The Washington Post
September 17, 2003
Health Plan Costs Up 10.6%
By Christopher Lee

Health insurance premiums for federal employees and retirees (under the Federal Employees Health Benefits Program) will rise an average of 10.6 percent next year, the fourth consecutive year of double-digit increases, the Bush administration said yesterday.

Kay Cole James, director of the Office of Personnel Management:”This is great news for the federal employees, and we’re excited today on their behalf.”

Alwyn Cassil, spokeswoman for the Center for Studying Health System Change:Although federal workers’ premium increases have been comparatively
smaller,10.6 percent “is still a very high rate of growth. It’s growing much faster than increases in wages, increases in growth of the economy and increases in inflation. That means that more and more money will be coming out of people’s pockets to pay for health care.”

The administration also announced that, for the first time in five years,the government will expand the number of health plan choices under the Federal Employees Health Benefits Program. The program will offer 205 plans nationwide next year, up from 188 in this year.

http://www.washingtonpost.com/wp-dyn/articles/A21909-2003Sep16.html Comment: The largest purchaser of health care coverage, the Federal Employees Health Benefits Program, has not been able to slow the rise in health care costs to anywhere near the rate of inflation. That is not good news.

The fact that more plans wish to participate in the program indicates that our national policies are designed to enhance the business model of private health plans at the cost of higher health care expenses for the employees and their families.

Should we continue with national policies that are designed to protect the health plans of the members of Congress, or should we change to policies that are designed to ensure access to affordable care for everyone?

The Washington Post
September 16, 2003
Proposals for Expanding Health Care Coverage
By Julie Ishida

While the uninsured are left to deal with the consequences of being uninsured, policymakers have designed a variety of proposals to expand access to health insurance. The majority of Americans polled in a 2003 survey by the Kaiser Family Foundation and the Harvard School of Public Health support increasing the number of people in the United States covered by health insurance, but there is no consensus on how to accomplish this.

Karen Davis, president of the Commonwealth Fund:

“The proposals that are now being talked about are more pragmatic and less ideological and more focused on building [on] what works currently. How can we find out what’s working now and add more people?”

Paul Ginsburg, president of the Center for Studying Health System Change:”The reason why individuals are uninsured differs so much that it is unlikely that a single provision is going to cover them all. We need different approaches for different segments of the population.”

Here’s a summary of the major approaches under discussion.

Universal Coverage Proposals:

* Single payer

* Employer mandate

* Individual mandate

Incremental Proposal:

* Expansion of Medicaid and Children’s Health Insurance Program (CHIP)
eligibility

* Subsidization of private insurance

* Creation of a system similar to the Federal Employees Health Benefits
(FEHB) Program

http://www.washingtonpost.com/wp-dyn/articles/A15812-2003Sep15_2.html

Comment: The messages of individuals such as Karen Davis and Paul Ginsburg have dominated the national dialogue on health care reform. They imply that only piecemeal measures are feasible.

But the failure to control increasing costs, combined with a failure to reduce the numbers of uninsured have created an awareness that we need a more aggressive approach toward reform.

The recent publicity surrounding the physicians’ proposal for national health insurance published in JAMA, and the administrative efficiency achievable by a single payer system published in NEJM, have regenerated an interest in looking again at truly universal models of health care coverage.

Washington Post reporter Julie Ishida exemplifies the changing dialogue as she now includes universal models in her list of proposals. Members of the media understand the need to broaden the debate. But we need to convince the leaders of those organizations which support comprehensive health care coverage that it is once again okay to discuss universal systems of reform.Davis and Ginsburg need to hear that message.

One more message that we need to deliver is that there are very fundamental differences between the single payer model of social insurance and other so-called universal proposals. As an example, SB 2, California’s employer mandate which passed last week (but not yet signed by Gov. Davis) will still fail to provide coverage for over four-fifths of those currently uninsured.

It will significantly increase costs because it fails to eliminate the administrative excesses and fails to provide any significant cost-containment features. It also represents flawed tax policy since it is regressively funded, providing tax advantages for the wealthy and a lower net cost of their coverage, a benefit not available to low income individuals. It falls so far short of single payer goals that it is inappropriate to consider it in the same general category of reform.

Let’s convince our policymakers that it is time to put everything on the table. But let’s also convince them that single payer needs to be in a special place on the table wherein the policies of all other models are challenged to meet the golden standard of a universal, single payer system of social insurance.

The New England Journal of Medicine
September 11, 2003
Health, Life Expectancy, and Health Care Spending among the Elderly
By James Lubitz, M.P.H., Liming Cai, Ph.D., Ellen Kramarow, Ph.D., and
Harold Lentzner, Ph.D.

Conclusions
The expected cumulative health expenditures for healthier elderly persons, despite their greater longevity, were similar to those for less healthy persons. Health-promotion efforts aimed at persons under 65 years of age may improve the health and longevity of the elderly without increasing health expenditures.

http://content.nejm.org/cgi/content/full/349/11/1048

Comment: Since living longer doesn’t increase health care costs, those who predict “bankruptcy” of Medicare are now limited to the premises that the numbers of Medicare beneficiaries will be too great, and that the increasing
technological costs will be excessive.

The ratio of retirees to workers will shift upward with the retirement of the baby boomers, but that increase is a relatively modest, finite number that is not “unaffordable” according to any reasonable actuarial forecast.And it will stabilize as the baby boomers transition through the other end of the life cycle.

The increase in health care costs is a major issue. But that is not a problem that is limited to the Medicare program. It applies to our entire health care system. There are many factors. Just a few of these are increased use of expensive technology, higher drug costs, higher pricing in the United States, and Overutilization of our higher capacity healthcare system. These are systemic problems that cannot be addressed simply by destroying Medicare as a program of social insurance.

We need structural reform of our health care system. A good start would be to revise the way that we pay for health care, keeping in mind the importance of access, equity and affordability.

Health Affairs
Web Exclusive
August 11, 2003

Excerpt from a letter from Stephen M. Davidson, Professor, Health Care Management, Boston University school of Management, responding to Alain Enthoven’s previous article on multiple-employer exchanges:

Alain Enthoven believes that the employment-based system has failed to control health care costs because so many employers offer their employees coverage from only a single source instead of from multiple sources that would compete for the employees’ business. His solution is to create multiple-employer exchanges,” which would offer members’ employees choices among plans.

I am not commenting on his diagnosis. However, the success of his prescription depends on the probability that it will actually reduce the cost of care. Since I believe the chances of that are slim for several reasons, in my view, Enthoven’s solutions will not work…

Managed care plans can contain costs for a time by paying lower salaries or fees, buying supplies in bulk, or reducing administrative staff. But the key to keeping them down is improving the system’s efficiency by changing the processes of care. As noted above, that is a complicated, costly undertaking that health insurance plans are unlikely to attempt unless the incentives are a lot stronger and more reliable than those that would result from Enthoven’s exchanges.

Excerpt from Alain Enthoven’s response to Davidson’s letter:

Davidson leaves me wondering what alternative he would suggest to motivate process improvement. Would he suggest a single payer? A single payer could offer important advantages, such as universal coverage and government monopsony power to counterbalance provider monopolies, but it seems unlikely that it could motivate process improvement. Yet if U.S. employers don’t make a radical change toward managed competition pretty soon, a single payer will become inevitable, if it isn’t already.

http://www.healthaffairs.org/WebExclusives/Web_Exclusive_Letters_Davidson_081103.htm#Davidson