PNHP

The ACA and a Single-Payer System

The ACA and a Single-Payer System

By J. David Gaines, M.D.
The Wall Street Journal, Letters, July 9, 2012

Regarding Daniel Henninger’s “The President That Time Forgot” (Wonder Land, June 28): Although the Supreme Court has upheld the Affordable Care Act, the unfortunate reality is that the law, despite its modest benefits, is not a remedy for our health-care crisis. It will not achieve universal coverage, as it leaves at least 26 million individuals uninsured. It will not make health care affordable to Americans with insurance because of high co-pays and gaps in coverage that leave patients vulnerable to financial ruin in the event of serious illness, and it will not control costs.

The reason for this is that the ACA perpetuates a dominant role for the private-insurance industry. Each year, that industry siphons off hundreds of billions of health-care dollars for overhead, profit and the paperwork it demands from doctors and hospitals. It denies care in order to increase insurers’ bottom line, and it obstructs any serious effort to control costs.

In contrast, a single-payer, improved Medicare-for-all system would provide truly universal, comprehensive coverage, health security for our patients and their families, and cost control. It would do so by replacing private insurers with a single, nonprofit agency like Medicare that pays all medical bills, streamlines administration and reins in costs for medications and other supplies through its bargaining clout.

The government need not run the program, only finance it. In the state of Connecticut, where I practiced general medicine for over 35 years, Medicare was administered by a private insurance company at an overhead of only 3%, compared to HMOs’ 20%. Unlike with HMOs, I was paid promptly and rarely questioned about my selection of diagnostic tests or treatments. My patients were satisfied with this type of care, and they never needed a referral to whatever specialist I thought was best to treat their conditions.

J. David Gaines, M.D., resides in New Haven, Conn.

http://online.wsj.com/public/page/letters.html

Presbyterian Church takes step toward divestment from for-profit health insurers

By Johanna W.H.van Wijk-Bos
Healthcare not Wealthcare, July 7, 2012

[PNHP note: Johanna W.H.van Wijk-Bos’ advocacy statement for the Assembly’s action is appended below.]

Today the Presbyterian Church (USA) took a step toward divestment from for-profit health insurance companies in the United States by instructing the appropriate committee of the General Assembly to begin a process of information gathering. The Mission Through Responsible Investing Committee (MRTI) is instructed by the General Assembly of the Presbyterian Church (USA) to request information and explanations of health insurance companies.

This information will focus especially on the insurers’ practices in regard to state and federal lobbying expenditures and political campaign contributions, government subsidies and profit margins, denials of claims, and top executives’ compensation packages. Other directives include a conversation with the Board of Pensions, the overseeing body that works with the health care provider, to ensure that the church’s health plan submits to the same standards that it asks of other insurers. Based on its analysis MRTI will evaluate the variance between church principles of universal access and affordability on the one hand and corporate objectives on the other. It will also assess the likelihood of significant change in corporate behavior.

In addition, the committee is to recommend measures to the appropriate Council of the church, including possible divestment from the health insurance companies, measures that will strengthen the integrity of the church’s practice. The relevant committees and councils are requested to report on their action to the General Assemblies of 2014 and 2016, with an eye to guiding individual Presbyterians, congregations and mid-councils, in relation to their own investment holdings in this major part of the economy.

Finally, all official bodies are encouraged to continue to support cost-effective health coverage for all through the single payer (or expanded Medicare) model common elsewhere in the developed world, and to support making health care affordable and transparent.

The overture for this step originated with the Mid-Kentucky Presbytery, was joined by the Presbyteries of Albany, New York City, Long Island and West Jersey, and was approved overwhelmingly by the Committee on Health Issues of the General Assembly on July 3, 2012.

Johanna W.H.van Wijk-Bos is Dora Pierce Professor of Bible – Louisville Presbyterian Seminary and Minister member of Mid-Kentucky Presbytery. She can be reached at jovanwijk@gmail.com.

