PNHP

M. Gladwell on the moral-hazard myth

M. Gladwell on the moral-hazard myth

The Moral-Hazard Myth: The bad idea behind our failed health-care system
By Malcolm Gladwell
The New Yorker
August 29, 2005

At the center of the Bush Administration’s plan to address the health-insurance mess are Health Savings Accounts, and Health Savings Accounts are exactly what you would come up with if you were concerned, above all else, with minimizing moral hazard. The logic behind them was laid out in the 2004 Economic Report of the President. Americans, the report argues, have too much health insurance: typical plans cover things that they shouldn’t, creating the problem of overconsumption.

John Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”

The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”

“The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance,” the Stanford economist Victor Fuchs says. Health Savings Accounts are not a variant of universal health care. In their governing assumptions, they are the antithesis of universal health care.

The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver… ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.

http://www.newyorker.com/fact/content/articles/050829fa_fact

Comment: Having returned from an escape to the Eastern Sierras, I found my email box stuffed with recommendations to read Malcolm Gladwell’s article. I have. You should too.

The Moral-Hazard Myth (New Yorker)

The Moral Harzard Myth
The bad idea behind our failed health-care system
By Malcom Gladwell
The New Yorker
August 29, 2005

Tooth decay begins, typically, when debris becomes trapped between the teeth and along the ridges and in the grooves of the molars. The food rots. It becomes colonized with bacteria. The bacteria feeds off sugars in the mouth and forms an acid that begins to eat away at the enamel of the teeth. Slowly, the bacteria works its way through to the dentin, the inner structure, and from there the cavity begins to blossom three-dimensionally, spreading inward and sideways. When the decay reaches the pulp tissue, the blood vessels, and the nerves that serve the tooth, the pain starts—an insistent throbbing. The tooth turns brown. It begins to lose its hard structure, to the point where a dentist can reach into a cavity with a hand instrument and scoop out the decay. At the base of the tooth, the bacteria mineralizes into tartar, which begins to irritate the gums. They become puffy and bright red and start to recede, leaving more and more of the tooth’s root exposed. When the infection works its way down to the bone, the structure holding the tooth in begins to collapse altogether.

Several years ago, two Harvard researchers, Susan Starr Sered and Rushika Fernandopulle, set out to interview people without health-care coverage for a book they were writing, “Uninsured in America.” They talked to as many kinds of people as they could find, collecting stories of untreated depression and struggling single mothers and chronically injured laborers—and the most common complaint they heard was about teeth. Gina, a hairdresser in Idaho, whose husband worked as a freight manager at a chain store, had “a peculiar mannerism of keeping her mouth closed even when speaking.” It turned out that she hadn’t been able to afford dental care for three years, and one of her front teeth was rotting. Daniel, a construction worker, pulled out his bad teeth with pliers. Then, there was Loretta, who worked nights at a university research center in Mississippi, and was missing most of her teeth. “They’ll break off after a while, and then you just grab a hold of them, and they work their way out,” she explained to Sered and Fernandopulle. “It hurts so bad, because the tooth aches. Then it’s a relief just to get it out of there. The hole closes up itself anyway. So it’s so much better.”

People without health insurance have bad teeth because, if you’re paying for everything out of your own pocket, going to the dentist for a checkup seems like a luxury. It isn’t, of course. The loss of teeth makes eating fresh fruits and vegetables difficult, and a diet heavy in soft, processed foods exacerbates more serious health problems, like diabetes. The pain of tooth decay leads many people to use alcohol as a salve. And those struggling to get ahead in the job market quickly find that the unsightliness of bad teeth, and the self-consciousness that results, can become a major barrier. If your teeth are bad, you’re not going to get a job as a receptionist, say, or a cashier. You’re going to be put in the back somewhere, far from the public eye. What Loretta, Gina, and Daniel understand, the two authors tell us, is that bad teeth have come to be seen as a marker of “poor parenting, low educational achievement and slow or faulty intellectual development.” They are an outward marker of caste. “Almost every time we asked interviewees what their first priority would be if the president established universal health coverage tomorrow,” Sered and Fernandopulle write, “the immediate answer was ‘my teeth.’ ”

The U. S. health-care system, according to “Uninsured in America,” has created a group of people who increasingly look different from others and suffer in ways that others do not. The leading cause of personal bankruptcy in the United States is unpaid medical bills. Half of the uninsured owe money to hospitals, and a third are being pursued by collection agencies. Children without health insurance are less likely to receive medical attention for serious injuries, for recurrent ear infections, or for asthma. Lung-cancer patients without insurance are less likely to receive surgery, chemotherapy, or radiation treatment. Heart-attack victims without health insurance are less likely to receive angioplasty. People with pneumonia who don’t have health insurance are less likely to receive X rays or consultations. The death rate in any given year for someone without health insurance is twenty-five per cent higher than for someone with insurance. Because the uninsured are sicker than the rest of us, they can’t get better jobs, and because they can’t get better jobs they can’t afford health insurance, and because they can’t afford health insurance they get even sicker. John, the manager of a bar in Idaho, tells Sered and Fernandopulle that as a result of various workplace injuries over the years he takes eight ibuprofen, waits two hours, then takes eight more—and tries to cadge as much prescription pain medication as he can from friends. “There are times when I should’ve gone to the doctor, but I couldn’t afford to go because I don’t have insurance,” he says. “Like when my back messed up, I should’ve gone. If I had insurance, I would’ve went, because I know I could get treatment, but when you can’t afford it you don’t go. Because the harder the hole you get into in terms of bills, then you’ll never get out. So you just say, ‘I can deal with the pain.’ ”

One of the great mysteries of political life in the United States is why Americans are so devoted to their health-care system. Six times in the past century—during the First World War, during the Depression, during the Truman and Johnson Administrations, in the Senate in the nineteen-seventies, and during the Clinton years—efforts have been made to introduce some kind of universal health insurance, and each time the efforts have been rejected. Instead, the United States has opted for a makeshift system of increasing complexity and dysfunction. Americans spend $5,267 per capita on health care every year, almost two and half times the industrialized world’s median of $2,193; the extra spending comes to hundreds of billions of dollars a year. What does that extra spending buy us? Americans have fewer doctors per capita than most Western countries. We go to the doctor less than people in other Western countries. We get admitted to the hospital less frequently than people in other Western countries. We are less satisfied with our health care than our counterparts in other countries. American life expectancy is lower than the Western average. Childhood-immunization rates in the United States are lower than average. Infant-mortality rates are in the nineteenth percentile of industrialized nations. Doctors here perform more high-end medical procedures, such as coronary angioplasties, than in other countries, but most of the wealthier Western countries have more CT scanners than the United States does, and Switzerland, Japan, Austria, and Finland all have more MRI machines per capita. Nor is our system more efficient. The United States spends more than a thousand dollars per capita per year—or close to four hundred billion dollars—on health-care-related paperwork and administration, whereas Canada, for example, spends only about three hundred dollars per capita. And, of course, every other country in the industrialized world insures all its citizens; despite those extra hundreds of billions of dollars we spend each year, we leave forty-five million people without any insurance. A country that displays an almost ruthless commitment to efficiency and performance in every aspect of its economy—a country that switched to Japanese cars the moment they were more reliable, and to Chinese T-shirts the moment they were five cents cheaper—has loyally stuck with a health-care system that leaves its citizenry pulling out their teeth with pliers.

America’s health-care mess is, in part, simply an accident of history. The fact that there have been six attempts at universal health coverage in the last century suggests that there has long been support for the idea. But politics has always got in the way. In both Europe and the United States, for example, the push for health insurance was led, in large part, by organized labor. But in Europe the unions worked through the political system, fighting for coverage for all citizens. From the start, health insurance in Europe was public and universal, and that created powerful political support for any attempt to expand benefits. In the United States, by contrast, the unions worked through the collective-bargaining system and, as a result, could win health benefits only for their own members. Health insurance here has always been private and selective, and every attempt to expand benefits has resulted in a paralyzing political battle over who would be added to insurance rolls and who ought to pay for those additions.

