PNHP

The time is now: Reform health care

The time is now: Reform health care

Editorial
Des Moines Register
November 30, 2008

“There is no way to solve America’s economic problems without solving health care,” said U.S. Sen. Max Baucus, chairman of the Senate Finance Committee. The $2.3 trillion spent annually on health care “sucks up 16 percent of our economy and is still growing.”

Baucus is right, and the 98-page white paper on health care he recently unveiled is a welcome development to push reform. Our view: What’s needed is a government-administered health-insurance program – similar to Medicare, which covers seniors and disabled people – available to all Americans.

A single system could reduce administrative expenses associated with facilitating thousands of different private health-insurance plans in this country. It could increase leverage for negotiating lower prices. It could facilitate the expansion of electronic medical records, which would streamline paperwork and help prevent costly medical errors. It would boost the country’s economy in the long run.

Grappling with an economic crisis, Washington has focused on bailing out industries, extending unemployment benefits and tweaking interest rates. How can Congress – and taxpayers – also afford to tackle health care?

The country can’t afford not to. Anyone who doesn’t believe that should:

Ask struggling businesses

Start with the automakers. The Big Three are asking Congress for billions of dollars to help pay future health-care costs for retirees. It’s difficult for automakers – which have made generous health-care promises to retirees – to compete with foreign competitors operating in countries with taxpayer-supported health insurance for their citizens.

The cost of health care burdens all American businesses – big and small.

Employer-sponsored health insurance began as a job perk after a labor shortage following World War II. Now it’s an expensive obligation for employers who are expected – and encouraged through tax benefits – to offer health insurance to workers.

But such an obligation creates an unfair playing field. Companies that shoulder the cost of providing health insurance have less money to hire workers, develop products and expand – which is exactly what this country needs in a troubled economy. Other companies skate by without this contribution to the overall well-being of their employees and society.

Ask the unemployed

In response to rising unemployment, Congress recently increased the length of time people can collect unemployment benefits – which generally amount to a maximum of a few hundred dollars a week. But for many people, the loss of a job is worse than losing income. It’s losing health care.

Granted, federal law allows for people to buy the health-care benefits offered by their employer. However, since the unemployed must pay the entire cost of insurance, this option is frequently unaffordable. The average employer picks up 84 percent of the premium for individual coverage and 73 percent of the premium for family coverage. Lose your job, and covering your family could jump from $300 a month to $1,200 a month – at a time when your income has plummeted.

Ask average workers

For many Americans, every paycheck is a reminder of how expensive it is to buy health insurance. November offered a special reminder, because it’s health-benefit re-enrollment time for millions of workers. What they usually get: higher costs and decreased coverage.

Tying jobs to employment also means workers are afraid to quit their jobs to start businesses for fear of losing health insurance – which discourages innovation and entrepreneurship. A national health-care system would allow Americans to secure insurance without help from an employer.

Covering everyone in a national system will require higher taxes. Private-sector workers already pay not only for their own health insurance, but also for covering millions of others. Getting help from taxpayers to pay for health care is hardly a foreign concept in America. Anyone using Medicare or Medicaid or working in the public sector, from teachers to lawmakers, already gets help.

Counting the private and public sectors, this country already spends more than any country in the world on health care. We should spend it more wisely and fairly.

Baucus’ plan is a good sign that Congress – as well as President-elect Barack Obama – is serious about reform. The goal should be to create a system all Americans can buy into while controlling costs, making use of electronic medical records and improving health outcomes.

One need only look to history to see that this is the time for such reform. In 1964, the Democrats won control, and the election of Lyndon Johnson was seen as an endorsement of a national health-insurance system.

Congress and Johnson created Medicare. In signing the bill into law, Johnson quoted his predecessor, President Harry Truman: “Millions do not now have protection or security against the economic effects of sickness. The time has arrived for action to help them attain that opportunity and that protection.”

Seniors and the disabled got help. Forty-four years later, after election of another presidential candidate who vowed to address health care, it’s time for the rest of America to get help, too.

http://www.desmoinesregister.com/article/20081130/OPINION03/811300317/0/OPINION01

Lessons from the Netherlands

An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System

By Pauline Vaillancourt Rosenau, University of Texas, Houston, and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands
Journal of Health Politics, Policy and Law
December 6, 2008
The 2006 Enthoven-inspired Dutch health insurance reform, based on regulated competition with a mandate for individuals to purchase insurance, will interest U.S. policy makers who seek universal coverage. This ongoing experiment includes guaranteed issue, price competition for a standardized basic benefits package, community rating, sliding-scale income-based subsidies for patients, and risk equalization for insurers. Our assessment of the first two years is based on Dutch Central Bank statistics, national opinion polls, consumer surveys, and qualitative interviews with policy makers. The first lesson for the United States is that the new Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. Finally, policy makers should not underestimate the opposition from health care providers who define their profession as more than simply a job. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?
http://jhppl.dukejournals.org/cgi/content/abstract/33/6/1031

Why is this article so important? Simply because there is a rapidly building momentum for similar health care reform in the United States built on a model of competing private insurance plans (possibly with a public plan offered as an additional option). The recent Dutch reform has important lessons for us.
Although the Dutch health care system was in far better shape than ours, their politicians decided that they could improve their system even more, while making it more affordable, by replacing their dual public and private insurance programs with a single market of competing private plans.
They put into place the policies (listed in the abstract above) that we are currently discussing for our reform, which theoretically would regulate the market to ensure efficiency and prevent the private insurers from gaming the system. The Netherlands has provided us with a very instructive, real-life experiment on whether competing private plans would serve us well as a model for health care financing reform in the United States.
The Dutch model was not initiated with a clean slate on policy principles. We now have decades of research and experience which should provide us with a basis for predicting, to varying degrees of certainly, the anticipated results of these policy applications.
Essentially everyone agrees that market competition fails to provide greater value and control costs when applied to obtaining care within the health care delivery system. Many still believe, however, that competition between private health plans will achieve that goal. Consumers can shop based on differences in the private plans, while the insurers can contract with the providers, demanding the value and cost containment that we seek. Or so goes the theory.
When the Dutch embarked on this reform, those understanding health policy raised many red flags. Here we’ll discuss only the basic premise that private plans are more effective in controlling costs than was the public/private dual system. After all, cost containment was given by the Dutch government as the primary reason for health financing reform.
What did those of us who were concerned about their model predict? We predicted that the private plans would not be able to control costs, that there would be consolidation of the private plans, and that health care would become even less affordable for the Dutch citizens.
After almost three years of this experiment, what has happened? Health care costs have continued to grow well in excess of the rate of inflation. Health insurers attempted to keep their premiums affordable in order to gain market share, but because of insurer losses, premium increases have been greater than would have been anticipated based on the market competition theory. In spite of these premium increases, insurer losses have been increasing. Insurers with less penetration in the marketplace are now facing the necessity of consolidation.
In another article in this same journal, Kieke Okma states, “… the trend of market concentration in Dutch health insurance and health care will likely continue. This might result in both higher prices and more-restricted access to health care services, both of which will not be too popular with Dutch patients and insured.”
Although there are many policy lessons for us in the Dutch experiment, there is one predominant message that the U.S. policy community must understand. Everyone agrees that costs absolutely must be contained, and we need to do that in a manner that repairs our fractured health care delivery system. The primary reason for the Dutch reform was this need for cost containment. But what is their position now?
According to Rosenau and Lako, “In the face of initial failure to control costs, the reaction of the Dutch government has been to reiterate its faith in the free market for health insurance and to argue that cost containment was not an important rationale for the Health Insurance Act in any case (confidential personal interview, April 13, 2007).”
With the insistence that the mandates of political feasibility require that the ideology of private plan competition displace sound health policies, the path that our national policy makers are currently negotiating places at grave risk both our finances and our health.

