By Uwe Reinhardt
The New York Times
August 21, 2009

Nothing has been quite as riveting in recent media reports as the question of what President Obama and his staff really think…

How did the brouhaha over the choice of a public health plan come about in the first place, when the real issue before us has been helping the millions of currently uninsured, low-income American families gain access to adequate and reliable health insurance?

One would have hoped that the overarching goal of health reform would have been to put in place a reformed health insurance system that can offer Americans the same reliable, permanent, portable and life-cycle health insurance enjoyed by, say, Germans or Canadians or the people of Japan and Taiwan.

As I have argued in earlier posts to this blog, the choice of a public, government-run standard health insurance plan would certainly go a long way toward reaching that, but it is not a necessary condition for doing so. Germany, the Netherlands and Switzerland all do offer their citizens permanent, portable and stable financial security in health care without the inclusion of a government-run health plan in the mix. That achievement, however, requires fairly heavy regulation of the industry.

If I had to guess what features really make a public plan so attractive to many Americans, they would probably be the stability, permanence, portability and simplicity that such a public plan could offer. It is these features that make traditional, government-run Medicare so popular with the public.

Herein lies the main challenge facing the private health insurance industry. It must convince the public and the legislators who do not trust it that with the help of government — including a wide set of new government regulations — the industry can transform itself into a structure that can offer Americans the same permanent, reliable, easy-to-understand life-cycle financial security that citizens in other nations take for granted and Americans crave.

Thus, instead of the cliche that a public health plan would lead to a “government takeover of American health care” and thus its demise, the industry would be better advised to put before the public a fully worked out purely private-sector model that truly will offer individuals reliable, life-cycle health insurance with relatively stable premiums, and at premiums that are defensible.

http://economix.blogs.nytimes.com/2009/08/21/who-needs-the-public-option/

Comment:

By Don McCanne, MD

The brouhaha over the public option is more than just symbolic. The accusation is correct: the public option was perceived as a means to move us toward single payer, while respecting the right of others to continue with their current coverage if they so preferred. The progressive camp was divided over this strategy since some of us believed that jettisoning single payer in favor of the public option would result in a bargaining position in which the public option would have to be traded away in exchange for some insurance market reforms. Those single payer advocates who agreed to support the public option now feel betrayed.

But the much more important goal is to establish a system that prevents financial hardship for anyone who needs health care – a system of social insurance, whether that is based on single payer or on a system of highly regulated private plans, as some European nations have.

Congress is trying to patch together a model based on private plans, but they have run up against a uniquely American problem – our very high health care costs. The average health care cost far a healthy family of four (the healthy workforce and their young healthy families) is now $16,771. With a typical family income of $60,000, generous subsidies will be mandatory for middle-income individuals and families.

We already have hit the wall on costs. Congress is proposing basic coverage (tier one) that has an actuarial value of 65 to 70 percent, leaving those with significant health care needs exposed to the balance of the costs (which is often higher than the stop loss because of the failure of our private insurance model to protect individuals from unanticipated out-of-network charges). Average-income individuals who need care will not be able to afford the out-of-pocket costs.

Even for those who remain healthy, our costs are now so high that a plan with reasonable benefits that would provide adequate financial protection in the event of need must charge premiums that are so high that a generous public subsidy is essential. The wall again – Congress is unwilling to use aggressive, progressive tax policies to pay for subsidies that are large enough to keep premiums affordable for average-income individuals.

There is an out. Congress will waive the fine for the criminal act of being uninsured merely because the premium is unaffordable. The standard “coverage” for the middle-income sector will then be “hardship waivers” (assuming a transition away from employer-sponsored coverage – the intent of many members of Congress). The only other option besides aggressive tax policies would be to make the basic plan so Spartan that it won’t provide adequate financial protection anyway. (Don’t say high deductible plans, because if the deductible is high enough to make the premium affordable, the plans do not provide adequate protection for middle-income individuals and families.)

