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Access to Health Care, Basic Necessities a Matter of Life or Debt

Access to Health Care, Basic Necessities a Matter of Life or Debt

By Margaret Flowers and Kevin Zeese
Truthout, March 20, 2013

This week the Strike Debt Rolling Jubilee, a project that arose from Occupy Wall Street, will announce its purchase of more than $1 million of medical debt as part of a weeklong national conversation about why people should not be put in debt meeting their basic needs.

The Rolling Jubilee raised funds to purchase bundles of debt for pennies on the dollar. Unlike the rapidly growing industry of collection agencies that purchase debt and then hound debtors until they repay, the Rolling Jubilee will erase their purchased debt, freeing debtors from their obligation. Rolling Jubilee members view debt as the intersection between Wall Street and people’s lives. They argue that medical and other debt shouldn’t exist because debt is part of a rigged system of mafia capitalism that extracts wealth from people who are trying to meet their basic needs.

We spoke with Thomas Gokey of Strike Debt and Dr. Steffie Woolhandler, co-founder of Physicians for a National Health Program and author of the leading studies on bankruptcy caused by medical debt, to learn more. We explored why medical debt exists in the United States, what its impacts are on health and what could be done to end medical debt completely. Woolhandler also described the impact of the 2006 Massachusetts’ health law, which was used as a blueprint for the national health law, on debt and health care costs. The solution, a national single-payer health system, described as “Expanded and Improved Medicare for All,” is already supported by the majority of Americans. Until this and other solutions to our crises are realized, Strike Debt provides a guide for organizing and resisting the culture of debt that binds us.

Living in the Land of Health Injustice

The U.S. has used a market-based health system for so long that most people probably feel that it is normal, but in truth, the U.S. health system is an aberration. Most industrialized nations have publicly-funded universal health care systems paid for through taxes that cover virtually 100 percent of necessary care. Their systems have been in existence for many decades, and while no system is perfect, other countries spend half what the United States  does per person on health care, cover everyone and have better health outcomes.

After World War II, the United States moved toward a system of health insurance primarily accessed through employment. Then, under President Reagan in the 1980s, there was an intentional effort to create investor-owned health-care services, turn health insurance into a profit-making sector and privatize the delivery of health care in for-profit hospitals. Creating a for-profit health care system is a thirty-year experiment with clear outcomes: uncontrolled costs, growing health disparities, falling life expectancy and other indicators of poor health status, including high numbers of preventable deaths. If such an experiment were to have been conducted by a research team, ethics would have demanded that the experiment be stopped a long time ago.

The basic flaws of the U.S. system are obvious. When health insurance is tied to employment, the healthiest segment of the population (i.e. essentially those who are working) is covered. Those who cannot work, perhaps because of a serious accident or illness, lose their coverage or struggle to afford it on the individual market where the prices are higher and the coverage is skimpier. When the bottom line is profit, not health, health insurers compete to attract those who are healthy in the first place and then find ways to restrict and deny payment for care through provider networks, authorization processes and out-of-pocket costs.

Patients and providers spend so much time and energy trying to navigate the complicated health system in the United States that it is hard to see the forest for the trees. But each time that a patient delays or avoids necessary care, that a patient is asked what kind of insurance they have before they are asked what they need, or that a family has to choose between paying for treatment and paying for basics such as food and shelter, a health injustice has occurred. These scenarios do not happen in other wealthy nations.

In fact, medical debt and bankruptcy are uniquely American experiences among wealthy nations. Some enter into medical debt because they are uninsured and need medical services, but the majority of people who end up with medical bankruptcy have health insurance. Dr. Woolhandler and her colleagues interviewed over two thousand people in bankruptcy court. They found that more than 60 percent became bankrupt because of medical illness and medical bills, and nearly 80 percent had insurance when they first became ill. Despite being insured, the out-of-pocket costs for the premiums, copays, deductibles, co-insurance and uncovered services combined to create an unsustainable financial burden.

Woolhandler’s landmark bankruptcy study was based on data from 2007, before the financial crisis of 2008. At present, over one-third of working families have no savings, and nearly two-thirds do not have enough cash on hand to withstand a $1,000 emergency. When families are living paycheck to paycheck, one serious accident or illness is enough to push them over the edge.

In addition to the obvious risk of financial ruin, we asked Woolhandler about the impact of being uninsured or underinsured on health outcomes. The consequences are well-documented. People without insurance do not receive primary or preventive care, have worse outcomes when they do seek treatment and are more likely to die. The same goes for those who have skimpy health insurance. Copays and deductibles cause people to delay or avoid necessary care

ObamaCare Will Escalate Health Injustice

There is a lot of confusion about the Affordable Care Act (ACA). At its root the ACA was an insurance company takeover of health care in the United States which included lots of ways for health corporations to profit. There has been a marketing effort to sell people on the ACA by claiming more people will have health insurance, but what is not mentioned is that the type of insurance coverage people will have is going to be skimpier. While it is true that more people will have insurance, the ACA will still leave tens of millions without insurance when fully implemented, and there will be an increase in expensive under-insurance plans.

Prior to the passage of the Obama health reform, there were efforts by some state-level insurance regulators to require insurance companies to provide more extensive coverage by spending 80 to 85 percent of premiums on health services rather than on profit and administration. The Obama law stopped those efforts by putting in place a law for the first time which said that 60-40 plans are acceptable. In a 60-40 plan, the insurance company pays 60 percent of the covered costs, while the enrollee pays 40 percent plus the full amount of uncovered costs, those not included in their policies. Enrollee costs include premiums, deductibles, copays, co-insurance and other out-of-pocket expenses. It is these out-of-pocket costs that quickly lead to health-care debt and bankruptcy.

The ACA will push coverage in the direction of under-insurance in a number of ways. One is through taxing so-called “Cadillac Plans” which are merely insurance plans that provide the kind of coverage all Americans once viewed as standard – actual health insurance. Employers are planning to avoid the Cadillac tax by lowering benefits so that their plans do not meet the Cadillac Plan criteria. Employers are also planning to drop health benefits and pay a penalty instead, which saves money, or to drop health benefits and offer subsidies to employees to purchase health insurance on their own. Other employers are changing the status of their employees to be consultants or less than full time to avoid having to provide health benefits.

The ACA will result in more people purchasing inadequate insurance plans when the state insurance exchanges open later this year. There will be four tiers of coverage from 90-10 to 60-40 plans. Most people will be forced to choose the lower tiers because premiums will rise even higher when the requirement to offer policies to people with pre-existing conditions begins.

Those who qualify for subsidies by earning below 250 percent of the federal poverty level (the Federal Poverty Level income for a family of four is $23,550, the qualifying income, $58,875) will be allowed to purchase 70-30 plans only.

And the Obama administration narrowly interpreted the law so that qualification for subsidies based on the cost of premiums only applies to individual, not family, plans. This means that if the cost of an individual plan is less than 9.5 percent of a person’s income, even if that person actually needs a family plan which would cost more than 9.5 percent, they do not qualify for a subsidy to buy a family plan.

One way to know how the Obama law will fare is to look at the experience of the pilot project in Massachusetts. The 2006 Massachusetts health-care law cut the number of uninsured in half, which is similar to what the ACA is expected to accomplish. Those who are still without coverage are primarily the working poor. The health insurance exchange has not brought the cost of premiums down and is not used by the majority of the public. The exchange is mainly used by those who receive a subsidy from the government because subsidized plans must be purchased from the exchange. To pay for subsidies for insurance premiums, Massachusetts cut important safety net public health programs, especially programs like those for mental health services that are not covered by insurance. The cost of health care in Massachusetts, already the highest in the nation, continues to rise. And the cost of health care continues to be a barrier for people who need health services. Medical debt and bankruptcies continue at the same levels as before the law was passed.

Based on predictions by groups like the Congressional Budget Office and the experience in Massachusetts, we can predict the result of the ACA: continued lack of insurance for at least 30 million, more people in the costly individual insurance market, more people with under-insurance, continued increases in the cost of health care, continued financial barriers to necessary health care and continued high levels of medical debt and medical bankruptcy. In other words, health injustice will continue in the United States.

How to End Health Injustice

One of the first steps required for change is awareness of the problem. The Strike Debt Rolling Jubilee “Life or Debt” campaign will help some people directly, but it will do more to highlight the ongoing problems of medical debt and the debtor system. The Rolling Jubilee has joined with single-payer health care advocates for a week of national solidarity actions to educate about the single-payer solution and to shift the broader conversation to one that questions a system that profits from people’s attempts to meet their needs.

The dominant message in the United States is one that places the blame on individuals when they are unable to meet their basic needs for health care, housing, education and food. The individual is blamed for making a bad decision to borrow money or for not being able to put money aside in a savings account. This is meant to make people feel shame. It is a form of social control that disempowers people and silences them. But Strike Debt recognizes that 76 percent of Americans are in debt and asks, “How is it possible that three-quarters of us could all have just somehow failed to figure out how to properly manage our money, all at the same time?”

This is a fundamental question because real transformation becomes possible when people stop feeling isolated and ashamed and instead join together to tell their stories, to find connections between their stories and to question the root causes of their shared situation. For us, this was a key reason for the physical occupations in the fall of 2011. In the occupations, people met others who were struggling with the same problems of homelessness, unemployment and debt. The Strike Debt campaign says it well, “You are not a loan. You are not alone.” Working in solidarity is both empower
ing and powerful.

