PNHP

Uwe Reinhardt on fraud and abuse

Uwe Reinhardt on fraud and abuse

How Much Fraud and Abuse Is There in U.S. Health Care?

By Uwe E. Reinhardt
The New York Times
March 5, 2010

One of the more remarkable proposals put on the table at last week’s bipartisan summit on health care reform was an idea from Senator Tom Coburn, an Oklahoma Republican, to deploy undercover agents posing as patients in an effort to ferret out fraud and abuse by doctors and hospitals.

It subsequently became one of the ideas from Republicans that President Obama offered to incorporate in a revised health reform bill. One wonders whether the president was sincere or just being a bit naughty.

After all, the idea to legislate the infiltration of undercover agents into private medical practices and hospitals in America does not exactly square with the loudly voiced opposition of Republicans to government intrusion into American health care. Can one imagine anything more intrusive?

Senator Coburn is a physician and may have reasons to put forth such a controversial idea. As someone outside of the profession, I would not be in a position to second-guess him on that issue.

…

If the president and Congress wish to constrain the growth of the administrative cost of American health care, they should look not only to the private health insurance industry. They might commission a study exploring how government-run health systems in other nations manage to pay hospitals and doctors without imposing on them the huge administrative burden borne by American providers of health care. Perhaps Congress can learn from such a study.

A proper slogan here might be “evidence-based administration” (E.B.A.), meaning that just as the use of clinical procedures should be based on solid empirical evidence that they work and are worth their cost, the ever-new administrative burdens that government imposes on health-care providers should meet the same evidence-based test.

A second problem faced by hospital executives is that they have only partial control over the costs they must book and for which they seek to get paid. The bulk of these costs are driven by the clinical decisions of physicians who are affiliated with hospitals and can use the hospital as a free workshop, so to speak.

http://economix.blogs.nytimes.com/2010/03/05/how-much-fraud-and-abuse-is-there-in-u-s-health-care/

Posted response of Don McCanne, San Juan Capistrano, CA (# 1):

Instances of blatant fraud in health care provide great fodder for the media. The identification and prosecution of criminals in Florida becomes national news.

Those who claim that fraud and abuse are a primary reason for high health care costs use such stories to say that the government is not doing its job in identifying and prosecuting these crooks, when the stories are about the government doing its job in identifying and prosecuting these crooks.

Thieves will always be with us and need to be ferreted out, and the government will continue to do that.

The far greater problem, as Dr. Reinhardt explains, is in physician practice patterns. The great variability in use of resources is not so much a matter of abuse as it is simply a variation in individual and regional concepts of “that’s the way its done.”

Much of the high use is in imaging, or consultations, or referral for high-tech procedures for which the primary physician receives no additional compensation. That is not fraud.

Nor is it defensive medicine. A test or consultation allegedly ordered to prevent a malpractice lawsuit is not ordered out of an intellectual void. It is ordered because the patient has a real risk, even if small, of having a problem that may require intervention.

Most physicians want to practice high quality, efficient medicine. They welcome information such as that generated by the British NICE program – a program designed to identify best practices. The opponents of reform dismiss even these efforts with nonsense accusations of “rationing.”

Not spending money on medical services that are not helpful or even harmful is not rationing. Rather it exemplifies a fundamental concept characteristic of free markets – providing more transparency in order to obtain greater value in our health care purchasing.

Single-Payer Healthcare Coming to Minnesota and Maryland

By David Swanson
OpEdNews.com, March 3, 2010

California keeps passing bills for state single-payer healthcare, but Ahhhnold won’t sign em, and Jerry Brown who wants to be governor doesn’t seem to want it badly enough to make a commitment on healthcare. Meanwhile, Pennsylvania is encouraged that their current governor has said he probably will sign a single-payer healthcare bill, and the legislature just might pass one. But Minnesota has an angle neither of these other states can claim: a serious candidate for governor who is the state’s leading advocate for single-payer.

State Senator John Marty was the Democratic nominee for governor of Minnesota 16 years ago and is making another run for it. My friend Vin Gopal, who’s working on Marty’s campaign, tells me “Senator John Marty is the real deal. If he gets elected Governor this year, which he has a good shot at, it’s a whole new ballgame for the single-payer movement. No other statewide candidate in the country is as committed to the movement as he is.”

Marty tells me he’s optimistic about bringing single-payer healthcare to Minnesota, and that he has a third of the legislature on board with it at this point. Marty’s election campaign can be supported here http://johnmarty.org and the campaign for single-payer in Minnesota can be found here http://muhcc.org and here http://mnhealthplan.org

The legislation currently moving forward is somewhat unusual. Like any single-payer plan, it would eliminate the for-profit health insurance companies and all of their bureaucracy. It would cover all medical needs of all Minnesota residents. There would be no co-pays, deductibles, or out-of-pocket expenses. All bills would be paid by the single plan. Those who now have no coverage would be covered. Those who do have coverage would, in most or all cases, save money in the new system which would be far more efficient, purchase drugs in bulk, etc. All of that should be familiar to supporters of single-payer or visitors to civilized nations. What’s different is that the word “premium” would still be around.

Most single-payer healthcare plans raise funding through taxes. The Minnesota plan would ask the same Department of Revenue that collects taxes to collect premiums from both individuals and businesses, but the premiums would go into a separate fund for healthcare that could never be tapped for anything else. Premiums would be based on each person’s ability to pay, but they would not be optional. However, they would fund a public system developed by elected representatives, unlike the legislation being considered in Congress which would require people to fund for-profit corporations that come with the built-in motivation to provide as little healthcare as possible.

Will Minnesota be our Saskatchewan, the Canadian province that led the way on healthcare? Not if Maryland can help it. I asked Eric Naumburg, a doctor with the Maryland chapter of Physicians for a National Health Program, where things stood in his state, and he told me:

“We have bills in both the Maryland Senate (SB-682) and House of Delegates (HB-767). The Senate Bill has 12 co-sponsors and the House Bill 38; that’s approximately 1/4 of each chamber. So far we have only Democrats on board. The leadership has not taken serious notice yet but there are some good signs and we are really just getting started. Also, between the state’s budget problems, the upcoming election and the health insurance reform mess in Washington, we hear lots of excuses for why not this year.

“The reality is that our bill, which is modeled after the one that has passed twice in California, has only general language about funding. We are raising money for an economic impact study on the effects of single payer. Key areas would include the effect on the state budget and economic growth within Maryland. This will help us with the best ways to fund the system. We continue to build our grassroots movement. This summer we are planning a concerted effort to talk to as many legislators as possible.

“As you have probably heard we have been collaborating on a weekly basis with groups from California and Pennsylvania; learning from each other’s experiences. California and Pennsylvania are further along in this process than we are; but we’re working to catch up. Also, the knowledge that there are several states working on state level single-payer healthcare reform has had a positive effect on some of our legislators. Down the road there is the possibility that a region could develop single payer reform, e.g. two or more adjoining states.”

Maryland and Pennsylvania? The Mason Dixon line crossed by a humane healthcare region? Why not. And who knows, maybe the nation someday!

The Maryland Senate bill is scheduled for a hearing March 10th at 1:00 p.m. in the Finance Committee.

