PNHP

Urban Institute's view of incrementalism

Urban Institute's view of incrementalism

Lowering Financial Burdens and Increasing Health Insurance Coverage for Those with High Medical Costs
By Linda J. Blumberg, Lisa Clemans-Cope, and Fredric Blavin
The Urban Institute
December 2005

Health care expenses associated with high-cost medical cases in the United States are increasingly being shifted to the individual, a phenomenon exacerbated by recent trends in product design.

As the costs of medical care are spread less broadly, financial burdens for seriously ill individuals with high medical costs can increase dramatically. This brief identifies evidence of the severity of these problems and presents policy options designed to address them.

Policy Options

While the government can subsidize those with high health care needs in many ways, we categorize those options into two general groups: (1) approaches that subsidize coverage obtained through existing private insurance carriers; and (2) approaches that subsidize coverage in an insurance context distinct from existing markets and open only to individuals (and possibly their dependents) that qualify based on health status. In this brief, we outline one policy option in each general category as examples of initiatives that can improve the coverage and access to care of those with high-cost illnesses. Both options discussed here specifically target individuals whose health care costs constitute a large share of income and minimize disruption of existing private insurance systems.

Option 1. Assignment of Risk to Existing Insurance Carriers Combined with Government Subsidies

Option 2. Federal Financing of State High-Risk Pools Combined with Federal Guidelines on Benefits and Eligibility

Neither policy option described in this brief would be considered a minor, incremental reform. Either would lead to a significant redistribution of private costs and would increase public spending on health care. However, both approaches can be implemented incrementally, for example, by initially targeting even one chronic disease or condition, such as diabetes.

Regardless of the approach taken, the need is clear. Mounting empirical evidence, policy research, and reports in the popular press attest that the U.S. health care system is currently inadequate to ensure access to care for those with the greatest health care needs. Many insured as well as uninsured high-cost individuals are at financial risk and at risk for poor health outcomes as a result.

http://www.urban.org/UploadedPDF/311261_financial_burdens.pdf

Comment: This health policy brief describes well the financial burdens and impaired access to care faced by those with significant medical needs, including those who are insured. Unfortunately, the policy recommendations fall woefully short and will never ensure affordable access and coverage.

It is not as if we have no experience with their recommendations. Previous efforts to risk adjust the Medicare + Choice (Medicare Advantage) options have been deferred indefinitely because of technical difficulties and insurer resistance, even though the concept remains in play as a desirable goal. Likewise, high-risk pools already exist but have been successful in insuring only about 180,000 individuals nationally, hardly a policy triumph.

It is amazing that the authors of this report consider these failed policy approaches to be much more than minor, incremental approaches. To appease the incrementalists, they suggest that these policies could be adopted for a single disease!?

Enough kowtowing to the incrementalists! The deterioration in affordability, coverage, and access is accelerating so rapidly that the incremental tweaks cannot possibly keep up with the rapid decline in security afforded by our private health plans.

What’s the next step? Do we apply two failed policies to diabetics, or shall we skip the incremental steps and adopt policies that would ensure affordable access to comprehensive coverage for everyone? Incremental steps increase health care spending whereas comprehensive single payer reform wouldn’t. Why are we still debating this?

Urban Institute’s view of incrementalism

Lowering Financial Burdens and Increasing Health Insurance Coverage for Those with High Medical Costs
By Linda J. Blumberg, Lisa Clemans-Cope, and Fredric Blavin
The Urban Institute
December 2005

Health care expenses associated with high-cost medical cases in the United States are increasingly being shifted to the individual, a phenomenon exacerbated by recent trends in product design.

As the costs of medical care are spread less broadly, financial burdens for seriously ill individuals with high medical costs can increase dramatically. This brief identifies evidence of the severity of these problems and presents policy options designed to address them.

Policy Options

While the government can subsidize those with high health care needs in many ways, we categorize those options into two general groups: (1) approaches that subsidize coverage obtained through existing private insurance carriers; and (2) approaches that subsidize coverage in an insurance context distinct from existing markets and open only to individuals (and possibly their dependents) that qualify based on health status. In this brief, we outline one policy option in each general category as examples of initiatives that can improve the coverage and access to care of those with high-cost illnesses. Both options discussed here specifically target individuals whose health care costs constitute a large share of income and minimize disruption of existing private insurance systems.

Option 1. Assignment of Risk to Existing Insurance Carriers Combined with Government Subsidies

Option 2. Federal Financing of State High-Risk Pools Combined with Federal Guidelines on Benefits and Eligibility

Neither policy option described in this brief would be considered a minor, incremental reform. Either would lead to a significant redistribution of private costs and would increase public spending on health care. However, both approaches can be implemented incrementally, for example, by initially targeting even one chronic disease or condition, such as diabetes.

Regardless of the approach taken, the need is clear. Mounting empirical evidence, policy research, and reports in the popular press attest that the U.S. health care system is currently inadequate to ensure access to care for those with the greatest health care needs. Many insured as well as uninsured high-cost individuals are at financial risk and at risk for poor health outcomes as a result.

http://www.urban.org/UploadedPDF/311261_financial_burdens.pdf

Comment: This health policy brief describes well the financial burdens and impaired access to care faced by those with significant medical needs, including those who are insured. Unfortunately, the policy recommendations fall woefully short and will never ensure affordable access and coverage.

It is not as if we have no experience with their recommendations. Previous efforts to risk adjust the Medicare + Choice (Medicare Advantage) options have been deferred indefinitely because of technical difficulties and insurer resistance, even though the concept remains in play as a desirable goal. Likewise, high-risk pools already exist but have been successful in insuring only about 180,000 individuals nationally, hardly a policy triumph.