For too long in the United States, politicians and the corporate media have defined the narrative. We can use single payer as a prime example. A single-payer health-care system or “improved Medicare-for-All” would ensure access to health care from birth to death for everyone in the United States. This is eminently affordable, indeed the U.S. already spends the most per person on health care in the world; we just get the least return for our spending. It is not a question of the cost; rather it is a question of the U.S. political system being able to put in place real solutions despite the power of the insurance and for-profit health-care industries.

The arguments for single payer are widely supported and well-known. It is the only proven path to a national health system that will provide coverage to everyone in the United States, control costs and produce excellent health outcomes. There is a solid majority of the public, including a majority of health professionals, who supports a single-payer health system despite the intentional misinformation campaign that characterizes single payer as “socialism” and “rationing.” But single-payer supporters are disempowered by being told that they are asking for too much and that what they want is not politically feasible. They are urged to be pragmatic and to accept incremental solutions.

Tens of millions of dollars have been invested in front groups such as Health Care for America Now to channel popular energy away from single payer and into Wall Street solutions such as the ACA. And it has been very effective. During the health-reform process, the groups who supported health reform were effectively split. Single-payer supporters were divided into those who held firm for a single payer plan and those who supported what was called the public option. Single-payer supporters who held firm were chastised for not being pragmatic and supporting a public option, which was mislabeled as a step toward single payer even though the evidence showed that a public option was neither a practical step nor was it intended to be included in the health law.

As the health law neared the final steps in the process, and the provisions in the bill were increasingly unacceptable, two additional methods of social control were employed. One was straight up lying. Politicians and their front groups called the health law “universal, affordable and guaranteed,” when it was none of those. And the other was to tie the success of the law to the success of the Democratic Party and to frighten the public into believing that Republicans would be much worse. This line of thinking ignored the fact that the state model for the bill was passed under a Republican administration, Governor Romney, in Massachusetts, and that the blueprint for the bill was developed in the conservative Heritage Foundation.

There are important lessons to learn from the health-reform process. First, is that advocates must have a solid understanding of what constitutes a real solution so they are not led down a path toward a false solution. Second, is that advocates must work in solidarity for real solutions with confidence rather than accepting watered-down solutions. And third, is that advocates must not tether their work to the agenda of any political party but must be willing to hold whoever is in office accountable.

Commodifying Human Needs Violates Human Rights

The human rights framework is being used more and more as a way to understand problems and their solutions and to empower people to demand that basic needs are met. The concept of human rights runs counter to the incentive of the market, which is to make everything a commodity. When human needs are treated as commodities, those who control access to them have a captive population.

Like the company towns that arose during the Industrial Revolution, Wall Street controls the currency, the jobs, and goods and services, so that many people have nowhere to go. It is estimated by author John Curl that 92 percent of the working population in the U.S. is trapped in indentured servitude, dependent on their job for their survival. As anthropologist David Graeber points out, the earliest wage contracts were slave rentals. Today, the reality for almost all Americans is living as indebted wage slaves.

One of the tools used by dictatorships to control their populations and prevent uprisings is to impose economic sanctions. Sanctions are easy to recognize when we look at other nations, but not so easy to see at home. The United States is the wealthiest nation in the world, and total wealth is growing. But this wealth, much of which is derived from the resources and labor of the population, is flowing to the top 1 percent or above, while the wealth of the bottom 99 percent is falling. There is enough wealth in the United States to provide free education and health care to all and to create a full employment program. The U.S. could invest in a clean energy infrastructure and affordable housing. The failure to do so is equivalent to imposing sanctions on the majority of the people.

Although some do not know it yet, all people in the United States are united by their human rights to have basic needs met. Indeed, the United States has signed onto two international treaties that delineate these human rights. One is the Universal Declaration of Human Rights and the other is the International Covenant on Economic, Social, and Cultural Rights. These rights, including our right to health care, are being violated. It is up to the people to realize this and to join together in demanding that our rights be honored. Human rights are the glue that binds us to each other. Debt is the shackle that enslaves us to Wall Street.

Starting at the Roots

The commodification of health care is the root cause of medical debt and bankruptcy, but we see the same pattern when it comes to other essentials such as housing, education and more. The Strike Debt campaign on medical debt is part of a broader campaign against our debt-based economy. Debt has been part of human society for thousands of years and, as David Graeber notes, there are “potentially catastrophic social consequences of debt.” In order to avoid a debt crisis:

“It soon became traditional for each new ruler to wipe the slate clean, cancel all debts, and declare a general amnesty or ‘freedom’, so that all bonded labourers could return to their families. (It is significant here that the first word for ‘freedom’ known in any human language, the Sumerian amarga, literally means ‘return to mother’.) Biblical prophets instituted a similar custom, the Jubilee, whereby after seven years all debts were similarly cancelled. This is the direct ancestor of the New Testament notion of ‘redemption.’
“

Strike Debt seeks to “build popular resistance to all forms of debt imposed on us by the banks. Debt keeps us isolated, ashamed and afraid. We are building a movement to challenge this system while creating alternatives and supporting each other. We want an economy where our debts are to our friends, families and communities – and not to the 1%.”

This type of thinking is fundamental to achieving a society based on equality, prosperity and human rights. A culture shift away from the dominant narrative of the marketplace to one of social solidarity is essential because a population that is empowered and works together is more difficult to oppress and control.

The Strike Debt campaign prepared a Debt Resisters Organizing Manual to provide people with tools to both resist debt and build the society we want to live in. The manual is an ongoing work that is available for free on the Strike Debt website. It explains debt and how it is created. It provides specific actions that people can take to decrease their individual debt. And it provides information so that communities can understand ways that debt controls their collective lives, for example when public debt is used to justify cuts to social services and basic public infrastructure.

Debt is a global problem. It is a tool that has been used for decades to advance a neoliberal agenda of privatization of goods and services. Secretary of State John Kerry’s first trip to Egypt was to push their new government to accept an International Monetary Fund (IMF) loan with the requirement that it end subsidies for fuel and food, among other structural adjustments. The United States, through the World Bank and IMF, routinely requires Structural Adjustment Programs as conditions of loans that demand decreased funding for public programs and increased foreign ownership of resources.

Indeed, rather than ending debt as wise rulers of the past have done, for the first time in the 5,000-year history of debt, Graeber writes, “we have begun to see the creation of the first effective planetary administrative system, operating through the IMF, World Bank, corporations and other financial institutions, largely in order to protect the interests of creditors.”

But more civil societies are taking a stand against debt that has been imposed upon them without their consent. In Spain, this is being done through the “No Pagamos” (We Won’t Pay) campaign. Likewise, it is happening in the U.K. and Greece. We have written previously about successes in Latin America such as Venezuela and Ecuador.

As neoliberal policies take root at home, more communities in the U.S. are building Strike Debt chapters and fighting back. To find a chapter near you or to start one, visit Strike Debt. It is time for Americans to stand together, with the people of the world, and end the systemic problem of debt enslavement. For this, our solidarity is more important than ever.

You can listen to our interview with Thomas Gokey of Strike Debt and Dr. Steffie Woolhandler of PNHP.org on Medical Debt and Bankruptcy on Clearing the FOG.

The Cost Curve Is Bending, but Not for All of Us

By Don McCanne, M.D.

“If the piece has a hero, it’s an unlikely one: Medicare, the government program that by law can pay hospitals only the approximate costs of care. It’s Medicare, not Obamacare, that is bending the curve in terms of cost and efficiency.”
–  Richard Stengel, managing editor, TIME, regarding “Bitter Pill’ by Steven Brill (1)

Under President Barack Obama, the nation once again undertook the effort to reform health care so that everyone would have access to essential health care services. But this time it was different. The costs of health care had become unbearable to individuals, to employers, and to the government. It became an imperative to bend the cost curve of health care – to slow the growth in health care costs to a sustainable level.

Although the effort resulted in the enactment of the Patient Protection and Affordable Care Act (Obamacare), the effort falls far short. Not only will 30 million people remain uninsured, underinsurance in the form of low actuarial value health plans will become the new standard. Although the legislation included many features designed to control health care costs, most are only tweaks and unfortunately will have very little impact when considering the enormity of the problem.

Perceiving that more measures are needed to control spending, President Obama and the members of Congress are considering significant changes to Medicare, as if the only health care cost problem were the projected increases in Medicare spending which the government faces. From a policy perspective, this would be a disastrous approach since the excess cost escalation is not occurring in Medicare, but rather it is occurring in the private sector – especially the health care that is funded through private health plans and through employer-sponsored self-insured plans. Our government stewards could not be further off target should they start to trim the Medicare program.

Steven Brill, in “Bitter Pill,” his epic special report for TIME, demonstrated very clearly that health care prices in the United States make us outliers when compared to all other nations (2). This has resulted in by far the most expensive health care system, though we fall far short on universality, quality, equity and efficiency. In their classic report of a decade ago, “It’s the Prices, Stupid: Why the United States Is So Different from Other Countries,” Gerard Anderson, Uwe Reinhardt and their colleagues removed any doubt about our excessive prices (3).