David Swanson is the author of “Daybreak: Undoing the Imperial Presidency and Forming a More Perfect Union” by Seven Stories Press.

http://www.opednews.com/articles/Single-Payer-Healthcare-Co-by-David-Swanson-100303-463.html

Single payer, here we come

Public option still on table in California’s health-care debate

By Amy Yannello
Sacramento News and Review
March 4, 2010

For more than 7 million working Californians who currently don’t have health insurance, Congress and President Barack Obama’s attempt to reform health care has been an exercise in frustration. The public option was almost immediately taken off the table, despite the fact that most independent experts agree reform won’t work without it, and after a year of negotiations, no bill is in sight. If the politicians in Washington, D.C., don’t get their act together soon, California just might beat the feds to the punch with a single-payer system of its own.

Senate Bill 810 (Mark Leno, D-San Francisco) would establish the “California Healthcare System”—a single-payer health-care system open to all residents. Currently in the Assembly, S.B. 810 is the third incarnation of a bill previously carried—and passed—by former state Sen. Sheila Kuehl (D-Santa Monica). Both bills, Senate Bill 921 and Senate Bill 840, were passed by the Legislature and vetoed by Republican Gov. Arnold Schwarzenegger.

Leno doesn’t expect the bill to pass this year, but said it lays the groundwork for two things: first, possible approval of the bill should a governor friendly to the concept be elected this November; and, in lieu of that, placing the bill on the ballot as an initiative and letting the people decide.

“We’ll either wait until we get a vote from a different governor—a Democrat—that believes in what we’re trying to do,” Leno said, “in which case the health insurers will challenge us at the ballot box. Or we won’t get a different vote, and we’ll take it to the voters ourselves. Either way, the voters will get their say.”

Leno and other health-care watchers say the initiative could land on the ballot as soon as 2012 and no later than 2014.

“It’s not socialized medicine,” Leno said. “It is a public/private partnership—publicly funded, privately managed. Your doctor does not change, your clinic, your hospital does not change. What changes is who pays, and rather than waste a third of our health-care dollars on administrative waste—current system—with single-payer, as with Medicare, we will have a 5 percent administrative cost.”

As with all government programs, taxpayers will be on the hook for the cost. But Leno and other experts claim that by pooling all the money together, including the federal dollars the state receives for public health-care programs such as Medicare, Medi-Cal and the Healthy Families Program, most individuals, families and employers will pay less than private insurance plans, which will be supplanted by the public system.

“That’s where the word tax takes on a negative connotation, and we need to educate people,” Leno said. “It’s important for people to know that this replaces the current premiums, co-pays and deductibles that they now pay to insurance companies.”

The fee structure was set out in 2005-06, when the bill was originally introduced. Leno maintains that voters would have to approve a premium structure based on true health-care costs once the measure is approved. The bill mandates that premiums must save the “average” resident and employer money.

If it should pass, the California Healthcare System would levy a tax on all working Californians, say, 4 percent, the amount agreed upon in the 2006 bill. This tax, combined with all public moneys currently spent on health care—including Medicare, Medi-Cal and Healthy Families—would be combined to form the funding mechanism for the CHS.

The bill places these public entities under one administrative umbrella. As the single payer, CHS will negotiate with providers to set fees for health-care services and reimburse claims for those services.

Should S.B. 810 pass, private health insurers, like Anthem Blue Cross, would be prohibited from practicing in California, except to do so for coverage of benefits not covered by the CHS—in other words, under very limited circumstances. The CHS will be administered by the California Healthcare Agency under the control of a health-care commissioner appointed by the governor and confirmed by the Senate.

Additionally, S.B. 810 simplifies the eligibility process for Medi-Cal and raises the income threshold to double the federal poverty index. An individual earning $21,000 or less annually, or a family of four earning $44,000 or less annually, would qualify for no-cost or low-cost medical care under Medi-Cal.

No co-pays or deductibles would be charged until the third year of the program’s operation, and then only for seeing a specialist without a referral from a primary care physician. Co-pays and deductibles would not exceed $250 annually per individual and $500 annually per family, except for those on Medi-Cal, who will not be subject to the co-pays or deductibles.

No co-pays or deductibles would be charged for preventive care received from a primary care physician.

Supporters of S.B. 810 out number opponents 3-1, and include the California Nurses Association, League of Women Voters, assorted clergy, labor unions, teachers and senior citizens.

“Why are the nurses supporting this?” asked Geri Jenkins, RN and co-president of the California Nurses Association. “Because we have 7 million uninsured in California and millions more who are underinsured, and they come to us sicker than they need to be because they didn’t have access to preventive care. So we see the pain and suffering that needn’t be there.”

Jenkins also contends that small-business owners are paying too much under the current system and that Leno’s plan would curtail spending substantially.

“Right now, employers are spending 14 percent of payroll to cover their employees. … This would cut that by half!” she said. “So it’s business-friendly. It’s an economic stimulus for the state to do something like this. We can’t compete with countries that have single-payer systems, because it costs us so much to provide health care, so this would give us an economic edge.”

Jenkins added that with health-insurance corporations like Anthem Blue Cross announcing in late February that it was raising its rates by 39 percent for all residents who sought to purchase insurance on the open market, California will cease to be a viable economy if it can’t rein in health-care costs.

“It’s the moral and economic thing to do,” Jenkins said. “We’re doing something fundamentally wrong here, the way things are.”

Anthem Blue Cross, one of the insurance companies signed on in opposition to the bill, did not return repeated calls for comment for this story.

The World Health Organization ranks the United States 37th among nations in quality of care, access to health care, health-care outcomes, life-expectancy rates and infant mortality rates—“and we pay twice per capita for this failed system,” Leno noted.

Check out the statistics: In 1960, the United States spent 5 percent of its gross domestic product on health-care costs. By 2000, health-care costs jumped to 13 percent of GDP, and in 2010, it will spend 17.3 percent. Projections for 2015 show the costs going up to 20 percent, and to 25 percent in 2025.

“This will consume us,” Leno said. “And the president is right—we will not restore our economic position on the world stage until we reform health care. Small business should support this because they can’t keep up with the ever-escalating cost, and we can’t compete in a global market with this system.”

At least two 2010 Republican candidates for governor—Steve Poizner and Meg Whitman—don’t appear to share Leno’s concern with the private system. Health care appears nowhere on either of their Web sites, not under
Poizner’s “Solutions for California” or Whitman’s “A New California” drop-down menus.

Poizner told SN&R he was “strongly against” any universal health-care plan and would, if elected, focus on four cost-containment measures. He believes “we need to accelerate the deployment of privacy-protected electronic medical records.” He would also support allowing health-insurance companies to offer catastrophic health plans, “rather than prepaid health care.”

“A big portion of the people who don’t have insurance right now could afford insurance if we would got rid of these mandates and just allow the health-insurance product to cover catastrophic events that, if they occur, would cause huge financial damage to people. If you had [that] coverage, then more people would be protected.”

Third, Poizner said he would greatly expand the fee-for-service “doc-in-the-box” clinics in Target and Wal-Mart stores “and other places where they actually post their prices and they provide a lot of the routine care that some people now go to the emergency rooms for.”

The final measure in Poizner’s medicine bag is cracking down on health-insurance fraud. As the current state insurance commissioner, Poizner claims he has 300 police officers in his department’s fraud unit who have uncovered “millions in insurance scams that all add to the current price of health insurance.”

Whitman’s campaign failed to return repeated phone calls for this story.

