PNHP

Are You Better Off Today Than You Were Four Years Ago?

Are You Better Off Today Than You Were Four Years Ago?

Families USA
September 2004

In 2004, there were 14.3 million Americans whose health care costs totaled more than one-quarter of their earnings-up from 11.6 million in 2000, an increase of approximately 22.9 percent.

Among insured people, the number with health care costs in excess of one-quarter of their earnings rose from 8.4 million to 10.7 million between 2000 and 2004.

The result of (the) combination of higher premium costs and thinner coverage is that insured workers with serious illnesses, those with chronic conditions or disabilities, or those who experience a one-time medical crisis often find themselves in real financial trouble. In 2004, having health insurance does not necessarily guarantee protection against high medical bills. A growing number of insured workers are facing catastrophic health care costs.

http://www.familiesusa.org/site/DocServer?docID=4601&JServSessionIdr005=sf27qmna31.app26a

And…

Rising Health Costs, Medical Debt and Chronic Conditions
By Ha T. Tu
Center for Studying Health System Change
September 2004

Between 2001 and 2003, the proportion of people with high out-of-pocket costs relative to income increased overall. The increase occurred almost completely within the privately insured group, and the increase was most pronounced for low-income people. The proportion of low-income, privately insured, chronically ill people with out-of-pocket costs exceeding 5 percent of family income increased from 28 percent in 2001 to 42 percent in 2003-an increase of 50 percent. This change likely reflects the impact of increased patient cost sharing for insured people, as well as the fact that health care costs increased at a much faster pace than incomes. By 2003, low-income, chronically ill people covered by private insurance had become as likely as their low-income, uninsured counterparts to spend at least 5 percent of income on health care.

http://www.hschange.org/CONTENT/706/

Comment:
Currently the rhetoric on health care reform centers around two
approaches. Some recommend that patients be “empowered” to pay more for
their own care. Only the “let them eat cake” ideologues can be serious about
this approach since all objective studies confirm that the negative impact
on the health of nation would be catastrophic.

Those who are serious about trying to address the unmet health care needs of
the nation are supporting expansion of our current fragmented system of
funding care, especially providing incentives to expand private health care
coverage. But these two reports add to the plethora of studies confirming
that private plans no longer protect individuals against catastrophic
financial losses, nor do they ensure adequate access to essential care.

We will attain our goals of comprehensive coverage for everyone only when we
address the real problems facing us. We must eliminate the $300 billion
waste in administrative excesses. We must provide incentives for a strong
primary care base which has been shown to improve quality while decreasing
costs. We must budget capital improvements to prevent the excess high-tech
capacity which results in much higher costs but with unimproved or even
detrimental outcomes. We’ll never be able to make these essential changes
until we establish a universal risk pool from which funds can be allocated
on a rational basis.

We don’t need more of the flawed coverage provided by private plans. We need
single-payer national health insurance. Nothing less will work.

(Please share this message with others. Thanks.)
Don McCanne

U.S. Health Plan Includes One With Catholic Tenets

By Milt Freudenheim
The New York Times
September 25, 2004

The Bush administration has broken new ground in its “faith-based” initiative, this time by offering federal employees a Catholic health plan that specifically excludes payment for contraceptives, abortion, sterilization and artificial insemination.

The new plan, announced last week, combines two White House priorities. It is part of a $1 billion project seeking to involve religious organizations in all types of federal social programs. At the same time, the plan is a new form of coverage – a health savings account combined with high-deductible coverage – that is being promoted as a centerpiece of President Bush’s health care policy.

…the new OSF health savings account plan will not cover contraceptives. But because the money in the savings account itself is controlled by the enrolled member, the member could use the account to pay for an abortion or for contraceptives, according to federal officials.

Kay Coles James, the director of the Office of Personnel Management (which manages the Federal Employee Health Benefits Plan, the nation’s largest purchaser of health insurance), said last week that the new additions to federal employees’ health benefits would “empower” workers to control their medical spending.

But some critics expressed concern that this trend in health care might grow into a wider phenomenon. Is this “explicit denial” the first step in “denying federal employees a normal benefit that has been traditional for 30 years?” asked Philip R. Lee, a professor of social medicine at the University of California, San Francisco and a former assistant secretary for health in the Clinton administration. “Is this simply the opening wedge?”

http://www.nytimes.com/2004/09/25/business/25care.html

Comment:
Today’s comments will not address the controversial issue of health plan coverage of reproductive services, other than to dismiss that issue with a restatement of our belief that we need a universal system that covers all beneficial services. Setting aside the issue of faith-based coverage, there is another extremely crucial health policy issue in this new FEHBP plan.

Much has already been said about the inadequacies of health savings accounts(HSAs) for those with major acute or chronic disorders. For these individuals, the HSAs would be rapidly depleted, and then the individual would be dependent on the high deductible plan that complements the HSA. We’ve already seen that these plans are not indemnity plans that cover all additional expenses, but they are managed care PPO plans with significant out-of-pocket expenses, restricted provider choices, and severe financial penalties for using non-contracted providers. But what is alarming is that the supporters of this version of consumer-directed health care (CDHC) call for increasing options in coverage. Why pay for services that you will not use? Parenthetically, this was Gov. Schwarzenegger’s message this week when he vetoed the bill requiring California health plans to include maternity benefits.

The FEHBP program has required plans to provide a minimum level of benefits. This new plan breaks ground by shifting the coverage for reproductive services from the high deductible plan to the individual’s own HSA. Very soon we can anticipate that patient-consumers will be further empowered by being offered a greater variety of high deductible plans with even lower premiums made possible by excluding benefits which they know or at least they hope that they will never need.

This is part of the agenda to break up all risk pools, whether public or private, and shift the responsibility of funding health care delivery in the United States. Instead of funding care in an equitable manner from a common pool based on solidarity shared with our fellow man, health care will become ever more the responsibility of the individual. The 20% of individuals who use 80% of all health care will find that the exclusions that made their premiums affordable will make their access to health care unaffordable.

Are we really a society that believes that we should cut the anchor ropes for those unfortunate enough to have significant medical needs and simply allow them to drift off into the seas of ill health, poverty, despair, and even death?

Do Bush and Kerry Offer a Cure?

Do Bush and Kerry Offer a Cure?
by Milton Fisk

A PERMANENT CRISIS has plagued American health care since 1981. It began with Ronald Reagan, whose tax cuts led to cuts in Medicaid as well as more stringent eligibility rules. The crisis has continued, even through the boom years presided over by Bill Clinton, to the present.

The current presidential campaign offers an opportunity to discuss the crisis and to agitate for resolving it. Yet the major political parties, the AFL-CIO, and other organizations like the AARP show little interest in opening a debate on whether still more incremental change–like computerizing health records or expanding
eligibility for the Children’s Health Insurance Program–will serve to end the crisis.

Dennis Kucinich, even after getting little support in the preference primaries for the Democratic Party presidential candidate, is trying to spark such a debate. Kucinich has emphasized the need for health care reform that would end the role of commercial insurers.