Brill, again in “Bitter Pill,” has shown that the private insurance industry has not been effective in bringing cost escalation down to sustainable levels. On the other hand, he demonstrates quite clearly that Medicare has been much more effective in this endeavor than has the private sector.

A half century ago, Nobel laureate Kenneth Arrow, in his classic paper, “Uncertainty and the Welfare Economics of Medical Care,” demonstrated decisively that free markets do not work in health care (4). Except occasionally at the margin, neither patients, nor private insurers working as patients’ intermediaries, are able to obtain optimal prices for health care. Although anti-government proponents of free markets have contended that their ideological preference would save us money in health care, it has been no more than a dream on their part since they have presented no substantial evidence to refute Arrow’s conclusions.

In the managed care revolution, private insurers did take one step forward in slowing the growth of costs by contracting with health care professionals and institutions, but experience has shown that the efforts of private insurers are relatively feeble when compared to the tremendous power of government administered pricing. This is demonstrated by the S&P Healthcare Economic Indices, which indicate the change in the average per capita cost of health care services (5). When breaking down the S&P Healthcare Economic Composite Index into the S&P Healthcare Economic Medicare Index and the S&P Healthcare Economic Commercial Index (private insurers and large self-funded employer groups), it is clear that Medicare has bent the cost curve when compared to the private commercial insurers (Figure 1).

Figure 1 – S&P Healthcare Economic Indices

This difference can be explained by the more rigid control that the government has over Medicare pricing. With the advice of the Medicare Payment Advisory Commission (MedPAC), an independent congressional agency, Congress sets payment rates. Through Medicare prospective payment, efforts are made to set payments based on costs rather than on prices (6). As an example, hospitals are paid based on diagnosis related groups adjusted for medical severity (DRGs), which are bundled payments based on average operating and capital costs.

Prospective payment is not always perfect, as exemplified by the difficulties with physician payment based on the flawed formula of the sustainable growth rate (SGR). Because of physician response to SGR in adjusting the frequency and intensity of services, and because of primary care/specialty distortions in the recommendations of AMA’s Relative Value Scale Update Committee (RUC), calculated adjustments would have caused a decline in physician payment rates that could threaten Medicare with an exodus of physicians no longer willing to participate in the program. Congress has overridden the scheduled reductions and is working on a replacement for SGR that would ensure fair payments. The response of Congress to this flaw shows that the system still works as long as the stewards remain attentive.

Even though Medicare has done a better job than the private sector at getting prices right, comparisons with other nations have shown that we can do even better. The United States and Canada were on the same trajectory in growth of health care costs until Canada adopted its medicare program – a single payer national health program administered in each province. Figure 2 demonstrates that, compared to the United States, Canada has effectively bent the cost curved for their entire national health expenditures.

 Figure 2 – Canada bending the cost curve

This dramatic difference between the United States and Canada in the percent of GDP that is devoted to health care cannot be explained by price differences alone. Canada uses other important single payer policies to achieve their more efficient use of health care funds. One of the more important differences is that their single payer system is much more administratively efficient than our fragmented, multi-payer system. In the United States, about 30 percent of health care spending goes to administrative services, whereas in Canada, the percentage is about half that. Instituting this one change alone would bring down the trajectory of health care spending in the United States, making spending more tolerable.

As quoted in Steven Brill’s article, John Gunn, chief operating officer of Sloan-Kettering, stated, “I could see where a single payer approach would be the most logical solution. It would certainly be a lot more efficient than hospitals like ours having hundreds of people sitting around filling out dozens of different kinds of bills for dozens of insurance companies.”

Other effective policies include global budgeting of hospitals and institutions. Rather than having complex, detailed billing for each medical encou
nter, hospitals would operate on global budgets just as our police and fire departments do now. Budget negotiations are based on legitimate costs with appropriate operating margins for extra needs such as surge demand or safety net functions. System capacity is set by separate budgeting of capital improvements, ensuring that capacity is adequate for the needs, while avoiding excess capacity that can result in overutilization. Pricing for pharmaceuticals and medical supplies can be improved through negotiated bulk purchasing, just as we have with the VA system. Payment rates for physicians and other health professionals can be set through negotiations based on legitimate costs and fair net compensation.

Some express concern that, by expanding the system to cover everyone while controlling spending through a publicly administered system, there would not be enough funds to ensure a robust health care delivery system. The experiences of virtually all other wealthy nations demonstrate that this should not be a concern. Although their systems do require constant oversight by their public stewards, they have shown that they can achieve high system performance at costs that are considerably below those of our dysfunctional system here in the United States.

Physicians worry that their incomes may not be adequate. The experience in Canada can be reassuring for those concerned. After Canada adopted their medicare system, physician incomes grew more quickly than the incomes of other Canadians, and continue to be considerably greater (7). The savings in a single payer system are achieved by means other than underpaying for health care services. Also, with a single payer system, attempts by conservative governments to roll back financing to inadequate levels are met with a pushback by patients and health care professionals that restricts the damage that could be done by those with an austerity agenda.

Other advantages of a properly designed single payer system, besides cost containment, include the assurance that absolutely everyone is covered automatically, that people have choice of their health care professionals and institutions, that access to all essential services is assured through central planning of system capacity, and that more efficient allocation of our health care dollars has the added benefit of improving quality.

What other option do we have? As mentioned, the Affordable Care Act will only perpetuate uninsurance, underinsurance, and the inefficiencies and high costs of a fragmented system composed of a multitude of private insurers and public plans. The cost savings provisions in the Act are a scattershot approach that cannot begin to harness costs in such a fragmented and dysfunctional system.

We have seen with Medicare that a publicly administered program can bend the cost curve. If we improved Medicare and made it our exclusive single payer system, we would be creating our own beneficent public monopsony – a single purchaser of health care enabling the attainment of optimal value for all of us. Congressman John Conyers, along with 41 cosponsors, has introduced legislation that would accomplish this  – H.R. 676, the Expanded and Improved Medicare for All Act.

Let’s keep bending the Medicare cost curve, but not just for seniors and people with disabilities. Let’s bend it for all of us.

Don McCanne, M.D., is senior health policy fellow of Physicians for a National Health Program (www.pnhp.org).


1. TIME, March 4, 2013, Editor’s Desk, “The High Cost of Care,” by Richard Stengel
2. TIME, March 4, 2013, Special Report – “Bitter Pill,” by Steven Brill, http://healthland.time.com/2013/02/20/bitter-pill-why-medical-bills-are-killing-us/
3. Health Affairs, Volume 22, Number 3, May/June 2003, “It’s The Prices, Stupid: Why The United States Is So Different From Other Countries,” by Gerard F. Anderson, Uwe E. Reinhardt, Peter S. Hussey, and Varduhi Petrosyan, https://pnhp.org/system/assets/drupal/single_payer_resources/prices_stupid.pdf
4. The American Economic Review, December 1963, “Uncertainty and the Welfare Economics of Medical Care,” by Kenneth Arrow, http://www.who.int/bulletin/volumes/82/2/PHCBP.pdf
5. S&P Dow Jones Indices, Healthcare Economic Indices, http://us.spindices.com/index-family/specialty/healthcare-cost
6. Rick Mayes and Robert Berenson, “Medicare Prospective Payment and the Shaping of U.S. Health Care,” The Johns Hopkins University Press, 2006.
7. American Journal of Public Health, July 2011, “The Impact of Single-Payer Health Care on Physician Income in Canada, 1850–2005,” by Jacalyn Duffin

Low cost eHealthInsurance plans exposed

eHealth Data: Premiums 47% Higher for Individual Health Insurance Plans with Comprehensive Health Benefits

eHealthInsurance
March 18, 2013

Today eHealth, Inc., parent company of  eHealthInsurance.com, America’s first and largest private online health insurance exchange, released a ‘Cost of Comprehensive Health Benefits’ report. This new report shows that average monthly premiums for individual health insurance plans are forty-seven percent (47%) higher than average when they cover a comprehensive list of eight health benefits.

Since 2005, eHealth’s Cost and Benefits report has tracked the percentage of plans surveyed that cover eight health benefits deemed to be comprehensive by eHealth, including: Laboratory and X-Ray; Emergency Services; Prescription Drugs; Chiropractic; Maternity; OB/GYN; Periodic Exams; and Well Baby care.

In 2010, the Affordable Care Act (ACA) created a new list of ten Essential Health Benefits (EHBs) that all major medical health insurance plans must cover at an actuarial value of 60% or more in order to fulfill the federal mandate for health coverage, beginning in January of 2014.  Those EHBs include: ambulatory patient services; emergency services; hospitalization; maternity and newborn care; mental health and substance use disorder services, including behavioral health treatment; prescription drugs; rehabilitative and habilitative services and devices; laboratory services; preventive and wellness services and chronic disease management; and pediatric services, including oral and vision care.

The data presented in this report do not reflect the impact that new Essential Health Benefit (EHB) standards will have on plan prices, nor does the report take into account other factors that may impact the cost of health insurance in 2014. Not only do some of the benefits differ and overlap, but chiropractic care is not deemed to be an EHB by the ACA.

