PNHP

U.S. Health Care Ranks Low Among Developed Nations: Report

U.S. Health Care Ranks Low Among Developed Nations: Report

Despite high cost, it delivers too little to patients, Commonwealth Fund says

By Steven Reinberg, HealthDay Reporter
Business Week, June 23, 2010

WEDNESDAY, June 23 (HealthDay News) — Compared with six other industrialized nations, the United States ranks last when it comes to many measures of quality health care, a new report concludes.

Despite having the costliest health care system in the world, the United States is last or next-to-last in quality, efficiency, access to care, equity and the ability of its citizens to lead long, healthy, productive lives, according to a new report from the Commonwealth Fund, a Washington, D.C.-based private foundation focused on improving health care.

“On many measures of health system performance, the U.S. has a long way to go to perform as well as other countries that spend far less than we do on healthcare, yet cover everyone,” the Commonwealth Fund’s president, Karen Davis, said during a Tuesday morning teleconference.

“It is disappointing, but not surprising, that despite our significant investment in health care, the U.S. continues to lag behind other countries,” she added.

However, Davis believes new health care reform legislation — when fully enacted in 2014 — will go a long way to improving the current system. “Our hope and expectation is that when the law is fully enacted, we will match and even exceed the performance of other countries,” she said.

The report compares the performance of the American health care system with those of Australia, Canada, Germany, the Netherlands, New Zealand and the United Kingdom.

According to 2007 data included in the report, the U.S. spends the most on health care, at $7,290 per capita per year. That’s almost twice the amount spent in Canada and nearly three times the rate of New Zealand, which spends the least.

The Netherlands, which has the highest-ranked health care system on the Commonwealth Fund list, spends only $3,837 per capita.

Despite higher spending, the U.S. ranks last or next to last in all categories, Davis said, and scored “particularly poorly on measures of access, efficiency, equity and long, healthy and productive lives.”

The U.S. ranks in the middle of the pack in measures of effective and patient-centered care, she added.

Overall, the Netherlands came in first on the list, followed by the United Kingdom and Australia. Canada and the United States ranked sixth and seventh, Davis noted.

Speaking at the teleconference, Cathy Schoen, senior vice president at the Commonwealth Fund, pointed out that in 2008, 14 percent of U.S. patients with chronic conditions had been given the wrong medication or the wrong dose. That’s twice the error rate observed in Germany and the Netherlands, she noted.

“Adults in the United States [also] reported delays in being notified about abnormal test results or given the wrong results at relatively high rates,” Schoen said. “Indeed, the rates were three times higher than in Germany and the Netherlands.”

“As a result we rank last in safety and do poorly on several dimensions of quality,” Schoen said.

In addition, many Americans are still going without medical care because of cost, she said. “We also do surprisingly poorly on access to primary care and access to after hours care given our overall resources and spending,” Schoen said.

In fact, 54 percent of people with chronic conditions reported going without needed care in 2008, compared with 13 percent in Great Britain and 7 percent in the Netherlands, she said.

The United States also ranked last in efficiency, Schoen said. There are too many duplicate tests, too much paperwork, high administrative costs and too many patients using emergency rooms as doctor’s offices. In addition, poverty appears to be a big factor in whether Americans have access to care, the report found.

The United States also performed worst in terms of the number of people who die early, in levels of infant mortality, and for healthy life expectancy among older adults, Schoen said.

Dr. David Katz, director of the Prevention Research Center at Yale University School of Medicine, commented that “as a physician and public health practitioner, I have routinely spoken out in favor of health care reform in the U.S. The responses evoked have not always been kind. Prominent among the counterarguments has been: ‘You should see what health care is like in other countries.'”

“This report utterly belies the notion that the former status quo for health care delivery in the U.S. was as good as it gets. Others have been doing better and we can, and should, too,” he said.

However, at least one expert doesn’t believe that health care reform, as it now stands, will solve these problems.

Dr. Steffie Woolhandler, a professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program, said that “the U.S. has the worst health care system among the seven countries studied, and arguably the worst in the developed world.”

“Unfortunately, the U.S. will almost certainly continue in last place, since the recently passed health reform will leave 23 million Americans without coverage while enlarging the role of the private insurance industry, which obstructs care and drives up costs,” she said.

U.S. scores dead last again in healthcare study

By Maggie Fox, Health and Science Editor
Reuters, June 23, 2010

Americans spend twice as much as residents of other developed countries on healthcare, but get lower quality, less efficiency and have the least equitable system, according to a report released on Wednesday.

The United States ranked last when compared to six other countries — Britain, Canada, Germany, Netherlands, Australia and New Zealand, the Commonwealth Fund report found.

“As an American it just bothers me that with all of our know-how, all of our wealth, that we are not assuring that people who need healthcare can get it,” Commonwealth Fund president Karen Davis told reporters in a telephone briefing.

Previous reports by the nonprofit fund, which conducts research into healthcare performance and promotes changes in the U.S. system, have been heavily used by policymakers and politicians pressing for healthcare reform.

Davis said she hoped health reform legislation passed in March would lead to improvements.

The current report uses data from nationally representative patient and physician surveys in seven countries in 2007, 2008, and 2009. It is available at http://bit.ly/9wLgQH.

In 2007, health spending was $7,290 per person in the United States, more than double that of any other country in the survey.

Australians spent $3,357, Canadians $3,895, Germans $3,588, the Netherlands $3,837 and Britons spent $2,992 per capita on health in 2007. New Zealand spent the least at $2,454.

This is a big rise from the Fund’s last similar survey, in 2007, which found Americans spent $6,697 per capita on healthcare in 2005, or 16 percent of gross domestic product.

“We rank last on safety and do poorly on several dimensions of quality,” Schoen told reporters. “We do particularly poorly on going without care because of cost. And we also do surprisingly poorly on access to primary care and after-hours care.”

