In this 1993 NEJM study, Steffie Woolhandler and David Himmelstein perform the first comprehensive analysis of administrative costs in U.S. hospitals. They find that administrative costs account for an average of 24.8 percent of hospital spending, more than double that of Canadian hospitals (~10 percent). Enrollment in HMOs and competitive bidding for managed-care contracts did not lower administrative costs. Read “Administrative Costs in U.S. Hosptials” (pdf)
60 Percent of Health Spending is Already Publicly Financed, Enough to Cover Everyone
Americans already pay for national health insurance — they just don’t get it. In this 2002 Health Affairs paper, David Himmelstein and Steffie Woolhandler point out that the standard accounting miscategorizes two major public health expenditures as private: the tax credit for private health insurance and the cost of the Federal Employees Health Benefit Program.
When these costs are accounted for, it becomes evident that Americans already pay the world’s highest health care taxes. In fact, the amount of public health spending in the U.S. is greater than the combined public and private spending of nations which provide universal comprehensive health insurance. A single-payer system could provide such coverage to all Americans with no need for additional health dollars.
Read “Paying for National Health Insurance — And Not Getting It” (pdf)
Is employer-sponsored insurance a tax problem or a structural problem?
Our Unhealthy Tax Code
By Jason Furman
Democracy: A Journal of Ideas
Issue #1, Summer 2006
American health care is beset by a well-known litany of problems.
If this were a government-run health care system, the voting public and policymakers would be up in arms. Yet, perhaps because health care is largely perceived as a private-sector concern, there is relative quiet:
while voters tell pollsters that it is a top priority, there appears not to be comparable political pressure for serious reform or any fundamental change in the government’s involvement, either in the provision or funding of health care. This is in part because much of the federal government’s involvement with the health care system is through the hidden backdoor of the tax code. An important principle for modern progressives is that when the government has to intervene in the marketplace, it should not prop up failure. Yet the federal government is, in fact, deeply involved in perpetuating the current “private” health care system and all its flaws, spending approximately $200 billion annually in subsidizing employer-provided insurance. It is the single biggest subsidy in our tax system, more than twice as costly as the mortgage interest deduction. The only government programs that cost more are Social Security, national defense, and Medicare.
The fact that the tax subsidy, which supports the employer-sponsored system, is better than nothing is a feeble excuse for resisting any changes to the status quo. This massive program of tax breaks is ineffective and regressive, wasting money on those who have health insurance while doing little for those who can barely afford it and nothing at all for those without it.
A single-payer national health care system would, by definition, remedy the problem, but it is unlikely to happen any time soon, if ever at all. Beyond the political limitations, it is also an open question whether a single-payer system would be the most efficient way to provide quality health care for all Americans. In the meantime, reforming health care will come down to a set of incremental changes that build on the current system.
But that does not mean that change cannot be ambitious. As Massachusetts has shown, achieving a plan for universal health insurance coverage need not wait for the establishment of single-payer government insurance like Medicare or a national health care system like the United Kingdom’s.
http://www.democracyjournal.org/
And…
Employment-Based Health Insurance: A Prominent Past, But Does It Have A Future?
Hosts: Brookings Institution and the New America Foundation
kaisernetwork.org
HealthCast
6/16/2006
Andrew Stern, president, Service Employees International Union:
…this is not a matter of policy. If we could solve this health care system by policy it would have been solved every single year. There’s more good policy about health care in America than I can imagine. It is the most studied, researched, you know, we have commissions and committees publicly and privately all throughout Washington and the United States. It’s really about politics and leadership.
Our choice is we could keep making incremental changes in the health care system. And I certainly appreciate that everyone would like to build a better funding stream for the health care system but the truth is we’re way past incremental change. It’s not going to work.
…so the fundamental change for me means one, you have to recognize that employer based health care is ending, it’s dying in front our very eyes. The charts say it there. It will not rebound, I believe, in the next economic upturn in America. It was a good friend. It served America well in the 20th Century. We love it dearly. Employers, to their credit, lived with it for a long time despite all of the distortions that it created. But it’s collapsing in front of our eyes. It may still be breathing but anybody who can look into the future says, “This employer based health care system is over in America.”
I’m here to also say I don’t think we need to import Canada or any other system. We’re going to build an American system because we’re Americans and we don’t like anybody else’s system.
