PNHP

The HDHP and CDHP experiment has already failed

The HDHP and CDHP experiment has already failed

Early Experience With High-Deductible and Consumer-Driven Health Plans:
Findings From the EBRI/ Commonwealth Fund Consumerism in Health Care Survey
By Paul Fronstin, EBRI, and Sara R. Collins, The Commonwealth Fund
Employee Benefit Research Institute
December 2005

This report presents findings from the first EBRI/Commonwealth Fund Consumerism in Health Care Survey. The online survey of privately insured adults ages 21-64 was conducted to provide national data regarding the growth of high-deductible health plans with and without savings accounts and their impact on the behavior and attitudes of health care consumers. The sample was randomly drawn from Harris Poll Online, Harris Interactive’s online sample of Internet users who have agreed to participate in research surveys. The final sample of adults participating in the survey is skewed toward higher-income, more highly educated individuals and also under represents minorities.

Despite its limitations, this is the first national survey of individuals with high-deductible health plans who also have savings accounts (HSAs or HRAs), or so-called consumer-driven health plans (CDHPs), and people with high-deductible health plans who are eligible to contribute to a health savings account but who currently do not have an account (HDHP).

Health Care Spending

When combined with premiums, outlays on health care as a share of income rose substantially among those with HDHPs and CDHPs, particularly among those with low incomes or health problems. More than two-fifths (42 percent) of people with HDHPs and 31 percent of those in CDHPs spent 5 percent or more of their income on out-of-pocket costs and premiums, compared with 12 percent of people in comprehensive plans. Nearly everyone (92 percent) with HDHPs with incomes under $50,000 spent 5 percent or more of their income on out-of-pocket costs and premiums, and one-third spent 10 percent or more. This compares with 34 percent of people in that income group in comprehensive plans who spent 5 percent or more of their income and 10 percent who spent 10 percent or more. People with health problems in HDHPs were also vulnerable to spending large shares of their income on out-of-pocket costs and premiums: more than half (53 percent) of those in HDHPs with health problems spent 5 percent or more and 18 percent spent 10 percent or more.

Cost-Related Access Problems

While people reported using health services at similar rates across health plans, adults with CDHPs and HDHPs were significantly more likely to report that they had avoided, skipped, or delayed health care because of costs than were those with comprehensive insurance, with problems particularly pronounced among those with health problems or incomes under $50,000. The survey asked whether in the last year respondents had delayed or avoided getting health care services when they were sick because of costs. About one-third of people in CDHPs (35 percent) and HDHPs (31 percent) reported delaying or avoiding care, twice the rate of those in comprehensive health plans (17 percent). Having a health problem made it more likely that people avoided or delayed care. Among people who reported being in fair or poor health or having at least one chronic health condition, those in CDHPs or HDHPs reported delaying or avoiding care at higher rates than those in comprehensive plans: 40 percent of those in CDHPs and 31 percent of people in HDHPs, compared with 21 percent in comprehensive plans.

Attitudes and Satisfaction

Overall, individuals with comprehensive health insurance were more satisfied with their health plan than individuals with CDHPs and HDHPs. Specifically, 63 percent of individuals with comprehensive health insurance were extremely or very satisfied with their health plan, compared with 42 percent among CDHP enrollees and 33 percent of individuals with HDHPs.

Availability and Use of Cost and Quality Information

The survey asked respondents whether their health plans provided any information regarding the cost and quality of providers. Just 1 in 7 people (12-16 percent) in all plan types said that their plans provided either type of information on doctors and hospitals.

More than 70 percent of people enrolled in CDHPs and 60 percent of those in HDHPs strongly or somewhat agreed that the terms of their health plans made them consider costs when deciding to see a doctor when sick or fill a prescription; less than 40 percent of those in comprehensive plans felt this way.

Conclusion

At its most fundamental level, consumerism in health care is an attempt to wrest control of the galloping increase in health care costs experienced by employers over the first half of this decade by addressing the incentives surrounding the demand for health care. This survey finds that consumer plans do, in fact, significantly raise consumer sensitivity to costs and reduce use.

But the survey also demonstrates that at least one factor crucial to the success of consumer-driven health plans-realistic, useful, accessible health-cost information-does not yet exist on a widespread basis. Further, the survey also demonstrates that cost-related reductions in demand are highest among individuals with the most to lose-those who are sick and those who have low incomes. To the extent that the health care cost problem is a problem owned by all of us, early evidence from the consumerism movement suggests that solving it through blunt, demand-side instruments like high deductibles gives disproportionate responsibility for the problem to the most vulnerable among us.

http://www.ebri.org/pdf/briefspdf/EBRI_IB_12-2005.pdf

Comment: Although the negative impact of CDHPs and HDHPs were fully predicted and then confirmed by this survey, one finding is shocking in the intensity of the negative impact: “Nearly everyone (92 percent) with HDHPs with incomes under $50,000 spent 5 percent or more of their income on out-of-pocket costs and premiums, and one-third spent 10 percent or more.” The introduction of financial disincentives to care resulted in widespread financial hardship.

A fundamental principle of health care research is that when preliminary results demonstrate significant harm that cannot be offset by any potential benefit, it is an ethical imperative that the study be terminated immediately. The experiment with CDHP and HDHP has already crossed that threshold. Further experimentation can only define more precisely the enormity of financial hardships created. Health policy researchers have the same ethical obligation as biomedical researchers; they should call for an immediate end to this disastrous experiment.

What feature of this model is causing the harm? The HSA plays an insignificant role in that it is merely a restricted savings account. The patient must still meet the out-of-pocket expenses whether they come from other income or savings or from this account distinguished primarily by an inequitable, regressive tax benefit.

The real harm is caused by the high-deductible requirement of both the CDHPs and the HDHPs. Extensive data already exist that confirm the harm done by high deductibles in impairing access and health outcomes and in creating a financial burden for those in need. This study indicates that the financial hardship appears to be far more extensive than previously thought.

