PNHP

CMS report on health spending increases

CMS report on health spending increases

Health Affairs
January/February 2004
Health Spending Rebound Continues In 2002
By Katharine Levit (and colleagues from the Office of the Actuary, Centers for Medicare and Medicaid Services)

U.S. health care spending climbed to $1.6 trillion in 2002, or $5,440 per person. Health spending rose 8.5 percent in 2001 and 9.3 percent in 2002, contributing to a spike of 1.6 percentage points in the health share of across domestic product (GDP) since 2000 (to 14.9% in 2002).

The continued acceleration in health care spending growth has posed financial challenges for government, businesses, and individuals alike. Compared with economic growth of 3.6 percent, growth in health spending of 9.3 percent pressures employers to cut other spending increases, possibly through reducing jobs, wage gains, or health benefits or through Shifting more costs to employees. State and federal governments face the same dilemma of costs rising more rapidly than revenues, leading every state to scrutinize discretionary Medicaid benefits as the number eligible for coverage continues to grow.

Factors fueling growth in health spending are already showing signs of dissipating in 2003. Preliminary data indicate that hospital use has eased and that wage growth in the health sector has decelerated slightly. Furthermore, Medicare givebacks have expired, and states have begun plans to curtail Medicaid spending growth. Finally, as consumers share more of the increases in cost, the value of health services will be more closely weighed against other purchases, underscoring the considerable value of some services and the discretionary nature of others.

http://content.healthaffairs.org/cgi/content/full/23/1/147

Comment: Can the health care consumer really distinguish between services that are of considerable value and those that are more discretionary? In a life-threatening emergency, services are rendered without significant consumer input, even though the financial consequences for the patient may be severe.

But what about decisions regarding management of serious chronic disorders such as diabetes, hypertension, congestive heart failure, or hyperlipidemia? For the great multitude of individuals who have negligible disposable income, the consumer decisions become a choice of essentials such as housing and food, versus adequately managing a disorder that may have minimal symptoms at present, but, in time, may have a major detrimental impact on the individual’s health status. The health care consumer may perceive these expenses to be discretionary, when, in reality, reducing spending now may result in disability and premature death. No truly humane policymaker for health care provider can ever consider these expenses to be being discretionary.

Perhaps the most common example of an “unnecessary” discretionary service is the C-T or MRI scan “demanded” by the patient. Even though medical decisions are ultimately made by the patient, it is the responsibility for the physician to see that the patient’s decision is an informed one. If the scan is unnecessary, the physician has an obligation to inform the patient of that fact in explaining why he or she is not ordering it. Sometimes the claim is made that a scan may be necessary to “prevent a lawsuit.” But if the patient’s symptoms indicate that a scan could detect a problem that might have adverse consequences, then it is an indicated test. But if the test is clearly not indicated, that alone is adequate evidence to defend against accusations of malpractice for not ordering the test. It is the physician’s obligation to avoid wasting resources on services that are not indicated.

Nevertheless, excessive discretionary services are a problem. But they are related to excess capacity and to a dependence on use of specialized services for problems that would be more appropriately provided on a primary care level. Rather than being left to a flawed decision process of patient-consumers, reduction of this waste will need to be made by comprehensive planning decisions, both controlling capacity and allocating our resources appropriately, thereby ensuring an adequate primary care Base with an appropriate level of high-tech care.

The other important method of improving spending is to eliminate the profound administrative waste by reforming our method of funding care. We need structural reform that will improve health care spending, rather than consumer-directed financial barriers to necessary services.

Reducing spending on essential health services through policies that create the deception that these costs are “discretionary,” and unaffordable anyway, is simply inhumane.

Bill Schwied, an inspiration for us all

January 7, 2004

William Schwied, MD, MPH, founder of People for a National Health Program (PNHP), in his acceptance speech as Leisure Worlder of the Month:

“I will close with a global approach to dreams and goals: Nurturing and enriching the lives of all peoples in need; and creating a world without poverty, greed, human suffering, inequality, and war.”

Comment: I am personally eternally grateful to Bill, initially for his presentation of the single payer proposal in grand rounds at our hospital a decade ago, and for his continuing support since. He has provided inspiration to me, encouraging me to continue to pursue a life of activism on behalf of health care for everyone.

Don McCanne

Using fines to fund trauma care?

Orlando Sentinel
January 5, 2004
Editorial
Give green light to fines

A legislative proposal to provide badly needed money to hospital trauma centers by increasing the traffic fine for red-light runners deserves support.

This approach could be a winner for Orlando Regional Medical Center and other hospitals that are struggling to come up with money to keep their trauma centers running.

http://www.orlandosentinel.com/news/opinion/orl-edped053010504jan05,1,2446659.story?coll=orl-opinion-headlines

Comment: Let’s get serious! We desperately need a rational system of funding all health care. Negligible tweaks just won’t do it.