Al Sharpton and Carol Moseley Braun, who both dropped out of the race for Democratic presidential candidate, and now Ralph Nader, an independent candidate for president, have also contributed to the revival of the single-payer idea.

If in addition to these efforts, the few state AFL-CIOs and unions like AFSCME, UAW and UNITE that support basic change in the health industry were to become active on the issue, then indeed a debate on the crisis might ensue that goes beyond talk of incremental change.

Instead, we are being treated in the campaign to a celebration of “choice,” with each candidate claiming his tinkering with the industry would give people the most choice.

President Bush advocates personal Health Savings Accounts, pointing out that they give their owners the choice of whether they want to spend their HSA on health care or keep it to gather tax-free interest. Senator John Kerry wants to give any citizen the same choice a congressperson has, under the Federal Employees Health Benefit (FEHB) Program, among various plans from different
insurers, assuming he or she can pay for one of those plans.

The real issue posed by the crisis is not choice between one insurer and another or between one doctor and another. The issue, rather, is having affordable insurance. The choices the presidential candidates celebrate are the choices of individuals about their individual well-being. All these “choices” are
irrelevant to the individuals who can’t afford insurance.

The choice to have affordable insurance in our society, though, is not one that individuals make on their own nor is it merely about their individual well-being. It is a choice that we as a society must make together about the good of our society. This would be a choice worth celebrating–if only we had it.

Why the Disaster?

The health care crisis has two sides. One is the upward spiral of premium rates charged by commercial health insurers; the other is the increase of the uninsured, within only two decades, by some 15 million up to 44 million.

Moreover, in response to higher premiums for comprehensive plans, people have bought cheaper health plans with higher deductibles and co-payments and fewer covered conditions. Thus, even those who have insurance are often underinsured.

The roots of the crisis are in dispute. Some blame it on the high cost of malpractice insurance; some say it comes from the success of disgruntled consumers in ending various cost-saving features of managed care; some explain it as due to the expensive new technology that patients ask for; and still others say insurers are catching up on the profits they failed to make in the mid-1990s.

These accounts either fail to explain the depth of the crisis or explain only its short-term aspects. Working people–those employed as well as the frequently unemployed –are most affected by the crisis. Employers are shifting the costs
of health insurance to employees. The working poor can only hope they might qualify for the under-funded Medicaid program.

Those eligible for Medicare are under-insured since illness could leave them with devastating co-payments; and even when George W.Bush’s drug program finally kicks in many of them will still pay large amounts for medicines. A change is needed that would eliminate all these vulnerabilities.

Fear of Going Public

In view of the inflationary tendencies unleashed by commercial insurance, it is remarkable that the main presidential contenders still rely on commercial insurance to reduce health care costs. In his campaign for the presidency, John Kerry’s grand gesture concerning health care has been to promise to make a program universally available that is now available to the Congress and
nine million federal employees, the Federal Employees Health Benefits Program.

FEHB’s advantage is the large pool over which it spreads risk and hence keeps premiums lower than they might be for smaller pools. For those who are not federal employees, Kerry would set up a separate pool, which could attract significantly higher numbers.

Individuals as well as large and small employers could join the plan. If you or your employer were in the plan, there would be a variety of commercial insurers among whom you could choose. In an urban setting, you might have the option of choosing between an HMO, which charges a capitation fee but sends you no bills for services; a PPO, which gives discounts for services coming from a specific list of providers; and a non-PPO.

A federal employee in Indianapolis, for example, can now enroll in the M*Plan, a local HMO, for $336 a month to cover his or her family; or among other options, the family can enroll in one of several national Blue Cross/BlueShield fee-for-service plans for $245 a month. There would be a great deal more out-of-pocket expenditure with the cheaper plan.

What about people who can’t afford to join the proposed FEHB-style program? Outside this program, Senator Kerry would have the federal government pay for the cost of 20 million children enrolled in Medicaid in exchange for the states’ insuring both children in the Children’s Health Insurance Program, which would be expanded up to 300% of poverty, and working parents of children in Medicaid or CHIP up to 200% of poverty.

These expansions would put the United States nearer to universal insurance coverage. The Kerry plan does not require that they take place through public insurance, however, even though public funds would foot the bill.

A Tangled Web

Kerry wants employers who now provide money for their employees’ health insurance to continue to do so. To keep the cost of doing so from rising rapidly, he proposes that the government reimburse employee benefit plans by 75% of the expenses of catastrophic illnesses costing more than $50,000.

This would reduce insurance claims for catastrophic illnesses, thereby lowering premiums. The condition Kerry puts on this reimbursement is that employers use the resultant savings in insurance costs to reduce premiums paid by employees.

This reimbursement plan locks employee benefit plans in place without asking whether they might be part of the problem. Even with reimbursement of catastrophic expenses, the costs of employee health benefits will continue to rise due to the non-competitive nature of insurers.

Where employees are insured under employer self-insured plans, the costs of health benefits will also rise since the costs allowed by commercial insurers will act as the norm. As costs of health benefits rise, employees will have to battle with employers over threatened cuts in health benefits, as occurred recently with grocery workers in California.

The struggle for affordable health care, though, should be one that engages us all for the purpose of reaching a society-wide commitment, rather than one that pits a few workers at a time against powerful employers in relatively isolated struggles.

The main weakness in the Kerry plan is, though, the assumption that keeping commercial insurers in it will create the competition to control the rise of premiums. To stick with this assumption, he has to create a patchwork of measures in order to give the impression he is solving the problem.

The FEHB-style program does spread the risk. But the advantage of spreading risk diminishes quickly as the pool gets larger. In controlling insurance costs, spreading risk will only take us so far: It is easy to cancel out the savings from spreading risk by raising the unit charges made by providers.

This brings us right back to the non-competitive nature of insurers stemming from their need for an added boost to their profits from higher premiums. Even with millions of people in an FEHB-style program, the participating insurers will seek to make profits from increasing premiums. It is less painful for them to raise premiums when they can point to the increasing charges providers are making.

Kerry’s bold gesture doesn’t, then, touch the root problem that with profit-making insurers, premiums will continue to rise leaving a large number of uninsured. He, or those who wrote his proposal, surely know this, but they fear the consequences of advocating public insurance as the alternative.

Lag Effect and Hostile Intermediary
Shouldn’t, though, having individual choices keep both medical costs and insurance rates down? According to advocates of competition, with only one insurer trying to get my business, that insurer has no incentive to put pressure on health care providers to keep their charges for my services down.

The providers will get what they charge since the insurer has only to raise the premium rate. My insurance is important to me, so I’ll follow along paying higher premiums until I can no longer afford them.

Following this logic, we should have at least a second insurer who will also want my business. This insurer will try to take business away from the first one by charging a lower premium. This will force the first insurer to lower premiums as well.

These competing insurers will tell health providers that they have to lower their charges in order to get fully reimbursed. As a result, medical costs will go down and more people will be able to afford health insurance.

This is a fairy tale, of course, since selling insurance is different from selling most other things. Say you build a house and the suppliers of materials are charging more than previously. When you sell the house, you will include the additional cost in the price precisely so you can pay the bills from the suppliers.
Raising the price, however, gives you no additional money to play around with since suppliers won’t wait to be paid.

