PNHP

Looting the Future

Looting the Future

Looting the Future
By PAUL KRUGMAN, NY Times
Published: December 5, 2003

Bush, George W
Republican Party
United States Politics and Government
Budgets and Budgeting

One thing you have to say about George W. Bush: he’s got a great sense of humor. At a recent fund-raiser, according to The Associated Press, he described eliminating weapons of mass destruction from Iraq and ensuring the solvency of Medicare as some of his administration’s accomplishments.

Then came the punch line: “I came to this office to solve problems and not pass them on to future presidents and future generations.” He must have had them rolling in the aisles.

In the early months of the Bush administration, one often heard that “the grown-ups are back in charge.” But if being a grown-up means planning for the future — in fact, if it means anything beyond marital fidelity — then this is the least grown-up administration in American history. It governs like there’s no tomorrow.

Nothing in our national experience prepared us for the spectacle of a government launching a war, increasing farm subsidies and establishing an expensive new Medicare entitlement — and not only failing to come up with a plan to pay for all this spending in the face of budget deficits, but cutting taxes at the same time.

Recent good economic news doesn’t change the verdict. These aren’t temporary measures aimed at getting the economy back on its feet; they’re permanent drains on the budget. Serious estimates show a long-term budget gap, even with a recovery, of at least 25 percent of federal spending. That is, the federal government — including Medicare, which Mr. Bush has given new responsibilities without new resources — is nowhere near solvent.

Then there’s international trade policy. Here’s how the steel story looks from Europe: the administration imposed an illegal tariff for domestic political reasons, then changed its mind when threatened with retaliatory tariffs focused on likely swing states. So the U.S. has squandered its credibility: it is now seen as a nation that honors promises only when it’s politically convenient.

What really makes me wonder whether this republic can be saved, however, is the downward spiral in governance, the hijacking of public policy by private interests.

The new Medicare bill is a huge subsidy for drug and insurance companies, coupled with a small benefit for retirees. In comparison, the energy bill — which stalled last month, but will come back — has a sort of purity: it barely even pretends to be anything other than corporate welfare. Did you hear about the subsidy that will help Shreveport get its first Hooters restaurant?

And it’s not just legislation: hardly a day goes by without an administrative decision that just happens to confer huge benefits on favored corporations, at the public’s expense. For example, last month the Internal Revenue Service dropped its efforts to crack down on the synfuel tax break — a famously abused measure that was supposed to encourage the production of alternative fuels, but has ended up giving companies billions in tax credits for spraying coal with a bit of diesel oil. The I.R.S. denies charges by Bill Henck, one of its own lawyers, that it buckled under political pressure. Coincidentally, according to The Wall Street Journal, Mr. Henck has suddenly found himself among the tiny minority of taxpayers facing an I.R.S. audit.

Awhile back, George Akerlof, the Nobel laureate in economics, described what’s happening to public policy as “a form of looting.” Some scoffed at the time, but now even publications like The Economist, which has consistently made excuses for the administration, are sounding the alarm.

To be fair, the looting is a partly bipartisan affair. More than a few Democrats threw their support behind the Medicare bill, the energy bill or both. But the Bush administration and the Republican leadership in Congress are leading the looting party. What are they thinking?

The prevailing theory among grown-up Republicans — yes, they still exist — seems to be that Mr. Bush is simply doing whatever it takes to win the next election. After that, he’ll put the political operatives in their place, bring in the policy experts and finally get down to the business of running the country.

But I think they’re in denial. Everything we know suggests that Mr. Bush’s people have given as little thought to running America after the election as they gave to running Iraq after the fall of Baghdad. And they will have no idea what to do when things fall apart.  

Employers' response to health care costs

Hewitt Associates
Press Release
December 2, 2003
Hewitt Study Shows Employers Critically Concerned with Health Care
Costs and Looking for Creative Solutions

Employers are struggling to cope with continuing double digit health care
cost increases, more interested than ever in consumer-driven plans and actively developing strategies and economic incentives to drive and enable better employee health care decisions, according to a new survey by global human resources outsourcing and consulting firm Hewitt Associates.

Hewitt’s survey of nearly 650 major U.S. companies revealed that companies
anticipate an average health care cost increase of 14 percent for 2004, but can only afford to absorb an increase of 9 percent.

Companies’ interest in implementing consumer-driven health plans as a means to control costs continues to grow, according to Hewitt’s survey. The most common consumer-driven models currently in use or planned for 2004 are customized design plan, which allows employees to customize their benefit options, levels and contributions for physician, hospital and pharmacy benefits (13 percent of companies surveyed) and health accounts plus high deductibles (12 percent).