Lessons from the Netherlands

An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System

By Pauline Vaillancourt Rosenau, University of Texas, Houston, and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands
Journal of Health Politics, Policy and Law
December 6, 2008

The 2006 Enthoven-inspired Dutch health insurance reform, based on regulated competition with a mandate for individuals to purchase insurance, will interest U.S. policy makers who seek universal coverage. This ongoing experiment includes guaranteed issue, price competition for a standardized basic benefits package, community rating, sliding-scale income-based subsidies for patients, and risk equalization for insurers. Our assessment of the first two years is based on Dutch Central Bank statistics, national opinion polls, consumer surveys, and qualitative interviews with policy makers. The first lesson for the United States is that the new Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. Finally, policy makers should not underestimate the opposition from health care providers who define their profession as more than simply a job. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?

http://jhppl.dukejournals.org/cgi/content/abstract/33/6/1031

Comment:

By Don McCanne, MD

Why is this article so important? Simply because there is a rapidly building momentum for similar health care reform in the United States built on a model of competing private insurance plans (possibly with a public plan offered as an additional option). The recent Dutch reform has important lessons for us.

Although the Dutch health care system was in far better shape than ours, their politicians decided that they could improve their system even more, while making it more affordable, by replacing their dual public and private insurance programs with a single market of competing private plans.

They put into place the policies (listed in the abstract above) that we are currently discussing for our reform, which theoretically would regulate the market to ensure efficiency and prevent the private insurers from gaming the system. The Netherlands has provided us with a very instructive, real-life experiment on whether competing private plans would serve us well as a model for health care financing reform in the United States.

The Dutch model was not initiated with a clean slate on policy principles. We now have decades of research and experience which should provide us with a basis for predicting, to varying degrees of certainly, the anticipated results of these policy applications.

Essentially everyone agrees that market competition fails to provide greater value and control costs when applied to obtaining care within the health care delivery system. Many still believe, however, that competition between private health plans will achieve that goal. Consumers can shop based on differences in the private plans, while the insurers can contract with the providers, demanding the value and cost containment that we seek. Or so goes the theory.

When the Dutch embarked on this reform, those understanding health policy raised many red flags. Here we’ll discuss only the basic premise that private plans are more effective in controlling costs than was the public/private dual system. After all, cost containment was given by the Dutch government as the primary reason for health financing reform.

What did those of us who were concerned about their model predict? We predicted that the private plans would not be able to control costs, that there would be consolidation of the private plans, and that health care would become even less affordable for the Dutch citizens.

After almost three years of this experiment, what has happened? Health care costs have continued to grow well in excess of the rate of inflation. Health insurers attempted to keep their premiums affordable in order to gain market share, but because of insurer losses, premium increases have been greater than would have been anticipated based on the market competition theory. In spite of these premium increases, insurer losses have been increasing. Insurers with less penetration in the marketplace are now facing the necessity of consolidation.

In another article in this same journal, Kieke Okma states, “… the trend of market concentration in Dutch health insurance and health care will likely continue. This might result in both higher prices and more-restricted access to health care services, both of which will not be too popular with Dutch patients and insured.”

Although there are many policy lessons for us in the Dutch experiment, there is one predominant message that the U.S. policy community must understand. Everyone agrees that costs absolutely must be contained, and we need to do that in a manner that repairs our fractured health care delivery system. The primary reason for the Dutch reform was this need for cost containment. But what is their position now?

According to Rosenau and Lako, “In the face of initial failure to control costs, the reaction of the Dutch government has been to reiterate its faith in the free market for health insurance and to argue that cost containment was not an important rationale for the Health Insurance Act in any case (confidential personal interview, April 13, 2007).”

With the insistence that the mandates of political feasibility require that the ideology of private plan competition displace sound health policies, the path that our national policy makers are currently negotiating places at grave risk both our finances and our health.

AHIP: tax credits for moderate-income individuals and working families

AHIP (America’s Health Insurance Plans)
November 19, 2008
From the Summary of AHIP’s Proposal to Guarantee Coverage for Pre-existing Conditions and Promote Affordability in the Individual Insurance Market:
* Promote affordability by providing refundable, advanceable tax credits for moderate-income individuals and working families
http://www.ahip.org/content/pressrelease.aspx?docid=25068

And…

Health Care Reform: An Economic Perspective

Testimony of Uwe Reinhardt, Ph.D.
U.S. Senate Finance Committee
November 19, 2008
Appendix A
A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care. One should always treat these two facets separately when thinking about health care reform, because any financing system for health care could be coupled with any number of alternate disbursement systems. (Journal of American Health Policy, May/June 1993)
http://finance.senate.gov/hearings/testimony/2008test/111908urtest.pdf

This quote from AHIP was buried in another Quote of the Day last week, but it is being repeated here because of its importance in the health reform dialogue.
AHIP has now explicitly acknowledged what single payer supporters have been saying for some time. Private health plans are no longer affordable for “moderate-income individuals and working families.” To maintain the viability of the private insurance market, AHIP is recommending tax subsidies to help purchase the plans.
Assuming that we are serious about including everyone in our health care system, why should we go to such extremes to assign a specific actuarial value for the insurance for each person in the United States, and then collect an individual premium that reflects that actuarial value (whether that premium is collected from the individual or from the employer on behalf of the individual), especially when that premium must now be modified by tax policies tailored to specific individuals?
Uwe Reinhardt states in an appendix to his testimony before the Senate Finance Committee, “A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care.”
In another quote this week, Uwe Reinhardt also stated, “The question is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.”
Although we support an administratively efficient public single payer to disburse the funds, others point out that it can also be done by private health plans functioning as a social insurance model (though at higher costs with some sacrifice in equity, which will not be discussed here). What is most important is that the financing of the universal risk pool be a separate process based on ability to pay rather than based on the actuarial value of the benefits.
If those now planning our health care future behind closed doors were to grasp this concept, it would certainly simplify their process. As Dr. Reinhardt has suggested, the contribution wouldn’t need to be through a tax. It could be through an income-adjusted premium paid in a different section of the tax return.
Okay. Maybe that’s just playing with labels. The point is that a universal risk pool, funded equitably based on ability to pay, would achieve what we all profess to be our goal: affordable health care for each individual. Once we get that right we can move on to defining the most efficient method of disbursing funds.