Meanwhile, state Attorney General Jerry Brown, who announced his bid for the Democratic gubernatorial nomination as this was going to press, makes it a point to highlight his health-care accomplishments in office at www.jerrybrown.org, under the heading “Fighting For You.”

“As Attorney General, Brown has sued medical laboratories for massive overcharges, stopped rip-offs in the Medi-Cal Program, cracked down on unlawful abuse of prescription drugs, fought misleading ad campaigns by major drug companies and arrested nursing home operators for forcibly drugging elderly patients,” the section reads.

As attorney general, he’s ordered an investigation into possible illegal practices by some insurers.

“We have been looking at these companies for a number of months and are very concerned that some of them are unjustly raising premiums and denying payment of legitimate claims,” Brown said. “Not only are the rate increases devastating to Californians strapped by the economy, but in some cases, they are possibly illegal. Our best attorneys are going to get to the bottom of this, and where we find violations of California’s unfair business laws, we intend to stop them.”

Brown subpoenaed records from the states seven largest insurers, Aetna, Anthem Blue Cross, Cigna, Health Net, Blue Shield of California, Kaiser Permanente and PacifiCare. The subpoenas cover pay-for-service health plans, which reimburse doctors and hospitals for services performed, unlike the HMO approach. The same seven companies were served subpoenas last month regarding their HMOs.

Brown said the insurance companies have 30 days to hand over their financial and other records. The investigation began in September and was prompted by reports that California’s five largest health-insurance providers were denying claims at rates of up to 39.6 percent.

Meanwhile, business owners appear to be taking a cautious approach to the Leno’s bill.

Daniel Conway, spokesman for the California Restaurant Association and its 23,000 members and 80,000 establishments, said his organization’s been “very focused” on what’s going on at the national level, “trying to find a workable solution.”

“Our stand right now is, they say there’s going to be a $46 billion hole the first year [in the state’s program] and a 12 percent tax imposed on employers and employees. … Who’s going to pay for those costs?” Conway said. “That’s a tough nut to crack.”

“I’m optimistic that we can get some solution at the federal level before we have to go to the voters here,” he added. “I think President Obama has put a lot of energy into this.”

But Leno and others dispute Conway’s figures, saying that the assumption is just a “spin answer” and that “no one can tell you for sure, right now, what premium schedule would be imposed.”

The nonpartisan Legislative Analyst’s Office, in its analysis of both Leno’s bill and of Kuehl’s previous two bills, seems to be saying both camps are correct. First, had S.B. 840 gone into effect and the CHS been enacted for 2010-11, the LAO estimated there would indeed have been a gap in funding of $42 billion. At the same time, the true cost of the initiative is “unknown” and could run into the “hundreds to millions” of dollars, depending on the ongoing role of the health-care commission and CHS.

What’s not in doubt is the dismal.

Whether S.B. 810 can cure California’s ills remains to be seen. What is certain, all agree, is that our health-care system is broken. For more than 7 million uninsured residents, the solution can’t come soon enough.

http://www.newsreview.com/sacramento/content?oid=1380298

Uwe Reinhardt on fraud and abuse

How Much Fraud and Abuse Is There in U.S. Health Care?

By Uwe E. Reinhardt
The New York Times
March 5, 2010
One of the more remarkable proposals put on the table at last week’s bipartisan summit on health care reform was an idea from Senator Tom Coburn, an Oklahoma Republican, to deploy undercover agents posing as patients in an effort to ferret out fraud and abuse by doctors and hospitals.
It subsequently became one of the ideas from Republicans that President Obama offered to incorporate in a revised health reform bill. One wonders whether the president was sincere or just being a bit naughty.
After all, the idea to legislate the infiltration of undercover agents into private medical practices and hospitals in America does not exactly square with the loudly voiced opposition of Republicans to government intrusion into American health care. Can one imagine anything more intrusive?
Senator Coburn is a physician and may have reasons to put forth such a controversial idea. As someone outside of the profession, I would not be in a position to second-guess him on that issue.
…
If the president and Congress wish to constrain the growth of the administrative cost of American health care, they should look not only to the private health insurance industry. They might commission a study exploring how government-run health systems in other nations manage to pay hospitals and doctors without imposing on them the huge administrative burden borne by American providers of health care. Perhaps Congress can learn from such a study.
A proper slogan here might be “evidence-based administration” (E.B.A.), meaning that just as the use of clinical procedures should be based on solid empirical evidence that they work and are worth their cost, the ever-new administrative burdens that government imposes on health-care providers should meet the same evidence-based test.
A second problem faced by hospital executives is that they have only partial control over the costs they must book and for which they seek to get paid. The bulk of these costs are driven by the clinical decisions of physicians who are affiliated with hospitals and can use the hospital as a free workshop, so to speak.
http://economix.blogs.nytimes.com/2010/03/05/how-much-fraud-and-abuse-is-there-in-u-s-health-care/

Posted response of Don McCanne, San Juan Capistrano, CA (# 1):
Instances of blatant fraud in health care provide great fodder for the media. The identification and prosecution of criminals in Florida becomes national news.
Those who claim that fraud and abuse are a primary reason for high health care costs use such stories to say that the government is not doing its job in identifying and prosecuting these crooks, when the stories are about the government doing its job in identifying and prosecuting these crooks.
Thieves will always be with us and need to be ferreted out, and the government will continue to do that.
The far greater problem, as Dr. Reinhardt explains, is in physician practice patterns. The great variability in use of resources is not so much a matter of abuse as it is simply a variation in individual and regional concepts of “that’s the way its done.”
Much of the high use is in imaging, or consultations, or referral for high-tech procedures for which the primary physician receives no additional compensation. That is not fraud.
Nor is it defensive medicine. A test or consultation allegedly ordered to prevent a malpractice lawsuit is not ordered out of an intellectual void. It is ordered because the patient has a real risk, even if small, of having a problem that may require intervention.
Most physicians want to practice high quality, efficient medicine. They welcome information such as that generated by the British NICE program – a program designed to identify best practices. The opponents of reform dismiss even these efforts with nonsense accusations of “rationing.”
Not spending money on medical services that are not helpful or even harmful is not rationing. Rather it exemplifies a fundamental concept characteristic of free markets – providing more transparency in order to obtain greater value in our health care purchasing.

The Boston Foundation's attack on municipal workers

The Utility of Trouble

Leveling the Playing Field: Giving Municipal Officials the Tools to Moderate Health Insurance Costs

By Bob Carey
The Boston Foundation
February 2010

The Boston Foundation, Greater Boston’s community foundation, is one of the oldest and largest community foundations in the nation… The Foundation is made up of some 900 separate charitable funds established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a major civic leader, provider of information, convener, and sponsor of special initiatives designed to address the community’s and region’s most pressing challenges.

Executive Summary (excerpts)

The drop in state tax revenues and the subsequent reduction in local aid to cities and towns have forced municipal governments across the Commonwealth to reduce services, impose layoffs, and increase taxes and fees to balance their fiscal 2009 and 2010 budgets. The outlook for fiscal 2011 is hardly encouraging. Compounding this problem is the continued escalation in operating and overhead costs, including the enormous cost of providing health insurance benefits to municipal employees and retirees.

