PNHP

United Healthcare violating insurance law, says NFIB

United Healthcare violating insurance law, says NFIB

Denver Business Journal
April 8, 2004
United Healthcare violating insurance law, says NFIB

The National Federation of Independent Business accused United Healthcare Thursday of violating new state laws governing the cost of insurance for small businesses.

HB 1164 allows insurers for the first time to charge healthy groups up to 15 percent less for their health insurance. Unhealthy groups — those with more medical claims — will pay up to 10 percent more, but not until later this year. At that time, insurers can also offer discounts of up to 25 percent for healthy groups.

NFIB says the law allows insurers to discount groups by up to 15 percent, but United did not offer discounts of more than 6 percent if the group included five or fewer workers.

“We were convinced that small employers would be penalized for being small under the new rating flexibility legislation. This action has proved employers’ worst fears have been realized,” NFIB State Director Tim Jackson said.

United Healthcare CEO Victor Lazzaro said… “We are extending discounts that we believe are actuarially appropriate and in line with regulations and laws as written.”

http://denver.bizjournals.com/denver/stories/2004/04/05/daily39.html

Comment: The National Federation of Independent Business and United Healthcare are both quite willing to sacrifice access to affordable care for those with significant needs, in exchange for benefiting the majority who are healthy. Isn’t it time to take the control of our health care system away from these private entities that place their own interests above those of patients with health care needs?

A publicly owned system of funding health care would be designed to ensure that those with needs would have affordable access to care. Isn’t that the way it should be, or am I missing something here?

Congress wastes tax funds on private Medicare plans

Medicare Payment Advisory Commission (MedPAC)
April 8, 2004
M+C payment rates compared with county Medicare per capita fee-for-service spending (revised)

The purpose of this report is to present data on the level of Medicare+Choice (M+C) payment rates relative to the spending on similar beneficiaries in Medicare’s traditional fee-for-service program.

Before the Balanced Budget Act of 1997 (BBA), payment rates for private plans were set at 95 percent of a county’s per beneficiary spending under the traditional FFS program.

The Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (MMA), altered the payments in several ways.

Across all counties, Medicare is paying M+C plans an average of 107 percent of what it would cost to cover the current mix of M+C enrollees under the traditional fee-for-service Medicare program. This estimate (along with all the other estimates in this report) assumes that the average health risk of the M+C and traditional enrollees are the same, other than those differences accounted for by demographic characteristics. If, as CMS has found, M+C plans enroll a less costly population than would be accounted for by demographics, Medicare would be paying M+C plans more than 107 percent of Medicare’s spending under FFS. (MMA), altered the payments in several ways.

The “100 percent of FFS” prong of the payment formula ensures that no county will have M+C payment rates below its average FFS spending. In fact, because of the additional payments made on behalf of M+C patients by the Medicare program directly to hospitals for IME (indirect medical education), payments to plans in “100 percent of FFS” counties average 102 percent of the cost of covering demographically similar beneficiaries.

Payment rates for enrollees in “blend” counties (most of whom are in areas of northern California with a relatively high hospital price index) average 111 percent of FFS payment. By design, the payment formula’s floors are set higher than FFS spending in many counties. Medicare pays 116 percent of FFS spending for enrollees in floor counties in large urban areas and 123 percent of FFS spending in floor counties in other areas. By contrast, in non-floor counties Medicare pays 104 percent of average FFS spending.

The minimum update component of the rate formula prevents county rates from declining, even if other portions of the formula would otherwise lower rates.

http://www.medpac.gov/
For the two page report, under “Recent products,” click on “MedPAC Brief: M+C payment rates compared with county Medicare per capita fee-for-service spending (revised April 8, 2004)”

Comment: The private Medicare plans promised us lower costs, which they said were made possible by the alleged efficiencies of the competitive marketplace. But they failed to deliver, and many plans pulled out of the Medicare markets. Now Congress has responded by granting the private plans between 3% and 23% more than the costs of the traditional Medicare program, plus whatever else the plans can gain on their own through selective marketing to healthy Medicare beneficiaries.

This is an explicit concession by members of Congress that there is no magic in the competitive marketplace of private health plans. When many members of Congress are protesting that Medicare is headed for bankruptcy, it is outrageous that they would spend even more taxpayer dollars merely to “stabilize” these private plans that have already proven their inability to prevent administrative waste.

This is no longer an expensive experiment in health funding policies. The experiment is over, and the results are in. It is an egregious abusive use of a Congressional edict to give billions of our tax funds to an unworthy private industry. We need to evict these highly unethical scoundrels from our venerable chambers of Congress and replace them with our own scoundrels, but scoundrels with at least some semblance of ethics.