AHIP: tax credits for moderate-income individuals and working families

AHIP (America’s Health Insurance Plans)
November 19, 2008

From the Summary of AHIP’s Proposal to Guarantee Coverage for Pre-existing Conditions and Promote Affordability in the Individual Insurance Market:

* Promote affordability by providing refundable, advanceable tax credits for moderate-income individuals and working families

http://www.ahip.org/content/pressrelease.aspx?docid=25068

And…

Health Care Reform: An Economic Perspective

Testimony of Uwe Reinhardt, Ph.D.
U.S. Senate Finance Committee
November 19, 2008

Appendix A

A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care. One should always treat these two facets separately when thinking about health care reform, because any financing system for health care could be coupled with any number of alternate disbursement systems. (Journal of American Health Policy, May/June 1993)

http://finance.senate.gov/hearings/testimony/2008test/111908urtest.pdf

Comment:

By Don McCanne, MD

This quote from AHIP was buried in another Quote of the Day last week, but it is being repeated here because of its importance in the health reform dialogue.

AHIP has now explicitly acknowledged what single payer supporters have been saying for some time. Private health plans are no longer affordable for “moderate-income individuals and working families.” To maintain the viability of the private insurance market, AHIP is recommending tax subsidies to help purchase the plans.

Assuming that we are serious about including everyone in our health care system, why should we go to such extremes to assign a specific actuarial value for the insurance for each person in the United States, and then collect an individual premium that reflects that actuarial value (whether that premium is collected from the individual or from the employer on behalf of the individual), especially when that premium must now be modified by tax policies tailored to specific individuals?

Uwe Reinhardt states in an appendix to his testimony before the Senate Finance Committee, “A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care.”

In another quote this week, Uwe Reinhardt also stated, “The question is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.”

Although we support an administratively efficient public single payer to disburse the funds, others point out that it can also be done by private health plans functioning as a social insurance model (though at higher costs with some sacrifice in equity, which will not be discussed here). What is most important is that the financing of the universal risk pool be a separate process based on ability to pay rather than based on the actuarial value of the benefits.

If those now planning our health care future behind closed doors were to grasp this concept, it would certainly simplify their process. As Dr. Reinhardt has suggested, the contribution wouldn’t need to be through a tax. It could be through an income-adjusted premium paid in a different section of the tax return.

Okay. Maybe that’s just playing with labels. The point is that a universal risk pool, funded equitably based on ability to pay, would achieve what we all profess to be our goal: affordable health care for each individual. Once we get that right we can move on to defining the most efficient method of disbursing funds.

Disgrace

45 million left out

Editorial
Charleston Gazette
November 18, 2008

America’s for-profit medical system is the world’s most expensive. For people with good insurance, it provides high-quality care. But 45 million “working poor” Americans – and many among the 1.2 million who lost their jobs so far this year – have no coverage. They must seek charity care or do without. That’s shameful.

America’s for-profit medical system is the world’s most expensive. For people with good insurance, it provides high-quality care. But 45 million “working poor” Americans – and many among the 1.2 million who lost their jobs so far this year – have no coverage. They must seek charity care or do without. That’s shameful.

Every other advanced democracy has universal health insurance for all citizens, suppressing costs and removing a heavy burden from employers. It’s disgraceful that America cannot do as well as other countries. Incoming President Barack Obama must push with deliberate speed to create all-encompassing U.S. coverage.

Meanwhile, it’s disturbing that many people overseas enjoy better health than Americans do, even though their countries have lower medical expense. In an editorial titled “Tied with Thailand,” the St. Louis Post-Dispatch said:

“Roughly seven of every 1,000 babies born in the United States die before their first birthday. That puts America on a par with the rates in Serbia and Lithuania. In a ranking of countries’ infant mortality rates, with number one being the best, the United States is tied with Thailand in 29th place. We rank slightly lower than Poland, Hungary, Croatia and South Korea. Our rate is more than twice as bad as the rates in Japan, Sweden, Cyprus and Italy, and three times worse than Iceland’s.”

The U.S. Centers for Disease Control and Prevention say America is substandard in various other health measures as well. For example, Americans have a “healthy life expectancy” – the number of years one lives before ailments set in – of 69 years. “That’s about the same as residents of Slovenia and Portugal, two fewer years than the British, three fewer years than the French and six fewer years than the Japanese,” the Post-Dispatch noted, adding:

“Yet we spend about twice as much on care as the British, French or Japanese. At least $1,000 of our health care spending per person, on average, pays for paperwork: administrative expenses. Unlike Americans, every citizen in Britain, France, Japan and every other developed country has government-paid health care.”

Why does America’s system cost twice as much, yet result in poorer health? This situation is outrageous. The cheapest, best, national insurance format is a Canada-style “single-payer” operation run by the government. We hope that President Obama and the new Democrat-dominated Congress move America swiftly toward that goal.

Building a New Wall: The Fundamental Right to Healthcare

By Rep. Jesse Jackson Jr.
The Huffington Post
Posted November 26, 2008

Today’s economic crisis, and the federal government’s response, is like putting a finger in the dike to avert a major catastrophe — possibly even a depression.

But as quickly as we plug one leak, another springs forth.

Congress is seeking to avoid deflation by pumping up public confidence and economic demand to encourage consumers who have lost faith and are operating on a psychology of fear. Most immediately and importantly, the credit crunch and consumer withdrawal is affecting the automotive industry. Millions of jobs and thousand of related suppliers are at stake if the auto industry fails, or if Congress fails to act. If this iconic sector collapses it’s likely the American people will feel even greater economic pain over a more protracted period of time than is currently anticipated.

The truth is $25 billion may not be enough to save the auto industry. Worse, other troubled economic institutions may soon surface needing help. At some point Congress is going to run out of enough fingers, toes and elbows to plug the holes in our economic dike.

President Barack Obama will soon have to make a judgment to reform the nation’s “wall” if he is, as he so often says, to build a more perfect union. The wall I refer to is the U. S. Constitution.

Candidate Obama said he can’t bring the change we need on his own. He needs the American people to stay actively involved. At noon on January 20, he will say the following, “I do solemnly swear (or affirm) that I will faithfully execute the office of President of the United States, and will to the best of my ability, preserve, protect, and defend the Constitution of the United States.” If Barack Obama is going to be a truly transformative President I suggest he also can’t bring the change we need, and he wants, with the Constitution as it is.

The Constitution is the wall that surrounds everything within it. The current wall consists of material from two central sources: a supreme law and the free enterprise system. The Constitution gives direction and authority to Congress, the president, federal agencies and to the states (under the Tenth Amendment). It is this sacred document that also grants the free market, our laissez-faire capitalist system, the legal authority to operate.