It is amazing that the authors of this report consider these failed policy approaches to be much more than minor, incremental approaches. To appease the incrementalists, they suggest that these policies could be adopted for a single disease!?

Enough kowtowing to the incrementalists! The deterioration in affordability, coverage, and access is accelerating so rapidly that the incremental tweaks cannot possibly keep up with the rapid decline in security afforded by our private health plans.

What’s the next step? Do we apply two failed policies to diabetics, or shall we skip the incremental steps and adopt policies that would ensure affordable access to comprehensive coverage for everyone? Incremental steps increase health care spending whereas comprehensive single payer reform wouldn’t. Why are we still debating this?

GM's Wagoner and single payer

In G.M.’s Sight Lines: Washington and Tokyo
By William J. Holstein
The New York Times
December 18, 2005

An interview with Rick Wagoner, the chairman and chief executive of General Motors

Q. Were your problems caused by internal decisions, or external forces?

A. Well, it’s obviously a combination of both. I think it would be disingenuous for us to point to things like U.S. health care policy or trade policy and the exchange rates, things like that, and say they are the whole cause of the problem. The flip side, though, is that anybody who says they are not part of the problem just doesn’t have their feet placed in reality.

Like it or not, if we pay $1,500 per car for health care and our cheap global competitors pay $200, that’s a disadvantage. And we don’t have that situation because we’re stupid – it’s been the U.S. government policy for us to pay that bill and we’ve been doing it.

Q. What should the government do?

A. I don’t understand why the U.S. government isn’t more proactive on health care. Regardless of whether one believes in sort of the individual-responsibility model or single-payer system, there’s a lot of things that can be done to get the cost of health care and the quality of health care moving in the right direction. I think this is an area where strong leadership from the government could play a key role. Information technology is one possibility. Another is leveraging the buying power of the government, which is the biggest purchaser of health care under Medicare and things of that sort.

http://www.nytimes.com/2005/12/18/business/yourmoney/
18advi.html?pagewanted=all

Comment: Leaders of all three major U.S. auto corporations have been calling for a “national solution” to the burden caused by the escalating costs of employer-sponsored health plans, but they have been hesitant to endorse a single-payer national health insurance program.

One advantage of an interview is that it is frequently possible to extract more candid views from the person being interviewed. Wagoner’s statement that “regardless of whether one believes in sort of the individual-responsibility model or single-payer system” certainly indicates that Wagoner does acknowledge the credibility of the single payer model, without the necessity of actually endorsing it. More importantly, his use of “sort of” in the phrase “sort of the individual-responsibility model,” indicates that he has not been convinced that this is a clearly defined model that would effectively resolve the health care crisis issues.

Although Wagoner may not be ready to risk offending his friends who oppose social insurance by leading the charge to single payer, he has telegraphed that he has no intention of standing in the way of comprehensive reform. In fact, he continues to plead that the U.S. government must be more proactive on health care.

GM’s Wagoner and single payer

In G.M.’s Sight Lines: Washington and Tokyo
By William J. Holstein
The New York Times
December 18, 2005

An interview with Rick Wagoner, the chairman and chief executive of General Motors

Q. Were your problems caused by internal decisions, or external forces?

A. Well, it’s obviously a combination of both. I think it would be disingenuous for us to point to things like U.S. health care policy or trade policy and the exchange rates, things like that, and say they are the whole cause of the problem. The flip side, though, is that anybody who says they are not part of the problem just doesn’t have their feet placed in reality.

Like it or not, if we pay $1,500 per car for health care and our cheap global competitors pay $200, that’s a disadvantage. And we don’t have that situation because we’re stupid – it’s been the U.S. government policy for us to pay that bill and we’ve been doing it.

Q. What should the government do?

A. I don’t understand why the U.S. government isn’t more proactive on health care. Regardless of whether one believes in sort of the individual-responsibility model or single-payer system, there’s a lot of things that can be done to get the cost of health care and the quality of health care moving in the right direction. I think this is an area where strong leadership from the government could play a key role. Information technology is one possibility. Another is leveraging the buying power of the government, which is the biggest purchaser of health care under Medicare and things of that sort.

http://www.nytimes.com/2005/12/18/business/yourmoney/
18advi.html?pagewanted=all

Comment: Leaders of all three major U.S. auto corporations have been calling for a “national solution” to the burden caused by the escalating costs of employer-sponsored health plans, but they have been hesitant to endorse a single-payer national health insurance program.

One advantage of an interview is that it is frequently possible to extract more candid views from the person being interviewed. Wagoner’s statement that “regardless of whether one believes in sort of the individual-responsibility model or single-payer system” certainly indicates that Wagoner does acknowledge the credibility of the single payer model, without the necessity of actually endorsing it. More importantly, his use of “sort of” in the phrase “sort of the individual-responsibility model,” indicates that he has not been convinced that this is a clearly defined model that would effectively resolve the health care crisis issues.

Although Wagoner may not be ready to risk offending his friends who oppose social insurance by leading the charge to single payer, he has telegraphed that he has no intention of standing in the way of comprehensive reform. In fact, he continues to plead that the U.S. government must be more proactive on health care.

Congress' gift for Tiny Tim

Budget Accord Could Mean Payments by Medicaid Recipients
By Robert Pear
The New York Times
December 20, 2005

The final Congressional agreement on a budget bill gives states sweeping new authority to impose premiums and co-payments on Medicaid recipients…

Under the agreement, states can charge premiums and higher co-payments for a wide range of Medicaid benefits, including prescription drugs, doctors’ services and hospital care.

States can scale back benefits, capping or eliminating coverage for services that federal law now guarantees.

In addition, states can end Medicaid coverage for people who fail to pay premiums for 60 days or more. Pharmacists can refuse to fill prescriptions, and doctors and hospitals can deny services, for recipients who do not make the required co-payments.