I think the single payer issue is kind of a stocking horse for I’m not sure what, because we’re going to have a multi-payer system or some kind of system, you know, that it’s built into the cost of goods in America.
Video and Transcript:
http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1768
Comment:
By Don McCanne, M.D.
The conservative policy community has long advocated for an end to employer-sponsored coverage. They believe that insurance should be an individual choice while recognizing that government has to play some role in funding care for low-income individuals.
What are we hearing from these voices in the progressive community? They agree that the regressive tax policies are highly inequitable and must be changed. Andrew Stern goes even further and states that the deterioration in employer-sponsored coverage, declining enrollment, and the financial burden placed on employers leaves no real option other than to replace it with a better system.
The progressives acknowledge that the policy issues are well understood. In fact, single payer would certainly accomplish our goals (though Furman conjectures on the well-documented and irrefutable efficiency of single payer). So what do they say? Let’s adopt any better system, except single payer.
The policy issues are well understood. Simply changing tax policy (Furman) or adopting a universal, multi-payer system (Stern) perpetuate and expand some of the crucial policy flaws that we face today.
Single payer won’t fix all of the problems in our health care system, but it will fix all of the problems with the financing of health care. And isn’t that what the debate is all about?
End health care game playing
The Daily Gazette
June 4, 2006
Editorial for Single-Payer
Ever wonder who gets stuck with the bill when the government undercompensates hospitals and doctors for services provided to Medicare and Medicaid patients? The hospitals and docs may eat part of the loss, but according to a new study, they pass a fair amount of it on to private payers, too. That’s insurers, employers, workers who buy their own insurance and people who pay for their health care out of pocket – anyone left with money in their pockets when the music stops.
The study, commissioned by a Washington state insurance company, provides yet another argument for scrapping the existing, unfair system and switching to a single-payer government-funded plan.
It’s hard to blame hospitals for shifting the burden for care they’re obligated to provide but don’t get adequately reimbursed for. Many are losing money. While the situation is somewhat different for doctors – they haven’t exactly been losing money, they’ve simply not been making as much – their sentiment is understandable: Why should they be required to work harder for less?
According to the study, reported in Thursday’s New York Times, hospitals in Washington state in 2004 charged $738 million – or 14.3 percent – more to private payers to help offset underpayments from Medicare and Medicaid. A similar study of Washington doctors found they charged private payers an additional $620 million, or 12 percent, to compensate for being undercompensated by the government.
So private payers, who already pay for Medicaid and Medicare through their tax dollars, have to pay again. Why not abandon the charade, put all the programs under one roof – the U.S. government’s – and presumably save a lot with a single bureaucracy and economies of scale?
Wrenching Changes on the Line
New York Times, editorial
June 14, 2006
The road back to prosperity will be a long and hard one for American automakers. Companies like Ford and General Motors groan under the weight of their history, manifested in the legacy costs that are a result of decades of promises to support workers and provide them with health care in their old age.
Foreign companies like Honda and Toyota have a double advantage. In the United States, their much newer manufacturing plants have hardly any retirees. Overseas, their workers can rely on national health care systems. Meanwhile, for American automakers, the costs are going only in one direction. In 1999, General Motors spent $3.6 billion to provide health benefits to 1.2 million workers, retirees and dependents. By 2005 the cost had ballooned to $5.3 billion for 1.1 million.
At the same time, vehicle production has been falling. G.M., Ford and the parts maker Delphi have all offered thousands of buyouts as part of efforts to restructure their inefficient manufacturing businesses, trimming payrolls to become more competitive. But that means fewer workers supporting armies of retirees, a demographic challenge not unlike the one facing the Social Security system.
The United Automobile Workers union has already made concessions on the superior health insurance its members receive. But slashing benefits is a short-term approach, and an insufficient answer when G.M. lost $10.6 billion in 2005.
In an ideal world, America would join the overwhelming majority of developed countries and hammer out some kind of national health care system. Failing such a sudden and unlikely onset of sanity, creative solutions are needed.
Sen. Barack Obama has proposed striking a bargain with American automakers to help them with retiree health care costs in exchange for higher fuel efficiency standards. While we have some questions about how to make such a system work, it is at least a worthy new idea — one of a very few in a field desperately in need of them.