The case of insurance is different because of a “lag effect.” When I pay a higher premium to my health insurer due to health providers’ raising the prices of their services, these providers, unlike the suppliers of building materials, don’t expect to get the additional amount immediately: It may be weeks, months, or if I’m lucky, years before I have to go to a health provider.

When I pay my premium, that commits my insurer to cover my risk of incurring future expenses instead of my previously incurred expenses. The lag effect opens up the possibility that the insurer will become a hostile intermediary, working against my interests as an insured party.

The insurer can profit from investing–usually in stocks, bonds or real estate–a premium payment prior to the time a claim is made to pay for a covered service. This of itself doesn’t harm the insured.

Yet from this fact it follows that the amount by which the premium rises to cover increased provider charges can also be invested to make a profit. Insurers derive from this the perverse incentive to allow providers’ charges to rise; for once those charges rise insurers have an excuse to raise premiums, thereby providing them additional funds to invest.

Wouldn’t competition over premiums among insurers be strong enough to overwhelm this perverse incentive and hence keep insurers from acquiescing in higher and higher medical costs? It would indeed; but the health insurance industry cannot afford such competition.It relies for an important part of its profit on taking advantage of the lag effect to invest the higher premiums that increased medical charges seem to legitimate.

There is a reason why the profits derived from this acquiescence in rising provider charges are important. The lag effect in health insurance is shorter than it is in life insurance and liability insurance. One goes to the doctor more frequently than one has automobile accidents and one only dies once. In health insurance, then, a great deal of liquidity is called for, leaving less money for investment. Thus profits in those other areas of insurance tend to be higher.

How then do health insurers compensate for this drawback? They must do something to attract investors to buy their stocks. In competing for investors with insurers in other areas, health insurers need to make extra profits from raising premiums as provider charges rise.

A Shell Game

From time to time, frustration with rising premiums reaches such intensity that health insurers are led to take measures. The most obvious measure at their disposal is the subordination of providers to the insurance function.

An attempt of this kind took place in the 1980s and 1990s, with the corporatization of the health care industry. If successful, this would have freed insurers to compete on premiums or capitation fees. With providers under control, they would accept less remuneration so that stabilizing insurance rates would not lower insurers’ profits.

Providers, though, turned out not to be so easy to control. The result was a return to a truce among insurers based on accepting rising premiums as their way of life.

There is an important spillover from this non-competitive way of life among health insurers. If they can increase premiums when providers charge more without a competitive challenge, then they might be able to increase them even faster than providers are increasing their charges. All will profit, thereby discouraging any competitor to break ranks.

These gratuitous increases in premiums have actually become a cyclical feature in the history of health insurers. Premiums rose dramatically in the late 1980s leading to profits that were 44% higher than only several years earlier. Health insurance profits came down in 1990 as investments by the industry in real estate and stock lost value.

A decade later, starting in 2000, premiums were again increasing faster than payments to providers and insurers were showing large gains in profits. Apologists said that the insurers were merely catching up for their low profits of the mid-1990s. No competitor challenged the gentlemen’s agreement to have catch-up.

Meanwhile medical equipment, laboratory tests, consultations, and hospital rooms are priced high in the light of the knowledge that the demand for them coming through insurance will not be significantly lowered. The message, then, is that we commit ourselves to a continuing inflation in health care costs so long as commercial insurance plays a major role.

Just Say No to Insurance?

For its part the Bush right wing, despite its defense of the commercial health insurers, feels instinctively that there is something socialistic about insurance, which involves not pure self-reliance, but reliance on others to help us cover our risk of incurring expenses through illness.

Relying on others makes us profligate, according to these ideologues. When we undergo a medical procedure and are covered by insurance, we may never know how expensive it is. We don’t really care: we’re covered! George W. Bush philosophizes that with insurance “there is no demand for better prices.”

This is what I have been arguing here. Bush, however, sees the other-reliant individual as the culprit, whereas I’m pointing the finger at the commercial insurer. To make the individual self-reliant, Bush wants him or her to swear off insurance, at least partially. One can do this by setting up a tax-deferred
Health Savings Account (HSA) of $5,000 to cover many of the ordinary expenses needed to keep a family healthy.

One will think a second time about sending Johnny to the doctor with his earache. One may even scowl at the doctor when she recommends a panel of blood tests for Susie that will cost $1,000. If Johnny gets well at home and Susie doesn’t get the tests, then one’s HSA stays in tact and continues producing tax-free interest. With demand for health care reduced by self-rationing of this kind, the theory predicts that our doctors and laboratories will start charging less.

The Bush campaign knows that HSAs by themselves are not enough. People want to rely on others to pay for catastrophic health expenses. Thus along with HSAs, Bush says there will have to be insurance for major illnesses. This would be a high-deductible insurance with an accompanying HSA at hand to pay the greater part of the deductible.

Premiums for such a major medical plan would cost 30% to 50% less than those for a traditional low deductible plan. Insurance would then have been made more affordable.

HSAs plus major medical insurance make sense if one is healthy. If instead, one needs considerable health care, it may be cheaper to join a traditional plan in order to avoid using one’s HSA up every year to pay the high deductible of the major medical insurance. But HSAs will have a serious impact on the affordability of traditional plans, by taking the healthy who choose the HSA-plus-major-medical route out of traditional plans. Even if only a quarter of all those insured opt for HSAs, the premiums of traditional low-deductible insurance would go up by an estimated 50-60%.

There will be a greater concentration of the not so healthy left in the traditional plans. At the same time, those who opt for HSAs, while they may be healthier, will have an incentive to keep their savings accounts rather than spend them on physical checkups; they may also delay getting treatment for a condition until it calls for expensive treatment.

Their short-term thrift merely makes it more likely that they will incur expenses for which their major medical insurance will be needed. The tendency over time will be to make that insurance less affordable.

Bush’s proposal to promote HSAs parallels several of his other programs. First, it serves the same individualism that is appealed to in regard to Individual Retirement Accounts, with which he hopes to privatize Social Security. Like the retirement accounts, HSAs roll back cooperation in favor of self-reliance.

Second, they would promote individual choice between saving money and getting health care, in the way that the recent Bush reform of Medicare promotes choice between HMOs and fee for service. Third, HSAs entail a mini-tax cut, with the savings being tax-deferred until 65 when one would cash in the account as one became eligible for Medicare, with the interest on the savings being tax-free.

The Real Choice

Government–federal, state and local–already contributes half the money that is expended on health care in the United States. Its contribution is slightly more than that of employers for their employees’ health benefits.

Would it be possible to use what government already spends together with what employers already spend on employees’ health care as an adequate financial base for a more reasonable system? Specifically, could that sum support universal comprehensive coverage and at the same time rein in the inflation in charges coming from providers?

By most estimates, it could. There is, though, an important condition. That sum would be sufficient provided a major part of it does not go to commercial insurers as intermediaries, whose interest in profits from rising premiums overrides the interest the public has in controlling the charges made by providers.

Yet as far as the goal of controlling costs goes, neither Kerry nor Bush see anything problematic in using private insurers as intermediaries between either government or employer funds and providers.

