PNHP

Tax evasion through HSAs

Tax evasion through HSAs

Tax bill could boost HSA administration costs

By Jerry Geisel
Business Insurance
April 10, 2008

Tax legislation approved Wednesday by the House Ways and Means Committee could significantly increase the costs of administering health savings accounts.

H.R. 5719, approved on a 23-17 vote, includes a provision that would effectively require HSA administrators — which often are banks — to put new systems in place to substantiate that HSA distributions are used to pay for health care-related expenses. That would be a big change from the current low-overhead system, in which employees with HSAs pay their uncovered health care expenses, such as those falling under a deductible, from their accounts with a bank-issued debit card or bank-issued checks. No substantiation is required that the distributions are, in fact, used for payment of health care expenses.

“Because most community banks and credit unions simply do not have the resources to put such costly technology into production, they would have to buy from vendors and pass on the cost to their accountholders,” said a memorandum prepared by the HSA Coalition, an HSA advocacy group in Washington.

Under current law, funds can be withdrawn tax-free from HSAs if used to pay for health care-related expenses. Funds withdrawn for other purposes are taxed, with an additional 10% penalty tax imposed.

The provision is expected to generate about $308 million in additional tax revenue for the federal government over the next 10 years, according to the congressional Joint Committee on Taxation.

http://www.businessinsurance.com/cgi-bin/news.pl?post_date=2008-04-10&id=12695

And…

Quote of the Day

PNHP
December 1, 2003

A major flaw in our health care system is the profound administrative waste that diverts funds from patient care. HSAs add a very significant administrative layer and interject more middlemen into the process.

https://pnhp.org/news/2003/december/stop_the_hsa_tsunami.php

Comment:

By Don McCanne, MD

In this day of negative savings rates and massive credit card debt, having readily accessible cash can be a problem. Health Savings Accounts (HSAs) are not insurance funds but are cash accounts that belong to the individual. By design, they are specifically intended to make individuals more aware of their own spending. Although intended to pay medical bills, shouldn’t individuals be able to tap these funds for other pressing needs such as paying past-due rent, or repairing an automobile that is essential for one’s employment? Well, no.

HSAs are a tax scheme in which we taxpayers subsidize the health care of individuals with incomes high enough to qualify for the tax relief. It would be inappropriate if these taxpayer-subsidized funds were used to purchase entertainment centers or expensive vacation trips. Unfortunately, the only way to ensure that these funds are used for health care is to establish an administrative process to clear each payment made out of the accounts. Otherwise, the temptation for individuals with HSAs to cheat their fellow taxpayers is just too great. It is far better to remove the temptation in advance than to penalize it after the fact.

Before the HSA legislation was signed (part of the Medicare Modernization Act), we cautioned that this would add another administrative layer to the administrative excesses that already drain resources from health care. Not only are the administrative services essential to prevent tax fraud, they are also essential to itemize qualified expenses that must be met before benefits of the associated high-deductible health plans can be accessed.

Employers, banks, credit card companies, and individuals may well find this hassle to be too great of a burden. Maybe then they’ll decide that HSAs aren’t such a great idea after all. Instead of splitting our risk pools into millions of individual accounts, maybe they will decide that it really would be better to establish one single, equitably-funded, universal risk pool – fair funding without the profound administrative waste. It does sound like an idea whose time has come.

Co-Payments Soar for Drugs With High Prices

By GINA KOLATA
The New York Times
April 14, 2008

Health insurance companies are rapidly adopting a new pricing system for very expensive drugs, asking patients to pay hundreds and even thousands of dollars for prescriptions for medications that may save their lives or slow the progress of serious diseases.

With the new pricing system, insurers abandoned the traditional arrangement that has patients pay a fixed amount, like $10, $20 or $30 for a prescription, no matter what the drug’s actual cost. Instead, they are charging patients a percentage of the cost of certain high-priced drugs, usually 20 to 33 percent, which can amount to thousands of dollars a month.

The system means that the burden of expensive health care can now affect insured people, too.


Daniel Rosenbaum for The New York Times
Robin Steinwand had been paying $20 a month for her
multiple sclerosis drug, which she keeps in the refrigerator.
When she went to pick up her prescription in January, it
cost $325.

No one knows how many patients are affected, but hundreds of drugs are priced this new way. They are used to treat diseases that may be fairly common, including multiple sclerosis, rheumatoid arthritis, hemophilia, hepatitis C and some cancers. There are no cheaper equivalents for these drugs, so patients are forced to pay the price or do without.

