PNHP

UnitedHeathcare's plan with a 10% medical loss ratio

UnitedHeathcare's plan with a 10% medical loss ratio

Is Your Kid Covered?

Insurers make big profits from college students, but some families are left with huge bills

by Ben Elgin and Jessica Silver-Greenberg
BusinessWeek
May 8, 2008

Six out of 10 colleges and universities now recommend specific health insurance plans for their students, and three of 10 require them. But… many of the policies turn out to be scanty at best, and inferior to comparably priced alternatives. This can leave families exposed to crippling medical bills they thought they’d be protected against. Insurers, meanwhile, have found that the student market can be quite profitable.

More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums.

Apart from low maximums, insurers can contain payouts by imposing “interior caps” on coverage for particular types of treatment. Sean Marquis discovered the hard way how this works. After turning 26, Marquis, a medical student at Ross University in Edison, N.J., was bumped from his parents’ plan. He signed up for the school-sponsored plan with UnitedHealthcare, comforted by its $100,000 overall maximum.

Last spring, Marquis became dizzy during class. He stepped into the hallway and collapsed, fracturing a bone near his jaw. He stayed in the hospital for 48 hours, and left owing $24,098. UnitedHealthcare covered only $6,260, because Marquis had hit the $2,500-per-day cap for room, board, and miscellaneous expenses.

UnitedHealthcare says in a statement that it allows school administrators “to customize plans to meet the needs of their unique student populations. Administrators strive to balance benefits with affordability and act in the best interests of their students.”

On a number of campuses, students feel pressure to purchase threadbare policies because those are the only ones the school will process. Unless students or their parents take the initiative to shop independently, Connecticut College, a private liberal arts school in New London, signs them up for a plan sold by Chickering Group, a subsidiary of Aetna, offering just $10,000 in maximum benefits for an illness.

The vigorous health of most college students helps make insuring them a lucrative niche, according to industry consultants. Most insurance companies, even if publicly traded, don’t break out separate financial results for their student-oriented policies. But some schools disclose an indication of the profitability of policies sold to their students: the so-called benefits ratio. This shows the percentage of premiums returned to customers in the form of benefit payouts. Large health insurers typically have overall ratios of about 80%, meaning 20% of premiums goes to profits and administrative costs.

In several cases where BusinessWeek was able to obtain benefits ratios from colleges or universities, the percentage was well below 70%.

At Palm Beach Community College, the benefits ratio for the spring semester of 2008 was 42.6%, according to reports provided to the school by UnitedHealthcare.

In previous semesters the benefits ratios dipped as low as 10.2% and 13.8%. This means the college’s plan has been a veritable gold mine for UnitedHealthcare. At the University of South Florida in Tampa, which offers a plan from American Fidelity Assurance, the ratio this academic year is 35%, down from 71% and 61% the previous two years, respectively.

http://www.businessweek.com/magazine/content/08_20/b4084041498815.htm

Comment:

By Don McCanne, MD

For an insurer, payment of health care benefits is a loss. For Wall Street, the medical loss ratio (or “benefits ratio” in this article) is the ratio of the loss in benefits paid out to the revenues received in insurance premiums. A low medical loss ratio is rewarded on Wall Street by higher stock prices since less paid for health care is translated into greater profits.

It is astounding that UnitedHealthcare has been able to achieve a medical loss ratio as low as 10%, retaining 90% of the premiums for administration and profit, simply by selling college students nearly worthless products that fail to prevent financial hardship in the face of medical need.

Senators McCain, Clinton, Obama, Wyden and Bennett all have proposals that would significantly expand the role of these private insurers in financing health care for the nation. The momentum behind these proposals continues to build. Why would we ever give this industry more control over our health care financing when we can replace it with our own public insurance program that would have the highest benefits ratio attainable? Spending health dollars on health care seems like the right thing to do.

Let's share cost of health insurance

Los Angeles Times
Sunday, May 11, 2008
Business Letters

Except for the healthy and the wealthy, the rest of us — not just employers — are being pinched, if not strangled, by rising healthcare costs. (“Healthcare costs pinch employers,” May 7.)

People with supposedly excellent insurance are forced to declare bankruptcy because of out-of-pocket expenses from major illness. We lose high paying jobs to Canada, Britain and Europe, where companies can provide quality products and services without the expense of healthcare.

If the U.S. were to have national health insurance, we could provide quality that no other country has accomplished while achieving similar cost savings.

The challenge is not to make for-profit health insurance affordable for employers but to establish public financing for national health insurance.

Jerry Frankel
Plano, Texas

A New Health Care Plan…Physicians for national health program finds willing ears in Ithaca

By Karen Gadiel
Ithaca Times
05/07/2008

A group of area physicians, frustrated by the limitations of providing health care to all who need it, recently formed a regional chapter of Physicians for a National Health Program, or PNHP. “We think the time has come,” said Dr. John Paul Mead, doctor of internal medicine.


Dr. John Paul Mead
(Photo by Rachel Philipson)

Two factors put this issue front and center for Mead and his fellow organizers – a core group of at least 10 physicians attended the first meeting in April, and their numbers are expected to grow.

“First, there’s the continuing erosion of a physician’s ability to take care of people who are ill,” Mead said. About 15 percent of patients in Tompkins County are uninsured, with a further 10 percent so under-insured that physicians can’t afford to treat them.

“It’s a problem of access,” Mead said. “We want to take care of them, but you can’t keep going when a quarter of your clients can’t pay – and of the remaining three quarters with insurance, those plans have been ratcheted down and kept flat until there’s nothing left over for the patient who needs free care.”

He cites a host of unavoidable expenses that can turn a medical practice into a small business on shaky financial ground. These include student loan repayments, office overhead and increased malpractice insurance costs. These headaches can lead to physicians leaving the system or becoming cash-only businesses.