“These data provide valuable insight into the cost of health insurance plans as consumers prepare to enroll in the more comprehensive health plans that will become available with the Affordable Care Act,” said eHealth Senior Vice President of Carrier Relations Robert Hurley. “Our report does not provide an ‘apples to apples’ comparison of plans that cover the essential health benefits established in the Affordable Care Act, but it does provide some interesting insight into the potential impact that new benefits standards could have on the cost of health insurance plans in the individual health insurance market.”

http://news.ehealthinsurance.com/news/ehealth-data:-premiums-47-higher-for-individual-health-insurance-plans-with-comprehensive-health-benefits

And…

Richer health benefits cost 47% more, industry report warns

By Chad Terhune
Los Angeles Times, March 19, 2013

“I think consumers can expect new health plans next year are going to be somewhere between 40% to 60% more expensive,” said Bob Hurley, eHealth’s senior vice president of carrier relations. “I think there is a fair amount of concern that the health plan requirements are too rich.”

http://www.latimes.com/business/money/la-fi-mo-health-insurance-rates-20130319,0,2057027.story

Comment:

By Don McCanne, M.D.

Many critics of the Affordable Care Act (ACA) say that the health plans to be offered in the proposed state insurance exchanges should be replaced with plans that have fewer regulatory requirements and that can be sold across state borders. They often cite the bargain prices of plans offered by eHealthInsurance as an example of how we could make health insurance more affordable for everyone. So what is eHealthInsurance offering?

By their own analysis, eHealthInsurance does not consider their plans to be comprehensive unless they offer the eight benefit categories listed in the article excerpt above. If those benefits are included, the premiums are 47 percent higher for both individual and family plans than the premiums for their cheapest plans. Note that these eight benefits are not the same as the ten benefit categories that are required as essential health benefits under ACA, so it is likely that the premiums under ACA will be even more than 47 percent higher than the cheap eHealthInsurance plans. This doesn’t even take into consideration cost sharing such as the deductibles.

There is already concern that the benchmark silver plans under ACA, with an actuarial value of only 70 percent (patient pays 30 percent of costs, which might be partially offset by income-indexed subsidies), may leave patients vulnerable to excessive out-of-pocket costs. If the stripped down eHealthInsurance plans were allowed as replacements for exchange plans, it is inevitable that most enrollees would face financial hardship should they develop significant medical problems.

So what is the response of eHealthInsurance? eHealth senior vice president Robert Hurley says, “I think there is a fair amount of concern that the health plan requirements are too rich.”

This exposes the highly touted low cost eHealthInsurance plans as the shoddy plans that they are. You might be nominally insured, but don’t you dare get sick.

What "forgiveness formula" would be appropriate for medical debt?

Forgiveness Formulas

By Casey B. Mulligan, Economics Professor, University of Chicago
The New York Times, March 20, 2013

In an ideal world, collecting debts would be as simple as asking debtors to pay their obligations when they are able to. But in reality most businesses have found that they need to obtain other assurances, such as collateral or the option to shut off services to a delinquent payer. Otherwise it is too easy for debtors to claim hardship and walk away without paying.

On the other hand, many families and other debtors do experience genuine hardship. In those cases it can be compassionate and even efficient to at least partly forgive the debts of people who have fallen on hard times. Many economists see loan defaults as (sometimes) an efficiency-enhancing form of risk-sharing.

One approach would be for lenders to develop and disclose a “forgiveness formula” that would clearly define “hard times” and indicate precisely what kind of forgiveness is possible. The advantage of forgiveness formulas is that distressed borrowers can be certain where they stand with the lender and can readily evaluate whether they were treated “fairly.”

Hospitals are also known to partly forgive medical debts incurred by the uninsured, while they make no accommodation for many others. Some states require hospitals to explain in writing how they go about discounting charges for hardship patients, but you might guess that hospitals worry that patients will game those calculations in order to pay less.

One advantage of health reforms that get more people on health insurance is that by getting people to pay for their health care before they get sick, the reforms reduce the number of cases in which clear forgiveness has to be traded off with formula gamesmanship.

Comment:

By Don McCanne, M.D.

A forgiveness formula for hospitals?

Other nations have been successful in providing health care to everyone at a cost much below that of our dysfunctional system here in the United States. Their programs often have first dollar coverage; therefore medical debt is almost unheard of – certainly a minuscule fraction of what we have here.

Instead of establishing strategies for forgiveness in the future, wouldn’t it be more logical to establish a health care financing system in which debt forgiveness would never need to be a consideration?

http://economix.blogs.nytimes.com/2013/03/20/forgiveness-formulas/

The cost of failing to use government price negotiation for drugs

State Savings with an Efficient Medicare Prescription Drug Benefit

By Dean Baker and Nicole Woo
Center for Economic and Policy Research (CEPR), March 2013

Americans pay far higher prices for prescription drugs than do people in other wealthy countries. The reason that other countries spend so much less on drugs is that their governments negotiate prices with the pharmaceutical industry. The United States government could adopt the same approach with the Medicare drug program and use its market leverage to negotiate the same, or even lower, prices as are paid by other wealthy nations. This issue brief finds the potential savings to states would be enormous, cumulatively between $31 billion and $73 billion over 10 years, and also each state individually could expect significant savings.  California leads the way, with potential savings between $3.3 and $7.8 billion. The next six top-saving states are Florida, New York, Texas, Pennsylvania, Ohio and Illinois, all with projected savings of at least $1 billion per year.

http://www.cepr.net/index.php/publications/reports/state-savings-with-an-efficient-medicare-prescription-drug-benefit

Comment:

By Don McCanne, M.D.

Those who have followed health policy closely are already aware that we could have had much lower drug spending in the Medicare Part D drug program had we authorized government price negotiation with the pharmaceutical industry, just as other governments have done so successfully. This new report from CEPR puts a price on the waste that we tolerate merely because we don’t place demands on our legislators to fix the system.

Think about this a little bit more. If we demanded government price negotiation not only for those of us enrolled in the Part D Medicare program, but for all of us who need prescription medication, just think of how much more reasonable our pharmaceutical spending would be. We could do this simply by adopting a single payer, improved Medicare for all program.

But the drug savings would be only the beginning. By now, most of you are aware of the many other single payer policies that would produce enough total savings to ensure high-quality care for all of us, while making our health care delivery system affordable for the entire nation. Why are we not beating down the doors of Congress?

Brill’s big breakthrough

A Time manifesto on healthcare costs smashes fences that have constricted this conversation for far too long

By Trudy Lieberman
Columbia Journalism Review, The Second Opinion blog, March 5, 2013

Steven Brill’s taboo-busting X-ray of the US medical system, “Bitter Pill,” has a chance to reframe the way we think and talk—and report—about healthcare costs.

In a penetrating, systemic, and long (36 pages) look at medical care, US style, for Time magazine, with tale after tale of the financial miseries befalling the system’s victims, with number after number bolstering his analysis, Brill zooms in on the nation’s unrealistic and destructive healthcare costs—why they exist and persist.

Brill, a journalist and an entrepreneur, offers the media a rare chance to move beyond the fence that usually corrals this discussion. High healthcare costs are spawned by a powerful ethic in American medicine that is too often nurtured by the press, an ethic that dictates that the medicine men—doctors, hospitals, and drug companies—sit at the right hand of God and deserve all they can get. Brill’s article crashes right through that fence, in fact, and provides the stuff for further productive reporting.

“When we debate health care policy,” he writes, “we seem to jump right to the issue of who should pay the bills, blowing past what should be the first question: Why exactly are the bills so high?” Precisely. Brill gives us some answers, too, not based on quotes from the self-serving players we hear from so often in this dreary debate, but based on serious investigation.

The waste at nonprofit hospitals: Waste in the US system is the recurring theme throughout Brill’s piece. The sacred cows he slaughters are the country’s nonprofit hospitals, which he holds largely responsible for much of the overspending. When McKinsey, the consulting firm, examined hospital financial reports with the help of a Bank of America survey, it found, as Brill put it:

The 2,900 nonprofit hospitals across the country, which are exempt from income taxes, actually end up averaging higher operating profit margins than the 1,000 for-profit hospitals after the for-profits’ income-tax obligations are deducted. In health care being nonprofit produces more profit.

Brill dissects some of these nonprofit places of healing—from the world-famous MD Anderson Cancer Center in Houston to less well known facilities, such as Stamford Hospital in Stamford CT—by showing, with real live bills from patients, the absurdity of some of their charges. For example: a $77 charge for one box of sterile gauze pads. Or consider this: $18 for a single diabetic test strip. Amazon sells a box of 50 for $27.85, about 55 cents a strip. In hundreds of small and midsize cities across the country—the American health care market has transformed tax-exempt ‘nonprofit’ hospitals into the towns’ most profitable business and largest employers, Brill reports. (Indeed, that latter point often makes it tough for local reporters to tackle these institutions.)

But Brill goes beyond the obviously absurd charges and examines where they come from—the chargemaster, an uber-list of prices each hospital keeps for every possible treatment and service. It governs what patients are actually charged and what payers actually pay. The chargemaster is phony and utterly flexible; it bends according to the negotiating leverage of hospitals and insurance companies when they joust for the final prices.

Brill describes the elaborate games that hospitals and payers play in determining who gets what discounts from the chargemaster, which result in an inequitable patchwork payment system. The leverage of the biggest of the big hospitals and insurers determines which patients are charged more or less depending on their carrier’s negotiating skill. As Brill demonstrates, that leaves plenty of room for hugely inflated prices, which in turn make it possible to pay over-the-top salaries to hospital executives.