Medicaid recipients can be charged 10 percent of the cost of any item or service if their family incomes were 100 percent to 150 percent of the federal poverty level, $12,830 to $19,245 for a family of two. Recipients with incomes above that can be required to pay 20 percent of the cost of any item or service.

Drug makers and health insurance companies escaped largely unscathed. Negotiators rejected several provisions of the Senate bill that would have cut their payments.

Representative Joe L. Barton, Republican of Texas, the architect of the Medicaid provisions, said the higher co-payments were needed to “encourage personal responsibility” among low-income people.

http://www.nytimes.com/2005/12/20/politics/20health.html

Comment: In the glorious spirit of Christmas, Congress is extending policies that shower gifts on the health insurance industry and pharmaceutical firms.

And for Tiny Tim? They are giving him the gift of “personal responsibility.” He can go out and get his own damn crutch!

Hospital bills — but with interest

Now patients who can’t pay, or who have high deductibles, can get credit cards specifically for medical care. But the rates can reach 23%.

By Daniel Costello
LA Times Staff Writer
December 12, 2005

With many Americans struggling to pay their medical bills – and more of those bills going unpaid – hospitals and medical providers are scrambling for solutions. They may have found at least a partial one: credit cards that can be used only for healthcare expenses.

The cards can help patients meet their deductibles and other out-of-pocket expenses, obtain elective surgery, even help pay for care that might otherwise be off-limits.

They could also increase the nation’s already staggering medical debt by increasing the amount of interest on unpaid hospital bills.

Kaiser Permanente last year began offering credit cards with $5,000 limits to customers in Hawaii and Colorado and is considering expanding the program to other states, including California. Hospital chains such as the Carolinas HealthCare System and Kansas-based Via Christi Health System are also signing up patients with cards. GE Capital has started offering credit cards to patients in several pilot programs around the country.

There are many pluses to the new cards. The primary benefit is that patients can more easily obtain procedures and tests when they’re most needed. Although federal law requires that hospitals treat patients for all emergency care, many people without insurance or with high-deductible health plans skip other necessary treatments because they can’t afford them.

In turn, hospitals and providers hope to see a reduction in patients who skip out on their bills. When patients pay with specialty credit cards, hospitals or other providers still get paid; it’s typically up to the banks that issued the cards to collect on the debt.

Healthcare credit cards “were once a trickle issue, but it’s turned into a steady business that could soon become a flood,” said Mark Rukavina, director of the Access Project, a Boston-based nonprofit group focused on consumer health access.

Still, patient advocates worry that the cards may do more harm than good. A big complaint: The cards have interest rates as high as 23%; comparatively, patients who set up payment plans with hospitals often pay nominal or no interest.

What’s more, patients who are offered credit cards may be less inclined to pursue other payment alternatives, such as researching if they’re eligible for charity care through the hospital. (The majority of hospitals around the country are nonprofit institutions and are required to give a certain amount of discounts and free care to patients.)

“These products ultimately could increase financial difficulties facing patients,” said Melissa Jacoby, an associate professor of law at the University of North Carolina at Chapel Hill who specializes in medical debt.

Many of the cards can only be used for health expenses, and hospitals typically offer them to patients after they have had medical treatment and report that they can’t pay the full tab. Other patients can ask to sign up on their own or contact banks directly to apply. Cards obtained directly through a bank can be used with any provider; those obtained through a hospital are for use there only.

Some of the cards, such as Citibank’s Citi Health card, can only be used to pay for “lifestyle” procedures such as fertility treatments or vision care. But many of the cards can pay for any healthcare charge. Some hospitals are going so far as to underwrite the cards with patients, meaning even those with poor credit are eligible. (In those cases, the hospital pays the bill if patients default.)

Many experts within the healthcare industry believe medical credit cards and other types of creative financing will become more common as health costs continue to rise and the number of Americans living without health insurance – now at 45 million – grows.

Also fueling the growth in medical credit cards are new consumer-directed health plans. These plans typically combine high-deductible insurance with a savings account that consumers can use to keep cash for out-of-pocket expenses. But some people are likely to have a hard time paying their initial deductible, which can be $2,000 a year or more.

The cards work in different ways. With Kaiser, for instance, patients pay 9.9% interest for the first year and then 23% on unpaid balances after that. In other programs, such as the Carolina Health System, patients who agree to pay the bill off during the first year get charged no interest, otherwise the rate is about 13%. Some providers will deduct the estimated interest on the outstanding credit balance from the overall hospital bill.

Dr. Rusty Salton, president of AccessOne, a niche North Carolina-based medical credit card provider with 30,000 clients, said that people apparently perceive a greater obligation to pay a credit card bill than an outstanding hospital bill. His clients have paid about 80% of their bills, he said, more than twice the industry average. “This isn’t about trying to make money off of people,” said Salton. “The fact is most people want to pay their bills, and this just helps them do it a little more easily.”

Kaiser Permanente chief executive George Halvorson said, “We’re helping people find a little more time to pay their deductibles and other expenses.”

Studies show that many low- and middle-income families are already strained by rising medical debt. More than half of all bankruptcies today result from unpaid medical bills.

A study released last month by the Access Project and Brandeis University found that medical debt is becoming a threat to homeownership and housing stability for many working families, including those with health insurance.

Among 1,700 people surveyed, more than a quarter of those with medical debt reported having housing problems. The most commonly reported problem was the inability to qualify for a mortgage; others reported not being able to pay their rent or their mortgage or that they had to move to less-expensive
housing.

Another concern is how credit card companies will try to collect from patients who don’t pay them. After state lawmakers threatened to restrict hospitals from aggressive debt collections practices such as placing liens on people’s homes and garnishing their wages, the California Hospital Assn. agreed last year to voluntary guidelines that bar hospitals from such practices.