Prerequisite humiliation for Medicaid and S-CHIP

The Argus
January 2, 2004
Sign ups for health insurance scheduled

OAKLAND — If you’re low-income and need no- to low-cost health insurance for both children and adults, mark Jan. 10 on your calendar.

That’s the day the Alameda County Social Services Agency will sign up children, families and senior citizens 65 and older for state and county health plan programs.

(Medi-Cal program specialist Belinda) Llaguno said applicants should bring a
birth certificate, marriage certificate or valid picture identification; proof of immigration status, Social Security card, proof of address (such as a utility bill), proof of income (such as wage stubs), child care receipts, vehicle registration, current bank statement and proof of other assets (such as life insurance).

http://www.theargusonline.com/Stories/0,1413,83~1971~1866160,00.html

Comment: Could you imagine being asked for this amount of documentation before being enrolled in either an employer-sponsored plan or an individual
private health plan? Yet those least able to afford health care coverage are
being subjected to this humiliating and burdensome process that denies these
individuals the right to privacy that the rest of us expect.

The obvious reason for extensive documentation is to establish that income and assets meet a level of poverty that would warrant public assistance for health care. Yet the rest of us are not required to establish a level of income and assets that would qualify us as being able to afford the payments for private insurance.

Health care coverage should be automatic for everyone, from the moment of birth, regardless of income or assets. Adopting a universal program of social insurance would end this unnecessary, humiliating process by including everyone in an equitably-funded system.

Time for single payer?

Time for single payer?
By Ruth Rosen  San Francisco Chronicle 12/29/03

Don’t be surprised if health care turns out to be the sleeper issue in the 2004 presidential campaign and if a majority of Americans eventually decide that a single-payer system is the most cost-efficient way to provide health care for everyone.

Why? Because our health system — a fragmented hodgepodge of private and public-health plans — is broken.

HMOs — which pay huge amounts for administrative and bureaucratic costs, advertising and skyrocketing drug prices — no longer can contain costs. They have also turned the health-care system into a blizzard of paperwork.

Physicians who recently resisted a single-payer system have grown increasingly resentful of HMO bureaucrats who micromanage their medical decisions. Inadequate reimbursements are driving some out of business. They also dislike having to consult dozens of drug lists or formularies before
they can prescribe medicine for their patients. They’d rather spend time caring for sick people.

Businesses, which seek a level playing field, may also become supporters of a single-payer system. Consider the inequities they face. General Motors, which has a huge group of retired workers, must pay for their lifetime health costs. Newer companies, however, either don’t offer health-care benefits to workers or retired workers or don’t yet have any retired workers to worry about.

Labor, too, is a natural constituency for a single-payer system. The three-month long grocery workers’ strike in Southern California against major supermarkets has highlighted the burden businesses now bear for paying for their workers’ health care. How can Safeway, which has paid decent wages and benefits, compete with union-busting Wal-Mart, which pays subsistence wages and offers health-care insurance at unaffordable premiums?

It can’t. To avoid a race to the bottom, each employer should not have to pay for their workers’ health care. Instead, through an equitable tax, they should contribute to a single-payer health system.

And don’t forget the 40 million uninsured Americans. Soon after the Medicare bill passed, Senate Majority leader Bill Frist announced that Republicans would next try to address the medical needs of those who lack medical insurance. These are people whose votes could be captured by any candidate who promises to reduce their anxieties about getting health care.

The wealthy, too, may come to view single payer as a better alternative. Why? Because one of the best kept secrets in the United States, according to the American Hospital Association, is that 80 percent of our emergency rooms are overcrowded and the average wait is four hours. The poor, of course, already know this. But when middle class and wealthy Americans with heart attacks or serious injuries discover that they, too, may be diverted from one hospital to another, they may reconsider the value of their “excellent” medical insurance.

The fact is, most hospitals operate with “a just-in-time inventory” that works just fine for an average Tuesday evening in May. But on a Saturday night during the winter flu season, emergency rooms are filled with children and elderly people with high temperatures, along with heart attack victims and people bleeding from knife or gunshot wounds. (Don’t even think about what might happen after a bio-terrorist attack, a fire or an earthquake.) Triage nurses must decide who will receive medical attention. When all the emergency rooms are filled to capacity, some patients lie on gurneys in the hall, waiting for an intensive-care bed and monitor.

By contrast, a single-payer system would reduce the burden on emergency rooms by providing everyone with primary care in physicians’ offices and outpatient facilities.

A single-payer system would also cost less. The overhead for Medicare is only 2 percent; for private insurance it is up to 25 percent.

Health care is a human right, not a privilege. If you don’t believe this now, you might change your mind if and when you find yourself in need of life-saving care in a hospital emergency room.