Few patients know about the chargemaster and its amazing flexibility. Even hospital execs profess ignorance. When Brill asked for a chat with the CEO of Stamford Hospital to find out more about a patient’s bill, a spokesman replied that he doubted the CEO “has even seen the list in years. So I’m not sure why you care.” Most top hospital execs refused to talk when Brill inquired about their charges. Instead he got blah-blah comments from communications operatives.

But supposedly nonprofit hospitals are accountable to the public. They get generous tax exemptions in return for giving community benefits that can range from health fairs to free care for the poor. Some reporters have tried to investigate these community benefits, and they often run in to the same stone wall as Brill did. It makes you wonder to whom these institutions are accountable.

Handcuffing Medicare: Perhaps the biggest public service Brill has done is give credit where credit is due—to Medicare, an efficient social insurance program that is the only thing that keeps the hospitals and doctors in check and deserves far better press than it has gotten. Brill’s comprehensive reporting on Medicare could be a game changer, switching the conversation from cutting Medicare and cost-shifting (to beneficiaries), to helping Medicare do its job even better.

By carefully parsing so many hospital bills from non-Medicare patients and comparing them to how much less Medicare would have paid, Brill shows what happens when the government gets involved in the price of care. The price goes down. One hospital charged a patient $333 for a particular X-Ray. Medicare pays $23.83.

The government’s involvement is what healthcare sellers fear, and that opposition has prevented a more rational discussion of alternatives to a bloated system.

Doctors and hospitals may grumble about Medicare’s lower reimbursement, but as Brill notes, most still treat Medicare patients. “Hospitals don’t lose money when they treat Medicare patients,” says Jonathan Blum, Medicare’s deputy administrator, whom Brill interviewed for his piece. (Take a look at all the billboard and TV advertising—often focused on the elderly—that hospitals spend a fortune on, partly to attract Medicare patients.)

Another major theme of Brill’s piece is that Medicare could do way more to control medical costs if only Congress would let them is a point he made on ABC’s This Week in late February, where he talked about the legal prohibition on negotiating prices with pharmaceutical companies. In many other countries drug prices are regulated; America could save some $94 billion a year if we paid what other countries pay for the same products, he reported. (It’s worth noting too that drugs in England are free to people age 60 and older. In the US, thousands of seniors pay hundreds of dollars each month, even with Medicare’s drug benefit, because the prices are so high, and because insurers, which provide the drug coverage, make them pay huge amounts of coinsurance and copays—cost-shifting arrangements that Congress allows.)

Yet drug makers have won over public opinion by arguing that their high profit margins in the US are justified because they subsid
ize R & D needed for trailblazing drugs. Brill writes:

Apart from the question of whether a country with a health-care spending crisis should subsidize the rest of the developed world—not to mention the question of who signed Americans up for that mission—there’s the fact that the companies’ math doesn’t add up.

Using the case of Flebogamma, a sterile solution to boost the immune system, and its maker, Grifols, he lays bare some of that fuzzy math.

Congress has placed other kinds of handcuffs on Medicare, too. Brill’s discussion of how the program is prohibited from considering whether drugs and medical devices are both cost effective and clinically effective in making payment decisions is illuminating, and one the press almost completely missed during the debate on Obamacare and afterward. The law did set up a Patient-Centered Outcomes Research Institute to do comparative effectiveness research.

But so what? “Medicare could see the research and say, Ah, this drug works better and costs the same, or is even cheaper,” says John Gunn, the chief operating officer at Sloan-Kettering. “But they are not allowed to do anything about it.” (In England and in other countries, government or quasi-government agencies use both cost and clinical effectiveness in recommending which drugs should be used. Maybe that helps explain why seniors in the UK get free medications. The National Health Service usually doesn’t pay for stuff that doesn’t work, and if there’s a cheaper and just-as-effective alternative, that’s what docs prescribe.)

The influence of drug and device makers: Brill makes clear that these two very profitable business sectors have a stranglehold on Congress. From the prohibition on Medicare to use competitive bidding for what’s called durable medical equipment—like wheelchairs, syringes for diabetics, hospital beds, and canes—to the high price of cancer drugs, Brill demonstrates how they manage to keep Congress on their side, to the detriment of the public purse.

Medicare spends about $15 billion a year on medical equipment, and it has been conducting a pilot program to see if those costs can come down. This pilot, which embraces competitive bidding, has resulted in a 40 percent savings. However, it covers only about three percent of the medical equipment that beneficiaries use. If the program went nationwide, Brill estimates Medicare could save some $6 billion annually.

The lobbying campaign of device makers such as the Minneapolis-based Medtronic, whose practices Brill carefully dissects, shows what healthcare sellers do when they don’t like some rule or regulation or tax. Time’s piece describes how device makers are trying to rid themselves of a 2.39 percent excise tax on medical devices called for by Obamacare. Their arguments are the usual ones—the tax would reduce sales so much that the industry would lose some 400,000 jobs, they say. The press, for the most part, has passed along the gloom and doom scenarios from device makers, who Brill calls “superstar performers in a booming medical economy,” without questioning their numbers.

Brill did question them, and found the Affordable Care Act, which imposed the tax to help fund subsidies for the uninsured, would barely hurt the industry. He cited a 2011 McKinsey report, showing that Medtronic “delivered an amazing compounded annual return of 14.95 percent to shareholders from 1990 to 2010.” If the tax were so disruptive that it would kill sales, why, Brill asks “would the industry pass it along to consumers as a price increase? It hardly has to given its profit margins.”

Flaws in Obamacare: “With Obamacare we’ve changed the rules related to who pays for what, but we haven’t done much to change the prices we pay,” Brill asserts. That’s an important observation, and one that was brushed aside by many policymakers in the haste to pass health reform. As CJR has pointed out, the media, too, may have helped oversell what the law is to accomplish.

Brill analyzes what the law does this way: Obamacare, he says, tinkers at the edges of the system but does not address the core problem. It does improve the claims appeal process, for example, and makes some insurance terms available in plain English. While such changes are positive, he writes, “none of it is a path to bending the healthcare cost curve.” That gets to the heart of the debate over the affordability (which CJR recently addressed in an Exchange Watch piece about the efforts to set up Connecticut’s Obamacare health exchange).

Brill observed the “exchanges could raise costs, not lower them.” Indeed, three of Obamacare’s best provisions—prohibiting exclusions for preexisting conditions, ending annual and lifetime caps on coverage, and restrictions on copays for preventive care, will most likely raise insurance premiums, Brill tells readers.

Unfortunately, Brill doesn’t fully explore the affordability conundrum. Many of the people whose misery he described owned “limited benefits policies,” which don’t cover much if someone has a catastrophic illness. Obamacare eliminates such restrictions.

Yet patients could still find themselves in the same financial boat when series illness strikes. Because insurance in the state insurance exchanges, as Brill argues, may well still be expensive, consumers faced with the mandate to buy coverage are likely to choose the cheapest policies—and those are designed to cover only 60 percent of the costs. Families might still struggle to pay the remaining 40 percent. Medical bills that seem like monsters from outer space will not disappear for many Americans—even with Obamacare.

An official of a firm who helps people untangle their medical bills and negotiate with providers tells Brill that most of the firm’s clients are middle or upper-middle people with insurance. That tracks with studies by CUNY professors Steffie Woolhandler and David Himmelstein and Elizabeth Warren (now a US Senator from Massachusetts), who found it was mostly middle class people with insurance who declared medical bankruptcy. Brill’s predictions about rising premiums and rising medical costs may not change this picture.

Brill’s solutions: A big omission in Brill’s remarkable tour through the American health system is a serious critique of the doctors. Although the piece devotes a brief section to the doctors’ role in creating this mess, he gives their complicity short shrift. To bolster this notion of what he calls “over-doctoring,” Brill seems to generalize from an 89-year-old patient named Alan A., who got 33 visits in one year from 11 doctors who, according to Brill, “had nothing to do with his recovery from the heart attack or his cancer.” While noting there’s been some progress toward weaning the docs from fee-for-service payments to salaries, he doesn’t directly address the question of whether US physicians, particularly specialists, are paid too much, a subject policymakers have been reluctant, for decades, to address.

Nor does Brill discuss Congressional efforts to limit inflation in doctors’ fees through the 1997 Balanced Budget Act, and the doctors’ mostly successful efforts to thwart its mandated cuts in Medicare reimbursements. Failing to discuss the “Doc Fix” campaign
s by physicians’ professional organizations leaves the impression they have no role in the high cost of care. They do.

Brill does talk about hospital consolidation and how hospitals are buying up doctor practices and steering patients to them, thus increasing their leverage with insurance companies—an ominous trend. As news outlets like National Journal, the Tampa Bay Times, and The Charlotte Observer have reported, such consolidations have already boosted prices and set up a battle between giant hospitals and giant insurers. Perhaps someday a Brill Part 2 might explore all this.

His offers some solutions, which Time lays out in an infographic. Each yields billions of dollars in savings.

• Recapturing 75 percent of the profits from hospitals by taxing them, regulating their prices, ensuring real competition and transparency, and rethinking the chargemaster so it reflects real costs, not phony ones. The savings: $84 billion.