The First Amendment illustrates the interaction between these two wall-building materials — the public and the private sides. That familiar amendment states that Congress shall make no law prohibiting or abridging the freedom of speech, or of the press. That’s it! The Constitution doesn’t say USA Today, New York Times, Chicago Sun-Times, Chicago Tribune, Chicago Defender, AM, FM, Satellite Radio, Newsweek, Time, Channels 2, 5, 7, or 9, PBS or CNN. Nor does it state cell phones, i-phones, the internet, and on-and-on. So, while it’s impossible to truly determine the economic impact of the First Amendment, the Constitution clearly has a major impact to our nation’s economic vitality.

Because our current economic crisis is forcing us to think outside the box, one topic worthy of renewed discussion is health care. What if the Constitution said: “All citizens shall enjoy the right to health care of equal high quality and the Congress shall have the power to implement this article by appropriate legislation?”

Beyond the obvious benefits of greater and better health care itself, imagine the economic consequences: thousands of doctors and nurses being trained; new medical colleges established and older ones expanded; increased medical research; a massive preventive health care industry springing up; new hospitals in needy urban and rural areas with the private sector, federal, state, county and local governments all working cooperatively under the authority granted by the Constitution and Congress.

The absence of this human right as a health care constitutional amendment has major economic consequences as well. Preventive medicine is almost entirely missing from our current health care system, which costs taxpayers billions.

Of course, even without an amendment, Congress can pass legislation granting universal and comprehensive health care to all Americans. That’s possible and candidate Barack Obama promised to do so in his first term in office. However, while high quality health care for all Americans can be established without a constitutional amendment, it can’t be sustained without such an amendment. Future presidents and Congresses are under no legal obligation to continue past legislative programs. For the new wall of health care to be built and sustained for as long as the nation exists it must have a constitutional foundation!

How can we afford such a system? Without a constitutional right to health care we already spend nearly twice as much as any other developed nation in the world — about $2.5 trillion or 16% of our GDP — yet nearly fifty million Americans are without health insurance and often receive their care in the most expensive manner possible, in the local hospital emergency room.

With a health care constitutional amendment, instead of plugging a hole in the dike, we would be building a wall with a strong and solid foundation. Instead of spending money on more band-aids, a revised Constitution would give direction to a unique American purpose and, over time, solve an historic problem. And with American innovation we could put millions of Americans to work expanding a more balanced economic system on the solid foundation of health care for all. Health care would be a human right protected by the American people in our Constitution.

Congressman Jackson is a seven term Member of Congress serving on the Labor Health and Human Services Appropriations subcommittee. He is the co-author with Frank Watkins of A More Perfect Union, Advancing New American Rights.

Yes: Government-financed, privately delivered care would work

By AMY F. ISAACS
Great Falls Tribune
Nov. 25, 2008

WASHINGTON — It’s no longer news that at least 47 million Americans lack health insurance, and an additional 50 million are “under-insured” — meaning whatever ails you is excluded. But we seldom hear that private health insurance wastes $350 billion every year, enough to pay for high-quality comprehensive health care for everyone.

Nearly one-third of our health-care costs are eaten up by overhead: marketing, billing, profits, denying coverage, and hassling patients and doctors.

While 30 cents of every dollar of health costs pays for overhead, Medicare costs 3 cents on the dollar. Today, rising health-care costs cause one-half of all personal bankruptcies, three-fourths of whom have insurance.

Politicians promise us “universal health care,” a phrase now devoid of meaning.

The government would help us buy private insurance, especially through employers. As the economy hemorrhages more than 200,000 jobs every month, insurance costs soar, and with employers large and small — including state and local governments — unable to afford to insure their employees, an employer-based system has become a non-starter.

In fact, relieving the auto and steel industries of the burden of providing health insurance for their employees and retirees would make those vital industries more competitive with industries around the world whose governments have assumed health-care costs.

Besides, Americans want free choice of a doctor, rather than a free choice of an insurance company, each of whom offers a confusing array of benefits, deductibles, co-pays, annual and lifetime caps.

A single-payer system simply means government-financed, privately delivered health care: no deductibles, no co-pay.

The Expanded and Improved Medicare for All Act, sponsored by Rep. John Conyers, D-Mich., and more than 90 fellow representatives in the 110th Congress is the answer.

It provides for doctor, dentist, prescription drugs, mental health, nursing home and home health care, eyeglasses and hearing aids. ADA and a broad coalition of groups representing doctors, nurses, medical students, labor unions, grass-roots citizen and faith-based advocates support the Conyers legislation.

Under his bill, everybody would have a card to present to a health-care provider. No more hassle or cost. Doctors can already bill Medicare electronically. That would be their only “paperwork.” There are other benefits for patients. For instance:

* The government would negotiate prices of prescription drugs.

* Electronic records would foster continuity of care and reduce medical errors.

* Complete data would be available so a professional board could determine best practices: what treatments work and which don’t.

* Doctors would emphasize prevention.

* Hospitals would be paid based on a global budget negotiated to cover their costs, rather than current practice of billing for each aspirin and each test.

We know the powerful $500 billion-a-year insurance industry and the super-rich pharmaceutical industry — reluctant to lose their bonanza — will barrage the airwaves with ads to scare and confuse the public.

They’ll argue that people will run to the doctor unnecessarily, that patients’ bad practices are causing soaring costs. The data show otherwise.

Rising costs are attributable to overuse of emergency rooms by people who have no family doctor or available clinic, by doctors over-ordering expensive technology, and by unnecessary surgery performed by for-profit hospitals.

In fact, Medigap policies purchased to cover unaffordable co-pays and deductibles are another insurance industry cash cow. Not to be forgotten, an insurance company’s fiduciary responsibility is to its stockholders, not to patients. Insurance companies are the problem, not the solution.

In 2003 Barack Obama said a single-payer system was a good idea, but he feared it was not politically feasible.

ADA members worked tirelessly for his election this November, and we agree with him that health care is a human right.

We believe that the American people will convince politicians that a single-payer system is politically feasible and an economic and moral imperative.

With soaring personal bankruptcies and unemployment, state governments forced to cut back on our tattered safety net, the question is not whether we can afford to enact single-payer health care, it is whether we can afford not to.

The Medicare Advantage lesson on what not to do

Medicare’s Private Plans: A Report Card On Medicare Advantage

MA has brought much more choice but also added complexity, higher costs, no apparent quality gains, and uneven benefits.

by Marsha Gold
Health Affairs
November 24, 2008
With higher payments and expanded private-plan authority, Medicare Advantage (MA) has caused the market to grow. One in three Medicare beneficiaries with Part D now gets this coverage through MA. Analysis of the sources of and reasons for enrollment growth suggest a troubling report card. Clearly, the Medicare Modernization Act (MMA) has expanded choice and the private-sector role. But it also has added to Medicare’s complexity and costs and has created potential inequities, without apparent improvements in quality.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w41v1

And…

Payment Policy And The Growth Of Medicare Advantage

Higher MA payment rates have financed a Medicare benefit expansion for MA enrollees, without producing any overall savings for Medicare.

by Carlos Zarabozo and Scott Harrison
Health Affairs
November 24, 2008
The higher MA payment rates have financed what is essentially a Medicare benefit expansion for MA enrollees, without producing any overall savings for the Medicare program, and with increased costs borne by all beneficiaries and taxpayers. At the same time, although plan payments have financed additional benefits for enrollees, the additional payments have not resulted in improved quality among MA plans.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w55v1