For an excellent article by Theodore Marmor and Jonathan Oberlander on the specious claim of Medicare ‘bankruptcy’:

http://www.post-gazette.com/pg/04095/295433.stm

Note: If and when the above link expires, the article is available under “Recent Articles of Interest”.

Forum: News flash — Medicare will not go 'bankrupt'

Alarmist language frightens and misleads the public, say Theodore Marmor and Jonathan Oberlander, and opens the door to imprudent policy debates

Sunday, April 04, 2004

Talk of Medicare going bankrupt is once again dominating the news. The pattern is utterly familiar.

Program trustees issue a report forecasting that Medicare revenues are insufficient to keep pace with future spending obligations and that the trust fund for hospital insurance consequently will become insolvent (last month’s report moved up the projected date of insolvency to 2019). Media accounts warn in hyperbolic tones that Medicare is “going bankrupt.” And politicians declare that “hard choices” must be made if Medicare is to be saved.

Unfortunately, most Americans do not realize that a program like Medicare cannot, like a private trust, go bankrupt.

Medicare has survived four decades of such warnings without any disruption of services to its elderly and disabled enrollees. Despite repeated earlier forecasts of insolvency, Medicare has never gone bankrupt — and it’s not going bankrupt this time around either.

Intended as prudent warning, the forecasting of Medicare’s future finances — and the alarmist language accompanying media reports — instead frightens and misleads the public, and opens the door to imprudent policy debates.

The intermingling of the vocabularies of trust funds, solvency and fiscal prudence has been a central (and ambiguous) feature of social insurance politics in America since the New Deal. Clarifying the language is a precondition to understanding the fiscal realities of a program like Medicare.

In the first place, no precise analogue to private bankruptcy exists in public programs like Medicare. The program’s hospital “trust fund” refers to an accounting term, a conventional way to describe earmarked revenue and spending. The very notion of a public “trust fund” emphasizes the “trust” that earmarked financing (such as the Medicare and Social Security payroll taxes) was originally meant to symbolize.

Since the mid-1930s, the federal government has used the language of trust funds to underscore the solidity of commitment to finance promised benefits in social insurance programs. Other agencies of government came to use this same device to describe specially favored (and protected) objects of governmental support. By the late 20th century, Americans had grown so used to such accounting conventions that the fundamental differences in private and public trust funds have become indistinct.

In private firms or households, a trust fund without funds is literally insolvent, unable to finance any activity. Private trusts cannot tax and their other options are highly constrained. It makes sense to think of private “trustees” making sure the projected income from the trust fund’s “investments” are financially realistic; there is no place else to turn if the invested capital is lost or the income sharply reduced.

Congress, on the other hand, has a radically different relation to the financing and spending decisions affecting trust fund programs like Medicare. It can, for example, change the hospital payroll tax rate for Medicare and immediately eliminate any shortfall, if it has the political will to do so. Likewise, the Congress can alter the benefits and reimbursement provisions of the program’s hospital or medical coverage. Or it can do some of both, as it has in different proportions over Medicare’s operational history since 1966.

Thinking that the trust fund is the crucial fiscal variable is analogous to thinking that a thermometer’s reading constitutes a heat wave or a freeze. Fiscal strain and political stress — that language accurately describes Medicare’s budget circumstances at some times and not at others. News accounts sometimes treat Medicare’s bankruptcy as a predetermined fact. Nothing could be further from the truth; the notion of bankruptcy as destiny distracts from Medicare’s capacity to alter its own future.

The trustees’ reports always stress that the projected date of insolvency assumes no corrective federal action or policy changes. But history shows that Medicare always has taken action to solidify its finances. In the 1980s, Medicare reformed its payment system for hospital and physicians, slowing down growth in program spending and pushing back the estimated date of trust fund exhaustion. More recently, the 1997 Balanced Budget Act included a series of Medicare reforms that dramatically controlled spending.

The result: While in 1997, Medicare’s hospital insurance trust fund was projected to become insolvent by 2001, by 2000 the trust fund was not predicted to be insolvent until 2025, the most optimistic fiscal forecast for Medicare in a quarter-century.

The lesson here is straightforward. Forecasts are simply possible futures, not predicted ones. Understood that way, the story worth telling is that attention now should focus on the problems and disappointments the recent Medicare legislation has generated, not handwringing about 2019. There will be plenty of time to worry about then; now is what is at issue.

(Theodore Marmor, a professor at the Yale School of Management, is the author of “The Politics of Medicare” (theodore.marmor@yale.edu ). Jonathan Oberlander, an associate professor of social medicine at the University of North Carolina-Chapel Hill, is the author of “The Political Life of Medicare” (oberland@med.unc.edu ).)