One option for communities to lower their health insurance costs is to join the state’s Group Insurance Commission (GIC), which manages health benefits for state employees, retirees, and their spouses and dependents. The GIC is the largest provider of employer-sponsored health benefits in the Commonwealth, covering over 320,000 individuals.

Over the past ten years, the GIC has moderated the growth in its health insurance premiums by increasing members’ point-of-service cost sharing and offering health plans that utilize tiered provider networks. During this same period, the municipal health plans reviewed in this report remained largely unchanged, with only minor increases in point-of-service cost sharing and no use of tiered provider network plans.

The difference in plan designs – that is, higher point-of-service cost sharing in GIC plans compared to municipal health plans – is the main reason why municipal health insurance premiums are higher than the state’s. This analysis highlights the differences in premiums to demonstrate the would-be savings available to municipalities from altering plan designs.

It is important to qualify that these estimated savings presuppose that cities and towns would not be required to make any associated tradeoffs by way of concessions to unions to secure labor approval for joining the GIC.

The irrefutable point, however, is that there could be significant savings for cities and towns – in a time of severe fiscal challenges – if they were allowed to join the GIC apart from collective bargaining. Furthermore, if municipal managers were provided the same authority that state managers possess to modify plan designs outside the collective bargaining process, it is likely municipalities could attain premium savings comparable to those realized by the GIC.

A prime example of the effect of the differences in management rights occurred earlier this year. A portion of the savings estimates noted above is due to mid-year benefits changes that the GIC made to address a budget deficit in FY 2010 resulting from higher than anticipated health care costs. The benefit changes, approved by the Commission in November 2009 and effective February 2010, increased the amount of cost sharing borne by enrollees and lowered health insurance premiums by an average of 5.5%. These mid-year changes further increased the differences in premiums and point-of-service cost sharing between the health benefits provided municipal employees and those provided state employees.

While the growth in municipal health insurance premiums can be reduced by increasing point-of-service cost sharing, enrollees will incur more out-of-pocket expenses as they utilize the health care system. As this report reveals, the higher cost sharing of the GIC plans compared to municipal health benefits would shift more of the costs to enrollees, although a portion of these expenses would be offset by a reduction in health insurance premiums.

Approval of changes to the GIC’s health benefits requires a majority vote of the Commission. And, while union and retiree representatives serve on the 15-member Commission, they make up a minority of the membership. Therefore, support from union and retiree representatives is not needed to approve the package of health insurance benefits provided to state employees and retirees.

Recommendations

1. Level the playing field between state and local health benefits management by removing the requirement that municipal officials must collectively bargain plan design changes

2. Bring the health benefits provided to municipal employees into line with the health benefits offered state employees and retirees

3. Require all municipal retirees who are eligible for Medicare to enroll in Medicare Part B as a precondition for receiving health benefits from the municipality

4. Adopt a premium contribution strategy that incents members to select more cost-effective health plans

5. As point-of-service cost sharing increases, limit members’ financial exposure by putting in place an out-of-pocket maximum or funding a Health Reimbursement Account (HRA)

The Utility of Trouble (79 pages):
http://www.tbf.org/uploadedFiles/tbforg/Utility_Navigation/Multimedia_Library/Reports/UtilityOfTrouble_2010.pdf

Comment:

By Don McCanne, MD

This report from The Boston Foundation contains two very important fundamental proposals designed to reduce health care costs for municipal governments in Massachusetts. One of them directly relates to health policy, but the other, which is perhaps even more important, relates to the freedom of workers to negotiate for a level of total compensation that meets their most basic needs.

First, the health policy lesson. This report adds another invidious voice to those who would control costs for those paying for health benefit programs, not by reducing health care costs, but by shifting those costs to the very individuals who need health care.

As has already happened with most pension plans, health benefit programs are shifting from defined benefit programs to defined contributions. Although they are passed off as providing choice of “more cost-effective health plans,” that is merely a euphemism for requiring workers to pay the full balance of premiums over that of the basic spartan plans.

The increases in “point-of-service cost sharing” again is merely shifting more costs to worker-patients through higher deductibles, co-payments, and ever increasing coinsurance. Anthem Blue Cross has some plans with coinsurance as high as 70 percent, meaning that the insurance pays only 30 percent of only the allowed charges.

We don’t need to repeat here the impact of making individuals pay more of the premiums and greater cost sharing. We’ve heard enough about the financial hardships and physical suffering that these health financing policies cause.

But what we should repeat here is that the proposal before Congress has the same impact. Individuals will have to pay the full premium differences for plans above the basic plans with a low actuarial value, and plans will continue to compete on premiums by using innovations to shift more costs to patients, especially through increased cost sharing.

On the second point, we’ll depart from our usual narrower topic of health policy, and touch on one of the most important issues of these times – the successful attack on social solidarity that has shifted the na
tion’s wealth up the economic ladder, now leaving middle-income Americans struggling to make ends meet.

With the shift from a manufacturing economy to a service economy, the attack on unions and collective bargaining has been unrelenting. Even government employees’ unions and teachers’ unions have had considerable difficulties maintaining clout.

Look at the recommendations of The Boston Foundation. Take away the health benefit programs that the workers paid for through forgone wage increases. When substituting the cheaper plans, the municipalities should not “make any associated tradeoffs by way of concessions to unions.” Most of the premium reductions will benefit the municipalities with very little going to the workers. Make sure that union and retiree representatives remain a minority of the state’s Group Insurance Commission (GIC) so that their demands can be ignored. This is class warfare, and the rich guys are winning.

The PNHP leadership and others in the policy community have warned that the Massachusetts reform efforts would fall short, and particularly would fail to address the cost issues. This Boston Foundation report is simply one more example of why reform should not have been based on a business model of a market of private plans. It should have been based on the better and less costly public social service model that has a mission to assist everyone in obtaining the health care that they need.

Now President Obama and Congress are making the same mistake by following the same primrose path to the everlasting bonfire. People are going to get burnt.

The Boston Foundation’s attack on municipal workers

The Utility of Trouble

Leveling the Playing Field: Giving Municipal Officials the Tools to Moderate Health Insurance Costs

By Bob Carey
The Boston Foundation
February 2010

The Boston Foundation, Greater Boston’s community foundation, is one of the oldest and largest community foundations in the nation… The Foundation is made up of some 900 separate charitable funds established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a major civic leader, provider of information, convener, and sponsor of special initiatives designed to address the community’s and region’s most pressing challenges.

Executive Summary (excerpts)

The drop in state tax revenues and the subsequent reduction in local aid to cities and towns have forced municipal governments across the Commonwealth to reduce services, impose layoffs, and increase taxes and fees to balance their fiscal 2009 and 2010 budgets. The outlook for fiscal 2011 is hardly encouraging. Compounding this problem is the continued escalation in operating and overhead costs, including the enormous cost of providing health insurance benefits to municipal employees and retirees.

One option for communities to lower their health insurance costs is to join the state’s Group Insurance Commission (GIC), which manages health benefits for state employees, retirees, and their spouses and dependents. The GIC is the largest provider of employer-sponsored health benefits in the Commonwealth, covering over 320,000 individuals.

Over the past ten years, the GIC has moderated the growth in its health insurance premiums by increasing members’ point-of-service cost sharing and offering health plans that utilize tiered provider networks. During this same period, the municipal health plans reviewed in this report remained largely unchanged, with only minor increases in point-of-service cost sharing and no use of tiered provider network plans.