NETHERLANDS RANKED FIRST OVERALL

The report looks at five measures of healthcare — quality, efficiency, access to care, equity and the ability to lead long, healthy, productive lives.

Britain, whose nationalized healthcare system was widely derided by opponents of U.S. healthcare reform, ranks first in quality while the Netherlands ranked first overall on all scores, the Commonwealth team found.

U.S. patients with chronic conditions were the most likely to say they gotten the wrong drug or had to wait to learn of abnormal test results.

“The findings demonstrate the need to quickly implement provisions in the new health reform law,” the report reads.

Critics of reports that show Europeans or Australians are healthier than Americans point to the U.S. lifestyle as a bigger factor than healthcare. Americans have higher rates of obesity than other developed countries, for instance.

“On the other hand, the other countries have higher rates of smoking,” Davis countered. And Germany, for instance, has a much older population more prone to chronic disease.

Every other system covers all its citizens, the report noted and said the U.S. system, which leaves 46 million Americans or 15 percent of the population without health insurance, is the most unfair.

“The lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it also fails to meet the needs of the average citizen,” the report reads.

(Editing by Sandra Maler and Cynthia Osterman)

Will grandfathering save our current private plans?

Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans

U.S. Department of Health & Human Services
Accessed June 23, 2010

During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.”  He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise.

Compared to their polices in effect on March 23, 2010, grandfathered plans:

* Cannot Significantly Cut or Reduce Benefits.
* Cannot Raise Co-Insurance Charges.
* Cannot Significantly Raise Co-Payment Charges.
* Cannot Significantly Raise Deductibles.
* Cannot Significantly Lower Employer Contributions.
* Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
* Cannot Change Insurance Companies

http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html

And…

“Keeping the insurance you have” – Don’t believe it!

Comment by Don McCanne, MD
Quote of the Day
July 11, 2008

Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not.

So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar copayments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents’ plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children’s Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can’t afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems.

https://pnhp.org/news/2008/july/keeping-the-insurance-you-have-dont-believe-it

Comment: 

By Don McCanne, MD

The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama’s promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date.

Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other financially sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes.

In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans.

This HHS report predicts an end to the individual market and a sharp decline in the small employer market. They claim that the large employer market will not see much change, but other studies have shown that large employers are already switching to plans with larger deductibles and other cost sharing simply to keep premiums affordable, and many are switching the insurers that they are using, thereby losing their eligibility for the grandfathered status. Besides, for the reasons mentioned in the July, 2008 comment above, almost no one will end up staying indefinitely in the same employer sponsored plan anyway.

“Keeping the insurance you have” was only a slogan used to market the reform proposal. It wasn’t a serious long term strategy. Instead of wasting time in another political dogfight – this time over grandfathering – we should move forward with supporting policies that will work for everyone – like a single payer national health program.

Will grandfathering save our current private plans?

Fact Sheet: Keeping the Health Plan You Have: The Affordable Care Act and “Grandfathered” Health Plans

U.S. Department of Health & Human Services
Accessed June 23, 2010
During the health reform debate, President Obama made clear to Americans that “if you like your health plan, you can keep it.”  He emphasized that there is nothing in the new law that would force them to change plans or doctors. Today, the Departments of Health and Human Services, Labor, and Treasury issued a new regulation for health coverage in place on March 23, 2010 that makes good on that promise.
Compared to their polices in effect on March 23, 2010, grandfathered plans:
* Cannot Significantly Cut or Reduce Benefits.
* Cannot Raise Co-Insurance Charges.
* Cannot Significantly Raise Co-Payment Charges.
* Cannot Significantly Raise Deductibles.
* Cannot Significantly Lower Employer Contributions.
* Cannot Add or Tighten an Annual Limit on What the Insurer Pays.
* Cannot Change Insurance Companies
http://www.healthreform.gov/newsroom/keeping_the_health_plan_you_have.html

And…

“Keeping the insurance you have” – Don’t believe it!

Comment by Don McCanne, MD
Quote of the Day
July 11, 2008
Pause for a minute. Think back to the insurance you had twenty years ago. Remember? Now do you still have precisely that same coverage? Unless you are over 85 and have been in the traditional Medicare program for the past twenty years, it is highly likely that you do not.
So why do you no longer have the better coverage that you had twenty years ago? You may have changed jobs, likely more than once, and lost the coverage that your prior employer provided. Your employer may have changed plans because of ever-increasing insurance premiums. Frequently your insurer introduces plan innovations such as larger deductibles, a change from fixed-dollar copayments to higher coinsurance percentages, tiering of your cost sharing for services and products, reduction in the benefits covered, dollar caps on payouts, and other innovations all designed to keep premiums competitive in a market of rapidly rising health care costs. You may have lost coverage when your age disqualified you from participating in your parents’ plan. You may have found that health benefit programs have been declining as an incentive offered by new employers. Your children may have lost coverage under the Children’s Health Insurance Program when your income, though modest, disqualified your family from the program. Your union may not have been able to negotiate the continuation of the high-quality coverage that you previously held. Your employer may have reduced or eliminated the retirement coverage that you were promised but not guaranteed. Your employer may have filed for bankruptcy without setting aside the legacy costs of their pensions and retiree health benefit programs. You may have decided to start your own small business and found that you could not qualify for coverage because of your medical history, even if relatively benign, or maybe your small business margins are so narrow that you can’t afford the premiums. You may have been covered previously by a small business owner whose entire group plan was cancelled at renewal because one employee developed diabetes, or another became HIV infected. Your COBRA coverage may have lapsed and you found that the individual insurance market offered you no realistic options. You may have retired before Medicare eligibility, only to find that premiums were truly unaffordable or coverage was not even available because of preexisting medical problems.
https://pnhp.org/news/2008/july/keeping-the-insurance-you-have-dont-believe-it