Said Jacoby of the University of North Carolina at Chapel Hill: “Bringing in a third party to collect the debt means we don’t really know what they are up to.”

http://www.latimes.com/business/la-he-credit12dec12,1,5053108.story?coll=la-h
eadlines-business

Health care reform urged

Speakers at town hall meeting call for universal coverage through government program

By Patrick Cain
Special to the Times Union
Thursday, December 15, 2005

ALBANY, New York — Medicaid referrals aren’t easy for Dr. Paul Sorum.

“I virtually throw my hands up trying to find a provider” who will accept payment through the government insurance program for the poor, said Sorum, chair of the Capital District chapter of Physicians for a National Health Program. “We want to treat not only some of our patients but all of our patients.”

Sorum spoke recently at a town hall meeting at which doctors, governmental officials, advocates and local residents shared their concerns about the need for health care reform. The event drew about 70 people.

“We’re headed in the wrong direction,’ said Dr. Glenn McGee, director of the Alden March Bioethics Institute at Albany Medical College. He and others who spoke backed a bill on Capitol Hill, HR 676, which would provide universal health care coverage.

The measure would be good for Albany resident Beeca Leet, who explained her circumstances. She said she spends more than $600 a month on medication — that’s half of what she earns, which is too much to qualify for government services, but not enough to meet her medical needs.

U.S. Rep. Michael McNulty, a co-sponsor of HR 676 in the House of Representatives, was pessimistic about its chances for passage. “With the Bush White House and a Republican-controlled Congress, the bill doesn’t have a chance,” said McNulty, a Green Island Democrat. Slamming his fist on the table, McNulty expressed anger that some people resort to cutting their pills in half. “I have people in my office tell me they do this to make their prescription last longer,” he said.

Erick Cheung, a third-year student at Albany Medical College, equated today’s health care system with an obsolete classic. “You can’t make a Model-T fly,” he said.

Kitzhaber's Rx for state

In eyeing a new run for governor, he thinks on a revolutionary scale
By David Steves
The Register-Guard, Eugene, Oregon
Saturday, December 17, 2005

The last time John Kitzhaber put Oregon on the map as a health care pioneer, it was by working within the decades-old system that delivers medical care. This time, the former doctor and governor wants to bulldoze what he sees as an antiquated system and replace it with a 21st-century model that would deliver universal health care to every Oregonian.

It’s a big enough idea to have Kitzhaber publicly contemplating a return to the governor’s office, where he says he could see it to fruition. That effort probably would involve ballot-measure or legislative campaigns. It also would be likely to involve the enlistment of Oregon’s congressional delegation and the White House to let Oregon out of the 20th-century rules of federal Medicare and Medicaid spending and to end tax exemption for employer-provided health insurance.

Kitzhaber on Friday said he plans to meet next week with Gov. Ted Kulongoski to discuss his health care ambitions and his interest in challenging Kulongoski in next May’s Democratic primary. The ex-governor said Friday he also has met with state teachers union officials, business leaders and others as he contemplates a political comeback.

Regardless of whether he runs for governor – something he plans to decide on next month – Kitzhaber said he wants to champion reforms. That could mean a ballot measure in 2006 or 2008 or a push for legislation in 2007 through the Legislature, he said.

In an hourlong interview Friday to discuss his ideas for reforming the health care system, Kitzhaber said he wants to start a national movement toward universal health care by designing a system for Oregon that would provide basic care to everyone.

After leaving office in January 2003 and getting involved with national health care research and education programs, Kitzhaber has observed rapidly gathering storm clouds. Health care costs are rising. Employers and governments are dropping coverage for workers, driving a growing number of uninsured people to emergency departments with chronic health problems that get shifted back onto insurance premium costs. The Medicare program, a federal entitlement that can’t be easily cut, is about to be swamped by aging, ailing baby boomers, resulting in trillions of dollars in national debt.

“I think it’s just terrifying,” Kitzhaber said. “That’s the situation, and clearly, something needs to be done. And I think it needs to be done very, very soon because this is really coming down right now.”

Kitzhaber once called Oregon “ungovernable” as he prepared to leave the state’s highest office. But Friday he exuded optimism as he described the enthusiastic reception he’s received while meeting with national audiences and in-state advisers from business, labor and the health care industry.

“People are looking for a place to engage in this debate,” he said.

Kitzhaber described a two-pronged goal: to actually bring universal health care to Oregon, and to force the debate at the national level – in Congress and perhaps even the 2008 presidential campaigns.

A rationing system

Kitzhaber made a mark in health care reform with the Oregon Health Plan, which he designed as Senate president in the 1980s and shepherded along while governor in 1995-2003. The health plan expanded the number of people who qualified for Medicaid by getting the federal government’s blessing to modestly limit care and to use the savings to let low-income people who didn’t fit into a Medicaid-eligible category – they weren’t elderly, blind, or pregnant women, for instance – get coverage.

This time, Kitzhaber says he wants to go much farther. Instead of dealing with those “working poor” who fall through the cracks, he envisions a basic coverage plan for all Oregonians – those who currently get coverage through work, those who aren’t insured, and those who qualify for government coverage such as Medicare.

How would Oregon pay for universal health care? Kitzhaber said his idea is to continue using the public dollars already going into Oregon’s system of delivering medical care, without raising taxes.

One element would be to persuade the federal government to remove its strings for how Medicaid and Medicare dollars are spent and put them into the universal health care pot.

Added to that would be the tax dollars that currently go uncollected on the money that employers pay for workers’ medical insurance premiums. The idea here – which Kitzhaber has yet to fully flesh out – is that employer-provided health care is a form of tax-exempt compensation to workers, a practice that began during the wage-control era of World War II and was added to the tax code in 1954.