Time to Decide

We are at a critical juncture. To save what we have in the way of public insurance, it has to be expanded to cover everyone. If the public insurance system is left as an isolated part of the overall insurance system, it will be underfunded, blamed for failure, and ultimately destroyed.

Medicare is in the crosshairs of the Bush sharpshooters. They want to use, not just part, but all of the funds it is based on to buy private insurance. This would be one of the largest privatizations in history. It would add, on a continuing basis, huge sums to the capital that circulates in the private financial system.

It is critical, then, that there should be a counter-offensive that would expand rather than privatize public insurance. The expanded system would be a Medicare For All. Defensive efforts will not suffice to protect Medicare.

Consider the sorry history of one such effort. In order to defend Medicare from rising costs, Medicare began during the Clinton period to pay private managed care companies to care for the elderly. That failed with the big insurers involved in managed care dumping millions of the elderly.

Now in the Bush period the Congress, still wanting to defend Medicare from rising costs, is having Medicare pay the same big insurers for managed care 7% more to enroll an elderly person than the per capita spending for traditional Medicare. In a twist of irony, this increase was used, shortly after its passage, to show that Medicare will be bankrupt by 2019.

We need, then, a public insurer whose mission would be to pay fairly for services coming from those professionals and institutions whose work is to provide health care, or to provide assistance or guidance in controlling behavior and environments which tend to create needs for health care. The likelihood that the services will be compensated fairly is increased when democratic
procedures are used.

Is, though, the idea of national health insurance realistic? This is the question people ask, often implying that they see a need for a public insurer as a way of putting an end to the seemingly permanent crisis. To respond, one must begin by recognizing the obstacles. In order of rising importance they are: distortions,
bribery, and inertia.

We can answer the distortions that the press distributes from places like the rightwing Fraser Institute in Vancouver about long waiting lists for MRIs in Canada. They are nowhere near as long as the lists of uninsured in the United States.

As to bribery, we can ask candidates for the Congress how much they have received from health sector corporations, and whether they plan to receive any more before the crisis of unaffordable insurance is really resolved.

The prods to reducing citizens’ inertia are multiplying: Employers are cutting health benefits, Medicaid is being cut back, Medicare funds are being squandered in subsidies to HMOs, and health corporations are regularly found guilty of fraudulent practices. Increasing numbers of people are no longer willing to accept the patchwork reforms offered by presidential candidates.

FEHBP: A Feeble Model for Universal Health Care!

Politicians are fond of saying that everyone should have a health plan as good as the one that Congress has. John Kerry, for instance, says that “all Americans should have access to the same affordable coverage policies that Members of
Congress get today,” and he proposes that any individual or business should be able to buy into it. This plan, which is available to Congress and all other employees of the Federal Government, is the Federal Employees Health Benefit Plan (FEHBP).

please click here to read the article

Is "Moral Hazard" Inefficient? The Policy Implications of a New Theory

By John A. Nyman
Health Affairs
September/October 2004

Excerpts:

Insurers call the change in behavior that occurs when a person becomes insured “moral hazard.” Moral hazard occurs, for example, when an insured person spends an extra day in the hospital or purchases some procedure that he or she would not otherwise have purchased. Insurers originally viewed moral hazard unfavorably because it often meant that they paid out more in benefits than expected when setting premiums – hence the negative term.

Economists also viewed moral hazard negatively because, under the conventional theory, the additional health care spending generated by insurance represents a welfare loss to society. When people become insured, insurance pays for their care. In economists’ view, insurance is reducing the price of care to zero. When the price is reduced in this way, consumers purchase more health care than they would have purchased at the normal market prices-this is the moral hazard. But because consumers purchase care when the price drops to zero that they would not have purchased at the market price, economists interpret this behavior as revealing that the value of this care to consumers is less than the market price. The additional care, however, is still costly to produce. The difference between the high cost of the resources devoted to producing this care (reflected in the high market price) and its low apparent value to insured consumers (reflected in the low insurance price) represents an inefficiency. Thus, health care spending increases with insurance, but the value of this care is less than its cost, generating an inefficiency that economists call the “moral-hazard welfare loss.”

Conventional insurance theory also provided the policy solution: Impose coinsurance payments and deductibles to increase the price of medical care to insured consumers and reduce these inefficient expenditures. In the 1970s many insurers adopted copayments to reduce health care spending. In the 1980s and 1990s economists also promoted utilization review and capitated payments to providers as further ways to reduce moral hazard. The managed health care system we have now is largely a product of this theory.

A fundamental ambiguity exists, however, in the welfare implications of moral hazard, which economists have, perhaps, always suspected but could never voice because they did not have the appropriate theory to explain it. That is, conventional theory makes sense for health care such as cosmetic surgery or drugs to improve sexual functioning or designer-style prescription sunglasses, but not for serious treatments such as coronary bypass operations or organ transplants. Clearly, insured people would purchase more of all these procedures than would uninsured people, so they would all be considered moral hazard to insurers.

Mark Pauly, one of the architects of the conventional insurance theory, recognized this ambiguity as early as 1983. He pointed out that his original theory of moral-hazard welfare loss was intended to apply only to “routine physician’s visits, prescriptions, dental care, and the like” and that “the relevant theory, empirical evidence and policy analysis for moral hazard in the case of serious illness has not been developed. This is one of the most serious omissions in the current literature.” This distinction, however, has been lost on most health economists. For example, health economics textbook writers continue to present moral hazard as being unambiguously welfare decreasing, and health policy analysts continue to use the conventional theory in developing their recommendations for optimal cost-sharing rates, managed care programs, and other policies designed to curb U.S. health care costs.

If insurers actually transferred income to an ill person in one lump-sum payment, the welfare implications of moral hazard would be unambiguous.

Health insurance policies, however, generally pay off by paying for the ill person’s care. The welfare ambiguity arises because of this payoff mechanism. …we cannot tell whether this additional moral-hazard spending represents a welfare loss or a welfare gain.

…there is some unknown portion of patients who would respond to insurance paying for their care in exactly the same way that they would respond to insurance paying them a cashier’s check for the same amount. For these patients, moral hazard is efficient and represents a welfare gain.

Implications For Policy

Cost sharing often not appropriate: Because some of the moral hazard that was considered a welfare loss under the conventional theory must now be reclassified as a welfare gain, health insurance under the new theory is generally much more valuable to consumers than economists have thought it was. Many of the more serious procedures – organ transplants; trauma care; many cancer treatments;and, indeed, a large portion of the costly, life-saving medical care that people could only afford to purchase with insurance – would now be tallied in a welfare gain column instead of a welfare loss column when determining the value of insurance. Because such a large portion of moral hazard spending represents a welfare gain, the recategorization of losses as gains dramatically changes the welfare calculations.

The new theory suggests that cost-sharing policies have been directed at problems that largely do not exist. Furthermore, it suggests instead that coinsurance is too blunt a policy instrument and that it should be refined to focus only on the inefficient moral hazard. Moral hazard that generates welfare gains should be left alone or even encouraged. That is, for those with serious illnesses, whose care might also be associated with a great deal of pain and suffering anyway, it makes little sense to apply copayments.