The opponents of reform, especially the Republicans in Congress, are making a big deal out of the fact that the Affordable Care Act breaks President Obama’s promise that you will be able to keep the insurance plan you have. The Obama administration is countering by publicizing the new regulations that will allow plans in place on March 23, 2010 to be grandfathered, supposedly assuring that you will be able to keep your plan if you had it on that date.
Actually, this is a silly debate. As explained in my comment two years ago, except for those individuals on Medicare or other financially sound retiree programs, almost no one gets to keep the insurance he or she has. Rather than stabilizing existing coverage, the regulations that would grandfather plans make it less likely, in an environment of increasing health care costs, that existing plans would continue to be offered without significant changes.
In an effort to make the insurance plans more affordable, further adjustments in deductibles and coinsurance are almost inevitable, and the ever-changing insurance marketplace will surely result in changes in insurance companies selected. Insurance price shoppers, who are mostly healthy, will be much more sensitive to size of the premiums than they would be to cost sharing; this is precisely what has happened throughout the individual market. These pressures would accelerate the decline in grandfathered plans.
This HHS report predicts an end to the individual market and a sharp decline in the small employer market. They claim that the large employer market will not see much change, but other studies have shown that large employers are already switching to plans with larger deductibles and other cost sharing simply to keep premiums affordable, and many are switching the insurers that they are using, thereby losing their eligibility for the grandfathered status. Besides, for the reasons mentioned in the July, 2008 comment above, almost no one will end up staying indefinitely in the same employer sponsored plan anyway.
“Keeping the insurance you have” was only a slogan used to market the reform proposal. It wasn’t a serious long term strategy. Instead of wasting time in another political dogfight – this time over grandfathering – we should move forward with supporting policies that will work for everyone – like a single payer national health program.

Are high premiums due to medical costs or insurer profits?

Insurance Industry Inflates Rates While Falsely Blaming New Health Care Law

Health Care for America Now! (HCAN)
June 2010

The health insurance industry argues that rising medical costs are to blame for runaway premiums, but it’s clear that they are constantly looking for excuses to raise rates and expand their cash flows.

Premium hikes have surpassed the growth of medical costs, wages and overall inflation. From 2000 to 2008, premiums for families enrolled in employer-sponsored health plans increased 97 percent, while rates for individuals in workplace health plans climbed 90 percent. During that same period, private insurers’ payments to health care providers rose only 72 percent, medical inflation increased 39 percent, wages grew 29 percent and overall inflation climbed 21 percent. Health insurers are basing increases on something other than medical inflation, wages or general inflation.

http://hcfan.3cdn.net/d8f62f1fc66d8e0224_q6m6bnff1.pdf

Comment: 

By Don McCanne, MD

If you look beyond the inflammatory anti-private insurance rhetoric of this report (mostly appropriate, some perhaps not), you can find a few real numbers to help understand rising insurance costs. From 2000 to 2008, overall inflation increased 21 percent, but medical inflation increased 39 percent, while employer-sponsored insurance premiums increased 90 percent for individuals and 97 percent for families.

The fact that medical inflation grew faster than overall inflation supports the position of the private insurers that rising health care costs have necessitated higher premiums, but that isn’t the whole story.

Private insurers’ payments to health care providers increased at 72 percent, considerably higher than the rate of medical inflation. This supports the insurers’ position that failure of government reimbursement rates to keep up with medical inflation, especially in the Medicare and Medicaid programs, has resulted in a cost shift to the private insurers who are paying more to make up the differences. However, some economists have suggested that this merely represents a failure of the private insurance industry to hold down excessive price increases.

Even with medical inflation and public-to-private cost shifting, premiums have increased at a significantly higher rate. This likely represents both higher administrative costs and greater profits. If the insurance industry were efficient, the percent dedicated to administrative costs should actually decline since higher prices would reduce the percentage of premiums absorbed by each unit of administrative service.

Although the insurance industry has been evasive about the portion of premiums that are consumed by administrative services, the for-profit insurers have been required to report their profits and their medical loss ratios. From the 2009 data (included in this report) we know that their administrative costs are outrageously wasteful, and that their profits are at an all time high.

Today President Obama told representatives of the insurance industry to not raise their prices so high. Do you think that they will listen? It seems that he would be much more effective if he were to tell the public stewards of an improved Medicare for all to get the prices right.

The following is to clarify a legitimate concern of one of the qotd subscribers.

From the 6/22/10 message:

21% – general inflation
39% – medical inflation
72% – increase in private insurers’ payments to health care providers
90% & 97% – premium increases for individual and family health plans

General inflation and medical inflation refer to increased prices. Payments to providers and insurance premium increases refer to increased prices modified by increased volume and intensity of services.

Though the numbers should not be compared on a single scale, the principles are still the same as stated earlier. The rate of medical inflation (prices) has continued to increase in excess of the rate of general inflation. Insurance premiums have continued to increase in excess of the payments (prices x services) to providers.

America Speaks Back: Derailing the Drive to Cut Social Security and Medicare

By Dean Baker
Co-Director of the Center for Economic and Policy Research
The Huffington Post, June 21, 2010

Next weekend will feature another milestone in the drive to cut Social Security and Medicare. The organization America Speaks will be hosting a series of 20 meetings in cities across the country. They will ask the people at these meetings, a cross section of the nation, to come up with proposals for dealing with the country’s projected long-term budget deficit.

The way the problem is outlined for these meetings virtually guarantees that most of the participants will opt for big cuts to Social Security and Medicare. The results of this song-and-dance exercise will then be presented to President Obama’s fiscal responsibility commission on June 30th, which will use it as further ammunition for plans by its co-chairs to gut these programs.

The rigged deck approach should come as no surprise. America Speaks is largely funded by Peter G. Peterson, the investment banker billionaire who has been on a decades long crusade to gut these programs. In recent years, Peterson has redoubled his efforts, committing more than a billion dollars to a wide variety of groups in addition to America Speaks. To advance his agenda Peterson has even set up a fake news service, the Fiscal Times. To fill the staff, Peterson’s son hired a number of reputable reporters who were displaced by the collapse of the newspaper industry.

