PNHP

Private health insurance offers us sickly benefits

Private health insurance offers us sickly benefits

By JIM McMEANS
Atlanta Journal-Constitution
Op-Ed
Published on: 12/21/07

President Bush on Dec. 13 vetoed the SCHIP renewal bill that would have expanded government health insurance to thousands more needy and sick children. The president said, “… our nation’s goal should be to move children who have no insurance to private coverage, not to move children who have private health coverage to government coverage.”

Bush also said, “the bill … moves our health care system in the wrong direction.”

But more than any other factor, private health insurance coverage is the reason why the United States has a dysfunctional health care system in which over 45 million Americans lack coverage and approximately another 40 million have unreliable coverage. Americans who have unreliable coverage are sometimes called the underinsured. A better description is Americans who have private health insurance.

In contrast to what he wishes to impose on his fellow Americans, President Bush spent much of his childhood with taxpayer-funded health insurance, or as he calls it, “socialized” health care, under his father’s taxpayer-provided government health insurance policy.

As governor of Texas, Bush and his family’s health insurance was taxpayer-subsidized. Bush has received health care from the taxpayers as president and he and Laura Bush will continue to enjoy the benefits of “socialized medicine” for the rest of their lives.

Rudy Giuliani is another strong advocate of private health insurance for the common folk. But he has enjoyed taxpayer-subsidized health insurance for almost his entire working life. Giuliani clerked for a federal judge for a year after graduating from law school in 1968, then went to work for the Department of Justice, with a four-year exile at a private law firm during the Carter presidency. He then returned to the Department of Justice from 1981 to the early 1990s before serving as mayor of New York for eight years beginning in 1993.

Is Giuliani running for president because he knows that if he were a typical American prostate cancer survivor working in the private sector, he would not be able to obtain a health insurance policy that would pay for the medical treatment he needs if his cancer reappears?

Tony Snow, who as spokesperson for the Bush administration frequently touted the “benefits” of private health insurance, is another cancer survivor who was fortunate to have government-sponsored, federal taxpayer-subsidized health insurance when his cancer returned. If Snow had left Fox News to begin a career as an independent small businessman instead of going to work for the government, he would not have been able to obtain a health insurance policy from the private health insurance industry that would have covered the treatment of his cancer. Both his life and his family’s financial security would have been put at risk.

Private equals predatory

While it’s not realistic for the average American to expect to have health insurance as good as the president of the United States, why can’t all Americans have health insurance as reliable and affordable as Tony Snow?

When so many individuals who avoid private health insurance are prescribing it for the rest of us, it’s important that they understand the consequences of the policies they are advocating for the American people.

Millions of Americans are reasonably happy with their health plans, but for the most part, they don’t have private health insurance. Americans who work for the government or for large corporations generally enjoy reliable and reasonably affordable employer-sponsored health plans, in which the employer assumes the monetary risk for most or all of the employee’s medical costs. In some of these plans, a private health insurance company shuffles the paperwork and negotiates prices with medical professionals, but the health insurance company does not risk its own money. Whether an employee enjoys reliable and affordable health care benefits seems to be determined by whose money is at risk, the employer or the private health insurance company.

Private, for-profit health insurance sold to individuals is almost always predatory health insurance. Millions of Americans like myself already have private health insurance, and unlike President Bush, I wouldn’t wish private health insurance on my worst enemy.

Some of the warning signs of predatory health insurance are denying health insurance coverage to those who need it; pre-existing condition limitation clauses; $2,000 and up deductibles that increase by the thousands each year; and finally, premium increases larger than general inflation or medical inflation.

The purpose of the inexplicably large premium increases is to induce the policyholder to drop the policy after three to five years, which according to industry statistics, is when previously healthy policyholders begin to get sick and file claims. The industry term for this practice is “churning.” If you have ever been hit with a premium increase larger than the rate of medical inflation, you have been “churned.”

Stockholders come first

It may seem incredible to some entrepreneurs that a business would chase away paying customers, but it’s true in the health insurance industry. Policyholders are not assets, but liabilities on a private health insurance company’s moral balance sheet. A policyholder with a chronic illness can run up hundreds of thousands of dollars worth of medical bills a year while paying less than $10,000 a year in premiums. Like any for-profit business, a commercial health insurance company’s first obligation is to the stockholders, not the policyholders, and as a result, private health insurance companies have a conflict of interest with their policyholders. The economic reality is that it is basically impossible to run a for-profit health insurance company honestly and still obtain the 15 percent and higher return on investment demanded by stockholders and board members.

I can testify first hand as to the existence of churning. As a self-employed independent bookseller, over the last 15 years, I have purchased private health insurance policies from five different for-profit health insurance companies. Before you accuse me of being flighty, please note that I have had the same car insurance policy for over 30 years and the same house insurance policy for 20 years.

So why did I take the risk of changing health insurance companies so many times? The truth is I was forced out of each of those policies within three years by yearly premium increases of 20 to 90 percent. At no time during that period did I ever file a claim or even go to the doctor.

In March 2005, I purchased an individual policy for myself from Blue Cross Blue Shield of Georgia. The cost was $165 a month with a $2,000 deductible and a 70/30 co-pay with a maximum of $2,000 out of pocket, not including some other minor miscellaneous co-pays. That was about the typical market price for a policy for a healthy 55-year-old man. Politicians who push consumer choice health plans and catastrophic health insurance policies usually cite similar figures in their speeches.

It’s true, as the politicians say, that an individual can sign up for a health insurance policy with a $2,000 deductible for around $200-250 a month depending on age. The problem is he or she can’t keep it.

111% premium hike

In October 2005, I was notified that as of Jan. 1, my Blue Cross health insurance premium was being raised to $314 a month, a 90 percent increase in less than one year. Or, I was given the option to raise my deductible from $2,000 to $3,500 and only face a 45 percent premium increase to $240 a month. These increases came at a time when general inflation was approximately 5 percent and medical inflation approximately 10-12 percent.

Did I mention that I never filed a claim or even went to a doctor that year?

I chose to raise the deductible to $3,500 and absorb the 45 percent increase. Fortunately, the co-pay remained $2,000.

In October 2006, I was notified that my premium was being raised to $283 as of Jan. 1, an increase of 18 percent. The new premium of $283 was an increase of 72 percent in my health insurance premium in one year and nine months.