Subsidizing insurance premiums is beneficial: The new theory suggests that health insurance generally makes the consumer better off. Therefore, the subsidies that encourage consumers to purchase insurance voluntarily, or a national health insurance program for the entire U.S. population, would improve society’s welfare.

High prices are harmful: …under conventional theory, high health care prices are not bad. Indeed, a few economists have even argued that high prices should be encouraged because they reduce moral hazard. …according to conventional theory, any reduction of moral hazard is a welfare gain. Under the new theory, the high prices that providers charge because they have market power would again be considered harmful. With the new theory… economists would be able to revert to the standard analysis that monopoly pricing causes an undesirable reduction in use, even for the insured.

More than anything else, the new theory suggests that health insurance provides an economywide redistribution of income from those who remain healthy to those who become ill. Those who become ill use this income either to cover the costs of health care that they would otherwise purchase, or to purchase more care, often care that they would not be able to afford without insurance. Those who remain healthy simply pay into the system, but they do so voluntarily because everyone has a chance of becoming ill. Because people value the additional income they receive from insurance when they become ill more than they value the income they lose when they pay a premium and remain healthy, and because everyone has in theory an equal chance of becoming ill, this national redistribution of income from the healthy to the ill is efficient and increases the welfare of society. Thus, the new theory identifies efficiency as a new justification for adopting some form of national health insurance.

http://content.healthaffairs.org/cgi/content/abstract/23/5/194

Comment: Although steeped in the rhetoric of health policy economists, the concepts presented are fundamental to the health care reform movement. It is imperative that we have a solid grasp of the issues.

The decades old Rand studies are still frequently cited to show that cost sharing through deductibles, copayments and coinsurance is effective in reducing health care costs. Cost sharing has been widely adopted in response to concerns about rising health care costs. Some features of managed care were designed to further reduce utilization of health care services. Largely ignored has been the well documented fact that this reduction included a reduction in the utilization of truly beneficial services. Avoiding the “moral hazard” has proven to be too blunt of a cost containment tool, even though it is still widely supported.

Today, the consumer-directed health care (CDHC) movement expands on that concept. The supporters of CDHC and health savings accounts (HSAs) contend that the moral hazard is eliminated because individuals will not spend funds on care that they perceive to have a value less than its cost. A major flaw in this concept is that individuals with major acute or chronic problems would rapidly deplete their funds. CDHC supporters state that catastrophic coverage would then provide an umbrella to cover the losses. But these plans are high deductible, managed care PPO plans which provide protection that is about as effective as a sieve. Coverage under these plans has already proven to be inadequate to protect against significant financial loss or even bankruptcy. Again, this tool is too blunt because it prevents the delivery of welfare-increasing health care.

There are other mechanisms to reduce ineffective, welfare-reducing care that are much more precisely targeted. Pricing can be improved through negotiation with providers which takes into consideration legitimate costs and fair profits. Excess capacity which results in higher spending without a commensurate improvement in outcomes can be controlled through planning and budgeting of capital improvements. Physicians who inappropriately upcode or who provide an excessive frequency or intensity of services can be identified as outliers and provided with education opportunities or subjected to punitive measures if refractory to the educational process.

Global budgeting can slow the expansion of health care services down to levels closer to inflation and growth of the GDP. The $1.8 trillion that we are spending should be sufficient to ensure that there is adequate capacity in our system to meet our needs for beneficial services.

John Nyman has provided us with an invaluable contribution to the health policy literature. As he says, “There is a new argument for national health insurance: efficiency.”

Is “Moral Hazard” Inefficient? The Policy Implications of a New Theory

By John A. Nyman
Health Affairs
September/October 2004

Excerpts:

Insurers call the change in behavior that occurs when a person becomes insured “moral hazard.” Moral hazard occurs, for example, when an insured person spends an extra day in the hospital or purchases some procedure that he or she would not otherwise have purchased. Insurers originally viewed moral hazard unfavorably because it often meant that they paid out more in benefits than expected when setting premiums – hence the negative term.

Economists also viewed moral hazard negatively because, under the conventional theory, the additional health care spending generated by insurance represents a welfare loss to society. When people become insured, insurance pays for their care. In economists’ view, insurance is reducing the price of care to zero. When the price is reduced in this way, consumers purchase more health care than they would have purchased at the normal market prices-this is the moral hazard. But because consumers purchase care when the price drops to zero that they would not have purchased at the market price, economists interpret this behavior as revealing that the value of this care to consumers is less than the market price. The additional care, however, is still costly to produce. The difference between the high cost of the resources devoted to producing this care (reflected in the high market price) and its low apparent value to insured consumers (reflected in the low insurance price) represents an inefficiency. Thus, health care spending increases with insurance, but the value of this care is less than its cost, generating an inefficiency that economists call the “moral-hazard welfare loss.”

Conventional insurance theory also provided the policy solution: Impose coinsurance payments and deductibles to increase the price of medical care to insured consumers and reduce these inefficient expenditures. In the 1970s many insurers adopted copayments to reduce health care spending. In the 1980s and 1990s economists also promoted utilization review and capitated payments to providers as further ways to reduce moral hazard. The managed health care system we have now is largely a product of this theory.

A fundamental ambiguity exists, however, in the welfare implications of moral hazard, which economists have, perhaps, always suspected but could never voice because they did not have the appropriate theory to explain it. That is, conventional theory makes sense for health care such as cosmetic surgery or drugs to improve sexual functioning or designer-style prescription sunglasses, but not for serious treatments such as coronary bypass operations or organ transplants. Clearly, insured people would purchase more of all these procedures than would uninsured people, so they would all be considered moral hazard to insurers.

Mark Pauly, one of the architects of the conventional insurance theory, recognized this ambiguity as early as 1983. He pointed out that his original theory of moral-hazard welfare loss was intended to apply only to “routine physician’s visits, prescriptions, dental care, and the like” and that “the relevant theory, empirical evidence and policy analysis for moral hazard in the case of serious illness has not been developed. This is one of the most serious omissions in the current literature.” This distinction, however, has been lost on most health economists. For example, health economics textbook writers continue to present moral hazard as being unambiguously welfare decreasing, and health policy analysts continue to use the conventional theory in developing their recommendations for optimal cost-sharing rates, managed care programs, and other policies designed to curb U.S. health care costs.

If insurers actually transferred income to an ill person in one lump-sum payment, the welfare implications of moral hazard would be unambiguous.

Health insurance policies, however, generally pay off by paying for the ill person’s care. The welfare ambiguity arises because of this payoff mechanism. …we cannot tell whether this additional moral-hazard spending represents a welfare loss or a welfare gain.

…there is some unknown portion of patients who would respond to insurance paying for their care in exactly the same way that they would respond to insurance paying them a cashier’s check for the same amount. For these patients, moral hazard is efficient and represents a welfare gain.