Federal Budget 101, the guidebook for the discussion, follows a predictably shoddy path. The book discusses the budget in almost complete isolation from any larger discussion of the economy. There is virtually no discussion of the ways in which the budget fosters growth, for example by funding education, research and infrastructure; nor the way in which the pattern of growth affects the budget.

For example, the booklet never discusses the extent to which the economic mismanagement that allowed the unchecked growth of an $8 trillion housing bubble contributed to the debt that is its central concern. The downturn caused by the resulting economic collapse will eventually add more than $3 trillion to the country’s debt, according to the Congressional Budget Office’s projections.

The booklet also neglects to point out the extent to which the long-term budget disaster story is driven by our broken health care system. If per person health care costs in the United States were the same as in any other wealthy country, we would be looking at enormous budget surpluses in the long-term, not deficits.

Incredibly, the booklet does not even point out the fact that income is projected to grow over time. The average hourly wage is projected to buy 20 percent more in 2025 (the year for which participants are supposed to design a budget) than it does today.

This knowledge might affect how people view things like tax increases. For example, if we know that people will be on average 20 percent richer, we might be less concerned if their tax rate were to rise by 1-2 percentage points.

The booklet also never mentions the plunge in wealth that older workers have suffered as a result of the collapse of the housing bubble and plunge in the stock market. This has left the bulk of near retirees (those in their late 40s and 50s) facing retirement with almost nothing other than their Social Security and Medicare.

The booklet even gets its basic economics wrong, warning participants at the very beginning that rising deficits can lead to a weaker dollar. In the real econ 101, students learn just the opposite — that budget deficits can jack up interest rates leading to a stronger dollar. This is how a budget deficit can be tied to a trade deficit — by raising the value of the dollar. A higher dollar makes U.S. exports more expensive to foreigners and imports cheaper for people living in the United States.

People who want to see our trade deficit fall want a lower dollar. Getting the value of the dollar down (not up) is an argument that more serious people would give for a smaller budget deficit. Peterson should have been able to get a better product for his millions.

Finally, it is striking that not a single person connected with this project was among those who warned of the housing bubble before its collapse wrecked the economy. Ostensibly, America Speaks tried to include a diverse range of economists and policy analysts. Yet, in the category of people who recognized the biggest economic disaster of the last 80 years, America Speaks came up completely empty.

To put this in perspective, suppose Peter Peterson had funded this exercise back in 2004, when the housing bubble was already huge, but still at a point where it could have been deflated without devastating the economy. This group would have given us a great discussion of the 2020 deficit, but said nothing about the tsunami that was about to wreck the economy (and send the deficit skyrocketing).

Unfortunately, there is no reason to assume that the America Speaks crew’s understanding of the economy is any better today than it was in 2004. We need more serious analysis than this propaganda exercise as a basis for deciding the fate of essential programs like Social Security and Medicare.

http://www.huffingtonpost.com/dean-baker/america-speaks-back-derai_b_619465.html

Are high premiums due to medical costs or insurer profits?

Insurance Industry Inflates Rates While Falsely Blaming New Health Care Law

Health Care for America Now! (HCAN)
June 2010
The health insurance industry argues that rising medical costs are to blame for runaway premiums, but it’s clear that they are constantly looking for excuses to raise rates and expand their cash flows.
Premium hikes have surpassed the growth of medical costs, wages and overall inflation. From 2000 to 2008, premiums for families enrolled in employer-sponsored health plans increased 97 percent, while rates for individuals in workplace health plans climbed 90 percent. During that same period, private insurers’ payments to health care providers rose only 72 percent, medical inflation increased 39 percent, wages grew 29 percent and overall inflation climbed 21 percent. Health insurers are basing increases on something other than medical inflation, wages or general inflation.
http://hcfan.3cdn.net/d8f62f1fc66d8e0224_q6m6bnff1.pdf

If you look beyond the inflammatory anti-private insurance rhetoric of this report (mostly appropriate, some perhaps not), you can find a few real numbers to help understand rising insurance costs. From 2000 to 2008, overall inflation increased 21 percent, but medical inflation increased 39 percent, while employer-sponsored insurance premiums increased 90 percent for individuals and 97 percent for families.
The fact that medical inflation grew faster than overall inflation supports the position of the private insurers that rising health care costs have necessitated higher premiums, but that isn’t the whole story.
Private insurers’ payments to health care providers increased at 72 percent, considerably higher than the rate of medical inflation. This supports the insurers’ position that failure of government reimbursement rates to keep up with medical inflation, especially in the Medicare and Medicaid programs, has resulted in a cost shift to the private insurers who are paying more to make up the differences. However, some economists have suggested that this merely represents a failure of the private insurance industry to hold down excessive price increases.
Even with medical inflation and public-to-private cost shifting, premiums have increased at a significantly higher rate. This likely represents both higher administrative costs and greater profits. If the insurance industry were efficient, the percent dedicated to administrative costs should actually decline since higher prices would reduce the percentage of premiums absorbed by each unit of administrative service.
Although the insurance industry has been evasive about the portion of premiums that are consumed by administrative services, the for-profit insurers have been required to report their profits and their medical loss ratios. From the 2009 data (included in this report) we know that their administrative costs are outrageously wasteful, and that their profits are at an all time high.
Today President Obama told representatives of the insurance industry to not raise their prices so high. Do you think that they will listen? It seems that he would be much more effective if he were to tell the public stewards of an improved Medicare for all to get the prices right.
The following is to clarify a legitimate concern of one of the qotd subscribers.
From the 6/22/10 message:
21% – general inflation
39% – medical inflation
72% – increase in private insurers’ payments to health care providers
90% & 97% – premium increases for individual and family health plans
General inflation and medical inflation refer to increased prices. Payments to providers and insurance premium increases refer to increased prices modified by increased volume and intensity of services.
Though the numbers should not be compared on a single scale, the principles are still the same as stated earlier. The rate of medical inflation (prices) has continued to increase in excess of the rate of general inflation. Insurance premiums have continued to increase in excess of the payments (prices x services) to providers.