Insurers say the new system keeps everyone’s premiums down at a time when some of the most innovative and promising new treatments for conditions like cancer and rheumatoid arthritis and multiple sclerosis can cost $100,000 and more a year.

But the result is that patients may have to spend more for a drug than they pay for their mortgages, more, in some cases, than their monthly incomes.

The system, often called Tier 4, began in earnest with Medicare drug plans and spread rapidly. It is now incorporated into 86 percent of those plans. Some have even higher co-payments for certain drugs, a Tier 5.

Now Tier 4 is also showing up in insurance that people buy on their own or acquire through employers, said Dan Mendelson of Avalere Health, a research organization in Washington. It is the fastest-growing segment in private insurance, Mr. Mendelson said. Five years ago it was virtually nonexistent in private plans, he said. Now 10 percent of them have Tier 4 drug categories.

Private insurers began offering Tier 4 plans in response to employers who were looking for ways to keep costs down, said Karen Ignagni, president of America’s Health Insurance Plans, which represents most of the nation’s health insurers. When people who need Tier 4 drugs pay more for them, other subscribers in the plan pay less for their coverage.

But the new system sticks seriously ill people with huge bills, said James Robinson, a health economist at the University of California, Berkeley. “It is very unfortunate social policy,” Dr. Robinson said. “The more the sick person pays, the less the healthy person pays.”

Traditionally, the idea of insurance was to spread the costs of paying for the sick.

“This is an erosion of the traditional concept of insurance,” Mr. Mendelson said. “Those beneficiaries who bear the burden of illness are also bearing the burden of cost.”

And often, patients say, they had no idea that they would be faced with such a situation.

It happened to Robin Steinwand, 53, who has multiple sclerosis.

In January, shortly after Ms. Steinwand renewed her insurance policy with Kaiser Permanente, she went to refill her prescription for Copaxone. She had been insured with Kaiser for 17 years through her husband, a federal employee, and had had no complaints about the coverage.

She had been taking Copaxone since multiple sclerosis was diagnosed in 2000, buying a 30 days’ supply at a time. And even though the drug costs $1,900 a month, Kaiser required only a $20 co-payment.

Not this time. When Ms. Steinwand went to pick up her prescription at a pharmacy near her home in Silver Spring, Md., the pharmacist handed her a bill for $325.

There must be a mistake, Ms. Steinwand said. So the pharmacist checked with her supervisor. The new price was correct. Kaiser’s policy had changed. Now Kaiser was charging 25 percent of the cost of the drug up to a maximum of $325 per prescription. Her annual cost would be $3,900 and unless her insurance changed or the drug dropped in price, it would go on for the rest of her life.

“I charged it, then got into my car and burst into tears,” Ms. Steinwand said.

She needed the drug, she said, because it can slow the course of her disease. And she knew she would just have to pay for it, but it would not be easy.

“It’s a tough economic time for everyone,” she said. “My son will start college in a year and a half. We are asking ourselves, can we afford a vacation? Can we continue to save for retirement and college?”

Although Kaiser advised patients of the new plan in its brochure that it sent out in the open enrollment period late last year, Ms. Steinwand did not notice it. And private insurers, Mr. Mendelson said, can legally change their coverage to one in which some drugs are Tier 4 with no advance notice.

Medicare drug plans have to notify patients but, Mr. Mendelson said, “that doesn’t mean the person will hear about it.” He added, “You don’t read all your mail.”

Some patients said they had no idea whether their plan changed or whether it always had a Tier 4. The new system came as a surprise when they found out that they needed an expensive drug.

That’s what happened to Robert W. Banning of Arlington, Va., when his doctor prescribed Sprycel for his chronic myelogenous leukemia. The drug can block the growth of cancer cells, extending lives. It is a tablet to be taken twice a day — no need for chemotherapy infusions.

Mr. Banning, 81, a retired owner of car dealerships, thought he had good insurance through AARP. But Sprycel, which he will have to take for the rest of his life, costs more than $13,500 for a 90-day supply, and Mr. Banning soon discovered that the AARP plan required him to pay more than $4,000.

Mr. Banning and his son, Robert Banning Jr., have accepted the situation. “We’re not trying to make anybody the heavy,” the father said.

So far, they have not purchased the drug. But if they do, they know that the expense would go on and on, his son said. “Somehow or other, myself and my family will do whatever it takes. You don’t put your parent on a scale.”

