Can we afford not to insure the uninsured?
ARNOLD BIRENBAUM
(Original publication: March 8, 2004)

The Journal News
The online information source for Westchester, Rockland, and Putnam

(The writer, a Larchmont resident, is a professor of pediatrics at Albert Einstein College of Medicine, Bronx.)

Sen. Bill Frist, U.S. Senate majority leader and a thoracic surgeon, recently predicted that many of the 43 million in America without insurance will remain uninsured. Dr. Frist believes that it is too expensive for the government to cover the entire population of the United States, particularly following the new expansion of Medicare-based drug benefits, the creation of financial incentives for managed-care plans to enroll senior citizens, and the taxes lost through the promotion of health savings accounts.

As a man with religious faith in the free market, he has seen a rosy future, but it does not work for the uninsured.

Other public leaders with less of a will to believe have seen further and call for action now with regard to the uninsured. In January, the Institute of Medicine, one of three congressionally chartered national academies functioning since 1970 as an adviser to the federal government, issued “Insuring America’s Health: Principles and Recommendations,” the last in a series of five reports on uninsurance — a social condition resulting from the rising cost of health care and increased family stress, as well as the individual health risks of having one out of seven Americans without insurance. These well-crafted studies and their recommendations were subject to review by national experts.

The status quo second, even third-class status for the uninsured is an unsustainable option for our society. What we see now are the lowlights of our health-care system.

People without insurance find private insurance unaffordable and put off necessary visits to the doctor. While they may be young and relatively healthy, they sometimes, like most of the insured, need access to care. Additionally, the uninsured do not seek preventive care or screening for disease. When hospitalized, those without insurance may not receive all the tests that the insured get.

Clearly, the quality of care of the uninsured does not match that received by those with private or public insurance.

The presence of uninsured patients in the health-care system is now more than ever destabilizing since cross-funding is no longer available. Private insurance payments became less generous when medicine entered the era of managed care. Inpatient and outpatient providers had to offer deep discounts to gain contracts from insurance plans. Thinner margins made charity care less possible.

Consequently, there is a personal and societal price for lack of access. The authors of “Insuring America’s Health” estimate that the cost of poorer health and shorter lives is somewhere between $65 billion and $130 billion, a bill that comes due down the road. Some of this extraordinary cost is the result of discontinuities in coverage — gaps that arise when workers lose their coverage when they become unemployed or beneficiaries are removed from state Medicaid rolls.

Other countries do more with less money. Most of the advanced industrial nations to which the United States is compared have universal coverage, either through a social insurance system or progressive taxation. Currently, the United States spends almost 14 percent of its gross domestic product on health care, and that is expected to increase by 2013 to more than 18 percent! No other country comes close to this share of GDP.

How long can we afford to ignore the conclusion that these costs are unsustainable in the long run?

And, by all standard public-health measures (e.g., infant mortality, life expectancy), these systems of financing found in Canada, Great Britain, France or Japan, to name but a few countries, do just as well as we do, or better. Continuity of coverage means better access to health care. Changing jobs or losing jobs does not mean that a German citizen, for example, has to go without health insurance and access to care.

Our country, unlike other advanced societies, does not have in place safety nets that generate cost benefits to society as well as to its citizens. There is no universal entitlement to health-insurance coverage in the United States. The recent recession has led more employers to eliminate health-care benefits for their employees and/or their dependents. This trend will only lead to more churning and reduced access to needed care.

There are long-run savings from universalizing coverage, even with subsidies for low-income workers. Otherwise, we will pay for the neglect of the health care of the growing number the uninsured in coming decades.

What kind of a future is that, Senator? Shall the last to gain insight into our predicament be the Frist?

Toward Openness in Drug Purchases
April 28, 2004
The New York Times

The veil of secrecy that shrouds the operations of the middleman companies that manage drug benefits for tens of millions of Americans was lifted a bit this week when the nation’s largest manager of pharmacy benefits agreed to greater transparency. If the settlement reached by that company, Medco Health Solutions, and litigators representing 20 states and the federal government becomes common practice, it may ease suspicions that the companies managing benefits make deals that favor their own financial interests rather than those of the patients or the health plans they serve.