E-mail Ruth Rosen at rrosen@sfchronicle.com
http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2003/12/29/EDGS53U1CM1.DTL
 
*****
[Extracts] Bush drug proposal enrages veterans
Plan may alienate military retirees by imposing higher fees for prescriptions
By DALE EISMAN 1/01/04Copyright 2004 The Virginian-Pilot
 
WASHINGTON — The Bush administration is considering dramatic increases in the fees military retirees pay for prescription drugs, a step that would roll back a benefit extended 33 months ago and risk alienating an important Republican constituency at the dawn of the 2004 campaign season.
 
Pentagon budget documents indicate that retirees may be asked to pay $10 — up from $3 — for each 90-day generic prescription filled by mail through Tricare, the military’s health insurance program. Tricare’s current $9 co-pay for a three-month supply of each brand-name drug would jump to $20.
 
The proposal also would impose charges for drugs the retirees now receive free at military hospitals and clinics. There would be a $10 fee for each generic prescription and a $20 charge for brand-name drugs dispensed at those facilities.
 
A Pentagon spokesman declined Wednesday to comment on the drug plan, calling it “pre-decisional.” But word of the proposal was being spread at the speed of light by veterans service organizations, who were urging their thousands of members to send calls and letters of protest to the White House and members of Congress.
 
“It’s something that we’re going to look at very closely when we return,” said Tom Gordy, chief of staff for Rep. Ed Schrock, R-Va. The House is to reconvene Jan. 20.
 
“You’re tampering with a benefit that was earned by people putting their lives on the line,” said James F. Lokovic, a retired Air Force chief master sergeant and deputy director of the Air Force Sergeants Association.
 
Lokovic’s 136,000-member association already has sent Bush a letter warning of “significant backlash from millions of retired military voters” if the plan is included in the 2005 defense budget the administration will unveil in a few weeks.
 
“Somebody just isn’t paying attention,” the Military Officers Association of America said in “special alert” sent to its 390,000 members. “The war on terrorism is reminding the nation of servicemembers’ sacrifices every night on the evening news … and yet the administration seems to continue going out of its way to penalize the military community.”
 
The officers association alert and an Internet site run by the sergeants association recall attempts by the administration to impose a $1,200 deductible for care provided to most military retirees at Veterans Affairs hospitals and the Pentagon’s long-running opposition to bills providing for “concurrent receipt” of military pension and VA disability payments.
 
The budget documents circulating Wednesday gave no hint of the current status of the plan or the thinking behind it. Military retirees — those who served 20 years or more — had no prescription drug coverage until April 2001.
 
But the documents indicate that the proposed charges would considerably ease the burden of prescription drug costs on the defense budget. The new co-pays would generate more than $728 million in 2005, the Pentagon estimated, and nearly $4.2 billion by the end of 2009.
 
But spokesmen for veterans groups said the VA fills prescriptions for service-related illnesses and injuries at no charge. Its $7 co-pay applies only for medications given to outpatients for ailments unrelated to their service. And even those prescriptions are free when the veteran receiving them has an annual income of less than $9,690 if single and $12,692 if married.
 
*****
To buy or block cheap drugs — Race to the Canadian border
By Froma Harrop  The Providence Journal  12/31/03

WE ARE NOW WITNESSING an extraordinary game of chicken between the states and the Bush administration. About a dozen states are gunning it toward the Canadian border in pursuit of cheaper prescription drugs. The federal government, meanwhile, is racing to block the way. If the states succeed in defying Congress’s ban on drug imports, everything will change: U.S. drug companies will no longer be able to charge Americans up to twice
what foreigners pay for the same pills.
 
The hottest head on the freeway belongs to New Hampshire’s Republican governor, Craig Benson. He has demanded a federal waiver that would let his state import U.S.-made drugs. And he’s setting up an official Web site to help private citizens buy their prescriptions in Canada.

“We will work within the law wherever possible,” says Benson’s spokesman, implying a right to also ignore the law.

Two days after Benson’s announcement, representatives from 10 states met in Atlanta with Canadian pharmacies to discuss doing business together.  The potential savings are huge. One participant, Illinois, puts the savings from buying drugs in Canada at $94 million. Also attending were Ohio, Oklahoma, North Carolina, Massachusetts, Alabama, Vermont, West Virginia, Delaware and Louisiana.

Drugs are cheaper in Canada because Ottawa negotiates the prices pharmaceutical makers may charge there. Most other countries do likewise. The United States, by contrast, keeps its people captive to whatever price the drug companies can get away with. Need we add that the industry is a very generous contributor to political campaigns?

Such policies are not very popular with the electorate, so the powers in Washington have developed complicated rules designed to hide what they’re up to. For example, the new Medicare law cleverly allows Americans to bring drugs back from Canada — but only if the U.S. Food and Drug Administration deems them safe, which it won’t do.

To calm the natives, the administration has left open a safety valve: It looks the other way when individuals bring back medicines from Canada or Mexico for their own use. Slapping cuffs on Grandma as she steps off the bus from Algodones is not good P.R.

But states and cities are another matter. They are enormous purchasers of drugs for workers, retirees, Medicaid patients and prisoners. Once they start going to Canada for drugs also, the ban becomes meaningless.