But Ms. Steinwand was not so sanguine. She immediately asked Kaiser why it had changed its plan.

The answer came in a letter from the federal Office of Personnel Management, which negotiates with health insurers in the plan her husband has as a federal employee. Kaiser classifies drugs like Copaxone as specialty drugs. They, the letter said, “are high-cost drugs used to treat relatively few people suffering from complex conditions like anemia, cancer, hemophilia, multiple sclerosis, rheumatoid arthritis and human growth hormone deficiency.”

And Kaiser, the agency added, had made a convincing argument that charging a percentage of the cost of these drugs “helped lower the rates for federal employees.”

Ms. Steinwand can change plans at the end of the year, choosing one that allows her to pay $20 for the Copaxone, but she worries about whether that will help. “I am a little nervous,” she said. “Will the next company follow suit next year?”

But it turns out that she won’t have to worry, at least for the rest of this year.

A Kaiser spokeswoman, Sandra R. Gregg, said on Friday that Kaiser had decided to suspend the change for the program involving federal employees in the mid-Atlantic region while it reviewed the new policy. The suspension will last for the rest of the year, she said. Ms. Steinwand and others who paid the new price for their drugs will be repaid the difference between the new price and the old co-payment.

Ms. Gregg explained that Kaiser had been discussing the new pricing plan with the Office of Personnel Management over the previous few days because patients had been raising questions about it. That led to the decision to suspend the changed pricing system.

“Letters will go out next week,” Ms. Gregg said.

But some with the new plans say they have no way out.

Julie Bass, who lives near Orlando, Fla., has metastatic breast cancer, lives on Social Security disability payments, and because she is disabled, is covered by insurance through a Medicare H.M.O. Ms. Bass, 52, said she had no alternatives to her H.M.O. She said she could not afford a regular Medicare plan, which has co-payments of 20 percent for such things as emergency care, outpatient surgery and scans. That left her with a choice of two Medicare H.M.O’s that operate in her region. But of the two H.M.O’s, her doctors accept only Wellcare.

Now, she said, one drug her doctor may prescribe to control her cancer is Tykerb. But her insurer, Wellcare, classifies it as Tier 4, and she knows she cannot afford it.

Wellcare declined to say what Tykerb might cost, but its list price according to a standard source, Red Book, is $3,480 for 150 tablets, which may last a patient 21 days. Wellcare requires patients to pay a third of the cost of its Tier 4 drugs.

“For everybody in my position with metastatic breast cancer, there are times when you are stable and can go off treatment,” Ms. Bass said. “But if we are progressing, we have to be on treatment, or we will die.”

“People’s eyes need to be opened,” she said. “They need to understand that these drugs are very costly, and there are a lot of people out there who are struggling with these costs.”

WellPoint and UCLA privacy breaches

WellPoint probing data breach for 130,000 members

Reuters
April 9, 2008

Health insurer WellPoint Inc is investigating the cause of a breach involving protected health information for about 130,000 members, the company said on Wednesday.

The largest U.S. health insurer by membership said it recently discovered data became publicly available over the Internet in the past 12 months.

WellPoint, which offers an array of insurance through public and employer-sponsored plans, declined to identify which type of members were involved, or which states they were in, beyond saying they were in several.

http://www.reuters.com/article/domesticNews/idUSN0921842120080409

And…

Snooping in records has a history at UCLA

By Charles Ornstein
Los Angeles Times
April 11, 2008

Though UCLA Medical Center has portrayed recent privacy breaches as the rare actions of rogue employees, the hospital has known since at least 1995 that staffers were peeking into the medical records of such prominent patients as Tom Cruise and Mariah Carey — and even spying on one another’s medical care, according to records and interviews.

The stakes for hospitals grew in 2003 when a federal law, the Health Insurance Portability and Accountability Act, put in place criminal and civil sanctions for breaches of patient confidentiality.

It appears that UCLA has not gone as far as a major competitor — Cedars-Sinai Medical Center — in providing extra security for the files of high-profile patients.

UCLA officials said this week that every day they audit the medical records of 72 high-profile people who have been patients to monitor which employees view them. Cedars-Sinai reviews 10 times as many.

Only certain employees can access the records at Cedars-Sinai, and if an unauthorized user so much as attempts to get in, he or she can be fired.