Policy is driven by more than politics, however. It is equally driven by ideas, and in the past few decades a particular idea has taken hold among prominent American economists which has also been a powerful impediment to the expansion of health insurance. The idea is known as “moral hazard.” Health economists in other Western nations do not share this obsession. Nor do most Americans. But moral hazard has profoundly shaped the way think tanks formulate policy and the way experts argue and the way health insurers structure their plans and the way legislation and regulations have been written. The health-care mess isn’t merely the unintentional result of political dysfunction, in other words. It is also the deliberate consequence of the way in which American policymakers have come to think about insurance.

“Moral hazard” is the term economists use to describe the fact that insurance can change the behavior of the person being insured. If your office gives you and your co-workers all the free Pepsi you want—if your employer, in effect, offers universal Pepsi insurance—you’ll drink more Pepsi than you would have otherwise. If you have a no-deductible fire-insurance policy, you may be a little less diligent in clearing the brush away from your house. The savings-and-loan crisis of the nineteen-eighties was created, in large part, by the fact that the federal government insured savings deposits of up to a hundred thousand dollars, and so the newly deregulated S. &L.s made far riskier investments than they would have otherwise. Insurance can have the paradoxical effect of producing risky and wasteful behavior. Economists spend a great deal of time thinking about such moral hazard for good reason. Insurance is an attempt to make human life safer and more secure. But, if those efforts can backfire and produce riskier behavior, providing insurance becomes a much more complicated and problematic endeavor.

In 1968, the economist Mark Pauly argued that moral hazard played an enormous role in medicine, and, as John Nyman writes in his book “The Theory of the Demand for Health Insurance,” Pauly’s paper has become the “single most influential article in the health economics literature.” Nyman, an economist at the University of Minnesota, says that the fear of moral hazard lies behind the thicket of co-payments and deductibles and utilization reviews which characterizes the American health-insurance system. Fear of moral hazard, Nyman writes, also explains “the general lack of enthusiasm by U.S. health economists for the expansion of health insurance coverage (for example, national health insurance or expanded Medicare benefits) in the U.S.”

What Nyman is saying is that when your insurance company requires that you make a twenty-dollar co-payment for a visit to the doctor, or when your plan includes an annual five-hundred-dollar or thousand-dollar deductible, it’s not simply an attempt to get you to pick up a larger share of your health costs. It is an attempt to make your use of the health-care system more efficient. Making you responsible for a share of the costs, the argument runs, will reduce moral hazard: you’ll no longer grab one of those free Pepsis when you aren’t really thirsty. That’s also why Nyman says that the notion of moral hazard is behind the “lack of enthusiasm” for expansion of health insurance. If you think of insurance as producing wasteful consumption of medical services, then the fact that there are forty-five million Americans without health insurance is no longer an immediate cause for alarm. After all, it’s not as if the uninsured never go to the doctor. They spend, on average, $934 a year on medical care. A moral-hazard theorist would say that they go to the doctor when they really have to. Those of us with private insurance, by contrast, consume $2,347 worth of health care a year. If a lot of that extra $1,413 is waste, then maybe the uninsured person is the truly efficient consumer of health care.

The moral-hazard argument makes sense, however, only if we consume health care in the same way that we consume other consumer goods, and to economists like Nyman this assumption is plainly absurd. We go to the doctor grudgingly, only because we’re sick. “Moral hazard is overblown,” the Princeton economist Uwe Reinhardt says. “You always hear that the demand for health care is unlimited. This is just not true. People who are very well insured, who are very rich, do you see them check into the hospital because it’s free? Do people really like to go to the doctor? Do they check into the hospital instead of playing golf?”

For that matter, when you have to pay for your own health care, does your consumption really become more efficient? In the late nineteen-seventies, the rand Corporation did an extensive study on the question, randomly assigning families to health plans with co-payment levels at zero per cent, twenty-five per cent, fifty per cent, or ninety-five per cent, up to six thousand dollars. As you might expect, the more that people were asked to chip in for their health care the less care they used. The problem was that they cut back equally on both frivolous care and useful care. Poor people in the high-deductible group with hypertension, for instance, didn’t do nearly as good a job of controlling their blood pressure as those in other groups, resulting in a ten-per-cent increase in the likelihood of death. As a recent Commonwealth Fund study concluded, cost sharing is “a blunt instrument.” Of course it is: how should the average consumer be expected to know beforehand what care is frivolous and what care is useful? I just went to the dermatologist to get moles checked for skin cancer. If I had had to pay a hundred per cent, or even fifty per cent, of the cost of the visit, I might not have gone. Would that have been a wise decision? I have no idea. But if one of those moles really is cancerous, that simple, inexpensive visit could save the health-care system tens of thousands of dollars (not to mention saving me a great deal of heartbreak). The focus on moral hazard suggests that the changes we make in our behavior when we have insurance are nearly always wasteful. Yet, when it comes to health care, many of the things we do only because we have insurance—like getting our moles checked, or getting our teeth cleaned regularly, or getting a mammogram or engaging in other routine preventive care—are anything but wasteful and inefficient. In fact, they are behaviors that could end up saving the health-care system a good deal of money.

Sered and Fernandopulle tell the story of Steve, a factory worker from northern Idaho, with a “grotesquelooking left hand—what looks like a bone sticks out the side.” When he was younger, he broke his hand. “The doctor wanted to operate on it,” he recalls. “And because I didn’t have insurance, well, I was like ‘I ain’t gonna have it operated on.’ The doctor said, ‘Well, I can wrap it for you with an Ace bandage.’ I said, ‘Ahh, let’s do that, then.’ ” Steve uses less health care than he would if he had insurance, but that’s not because he has defeated the scourge of moral hazard. It’s because instead of getting a broken bone fixed he put a bandage on it.

At the center of the Bush Administration’s plan to address the health-insurance mess are Health Savings Accounts, and Health Savings Accounts are exactly what you would come up with if you were concerned, above all else, with minimizing moral hazard. The logic behind them was laid out in the 2004 Economic Report of the President. Americans, the report argues, have too much health insurance: typical plans cover things that they shouldn’t, creating the problem of overconsumption. Several paragraphs are then devoted to explaining the theory of moral hazard. The report turns to the subject of the uninsured, concluding that they fall into several groups. Some are foreigners who may be covered by their countries of origin. Some are people who could be covered by Medicaid but aren’t or aren’t admitting that they are. Finally, a large number “remain uninsured as a matter of choice.” The report continues, “Researchers believe that as many as one-quarter of those without health insurance had coverage available through an employer but declined the coverage. . . . Still others may remain uninsured because they are young and healthy and do not see the need for insurance.” In other words, those with health insurance are overinsured and their behavior is distorted by moral hazard. Those without health insurance use their own money to make decisions about insurance based on an assessment of their needs. The insured are wasteful. The uninsured are prudent. So what’s the solution? Make the insured a little bit more like the uninsured.

Under the Health Savings Accounts system, consumers are asked to pay for routine health care with their own money—several thousand dollars of which can be put into a tax-free account. To handle their catastrophic expenses, they then purchase a basic health-insurance package with, say, a thousand-dollar annual deductible. As President Bush explained recently, “Health Savings Accounts all aim at empowering people to make decisions for themselves, owning their own health-care plan, and at the same time bringing some demand control into the cost of health care.”