The battle is not without its comical moments. Three of New Hampshire’s four congressional delegates voted with the Republican leadership against legalizing drug imports. One of them, Rep. Jeb Bradley, now praises Governor Benson for defying a law he helped pass. The two senators, John Sununu and Judd Gregg, had the good sense not to comment.

Is there a states’-rights issue here? “From a constitutional perspective, it’s a fairly clear-cut case,” says Timothy Conlan, a professor of government at George Mason University. “Congress has the power to regulate interstate and foreign commerce.”

However, the Bush administration is under no obligation to block the road to Canada. “It’s likely that the administration has enough discretion that if it wanted to allow states to do this, it probably could have allowed it,” Conlan adds. And giving the states the green light would have fit in with the president’s stated pro-federalism agenda.

(Although conservatives in Washington speak of promoting states’ rights, they often bar state action when it conflicts with the interests of the private sector. “That pattern is pretty consistent,” Conlan says.)

In discussing this issue, it would help to recognize that the pharmaceutical industry is not like most businesses. The public considers its products a social good and helps pay for them with large taxpayer subsidies. Further, a new medication enjoys many years of patent protection — during which its maker has the exclusive right to sell it.

So there’s no point pretending that Coumadin is like a camera battery — a product whose price can be sensibly set by market forces. The federal government must sit down with the pharmaceutical industry and work out a new arrangement for pricing drugs.

Until then, we will be treated to the weird sight of Americans begging foreign governments for relief on the price of American-made drugs. The states’ mad dash to the Canadian border shows more than a dissatisfaction with Washington policy. It demonstrates a growing contempt for it.

Froma Harrop is a Journal editorial writer and syndicated columnist. She may be reached by e-mail at: fharrop@projo.com.

Miami hospice pioneers cash in

The Miami Herald
Dec. 28, 2003
Miami hospice pioneers cash in
By John Dorschner

Starting with a few volunteers and a small office in a Miami Methodist church, the minister and the nurse had a simple, idealistic mission. “We wanted to change the way America took care of terminally ill patients,” said Esther Colliflower, the nurse.

A quarter-century later, they head the largest hospice organization in the country, a for-profit firm specializing in the business of death. They have become fabulously wealthy, and now they are cashing in, selling out to Roto-Rooter in a $410 million deal announced last week.

The minister, Hugh Westbrook, stands to gain about $200 million and Colliflower somewhat less.

For some who work with the dying, these huge sums are unseemly. “We feel strongly that excellence in hospice care is a local, community-based concern
with neighbors, friends and families caring for one another,” said Mike Bell of the nonprofit Hospice of the Florida Suncoast, which serves the Tampa area. “Certainly when it’s a business, there’s a risk decisions might not be guided in a way that puts patient and family care first.”

Westbrook will remain a consultant, receiving $25 million over the next seven years, but control of the firm will pass to Tim O’Toole, a Roto-Rooter executive.

Graying baby boomers and the growing acceptance of hospices appear to make
this a solid growth business. Since the deal was announced Dec. 19, Roto-Rooter stock has shot up more than 35 percent.

“Under new ownership,” (investment analyst Jim) Barrett wrote, “we would expect (Roto-Rooter’s) VITAS’ overhead to be reduced.” Barrett didn’t specify, but a prime target for cuts would be the $5.8 million in annual charity care.

Is Westbrook afraid a bottom-line focus will reduce care for the dying? “We’ve always had fears,” he acknowledged, but said the firm is in good hands.

http://www.miami.com/mld/miamiherald/business/7582675.htm Comment:  PNHP has not only supported an equitable system of funding universal health care, but we have also opposed the for-profit, corporate model in health care which must place the interests of investors above all else, including patients. The Roto-Rooter takeover of this hospice chain exemplifies why we need reform in both of these arenas of concern.

A minister and a nurse dedicated to meeting the needs of the terminally ill represent amongst the noblest of efforts of the healing professions. The hospice movement has been one of the more important advances in the care of those with the greatest needs for relief from suffering. If the story ended here, Westbrook and Colliflower might be considered for secular sainthood. But what happened? The for-profit conversion shifted the prime mission of the organization to its obligatory requirement to enhance shareholder value. Merger and acquisition activities are a major contributor to shareholder value. The surviving entity is mandated to further enhance value. And in hospice care, what could improve the bottom line more than eliminating uncompensated (charity) care?

The for-profit, corporate model must always place shareholders above patients, or risk SEC sanctions. But a public service model will always place the patient first. There has been no exception to this rule, and Roto-Rooter’s anticipated intent to ream out this hospice chain would be only the latest example.

Thus PNHP will continue to oppose for-profit, investor-owned corporate entities in health care. But our other mission of supporting an equitable, efficient method of funding care also applies here. A publicly-owned third party payer is ethically obligated to demand value from the provider of services. Diverting huge sums away from health care and to private investors does not provide health care value. If we had our own universal system of social insurance, we would be in a position to demand value from all providers of health care. Merely introducing an equitable single-payer system would have a suppressive effect on investor-owned entities since they would not be able to provide the same value as non-profit entities.