With universal coverage, employers would not need to buy insurance for their workers. So, employers could use that money instead to pay wages, which would remove the tax exclusion currently available under state and federal law. Kitzhaber calls the current tax exemption a subsidy paid by all U.S. residents amounting to $200 billion a year.

With that combination, Oregon would have about $6.3 billion a year to pay for universal health care.

Per capita, that $6.3 billion would break down to about $2,000 per Oregonian. That’s not enough to cover everyone’s basic needs, Kitzhaber said, given the inefficiency of Oregon’s current medical care delivery system – doctors’ practices, private and government-sponsored health insurance, hospitals and clinics.

But if the state replaced that system with one designed from scratch, guided by the principle of maximizing Oregonians’ health in the most cost-effective way, it would be enough, he said. He said Italy achieves better health outcomes than does the United States at a cost of about $2,000 per person.

Designing a new system

Kitzhaber said his new system would deliver basic health care to all Oregonians – from private-sector employees to retirees, children, and the poor.

That step would involve scrapping everything about the current system – employer-provided medical coverage rooted in the 1940s, and 1960s-era Medicaid and Medicare programs. He said he’d model a new system on other public services, such as education, police and fire – services that all citizens are entitled to, regardless of where they live, their incomes, or other factors.

Using the education system as an analogy, Kitzhaber envisions a basic level of care that everyone would be eligible for. Just as those with the resources can seek out more specialized education through private schooling, so could individuals buy insurance for things not covered by the universal health care program, he said.

Continuing coverage for those currently receiving it and adding it for the 609,000 Oregonians who lack insurance would be costly.

But Kitzhaber said he thinks it could be done using existing public health care dollars and increasing the efficiency of hospitals, doctors and clinics.

For instance, if all Oregonians were entitled to medical coverage, it would be easier to ensure that people with high blood pressure get moderately priced instruction and monitoring to reduce and control the condition, rather than leaving it untended until they suffer strokes and require expensive care, he said.

Any such reforms would need federal approval. But Kitzhaber said he has no interest in pursuing them by running for the U.S. Senate – something he was urged to do in 2002, but rejected. He said he would prefer to launch such a system at the state level, then push it nationally.

“I could be a U.S. senator today and I couldn’t do anything about this, unless my state or some state actually blew in something that we had to deal with,” he said. “It doesn’t start there. That’s where it ends, but it’s got to start outside.”

Public or private role?

Kitzhaber doesn’t rule out that another governor might be able to champion his reforms, or that he could do so himself from outside government.

Up to now, Kitzhaber has been able to pursue his ideas as a private citizen, thanks to his expertise and stature in health care policy circles, as well as his involvement with health policy groups. He holds various posts at academic and medical organizations where he is developing his ideas.

Kitzhaber said he began to consider running for governor earlier this year.

Republican lawmakers who remember Kitzhaber as a governor who was quick to veto their bills and reluctant to compromise said it’s difficult to imagine him succeeding in a bid.

“You’ll have to do a lot more convincing for me to believe that he is really serious about being chief executive and dealing with the whole universe of challenges facing Oregon,” said Senate Republican Leader Ted Ferrioli of John Day, citing land use, employment issues and housing. “I think it’s inappropriate for him to even consider a run for the governorship if he’s just trying to use it as a bully pulpit to frame health care issues.”

But independent Portland-based pollster Adam Davis said Kitzhaber’s re-emergence is well timed, given his credibility on health care and the voters’ demands for change.

Health care “is the sleeping giant of issues right now. The whole cluster of health care quality and health care costs is really very much on the minds of Oregonians and is an issue that we see showing up over and over again as a big blinking dot on the radar screen,” he said. “It’s interesting that you have a guy like Kitzhaber. He just happens to be the guy who’s most qualified to talk on this issue. I think he would have credibility on it.”

Kitzhaber said running for governor could hurt his health care reform cause.

“You politicize the issue if you run,” he said.

Kitzhaber said if he does run, health care would be his big campaign issue. But he said other concerns, such as education and the economy, would be on his agenda. But reforming Oregon’s health care system is critical, he said.

“Health care is impacting our ability to grow our economy,” he said. “It’s impacting our ability to invest in education.”

He said his critics will prevail if they can seize on certain details and fuel voters’ skepticism about taxes, spending and the loss of a system that serves some people – those with good medical coverage – very well.

Kitzhaber said his message “has to be about empowerment – that we don’t have to wait for the future … that we can step up and actually take care of ourselves.”

HEALTH CARE CRISIS

Numbers that point to what many, including former Gov. John Kitzhaber, see as an impending crisis in health care.

Oregon Health Plan coverage:
2002: 475,000 people (including 109,000 on OHP Standard)
2005: 409,000 (including 25,000 on OHP Standard)
Oregonians without health insurance
1996: 11 percent
2002: 14 percent
2004: 17 percent

Bankruptcy:
50 percent of U.S. households declaring bankruptcy cite medical causes; 76 percent had medical insurance at onset of illness.

Insurance premiums:
Average annual cost: $10,800
Employees’ average share: $2,713
Employees’ increase from 2004: 9.2 percent
Employees’ wage increase from 2004: 2.7 percent
Employees’ premium increases since 2000: 73 percent

Decline in employer-provided medical coverage:
1990-2000: Employers providing coverage declines by 2 percent a year.
Since 2000: Employers providing coverage declines by 4 percent a year.

