PNHP

Blame private firms for health-provider losses

Blame private firms for health-provider losses

Letter to the Editor
Des Moines Register
October 15, 2007

The tone of Dr. Charles F. Hesse’s Oct. 6 letter, “Medicare-Type Insurance Penalizes Providers,” makes the good doctor appear as if he is more concerned about his bottom line than the health of his patients.

Yet Hesse’s letter would not seem so self-serving had he mentioned the reason for his ire: the Medicare Modernization Act of 2003 that, then, had the support of the American Medical Association.

Medicare payments to physicians for traditional Medicare Parts A and B have remained stagnant since 2001. This in itself is bad enough. But according to the AMA, it is Medicare Advantage plans, in which benefits and payments are administered by private health-care insurance companies, that are shortchanging both patients and physicians.

In May of this year, the AMA reported that a survey of its members found that half the patients with Medicare Advantage HMOs and PPOs were denied services typically covered by traditional Medicare. The same survey also reported that 51 percent of its doctors received lower payments from Medicare Advantage plans than from traditional Medicare.

Hesse advises Register readers to visit the American Medical Association’s Web site for “an intelligent solution to the health-care dilemma.” Among the AMA’s proposals are a national cap on medical-malpractice awards and shifting the burden of health-insurance ownership from employers to individuals. It is little different than the so-called “universal” health-care plan forwarded by Democratic presidential hopeful Hillary Clinton.

Perhaps Hesse should be asking why a private health-insurance company, answerable only to its major shareholders, is better than a single-payer health-care system which, if the government is properly functioning, is accountable to the voting public.

Bob Jewett
Des Moines

Brief Response from Dr. Robert McMurtry, Canadian orthopedic surgeon and former Dean of a medical school, to the internet hoax “letter from a Canadian friend”

Click here to read “letter from a Canadian friend” at scopes.com

By Dr. Robert McMurtry

The fake letter is so patently ridiculous and written from an right wing American view that it should be exposed.

My response in brief is that single payer works. A few points about health care in Canada.

* There is no anxiety about physician and hospital bills.

* For the first time in many years I sat at a department of surgery meeting and heard that we are not filling the OR time! Why? Because the government of Ontario has been so effective at attacking wait times.

* There are no wait times for cardiac and cancer care in Ontario.

* No one has ever been denied care for smoking and the outcomes for health care are better in Canada
than in the U.S.

* We are competing very successfully with the U.S. because of single payer health care.

* Our dollar is now worth more than the American dollar.

The only question is why profit and greed in the U.S.continue to trump compassion, efficiency and quality.

http://www.snopes.com/politics/medical/canada.asp

Letter to Gov. Schwarzenegger

The California State Legislature is currently in a special session, negotiating with Gov. Schwarzenegger the terms of a compromise bill on health care reform. They are fixated on using private health plans to expand coverage, even though private insurers cannot provide a product that is reasonably comprehensive and still has premiums that are affordable for average-income families. It appears that the governor would strip the plans of the financial protection that insurance must provide in order to make the plans (but not health care) affordable, and then mandate universal coverage. The legislators seem to be insisting that the plans must be required to be comprehensive enough to prevent financial hardship for those with health care needs, but since these plans no longer would be affordable for the majority of us, the legislators would leave millions of Californians without coverage.

Following is a letter that I sent to the governor last month making the point that affordable, comprehensive health care for everyone is attainable if we truly accept his call for a post-partisan solution with shared responsibility. Although the negotiations are not public, there is no evidence that the policy discussions have extended beyond the obsolete model of private health plan financing. This letter is being distributed in hopes that others will join in the call for reform that will achieve our goal of comprehensive health care for everyone. Please share this message with others who do care.

September 3, 2007

The Honorable Arnold Schwarzenegger
Governor of California
State Capitol Building
Sacramento, CA 95814

Re: Shared responsibility, the hidden tax, and affordable private health plans

Dear Governor Schwarzenegger,

You are to be commended for taking the lead in reforming health care financing for the state of California. The decades-long ideological gridlock has allowed affordable access to our very expensive health care system to deteriorate to a level that threatens almost everyone. We are spending enough to provide comprehensive, high-quality care for everyone, yet millions without insurance, and millions more who have inadequate insurance, face financial hardship as a consequence of significant illness or injury. Not only are the uninsured a major problem, our insurance system is now failing us.

An essential first step for reform is to answer your call for us to enter a post-partisan era wherein we set the rhetoric of ideology aside and address the actual policies that will be required to accomplish our common goals. You are right to insist that everyone must be provided with health insurance coverage now since any major reform enacted in the near future will likely bring an end to efforts to achieve comprehensive reform.

Your concept of shared responsibility must be a component of reform since everyone must be included, and all individuals and entities must participate equitably, based on their ability. You have acknowledged that the hidden tax that we all pay for uncompensated care is an important resource that is already a part of our health care financing, but that it should be replaced with a more equitable, transparent source of funds.

In establishing policies of shared responsibility, it is important to understand the publicĆ¢ā‚¬ā„¢s perceptions of the costs of health care today, as contrasted to the realities. Since most of us are insured by private plans, it appears to us that our primary costs include our insurance premiums (whether paid individually or as a salary reduction for employer-sponsored plans), our deductibles, copayments and coinsurance, and out-of-pocket payments for products and services not covered by our plans. But we shall see that our actual health care spending is far greater than that represented by the covered and uncovered costs through the private plans.

Although representing only a small portion of our total health care spending, it is these private plans that are becoming unaffordable for everyone. Businesses, especially small businesses, are less and less able to afford the premiums of group plans. And in order for premiums in the individual market to remain affordable, insurers are decreasing the financial protection for those who do develop health care needs. The combined costs of the premiums plus the cost sharing and other out-of-pocket expenses are now so high that coverage through private plans is no longer affordable for the average-income family. The primary flaw of the proposal for an individual mandate to purchase private insurance lies in the fact that it is impossible for the insurance industry to provide innovative products that would have both affordable premiums and adequate benefits, especially if they are to expand their essential insurance function of pooling risk.