Let’s establish our own public health insurance program and thereby take control of our health care system. Let’s send Roto-Rooter back to the sewers where they can continue to do what they do well.

Star Tribune Editorial

Star Tribune Editorial: Hope, profit/Proper oversight in health care

Reading the Star Tribune’s excellent series of articles on Parker Hughes Cancer Center can’t have been easy for a number of people, chief among them patients of the clinic and their families. For many other readers, the distress comes from a question the series raised: If these descriptions of medical practice run amok were accurate, where was the oversight, from both government agencies and private health-care insurers?

The answer is partly hopeful, mostly unsettling. Parker Hughes is a private enterprise operating in a highly competitive, even cutthroat, field controlled by a few players with lots of money for image advertising and for hiring batteries of lawyers. Moreover, regulatory control almost always occurs after the fact. A lawyer who knows that and who is determined to take advantage of it can get away with a great deal for a very long time. Unless employees or patients of a clinic complain persistently, nothing is likely to happen. Even if many do complain, getting to the truth can be a long, expensive and litigious undertaking. Every “i” must be dotted, every “t” crossed, every legal challenge anticipated. That’s an undertaking which until almost the very end operates out of public view, as is now happening.

Partly the confidentiality is explained by medical care being the issue. Society generally grants professionally licensed health-care professionals wide latitude in exercising their best judgment. If a physician operates on the wrong person or the wrong leg, that’s medical malpractice for which clear remedies are available. But questions about the appropriateness of care are far more difficult to resolve.

Because the community of Minnesota physicians operating in some specialties is small, questions about appropriate care are referred to experts from other states — to avoid bias and to blunt inevitable counteraccusations of vendettas motivated by professional jealousy or competition. That’s expensive and time-consuming. It’s also, by law, confidential. All the public generally learns is the outcome.

Concerns about medical business practices, such as billing improprieties and excessive charges, should be, and indeed sometimes are, raised when those who pay much of the bill — state health officials for Medicaid and private insurers such as Medica, HealthPartners and Blue Cross — review the charges submitted by clinics and physicians. More vigilant review of charges needs to become a matter of course.

When the Legislature convenes early next year, it should examine several issues raised by the Star Tribune series. Most seriously, it should assess whether more sunshine is needed when licensed Minnesota health professionals are accused of wrongdoing. If, for example, an expert evaluation validates a complaint, shouldn’t the public at the least have access to the evaluation — if only to assess any disciplinary action taken as a result? Right now, discipline is too much controlled by the professions themselves, and within the professions there exists a high tolerance for some misconduct, such as inflating credentials or seeking favors from vendors.

More broadly, the Star Tribune has illuminated one more reason why the United States should consider some form of a single-payer health care system. Americans generally get excellent health care. But the patchwork system by which they get it drains a hugely excessive amount of revenue from the economy — even as many millions of people go without any coverage at all.

At every level, escalating health-care costs compete with funding for teachers and schools, police agencies and road repair. In many households, those costs compete with the rent and the telephone. For a variety of complex reasons, normal market economics don’t work in health care. It’s one area in which government generally can do a more efficient job of controlling costs and ensuring good care for all.

 

 
 

 
 

Health care eats up parish pay raises

shreveporttimes.com
December 26, 2003
Health care eats up parish pay raises
By Don Walker

Caddo Parish employees will receive an across-the-board 2.2 percent pay raise at the start of the new year that, for many, will be swallowed by a 32.7 percent increase in the amount they pay in monthly premiums for health care insurance.

Caddo Administrator Bill Hanna said the increase is unfortunate, yet unavoidable.

“All of this started back with 9/11. Home insurance, auto insurance went up, too. I don’t think there’s a person in the country who hasn’t been affected, and what caused this to escalate was a terrorist attack.”

http://www.shreveporttimes.com/html/E16C8335-645D-4C76-A4CC-22302D6CBB95.shtml

Comment:  The rhetoric of the Bush administration certainly has been very effective, but apparently we need to work on ours.

_______________________________________________

Do the WSJ editors really understand HSAs?

The Wall Street Journal
December 23, 2003
Teddy’s Nightmare

The new year will bring something of a revolution in American health care. Insurance companies such as Golden Rule, Fortis and Aetna will soon be marketing Health Savings Accounts (HSAs), which promise a new era of individual choice for health insurance.

HSAs, the saving grace of the Medicare prescription drug bill, are the new and improved version of Medical Savings Accounts. They promise individuals and employers relief from spiraling health costs, and without the need for restrictive HMOs.

The basic idea is to pair an inexpensive insurance policy that has a high deductible — $1,000 or more for an individual, $2,000 for a family — with a tax-free savings account.

After the Mandela government deregulated South Africa’s private insurance market in 1994, HSA-type plans quickly captured about two-thirds of it.