Implications For Policy

Cost sharing often not appropriate: Because some of the moral hazard that was considered a welfare loss under the conventional theory must now be reclassified as a welfare gain, health insurance under the new theory is generally much more valuable to consumers than economists have thought it was. Many of the more serious procedures – organ transplants; trauma care; many cancer treatments;and, indeed, a large portion of the costly, life-saving medical care that people could only afford to purchase with insurance – would now be tallied in a welfare gain column instead of a welfare loss column when determining the value of insurance. Because such a large portion of moral hazard spending represents a welfare gain, the recategorization of losses as gains dramatically changes the welfare calculations.

The new theory suggests that cost-sharing policies have been directed at problems that largely do not exist. Furthermore, it suggests instead that coinsurance is too blunt a policy instrument and that it should be refined to focus only on the inefficient moral hazard. Moral hazard that generates welfare gains should be left alone or even encouraged. That is, for those with serious illnesses, whose care might also be associated with a great deal of pain and suffering anyway, it makes little sense to apply copayments.

Subsidizing insurance premiums is beneficial: The new theory suggests that health insurance generally makes the consumer better off. Therefore, the subsidies that encourage consumers to purchase insurance voluntarily, or a national health insurance program for the entire U.S. population, would improve society’s welfare.

High prices are harmful: …under conventional theory, high health care prices are not bad. Indeed, a few economists have even argued that high prices should be encouraged because they reduce moral hazard. …according to conventional theory, any reduction of moral hazard is a welfare gain. Under the new theory, the high prices that providers charge because they have market power would again be considered harmful. With the new theory… economists would be able to revert to the standard analysis that monopoly pricing causes an undesirable reduction in use, even for the insured.

More than anything else, the new theory suggests that health insurance provides an economywide redistribution of income from those who remain healthy to those who become ill. Those who become ill use this income either to cover the costs of health care that they would otherwise purchase, or to purchase more care, often care that they would not be able to afford without insurance. Those who remain healthy simply pay into the system, but they do so voluntarily because everyone has a chance of becoming ill. Because people value the additional income they receive from insurance when they become ill more than they value the income they lose when they pay a premium and remain healthy, and because everyone has in theory an equal chance of becoming ill, this national redistribution of income from the healthy to the ill is efficient and increases the welfare of society. Thus, the new theory identifies efficiency as a new justification for adopting some form of national health insurance.

http://content.healthaffairs.org/cgi/content/abstract/23/5/194

Comment: Although steeped in the rhetoric of health policy economists, the concepts presented are fundamental to the health care reform movement. It is imperative that we have a solid grasp of the issues.

The decades old Rand studies are still frequently cited to show that cost sharing through deductibles, copayments and coinsurance is effective in reducing health care costs. Cost sharing has been widely adopted in response to concerns about rising health care costs. Some features of managed care were designed to further reduce utilization of health care services. Largely ignored has been the well documented fact that this reduction included a reduction in the utilization of truly beneficial services. Avoiding the “moral hazard” has proven to be too blunt of a cost containment tool, even though it is still widely supported.

Today, the consumer-directed health care (CDHC) movement expands on that concept. The supporters of CDHC and health savings accounts (HSAs) contend that the moral hazard is eliminated because individuals will not spend funds on care that they perceive to have a value less than its cost. A major flaw in this concept is that individuals with major acute or chronic problems would rapidly deplete their funds. CDHC supporters state that catastrophic coverage would then provide an umbrella to cover the losses. But these plans are high deductible, managed care PPO plans which provide protection that is about as effective as a sieve. Coverage under these plans has already proven to be inadequate to protect against significant financial loss or even bankruptcy. Again, this tool is too blunt because it prevents the delivery of welfare-increasing health care.

There are other mechanisms to reduce ineffective, welfare-reducing care that are much more precisely targeted. Pricing can be improved through negotiation with providers which takes into consideration legitimate costs and fair profits. Excess capacity which results in higher spending without a commensurate improvement in outcomes can be controlled through planning and budgeting of capital improvements. Physicians who inappropriately upcode or who provide an excessive frequency or intensity of services can be identified as outliers and provided with education opportunities or subjected to punitive measures if refractory to the educational process.

Global budgeting can slow the expansion of health care services down to levels closer to inflation and growth of the GDP. The $1.8 trillion that we are spending should be sufficient to ensure that there is adequate capacity in our system to meet our needs for beneficial services.

John Nyman has provided us with an invaluable contribution to the health policy literature. As he says, “There is a new argument for national health insurance: efficiency.”

Lifespan Crisis Hits Supersize America

Robin McKie, science editor
The Observer – Sunday September 19, 2004
http://observer.guardian.co.uk/international/story/
0,6903,1307825,00.html

Bloated, blue-collar Americans – gorged on diets of fries and burgers, but denied their share of US riches – are bringing the nation’s steady rise in life expectancy to a grinding halt.

Twenty years ago, the US, the richest nation on the planet, led the world’s longevity league. Today, American women rank only 19th, while males can manage only 28th place, alongside men from Brunei.

These startling figures are blamed by researchers on two key factors: obesity, and inequality of health care. A man born in a poor area of Washington can have a life expectancy that is 40 years less than a woman in a prosperous neighbourhood only a few blocks away, for example.

‘A look at the Americans’ health reveals astonishing inequalities in our society,’ state Professor Lawrence Jacobs of Minnesota University and Professor James Morone, of Brown University, Rhode Island, in the journal American Prospect .

Their paper is one of a recent swathe of studies that have uncovered a shocking truth: America, once the home of the world’s best-fed, longest-lived people, is now a divided nation made up of a rich elite and a large underclass of poor, ill-fed, often obese, men and women who are dying early.

In another newly published paper, statisticians at Boston College reveal that in France, Japan and Switzerland, men and women aged 65 now live several years longer than they do in the US. Indeed, America only just scrapes above Mexico and most East European nations.

This decline is astonishing given America’s wealth. Not only is it Earth’s richest nation, it devotes more gross domestic product – 13 per cent – to health care than any other developed nation. Switzerland comes next with 10 per cent; Britain spends 7 per cent. As the Boston group – Alicia Munnell, Robert Hatch and James Lee – point out: ‘The richer a country is, the more resources it can dedicate to education, medical and other goods and services associated with great longevity.’ The result in every other developed country has been an unbroken rise in life expectancy since 1960.

But this formula no longer applies to America, where life expectancy’s rise has slowed but not yet stopped, because resources are now so unevenly distributed. When the Boston College group compared men and women in America’s top 10 per cent wage bracket with those in the bottom ten per cent, they found the former group earned 17 times more than the latter. In Japan, Switzerland and Norway, this ratio is only five-to-one.

Jacobs and Morone state: ‘Check-ups, screenings and vaccinations save lives, improve well-being, and are shockingly uneven [in America]. Well-insured people get assigned hospital beds; the uninsured get patched up and sent back to the streets.’ For poor Americans, health service provision is little better than that in third world nations. ‘People die younger in Harlem than in Bangladesh,’ report Jacobs and Morone.

Consumption of alcohol, tobacco and food can also have a huge impact on life expectancy. The first two factors are not involved with America’s longevity crisis. Smoking and drinking are modest compared with Europe. Food consumption is a different matter, however, for the US has experienced an explosion in obesity rates in the past 20 years. As a result, 34 per cent of all women in the US are obese compared with 4 per cent in Japan. For men, the figures are 28 and 2 per cent respectively.