Consumer-driven health plans that combine a health reimbursement account
with PPO coverage after a bridged deductible are also growing in popularity…
… the number of employees and participants in consumer plans will grow
exponentially over the next five years…

Employer confidence in employees’ taking greater responsibility for making
health care choices is growing…

Employers Look to the Government for Help

While the overwhelming majority of employers do not support national health
care, an increasing number feel that the government should play a limited
role in helping control skyrocketing costs and in making legislative changes to help drive consumerism, such as mandating quality reporting by hospitals and physicians (85 percent), requiring providers to disclose prices publicly (70 percent), mandating uniform provider data and payment reporting if long-term savings outweigh costs (64 percent) and allowing U.S.consumers to purchase prescription drugs from foreign countries (47 percent). More than half of all respondents (58 percent) indicated that they feel the federal government should make Medicare available to retirees ages 55-64 at their own cost.

http://was4.hewitt.com/hewitt/resource/newsroom/pressrel/2003/12-02-03.htm

The Hartford Courant
December 3, 2003
Employers Shift Health Care Costs In New Ways
By Diane Levick

… Hewitt survey …

Though still in the minority, 21 percent of large employers think the government should develop a universal health care system, compared with 17 percent in last year’s survey, according to Hewitt. Half the employers this year oppose a universal system, and the rest weren’t sure.

http://www.ctnow.com/business/hc-healthsurvey1203.artdec03,1,5493792.story?coll=hc-headlines-business

Comment: Pro-market, MBA-type responses would be expected from this survey
of health program managers of large, mostly self-insured employers. So it is
no surprise that support for a universal health care system remains quite
modest, though growing. It is also no surprise that marketplace advocates are willing to compromise their purity by advocating for government solutions that distort or even nullify markets when it is to their benefit.

This pro-market, anti-government bias leaves the thinking of the MBA health
managers confined within their traditional boxes. Their rigid thinking is
leading to conclusions that costs need to be shifted from employers to employees through consumer-driven strategies. But by accepting the market as
being less fallible than the government, it leaves in place market mechanisms that are continuing to drive costs up well in excess of inflation, and that are shifting more costs to the payers as a result of the highly inequitable method that the marketplace uses to fund health care. The MBA health managers need to move their thinking out of the marketplace box, and look also at other solutions that would control costs and ensure equitable funding.

A government-run, taxpayer-financed program of national health insurance
would contain costs and would establish an equitable method of funding
care. And it would do so without the necessity of establishing consumer-driven
financial barriers to beneficial care. And who more than MBAs would understand the benefits of the well-documented administrative efficiency of public insurance when contrasted to private plans?

MBAs instinctively should support a system that would finally contain health
care costs and would do so equitably. The business community would greatly
benefit from a universal program of social insurance. Business leaders
and their MBA advisors need to expand their list of reform options under
consideration. It is our task to be certain that they are more thoroughly
informed on the universal, publicly-funded and publicly-administered
model.

When ideology is set aside, and all options are assessed objectively, employer support of a government insurance system should be an inevitability. In fact, a majority already support expansion of eligibility for Medicare, a government insurance system. We’re part way there.

Employers’ response to health care costs

Hewitt Associates
Press Release
December 2, 2003
Hewitt Study Shows Employers Critically Concerned with Health Care
Costs and Looking for Creative Solutions

Employers are struggling to cope with continuing double digit health care
cost increases, more interested than ever in consumer-driven plans and actively developing strategies and economic incentives to drive and enable better employee health care decisions, according to a new survey by global human resources outsourcing and consulting firm Hewitt Associates.

Hewitt’s survey of nearly 650 major U.S. companies revealed that companies
anticipate an average health care cost increase of 14 percent for 2004, but can only afford to absorb an increase of 9 percent.

Companies’ interest in implementing consumer-driven health plans as a means to control costs continues to grow, according to Hewitt’s survey. The most common consumer-driven models currently in use or planned for 2004 are customized design plan, which allows employees to customize their benefit options, levels and contributions for physician, hospital and pharmacy benefits (13 percent of companies surveyed) and health accounts plus high deductibles (12 percent).