Fortunately, I did not fall ill, did not file a claim or even go to a doctor in 2006.

Now, as of October 2007, I have been notified that my premium is being raised to $349. That figure represents an increase of 111 percent in my Blue Cross health insurance premium in two years and nine months.

I haven’t decided yet whether to keep this policy, raise the deductible or try to get another policy. But based on my past experiences with the other four health insurance companies, I believe I can safely predict that my Blue Cross premiums will be increasing next year, an election year, by about 20 percent and the year after by anywhere from 30 to 90 percent.

Americans would be wise to emulate Bush and Giuliani and go to work for the government and obtain taxpayer-subsidized health insurance, or get a job with a large corporation that provides an employer-sponsored health care benefit plan.

My advice is to avoid private health insurance like the plague.

Jim McMeans lives in Danielsville

Insurance and cancer

Report Links Health Insurance Status With Cancer Care

American Cancer Society
December 20, 2007

Uninsured Americans are less likely to get screened for cancer, more likely to be diagnosed with an advanced stage of the disease, and less likely to survive that diagnosis than their privately insured counterparts, according to a new American Cancer Society report examining the impact of health insurance status on cancer treatment and survival.

American Cancer Society researchers analyzed 598,635 cases using the most recent data from the National Cancer Data Base (NCDB), a hospital-based registry held by ACS and the Commission on Cancer of the American College of Surgeons. The NCDB tracks approximately 70% of the cancer cases in the United States and collects data from about 1,500 hospitals. The patients included had either private insurance, Medicaid, or no insurance. The researchers also examined data from the 2005 and 2006 National Health Interview Survey (NHIS), a nationwide in-person survey of approximately 40,000 U.S. households conducted by the National Center for Health Statistics (NCHS) of the Centers for Disease Control and Prevention (CDC).

For all cancers combined, the ACS researchers found that uninsured patients were 1.6 times as likely to die within 5 years compared to individuals with private insurance.

People with lower incomes were less likely to have insurance, the report found. And those without insurance were less likely to use certain health services. About 54% of uninsured patients aged 18 to 64 did not have a usual source of health care. About 26% delayed care due to cost, while nearly 23% did not get care because of cost. An estimated 23% did not get prescription drugs because of the expense.

Individuals with health insurance were about twice as likely as those without to have had a recent mammogram or colorectal cancer screening. People with insurance were also more likely to be diagnosed with early stage disease and less likely to be diagnosed with advanced stage disease than the uninsured.

The researchers saw a survival difference in breast and colorectal cancer, too. About 89% of privately insured white women with breast cancer survived at least 5 years, compared to 76% of white women with Medicaid or no insurance. Among African-American women, 81% of breast cancer patients with private insurance survived 5 years, compared to 65% of those on Medicaid and 63% of those without insurance. A similar pattern emerged in colorectal cancer. Among white patients with private insurance, 66% survived 5 years, compared to 50% of those with no insurance and 46% of those on Medicaid. Among African Americans, 60% with private insurance survived 5 years compared to 41% of the uninsured and Medicaid patients.

The risk of being uninsured or underinsured varies.

Almost anyone can be underinsured in the event of a major illness. The underinsured, commonly defined as people who spend more than 10% of their after-tax household income on out-of-pocket expenses in the event of a serious illness, often don’t realize the gravity of their situation until faced with high premiums and deductibles, limits on terms for covered services, and caps on monthly, lifetime, or disease-specific coverage.

According to a 2003 study sponsored by the Agency for Health Care Research and Quality, the prevalence of being underinsured increased from 6.7% to 8.5% among nonelderly adults between 1996 and 2003. These numbers shot up when the costs of health insurance premiums were factored in. Among people with cancer, 29% had out-of-pocket expenses that exceeded 10% of their family’s income and about 11% exceeded it by 20%.

http://www.cancer.org/docroot/NWS/content/NWS_1_1x_Report_Links_Health_Insurance_Status_With_Cancer_Care.asp

“Association of Insurance with Cancer Care Utilization and Outcomes” January/February 2008 issue of CA: A Cancer Journal for Clinicians, published by the American Cancer Society:
http://caonline.amcancersoc.org/

Comment:

By Don McCanne, MD

There are many factors that influence access and outcomes for cancer patients. This comprehensive study confirms that insurance status is one of the most important factors. The uninsured are screened less frequently; they are diagnosed at a later stage, and they have a lower survival rate.

Because of socioeconomic and other factors, insuring everyone will not eliminate these disparities. But financial barriers perpetuate and intensify the disparities. The crucial first step to improve health care for cancer patients (and for all other patients) is to remove financial barriers by including everyone in a comprehensive national health insurance program.

This study raises another important issue. Not only is insurance coverage crucial, the nature of that coverage counts as well.

Somewhat shocking is that the survival of Medicaid patients in this study was no better than that of the uninsured. Part of this is likely due to the reality that Medicaid is a chronically underfunded medical welfare program. Many health care providers refuse to accept Medicaid patients. Using Medicaid to reduce financial barriers is of little help when the health care delivery system has shut its doors to those enrolled in the program.

Another factor that may result in a lower survival rate for Medicaid patients is that many were previously uninsured or lost the coverage they had, so they use Medicaid as rescue coverage, inevitably entering the system at a later stage of their disease. But this only further confirms that it is not an adequate substitute for continuous comprehensive coverage that provides sufficient funding for the health care delivery system.

Another important reason that universal insurance coverage alone is not enough is that underinsurance has become a source of financial hardship, precisely for those with significant health care needs such as cancer patients. Not only does underinsurance create a hardship, it also is a barrier to care when the patient cannot afford his/her expensive chemotherapy because it isn’t covered by the plan.

Medical welfare programs and inadequate coverage can never patch the vast holes in our health care system. Again, there is much to be done, but all other efforts will be relatively feeble until we remove financial barriers to care for everyone by enacting a single payer national health insurance program. That’s the easy step. Then we need to go to work.

California's Christmas Gift to the Big Insurers

By Rose Ann DeMoro
The Huffington Post
Posted December 18, 2007 | 09:36 PM (EST)

Christmas came one week early for California insurers Monday.

In a present gift wrapped by the California Assembly with Gov. Arnold Schwarzenegger playing Santa, Assembly members passed a bill mislabeled as healthcare reform that will guarantee not health care but millions of new customers for the insurance industry, with California taxpayers paying the bill.