Cedars-Sinai spokesman Richard Elbaum said the hospital also uses real-time alerts to signal inappropriate access of certain medical records. And the records of high-profile patients have a special on-screen warning that reads, “This patient record is restricted. All accesses are logged and audited. Inappropriate accesses are grounds for disciplinary action and/or dismissal.”

http://www.latimes.com/news/printedition/california/la-me-ucla11apr11,1,878793,full.story

Comment:

By Don McCanne, MD

Electronic medical records (EMRs) and integrated information technology systems (IT systems) will reduce health care costs in the future. At least that is what the politicians would have you believe, though the systems are expensive and will increase net costs since the expense and maintenance would more than offset any efficiency improvements.

Although EMRs and IT systems are helpful tools, they introduce exposure to privacy breaches that have implications far beyond those of paper records. Looking through a patient’s paper chart is one thing, but obtaining digital information that can be unleashed over the Internet for all the world to see, without any possibility of retracting the release of that information, is quite another.

Representatives of the IT industry claim that information is made secure through encryption. Even if the encryption involves a gazillion steps to access information, individuals such as physicians, nurses, pharmacists, billing administrators, and the patients themselves, who need that information, must be able to access it. It is impossible to create a security system that ensures appropriate access only to those with a need to know, while excluding access to every single other individual who has no right to that information.

Contrasting themselves with UCLA, the officials at Cedars-Sinai gloat that they have adopted extra measures to protect the information of high-profile patients. The implication is that the medical information about most of us does not warrant the same security level, and thus is more vulnerable to breaches. But even for the high-profile patients, many individuals would have legitimate access to those records. How can any administrator ever be certain that each individual with access would never abuse the responsibility that goes along with knowledge of patient’s most intimate medical history and findings? And there is no way to prevent others with nefarious intents (hackers) to access records if they really want the information.

The next politician who claims that we will control costs through EMRs and IT systems needs to be immediately confronted with this request. “Please explain precisely the technology that will be used to ensure that our private medical information can NEVER be unleashed on the Internet.” They will not have an answer, because it doesn’t exist.

Medical students rally for health care

By Jesse Muhammad
Staff Writer
HOUSTON (FinalCall.com)
Apr 10, 2008

Rallying for affordable health care for all, hundreds of medical students from around the country recently gathered at Houston City Hall in conjunction with the American Medical Student Association’s (AMSA) 58th Annual Convention. The group met at the Hyatt Regency Houston and marched to City Hall.

According to statistics, Texas has the largest uninsured population in the nation. Houston alone has 1.1 million uninsured people. Almost 40,000 are children.

“A person is a person; a child is a child; and there are no good moral, ethical, rational or medical reasons to ever exclude human beings from getting the health care they deserve,” said Flavio Casoy, AMSA’s Jack Rutledge Fellow and leader of the rally. “As future physicians, we declare that healthcare is a human right for all people, regardless of race, gender, sexual orientation or country of origin. We invite all Houston residents to join us in asking the 2008 presidential candidates to support a single, public, national health insurance program.”

Low-income workers affiliated with Service Employees International Union also spoke at the rally about their daily struggle to secure affordable health care for their families from their employers.

In addition to the rally, AMSA’s annual convention attracted more than 1,500 attendees, who attended workshops and seminars on issues such as pharmaceutical industry marketing, minority health, 2008 election issues, immigrant health, healthcare and the aging population, the AIDS epidemic and mental health.

“Students coming together like this sends a message to the next president of the United States, that we as young people can impact change,” said Dan Glickman, a medical student at Rutger Canden in New Jersey.

Bryan Boynton, a junior at the same school, added, “It’s all about the future. The main issues today are the economy and health care. This rally is critical.”

“As the future physicians, we see a broken system, so if there is going to be change then we are going to be apart of it,” said Laura Janneck of Case Western Reserve University.

Jamil Muhammad, a senior at Girls and Boys Preparatory Academy, came out to show his support. “I am here because healthcare for our families is critical. Most low- income families can’t afford it and young people are suffering from lack of medical check-ups. This was a powerful stance by young people today.”

The American Medical Student Association, with more than a half-century history of medical student activism, is the oldest and largest independent association of physicians-in-training in the United States. Founded in 1950, AMSA is a student-governed, non-profit organization committed to representing the concerns of physicians-in-training. With more than 68,000 members, including medical and premedical students, residents and practicing physicians, AMSA is committed to improving medical training as well as advancing the profession of medicine.

Health Policy Placebos

by DAVID U. HIMMELSTEIN & STEFFIE WOOLHANDLER
The Nation
April 14, 2008

We don’t administer useless nostrums for curable cancer–even when effective treatment is arduous. Yet Hillary Clinton and Barack Obama prescribe the health policy equivalent of placebos. (John McCain suggests arsenic, but more about him another time.)