And…

Medicare Advantage Plans At A Crossroads–Yet Again

The experience with private-plan contracting shows that assuring stable plan choices and extra benefits requires extra money.

by Robert A. Berenson and Bryan E. Dowd
Health Affairs
November 24, 2008
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w29v1

These three online reports from Health Affairs give us an update on a decade of experience with private health plan options in the Medicare program. The plans were sold to us as a private sector solution that would provide higher quality care at a lower cost than the traditional public Medicare program.
The results are in. These reports add to the plethora of data that confirm that the private plans have not improved quality, yet they have been considerably more expensive than care provided under the traditional Medicare program for patients of comparable health status. (This comment and those that follow do not refer to integrated health care delivery systems, but only to the private insurance function.)
Since a significant portion of this excess spending was for administrative services that benefit insurers rather than patients, taxpayers should be outraged at this waste of our Medicare funds. The good news is that some of these funds were used to expand benefits for patients in the Medicare Advantage plans, but this is another instance where good news is really more bad news.
Individuals receiving these extra benefits generally did not pay for them, and often paid less in premiums and cost sharing. So where did the money come from? It was paid by all taxpayers (payroll taxes and general revenues) and by patients paying premiums into the traditional Medicare program. So the bad news is that these extra benefits are highly inequitable because they’re granted to individuals in the Medicare Advantage programs but paid by everyone else not in the programs. Tax policies and public programs should be designed to achieve equity, but the Medicare Advantage program achieves the opposite.
Does that mean that the extra Medicare Advantage benefits should be eliminated? No. Instead, those benefits should be added to the traditional Medicare program to make it even better. The Medigap plans that supplement the traditional Medicare program are one of the worst values in health insurance. The benefits provided by the Medigap plans should be rolled into Medicare, and then the wasteful Medigap plans can be eliminated.
Those who contend that we can’t afford to add more benefits to Medicare need to keep in mind that we would merely be shifting private out-of-pocket spending to the public Medicare program, actually reducing total spending by eliminating the waste in the Medigap and Medicare Advantage plans, offset partially by improved access to appropriate services.
There is an interesting comment in the paper by Berenson and Dowd:

“However, a point often overlooked by single-payer advocates is that unilateral monopsonist purchasing power also is inefficient. The optimal market structure is ‘atomistic’ competition among many sellers in markets with many purchasers, but this has proved difficult to achieve in health care. For example, atomistic competition requires aggressive enforcement of antitrust laws in both provider and insurance markets–something that the antitrust enforcement agencies and the courts appear unwilling or unable to do. Thus, reliance on monopsony purchasers, public or private, may be socially desirable.”

Hmmm. Help me with this one. We single payer advocates sometimes do refer to single payer as a beneficent public monopsony, but we also tout its efficiency. Since atomistic competition does not and never will exist in health care, we will never be able to use the market to price health care services efficiently. Thus, as a single public monopsony, we would rely on the efficiency of pricing through a process of negotiation, taking into consideration all legitimate costs and fair profits, and balancing our interests as both patients and taxpayers. Did I miss something here?
More from Berenson and Dowd:

“Traditional Medicare has been the source of important payment innovations, moving many payment systems away from FFS to prospective payment, such as the diagnosis-related group (DRG) prospective payment system (PPS) for inpatient services. The resource-based relative value scale (RBRVS) for physician fees, despite its flaws, has been adopted widely by private plans… Commercial insurers also look to Medicare to make initial technology approval decisions and to initiate more-aggressive payment denials–for example, for ‘never’ events and medically ineffective treatments.”

Thus the public Medicare program has brought us greater efficiency in health care financing than has the private sector. The private Medicare Advantage plans have brought us higher costs with no improvement in quality, and have actually increased the inequities in our health care system. Why should we expect the private plans in our current health reform proposals to do any better? They won’t.
It’s time to move forward with a new and improved, single payer Medicare for all.

The Medicare Advantage lesson on what not to do

Medicare's Private Plans: A Report Card On Medicare Advantage

MA has brought much more choice but also added complexity, higher costs, no apparent quality gains, and uneven benefits.

by Marsha Gold
Health Affairs
November 24, 2008

With higher payments and expanded private-plan authority, Medicare Advantage (MA) has caused the market to grow. One in three Medicare beneficiaries with Part D now gets this coverage through MA. Analysis of the sources of and reasons for enrollment growth suggest a troubling report card. Clearly, the Medicare Modernization Act (MMA) has expanded choice and the private-sector role. But it also has added to Medicare’s complexity and costs and has created potential inequities, without apparent improvements in quality.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w41v1

And…

Payment Policy And The Growth Of Medicare Advantage

Higher MA payment rates have financed a Medicare benefit expansion for MA enrollees, without producing any overall savings for Medicare.

by Carlos Zarabozo and Scott Harrison
Health Affairs
November 24, 2008

The higher MA payment rates have financed what is essentially a Medicare benefit expansion for MA enrollees, without producing any overall savings for the Medicare program, and with increased costs borne by all beneficiaries and taxpayers. At the same time, although plan payments have financed additional benefits for enrollees, the additional payments have not resulted in improved quality among MA plans.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w55v1

And…

Medicare Advantage Plans At A Crossroads–Yet Again

The experience with private-plan contracting shows that assuring stable plan choices and extra benefits requires extra money.

by Robert A. Berenson and Bryan E. Dowd
Health Affairs
November 24, 2008

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w29v1

Comment:

By Don McCanne, MD

These three online reports from Health Affairs give us an update on a decade of experience with private health plan options in the Medicare program. The plans were sold to us as a private sector solution that would provide higher quality care at a lower cost than the traditional public Medicare program.

The results are in. These reports add to the plethora of data that confirm that the private plans have not improved quality, yet they have been considerably more expensive than care provided under the traditional Medicare program for patients of comparable health status. (This comment and those that follow do not refer to integrated health care delivery systems, but only to the private insurance function.)

Since a significant portion of this excess spending was for administrative services that benefit insurers rather than patients, taxpayers should be outraged at this waste of our Medicare funds. The good news is that some of these funds were used to expand benefits for patients in the Medicare Advantage plans, but this is another instance where good news is really more bad news.

Individuals receiving these extra benefits generally did not pay for them, and often paid less in premiums and cost sharing. So where did the money come from? It was paid by all taxpayers (payroll taxes and general revenues) and by patients paying premiums into the traditional Medicare program. So the bad news is that these extra benefits are highly inequitable because they’re granted to individuals in the Medicare Advantage programs but paid by everyone else not in the programs. Tax policies and public programs should be designed to achieve equity, but the Medicare Advantage program achieves the opposite.

Does that mean that the extra Medicare Advantage benefits should be eliminated? No. Instead, those benefits should be added to the traditional Medicare program to make it even better. The Medigap plans that supplement the traditional Medicare program are one of the worst values in health insurance. The benefits provided by the Medigap plans should be rolled into Medicare, and then the wasteful Medigap plans can be eliminated.