In theory, the middleman companies are supposed to keep drug prices low by negotiating favorable deals with pharmaceutical manufacturers and passing on the savings to health plans, employers and other clients. But lawsuits filed by 20 states and the United States attorney in Philadelphia alleged that Medco had sometimes made deals to benefit itself and failed to pass on sufficient savings to its customers. Indeed, the suits contended that Medco, in return for higher rebates from manufacturers, had sometimes persuaded doctors to change patients’ prescriptions in ways that had actually increased the costs for the patients and their health plans. Medco was accused of pocketing a lot of the rebate money and failing to tell clients it had done so.

Without admitting any wrongdoing, Medco has agreed to pay a modest cash settlement and, more important, to change its business practices. The settlement prohibits Medco from seeking to switch drugs if the net result would be higher costs for the patients or the drug plans. Medco will also reveal to prescribers and their patients any financial incentives it receives for switching drugs. These and other requirements could help rein in these largely unregulated companies as they assume a major role in administering the new Medicare prescription drug benefit.

Copyright 2004 The New York Times Company

Atlanta Journal Constitution
Editorial
Health care system needs doctoring
Published on: 04/24/04

The American health care system is in some ways like the Titanic. It is big and luxurious and a showplace for the last word in technology. It is committed to its clientele, especially those in the upper decks. Many of the people bidding the ocean liner farewell from the shore wish that they could come aboard, but even though they work hard, sometimes holding down two jobs at a time, they just can’t afford it.

Our titanic medical delivery system is the envy of the world, embraced and patronized by kings and potentates. Surely its future is guaranteed.

Or is it?

Critics of our $1.6 trillion health care industry warn of real trouble ahead. We spend more per capita than any nation in the world, yet the CIA World Fact Book rates us 48th in life expectancy, compared to 11th for neighboring Canada. We annually squander some $135 billion in lost productivity due to illness, much of it preventable, and an estimated 15 percent of our population — some 43.6 million people — lived without health insurance for all of 2002. According to Census Bureau figures, 25.6 million of those without insurance worked either part time or full time.

But the truly big iceberg looming dead ahead is the rising cost of health care, including prescription drugs and hospital care. That is driving some employers to drop job-related health insurance, and is putting others at a serious disadvantage with foreign competitors that do not have to cover health insurance costs for their employees.

In the fierce, globally competitive auto industry, for instance, accountants estimate that health insurance costs for U.S. manufacturers add $1,300 to the price of each vehicle, even more than the cost of steel. European manufacturers, in contrast, often benefit from government health insurance plans that keep companies off the hook. The lure of avoiding health insurance costs also helps account for the outsourcing of jobs overseas.

Technology also poses a threat to the current U.S. health care system. Genetic research, for example, may soon identify which of us are prone to certain diseases, thereby making preventive care possible. But it will also help insurance companies identify which of us are at higher risk of illnesses that threaten to be chronic and even catastrophic, allowing the companies to deny coverage for those people. After all, as one traditional insurance source put it, “We are not in the habit of insuring burning houses.”

A decade ago, the Clinton administration made a well-intended but poorly handled bid to introduce universal, single-payer coverage, an effort that ended in political disaster for Democrats and took the issue off the national agenda. The passage of time, however, has only confirmed the initial attractions of that approach. In a lengthy piece in the April 18 New York Times Sunday Magazine, former first lady Hillary Clinton, now a U.S. senator from New York, argues for an overall system that pools risk and directs funds to a comprehensive plan that takes care of health needs and focuses on health maintenance.

Such a plan could focus on efficiencies of delivery and mandate research on illnesses that are neglected because the numbers of the sick are small” for instance, serious diseases such as epilepsy and killers such as scleroderma. A managed health care program could also guide and finance research into overarching health problems such as asthma and other pulmonary diseases.

Inevitably, a single-payer system would create challenges of its own, and may not be the ultimate answer. But the business community that bitterly opposed the concept a decade ago is now beginning to see financial merits in the approach. Doctors, hospitals and patients struggling to deal with an ever-more complex private insurance scheme may prove more open to the idea as well. And the inescapable truth is that for all of its technology and know-how, the United States gets less cure for its health care buck than any other highly advanced nation.

Surely that’s sufficient cause to rethink what we’ve been doing.

LIFE EXPECTANCY

The United States ranks 48th out of 225 countries surveyed.

By ROBERT PEAR
Published: April 23, 2004
The New York Times

WASHINGTON, April 22 — The Equal Employment Opportunity Commission voted Thursday to allow employers to reduce or eliminate health benefits for retirees when they become eligible for Medicare at age 65.

The agency approved a final rule saying that such cuts do not violate the civil rights law banning age discrimination. The vote was 3 to 1, with Republicans lining up in favor of the rule and a Democrat opposing it.