Mead himself recently sold his practice to the hospital, “which has a better ability to take care of the uninsured,” he explained. “When I finished my residency eight years ago, this was not what I had in mind.”

The other critical reason for beginning the group now is the national focus on health care, sharpened in campaigns for the upcoming elections. While both Democratic presidential candidates have been talking about universal health care coverage, many physicians, including Mead, consider the plans put forward to be either unclear as to financing – or unworkable. Preventive health care and the use of electronic records, as both Clinton and Obama have proposed, are not bad ideas, Mead says, but they do nothing to save money.

“Basically, there’s already enough money in the system to cover everyone, but it’s inefficiently administered,” he said.

“For hundreds of insurance companies, 15 to 22 percent is wasted on overhead, compared to Medicare which spends only about three percent on overhead – the rest going to healthcare. Every industrialized democracy has a national plan that covers all its citizens. But we’re on a par with Serbia when it comes to life expectancy. The only people who like the system [as it is now] are those with great health care plans.”

Additionally, he notes, we already spend twice per person on medical care as Canada does.

“Spread it around,” Mead said. “Spread it around in a more equal way and we’d have twice as a good a system as they do.”

Congressman Maurice Hinchey has co-sponsored a bill in the House of Representatives known as HR-676, or The United States National Health Insurance Act (or the Expanded and Improved Medicare for All Act). Though people ranging from Michael Moore to the PNHP physicians support this proposal, the bill is currently stalled.

“It’s sitting and waiting for the election cycle to be over,” Mead commented.

So for now, the group is organizing to get a local conversation going on this issue.

“We want to get the word out,” Mead said. “Ithaca is full of readers and writers to help get the word out and get behind it.”

He’s hoping, too, to build more support for HR-676 and similar proposals as physicians learn more about possible ways to fund health care, to critically look at health care proposals and effectively voice their opinions.

“If things don’t change, we may have to figure out another tier of health care, like the Free Clinic in Ithaca,” he said, explaining that the Free Clinic can help patients with routine areas of health care but currently can’t take care of more complex medical matters like surgeries and obstetrics. “As physicians, we went into medicine to serve the patients, not the insurance companies,” he said.

Whoever wins the next presidential election will have to address health care, Mead adds. This local physicians’ organization wants to be part of that discussion.

Advocates asking for health coverage for all New Yorkers

By MARIA BRANDECKER
Legislative Gazette Staff Writer
Mon, May 12, 2008

Supporters of a single-payer health care system held a rally outside the Capitol in Albany last Tuesday urging state and federal leaders to ensure all Americans get coverage.

Representatives from the New York State Nurses Association, the Troy Area Labor Network, Hunger Action Network of New York State and Capital District Alliance for Universal Healthcare, along with others, chanted: “Everybody in, nobody out,” and sang “Single Payer for All” by singer-songwriter, Ruth Pelham, executive director of Music Mobile Online.

The groups advocated for a single-payer system that would finance health care for the entire population through a single source, for example, the government, from funding that would be collected through progressive taxation of citizens and businesses.

“What we really want to get back to is medicine as a profession and a social good instead of a commodity,” said Capital District Alliance for Universal Healthcare Chairman Dr. Richard Propp.

The advocates are pushing for the passage of the U.S. National Health Insurance Act, a federal universal health care bill (H.R.676) introduced in Congress. On the state level, they want to see the Legislature pass Assemblyman Felix Ortiz’s, D-Brooklyn, proposed resolution (K.779) in the Assembly in support of H.R.676. Ortiz’s resolution was referred to the Assembly Insurance Committee last year, but no action has been taken on it in 2008.

The groups were also calling on Legislature to pass a bill that would establish a system of universal access to health insurance for New Yorkers by enacting the “New York State Health Plan.” The bill (A.07354/S.3107) is sponsored by Assembly Health Committee Chairman Richard Gottfried, D-Manhattan, and Sen. Eric Schneiderman, D,WF-Manhattan, a member of the Senate Health Committee.

The legislation would aim to increase health coverage for the more than 3 million New Yorkers who are uninsured or lack adequate coverage.

The bill would cover health services including preventative care, prescription drugs and mental health services. Under the plan, health coverage would be extended to all residents regardless of age, income or employment status. The plan would be administered by an independent public benefit corporation consisting of an 18-member board of governors appointed by the governor and confirmed by the Senate.

The bill justification states a single, publicly financed, insurance program would eliminate more than $5 billion in administrative waste from insurance companies, including the costs associated with billing and collecting for hospitals, physicians and other health care providers. It, according to the justification, would also provide stability to New York’s hospitals and free up resources for patients.

Savings realized from the program, according to the justification, would be used to finance the training of health care workers, pay for primary and preventive services, and help physicians set up practices in inner cities and rural communities.

The bill was referred to both the Assembly Health Committee and Senate Finance Committee on Jan. 9.

“It is always a question of cost and how you would pay for that,” Scott Reif, a spokesman for Senate Majority Leader Joseph L. Bruno, R,C,I-Brunswick said.

Reif did not say whether Bruno would support a universal health care system for New York. But Reif did say the state is facing “real fiscal challenges,” and one of the Senate GOP’s initiatives is aimed at making health care more affordable.

“In the Senate we have taken action to make health care more affordable and accessible to as many New Yorkers as possible,” Reif said. Reif mentioned the Child Health Plus and Family Health Plus programs as well as the Senate’s efforts to help small businesses provide health insurance.

Matt Funiciello, owner of Rock Hill Bakehouse in Glens Falls, Warren County, said he is unable to afford health care for his 40-person staff. Funiciello encouraged legislators who do not support universal health care to take off their “political and mathematical hats” and put on their “small business and workers hats.”

Propp said he and others lobbied to get $200,000 in the state budget last year to study the various universal health care plans and decide which one would be best for New York. Propp said the Urban Institute was hired to conduct the study. The Urban Institue conducts nonpartisan economic and social policy research.