The difference in plan designs – that is, higher point-of-service cost sharing in GIC plans compared to municipal health plans – is the main reason why municipal health insurance premiums are higher than the state’s. This analysis highlights the differences in premiums to demonstrate the would-be savings available to municipalities from altering plan designs.

It is important to qualify that these estimated savings presuppose that cities and towns would not be required to make any associated tradeoffs by way of concessions to unions to secure labor approval for joining the GIC.

The irrefutable point, however, is that there could be significant savings for cities and towns – in a time of severe fiscal challenges – if they were allowed to join the GIC apart from collective bargaining. Furthermore, if municipal managers were provided the same authority that state managers possess to modify plan designs outside the collective bargaining process, it is likely municipalities could attain premium savings comparable to those realized by the GIC.

A prime example of the effect of the differences in management rights occurred earlier this year. A portion of the savings estimates noted above is due to mid-year benefits changes that the GIC made to address a budget deficit in FY 2010 resulting from higher than anticipated health care costs. The benefit changes, approved by the Commission in November 2009 and effective February 2010, increased the amount of cost sharing borne by enrollees and lowered health insurance premiums by an average of 5.5%. These mid-year changes further increased the differences in premiums and point-of-service cost sharing between the health benefits provided municipal employees and those provided state employees.

While the growth in municipal health insurance premiums can be reduced by increasing point-of-service cost sharing, enrollees will incur more out-of-pocket expenses as they utilize the health care system. As this report reveals, the higher cost sharing of the GIC plans compared to municipal health benefits would shift more of the costs to enrollees, although a portion of these expenses would be offset by a reduction in health insurance premiums.

Approval of changes to the GIC’s health benefits requires a majority vote of the Commission. And, while union and retiree representatives serve on the 15-member Commission, they make up a minority of the membership. Therefore, support from union and retiree representatives is not needed to approve the package of health insurance benefits provided to state employees and retirees.

Recommendations

1. Level the playing field between state and local health benefits management by removing the requirement that municipal officials must collectively bargain plan design changes

2. Bring the health benefits provided to municipal employees into line with the health benefits offered state employees and retirees

3. Require all municipal retirees who are eligible for Medicare to enroll in Medicare Part B as a precondition for receiving health benefits from the municipality

4. Adopt a premium contribution strategy that incents members to select more cost-effective health plans

5. As point-of-service cost sharing increases, limit members’ financial exposure by putting in place an out-of-pocket maximum or funding a Health Reimbursement Account (HRA)

The Utility of Trouble (79 pages):
http://www.tbf.org/uploadedFiles/tbforg/Utility_Navigation/Multimedia_Library/Reports/UtilityOfTrouble_2010.pdf

Comment:

By Don McCanne, MD

This report from The Boston Foundation contains two very important fundamental proposals designed to reduce health care costs for municipal governments in Massachusetts. One of them directly relates to health policy, but the other, which is perhaps even more important, relates to the freedom of workers to negotiate for a level of total compensation that meets their most basic needs.

First, the health policy lesson. This report adds another invidious voice to those who would control costs for those paying for health benefit programs, not by reducing health care costs, but by shifting those costs to the very individuals who need health care.

As has already happened with most pension plans, health benefit programs are shifting from defined benefit programs to defined contributions. Although they are passed off as providing choice of “more cost-effective health plans,” that is merely a euphemism for requiring workers to pay the full balance of premiums over that of the basic spartan plans.

The increases in “point-of-service cost sharing” again is merely shifting more costs to worker-patients through higher deductibles, co-payments, and ever increasing coinsurance. Anthem Blue Cross has some plans with coinsurance as high as 70 percent, meaning that the insurance pays only 30 percent of only the allowed charges.

We don’t need to repeat here the impact of making individuals pay more of the premiums and greater cost sharing. We’ve heard enough about the financial hardships and physical suffering that these health financing policies cause.

But what we should repeat here is that the proposal before Congress has the same impact. Individuals will have to pay the full premium differences for plans above the basic plans with a low actuarial value, and plans will continue to compete on premiums by using innovations to shift more costs to patients, especially through increased cost sharing.

On the second point, we’ll depart from our usual narrower topic of health policy, and touch on one of the most important issues of these times – the successful attack on social solidarity that has shifted the nation’s wealth up the economic ladder, now leaving middle-income Americans struggling to make ends meet.

With the shift from a manufacturing economy to a service economy, the attack on unions and collective bargaining has been unrelenting. Even government employees’ unions and teachers’ unions have had considerable difficulties maintaining clout.

Look at the recommendations of The Boston Foundation. Take away the health benefit programs that the workers paid for through forgone wage increases. When substituting the cheaper plans, the municipalities should not “make any associated tradeoffs by way of concessions to unions.” Most of the premium reductions will benefit the municipalities with very little going to the workers. Make sure that union and retiree representatives remain a minority of the state’s Group Insurance Commission (GIC) so that their demands can be ignored. This is class warfare, and the rich guys are winning.

The PNHP leadership and others in the policy community have warned that the Massachusetts reform efforts would fall short, and particularly would fail to address the cost issues. This Boston Foundation report is simply one more example of why reform should not have been based on a business model of a market of private plans. It should have been based on the better and less costly public social service model that has a mission to assist everyone in obtaining the health care that they need.

Now President Obama and Congress are making the same mistake by following the same primrose path to the everlasting bonfire. People are going to get burnt.

Maine AFL-CIO Organizes Single Payer Education Program

From Unions for Single Payer Health Care
March 4, 2010

One state AFL-CIO is actively trying to build the social movement necessary to pass single payer legislation such as HR 676.  The Maine AFL-CIO takes its lead from resolution 34 passed at the September National AFL-CIO convention.

Recently, The Maine state AFL-CIO has developed a number of materials, including a power point presentation, leaflets, cost analysis, and other tools to reach out to local unions and rank and file members to help educate and arm them with the knowledge of the benefits of single payer health care and how it works.

All the materials developed by the Maine state AFL-CIO are available here:

http://unionsforsinglepayer.org/other_resources/singlepayer_docs/batch_1

The Maine AFL-CIO State Convention first passed a resolution calling on the National AFL-CIO to convene a summit to make plans and to commit the resources necessary to build a successful movement for single payer.  That resolution is available here, and state feds, CLCs, and unions are invited to take similar action.

http://unionsforsinglepayerhr676.org/news_releases/2009-12-10

Our thanks to Charlie Urquhart of the Maine Labor Group on Health and to Matt Schlobohm, Public Policy & Political Mobilization Direction of the Maine AFL-CIO for making these materials available.

Distributed by:
All Unions Committee For Single Payer Health Care–HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551
Email: nursenpo@aol.com
http://unionsforsinglepayerHR676.org
03/03/10

Williams's heart surgery choice was based on ignorance

By Andre Picard
The Globe and Mail
Thursday, Feb. 25, 2010

Danny Williams has the unquestionable right to get medical treatment in the United States.

But the ignorance and arrogance Mr. Williams displayed in making the decision to get heart surgery in Miami Beach is staggering.

As the Premier of Newfoundland and Labrador, he is one of the stewards of the medicare system.

The least we can expect from a political leader is some leadership and sound reasoning. What we got instead were inanities like: “This was my heart, my choice and my health.”

