PNHP

Op-Ed: Privatize NHS?

Op-Ed: Privatize NHS?

By Colin Leys Allyson Pollock
Tuesday, May 3, 2005
Globe and Mail Update

Living next door to the United States, where half of all personal bankruptcies are caused by medical expenses, Canadians know what a market in health care implies. The Canada Health Act, giving comprehensive and equal coverage to all, was modelled on European, and especially British, principles. And because it effectively bans for-profit hospitals, it gives all Canadians, including the affluent, an incentive to support Canada’s public system. The system has its flaws and imperfections, like everywhere else, but polls consistently show that the vast majority of Canadians value it highly and will defend it.

So no wonder Canadians are astonished that Britain should succumb to pressure from the U.S. government and corporations and turn the much-loved British National Health Service (NHS) into a laboratory for privatization.

For the (mainly U.S.) global health-care industry, Britain posed the ultimate challenge – how to privatize a system that was still mainly under public ownership and control, with strong political accountability. The first breakthrough was into the physical plant and infrastructure.

Back in 1948, all hospitals and most clinics were taken into public ownership. Now, through public-private partnerships (PPPs), public buildings and assets are being transferred to an unaccountable private sector. Instead of building new ones with money borrowed cheaply by the government, the British are building hospitals with money borrowed more expensively by private companies, for which the public nonetheless pays, by leasing back the buildings over 30 years.

The New Labour government of Tony Blair represents this as “extra” investment, money that would not otherwise be available, but its own backbenchers have described it as going to a loan shark. Media commentators have called it mortgaging your future – and your children’s and grandchildren’s.

Emotive stuff – but then the issues are emotive. The impact of financing PPPs, with their heavy extra costs, has been like that of a killer plague, highly contagious and catastrophic. The first wave of PPP hospital schemes required average reductions of 30 per cent in bed numbers as well as 25-per-cent reductions in nursing staff – in order to meet the extra financing costs out of the hospitals’ operating budgets.

The next stage is the privatization of clinical services. The companies bidding for PPPs are teaming up with health-care transnationals to provide clinical services – mainly routine elective surgery (such as cataracts and hip replacements), and diagnostics and radiology. Like all market actors, they operate by selecting the most profitable treatments and patients. This is why routine elective surgery is the first thing to be put into the marketplace.

There is already huge unease about the consequences. Doctors and nurses and other health professionals are beginning to mobilize against the growing role of health-care transnationals. Last month, 95 per cent of the surgeons attending the annual conference of the Association of Surgeons of Great Britain and Ireland opposed privatization and voted for expansion to take place only within the NHS. In their view, the privatization of elective surgery was already adversely affecting the quality of surgery, training standards and access.

Netcare, a large South African company now treating NHS patients, has been found to be turning away 20 per cent of the patients referred to it because of the risk they posed – cherry-picking twice over. Even so, Netcare’s complication rate is higher than that of NHS hospitals, prompting concerns about standards and quality of care.

The implications for future standards are even more serious, because the private companies don’t pay for training. Their profitability depends on operating as fast as possible on “quick and easy” cases – precisely those that trainee doctors need to train on, but which will be seen less and less in NHS hospitals.

There are major concerns, too, about costs – the private companies get five-year contracts for a guaranteed number of patients at a price per treatment 40-per-cent higher than the NHS price, and are paid regardless of how many are actually treated. Recent reports show that that they won’t achieve their contracted numbers.

The privatization of routine elective surgery is a prelude to the creation of a full health-care market, to be regulated by an independent regulator on the basis of purely financial criteria (a banker has already been appointed to the job). The present government envisages private companies providing a steadily growing share of clinical services. The U.S. health-care industry is working hard to see that future governments go further still. For example, Tony Blair’s senior health-policy adviser, and the architect of many of New Labour’s pro-market health policies, quit last year to join United Healthcare, a major U.S. HMO, as president of its European subsidiary, with a mandate to break into Europe’s publicly-financed health-care systems.

British voters are broadly opposed to the privatization policies being imposed on the NHS, but they can’t register this electorally so long as the leadership of both major parties is in thrall to business-school ideology. Canadians should learn from Britain and not let their health-care system be hijacked in the same way.

Colin Leys is emeritus professor of political studies at Queen’s University and an honorary senior research fellow at University College, London. He is the author of Market Driven Politics: Neoliberal Democracy and The Public Interest. Allyson Pollock, a physician, is director of research and development at University College Hospitals Trust, London, and professor of health policy at University College, London. She is the author of NHS plc: The Privatisation of Our Health Care.

Does insurance make health care affordable?