The real problem with the public option concept is that it automatically leaves in place the most expensive and least efficient method of financing health care. A single payer or improved Medicare for all would provide us with more than simply an equitable and efficient method of financing care for everyone, it would also create our own public monopsony so that we can demand greater value from our health care system.

NBC News Health Care Survey

Hart/McInturff
August 15-17, 2009
8. Thinking about efforts to reform the health care system, which would concern you more?
41% – Not doing enough to make the health care system better than it is now by lowering costs and covering the uninsured.
54% – Going too far and making the health care system worse than it is now in terms of quality of care and choice of doctor.
5% – Not sure
http://msnbcmedia.msn.com/i/MSNBC/Sections/NEWS/NBC-WSJ_Poll.pdf

A PhD thesis could be written over just what this survey tells us, but we’re certainly not going to do that here.
Give this some thought. Think about what this might mean. Then think about what we should be doing in response. And then do it!

Hart/McInturff
August 15-17, 2009

8. Thinking about efforts to reform the health care system, which would concern you more?

41% – Not doing enough to make the health care system better than it is now by lowering costs and covering the uninsured.

54% – Going too far and making the health care system worse than it is now in terms of quality of care and choice of doctor.

5% – Not sure

http://msnbcmedia.msn.com/i/MSNBC/Sections/NEWS/NBC-WSJ_Poll.pdf

Comment:

By Don McCanne, MD

A PhD thesis could be written over just what this survey tells us, but we’re certainly not going to do that here.

Give this some thought. Think about what this might mean. Then think about what we should be doing in response. And then do it!

Code Blue: Out-of-Network Charges Can Spur Financial Emergency

By Paul Raeburn
Kaiser Health News
August 19, 2009
On the evening of March 1, 2008, Gary Diego was relaxing with his wife, Ellen, when she abruptly lost her hearing, began repeating herself, and seemed to be losing her grip.
Alarmed, Diego rushed her to his insurance company’s in-network hospital, near his home in Truckee, Calif. Unable to handle what was determined to be bleeding in the brain, the hospital quickly transferred her to Renown Regional Medical Center in Reno, Nev., where she spent 17 days in intensive care. While recovering, she caught pneumonia and died.
A few weeks later, a still-grieving Diego learned from his insurer, Health Net, that he owed the Reno hospital $75,462.77. The reason? The hospital was not in his approved network.
(Later Mr. Diego paid a medical billing consultant $7,500 to negotiate a settlement.)
http://www.kaiserhealthnews.org/Stories/2009/August/19/out-of-network.aspx

And…

Tackling the Mystery of How Much It Costs

By Gina Kolata
The New York Times
August 18, 2009
But the health care legislation under discussion does not directly address the out-of-network fee issue. And that is intentional, says Dr. Mark McClellan of the Brookings Institution. Dr. McClellan, a former head of Medicare who works closely with policy makers, says the goal of the House and Senate bills is to encourage people to stay in their networks. He added that the result should be networks that provide better care “so that people don’t have so much need to go outside of them.”
Mark A. Hall, a professor of law and public health at Wake Forest University, for example, advocates restricting out-of-network fees to a fixed amount, perhaps 150 percent of the amount Medicare would pay.
That is how the system works in Germany, says Uwe Reinhardt, a health economist at Princeton University. Professor Reinhardt advocates a national law that caps the maximum doctors can charge when they are out of a patient’s network.
America’s Health Insurance Plans, which represents health insurers, is also trying to draw attention to out-of-network doctors’ fees. Last Tuesday, the group released results of its own survey to show how high such fees can go.
Jonathan Gruber, a health economist at M.I.T., says, however, that it makes more sense to encourage people to stay in networks.
Some may want to pay anyway for an out-of-network doctor, and that is fine, he said. “If you want to go outside your network, God bless you,” he said. “It’s the American way.”
But the only way to fix the system, Dr. Gruber said, is to make the networks better so that people will stay in them and then, most patients, knowing what it will cost them to leave their networks, will decide not to.
http://www.nytimes.com/2009/08/19/health/policy/19fees.html
qotd on AHIP’s report referenced above:
https://pnhp.org/news/2009/august/ahip_explains_why_pr.php