Pittsburgh Columnist on How Health Care Profits Starve the Patients
Feed the beast, starve the patient:
Too much money in the health-care system isn’t going to health care
Pittsburgh Post-Gazette
Sunday, June 04, 2006
I write this as a cancer survivor who has benefited from excellent medical care in Pittsburgh, all of it covered by employer-provided health insurance. Without these, I would likely be very sick, dying or dead, and my family might be bankrupt or close to it.
My continued existence makes me a tiny contributor to Allegheny County’s lowest mortality rate in 15 years. The drop, mirroring national trends, is attributed by experts to healthier living habits and improved therapies.
Of course I am grateful to be part of this good-news statistic, and for the coverage that paid for it. And yet, I still blow a gasket when I see what hospital and health insurance executives are being paid, even as premium hikes are bleeding the nation. And I do mean bleeding.
Since 2000, employer-based health premiums have increased a staggering 73 percent, far outstripping increases in wages (15 percent) and inflation (14 percent). In 2004, this country spent $1.9 trillion on health costs, or 16 percent of the gross national product.
If the rise in health costs correlated to the nation’s actual health, our death rate wouldn’t just be the lowest in 15 years, it would be zero. And I wouldn’t just be a survivor, I’d be immortal.
Administrative costs, accounting for about 20 percent of each health-care dollar, aren’t the cause of this cost spiral, they’re a symptom. But they cannot be ignored. Let’s connect the dots of some recent reports in this newspaper.
Item: The 10 highest-paid executives of Highmark, the region’s biggest health insurer, received 41 percent pay increases last year. That includes Kenneth Melani, the CEO, whose compensation went from $1.7 million to $2.5 million. Combined, the executives’ pay went from $8 million to $11.3 million — a $3.3 million hike in a single year.
Item: Meanwhile, Highmark was moving to raise its average premium by 6.6 to 7.6 percent for small businesses that can least afford it. This was less than its double-digit hike the previous year, but added on top of previous increases, it looks and quacks like price gouging — especially considering that the company is sitting atop a surplus of $2.8 billion.
Item: Hospital CEOs in this region are doing even better than their counterparts elsewhere. The University of Pittsburgh Medical Center’s Jeffrey Romoff was paid $2.88 million last year — $480,000 more than the year before. Elizabeth Concordia at UPMC Presbyterian Shadyside went from $649,500 to $927,800; Jerry Fedele at West Penn Allegheny Health System from $534,400 to $834,400; and James Collins at West Penn Hospital from $360,400 to $542,300.
These figures demonstrate the system’s central dysfunction: It is awash in money that is not going to health care. That might be just great for the executives, but it translates into unconscionable inequities for consumers and health-care workers, even as costs are killing American business, driving outsourcing and layoffs, gutting retiree benefits.
Here’s one example of how too much money in the wrong places affects the system. Hospitals don’t hire enough nurses even when they can afford to because they’d rather put the money elsewhere. So overtaxed nurses who are holding down the fort wind up laboring under terrible stress, which drives more members of the profession into non-hospital jobs and makes nursing unattractive to young people in search of a career, which contributes to the nursing shortage.
Clearly, we are treating health care as a commodity in a system geared as much or more to a profit (or, in the case of “nonprofits” like Highmark and UPMC, a “margin”) as it is to providing service. And as with any product that prices itself out of the market, its customer base is falling away — or, more accurately, being squeezed out. Some 50 million Americans are currently uninsured; many of them are working, and increasingly they are members of the middle class.
The problem with this commodity approach is self-evident. Health care is not the automobile market, where you can buy a cheaper model or take a bus. It’s life and death.
“All this talk about medical consumerism is a red herring,” said Pat Schoeni, executive director of the National Coalition on Health Care, a nonpartisan organization in Washington, whose 80 members represent a broad spectrum of interests.
“When you call 911 in a medical emergency, you aren’t researching which hospital is the cheapest. And God help you if you go to the hospital without health insurance and have any type of resources, because they’re going to eat you alive.”
The great paradox of this picture is that the health care “system” is acting like a cancer on health care. Excessive administrative expense, combined with inefficiencies, inflated prices, poor management, inappropriate care, waste and fraud are eating up the resources that the body needs elsewhere in order to survive.
“That’s a fair analogy,” said Ms. Schoeni. “There’s certainly enough money, but how is it being spent?”