The country described in the President’s report is a very different place from the country described in “Uninsured in America.” Sered and Fernandopulle look at the billions we spend on medical care and wonder why Americans have so little insurance. The President’s report considers the same situation and worries that we have too much. Sered and Fernandopulle see the lack of insurance as a problem of poverty; a third of the uninsured, after all, have incomes below the federal poverty line. In the section on the uninsured in the President’s report, the word “poverty” is never used. In the Administration’s view, people are offered insurance but “decline the coverage” as “a matter of choice.” The uninsured in Sered and Fernandopulle’s book decline coverage, but only because they can’t afford it. Gina, for instance, works for a beauty salon that offers her a bare-bones health-insurance plan with a thousand-dollar deductible for two hundred dollars a month. What’s her total income? Nine hundred dollars a month. She could “choose” to accept health insurance, but only if she chose to stop buying food or paying the rent.

The biggest difference between the two accounts, though, has to do with how each views the function of insurance. Gina, Steve, and Loretta are ill, and need insurance to cover the costs of getting better. In their eyes, insurance is meant to help equalize financial risk between the healthy and the sick. In the insurance business, this model of coverage is known as “social insurance,” and historically it was the way health coverage was conceived. If you were sixty and had heart disease and diabetes, you didn’t pay substantially more for coverage than a perfectly healthy twenty-five-year-old. Under social insurance, the twenty-five-year-old agrees to pay thousands of dollars in premiums even though he didn’t go to the doctor at all in the previous year, because he wants to make sure that someone else will subsidize his health care if he ever comes down with heart disease or diabetes. Canada and Germany and Japan and all the other industrialized nations with universal health care follow the social-insurance model. Medicare, too, is based on the social-insurance model, and, when Americans with Medicare report themselves to be happier with virtually every aspect of their insurance coverage than people with private insurance (as they do, repeatedly and overwhelmingly), they are referring to the social aspect of their insurance. They aren’t getting better care. But they are getting something just as valuable: the security of being insulated against the financial shock of serious illness.

There is another way to organize insurance, however, and that is to make it actuarial. Car insurance, for instance, is actuarial. How much you pay is in large part a function of your individual situation and history: someone who drives a sports car and has received twenty speeding tickets in the past two years pays a much higher annual premium than a soccer mom with a minivan. In recent years, the private insurance industry in the United States has been moving toward the actuarial model, with profound consequences. The triumph of the actuarial model over the social-insurance model is the reason that companies unlucky enough to employ older, high-cost employees—like United Airlines—have run into such financial difficulty. It’s the reason that automakers are increasingly moving their operations to Canada. It’s the reason that small businesses that have one or two employees with serious illnesses suddenly face unmanageably high health-insurance premiums, and it’s the reason that, in many states, people suffering from a potentially high-cost medical condition can’t get anyone to insure them at all.

Health Savings Accounts represent the final, irrevocable step in the actuarial direction. If you are preoccupied with moral hazard, then you want people to pay for care with their own money, and, when you do that, the sick inevitably end up paying more than the healthy. And when you make people choose an insurance plan that fits their individual needs, those with significant medical problems will choose expensive health plans that cover lots of things, while those with few health problems will choose cheaper, bare-bones plans. The more expensive the comprehensive plans become, and the less expensive the bare-bones plans become, the more the very sick will cluster together at one end of the insurance spectrum, and the more the well will cluster together at the low-cost end. The days when the healthy twenty-five-year-old subsidizes the sixty-year-old with heart disease or diabetes are coming to an end. “The main effect of putting more of it on the consumer is to reduce the social redistributive element of insurance,” the Stanford economist Victor Fuchs says. Health Savings Accounts are not a variant of universal health care. In their governing assumptions, they are the antithesis of universal health care.

The issue about what to do with the health-care system is sometimes presented as a technical argument about the merits of one kind of coverage over another or as an ideological argument about socialized versus private medicine. It is, instead, about a few very simple questions. Do you think that this kind of redistribution of risk is a good idea? Do you think that people whose genes predispose them to depression or cancer, or whose poverty complicates asthma or diabetes, or who get hit by a drunk driver, or who have to keep their mouths closed because their teeth are rotting ought to bear a greater share of the costs of their health care than those of us who are lucky enough to escape such misfortunes? In the rest of the industrialized world, it is assumed that the more equally and widely the burdens of illness are shared, the better off the population as a whole is likely to be. The reason the United States has forty-five million people without coverage is that its health-care policy is in the hands of people who disagree, and who regard health insurance not as the solution but as the problem.

State's health insurance needs intensive care

State’s health insurance needs intensive care
By David Lazarus
San Francisco Chronicle
Sunday, August 21, 2005

The United States is spending billions of dollars a year — not including the roughly $60 billion annual tab for the war in Iraq — to fight terrorism.

We’re doing this because terrorists hurt people. The especially proficient ones kill people.

But if keeping people out of the hospital (or morgue) is a primary goal of this lavish spending, how do we explain the catastrophe that is the U. S. health care system?

An increasing number of Americans are going without health coverage as our company-sponsored insurance system continues to erode.

Those without insurance, in turn, are skipping visits to doctors and failing to take preventive measures that could keep an illness from becoming debilitating.

These are two of the findings from a report issued last week by the UCLA Center for Health Policy Research. It showed that the number of California adults covered by company-sponsored health plans is steadily falling.

Perhaps even more troubling, spouses and kids of California workers are increasingly losing health insurance as companies cut back on the scope of coverage.

This is California we’re talking about — the wealthiest state in the wealthiest nation on the planet. And our health care system is failing us.

“California’s problems are the problems of the nation,” said Richard Brown, director of the UCLA center and co-author of the newly released study.

“The cost of health care has continued to increase so rapidly it has outstripped by far workers’ increases in salary and the ability of employers to afford it.”

Indeed, companies that once provided health benefits as a routine matter of employee compensation are increasingly offloading costs on workers in the face of double-digit annual price increases.

Average workers, in turn, are increasingly finding it difficult to provide themselves and their families with the coverage they need to ensure well-being.

More than 6 million Californians now lack health insurance. At the national level, the number of uninsured is a staggering 45 million.

That number will only continue to climb as more companies step back from their traditional role as health-insurance provider.

Rick Wagoner, chief exec of General Motors, told shareholders earlier this summer that GM — the nation’s largest private purchaser of health insurance — will spend $5.6 billion this year on health benefits for workers and retirees.

That’s more than the company spends on steel for its vehicles, and translates to an extra cost of $1,500 for every car or truck produced.

“Our $1,500-per-unit health care expense represents a significant disadvantage versus our foreign-based competitors,” Wagoner said. “Left unaddressed, this will make a big difference in our ability to compete in investment, technology and other key contributors to our future success.”

He added: “It is crystal clear that we need to achieve a significant reduction in our health care cost disadvantage and to do so promptly.”

But how do we do that? If universal coverage for all Americans is our goal, and it must be, what’s the use of pouring more money and resources into a system that’s already out of reach of millions of people and breaking the economic backs of employers large and small?

The answer, obviously, is to admit that the employer-based insurance system that came into being during World War II is no longer capable of accommodating the nation’s health care needs.

“It’s time for employers to take a very close look at a single-payer health care system,” said state Sen. Sheila Kuehl, D-Santa Monica. “They need to see that there is a way to control costs while still providing high standards of health care for everyone.”

Kuehl has introduced legislation — SB840 — that would create such a system in California. The bill was approved by the state Senate in May and is now winding its way through the Assembly.

A single-payer system essentially provides health coverage for everyone, based on taxes collected from companies and individuals. There are no extra co- pays or premiums. Anyone can receive treatment from any doctor at any hospital.

“Single-payer is a really good system,” UCLA’s Brown said. “It’s the most effective way to ensure equity and to control health care spending and costs.”

The beauty of Kuehl’s plan is that it would allow California to serve as a proving ground for the rest of the country. Single payer could be introduced and tinkered with here, then rolled out elsewhere.