Those who contend that we can’t afford to add more benefits to Medicare need to keep in mind that we would merely be shifting private out-of-pocket spending to the public Medicare program, actually reducing total spending by eliminating the waste in the Medigap and Medicare Advantage plans, offset partially by improved access to appropriate services.

There is an interesting comment in the paper by Berenson and Dowd:

“However, a point often overlooked by single-payer advocates is that unilateral monopsonist purchasing power also is inefficient. The optimal market structure is ‘atomistic’ competition among many sellers in markets with many purchasers, but this has proved difficult to achieve in health care. For example, atomistic competition requires aggressive enforcement of antitrust laws in both provider and insurance markets–something that the antitrust enforcement agencies and the courts appear unwilling or unable to do. Thus, reliance on monopsony purchasers, public or private, may be socially desirable.”

Hmmm. Help me with this one. We single payer advocates sometimes do refer to single payer as a beneficent public monopsony, but we also tout its efficiency. Since atomistic competition does not and never will exist in health care, we will never be able to use the market to price health care services efficiently. Thus, as a single public monopsony, we would rely on the efficiency of pricing through a process of negotiation, taking into consideration all legitimate costs and fair profits, and balancing our interests as both patients and taxpayers. Did I miss something here?

More from Berenson and Dowd:

“Traditional Medicare has been the source of important payment innovations, moving many payment systems away from FFS to prospective payment, such as the diagnosis-related group (DRG) prospective payment system (PPS) for inpatient services. The resource-based relative value scale (RBRVS) for physician fees, despite its flaws, has been adopted widely by private plans… Commercial insurers also look to Medicare to make initial technology approval decisions and to initiate more-aggressive payment denials–for example, for ‘never’ events and medically ineffective treatments.”

Thus the public Medicare program has brought us greater efficiency in health care financing than has the private sector. The private Medicare Advantage plans have brought us higher costs with no improvement in quality, and have actually increased the inequities in our health care system. Why should we expect the private plans in our current health reform proposals to do any better? They won’t.

It’s time to move forward with a new and improved, single payer Medicare for all.

America's Looming Health Care Disaster

Rising Unemployment Threatens Health Care of Even Those Who Keep Their Jobs

By DAN CHILDS
ABC News Medical Unit
Nov. 24, 2008

Last year at this time, health coverage may well have been among the last things on Terri Rushing’s mind.

Her husband, David, was 55 years old and working for Champion Homes in McKenzie, Tenn. It was a job he had held for nearly a decade and a half. He had a good Blue Cross and Blue Shield health care plan through his employer, and it was also affordable. Terri Rushing said that she and her husband paid less than $200 in premiums each month.

“We never worried because we always had insurance,” she said. “My husband has worked all of his life. We’ve always had health care; we’ve never had to worry about not having it.”

But on Feb. 7, everything changed. Rushing said her husband went to work as usual, only to find that state troopers blocked his way. The factory had burned to the ground. And with the loss of the plant came the loss of the job David Rushing had worked for the past 14 years.

It is a story that is becoming more common as the country weathers the worst economic downturn in decades. And health policy experts say it may not be long before all Americans feel the impact of what is shaping up to be a national health care disaster.

Today, Terri Rushing’s job as an office worker affords her a catastrophic health coverage plan that only kicks in once she is hospitalized. David Rushing, an insulin-dependent diabetic, was able to maintain his health coverage through the health program known as COBRA. But even though it covers only him, the plan costs nearly $400 per month — twice what they were paying before.

As difficult as the situation is, eligibility for the COBRA program expires after 18 months.

“The COBRA is just going to last until the first of September of next year,” she said. “After that, we have no way to pay.”

The only way for the family to enjoy the same health coverage they had before would be for David Rushing to find another job that offers similar health coverage benefits as his old position. But now at age 56, and living in a community with two other major plant closings in recent months, David’s job prospects are grim.

Terri Rushing has started to shop around for health plans she and her husband can afford.

“I did call several plans when we found out that we were going to start paying for COBRA, basically because we could not afford coverage for both of us,” she said. “I was told over and over again that we couldn’t qualify.”

And she has encountered little sympathy. In one conversation with a health insurance company she contacted, she explained to the customer service representative her difficult situation.

“I asked him, ‘So, basically, what you’re telling me is that we have a choice between having a house payment and having health insurance.’ And he says, ‘It sounds like you have a problem.’

“That’s it. That’s all.”

No Longer an Isolated Story

While the number of Americans in a situation like the Rushings’ grows, solutions remain elusive.

“There is a huge, looming problem about what to do with people who are unemployed,” said Dr. David Nash, dean of the Jefferson School of Health Policy and Population Health in Philadelphia. “The short answer, regretfully, is that there is no good answer for these people.”

According to the Bureau of Labor Statistics of the U.S. Department of Labor, the unemployment rate rose to 6.5 percent in October, with the number of unemployed people increasing to 10.1 million. Since last year, unemployment rolls have increased by 2.8 million.

And more bad news arrived last week: the number of newly laid-off workers is officially at a 16-year high.

As these workers face the loss of their employer-provided health insurance, about 1 in 5 looks to COBRA (an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1986) for help. Through COBRA, a laid-off worker can maintain the same insurance coverage he or she had through their previous employer, but at a cost. Specifically, they must pay the portion of their premiums that they had been responsible for, plus the portion that their employers previously paid — as well as an extra 2 percent of this combined premium.

The increases are a bitter pill to swallow for someone who has just lost a job and likely has less money to spread around. And the small relief provided is only temporary. Those who cannot find another option within 18 months face a new scramble for coverage once this window expires.

“Unfortunately, the COBRA legislation guarantees laid-off workers the right to continue coverage at their own expense, but does not make that coverage affordable,” said Dr. David Himmelstein, associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program.

“Under COBRA, health insurers may charge higher premiums to sick individuals, so anyone with a chronic condition who really needs insurance will face astronomical premiums,” he added. “As a result, the vast majority are likely to become uninsured quite quickly.”

“The cost for coverage, coupled with no or substantially reduced [income], may force additional steps to secure cash flow, including mortgage leveraging, credit card and family borrowing, to the extent it is even available,” said Jay Wolfson, associate vice president of Health Law, Policy and Safety at the University of South Florida. “And then, without new employment — perhaps even before COBRA expires — there is no reservoir for cash, and the cascade of additional economic difficulties may create a deadly flood.”

Uwe Reinhardt, professor of economics and public affairs at Princeton University, has studied the U.S. health care system for the past two decades. He agreed that if the economic picture gets much worse, many families could be heading for disaster.

“If this recession gets any deeper and lasts several years, many Americans may lose whatever savings they have, should they or their family members get sick,” Reinhardt said.

Will Everyone Be Caught in the Collapse?

But the problems may not be limited to the growing ranks of unemployed. Nash said that even if you have a secure job with a good health care plan, there is still reason to worry. The massive uptick in job losses, he said, are setting into motion a domino effect within the health care system.