‘US obesity rates jumped in the 1980s and 1990s, and the vast majority of the population affected by obesity had not yet reached age 65 by 2000,’ state the Boston group. ‘As the large baby boom cohort begins to turn 65 in coming years, a stronger connection between obesity rates and life expectancy may emerge.’

In other words, as the nation’s middle-aged fatties reach retirement age, more and more will start to die out. Life expectancy in the US could then actually go into decline.

Wasting resources leaves us with Band-Aids

The Inquirer
Sep. 17, 2004
Waiting list for health care surges in Pa.
By Marian Uhlman

The waiting list for adults trying to get cheap government health coverage in Pennsylvania has jumped by a third since February, and in July topped 100,000 people for the first time, setting a record for the two-year-old program.

Experts see the surge as indicating a further decline of health insurance paid by businesses, which have been gradually cutting back benefits and raising costs for workers for several years.

The Pennsylvania Insurance Department launched the adultBasic insurance program two years ago in response to the growing ranks of uninsured adults.

The program dwindled to 37,000 people in August – the lowest number since November 2002 – because of budget uncertainties earlier this year.

The enrollees make too much money for the government’s medical assistance
program, but their income is too modest to pay for private insurance.

About 97,000 people are… on the waiting list, according to the state Insurance Department. The wait has been about 16 months. About 10,000 more people apply each month.

AdultBasic “is a Band-Aid,” said Kate Sorensen, health organizer for the Philadelphia Unemployment Project. “There has to be a more concerted effort
to deal with health care.”

http://www.philly.com/mld/philly/living/health/9684191.htm

Comment: Innumerable incremental measures, such as Pennsylvania’s adultBasic, have not been effective in even stabilizing the level of insurance coverage as the numbers of uninsured continue to increase. Other nations may struggle with queues for non-urgent services, but none of them condone queues for any health care coverage whatsoever. Our queues are criminally negligent, or at least they should be illegal.

As if the failure to adequately address the problem of increasing numbers of
uninsured were not enough, a Zogby poll last week revealed that 56% of Americans are now “personally affected” by health care costs. The 84% who do
have insurance now believe that health care costs are the number health care
concern. Middle America has been impacted.

Cost is an issue. Most current proposals for reform do not really address costs, in spite of the rhetoric, but rather only infuse more funds into our flawed system. The only approach currently under serious consideration that would work to reduce costs is to expand consumer-directed models of reform. The tragedy of this approach is that these models work by making essential health care services unaffordable, especially for those who have the greatest needs. That is the most inhumane policy approach that can be devised to contain costs.

There is tremendous waste in our system that is recoverable, but only if we adopt structural reforms that will improve our resource allocation. Prices in the United States are much higher than in other nations, pharmaceuticals being only one obvious example. Prices can be negotiated to ensure that only legitimate costs and fair profits are funded.

The well documented administrative excesses due to our fragmented system of
funding care are enormous and could be recovered by changing to a single
payer.

The tremendous technological excesses that are not beneficial, and sometimes
even detrimental, could be reduced by two measures. A strong primary care
base has been demonstrated to provide higher quality at lower cost. Providing incentives to strengthen the primary care base while reducing excessive rewards for high tech care would improve resource utilization. Excess capacity has also been demonstrated to increase the frequency and intensity of services without a commensurate benefit in health care outcomes. Planning and budgeting of capital improvements would reduce waste while ensuring adequate capacity to prevent excessive queues.

This is not rocket science. Through our tax system we’re already paying enough to fund the finest health care system in the world. But by international standards our health care delivery system is characterized by mediocrity, and affordable access to care is the worst of all industrialized nations. We are providing our government with the health care funds needed, but we are not demanding accountability for the use of those funds. We should hang our heads in shame.

Don McCanne
(Please share this message with others.)

Most Back Health Care Regulation

By Randi F. Marshall

Rising health care costs and shrinking coverage have prompted a significant majority of Americans to support government regulation – or even universal health care, according to a survey released yesterday.

Two-thirds of those surveyed said they supported a health care “guarantee,” similar to the Canadian or British systems, according to the survey, which was issued by Results for America, a division of the Civil Society Institute, a think tank based in Newtown, Mass.

Additionally, 78 percent of Americans advocate government regulation of health care, similar to utilities such as gas and water, the survey found.

“What this survey shows is a nation in the grips of a health care crisis,” said Civil Society Institute president Pam Solo. “Americans are now prepared to embrace some tough ideas.”

That’s certainly true for Plainview resident Jeffrey Rosen. As a vice president for a retail company, Rosen, who is married and has two children, watched his employer’s health care costs rise 18 percent in the past year. As a result, Rosen is seeing fewer benefits, higher deductibles and a co-payment that has gone from $10 to $25 in the past five years.

“It just gets harder and harder and harder,” Rosen said. “But it doesn’t matter what it costs; I have to spend it.”

He said he expects the United States to head toward a socialized medicine system within 10 to 15 years.

“You have no choice,” he said. “You can’t deprive people of medical coverage.”

The Civil Society Institute says it is a nonprofit, independent organization that attempts to focus on social issues such as health care, education and the environment. Solo is a social activist and grassroots advocate who has focused on issues such as national health care, stem cell research and global warming.

The institute’s survey of 1,020 adults showed that while 85 percent of respondents have health insurance, the majority of them either have seen their coverage cut or their costs rise. That represents about 100 million Americans, according to the institute.

The survey’s results, particularly on the rising cost of health care, have been echoed by other experts and research groups. The Kaiser Family Foundation just announced its findings that health care premiums rose by double digits for the fourth year in a row in 2004.

“Health insurance is becoming increasingly unaffordable in our country, especially for small employers,” said Kaiser president Drew Altman at a Washington, D.C., news conference last week. “We unfortunately should expect the ranks of the uninsured to continue to pick up.”

Nearly 20 percent said they skip or reduce dosages of their medications because they cannot afford their prescription drugs.

That translates into more than 20 million Americans, said Wayne Russum, senior researcher with Opinion Research Corp., which conducted and analyzed the survey.

As a result, more and more Americans are turning to Canada and other countries to buy their medications. More than a third are either purchasing or would consider purchasing their prescription drugs from Canada or elsewhere, the survey found. Russum said 6 percent – or as many as 10 million Americans – have bought their medications abroad. Among them are Rosen’s parents, who live in Florida and order their prescription drugs via mail-order, at a third of what it would cost here, Rosen said.

Solo said the American public was ahead of Washington politicians in their concern for health care costs.

She said, “The longer our leaders fail to take steps … the more millions of Americans will be squeezed out of our health care system and left out in the cold.”

Women business owners say it's time to put single payer on the table

The Albuquerque Tribune
September 13, 2004
Women: Health care is in crisis
By J. D. Bullington

The National Association of Women Business Owners (NAWBO) has become increasingly outspoken on health care policy…

The NAWBO position doesn’t address whether a government-run, single-payer health care system should be studied. However, several prominent NAWBO members, including past presidents, say it’s time for universal, government-run health care to be put on the table as an option for consideration.