The Democratic contenders proffer a superficially plausible reform model that has a long record of failure. Their proposals trace back to Nixon’s 1971 employer mandate scheme, concocted to woo moderate Republicans away from Ted Kennedy’s single-payer plan. Like mandate reforms subsequently passed (and failed) in Massachusetts (1988), Oregon (1989) and Washington (1993), Clinton’s and Obama’s plans would couple subsidies for the poor with a requirement that large employers foot part of the bill for employee coverage. These earlier reforms also required the self-employed to buy coverage, an individual mandate that Clinton (like the 2006 Massachusetts reform) would expand to virtually all; Obama limits his mandate to children. In both versions, a federal agency would serve as insurance broker, selling a new public plan and a menu of private ones–reprising the format of Medicare’s ongoing privatization, implemented through competition rigged to favor private plans [see Trudy Lieberman, “The Medicare Privatization Scam,” July 16/23, 2007].

The earlier state reforms foundered on the shoals of cost. As health spending soared, employers rebelled and legislators rescinded the mandates and subsidies. Massachusetts looks set to replay this experience; only 7 percent of those required to buy unsubsidized coverage have yet to sign up, while the state wrestles with massive cost overruns for subsidies.

Proposals that rely on private insurers can add coverage only by adding costs. Both Democrats promise savings from computerization, prevention and chronic disease-care management. Yet medical computing hasn’t yielded savings, despite thirty years of rosy promises. As for prevention, a raft of studies show that it saves lives but not money. And the Medicare Health Support program recently abandoned its care management project because it yielded no savings.

Both Democrats’ proposals forgo the administrative savings possible under single-payer national health insurance (NHI) such as that proposed by the Conyers/Kucinich bill (HR 676) and by Ralph Nader. Bureaucracy consumes 31 percent of US health spending, versus 17 percent in Canada. The difference translates into $350 billion frittered away annually here, where a million healthcare workers, as well as hundreds of thousands in the insurance industry, spend their days on useless paperwork.

This waste is a natural byproduct of private insurance. Private plan overhead is eleven times that of Canada’s NHI program. Each dollar spent on private premiums buys only 88 cents of care; the rest pays for insurers’ marketing, underwriting, utilization reviewers and profits–and for the billions paid to their CEOs. Fragmented coverage also means duplication of claims-processing facilities and mountains of paperwork for doctors and hospitals, which must deal with multiple insurance products each with its own eligibility rules, co-payments, referral networks, etc.–tasks that are absent in Canada. Our multiplicity of insurers also precludes the payment to hospitals of a global, lump-sum budget. In Canada global budgets obviate the need for most hospital billing and much of the internal accounting needed to attribute costs to individual patients and payers.

Clinton’s and Obama’s plans also lack credible means to redirect the hundreds of billions now wasted on overtreatment. Hospitals, doctors and equipment firms profit from investments in expensive high-tech care, encouraging the overuse of interventions that help some patients but harm others–for example, spine surgery, cardiac stents and CAT scans (which often deliver radiation equivalent to 500 chest X-rays). Insurers limit their outlays through intrusive case-by-case reviews or by raising co-payments. But they have little interest in systemwide cost control, so their efforts have mainly shifted costs to patients or other payers–the economic equivalent of squeezing a balloon. In contrast, NHI would allow explicit public decision-making about today’s capital investments that shape tomorrow’s care, and straightforward mechanisms to limit profit.

Without savings, the tax increases Obama and Clinton propose would be eaten up by subsidies for the uninsured, leaving nothing for the majority of Americans already covered but often unable to afford care. As we found in a 2005 study with Elizabeth Warren and Deborah Thorne, three-quarters of the 750,000 families driven to bankruptcy each year by illness or medical bills had coverage, though with unaffordable co-payments, deductibles and uncovered services. NHI would eliminate these gaps.

Private insurers caused the healthcare crisis. Yet both Democratic contenders advocate reforms that would fortify private plans, making government their debt collector. Their proposals, while palatable to the health industry–which supplies the Democrats with huge donations as well as key officials (DNC credentials committee co-chair James Roosevelt moonlights as an insurance company CEO)–cannot cure our healthcare crisis.