Mr. Williams went on to tell The Canadian Press: “I did not sign away my right to get the best possible health care for myself when I entered politics.”

The clear implication of that statement is that the surgery he sought in the United States was not available in Canada, and that health care in this country – and cardiac surgery in particular – is inferior.

That is utter nonsense on both counts.

Further, no one has suggested for an instant that being a politician somehow condemns one to a gulag of second-rate care. That is a straw man, and a flimsy one at that.

What we should expect from our politicians, however, is a degree of transparency and an ability to make evidence-based decisions.

Opting for a life in politics does not prevent you from making choices like going to the United States for care, but it does imply an obligation to explain your actions.

Skulking off to Miami, then petulantly refusing to detail why, just doesn’t cut it. At the very least, Mr. Williams owes his employers (the public) explanations about his health and his absences from work. Like other employees, he also deserves time off to recover.

Of course, there are those who say: “Leave the Premier alone. It’s his money, and his health is none our business.”

That he is wealthy enough to afford to pay for heart surgery – the procedure can cost from $25,000 to $50,000 – is irrelevant. So is the fact that he recovered at his Florida condo.

What is our business is how and why a politician makes a decision that clearly has social policy implications. In this case, the personal is political.

Evidence-based decision-making is fundamental to the delivery of good health care, on a personal as well as a systems level.

If our politicians do not know how to use evidence to make decisions rationally, is it any wonder our medicare system is adrift?

Let’s look at the evidence.

Last spring, during a routine check-up, Mr. Williams’s doctor detected an abnormality, a heart valve that wasn’t closing properly. The condition required only monitoring.

Eight months later, in December, 2009, the Premier was told the problem had become more severe and required surgery soon, though not urgently.

Like all patients, Mr. Williams wanted the best surgery available – meaning prompt treatment and a good outcome, with minimal complications and a relatively easy recovery.

He was offered the standard treatment for his condition, mitral valve repair. The surgery requires that the breastbone be cracked. which suggests longer recovery time.

Mr. Williams, wisely, sought a second opinion. Every surgery patient should.

The Premier was told the mitral valve could also be repaired with minimally invasive surgery – with smaller incisions and no cracking of the chest, suggesting less recovery time.

Up to that point, Mr. Williams did his homework relatively well. But then his decision-making went off the rails.

He contacted Lynn McGrath, a Memorial University alumnus who is a cardiovascular surgeon in New Jersey.

Dr. McGrath recommended a surgeon at Mount Sinai Hospital in Miami who does minimally invasive surgery, Joseph Lamelas.

While these men are excellent health-care practitioners, they know little about Canada’s health system.

Had Mr. Williams asked his questions of the right people, he would have learned what procedures are offered in Canada, and that cardiovascular outcomes in this country are as good as in the U.S., and often better.

The surgery that Mr. Williams wanted and was medically appropriate was not available in St. John’s, but is available in at least seven Canadian cities.

(And let’s dismiss quickly the suggestion that every procedure should be offered in small centres like St. John’s. In surgery, high volumes translate into better quality and safety, so it is wise to bring patients to central locations.)

If he’d sought advice in Canada, Mr. Williams would also have learned that minimally invasive surgery, despite the hype, is not necessarily the best option for his condition.

In the U.S. system, marketing, newness and profit margins too often trump evidence.

Mr. Williams’s sin was not in going to the U.S. for surgery, it was in acting on partial information, uttering untruths about the availability of care, and smearing – however inadvertently – Canada’s health system in the process.

The Premier said he did “some checking,” but the reality is that he depended on the old boys’ network and on prejudices about Canada’s health system instead of readily available evidence.

Sadly, this is often how decisions are made by the politicians who are stewards of our health system, and we all suffer for it.

Health care in this country is good, but it would be better if we acted more often with our heads than with our hearts.

http://www.theglobeandmail.com/life/health/williamss-heart-surgery-choice-was-based-on-ignorance/article1480937/

Williams’s heart surgery choice was based on ignorance

By Andre Picard
The Globe and Mail
Thursday, Feb. 25, 2010

Danny Williams has the unquestionable right to get medical treatment in the United States.

But the ignorance and arrogance Mr. Williams displayed in making the decision to get heart surgery in Miami Beach is staggering.

As the Premier of Newfoundland and Labrador, he is one of the stewards of the medicare system.

The least we can expect from a political leader is some leadership and sound reasoning. What we got instead were inanities like: “This was my heart, my choice and my health.”

Mr. Williams went on to tell The Canadian Press: “I did not sign away my right to get the best possible health care for myself when I entered politics.”

The clear implication of that statement is that the surgery he sought in the United States was not available in Canada, and that health care in this country – and cardiac surgery in particular – is inferior.

That is utter nonsense on both counts.

Further, no one has suggested for an instant that being a politician somehow condemns one to a gulag of second-rate care. That is a straw man, and a flimsy one at that.

What we should expect from our politicians, however, is a degree of transparency and an ability to make evidence-based decisions.

Opting for a life in politics does not prevent you from making choices like going to the United States for care, but it does imply an obligation to explain your actions.

Skulking off to Miami, then petulantly refusing to detail why, just doesn’t cut it. At the very least, Mr. Williams owes his employers (the public) explanations about his health and his absences from work. Like other employees, he also deserves time off to recover.

Of course, there are those who say: “Leave the Premier alone. It’s his money, and his health is none our business.”

That he is wealthy enough to afford to pay for heart surgery – the procedure can cost from $25,000 to $50,000 – is irrelevant. So is the fact that he recovered at his Florida condo.

What is our business is how and why a politician makes a decision that clearly has social policy implications. In this case, the personal is political.

Evidence-based decision-making is fundamental to the delivery of good health care, on a personal as well as a systems level.

If our politicians do not know how to use evidence to make decisions rationally, is it any wonder our medicare system is adrift?

Let’s look at the evidence.

Last spring, during a routine check-up, Mr. Williams’s doctor detected an abnormality, a heart valve that wasn’t closing properly. The condition required only monitoring.

Eight months later, in December, 2009, the Premier was told the problem had become more severe and required surgery soon, though not urgently.

Like all patients, Mr. Williams wanted the best surgery available – meaning prompt treatment and a good outcome, with minimal complications and a relatively easy recovery.

He was offered the standard treatment for his condition, mitral valve repair. The surgery requires that the breastbone be cracked. which suggests longer recovery time.

Mr. Williams, wisely, sought a second opinion. Every surgery patient should.

The Premier was told the mitral valve could also be repaired with minimally invasive surgery – with smaller incisions and no cracking of the chest, suggesting less recovery time.

Up to that point, Mr. Williams did his homework relatively well. But then his decision-making went off the rails.

He contacted Lynn McGrath, a Memorial University alumnus who is a cardiovascular surgeon in New Jersey.

Dr. McGrath recommended a surgeon at Mount Sinai Hospital in Miami who does minimally invasive surgery, Joseph Lamelas.

While these men are excellent health-care practitioners, they know little about Canada’s health system.

Had Mr. Williams asked his questions of the right people, he would have learned what procedures are offered in Canada, and that cardiovascular outcomes in this country are as good as in the U.S., and often better.

The surgery that Mr. Williams wanted and was medically appropriate was not available in St. John’s, but is available in at least seven Canadian cities.

(And let’s dismiss quickly the suggestion that every procedure should be offered in small centres like St. John’s. In surgery, high volumes translate into better quality and safety, so it is wise to bring patients to central locations.)