Click here to view the article at Post-Gazette.com.

Forum: News flash — Medicare will not go ‘bankrupt’

Alarmist language frightens and misleads the public, say Theodore Marmor and Jonathan Oberlander, and opens the door to imprudent policy debates

Sunday, April 04, 2004

Talk of Medicare going bankrupt is once again dominating the news. The pattern is utterly familiar.

Program trustees issue a report forecasting that Medicare revenues are insufficient to keep pace with future spending obligations and that the trust fund for hospital insurance consequently will become insolvent (last month’s report moved up the projected date of insolvency to 2019). Media accounts warn in hyperbolic tones that Medicare is “going bankrupt.” And politicians declare that “hard choices” must be made if Medicare is to be saved.

Unfortunately, most Americans do not realize that a program like Medicare cannot, like a private trust, go bankrupt.

Medicare has survived four decades of such warnings without any disruption of services to its elderly and disabled enrollees. Despite repeated earlier forecasts of insolvency, Medicare has never gone bankrupt — and it’s not going bankrupt this time around either.

Intended as prudent warning, the forecasting of Medicare’s future finances — and the alarmist language accompanying media reports — instead frightens and misleads the public, and opens the door to imprudent policy debates.

The intermingling of the vocabularies of trust funds, solvency and fiscal prudence has been a central (and ambiguous) feature of social insurance politics in America since the New Deal. Clarifying the language is a precondition to understanding the fiscal realities of a program like Medicare.

In the first place, no precise analogue to private bankruptcy exists in public programs like Medicare. The program’s hospital “trust fund” refers to an accounting term, a conventional way to describe earmarked revenue and spending. The very notion of a public “trust fund” emphasizes the “trust” that earmarked financing (such as the Medicare and Social Security payroll taxes) was originally meant to symbolize.

Since the mid-1930s, the federal government has used the language of trust funds to underscore the solidity of commitment to finance promised benefits in social insurance programs. Other agencies of government came to use this same device to describe specially favored (and protected) objects of governmental support. By the late 20th century, Americans had grown so used to such accounting conventions that the fundamental differences in private and public trust funds have become indistinct.

In private firms or households, a trust fund without funds is literally insolvent, unable to finance any activity. Private trusts cannot tax and their other options are highly constrained. It makes sense to think of private “trustees” making sure the projected income from the trust fund’s “investments” are financially realistic; there is no place else to turn if the invested capital is lost or the income sharply reduced.

Congress, on the other hand, has a radically different relation to the financing and spending decisions affecting trust fund programs like Medicare. It can, for example, change the hospital payroll tax rate for Medicare and immediately eliminate any shortfall, if it has the political will to do so. Likewise, the Congress can alter the benefits and reimbursement provisions of the program’s hospital or medical coverage. Or it can do some of both, as it has in different proportions over Medicare’s operational history since 1966.

Thinking that the trust fund is the crucial fiscal variable is analogous to thinking that a thermometer’s reading constitutes a heat wave or a freeze. Fiscal strain and political stress — that language accurately describes Medicare’s budget circumstances at some times and not at others. News accounts sometimes treat Medicare’s bankruptcy as a predetermined fact. Nothing could be further from the truth; the notion of bankruptcy as destiny distracts from Medicare’s capacity to alter its own future.

The trustees’ reports always stress that the projected date of insolvency assumes no corrective federal action or policy changes. But history shows that Medicare always has taken action to solidify its finances. In the 1980s, Medicare reformed its payment system for hospital and physicians, slowing down growth in program spending and pushing back the estimated date of trust fund exhaustion. More recently, the 1997 Balanced Budget Act included a series of Medicare reforms that dramatically controlled spending.

The result: While in 1997, Medicare’s hospital insurance trust fund was projected to become insolvent by 2001, by 2000 the trust fund was not predicted to be insolvent until 2025, the most optimistic fiscal forecast for Medicare in a quarter-century.

The lesson here is straightforward. Forecasts are simply possible futures, not predicted ones. Understood that way, the story worth telling is that attention now should focus on the problems and disappointments the recent Medicare legislation has generated, not handwringing about 2019. There will be plenty of time to worry about then; now is what is at issue.

(Theodore Marmor, a professor at the Yale School of Management, is the author of “The Politics of Medicare” (theodore.marmor@yale.edu ). Jonathan Oberlander, an associate professor of social medicine at the University of North Carolina-Chapel Hill, is the author of “The Political Life of Medicare” (oberland@med.unc.edu ).)

Click here to view the article at Post-Gazette.com.

