course, is not whether the drugs from Canada are safe, but rather, why are they so much cheaper? Canadian pharmacies offer savings that average 35 percent over prices available in the United States, mostly because the Canadian government imposes price controls.

In a free-market society, people’s blood boils at the thought of imposing price controls. But is the health care industry part of a true free-market economy? When purchase decisions are ultimately made by the prescriber without much input from the patient, as is the case here, the drug industry is not a free-market economy.

The FDA’s froth about Canadian drugs are indicators of a much larger problem: the inability of the current administration to lower the outrageous cost of prescription drugs. Viewed through that lens, the FDA’s recent rantings are intended to deflect criticism from Congress’ inability to come up with a meaningful program to reduce the costs of drugs and to conceal its toasty warm relationship with the industry.

Cash-strapped health programs from cities and states around our nation are beginning to embrace the idea of taking their business north. Surely, responsible government officials from around the nation would not thumb their collective noses at the FDA if they felt it would put citizens at risk.

Make no mistake about it: Buying drugs from licensed brick-and-mortar pharmacies in Canada is an altogether different proposition from buying drugs from so-called rogue Web sites. Anytime consumers are offered the opportunity to buy prescription drugs without a prescription, they should be suspicious. It is illegal to do so, and more importantly, it’s a risky proposition. But it’s not the same as getting a properly written prescription filled by a licensed and regulated pharmacy through the mail.

The sound of FDA’s sabers rattling is reverberating from Vermont to Florida and from California to Washington.

I am not sure what the answer is, but it is time we shifted our focus from Canada to Washington – where the real problem lies.

Copyright (C) 2004, Newsday, Inc.
Posted under the requirements of “Fair Use.”

Gail Shearer's JEC testimony on "consumer-driven" health care

United States Congress
Joint Economic Committee
February 25, 2004

Impact of “Consumer-Driven” Health Care on Consumers Testimony of Gail Shearer, Director, Health Policy Analysis Washington Office of Consumers Union

Excerpts:

One way to reduce the employer premiums for health insurance, and to make
payments more predictable, is to switch to a “defined contribution” approach
to health insurance… In the employer health insurance market, a key dstinguishing feature of its effort to move toward a defined contribution model is high-deductible coverage. As indicated by the title of the Joint Economic Committee hearing, the term that insurers and employers have coined to name this new trend in the marketplace is “consumer-driven health care.” Consumers Union… is troubled by this trend in the marketplace. In our testimony, we plan to explain why we believe this type of coverage is misnamed, misguided from a policy perspective, and a dangerous distraction from the health insurance crisis that faces 43.6 million uninsured consumers and tens of millions of underinsured consumers.

The focus of the President’s Economic Report chapter on health insurance is
more on the alleged problems of over-insurance rather than the problems associated with the lack of insurance and underinsurance. The chapter could
be a primer for a Health Economics 101 course on the virtues of an unfettered free market for health insurance: the reader learns about different consumption choices that consumers make when they have insurance. It posits that patients might over-consume services if they face too little cost-sharing.

Nowhere in this chapter is there recognition of the reality that faces millions of Americans every year: For the most part, people are not uninsured out of choice, but because they can not afford to pay health insurance premiums. Every day, uninsured and underinsured Americans are dying because of the lack of insurance.

When the marketplace shifts to one characterized by pricing to risk, as suggested by the President’s Economic Report, this leads to escalating premiums for the very people who can least afford them – people who face serious health challenges.

The Administration’s proposals, which boost “consumer-driven” health care,
by design, shift more costs to those who are sick. The result will ultimately be a health care system that distributes costs of health care even less fairly than it does today.

Based on survey data from the Medical Expenditure Panel Survey (MEPS) and
adjusted to 2000 levels (by the Lewin microsimulation model), the average
health care costs of those with employer based coverage was $2,628 in 2000.
However, the average masks a large degree of variation: those in the lowest
fifth of spending incurred on average $30 of health care expenditures, while
those in the top tenth of spending incurred costs of $16,710. This variation
of risk goes to the heart of the need to find a way to spread costs broadly
in order to keep costs affordable to those at the highest risk level. Yet the Economic Report of the President suggests that instead of spreading risks broadly so that health coverage will be affordable to those with existing conditions, “pricing to risk” is a primary goal of the health insurance marketplace. This approach sacrifices any notion of community and sharing of our neighbor’s burden, in favor of marketplace efficiency.

Expansion of medical savings accounts (MSAs) under the new name of Health
Savings Accounts (HSAs) adds a new wrinkle to “consumer-driven health care”
plans by making the contributions to the health reimbursement account tax
deductible. This new tax policy, combined with high deductible health coverage, is likely to appeal disproportionately to the healthy and wealthy.

Because of the variation of risks, and different selections made by people of different health status, high deductible plans can not exist in the long-term in a marketplace that offers low-deductible plans as well. Ultimately, low-deductible plans will be driven out of the market, with “premium spirals” driving out comprehensive coverage.

“Fundamentally, those who would likely win from shifting to MSA/catastrophic
arrangements are the healthy who will ‘take back’ some of their ‘excess’ contributions that effectively help to subsidize others.”

“The great savings will be for the employees who have little or no health care expenditures. The greatest losses will be for employees with substantial health care expenditures.”

A recent study of “consumer-directed health benefits” concluded that the young and healthy are potential winners, and that older people are less likely to choose high deductible plans.

In sum, high deductible coverage, combined with the new tax shelter, drive up premiums for those wanting low deductible coverage, are likely to lead to elimination of low-deductible coverage, strain the federal treasury, and will lead to shifting of costs to those who are sick while benefiting the healthy and those in high tax brackets.

As the President’s Economic Report clearly points out, high-deductible (and “consumer-driven”) health care plans are designed to increase out-of-pocket
costs for those who have health care expenditures.

Focusing on transforming our health care marketplace into a high-deductible marketplace is a dangerous distraction from the urgent national goal of extending affordable, quality health coverage to all.

For the full testimony:
http://www.consumersunion.org/pub/0225JECTestimonyNoSummary.pdf

Comment: High-deductible coverage, health savings accounts, defined contributions, and plans with Spartan benefits and greater cost sharing are all methods of “empowering the consumer” in the health care marketplace. In health care, an “empowered consumer” means that he or she feels the pain of health care costs. Current trends are intensifying this pain by “pricing to risk.” Those with greater health care risks are being required to pay higher prices if they “choose” to have access to health care. Those who cannot afford the higher prices will “choose” to have impaired health care outcomes (though no other real option is being offered).

Gail Shearer’s testimony should be downloaded and distributed widely. The
nation needs to understand why we should reject current policies that provide the healthy and wealthy with the option of not participating in the risk pools that help to fund care for the sick and poor.