Whacking the Old Folks

By William Greider
The Nation, May 20, 2010

In setting up his National Commission on Fiscal Responsibility and Reform, Barack Obama is again playing coy in public, but his intentions are widely understood among Washington insiders. The president intends to offer Social Security as a sacrificial lamb to entice conservative deficit hawks into a grand bipartisan compromise in which Democrats agree to cut Social Security benefits for future retirees while Republicans accede to significant tax increases to reduce government red ink.

Obama’s commission is the vehicle created to achieve this deal. He ducks questions about his preferences, saying only that “everything has to be on the table.” But White House lieutenants are privately talking up a bargain along those lines. They are telling anxious liberals to trust the president to make only moderate cuts. Better to have Democrats cut Social Security, Obama advisers say, than leave the task to bloodthirsty Republicans.

The president has stacked the deck to encourage this strategy. The eighteen-member commission is top-heavy with fiscal conservatives and hostile right-wingers who yearn to dismantle the retirement program. The Republican co-chair, former Senator Alan Simpson, is especially nasty; he likes to get laughs by ridiculing wheezy old folks. Democratic co-chair Erskine Bowles and staff director Bruce Reed secretly negotiated a partial privatization of Social Security with Newt Gingrich back when they served in the Clinton White House, but the deal blew up with Clinton’s sex scandal. Monica Lewinsky saved the system.

Any recommendations require fourteen votes, and Obama has at least five loyalists who will protect him—Senators Dick Durbin and Max Baucus, Representatives Jan Schakowsky and Xavier Becerra, and former SEIU president Andy Stern. On the other hand, if Obama really wants to make a deal, these commissioners will very likely support him.

The people, once again, are kept in the dark. The Obama commission will not report its recommendations until after this fall’s elections—too late for voters to express objections. Both parties assume they can evade blame by holding hands and jumping together.

What’s extraordinary about this assault on Social Security is that a Democratic president is leading it. Obama is arm in arm with GOP conservatives like Wall Street billionaire Pete Peterson, who for decades has demonized Social Security as a grave threat to the Republic and has spread some $12 million among economists, think tanks, foundations and assorted front groups to sell his case. If Obama pulls the deal off, this will be his version of “Nixon goes to China”—a leader proving his manhood by going against his party’s convictions. Even if he fails, the president will get some protective cover on the deficit issue. After all, he is targeting Big Government’s most beloved and trusted program—the New Deal’s most prominent pillar.

Obama’s initiative rests on two falsehoods spread by Peterson’s propaganda—the notion that Social Security somehow contributes to the swollen federal deficits and that cutting benefits will address this problem. Obama and his advisers do not say this in so many words, but their rhetoric implies that Social Security is a big source of the deficit problem. Major media promote the same falsehoods. Here is what the media don’t tell you: Social Security has accumulated a massive surplus—$2.5 trillion now, rising to $4.3 trillion by 2023. This vast wealth was collected over many years from workers under the Federal Insurance Contributions Act (FICA) to pay in advance for baby boom retirements. The money will cover all benefits until the 2040s—unless Congress double-crosses workers by changing the rules. This nest egg does not belong to the government; it belongs to the people who paid for it. FICA is not a tax but involuntary savings.

As a candidate, Obama assured voters that any shortfall was in the distant future and could be easily resolved with minor adjustments. As president, he has abandoned this accurate analysis and turned rightward without explaining why. He faces an awkward problem, however. Despite conservative propaganda, cutting Social Security will have no impact on the deficit problem that so stirs public anxiety. The White House knows this, and some advisers admit as much. So why is the president targeting Social Security?

Paul Volcker, former Federal Reserve chair and adviser to the president, declares, “In my view, we can deal with the Social Security problem fairly promptly.” Cutting benefits, Volcker adds, “is not going to deal with the deficit problem in the short run, but it’s confidence building.” John Podesta of the Center for American Progress, another adviser, agrees but says, “Reforms could starkly demonstrate to skeptical debt markets that the United States is willing to take on a politically difficult fiscal issue.”

In other words, targeting Social Security is a smokescreen designed to reassure foreign creditors and avoid confronting the true sources of US indebtedness. The politicians might instead address the cost of fighting two wars on borrowed money or the tax cuts for the rich and corporations or the deregulation that led to the recent financial catastrophe and destroyed vast wealth. But those and other sources of deficits involve very powerful interests. Instead of taking them on, the thinking in Washington goes, let’s whack the old folks while they’re not watching.

This issue is a seminal fight with the potential to scramble party politics. If Democrats can no longer be trusted to defend Social Security, who can be? The people from left to right overwhelmingly support the program (88 percent), and a majority (66 percent) believe benefits should be increased now to cope with the loss of jobs and savings in the Great Recession.

Citizens can win this fight if they mobilize smartly. We can do this by arousing public alarm right now, while members of Congress face a treacherous election and before Obama can work out his deal. Some liberal groups are discussing a “take the pledge” campaign that demands senators and representatives sign commitments to keep Hands Off Social Security Benefits. If politicians refuse to sign, put them on the target list for November. Barack Obama is standing on the third rail of politics—let’s give him a warning jolt.

http://www.thenation.com/article/whacking-old-folks

How Social Security Can Gain Without Much Pain

By Greg Anrig
Vice President, Programs, at The Century Foundation
The Huffington Post, June 17, 2010

As Obama’s Fiscal Commission prepares for its June 30 hearing, the Roosevelt Institute’s New Deal 2.0 blog invited me to participate in its Social Security’s Fiscal Fitness series, which examines the soundness of the program, its relationship to the federal deficit, and the vital role it plays in America’s economic future.