What can we do? Existing HSAs can be converted into IRAs, and future HSAs should be prohibited as bad tax policy, bad pension policy and bad health policy. HDHPs should be prohibited. Financial hardship created by the need to access the health-care system can be eliminated by covering all beneficial services through a single risk pool. Since insurers will never attempt to corner the market on those who need care, this can be accomplished only by public policies requiring a universal pool. It’s time for single payer.

Des Moines Register editorial – A system that works for America

A system that works for America
By Register Editorial Board
The Des Moines Register
December 7, 2005

The U.S. health-care system doesn’t work for ordinary people. It doesn’t work for Bill Cotton of Des Moines, who is spending his life savings for his wife’s nursing-home care. Or Hollee Crees of West Des Moines, who has had to fight the state of Iowa to keep her son on Medicaid. Or John Greener of Washington, Iowa, who can’t retire from teaching because his health care would be unaffordable.

And they’re insured. Then there are the 45 million Americans without health insurance.

The Register’s editorial board has pushed repeatedly for a tax-financed system of health care that provides basic care for all Americans. We have suggested using Medicare as a financing model that could be gradually expanded to cover everyone. Why Medicare? It’s a proven model that provides uniform coverage with low administrative costs – around 3 percent, compared with an average of 15 percent in the private sector. Medicare is familiar, which makes it politically palatable.

Medicare was created 40 years ago because seniors needed help with health care. Now everyone needs it. It makes sense to build on the idea of pooling people together, lowering costs through economies of scale and greater negotiating leverage, and offering uniform benefits people can understand.

We realize our suggestion is hardly simple. Medicare would need to be reformed before it could be expanded – and not in the way Congress “reformed” it in 2003. It should provide a uniform drug benefit that allows the government to negotiate the cost of drugs. It should offer a more comprehensive package of benefits, which would eliminate the need to purchase supplemental insurance. It should do a better job of coordinating patients’ care.

But wouldn’t a system like that break the budget? No. A taxpayer-financed system, covering all Americans, could save 1.1 trillion health-care dollars over 10 years, concluded a recent study by the nonprofit, nonpartisan National Coalition on Health Care, the nation’s largest alliance working to improve health care.

The coalition offered four scenarios for reforming health care in this country. All are comprehensive reform plans, not tinkering around the edges. All would provide everyone with health insurance, increase efficiency and improve quality of care. All four would save money. The one that would save the most money: a universal, publicly financed program.

Kenneth Thorpe, a former government economist, estimated the cost and savings using Congressional Budget Office methodology. He assumed employers would pay 75 percent of the tax for covering employees and workers would pay the remaining 25 percent through payroll taxes. The benefits wouldn’t be bare bones either. They would be similar to what federal employees enjoy. The system would provide drug coverage and wouldn’t require purchasing supplemental insurance.

The coalition isn’t a bunch of left-wing nuts. It’s co-chaired by former Iowa Gov. Robert Ray, a Republican. Members include Principal Financial Group, AARP and Blue Shield of California.

None of the coalition’s coverage and cost scenarios exactly matches the expansion of Medicare that the Register advocates. But they clearly indicate that Medicare expansion would be feasible and save money.

The alternative to comprehensive reform is to keep putting Band-Aids on a system that doesn’t work even for the insured. Quality and availability of care varies for those covered by Medicare versus Medicaid versus benefits through public jobs versus thousands of different plans through private employers versus insurance bought in the open market. And millions are uninsured. The fractured system’s very structure – or lack of it – makes it wasteful.

Instead, the United States could use the money it’s already spending on health care to cover all Americans.

One system. Everyone pays for it. Everyone is insured by it. It would be more efficient and more humane.

It would work for ordinary people. It would work for America.

The obstacle: Special interests

So what stands between America and a tax-financed system of health care?

Powerful special interests that funnel cash to politicians for their political campaigns and lobby heavily to protect their bottom lines.

Reforming the current system theoretically could eliminate the health-insurance industry, although parts of that business would likely remain. Consumers in many countries with national health-care systems buy insurance policies to cover care beyond what the government provides. The pharmaceutical industry would see smaller profits if a government system negotiated down the cost of drugs for everyone.

Two other key players, physicians and businesses, have historically opposed a taxpayer-financed system. Their main national associations continue to do so. As members’ costs and frustration mount, however, views are starting to change.

Business associations have long advocated market-based solutions rather than a government system. Yet, in part because of existing government involvement, the free market hasn’t worked in health care. Businesses large and small see that each year when they receive their annual health-insurance rate increases.

The American Medical Association, too, has fought the idea of a national system, but some physician groups are coming around. Many doctors are growing tired of the paperwork burden of dealing with thousands of different private insurance plans in addition to government programs. And physicians embrace a credo of providing health care to everyone.

The business and medical lobbies wield considerable clout in the halls of Congress. If some of that clout shifted toward pushing reform, rather than resisting it, Congress would be forced to respond.

http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20051207/OPINION03/512070328/1035/OPINION

Blue Bank and Blue VISA to administer HSAs

Blue Cross starting bank for health-related matters
By Sarah Skidmore
The San Diego Union-Tribune
December 6, 2005

The Blue Cross and Blue Shield Association announced yesterday that it will start its own bank (Blue Healthcare Bank) to provide members a place to handle their health-insurance related banking.

This is the second recent financial offering by the Blue Cross and Blue Shield Association. Last month, the association announced an agreement to work with Visa on a branded debit card to pay for health services.

The bank will provide financial services for members enrolled in plans that require dedicated accounts for their health care spending, such as health savings accounts, flexible spending plans or other health reimbursement arrangements.

Such plans are part of a small but growing trend in insurance toward “consumer-directed health plans,” which essentially put more of the decision-making and financial responsibility on the consumer.

Health plan members would use the bank to save and withdraw money for health expenses, even using check or debit cards to do so. The bank will offer some credit lines to members to pay for health care expenses and various investment opportunities.