“We want the single-payer plan to be given a fair shake, and we want the process to be transparent and the public to have a say … we just want them [the Urban Institute] to follow through with a fair process.”

“Nurses firmly uphold health care is a right not a privilege,” said Deborah Elliott, deputy executive officer of the New York State Association of Nurses. Elliott, who has been a registered nurse for 30 years, said she has seen New York nurses “pick up the pieces of our broken health care systems every day.”

Elliot said many New Yorkers delay treatment because they are uninsured, and there needs to be an increase in preventative care.

“Health care for all is what we need, health care for all is what we want, and health care for all is what we deserve,” said Elliott.

Is Your Kid Covered?

Insurers make big profits from college students, but some families are left with huge bills

by Ben Elgin and Jessica Silver-Greenberg
BusinessWeek
May 8, 2008

In fall 2006, Ralph Giunta Sr. decided to buy his son Ralph Jr. a practical birthday gift: health insurance. The father, who owns a small financial-services company that lacks an insurance plan, phoned Palm Beach Community College, where his son was on the dean’s list. The Lake Worth (Fla.) school recommended a policy provided by MEGA Life and Health Insurance, whose student business was acquired in late 2006 by giant UnitedHealthcare. Giunta wrote a check for $1,044 for one year. “They assured me he was well covered,” he says.


Marquis had $100,000 coverage but got stung by the fine print
(Photo by David Deal)

Six out of 10 colleges and universities now recommend specific health insurance plans for their students, and three of 10 require them. But as the Giuntas discovered, many of the policies turn out to be scanty at best, and inferior to comparably priced alternatives. This can leave families exposed to crippling medical bills they thought they’d protected against. Insurers, meanwhile, have found that the student market can be quite profitable.

Ralph Giunta Jr. knew something was wrong in March, 2007, when the photography major and avid skateboarder felt pain in his legs and feet. Then 19, he lost all feeling in his lower extremities and was rushed to the hospital. The diagnosis: Guillain-Barré’s syndrome, a rare disease of the nervous system that typically causes temporary paralysis. His father’s anxiety was compounded upon learning more about the insurance he had purchased. Even with “major medical” coverage, the plan reimbursed only $22,800 of the $206,325 bill for 19 days of intensive care.

In the end, Ralph Jr. recovered, but the Giuntas owed $265,000 in hospital and doctor bills. As he juggles maxed-out credit cards and loans from friends to make minimum payments on medical debts, Ralph Sr. admits he didn’t read the UnitedHealthcare plan closely. “I thought, well, the college is offering it,” he says. “Why would it be a bad plan?”

More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums. While two-thirds of the country’s more than 17 million college students have coverage from a parent’s employer or their own job, many of the rest may be vulnerable if they suffer a serious illness or accident. With premiums and restrictions increasing under employer-provided plans, a growing number of parents are shifting children to college-sponsored coverage. But “when a student gets gravely sick, $30,000 in benefits is unrealistically low,” says Alan Sager, a professor at Boston University’s School of Public Health.

Schools often arrange for a standard student plan, and some even bill for it automatically unless students or their families opt out. But the administrators negotiating multimillion-dollar insurance packages frequently aren’t sophisticated or diligent enough to obtain the best deals in the marketplace, says Mark Rukavina, executive director of the Access Project, a nonprofit health advocacy group in Boston. “Unfortunately, most schools don’t know how to secure the best coverage for students, and so what results is simply the illusion of coverage.” Students and parents, for their part, often don’t take the time to study the fine print.

IN WHOSE INTEREST?

In some cases, universities have comfortable relationships with carriers that reimburse the schools a small percentage of student premiums to cover administrative expenses. This raises questions about whether schools ought to serve as what amounts to a broker. The University of Alaska system receives 5% of premiums collected through its plan. With $2.3 million in premiums expected this academic year, the payment would come to about $115,000, according to a copy of the contract provided by the system. The Kansas Board of Regents receives 1.5% of its students’ premiums to cover costs of administering the plan “or other uses as determined by the Board,” according to its contract. That could mean a reimbursement of about $100,000 for 2007-08.

Officials at the University of Alaska and the Kansas Board of Regents say the modest fees don’t influence their judgment and are used only to pay staff to handle student insurance. Some critics counter that the payments create a conflict of interest. New York Attorney General Andrew M. Cuomo is examining ties between universities and insurers. “The question is whether…the relationships between vendors like health insurance companies and schools cause schools to favor vendors that are best for the schools financially rather than those that are best for students,” says Cuomo aide Benjamin Lawsky.

Some plans endorsed by colleges are inferior to what a savvy consumer can secure on the open market. In the case of the Giuntas, a search on the Web site eHealthInsurance.com shows several plans in the Palm Beach area for a healthy, 19-year-old male that provide $5 million in benefits for roughly the same premium the family paid UnitedHealthcare. The more robust plans have higher deductiblesĆ¢ā‚¬ā€up to $2,500Ć¢ā‚¬ā€which patients must pay before coverage kicks in.

UnitedHealthcare says in a statement that it allows school administrators “to customize plans to meet the needs of their unique student populations. Administrators strive to balance benefits with affordability and act in the best interests of their students.” Bill Truxal, who heads the company’s student unit, says in an interview that colleges have sufficient clout to negotiate favorable terms. Since the Giuntas purchased more coverage than the basic plan recommended by Palm Beach, the payout to the family exceeded the school’s ordinary benefit cap, the company says.

On a number of campuses, students feel pressure to purchase threadbare policies because those are the only ones the school will process. Unless students or their parents take the initiative to shop independently, Connecticut College, a private liberal arts school in New London, signs them up for a plan sold by Chickering Group, a subsidiary of Aetna (AET), offering just $10,000 in maximum benefits for an illness. The school includes coverage for “catastrophic” accidents, but this doesn’t apply to major illnesses such as cancer or appendicitis. If students buy their own policies, they have to handle the reimbursement paperwork for all but the most rudimentary services provided by the campus health center. That’s a burden most 19- and 20-year-olds don’t want to assume.