21-01On Instructing MRTI to Study and Report Corporate Practices of Health Insurance Companies and Possible Divestment of Same—From the Presbytery of Mid-Kentucky.
Source:Presbytery Sponsor: Mid-Kentucky Presbytery
https://www.pc-biz.org/IOBView.aspx?m=ro&id=3735

ASSEMBLY ACTION
On this Item, the General Assembly, acted as follows:
Approve as Amended

Voice Vote
Final Text:
In response to Item 21-01, that the 220th General Assembly (2012) approve the following alternate recommendation:

“1. The MRTI Committee is instructed to request information and explanations of health insurance company policy and practice on: state and federal lobbying expenditures and political/campaign contributions, government subsidies and profit margins related to provisions of the healthcare ‘reform’ legislation, aggregate data on increases in premiums and deductibles over the past ten years, categories and percentages of claims denied, and percentages of profits used in compensating top executives in comparison with return to shareholders.

“2. The MRTI Committee is instructed to be in conversation with the PC(USA) Board of Pensions to ensure the PC(USA) health plan submits to the same standards that PC(USA), through MRTI, asks of other insurers.

“3. Based on this corporate engagement and analysis, a summary of which shall be posted, MRTI is asked to evaluate the variance between church principles of universal access and affordability and corporate objectives, to assess the likelihood of significant change in corporate behavior, and to recommend to the GAMC and General Assembly measures, including possible divestment, that would strengthen the integrity of the church’s practice.

“4. The GAMC, the Presbyterian Foundation, and the Board of Pensions, in turn, are requested to report on their actions (or request guidance) to the 221st and 222nd General Assembly (2014) and (2016), with an eye to guiding individual Presbyterians, congregations, and mid councils in relation to their own investment holdings in this major part of the economy.

“5. The Office of Public Witness and other Presbyterian bodies are encouraged to continue to support cost-effective health coverage for all through the single payer (or expanded Medicare) model common elsewhere in the developed world, and, to support making health care affordable and transparent.”
http://pc-biz.org/Explorer.aspx?id=3735

http://healthcarenotwealthcare.us/2012/07/07/presbyterian-church-usa-takes-step-toward-divestment-from-for-profit-health-insurance-companies/

Advocacy Statement

By Johanna W.H.van Wijk-Bos

Presented by Johanna W.H.van Wijk-Bos, Overture Advocate on overture 21-01 from Mid-Kentucky Presbytery, before the Health Issues Committee of the 220th General Assembly of the Presbyterian Church (USA), July 3, 2012, Pittsburgh, Pa., David Lawrence Convention Center.

Thank you, Madam Moderator, for providing this opportunity to speak to the overture before us and advocate its passing. My name is Johanna Bos, Teaching Elder member of the Mid-Kentucky Presbytery, the Presbytery that elected me to be the Overture Advocate during its meeting on September 17, 2011.

You are familiar with the overture, for which the background is the 2008 endorsement of Single Payer health care reform by the General Assembly.

Clearly, I am for it, I would not be here otherwise, so in preparing for the meeting today, I thought about what would be the best advocacy. I could recite a great deal of facts, huge profits on the part of the health insurance companies, escalating premiums, declining access, the lamentable state of actual health care in the United States, the maternal death rate rising by 25 percent in the last 10 years while globally maternal death rates are declining, infant mortality rates and so on, racial and gender disparity … the list goes on and on.

There is an overview here on the resource table for your interest and much of it is described in the rationale and background materials of the overture. I lift out only the last sentence of the document: “The only way for the health insurance companies to make a profit for their shareholders is to find ways not to pay for the care of the sick. This is the basic flaw in for-profit health insurance. … They add no social value to justify their profits and the negative effects they inflict on the entire medical system.”

So there are lists and statistics that clearly go against the mandates of our faith and institutions. Then I thought about the Bible, I am a teacher of Bible after all, and how the Bible often teaches through story. Jesus went around as a healer and teacher and taught through stories, stories that people recognized and identified with, stories in which they recognized themselves.

Long before the time of Jesus, when King David had gone off the rails, God sent the prophet Nathan who told the king a story. The story Nathan tells is not one of adultery, or rape or even directly murder, but it is about theft and misuse of privilege by a rich man, a great
benefactor for a guest who comes to visit and who does not ask where the gift he receives came from.