Consumer-driven health plans that combine a health reimbursement account
with PPO coverage after a bridged deductible are also growing in popularity…
… the number of employees and participants in consumer plans will grow
exponentially over the next five years…

Employer confidence in employees’ taking greater responsibility for making
health care choices is growing…

Employers Look to the Government for Help

While the overwhelming majority of employers do not support national health
care, an increasing number feel that the government should play a limited
role in helping control skyrocketing costs and in making legislative changes to help drive consumerism, such as mandating quality reporting by hospitals and physicians (85 percent), requiring providers to disclose prices publicly (70 percent), mandating uniform provider data and payment reporting if long-term savings outweigh costs (64 percent) and allowing U.S.consumers to purchase prescription drugs from foreign countries (47 percent). More than half of all respondents (58 percent) indicated that they feel the federal government should make Medicare available to retirees ages 55-64 at their own cost.

http://was4.hewitt.com/hewitt/resource/newsroom/pressrel/2003/12-02-03.htm

The Hartford Courant
December 3, 2003
Employers Shift Health Care Costs In New Ways
By Diane Levick

… Hewitt survey …

Though still in the minority, 21 percent of large employers think the government should develop a universal health care system, compared with 17 percent in last year’s survey, according to Hewitt. Half the employers this year oppose a universal system, and the rest weren’t sure.

http://www.ctnow.com/business/hc-healthsurvey1203.artdec03,1,5493792.story?coll=hc-headlines-business

Comment: Pro-market, MBA-type responses would be expected from this survey
of health program managers of large, mostly self-insured employers. So it is
no surprise that support for a universal health care system remains quite
modest, though growing. It is also no surprise that marketplace advocates are willing to compromise their purity by advocating for government solutions that distort or even nullify markets when it is to their benefit.

This pro-market, anti-government bias leaves the thinking of the MBA health
managers confined within their traditional boxes. Their rigid thinking is
leading to conclusions that costs need to be shifted from employers to employees through consumer-driven strategies. But by accepting the market as
being less fallible than the government, it leaves in place market mechanisms that are continuing to drive costs up well in excess of inflation, and that are shifting more costs to the payers as a result of the highly inequitable method that the marketplace uses to fund health care. The MBA health managers need to move their thinking out of the marketplace box, and look also at other solutions that would control costs and ensure equitable funding.

A government-run, taxpayer-financed program of national health insurance
would contain costs and would establish an equitable method of funding
care. And it would do so without the necessity of establishing consumer-driven
financial barriers to beneficial care. And who more than MBAs would understand the benefits of the well-documented administrative efficiency of public insurance when contrasted to private plans?

MBAs instinctively should support a system that would finally contain health
care costs and would do so equitably. The business community would greatly
benefit from a universal program of social insurance. Business leaders
and their MBA advisors need to expand their list of reform options under
consideration. It is our task to be certain that they are more thoroughly
informed on the universal, publicly-funded and publicly-administered
model.

When ideology is set aside, and all options are assessed objectively, employer support of a government insurance system should be an inevitability. In fact, a majority already support expansion of eligibility for Medicare, a government insurance system. We’re part way there.

New York Times interview of Steffie Woolhandler

The New York Times
December 2, 2003
A Conversation with Steffie Woolhandler
Heal Health Care System? Start Anew
By Judy Foreman

Dr. Steffie Woolhandler… an associate professor at Harvard Medical School and an internist at Cambridge Hospital, wants to change the health care system. Soon, and not in the way Congress just did.

Her plan is simple. Get rid of the private health insurance industry and abolish Medicaid, the government’s health insurance program for the poor. In their stead, set up a national health insurance system that would cover all Americans by expanding Medicare, the old-style Medicare, to include everyone from birth to death.

Dr. Woolhandler’s plan would add prescription drug benefits to Medicare, as the newly passed bill does. But in her plan, drugs would be paid 100 percent by the government, not administered through private insurance plans. She would also abolish co-pays and deductibles for both drugs and medical visits.

Patients would still choose their doctors, who would be paid on a fee-for-service basis. Hospitals would be privately run and would be paid a fixed monthly budget. By getting rid of the high administrative costs of private insurance, the money that people now pay out in premiums would be collected as a new tax.

Q. Is it too late to move ahead on your plan for national health insurance now that Congress has passed the new Medicare bill?

A. Actually, no. The reasons for moving ahead are even larger. We are going
to see more money spent on administrative costs than before. The bill doesn’t even benefit seniors, much less extend benefits to everyone else.

Q. … What, if anything, is going to get a vast majority of doctors on your side?

A. We want to get a real debate going, so the American people can choose. If
no one discusses it, we have deprived the American people of their right to
choose.

http://www.nytimes.com/2003/12/02/health/02CONV.html

Comment: Steffie’s message to us is that our colleagues and the public must understand our model of social insurance and how that contrasts with the current system and with the other options for reform.

There is no question that the vast majority of Americans would choose the single-payer social insurance model if only they really understood it. It’s our job to make sure that they do.

The Real Drug War

December 3, 2003 The Real Drug War: Against the Sick Profit Margins and Mortality Rates

By JOANNE MARINER

Here are some numbers to consider: 14 million, 35.9 billion, and one. The first is an estimate of the number of people who will die of AIDS and other treatable diseases over the course of the coming year, most of them in the poor countries of the developing world.