Cate Moffett, director of Connecticut College’s health center, says her small staff can’t handle insurance claims for multiple underwriters. Echoing an argument made by many campus administrators, she notes that relatively few students fall seriously ill and complaints about coverage are rare.

A spokesman for Aetna, Matthew N. Wiggin, reiterates that schools need to weigh policy coverage and cost. “It’s ultimately the decision of the schools to select the plan that best fits their needs,” he adds.

The vigorous health of most college students helps make insuring them a lucrative niche, according to industry consultants. Most insurance companies, even if publicly traded, don’t break out separate financial results for their student-oriented policies. But some schools disclose an indication of the profitability of policies sold to their students: the so-called benefits ratio. This shows the percentage of premiums returned to customers in the form of benefit payouts. Large health insurers typically have overall ratios of about 80%, meaning 20% of premiums goes to profits and administrative costs.

In several cases where BusinessWeek (MHP) was able to obtain benefits ratios from colleges or universities, the percentage was well below 70%. Anything below 75% ought to be grounds to negotiate a better deal, according to Eric Engstrom, president of Keeling & Associates, a consulting firm in New York.

At Palm Beach Community College, the benefits ratio for the spring semester of 2008 was 42.6%, according to reports provided to the school by UnitedHealthcare. In previous semesters the benefits ratios dipped as low as 10.2% and 13.8%. This means the college’s plan has been a veritable gold mine for UnitedHealthcare. At the University of South Florida in Tampa, which offers a plan from American Fidelity Assurance, the ratio this academic year is 35%, down from 71% and 61% the previous two years, respectively.

Asked about the ratios, Grace Truman, a spokeswoman for Palm Beach Community College, says: “We do not negotiate coverage with the insurance company. We are not an active player in what they cover and at what percentage.” To choose its plan, the school relied on “positive comments” from other colleges about UnitedHealthcare, not on independent comparisons. Palm Beach has received only one complaint about the plan, she stresses. “We do tell students to read the plan carefully.” Still, she continues, “it may be time to take a better look at this insurance plan.” The University of South Florida acknowledges that it is seeking a more favorable benefits ratio. “During renewal negotiations there are lengthy discussions regarding benefit designs,” says Marisol Amarante- Hernandez, manager of the school’s insurance office.

James Breeding, director of risk management and insurance at Rutgers University, stresses that most students and their families are looking for low prices. Breeding recently negotiated a better deal for Rutgers students, upping the school plan’s maximum from $50,000 to at least $100,000, after finding that three to six students exceeded the plan’s old maximum each year. The new plan, provided by Aetna’s Chickering, costs about the same as the former one: $424 per year. “The plan is designed to meet most of the needs of most students, not to meet all the needs of all students,” Breeding says.

Apart from low maximums, insurers can contain payouts by imposing “interior caps” on coverage for particular types of treatment. Sean Marquis discovered the hard way how this works. After turning 26, Marquis, a medical student at Ross University in Edison, N.J., was bumped from his parents’ plan. He signed up for the school-sponsored plan with UnitedHealthcare, comforted by its $100,000 overall maximum.

Last spring, Marquis became dizzy during class. He stepped into the hallway and collapsed, fracturing a bone near his jaw. He stayed in the hospital for 48 hours, and left owing $24,098. UnitedHealthcare covered only $6,260, because Marquis had hit the $2,500-per-day cap for room, board, and miscellaneous expenses. The hospital forgave more than $10,000, but Marquis still had to pay several thousand dollars and has set up an installment plan for remaining medical bills. “I bought insurance to cover something just like this,” he says.

Peter Goetz, vice-president at Ross, declines to comment on the Marquis case, citing privacy concerns. The school looks for the best deal for its students, putting its insurance contract out to bid every two years, he says. Last fall, it switched from UnitedHealthcare to Chickering. “Our goal is to always find reasonably priced insurance that also covers catastrophic events,” Goetz says. UnitedHealthcare won’t discuss Marquis’ case.

Interior caps aren’t exclusive to the college market, but they appear to be spreading more quickly there, due to the lack of demanding buyers. “In the college market, things are more egregious,” says Bryan A. Liang, executive director of the Institute of Health Law at California Western School of Law. “Insurers can do what they want and get away with it.”

Elgin is a correspondent in BusinessWeek’s Silicon Valley bureau . Silver-Greenberg is a reporter for BusinessWeek.com.

UnitedHeathcare’s plan with a 10% medical loss ratio

Is Your Kid Covered?

Insurers make big profits from college students, but some families are left with huge bills

by Ben Elgin and Jessica Silver-Greenberg
BusinessWeek
May 8, 2008

Six out of 10 colleges and universities now recommend specific health insurance plans for their students, and three of 10 require them. But… many of the policies turn out to be scanty at best, and inferior to comparably priced alternatives. This can leave families exposed to crippling medical bills they thought they’d be protected against. Insurers, meanwhile, have found that the student market can be quite profitable.

More than half of the insurance plans recommended by colleges offer benefits of $30,000 or less, according to a survey published in March by the General Accounting Office, an arm of Congress. Many plans have further limits that prevent payout of even modest maximums.

Apart from low maximums, insurers can contain payouts by imposing “interior caps” on coverage for particular types of treatment. Sean Marquis discovered the hard way how this works. After turning 26, Marquis, a medical student at Ross University in Edison, N.J., was bumped from his parents’ plan. He signed up for the school-sponsored plan with UnitedHealthcare, comforted by its $100,000 overall maximum.

Last spring, Marquis became dizzy during class. He stepped into the hallway and collapsed, fracturing a bone near his jaw. He stayed in the hospital for 48 hours, and left owing $24,098. UnitedHealthcare covered only $6,260, because Marquis had hit the $2,500-per-day cap for room, board, and miscellaneous expenses.