That’s precisely the kind of success that Senator Kennedy and friends fear could happen here. Democrats know that a reinvigorated private health insurance market will end their dream of a Canadian-style health system.

“Once millions of HSAs are established, it will be almost impossible to reverse this program,” says the Web site for Physicians for a National Health Program, which also urges visitors to “CONTACT YOUR REPRESENTATIVES AND SENATORS IMMEDIATELY AND DEMAND THE URGENT REPEAL OF TITLE XII OF THE MEDICARE ACT!” Good to see they’re calm about the whole thing.

Critics have been making a number of dire predictions about the effects of
HSAs, none of which stand up to scrutiny. The most common is that HSAs would
attract a disproportionate number of “healthy and wealthy” individuals, “fragment the risk pool,” and drive up the cost of insurance for those who need it most.

http://online.wsj.com/article_email/0,,SB107214365174988600-H9jeoNmlah2op2vZ32Ib6iBm4,00.html

And…

eHealthInsurance.com
Frequently Asked Questions

What is an Indemnity Plan?

An indemnity plan is commonly known as a fee for service or traditional plan. If you select an Indemnity plan you have the freedom to visit any medical provider. You do not need referrals or authorizations; however, some plans may require you to precertify for certain procedures.Most indemnity plans require you to pay a deductible. After you have paid your deductible, indemnity policies typically pay a percentage of “usual and customary” charges for covered services; often the insurance company pays 80% and you pay 20%. Most plans have an annual out of pocket maximum and once you’ve reached this they will pay 100% of all “usual and customary” charges for covered services.

Many health insurance companies have moved away from indemnity plans and are instead offering managed care plans such as HMOs and PPOs. You may have few or no indemnity plan choices in your area.

http://www.ehealthinsurance.com/ehealthinsurance/FrequentlyAskedQuestions_1.html

And…

Internal Revenue Service
Notice 2004-2

This notice provides guidance on Health Savings Accounts.

Q-3. What is a “high-deductible health plan” (HDHP)?

A-3. Generally, an HDHP is a health plan that satisfies certain requirements
with respect to deductibles and out-of-pocket expenses. Specifically, for
self-only coverage, an HDHP has an annual deductible of at least $1,000 and
annual out-of-pocket expenses required to be paid (deductibles, co-payments
and other amounts, but not premiums) not exceeding $5,000. For family coverage, an HDHP has an annual deductible of at least $2,000 and annual
out-of-pocket expenses required to be paid not exceeding $10,000.

Q-4. What are the special rules for determining whether a health plan that
is a network plan meets the requirements of an HDHP (high-deductible health
plan)?

A-4. A network plan is a plan that generally provides more favorable benefits for services provided by its network of providers than for services provided outside of the network. In the case of a plan using a network of providers, the plan does not fail to be an HDHP (if it would otherwise meet the requirements of an HDHP) solely because the out-of-pocket expense limits for services provided outside of the network exceeds the maximum annual out-of-pocket expense limits allowed for an HDHP. In addition, the plan’s annual deductible for out-of-network services is not taken into account in determining the annual contribution limit. Rather, the annual contribution limit is determined by reference to the deductible for services within the network.

http://www.irs.gov/pub/irs-drop/n-04-2.pdf

Comment: The health policy literature is replete with studies describing the “death spiral” of skyrocketing premiums that result from drawing healthier beneficiaries out of risk pools, leaving higher-cost patients behind. The WSJ editors have exceeded their editorial prerogative when they state that the “dire prediction” of fragmenting the risk pool “fails to stand up to scrutiny.” The editors are entitled to their opinions, but not to their facts.

But it is not only those with current needs who will be exposed by widespread use of HSAs. Healthy individuals purchasing the high-deductible plans will find that they do not provide adequate financial protection should they later have major health care needs. It is important to realize that the traditional high-deductible indemnity plans essentially no longer exist, as indicated on the HealthInsurance.com website. No longer can you buy a plan that has only a 20% coinsurance for all services, and full, 100% coverage after an out-of-pocket maximum.

Currently available and HSA-qualified high-deductible plans are primarily PPO plans with restricted benefits, significant coinsurance, and limited provider lists. Current trends suggest that these restrictions will increase as efforts are made to keep the premiums affordable.

The IRS notice confirms that the maximum out-of-pocket expense of $5000 for individuals and $10,000 for families applies only to care provided under the plan. There is no stop-loss protection for care obtained from non-contracted physicians and hospitals, not to mention the very heavy financial penalties that are assessed for receiving care out of the network of providers.

Thus the only individuals who will be exposed to financial disaster are those with health care needs who are left with the death spiral of premiums, or those with needs who will find that their high-deductible PPO will leave them financially exposed. But those of us who are healthy and who will remain healthy will do just fine. Just don’t get sick.