An excellent question for American businesses and consumers to put front and center this election season. We have allowed our elected officials to recoil from reform for far too long. It has to happen, and I, for one, would like to be employed, insured and alive to see it.
(Sally Kalson is a Post-Gazette columnist (skalson@post-gazette.com, 412-263-1610). )
We can address our health care crisis, or we can outsource it
June 19, 2006
Asheville Citizen Times, North Carolina
Economics is sort of like water; when it comes to cost, things tend to flow toward the lowest point.
Regarding health care, the water is beginning to flow to the other side of the world.
Rising costs for health care have been a major concern for families and businesses for years. Solutions to address the problem from the business side have included higher premiums, higher deductibles and in some cases elimination of insurance programs.
Even given this backdrop, it was still somewhat of a shock to see a solution being considered by Blue Ridge Paper Products in Canton: An option that would allow their employees to travel to India for medical care.
A look at the raw numbers shows there is the potential for huge savings. For example, a hip operation that costs $50,000 stateside checks in at $18,000 when performed in India – and that cost includes travel expenses for two people.
We can’t fault Blue Ridge for looking at the plan. And we can’t fault entrepreneurs like Tom Keesling, President of IndUShealth, for commenting that his company, which coordinates health care in India for American patients, that “We’re not exporting health care to India as much as importing competition in the United States.â€
In our opinion the jury is still out regarding whether this will import competition, but this tale out of Canton starkly illustrates the reality of the state of health care in this country and around the industrialized world.
The reality is there is now only one significant difference in health care in America and health care abroad:
We pay more for it.
A lot more.
Recent data from the Organization for Economic Cooperation and Development that compared health care spending in 30 industrialized nations put the annual average health bill for an American is $5,267. That’s more than double the world median of $2,193.
Now, the U.S. has the best doctors, nurses and health care professionals on the planet. But we are nowhere near having the best health care system. Despite the aforementioned lavish spending, millions of our citizens are underinsured and a growing number – 46 million – have no insurance at all.
Further, we’re toward the bottom on infant mortality, life expectancy and a host of other measures among industrialized nations.
What’s more, a relatively new phenomenon, medical debt, is reaching alarming levels. A study by the Commonwealth Fund showed nearly 20 percent of Americans are paying off medical debts. Among middle class Americans who are underinsured, according to a survey conducted by Reader’s Digest, almost half have refused or delayed medical treatments for serious conditions, or put off or didn’t renew prescriptions for drugs. Half had used credit cards to pay health costs.
This is despite health spending in this nation that represents 14.6 percent of the Gross National Product (compared to 7.7 percent in the United Kingdom).
We’re spending plenty. We’re not spending wisely.
There are really only two roads we can see in our future. Down one road there is rising spending, more uninsured, more debt and the occasional innovative approach such as Blue Ridge Paper is looking at.
The other is a serious discussion of single-payer national health insurance.
Actually, that brings our attention to a statement we made earlier that we need to correct. There are actually two major differences between the state of U.S. healthcare and the state of healthcare in other industrialized nations.
One, we pay a lot more, and two, they all have national health insurance.
Note, that’s “national health insurance,’’ not “socialized medicine.’’ Every time the subject of single-payer health insurance comes up, there will be those who want to paint it as some sort of communist plot, a system that will be incredibly expensive, that will force patients to go through bureaucratic labyrinths to receive care and will be cumbersome and time-consuming.
Actually, that sounds a lot like our current system, which doesn’t even cover everyone.
A nationwide plan could work – Medicare, despite some faults, has been an effective single-payer program for 40 years. The other solutions being put forth, like the wildly expensive and complex prescription drug plan, do not appear to be long-term solutions at all.
It’s worth discussing.
Otherwise, we’re going to be seeing a lot more things like people from Bethel headed to Bangalore.
Can’t we do better?
CalPERS rejects copays, but at a cost
CalPERS Rejects Co-Pay Increase
By Marc Lifsher
Los Angeles Times
June 21, 2006
A California Public Employees’ Retirement System committee on Tuesday rejected a proposal to increase healthcare co-payments for more than one million members.
Facing solid opposition from powerful public employee unions, the CalPERS health benefits committee turned down all staff proposals to hike co-payments for visits to doctors, emergency rooms, outpatient surgical centers and hospital stays.