UnitedHealthcare says in a statement that it allows school administrators “to customize plans to meet the needs of their unique student populations. Administrators strive to balance benefits with affordability and act in the best interests of their students.”

On a number of campuses, students feel pressure to purchase threadbare policies because those are the only ones the school will process. Unless students or their parents take the initiative to shop independently, Connecticut College, a private liberal arts school in New London, signs them up for a plan sold by Chickering Group, a subsidiary of Aetna, offering just $10,000 in maximum benefits for an illness.

The vigorous health of most college students helps make insuring them a lucrative niche, according to industry consultants. Most insurance companies, even if publicly traded, don’t break out separate financial results for their student-oriented policies. But some schools disclose an indication of the profitability of policies sold to their students: the so-called benefits ratio. This shows the percentage of premiums returned to customers in the form of benefit payouts. Large health insurers typically have overall ratios of about 80%, meaning 20% of premiums goes to profits and administrative costs.

In several cases where BusinessWeek was able to obtain benefits ratios from colleges or universities, the percentage was well below 70%.

At Palm Beach Community College, the benefits ratio for the spring semester of 2008 was 42.6%, according to reports provided to the school by UnitedHealthcare.

In previous semesters the benefits ratios dipped as low as 10.2% and 13.8%. This means the college’s plan has been a veritable gold mine for UnitedHealthcare. At the University of South Florida in Tampa, which offers a plan from American Fidelity Assurance, the ratio this academic year is 35%, down from 71% and 61% the previous two years, respectively.

http://www.businessweek.com/magazine/content/08_20/b4084041498815.htm

Comment:

By Don McCanne, MD

For an insurer, payment of health care benefits is a loss. For Wall Street, the medical loss ratio (or “benefits ratio” in this article) is the ratio of the loss in benefits paid out to the revenues received in insurance premiums. A low medical loss ratio is rewarded on Wall Street by higher stock prices since less paid for health care is translated into greater profits.

It is astounding that UnitedHealthcare has been able to achieve a medical loss ratio as low as 10%, retaining 90% of the premiums for administration and profit, simply by selling college students nearly worthless products that fail to prevent financial hardship in the face of medical need.

Senators McCain, Clinton, Obama, Wyden and Bennett all have proposals that would significantly expand the role of these private insurers in financing health care for the nation. The momentum behind these proposals continues to build. Why would we ever give this industry more control over our health care financing when we can replace it with our own public insurance program that would have the highest benefits ratio attainable? Spending health dollars on health care seems like the right thing to do.

Let’s share cost of health insurance

Los Angeles Times
Sunday, May 11, 2008
Business Letters

Except for the healthy and the wealthy, the rest of us — not just employers — are being pinched, if not strangled, by rising healthcare costs. (“Healthcare costs pinch employers,” May 7.)

People with supposedly excellent insurance are forced to declare bankruptcy because of out-of-pocket expenses from major illness. We lose high paying jobs to Canada, Britain and Europe, where companies can provide quality products and services without the expense of healthcare.

If the U.S. were to have national health insurance, we could provide quality that no other country has accomplished while achieving similar cost savings.

The challenge is not to make for-profit health insurance affordable for employers but to establish public financing for national health insurance.

Jerry Frankel
Plano, Texas

Herzlinger and McCanne on "choice" in candidates' proposals

Who will fix America's broken health care system?

The Real News Network
May 8, 2008

Prof. Regina E. Herzlinger is the Nancy R. McPherson Professor of Business Administration Chair at the Harvard Business School. She is the author of bestselling books “Who Killed Health Care?” and “Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers”.

Dr. Don McCanne is a Senior Health Policy Fellow with Physicians for a National Health Program, a widely recognized organization that represents over 15,000 doctors across the US that advocate for a single-payer national health insurance plan.

Transcript

VOICEOVER: Professor Regina Herzlinger of the Harvard School of Business and Dr. Don McCanne of Physicians for a National Health Program each evaluated the health care platforms of all three candidates.

PROF. REGINA HERZLINGER, HARVARD SCHOOL OF BUSINESS: I like all three platforms that the presidential candidates are offering. All three of them offer choice to the American consumer, although Senator McCain has put that much more front and center. Choice is very important. It is very important not to be at the mercy of a single payer, whether that single payer for your health insurance is your employer or your government, because they may not give you what you want.

DR. DON MCCANNE, PHYSICIANS FOR A NATIONAL HEALTH PROGRAM: The three proposals of the presidential candidates all fall short of what we think needs to be done. They all build on the private health insurance model. That’s a highly defective model, which is wasting a tremendous amount of resources and failing to provide the coverage that we need. Private plans compete based on the premium they charge. What we really want is competition between health care providers, physicians and hospitals competing based on quality. And that requires that patients have freedom to choose their doctors. Private plans take away that freedom.

VOICEOVER: Both experts took a look at how close Obama and Clinton’s proposals will get to achieving universal coverage.

MCCANNE: The Clinton model mandates individuals to purchase health insurance, whereas Obama does not. He says that we need to make plans affordable so people can purchase them. Neither approach is going to get everyone insured. Obama’s approach is flawed because the private health plans are not going to be able to have enough benefits if they’re going to have affordable premiums. So people will still go without health care in his model. In Hillary Clinton’s model, the plans will not be affordable. So requiring individuals to purchase a plan they can’t pay for is unrealistic. The flaw of their proposal is that the private health insurance plan has become an obsolete model of financing health care.

The Real News video (3 minutes):
http://www.therealnews.com/web/index.php?thisdataswitch=0&thisid=1457&thisview=item&renewx=2008-05-08+09%3A36%3A45

Same video also accessible at:
https://pnhp.org/news/2008/may/video_who_will_fix_.php

Comment:

By Don McCanne, MD

Anyone following the national dialogue on reform is certainly aware of the rhetoric over “choice.” Those supporting reform that builds on private health plans use “choice” to mean choice of health plans. Those supporting a publicly financed and publicly administered national health program use “choice” to mean choice of physicians and hospitals and other health care professionals and institutions.