Advocates of cutting Social Security benefits often argue ruefully that they wish that there was some other way to “save” the program. But, they say sadly, the only realistic choices involve shared sacrifice and pain. So they recommend changes like further delays in the age when full retirement benefits can be collected, reducing cost-of-living adjustments to Social Security payments, and other cuts that would reduce how much future retirees are scheduled to receive.

But in fact, Social Security’s currently strong finances could be sustained beyond a 75-year time horizon entirely through modest tax increases targeted toward high-income workers. Social Security provides vital protections that have been enormously successful in reducing poverty among the elderly and disabled, but its benefits are by no means overly generous. Compared to 30 OECD nations, the U.S. ranks 25th in the share of an average worker’s earnings that is replaced upon retirement by a country’s public pension program. Social Security’s annual benefit of about $13,860 a year for an average retired worker is only slightly above the poverty level of $10,830.

According to the projections of Social Security’s Trustees, the program will be able to continue paying promised benefits in full until 2037. After that point, payroll taxes will be sufficient to finance about three-fourths of promised benefits. Over the 75-year time frame that the Trustees are required to forecast, that gap between promised benefits and revenues amounts to about 0.7 percent of GDP. Closing it would require the equivalent of a 1 percentage point increase in the current Social Security payroll tax rate paid by employees and matched by employers. But the same amount of revenue could be raised in a variety of ways that would confine the extra burden to taxpayers who would be best able to afford it.

One easily defended way to do that would be to raise the cap on annual wages subject to the Social Security payroll tax, which is currently $106,800. Past Congresses have set the cap at a level where it equaled 90 percent of aggregate earnings in Social Security employment. But simply because the incomes of the higher paid have risen much more rapidly than average wages over the past few decades, the cap has declined to nearly the 80 percent level, without any action by Congress whatsoever. Gradually restoring it to the historic 90 percent baseline in and of itself would close about a third of the 75-year shortfall. In the process, only the 6 percent of workers earning above the cap would owe more and their payroll tax deductions would simply continue for a few days longer into the year than they do now. And those workers paying more would receive higher benefits as a result.

One way to close the entire remainder of the shortfall would be to remove the cap entirely just for the employer contributions to an upper income worker’s payroll taxes. That wouldn’t directly affect the paychecks of those employees, though it might somewhat dampen their future raises. Still, considering that the highest earners continue to prosper and enjoy far greater economic security than everyone else, the adjustment is a reasonably fair way to sustain the nation’s most important social insurance program.

An alternative that would more than completely eliminate the 2 percent of payroll shortfall would be to impose a small investment transactions tax (similar to Great Britain’s) of one-fourth of one percent on publicly traded stock, credit swap derivatives, and other financial instruments. Some economists have long supported the idea as a way of deterring economically wasteful “churning” in investment markets, and the cost again would largely be borne by individuals and Wall Street firms that can most afford it.

Other proposals, including earmarking estate revenues to Social Security, also could go a long way to bridging the long-term funding gap without imposing pain on average citizens. But the main reality to recognize is that, notwithstanding the dour “truth-telling” of alarmist politicians, anti-government ideologues, and misinformed journalists, Social Security can be sustained indefinitely without inflicting any pain whatsoever on the vast majority of Americans, and with only modest costs to upper-income taxpayers.

Cross-posted from New Deal 2.0.

http://www.huffingtonpost.com/greg-anrig/how-social-security-can-g_b_615811.html

Twenty percent average premium increase

Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance, Kaiser Survey Finds

Kaiser Family Foundation
June 21, 2010

People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser survey examining the experiences and views of people who buy health coverage in the non-group or individual market.

Most say they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether. After these so-called “buy downs” are taken into account, people who faced a premium increase ended up paying 13 percent more than before.

Many people report being in plans with high deductibles, including one in four (26 percent) with an annual deductible of $5,000 or more and 6 percent with a deductible of $10,000 or more. 

Overall, the average deductible reported for single coverage is $2,498, almost four times the $634 deductible reported on average for employer-sponsored PPO coverage.  Those with family coverage whose deductibles must be met on a per-person basis report an average deductible of $2,959, while those with a family deductible (the total spending required across the entire family before coverage kicks in) report an average of $5,149.

More than one in five (22 percent) say over the past year they or a family member covered by their plan did not get needed medical care because of the cost, and a similar share (20 percent) say they skipped filling a prescription due to cost.

Nearly four in ten policyholders (38 percent) report at least one problem getting their insurer to pay a bill.

“With people in the individual market being hit with average increases of 20%, the survey shows that the steep increases we have been reading about over the last several months are not just extreme cases,” Kaiser Family Foundation President and CEO Drew Altman said.

http://www.kff.org/kaiserpolls/posr062110nr.cfm

Comment: 

By Don McCanne, MD

This survey is very important because it shows that outrageous insurance premium increases are not limited to the anecdotes that we have been hearing, but rather are a pervasive problem, inflicting the nation with an average 20 percent premium increase in the individual insurance market. Those who say that the Patient Protection and Affordable Care Act (PPACA) will fix this had better take a closer look.

With these increases, it is not surprising that many looked for less expensive plans, usually opting for higher deductibles. But look at the numbers. The average deductible for a family is now over $5000, and for some, $10,000 or more. In spite of all of the buy-downs to higher deductible plans, people still ended up this year paying an average of 13 percent higher premiums – paying more and getting less.

Will PPACA provide relief from these high deductibles that are impairing access to needed medical care? No. The plans will be required to have an actuarial value of only 60 percent, or 70 percent for the exchange plans eligible for premium credits. When the patients’ share averages 30 to 40 percent of the costs (plus the premium), it is inevitable that the plans will have high deductibles.