As stated, these expensive private plans that are no longer affordable for average-income individuals represent only a minor portion of our health care spending. Private plans are sold to the largest and healthiest sector of our society: the relatively healthy workforce and their young, healthy families, and the healthy sector of the individual market that passes underwriting standards. If the private insurance industry can no longer provide us with affordable products for this large healthy sector, how could they ever create a product that brings in those with significant health care needs, and expands benefits and reduces cost sharing to a level that does not create a financial hardship for those who must access the system? Although Blue Cross of California has been criticized appropriately for its anti-consumer practices, it is the only insurer that has been forthright on this issue. Blue Cross has been very successful in keeping payment for actual health care services at a minimum, and its business model would fail if they had to include all individuals with health care needs while providing them with adequate benefits and protecting them against potential financial hardship. They know that they cannot provide such coverage at a competitive premium.

If we think that private insurance premiums and our out-of-pocket spending represent most of our health care costs, then we have really deceived ourselves. Our greatest costs are financed by a massive hidden tax. According to Princeton health economist Uwe Reinhardt, two-thirds of our health care financing is already through the tax system. Amongst the programs that are funded by the taxpayer are Medicare, Medicaid, SCHIP, Veterans Health Administration, military health care, US Public Health Service, Indian Health Service, other public hospitals and clinics, insurance programs provided by taxpayers for public employees including FEHBP and CalPERS, the tax subsidy of employer-sponsored coverage, and, of course, the hidden tax of uncompensated care shifted to the rest of us. The amount we pay for health care on a per capita basis through our tax system alone is more than other nations pay in public and private spending combined. Except for Medicare payroll taxes, most of the taxes we pay for health care are hidden since there is no transparent link for general revenue taxes, and much of the tax we pay for health care is passed on to us as overhead expenses built into the products and services that we purchase.

Professor Reinhardt also makes the point that risk pooling must not only serve its traditional role of transferring funds from the many who are healthy to the few who have significant health care needs, but now, since health care costs are so high, risk pooling must also serve the function of transferring funds from the wealthy to average- and low-income individuals with health care needs. Although some would oppose accomplishing this transfer through the tax system, it is already taking place since our relatively progressive taxes are currently being used to fund two-thirds of our health care system.

It is fortunate that we do have this transfer through our tax system. We already are spending $7500 per capita for health care (current national health expenditures divided by the total population). If we were each to pay our pro rata share into a single risk pool, a family of four would be paying $30,000, obviously an impossibility when the median household income is $48,000 (nationally). Although the tax transfer has reduced the impact of health care costs on average-income families, it has not prevented the costs within the private insurance risk pools to push premiums and out-of-pocket expenses to unaffordable levels. The segregated risk pools of private plans have become an obsolete method of financing health care.

In a post-partisan environment, we can dismiss the ideological debate over whether or not health care should be funded through the tax system, because we see that much of it already is. Further, since tax systems are much more equitable in the funding of health care than are private health plans, we already have accepted implicitly the doctrine of shared responsibility through our massive hidden tax programs.

What we have not achieved is value for our health care spending. Much of the waste is directly due to our very inefficient and highly ineffective, fragmented system of financing health care. The private insurers continue to sell us a profusion of administrative services while greatly compounding the waste by placing an intolerable administrative burden on the health care providers. Since the private insurers have failed to provide the market solutions that would provide us with the effective risk pooling that we need, some might consider it to be irresponsible for us to continue to finance their wasteful administrative excesses and the costs of the administrative burdens placed on the providers.

Reports from the Organization for Economic Development and Cooperation (OECD) and from the World Health Organization (WHO) address the superfluous costs of the private insurance plans.

OECD:

“Whatever the role played in a health system, private health insurance has added to total health expenditure. Most OECD countries apply less government control over private sector activities and prices, compared to public programmes and providers. Private insurers tend to have less bargaining power over the price and quantity of care as compared with public systems, particularly single-payer ones. Countries that have multiple sources of primary coverage, including those with significant private health insurance market size, tend to be those with the highest total health spending levels per capita, such as the United States, Switzerland, Germany and France.”

WHO:

“Evidence shows that private sources of health care funding are often regressive and present financial barriers to access. They contribute little to efforts to contain costs and may actually encourage cost inflation.”

If an individual mandate to purchase private insurance were to be adopted, important trade-offs would have to be accepted. All modeling simulations and the experience of other nations have demonstrated that building on the private insurance model is by far the most expensive way of reforming health care financing. Risk pools would be difficult to manage since inter-pool transfers would be required to risk-adjust the pools based on claims experience. If a simpler, separate universal pool were to be established, then it would be difficult to justify the high administrative costs of an industry that would serve little function other than claims processing. Since reasonably comprehensive plans are no longer affordable for average-income families, a complex, means-tested system of tax credits or vouchers would have to be created, which would require constant administrative readjustments because of changing income levels. It is difficult to justify adding on an administratively complex system of credits or vouchers to a private health insurance system already heavily weighted down with administrative complexity. It would be far simpler to use the equitable policies of our tax system to fund the health care system up front, and then to grant everyone unencumbered access through our own public insurance program, not burdened by means testing.

Although most but not all of us are concerned about ensuring that everyone has access to health care, the one issue on which we all do agree is that we can no longer tolerate the escalation of health care costs. From a policy perspective, public insurance addresses the cost issues most effectively by eliminating administrative excesses, and by realigning incentives to provide greater value in health care purchasing. Setting ideology aside, a decision must be made as to what role, if any, the private insurers should have in the future of our system of financing health care.

The current partisan divide on health reform is unfortunate. The Democratic proposal would leave millions of people without coverage unless they are able to find a way to raise the billions of public dollars that would be required to support the individual mandate. Those dollars would be added to the financial burden that society already bears for health care. And the Republican proposals fail to address realistically any of the major concerns in health care financing. Your post-partisan proposal calls for including everyone by effectively pooling risks, with everyone sharing responsibility equitably, and using the hidden tax to help fund health care for all of us. The adjustment that we would make to the massive tax funding that we already have would be more than offset by providing relief for businesses and individuals from the excessive premiums we are paying to the inefficient and ineffective private insurance industry.