Federal safety-net health care spending:
2001: $546 per uninsured person
2004: $498 per uninsured person

— Sources: Oregon Office of Health Policy & Research; Harvard law professor Elizabeth Warren; Kaiser Family Foundation; Portland Business Journal; Foundation for Medical Excellence

Congress’ gift for Tiny Tim

Budget Accord Could Mean Payments by Medicaid Recipients
By Robert Pear
The New York Times
December 20, 2005

The final Congressional agreement on a budget bill gives states sweeping new authority to impose premiums and co-payments on Medicaid recipients…

Under the agreement, states can charge premiums and higher co-payments for a wide range of Medicaid benefits, including prescription drugs, doctors’ services and hospital care.

States can scale back benefits, capping or eliminating coverage for services that federal law now guarantees.

In addition, states can end Medicaid coverage for people who fail to pay premiums for 60 days or more. Pharmacists can refuse to fill prescriptions, and doctors and hospitals can deny services, for recipients who do not make the required co-payments.

Medicaid recipients can be charged 10 percent of the cost of any item or service if their family incomes were 100 percent to 150 percent of the federal poverty level, $12,830 to $19,245 for a family of two. Recipients with incomes above that can be required to pay 20 percent of the cost of any item or service.

Drug makers and health insurance companies escaped largely unscathed. Negotiators rejected several provisions of the Senate bill that would have cut their payments.

Representative Joe L. Barton, Republican of Texas, the architect of the Medicaid provisions, said the higher co-payments were needed to “encourage personal responsibility” among low-income people.

http://www.nytimes.com/2005/12/20/politics/20health.html

Comment: In the glorious spirit of Christmas, Congress is extending policies that shower gifts on the health insurance industry and pharmaceutical firms.

And for Tiny Tim? They are giving him the gift of “personal responsibility.” He can go out and get his own damn crutch!

Kitzhaber’s Rx for state

In eyeing a new run for governor, he thinks on a revolutionary scale
By David Steves
The Register-Guard, Eugene, Oregon
Saturday, December 17, 2005

The last time John Kitzhaber put Oregon on the map as a health care pioneer, it was by working within the decades-old system that delivers medical care. This time, the former doctor and governor wants to bulldoze what he sees as an antiquated system and replace it with a 21st-century model that would deliver universal health care to every Oregonian.

It’s a big enough idea to have Kitzhaber publicly contemplating a return to the governor’s office, where he says he could see it to fruition. That effort probably would involve ballot-measure or legislative campaigns. It also would be likely to involve the enlistment of Oregon’s congressional delegation and the White House to let Oregon out of the 20th-century rules of federal Medicare and Medicaid spending and to end tax exemption for employer-provided health insurance.

Kitzhaber on Friday said he plans to meet next week with Gov. Ted Kulongoski to discuss his health care ambitions and his interest in challenging Kulongoski in next May’s Democratic primary. The ex-governor said Friday he also has met with state teachers union officials, business leaders and others as he contemplates a political comeback.

Regardless of whether he runs for governor – something he plans to decide on next month – Kitzhaber said he wants to champion reforms. That could mean a ballot measure in 2006 or 2008 or a push for legislation in 2007 through the Legislature, he said.

In an hourlong interview Friday to discuss his ideas for reforming the health care system, Kitzhaber said he wants to start a national movement toward universal health care by designing a system for Oregon that would provide basic care to everyone.

After leaving office in January 2003 and getting involved with national health care research and education programs, Kitzhaber has observed rapidly gathering storm clouds. Health care costs are rising. Employers and governments are dropping coverage for workers, driving a growing number of uninsured people to emergency departments with chronic health problems that get shifted back onto insurance premium costs. The Medicare program, a federal entitlement that can’t be easily cut, is about to be swamped by aging, ailing baby boomers, resulting in trillions of dollars in national debt.

“I think it’s just terrifying,” Kitzhaber said. “That’s the situation, and clearly, something needs to be done. And I think it needs to be done very, very soon because this is really coming down right now.”

Kitzhaber once called Oregon “ungovernable” as he prepared to leave the state’s highest office. But Friday he exuded optimism as he described the enthusiastic reception he’s received while meeting with national audiences and in-state advisers from business, labor and the health care industry.

“People are looking for a place to engage in this debate,” he said.

Kitzhaber described a two-pronged goal: to actually bring universal health care to Oregon, and to force the debate at the national level – in Congress and perhaps even the 2008 presidential campaigns.

A rationing system

Kitzhaber made a mark in health care reform with the Oregon Health Plan, which he designed as Senate president in the 1980s and shepherded along while governor in 1995-2003. The health plan expanded the number of people who qualified for Medicaid by getting the federal government’s blessing to modestly limit care and to use the savings to let low-income people who didn’t fit into a Medicaid-eligible category – they weren’t elderly, blind, or pregnant women, for instance – get coverage.

This time, Kitzhaber says he wants to go much farther. Instead of dealing with those “working poor” who fall through the cracks, he envisions a basic coverage plan for all Oregonians – those who currently get coverage through work, those who aren’t insured, and those who qualify for government coverage such as Medicare.

How would Oregon pay for universal health care? Kitzhaber said his idea is to continue using the public dollars already going into Oregon’s system of delivering medical care, without raising taxes.

One element would be to persuade the federal government to remove its strings for how Medicaid and Medicare dollars are spent and put them into the universal health care pot.

Added to that would be the tax dollars that currently go uncollected on the money that employers pay for workers’ medical insurance premiums. The idea here – which Kitzhaber has yet to fully flesh out – is that employer-provided health care is a form of tax-exempt compensation to workers, a practice that began during the wage-control era of World War II and was added to the tax code in 1954.

With universal coverage, employers would not need to buy insurance for their workers. So, employers could use that money instead to pay wages, which would remove the tax exclusion currently available under state and federal law. Kitzhaber calls the current tax exemption a subsidy paid by all U.S. residents amounting to $200 billion a year.

With that combination, Oregon would have about $6.3 billion a year to pay for universal health care.