The first domino falls when those who lose their jobs seek assistance through COBRA. If they can afford it, they will remain under their old policy and still pay premiums. But if they cannot, they will join the ranks of the uninsured.

For every person who becomes uninsured, health insurance companies lose revenue from monthly premiums. The situation worsens 18 months later, when those who opted for COBRA but have not yet been able to find a new employer-based plan, become ineligible for coverage. The insurance companies will take yet another hit.

“Insurance carriers, even the not-for-profit Blue Cross plans, are going to suffer mightily as layoffs accrue,” Nash noted.

And this hit from lost revenue gets passed on to employers, who, in turn, pass it on to existing policyholders.

“Many employers have faced double-digit increases in the costs of their share of health benefits this year, and that is going to continue,” Wolfson said. “In response, many employers elect to shift or eliminate cost burdens associated with health benefits to employees.”

Nash calls this additional cost burden on the average family “catastrophic.”

“The average family of four with private health insurance in the U.S. already spends $10,000 a year [for health insurance coverage],” he said. “That’s in addition to what their employers provide. … It’s staggering.”

For such a family, an increase in premiums or a decrease in employer support could mean thousands of dollars more per year — even if none of the wage earners in the family suffer a layoff.

For the health industry, the outlook may be even bleaker, at least in the short term. Nash said the signs of the U.S. medical system’s imminent catastrophe are already being seen. Along with postponement and cancellation of elective surgeries and an increase in bad medical debt, more people are experiencing decreased access to medical services. Likewise, more people are unable to afford their medication.

Unpaid health care bills are the single leading cause of personal bankruptcy in the United States. A surge in this statistic, combined with unemployment and bad medical debt, could be enough to capsize some major players in the health care industry, Nash said — an industry that contributes 17 percent of the country’s GDP.

“Nobody ever thought of this toxic byproduct of health insurance being tied to the work place,” Nash said. “This is a really dreadful knockout punch that you are not hearing anybody in positions of authority talk about.

“Very soon you can predict that the American Hospital Association will be at the White House looking for the same kind of handouts that we’re giving the auto industry.”

‘There Is Not a Silver Lining’

Most health policy experts said that, while the future of the American health care system remains uncertain, what is clear is that a change is needed.

“As someone who grew up in Germany and lived for some years in Canada and got used to portable, life-cycle health insurance, I have always been amazed that Americans preferred the ephemeral health insurance that comes with the job at a particular firm and is lost with losing that job.” Reinhardt said. “Now, the foolishness of that preference is becoming clear to many middle-class Americans who spent their life denigrating ‘government’ health insurance.

“Frankly, I find it hard to muster much sympathy for people who are waking up only now.”

“There is not a silver lining,” Nash said. “What’s coming home to roost here is the historical accident of having private health care insurance tied to the place of employment. There is no way out if it is tied to the source of where you work.”

Some options still exist for those who need health care coverage, but still need to make ends meet after a layoff.

“One is a high-deductible plan, or a limited-benefits plan,” said Merrill Matthews, executive director of the Alexandria, Va.-based Council for Affordable Health Insurance. “In addition, there are what’s known as ‘bridge’ or ‘gap’ policies. These are very easy to get, with usually only one page to fill out and they will cover you immediately, assuming you don’t have AIDS or a life-threatening heart condition.”

“To be very clear: these aren’t comprehensive policies,” he added. “But they can be a good option for someone with limited means who needs some coverage.”

Nash said families should also plan to see health care spending encroach into other areas of the family budget.

“I would urge families to have an emergency health care cash fund available, and I would tell them to think very carefully about what they’re spending for Christmas,” he said. “I know retailers don’t want to hear that, but 18 months from now, there are people who are going to regret very much that Christmas spending.”

But for some, like the Rushings, frugal living proved to be no sanctuary.

“We don’t live extravagantly,” Terri Rushing said. “We have a three-bedroom, two-bath house. We don’t drive fancy cars; we drive older cars.”

Now, she and her husband have used the money in his 401(k) to keep up with their costs of living. David received his second to last unemployment check Thursday.

“As far as surviving, we’re looking at the possibility of losing our home,” Terri Rushing said. “It just feels like our lives have been turned upside down and put in a paper bag, and now we’re waiting for someone to come by and shake us out.”

Her advice for others who find themselves on the brink of a personal health care disaster is brief.

“Expect nothing. Prepare for everything. And pray,” she said.

Scott Mayerowitz contributed to this report.

Copyright (c) 2008 ABC News Internet Ventures

http://abcnews.go.com/print?id=6309491

America’s Looming Health Care Disaster

Rising Unemployment Threatens Health Care of Even Those Who Keep Their Jobs

By DAN CHILDS
ABC News Medical Unit
Nov. 24, 2008

Last year at this time, health coverage may well have been among the last things on Terri Rushing’s mind.

Her husband, David, was 55 years old and working for Champion Homes in McKenzie, Tenn. It was a job he had held for nearly a decade and a half. He had a good Blue Cross and Blue Shield health care plan through his employer, and it was also affordable. Terri Rushing said that she and her husband paid less than $200 in premiums each month.

“We never worried because we always had insurance,” she said. “My husband has worked all of his life. We’ve always had health care; we’ve never had to worry about not having it.”

But on Feb. 7, everything changed. Rushing said her husband went to work as usual, only to find that state troopers blocked his way. The factory had burned to the ground. And with the loss of the plant came the loss of the job David Rushing had worked for the past 14 years.

It is a story that is becoming more common as the country weathers the worst economic downturn in decades. And health policy experts say it may not be long before all Americans feel the impact of what is shaping up to be a national health care disaster.

Today, Terri Rushing’s job as an office worker affords her a catastrophic health coverage plan that only kicks in once she is hospitalized. David Rushing, an insulin-dependent diabetic, was able to maintain his health coverage through the health program known as COBRA. But even though it covers only him, the plan costs nearly $400 per month — twice what they were paying before.

As difficult as the situation is, eligibility for the COBRA program expires after 18 months.

“The COBRA is just going to last until the first of September of next year,” she said. “After that, we have no way to pay.”

The only way for the family to enjoy the same health coverage they had before would be for David Rushing to find another job that offers similar health coverage benefits as his old position. But now at age 56, and living in a community with two other major plant closings in recent months, David’s job prospects are grim.

Terri Rushing has started to shop around for health plans she and her husband can afford.

“I did call several plans when we found out that we were going to start paying for COBRA, basically because we could not afford coverage for both of us,” she said. “I was told over and over again that we couldn’t qualify.”

And she has encountered little sympathy. In one conversation with a health insurance company she contacted, she explained to the customer service representative her difficult situation.

“I asked him, ‘So, basically, what you’re telling me is that we have a choice between having a house payment and having health insurance.’ And he says, ‘It sounds like you have a problem.’

“That’s it. That’s all.”

No Longer an Isolated Story

While the number of Americans in a situation like the Rushings’ grows, solutions remain elusive.