Since there have been innumerable meetings during which various concepts have been vetted, it is tempting to claim that AB 8 merely needs to be adjusted to conform to the principles that you support, and that we are too close to reform to reopen the discussions to other options. But since we may live with these decisions for decades, it is important that we get it right. We should look again at the massive government financing that is already in place and see how that can be modified and meshed seamlessly with the expansion of coverage that we need. In this post-partisan era, it is no longer necessary to dismiss policy improvements merely because they are drawn from the single payer model.

All policies that would improve our flawed system of financing need to be on the table. A model that would automatically include everyone by establishing a single, universal risk pool that is equitably funded through the tax system is the most efficient, effective, equitable and least expensive model and should certainly be on the table with the rest of proposals. In contrast, consideration should be given to removing from the table the very expensive, highly inefficient and ineffective private insurance model that served us well in the last century but now is obsolete in our current environment of very high health care costs.

Thank you for your sincere personal efforts to achieve health care reform that will serve all Californians. Your post-partisan leadership should help to bring us reform that is based on sound policy science rather than on simple partisan rhetoric.

Sincerely,

Don R. McCanne, M.D.
San Juan Capistrano, CA
don@mccanne.org

Don McCanne is senior health policy fellow for Physicians for a National Health Program (www.pnhp.org).

Ideology and kids' health

Editorial
The Berkshire Eagle
Monday, October 08

President Bush’s veto of legislation providing an overdue expansion of the State Children’s Health Insurance Program (S-CHIP) is the latest of many examples of the foolishness that can result when ideology is allowed to trump all else, including logic and fairness. Mr. Bush, who worries about creeping socialism as if was still 1957, is beyond hope, but if enough congressional Republicans can set aside the ideology that helped put them in the minority and do what is right, his veto could still be overridden later this month.

The 10-year-old S-CHIP program has done a fine job of providing health insurance coverage for children from low-income families, but because of a growing population and changing demographics, many children are now falling through the cracks. Congress wants to expand the program to include another 3.8 million children, many in middle-income families that cannot afford insurance because modest wage increases cannot keep up with the rising costs of employer-based insurance.

Mr. Bush, who is always willing to mislead when it comes to making an ideological point, asserts that children in families earning $83,000 a year will be covered by the expanded program, which as far as can be determined, is based on a proposal in New York state to extend the plan to families making 400 percent of the poverty level. The actual legislation, however, would cover families earning up to 300 percent of the poverty level, or $51,000 a year. Those families are not wealthy, and with health insurance costs climbing at roughly four times the rate as wages, they need help insuring their children.

Ideology enters the picture with the president’s insistence that the expanded S-CHIP plan will open the door to “socialized medicine.” The word “socialism” doesn’t scare people much anymore, but it isn’t accurate anyway when applied to proposals like single-payer health care, in which the government pays for health care, not patients and their families at the mercy of profit-driven insurance companies. The medicine would not be “socialized” because patients would receive the same treatment and have the same options as they do now. The difference is that working men and women would not have their paychecks gouged by insurance payments and would not risk bankruptcy if hit by a catastrophic illness.

Out on the campaign trail, the Republican presidential candidates have all backed the veto, even though in the case of former Massachusetts Governor Mitt Romney and former New York City Mayor Rudy Giuliani, this involves repudiating stands on health insurance they took as elected officials. Mr. Romney is so tied in knots by his serial flip-flopping that he now finds himself campaigning against the Massachusetts plan to provide insurance for all residents that he signed into law because it constitutes the dreaded “socialized medicine.”

Ideology should never get in the way of good government, as it has with the expansion of the children’s health insurance program. Another 20 legislators are needed to override the veto in the House, and if enough Republicans care about their constituents, and their re-election hopes, to change their votes, this expansion of a valuable program could still overcome ideology and become law.

Physician makes case for single-payer health care

By Larry Mitchell
The Enterprise Record
10/14/2007
Chico, California

To Dr. Don McCanne, the remedy for California’s health-care crisis is obvious.

“Let’s give up this concept that belongs in the last century of individual private plans,” he told about 100 people who came to hear him speak in the Chico City Council chambers Thursday evening.

McCanne said the solution is a single-payer system: private health insurance would disappear and the government — California or the whole nation — would act as an insurer, collecting premiums and paying for medicine, doctors, hospitals and other health-care services.

Trying to fix the present system the way the leading Democratic presidential candidates and Gov. Schwarzenegger propose doing, makes no sense, said McCanne, a senior health policy fellow for Physicians for a National Health Program, an organization advocating the single-payer system.

McCanne, who worked as a family-practice doctor in Orange County for three decades, said the $2.2 trillion America spends every year on health care “will provide high-quality care for everyone if we spend it right.”

He claimed insurance companies use 20 percent of the money they collect for “administration,” which includes such things as profit, paying their employees, lobbying and advertising. When you add the 12 percent of their income that doctors and hospitals spend dealing with insurance plans, you have 32 percent of the health-care dollar going for “administration.”

“Most of it is waste,” McCanne said.

“We are being soaked, and we don’t even recognize it.”

However, Nicole Evans, spokeswoman for the California Association of Health Plans, which represents 40 health plans that represent 21 million Californians, said McCanne’s figures were outdated. She said more recent data show administration, at most, accounts for 20 percent of the health-care dollar (see Dr. Don McCanne’s response to Nicole Evans below).

Not only is the present system way too expensive for what it provides but it’s extremely inefficient, McCanne said. “This fragmented system of thousands of plans physicians and hospitals have to deal with puts a tremendous burden on them.”

He said it makes much better sense “to put all funds in one pool, fund it equitably and pay for health care out of that.”