As a result, the CalPERS committee was forced to approve rate increases of 11.6% for health maintenance organization participants and 12.9% for members who opt for preferred provider networks.
Most of the increase — 80% in the case of state workers — will be picked up by state and local government employers and ultimately taxpayers, based on collective bargaining agreements between state and public employee unions. The rest is paid by employees through higher payroll deductions.
The decision against increasing co-payments shows how CalPERS, the nation’s largest public pension fund, is subject to far greater political and union pressures than many private sector employers that have been more aggressive in forcing workers to pay a higher proportion of rising health benefit costs.
http://www.latimes.com/business/la-fi-calpers21jun21,1,2411053.story
Comments: The CalPERS health benefits committee is to be commended for accepting the union position that shifting more costs to patients in the form of copays is unacceptable because of its negative impact on access and outcomes. Erecting financial barriers to care is a potentially injurious method of controlling costs.
The unfortunate dilemma faced by CalPERS is that it must pay higher, much higher, premiums for health insurance because it is no longer able to control health care spending by methods other than making care unaffordable for precisely those individuals with needs.
The actual excessive cost drivers include non-beneficial high-tech excesses, profound administrative inefficiencies, high prices, and the lack of an adequate primary care infrastructure. The ineffectual, fragmented system of private insurers sit between CalPERS and the health care delivery system, effectively blocking reform efforts. Limited price moderation is about the only impact they can claim, but even that results in higher prices for others through cost shifting, especially for the uninsured.
The useless and wasteful middlemen, the private insurers, need to be eliminated. Also there are reasons that we should not fragment the representation of patients through organizations such as CalPERS for public employees and Pacific Business Group on Health for a portion of private industry employees. We need only one agency, our own, with a publicly-administered and publicly-funded universal risk pool. We need a single payer system.
Remedy for insurers' actions that resulted in racketeeringallegations
Filed June 19, 2006)
United States District Court for the Southern District of Florida Miami Division
Master File No. 00-1334-MD-Moreno
(U.S. District Judge Federico Moreno)
IN RE: MANAGED CARE LITIGATION
Order Granting Summary Judgment in Favor of Remaining Defendants United and Coventry on All Claims
Presently before the Court is the Omnibus Motion for Summary Judgment (D.E.No. 3922) filed by Defendants United Healthcare, Inc., United Health Group, Inc. (collectively, “United”) and Coventry Health Care, Inc. Since the Defendants filed their motion for summary judgment, the Court has provided the Plaintiffs with multiple opportunities to demonstrate a triable issue of fact regarding whether the Defendants conspired to defraud doctors by manipulating their claims processing systems. The Plaintiffs and Defendants have filed numerous briefs regarding conspiracy, and the Court has heard oral argument several times, most recently on March 14, 2006. As explained below, because no reasonable juror could return a verdict in the Plaintiffs’ favor, the Defendants’ motion for summary judgment is GRANTED as to all remaining claims.
In granting judgment in favor of the remaining defendants, this court is reminded of the Eleventh Circuit’s opinion affirming class certification in this very case. See Klay v. Humana, Inc., 382 F.3d 1242 (11th Cir. 2004).
The appellate court indicated that “(i)t would be unjust to allow corporations to engage in rampant and systemic wrongdoing, and then allow them to avoid a class action because the consequences of being held accountable for their misdeeds would be financially ruinous.” Klay, 382 F.3d at 1274. As such, based on the allegations of conspiracy with each other to program their computer systems to systematically underpay physicians for their services, the class was certified. After reviewing thousands of documents, there simply is insufficient evidence of the wrongdoing claimed – i.e. agreeing with their competitors to defraud doctors. The evidence submitted here falls short of that needed to trigger the Racketeer Influenced and Corrupt Organizations Act’s remedial scheme described as “the litigation equivalent of a thermonuclear device.” See Miranda v. Ponce Federal Bank, 948 F.2d 41, 44 (1st Cir. 1991). In so holding, the Court is not giving its imprimatur to the Defendants’ actions or to the tremendous amounts of compensation received by their executives, described by some as exorbitant. But any reform related to executive compensation or individual practices by health maintenance organizations is beyond the power of this court. Those desiring changes in the way health care is provided in America must either look for remedies before Congress or allow the free market to dictate the results.
http://www.flsd.uscourts.gov/default.asp?file=cases/index.html (Under “00-MD-1334-MORENO-In Re Managed Care Litigation” click “”Order granting summary judgment in favor of remaining defendants United and Coventry on all claims”)
Comment:
By Don McCanne, M.D.