The second figure represents the combined 2002 profits, in dollars, of the ten biggest pharmaceutical companies listed in Fortune magazine’s annual review of America’s largest businesses. The third figure corresponds to the number of countries that, last week, voted against a U.N. resolution on access to drugs in global epidemics such as HIV/AIDS, tuberculosis and malaria. The resolution emphasized that the failure to deliver life-saving drugs to millions of people who are living with HIV/AIDS constitutes a global health emergency. 167 countries voted in favor of the resolution. The single vote against it was cast by the United States.

Sadly, these numbers are closely related. To protect their exorbitant profits, drug companies are fighting the production and distribution of cheap generic versions of patented drugs. Unable to afford the medicines that could save their lives, millions of poor people around the world die of treatable illnesses every year.
And, as the recent U.N. vote exemplifies, the drug companies have a reliable ally. Not only does the U.S. government use its considerable economic power to bully developing countries into restricting access to low-cost generics, it continues to try to change the international rules that allow such generics to be made in the first place.

Unnecessary Deaths,.
In their vulnerability to treatable diseases, the rich and the poor live in different worlds. Every year, millions of people in developing countries die of illnesses that they would likely have survived had they lived in Europe or the United States. A key factor in the enormous global disparities in death rates is poor people’s lack of access to needed drugs.

Consider the case of HIV/AIDS. An estimated 42 million people are living with HIV/AIDS worldwide, 39 million of them in the developing world. India alone has at least 4.5 million people who are HIV-positive, and possibly many more.
In the United States and other rich countries, since the advent of anti-retroviral drug treatment, AIDS has become a manageable disease, not a death sentence. But for the millions living with HIV in the developing world, prospects for effective treatment remain dim.

At present, only a tiny minority of HIV-positive people in poor countries have access to anti-retroviral drugs. For the others, as well as some marginalized populations in rich countries, the cost of treatment remains prohibitively high.
Patent Protections and Profits Nothing in the ingredients of anti-retroviral drug treatment makes it inherently expensive. Indeed, when a combination of generic drugs is used, treatment costs are about $600 per patient per year. But companies that profit from drug sales have an interest in keeping drug costs artificially high. In the United States, the cost of anti-retroviral drugs is generally in the range of $10,000 to $15,000 per patient annually, and people with advanced cases of AIDS may pay far more. Relying on international patent protections, drug companies have been trying to maintain drug prices high globally by restricting the production and distribution of low-cost generic substitutes.

Global patent protections are tied to global rules on trade, specifically, the rules of the World Trade Organization. Although the WTO’s strict intellectual property rules carve out exceptions for national health emergencies, they still go a long way toward limiting poor people’s access to life-saving medicines. And as Oxfam has shown in a paper titled “Patent Injustice,” the problem extends beyond HIV/AIDS. Brand name drugs for a number of major diseases cost several times more than their generic equivalents. The increasing drug resistance of endemic diseases such as tuberculosis and malaria — and the resulting need for access to new drugs — mean that the WTO’s monopolistic pricing rules threaten many millions of the world’s poor.

The Brazil Model
Despite the WTO’s restrictions, some developing countries have made important steps in meeting their peoples’ drug treatment needs. In Brazil, notably, extensive prevention efforts combined with state-funded anti-retroviral treatment have reduced AIDS-related deaths by more than half since 1996. The cornerstone of Brazil’s treatment program has been the local production of generic equivalents of brand name anti-retroviral drugs, which has driven down the cost of treatment enormously.

But Brazil’s successes, and those of countries like it, have been hard fought. TheWTO rules have been a battleground on which Brazil and others have fought a series of high-stakes skirmishes with drug companies. Backed by one of the world’s richest and most politically influential industrial lobbies, the drug companies have enlisted the U.S. government as a loyal ally in the campaign against generics. Through the office of the U.S. Trade Representative, the United States has fought to advance the interests of the pharmaceutical industry, pressuring other governments on a bilateral basis and threatening to seek trade sanctions via the WTO.

The U.S. vote last Wednesday in the Third Committee of the U.N. General Assembly was not too surprising, given this record. Still, it was dismaying to find the United States willing to stand alone against 167 other countries — as if it were a matter of principle to vote against a resolution calling for widespread public access to the drugs necessary to combat global epidemics such as HIV/AIDS, tuberculosis and malaria.

Future Trade Agreements

The U.N. vote is, moreover, a worrisome portent for the future. At present, the U.S. Trade Representative is negotiating a number of bilateral and multilateral trade agreements, including the proposed Free Trade Area of the Americas. Given U.S. advocacy on behalf of pharmaceutical companies’ interests, these agreements are likely to go beyond the WTO’s rules in protecting drug patents.
President George Bush, in a number of his most high-profile speeches, has expressed a rhetorical determination to assist in the global fight against HIV/AIDS. By allowing U.S. officials to lead the world in protecting the commercial interests of drug companies, he betrays his public commitment to this cause.
Joanne Mariner is a New York-based human rights lawyer. She can be reached at: mariner@counterpunch.org

Gingrich praises HSAs. Watch out!