Samantha Lapin, former NAWBO president and CEO of POD Inc., an Albuquerque computer services company, says: “I’m the last person that would have ever considered looking at universal health care, single-payer, socialized medicine – call it what you want. But the more I learn about the health care system, and the more I hear the health care industry say costs will keep rising, and there is no end in sight, then I think we’ve gotten to the position where we have to keep all of our options open and every proposal on the table.”

Another former NAWBO president, Karen Urbieliewicz, principal of her own accounting firm, largely agrees with Lapin’s assessment of the health care industry and the growing financial burden on small businesses.

“The rising costs of the medical system are out of control,” she said. “I’ve shopped for alternatives like catastrophic coverage and health savings accounts, but these products are priced higher than regular health insurance coverage. We need to look at and reevaluate the entire health care system.”

Another active NAWBO member is Edna Lopez, CEO and president of COMPA Industries, a staff augmentation and program management company with 168 employees. Lopez is also president of the Hispanic Women’s Council.

“A single-payer system used to be unattractive and ridiculous to us. But we’re in a desperate situation, where health premium increases are hurting our businesses. We’re at a point now where we have to look at all other options.”

Lapin, who was named New Mexico’s 2004 Small Business Person of the Year by
the U.S. Small Business Administration, sums up the frustration many women
in business feel toward health care: “Maybe a single-payer system isn’t viable, but we don’t know, because we haven’t discussed it.”

“Is there an alternative? What is the alternative? I can’t find it. Can you?”

http://www.abqtrib.com/archives/business04/091304_business_jdcol.shtml

Comment: It is time to put all options on the table. But that is what is feared the most by the vested interests that are diverting our health care dollars into their own coffers. These vested interests can’t find an alternative to single payer that makes any sense if the goal is to provide everyone with affordable access to comprehensive care.

Go ahead and put all options on the table and then study them. I’ve done that. And, as Ms. Lapin says, I can’t find the alternative either.

Don McCanne

A Wonderful Country – If Only We Had Universal Health Care

America is wonderful – a mixture of Disney World and Lake Woebegone. You remember Garrison Keilor’s home where all the men are good looking and all the children are above average. In a recent poll review in Provider (Sep. 2004) – a majority of baby boomers believe they are not going to need ongoing health care during their retirement years . Fact: Only 1/3 will drop dead during their first heart attack. Even Bill Clinton got caught needing health care.

Only 14 % of adults between the ages of 50 and 65 believe they will ever need day to day assistance or long term care (nursing home). Fact: Forty three percent will wind up in a nursing home – even when you go to assisted living there is probably a 50 % chance you will graduate to a nursing home – often correlated with when you run out of funds.

Sixty two percent plan to use medicare to pay for long term care services. Fact: – medicare does not pay for nursing home care other than brief rehabilitation programs. Forty per cent expect to use health insurance for their extended care – described as a total misconception of those resources – even if you were lucky enough to have insurance.

Not convinced about Lake Woebegone yet, try this! Twenty percent of the U.S. population believes they are in the top 1 % of income tax brackets. No wonder it does not bother many people when it is mentioned that nearly 50 % of the tax cut went to the upper 1%.

The poll described at the beginning of this note was done by computer on line – suggesting that the group might be above average in education and resources and are much less likely to be in the 45 million who have no health care and the 83 million who have inadequate health care or were without insurance for considerable time during the last two years.

The nation watched survival and reality shows during the conventions, just as big media predicted. This decade will decide how your children and grand children will live – even if they will live. Isn’t 18,000 deaths from lack of health care enough reality? Enough survival? These dramas are playing out every day in our non affluent homes, on the streets and in the emergency rooms. If physicians do not help the public to understand this and even remain uninformed themselves, who will help? Please remember that we pay for universal health care and do not get it! Get it?? Jerry Earll M.D.

Note: This message and any attachments are intended only for the use of the individual or entity to which it is addressed and may contain information that is privileged, confidential, and exempt from disclosure under applicable law. If the reader of this message is not the intended recipient, or the employee or agent responsible for delivering the message to the intended recipient, you are hereby notified that any dissemination, distribution or copying of this communication is strictly prohibited. If you have received this communication in error, please notify the sender.

Number of Uninsured Americans Rises to 45 Million

For Immediate Release:
September 14, 2004

Contacts:
Dr. Jerry Earll
Phone:(202) 895-0122
Email: jearll@thewashingtonhome.org
Nick Skala
(312) 782-6006

1.6 Million More Americans Uninsured, Millions More �Underinsured�
Statement of Dr. Jerry Earll on the Uninsured

Washington, DC. — The recent report by the U.S. Census Bureau on the uninsured brought sad news. The number of uninsured Americans climbed dramatically to 45.0 million (15.6 percent of the population) in 2003, an increase of 1.4 million. The increase would have been much greater if Medicaid enrollment had not been expanded to an additional 2.4 million Americans. Children make up 8.4 million of the uninsured, a number that has not budged despite the expansion of the Children’s Health Insurance Program. In the state of Texas, a shocking one-fourth of the population has no health care insurance.

Businesses are dropping health coverage as a benefit for their workers in response to continually escalating costs, up 60 percent since 2001. A fall in the percentage of Americans with employer-sponsored insurance (from 65 percent in 2001 to 60.4 percent this year) accounted for most of the increase in uninsured. Health insurance premiums are now so high that they often exceed a family’s mortgage payments. Family coverage averages almost $10,000 a year.

In our nation’s capital, the uninsured scramble for health care since the closure of the public hospital, DC General. It is not only the indigent. Middle class Americans make up a growing share of the uninsured, and tens of millions more are “underinsured.” We regularly see patients who refuse to go to the emergency room for needed evaluation because of the cost. 18,000 Americans die every year because of lack of health care, and one million middle class families go bankrupt for medical bills. Death and bankruptcy — that is real terror for any family!

David Broder’s recent description of the American health care system in a “downward death spiral” remains accurate. Americans are being offered tea cups to bail out the Titanic. Proposals for “consumer directed health care,” “health savings accounts” and “taking ownership” will neither help the uninsured nor control rising costs: They are cruel hoaxes when you do not own anything. Americans already pay the highest out-of-pocket costs in the world, so shifting more costs onto “consumers” will simply add to the heavy financial burden faced by the ill. Our nation is already spending more than enough money to pay for health care for all, but nearly one-third of every dollar is squandered on private insurance paperwork and overhead.

It is time for all physicians to become active in health policy and the movement for single payer national health insurance. Single payer could save enough on administrative costs to cover all the uninsured and upgrade benefits for everyone, including prescription medications. It is our duty as physicians to promote an effective remedy to the crisis and wise stewardship of health resources. Please join me in this effort.

#####

Dr. Jerry Earll is a Professor in the Department of Medicine at Georgetown University and the Director of the Washington Home and Hospice in Washington, DC. He served as a Colonel in the US Medical Corps (1958-1979).

Physicians for a National Health Program was founded in 1987 and has over 12,000 physician members in every specialty and state. For information or additional contacts, please call Nick Skala at (312) 782-6006.