Need more evidence. Look at the list of supporters. They include industry giants, Kaiser Permanente, Health Net, PacifiCare, Blue Shield, Cigna, and Molina Health Care — all among the biggest and most profitable health plans in the state.

It’s not hard to see why they are on board.

Under the new bill, insurers would gain millions of new customers who are either forced to buy insurance under threat of having their wages garnished or facing a lien on their property — or signed up into private insurance plans through a public pool funded with taxpayer or employer funded subsidies.

The bill passed Monday — the product of a backroom deal between Schwarzenegger and Assembly Speaker Fabian Nunez — even eliminated a provision from an earlier draft that would have provided exemptions to the forced insurance for Californians whose costs would exceed 6.5 percent of their income. Now those people will still have the mandate to buy insurance, though they will be eligible for full or partial public subsidies.

It’s a disgraceful day when we have our elected leaders shaking down patients and consumers to swell the profits of an industry that became incredibly rich off the pain and suffering of patients who are routinely denied care when they need it most.

Nothing in this plan changes those deplorable practices. Insurers will continue to be able to block care even when recommended by a physician when they brand it as “experimental” or “not medically necessary.” They will continue to be able to reject diagnostic procedures and access to specialists.

And, they will continue to be permitted to charge whatever they want. There are absolutely no restrictions on skyrocketing premiums, deductibles, or co-pays. The inevitable result will be more Californians facing bankruptcy for medical debt when they are forced to buy junk insurance they can’t afford or self-rationing care even while they continue to pay the premiums.

Proponents of the bill praise the model of a similar Massachusetts law on which the California bill is based. Well, here’s what’s happening in Massachusetts today. State officials has discovered that since they failed to place any limits on insurance industry price gouging, the state will not be able to continue to afford the subsidies. So they are going to have to reduce payments to doctors and hospitals or sharply increase out-of-pocket costs for patients. That’s progress?

This is not health care reform. It’s a hijacking of the yearning of the public for genuine overhaul of our health care system. It’s Schwarzenegger as a reverse Robin Hood, picking the pockets of patients and the public coffers for the biggest insurers in the land. And it will not stand.

California’s State Senate may yet put the brakes on this plan — not even scheduled to go into effect for four more years.

If California lawmakers want to actually accomplish something today on health care, they should look elsewhere. Thousands of California children face the imminent cutoff of coverage due to the President’s veto of the children’s health program. Concurrently, with California facing a $14 billion and growing budget deficit, Schwarzenegger is talking about big across the board cuts, including significant reductions in existing health programs.

Let’s address these immediate crises — and then move to enact genuine, healthcare reform such as a single payer, improved Medicare for all approach embodied in HR 676 in Congress and SB 840 in California — rather than handing out any more presents to a wealthy industry that hardly needs the help.

California’s Christmas Gift to the Big Insurers

By Rose Ann DeMoro
The Huffington Post
Posted December 18, 2007 | 09:36 PM (EST)

Christmas came one week early for California insurers Monday.

In a present gift wrapped by the California Assembly with Gov. Arnold Schwarzenegger playing Santa, Assembly members passed a bill mislabeled as healthcare reform that will guarantee not health care but millions of new customers for the insurance industry, with California taxpayers paying the bill.

Need more evidence. Look at the list of supporters. They include industry giants, Kaiser Permanente, Health Net, PacifiCare, Blue Shield, Cigna, and Molina Health Care — all among the biggest and most profitable health plans in the state.

It’s not hard to see why they are on board.

Under the new bill, insurers would gain millions of new customers who are either forced to buy insurance under threat of having their wages garnished or facing a lien on their property — or signed up into private insurance plans through a public pool funded with taxpayer or employer funded subsidies.

The bill passed Monday — the product of a backroom deal between Schwarzenegger and Assembly Speaker Fabian Nunez — even eliminated a provision from an earlier draft that would have provided exemptions to the forced insurance for Californians whose costs would exceed 6.5 percent of their income. Now those people will still have the mandate to buy insurance, though they will be eligible for full or partial public subsidies.

It’s a disgraceful day when we have our elected leaders shaking down patients and consumers to swell the profits of an industry that became incredibly rich off the pain and suffering of patients who are routinely denied care when they need it most.

Nothing in this plan changes those deplorable practices. Insurers will continue to be able to block care even when recommended by a physician when they brand it as “experimental” or “not medically necessary.” They will continue to be able to reject diagnostic procedures and access to specialists.

And, they will continue to be permitted to charge whatever they want. There are absolutely no restrictions on skyrocketing premiums, deductibles, or co-pays. The inevitable result will be more Californians facing bankruptcy for medical debt when they are forced to buy junk insurance they can’t afford or self-rationing care even while they continue to pay the premiums.

Proponents of the bill praise the model of a similar Massachusetts law on which the California bill is based. Well, here’s what’s happening in Massachusetts today. State officials has discovered that since they failed to place any limits on insurance industry price gouging, the state will not be able to continue to afford the subsidies. So they are going to have to reduce payments to doctors and hospitals or sharply increase out-of-pocket costs for patients. That’s progress?

This is not health care reform. It’s a hijacking of the yearning of the public for genuine overhaul of our health care system. It’s Schwarzenegger as a reverse Robin Hood, picking the pockets of patients and the public coffers for the biggest insurers in the land. And it will not stand.

California’s State Senate may yet put the brakes on this plan — not even scheduled to go into effect for four more years.

If California lawmakers want to actually accomplish something today on health care, they should look elsewhere. Thousands of California children face the imminent cutoff of coverage due to the President’s veto of the children’s health program. Concurrently, with California facing a $14 billion and growing budget deficit, Schwarzenegger is talking about big across the board cuts, including significant reductions in existing health programs.

Let’s address these immediate crises — and then move to enact genuine, healthcare reform such as a single payer, improved Medicare for all approach embodied in HR 676 in Congress and SB 840 in California — rather than handing out any more presents to a wealthy industry that hardly needs the help.

AHIP's Guarantee Access Plans

Guaranteeing Access to Coverage for All Americans

America’s Health Insurance Plans (AHIP)
(Released December 19, 2007)

Our Commitment

The members of AmericaĆ¢ā‚¬ā„¢s Health Insurance Plans (AHIP) believe that all Americans — regardless of health status or income — should have access to affordable health care coverage. We also believe that it is our responsibility to offer solutions to help the nation meet its health care challenges.