• Allowing and funding comparative effectiveness evaluations in prescribing drugs. (We hope he means both clinical and cost effectiveness.) The savings: $28 billion.

• Reducing the number of tests and procedures done only to prevent malpractice lawsuits. (The literature is full of alternatives to this broken system, which both sides perpetuate.) The savings: $74 billion.

Brill’s list goes on, totaling some $360 billion in savings, or about 13 percent of the country’s total healthcare spending.

What’s really eye-opening is the $3.6 billion operating profit amassed by the country’s ten largest nonprofit hospitals—money that now goes for huge executive salaries and for buying up other hospitals and doctor practices, which, as the consolidation frenzy continues apace, will further drive up costs.

Are his remedies adequate? He concedes some are unlikely to happen. And he doesn’t quite follow the logic of his own research all the way.

He convincingly argues that Medicare is the superior angel in the US system, and that it could actually control costs if only Congress would let it. Medicare is “the only player in the system that seems to have to balance countervailing interests the way market players in a real market usually do,” he writes.

Brill recommends lowering, not raising, the age for Medicare eligibility—a goal the creators of Medicare had in 1965. Lowering the age would improve the government’s cost challenge, because people in their late 50s and early 60s would be covered by a more efficient and less costly arrangement than will be the case under Obamacare’s insurance exchanges, which will be able to exert little, if any downward pressure on prices.

Brill’s solution seems to set the nation on the path of Medicare for All and toward a national health system—that Brill cannot bring himself to endorse.

Gunn, the chief operating officer at Sloan-Kettering, told Brill. “If you could figure out a way to pay doctors better and separately fund research… adequately, I could see where a single-payer approach would be the most logical solution.”

Brill sees it somewhat differently: “The real issue isn’t whether we have a single payer or multiple payers. It’s whether whoever pays has a fair chance in a fair market.” Yet he still roots for government power to strip away some of the tremendous leverage held by healthcare providers in today’s health market.

Logically, that circles back to how much doctors should get paid, who pays for their education (Medicare finances some of it), how much nonprofit hospitals should profit, and how much drug and device manufacturers really need to earn. Those questions have been on the shelf for decades. Brill’s contribution dusts them off, exposing them once again to scrutiny by the public and the press.

Maybe Brill has finally succeeded in breaking down the fences that have penned in what’s possible to discuss when it comes to healthcare, and offering to Americans some previously out-of-sight, out-of-mind topics for honest, objective consideration. In his morning on the Sunday network news circuit, the roundtable participants on ABC’s This Week raced as hard as they could to fence in the discussion and cut Brill off, but they didn’t completely succeed.

The Second Opinion, CJR’s healthcare desk, is part of our United States Project on the coverage of politics and policy. Follow @USProjectCJR for more posts from this author and the rest of the United States Project team. And follow Trudy Lieberman @Trudy_Lieberman.

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The Big Boys: An affordability puzzle

The Big Boys: hospitals and their pricing muscles

Care crisis: Medicare for all

By the Editorial Board
The Charleston (W.Va.) Gazette, March 17, 2013

CHARLESTON, W.Va. — Health care should be a human right for all people. Medical insurance should be universal, covering everyone. It should be operated by government, the only sector with enough power to curb runaway trillion-dollar costs. Insurance firms and medical corporations shouldn’t get rich from sickness, their executives pocketing millions per year. U.S. employers shouldn’t be forced to spend more than $7,000 per employee per year for health insurance.

Most modern democracies have nationalized “single-payer” health systems guaranteeing care for all at moderate cost — but America shamefully clings to for-profit medicine, and the U.S. system is a disaster.

The entire March 4 Time magazine is devoted to America’s dilemma, in a cover story titled “Why Medical Bills Are Killing Us.” The 25,000-word study says:

“In the United States, people spend almost 20 percent of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries …. We’re likely to spend $2.8 trillion this year on health care ….”

“Why exactly are the bills so high? What are the reasons, good or bad, that cancer means a half-million or million-dollar tab? Why should a trip to the emergency room for chest pains that turn out to be indigestion bring a bill that can exceed the cost of a semester of college? … Why does simple lab work done during a few days in a hospital cost more than a car?”

The long report describes families who are devastated by colossal medical bills. And it describes sky-high profiteering by medical executives. The CEO of Medtronics electronic device firm was paid $25 million in 2012 — and hospital administrators grab up to $5 million yearly.

It described a blue-collar Oklahoma man who suffered back pain, and a Catholic charity hospital billed him $86,951 for a one-day visit to install an electronic nerve interceptor. The hospital’s administrator is paid $1.9 million per year.

Surprisingly, Time concludes that Medicare, America’s chief “socialized medicine” system, is the best cure for skyrocketing costs, because it clamps tight controls on medical bills. And its bureaucracy is super-frugal. Medicare spends just $3.80 each to process more than 1 billion claims per year — while Aetna insurance spends $30 to process each claim. Commercial insurers waste a lot of money trying to foist bills onto someone else.

For generations, Democrats in Washington have sought to bring low-cost universal health care to America. President Obama’s landmark 2010 reform was a major step. Maybe the wisest course would be to expand Medicare until it covers every American.

http://www.wvgazette.com/Opinion/Editorials/201303170050

Oregon bill backs study of single-payer financing

By Bennett Hall
Corvallis (Ore.) Gazette-Times, March 18, 2013

Oregon health care reformers are hoping a measure working its way through the Legislature will help them prove what they’ve been claiming all along: that a single-payer system is the cheapest way to provide quality care for all.

House Bill 3260 would direct the Oregon Health Authority to conduct a feasibility study on at least four options for financing health care delivery in the state, including a publicly financed single-payer system.

The study also would evaluate the costs of continuing to rely on a mix of public health plans and private insurance; an option that would allow consumers to choose between publicly funded and private plans; and one or more other options designed by the researchers conducting the study.

In addition, HB 3260 sets out a list of criteria that any financing system should meet. Among other things, the system should provide:

• universal access to comprehensive care;
• transparency and accountability;
• integration of physical, dental, vision, mental health and long-term care;
• reduction of administrative costs; and
• sufficient, fair and sustainable financing.

Rep. Michael Dembrow, a chief sponsor of the bill, called it part of a long-term plan to create a single-payer health care system in Oregon.

The Portland Democrat noted that the earliest such a system could be implemented would be 2017, when states can seek waivers under the federal Affordable Care Act. In the meantime, he and others are laying the groundwork.

Earlier this session, Dembrow reintroduced the Health Care for All Oregon Act, which would create the framework for a state single-payer system. While he doesn’t expect that measure, House Bill 2922, to pass this session, Dembrow noted that its already attracted 24 sponsors, more than twice the support he got for HB 3510 in the 2011 Legislature.

“The bill is not fully fleshed out in terms of a funding mechanism,” he said. “What we need to do is get to that level of specificity, and that’s what (HB 3260) does.”

Dr. Mike Huntington of Corvallis, a leader of the statewide reform group Health Care for All Oregon, said a thorough financial analysis could set the stage for serious discussion of single payer.

HB 3260 is similar to a measure passed by lawmakers in Vermont several years ago. The feasibility study it authorized was a key step on that state’s path to adopting a modified single-payer health care system.

“We are convinced that publicly managed financing is critical to any health-care plan,” Huntington said. “But to be persuasive for the public and the Legislature, we want to have a study done specifically for Oregon.”

The study, expected to cost between $250,000 and $500,000, would be financed by grants and private donations. Under terms of HB 3260, the Oregon Health Authority would be expected to complete the job and offer its recommendations on health care funding before the 2015 Legislature opens.

Hearings on the measure have been scheduled for early April before the House Health Care Committee, and Dembrow said he’s expecting a strong show of support.

“I’m feeling very, very optimistic,” he said. “There really seems to be a lot of momentum behind this bill.”

http://www.gazettetimes.com/news/local/bill-backs-study-of-single-payer-financing/article_71ee5e10-8dbf-11e2-a5b9-001a4bcf887a.html

Rhode Island's is 41st state AFL-CIO to endorse H.R. 676

By Single Payer News

On Feb. 25 the Executive Board of the Rhode Island AFL-CIO unanimously endorsed H.R. 676, Expanded and Improved Medicare for All, the national single-payer legislation recently reintroduced into Congress by Rep. John Conyers Jr., D-Mich.

George Nee, president of the Rhode Island AFL-CIO, stated, “Year after year America continues to spend more and get less in return for our broken health care system, something must be done. The Rhode Island AFL-CIO strongly supports single-payer national health care as a way to insure all Americans, cut wasteful spending out of our health care system, and contain costs in a system where prices are spinning out of control. All Americans should have access to high quality affordable health care, that does not jeopardize the financial or physical well-being of themselves, their families, or the companies they work for.”

The vote followed a presentation on single payer health care by J. Mark Ryan, M.D., F.A.C.P., president of the state chapter of Physicians for a National Health Program (PNHP). Dr. Ryan is an internist in Providence where he provides primary care at the University Medicine Foundation. “I was very impressed at how knowledgeable the Executive Board members were about H.R. 676 and the benefits of single-payer national health care,” Dr. Ryan told the All Unions Committee.