Employers and some labor unions supported the change, saying it would help preserve coverage for early retirees. But AARP, which represents millions of Americans age 50 and older, strenuously objected.

The new rule creates a potentially explosive political issue, because it will create anxiety for many of the 12 million Medicare beneficiaries who also receive health benefits from their former employers.

“We are aware of the anxieties and misperceptions that have taken root,” said Cari M. Dominguez, chairwoman of the commission, which was deluged with letters opposing the rule from more than 50,000 AARP members.

Employer-sponsored health plans help retirees pay medical expenses not covered by Medicare. Those expenses could include co-payments and deductibles, the catastrophic costs of severe illness and the cost of preventive care and prescription drugs, beyond what Medicare might pay.

Debate over the rule highlights the tradeoffs employers make as they decide what benefits, if any, to provide workers and retirees at a time when health care is gobbling up a growing share of total compensation.

The rule creates an explicit exemption to the Age Discrimination in Employment Act of 1967. In practice, it allows employers to reduce health benefits for retirees when they become eligible for Medicare at the age of 65.

A federal appeals court ruled in 2000 that such age-based distinctions were unlawful.

No law requires employers to provide health benefits to workers or retirees. Employers can legally provide benefits to active workers and not to retirees. Courts have said that if an employer provides benefits, it cannot discriminate among retirees on the basis of age.

But the commission said that under the age discrimination act it had authority to make “reasonable exemptions” to the law in the public interest. The law does not define “reasonable.”

Leslie E. Silverman, a member of the commission, said the appeals court decision had confronted employers with an all-or-nothing choice: “Give all of your retirees the exact same benefits, which is incredibly difficult, or eliminate your retiree health benefits altogether.”

Several commission members said that employers were more likely to continue providing health benefits to retirees under 65 if they were allowed to reduce or eliminate benefits for those 65 and older.

A preamble to the final rule says it “is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.”

But Michele Pollak, a lawyer at AARP, said that might well occur.

“This rule will allow employers to reduce or eliminate retiree health benefits for anyone over the age of 65,” Ms. Pollak said. “More than 12 million Medicare beneficiaries currently receive retiree health benefits from employers and could potentially be affected.”

Ms. Pollak said the commission did not have authority to create such an exemption. Ms. Dominguez insisted that it did, though she said the power was rarely used.

Paul W. Dennett, vice president of the American Benefits Council, a trade group for large employers, welcomed the rule, saying, “It removes a cloud that has been hanging over retiree health coverage since the court decision in 2000.”

The American Federation of Teachers and the National Education Association also supported the rule. School employees often retire early and rely on employer-provided health benefits until they become eligible for Medicare.

Alfred Campos, a lobbyist for the National Education Association, praised the rule, saying, “It will encourage school districts to continue providing health insurance to retired teachers under 65.”

Stuart J. Ishimaru, who cast the only no vote, said: “I came to the commission as a civil rights lawyer. Before making an exemption to a major civil rights law, you need a compelling reason, which I have not seen.”

The proper role of the commission, Mr. Ishimaru said, is not to make health policy, but to protect people from discrimination.

The rule is subject to comment by other federal agencies, and it will be reviewed by the Office of Management and Budget. But it is within the jurisdiction of the employment commission and is expected to stand.

The rule reverses a position that the commission took in the court case and in a national policy statement issued in October 2000.

Under the rule, employers can coordinate retiree health benefits with Medicare.

“For example,” the commission said, “in order to ensure that all retirees have access to some health care coverage, employers and unions may provide retiree health coverage to only those retirees who are not yet eligible for Medicare. They also may supplement a retiree’s Medicare coverage without having to demonstrate that the coverage is identical to that of non-Medicare eligible retirees.”

Opponents could challenge the rule in court. AARP said it would “explore a range of different steps, including litigation,” to block the rule if it is not changed.

Congress considered the issue in debating Medicare legislation last year. The Senate version of the Medicare bill included a provision similar to the commission’s rule, but it was dropped from the measure ultimately signed by President Bush.

AARP insisted on elimination of that provision before it announced its support for the bill in November. That endorsement played a critical role in passage of the measure.

In recent years, many employers have reduced health benefits for retirees, in part because of soaring health costs.

Employers said that uncertainty caused by the court decision, involving retired government workers in Erie County, Pa., would accelerate the erosion of retiree health benefits if the commission did not take action.