“It’s a strategic investment for the blues,” said Maureen Sullivan, senior vice president of strategic services for the Chicago-based association. “For these (new health) services to succeed long term, we need to provide comprehensive services.”

http://www.signonsandiego.com/news/business/20051206-9999-1b6bank.html

BlueCross BlueShield Association
Press Releases

12/05/2005
Blue Cross And Blue Shield Companies To Develop Bank

11/21/2005
Blues And Visa Enter Into Co-Branded Debit Card Deal

http://onlinepressroom.net/bcbsa/

Comment: Supporters of health savings accounts (HSA) with high-deductible health plans (HDHP) tout the simplicity of paying cash for up-front medical expenses followed by 100% coverage after the HDHP deductible is met. They gloss over the fact that complex, detailed accounting is required to define when the deductible has been met. Factors to be considered include whether services and products qualify, whether they are provided in or out of network, and what amounts are disallowed because they exceeded the contracted rates. Additional accounting may be required to determine tax liability and potential penalties for disallowed distributions.

As the largest marketers of HDHPs, Blue Cross and Blue Shield insurers (BC/BS) faced the possibility of losing control of the administrative task of providing this complex accounting. The alternative would have been to require their beneficiaries to provide reams of documentation at the time that the deductible was believed, by the patient, to have been met. The receipts, cancelled checks, charge card records and whatever else would not have provided enough information for the insurers to qualify the expenses as meeting the deductible. In most instances, many charges would be disqualified and the deductible would not have been met, but the insurer would have expended considerable administrative effort with the end result that no HDHP benefits would be paid out.

In order to maintain control of the administration of the up-front expenses, BC/BS really didn’t have much choice other than to establish Blue Healthcare Bank to segregate the accounts, and the Blue-branded VISA debit card to document access to the accounts. An additional reason for the bank is that BC/BS had to enter the lending business in the form of credit lines attached to the debit cards. For the debit card to function smoothly at the time of service, credit lines have to be in place to cover expenses after the HSAs are depleted, but before the deductible is met. It is not clear whether they also intend to extend credit for the inevitable disallowed charges that occur after the “100% coverage” is in place.

HSAs do not provide administrative simplification. Not only do the HDHPs require the same administrative effort to account for HSA spending, they are now adding the administrative costs of banking and debit cards. It makes you wonder what the driving force is behind the passion of the HSA/HDHP advocates. It certainly isn’t logic.

Our health care serves up profits

By Andre Picard
The Globe and Mail (Canada)
Thursday, December 1, 2005

Starbucks spends more on health insurance for its American employees than it does for coffee beans — $200-million (U.S.) annually. General Motors spends more on health benefits than it does on steel — the equivalent of more than $1,500 per U.S. vehicle it builds.

Wal-Mart’s annual bill for health benefits is $1.5-billion yet, by some accounts, fewer than half of the company’s 1.3 million U.S. employees are actually insured.

Aside from being fodder for cocktail party conversations, why do these little bits of trivia matter? Because they serve as a graphic reminder that one of the biggest beneficiaries of Canada’s medicare system is big business, and the millions of workers it employs.

When we talk about the right to buy private insurance — a hot topic since the Supreme Court’s Chaoulli decision — one aspect is often overlooked: Who will pay for it? In countries with private health insurance for basic medical care, premiums are invariably paid — in whole or in large part — by employers; they become a key element of contract negotiations. (In Canada, health insurance is available but it covers services not covered by medicare such as prescription drugs, dental care, vision care, etc. The Chaoulli decision extends the right to other basic services if they are not provided by the state in a timely manner.)

The U.S. has an employer-based health-insurance program — 90 per cent of people with health insurance get it through employers. But there are 45 million who are uninsured, and many more who depend on Medicare (for the elderly) and Medicaid (for the poor).

The employer-based health-insurance system is one of the major concerns of U.S. business because it is a drain on profits. Thankfully, the system is collapsing under the weight of its irrationality.

Bob Moffit of the ultraconservative Heritage Foundation said it best: “Why is America the only industrialized country that ties health insurance to employment? It’s nuts.”

“Imagine if auto insurance worked the same way. So if you lost your job, you could no longer drive. That would be absurd.”

Yet, the absurd reality is that, in the U.S., many employees dare not change jobs for fear of losing their health benefits.

According to a recent survey by the Kaiser Foundation, the average health premium in the U.S. is now $10,880 a year — more than the gross earnings of minimum-wage workers. On average, employees with benefits pay $3,718 of that total, with employers picking up the balance.

Even loyal employees are taking it on the neck. Last month, the United Auto Workers approved a contract that will allow GM to cut $15-billion from its retiree health-care liability. Practically speaking, that means retirees will now have to pay additional insurance premiums of up to $750 a year.

Wal-Mart, for its part, is talking about screening policies to avoid hiring employees with health problems and looking for ways to shuffle workers and their families to government-run social services programs like Medicaid.

Wal-Mart is an easy target but it is simply doing what the market demands — maximizing profits. Employer-based health coverage creates an inherent conflict of interest: Companies will always protect profits over the health of workers and retirees.

Still, there are companies — Starbucks, Costco, Verizon, Honeywell — that continue to offer health coverage to all employees. They argue that the only way to get good people is to pay living wages and provide decent benefits. Companies without good benefits have extremely high turnover and, not surprisingly, unhealthy workers.

Howard Schultz, the chairman of Starbucks, has been the most outspoken business leader about the moral responsibility of corporations to provide health benefits. But he has also expressed exasperation: “What’s perverse is that companies like ours who are doing the right thing are actually paying more,” he said on CNBC.

Mr. Schultz noted that those with health insurance are paying more to offset the costs of the 45 million uninsured who depend on government programs and charity. He said public, state-run health programs would be more efficient, cost-effective and just.

In Canada, individuals and corporations pay higher taxes than in the U.S. But when medicare benefits are factored in, the differences are negligible.