If he’d sought advice in Canada, Mr. Williams would also have learned that minimally invasive surgery, despite the hype, is not necessarily the best option for his condition.

In the U.S. system, marketing, newness and profit margins too often trump evidence.

Mr. Williams’s sin was not in going to the U.S. for surgery, it was in acting on partial information, uttering untruths about the availability of care, and smearing – however inadvertently – Canada’s health system in the process.

The Premier said he did “some checking,” but the reality is that he depended on the old boys’ network and on prejudices about Canada’s health system instead of readily available evidence.

Sadly, this is often how decisions are made by the politicians who are stewards of our health system, and we all suffer for it.

Health care in this country is good, but it would be better if we acted more often with our heads than with our hearts.

http://www.theglobeandmail.com/life/health/williamss-heart-surgery-choice-was-based-on-ignorance/article1480937/

The Boston Foundation's attack on municipal workers

The Utility of Trouble

Leveling the Playing Field: Giving Municipal Officials the Tools to Moderate Health Insurance Costs

By Bob Carey
The Boston Foundation
February 2010
The Boston Foundation, Greater Boston’s community foundation, is one of the oldest and largest community foundations in the nation… The Foundation is made up of some 900 separate charitable funds established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a major civic leader, provider of information, convener, and sponsor of special initiatives designed to address the community’s and region’s most pressing challenges.
Executive Summary (excerpts)
The drop in state tax revenues and the subsequent reduction in local aid to cities and towns have forced municipal governments across the Commonwealth to reduce services, impose layoffs, and increase taxes and fees to balance their fiscal 2009 and 2010 budgets. The outlook for fiscal 2011 is hardly encouraging. Compounding this problem is the continued escalation in operating and overhead costs, including the enormous cost of providing health insurance benefits to municipal employees and retirees.
One option for communities to lower their health insurance costs is to join the state’s Group Insurance Commission (GIC), which manages health benefits for state employees, retirees, and their spouses and dependents. The GIC is the largest provider of employer-sponsored health benefits in the Commonwealth, covering over 320,000 individuals.
Over the past ten years, the GIC has moderated the growth in its health insurance premiums by increasing members’ point-of-service cost sharing and offering health plans that utilize tiered provider networks. During this same period, the municipal health plans reviewed in this report remained largely unchanged, with only minor increases in point-of-service cost sharing and no use of tiered provider network plans.
The difference in plan designs – that is, higher point-of-service cost sharing in GIC plans compared to municipal health plans – is the main reason why municipal health insurance premiums are higher than the state’s. This analysis highlights the differences in premiums to demonstrate the would-be savings available to municipalities from altering plan designs.
It is important to qualify that these estimated savings presuppose that cities and towns would not be required to make any associated tradeoffs by way of concessions to unions to secure labor approval for joining the GIC.
The irrefutable point, however, is that there could be significant savings for cities and towns – in a time of severe fiscal challenges – if they were allowed to join the GIC apart from collective bargaining. Furthermore, if municipal managers were provided the same authority that state managers possess to modify plan designs outside the collective bargaining process, it is likely municipalities could attain premium savings comparable to those realized by the GIC.
A prime example of the effect of the differences in management rights occurred earlier this year. A portion of the savings estimates noted above is due to mid-year benefits changes that the GIC made to address a budget deficit in FY 2010 resulting from higher than anticipated health care costs. The benefit changes, approved by the Commission in November 2009 and effective February 2010, increased the amount of cost sharing borne by enrollees and lowered health insurance premiums by an average of 5.5%. These mid-year changes further increased the differences in premiums and point-of-service cost sharing between the health benefits provided municipal employees and those provided state employees.
While the growth in municipal health insurance premiums can be reduced by increasing point-of-service cost sharing, enrollees will incur more out-of-pocket expenses as they utilize the health care system. As this report reveals, the higher cost sharing of the GIC plans compared to municipal health benefits would shift more of the costs to enrollees, although a portion of these expenses would be offset by a reduction in health insurance premiums.
Approval of changes to the GIC’s health benefits requires a majority vote of the Commission. And, while union and retiree representatives serve on the 15-member Commission, they make up a minority of the membership. Therefore, support from union and retiree representatives is not needed to approve the package of health insurance benefits provided to state employees and retirees.
Recommendations
1. Level the playing field between state and local health benefits management by removing the requirement that municipal officials must collectively bargain plan design changes
2. Bring the health benefits provided to municipal employees into line with the health benefits offered state employees and retirees
3. Require all municipal retirees who are eligible for Medicare to enroll in Medicare Part B as a precondition for receiving health benefits from the municipality
4. Adopt a premium contribution strategy that incents members to select more cost-effective health plans
5. As point-of-service cost sharing increases, limit members’ financial exposure by putting in place an out-of-pocket maximum or funding a Health Reimbursement Account (HRA)
The Utility of Trouble (79 pages):
http://www.tbf.org/uploadedFiles/tbforg/Utility_Navigation/Multimedia_Library/Reports/UtilityOfTrouble_2010.pdf

This report from The Boston Foundation contains two very important fundamental proposals designed to reduce health care costs for municipal governments in Massachusetts. One of them directly relates to health policy, but the other, which is perhaps even more important, relates to the freedom of workers to negotiate for a level of total compensation that meets their most basic needs.
First, the health policy lesson. This report adds another invidious voice to those who would control costs for those paying for health benefit programs, not by reducing health care costs, but by shifting those costs to the very individuals who need health care.
As has already happened with most pension plans, health benefit programs are shifting from defined benefit programs to defined contributions. Although they are passed off as providing choice of “more cost-effective health plans,” that is merely a euphemism for requiring workers to pay the full balance of premiums over that of the basic spartan plans.
The increases in “point-of-service cost sharing” again is merely shifting more costs to worker-patients through higher deductibles, co-payments, and ever increasing coinsurance. Anthem Blue Cross has some plans with coinsurance as high as 70 percent, meaning that the insurance pays only 30 percent of only the allowed charges.
We don’t need to repeat here the impact of making individuals pay more of the premiums and greater cost sharing. We’ve heard enough about the financial hardships and physical suffering that these health financing policies cause.
But what we should repeat here is that the proposal before Congress has the same impact. Individuals will have to pay the full premium differences for plans above the basic plans with a low actuarial value, and plans will continue to compete on premiums by using innovations to shift more costs to patients, especially through increased cost sharing.
On the second point, we’ll depart from our usual narrower topic of health policy, and touch on one of the most important issues of these times – the successful attack on social solidarity that has shifted the nation’s wealth up the economic ladder, now leaving middle-income Americans struggling to make ends meet.
With the shift from a manufacturing economy to a service economy, the attack on unions and collective bargaining has been unrelenting. Even government employees’ unions and teachers’ unions have had considerable difficulties maintaining clout.
Look at the recommendations of The Boston Foundation. Take away the health benefit programs that the workers paid for through forgone wage increases. When substituting the cheaper plans, the municipalities should not “make any associated tradeoffs by way of concessions to unions.” Most of the premium reductions will benefit the municipalities with very little going to the workers. Make sure that union and retiree representatives remain a minority of the state’s Group Insurance Commission (GIC) so that their demands can be ignored. This is class warfare, and the rich guys are winning.
The PNHP leadership and others in the policy community have warned that the Massachusetts reform efforts would fall short, and particularly would fail to address the cost issues. This Boston Foundation report is simply one more example of why reform should not have been based on a business model of a market of private plans. It should have been based on the better and less costly public social service model that has a mission to assist everyone in obtaining the health care that they need.
Now President Obama and Congress are making the same mistake by following the same primrose path to the everlasting bonfire. People are going to get burnt.