Health Insurance: Can Californians Afford It?
California HealthCare Foundation
May 3, 2005

For minimum-wage workers and the chronically ill, the cost of health insurance is increasingly unaffordable and may not be providing the financial protection for which it is intended, according to Health Insurance: Can Californians Afford It?, a new analysis from the California HealthCare foundation (CHCF). The snapshot of health insurance costs reveals, however, that the issue of affordability is not isolated to those groups.

“We have to consider that these worrisome affordability figures may be a sign of things to come for a greater number of Californians,” said Mark D. Smith, M.D., M.B.A., president and CEO of CHCF.

The snapshot compares health insurance premiums and out-of-pocket expenses to hourly wages and household spending across California and within six local markets: Fresno, Los Angeles, Sacramento, San Diego, San Francisco, and Shasta. The results show the significant financial pressure health care costs are putting on insured Californians.

“… we should recognize that even for those Californians who are insured, it can be a struggle to pay their share of premiums and out-of-pocket expenses. If health insurance becomes unaffordable, this will increase the numbers of uninsured Californians,” (said Dr. Smith).

Press release:
http://www.chcf.org/press/view.cfm?itemID=110808&archive=2005

The report (22 slides):
http://www.chcf.org/documents/insurance/HealthInsuranceAffordability.pdf

Comment: Some important numbers from the report:

The premium for Blue Cross or Blue Shield plans with more limited benefits and higher cost sharing is 66% of the entire income of minimum wage employees (or 77% if standard higher option plans were selected).

For employees with median wages, the median premium is 14% (PPO) to 17% (HMO) of wages.

For small group coverage, the employee’s contribution to the premium plus the out-of-pocket payments for a moderate PPO plan is $370 for the healthy but $5304 for the chronically ill. For limited PPO individual coverage, the premiums paid plus out-of-pocket expenses are $1128 for the healthy and $11,556 for the chronically ill. For an after tax income of $29,458, that means that the chronically ill would be paying 39% of income for this coverage.

Because of the obvious concerns about the uninsured, most efforts at reform today are directed toward patching together coverage by expanding our existing, fragmented system. But this is yet one more report that should make us question the wisdom of continuing on this path of pseudo-reform.

We are paying the insurance industry a couple hundred billion dollars to design insurance plans for us. But the plans they have produced protect their own industry from loss by passing financial risk on to those who most need the protection. This defeats the traditional concept of insurance: pooling funds to provide a source of payment for specified losses, in this case the cost of medical care. And at today’s cost of health care, such financial protection has become essential for all but the very wealthy.

What is ironic is that we do not have a lack of funds to pay for health care. The $1.9 trillion that we are already spending is enough to provide comprehensive health care services for everyone. But we are diverting a significant portion of these funds to an insurance industry that has proven that it cannot competently provide financial protection for those with significant needs. And it continues to get worse.

We would never tolerate that level of incompetence and waste in a government bureaucracy. So maybe it is time to establish our own governmental insurance bureaucracy. At least we’ll be in a position to demand, as voting taxpayers, that health care dollars be spent on health care.

Shifting from co-payments to coinsurance

Firms passing on cost of care
By Marguerite Higgins
The Washington Times
May 3, 2005

… out-of-pocket costs, which jumped 9 percent for workers at large companies last year, are expected to continue rising as businesses shift more of the health care costs onto their workers.

The cost shifting signals that insured consumers probably will see more co-payment plans, in which patients pay a set price for doctor and hospital visits, change to plans in which patients pay a percentage of the total cost of the visit, said David Guilmette, a managing director at Towers Perrin.

http://www.washtimes.com/business/20050502-094124-1088r.htm

Comment: Is there any significant difference between a patient paying out-of-pocket a $25 co-payment or 20% coinsurance?

For illustration purposes, let’s compare the impact of a plan that has a $25 co-payment for a physician visit and $250 for hospitalization, with a plan that has 20% coinsurance for both physician and hospital services.

Let’s assume that a patient visits his or her physician and that hospitalization is recommended. The total allowed charges are $43,000 (even though itemized charges before insurance discounts are applied might be $117,000). The patient with the co-payment plan pays $25 plus $250 for a total of $275. The patient with the coinsurance plan pays 20% of $43,000 for a total of $8600. Thus the simple measure of changing from co-payments to coinsurance in this case results in a 3100% increase in out-of-pocket expenses!

But wait, there’s more! Another trend today is to shift to high-deductible plans. Using the same examples, let’s assume that the co-payment plan has a deductible of $250, and the coinsurance plan has a deductible of $5000. With the co-payment plan, the deductible has been met by the co-payments and so the out-of-pocket cost is still $275. With the coinsurance plan, the patient must pay 20% of the amount over the deductible, which is $7600, plus 100% of the deductible, which is $5000, for a total out-of-pocket expense of $12,600, or a 4600% increase in out-of-pocket expenses. Innumerable studies have confirmed that out-of-pocket expenses of much less than this magnitude impair access to care and impair health outcomes, the opposite of what a rational health care system should be supporting.