At least the WSJ editors were correct when they facetiously noted that I was
not calm in my response to Title XII, the HSA provision of the Medicare bill. My histrionics are still applicable:

“CONTACT YOUR REPRESENTATIVES AND SENATORS IMMEDIATELY AND DEMAND THE URGENT REPEAL OF TITLE XII OF THE MEDICARE ACT!”

Don McCanne

Is Dr. Dean's prescription a placebo?

The Washington Post
December 21, 2003
Dean’s Care For All, Built Part by Part
By Ceci Connolly

(In 1994, Vermont Governor Howard) Dean, a doctor by training, would be the nation’s first governor to guarantee health coverage to every state resident. And he would do it in a single legislative session, with one enormous bill.

It was ambitious, bold — and an utter failure.

But it wasn’t the end. Like a pragmatic physician who tries a new therapy when the first fails, Dean devoted much of the next decade to smaller, incremental changes aimed at filling the state’s health care gaps.

It was a slower strategy, but by the close of his tenure, Dean came very close to achieving universal health coverage. Vermont now has one of the nation’s highest rates of health insurance coverage, providing care to virtually every child and more than 90 percent of adults. The national average is 83.7 percent.

As some Democratic presidential rivals are quick to note, Dean’s embrace of
balanced budgets led him to flirt with the Medicare-reduction plans of then-U.S. House Speaker Newt Gingrich (R-Ga.), and Dean sometimes trimmed his own state health programs.

These opponents also said that his policies have exacerbated the financial problems for Vermont hospitals, and despite Dean’s efforts to expand health
care coverage, there remains a yawning insurance gap for residents ages 18
to 29. Most important, Dean’s heavy emphasis on government-run programs,
with their low reimbursement rates, has saddled the business community with
higher costs, according to some health care officials.

“Gov. Howard Dean has presided over a constant expansion in government health programs, without a commensurate increase in funding,” the Burlington Free Press editorialized in December 2000.

Another criticism of Dean’s health care record is that his heavy reliance on
government programs hurt the private sector. Because government reimbursement rates are so low, doctors and hospitals in Vermont have been forced to charge more to private clients — individuals and businesses — to make up the difference. As Dean encouraged families to enroll their children in Dr.Dynasaur, corporate insurance pools were left with a larger proportion of high-risk, more expensive adults.

Dean’s tactics and style could inflame tensions, lawmakers said. On several
occasions, he proposed trimming the very health benefits he instituted, including dental, foot and eye care for Vermont’s low- and moderate-income adults. He fiercely defends this approach.

“I promised the people of Vermont I would not take one person off the program,” he said. “So we did eliminate certain benefits. But that’s better than cutting people.”

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A17383-2003Dec20¬Found=true

Comment: The current emphasis on reducing the numbers of uninsured has created an explosion in the rate of under-insurance. Reducing benefits, increasing cost sharing, inequitably funding risk pools, shifting public program costs to providers which drives up fees for private payers, concentrating high-cost patients in separate risk pools making the premiums unaffordable, are only a few of the problems exacerbated by implementing a policy of incremental expansions of program enrollment without ensuring adequate funding of those programs.

Being insured may not mean much if care remains unaffordable because necessary benefits are not covered or the out-of-pocket expenses are too high. But limited insurance is better than none at all. Is there an alternative? Of course. Comprehensive coverage can be provided for everyone at no significant increase in cost if we were to eliminate the administrative inefficiencies of our multi-payer and non-payer system, and establish a single, universal health program.

Dr. Dean initially supported single payer reform but found that it wasn’t politically feasible. He then demonstrated that a pragmatic, incremental approach was feasible, even though it falls short on many goals. Dr.Dean has said that, as president, he would sign a single payer bill if it made it to his desk. But whoever is president, a single payer bill will never pass Congress without overwhelming public support. That won’t happen until the public really understands the various options. We have a lot of work to do.

There is risk for us. We may discover that the real reason for the lack of reform is that the United States is a nation that does, in fact, uniquely reject egalitarianism. Are you prepared to accept that possibility?

Is Dr. Dean’s prescription a placebo?

The Washington Post
December 21, 2003
Dean’s Care For All, Built Part by Part
By Ceci Connolly

(In 1994, Vermont Governor Howard) Dean, a doctor by training, would be the nation’s first governor to guarantee health coverage to every state resident. And he would do it in a single legislative session, with one enormous bill.

It was ambitious, bold — and an utter failure.

But it wasn’t the end. Like a pragmatic physician who tries a new therapy when the first fails, Dean devoted much of the next decade to smaller, incremental changes aimed at filling the state’s health care gaps.

It was a slower strategy, but by the close of his tenure, Dean came very close to achieving universal health coverage. Vermont now has one of the nation’s highest rates of health insurance coverage, providing care to virtually every child and more than 90 percent of adults. The national average is 83.7 percent.

As some Democratic presidential rivals are quick to note, Dean’s embrace of
balanced budgets led him to flirt with the Medicare-reduction plans of then-U.S. House Speaker Newt Gingrich (R-Ga.), and Dean sometimes trimmed his own state health programs.