A universal program like medicare not only introduces an element of social justice, it also levels the playing field — it does not allow corporations to satisfy the profit demands of Bay Street (and Wall Street) at the expense of their employees’ security and health.

As the U.S. moves inexorably from private sector coverage to public sector coverage, Canadians should take a moment to appreciate their much-maligned system. And business leaders, in particular, should have the courage and the honesty to stand up and declare how good they have it.

Canada’s medicare system is far from perfect, but it has done wonders for the bottom line of corporate Canada.

apicard@globeandmail.ca

Metropolitan Detroit AFL-CIO Central Labor Council Endorses Conyers Single Payer Health Care, HR 676

Detroit, MI–The motor city became the first big urban labor council to endorse HR 676, Single Payer Health Care, a bill introduced by Congressman John Conyers.

Acting at its regular November meeting, the Council, which represents 36 local unions, resolved to “ā€¦work with other unions and community groups to build support and action for single payer universal health care and HR 676.” The resolution, which passed unanimously, was introduced by Michele Artt, a delegate from the Detroit Federation of Teachers.

The Detroit AFL-CIO joins a growing list of Central labor bodies that have endorsed HR 676. The Conyers bill now has 57 co-sponsors.

#30#

For a complete list of union endorsers of HR 676 contact:
Kay Tillow
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway #2218
Louisville, KY 40217
(502) 636 1551or (502) 459 3393
email: Nursenpo@aol.com

Health Plan Costs Come Under Fire

At a hearing in L.A., Garamendi grills insurance company executives about why premiums have soared 60% in four years.
By Lisa Girion, Times Staff Writer
LA Times Business Section
December 2, 2005

Concerned that some health insurers may be price gouging to boost profits, California Insurance Commissioner John Garamendi said Thursday that he might seek to raise the percentage of premium dollars that, by regulation, must be spent on healthcare.

At a hearing in Los Angeles, Garamendi grilled executives of five health insurance companies about why premiums have soared 60% in four years, causing more employers and individuals to drop coverage.

“At the same time that this meltdown is occurring, many insurers continue to enjoy very healthy profit margins,” Garamendi said.

Garamendi singled out Blue Cross of California for criticism, noting that its profit margins on certain insurance plans rose from about 15% to 24% in recent years. The company’s trend on healthcare spending, he noted, was just the opposite ? declining from 80% of premiums in 2000 to 68% last year.

“It’s unconscionable,” Garamendi said.

Blue Cross executives responded that the company’s overall profit margin in California is 6% to 7% when its HMO plans, which are not regulated by Garamendi, were considered.

But some of the company’s fastest growing ? and most profitable ? plans are new ones that offer low premiums in exchange for high deductibles or limited benefits.

The most controversial among them is a plan called Tonik. Aimed at young adults who are generally healthy, Tonik does not cover maternity benefits. Garamendi said such plans amounted to “cherry-picking,” or orienting coverage to attract healthy members, who are cheaper to underwrite.

“They are looking to find individuals that do not ! get sick,” Garamendi said in an interview. The plans “are all designed to appeal to people who don’t need medical services. That increases their bottom-line profit.”

Officials with Blue Cross parent WellPoint Inc. denied the charge. Tonik is designed to serve young people who might otherwise have no insurance at all, they said.

Blue Cross regional Vice President Ann-Louise Kuhns told Garamendi at the hearing that Tonik and some of the other new plans were aimed at people who hadn’t previously bought health insurance because they couldn’t afford it or viewed it as too expensive.

The plans’ popularity, Kuhns said, showed that they were meeting a need. “If we were offering a product that people didn’t like, they don’t have to buy it,” she said.

Kuhns said rapid growth in these high-deductible plans had temporarily cut the share of premiums spent on healthcare. That share is expected to rise as those members remain longer with Blue Cross.

Garamendi said medical spending was lower in plans purchased by individuals than in employer-sponsored coverage. He said he believed that was because individuals lacked the purchasing power to drive better deals.

To change that, Garamendi said he might seek to raise the minimum share of individual-plan premiums ? currently 50% ? that insurers must spend on medical care.

But one consumer advocate accused Garamendi, who is running for lieutenant governor, of grandstanding for political gain.

Jamie Court, president of the Santa Monica-based Foundation for Taxpayer & Consumer Rights, said Garamendi should have taken such a step earlier, and that he doubted there was enough time for the commissioner to put through a new regulation before his term ended next year.

“This is an opportunity for Garamendi to score some points without landing any punches on the profiteers,” Court said.

'Medicare for All' would cure health care crisis

By Saul Friedman
Newsday
December 3, 2005

Where were we? Oh, yes. I was saying last week that it’s about time we joined the rest of the civilized and industrialized world in providing publicly financed, universal health care for the American people and their families. But I didn’t say why or how.

After all, the United States has some of the finest, most modern medical facilities in the world. I ought to know; Baltimore’s Johns Hopkins Medical Center saved my life.

Nearby, the National Cancer Institute and the National Institutes of Health, outside Washington, D.C., set the standards for American research. And patients come from abroad seeking help from many U.S. hospitals.

If you don’t have a life-threatening illness, you won’t have to wait weeks, as you might in Canada or Britain, for elective surgery on those cataracts or to repair a hernia – if you have the right insurance.

Ah, there’s the rub for nearly 46 million Americans (including 9 million children) who have no insurance. For a hacking cough bordering on pneumonia, they wait in crowded clinics or go without care. Caring for a child burning up with fever can be frightening enough, with insurance; being uninsured can end up killing that child.

A Florida study found that children who enter a hospital without insurance are more than twice as likely to die as children with insurance. Another study reported that 18,000 Americans die each year because they are uninsured.

Millions more Americans are underinsured or find that their insurance doesn’t cover what they thought. In the United States, administrative costs amount to 25 percent of health care spending, or $300 billion a year, says economics columnist Paul Krugman, partly because the huge bureaucracy is engaged in denying care to those who most need it. The rest of those costs are profits.