Nonetheless, we’re optimistic about the prognosis for healthcare reform. If you turn up the volume on C-SPAN you can hear the audience cheering whenever Clinton or Obama lets the words “single payer” slip out–a reflection of the fact that three-fifths of the general public, as well as the 124,000-member American College of Physicians, support NHI. As in the JFK era, a charismatic, if only tepidly liberal, candidate can help raise hopes and expectations, igniting a mass movement that pushes a progressive agenda further and faster than the candidate intends.

Obama speaks out on issues

KCPNews

KPC (questioners): Health care is an important issue for most voters. More and more physicians are turning to national health insurance as a solution to our health insurance coverage gaps. According to a survey reported last month by Indiana University, of more than 2,000 doctors surveyed, 59 percent said they support legislation to establish a national health insurance program such as “Medicare for all” to insure all Americans. Why do you think your plan which continues our current patchwork of both public and private insurance is better than expanding Medicare into a “Medicare for all” universal health insurance plan?

Obama: I have said in the past if I were designing a system from scratch I would probably prefer a single-payer system. I think the administrative advantages are significant and by having patients in a single system they are much more likely to benefit from preventive care because the person providing the care has an incentive (to keep people in the system well). There are significant advantages.

The problem is we are not starting from scratch. A sizable percentage of the population gets health insurance from their employers and I think we are going to have to see changed attitudes before we would see a single payer system. I also think there is some advantage to the marketplace being involved and increased competition. So I have said if you are in an employer based plan currently, then we will work with your employer to lower premiums. If you don’t have health insurance then you can buy into a plan that is similar to the plan I have as a member of Congress, and there won’t be exclusions for preexisting conditions. If you can’t afford the plan, then we will subsidize you.

There will be tight regulations on insurers to make sure that we are reimbursing for preventive services, that we are emphasizing the management of the care of the chronically ill more effectively and that we are investing in information technology to reduce bureaucracy, reduce error and improve quality. If we do all those things, we can save as much as $100 – $150 billion per year that we can then use to subsidize those currently without care. These principles have to be applied to Medicare and Medicaid, as well…

This is the most effective way to provide the help people need immediately, and I think this is something we can accomplish within my first term as president of the United States of America.

Health Care System Profiles

Author(s): Karsten Vrangbaek, Isabelle Durand-Zaleski, Reinhard Busse, Niek Klazinga, and Anders Anell
Commonwealth Fund
March 2008

Descriptions of Health Care Systems: Denmark, France, Germany, The Netherlands, Sweden, and the United Kingdom

The work of the Commonwealth Fund’s international program highlights the valuable lessons the U.S. can learn from the health care systems in other industrialized countries. These country profiles provide overviews of the health care systems of several countries, including Denmark, France, Germany, the Netherlands, Sweden, and the U.K. Each profile includes descriptions of how each country organizes, finances, and delivers health services and highlights quality, efficiency, and cost-controlling policy initiatives and reforms

Health Care Horror Stories

Paul Krugman
The New York Times
April 11, 2008

Not long ago, a young Ohio woman named Trina Bachtel, who was having health problems while pregnant, tried to get help at a local clinic.

Unfortunately, she had previously sought care at the same clinic while uninsured and had a large unpaid balance. The clinic wouldn’t see her again unless she paid $100 per visit — which she didn’t have.

Eventually, she sought care at a hospital 30 miles away. By then, however, it was too late. Both she and the baby died.

You may think that this was an extreme case, but stories like this are common in America.

Back in 2006, The Wall Street Journal told another such story: that of a young woman named Monique White, who failed to get regular care for lupus because she lacked insurance. Then, one night, “as skin lesions spread over her body and her stomach swelled, she couldn’t sleep.”

The Journal’s report goes on: “Mama, please help me! Please take me to the E.R.,” she howled, according to her mother, Gail Deal. “O.K., let’s go,” Mrs. Deal recalls saying. “No, I can’t,” the daughter replied. “I don’t have insurance.”

She was rushed to the hospital the next day after suffering a seizure — and the hospital spared no expense on her treatment. But it all came too late; she was dead a few months later.

How can such things happen? “I mean, people have access to health care in America,” President Bush once declared. “After all, you just go to an emergency room.” Not quite.

First of all, visits to the emergency room are no substitute for regular care, which can identify and treat health problems before they get acute. And more than 40 percent of uninsured adults have no regular source of care.

Second, uninsured Americans often postpone medical care, even when they know they need it, because of expense.

Finally, while it’s true that hospitals will treat anyone who arrives in an emergency room with an acute problem — and it’s wonderful that they will — it’s also true that hospitals bill patients for emergency-room treatment. And fear of those bills often causes uninsured Americans to hesitate before seeking medical help, even in emergencies, as the Monique White story illustrates.