His appearance in Chico was sponsored by several groups: the League of Women Voters of Butte County; the California Nurses Association; and the Butte Healthcare Coalition, a local organization that has been pushing a single-payer system for years.

Many leading Democratic politicians want to try to fix the current system, and Republicans tend to “blame the victims,” saying things like if people wouldn’t get so fat, health care wouldn’t cost so much, McCanne said.

He noted the Legislature passed Sen. Sheila Kuehl’s single-payer bill, but the governor vetoed it. She’s holding the bill in abeyance, trying to keep it alive, he said.

McCanne said states like Massachusetts and Hawaii, which have tried to make private insurance cover everyone, have only run into more problems.

The people indicate they want action on the health-care crisis, and it’s clear that single payer is the answer, he said.

But Evans insisted single payer is not the solution. The biggest problem today is that medical costs are rising between two and three times faster than other types of inflation, she said. “Single-payer health care doesn’t do anything to address that.”

She said the rising costs are due to many factors, such as the shortage of doctors and nurses, hospitals’ growing expenses, drug costs, and a large population that is getting older and less healthy.

McCanne noted that the number of uninsured people in America rose by 2.2 million last year to a total of 47 million, according to the U.S. Census. A fact sheet from the California Nurses Association says the uninsured receive less preventive care, are diagnosed at more advanced disease stages and get less medicine and fewer surgical interventions for their medical problems than people with health insurance.

One of the best things about a single-payer system is that it would cover everyone, McCanne said. “Health care is a right. I think most of us health-care providers feel that way.”

Staff writer Larry Mitchell can be reached at 896-7759 or lmitchell@chicoer.com.

BACKGROUND: In a single-payer system of health care, private insurance would be abolished and the state or federal government would pay private hospitals and doctors to care for everyone.

WHAT’S NEW: Dr. Don McCanne, representing Physicians for a National Health Program, spoke in Chico this week on the benefits he believes would come from a single-payer system.

WHAT’S NEXT: For area health-care providers, a local chapter of the California Physicians Alliance has been formed. Its aim is to promote a single-payer system for the state.

Don McCanne responds to Nicole Evans’ statement that his figures on administrative costs are outdated:

The total administrative cost of our entire health care system is about 31 percent of our health care spending, which some claim is an outdated estimate. However, I was referring to the portion of premiums paid to private insurers that is consumed in administrative services, which also happens to be about 32 percent. In either instance, the numbers are still valid.

A January 2004 update of prior studies on the total administrative costs of our entire health care system demonstrated that they are about 31 percent of the entire costs. Nothing has changed in the past three years to alter that estimate. Insurers have actually increased the often intrusive administrative services that they provide. Changing to a single payer national health insurance program would recover a significant portion of those costs.

Press release on that study:
https://pnhp.org/news/2004/january/national_health_insu.php

My comments on the percentage of health insurance premiums being consumed by administrative services were based, in part, on a study of billing and insurance related (BIR) costs. Excluding other administrative costs, the portion of the premium consumed by BIR functions alone was 8 percent for private insurers, 14 percent for physician offices, and 7 to 11 percent for hospitals, for a total of 20 to 22 percent. Insurers also spend an additional 9.9 percent for other administrative functions. Thus the percent of premiums used for administration is about 30 to 32 percent, and that does not include insurers’ profits.

Brief excerpts from this study (with my comment on the BIR portion):
https://pnhp.org/news/2005/november/landmark_study_much.php

Although the insurance industry tends to dismiss their administrative costs as an insignificant portion of our health cost burden, they do have to report their medical loss ratios to the SEC. These reports do show that they retain an average of about 20 percent for administration and profit, but, of course, that does not include the administrative burden placed on the health care providers (another 12 percent).

Medical loss ratios of largest insurers for 2005:
https://pnhp.org/news/2006/march/medicalloss_ratios_.php
Note the first paragraph of my comment.

Also, Nicole Evans’ comment that single payer does not address rising medical costs is untrue. Besides the administrative savings, a single payer system would realign incentives to improve our rapidly deteriorating primary care infrastructure while reducing wasteful spending on non-beneficial high-tech excesses. Systems with a strong primary care base provide higher quality care at a lower cost. Health care prices are much higher in the United States, and a single payer system would use negotiation to achieve greater value. Negotiation would include fair profits but would reduce wasteful spending (such as pharmaceutical marketing and patent abuses).

Support for single-payer system

BY KEVIN DUGGAN
The Coloradoan
KevinDuggan@coloradoan.com

Choking back tears and outrage at the state of health care in the United States, many local residents Friday called for following a different tack in crafting a health insurance program for Colorado.

About 100 people attended a sometimes emotional hearing at the Lincoln Center sponsored by the state’s Blue Ribbon Commission on Health Care Reform regarding proposals the state Legislature is expected to take up next year.

Of the more than 30 people who addressed panel members, all but a few voiced support for a proposal that would establish a single-payer system for the state’s health-care system.

The current system is geared toward making profits for insurance companies and their shareholders rather than providing care for patients, said Dr. Kathy Waller, of Fort Collins.

“Private, for-profit health insurance served its purpose in the early part of the 20th century, but it is obsolete for the 21st century,” she said.

Forcing consumers to buy private health insurance to meet their medical needs does not provide universal coverage and is “legalized extortion,” Waller said.

A single-payer plan would save the state about $1 billion in health-care costs and provide better coverage, she said.

Many audience members told personal stories of dealing with catastrophic medical problems and near financial ruin. Others said the government should play a role in providing universal care.

Rebecca Renz, of Windsor, said she worries every day about her husband losing his job and insurance. The couple’s 3-year-old daughter has a heart condition that might require a heart transplant.

“Working through the current system is humiliating and painful,” she said. “In our beautiful state, we must be willing to say that health care is not a birthright but a human right.”

But Chris Davies, of Fort Collins, said a single-payer system sounded too good to be true.

Under the proposed single-payer system, the residency requirement would be only three months. The state could be inundated with seriously ill patients who can’t get coverage elsewhere, she said.