Canada adopted a similar approach in gradually expanding a single-payer system to all its provinces. It started with Saskatchewan in the 1940s.

The Canadian system isn’t perfect — far from it. Long waits for treatment are a constant complaint.

Nevertheless, nearly two-thirds of Canadians surveyed still give their health care system a grade of A or B, according to poll results released last week.

When was the last time you spoke with a working man or woman who gave similarly high marks to the U.S. health insurance system?

If anything, the experiences of Canada, Britain and other developed nations that have pursued single-payer systems can show the United States both what works and what doesn’t in shaping a program to meet this country’s needs.

Whatever else, the UCLA study shows that if we don’t do something soon to remedy things, more Americans will go without coverage with each passing year.

“I think we’re finally getting to a point where a significant portion of the business community will stand up and say that it can’t take it anymore,” said Brown. “Maybe that’s when we’ll see something get done.”

David Lazarus’ column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU’s “Mornings on 2.” Send tips or feedback to dlazarus@sfchronicle.com.

Time for a healthy divorce from employment

Time for a healthy divorce from employment
By Dr. Susanne King
Berkshire Eagle
Tuesday, August 23, 2005

LENOX – “Employers bracing for health bills” cried the headline in The Berkshire Eagle earlier this month. For the past five years, employee health plan costs in Berkshire County and elsewhere have been rising at double digit rates, and the same is predicted for the coming year. For some small business owners, the rate of rise in health insurance prices has been even steeper. A friend who is a self-insured small business woman told me her insurance tripled over the past five years. She said if her premiums continue to rise, she will be unable to afford health insurance.

Cities and towns have also been struggling to pay for health care for municipal employees, which has led to conflict. Unable to afford the rising cost of health insurance, cities and towns are asking their employees to pay for a greater percentage of the cost of their health care. Property owners are affected as well, since property taxes must be increased to pay for health insurance for municipal employees.

The New York Times reported last year that “health premiums are sapping corporate balance sheets even more than the rising cost of energy.”

*

Take the case of General Motors. In 2003, GM’s cost to build a midsize car in the United States included $1,400 for health insurance. However, in Canada, GM was able to manufacture a car for $1,400 less than in the U.S. because Canada has a single payer national health insurance program rather than private insurance tied to employment.

Single payer means that the government collects and dispenses health care funds. In other words, the government is the “single payer” and insurance companies are eliminated. Canada’s single payer, national health care system covers everyone regardless of employment. In a single payer system, huge savings occur because administrative expenses are approximately 3 percent compared to 39 percent when hundreds of American insurance companies are involved. Single payer health care would be like our current Medicare system, except everyone would be covered, regardless of age.

A joint letter signed by the top executives of the Big Three automakers (GM, Ford, and Daimler/ Chrysler) in Canada, said that in addition to providing “essential and affordable health services for all” single payer “significantly reduces total labor costs compared to the cost of equivalent private insurance services purchased by U.S. -based automakers,” and “has been an important ingredient in the success of Canada’s most important export industry (automobiles).”

Canadian national health insurance saved Canadian automakers $4 per hour per worker in 2003 (in U.S. dollars). “High health care costs have created a competitive gap that’s driving investment decisions away from the U.S.,” said the vice chairman at Ford.

Our economy is hurting. In 2003, General Motors spent $4.5 billion on health care, Ford spent $2.8 billion, and Daimler/Chrysler spent $1.4 billion. Every business, big or small, is hurting. Meanwhile, the number of workers insured by their employers is shrinking, and the remaining insured workers are being asked to contribute more to their health care costs, sharing premium costs and having higher deductibles and co-pays.

Employees are hurting. The employer-based private health insurance system in the United States is an unhealthy marriage between employers and private insurance companies. Our system was created after World War II, when wages were frozen, and health care benefits were provided instead of raising wages.

This system has lumbered along, getting more and more unwieldy and expensive, dragging down the competitiveness of our country in a global economy, while workers in every other industrialized nation have national health insurance administered by their governments.

Private health insurance companies are responsible for this unhealthy marriage in our country, which spends twice as much for health care as any country in the world, and yet has poorer health care outcomes than other industrialized countries. What has developed is a system in which our struggling businesses and towns subsidize the profits of insurance companies and drug companies.

In order to maintain their enormous profits, these companies raise the specter of “socialized medicine,” with visions of lines and inferior care. But single payer is not socialized medicine, because health care itself would be provided by privately-owned hospitals and doctors’ offices. The only change would be in the funding and administering of health care by a “single payer” (the government), rather than the current hundreds of insurance payers. The government already pays for more than 60 percent of health care, including Medicaid, Medicare, and the Veterans Administration health care system, as well as paying for public employees’ private health care coverage and giving tax subsidies to private insurance companies.

Government health care spending will increase with the boondoggle that is coming with the privatization of the prescription benefit for Medicare. Why not eliminate the middle men, and use the public funds that are now going through private insurers to actually fund public coverage? Massachusetts has everything to gain by embracing single payer health care.

If towns did not have to subsidize health insurance and drug company profits by paying for health care coverage for employees, they could focus on paying for education, which has suffered from cutbacks in funding because of rising health care costs. And how many business owners and employees matched the salary and benefits of the not-for-profit Massachusetts Blue Cross Blue Shield CEO in 2002, who made more than $3 million?

Automakers have moved manufacturing to Canada, where they take advantage of the single payer national health care system to increase their profits. If we were to have single payer health care in Massachusetts, our system would be an incentive for businesses to move to our state, where the costs of doing business would be lower. What would you save in your business if you did not have to pay for health care insurance premiums for your employees?

*

Now is the time to legislate a new system that will divorce health insurance from employment. There are four bills addressing health care reform in the Massachusetts legislature. Only one bill, the single payer Massachusetts Health Care Trust, S. 755, would free businesses, workers and our economy from this tyrannical alliance of health care insurance and employment.

S. 755 is also the only universal and affordable bill. Now is the time to legislate a single payer health care system for our state.

Healthcare is Migrating South of the Border (LA Times)

Healthcare Is Migrating South of the Border
California employers are steering Latinos to Mexico, where care is less costly but uneven
By Richard Marosi, Times Staff Writer
Los Angeles Times

TIJUANA — Thousands of Latinos who live near the border are taking advantage of a benefit increasingly offered by their U.S. employers: cheaper healthcare in Mexico.

About 160,000 California workers — farm laborers as well as working–class Latinos employed at hotels, casinos, restaurants and local governments in San Diego and Imperial counties — are getting their annual checkkups and having surgeries through health networks south of the border, insurers say.

The arrangement is cheaper for both employers and employees. In Mexico, healthcare costs are about 40% to 50% lower than in California, freeing some employers to offer services that they couldn’t otherwise afford.

“It’s a win-win situation for me. I’m able to offer it to everybody, and my premiums went way down,” said Mark Holloway, part owner of a department store in Calexico, Calif., who said he couldn’t afford health insurance for his 50 employees until he enrolled them in a cross-border plan.

He said he can sign up several employees, each at about $100 monthly, for about the same price as one employee in a U.S. plan.

Employees enjoy lower premiums and co-payments, typically $5, and the comfort and convenience of describing their aches and pains in Spanish to doctors who, they say, tend to take more time with them.

“The rate is good, the service is good,” said David Ouzan, a city councilman in Calexico, where about a third of the city’s workers use dental and medical clinics in Mexicali, just across the border. “I myself have used dentists in Mexico.”

Still, the trend has generated some misgivings among doctors and consumer advocates north of the border.

Some worry about the quality of care in Mexico and limited regulatory control.

Others say the cross-border plans represent a sad commentary on the limited access that immigrants and the working poor have to treatment in California.

They represent a “positive turn of events for cross-border health coverage … but are another reminder about how sick our health system is in thhe U.S.,” said Dr. Robert K. Ross, president of the California Endowment, a healthcare philanthropy.