Establish Guarantee Access Plans

Guarantee Access Plans can ensure that everyone — including individuals with pre-existing medical conditions — has access to health care coverage. Uninsured individuals with the highest expected medical costs would be eligible to enroll in the new plans.

How Guarantee Access Plans Will Ensure Access to Affordable Coverage

Individuals would be eligible for coverage through the Guarantee Access Plan if their health care claims costs — based on objective, independent underwriting criteria — are expected to be more than twice the statewide average. Premium rates for Guarantee Access Plan coverage would be limited to one-and-one-half times standard market rates.

How Health Insurance Plans Will Provide a Coverage Safety Net

Health plans would guarantee coverage to individuals who are not eligible for coverage through the Guarantee Access Plan. Each health insurance plan would guarantee issue policies to these individuals up to a predetermined level of participation (for example, 0.5 percent of the health planĆ¢ā‚¬ā„¢s insured population in the individual market). This cap would need to be reset if all health plans reach that level. Health plans would limit the premium for these guarantee issue policies to one-and-one-half times standard market rates.

Maintaining Affordability

As part of their efforts to keep coverage as affordable as possible, states will need to:

* Create a sliding-scale premium subsidy program with additional assistance for those with high health care costs.

* Fund the Guarantee Access Plans from a broad base of sources, so that coverage remains affordable for those who are currently insured.

http://www.ahip.org/content/default.aspx?docid=21727

Press release

AHIP
December 19, 2007

“Health plans from across the country came together to address the unique challenges facing the individual health insurance market. We believe that plans and the states, working together, can guarantee access to affordable insurance for everyone in the individual market,” said Jay Gellert, President and CEO of Health Net, Inc. and Co-Chairman of the Individual Market Task Force.

“This initiative is a fundamental repositioning,” said Karen Ignagni, President and CEO of AHIP. “Our Board is committed to ensuring that no American falls between the cracks of public and private programs.”

http://www.ahip.org/content/pressrelease.aspx?docid=21728

Comment:

By Don McCanne, MD

It does not take very many high-cost patients in an insurance risk pool to drive up to unaffordable levels the premiums required to fund that pool. In fact, health care costs are now so high that premiums for a risk pool limited to healthy individuals are now unaffordable for many. The private insurance industry understands that their business model breaks down if they have to start paying for the health care of individuals with greater needs.

The private insurance industry has long supported the establishment of state high-risk pools, funded with very high premiums and subsidies from the taxpayers. This has allowed the private insurers to pass this problem of adverse selection off onto the taxpayers. But it hasn’t been particularly successful. Only about 180,000 people in the nation (0.06 percent of our population) are covered by these programs. You can understand how ineffective that has been when you consider that about 60,000,000 high-needs people use about 80 percent of our national health expenditures.

So now what are they proposing? Keep in mind that private insurers sell their products primarily to the 80 percent of people with minimal health care needs. AHIP is proposing that they be relieved of covering any individual that the actuaries predict might cost twice the average of claims in this very low cost group. Everyone who might actually need care is transferred to the Guarantee Access Plans managed by the state. These plans would be funded by a premium with a 50 percent penalty added, plus financing that the state obtains from “a broad base of sources.” That broad base, of course, is the taxpayers.

You would think that this would solve the problems for the insurers. But no. They also are concerned about individuals who have had yeast infections, or hay fever, or migraine headaches, or thousands of other disorders that fall below the actuarially determined threshold of twice the anticipated average of claims. These are the individuals in the upper half of the healthy population. They know, based on claims experience, that these individuals, on average, may use up to twice the care as the median insured. Although this is still a very low cost group, AHIP is recommending that they be allowed to assess a 50 percent penalty to their premiums. Not only that, they also want the right to cut off enrollment of these individuals once their risk pools have met a threshold of a fraction of one percent of them. They want a risk pool that is 99 and 44/100’s percent pure, but someone needs to tell them that this isn’t soap that they’re selling.

AHIP’s proposal is a response to the threat they face if individual mandates become the mainstream policy solution for achieving universal coverage. If they are forced to actually cover those with even modest health care needs, their business model is dead.

AHIP has made it very clear they they do not want to pay for health care. They simply want to sell administrative products to only the healthiest of us. What we need instead is an equitable system to pay for health care, so that we can prevent financial hardship for those who do need care.

Since the private insurance industry doesn’t want to do that, it’s time for us to show them the door.

AHIP’s Guarantee Access Plans

Guaranteeing Access to Coverage for All Americans

America’s Health Insurance Plans (AHIP)
(Released December 19, 2007)

Our Commitment

The members of AmericaĆ¢ā‚¬™s Health Insurance Plans (AHIP) believe that all Americans — regardless of health status or income — should have access to affordable health care coverage. We also believe that it is our responsibility to offer solutions to help the nation meet its health care challenges.

Establish Guarantee Access Plans

Guarantee Access Plans can ensure that everyone — including individuals with pre-existing medical conditions — has access to health care coverage. Uninsured individuals with the highest expected medical costs would be eligible to enroll in the new plans.

How Guarantee Access Plans Will Ensure Access to Affordable Coverage

Individuals would be eligible for coverage through the Guarantee Access Plan if their health care claims costs — based on objective, independent underwriting criteria — are expected to be more than twice the statewide average. Premium rates for Guarantee Access Plan coverage would be limited to one-and-one-half times standard market rates.

How Health Insurance Plans Will Provide a Coverage Safety Net

Health plans would guarantee coverage to individuals who are not eligible for coverage through the Guarantee Access Plan. Each health insurance plan would guarantee issue policies to these individuals up to a predetermined level of participation (for example, 0.5 percent of the health planĆ¢ā‚¬™s insured population in the individual market). This cap would need to be reset if all health plans reach that level. Health plans would limit the premium for these guarantee issue policies to one-and-one-half times standard market rates.

Maintaining Affordability

As part of their efforts to keep coverage as affordable as possible, states will need to:

* Create a sliding-scale premium subsidy program with additional assistance for those with high health care costs.

* Fund the Guarantee Access Plans from a broad base of sources, so that coverage remains affordable for those who are currently insured.

http://www.ahip.org/content/default.aspx?docid=21727

Press release

AHIP
December 19, 2007

“Health plans from across the country came together to address the unique challenges facing the individual health insurance market. We believe that plans and the states, working together, can guarantee access to affordable insurance for everyone in the individual market,” said Jay Gellert, President and CEO of Health Net, Inc. and Co-Chairman of the Individual Market Task Force.