The costs could be prohibitive, Davies said.

“There are millions of dollars missing in Iraq – who knows where they went,” she said. “The government is administrating that plan. Do we want them to administer our health care that’s so important to us?”

Private insurance system is the problem

Letter to the Editor
Milwaukee Journal Sentinel
Oct. 14, 2007

Regarding the Oct. 7 editorial “Mandating coverage: A sensible solution,” private for-profit insurance is the very cause of our health care crisis — not the solution.

“Private insurers maximize profits mainly by limiting benefits or by not covering people with health problems,” points out Marcia Angell of Harvard Medical School. “The United States is the only advanced country in the world with a health care system based on avoiding sick people.” How will a mandate for individual coverage address this basic yet perverse motive?

Nor will it address the nearly $400 billion from this huge private-sector bureaucracy dedicated expressly to denying insurance to those with pre-existing conditions and refusing coverage to the insured whenever possible. Further, individual mandates will not guarantee coverage of the 47 million uninsured.

The Journal Sentinel editorial contended that a single-payer system — like those in Canada, Taiwan and France — is not “politically doable.” Yet BusinessWeek’s May 17, 2005, poll showed “67% of all Americans think it’s a good idea to guarantee health care for all U.S. citizens, as Canada and Britain do, with just 27% dissenting.”

It’s time to cut out the parasitic middleman — the for-profit insurance industry that is driving up costs, dictating to patients and doctors alike and diminishing quality.

Roger Bybee

How Many Connector Staff Does It Take to Change a Light Bulb?

by David Himmelstein, MD
Posted by CommonHealth
WBUR 90.9
Friday, October 5th, 2007

The Ontario Health Insurance Plan (OHIP), which covers about 12 million residents of that Canadian province, employs roughly 1500 people. The Connector has 35.6 FTEs. It helps arrange coverage for the 30,000 people with private insurance purchased through the Commonwealth Choice program; 23,000 who get partially subsidized coverage under Commonwealth Care; and 92,000 low income individuals signed up for free insurance. That’s a total of 145,000 people. In other words, the Connector employs twice as many (2.5) people per 10,000 enrollees as OHIP (1.2).

That comparison doesn’t sound too bad, until you realize that OHIP actually pays all of the bills for care in Ontario and administers virtually the entire health care financing system. The Connector merely serves as a glorified insurance broker, signing people up for coverage with plans like Blue Cross and Harvard Pilgrim. So on top of the 4% to 5% cut of every premium dollar that the Connector takes, Blue Cross and Harvard Pilgrim take their 15%. (I can’t tell you what Tufts’ share is — their annual report for 2006 left out the figures — though it does let slip that its net worth rose by $96 million even as enrollment fell).

In total we paid more than $800 million for health insurance companies’ overhead last year – $20 million to the Connector (about $145 per person they helped find coverage) $251 million to Blue Cross, $332 million to Harvard Pilgrim, and (my estimate) about $200 million to Tufts. And this figure doesn’t include the overhead of the dozens of smaller insurance plans in our state. If OHIP had been on the job the cost would have been about $75 million — less than one tenth as much.

A few other figures to remember on this first birthday of health reform. According to the U.S. Census Bureau, in 2006 there were 469,733 uninsured residents of Massachusetts with family incomes above $150% of poverty. The Connector says that it now covers 23,083 of them under Commonwealth Care and has enrolled another 30,000 private plans. That’s 11% of the total.

David Himmelstein is an Associate professor of medicine at Harvard Medical School and Co-founder of Physicians for a National Health Program

Ideology and kids’ health

Editorial
The Berkshire Eagle
Monday, October 08

President Bush’s veto of legislation providing an overdue expansion of the State Children’s Health Insurance Program (S-CHIP) is the latest of many examples of the foolishness that can result when ideology is allowed to trump all else, including logic and fairness. Mr. Bush, who worries about creeping socialism as if was still 1957, is beyond hope, but if enough congressional Republicans can set aside the ideology that helped put them in the minority and do what is right, his veto could still be overridden later this month.

The 10-year-old S-CHIP program has done a fine job of providing health insurance coverage for children from low-income families, but because of a growing population and changing demographics, many children are now falling through the cracks. Congress wants to expand the program to include another 3.8 million children, many in middle-income families that cannot afford insurance because modest wage increases cannot keep up with the rising costs of employer-based insurance.

Mr. Bush, who is always willing to mislead when it comes to making an ideological point, asserts that children in families earning $83,000 a year will be covered by the expanded program, which as far as can be determined, is based on a proposal in New York state to extend the plan to families making 400 percent of the poverty level. The actual legislation, however, would cover families earning up to 300 percent of the poverty level, or $51,000 a year. Those families are not wealthy, and with health insurance costs climbing at roughly four times the rate as wages, they need help insuring their children.

Ideology enters the picture with the president’s insistence that the expanded S-CHIP plan will open the door to “socialized medicine.” The word “socialism” doesn’t scare people much anymore, but it isn’t accurate anyway when applied to proposals like single-payer health care, in which the government pays for health care, not patients and their families at the mercy of profit-driven insurance companies. The medicine would not be “socialized” because patients would receive the same treatment and have the same options as they do now. The difference is that working men and women would not have their paychecks gouged by insurance payments and would not risk bankruptcy if hit by a catastrophic illness.

Out on the campaign trail, the Republican presidential candidates have all backed the veto, even though in the case of former Massachusetts Governor Mitt Romney and former New York City Mayor Rudy Giuliani, this involves repudiating stands on health insurance they took as elected officials. Mr. Romney is so tied in knots by his serial flip-flopping that he now finds himself campaigning against the Massachusetts plan to provide insurance for all residents that he signed into law because it constitutes the dreaded “socialized medicine.”

Ideology should never get in the way of good government, as it has with the expansion of the children’s health insurance program. Another 20 legislators are needed to override the veto in the House, and if enough Republicans care about their constituents, and their re-election hopes, to change their votes, this expansion of a valuable program could still overcome ideology and become law.