Mexico has long been a low-cost alternative for thousands of people — many of them uninsured — who price-hunt among clusters of storeffront clinics and small hospitals in Tijuana and Mexicali for treatment they can’t afford in the States.

And some cross-border health plans have operated since at least the 1950s, when Imperial Valley farmers started offering coverage to migrant workers.

But the emergence in the last five years of cross-border HMOs, which must be licensed by the state of California, signals the growing acceptance of Mexican doctor networks by mainstream employers and insurers in the United States.

HMOs Cover 36,000

So far, three HMOs, two in the U.S. and one in Mexico called SIMNSA, are providing coverage for employees of California companies, covering 36,000 workers and their dependents, according to statistics provided by the insurers. About two-thirds of those employees are covered by the U.S. insurers, Blue Shield of California and Health Net Inc. (Health Net enrollees can access clinics on either side of the border.)

Since 2000, the number of nonagricultural employers in California offering such health plans has jumped from 165 to about 700.

Employee enrollment in farming association-sponsored plans in Mexico is far greater, though, reaching about 124,000, according to the plans. Though these are not HMOs, they rely on networks of Mexican doctors and hospitals.

Enrollees are typically Mexican citizens legally employed at U.S. companies, either living in Mexico or in the U.S. Many earn only $5 to $7 an hour and could not afford U.S.-based plans. But others are Mexican Americans, some of them in executive-level positions.

“Employers are really surprised a bit by the quality, the cleanliness,” said Peter Duncan, a vice president at Blue Shield of California, whose cross-border program is called Access Baja. “Often they had visions of squalor. It isn’t Cedars-Sinai. But they find that the basic quality of care is really there.”

Mexican facilities that are part of HMO networks serving U.S. companies are audited by the HMOs themselves for sanitary conditions, infection control policies and staff training levels, as required by the California Department of Managed Health Care. They are not directly evaluated by state regulators. Physicians must be licensed in Mexico and maintain a good standing in the medical community.

Still, some medical experts are concerned about what they describe as a wide variation in quality south of the border.

Though comparing the two systems, with their differing standards and philosophies, is difficult, doctors on both sides of the border say the Mexican regulatory system is lax, and doctor training not as rigorous as in the U.S.

In Mexico, doctors typically need six years of schooling; in the U.S., a physician’s education can take eight to 11 years, including college, medical school and possibly a residency training program.

“High-quality [healthcare] does exist in many places,” said Dr. Michael Rodriguez, a UCLA professor familiar with the border region, but “sometimes there are places that you’d wonder whether you would want to take a dog for treatment, let alone a person…. My guess and my hope is that HMOs are veery [discriminating] who they work with.”

Some consumer advocates say the audits done by HMOs themselves potentially create a conflict of interest. And they note that when complaints surface, the state may not have the jurisdiction to thoroughly investigate them. Mexican doctors, for instance, are not subject to regulation by the Medical Board of California.

Medical care in Tijuana, however, has generally improved since 1991, when Mother Teresa fell ill there and had to be taken to San Diego for treatment, said Patricia Aubanel, a U.S.-trained cardiologist who has performed heart surgeries in both countries.

Disreputable clinics touting miracle cancer cures or cut-rate cosmetic surgery still draw thousands of Californians, but a cottage industry of modern clinics and hospitals has developed in recent years that treats ailments ranging from colds to heart disease.

Insurers, employers and many border medical experts insist that the Mexican plans offer an acceptable level of care to a population that prefers healthcare in Mexico, even when offered plans in California.

But for some Latinos along the border, any plan is an improvement.

They are more likely to lack heath insurance than any other demographic group, according to the National Hispanic Medical Assn., and one of the draws of these cross-border plans is that they are a bargain.

Monthly premiums average about $100 for individuals and $350 for families in Blue Shield of California’s Access Baja plan. By contrast, the average monthly premium for California HMO plans was $261 for singles and $721 for families, according to a 2004 survey of employers by the California Healthcare Foundation.

Cross-border programs “seem to be fulfilling an important need, providing quality … healthcare services for very specific populations,” said Evaa Moya, executive director of the U.S. section of the U.S.-Mexico Border Health Commission.

Most cross-border enterprises function like California healthcare plans. Enrollees choose a doctor in Mexico for routine care. In emergency or urgent-care situations they can go to the nearest hospital or clinic in California or Mexico.

Participating employers include San Diego County’s landmark Hotel del Coronado, several manufacturing companies and retailers, and local governments such as El Centro’s Central Union High School District.

In Mexico, some medical offices brim with state-of-the-art equipment. Hospital signs direct patients in English and Spanish. Physicians in those offices say many of their colleagues boast degrees and training from top universities in the U.S. and Mexico.

Tijuana’s rapid population growth has fueled a mini-boom in hospital construction, drawing well-trained doctors from Mexico City and the U.S., say experts in both countries.

Technology Compared

Many facilities’ technology is comparable to that in the U.S., said Dr. Jose Hernandez Fujigaki, a U.S.-trained cardiologist who has performed heart surgery in National City, near San Diego, and, for a fraction of the cost, at the hospital he owns in Tijuana, Centro Medico Excel.

“We’re catching up,” said Fujigaki, adding that the Tijuana hospital can handle almost any surgery except skin grafts and organ transplants.

At Excel’s classroom-size main operating room, a horse trainer was recently wheeled in for a hernia operation. Three nurses in crisply pressed hospital garb spent several minutes meticulously assembling the instrument tray.

The team of three doctors made a small incision, inserted a small scope connected to a special camera called a laparoscope and repaired the man’s abdominal wall. Several visitors watched the procedure on television monitors from the observation room overhead.

Dr. Ruben Flores Diaz said the surgery, along with open-heart and other complex procedures, have been performed hundreds of times at Excel.

“This afternoon, he will leave … and a week from now he’ll be back wwith his horses,” said Flores Diaz, a general surgeon.

Excel’s charges are a fraction of those at U.S. hospitals. The daily charge for room and care in Excel’s intensive care unit is about $1,200. At Scripps Clinic, a large hospital in San Diego, the cost is about $4,000.

Personal Touch

Part of what draws patients south of the border is the very different medical culture. In California, some Latino patients say, care takes longer to get and is not rendered with as personal a touch.

These enrollees, who have received healthcare in both countries, say the U.S. system is too bureaucratic and hurries them out the door.

“Over there [in San Diego], we wait for more than half an hour and they just give us a Tylenol,” said cross-border plan member Guadalupe Briseno, who accompanied her 15-year-old son, Jorge, to the Tijuana clinic of Dr. Teresa Figueroa Garcia.

Garcia, 52, a soft-spoken family practitioner, is one of about 73 doctors in Tijuana affiliated with Access Baja.

Garcia, who shares her suite of offices with her husband, an internist, consults with patients in her office before treating them in an adjoining examination room.

She said she sees about seven patients daily. American doctors, by comparison, may see several times that, according to doctors north of the border.

Rosalia Serratos of Brawley, Calif., couldn’t afford insurance before her husband was hired three years ago at an Imperial Valley farm.

In years past, the family would seek treatment only in emergency rooms.

Now, their Access Baja plan enables them to go to Mexicali doctors, and in emergencies, U.S. doctors. The family believes that it can take advantage of the best from both countries.

Earlier this year, Serratos’ 3-year-old son, Saul, almost drowned in a pool accident and had to be airlifted to San Diego.

U.S. doctors, she said, saved her son’s life.

But for routine care she prefers taking him and her 9-year-old daughter to Mexicali, 25 miles away, where she says the clinics have shorter waits and more attentive doctors.

“I like the way they treated my son in San Diego. They never left him alone,” said Serratos, referring to the near-drowning. But for regular care, she added, “I like going to Mexico.”