According to The New York Times, many of the non-Medicare insured go broke trying to keep up with co-pays for chronic illness or the bills from hospitals, for the room, surgeons, labs, anesthetists, drugs and any other white coat that drops in. A third of American patients spend more than $1,000 a year out of pocket, and 68 percent of those who declared bankruptcy because of medical bills had insurance.

The Washington Post reported weeks ago that the Blue Shield HMO in California, to save money for the company and patients, is sending members from the San Diego area to Mexico for nonemergency care because services are less expensive than in the United States.

A doctor, who performs laser eye surgery on both sides of the border, told the Post he charges in Mexico a third of what he charges in San Diego. A hysterectomy that averages $2,025 in the United States costs $810 in Mexico. Blue Shield said the services on both sides of the border are comparable. And in Mexico the doctors’ parking lots are filled with California cars.

The United States spends more than any nation on health: $5,600 for every American, or 14.6 percent of national income, compared with Germany, 10.9 percent; Canada, 9.6 percent; New Zealand, 8.5 percent; and Britain, 7.7 percent. Yet a recent study for the private, nonpartisan Commonwealth Fund, which surveyed 7,000 of the sickest patients in Australia, Canada, Germany, New Zealand, Britain and the United States, found that American medicine has the highest error rates, the most fragmented and disorganized care and highest costs.

Are we getting our money’s worth?

Infant mortality – the number of deaths of children under one year, probably the best measure of the level of health of any country – actually increased from 6.6 to 7 per thousand live U.S. births. That’s higher than 41 nations, including Italy (6.07), Canada (4.82), Germany (4.2) and Japan, which has the lowest rate in the world at 3.28. The percentage of live births classified as low birth weight, an indication of the mother’s health and prenatal care, is 7.8 percent for the United States, behind Canada (5.6), the Netherlands (4.7), Australia (6.2) and all of Europe.

The United States boasts a life expectancy for men of 77.3 years, but we’re behind 34 other nations, including New Zealand (79), Germany (79), Britain (79), Canada (80), Australia (81) and Japan (82). Need I add that all these countries provide universal health care – the ability to walk into a doctor’s office without worrying about cost? What are we waiting for?

Polls indicate most Americans (75 percent) would support universal health care. And leading newspapers, commentators, economists, lawmakers, 13,000 doctors, former surgeons general, businessmen and a few conservatives have come to the same, obvious conclusion: If we were to pay in taxes just a fraction of what health care now costs us, we could afford it.

But universal health care is much easier said than done. How to deal with the entrenched insurance-medical-hospital complex? How to make the transition relatively painless for medical professionals and patients?

The answer is also obvious: Medicare for every American, or what I proposed years ago, “Medicare for All.” A distinguished panel of health care experts, Democrats, Republicans, financiers, insurance executives and academics concluded in an open letter to the journal Health Affairs, that Medicare must be empowered as the vehicle “to make pay-for-performance a national strategy for better quality.” Lawmakers, medical journals, a couple of former surgeons general and 13,000 doctors have proposed phasing in “Medicare for All.”

And if this administration doesn’t trash the rest of Medicare before it leaves the scene, it remains the most obvious, affordable and doable way to providing universal coverage.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY 11747-4250, or by e-mail at saulfriedman@comcast.net.

Copyright (c) 2005, Newsday, Inc.

——————–

This article originally appeared at:
http://www.newsday.com/business/custom/retirement/ny-bzsaul4535330dec03,0,1158012.column?coll=ny-retirement-headlines

‘Medicare for All’ would cure health care crisis

By Saul Friedman
Newsday
December 3, 2005

Where were we? Oh, yes. I was saying last week that it’s about time we joined the rest of the civilized and industrialized world in providing publicly financed, universal health care for the American people and their families. But I didn’t say why or how.

After all, the United States has some of the finest, most modern medical facilities in the world. I ought to know; Baltimore’s Johns Hopkins Medical Center saved my life.

Nearby, the National Cancer Institute and the National Institutes of Health, outside Washington, D.C., set the standards for American research. And patients come from abroad seeking help from many U.S. hospitals.

If you don’t have a life-threatening illness, you won’t have to wait weeks, as you might in Canada or Britain, for elective surgery on those cataracts or to repair a hernia – if you have the right insurance.

Ah, there’s the rub for nearly 46 million Americans (including 9 million children) who have no insurance. For a hacking cough bordering on pneumonia, they wait in crowded clinics or go without care. Caring for a child burning up with fever can be frightening enough, with insurance; being uninsured can end up killing that child.

A Florida study found that children who enter a hospital without insurance are more than twice as likely to die as children with insurance. Another study reported that 18,000 Americans die each year because they are uninsured.

Millions more Americans are underinsured or find that their insurance doesn’t cover what they thought. In the United States, administrative costs amount to 25 percent of health care spending, or $300 billion a year, says economics columnist Paul Krugman, partly because the huge bureaucracy is engaged in denying care to those who most need it. The rest of those costs are profits.

According to The New York Times, many of the non-Medicare insured go broke trying to keep up with co-pays for chronic illness or the bills from hospitals, for the room, surgeons, labs, anesthetists, drugs and any other white coat that drops in. A third of American patients spend more than $1,000 a year out of pocket, and 68 percent of those who declared bankruptcy because of medical bills had insurance.

The Washington Post reported weeks ago that the Blue Shield HMO in California, to save money for the company and patients, is sending members from the San Diego area to Mexico for nonemergency care because services are less expensive than in the United States.

A doctor, who performs laser eye surgery on both sides of the border, told the Post he charges in Mexico a third of what he charges in San Diego. A hysterectomy that averages $2,025 in the United States costs $810 in Mexico. Blue Shield said the services on both sides of the border are comparable. And in Mexico the doctors’ parking lots are filled with California cars.