The Atlanta Journal-Constitution
11/30/03
Condition of health care system has been upgraded
By Newt Gingrich

The historic Medicare and health savings account legislation that the House and Senate have passed, and which President Bush has promised to sign, is an extraordinarily important first step in the transformation of the American health and health care system that will save lives and money.

… the impact of this legislation extends far beyond the drug benefit. Through its creation of health savings accounts, the measure will begin to address the crisis in health care that affects all Americans.

If you are a fiscal conservative who cares about balancing the federal budget, the new legislation may have no more important feature than the health savings accounts. The new account will begin to move us away from the current model in which insurance companies dominate the health care transaction. Instead, the HSA will enable transactions between doctor and patient in which the patient controls how dollars are spent.

… the HSA represents the single most significant transformation that can be made in saving the country from skyrocketing health costs and steadily increasing calls for taxpayers to finance more and more of the health care system through higher taxes.

The next balanced budgets will only be possible once there is a transformation of the health system, and part of the key to this transformation will be the existence of health savings accounts. Without the first dollar interest in the payment of health expenses, there is little incentive on the part of the patient/consumer to scrutinize a doctor’s bill.

Health savings accounts will encourage individuals to shop for health plans that best fit their needs and to make cost-conscious decisions about how they spend their own health dollars as opposed to a third party’s money. Individuals who control their own health dollars will be wise purchasers of health services.

… all Americans will receive the opportunity to take control of their own health care spending so that they can provide better health for themselves and contribute to the better health of the economy.

http://www.ajc.com/opinion/content/opinion/1103/30newt.html

Comment: Laudatory comments about HSAs coming from Newt Gingrich should
alert us all to the intent of this isolated provision that was tacked onto the Medicare drug and “modernization” bill. HSAs are not about Medicare. Instead, they lay the foundation for a fundamental revision of the way we fund health care for all of us.

The individual accounts provide a tax “subsidy” for health care at the marginal tax rate which results in health care funding that is inversely proportional to income, the poor paying more for health care than the rich.

That alone should cause us to reject this model of health care “reform.” The
health policy literature is replete with other examples of the fundamental
flaws of these medical savings accounts.

Of perhaps greater concern is the flexibility that will be allowed in the design of the high-deductible plans. Although the plans would limit out-of-pocket expenses for families at $10,000, this does not include payments made for outside-of-network services. To keep premiums affordable, insurers will fail to provide adequate reimbursement increases for providers, limiting the numbers of providers who are willing to sign the contracts. Also, to provide options with lower premiums, insurers are deliberately diminishing the number of providers available thus saving costs by limiting access. Those families that purchase plans with affordable premiums will find that they do not have the protection of the $10,000 stop-loss limit when they are forced in urgent circumstances to accept available but non-contracted providers. A person with major trauma or an acute myocardial infarction cannot ever be an informed shopper of health care services. Those with high-cost, chronic problems may also find that restricted provider lists could significantly impair accessibility.

The claim that the catastrophic plans will take care of all costs after the HSAs are depleted is a fraud. The managed care PPO products will prove to be severely deficient for those with significant health care needs, but with modest or meager resources. Traditional indemnity catastrophic plans have almost disappeared already and, in the future, will surely not be an affordable option for the average-income individual.

Splitting the health insurance pool into millions of segregated accounts will adversely impact only those who have significant needs by depleting their accounts: the very individuals for whom insurance was designed. Providing catastrophic coverage by marketplace plans that compete on premium pricing (by reducing benefits and increasing cost-sharing) can only result in financial disaster and impaired health care access for the average individual with significant needs.

Title XII, authorizing HSAs, goes into affect one month from today. If it is
not repealed immediately, many of us will be left with the option of shopping for bankruptcy attorneys who will best meet our need to be relieved of a morass of medical bills. But after all, isn’t consumer-directed, personal bankruptcy the American way? Gingrich and friends apparently believe so.

The AARP Ads and the new medicare prescription drug law

On December 2, 2003, the AARP began running advertisements in national newspapers citing eight benefits of the final Medicare legislation that the President signed into law on December 8. The ad’s headline states that the ad contains “no sound bites… no spin…. no politics… just the facts.”

The following is an analysis of the ad’s claims.1 It should be noted that some of the problematic aspects of the legislation that relate to low-income Medicare beneficiaries and the premium support demonstration, which are described below, would have been more problematic without AARP’s use of its influence to soften the adverse effects of those provisions.

please click here to read the analysis of the ad’s claim

Stop the HSA Tsunami!!