Buried in this example is a number that really does make a difference. By contracting, charges were reduced by $74,000. That number simply disappeared; no funds changed hands. Was that the right amount to adjust off? Because of all of the cost shifting that is taking place, it’s not clear. But with our own publicly funded and publicly administered system, we’ll eliminate cost shifting and we’ll get that number right. That will represent the degree of savings that our policies should be aiming for. Then we can dispense with diddling around with the institution of individual financial barriers that impair outcomes and concentrate on the more important task of ensuring access for everyone who does need care.

New York Universal Health Care Options Campaign

For release May 2, 2005

Contacts:
Mark Dunlea, Hunger Action Network, 518 434-7371
Physicians for a National Health Program – Capital District, PaulSorum@cs.com

New York Universal Health Care Options Campaign

Assembly Health Committee to Vote this Week on Universal Health Coverage Commission

Senate Republican Introduces Similar Proposal

ALBANY, NY � Members of the New York Universal Health Care Options Campaign praised recent actions in the Assembly and Senate to expand quality, affordable health care to all New Yorkers through the creation of a Legislative Commission on Health Care Coverage.

On Tuesday, the New York State Assembly Health Committee is expected to approve a Commission proposal (A6575) introduced by Assemblymember Richard Gottfried (D � Manhattan) and endorsed by forty other Assemblymembers. A related Commission bill (S4928) has been introduced by Senator Marchi (R � Staten Island).

Five years ago, the Assembly and Senate created Family Health Plus, covering over 450,000 low-income working families in New York. Last month, the General Assembly in neighboring Vermont passed a universal health care-oriented proposal dubbed �Green Mountain Health.� Earlier this year, Maine�s landmark �Dirigo� health plan took effect, providing affordable coverage to thousands of uninsured residents. Last year, Illinois passed its �Health Care Justice Act� setting underway a two-year process of public debate of health care reform, and earlier this decade, California�s �Health Care Options Project� stimulated renewed Legislative action to expand health insurance coverage.

�The recently-adopted state budget state established a new �Commission on Health Care Facilities in the 21st Century�, and charged it with making recommendations for �right-sizing� the state�s health care delivery system,� said Mark Dunlea, Associate Director of the Hunger Action Network of New York State. �What�s also needed now is a complementary process to look at the insurance side of the equation so that New Yorkers not only have places to go for quality services, but also a way to afford them.�

Many policymakers acknowledge that resolving the problem of lack of insurance is critical to the success of restructuring New York�s health care system. Many of the hospitals with the biggest financial problems are those serving the poorest communities with the highest number of uninsured patients.

Every year, 18,000 Americans die prematurely because they don�t have health insurance, according to a comprehensive report by the National Academy of Sciences� Institute of Medicine. Since they receive inadequate health care and their major illnesses are diagnosed too late, the uninsured become sicker and die sooner. For instance, uninsured women with breast cancer have a 30 to 50 percent higher risk of dying than women with health insurance.

The current system for providing medical care to the uninsured drives up healthcare costs for everyone else. When the uninsured do receive care, it is often at hospital emergency rooms and urgent care clinics�costly and inefficient places to provide primary care. Nationwide, facilities that treat the uninsured provide nearly $100 billion in healthcare services each year. To pay for unreimbursed costs, these facilities have to increase costs to public and private insurance programs, driving up rates for everyone.

Assemblyman Gottfried�s legislative commission bill, currently with 40 sponsors, calls for a series of statewide hearings, independent cost-benefit studies of various public and private sector-based approaches to providing health care to all of New York residents, and would also examine how to control health insurance costs for small businesses and the self-employed. Senator Marchi�s bill is less specific and calls for a legislative commission to assess the extent of uninsurance in the state and to develop proposals for the state to conform to provisions of Section 3 of Article 17 of the state constitution. Both the Assembly and Senate Commission bills would allocate $500,000 for the work of a commission.

�Health insurance costs are too big a crisis for too many New Yorkers, businesses, churches, school districts, and local governments for the Legislature to avoid any longer coming up with comprehensive, cost-effective solutions, added Lou Levitt, Co-convenor of Rekindling Reform. �Passing an on-time budget for the first time in two decades is merely the first step in reforming the Legislature�s operations � now it�s time to take up important policy matters, like how to best assure good health coverage to all New Yorkers. There are workable commission bills introduced by majority members in each house, and we urge leaders to now resolve any differences and move a shared bill forward before they adjourn for the year.�

Assemblyman Gottfried�s commission proposal has previously been endorsed by more than 250 organizations, including the NYS Nurses Association, NYPIRG, Physicians for a National Health Program (NY Metro), Rekindling Reform, Hunger Action Network of NYS, 1199 SEIU, Housing Works, Capital District Area Labor Federation, Community Service Society, American Medical Student Association (Albany Med and Cornell), Rochester Interfaith Health Coalition, ES2, SENSES, NASW NYS, UJA Federation of NY, Federation of Protestant Welfare Agencies, Public Health Association of NYC, Professional Staff Congress (CUNY), Congress of Senior Citizens, Metro NY Health Care for All Campaign, Western NY Health Care Campaign, NYS Health Care Campaign, Citizen Action, and SCAA.