The end result is that the uninsured receive a lot less care than the insured. And sometimes this lack of care kills them. According to a recent estimate by the Urban Institute, the lack of health insurance leads to 27,000 preventable deaths in America each year.

But are they really preventable? Yes. Stories like those of Trina Bachtel and Monique White are common in America, but don’t happen in any other rich country — because every other advanced nation has some form of universal health insurance. We should, too.

All of which makes the media circus of a few days ago truly shameful.

Some readers may already have recognized the story of Trina Bachtel. While campaigning in Ohio, Hillary Clinton was told this story, and she took to repeating it, without naming the victim, on the campaign trail. She used it as an illustration of what’s wrong with American health care and why we need universal coverage.

Then The Washington Post identified Ms. Bachtel, the hospital where she died claimed that the story was false — and the news media went to town, accusing Mrs. Clinton of making stuff up. Instead of being a story about health care, it became a story about the candidate’s supposed problems with the truth.

In fact, Mrs. Clinton was accurately repeating the story as it was told to her — and it turns out that while some of the details were slightly off, the essentials of her story were correct. After all the fuss, The Washington Post eventually conceded that “Bachtel’s medical tragedy began with circumstances very close to the essence” of Mrs. Clinton’s account.

And even more important, Mrs. Clinton was making a valid point about the state of health care in this country.

In other words, this was a disgraceful episode. It was particularly sad to see a number of Obama supporters (though not the Obama campaign itself) join enthusiastically in the catcalls against Mrs. Clinton’s good-faith effort to put a human face on the cruelty and injustice of the American health care system.

Look, I know that many progressives have their hearts set on seeing Barack Obama get the Democratic nomination. But politics is supposed to be about more than cheering your team and jeering the other side. It’s supposed to be about changing the country for the better.

And if being a progressive means anything, it means believing that we need universal health care, so that terrible stories like those of Monique White, Trina Bachtel and the thousands of other Americans who die each year from lack of insurance become a thing of the past.

AHIP's definition of equity

The Principles of Pricing Health Insurance

America’s Health Insurance Plans (AHIP)

Equity

Some insureds make more claims than others, and consequently the cost of providing coverage is different for different insureds. The premium amount each insured pays must reflect the expected cost of providing coverage to that insured. Why? Suppose an insurer charged some insureds less than the expected cost of providing coverage to them. That insurer would have to charge other insureds an extra amount to make up for those paying less than cost. Those insureds paying extra would go to other insurers that would not charge them extra. The original insurer would be left only with insureds paying less than costs and could go out of business.

http://www.ahiphiwire.org/HealthInsurance/LearningCenter/Feature.aspx?doc_id=159743

Comment:

By Don McCanne, MD

What is “equity,” as the term would apply to our health care system?

The American Heritage Dictionary defines equity as “something that is just, impartial, and fair.” Merriam-Webster defines it as “something that is equitable,” and equitable as “dealing fairly and equally with all concerned.”

In an article from the Journal of Epidemiology and Community Health (2003;57:254-258), P. Braveman and S. Gruskin define equity in health as “the absence of systematic disparities in health (or in the major social determinants of health) between groups with different levels of underlying social advantage/disadvantage — that is, wealth, power, or prestige.”

And how does the private insurance industry define equity in the pricing of health insurance premiums? The premium that “EACH insured pays must reflect the expected cost of providing coverage to THAT insured,” but not “an extra amount to make up for those paying less than cost.”

So let’s see how that would work in a system that finances health care for everyone. The 80 percent of individuals (243 million people) who use 20 percent of our national health expenditures ($479 billion) would each be responsible for $1970 in an equitable system, according to the insurance industry’s version. The other 20 percent of individuals (61 million people) who use 80 percent of our national health expenditures ($1,915 billion) would each be responsible for $31,400 in AHIP’s version of equity.

So the private insurance industry, in order to establish equity, would set their premiums based on health care costs of $1970 each (plus administrative costs and profits, less cost-sharing) for four-fifths of us. But what about the one-fifth with health care costs averaging $31,400 each? They simply avoid that market.

Thus the insurance industry’s definition of equity is making premiums fair by excluding the costs of those needing health care, which equates with excluding them from coverage under their plans. Those with high costs can use their wealth, power, or prestige to obtain care. But what about those without? Doesn’t that stretch the definition of equity to well past the breaking point?