Higher Medicare spending correlated with lower-quality care

Health Affairs
April 7, 2004
Medicare Spending, The Physician Workforce, And Beneficiaries’ Quality Of Care
By Katherine Baicker and Amitabh Chandra

Abstract:

The quality of care received by Medicare beneficiaries varies across areas. We find that states with higher Medicare spending have lower-quality care. This negative relationship may be driven by the use of intensive, costly care that crowds out the use of more effective care. One mechanism for this trade-off may be the mix of the provider workforce: States with more general practitioners use more effective care and have lower spending, while those with more specialists have higher costs and lower quality. Improving the quality of beneficiaries’ care could be accomplished with more effective use of existing dollars.

http://content.healthaffairs.org/cgi/content/full/hlthaff.w4.184v1/DC1

Comment: Some will surely react in disbelief to the fact that “the greatest health care system on earth,” with its technologically-advanced, highly-specialized services, actually delivers lower-quality care when there is increased utilization of those high-tech, highly-specialized services. Though it is true, it represents not so much of an indictment of high-tech medicine as it is an indictment of our failure to adequately support a strong primary care base.

Primary care physicians deliver care at a lower cost primarily because they do not use as much expensive, high-tech interventions as do specialists practicing within their own field. But the long-term relationship between the primary care physician and his or her patient occurs within an environment that is more than conducive to lending attention to broader interventions that are well documented to improve outcomes. Scheduling a routine, screening mammogram is an impotent function of primary care physicians, but would not normally be part of the role description of a general surgeon, or certainly not of an ophthalmologist. The primary care fields are board-certified specialties for a very good reason. Primary care specialists specialize in primary care, providing important, beneficial services that are not provided by high-tech specialists.

We clearly need to improve the way in which we allocate our health care funds. Our current system is profit oriented. Physicians will understandably factor in profit potential as they choose their specialties. Access to health care funds should have a positive correlation with quality. But that will never happen under our current fragmented system of funding care.

Only with an integrated approach within a universal system will we be able to improve resource allocation. Such improvement should inevitably include generous funding of a strong primary care base. That would certainly move us closer to our goal of affordable, high quality care for all of us.

Private payment: the zombie of health care

Globe and Mail
Apr. 6, 2004
Private payment: the zombie of health care
By Gordon Guyatt

A number of commentators have issued vigorous calls for a debate on private payment for health care, and the two-tier system that private payment brings. They paint a picture of a cowardly conspiracy of silence in the face of an unsustainable system. However, Canadians have been debating public versus private payment since 1919, when Liberal leader William Lyon Mackenzie King included a form of medicare in his election platform. Five times in Canada’s history, the federal government has asked high-profile political or judicial leaders to debate and resolve the health-funding controversy.

The five reviews all came to the same conclusion: Public funding of health care is more equitable and more efficient. A parallel private system will not only introduce inequities in access to care, but will waste our resources and reduce our international competitiveness.

On each occasion, these august bodies widely publicized the relevant evidence. Before national health insurance, Canada’s poor had limited access to health care. Studies have consistently shown that income no longer limits utilization of care.

Public funding means that the single payer, the government, can exercise a discipline impossible when private insurance pays for a substantial part of care. That’s why Canada’s publicly funded sectors of health care, and physician and hospital services, have managed to contain costs.

Both (recent) reports (Roy Romanow and Michael Kirby) also seriously considered, and rejected, the private-pay option. Paying more to get less, the inevitable consequence of moving away from public pay, didn’t make sense to the reports’ authors.

So, why the amnesia about the prior debates? Almost a decade of provincial and federal tax cuts have left government program spending at the lowest percentage of GDP since the 1950s. For some, the mandate to keep taxes low trumps all other considerations.

If our commitment to maintain or extend tax cuts is absolute, we indeed have a problem. In that ideology, it doesn’t matter if we spend more on health care and receive less. We have no choice but to turn to private pay, two-tier health care.

Canadian health economist Bob Evans has described private-pay advocacy for health care as a zombie: intellectually dead, but destined to keep rising again and again to haunt health-policy debates. The critics’ recent comments suggest that even the weight of five lucid, publicly debated reports and recommendations will not put the zombie to rest.

(Gordon Guyatt is a professor in the faculty of health sciences at McMaster University.)

Are tax credits the best way to cover the uninsured?

Family Practice News
April 1, 2004
Pro & Con
Are tax credits the best way to cover the uninsured?

Dr. John C. Nelson, president-elect of the American Medical Association:

To most effectively increase health care coverage, we need a national solution that builds on the strengths of our current system. The American Medical Association has long held that properly structured tax credits are the best approach to covering the uninsured.