Galen Institute
Consumer Choice Matters, #41
11/25/2003
HSA TSUNAMI
By Greg Scandlen

The new Health Savings Accounts (HSA) provision included in the Medicare bill just passed the Senate 54-44 and soon will be signed by the President. The new law will go into effect January 1, 2004. All 250 million non-elderly Americans will now have access to a Medical Savings Account, and one that is far more attractive than the Archer MSAs that were enacted in 1996.

Market analysis

* There will be a rush of banks, insurance companies and third-party administrators (TPAs) to develop products. The previous restrictions on
Archer MSAs have been removed. There is no longer a sunset provision,
there is no limit on employer size or total enrollment.

* All these development efforts will lead to far greater public awareness of the product.

* The individual market will convert to HSAs in droves.

* The small group market will be slower. Small employers are not benefits innovators.

* The fully-insured mid-market is a different story. Companies with 100
to 1,000 employees are more likely to have staff that concentrates on
benefits options and has the time to investigate new products. These companies
have been raising cost-sharing requirements anyway, so the prospect of
employee responsibility for funding part of the HSA is less of a stretch in this
segment.

* Self-insured large companies will likely stay with Health Reimbursement
Arrangements (HRAs). Companies that pay directly for the services consumed
are unlikely to be attracted to HSAs, which expect an up-front contribution
of money for all employees whether they are using services or not. HRAs
have the considerable advantage of not requiring pre-funding.

* The uninsured should find it easier to gain coverage. HSAs will be available to everybody – especially those workers whose employers provide no coverage at all, and who make up the vast majority of the uninsured.

Prospects

The market is ready for this. All of the discussion about consumer directed
health care in the last few years has sensitized corporate decision makers
to the advantage of putting more control in the hands of employees. HSAs
provide them with the perfect opportunity to do exactly that. The year 2004
will probably not see massive enrollment because vendors will need to
work on developing new products and marketing strategies. But by mid-year
there will be an enormous push to gain an early position in this new market
and become the recognized “industry leader.”

The timing couldn’t be better, with an improving economy and widespread
gains in the equities markets. Venture capital will be in great demand
to get the new products off the ground. Get ready for a twelve month race
to the finish line of 12/31/04 and the first-year enrollment numbers.

http://www.galen.org/ccbdocs.asp?docID=569

Comment: The Galen Institute… is a “free-market research organization”
that “was founded in 1995 by Grace-Marie Turner to promote a more
informed public debate over individual freedom, consumer choice, competition,
and diversity in the health sector” (Mission statement, Galen Institute).
Anyone following the health care reform debate recognizes the rhetoric of the
advocates of “consumer-directed,” “free market” health care. Galen has
strongly supported medical savings accounts (now health savings accounts, or
HSAs) as a tool to achieve consumer independence in the free marketplace.

What Galen fails to point out is that HSAs fragment the insurance pools. The
tax advantages accrue to the wealthy, and a tax-favored personal account
appeals to those who do not expect to have high health care bills. By removing the large sector of the healthier and wealthier from the traditional insurance risk pools, the higher-cost individuals remaining drive up premiums making traditional coverage unaffordable for those with the greatest health care needs. HSAs are both regressive tax policy, and cruel health policy which rations care by erecting financial barriers for those with the greatest needs.

For those of us who are healthy, HSAs with catastrophic coverage would serve our purposes well. But those of us who later develop significant disorders will discover why we should all have comprehensive coverage using a common risk pool. Many of us would decide in advance that we want that degree of security and would want to purchase traditional coverage. But we’ll find that traditional coverage will have left the market because of the death spiral of unaffordable premiums.

This fundamental flaw in dividing the risk pool into segregated accounts, favoring the wealthy while penalizing the sick, alone is enough to disqualify HSAs as a rational model of reform. But there are a great many other problems, only a few of which are listed here.

HSAs must be matched with high-deductible insurance. Insurers offer primarily managed care PPOs as the high deductible or “catastrophic” option. PPOs are undergoing transformation in order to keep their premiums affordable. They are using methods often lacking transparency to reduce benefits and increase out-of-pocket cost sharing. Tighter provider lists decrease choices. Greater penalties for using non-providers are now standard. Tiering rates for services shift costs to beneficiaries.

Individual PPO plans often exclude essential benefits such as obstetrical services. Deductibles have become the norm in PPO plans. The cost savings by using a high deductible plan theoretically funds the HSA. But, in fact, the savings now is usually so small that it could not be considered as a major source for HSA funding. When pricing different plans, you will find that the moderate deductibles have very little effect on the premium. Rather, the premium differences are due more to other factors such as the richness of the benefit package, other cost sharing measures, and the differences in competitive pricing in the various service areas.