The United States spends more than any nation on health: $5,600 for every American, or 14.6 percent of national income, compared with Germany, 10.9 percent; Canada, 9.6 percent; New Zealand, 8.5 percent; and Britain, 7.7 percent. Yet a recent study for the private, nonpartisan Commonwealth Fund, which surveyed 7,000 of the sickest patients in Australia, Canada, Germany, New Zealand, Britain and the United States, found that American medicine has the highest error rates, the most fragmented and disorganized care and highest costs.

Are we getting our money’s worth?

Infant mortality – the number of deaths of children under one year, probably the best measure of the level of health of any country – actually increased from 6.6 to 7 per thousand live U.S. births. That’s higher than 41 nations, including Italy (6.07), Canada (4.82), Germany (4.2) and Japan, which has the lowest rate in the world at 3.28. The percentage of live births classified as low birth weight, an indication of the mother’s health and prenatal care, is 7.8 percent for the United States, behind Canada (5.6), the Netherlands (4.7), Australia (6.2) and all of Europe.

The United States boasts a life expectancy for men of 77.3 years, but we’re behind 34 other nations, including New Zealand (79), Germany (79), Britain (79), Canada (80), Australia (81) and Japan (82). Need I add that all these countries provide universal health care – the ability to walk into a doctor’s office without worrying about cost? What are we waiting for?

Polls indicate most Americans (75 percent) would support universal health care. And leading newspapers, commentators, economists, lawmakers, 13,000 doctors, former surgeons general, businessmen and a few conservatives have come to the same, obvious conclusion: If we were to pay in taxes just a fraction of what health care now costs us, we could afford it.

But universal health care is much easier said than done. How to deal with the entrenched insurance-medical-hospital complex? How to make the transition relatively painless for medical professionals and patients?

The answer is also obvious: Medicare for every American, or what I proposed years ago, “Medicare for All.” A distinguished panel of health care experts, Democrats, Republicans, financiers, insurance executives and academics concluded in an open letter to the journal Health Affairs, that Medicare must be empowered as the vehicle “to make pay-for-performance a national strategy for better quality.” Lawmakers, medical journals, a couple of former surgeons general and 13,000 doctors have proposed phasing in “Medicare for All.”

And if this administration doesn’t trash the rest of Medicare before it leaves the scene, it remains the most obvious, affordable and doable way to providing universal coverage.

WRITE TO Saul Friedman, Newsday, 235 Pinelawn Rd., Melville, NY 11747-4250, or by e-mail at saulfriedman@comcast.net.

Copyright (c) 2005, Newsday, Inc.

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This article originally appeared at:
http://www.newsday.com/business/custom/retirement/ny-bzsaul4535330dec03,0,1158012.column?coll=ny-retirement-headlines

Widening rift in health-care access

A Widening Rift In Access And Quality: Growing Evidence Of Economic Disparities
By Robert E. Hurley, Hoangmai H. Pham, Gary Claxton
Health Affairs
December 6, 2005

Data from the Community Tracking Study provide a valuable perspective from which to observe how economic disparities–largely a function of different sources of coverage–influence access to medical care in the United States. Many recent investments and initiatives are focused on affluent communities and are accessible mainly to people with employer-based or Medicare coverage. For people with Medicaid or no coverage at all, access to basic care is worsening, as a result of stalled coverage expansions and service cutbacks. An improving economy could forestall further cuts and permit reversal of earlier ones, but progress in closing this rift does not appear imminent.

Coverage And The Hierarchy Of Access To High-Quality Care

A clear hierarchy of access to care is apparent in many communities, which closely corresponds to insurance coverage and its sponsorship. Long-standing anxiety about prospects for a “two-tier” health care system has, in fact, given way to a three-tier reality in the CTS markets:

* Employer-sponsored and Medicare coverage.
* Medicaid and other state and local programs.
* Unsponsored and unfortunate.

There is every reason to expect that Americans will demand and receive more and better health care, shifting more resources into the health care sector. However, not all will be able to afford this care, and there is growing evidence that U.S. society is prepared to tolerate trading off pursuing excellence for some, at the expense of deteriorating care for others.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w5.566v1

Comment: It is a gross understatement to say that individuals who have dedicated their lives to health care reform will be dismayed by this report.

The lowest tier of the unfortunate provides perhaps the greatest angst for us as we watch their problems grow ever greater. The middle tier compounds our angst as we recognize that this sector is shifting from having access to basic services to a lower level that could only be described as “unsatisfactory.” And the first tier? We are pouring resources into their affluent communities to provide them not the best, but the highest tech care available. Innumerable studies have shown that the overall quality of care for this first tier would actually improve if we would moderate the infusion of excessive high-tech resources into these communities.

We can get it right. This study confirms that the maldistribution of resources is directly related to the adequacy of coverage of the three tiers. Establishing a single, universal, equitable system of coverage would dramatically improve the allocation of our health care resources. It is not the only factor, but it is the most important one.

But will we get it right? We seem to be captivated by the high-tech glitz of the “greatest health care system on earth.” Those in the first tier seem to be unwilling to exchange some of the unnecessary glitz for greater equity in health care. Maybe we’ll have an awakening when the expansion of cost sharing moves many from the first tier to the second. Then those few remaining in the first tier may not be able to tolerate the cacophony of the masses. But even then, noise cancellation technology has become much more advanced.

BC of California loses 68% of premiums to health care

Health Plan Costs Come Under Fire
At a hearing in L.A., Garamendi grills insurance company executives about why premiums have soared 60% in four years.
By Lisa Girion
Los Angeles Times
December 2, 2005

(California Insurance Commissioner John) Garamendi singled out Blue Cross of California for criticism, noting that its profit margins on certain insurance plans rose from about 15% to 24% in recent years. The company’s trend on healthcare spending, he noted, was just the opposite – declining from 80% of premiums in 2000 to 68% last year.

“It’s unconscionable,” Garamendi said.