Dr. Don McCanne, immediate past president of Physicians for a National Health Program:

Tax credit proposals are designed to provide financial assistance for the purchase of private health plans that are becoming less and less affordable. The problem is that private plans are an expensive, inequitable, and administratively inefficient method of funding health care.

http://www2.efamilypracticenews.com/scripts/om.dll/serve?action=searchDB&searchDBfor=art&artType=full&id=aqf04034716b

Comment: This brief “pro and con” opinion feature is well worth reading in its entirety.

Note: If you above link does not take you straight to the “pro and con” feature, you may view it under ‘Recent Articles of Interest’.

Pro & Con – Are tax credits the best way to cover the uninsured?

Pro & Con – Family Practice News, April , 2004
Are tax credits the best way to cover the uninsured?

PRO: Dr. John C. Nelson, AMA
CON: Dr. Don McCanne, Physicians for a National Health Program

Dr. John C. Nelson is president-elect of the American Medical Association.

Providing health insurance to the swelling ranks of the uninsured has become one of America’s most pressing health care issues.

As physicians, we know that when our patients don’t have insurance, their health is in jeopardy. In fact, uninsured women are twice as likely as women with insurance to die if they have breast cancer. While many states and the federal government are working to cover the uninsured, much more needs to be done to provide the majority of uninsured Americans with stable health care coverage.

To most effectively increase health care coverage, we need a national solution that builds on the strengths of our current system. The American Medical Association has long held that properly structured tax credits are the best approach to covering the uninsured.

The existing tax exclusion for employer spending on health insurance should be transitioned to a system of tax credits for individuals and families to obtain health insurance. Currently, the government provides a $100 billion subsidy for health insurance to employees who receive employer-sponsored health insurance every year. The result: Two-thirds of the tax subsidy goes to the wealthiest one-third of American families.

Tax credits should be inversely related to income and generous enough to put health insurance within everyone’s reach. They should be refundable, and advanceable, so that families who owe little or no income tax still receive the tax credit, and those who cannot afford monthly out-of-pocket premium payments can purchase coverage without waiting for a year-end tax credit.

Just as strong as the AMA’s support for tax credits is our opposition to the single-payer health system proposal. Long waits for health care services, delays in adopting new technologies and maintaining facilities, and development of a large bureaucracy that can cause a decline in the authority of patients and their physicians over clinical decision-making are all hallmarks of the single-payer system.

We need a plan that will work, and tax credits are an idea whose time has come. In 2002, tax credits for displaced workers gained bipartisan support and became available through federal legislation, and President Bush recently reaffirmed his support for tax credits with his proposal to establish refundable tax credits to help low-income workers buy health insurance coverage. In addition, the major Democratic presidential candidates have embraced tax credits as part of their health care plans.

Currently, there is little choice in health insurance plans. Most Americans have health insurance through their employers, and more than 90% of employers offer only one plan. Through tax credits, individuals and families would be able to select any plan of their choosing, and insurers would be more responsive to patient demand for access, quality, and affordability. This shift in choice and ownership would spur insurers to innovate new plans and new forms of coverage, including a wider range of affordable coverage options.

Let’s act now to better the health of our nation’s uninsured men, women, and children by working together to promote a solution that works for individual and family tax credits to purchase health insurance.

———————————

Dr. Don McCanne is immediate past president of Physicians for a National Health Program.

Tax credits are not the best way to cover the uninsured. The goal of reform should be to provide comprehensive, but affordable, coverage for everyone. Tax credits fall short on these goals.

Tax credit proposals are designed to provide financial assistance for the purchase of private health plans that are becoming less and less affordable. The problem is that private plans are an expensive, inequitable, and administratively inefficient method of funding health care. They waste resources on their own administrative excesses and especially through the tremendous administrative burden that they place on the health care delivery system. And since tax credits do not cover the entire premium, many people still will be left without coverage simply because they cannot fund their portion.

Studies have shown that tax credits for individual plans would have only a very minimal impact on the numbers of the uninsured since uptake of the plans would be mostly offset by the incentives for employers to drop coverage for their employees. As the amount of the credit increases, the rate of termination of employer-sponsored plans also increases. Shifting employees to the individual market is a problem because premiums are higher for comparable coverage, benefits are lower, and cost sharing is greater. Those with the greatest need for coverage may be excluded from the individual market because of preexisting disorders.

Other studies have demonstrated that using tax policies to assist with the purchase of group plans is the most expensive method of expanding coverage. Large employers and government purchasers such as the Federal Employees Health Benefit Program have failed to control escalating costs. Middleman health plans were able to slow cost increases through provider contracting. But that sponge was wrung dry, and they no longer are able to further slow the growth in costs. Providing more federal funding would only add fuel to this health care cost explosion.