“This initiative is a fundamental repositioning,” said Karen Ignagni, President and CEO of AHIP. “Our Board is committed to ensuring that no American falls between the cracks of public and private programs.”

http://www.ahip.org/content/pressrelease.aspx?docid=21728

Comment:

By Don McCanne, MD

It does not take very many high-cost patients in an insurance risk pool to drive up to unaffordable levels the premiums required to fund that pool. In fact, health care costs are now so high that premiums for a risk pool limited to healthy individuals are now unaffordable for many. The private insurance industry understands that their business model breaks down if they have to start paying for the health care of individuals with greater needs.

The private insurance industry has long supported the establishment of state high-risk pools, funded with very high premiums and subsidies from the taxpayers. This has allowed the private insurers to pass this problem of adverse selection off onto the taxpayers. But it hasn’t been particularly successful. Only about 180,000 people in the nation (0.06 percent of our population) are covered by these programs. You can understand how ineffective that has been when you consider that about 60,000,000 high-needs people use about 80 percent of our national health expenditures.

So now what are they proposing? Keep in mind that private insurers sell their products primarily to the 80 percent of people with minimal health care needs. AHIP is proposing that they be relieved of covering any individual that the actuaries predict might cost twice the average of claims in this very low cost group. Everyone who might actually need care is transferred to the Guarantee Access Plans managed by the state. These plans would be funded by a premium with a 50 percent penalty added, plus financing that the state obtains from “a broad base of sources.” That broad base, of course, is the taxpayers.

You would think that this would solve the problems for the insurers. But no. They also are concerned about individuals who have had yeast infections, or hay fever, or migraine headaches, or thousands of other disorders that fall below the actuarially determined threshold of twice the anticipated average of claims. These are the individuals in the upper half of the healthy population. They know, based on claims experience, that these individuals, on average, may use up to twice the care as the median insured. Although this is still a very low cost group, AHIP is recommending that they be allowed to assess a 50 percent penalty to their premiums. Not only that, they also want the right to cut off enrollment of these individuals once their risk pools have met a threshold of a fraction of one percent of them. They want a risk pool that is 99 and 44/100’s percent pure, but someone needs to tell them that this isn’t soap that they’re selling.

AHIP’s proposal is a response to the threat they face if individual mandates become the mainstream policy solution for achieving universal coverage. If they are forced to actually cover those with even modest health care needs, their business model is dead.

AHIP has made it very clear they they do not want to pay for health care. They simply want to sell administrative products to only the healthiest of us. What we need instead is an equitable system to pay for health care, so that we can prevent financial hardship for those who do need care.

Since the private insurance industry doesn’t want to do that, it’s time for us to show them the door.

Scrap the California victory celebration

2007-2008 First Extraordinary Session

California Legislature
Assembly Bill No. 1 (ABx1 1)

SEC. 2. It is the intent of the Legislature to accomplish the goal of universal health care for all California residents. To accomplish this goal, the Legislature proposes to take all of the following steps:

a) Ensure that all Californians have access to affordable, comprehensive health care.

b) Leverage available federal funds to the greatest extent possible through existing federal programs.

c) Maintain and strengthen the health insurance system and improve availability and affordability of private health care coverage for all purchasers through
(1) insurance market reforms;
(2) enhanced access to effective primary and preventive services, including management of chronic illnesses;
(3) promotion of cost-effective health technologies; and
(4) implementation of meaningful, systemwide cost containment strategies.

(d) Engage in early and systematic evaluation at each step of the implementation process to identify the impacts on state costs, the costs of coverage, employment and insurance markets, health delivery systems, quality of care, and overall progress in moving toward universal coverage.

If any provision of this act is held to be invalid, as determined by a final judgment of a court of competent jurisdiction, the entire act shall become inoperative, and those provisions of law amended by this act that were in effect and operative immediately prior to the operative date of this act shall again be operative.

Full text of bill (210 pages; Legislative Counsel’s Digest in first 13 pages):
http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_0001-0050/abx1_1_bill_20071217_amended_asm_v96.pdf

Comment:

By Don McCanne, MD

Last evening, Governor Arnold Schwarzenegger and Assembly Speaker Fabian Nunez celebrated the Assembly’s approval of their compromise universal health care reform for California. Hold the celebration.

ABx1 1 is an employer pay or play, combined with an individual mandate. It calls for five tiers of insurance coverage, allowing the wealthy to have the best, and, well, you know (and we thought that two tiers were inhumane). Much of the 210 pages of the bill is dedicated to tortuous, complex administrative machinations designed to keep the private insurers in play, at a cost in greatly diminished health care justice, compared to what we could have had.

California currently has 6.6 million uninsured residents; 5.1 million are considered “permanently uninsured.” If this proposal works as designed (a highly unlikely scenario), it would bring medical coverage to about 3.6 million Californians.

And who are these millions of people who would be exempt from having coverage? “12739.501. (a) A person or family who has an income at or below 250 percent of the federal poverty level shall be exempt from the requirements established in Section 8899.50 of the Government Code if the person’s or family’s share of the premium for 8899.50 minimum creditable coverage exceeds 5 percent of his or her family’s income.”

Of all of the policy tradeoffs to achieve compromise, this is the sickest. The millions who do not qualify for the medical welfare programs, and don’t have enough income to pay the premium for the “minimum creditable coverage” are excused from being included in our universal health care program.

Sick. Sick.

It is interesting that a clause was included that declares that if any single provision is invalidated, then the entire measure implodes. (Could this whole thing really be just a practical joke?)

As you know, the legislature already passed a bill that would achieve our goals of affordable, comprehensive care for everyone: Sen Sheila Kuehl’s single payer bill, SB 840. It was vetoed by the governor to make way for his highly flawed version of reform. Following is Sen. Kuehl’s response today to the Assembly approval of ABx1 1.

Sen. Sheila Kuehl:

“Giant Leap” for Health Coverage? Or for premiums…

The press has described the bill in breathless prose as a “giant leap” for health coverage. Unfortunately, this is not quite the case, depending on who you are and how and where you work. Each of the sections below will explain some of the provisions of the bill actually harmful to regular, working-class and middle-class families. And it provides less help than advertised for poor families, as well.

Coverage for everyone?