Although this insurance company racketeering lawsuit was dismissed because of the failure of the plaintiffs to demonstrate a joint conspiracy between the insurers, Judge Moreno did not rule that the insurers were blameless. In fact, he specifically stated that “the Court is not giving its imprimatur to the Defendants’ actions.” If the insurers had done no wrong, it is unlikely that the other defendant companies would have previously settled. These included, alphabetically, Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Net, Humana, Prudential Financial Services, and WellPoint Health Networks (though PacifiCare Health Systems also escaped by holding out for a summary judgment).
The primary allegation was that the insurers used claims processing software that was designed to reduce or deny payment to physicians for legitimate services provided and billed, using agreed-upon, standard CPT coding.
Physicians understandably felt that they were being cheated, and were particularly incensed by the outrageous executive compensation being granted with what seemed to be funds that rightfully belonged to the physicians.
(The reality of stock options is another story that won’t be covered here.)
In my opinion, the actions of the insurers were blatantly dishonest and should disqualify them from their role as managers of our health care funds.
Leaving crooks in charge merely because they manage to barely fall short of being criminals is not sound policy.
Judge Moreno states that, if we desire change, we should look to Congress or the free market. By continuing to leave control in the hands of private insurers, we have already selected the market approach. In the face of overwhelming evidence that this distorted market is not working to the benefit of patients or providers, we continue to do nothing. Well, we do something. Some of us whine. Some of us pay more. Some of us die!
Congress must provide us with the remedy. We desperately need a publicly-funded and publicly-administered program of national health insurance.
Why copays?
Retail clinics: The competition heats up
By Ken Terry
Medical Economics
June 16, 2006
“Retail” walk-in clinics, located in supermarkets and stores like CVS and Target, are already competing with physicians in many communities. Now Blue Cross and Blue Shield of Minnesota has added a new twist: It’s waiving copayments for patients who go to these in-store clinics.
Copayments for office visits are on the rise everywhere. So if there were no copays in retail clinics, an increasing number of patients would have an incentive to go there. Blue Cross sees this as a matter of saving money for its customers and for itself.
FP Michael J. Morris of Willmar, MN, thinks the insurer’s approach to this issue works against its efforts (and those of other plans) to encourage primary care doctors to manage patients’ overall health.
FP David D. Luehr, president of the Minnesota Medical Association, agrees.
“It’s important for physicians to see patients in their offices, where they have their medical records,” he says. “This type of approach starts to disrupt that continuity.”
Rick Kellerman, president-elect of the AAFP, says the Blue Cross initiative is “a bit shortsighted. If they’re going to waive copays on visits to retail clinics, why don’t they waive them for a similar service in a physician’s office? They should try to encourage people to have a personal medical home, where cost can be better controlled and quality better assured.”
So why not give patients the same incentive to visit primary care physicians for minor problems that the plan gives them to go to retail clinics? It’s mainly a matter of price, replies (internist David W. Plocher, senior vice president and medical director of Blue Cross and Blue Shield of Michigan).
If a nurse practitioner can provide the same service at half the cost, Blue Cross wants patients to use the NP.
http://www.memag.com/memag/article/articleDetail.jsp?id=333253
And…
CalPERS to Weigh Cutting Health Benefits The proposed changes, including some higher co-pays, are designed to give patients incentives to choose cheaper medical care.
By Daniel Yi
Los Angeles Times
June 19, 2006
The California Public Employees’ Retirement System, once a benchmark of generous employer-sponsored health plans, is proposing to trim benefits for hundreds of thousands of its members in a bid to rein in runaway healthcare costs.
CalPERS’ plans include raising co-pays for more expensive treatments and lowering premiums for those willing to use a smaller network of doctors.
Health plans and large employers have been dropping more-expensive doctors and hospitals from their provider networks to save money, but such measures are reaching their limits. Increasing patients’ financial stakes may be unpopular but does drive down costs.
CalPERS currently offers two Blue Cross of California PPO plans. Among the measures being considered Tuesday is the creation of a third PPO that would have about half the number of doctors in the network compared with the other two plans, but premiums would be 7.5% cheaper.