The Rhode Island AFL-CIO is the umbrella organization for more than 250 local unions which represent over 80,000 working men and women across the state. The story on the Rhode Island AFL-CIO website is here.

*****
H.R. 676 would institute a single payer health care system by expanding a greatly improved Medicare to everyone residing in the U. S.

H.R. 676 would cover every person for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental (including oral surgery, periodontics, endodontics), mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care and correction, hearing services including hearing aids, chiropractic, durable medical equipment, palliative care, podiatric care, and long-term care.

H.R. 676 ends deductibles and co-payments. H.R. 676 would save hundreds of billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

In the current 113th Congress, H.R. 676 has 41 co-sponsors in addition to Conyers.

H.R. 676 has been endorsed by 598 union organizations including 144 Central Labor Councils/Area Labor Federations and 41 state AFL-CIO’s (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC, MO, MN, ME, AR, MD-DC, TX, IA, AZ, TN, OR, GA, OK, KS, CO, IN, AL, CA, AK, MI, MT, NE, NJ, NY, NV, MA, & RI).

For further information, a list of union endorsers, or a sample endorsement resolution, contact Kay Tillow, All Unions Committee for Single Payer Health Care–HR 676, c/o Nurses Professional Organization (NPO), 1169 Eastern Parkway, Suite 2218, Louisville, KY 40217. Phone: (502) 636 1551 E-mail: nursenpo@aol.com, unionsforsinglepayer.org

Single-payer health care: What it is, what it isn't

Step back and look at it with clear eyes. You’ll see that it’s practical.

By Bonnie Blodgett
Star Tribune (Minneapolis), March 16, 2013

Dr. David Dvorak is an emergency room physician. He supports a single-payer system for Minnesota and wants to make one thing clear: “single payer” doesn’t mean socialized medicine.

In Germany, for instance, hospitals and doctors compete for customers, and the market dictates the cost of what they provide. The government pays the bill because health care isn’t viewed as discretionary but as a basic right. Every taxpayer pays in, according to ability and regardless of illness or age. This creates a vast pool, to borrow a term from the insurance industry, and the larger the pool, the smaller the risk that each participant poses to everyone else. Now that’s an insurance plan!

What bothers Dvorak is that in this country health care is such a hodgepodge. About half of us get coverage through our employers. There are nonprofit insurers and for-profit insurers. The latter group spends about twice as much in overhead as their nonprofit peers. If you’re uninsured because you’re self-employed, unemployed or have a preexisting condition and are 19 or older, well, that’s too bad — but not at all surprising. Fifty million Americans are in the same predicament. Health crises are now the No. 1 cause of bankruptcy in the United States.

Veterans Affairs and Medicare take care of the sickest among us yet somehow manage to deliver health care at the lowest cost. Could that be, at least partly, because they’ve eliminated the middleman? The nonpartisan U.S. General Accounting Office concluded that a system like Germany’s would save the United States nearly $400 billion per year, enough to cover all of the uninsured.

Critics believe that single payer would put an end to innovation. It’s a false argument to begin with, but look at the record: Shiny new stents, scanners and specialists don’t automatically deliver improved health. Moreover, gains produced by medical breakthroughs are erased by such mundane realities as this: When people lose their health coverage, they put off going to the doctor until the cost to heal them is through the roof. Who pays? Taxpayers. Fact is, business pays less than 20 percent of our nation’s health bill, while 60 percent is funded by taxes and the rest is out-of-pocket.

We are spending twice as much as other wealthy democracies — yet our health outcomes, including life expectancy and infant mortality, keep heading the wrong way compared with theirs. Meanwhile, insurance companies and their top executives are raking it in. It takes a certain kind of smarts to deliver shareholders the handsome rewards they’ve come to expect from this industry, rewards that also accrue to the benefit of those brainy executives, whose salaries are dwarfed by what they receive in stock options.

In 2009, when the rest of the nation was mired in recession, the New York Times asked the UnitedHealth compensation committee why CEO Stephen J. Hemsley had been awarded $100 million in stock options that year. The committee praised their man for “enhancing the Company’s reputation, ethical culture and tone at the top.” The Times noted that Hemsley’s predecessor, William W. McGuire, “had stepped down in a scandal over his stock options.”

UnitedHealth employs ordinary people, of course. Jobs are important. But do these jobs grow the economy in a meaningful way? Do they create new treatments or diagnose tumors or comfort an ill patient?

Many studies have proven that single-payer systems are vastly more efficient and fair than our own combo platter. The Affordable Care Act reforms a system that needs to be replaced. In 2017, states will be allowed to opt out. Maybe, on this issue, the agendas of left and the right will align. Conservatives who like taking power from the feds and liberals who see health care as a human right might just see eye-to-eye enact the first single-payer system right here in Minnesota.

That’s how it started in Canada. Dvorak likes to point out that when asked in a nationwide poll to pick from a star-studded roster their greatest national hero, Canadians chose Tommy Douglas, who set up a single-payer health care system in Saskatchewan that was so successful the rest of the country wanted in.

Something else Dvorak wants to clarify: He’s not some renegade outlier. Polling shows not only that two-thirds of Americans support single-payer, but that 59 percent of American physicians do, too.

Why didn’t you know that? Spin. Insurance companies spent $1.5 million a day lobbying to ensure that the ACA would pose no significant threat to its presence in health care. That’s what I mean by smart.

Bonnie Blodgett is a St. Paul writer.

http://www.startribune.com/opinion/commentaries/198548261.html

A disaster in the making – defined contribution for employer plans

To Save, Workers Take On Health-Cost Risk

By Anna Wilde Mathews
The Wall Street Journal, March 17, 2013

Last fall, two big employers embarked on a radical new approach to employee health benefits, offering workers a sum of money and allowing them to choose their health plans on an online marketplace. Now, the first results are in: Many workers were willing to choose lower-priced plans that required them to pay more out of their pockets for health care.

The new online marketplace, operated by consulting firm Aon Hewitt, a unit of Aon PLC, was used by more than 100,000 employees of Sears Holdings Corp. and Darden Restaurants Inc. (Olive Garden and Red Lobster), as well as Aon itself, to pick plans for 2013. The employers gave workers a set contribution to use toward health benefits, and they could opt to pay more each month to get richer plans, or choose cheaper ones that might have bigger out-of-pocket fees, such as higher deductibles.

Such employer-centric marketplaces, known as private exchanges, are separate from the public exchanges created by the federal health overhaul law, which will be set up by state and federal governments. However, the public exchanges, serving individual consumers and small businesses, will operate on a similar principle of allowing people to shop for health coverage in an online marketplace.

Companies offering the exchanges say that a lot of employers are considering the approach. “The interest level is like nothing I’ve ever seen,” said Eric Grossman, a senior partner at Mercer.

Change in workers’ choices:

Consumer-Directed Health Plan (Higher deductible)
2012: 12%
2013: 39%

Health Maintenance Organization (HMO)
2012: 18%
2013: 14%

Preferred Provider Organization (PPO)
2012: 70%
2013: 47%

http://online.wsj.com/article/SB10001424127887323639604578366420251188326.html

Comment:

By Don McCanne, M.D.

Be prepared. Very shortly you will be hearing from the supporters of consumer-directed health plans (CDHPs) of the phenomenal success of these plans wherein you put consumers in charge of the money to be used for their health plan purchases. In the first year of this program, there has been a massive shift from more traditional preferred provider organizations (PPOs) to these CDHPs. But you have to understand why this is really terrible news.

Under the traditional employer-sponsored defined benefit health plans, the employers purchase plans for their employees, with the employees paying a percentage of the premium. If the employer offers options, the employee will often select the plan that requires a lower contribution – typically a PPO, but with enough benefits to provide some health security.

Under this newer model of employer-sponsored defined contribution health plans, the employers give a fixed amount of money to each employee to be used to select plans from these private insurance exchanges. Since the employees become responsible for 100 percent of the premium costs above the employer defined contribution, the employees have a much greater incentive to choose plans with the premiums that are closest to the amount of the employer defined contribution – typically a cheaper CDHP.

The experience in the first year alone, with this Aon-operated exchange, 23 percent of employees dropped PPOs, and 4 percent dropped HMOs, resulting in increased enrollment in CDHPs from 12 percent in 2012 to an astonishing 39 percent in 2013!

While the CDHP advocates spread the word that giving consumers control of their health insurance dollars will lower health care spending by allowing employees to “buy only the insurance that they need,” they will remain silent on what really happened. They shifted risk from the employers and their insurers onto the backs of the employees.

How does this work? First, it is important to understand that the workforce and their young families are the healthiest sector of our society. When selecting a plan, it is understandable that many workers would prefer to take home more money in exchange for the risk of paying more out of pocket in the unlikelihood of a major medical event occurring in the next year. People who live check-to-check welcome trading a higher net income for accepting more risk should a low-odds event happen to them.

Keep in mind that a minority of workers or their family members actually will face major medical events. Should that occur, these individuals, who have quite modest incomes, will be responsible for huge medical bills – bills because of the very high deductibles, high coinsurance, and all costs of out-of-network care in these plans that tend to have more limited networks.

This is a setup for personal bankruptcy. Should these CDHP-enrolled employees lose their bets and end up with major injuries or major medical disorders, a very large percentage of them will face this prospect . This is exactly the opposite of what their health care coverage should be providing. The system should ensure that financial barriers to care are removed so that patients can access the care that they need without having to face severe financial hardship.