The press characterizes the bill as “providing” or “extending” coverage to all but a few Californians.

This is a mischaracterization, nothing is “provided”. Instead, all Californians would be required to buy insurance with no caps on premiums, no regulation of the cost of insurance or medical expense, no maximum deductibles, and no floor on how little coverage you can buy and satisfy the legal requirement. If you do not buy insurance within 62 days after the requirement kicks in, the Franchise Tax Board is authorized to collect premiums determined by the Managed Risk Medical Insurance Board by garnishment of wages or mortgage liens.

Your employer would be required to spend from 1% to 6.5% of payroll (depending on the size of the payroll) to buy insurance policies for employees. Employees would be required to take the insurance and to pay whatever supplemental premiums, co-pays and out of pocket costs are not paid by the employer. There are no caps on what the employee would pay, only for the employer. There is a vague term about “hardship” letting people out of the mandate, but no definition is offered and, as in Massachusetts, if you are excused from the mandatory purchase of insurance, you simply have no insurance!

If your employer does not wish to spend 1% to 6.5% of payroll on your insurance, he or she must pay the same amount into a state fund, and employees of those employers will be required to buy their insurance through the state fund, again with no cap on premiums and no floor on coverage.

Is there at least minimum coverage required in the bill?

No. For the State Fund, for those employers who choose to pay into it, the Managed Risk Medical Insurance Board will set the minimum coverage (what you get for your premiums, what conditions, services, treatments, are covered by your insurance), which will not appear in statute. For those who buy insurance on the open, private market, and those whose employers pay total or partial premiums for insurance chosen by the employer, as well as for self-employed folks, there is no minimum coverage in the bill. One woman reported to me that she had a bare-bones, catastrophic policy and, upon being rushed to the hospital, received the bill for the ambulance ride that got her there, placed on her chest, as she was carried into the hospital.

How is the bill to be financed?

There is no funding in the bill. Instead, there is the promise of an initiative, no language available yet, to tax cigarettes at an additional $1, $1.50 or $2 a pack, tax hospitals in order to draw down federal money which would then go back, to a great extent, to the public hospitals, and require employers to pay a portion of their employees premiums, as indicated above. There is also a hope that the federal government will provide more money for children’s insurance. Instead, of course, the federal government is cutting children’s insurance such that the California Legislature will meet in emergency session in January to disenroll children from Healthy Families. Everything else would be paid for by premiums, co-pays and deductibles.

In addition, if the Director of Finance finds that the state cannot afford all the promises made in the bill, the bill goes away. Or does it? There needs to be clarification that, if the initiative fails, we’re not still stuck with an individual mandate to buy insurance.

But how do poor people fare…..today’s uninsured?

Better, but still a hardship. Healthy Families coverage for children would allow those whose families who earn up to $40,500 for one adult and one child to be covered (children only) by state or federal money. (federal cuts mean we already have to kick kids off this program, see above). Since the bill allows all children, even those with undocumented parents, to be covered, but the feds won’t pay for those children, there will be increased state costs in Healthy Families. (see budget discussion below)

Families whose income is at or less than $43,000 for a family of three would be “subsidized” for their premiums only. This means they would be required to pay an unspecified amount for premiums and receive an unspecified amount from the state budget to help. There is no subsidy for co-pays, deductibles or out of pocket (uninsured) expenses associated with their policies, which could be sizeable if they bought a minimal policy.

Families who earn between $43,000 and $68,680 for a family of three would be allowed to pay full boat for their uncapped premiums and then deduct any part of the premium that exceeds 5.5% of their income as a tax credit, refunded dollar for dollar by state money. (again, see budget discussion, below). There is no tax credit for their required co-pays, deductibles or out of pocket (uninsured) expenses, which could be big if they purchased a minimal policy.

But insurance companies would be required to take everyone

That is correct. However, they are allowed to offer minimal coverage set by the Managed Risk Medical Insurance Board (minimum coverage that may be offered is not specified in the bill) and there is no control over their premiums or deductibles.

In addition, they are allowed to adjust their premiums, not by medical condition, but by age and other demographic factors.

The companies are required to spend 85% of premiums on care, but they maintain they do that now, and count marketing, information technology and other kinds of administrative overhead as “care”. The bill would allow this characterization to continue.

Unions seem to like the bill, don’t they?

Well, some of them. SEIU, who has organized and hopes to organize healthcare workers is positively salivating over the bill, to the extent that their national leader, Andy Stern, is engineering moving out the current state leader, who has questioned the bill, in favor of a new leader who will go along with it. AFSCME has also come on board with the bill, thinking that public employees will benefit. (However, with all the hits the bill brings on the state budget, this may be short sighted). About half of the unions in the California Labor Federation are with it, and half are against it but not taking a firm position. The California Nurses, the California School Employees and the Teamsters, among others, are strongly in opposition.

Many other troubling sections in the bill. (1) rescission

While we are struggling to keep insurance companies from rescinding policies of beneficiaries who do nothing wrong except try to use their insurance, the bill takes a step backward by applying the “no retroactive rescission” language only to HMO’s and not to all insurers.

Troubling (2), no choice of doctors or hospitals

Your insurance company tells you who is in their provider network. Employers are not required to give a range of choices. The state fund would give a range of choices, as soon as they are determined by the Managed Risk Medical Insurance Board.

Troubling (3), more unsupervised healthcare workers

Nurse Practitioners and Physician’s Assistants would be allowed, by the bill, to give written instructions (not personal supervision) to medical assistants in retail clinics, such as those proposed for Wal Mart, and the assistants would be allowed to give medication. Currently they can do so in specific clinic settings. The bill removes this requirement.

So, what’s next?

The bill goes over to the Senate, into the Senate Rules Committee, which then refers it to the Senate Health Committee and any other committees that should hear it before it goes to the Floor. There may be a hearing on the bill in Senate Health on January 16th, but only if the language of the bill is in its final form according to its author, the Speaker, the requested analysis of the impact of the State Budget by the Legislative Analyst’s Office is complete, and the Committee also has the language of the proposed initiative that will, supposedly, fund the bill. Any organizations wishing to support or oppose the bill may send their letters to the Senate Health Committee in Sacramento. The bill may be read online at www.leginfo.ca.gov. Press the button for Bill Information and type in ABX1 1 and click on what comes up. The author is Speaker Nunez.