Covering the uninsured through compromise?

kaisernetwork.org
HealthCast
Cover the Uninsured Week National Launch Event Robert Wood Johnson Foundation and other organizations
4/27/2005

Risa Lavizzo-Mourey, M.D., MBA, president and CEO, Robert Wood Johnson
Foundation:

Our country desperately needs less partisanship and more compromise for its coming to real solutions on this important issue… We wish that more leaders would follow the example of Senators Wyden and Hatch and put aside their preconceived notions about what healthcare reform should look like and come together in the spirit of compromise rising above the partisanship and making compromise the first choice, not the last resort.

There is no responsible reason not to take action. The mechanisms for securing coverage have been worked out. Millions have been spent on policy studies with the physical implication clearly worked out, forecast by some of our own research by the Institute of Medicine. The tools are on the table.

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1421

Transcript:
http://www.kaisernetwork.org/health_cast/uploaded_files/042705_covertheunisured05_transcript.pdf

And…

Critical condition – 6.6 million uninsured in nation’s largest state By Risa Lavizzo-Mourey
San Francisco Chronicle
May 1, 2005

Many of us have our fix, the choice we prefer over all others: tax credits, public programs, business mandates, individual mandates, association health plans, a combination of some or all of these options, or a completely public program like Canada’s.

But every time we get serious about changing the status quo, too many of us stick to our own fix and refuse to budge. The only consensus we reach is that the status quo — the mess we are in — is the least objectionable choice to the most people.

This may sound idealistic, even naive, but something has to give. The mess must be solved. Health care is not a policy, product or political gotcha — it is something everyone needs.

There is no responsible reason for not acting. The main thing we are missing is leadership.

Accepting the status quo isn’t an alternative. The number of uninsured Americans is too large. The number of people at risk of losing their coverage is too great. The consequences of inaction for everyone are too serious.

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2005/05/01/INGCGCFQK81.DTL

Comment: Compromise? Compromise what with what?

Do we cover everyone with health insurance? If not, who do we leave out?

Do we cover all beneficial services? If not, what do we leave out?

Do we make care affordable for everyone? If not, which people will be denied access to what services because of the lack of affordability?

Do we reduce the waste of profound administrative excesses? If not, what administrative excesses should we continue to use in spite of lack of value?

Do we institute measures to control some of the excessive prices in health care? If not, what goods and services are worthy of pricing in excess of their value?

Do we establish policies to end funding of expensive technological excesses that have been demonstrated to have no benefit or even produce worse outcomes? If not, which detrimental services should be funded?

Do we improve quality and reduce costs by strengthening our deficient primary care infrastructure? If not, which specialists in our fragmented system should we put in charge of coordinating integrated preventive and chronic care services?

The call for compromise is a call to work with all of the tools on the table, placing various patches on our fragmented system of health care. But there is a problem. How do we use that one other tool left on the table once most of the interests have used their favorite fix to cobble together a profoundly expensive and highly deficient health care system?

And what is that other tool? A single, efficient, effective, affordable, universal, comprehensive, national health insurance program. But, of course, that tool has to be discarded because it won’t work. It doesn’t allow for compromise.

A Private Obsession (New York Times)

By Paul Krugman
April 29, 2005

American health care is unique among advanced countries in its heavy reliance on the private sector. It’s also uniquely inefficient. We spend far more per person on health care than any other country, yet many Americans lack health insurance and don’t receive essential care.

This week yet another report emphasized just how bad a job the American system does at providing basic health care. A study by the Robert Wood Johnson Foundation estimates that 20 million working Americans are uninsured; in Texas, which has the worst record, more than 30 percent of the adults under 65 have no insurance.

And lack of insurance leads to inadequate medical attention. Over a 12-month period, 41 percent of the uninsured were unable to see a doctor when needed because of cost; 56 percent had no personal doctor or health care provider.

Our system is desperately in need of reform. Yet it will be very hard to get useful reform, for two reasons: vested interests and ideology.

I’ll have a lot more to say about vested interests and health care in future columns, but let me emphasize one key point: a lot of big companies are essentially in the business of wasting health care resources.

The most striking inefficiency of our health system is our huge medical bureaucracy, which is mainly occupied in trying to get someone else to pay the bills. A good guess is that two million to three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck to other people.