What are private insurers selling us? Their primary product is a network of health care providers that have contracted to accept the insurers’ rates. The benefit of that is that it has helped to slow the rate of increase in health insurance premiums. One major problem with that is individuals frequently obtain care from out-of-network providers – usually not by choice, but by medical circumstances not really under the control of the patient. Under most insurance plans, the individual then becomes responsible for payment of most or all of the out-of-network charges.
With higher premiums, larger deductibles, greater coinsurance, more benefit exclusions, patients are already facing financial hardship without the addition of the out-of-network charges. These unanticipated charges are contributing to our growing epidemic of underinsurance. What to do?
Mark McClellan (think of Medicare privatization) and Jonathan Gruber (think of Massachusetts’ flawed policy of getting more people covered and then pretending that we can figure out later on how to make it work) both believe the answer is to penalize individuals who obtain out-of-network care in an effort to establish incentives for insurers to create perfect networks so that out-of-network care will never have to happen. Of course, “it’s the American way” to choose care outside of your network, and “God bless you” when you can’t pay your bills.
It’s also the American way for Mr. Diego to receive a $75,000 out-of-network bill for his wife’s life-threatening and life-ending care. Haven’t we had enough of our uniquely American system?
There is another way of protecting patients from out-of-network charges. The government can require that out-of-network fees be close to insurer-authorized payments within networks. Yes, that would be the imposition of government fee controls, but fees that are designed to match fees already imposed by the private insurer bureaucracies. That would help, but it does bring up an important question. If the government is going to impose fee controls anyway, then why should we continue to pay the costs of the outrageous administrative waste of the private insurers?
Some might say that they do provide us with the function of pooling risk. But one of the goals of reform is to pool risk across insurers, relieving them of the burden of bearing risk. If we achieve risk equalization then it would be much more efficient and equitable to establish a single universal risk pool administered by the government. Again, the private insurers would be superfluous.
How much risk are the insurers exposed to now under our current system? Half of employer-sponsored benefits are already self-insured. The employer pays the benefits with absolutely no risk exposure to the insurers. So what do the insurers provide the employer? Claims processing for one. But the other service should really give us pause. The private insurers rent their network provider lists to the self-insured employers. How many physicians do you think might be offended if they knew that rent was being paid for use of contracts they signed with the insurers that require the physicians to provide a large discount, and that rent is not going to the physicians but is being kept by the private insurers!?
Tell Congress and the President that we’ve had it with private insurers! Urge them to support the single-payer amendment to the House bill by Rep. Anthony Weiner which Speaker Pelosi has promised will receive an up or down vote on the House floor this year.
Use the following link to access resources on the Weiner amendment:
https://pnhp.org/amendment/

By Paul Raeburn
Kaiser Health News
August 19, 2009

On the evening of March 1, 2008, Gary Diego was relaxing with his wife, Ellen, when she abruptly lost her hearing, began repeating herself, and seemed to be losing her grip.

Alarmed, Diego rushed her to his insurance company’s in-network hospital, near his home in Truckee, Calif. Unable to handle what was determined to be bleeding in the brain, the hospital quickly transferred her to Renown Regional Medical Center in Reno, Nev., where she spent 17 days in intensive care. While recovering, she caught pneumonia and died.

A few weeks later, a still-grieving Diego learned from his insurer, Health Net, that he owed the Reno hospital $75,462.77. The reason? The hospital was not in his approved network.

(Later Mr. Diego paid a medical billing consultant $7,500 to negotiate a settlement.)

http://www.kaiserhealthnews.org/Stories/2009/August/19/out-of-network.aspx

And…

Tackling the Mystery of How Much It Costs

By Gina Kolata
The New York Times
August 18, 2009

But the health care legislation under discussion does not directly address the out-of-network fee issue. And that is intentional, says Dr. Mark McClellan of the Brookings Institution. Dr. McClellan, a former head of Medicare who works closely with policy makers, says the goal of the House and Senate bills is to encourage people to stay in their networks. He added that the result should be networks that provide better care “so that people don’t have so much need to go outside of them.”