In the individual market, most insurers will not sell plans to individuals with significant preexisting disorders, often for even simple problems such as allergic rhinitis. The uninsured will be able to access this market only if they have no current or expected needs for health care. Creating an insurance market for the healthy, and letting those with needs fend for themselves, is inhumane health policy at best.

A major flaw in our health care system is the profound administrative waste that diverts funds from patient care. HSAs add a very significant administrative layer and interject more middlemen into the process. Insurers sell administrative services, and HSAs will expand their market. Not only will insurers be involved but bank trustees, third party administrators, various investment managers, and others will all be there quite willing to divert to themselves their unfair share of the health care dollar. And the providers of care will have added to their administrative burden the need to access millions of individual, segregated accounts as they seek compensation for their services, whether by direct billing to the account managers or by the necessity of providing documentation of qualified expenses.

Once the beneficiary is eligible for Medicare, funds may be withdrawn from
the HSAs for non-medical purposes without penalty. For those who remain
healthy, the HSA becomes the equivalent of an individual retirement account
(IRA). Much can be said about the inequitable, regressive tax subsidies of
IRAs, but that will not be discussed here. But it is clearly inappropriate to remove dollars from an equitable health care risk pool and grant them to wealthier individuals. Such regressive tax avoidance schemes certainly should have no place in our health care system.

This program requires that the deductible for the catastrophic coverage
be at lease $1000 for individuals and $2000 for families. Many already
have deductibles at this level or higher. Why should an administratively
cumbersome program be established for expenses that are already being
met by personal reserves? The tax advantages for most would not begin to
offset the extra expenses and nuisance of HSAs.

Again, the worst feature of HSAs is that they effectively shift costs to individuals with the greatest health care needs which will threaten affordability of care. More individuals will be forced into public programs, such as Medicaid, but only if eligible. Public programs targeted to those with greater needs will remain chronically underfunded, again further impairing access.

It is important to understand health savings accounts. They are explained in
Title XII of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 (pages 660-678). The bill can be downloaded at:
http://www.house.gov/medicarerx/hr1-conflegtext.pdf

Although there are many other elements of the Medicare bill that are absolutely unacceptable, we have maybe a year or so to change them. But Title XII, which authorizes HSAs, must be repealed immediately because it becomes law in only one month. Once millions of HSAs are established, it will be almost impossible to reverse this program.

CONTACT YOUR REPRESENTATIVES AND SENATORS IMMEDIATELY AND DEMAND THE URGENT REPEAL OF TITLE XII OF THE MEDICARE ACT!

–__–__–

Message: 2
From: “Don McCanne”
To:
Date: Sat, 29 Nov 2003 18:11:11 -0800
Subject: qotd: Bob LeBow

Dear Don and Ida,

I am so sorry to inform you that our great friend Dr. Bob LeBow just
passed away today, at about 11:30. As his fellow warriors, I know you would
want to know and would want to tell the many other friends around the country.
His funeral will be tomorrow at 1:00 at the Relyea Funeral Home at 318 N.
Latah in Boise. We have lost a giant among men.

Ern

Erwin Teuber, Ph.D.
Executive Director
Terry Reilly Health Services
211 16th Avenue North
Nampa, ID 83653
e-mail: eteuber@trhs.org
website: http://www.trhs.org

In Bob's own words

The Idaho Statesman
November 30, 2003
Doctor who ‘walked the walk’ dies in Boise at 63

Dr. Bob LeBow, a tireless advocate for health-care reform who was severely injured in a 2002 bicycle accident, died Saturday in a Boise hospital.

LeBow, 63, spent more than 30 years working to provide medical services
to those who can least afford them.

LeBow’s accident came shortly after the publication of his book “Health Care Meltdown,” an indictment of a system that grants access to medical care
based on ability to pay.

A former president of Physicians for a National Health Program, LeBow
continued to campaign for health-care reform after his devastating injury.

In August, he spoke at a news conference in Philadelphia, advocating a
national health insurance program. With words that echo his lifelong passion and service, LeBow said, “It is time to put the patient first – not last – in the setting of priorities.”

http://www.idahostatesman.com/story.asp?ID=55031

Health Care Meltdown (Benefiting needy patients at Terry Reilly Health
Services):
http://www.trhs.org/bobsbook/

Comment: In Bob’s own words:

“The U.S. also is the only developed country where getting sick or injured can, and all too frequently does, lead to bankruptcy. …

“Our employer-based health insurance system is outmoded, illogical and needs to be replaced. Perverse incentives make our health care system a poor value for the amount we spend. Health care needs to return to an emphasis on health, not cost or profit. …”

http://www.idahostatesman.com/story.asp?I

In Bob’s own words

The Idaho Statesman
November 30, 2003
Doctor who ‘walked the walk’ dies in Boise at 63

Dr. Bob LeBow, a tireless advocate for health-care reform who was severely injured in a 2002 bicycle accident, died Saturday in a Boise hospital.