Jose Rangel, a San Diego construction worker, said finding a good doctor to treat his lower-back pain was a problem in both countries.

In California, he would wait weeks for an appointment that lasted just a few minutes, he said. The doctors, he said, prescribed an assortment of drugs that only temporarily eased the pain.

In Mexico, the first physician he saw took X-rays and recommended surgery, but Rangel didn’t trust him because he didn’t take time to explain why.

“In Mexico, there are bad doctors just like here,” said Rangel, whose wife and two children also visit Mexican physicians. “It’s like everything else. It’s all about getting a good recommendation.”

Rangel ended up seeing Dr. Felipe Tovar Vasquez, a slim, middle-age back specialist for the Access Baja plan who extracted Rangel’s herniated disc and fused two vertebral bones. The operation was so successful that Rangel recommended the same procedure and doctor to his brother.

“I ended up well, thank God. I was walking two days after the surgery,” said Rangel, who can now painlessly hoist cabinets at his current job.

Tovar, a graduate of Mexico City’s prestigious Universidad Nacional Autonoma de Mexico, said Rangel was one of hundreds of people he had helped. His training and skills, he said, are the equal of U.S. doctors’.

The only difference, he said, is “a lot of money.”

Canadian nurses speak out against CMA support of private system

Registered Nurses’ Association of Ontario – Open letter to the Ontario Medical Association

TORONTO, Aug. 17 /CNW/ –

Dr. Gregory Flynn
President
Ontario Medical Association

Jonathan Guss
Chief Executive Officer
Ontario Medical Association

August 17, 2005

Dear physician colleagues,

Ontario nurses have been following the deliberations at the 138th annual meeting of the Canadian Medical Association with much concern. While we were heartened to hear that delegates showed strong support for access to medical care based on need, not ability to pay, we were dismayed that CMA members failed to reject a parallel, investor-driven, for-profit system. The CMA squandered an opportunity to show Canadians that it is committed to continue to put in the time and effort to rebuild and reform our universal, publicly funded and delivered health-care system. That would have shown as much common sense as courageous leadership, and the Registered Nurses’ Association of Ontario would have saluted it. Instead, we are saddened that two-thirds of the delegates rejected a motion calling on doctors to denounce a parallel health-care system as a way to deal with long waiting lists.

As registered nurses working alongside you on the front line of health-care delivery, we are well aware that our system has problems. Evidence and experience from other jurisdictions shows, however, that those problems will only deepen and grow if we increase the role of investor-driven, for-profit health insurance and health delivery in our system. Investor-driven insurance and businesses are already siphoning physicians, nurses, resources and support away from the public system, privileging those who can afford to pay for private health care.

There is little doubt there are those who will benefit by linking profits with illness and suffering. But the most vulnerable people in our community, those who have the least resources and are most likely to need health care, have the most to lose if we allow our single-tier, publicly funded system to be slowly but surely starved of resources and respect. We know that private insurers will “skim” the more profitable cases and burden the public system with chronic and catastrophic care. And anyone who is less than healthy and/or less than wealthy is at risk to receive compromised access to health-care services in a for-profit insurance market. The Canadian Medical Association’s own poll recently showed that 58 per cent of physicians felt that most of their patients will either not qualify or be unable to afford private insurance.

Organizations like the CMA are careful to shun American-style health care, and have turned instead to countries such as Sweden, Britain and Germany for guidance. But this advice ignores the realities of an increasingly integrated North American economy, as well as our formal commitments under NAFTA which may open the door to U.S. corporations if we expand for-profit health care in Canada.

At the same time, the CMA fails to learn from those very jurisdictions it cites. For example, British doctors, representing the National Health Service Consultants’ Association, sent an open letter to the incoming CMA president urging Canadian doctors to “learn from our country’s mistakes and reject private care and other market-style policies.” The letter warns that instead of “saving” public health care, privatization has undermined the National Health Service, raising costs and undermining quality.

Nurses are not interested in protecting the “status quo;” they are unified in their interest to protect the public by strengthening and expanding medicare for all Canadians. As extensive evidence from the Romanow Commission has shown us, the best solution is to “build on our values” by making the public system even more responsive, efficient and accountable to Canadians. Now is the time to accelerate the positive reforms that are taking root with support from a series of Health Accords. These reforms will strengthen public hospitals, community health, access to pharmaceutical drugs, and healthy living. That reform must pick up momentum — boosted by Canada and Ontario’s solid financial performance — but it must serve the needs of all Ontarians, not just those with deep pockets and good health.

Nurses call on their physician colleagues to avoid the mistakes of the past, such as the Saskatchewan MD strike of 1962 that tried to stop the implementation of Saskatchewan’s Medical Care Act — the precursor to medicare. It is unfortunate that four decades later, delegates at this annual meeting have decided not to take a strong stand against for-profit health care, ignoring the will of the vast majority of Canadians. While a parallel, investor-driven system might financially benefit some individual doctors, strengthening the for-profit motive in health care will fray our social fabric and jeopardize quality health care.

As the CMA conference wraps up today, we ask the Ontario Medical Association to show some leadership by taking a strong stand against that which would weaken our health-care system — private health insurance, two-tier, cheque-book medicine — and a strong stand for what will improve it: accelerated health-care reform that improves the quality and access of our health care while strengthening Canadians’ confidence in it.

Respectfully,

(signed)
Joan Lesmond, RN, BScN, MSN
President

(signed)
Doris Grinspun, RN, MSN, PhD (cand), O.Ont.
Executive Director

Cc:
Dr. Ruth Collins-Nakai, President of the Canadian Medical Association
Hon. Dalton McGuinty, Premier of Ontario
Rt. Hon. Paul Martin, Prime Minister of Canada
Hon. George Smitherman, Ontario Minister of Health and Long-Term Care
Hon. Ujjal Dosanjh, Minister of Health
Dr. Deborah Tamlyn, President of the Canadian Nurses Association

For further information: please contact: Sine MacKinnon, Director of Communications, Registered Nurses’ Association of Ontario, Phone: (416) 599-1925, 1-800-268-7199 ext. 209, Cell: (416) 829-6657, smackinnon@rnao.org

http://www.newswire.ca/en/releases/archive/August2005/17/c0949.html

State’s health insurance needs intensive care

State’s health insurance needs intensive care
By David Lazarus
San Francisco Chronicle
Sunday, August 21, 2005

The United States is spending billions of dollars a year — not including the roughly $60 billion annual tab for the war in Iraq — to fight terrorism.

We’re doing this because terrorists hurt people. The especially proficient ones kill people.

But if keeping people out of the hospital (or morgue) is a primary goal of this lavish spending, how do we explain the catastrophe that is the U. S. health care system?

An increasing number of Americans are going without health coverage as our company-sponsored insurance system continues to erode.

Those without insurance, in turn, are skipping visits to doctors and failing to take preventive measures that could keep an illness from becoming debilitating.

These are two of the findings from a report issued last week by the UCLA Center for Health Policy Research. It showed that the number of California adults covered by company-sponsored health plans is steadily falling.

Perhaps even more troubling, spouses and kids of California workers are increasingly losing health insurance as companies cut back on the scope of coverage.

This is California we’re talking about — the wealthiest state in the wealthiest nation on the planet. And our health care system is failing us.

“California’s problems are the problems of the nation,” said Richard Brown, director of the UCLA center and co-author of the newly released study.

“The cost of health care has continued to increase so rapidly it has outstripped by far workers’ increases in salary and the ability of employers to afford it.”

Indeed, companies that once provided health benefits as a routine matter of employee compensation are increasingly offloading costs on workers in the face of double-digit annual price increases.

Average workers, in turn, are increasingly finding it difficult to provide themselves and their families with the coverage they need to ensure well-being.

More than 6 million Californians now lack health insurance. At the national level, the number of uninsured is a staggering 45 million.