The Frosts Demonstrate Why We Need Single Payer Health Care

Hale “Bonddad” Stewart
Thu Oct 11, 1:05 PM ET

For economic commentary and market analysis, go to the Bonddad Blog:

From Time:

It turns out, however, that not everything about the Frosts’ life pops up on a Google search. While Graeme does attend a private school, he does so on scholarship. Halsey Frost is a self-employed woodworker; he and his wife say they earn between $45,000 and $50,000 a year to provide for their family of six. Their 1936 rowhouse was purchased in 1990 for $55,000. It was vacant and in a run-down neighborhood that has improved since then, in part because of people like themselves who took a chance. It is now assessed at $263,140, though under state law the value of that asset is not taken into account in determining their eligibility for SCHIP. And while they are still uninsured, they claim it is most certainly not by choice. Bonnie Frost says the last time she priced health coverage, she learned it would cost them $1,200 a month.

The above snippet from Time perfectly illustrate why single-payer health care is really the answer to the health care problem in the US.

1.) Notice the Frost’s already priced insurance. At $1200/month, the Frosts would be looking at $14,000/year in payments. That’s 32% of their income. That assumes those are all the medical costs the Frosts would pay which simply isn’t true. My guess is the $1200/month policy would have some type of deductible, co-pay structure etc…. Considering the Frosts overall situation of two children needing expensive medical care, medical costs could easily become 40%-50% of their annual expenses.

2.) Malkin has argued that assets should be included in the eligibility computation for SCHIP. This is a really stupid idea. According to the article, the Frost’s home is $263,000. According to Malkini’s argument, the Frosts should either take out a home loan (home equity loan) or sell their home. If the Frost’s sell their home, they will take out their equity (assuming they have some). But they’ll eventually spend that. In addition, this assumes the Frosts can sell their home right now — in the worst housing market in the last 20 years. In other words, this argument makes a lot of assumptions that probably won’t play out in reality. When they’re done spending the loan proceeds, they’ll be poorer. In taking out a home equity loan, the Frost’s are simply delaying he inevitable — bankruptcy. The Frosts would then have a note which would provide a drain on their finances until the loan proceeds ran out. At that time, the Frosts would have an additional payment in their monthly nut in addition to medical costs. I’m not sure if Malkin realizes the debt issue in America, but it is pretty severe. For example, foreclosures doubled this month.

Here’s the basic problem. The Frosts aren’t rich and they have children. That means medical expenses are their biggest problem. Under the Malkin theory, either poor people shouldn’t have children because insurance is too expensive, or the poor should go into debt to pay for insurance which under the new bankruptcy laws is tantamount to indentured servitude.

Anyway — now that I’ve weighed in on the Frost debate, I want to bring back the central arguments I have always made (and will continue to make) about single-payer health care.

While I will almost always advocate for a market based economic approach to allocating resources, health care is not an area where the profit motive should dominate decision making. Simply put, the end product is a patient’s health. Private health insurance has a conflict of interest between the insurance company and the insured which will be resolved in favor of the insurance company a majority of the time.

Let me paint a hypothetical picture to illustrate this point. Insured makes a claim with the insurance company, which is a publicly traded company. Because the insurance company is publicly traded they must turn a profit and increase their profits to maintain their share price. In order to make a profit they have every incentive to either

1. Deny the insured’s claim, or
2. Delay payment to increase the possibility the insured will drop his claim

There are numerous stories about an insured making a routine claim only to be inundated with paperwork, or being told the policy doesn’t cover that procedure, or being told the insurance company has to look into the claim to see if the insurance company can make a payment. In any of these situations the central idea of insurance — to provide some safety for the insured at a specific cost — is compromised.

In addition, insurance companies will seek to minimize the amount of money they would have to pay to the insured. Again, remember the product here is the patient’s health. Supposed the insured has a disease where the cure is expensive but a cheaper alternative exists. However, the cheaper alternative would moderately or seriously compromise the insured’s quality of life. Because the insurance company is profit-driven, it will probably opt for the cheaper treatment that compromises the insured’s quality of life.

Here is what the Frost’s ran into in the private health care market:

In a telephone interview, the Frosts said they had recently been rejected by three private insurance companies because of pre-existing medical conditions. “We stood up in the first place because S-chip really helped our family and we wanted to help other families,” Mrs. Frost said.

The profit motive worked to the Frost’s extreme disadvantage. Because covering the Frost’s was expensive, the insurance companies simply denied them coverage.

Secondly, private health care is more expensive the public health care. Here are three charts compiled from the Organization for Economic Cooperation and Development. The figures are from 2004.

First, the US spends the least amount of public money on health care.

However, the US spends the most on health care as a percentage of GDP and on a per capita basis.

Notice the partially inverse relationship between public expenditures and total amount spent on health care. In short, publicly available health care is cheaper.

Finally there is the issue of competitiveness. I’ll let General Motors of Canada make the argument for me.

“The Canadian plan has been a significant advantage for investing in Canada,” says GM Canada spokesman David Patterson, noting that in the United States, GM spends $1,400 per car on health benefits. Indeed, with the provinces sharing 75 percent of the cost of Canadian healthcare, it’s no surprise that GM, Ford and Chrysler have all been shifting car production across the border at such a rate that the name “Motor City” should belong to Windsor, not Detroit. Just two years ago, GM Canada’s CEO Michael Grimaldi sent a letter co-signed by Canadian Autoworkers Union president Buzz Hargrave to a Crown Commission considering reforms of Canada’s 35-year-old national health program that said, “The public healthcare system significantly reduces total labour costs for automobile manufacturing firms, compared to their cost of equivalent private insurance services purchased by U.S.-based automakers.” That letter also said it was “vitally important that the publicly funded healthcare system be preserved and renewed, on the existing principles of universality, accessibility, portability, comprehensiveness and public administration,” and went on to call not just for preservation but for an “updated range of services.” CEOs of the Canadian units of Ford and DaimlerChrysler wrote similar encomiums endorsing the national health system.