So when the CDHP advocates tout the success of empowered health care insurance shoppers, they will be able to claim that it works really well for most workers and their families (only not for those who end up needing health care). We need to keep exposing this con job.

Dr. Steffie Woolhandler: Time to end medical debt, medical bankruptcy

The following is an unofficial, slightly edited set of excerpts from a March 4 telephone interview with Dr. Steffie Woolhandler, professor at the City University of New York School of Public Health at Hunter College, visiting professor of medicine at Harvard Medical School, and co-founder of Physicians for a National Health Program, conducted by Dr. Margaret Flowers and Kevin Zeese on their radio show “Clearing the FOG” on We Act Radio, 1480 AM, in Washington, D.C. It took place in the run-up to Strike Debt/Rolling Jubilee’s week of actions, March 16-23, which will spotlight the problems of medical debt and medical bankruptcy. The full radio show, which includes a spokesperson for Strike Debt, can be listened to here.

Dr. Margaret Flowers: Welcome, Dr. Woolhandler.

Dr. Steffie Woolhandler: Good morning. Thank you for having me.

How to people get into medical debt?

Some people get into medical debt because they have no insurance and they get sick. But the majority of people with serious medical debt have insurance, but their insurance is partial – full of gaps like copayments, deductibles and uncovered services.

So what happens is that people get sick, they try to use their insurance, and find that they’re still left holding literally thousands of dollars in unpaid medical bills.

You’ve done several research studies on health care and bankruptcy. What have those studies found?

We interviewed more than 2,000 people in federal bankruptcy court to figure out why they went into bankruptcy. In about 60 percent of all personal bankruptcies, medical bills and medical illness played a major role. Either people were uninsured and got sick, or they were insured, but found that their insurance really failed them when they had a serious illness.

More than three-quarters of people in medical bankruptcy had health insurance when they first got sick. Now, some of those people got so sick they lost their job, or they had to quit their job to take care of a sick family member. When they lost their job they lost their insurance. But even more commonly, people had insurance, usually private insurance, that they kept throughout their medical illness, but were bankrupted anyway because of gaps in coverage like copayments, deductibles and uncovered services.

What’s the trend regarding copayments, deductibles and uncovered services? Is the situation going to improve when Obamacare takes hold?

No. In fact, the federal health law will make the problem of gaps in coverage much more serious because the required insurance policies under the legislation are extremely skimpy. The so-called bronze policies, which are the cheapest policies that will meet the mandate under Obamacare, will only cover about 60 percent of your medical costs. People who buy those plans will still be responsible for 40 percent of total medical care costs. Typically, for someone with a bronze plan who got sick and tried to use their insurance, they would have at least $6,000 per person in out-of-pocket medical costs every single year they’re sick.

This is really the first time that the government has put its stamp of approval on such extremely skimpy policies. In the past, some states were trying to get consumer protections or were trying to regulate the insurance market to make the policies more generous, but Obamacare really reversed that trend with the federal government stepping in and saying we’re going to have these bronze policies that only pay 60 percent of your costs. The federal government is saying, “That’s fine with us, we think that’s OK.”

So the new federal health law has in some ways made the problem of underinsurance worse. It does improve the problem of being completely uninsured, we all know that. Approximately half of all currently uninsured people will receive coverage under Obamacare, and the other half – around 30 million people – will remain uninsured. But when we get to the problem of underinsurance, people with only partial coverage, Obamacare actually makes the situation worse.

The subsidies only kick in with the silver plan or higher. Is that true?

For whatever reason, the subsidies are only available if you purchase at the silver level, and the subsidies phase out at about 250 percent of the federal poverty level, so the subsidies disappear at a relatively low income level.

Can you speak about the impact of financial barriers to care on our health?

There’s a tremendous body of research saying that when people have no insurance, they don’t get preventive care, they don’t get primary care, and when they have a serious illness and go to the hospital they have much worse outcomes – they’re more likely to die.

There’s a growing body of evidence showing that people who have insurance, but have these skimpy policies, so-called underinsurance policies, also face really bad health consequences. When people have skimpy policies they delay getting primary care, they delay going to the hospital, and they also have worse outcomes than people who have full coverage.

We need a system where everybody has coverage for all medically necessary care, because that’s really the only way to assure people get the care they need, and it’s the only way to protect the budget of American families from the very high costs when a serious illness hits.

Do other countries have this problem of underinsurance?

Many countries have systems that cover virtually 100 percent of all medical care. In Canada, traditionally, people have 100 percent coverage of hospital costs, 100 percent coverage of doctors. Certainly in Great Britain there’s a tradition of 100 percent coverage for many people.

Some of the European countries do have copayments; however, in those countries they have much more equal income distribution so they don’t have the huge group of very poor people that we have here, or even low-income people like we have here, who just don’t have the cash in their pocket to pay a copayment.

We have a bad situation in the United States with a lot of income inequality, lots of people who are just barely getting by on their paychecks, and then health care costs, which even if you have insurance, can run into thousands and thousands of dollars out-of-pocket expenses every year.

How will Obamacare affect the middle class?

The underinsurance is actually a very big hit on working families. People are living paycheck to paycheck but are getting by, they’re making it work, and then something like appendicitis or a bad car accident will sink the family and push them into bankruptcy. So one of the things that would really improve the financial security of working families would be if insurance really covered everything.

You’ve also lived and worked in Massachusetts. How is their health law working out?

The Massachusetts health law was the model for the national plan. In Massachusetts, the new law cut the number of uninsured by approximately half, which is what is expected to happen nationally, but you still have about half of the uninsured around, lacking insurance.

The problem is that after enactment of the law, a lot of the services that were available free for the uninsured have been cut. Safety-net funding was reduced by the law. And again that’s going to happen with Obamacare. There’s about $36 billion in cuts to safety-net hospital payments under the federal
health law. There will still be uninsured people – 30 million of them after Obamacare is fully implemented – but the safety-net institutions that care for them will be starved of funds. So, while some people may be better off under Obamacare, certainly, some folks who are uninsured will be significantly worse off under the new legislation.

So basically what’s happening is that cuts are being made to public programs so as to subsidize private insurance?

Yes, that’s what’s going on. And it’s important to remember that the safety-net institutions are not just there for uninsured people – that’s very important, of course – but safety-net institutions also take care of patients with insurance who can’t get care in the private sector. Some who have mental illness problems, or substance abuse problems, may not be welcome in the private sector, regardless of their insurance. Those folks may have to seek care in the safety net, and those institutions have seen their funds taken away and given to private insurance under the Massachusetts law and also the Obamacare legislation.

Has the Massachusetts reform controlled costs?

Health care costs have absolutely not been controlled in Massachusetts despite the fact that then-Gov. Romney claimed that the 2006 reform would control them. Massachusetts’ health care costs are the highest in the nation and continue to rise very rapidly. In fact, it’s pretty certain that they’re the highest health care costs anywhere in the world.

How about medical bankruptcies in Massachusetts? You’ve also done research on that, correct?

Medical bankruptcy in Massachusetts still accounts for about half of all bankruptcies. That was true before the 2006 legislation went into effect and that was true after 2009, after the legislation had been around for a couple of years.

It’s pretty clear that what was done in Massachusetts didn’t impact the problem of medical bankruptcy in any significant way. And if you look at what the insurance is like in Massachusetts, it’s pretty similar to what will occur under Obamacare, that is, very high copayments and deductibles.

If you go on the Massachusetts exchange website, it’s actually called The Connector, you’ll see the cost of a policy of someone in their fifties. For someone in their fifties, the premium would be about $5,000 per year, but then that policy would come with a $2,000 deductible – so figure $7,000 out-of-pocket before the insurance pays a single penny. And then, thereafter, for the next $15,000 in spending, you, the patient, are responsible for 20 percent of the costs, year after year.

Keep in mind that the plans in Massachusetts are a little better than what we can expect under Obamacare.

You’ve been working on these problems for many years. What do you think is the solution?

A single-payer solution, sometimes called an expanded and improved Medicare for all. Everyone would be covered in a program like Medicare, only the single payer would eliminate all of the copayments and deductibles that exist in Medicare.

It’s sometimes called a single-payer system. It’s the type of system that they have in Canada and in several western European countries. You pay for the system out of taxes. Patients have complete free choice of doctor and hospital. There’s no copayments, no deductibles for covered services.

Nations with single-payer systems actually have lower health care costs than in the United States, largely because the administrative costs in a single-payer system are so much lower. If you just have one agency, something like Medicare or Social Security, paying all the doctor bills, giving budgets to hospitals, and so on, you save several hundred billion dollars a year on health care paperwork and administration and that makes the entire health care system substantially more affordable, not just for individuals, but for the government and society.

How can listeners to this program get involved?

I mostly want to echo what’s been said by some of the Strike Debt/Rolling Jubilee people. People are in debt and it’s not your fault if you’re in debt and it’s particularly not your fault if you’re in debt because of a medical problem. This is unfair. No other developed nation forces people to go into debt because they get sick. We need to be thinking of moving toward a fair, efficient, single-payer system so that no one ever has to go into debt because they have the misfortune of being sick.