Will the cost sharing subsidies of the exchange plans adequately ameliorate the impact of the deductibles? No. Lower income individuals do not have adequate disposable income to meet their portion of the cost sharing, even with the subsidies. For those with incomes over 250 percent of the federal poverty level ($55,125 for a family of four), there are no cost sharing subsidies beyond the equivalent of a 70 percent actuarial value. The portion of the subsidized insurance premium that this family would still have to pay is $4438 (8.05 percent of income), so with a $5000 deductible, they would have to pay over 17 percent of their income before coverage begins (except for limited preventive services), and even then they would still have coinsurance payments plus costs for non-covered or most out-of-network services. By any definition, that is underinsurance, which will become the norm for the United States.

The problem is not the total cost of health care for our nation. We can afford it, though we are nearing our collective tolerance. The problem is the fragmented, dysfunctional financing system that results in tremendous inequities and runaway cost increases. A single payer national health program would fix this.

Recent Premium Increases Imposed by Insurers Averaged 20% for People Who Buy Their Own Health Insurance, Kaiser Survey Finds

Facing Such Increases, Some Enrollees Switched To Lower-Cost Coverage

People With Pre-Existing Conditions Much More Likely To Report Problems

Kaiser Family Foundation
News Release, June 21, 2010

MENLO PARK, CA –People who buy their own insurance report that their insurers most recently requested premium increases averaging 20 percent, according to a new Kaiser survey examining the experiences and views of people who buy health coverage in the non-group or individual market.

Overall roughly three in four people (77 percent) with non-group coverage report facing a premium increase with a current or previous insurer. Most say they paid the increase, but 16 percent of all policyholders say they switched plans, either buying a less expensive policy from their current insurer or switching companies altogether. After these so-called “buy downs” are taken into account, people who faced a premium increase ended up paying 13 percent more than before.

Many of those facing a premium increase who switched to a cheaper policy are now getting less comprehensive coverage than they were before. The survey found that those who switched are more than four times as likely to say their new plan offers worse benefits than their previous plan (49 percent) as they are to say their new plan’s benefits are better (11 percent).

“With people in the individual market being hit with average increases of 20%, the survey shows that the steep increases we have been reading about over the last several months are not just extreme cases,” Kaiser Family Foundation President and CEO Drew Altman said.

While most people in the U.S. get health insurance through their employer, about 14 million people under age 65 have coverage through the non-group or individual market, which has faced scrutiny recently in news reports about some insurers’ steep rate increases and in the market reforms in the new health reform law that will take effect in 2014. Kaiser’s Survey of People Who Purchase Their Own Insurance provides insight into the current state of the non-group market. It is based on a nationally representative random sample of 1,038 people ages 18-64 who purchase their own health coverage and was conducted between March 19 and April 2, during the final congressional debate and enactment of health reform legislation.

Premiums and deductibles

More than half (57 percent) of those with non-group insurance say that they are the only ones covered by their policy. This group reports average annual premiums of $3,606, less than the average $4,824 premium reported in 2009 for employer-sponsored coverage (which typically provides more comprehensive insurance). Among those whose policies cover not only themselves but also other family members, the average annual premiums are $7,102. With insurers generally varying premiums by age in the non-group market, older people report paying higher premiums than younger people, both for individual policies and for family policies.

Many people report being in plans with high deductibles, including one in four (26 percent) with an annual deductible of $5,000 or more and 6 percent with a deductible of $10,000 or more.

Overall, the average deductible reported for single coverage is $2,498, almost four times the $634 deductible reported on average for employer-sponsored PPO coverage. Those with family coverage whose deductibles must be met on a per-person basis report an average deductible of $2,959, while those with a family deductible (the total spending required across the entire family before coverage kicks in) report an average of $5,149.

Cost concerns among policyholders

Those who purchase their own coverage are much more likely to worry about being able to pay for health care than those with employer coverage.

For example, 40 percent of those who buy their own coverage say they are “not too confident” or “not at all confident” that they will be able to pay their usual medical bills, twice the share of those with employer coverage who said so in another Kaiser survey. Only 17 percent say they are “very confident” they could pay these usual bills, compared to 36 percent of those with employer coverage.

A similar disparity exists when asked about their ability to pay for a major illness or injury that requires hospitalization. Half (51 percent) of those who purchase their own coverage say they are “not confident” they could pay their bills in such circumstances, compared with a quarter (26 percent) of those with employer coverage.

This lack of confidence may reflect real problems policyholders have experienced. More than one in five (22 percent) say over the past year they or a family member covered by their plan did not get needed medical care because of the cost, and a similar share (20 percent) say they skipped filling a prescription due to cost. Those who report a pre-existing condition are twice as likely as those without to report skipping needed medical care because of the cost (31 percent vs. 15 percent) or not filling a prescription because of the cost (28 percent vs. 14 percent).

Nearly four in ten policyholders (38 percent) report at least one problem getting their insurer to pay a bill, either because the plan paid less than they expected (31 percent), the plan would not pay anything for a bill they thought was covered (22 percent), or they reached the limit of what the plan would pay for a specific illness or injury (7 percent).

Pre-existing conditions

Nearly half (47 percent) of those in non-group plans say that they or someone covered by their policy have what could be considered a pre-existing condition. This group is more likely than other policyholders to report difficulty in finding a plan that met their needs (49 percent vs. 27 percent) and are more likely to worry about losing that coverage if they become seriously ill (62 percent vs. 48 percent). These findings do not reflect the experiences of people with pre-existing conditions who could not find affordable coverage on their own at all — as the survey only captures the experiences of current policyholders.

Within this group, nearly half (49 percent) say they have had at least one problem getting their insurer to pay bills and one in five (21 percent) of those in the pre-existing group report that an insurance company denied them coverage in the past, compared to just 3 percent of other policyholders. The group is also more likely to say they are worried about the future stability of their insurance coverage.