There is a way to provide affordable, comprehensive coverage for everyone. Replacing our fragmented, wasteful system of private plans, public programs, and no programs at all with a single, publicly funded and publicly administered universal insurance program would provide enough administrative savings to pay for comprehensive care for everyone, with no increase in our current level of health care spending. This has been demonstrated not only by microsimulation models, but also by the actual experience in other nations. And the United States has the unique advantage that the $1.79 trillion that we are already spending is more than enough to ensure a capacity that would prevent excessive queues, and to continue to provide adequate incentives for future technologic innovation.

Instead of pouring more tax dollars into a wasteful, flawed, and inefficient system of funding care, let’s adopt a much more equitable and affordable system. Our current private and public health care delivery system would function much more effectively under a publicly funded and administratively efficient system of insurance that truly covers everyone.

Copyright © 2004 by International Medical News Group, an Elsevier company.

Pro & Con – Are tax credits the best way to cover the uninsured?

Pro & Con – Family Practice News, April , 2004
Are tax credits the best way to cover the uninsured?

PRO: Dr. John C. Nelson, AMA
CON: Dr. Don McCanne, Physicians for a National Health Program

Dr. John C. Nelson is president-elect of the American Medical Association.

Providing health insurance to the swelling ranks of the uninsured has become one of America’s most pressing health care issues.

As physicians, we know that when our patients don’t have insurance, their health is in jeopardy. In fact, uninsured women are twice as likely as women with insurance to die if they have breast cancer. While many states and the federal government are working to cover the uninsured, much more needs to be done to provide the majority of uninsured Americans with stable health care coverage.

To most effectively increase health care coverage, we need a national solution that builds on the strengths of our current system. The American Medical Association has long held that properly structured tax credits are the best approach to covering the uninsured.

The existing tax exclusion for employer spending on health insurance should be transitioned to a system of tax credits for individuals and families to obtain health insurance. Currently, the government provides a $100 billion subsidy for health insurance to employees who receive employer-sponsored health insurance every year. The result: Two-thirds of the tax subsidy goes to the wealthiest one-third of American families.

Tax credits should be inversely related to income and generous enough to put health insurance within everyone’s reach. They should be refundable, and advanceable, so that families who owe little or no income tax still receive the tax credit, and those who cannot afford monthly out-of-pocket premium payments can purchase coverage without waiting for a year-end tax credit.

Just as strong as the AMA’s support for tax credits is our opposition to the single-payer health system proposal. Long waits for health care services, delays in adopting new technologies and maintaining facilities, and development of a large bureaucracy that can cause a decline in the authority of patients and their physicians over clinical decision-making are all hallmarks of the single-payer system.

We need a plan that will work, and tax credits are an idea whose time has come. In 2002, tax credits for displaced workers gained bipartisan support and became available through federal legislation, and President Bush recently reaffirmed his support for tax credits with his proposal to establish refundable tax credits to help low-income workers buy health insurance coverage. In addition, the major Democratic presidential candidates have embraced tax credits as part of their health care plans.

Currently, there is little choice in health insurance plans. Most Americans have health insurance through their employers, and more than 90% of employers offer only one plan. Through tax credits, individuals and families would be able to select any plan of their choosing, and insurers would be more responsive to patient demand for access, quality, and affordability. This shift in choice and ownership would spur insurers to innovate new plans and new forms of coverage, including a wider range of affordable coverage options.

Let’s act now to better the health of our nation’s uninsured men, women, and children by working together to promote a solution that works for individual and family tax credits to purchase health insurance.

———————————

Dr. Don McCanne is immediate past president of Physicians for a National Health Program.

Tax credits are not the best way to cover the uninsured. The goal of reform should be to provide comprehensive, but affordable, coverage for everyone. Tax credits fall short on these goals.

Tax credit proposals are designed to provide financial assistance for the purchase of private health plans that are becoming less and less affordable. The problem is that private plans are an expensive, inequitable, and administratively inefficient method of funding health care. They waste resources on their own administrative excesses and especially through the tremendous administrative burden that they place on the health care delivery system. And since tax credits do not cover the entire premium, many people still will be left without coverage simply because they cannot fund their portion.

Studies have shown that tax credits for individual plans would have only a very minimal impact on the numbers of the uninsured since uptake of the plans would be mostly offset by the incentives for employers to drop coverage for their employees. As the amount of the credit increases, the rate of termination of employer-sponsored plans also increases. Shifting employees to the individual market is a problem because premiums are higher for comparable coverage, benefits are lower, and cost sharing is greater. Those with the greatest need for coverage may be excluded from the individual market because of preexisting disorders.