That number will only continue to climb as more companies step back from their traditional role as health-insurance provider.

Rick Wagoner, chief exec of General Motors, told shareholders earlier this summer that GM — the nation’s largest private purchaser of health insurance — will spend $5.6 billion this year on health benefits for workers and retirees.

That’s more than the company spends on steel for its vehicles, and translates to an extra cost of $1,500 for every car or truck produced.

“Our $1,500-per-unit health care expense represents a significant disadvantage versus our foreign-based competitors,” Wagoner said. “Left unaddressed, this will make a big difference in our ability to compete in investment, technology and other key contributors to our future success.”

He added: “It is crystal clear that we need to achieve a significant reduction in our health care cost disadvantage and to do so promptly.”

But how do we do that? If universal coverage for all Americans is our goal, and it must be, what’s the use of pouring more money and resources into a system that’s already out of reach of millions of people and breaking the economic backs of employers large and small?

The answer, obviously, is to admit that the employer-based insurance system that came into being during World War II is no longer capable of accommodating the nation’s health care needs.

“It’s time for employers to take a very close look at a single-payer health care system,” said state Sen. Sheila Kuehl, D-Santa Monica. “They need to see that there is a way to control costs while still providing high standards of health care for everyone.”

Kuehl has introduced legislation — SB840 — that would create such a system in California. The bill was approved by the state Senate in May and is now winding its way through the Assembly.

A single-payer system essentially provides health coverage for everyone, based on taxes collected from companies and individuals. There are no extra co- pays or premiums. Anyone can receive treatment from any doctor at any hospital.

“Single-payer is a really good system,” UCLA’s Brown said. “It’s the most effective way to ensure equity and to control health care spending and costs.”

The beauty of Kuehl’s plan is that it would allow California to serve as a proving ground for the rest of the country. Single payer could be introduced and tinkered with here, then rolled out elsewhere.

Canada adopted a similar approach in gradually expanding a single-payer system to all its provinces. It started with Saskatchewan in the 1940s.

The Canadian system isn’t perfect — far from it. Long waits for treatment are a constant complaint.

Nevertheless, nearly two-thirds of Canadians surveyed still give their health care system a grade of A or B, according to poll results released last week.

When was the last time you spoke with a working man or woman who gave similarly high marks to the U.S. health insurance system?

If anything, the experiences of Canada, Britain and other developed nations that have pursued single-payer systems can show the United States both what works and what doesn’t in shaping a program to meet this country’s needs.

Whatever else, the UCLA study shows that if we don’t do something soon to remedy things, more Americans will go without coverage with each passing year.

“I think we’re finally getting to a point where a significant portion of the business community will stand up and say that it can’t take it anymore,” said Brown. “Maybe that’s when we’ll see something get done.”

David Lazarus’ column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU’s “Mornings on 2.” Send tips or feedback to dlazarus@sfchronicle.com.

Aetna and the California Medical Association are off target

Cover Yourself!
Op-Ed
By Jack Lewin, M.D. and Ronald Williams
(Dr. Lewin is CEO of the California Medical Association. Mr. Williams is president of Aetna.)
Wall Street Journal
August 19, 2005

With 45 million Americans uninsured, achieving universal access to health care may seem daunting, but it’s not impossible. Encouraging work is underway in California to aid employers who don’t provide insurance to voluntarily expand primary and preventive care, and the innovative coverage options targeting groups such as students and part-time employees show great promise.

Employer-based coverage is beneficial and should be preserved. But the environment is changing and costs are crippling the system. Under an individual-coverage requirement, many more Americans would benefit from the private-sector health care that most enjoy currently in our employer-based system. This would foster the adoption of consumer-directed health plans, which typically include high-deductible plan features. These new plans create greater awareness of health-care costs by providing consumers with better information about available treatment options, including the cost of these services. Consumers then can make the treatment choices that are right for them without the third-party disconnect that divorces the consumer from costs.

With an individual-coverage requirement, people who want more comprehensive coverage and can afford the higher premiums could choose to buy it.

As it is, state legislatures are still mandating costly new benefits for insured persons, destabilizing employer coverage and, as a result, increasing the number of uninsured.

We urge the state legislatures and Congress to approach this debate with an open mind as the access to care debate intensifies. At the very least, let’s study and analyze this concept to determine whether its practical application can work to unite us in our quest to solve the persistent problem of the uninsured.

The status quo is the worst possible strategy. We need a new approach to financing universal access that is more practical and affordable, while still socially responsible and ethical.

http://www.calphys.org/html/editorials01.asp

Comment: Dr. Lewin has long been a passionate advocate of health care coverage for all. He shares with us the frustrations of observing the profound escalation in costs without a commensurate increase in coverage. He is well informed on the options, but is partnering with the private insurance industry the right choice?

This joint op-ed states that “the innovative coverage options targeting groups such as students and part-time employees show great promise.” Great promise? Many of these “innovative” products do not provide even bare-bones coverage, and it should be a criminal act to even imply that they are insurance products.

The op-ed also states that “people who want more comprehensive coverage and can afford the higher premiums could choose to buy it.” With current trends, this equates to a statement that you can qualify for services such as joint replacement only if you are willing and able to pay for coverage. For those who say that joint replacement would be covered, we should ask then what would be left out?

In addition, the op-ed mentions the “third-party disconnect that divorces the consumer from costs.” This is code language for requiring the patient to pay out-of-pocket as a mechanism of relieving the insurance intermediary of its responsibility to insure against loss. That impairs access due to lack of affordability.

The op-ed calls for study and analysis, as long as the solution is a consumer-directed, individual mandate that protects insurers while leaving patients exposed to financial disaster. Although more studies will continue – indefinitely – enough have been completed to draw conclusions about the perversities of this approach. For those who believe that they need more study, I would suggest reading, as a few sources, Health Affairs, Kaiser Daily Health Policy Report, The Commonwealth Fund, Families USA, National Coalition on Health Care, Physicians for a National Health Program, Consumers Union, and a Google search of the issue. Just be careful to separate health policy science from ideology (theirs and ours).

The authors are certainly correct when they state that “we need a new approach to financing universal access that is more practical and affordable, while still socially responsible and ethical.” We are already spending enough to do that, but, sadly, their model is not socially responsible.

Employer-sponsored HMOs signal financial disaster

Health Benefits May Cost 12% More
By Kristen Hallam
Hartford Courant
August 16, 2005

American companies may have to pay an average of 12.6 percent more for their employees’ health insurance next year, according to a survey by Hewitt Associates, a leading benefits consultant.

Humana Inc. plans the largest increase, 23.6 percent, and nonprofit Kaiser Permanente the smallest at 10.4 percent, Hewitt found in a survey of employers. The rates are for health maintenance organizations, plans that cover 20 percent of privately insured Americans.

40 percent of employers are proposing to shift more medical costs to workers in the form of higher deductibles and a larger share of premiums, according to the Hewitt survey.

The Hewitt data suggest that employers’ health costs next year may climb at almost five times the U.S. inflation rate.

WellPoint Inc., the biggest U.S. provider of health insurance, is planning an average rate increase of 16.7 percent for employers, the Hewitt survey found.

CIGNA Corp., whose health insurance operations are based in Bloomfield, said earlier this month that about 80 percent of requests from employers are for information about plans that shift a bigger share of costs to workers. CIGNA plans to raise premiums 12.3 percent, the Hewitt survey found.