Who buys individual coverage?

The survey finds that people who buy their own insurance on average are somewhat older than those with employer-sponsored coverage, but with similar incomes and health status.

When asked why they buy their own health coverage, nearly half (45 percent) say it is because they are self-employed and small business owners. One in four (25 percent) say they or their spouse work for an employer, but the employer either does not offer coverage or they are not eligible for, or cannot afford, the employer coverage.

When purchasing their current policy, eight in ten (79 percent) say they shopped around at different insurance companies — though fewer than half ended up applying to more than one insurer: 13 percent say they applied to two insurers, 28 percent to three or four, and 7 percent to 5 or more. Fifteen percent of those who shopped around (accounting for 12 percent of all those who purchase their own insurance) say that at least one insurance company refused to offer them a policy.

The vast majority (74 percent) of those who buy their own insurance say they’re likely to keep purchasing coverage on their own one year from now. Just over half (54 percent) think it would be difficult for them to switch plans if they wanted to. The most common reasons p
eople think it would be difficult to switch is that they or someone else on their plan has a pre-existing condition (42 percent of those who say it would be difficult), they wouldn’t be able to find a price as low as they have now (26 percent), and it would be too complicated to look for a new plan (18 percent).

METHODOLOGY

The Survey of People Who Purchase Their Own Insurance was designed, analyzed, and conducted by researchers at the Kaiser Family Foundation. In order to identify people who purchase their own insurance, screening interviews were completed with a nationally representative sample of 8,499 people ages 18-64. Respondents were drawn from the Knowledge Networks Panel, a large-randomly drawn representative national panel of households recruited by telephone and mail. A web-based survey among the 1,038 randomly selected individuals was conducted between March 19 and April 2, 2010. The margin of sampling error for results based on the full sample is plus or minus 4 percentage points. The full question wording, results, charts and a brief on the poll can be viewed online.

The Kaiser Family Foundation is a non-profit private operating foundation, based in Menlo Park, California, dedicated to producing and communicating the best possible analysis and information on health issues.

http://www.kff.org/kaiserpolls/posr062110nr.cfm

GOP Health Expert: Medical Industry to ‘Boom’ Under New Law

By Kay Tillow
FireDogLake, Saturday June 19, 2010

The Republican Party recently told its leaders to call the Obama administration’s new health law “Exhibit A” of a “runaway Washington government.”

But that’s not how longtime GOP health expert Thomas Scully sees it.

“The bill signed by Obama is not a big-government takeover,” Scully told a pro-business audience in Louisville, Ky., last month, adding the new law will result in “an explosive boom for the medical industry.”

Scully, a staunch Republican who worked in George H.W. Bush’s White House and was later President George W. Bush’s top administrator for Medicare and Medicaid, said, “The health care reform bill that passed in March is very much like the Bush 1 plan. I know. Richard Darman and I wrote that 1992 plan.”

Scully, who now works in the private sector, was the keynote speaker at a gathering of health industry entrepreneurs sponsored by the Health Enterprises Network, an affiliate of the local Chamber of Commerce, here on May 27.

Three of us from Kentuckians for Single Payer Healthcare attended the forum, curious to see what the reform looks like to those who seek financial fortune in the health industry.

For-profit companies win, taxpayers lose

Early in his talk, Scully projected a slide on a large screen with a smiley face over the left seven-eighths of the frame and a frowning face over the right eighth.

Under the smiley face were the “winners” under the health law, including the private health insurance firms, pharmaceutical companies, hospitals, dialysis and hospice companies, and disease management groups. Also listed were the device manufacturers who would pay a special tax but would simply pass it on to others and come out ahead. Home health care would take a hit in the short run but prosper in the long run, he said.

On the far right-hand side of the slide, under the frowning face, was the sole “loser”: the taxpayers. (In case you’re wondering, patients didn’t even make the slide.)

While complimenting the bill’s backers for their shrewdness (“The bill is politically smart — the doctors, drug companies and hospitals were bought off early”), he said the new law’s main weakness was its inability to control spending.

“In 10 years there will be $1.5 trillion in new spending,” a half-trillion dollars more than the administration has projected, he said. In short, the law is “a fiscal disaster,” and U.S. taxpayers will end up paying for it.

“Someone will have to raise the Medicare and Social Security age to 70, and we will have to have tax increases,” he said.

His prediction of devastating changes to these cherished social safety-net programs caused no stir in a room full of people sporting health industry badges.

Scully should have some insight into the implications of health reform for taxpayers and businesses. In 2003, when he was administrator for the Centers for Medicare and Medicaid Services (CMS), he withheld from Congress the real costs of the Medicare Modernization Act, which barely passed in an arm-twisting vote.

The bill blocked Medicare from negotiating prices with pharmaceutical companies, something that has since proven wildly lucrative for insurers and drug makers. The Medicare Modernization Act also gave away the store to the privatized Medicare Advantage plans.

Along these same lines, Scully told the audience, “We need to turn all of Medicare over to Medicare Advantage.”

Likes Obama plan

Scully said he was a big fan of the Obama plan, but he confessed that it was not his first choice in health reform: “Of course, the Wyden plan is really the best thing to do — it gets rid of Medicare and Medicaid — that is the totally right thing to do.”

The bill offered last year by Sen. Ron Wyden, D-Ore., would have put health care financing entirely in the hands of private insurers, with mandatory individual purchase taking the place of employer-sponsored coverage.

Nonetheless, Scully was clearly pleased with the bill passed by the Democrats, which reinforces, not undermines, profit-seeking in health care.

Scully’s last words at the meeting were, “All is driven by money.”

We left even more determined to build the movement for single payer.

Kay Tillow is a native of western Kentucky and is a leader of All Unions Committee for Single Payer Health Care–HR 676.

http://seminal.firedoglake.com/diary/55674