Per capita, that $6.3 billion would break down to about $2,000 per Oregonian. That’s not enough to cover everyone’s basic needs, Kitzhaber said, given the inefficiency of Oregon’s current medical care delivery system – doctors’ practices, private and government-sponsored health insurance, hospitals and clinics.

But if the state replaced that system with one designed from scratch, guided by the principle of maximizing Oregonians’ health in the most cost-effective way, it would be enough, he said. He said Italy achieves better health outcomes than does the United States at a cost of about $2,000 per person.

Designing a new system

Kitzhaber said his new system would deliver basic health care to all Oregonians – from private-sector employees to retirees, children, and the poor.

That step would involve scrapping everything about the current system – employer-provided medical coverage rooted in the 1940s, and 1960s-era Medicaid and Medicare programs. He said he’d model a new system on other public services, such as education, police and fire – services that all citizens are entitled to, regardless of where they live, their incomes, or other factors.

Using the education system as an analogy, Kitzhaber envisions a basic level of care that everyone would be eligible for. Just as those with the resources can seek out more specialized education through private schooling, so could individuals buy insurance for things not covered by the universal health care program, he said.

Continuing coverage for those currently receiving it and adding it for the 609,000 Oregonians who lack insurance would be costly.

But Kitzhaber said he thinks it could be done using existing public health care dollars and increasing the efficiency of hospitals, doctors and clinics.

For instance, if all Oregonians were entitled to medical coverage, it would be easier to ensure that people with high blood pressure get moderately priced instruction and monitoring to reduce and control the condition, rather than leaving it untended until they suffer strokes and require expensive care, he said.

Any such reforms would need federal approval. But Kitzhaber said he has no interest in pursuing them by running for the U.S. Senate – something he was urged to do in 2002, but rejected. He said he would prefer to launch such a system at the state level, then push it nationally.

“I could be a U.S. senator today and I couldn’t do anything about this, unless my state or some state actually blew in something that we had to deal with,” he said. “It doesn’t start there. That’s where it ends, but it’s got to start outside.”

Public or private role?

Kitzhaber doesn’t rule out that another governor might be able to champion his reforms, or that he could do so himself from outside government.

Up to now, Kitzhaber has been able to pursue his ideas as a private citizen, thanks to his expertise and stature in health care policy circles, as well as his involvement with health policy groups. He holds various posts at academic and medical organizations where he is developing his ideas.

Kitzhaber said he began to consider running for governor earlier this year.

Republican lawmakers who remember Kitzhaber as a governor who was quick to veto their bills and reluctant to compromise said it’s difficult to imagine him succeeding in a bid.

“You’ll have to do a lot more convincing for me to believe that he is really serious about being chief executive and dealing with the whole universe of challenges facing Oregon,” said Senate Republican Leader Ted Ferrioli of John Day, citing land use, employment issues and housing. “I think it’s inappropriate for him to even consider a run for the governorship if he’s just trying to use it as a bully pulpit to frame health care issues.”

But independent Portland-based pollster Adam Davis said Kitzhaber’s re-emergence is well timed, given his credibility on health care and the voters’ demands for change.

Health care “is the sleeping giant of issues right now. The whole cluster of health care quality and health care costs is really very much on the minds of Oregonians and is an issue that we see showing up over and over again as a big blinking dot on the radar screen,” he said. “It’s interesting that you have a guy like Kitzhaber. He just happens to be the guy who’s most qualified to talk on this issue. I think he would have credibility on it.”

Kitzhaber said running for governor could hurt his health care reform cause.

“You politicize the issue if you run,” he said.

Kitzhaber said if he does run, health care would be his big campaign issue. But he said other concerns, such as education and the economy, would be on his agenda. But reforming Oregon’s health care system is critical, he said.

“Health care is impacting our ability to grow our economy,” he said. “It’s impacting our ability to invest in education.”

He said his critics will prevail if they can seize on certain details and fuel voters’ skepticism about taxes, spending and the loss of a system that serves some people – those with good medical coverage – very well.

Kitzhaber said his message “has to be about empowerment – that we don’t have to wait for the future … that we can step up and actually take care of ourselves.”

HEALTH CARE CRISIS

Numbers that point to what many, including former Gov. John Kitzhaber, see as an impending crisis in health care.

Oregon Health Plan coverage:
2002: 475,000 people (including 109,000 on OHP Standard)
2005: 409,000 (including 25,000 on OHP Standard)
Oregonians without health insurance
1996: 11 percent
2002: 14 percent
2004: 17 percent

Bankruptcy:
50 percent of U.S. households declaring bankruptcy cite medical causes; 76 percent had medical insurance at onset of illness.

Insurance premiums:
Average annual cost: $10,800
Employees’ average share: $2,713
Employees’ increase from 2004: 9.2 percent
Employees’ wage increase from 2004: 2.7 percent
Employees’ premium increases since 2000: 73 percent

Decline in employer-provided medical coverage:
1990-2000: Employers providing coverage declines by 2 percent a year.
Since 2000: Employers providing coverage declines by 4 percent a year.

Federal safety-net health care spending:
2001: $546 per uninsured person
2004: $498 per uninsured person

— Sources: Oregon Office of Health Policy & Research; Harvard law professor Elizabeth Warren; Kaiser Family Foundation; Portland Business Journal; Foundation for Medical Excellence

The inefficiency of tax credits for private insurance

Health Care for All, Just a (Big) Step Away
By Eduardo Porter
The New York Times
December 18, 2005

Next year, the federal government expects to provide about $130 billion for Americans to buy health insurance (through the tax break for employer-sponsored coverage).

Although subsidizing health insurance may seem a worthy effort, a positive contribution to the goal of universal coverage, it is among the most inefficient spending in the nation’s fiscal arsenal.