Yet any effort to reduce this waste would hurt powerful, well-organized interests, which have already demonstrated their power to block reform. Remember the “Harry and Louise” ads that doomed the Clinton health plan? The actors may have seemed like regular folks, but the ads were paid for by the Health Insurance Association of America, an industry lobbying group that liked the health care system just the way it was.

But vested interests aren’t the only obstacle to fixing our health care system. We also have a big problem with ideology.

You see, America is ruled by conservatives, and they have a private obsession: they believe that more privatization, not less, is always the answer. And their faith persists even when the evidence clearly points to a private sector gone bad.

I could cite many examples of this obsession at work. But a particularly good illustration of ideology-induced obliviousness is the 2004 Economic Report of the President, which devotes a whole chapter to health care that can be read as a sort of conservative manifesto on the subject.

The main message of that report is that U.S. health care is doing just fine. Never mind the huge expense, the low life expectancy, the high infant mortality; it’s a market-based system, so it must be good.

The report even takes a Panglossian view of uninsured Americans – one that is completely at odds with the grim statistics I cited above – suggesting that “many of them may remain uninsured as a matter of choice,” perhaps because “they are young and healthy and do not see the need for insurance.”

The president’s economists had only one criticism of the system: insurance is too comprehensive, which encourages people to consume too much health care. As they see it, insurance covers too large a percentage of medical costs. The answer to this problem is the creation of, you guessed it, private accounts, which have now superseded tax cuts as the answer to all problems.

Indeed, a new paper by Martin Feldstein of Harvard, which clearly reflects the administration’s views, suggests that Social Security privatization and health savings accounts – tax shelters designed to encourage people to pay medical costs out of their own pockets – are only the beginning. “Investment-based personal accounts,” he says, are the way to go for unemployment insurance and Medicare, too.

O.K., let’s not turn this into a Bush-bashing session. President Bush didn’t cause the crisis in American health care. His health care policies have made things only a little bit worse.

The point, instead, is that even though all the evidence suggests that we would be much better off under a system of universal coverage, any such move will be fiercely opposed, on principle, by conservatives who want us to move in the opposite direction.

And reform will also be opposed by powerful vested interests – my next subject in this series.

E-mail krugman@nytimes.com

Medical costs prove a burden even for some with insurance (USA Today)

By Julie Appleby
April 28, 2005

Think your health insurance has you covered? Think again.

Even insured workers can find themselves on the hook for thousands of dollars, often at a time when illness has decreased their income.Few workers realize the limits of their insurance until the bills start coming for: policies that don’t cover rehabilitation care or limit it to a few visits; expensive drugs that come with a 20% charge, rather than a $20 co-pay; separate deductibles for drugs and medical care; doctors at “in-network” hospitals that aren’t members of the insurer’s network, leaving patients vulnerable to thousands of dollars in bills; annual “out-of-pocket maximums” that aren’t always true ceilings on expenses.

Such costs can quickly add up. A drug co-payment of 20%, for example, could cost thousands a year for patients taking some cancer drugs. Avastin, a colon cancer drug, recently went on the market at a price of more than $4,000 a month. Erbitux, another colon cancer treatment, can cost $12,000 or more for a month’s treatment. Gleevec, for leukemia, is more than $2,000 a month.

That’s the reality for Rita Wirsch, a 55-year-old clerical worker in Hamilton, Ohio, who is struggling to pay off about $10,000 in medical bills that her insurance did not cover. The total added up over four years, bill by bill, in amounts from $25 to more than $400 a pop. Three months on disability pay this year after surgery put her further behind.

“I thank God every day that I have insurance,” says Wirsch. “But there’s a problem in the U.S. for hard-working people.”

And it isn’t likely to change.

More workers are facing larger medical bills as employers increase what they must pay for doctor visits, drugs and hospital care in an effort to control health care costs. Some employers are embracing high-deductible policies — requiring workers to pay $1,000 or more a year in expenses before insurance kicks in. Such policies are also common for the self-employed, who buy their own insurance, because premiums are generally lower.

Shifting more costs to the insured is having ripple effects. Hospitals are collecting more upfront from patients, after being left with bad debt by insured patients who failed to pay their deductibles. Insured patients are also attracting charity efforts: The Patient Advocate Foundation, for example, has a program aimed solely at helping insured patients make the co-payments on their prescription drugs. The group pays up to $2,500 annually toward drug co-payments for qualified patients with four conditions: the eye disease macular degeneration, and cancers of the breast, lung or prostate.

“The fully insured middle-class people who become ill with critical or life-threatening illnesses, it can completely ruin their financial health,” says Beth Darnley, chief program officer for the foundation.

Limits of insurance

Many Americans are not prepared. Whether struggling to meet mortgage costs, college tuition and other expenses — or simply buying all the latest gadgets — few are saving enough to weather unexpected bad times. The personal savings rate, the difference between what people earn and what they spend, fell for the second-straight year in 2004 to the lowest level since 1934.But it isn’t just catastrophic illness or accident that leads to financial stress. For some, ordinary medical problems can lead to seemingly insurmountable bills.