Yet another administrative siphon

Health Care

By Jason Roberson
The Dallas Morning News
December 6, 2007

(Health Management Systems, a New York-based company) that works to recover health insurance benefits in child support cases and cut states’ medical bills has opened a branch in Irving.

HMS already does business in Texas from its offices in other states, operating like a medical debt collector for the government.

If a person who applies for Medicaid is already covered under a private insurance policy, HMS will work to collect money from the insurance company.

In child-support cases, HMS uses its databases to see if a child is covered under a noncustodial parent’s employer-provided insurance.

Since the late 1990s, HMS has helped the Texas attorney general’s office collect nearly $80 million in medical child support and has recovered more than $200 million from private insurers for the Texas Medicaid and Health Partnership, according to the company.

HMS serves Medicaid programs in 40 states.

In 2006, the company recovered more than $1 billion for its clients, and provided data that helped them save billions more, according to HMS.

“We are proud to have a new Texas location from which to help our government clients manage and save money,” said HMS president Bill Lucia.

http://www.dallasnews.com/sharedcontent/dws/bus/casual/stories/DN-HealthManagment_05bus.ART.State.Edition1.2ac5f65.html

Comment:

By Don McCanne, MD

Yes, but how much medical care do they finance? None? You mean that this is yet one more innovative administrative service that the industry sells us because of our insistence on perpetuating our inefficient, inequitable, fragmented system of financing care?

What we do not need is more administrators that find innovative ways to move health dollars around while taking their percentage of every dollar they touch. HMS wouldn’t even exist if we had a single payer national health program.

Giving Back

By Nelson Bradshaw
Catskill Mountain Foundation

Excerpts from http://www.catskillmtn.org/publications/articles/2007-12-giving-back.html

The Oneonta Free Clinic will make a valiant effort meet the medical needs of these people. But small, private clinics are not the real answer to the nation’s mounting health care crisis, according to Doctor Friedell. “A free clinic is just a band-aid,” says the physician. “It’s a way of getting care to people in a hurry. My personal belief is that we need a single-payer health insurance system in this country. A simple name for the program might be Medicare for Everybody. Medicare is the Federally funded system that pays for everybody who is over 65-years-old or who is disabled. It is a single-payer system. All the bills go to the Federal government. It works very well. The customers are quite satisfied. Nevertheless, there has been a tremendous amount of resistance to establishing a similar program for the whole country.”

Friedell notes that the existence of a one-payer, national system would mean that just by virtue of being a citizen of this country, you would be insured from the time of your birth to the time of your death. Friedell expands, “You would never have to worry about that, no matter how many times you changed your job or college or your status in the military.”

Most opponents of a proposed national system say that the country can’t afford it. Dr. Friedell argues that, first, a patient wouldn’t be able to get just any treatment or an infinite amount of care under a national plan. “There would be a cut-off point,” Friedell asserts. “Medicare, Medicaid and the Veteran’s Administration are all examples of government-run, single-payer systems. They have cut-offs.”

Second, a single-payer system would save a lot on administrative costs, the doctor points out. “The advantage of using a single-payer program is that it eliminates bureaucracy and expense,” he says. “If you come to my office now for treatment, for example, you have to show your insurance card. My staff has to get on the phone or a Web site and verify that you still have coverage. There is a plethora of insurance companies in our area alone, and they all have different rules and different measures of membership and services covered.It is really very frustrating.”

Friedell concedes that one point frequently raised by national health care plan critics is valid–some procedures would have to be rationed. “If we go to a single-payer system, certainly if you want an elective procedure like having a cataract removed or a hip replaced, you’re going to have wait a few months,” says the doctor. “These things are not emergencies. However, if you come into a hospital with a true emergency, if will get taken care of that day or the next day.

Doctor Friedell also points out that health care is rationed under the current system. “If you live in New York City, you can get in to see a gastroenterologist quickly,” he states. “But, if you live up here and you want to see one, you’ve got a long wait ahead of you. If you have the money or insurance and you live in an urban area or can travel, you can get whatever medical care you want. But, you can’t if you lack insurance or if you reside upstate or in a poor part of town. We’re doing de facto rationing right now. We’re limiting medical care on an economic basis.”

Another fear raised by the critics of a proposed national care system is idea that the government would make a mess of it. “They talk about the idea that you can’t trust government to run health care,” Doctor Friedell notes. “But, the government’s been doing it very effectively for over 40 years. Medicare and Medicaid have been in existence since the mid ’60s. Medicare spends a very small percentage of its funding on administration. That allows more money to be spent on doctors, nurses and medicine.”

After the next presidential election, there could be a public debate on a national scale about the single-payer idea. But a small, determined group in Oneonta is ready to do what it can right now.

A public health system defeated at the hands of ideology

By Susan F. Wood
The Boston Globe
December 17, 2007

The State Children’s Health Insurance Program, which provides working families with low-cost health insurance coverage, is now in limbo – on short term extensions by Congress and just vetoed again by the president. This confronts states with difficult choices on how to continue providing health coverage for kids when the funding from Washington just isn’t enough.

This latest affront to public health also comes at the same time that the price of birth control pills on colleges campuses has skyrocketed from $5-10 a month to $40 a month or more as an unintended consequence of a recent change in federal law. There is an easy and free technical fix that Congress or the Department of Health and Human Services could make, but this administration does not support allowing companies to sell birth control pills at a discount to colleges, universities, and other safety net programs.

These are just two of the more visible defeats that healthcare has suffered during this administration. At a deeper level, the low priority healthcare gets from President Bush is reflected in his failure to staff important health-related positions with qualified individuals willing to provide science-based advice.

Currently, the Department of Health and Human Services, the lead department that includes all of our national health agencies, lacks a permanent assistant secretary for health, assistant secretary for children and families and a surgeon general. All of these key senior positions are held by temporary appointees, some highly qualified, others not, but none with the ability to truly move us forward by providing sound advice and having the ear of decision-makers.

The Food and Drug Administration lacked a permanent commissioner for over half of the current administration, and currently the Centers for Medicare and Medicaid – which runs the State Children’s Health Insurance Program – also has no permanent leader.

Over two years ago, I resigned my post as assistant commissioner of women’s health at the FDA because of the agency leadership’s disregard for scientific decision-making regarding emergency contraception.