… some of the company’s fastest growing – and most profitable – plans are new ones that offer low premiums in exchange for high deductibles or limited benefits.

The most controversial among them is a plan called Tonik. Aimed at young adults who are generally healthy, Tonik does not cover maternity benefits. Garamendi said such plans amounted to “cherry-picking,” or orienting coverage to attract healthy members, who are cheaper to underwrite.

“They are looking to find individuals that do not get sick,” Garamendi said in an interview. The plans “are all designed to appeal to people who don’t need medical services. That increases their bottom-line profit.”

Officials with Blue Cross parent WellPoint Inc. denied the charge. Tonik is designed to serve young people who might otherwise have no insurance at all, they said.

Blue Cross regional Vice President Ann-Louise Kuhns told Garamendi at the hearing that Tonik and some of the other new plans were aimed at people who hadn’t previously bought health insurance because they couldn’t afford it or viewed it as too expensive.

The plans’ popularity, Kuhns said, showed that they were meeting a need. “If we were offering a product that people didn’t like, they don’t have to buy it,” she said.

http://www.latimes.com/business/la-fi-profits2dec02,1,630081.story?coll=la-headlines-business

Comment: This is great news for Wall Street. The best insurance stock investments are in those companies that have the lowest medical loss ratios – the companies that spend the lowest percentage of their premium income on health care services for their beneficiaries. The medical loss ratio for for-profit Blue Cross of California, a major subsidiary of WellPoint Inc., is only 68%. They keep one-third of the premium dollar!

Blue Cross of California has been an innovative leader in setting health insurance trends throughout the nation. For those who still believe that private health plans must be a major player in any future model of health care reform, just imagine what it would be like if Blue Cross’ innovations were to dominate the scene. In 2006, we’ll be spending $2 trillion on health care. Under these latest Blue Cross policies, insurers would keep $640 billion of that.

So you say that we would never allow that. But what are we allowing now? We are permitting Blue Cross of California to use nefarious chicanery to segregate out the most healthy sector of our society and sell them a profoundly inadequate product that merely masquerades as health insurance. Again, those of you who have believed that we should keep this industry in charge of health care spending should realize that it’s now time for an epiphany.

We will never get it right until we agree that we need a universal, publicly-funded and publicly-administered national health insurance program. The plundering pirates of the insurance industry will never do it right for us.

Our health-care system is not what the best minds woulddevise

Editorial: Fractured system hurts everyone
By Register Editorial Board
The Des Moines Register
December 4, 2005

If the best minds in the world gathered to devise a health-care system for the United States, it would look nothing like what we have today.

No one would create a fragmented system that provides taxpayer-funded care for some and not for others. A system that leaves 45 million people, about 15 percent of the population, uninsured. That wastes billions on administrative costs. That burdens business. That relegates the United States behind other industrialized countries in life expectancy, infant mortality and immunization rates.

No one would intentionally create a model of health care that was unfair, inefficient and nearly impossible for an average person to navigate.

Yet that is exactly what the United States has. And it hurts everyone.

Reforming (the U.S. health-care system) will take leadership in Washington, pressure from individuals and businesses across the nation and a hard look at what other countries are doing better.

America’s hodgepodge of health care isn’t the best system for this country. It’s not what the brightest minds would choose now. Americans don’t have to accept it just because it’s the only thing they know.

http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20051204/OPINION03/512040307/1001/NEWS

Today’s edition of The Des Moines Register has a several articles on “Condition Critical,” focusing on “worries about soaring health care costs.”
http://desmoinesregister.com/apps/pbcs.dll/section?Category=NEWS&theme=condition_critical&template=theme

We're almost there with three single payer bills

H.R.676, H.R.1200, and SB 840

Do not waste your time studying these bill summaries, but merely skim through them rapidly. You will see how a fairly simple concept, single payer reform, can become quite complex when reduced to legislative language. The summaries of H.R.676 and H.R.1200 were prepared by the Congressional Research Service, and the summary of SB 840 was prepared by the California Legislative Counsel.

H.R.676
Title: To provide for comprehensive health insurance coverage for all United States residents, and for other purposes.
Sponsor: Rep Conyers, John, Jr.

SUMMARY AS OF:
2/8/2005–Introduced.

United States National Health Insurance Act (or the Expanded and Improved Medicare for All Act) – Establishes the United States National Health Insurance Program (the Program) to provide all individuals residing in the United States and in U.S. territories with free health care that includes all medically necessary care, such as primary care and prevention, prescription drugs, emergency care, and mental health services.

Prohibits an institution from participating in the Program unless it is a public or nonprofit institution. Allows nonprofit health maintenance organizations (HMOs) that actually deliver care in their own facilities to participate in the Program.

Gives patients the freedom to choose from participating physicians and institutions.

Prohibits a private health insurer from selling health insurance coverage that duplicates the benefits provided under this Act. Allows such insurers to sell benefits that are not medically necessary, such as cosmetic surgery benefits.

Sets forth methods to pay hospitals and health professionals for services. Prohibits financial incentives between HMOs and physicians based on utilization.

Authorizes appropriations and provides for appropriated sums to be paid for: (1) by vastly reducing paperwork; (2) by requiring a rational bulk procurement of medications; (3) from existing sources of Government revenues for health care; (4) by increasing personal income taxes on the top five percent income earners; (5) by instituting a modest payroll tax; and (6) by instituting a small tax on stock and bond transactions.

Requires the Program to give first priority in retraining and job placement to individuals whose jobs are eliminated due to reduced administration.

Establishes a National Board of Universal Quality and Access to advise the Secretary and the Director to ensure quality, access, and affordability.

Provides for the eventual integration of the health programs of the Department of Veterans’ Affairs and the Indian Health Service into the Program.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR00676:@@@D&summ2=m&

H.R.1200
Title: To provide for health care for every American and to control the cost and enhance the quality of the health care system.
Sponsor: Rep McDermott, Jim

SUMMARY AS OF:
3/9/2005–Introduced.