These opponents also said that his policies have exacerbated the financial problems for Vermont hospitals, and despite Dean’s efforts to expand health
care coverage, there remains a yawning insurance gap for residents ages 18
to 29. Most important, Dean’s heavy emphasis on government-run programs,
with their low reimbursement rates, has saddled the business community with
higher costs, according to some health care officials.

“Gov. Howard Dean has presided over a constant expansion in government health programs, without a commensurate increase in funding,” the Burlington Free Press editorialized in December 2000.

Another criticism of Dean’s health care record is that his heavy reliance on
government programs hurt the private sector. Because government reimbursement rates are so low, doctors and hospitals in Vermont have been forced to charge more to private clients — individuals and businesses — to make up the difference. As Dean encouraged families to enroll their children in Dr.Dynasaur, corporate insurance pools were left with a larger proportion of high-risk, more expensive adults.

Dean’s tactics and style could inflame tensions, lawmakers said. On several
occasions, he proposed trimming the very health benefits he instituted, including dental, foot and eye care for Vermont’s low- and moderate-income adults. He fiercely defends this approach.

“I promised the people of Vermont I would not take one person off the program,” he said. “So we did eliminate certain benefits. But that’s better than cutting people.”

http://www.washingtonpost.com/ac2/wp-dyn?pagename=article&node=&contentId=A17383-2003Dec20¬Found=true

Comment: The current emphasis on reducing the numbers of uninsured has created an explosion in the rate of under-insurance. Reducing benefits, increasing cost sharing, inequitably funding risk pools, shifting public program costs to providers which drives up fees for private payers, concentrating high-cost patients in separate risk pools making the premiums unaffordable, are only a few of the problems exacerbated by implementing a policy of incremental expansions of program enrollment without ensuring adequate funding of those programs.

Being insured may not mean much if care remains unaffordable because necessary benefits are not covered or the out-of-pocket expenses are too high. But limited insurance is better than none at all. Is there an alternative? Of course. Comprehensive coverage can be provided for everyone at no significant increase in cost if we were to eliminate the administrative inefficiencies of our multi-payer and non-payer system, and establish a single, universal health program.

Dr. Dean initially supported single payer reform but found that it wasn’t politically feasible. He then demonstrated that a pragmatic, incremental approach was feasible, even though it falls short on many goals. Dr.Dean has said that, as president, he would sign a single payer bill if it made it to his desk. But whoever is president, a single payer bill will never pass Congress without overwhelming public support. That won’t happen until the public really understands the various options. We have a lot of work to do.

There is risk for us. We may discover that the real reason for the lack of reform is that the United States is a nation that does, in fact, uniquely reject egalitarianism. Are you prepared to accept that possibility?

President Bush's "Ownership Society"

The New York Times
December 20, 2003
The Ownership Society
By David Brooks

In his State of the Union address, the president will announce measures to foster job creation. In the meantime, he is talking about what he calls the Ownership Society.

This is a bundle of proposals that treat workers as self-reliant pioneers who rise through several employers and careers. To thrive, these pioneers need survival tools. They need to own their own capital reserves, their own retraining programs, their own pensions and their own health insurance.

President Bush has a proposal to combine and simplify the confusing morass
of government savings programs and give individuals greater control over how
they want to spend their tax-sheltered savings. Administration officials hope, in a second term, to let individuals control part of their Social Security pensions and perhaps even their medical savings accounts.

Talking with staff, Bush emphasizes that he wants to use these policies to move from an “anything-goes culture” to a “responsibility culture.” By giving individuals control of their own retraining, their own savings and their own homes, he hopes to inculcate self-reliance, industriousness and responsibility.

Comment: Implicit in the shift to a “responsibility culture” through the establishment of the “Ownership Society” is the principle that opportunity is available to all. But universal opportunity means that we must have employment opportunities, living wages, affordable housing, affordable health insurance, enough disposable income to fund retirement accounts, and all of the other affordable opportunities that will make us “self-reliant pioneers.”

It is safe to say that for far too many of us, those opportunities do not exist. It is highly unlikely that the individuals without opportunities can create them by mere volition using their pioneering spirit. These deeply-rooted societal problems cannot be solved by merely praising the virtues of a utopian Ownership Society. These problems require a component of public policies and public programs to give us the “survival tools” needed to accomplish these goals.

We can use health care as an example. Just as mega-corporations are jointly
owned by shareholders, a universal program of health insurance can be jointly owned by the citizens. That would provide everyone with the survival tool for health care.

We can approach the goals of a utopian Ownership Society providing that we
properly balance private and public ownership by adopting public policies
that will accomplish these goals. President Bush needs to show us real policies that will provide all citizens with the survival tools they need to “own their own capital reserves, their own retraining programs, their own pensions and their own health insurance.” But to be effective, some of these will require joint public ownership within our Ownership Society.