“My problem with these proposals is that they don’t address the underlying problem of lack of affordable healthcare,” said Yvonne Walker, a bargaining official with Service Employees International Union Local 1000, which represents 90,000 state employees. “You have gas going up, the overall cost of living going up, and you want to put people in a position where they have to make financial decisions about their healthcare. I don’t think that is the direction we want to go.”
But that is the direction most are already headed, said Peter Lee, chief executive of the Pacific Business Group on Health, a coalition of employers.
If the system is not made more efficient, rising healthcare costs will drive more employers to drop benefits, leaving workers unprotected, Lee said.
“Costs will be shared one way or the other,” he said, either through co-pays or “taxes going up to treat more uninsured people.”
http://www.latimes.com/business/la-fi-calpers19jun19,1,5491259.story?coll=la-headlines-business
Comment:
By Don McCanne, M.D.
Copayments have continued to grow in popularity because they have been proven to reduce health care utilization, and, therefore, health care spending. The problem with copays is that they are a very blunt instrument.
They reduce utilization of beneficial health care services and result in impaired health outcomes. Clearly we should be looking for policies that contain costs while improving health care quality.
It has been well established that improving the primary care infrastructure, establishing a medical home for everyone, improves quality while reducing spending. It seems that the private insurers would want to establish policies that would promote primary care. But what are they doing?
BC/BS of Minnesota is now adopting a policy of discouraging use of primary care by requiring copays, but waiving them when the patient fragments their own care by using discount, walk-in, retail clinics. When insurers adopt policies to discourage efficient, higher-quality care in exchange for a cheaper, instant fix, it’s clearly not about encouraging better health consumer shopping; it’s purely “a matter of price.”
CalPERS’ new Blue Cross PPO raises similar flags. In order to reduce premiums, they are slashing the list of contracted providers. Insurers should be adopting policies that improve access to primary care providers, rather than disrupting the medical home of those whose primary care providers are deleted from the approved lists.
Blue Cross already uses coinsurance to limit patients’ choices of a medical home. Coinsurance is a percentage of the fee that the patient must pay. Like copays, coinsurance is a disincentive to obtaining care, but even more so since the out-of-pocket payments are often much higher than with copays.
Coinsurance can also be very disruptive when it heavily penalizes the patient for staying with his or her non-contracted primary care provider.
Affordability of health care concerns everyone today, but policies designed to reduce use of beneficial services are the wrong way to go.
Peter Lee says that we will share costs either through copays or taxes.
Clearly our current copay policies are detrimental to health care. What about taxes? Not only are they much more equitable, but the public stewards of a single payer system would ensure that each and every one of us has affordable access to a medical home.
APA President Urges Support For Single-Payer InsuranceSystem
APA President Urges Support For Single-Payer Insurance System
American Psychiatric Association
Psychiatric News
June 16, 2006
The events that (APA President Steven) Sharfstein weathered this past year underscored the importance of the advocacy mission in which he had challenged his fellow APA members to join him. He left them with this simple but weighty message:
“We must tirelessly advocate for [single-payer universal health reform]. As the health care crisis extends and mushrooms, with more and more Americans without adequate coverage, the opportunity for such change will come at national, state, and local levels. And we must be there as advocates for our patients.”
Is the NBT an individual mandate?
State health law could be template
By Bob Kievra
Worcester Telegram & Gazette
June 16, 2006
The state’s 65-day-old health care law could have national significance – legislation that might alter presidential politics in 2008 and shift the vexing topic out of the “hopeless” category for the first time in a generation, a Harvard University professor said last night.
Robert J. Blendon, professor of health policy and political analysis at the Harvard University of Public Health and the John F. Kennedy School of Government, said the new Massachusetts law – if it can be made to work – offers hope that the problems of the uninsured can be tackled in a thoughtful, bipartisan manner.
The 145-page law, intended to provide health care coverage to the state’s 550,000 uninsured adults, imposes an individual mandate for everyone in Massachusetts to obtain health insurance by July 1, 2007.
http://www.telegram.com/apps/pbcs.dll/article?AID=/20060616/NEWS/606160517/1002/BUSINESS
And…
AMA: Penalize some uninsured Americans
By Bruce Japsen
Chicago Tribune
June 13, 2006
The AMA’s policy-making House of Delegates vote in favor of what it called “individual responsibility” comes as state and federal lawmakers are weighing similar ideas in the form of legislation in Congress and state houses across the country.