LeBow, 63, spent more than 30 years working to provide medical services
to those who can least afford them.

LeBow’s accident came shortly after the publication of his book “Health Care Meltdown,” an indictment of a system that grants access to medical care
based on ability to pay.

A former president of Physicians for a National Health Program, LeBow
continued to campaign for health-care reform after his devastating injury.

In August, he spoke at a news conference in Philadelphia, advocating a
national health insurance program. With words that echo his lifelong passion and service, LeBow said, “It is time to put the patient first – not last – in the setting of priorities.”

http://www.idahostatesman.com/story.asp?ID=55031

Health Care Meltdown (Benefiting needy patients at Terry Reilly Health
Services):
http://www.trhs.org/bobsbook/

Comment: In Bob’s own words:

“The U.S. also is the only developed country where getting sick or injured can, and all too frequently does, lead to bankruptcy. …

“Our employer-based health insurance system is outmoded, illogical and needs to be replaced. Perverse incentives make our health care system a poor value for the amount we spend. Health care needs to return to an emphasis on health, not cost or profit. …”

http://www.idahostatesman.com/story.asp?I

Urgent need to repeal HSAs!

Los Angeles Times
November 27, 2003
Savings Accounts Key to Drug Law
By Vicki Kemper

… when Republican leaders were scrambling to attract or hold onto the votes of the most conservative members, their most powerful argument was reduced to a three-word mantra: health savings accounts.

… these unique tax shelters never had anything to do with Medicare or prescription drugs.

“It’s a double tax break,” said Gail Shearer, director of health policy analysis for Consumers Union. “Your money does not get taxed when you put in it; it does not get taxed when you pull it out. It’s an unprecedented tax shelter, especially for wealthy people, who are in a higher tax bracket.”

Shearer and other critics warn that the accounts will undermine the nation’s employer-based health-insurance system, leave additional low- and moderate-income workers unable to afford health insurance and further deplete the federal treasury.

“They will be attractive to the affluent and the healthy,” said Edwin Park, senior health policy analyst at the liberal Center for Budget and Policy Priorities. But he argued that premiums for conventional policies, which would be held by workers who are sicker and have higher medical expenses, could then skyrocket, leading some employers to stop offering such coverage.

“This is terrible policy on the tax, fiscal and health fronts,” he said.

http://www.latimes.com/news/nationworld/nation/la-na-savings27nov27,1,6319399.story?coll=la-headlines-nation

Comment: These medical savings accounts, renamed health savings accounts
(HSAs), have nothing to do with Medicare nor with the prescription benefit.
But they have everything to do with the efforts of conservatives to shift our private health coverage to “consumer-directed” models.

HSAs are much more tax policy than anything else. They allow tax-free contributions to personal, segregated funds for health care payments.
Those in higher tax brackets benefit whereas those with incomes below the
taxable threshold receive very little benefit. Thus this is a highly regressive tax policy, providing generous tax subsidies to the HSAs of the wealthy not available to the same extent to lower income individuals.

But the greatest concern is that HSAs will selectively attract those who do not believe that they will have to pay much out of their HSAs. Obviously, it is the healthier individuals, who happen to be the majority, that will be attracted to these plans. By concentrating those with higher health care needs into our traditional individual and employer-sponsored health plans, costs will go up. With increased costs, premiums will skyrocket. With this “death spiral” of premiums, traditional health insurance will become less and less affordable, and the numbers of uninsured will increase. Thus an extraneous program, HSAs, which has been included in the Medicare prescription bill, threatens the future integrity of the private health plans on which most of us depend.

Once a large number of these tax-preferred accounts have been established,
reversal of this program will be very difficult. It is essential that this provision of the Medicare bill be repealed immediately since it goes into effect January 1, 2004, only a month from now. That means that it must be the very first item of business when the members of Congress return! It is no coincidence that the conservatives made sure that this program would be up and running immediately as others begin to work on repealing sections that will not be in force for some years to come.

CONTACT YOUR SENATORS AND REPRESENTATIVES IMMEDIATELY TO DEMAND URGENT REPEAL OF THE HEALTH SAVINGS ACCOUNT SECTION OF THE MEDICARE PRESCRIPTION DRUG, IMPROVEMENT, AND MODERNIZATION ACT OF 2003!

(Because of the urgency, please circulate this message immediately to as
many concerned citizens as possible. HSAs will be a permanent fixture of our
health care system without an immediate groundswell of opposition.)