Unfortunately, since then, I have only seen mounting evidence of this administration putting politics before science. Key leadership positions in our health agencies are left vacant for unacceptable time periods or filled with individuals who advance an ideological agenda and show a disregard for scientific integrity. This pattern is troubling because it threatens the objectivity that guarantees the health and safety of American families.

Just a year after my resignation, Dr. Richard H. Carmona resigned as surgeon general. He later revealed that the administration asked him to censor his reporting on embryonic stem cell research, contraception, and the unrealistic proposition of abstinence-only sex education. This position has been vacant for over a year and in October Dr. Steven K. Galson – who was one of those at FDA who initially blocked the provision of emergency contraception over-the-counter – was given the temporary appointment of acting surgeon general.

More recently, President Bush appointed Dr. Susan Orr, an opponent of family planning, as acting deputy assistant secretary for population affairs where she is charged with advising on issues regarding population affairs and overseeing the only federal grant program dedicated solely to providing individuals with comprehensive family planning and preventive health services.

By appointing a leader who clearly does not support contraception, the administration is once again neglecting the health needs of millions of Americans, particularly those who are low income and rely on public programs to get access to preventive healthcare, including contraception and pap tests.

To ensure the health of our families we need strong, consistent leaders who value the integrity of science, make decisions on the best available information, and support prevention. Without that leadership, we will not succeed in promoting the health of all Americans. We shouldn’t have to wait for a change in presidential leadership.

Susan F. Wood is research professor at the George Washington University School of Public Health and Health Services. She served as assistant commissioner for women’s health at the Food and Drug Administration from 2000 to 2005 and is advising Hillary Clinton on health issues.

Internist society sees single-payer as option

A new American College of Physicians paper says the government should guarantee a basic level of health care as part of larger reforms

By Doug Trapp
American Medical News
Dec. 24/31, 2007

Washington — The American College of Physicians has endorsed the concept of a single-payer health care system for the first time.

In a new position paper, the organization, which represents 124,000 physicians in internal medicine and related subspecialties, identified a system in which the federal government is the sole third-party payer as one of two reform vehicles to achieve universal coverage. The other is a public-private system that includes a legal guarantee that everyone has access to coverage and that offers health care subsidies to low-income residents.

The ACP likely was influenced by the general deterioration of the U.S. health system, with its 47 million uninsured and decreasing affordability of health care, said David Dale, MD, the organization’s president.

The 31-page paper, published Dec. 4 on the Annals of Internal Medicine Web site and in the Jan. 1, 2008, print issue, compares the U.S. health care system to systems in 12 other industrialized countries and offers eight major health reform recommendations based on that review. One proposal calls for adoption of a single-payer or pluralistic system, while the others tackle everything from electronic health records to physician training.

The paper is part of the college’s ongoing effort to effect changes to the U.S. health care system that would support patient-centered medical homes, in which a primary care physician coordinates care. The ACP endorsed guidelines for establishing medical homes in March.

“I think there’s a consensus that our system is not working very well, and when we compare it with others, that brings it into the spotlight,” Dr. Dale said. The paper highlights how the U.S. system, compared with others, underemphasizes primary care, in part, by not covering everyone.

Dr. Dale said the heart of the reform proposal is making sure that everyone has access to primary and preventive care.

ACP leadership reviewed the paper for about six months. “What we have is a consensus document,” he said. Dr. Dale said he received only a few e-mails — all positive — about the paper in the first few days after it was published online. He had anticipated receiving some negative comments from members questioning why the ACP didn’t ask for their opinion, but Dr. Dale said he senses that support for single-payer is growing among younger physicians.

That consensus does not extend to the American Medical Association or the American Academy of Family Physicians. The AMA opposes a single-payer health system, and the AAFP has not taken a position on the issue.

But a co-founder of Physicians for a National Health Program welcomed the ACP position. “It says that the mainstream is ready for [single payer],” said David Himmelstein, MD. “It doesn’t go as far as we’d like to see, but it’s a big step forward.”

Dr. Dale said the U.S. already has more than 40 years’ experience with single-payer health care — in the Medicare program. “So single-payer hasn’t failed in America. It’s actually succeeded.”

But AMA President Ron Davis, MD, takes a different lesson from Medicare. Both Medicare and Medicaid sometimes pay physicians less than it costs doctors to provide care. Inadequate payment leads physicians to limit the number of elderly, disabled and poor patients they see.

“While other nations’ experiences with single-payer health care provide important information, we need look no further than our own experiment with government-run health care to see the flaws with this approach,” Dr. Davis said.

AAFP President Jim King, MD, said many of his members wouldn’t support the organization endorsing a single-payer system. AAFP membership is divided on the issue much in the way America is split between urban and rural, and Democratic- and Republican-leaning areas, he said.

Instead, the AMA and AAFP have proposals that would expand health care access and call for patient protections, choice and responsibility.

The 26-page AMA plan, promoted in its Voice for the Uninsured campaign, recommends increasing individual access to health insurance by offering refundable tax credits or vouchers, with larger subsidies for low-income people, who could get their credits in advance. The Association also calls for increasing individual choice by standardizing health insurance regulations to help broaden insurance markets.

“Our pluralistic approach to covering the uninsured focuses on tax credits to individuals and families, individual ownership and choice of health insurance, and market reforms,” Dr. Davis said.

The seven-page AAFP plan, “Health Care Coverage for All,” recommends creating patient-centered medical homes and offering incentives for patients to seek care through those entities.

It also would safeguard patients against excessive medical costs by capping out-of-pocket spending at a fixed amount per household, possibly $5,000, and offering a free, basic set of mostly primary and preventive health care services.

The AAFP proposal doesn’t delve into how the U.S. should pay for health care. Dr King said it’s more important for the organization to focus on the kind of health care delivery system the country should have.

The financial structure can be worked out later, he said. “The problem at this particular stage is when you start mentioning a specific plan and how it’s going to be paid for, it closes so many doors,” he added.

Could be influential later

The ACP position paper won’t cause the 2008 presidential candidates to change their health plans, which already have been issued, but it could influence health reform after the election, said Robert Blendon, ScD, professor of health policy and political analysis at Harvard School of Public Health.

A large physician organization like the ACP hasn’t endorsed single-payer before. Once the election is over, the paper could gain political traction.

“[The paper is] important for sort of setting an agenda for the future,” Dr. Blendon said.

That assumes, however, that Congress tackles health system reform. “The country is concerned about things now other than redoing the health care system,” he said.