People do like to have choice. The three remaining presidential candidates understand that and tout the choice that their heath care proposals offer. Of course, that is only the choice of health plans, a choice that usually takes away your freedom to choose your health care professionals. But they never mention this latter point since they would be admitting to a serious flaw in their proposals. Even libertarians should be concerned about loss of freedom to choose your own health care.

One irony here is that Regina Herzlinger, who has been referred to as the Godmother of consumer-driven health care and who is an outspoken opponent of single payer, states that she likes “all three platforms that the presidential candidates are offering.” You would think that the Democratic candidates would support a progressive model of reform. Instead, they are supporting a neoliberal model based on the conservative framing of private market health plans.

When you fully understand Herzlinger’s concepts of reform, you recognize what a disaster they would be for access, equity and affordability. You really must ask yourself why she likes the proposals of Senators Obama and Clinton. When you figure that out, speak up!

Single-Payer Healthcare: a Reality for California?

Voices From the Nursing School

By Julie Illi Laird
Synapse, UCSF Student Paper

As a nurse, I have seen countless examples of the devastating outcomes that result when people do not have access to care due to lack of insurance. Just last week, I visited a 35-year-old cancer patient to help her manage oxygen treatments at home. She had beaten breast cancer at age 25. However, she was a restaurant worker and did not have health insurance; consequently, once she started working again, she no longer qualified for MediCal and could no longer see a doctor to be screened for recurrence. Sadly, when the cancer did come back it was not detected until she went to the ER one night when she could no longer breathe. Cancer metastases cover most of both her lungs. As she can no longer work, she is once again eligible for MediCal. Unfortunately, this coverage has come too late to save her life. I wish this story was an isolated event, but the fact is 18,000 people die in the U.S. every year solely because they do not have health insurance. A single-payer system would not only give access to care to the millions of currently uninsured, it would also create a better environment for all healthcare workers to practice in.

The reality of a single-payer system for California may not be as far away as you think. Senate bill 840 — a proposal for single-payer healthcare in California — was passed on the floor of both the Senate and the Assembly last year (only to be later vetoed by the governor). It will be re-introduced in the upcoming months. State Senator Sheila Kuehl, author of SB840, explains the rationale behind the bill: “SB 840 would replace insurance companies with a statewide trust fund that collects premiums paid by employers and individuals. The creation of a single state fund reduces the administrative portion of California’s healthcare costs from nearly 30 percent to under 10 percent. With everyone in one pool, which spreads the risk as widely as possible, no one would be denied coverage for a preexisting condition. Individuals would be free to change jobs, start a business, go to school or start a family without losing coverage or doctors they trust.”

SB 840 is good for the practice of healthcare, as well. Under this new system, decision-making would be returned to physicians and advanced practice nurses as treatment options would no longer be determined by what is covered by each individual’s insurance plan. SB 840 would end uncompensated medical care by ensuring that everyone has a payer. Paperwork would be infinitely streamlined and medical offices would no longer need teams of administrators to argue for authorization and bill dozens of different insurance companies every month. Practices will be able to refocus their staffing on nurses and other providers, which will increase the quality of care and decrease medical errors. Continuity of care will improve as patients are no longer forced to change medical groups when they switch jobs or their employers switch plans. This will lead to more meaningful, long-term relationships between providers and patients — improving quality of care and patient safety.

In the face of a rapidly deteriorating healthcare system, the term “universal healthcare” has taken on a new popularity in 2008. Many of current proposals, however, are simply mandates for universal coverage rather than universal care. Mandating insurance provides neither a guarantee of affordable insurability, nor actual medical services, nor does it resolve the problems of the tremendously expensive administrative overhead and system inefficiencies of the private insurance-based system. While insurance mandates make perfect political sense, they are complete economic non-sense. The only truly comprehensive, economically feasible method for providing universal care is the establishment of a single-payer system.

The advantages of a single-payer healthcare system for California are clear. Increasing numbers of UCSF students not only agree, but also are doing something about it! In a tradition that started in January 2006, almost 400 health professional students from across the state converged in Sacramento on January 28 to call on state legislators to support SB 840. Participants conducted legislative visits with 38 (out of 40) Senators and 65 (out of 80) Assebly members securing at least four new co-authorships, two new yes votes, and numerous pledges for continued support of SB 840. Preceding the legislative visits, a raucous rally was held on the Capitol steps. In a sea of white coats and rally signs, keynote speaker Sheila Kuehl announced, “That our newest generation of [healthcare providers] is exhibiting such a strong commitment to universal health care means it is only a matter of time until it becomes a reality. They are acting to protect not only their future patients, but also their own ability to practice good medicine. [Legislators] must listen.” And, so should you. To learn more about the issue and how you can get involved, visit the UCSF student run website “Nursing Students for Universal Healthcare” at http://ns4universalhealthcare.blogspot.com/

Julie Illi Laird is a MEPN student, UCSF School of Nursing.

Rising insurance costs may force MDs to quit

By Saul Friedman
Gray Matters
Newsday.com
2:03 PM EDT, May 9, 2008

Let’s hear it for doctors!

I know, everyone has a doctor story, including me. But most of today’s doctors are besieged, working under great pressure from insurance companies and the corporations that own or finance their practices. They are trying to keep up with the latest devices, drugs and developments in their fields, and dealing with sick patients who can’t afford all the medical care they should get.

Also, they don’t make huge amounts of money (average is $200,000). And added to that is the threat, peculiar to New York State that, beginning July 1, every doctor must cough up an average of $50,000 over the next five years to replenish the medical malpractice insurance fund, then face steep increases in malpractice insurance. On this, more later.