… if the objective is to expand health care coverage, a bolder option is available: focusing the bulk of the money on the bottom end of the income distribution.

Added to what is already spent on Medicaid, this financing would be roughly enough to make health insurance free for people earning up to three times the poverty level, and perhaps somewhat more, said Jonathan Gruber, an economics professor at the Massachusetts Institute of Technology who has studied the efficiency of alternative methods for financing health insurance.

To make insurance universal, two other things would be needed, Mr. Gruber said. As soon as the tax break was eliminated, company-provided health insurance would be likely to disappear, too. So some mechanism would be needed to pool groups of people and to avoid leaving higher-risk people to face enormous insurance costs. Such a mechanism would probably make health insurance affordable for all. And to make it universal, a mandate would be needed to make people buy it.

http://www.nytimes.com/2005/12/18/business/yourmoney/18view.html?pagewanted=all

And…

Tax Policy for Health Insurance
By Jonathan Gruber
National Bureau of Economic Research
December 2004

Despite a $140 billion existing tax break for employer-provided health insurance, tax policy remains the tool of choice for many policy-makers in addressing the problem of the uninsured. In this paper, I use a microsimulation model to estimate the impact of various tax interventions to cover the uninsured, relative to an expansion of public insurance designed to accomplish the same goals. I contrast the efficiency of these policies along several dimensions, most notably the dollars of public spending per dollar of insurance value provided. I find that every tax policy is much less efficient than public insurance expansions: while public insurance costs the government only between $1.17 and $1.33 per dollar of insurance value provided, tax policies cost the government between $2.36 and $12.98 per dollar of insurance value provided. I also find that targeting is crucial for efficient tax policy; policies tightly targeted to the lowest income earners have a much higher efficiency than those available higher in the income distribution.

http://www.nber.org/papers/w10977

Comment: Professor Gruber has demonstrated that a tax-payer funded government insurance program would be a far more efficient use of public dollars than tax-payer funded tax credits for the purchase of either employer-sponsored or individual private insurance plans. Even targeted tax credits for private insurance are much less efficient than tax-funded public programs.

Those who insist that we should use policies supporting private insurance to expand coverage do recognize the inequities of their proposals. Realizing that low-income individuals cannot afford reasonable coverage, they have recommended tax credits that are specifically targeted to this sector. Without considering all of the other inefficiencies and inequities of private insurance, Dr. Gruber’s work should lead to the conclusion that private insurance approaches should be abandoned as being a terrible waste of public dollars.

It is true that a publicly-funded, universal insurance program would increase public spending, but the important difference is that it would provide greater insurance value by eliminating many of the inefficiencies and inequities of our fragmented public/private system, thereby improving overall efficiency.

Not only those on the right want to see an efficient system, and not only those on the left want to see an equitable system. It seems that equity and efficiency should provide us with a common ground for crafting reform.

Universal medicare: TV is listening; what about Washington?

A reader writes, “What are your thoughts about the statement by Matt Santos, the Democratic presidential nominee on TV’s ‘The West Wing,’ that extending Medicare to all Americans would be an inexpensive and effective way of providing national health insurance?”

My first thought is what Matt Santos might have been reading lately.

It’s possible he was reading one of my old columns, for example, http://www.lansingcitypulse.com/030212/health2/index.html. There I mentioned that both the UAW and General Motors had concluded that national health insurance was the best way to get the auto industry to stop hemorrhaging red ink (and that was well before recent bankruptcies and plant closings).

Or else Santos might have been perusing the recent columns by Paul Krugman of The New York Times, who, I admit, gets a bit more exposure. Krugman has been teaching his readers a crash course in Health Economics 101 and basically saying that no matter how you add up the numbers, some sort of single-payer national insurance makes the most sense.

Finally, ol’ Matt may have been paying attention to the literature put out by the Physicians for a National Health Program. For some years they have been talking about “universal Medicare,” and it’s from them that I picked up the phrase to use in my 2003 column. The thinking is that we need some sort of single-payer national health insurance. But if we call it “Canadian style single-payer,” it’s a non-starter right away in the U.S. political landscape. Medicare, as we have seen in the last couple of years, is extremely popular; even the most-far-right conservatives are afraid to mess with it too much. And it just so happens that Medicare is the closest thing we have in the United States to a single payer system, even though it serves only a part of the population. So maybe “universal Medicare” is the way to get the average Joe on the street to think about it.

What about Santos’ claims that this will save money? Lots of people have done that math too, and it keeps coming out favorably. We continue to believe the myth that the government is inherently inefficient and the private sector is a model of efficiency. The administration of the Medicare program costs about 3 percent of total revenues. The average U.S. private health insurer spends between 15percent and 25 percent of revenues on administrative overhead and bureaucracy. It’s been frequently estimated that switching to a single-payer system would immediately save the U.S. some $150 to 200 billion annually, which is enough to provide good health care for all of those now uninsured.

By contrast, no one advocating a “free market” solution to the U.S. health care implosion has been able to come up with a plan that will both provide universal access and also control costs.

The proof seems to lie in the international experience. The most developed nations of the world all manage to provide high quality care for all their citizens while spending around 8-9 percent of their GDP to do it. All have some sort of nationally-run or at least nationally-coordinated plan, though some, like Germany, are not true single-payer.

The United States is the sole outlier. We leave about 46 million uninsured, or up to 80 million if you count those who lack insurance for at least part of a two-year period. We spend 15 percent of GDP on this boondoggle. And for all that, we get a health care system that on recent international charts ranks around 30th in the world, somewhere around Slovenia’s.

Experts in health policy have been saying this for years. Now the TV politicians appear to be saying it. When are the real politicians going to speak up?

(Howard Brody is a family practice physician and professor of medical ethics at MSU.)