Health care costs are killing American business. Our international competitors don’t have to deal with these costs. As a result, private health care is making US business less competitive.

So, public health eliminates a conflict of interest that compromises individual health, is cheaper and makes the US more competitive. And we don’t have a public health system because?

Digby makes the point far more eloquently than I:

Setting aside the total dishonesty of that — surely Steyn has been informed by now that the Frost kids go to private school on scholarship and the house was bought for 55,000 in 1990 — what has become crystal clear in this debate is one that I think needs to be discussed. The Republicans believe that people should be completely destitute, living in a one room shack and working two jobs before they “deserve” subsidized health insurance. The middle class who are one car accident or one cancer diagnosis away from losing their jobs, being unable to afford either the cadillac COBRA plans from their employers (my last one here in California was $1700.00 a month and I’m healthy) must not be allowed to keep ANY assets.They must be, as Steyn’s pal wrote, “dying on the streets with sores on their bodies” before they qualify for aid. …..

If the free-wheeling capitalists of the right wing believe that you can keep an economy dynamic, growing and flexible in a twisted system like this, they are even more blindly ideological than I thought. This is not just a moral crisis, it’s an economic crisis and if these people are determined to continue down this path then I suggest the rest of us start buying land in Costa Rica because this country is going to fail. Hugely. The numbers do not add up.

"Why Not Single Payer?" A Response to Paul Krugman and the Leading Democratic Presidential Contenders.

Miles Mogulescu
The Huffington Post
Posted October 10, 2007
Part I

Faster than you can say the word “Sicko” and turn around 3 times, the Democrats’ promise of health care for all has gone from “Universal Medicare For All” to “Individual Insurance Mandate”. In Monday’s New York Times, Paul Krugman defends that reversal in an article entitled “Why Not Single Payer?”

The possibility, after the 2008 elections, of a Democratic-controlled Congress which could pass Medicare For All (a/k/a Universal Single Payer Health Insurance) and a Democratic President who would sign it, could bring about the best chance to enact Medicare For All since Harry Truman first proposed it in 1948.

Yet without firing a shot and with no debate, the leading Democratic Presidential Contenders–Hillary Clinton, John Edwards and Barack Obama–as well as a good part of the Washington progressive infrastructure of think tanks and lobbying groups–have given up the fight for Medicare For All. Instead they propose variations of an Individual Mandate plan developed over the past 15 years by the “moderate” corporate wing of the Republican Party, a version of which Mitt Romney enacted in Massachusetts and which Arnold Schwarzenegger is proposing in California as an alternative to the single payer plan which the Democratic California legislature passed last year that he vetoed.

The thing is, I can’t quite figure out why the Democrats are in such rapid retreat from Medicare For All before the first battle has even been joined. Is it another example of the political cowardice by which the only Iraq resolutions that can pass the Democratic controlled Senate are a Republican-driven bill condemning MoveOn.Org. and praising Gen. Petraeus and another declaring the Iranian Revolutionary Guards a terrorist organization? Is it because the Democratic candidates are afraid of being accused by Republicans of supporting socialized medicine? (If so, it won’t help because Giuliani, Thompson, and Romney–whose Massachusetts plan Hillary largely imitates–all quickly claimed that Hillarycare 2.0 is socialized medicine, anyway.) Is it because they’ve been bought off by insurance companies and drug companies or fear that too many other Congress and Senate members have?

Or is it because they think that the insurance companies and drug companies are just too politically powerful to take on: Therefore the only way to insure most Americans is to make a deal with the devil that requires profit-making insurance companies to waive pre-existing conditions and charge everyone similar premiums regardless of age or health, in exchange for Congress delivering them 50 million guaranteed new profit-making customers, partly subsidized by the government?

Paul Krugman’s NY Times column is one of the first direct attempts by a liberal former supporter of single payer to try to make the case for adopting the Individual Mandate approach instead. According to Krugman, “basically it looks like something that could actually happen in the next administration, while enacting a single-payer plan…excellent as those plans are, might take a very long time.”

First, Krugman argues than an Individual Mandate would not require a big tax increase, although he admits (thus defeating his own argument) that taxes which most people would pay for single payer would most likely be lower than premiums that an Individual Mandate would require them to pay out of their pockets to buy insurance. Second, he argues than an Individual Mandate won’t make people feel that they’re “being forced into a government plan”. But the essence of an Individual Mandate plan is that the federal government forces the uninsured to buy health insurance. It involves even more government coercion than Medicare For All.

Finally, he argues that the Democrats’ proposals generally include a Medicare-like public insurance alternative which individuals may buy into and which “would evolve into single-payer over time.” Krugman never quite explains how this piece of alchemy will occur. Moreover, he admits that this is the part of the Democrats’ plan that the insurance industry will fight “tooth and nail”. If the Democrats have already surrendered on Medicare For All without firing a shot, isn’t it likely that the public alternative (the “socialized medicine” part) will be the first part of the plan to be compromised away when the legislative battles start in Congress and the insurance lobby starts exercising its muscle with its hundreds of lobbyists and tens of millions of dollars in campaign contributions?

In short, I find Krugman’s notion that an Individual Mandate is somehow more politically pragmatic than Medicare For All unconvincing and I don’t buy his argument that it’s a backdoor way to eventually get there. I even wonder how strongly he believes his own arguments. Only last January, in critiquing Schwarzeneggers’s Individual Mandate plan for California as a complicated “Rube Goldberg” device, Krugman argued that “the plan requires a much more intrusive government role than a single-payer system. Instead of reducing paperwork, the plan adds three new bureaucracies: one to police individuals to make sure they buy insurance, one to determine if they’re poor enough to receive aid, and one to police insurers to make sure they don’t discriminate against the unwell.” If you then add a public Medicare-like alternative that individuals can buy into, you need a fourth bureaucracy to administer that system.