These are among the reasons why a new survey of 2,193 doctors by the University of Indiana School of Medicine, published April 1 in the Annals of Internal Medicine, found that 59 percent support legislation that would establish a national health insurance program; 32 percent are opposed. Authors of the study said the sample was representative of the nation’s 800,000 physicians.

The findings reflected a sharp increase over a 2002 National Institutes of Health survey of physicians that found 49 percent favored a national health insurance program and 40 percent were opposed. Dr. Ronald T. Ackerman, co-director of the latest study, said support for national health insurance has increased across all specialties.

Support was particularly strong among psychiatrists (83 percent), emergency physicians (69), pediatricians (65), internists (64), and family physicians (60). Fifty-five percent of general surgeons supported national health insurance, but that was double the percentage of 2002.

“Across the board,” Ackerman said, “more physicians feel that our fragmented and for-profit insurance system is obstructing good patient care.” Indeed, ask your own doctor. Virtually all of mine tell me they favor national health insurance.

In December the 124,000-member American College of Physicians went further and endorsed a single-payer national health insurance program, like “Medicare for all.”

And even the once-stodgy American Medical Association is lobbying hard for a stronger, better-financed Medicare program.

We are not talking “socialized medicine,” where doctors work for the government. The excellent Veterans Administration hospitals, where doctors, nurses and lab people work for the V.A., come close to the socialist model (as do military doctors and those on the White House and congressional payrolls). But “socialized medicine,” says Yale political scientist Jacob Hacker, “is the bogeyman that just won’t die.” And it’s been “hurled at every national health plan … even Medicare.”

But as every beneficiary knows, doctors and hospitals that accept Medicare work for themselves and are paid by a public insurance system that has worked well for more than 40 years, despite efforts by this administration and its allies to starve it to death and turn it over to private insurers. If Medicare becomes the single-payer model for an American national health insurance program, doctors and patients will get the program that most of them have told pollsters they favor.

As usual, the Congress lags far behind the public. Until that changes, doctors as well as patients will live in limbo, beset by the problems of private for-profit insurance. In New York, many physicians could be driven out of their practices, according to my friend Dr. Christopher J. Beatty, a general surgeon, in East Setauket and Port Jefferson, who has been practicing for 33 years.

He asks that I warn patients that “come July 1, their doctors may be gone.” The reason: Eric Dinallo, the state superintendent of insurance, says he’s required by law to replenish the shortfall in the reserves of the state’s malpractice insurance fund. To do so, Dinallo warns, would mean a surcharge for every doctor of about $50,000, to be followed by sharp raises of 15 to 25 percent in malpractice insurance premiums.

“In my case,” Beatty wrote, “my already outrageous malpractice premium of $100,000 will go to $125,000 and adding $50,000 on top of that, you have a quarterly payment due on July 1 of $81,250. That is about half my yearly salary.” Beatty is a salaried employee of a surgical group, which may be forced by such expenses to lay off surgeons. “I did five major operations last week and assisted on five others,” he said. “Who will replace me?”

There have been similar cries of alarms among other New York doctors. And dozens of physicians have left the state or are reported preparing to leave. Dinallo has said he will impose the surcharge unless the legislature acts to relieve the crisis. Beatty and his colleagues are urging lawmakers to pass malpractice reform, which had been favored by Eliot Spitzer. But it is strongly opposed by trial lawyers, of which Assembly Speaker Sheldon Silver is one.

Critics of reform minimize the effects of malpractice claims on the crisis and oppose reforms that would put a cap on judgments. Rather, they blame the crisis on mismanagement of the fund, which Beatty says was raided to pay for other state programs.

Medicare for all may not end malpractice or the need for such insurance, although such cases have been rare in my experience with Medicare. (Medicare has refused to pay for a hospital’s errors.) But perhaps taking the profit motive and greed out of health care could help doctors as well as patients.

Copyright (c) 2008, Newsday Inc.

Herzlinger and McCanne on “choice” in candidates’ proposals

Who will fix America’s broken health care system?

The Real News Network
May 8, 2008

Prof. Regina E. Herzlinger is the Nancy R. McPherson Professor of Business Administration Chair at the Harvard Business School. She is the author of bestselling books “Who Killed Health Care?” and “Consumer-Driven Health Care: Implications for Providers, Payers, and Policymakers”.

Dr. Don McCanne is a Senior Health Policy Fellow with Physicians for a National Health Program, a widely recognized organization that represents over 15,000 doctors across the US that advocate for a single-payer national health insurance plan.

Transcript

VOICEOVER: Professor Regina Herzlinger of the Harvard School of Business and Dr. Don McCanne of Physicians for a National Health Program each evaluated the health care platforms of all three candidates.

PROF. REGINA HERZLINGER, HARVARD SCHOOL OF BUSINESS: I like all three platforms that the presidential candidates are offering. All three of them offer choice to the American consumer, although Senator McCain has put that much more front and center. Choice is very important. It is very important not to be at the mercy of a single payer, whether that single payer for your health insurance is your employer or your government, because they may not give you what you want.

DR. DON MCCANNE, PHYSICIANS FOR A NATIONAL HEALTH PROGRAM: The three proposals of the presidential candidates all fall short of what we think needs to be done. They all build on the private health insurance model. That’s a highly defective model, which is wasting a tremendous amount of resources and failing to provide the coverage that we need. Private plans compete based on the premium they charge. What we really want is competition between health care providers, physicians and hospitals competing based on quality. And that requires that patients have freedom to choose their doctors. Private plans take away that freedom.

VOICEOVER: Both experts took a look at how close Obama and Clinton’s proposals will get to achieving universal coverage.