AHIP’s definition of equity

The Principles of Pricing Health Insurance

America’s Health Insurance Plans (AHIP)

Equity

Some insureds make more claims than others, and consequently the cost of providing coverage is different for different insureds. The premium amount each insured pays must reflect the expected cost of providing coverage to that insured. Why? Suppose an insurer charged some insureds less than the expected cost of providing coverage to them. That insurer would have to charge other insureds an extra amount to make up for those paying less than cost. Those insureds paying extra would go to other insurers that would not charge them extra. The original insurer would be left only with insureds paying less than costs and could go out of business.

http://www.ahiphiwire.org/HealthInsurance/LearningCenter/Feature.aspx?doc_id=159743

Comment:

By Don McCanne, MD

What is “equity,” as the term would apply to our health care system?

The American Heritage Dictionary defines equity as “something that is just, impartial, and fair.” Merriam-Webster defines it as “something that is equitable,” and equitable as “dealing fairly and equally with all concerned.”

In an article from the Journal of Epidemiology and Community Health (2003;57:254-258), P. Braveman and S. Gruskin define equity in health as “the absence of systematic disparities in health (or in the major social determinants of health) between groups with different levels of underlying social advantage/disadvantage — that is, wealth, power, or prestige.”

And how does the private insurance industry define equity in the pricing of health insurance premiums? The premium that “EACH insured pays must reflect the expected cost of providing coverage to THAT insured,” but not “an extra amount to make up for those paying less than cost.”

So let’s see how that would work in a system that finances health care for everyone. The 80 percent of individuals (243 million people) who use 20 percent of our national health expenditures ($479 billion) would each be responsible for $1970 in an equitable system, according to the insurance industry’s version. The other 20 percent of individuals (61 million people) who use 80 percent of our national health expenditures ($1,915 billion) would each be responsible for $31,400 in AHIP’s version of equity.

So the private insurance industry, in order to establish equity, would set their premiums based on health care costs of $1970 each (plus administrative costs and profits, less cost-sharing) for four-fifths of us. But what about the one-fifth with health care costs averaging $31,400 each? They simply avoid that market.

Thus the insurance industry’s definition of equity is making premiums fair by excluding the costs of those needing health care, which equates with excluding them from coverage under their plans. Those with high costs can use their wealth, power, or prestige to obtain care. But what about those without? Doesn’t that stretch the definition of equity to well past the breaking point?

Health reform lessons from Chile

Chile's Neoliberal Health Reform: An Assessment and a Critique

By Jean-Pierre Unger, Pierre De Paepe, Giorgio Solimano Cantuarias, Oscar Arteaga Herrera
PLoS Medicine
April 1, 2008

Summary Points

* The Chilean health system underwent a drastic neoliberal reform in the 1980s, with the creation of a dual system: public and private health insurance and public and private provision of health services.

* This reform served as a model for later World Bank–inspired reforms in countries like Colombia.

* The private part of the Chilean health system, including private insurers and private providers, is highly inefficient and has decreased solidarity between rich and poor, sick and healthy, and young and old.

* In spite of serious underfinancing during the Pinochet years, the public health component remains the backbone of the system and is responsible for the good health status of the Chilean population.

* The Chilean health reform has lessons for other countries in Latin America and elsewhere: privatisation of health insurance services may not have the expected results according to neoliberal doctrine. On the contrary, it may increase unfairness in financing and inequitable access to quality care.

The Impact of the Reform: Efficiency

Here the evidence is clearer. ISAPRES (the private system) has hardly contained costs, and the ISAPRES companies never intended to do so: they have few incentives to be efficient buyers of health services for their clients. Instead, they work hard to be efficient in the selection of their clients (they are allowed to refuse clients). Their focus is on low-risk, high-income patients, with the goal of making a profit. They spend ten times as much on administration per member and about two times as much on health care per member than FONASA (National Health Fund, a public agency), even though ISAPRES members are in better health and need less care. To deliver care, ISAPRES companies rely on a burgeoning private sector, reimbursed on a fee-for-service basis, which induces an increased supply of unnecessary but profitable services.

http://medicine.plosjournals.org/perlserv/?request=get-document&doi=10.1371/journal.pmed.0050079

Comment:

By Don McCanne, MD

This article is worth reading in its entirety because of the important lessons that would apply to reform in the United States.

But do we really need Chile to provide us with these lessons? Just look around. With our $2.4 trillion/year experiment, we’ve already demonstrated the same results here. And yet we keep doing the same thing?