Thus, when Hillary Clinton claims that her plan requires no new government bureaucracy, she’s not being candid with the voters. That lack of candor will quickly be exploited by the Republicans and the insurance and drug lobbies. While Republicans are wrong that her plan amounts to “socialized medicine”, such charges will still ring true since, in fact, her plan will require intrusive government regulation of the private insurance industry and coercive action to be sure that all citizens are obeying the individual mandate to buy health insurance. That’s one of the big reasons why, once the debate really starts, an Individual Mandate will not necessarily be a popular plan with the voters–Using the political pragmatism test, it stands a better chance of being rejected by the public and meeting the same fate as Hillarycare 1.0 than does Medicare For All, for which the political arguments are simple and clean.

Whatever Clinton might claim, Hillarycare 2.0 in fact requires a highly intrusive government presence in the lives of both businesses and individuals. As with Hillarycare 1.0, this is likely to be the biggest club that Republicans and their insurance company allies will use to defeat her or another Democrat as they did in 1994, unless so many compromises are made to water down the plan that insurance and drug companies decide it’s in their interest to accept the 50 million new mandatory government subsidized customers to pad their bottom lines. (Remember that with private insurance, approximately 30% of the healthcare dollar goes to administration, executive salaries and profits, compared to 2%-3% for Medicare; when all the political deals are finally cut, the private insurance and drug industries might find a new government subsidy for their bottom line an attractive deal.) If an Individual Mandate plan is more politically expedient than Medicare For All, it’s not for any of the reasons which Krugman cites and not because it’s likely to be more politically popular with the voters. The real reason is that with a few backroom political compromises, it could become a that plan the insurance and drug industries could learn to love.

Miles Mogulescu is an entertainment attorney and former Senior Vice-President at MGM before it was sold to Sony. In his professional capacity, he recently negotiated the distribution arrangements for the film “Bobby” about the assassination of Bobby Kennedy. He has been a lifelong progressive since the age of 12 when his father helped raise substantial sums of money for Dr. Martin Luther King, who was a guest in his home several times. He will never forget the impression which that extraordinary man made on him, which helped lead to a lifelong commitment to social justice.

The Health Care Crisis in California

Jenny Price
The Huffington Post
Posted October 10, 2007

On December 31, 2006, the health insurance I purchase through a group of freelance artists and writers cost me $4715/year. On January 1, it jumped to $12,268. That’s $1.40 per hour. I watch a Dodgers game, and I’m down $3.50 by the 7th inning. I go to sleep, and I’ve paid another $11.20 for health insurance by the time I wake up.

Like so many people in California, then, I’ve been watching with high hopes this year as the Democratic legislature and the Republican governor both try mightily to pass a health-care reform bill. This is California, after all — the state that’s decided to unilaterally stop global warming. We love to pave the way for everyone else.

The bad news is that Schwarzenegger and the legislature have proposed moderately different plans, and are battling fiercely to prevent passage of the other. The worse news, unfortunately, is that both plans fail miserably to tackle two major causes of the health care crisis — the link between insurance and employment, and the major economic and managerial role for private insurers. These competing plans aren’t worth a seed-spitting contest, much less the raging foot-stomping political brawl.

The governor and the Democrats, rather, are duking it out to add modest regulations to a system that the majority of Americans say is radically broken. California seems dead-set on showing the rest of the country how to continue to keep us all in a state of mass anxiety about how to get and pay for health care.

The centerpiece of both plans is that employers are required to spend a minimum percentage of their payroll to cover their workers — 4 percent in Schwarzenegger’s plan, and a massive 7.5 percent in the other. So both strengthen, rather than sever, the current disastrous reliance on employers — an accidental artifact of the post-World-War-II economy, when companies started to use health coverage to compete for workers. Both pave the way for how to perpetuate a system that restricts Americans’ career choices and discourages self-employment. The plans burden smaller and lower-profit businesses, especially. And Americans who become too sick to work will continue to lose coverage at exactly the moment when they most desperately require health care.

By keeping decisions and profits in the hands of private insurers, the Golden State also aims to demonstrate how this country can continue to tie up the costs of health care in the earnings of companies that maximize profits most efficiently by minimizing health care-CIGNA, for example, which cleared $1.63 billion in profits in 2005 and earned a 37 percent return for shareholders. Which paid its CEO $28.8 million — $54.83/minute, and 6,117 premiums at my rate that year. And which does not bother to prioritize, much less mention, health care in its self-described purpose (in its annual reports) as a company “that focuses on our control environment [whatever that is], risk management and shareholder return.”

Schwarzenegger’s plan does require everyone to buy insurance, while the Democrats’ doesn’t (though to be fair, he vetoed the Democratic single-payer bill last year). And both sides propose to control the cost of premiums, and to prohibit denial of coverage to people with health problems. However, neither plans imposes clear-cut regulations on insurance rates and extent of coverage. It’s a good thing, therefore, that both sides promise to subsidize the poor, since the financial strain of unafforable premiums and uncovered medical costs should make many people sufficiently impoverished to qualify.

Yes, California will lead the way to leave Americans’ health care in these companies’ hands, since, as Assembly Speaker Fabian NuƃĀ±ez has assured us this year, “We’re not trying to turn this state into Cuba or Canada.” They’ll show us how not to do something so un-American as prioritizing the health of many over the profits of a few, which is a priority that other prosperous democratic countries (all of them, actually) embrace. They’ll patriotically lead the charge to support a free-market health-care economy that increasingly has stripped Americans of the basic everyday freedoms of deciding what careers they can pursue, and whether they can move to another town or state, and even how many children they can realistically think about being able to afford.

In sum, California’s political leaders, who are pioneering the way to global re-cooling, are inexplicably and pusillanimously leading the way toward health care reform that will cover some more people and provide moderate cost reductions. And it will energetically preserve a system in which the extreme difficulty of getting and paying for health care will undemocratically restrict the most essential choices in our lives, and will remain an omnipresent source of anxiety.

Or to put it another way — a night of sleep in California might soon cost slightly less than $11.40, but in any state that follows California’s lead, a good night’s sleep will continue to be exceptionally hard to get.