American Health Security Act of 2005 – Establishes the State-Based American Health Security Program to provide every U.S. resident who is a U.S. citizen, national, or lawful resident alien with health care services. Requires each participating State to establish a State health security program.

Eliminates benefits under: (1) titles XVIII (Medicare), XIX (Medicaid), and XXI (State Children’s Health Insurance) (SCHIP) of the Social Security Act; (2) the Federal Employees Health Benefits Program; and (3) the Civilian Health and Medical Program of the Uniformed Services (CHAMPUS).

Requires each State health security program to prohibit the sale of health insurance in that State that duplicates benefits provided under the program.

Establishes the American Health Security Standards Board to: (1) develop policies, procedures, guidelines and requirements to carry out this Act; (2) establish uniform reporting requirements; (3) provide for an American Health Security Advisory Council and an Advisory Committee on Health Professional Education; and (4) establish a national health security budget specifying the total Federal and State expenditures to be made for covered health care services.

Establishes the American Health Security Quality Council to: (1) review and evaluate practice guidelines, standards of quality, performance measures, and medical review criteria; and (2) develop minimum competence criteria.

Establishes the Office of Primary Care and Prevention Research within the Office of the Director of the National Institutes of Health (NIH).

Amends the Internal Revenue Code to create the American Health Security Trust Fund and appropriates to the Fund specified tax liabilities and current health program receipts.

http://thomas.loc.gov/cgi-bin/bdquery/z?d109:HR01200:@@@D&summ2=m&

SB 840
Single-payer health care coverage.
Introduced by Sen. Sheila Kuehl

Existing law does not provide a system of universal health care coverage for California residents. Existing law provides for the creation of various programs to provide health care services to persons who have limited incomes and meet various eligibility requirements. These programs include the Healthy Families Program administered by the Managed Risk Medical Insurance Board, and the Medi-Cal program administered by the State Department of Health Services. Existing law provides for the regulation of health care service plans by the Department of Managed Health Care and health insurers by the Department of Insurance.

This bill would establish the California Health Insurance System to be administered by the newly created California Health Insurance Agency under the control of an elected Health Insurance Commissioner. The bill would make all California residents eligible for specified health care benefits under the California Health Insurance System, which would, on a single-payer basis, negotiate for or set fees for health care services provided through the system and pay claims for those services. The bill would require the health care system to be operational within 2 years of enactment, and would enact various transition provisions. The bill would require the commissioner to seek all necessary waivers, exemptions, agreements, or legislation to allow various existing federal, state, and local health care payments to be paid to the California Health Insurance System, which would then assume responsibility for all benefits and services previously paid for with those funds.

The bill would create a health insurance policy board to establish policy on medical issues and various other matters relating to the health care system. The bill would create the Office of Consumer Advocacy within the agency to represent the interests of health care consumers relative to the health care system. The bill would create within the agency the Office of Health Planning to plan for the health care needs of the population, and the Office of Health Care Quality, headed by the chief medical officer, to support the delivery of high quality care and promote provider and patient satisfaction.

The bill would create the Office of Inspector General for the California Health Insurance System within the Attorney General’s office, which would have various oversight powers. The bill would prohibit health care service plan contracts or health insurance policies from being issued for services covered by the California Health Insurance System. The bill would create the Health Insurance Fund and the Payments Board to administer the finances of the California Health Insurance System. The bill would extend the application of certain insurance fraud laws to providers of services and products under the health care system, thereby imposing a state-mandated local program by revising the definition of a crime. The bill would enact other related provisions relative to budgeting, regional entities, federal preemption, subrogation, collective bargaining agreements, compensation of health care providers, conflict of interest, patient grievances, independent medical review,and associated matters.

The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement.

This bill would provide that no reimbursement is required by this act for a specified reason.

http://info.sen.ca.gov/pub/bill/sen/sb_0801-0850/sb_840_bill_20050712_amended_asm.html

(If you are interested in the details of the bills, they can be downloaded at http://thomas.loc.gov/ and
http://info.sen.ca.gov/cgi-bin/pagequery?type=sen_bilinfo&site=sen&title=Bill+Information.)

Comment: We are truly at a transition in the health care reform movement. Everyone understands that we can no longer accept a system that is failing to deliver high-quality comprehensive care to everyone when we are already spending more than enough to have such a system. It is clear that incremental tweaking has increased costs while providing only modest gains that are more than offset by the large losses. The consumer-directed health care movement will soon fizzle as more people realize that you cannot control costs by making health care less affordable for those with significant needs.

All policymakers now understand the single payer model. They understand that it does have the power to fund comprehensive care for everyone while controlling health care costs. Although uncaring, anti-government ideologues will always remain opposed, those who really do care about the health of our people are ready to look at fleshed-out legislative proposals. We are now at that stage of the process.

The process will require the participation of legislators and their staffs on both the federal and state levels. Even if a state established its own single payer system, federal legislation would be required to transfer the funding of federal programs such as Medicare and Medicaid to the state(s). Although federal funding is essential, the federal government is too unwieldy to administer the program as one mega-bureaucracy, so administration needs to be established on a state or regional level.

It is time for federal and state legislators to unify the process. Participants should include those who believe that our health care system must be universal, equitable, accessible, and affordable, while providing high-quality services. The only special interests that should be represented are the patients and those who provide their care. Special interests with other agendas should be dismissed from the process. This is not a time to compromise with powerful, moneyed interests. Rather it is the time to craft single-payer proposals that best serve the health care needs of the people of each of our states and the nation as a whole.

We already understand the policies that would be effective. We don’t need any more study commissions. It is time for federal and state legislators and their health policy staff members to join together to draft the American Health Care Act. Congressmen Conyers and McDermott and Senator Kuehl, amongst others, have given us a great start towards that goal.

Okay. Who is going to convene this unified effort? (I’m serious!)