Other studies have demonstrated that using tax policies to assist with the purchase of group plans is the most expensive method of expanding coverage. Large employers and government purchasers such as the Federal Employees Health Benefit Program have failed to control escalating costs. Middleman health plans were able to slow cost increases through provider contracting. But that sponge was wrung dry, and they no longer are able to further slow the growth in costs. Providing more federal funding would only add fuel to this health care cost explosion.

There is a way to provide affordable, comprehensive coverage for everyone. Replacing our fragmented, wasteful system of private plans, public programs, and no programs at all with a single, publicly funded and publicly administered universal insurance program would provide enough administrative savings to pay for comprehensive care for everyone, with no increase in our current level of health care spending. This has been demonstrated not only by microsimulation models, but also by the actual experience in other nations. And the United States has the unique advantage that the $1.79 trillion that we are already spending is more than enough to ensure a capacity that would prevent excessive queues, and to continue to provide adequate incentives for future technologic innovation.

Instead of pouring more tax dollars into a wasteful, flawed, and inefficient system of funding care, let’s adopt a much more equitable and affordable system. Our current private and public health care delivery system would function much more effectively under a publicly funded and administratively efficient system of insurance that truly covers everyone.

Copyright © 2004 by International Medical News Group, an Elsevier company.

Greeley, Colo., Hospital Suffers Financial Crisis

Knight Ridder/Tribune Business News
The Miami Herald
Apr. 02, 2004
Greeley, Colo., Hospital Suffers Financial Crisis
By Tom Hacker, Greeley Tribune

Bad debt, charity care and federal reimbursement shortfalls are strangling Colorado hospitals, with Greeley’s hospital shouldering a disproportionate share of the statewide burden, an industry report released today says. And North Colorado Medical Center’s top official said Thursday the numbers show a crisis so severe that only a move toward a national health-care system would bring a solution.

“I was one of the last people, because of my political leanings, to ever see a national health plan as the way to go,” said Jon Sewell, NCMC’s chief executive officer. “But it’s becoming more and more apparent that that’s the only solution I can envision. You can’t have this growing gap between haves and have-nots.”

The widening gap had reached a crisis point that required a shift in thinking toward a national health-care solution, Sewell said. “In Greeley and the rest of the country, we’re at the breaking point as more and more people are moving from the managed-care category” into the uninsured or underinsured groups, he said.

“We need a national health plan that covers everybody to some degree. Something has to happen. We are literally at the brink.”

http://www.miami.com/mld/miamiherald/business/national/8341077.htm

Comment: “Political leanings” have little significance in the face overwhelming evidence that our system of funding health care is fatally flawed. The $1.79 trillion that we are spending this year is more than enough to fund comprehensive care for everyone. Objective assessment of the various funding options available inevitably leads to the conclusion that only a national health plan is capable of allocating our resources effectively, even if some political persuasions have resisted this conclusion.

It’s time to lay partisanship aside and proceed with the restructuring of health care funding. After all, it’s for our health.

The Puzzling Popularity Of The PPO

Health Affairs
March/April 2004
The Puzzling Popularity Of The PPO
By Robert E. Hurley, Bradley C. Strunk and Justin S. White

The PPO benefit option is assumed to offer more choice of providers, less
restrictive features for consumers, fewer impositions on caregivers, and lower administrative costs to purchasers. Less apparent is that many employers, increasingly concerned about controlling rising costs, are adopting benefit offerings that are more flexible in terms of customized design and less subject to regulatory strictures. For them, the virtue of the PPO design is its malleability, as its component parts can be shaped into an infinite set of alternative arrangements including broader or narrower networks, richer or more meager benefits, maximum or minimal medical management, and more or less consumer cost sharing.

As the drumbeat for increased consumer responsibility builds with more cost sharing, increased benefit buy-down opportunities, multi-tier provider networks, and various consumer-driven health plan designs, PPO arrangements
seem well positioned to respond to these preferences. The positioning to offer one or more of these options is apparent in every market, as employers grow more restive about what existing product designs can deliver by way of cost containment and interest shifts from supply-side to demand-side interventions. The coinsurance feature of PPO options is especially valued as a means to cultivate price-sensitivity as consumers begin to spend more of their own money for their medical care.

The fact that PPOs have grown in popularity at the same time that overall
health benefit costs have risen sharply is not a ringing endorsement; nor are the trends reported for PPO premiums different from HMO premium trends. Thus, it does not appear that PPO arrangements have played much of a role in
cost containment despite the fact that more than half of all commercially covered lives are in PPOs. What they do seem to deliver is cost displacement by moving costs from employer-sponsors to individuals, which, nonetheless, has the real effect of moderating the rate of increase in employers’
contributions for benefits. In addition, the flexible PPO design enables employers to buy down benefits by requiring more cost participation for existing benefits or to lower their premium contributions by shifting more cost to consumers in the form of user fees.