In the past, the Republican-leaning AMA has shied away from government mandates as a way to provide health insurance coverage for more Americans.
In this instance, the group acknowledged Tuesday at a press briefing that its support of tax penalties to incentivize people to buy coverage would be a “significant shift” in the organization’s thinking on matters of covering the uninsured.
http://www.chicagotribune.com/business/chi-060613ama,1,3515691.story?coll=chi-news-hed
And…
Can Massachusetts Lead the Way in Health Care Reform?
By Stuart H. Altman, Ph.D., and Michael Doonan, Ph.D.
The New England Journal of Medicine
May 18, 2006
Massachusetts will require everyone who can afford health insurance to buy it – an individual mandate.
We don’t know exactly what the new insurance plans will look like, how much they will cost, and whether government subsidies will prove adequate. The cost of the reform will be contingent on the actual price of available plans and subsidy levels, which will not be known until regulations are drafted and insurers and health plans offer new products for this market.
http://content.nejm.org/cgi/content/full/354/20/2093
And…
Editorial
Los Angeles Times
June 14, 2006
…the real solution to the nation’s healthcare problems will have to come from a Washington ZIP Code. If it’s smart, Congress will study some of the states’ innovative ideas to determine whether they could work on a national level.
Requiring all citizens to have health insurance, for instance, is an interesting idea that could gain bipartisan traction.
And…
Cheers and jeers for Mass. insurance mandate By Leah Carlson Shepherd
Employee Benefit News
June 1, 2006
In a groundbreaking move with far-reaching implications, Massachusetts adopted a law in April to require state residents to obtain medical insurance by July 1, 2007. Previously, no state had required people to carry medical insurance.
U.S. Sen. Edward Kennedy (D-Mass.): “Massachusetts once again leads the nation with an innovative plan that will achieve our longstanding goal of expanding health care for all.”
http://www.benefitnews.com/detail.cfm?id=9026
Comment:
By Don McCanne, M.D.
There has been a dramatic surge in media reports that there is a developing consensus that the individual mandate, requiring each individual to purchase his or her own insurance, is the common ground which will bridge the partisan divide on health care reform. It is rumored that even the leading candidate for the 2008 Democratic Party presidential nomination is currently working with consultants to develop an individual mandate model.
The individual mandate does not displace consumer-directed health care as the leading right-wing proposal for reform. On the contrary, it would greatly expand the market for consumer-directed products such as HSAs and high-deductible health plans. It merely reframes the rhetoric, making the individual mandate appear to be the politically feasible compromise. But do the politicians really understand what they are supporting?
The fundamental flaw with the individual mandate model is that insurance plans will have a new responsibility. They will have to cover not only the relatively healthy: healthy employees, their healthy families, and those who pass underwriting standards in the individual market. Since the individual mandate means that everyone must be covered, the plans will have to cover those with higher health care costs as well. Pooling everyone together is expensive. This year we are already spending $7110 per person for health care. Can a middle-income family of four really afford to pay nearly $30,000 for their share of the health care spending pool? Of course not.
A universal individual mandate can work only if the insurance product is affordable. By mandating that everyone be included, there are only two ways of keeping premiums affordable.
The current consumer-directed trend is to strip benefits out of the plans, and to increase out-of-pocket spending through high-deductibles, co-payments and coinsurance. That way, the health insurance premium is affordable, but access to care is not affordable for those who have needs. This totally defeats the purpose of insurance: providing financial protection against the losses of adverse medical events.
The other way to keep premiums affordable would be to shift the bulk of health care costs to the government. Very large tax credits would help, but that would add even more to the current, relatively-opaque taxpayer burden that is already funding 60 percent of our health care. Another government role would be to provide re-insurance, protecting the insurance companies from major losses (i.e., that 20 percent of individuals who use 80 percent of our health care). But then what good are insurers if they are not going to insure us against loss?
Even if we did adopt a government-funded individual mandate, we would perpetuate the tremendous losses that we are already experiencing due to profound administrative excesses, and due to a highly wasteful and even harmful maldistribution of our health care resources. Now that’s what’s not affordable!
So the NBT (Next Big Thing) is the individual mandate? Single payer advocates – get on your horses!