MCCANNE: The Clinton model mandates individuals to purchase health insurance, whereas Obama does not. He says that we need to make plans affordable so people can purchase them. Neither approach is going to get everyone insured. Obama’s approach is flawed because the private health plans are not going to be able to have enough benefits if they’re going to have affordable premiums. So people will still go without health care in his model. In Hillary Clinton’s model, the plans will not be affordable. So requiring individuals to purchase a plan they can’t pay for is unrealistic. The flaw of their proposal is that the private health insurance plan has become an obsolete model of financing health care.

The Real News video (3 minutes):
http://www.therealnews.com/web/index.php?thisdataswitch=0&thisid=1457&thisview=item&renewx=2008-05-08+09%3A36%3A45

Same video also accessible at:
https://www.pnhp.org/news/2008/may/video_who_will_fix_.php

Comment:

By Don McCanne, MD

Anyone following the national dialogue on reform is certainly aware of the rhetoric over “choice.” Those supporting reform that builds on private health plans use “choice” to mean choice of health plans. Those supporting a publicly financed and publicly administered national health program use “choice” to mean choice of physicians and hospitals and other health care professionals and institutions.

People do like to have choice. The three remaining presidential candidates understand that and tout the choice that their heath care proposals offer. Of course, that is only the choice of health plans, a choice that usually takes away your freedom to choose your health care professionals. But they never mention this latter point since they would be admitting to a serious flaw in their proposals. Even libertarians should be concerned about loss of freedom to choose your own health care.

One irony here is that Regina Herzlinger, who has been referred to as the Godmother of consumer-driven health care and who is an outspoken opponent of single payer, states that she likes “all three platforms that the presidential candidates are offering.” You would think that the Democratic candidates would support a progressive model of reform. Instead, they are supporting a neoliberal model based on the conservative framing of private market health plans.

When you fully understand Herzlinger’s concepts of reform, you recognize what a disaster they would be for access, equity and affordability. You really must ask yourself why she likes the proposals of Senators Obama and Clinton. When you figure that out, speak up!

AHIP on Medigap's Impact On Medicare Costs

Taking A Fresh Look At Medigap's Impact On Medicare Costs

New Health Affairs Study Shows That Medigap Coverage May Have A Much Smaller Impact on Medicare Spending Than Previously Estimated.

America’s Health Insurance Plans (AHIP)
Policy Brief

Previous studies, including those conducted by the Congressional Budget Office (CBO), have reported that Medigap policyholders incur as much as 25 percent more Medicare expenditures than beneficiaries with FFS-only coverage. Thus CBO periodically estimates that restrictions on Medigap’s first-dollar coverage would significantly reduce Medicare outlays.

A recent report from America’s Health Insurance Plans (AHIP) presents new information that explains why past conclusions on this topic should be reconsidered.

Besides controlling for age, gender, and geography as done in prior analyses, the AHIP study broke new ground by analyzing two new factors that turned out to be critical: 1) use of services provided through the Veterans Administration (VA) or at military facilities, and 2) Medicare beneficiaries’ diagnoses (in lieu of self-reported health status or health conditions).

Key Findings

* Nearly half of the increase in Medicare spending that prior studies have reported among beneficiaries with Medigap disappeared when AHIP controlled for use of services received through the VA or at military facilities.

* Detailed analyses of beneficiaries’ health status based on actual diagnosis rather than on the self-reported data used in previous studies found that beneficiaries with Medigap are more likely than those with FFS-only coverage to have high-cost chronic conditions. Therefore, much of the difference in health costs between the two groups may stem from differences in health status rather than differences in insurance coverage.

In short, these results call into question past assumptions about the impact of Medigap coverage on Medicare claims costs. Before taking any action that would affect the Medigap program, policymakers should demand a thorough reexamination of previous research on the health status, service use, and health spending among Medigap policyholders.

http://www.ahipresearch.org/pdfs/MedigapFreshLook2008.pdf#http://www.ahipresearch.org/pdfs/MedigapFreshLook2008.pdf

Health Affairs: “Medigap Coverage And Medicare Spending: A Second Look”
by Jeff Lemieux, Teresa Chovan and Karen Heath (AHIP staff)
http://content.healthaffairs.org/cgi/content/abstract/27/2/469

Comment:

By Don McCanne, MD

Medigap plans are standardized supplemental private insurance plans that fill in some of the gaps in Medicare coverage. Medigap plans, as a group, have amongst the lowest medical loss ratios of all private insurance plans; that is, they pay out the least for health care benefits. Thus the plans are very lucrative for the private insurers, but they are amongst the worst values in private health care coverage.

Previous studies have indicated that individuals with Medigap coverage use more health care services than those covered by Medicare alone. The theory is that patients insulated from out-of-pocket costs will use less discretion in accessing health care, resulting in greater use of health care resources. In fact this does occur to a limited extent, but the recent work by John Nyman and others on the moral hazard theory demonstrates that much of that health care is beneficial (welfare gain rather than a welfare loss). It is particularly important to understand whether those with Medigap coverage actually do have greater health care needs that would result in greater use of services.

This study done by AHIP staff members demonstrates that when the numbers are corrected for those using the VA and military systems and corrected for health status, then much of increased spending for Medigap patients is very appropriate.

This result is quite convenient for the insurance industry. Those supporting an increase in cost-sensitivity for patients (consumer-directed health care) have been advocating for paring back the financial insulation that Medigap policies provide. Obviously the insurance industry does not want to reduce their market for these highly profitable products, and so they are able to use this study to counter this argument.

The result of this study also is quite convenient for those of us who support reasonably comprehensive health care for everyone. The Medigap plans do improve access to health care.

However, our conclusion is the opposite of AHIP’s. AHIP members would continue to market these lucrative plans even though they represent a terrible value for the patient/consumer. In sharp contrast, we would fold the very modest benefits of the Medigap plans into the traditional Medicare program. Based on the results of this study and on newer theories of moral hazard, the increase in Medicare spending would likely be mostly (if not completely) offset by the savings gained by the elimination of the profound administrative waste of the Medigap plans.