“There is a huge, looming problem about what to do with people who are unemployed,” said Dr. David Nash, dean of the Jefferson School of Health Policy and Population Health in Philadelphia. “The short answer, regretfully, is that there is no good answer for these people.”

According to the Bureau of Labor Statistics of the U.S. Department of Labor, the unemployment rate rose to 6.5 percent in October, with the number of unemployed people increasing to 10.1 million. Since last year, unemployment rolls have increased by 2.8 million.

And more bad news arrived last week: the number of newly laid-off workers is officially at a 16-year high.

As these workers face the loss of their employer-provided health insurance, about 1 in 5 looks to COBRA (an acronym for the Consolidated Omnibus Budget Reconciliation Act of 1986) for help. Through COBRA, a laid-off worker can maintain the same insurance coverage he or she had through their previous employer, but at a cost. Specifically, they must pay the portion of their premiums that they had been responsible for, plus the portion that their employers previously paid — as well as an extra 2 percent of this combined premium.

The increases are a bitter pill to swallow for someone who has just lost a job and likely has less money to spread around. And the small relief provided is only temporary. Those who cannot find another option within 18 months face a new scramble for coverage once this window expires.

“Unfortunately, the COBRA legislation guarantees laid-off workers the right to continue coverage at their own expense, but does not make that coverage affordable,” said Dr. David Himmelstein, associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program.

“Under COBRA, health insurers may charge higher premiums to sick individuals, so anyone with a chronic condition who really needs insurance will face astronomical premiums,” he added. “As a result, the vast majority are likely to become uninsured quite quickly.”

“The cost for coverage, coupled with no or substantially reduced [income], may force additional steps to secure cash flow, including mortgage leveraging, credit card and family borrowing, to the extent it is even available,” said Jay Wolfson, associate vice president of Health Law, Policy and Safety at the University of South Florida. “And then, without new employment — perhaps even before COBRA expires — there is no reservoir for cash, and the cascade of additional economic difficulties may create a deadly flood.”

Uwe Reinhardt, professor of economics and public affairs at Princeton University, has studied the U.S. health care system for the past two decades. He agreed that if the economic picture gets much worse, many families could be heading for disaster.

“If this recession gets any deeper and lasts several years, many Americans may lose whatever savings they have, should they or their family members get sick,” Reinhardt said.

Will Everyone Be Caught in the Collapse?

But the problems may not be limited to the growing ranks of unemployed. Nash said that even if you have a secure job with a good health care plan, there is still reason to worry. The massive uptick in job losses, he said, are setting into motion a domino effect within the health care system.

The first domino falls when those who lose their jobs seek assistance through COBRA. If they can afford it, they will remain under their old policy and still pay premiums. But if they cannot, they will join the ranks of the uninsured.

For every person who becomes uninsured, health insurance companies lose revenue from monthly premiums. The situation worsens 18 months later, when those who opted for COBRA but have not yet been able to find a new employer-based plan, become ineligible for coverage. The insurance companies will take yet another hit.

“Insurance carriers, even the not-for-profit Blue Cross plans, are going to suffer mightily as layoffs accrue,” Nash noted.

And this hit from lost revenue gets passed on to employers, who, in turn, pass it on to existing policyholders.

“Many employers have faced double-digit increases in the costs of their share of health benefits this year, and that is going to continue,” Wolfson said. “In response, many employers elect to shift or eliminate cost burdens associated with health benefits to employees.”

Nash calls this additional cost burden on the average family “catastrophic.”

“The average family of four with private health insurance in the U.S. already spends $10,000 a year [for health insurance coverage],” he said. “That’s in addition to what their employers provide. … It’s staggering.”

For such a family, an increase in premiums or a decrease in employer support could mean thousands of dollars more per year — even if none of the wage earners in the family suffer a layoff.

For the health industry, the outlook may be even bleaker, at least in the short term. Nash said the signs of the U.S. medical system’s imminent catastrophe are already being seen. Along with postponement and cancellation of elective surgeries and an increase in bad medical debt, more people are experiencing decreased access to medical services. Likewise, more people are unable to afford their medication.

Unpaid health care bills are the single leading cause of personal bankruptcy in the United States. A surge in this statistic, combined with unemployment and bad medical debt, could be enough to capsize some major players in the health care industry, Nash said — an industry that contributes 17 percent of the country’s GDP.

“Nobody ever thought of this toxic byproduct of health insurance being tied to the work place,” Nash said. “This is a really dreadful knockout punch that you are not hearing anybody in positions of authority talk about.

“Very soon you can predict that the American Hospital Association will be at the White House looking for the same kind of handouts that we’re giving the auto industry.”

‘There Is Not a Silver Lining’

Most health policy experts said that, while the future of the American health care system remains uncertain, what is clear is that a change is needed.

“As someone who grew up in Germany and lived for some years in Canada and got used to portable, life-cycle health insurance, I have always been amazed that Americans preferred the ephemeral health insurance that comes with the job at a particular firm and is lost with losing that job.” Reinhardt said. “Now, the foolishness of that preference is becoming clear to many middle-class Americans who spent their life denigrating ‘government’ health insurance.

“Frankly, I find it hard to muster much sympathy for people who are waking up only now.”

“There is not a silver lining,” Nash said. “What’s coming home to roost here is the historical accident of having private health care insurance tied to the place of employment. There is no way out if it is tied to the source of where you work.”

Some options still exist for those who need health care coverage, but still need to make ends meet after a layoff.

“One is a high-deductible plan, or a limited-benefits plan,” said Merrill Matthews, executive director of the Alexandria, Va.-based Council for Affordable Health Insurance. “In addition, there are what’s known as ‘bridge’ or ‘gap’ policies. These are very easy to get, with usually only one page to fill out and they will cover you immediately, assuming you don’t have AIDS or a life-threatening heart condition.”

“To be very clear: these aren’t comprehensive policies,” he added. “But they can be a good option for someone with limited means who needs some coverage.”

Nash said families should also plan to see health care spending encroach into other areas of the family budget.

“I would urge families to have an emergency health care cash fund available, and I would tell them to think very carefully about what they’re spending for Christmas,” he said. “I know retailers don’t want to hear that, but 18 months from now, there are people who are going to regret very much that Christmas spending.”

But for some, like the Rushings, frugal living proved to be no sanctuary.

“We don’t live extravagantly,” Terri Rushing said. “We have a three-bedroom, two-bath house. We don’t drive fancy cars; we drive older cars.”

Now, she and her husband have used the money in his 401(k) to keep up with their costs of living. David received his second to last unemployment check Thursday.

“As far as surviving, we’re looking at the possibility of losing our home,” Terri Rushing said. “It just feels like our lives have been turned upside down and put in a paper bag, and now we’re waiting for someone to come by and shake us out.”

Her advice for others who find themselves on the brink of a personal health care disaster is brief.

“Expect nothing. Prepare for everything. And pray,” she said.

Scott Mayerowitz contributed to this report.

Copyright (c) 2008 ABC News Internet Ventures

http://abcnews.go.com/print?id=6309491