These findings are pertinent to the current debate regarding the suitability
of the PPO as a policy option for major public-sector programs such as Medicare.

Much of the appeal of the PPO option lies in its asserted superiority relative to HMOs in terms of choice, limited medical management, accommodation of providers’ preferences, and lower administrative expenses. However, the PPO arrangement enjoys none of these advantages relative to traditional Medicare. Moreover, as current trends indicate, much of the recent growth of the PPO is driven by its flexibility to enable employers to shift more costs to consumers and shrink benefit packages, not augment them. Finally, the fact that most PPO networks harbor limited aspirations to manage care, reward provider behavior, and promote aggressive quality improvement for participants makes it far from clear what it is that Medicare hopes to obtain from the PPO product.

The popularity of the PPO is subject to much misunderstanding. The confusion is attributable in part to the diversity of forms in which PPO offerings
appear in the market. It is also related to the fact that PPO participation growth resulted from flight from the undesirable features of the HMO and widespread skepticism about the value of managed care, rather than from a migration to the attractive features of the PPO. Seen from a slightly different angle, however, PPO growth also represents a retreat from the era of benefit expansion of the 1990s because financing these benefits, particularly via provider discounts, has proved unsustainable. In this vein, the PPO option is an instrument for private purchasers to realign what they wish to pay for health benefits with what they believe they can afford to pay. For consumers, the continued “success” in PPO growth almost certainly translates into paying more to try to hold onto what they have.

http://content.healthaffairs.org/cgi/content/abstract/23/2/56

Comment: With the loss of indemnity plans and the dissatisfaction with
network model HMOs, PPOs have become the favored model, both for employer
sponsored coverage and for individual plan purchasers. High deductible PPOs
will be the primary model to fulfill the catastrophic requirement for the new health savings accounts. And Medicare + Choice was converted into Medicare Advantage primarily to shift Medicare into the private PPO market.

PPOs will continue to expand as benefits and affordability contract. We need to understand that as we shift more into PPO “insurance” products, we are
relinquishing the financial security that insurance should be providing to protect us against the risk of excessive health care costs.

There are better options. A universal, single payer system of social insurance would ensure affordability and financial security in the face of potential health care risks. Why should we lend support to the PPOs at the cost of our own financial and health security?

It's time to look again at single-payer

It’s time to look again at single-payer
Capital Times – Madison, WI
By Dave Zweifel
April 2, 2004

Marjie Colson, Madison’s passionate champion for the rights of the powerless, shipped me an e-mail a few days ago saying it is time to talk about single-payer health coverage again.

Colson is convinced, like many of us, that we’re never going to solve our health care problems by continuing down the same path that has left an estimated 42 million Americans, many of them children, without any insurance coverage and tens of millions more sacrificing pay raises to keep the coverage they have.

She’s been invited to a meeting in Washington in early May that’s aimed at drumming up support for Michigan Rep. John Conyers’ proposal that would establish national single-payer health insurance by extending Medicare coverage to everyone in the country. The meeting will bring together for the first time two major organizations that have long been pushing single-payer: Physicians for a National Health Program and the Universal Health Care Action Network.

The organizations are optimistic that the tide is finally turning in favor of a national health program as more and more people are becoming fed up with the current mess.

Conyers envisions paying for his plan, known as the U.S. National Insurance Act, with a 3.3 percent payroll tax that employers would pay Medicare on each of their employees. The employer would pay less than $1,200 per year – $100 a month – for an employee earning $35,000 annually, for example. Full private health insurance is now costing employers who provide it an average of $755 per employee per month.

Conyers figures that a single-payer system based on Medicare would save Americans about $150 billion on paperwork per year and another $50 billion by pooling drug purchases. It is estimated that our current private insurance and HMO plans are eating up close to 18 cents of every health dollar just for administrative costs. Medicare administration, meanwhile, runs less than 3 cents on every dollar.

The problems with our health system today are being felt not only by the 42 million Americans who have no coverage, but by small business owners who simply cannot afford to continue providing their workers with coverage.

“We’ve got to get the profiteers out of health care,” Colson wrote. “They don’t belong. They never did.”

Colson is concerned, though, that so far there are no Wisconsin members of Congress among the 29 co-sponsors of the Conyers bill.

“I can’t believe that,” she said. Neither can I.

Dave Zweifel has been editor of The Capital Times since 1983. A native of New Glarus, Wis. and a graduate of the University of Wisconsin-Madison, his life-long goal was to be the editor of this newspaper. He has had more luck achieving that than his other fondest hope watching the Chicago Cubs win the World Series. He served for many years as president of the Wisconsin Freedom of Information Council and served two years as a juror for the Pulitzer Prizes.