The Boston Foundation’s attack on municipal workers

The Utility of Trouble

Leveling the Playing Field: Giving Municipal Officials the Tools to Moderate Health Insurance Costs

By Bob Carey
The Boston Foundation
February 2010

The Boston Foundation, Greater Boston’s community foundation, is one of the oldest and largest community foundations in the nation… The Foundation is made up of some 900 separate charitable funds established by donors either for the general benefit of the community or for special purposes. The Boston Foundation also serves as a major civic leader, provider of information, convener, and sponsor of special initiatives designed to address the community’s and region’s most pressing challenges.

Executive Summary (excerpts)

The drop in state tax revenues and the subsequent reduction in local aid to cities and towns have forced municipal governments across the Commonwealth to reduce services, impose layoffs, and increase taxes and fees to balance their fiscal 2009 and 2010 budgets. The outlook for fiscal 2011 is hardly encouraging. Compounding this problem is the continued escalation in operating and overhead costs, including the enormous cost of providing health insurance benefits to municipal employees and retirees.

One option for communities to lower their health insurance costs is to join the state’s Group Insurance Commission (GIC), which manages health benefits for state employees, retirees, and their spouses and dependents. The GIC is the largest provider of employer-sponsored health benefits in the Commonwealth, covering over 320,000 individuals.

Over the past ten years, the GIC has moderated the growth in its health insurance premiums by increasing members’ point-of-service cost sharing and offering health plans that utilize tiered provider networks. During this same period, the municipal health plans reviewed in this report remained largely unchanged, with only minor increases in point-of-service cost sharing and no use of tiered provider network plans.

The difference in plan designs – that is, higher point-of-service cost sharing in GIC plans compared to municipal health plans – is the main reason why municipal health insurance premiums are higher than the state’s. This analysis highlights the differences in premiums to demonstrate the would-be savings available to municipalities from altering plan designs.

It is important to qualify that these estimated savings presuppose that cities and towns would not be required to make any associated tradeoffs by way of concessions to unions to secure labor approval for joining the GIC.

The irrefutable point, however, is that there could be significant savings for cities and towns – in a time of severe fiscal challenges – if they were allowed to join the GIC apart from collective bargaining. Furthermore, if municipal managers were provided the same authority that state managers possess to modify plan designs outside the collective bargaining process, it is likely municipalities could attain premium savings comparable to those realized by the GIC.

A prime example of the effect of the differences in management rights occurred earlier this year. A portion of the savings estimates noted above is due to mid-year benefits changes that the GIC made to address a budget deficit in FY 2010 resulting from higher than anticipated health care costs. The benefit changes, approved by the Commission in November 2009 and effective February 2010, increased the amount of cost sharing borne by enrollees and lowered health insurance premiums by an average of 5.5%. These mid-year changes further increased the differences in premiums and point-of-service cost sharing between the health benefits provided municipal employees and those provided state employees.

While the growth in municipal health insurance premiums can be reduced by increasing point-of-service cost sharing, enrollees will incur more out-of-pocket expenses as they utilize the health care system. As this report reveals, the higher cost sharing of the GIC plans compared to municipal health benefits would shift more of the costs to enrollees, although a portion of these expenses would be offset by a reduction in health insurance premiums.

Approval of changes to the GIC’s health benefits requires a majority vote of the Commission. And, while union and retiree representatives serve on the 15-member Commission, they make up a minority of the membership. Therefore, support from union and retiree representatives is not needed to approve the package of health insurance benefits provided to state employees and retirees.

Recommendations

1. Level the playing field between state and local health benefits management by removing the requirement that municipal officials must collectively bargain plan design changes

2. Bring the health benefits provided to municipal employees into line with the health benefits offered state employees and retirees

3. Require all municipal retirees who are eligible for Medicare to enroll in Medicare Part B as a precondition for receiving health benefits from the municipality

4. Adopt a premium contribution strategy that incents members to select more cost-effective health plans

5. As point-of-service cost sharing increases, limit members’ financial exposure by putting in place an out-of-pocket maximum or funding a Health Reimbursement Account (HRA)

The Utility of Trouble (79 pages):
http://www.tbf.org/uploadedFiles/tbforg/Utility_Navigation/Multimedia_Library/Reports/UtilityOfTrouble_2010.pdf

This report from The Boston Foundation contains two very important fundamental proposals designed to reduce health care costs for municipal governments in Massachusetts. One of them directly relates to health policy, but the other, which is perhaps even more important, relates to the freedom of workers to negotiate for a level of total compensation that meets their most basic needs.

First, the health policy lesson. This report adds another invidious voice to those who would control costs for those paying for health benefit programs, not by reducing health care costs, but by shifting those costs to the very individuals who need health care.

As has already happened with most pension plans, health benefit programs are shifting from defined benefit programs to defined contributions. Although they are passed off as providing choice of “more cost-effective health plans,” that is merely a euphemism for requiring workers to pay the full balance of premiums over that of the basic spartan plans.

The increases in “point-of-service cost sharing” again is merely shifting more costs to worker-patients through higher deductibles, co-payments, and ever increasing coinsurance. Anthem Blue Cross has some plans with coinsurance as high as 70 percent, meaning that the insurance pays only 30 percent of only the allowed charges.

We don’t need to repeat here the impact of making individuals pay more of the premiums and greater cost sharing. We’ve heard enough about the financial hardships and physical suffering that these health financing policies cause.

But what we should repeat here is that the proposal before Congress has the same impact. Individuals will have to pay the full premium differences for plans above the basic plans with a low actuarial value, and plans will continue to compete on premiums by using innovations to shift more costs to patients, especially through increased cost sharing.

On the second point, we’ll depart from our usual narrower topic of health policy, and touch on one of the most important issues of these times – the successful attack on social solidarity that has shifted the nation’s wealth up the economic ladder, now leaving middle-income Americans struggling to make ends meet.

With the shift from a manufacturing economy to a service economy, the attack on unions and collective bargaining has been unrelenting. Even government employees’ unions and teachers’ unions have had considerable difficulties maintaining clout.

Look at the recommendations of The Boston Foundation. Take away the health benefit programs that the workers paid for through forgone wage increases. When substituting the cheaper plans, the municipalities should not “make any associated tradeoffs by way of concessions to unions.” Most of the premium reductions will benefit the municipalities with very little going to the workers. Make sure that union and retiree representatives remain a minority of the state’s Group Insurance Commission (GIC) so that their demands can be ignored. This is class warfare, and the rich guys are winning.

The PNHP leadership and others in the policy community have warned that the Massachusetts reform efforts would fall short, and particularly would fail to address the cost issues. This Boston Foundation report is simply one more example of why reform should not have been based on a business model of a market of private plans. It should have been based on the better and less costly public social service model that has a mission to assist everyone in obtaining the health care that they need.

Now President Obama and Congress are making the same mistake by following the same primrose path to the everlasting bonfire. People are going to get burnt.