Mark A. Hall, a professor of law and public health at Wake Forest University, for example, advocates restricting out-of-network fees to a fixed amount, perhaps 150 percent of the amount Medicare would pay.

That is how the system works in Germany, says Uwe Reinhardt, a health economist at Princeton University. Professor Reinhardt advocates a national law that caps the maximum doctors can charge when they are out of a patient’s network.

America’s Health Insurance Plans, which represents health insurers, is also trying to draw attention to out-of-network doctors’ fees. Last Tuesday, the group released results of its own survey to show how high such fees can go.

Jonathan Gruber, a health economist at M.I.T., says, however, that it makes more sense to encourage people to stay in networks.

Some may want to pay anyway for an out-of-network doctor, and that is fine, he said. “If you want to go outside your network, God bless you,” he said. “It’s the American way.”

But the only way to fix the system, Dr. Gruber said, is to make the networks better so that people will stay in them and then, most patients, knowing what it will cost them to leave their networks, will decide not to.

http://www.nytimes.com/2009/08/19/health/policy/19fees.html

qotd on AHIP’s report referenced above:
https://pnhp.org/news/2009/august/ahip_explains_why_pr.php

Comment:

By Don McCanne, MD

What are private insurers selling us? Their primary product is a network of health care providers that have contracted to accept the insurers’ rates. The benefit of that is that it has helped to slow the rate of increase in health insurance premiums. One major problem with that is individuals frequently obtain care from out-of-network providers – usually not by choice, but by medical circumstances not really under the control of the patient. Under most insurance plans, the individual then becomes responsible for payment of most or all of the out-of-network charges.

With higher premiums, larger deductibles, greater coinsurance, more benefit exclusions, patients are already facing financial hardship without the addition of the out-of-network charges. These unanticipated charges are contributing to our growing epidemic of underinsurance. What to do?

Mark McClellan (think of Medicare privatization) and Jonathan Gruber (think of Massachusetts’ flawed policy of getting more people covered and then pretending that we can figure out later on how to make it work) both believe the answer is to penalize individuals who obtain out-of-network care in an effort to establish incentives for insurers to create perfect networks so that out-of-network care will never have to happen. Of course, “it’s the American way” to choose care outside of your network, and “God bless you” when you can’t pay your bills.

It’s also the American way for Mr. Diego to receive a $75,000 out-of-network bill for his wife’s life-threatening and life-ending care. Haven’t we had enough of our uniquely American system?

There is another way of protecting patients from out-of-network charges. The government can require that out-of-network fees be close to insurer-authorized payments within networks. Yes, that would be the imposition of government fee controls, but fees that are designed to match fees already imposed by the private insurer bureaucracies. That would help, but it does bring up an important question. If the government is going to impose fee controls anyway, then why should we continue to pay the costs of the outrageous administrative waste of the private insurers?

Some might say that they do provide us with the function of pooling risk. But one of the goals of reform is to pool risk across insurers, relieving them of the burden of bearing risk. If we achieve risk equalization then it would be much more efficient and equitable to establish a single universal risk pool administered by the government. Again, the private insurers would be superfluous.

How much risk are the insurers exposed to now under our current system? Half of employer-sponsored benefits are already self-insured. The employer pays the benefits with absolutely no risk exposure to the insurers. So what do the insurers provide the employer? Claims processing for one. But the other service should really give us pause. The private insurers rent their network provider lists to the self-insured employers. How many physicians do you think might be offended if they knew that rent was being paid for use of contracts they signed with the insurers that require the physicians to provide a large discount, and that rent is not going to the physicians but is being kept by the private insurers!?

Tell Congress and the President that we’ve had it with private insurers! Urge them to support the single-payer amendment to the House bill by Rep. Anthony Weiner which Speaker Pelosi has promised will receive an up or down vote on the House floor this year.

Use the following link to access resources on the Weiner amendment:
https://pnhp.org/amendment/