“Families are paying more and more for health insurance that covers them less and less,” says Elizabeth Warren, a Harvard professor and co-author of a recent study of bankruptcy filings in five states. The study concluded that medical bills contributed to half of all personal bankruptcies.

The bills, coupled with a low savings rate for most American families, tip about 1 million into bankruptcy each year, Warren says. The average out-of-pocket medical debt for those who filed is about $12,000, and 68% had health insurance at the time of their bankruptcy filing.

Things might soon get tougher for some families. Federal bankruptcy legislation that goes into effect in six months could require many people to repay all or part of their debts, including medical bills.

Some have questioned the bankruptcy study findings. Greg Scandlen a policy analyst with the Galen Institute, a free-market health care research group, says the definition of medical bankruptcy in the study was so broad that the results are not useful in determining whether medical bills were the main source of families’ financial troubles or a small part.

“I’m not denying at all that there’s a problem out there, but this study doesn’t tell us anything about the dimensions of that problem,” Scandlen said.

Several thousand dollars in charges might not sink a highly paid worker, but the middle class and those on the lower end of the pay scale can find themselves spending a significant share of their income on medical care.

A recent report by the Center for Studying Health System Change found that the proportion of low-income, chronically ill patients who were insured but still spent more than 5% of their income on health costs rose from 28% to 42% from 2001 to 2003. The study defined low income as being below 200% of the poverty line, or about $36,800 for a family of four in 2003.

“Bankruptcy is just the tip of the iceberg: 29 million Americans are in medical debt,” says Jennifer Edwards of the Commonwealth Fund, a private foundation that supports research on health and social issues.

A recent Commonwealth study defined those in medical debt as paying bills to health care providers or having large credit card debt or loans against their homes related to medical costs.

Of those, 70% were insured when they got the health care that put them in debt, and nearly half had used up all or most of their savings, Edwards said.

Stretching to pay bills

As do many families, Wirsch recently tapped her retirement fund to help pay the bills.

She has a good clerical job at a Fortune 500 company, earning nearly $13 an hour. And it comes with insurance: a policy with a $2,000 annual deductible for medical and hospital care. Starting this year, the plan added a separate $2,000 deductible for drugs.

This year, she had to take three months off, living on a reduced income from disability payments, while recovering from surgery.

The surgery bills are now added to what she owes from past medical treatments. Her share of the surgeon’s bill: $480. Bills for physical therapy: $155. Prescription refills: $25 to $40. She takes 14 pills a day for diabetes, fibromyalgia, which is a painful muscle condition, and intestinal problems. She asks for free samples from her doctor to help make ends meet.

She now has $5,800 in credit card debt that she says is all from medical bills. Wirsch says she’s making payments on the card, sometimes $10 a month: “That will take me till I’m 100 to pay off.”

Still, she appreciates her health insurance and knows her employer has paid far more than she has.

“Since I started working there 14 years ago, they’ve probably paid out over $80,000 in medical bills for me,” says Wirsch.

Warren says that many of the people in her study of bankruptcies were dealing with non-catastrophic medical problems.

In her study, one man, who was not named, filed for bankruptcy after hurting his knee in a fall. At first he wasn’t worried because he had insurance, which paid 80% of his hospital and surgeon’s bills. But his coverage left him responsible for physical therapy costs, crutches, braces and all drugs.

“His out-of-pocket expenses ran to $12,000,” says Warren. “It wasn’t medically catastrophic, but it was financially catastrophic.”

For Andrea Talaga, 42, of Bolingbrook, Ill., medical and financial troubles are becoming catastrophic. She filed for Chapter 7 bankruptcy protection in 1992 and says she might have to again.

Talaga, a lab technician at a hospital, says she spends $1,225 a month on her share of prescription drugs for her family. She’s diabetic. Her husband, a security officer at a hospital, has high blood pressure and high cholesterol. Both her sons are asthmatic, and one was just diagnosed with major depression. One son’s asthma medication isn’t covered by her insurance: It costs $225 for a 28-dose pack, and he usually uses two packs a month.

She says her husband’s $40,000 salary covers the mortgage and home expenses. Her $25,000 goes for food and medical costs.

“I can’t not take my insulin. My husband can’t go without his high blood pressure medicine,” she says. “My son definitely cannot go without any of his medicine.”

She recently learned her health plan limits mental-health counseling to 20 visits a year. Her son will soon exhaust those benefits.

“How can you cure someone in 20 days if they have mental health issues as severe as my son’s?”

She doesn’t have a solution.