“You do double-digit increases year over year over year, and we’re now looking at costs of health care going up 80 percent in the last six years,”
said Paul Harris, senior health strategist at Hewitt.

http://www.courant.com/business/hc-insurancerates.artaug16,0,2934551.story?coll=hc-headlines-business

Comment: Although this report is limited to the costs of employer-sponsored HMOs, it is particularly relevant for two reasons. HMOs are designed to provide comprehensive health care services, at least in theory, so HMO premiums reflect more closely the true costs of comprehensive health services than do PPO plans which require greater cost sharing while providing fewer benefits. The other reason that this report is especially relevant is that it reflects pricing resulting from employer/insurer negotiations and therefore represents the lowest premiums attainable for comprehensive coverage, typically about 30% lower than the individual market for comparable benefits.

Our current system of funding health care has placed America’s employers in the front seat in controlling health care cost escalation. But they’re driving us off a cliff!

It’s really not the employers’ fault. They have little control over the structural flaws that are resulting in the outrageous increases in health care costs. It will take a unified system of funding care to bring the system under control. Only then could we hope to effectively tackle problems such as those demonstrated by Wennberg (regional excesses in high-tech capacity) and Starfield (lack of an adequate primary care infrastructure that would improve quality while reducing costs). Only then would we have true monopsonistic power (single purchaser) to demand value for our health care investment (a beneficent power as long as it is our own public monopsony).

General Motors, as the largest private purchaser of health benefits, recognizes that they cannot stop a system headed toward a cliff, and that we need a “national solution.” Imagine what we could do with the nearly $2 trillion we are spending on health care if only we had a rational, national program of health insurance. Comprehensive, high quality care for everyone:
it doesn’t have to be just a dream.

National health-insurance bill backed

Measure calls for public financing
By Paul Wilson
pawilson@courier-journal.com
The (Louisville) Courier-Journal
Wednesday, August 17, 2005

The director of the Louisville Metro Health Department and others called last night for single-payer health insurance — described as Medicare for everyone — to ensure quality medical care for all Americans.

“Health care is about life and death, and it should not be driven by market factors,” said Dr. Adewale Troutman, speaking to about 15 people at a community forum at the Braden Center, 3208 W. Broadway.

“This is an issue of human rights and social justice,” he added. Troutman said that more than 40 million Americans have no health insurance — and that millions more are underinsured.

Troutman was joined by Dr. Garrett Adams, president of Kentucky’s Physicians for a National Health Care Program, and Kay Tillow, coordinator of Kentuckians for Single Payer Health Insurance, in support of legislation introduced this year by U.S. Rep. John Conyers, D-Mich., that would make health care “publicly financed but privately delivered.”

Under Conyers’ bill, health care would be administered by the federal government, not by insurance companies, which Adams described as parasites on U.S. health care.

“As the number of uninsured grows, the number of administrators grow,” Adams said. “Is that right?”

About 50 House members joined Conyers in co-sponsoring the bill.

But U.S. Rep. Anne Northup of Louisville, who represents Kentucky’s 3rd District, said a nationalized health system would bankrupt the country and lower the quality of care.

Critics also say that countries with national health care, such as Canada, drive doctors away, and sometimes require patients to wait years for some procedures.

Troutman dismissed both concerns as unfounded. After hearing the presentation, Ruth Weathers of western Louisville called the single-payer idea “superb.”

She said her husband died when she was 40 — 25 years before she was eligible for health insurance from Medicare.

No longer covered by her husband’s insurance, Weathers worked two part-time jobs to pay for medical coverage.

But she wondered about the chances of Conyers’ legislation passing.

“It’s possible, but probable?” Weathers asked.

“We’ve got a long way to go, especially with this government that’s more concerned with haves than have-nots.”

Celebrate New York's victory, but get back to work!

N.Y. Council Backs Benefits Bill
By Amy Joyce
The Washington Post
August 18, 2005

The New York City Council yesterday passed a measure requiring most stores that sell groceries to provide a set level of health care coverage for their workers in a move aimed at forcing companies such as Whole Foods Market Inc. and Wal-Mart Stores Inc. to change their labor practices.

In New York, 46 of the council’s 51 members voted in favor of the bill, with one member against it. It would require any grocery store with 35 or more employees or other retail stores with 10,000 square feet or more of floor space for food items to contribute $2.50 to $3 for health care for each hour an employee works. That is the average amount that employers in the New York grocery industry that provide health care currently contribute.

Mayor Michael R. Bloomberg (Rep) is expected to veto the measure. It takes 34 votes to override a mayoral veto.

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/17/AR2005081701892.html

Comment: The New York City Council should be commended for passing this beneficial measure. Advocates of incremental reform can chalk this one up as a significant victory. Any measure that expands health care coverage should receive the support of all of us.

Although this measure is a definite step forward, it does fall far short of what needs to be done. Perhaps the most important failure is that 90% of the uninsured in New York City will not benefit from this measure. Much more must be done to achieve the goal of universal coverage.

Another important issue is that New York has a regulatory and legislative environment that has required insurers to offer products that are readily available and relatively effective in providing financial security for those with health care needs. This means that insurance premiums are very high in New York because those with needs are included in the insurance risk pools.

Because of our fragmented system of funding health care, New York has little control over escalating global health care costs. Affordability is a major concern to all payers, yet New York and the rest of the nation can do little about it since our fragmented system has relied largely on market forces to control costs. Sadly, the U.S. experiment in private coverage has proven that market forces in health care are not only ineffective, but they have been quite perverse. A strong regulatory environment dampens the perversities, but still falls far short on equity, access, universality, efficiency and the camel-back-breaking straw – affordability.

We need a system that provides mechanisms of containing costs and ensuring that we are receiving quality and value for our health care investment. We need a system that provides access and coverage for everyone. We need a system that is funded equitably. Incremental tweaks of our fragmented system, no matter how beneficial they are, will never get us there. We really do need a single payer system.

Celebrate New York’s victory, but get back to work!

N.Y. Council Backs Benefits Bill
By Amy Joyce
The Washington Post
August 18, 2005

The New York City Council yesterday passed a measure requiring most stores that sell groceries to provide a set level of health care coverage for their workers in a move aimed at forcing companies such as Whole Foods Market Inc. and Wal-Mart Stores Inc. to change their labor practices.

In New York, 46 of the council’s 51 members voted in favor of the bill, with one member against it. It would require any grocery store with 35 or more employees or other retail stores with 10,000 square feet or more of floor space for food items to contribute $2.50 to $3 for health care for each hour an employee works. That is the average amount that employers in the New York grocery industry that provide health care currently contribute.

Mayor Michael R. Bloomberg (Rep) is expected to veto the measure. It takes 34 votes to override a mayoral veto.

http://www.washingtonpost.com/wp-dyn/content/article/2005/08/17/AR2005081701892.html

Comment: The New York City Council should be commended for passing this beneficial measure. Advocates of incremental reform can chalk this one up as a significant victory. Any measure that expands health care coverage should receive the support of all of us.

Although this measure is a definite step forward, it does fall far short of what needs to be done. Perhaps the most important failure is that 90% of the uninsured in New York City will not benefit from this measure. Much more must be done to achieve the goal of universal coverage.

Another important issue is that New York has a regulatory and legislative environment that has required insurers to offer products that are readily available and relatively effective in providing financial security for those with health care needs. This means that insurance premiums are very high in New York because those with needs are included in the insurance risk pools.

Because of our fragmented system of funding health care, New York has little control over escalating global health care costs. Affordability is a major concern to all payers, yet New York and the rest of the nation can do little about it since our fragmented system has relied largely on market forces to control costs. Sadly, the U.S. experiment in private coverage has proven that market forces in health care are not only ineffective, but they have been quite perverse. A strong regulatory environment dampens the perversities, but still falls far short on equity, access, universality, efficiency and the camel-back-breaking straw – affordability.

We need a system that provides mechanisms of containing costs and ensuring that we are receiving quality and value for our health care investment. We need a system that provides access and coverage for everyone. We need a system that is funded equitably. Incremental tweaks of our fragmented system, no matter how beneficial they are, will never get us there. We really do need a single payer system.