“I wish my employer would back me up and look at people like us,” she says. “I know they still pay a lot for employees, but in the long run, they aren’t looking at the whole picture.”

An economist clarifies the fundamental issue in reform

Princeton University Office of Community and State Affairs, 2005 Symposium of New Jersey Issues
April 15, 2005
The Unhealthy State of Health Insurance for American Children
Uwe E. Reinhardt, Ph.D.

A numerical illustration:

Assume that the total gross compensation of a low-skilled worker is now $30,000 and will grow at 3.5% per year for the next decade to about $42,300.

Assume next that the health insurance premium for that worker and his or her family grows at “only” 8% per year, from $10,000 now to about $21,600 ten years hence. That’s 50% of the wage base just for health insurance.

Employers will respond to these trends in two phases:

1. Initially they will shift more and more of the cost of insuring their workers onto the workers themselves.

That won’t solve the problem, of course. It merely shifts the burden of health care from the well-to-do to the poor and from the healthy to the chronically sick. The small wage base of low-wage workers would still have to carry the financial burden of modern health care, and that wage base is just too small a donkey to carry that burden.

2. Eventually they will stop providing health insurance to their employees altogether.

The question then is whether Americans in the upper half of the nation’s income distribution will be willing to pay higher taxes to subsidize those in the bottom third of that distribution, or whether the latter will simply be priced out of health care.

http://web.princeton.edu/sites/pucsa/pucsa_reg/Agenda.htm

Comment: We spin our wheels debating employer mandates, individual mandates, consumer empowerment, and innumerable other policies that might influence costs and coverage. But before we can rationally discuss changes that would make health care accessible and affordable for everyone, we must first answer the question that Prof. Reinhardt poses. Are Americans in the upper half of the nation’s income distribution willing to pay higher taxes to subsidize health care for those in the bottom third of that distribution? If not, we should stop wasting our time and accept the fact that the bottom
third will simply be priced out of health care. It’s as simple as that.

But first we need to be certain that Americans do understand that this is the fundamental issue so that the answer is a truly informed choice. Another quote from Prof. Reinhardt suggests there is great risk that we may not like the answer:

“Government budgets are statements through which a people expresses its moral values. Even as we speak, Congress is poised to abolish all estate taxes on the well-to-do, while it is cutting budgets for Medicaid and other poverty programs. Could there be a clearer statement on the dominant moral values of the American people than the federal budgets of 2001, 2003 and beyond?”

What are we purchasing from the private plans?

Passing the Buck
By Paul Krugman
The New York Times
April 22, 2005

Isn’t competition supposed to make the private sector more efficient than the public sector? Well, as the World Health Organization put it in a discussion of Western Europe, private insurers generally don’t compete by delivering care at lower cost. Instead, they “compete on the basis of risk selection” – that is, by turning away people who are likely to have high medical bills and by refusing or delaying any payment they can.

Yet the cost of providing medical care to those denied private insurance doesn’t go away. If individuals are poor, or if medical expenses impoverish them, they are covered by Medicaid. Otherwise, they pay out of pocket or rely on the charity of public hospitals.

So we’ve created a vast and hugely expensive insurance bureaucracy that accomplishes nothing. The resources spent by private insurers don’t reduce overall costs; they simply shift those costs to other people and institutions. It’s perverse but true that this system, which insures only 85 percent of the population, costs much more than we would pay for a system that covered everyone.

Think about how crazy all of this is. At a rough guess, between two million and three million Americans are employed by insurers and health care providers not to deliver health care, but to pass the buck for that care to someone else. And the result of all their exertions is to make the nation poorer and sicker.

Why do we put up with such an expensive, counterproductive health care system? Vested interests play an important role. But we also suffer from ideological blinders: decades of indoctrination in the virtues of market competition and the evils of big government have left many Americans unable to comprehend the idea that sometimes competition is the problem, not the solution.

http://www.nytimes.com/2005/04/22/opinion/22krugman.html?hp

Comment: The debate today rages on as to whether we want to build on the current system, or replace it with a single, universal system. But why would we continue to support an industry that is consuming ever more of our health care dollars when its primary function is to devise methods of shifting the funding of health care from the insurance risk pool to patients and taxpayers? We are paying for a complex and expensive administrative system designed specifically to defeat the function that is the reason for its existence: pooling risk.

To quote further from Krugman’s article: “According to the (World Health Organization), the higher costs of private insurers are ‘mainly due to the extensive bureaucracy required to assess risk, rate premiums, design benefit packages and review, pay or refuse claims.’ Public insurance plans have far less bureaucracy because they don’t try to screen out high-risk clients or charge them higher fees.”

Why then are we even considering the option of expanding our current system? It’s broken beyond repair. Installing a new universal system would be cheaper and more effective. And we would all be healthier, both physically and financially.

The U.S. stands alone in officially denying health care as a right

The United Nations
Commission on Human Rights
April 15, 2005

In a resolution (E/CN.4/2005/L.28) on the right of everyone to the enjoyment of the highest attainable standard of physical and mental health, adopted as orally revised and by a roll-call vote of 52 in favour to one against, with no abstentions, the Commission urged States to take steps, individually and through international assistance and cooperation, especially economic and technical, to the maximum of their available resources, with a view to achieving progressively the full realization of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health; and called upon the international community to continue to assist the developing countries in promoting the full realization of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health, including through financial and technical support as well as training of personnel, while recognizing that the primary responsibility for promoting and protecting all human rights rests with States.

The Commission encouraged States to recognize the particular needs of persons with disabilities related to mental disorders, as well as their families, including by reflecting their needs in national health and social policies, such as national poverty reduction strategies; and called upon them to place a gender perspective at the centre of all policies and programmes affecting women’s health. They also called upon States to protect and promote sexual and reproductive health as integral elements of the right of everyone to the enjoyment of the highest attainable standard of physical and mental health and decided to extend, for a period of three years, the mandate of the Special Rapporteur on the right to everyone to the enjoyment of the highest attainable standard of physical and mental health.

The result of the vote was as follows:

In favour (52): Argentina, Armenia, Australia, Bhutan, Brazil, Burkina Faso, Canada, China, Congo, Costa Rica, Cuba, Dominican Republic, Ecuador, Egypt, Eritrea, Ethiopia, Finland, France, Gabon, Germany, Guatemala, Guinea, Honduras, Hungary, India, Indonesia, Ireland, Italy, Japan, Kenya, Malaysia, Mauritania, Mexico, Nepal, Netherlands, Nigeria, Pakistan, Paraguay, Peru, Qatar, Republic of Korea, Romania, Russian Federation, Saudi Arabia, South Africa, Sri Lanka, Sudan, Swaziland, Togo, Ukraine, United Kingdom and Zimbabwe.

Against (1): United States.

David Hohman (United States), speaking in explanation of the vote… said the United States believed that while the progressive realization of economic, social and cultural rights required government action, those rights were not an immediate entitlement to a citizen.

http://www.unog.ch/unog/website/news_media.nsf/(httpNewsByYear_en)/0DC62B805E191CF7C1256FE40050A75D?OpenDocument

Comment: It’s official. “The right of everyone to the enjoyment of the
highest attainable standard of physical and mental health” is “not an immediate entitlement to a citizen” in the United States. We stand alone in denying that right.

Medicare coverage of new technology

Medicare’s dilemma grows: How far to go in coverage
By Julie Appleby
USA Today
4/21/2005

…an ongoing dilemma for Medicare: whether to pay for a treatment when data on its effectiveness are uncertain or show it to be of limited value. The program… will increasingly face such debates as medical technology advances, baby boomers retire and Medicare confronts vast deficits.

“The question is, are we willing to pay for treatments that have a small chance at success?” says Peter Neumann, associate professor of health policy at the Harvard School of Public Health. “It’s true that we are a wealthy country, but whether we admit it or not, there are limits.”

Should Medicare cover every new $20,000-a month cancer drug? If a treatment is found for Alzheimer’s disease, will it go only to those diagnosed with the disease, or will patients who have normal age-associated memory lapses also be covered? Can the U.S. afford to put a pacemaker or other cardiac device into every patient with heart problems?

Medicare and other insurers are aiming to develop a better understanding of treatment outcomes by studying the results. Medicare, for example, has recently approved some new technologies but will track the patients – either by requiring them to be in clinical trials or by using a databank where medical information can be compiled – to see how well they do.

But cost isn’t the only factor in Medicare’s growing push to gather more data on effectiveness. The head of Medicare, Mark McClellan, says better evidence can help Medicare avoid treatments that don’t work or are dangerous.

“Why shouldn’t a patient who is very desperate say, ‘I’m willing to take a risk of dying from this technology, because I have little to lose’?” asks Princeton economist Uwe Reinhardt. While Medicare and other insurers should not pay for every treatment, regardless of its value, he says that some provision should be made to allow for innovation and experimentation.

http://www.usatoday.com/money/industries/health/2005-04-20-medicare-cover_x.htm

Comment: A common criticism of the Medicare program is that there are excessive delays in approving coverage of new technological advances. But we should keep in mind that new technology has contributed significantly to the continuing escalation of health care costs. So it seems that the Centers for Medicare and Medicaid Services is acting responsibly in requiring adequate evidence that new technology is providing reasonable value for the taxpayer.

It is entirely appropriate to limit coverage of unproven new technology to an experimental protocol until there are adequate data to warrant coverage for everyone.

As patients, each of us may want unlimited access to new, unproven, high tech care, but, as taxpayers, we should be assured that our health care spending on others is responsible.