So then I thought the best thing I could do is to tell my story, because it may help us forward. Not that I think of myself as a prophet but I do believe the overture asks our denomination to take on a prophetic task.

The overture that you have before you was written by my husband, whose name was also David, who believed strongly in a Church that calls society and government to its responsibilities of caring for the weakest among us first of all. He would have stood before you today, had his sudden and unexpected death in February of last year not robbed us of his presence.

As he lay in the hospital, struggling with the oxygen mask provided to give his lungs the air they needed, he spoke haltingly what would be his last words on this earth: “How much will this cost?” He died six days later.

Three weeks after his death a representative from our health insurance company informed me in a telephone call that they rejected the claim to pay for my husband’s hospitalization and medical costs because of a “pre-existing condition.”

How much will it cost? The existing problems are clear, our mandate is clear, so how much will it cost our denomination to continue on the path we have started on? It will cost us only the courage to stand up and investigate where the money lavishly earned at times and lavishly spread around, also to us as a denomination, where this money is coming from, and how it is gained.

I can think of few issues going to the core of who we are as a Christian community that are of greater importance. We have the opportunity to let our light shine before the world. Let us take this chance.

Madam Moderator, Madam Vice-Moderator, members and facilitators of the committee, I thank you for your attention and cede the rest of my time to my co-advocate, Bebb Stone from Albany Presbytery.

Private insurers have more administrative services to sell us

How to split the health care dollar (America’s Health Insurance Plans meeting)

By Emily Berry
American Medical News, July 9, 2012

Payers are well aware that physicians and hospitals need the kind of business expertise that insurers have held almost exclusively until now: how to track claims, coordinate care, administer case management and deploy a new records system.

Health insurers are offering physicians and health systems access to that expertise — for a price. UnitedHealth Group’s enormously profitable Optum subsidiary is one example of that business angle. Indeed, Dr. Safavi said, some hospitals and doctors may be in a position of paying Optum for consulting and information technology expertise so they can be prepared for the demands that United and other insurers will make under new payment models. They will have to pay United before they can get paid by United.

http://www.ama-assn.org/amednews/2012/07/09/bisa0709.htm

Comment: 

By Don McCanne, MD

What did you expect? As long as private insurers are left in charge, as they are under the Affordable Care Act, they will always figure out a way to work the system to benefit themselves. We really do need to replace them with a single payer system.

Local physician has mixed feelings on Supreme Court ruling

By George Prentice
Boise Weekly (Idaho), June 28, 2012

In a landmark ruling still being scrutinized by analysts, the U.S. Supreme Court handed down its ruling on the Affordable Care Act this morning, largely letting it stand. According to The New York Times, ” the decision was a striking victory for President Barack Obama and Congressional Democrats.”

The majority of the court, including its Chief Justice John Roberts, affirmed “the central legislative pillar of Obama’s term,” according to the Times. The high court upheld the ACA’s individual mandate in a 5-4 decision, conceding that the mandate was a tax despite the Obama administration’s reluctance to describe it that way during the bill’s passage in 2010.

However, the Supreme Court did restrict one major portion of the law: an expansion of Medicaid. The ruling now allows states the flexibility not to expand their Mediciad programs, without paying the same financial penalties that the law initially called for.

“I’m disappointed with that,” Dr. Greg Thompson, a Boise physician told Citydesk this morning.”That expansion would have help to insure 16 to 17 million more Americans. Unfortunately, by 2019, we may still have as many as 42 million Americans still uninsured.”

Thompson said he knows quite a bit about the uninsured. As a physician in the St. Luke’s Healthcare System, he estimated that more than 80 percent of his patients accessed Medicaid or Medicare. Thompson said he treats everyone from “presidents of corporations to the homeless.”

Idaho joined 25 other states in suing the federal government over the law, arguing that the individual mandate, which requires people to buy health insurance or face a fine starting in 2014, was unconstitutional. But the high court’s majority maintained that the mandate was indeed constitutional.

“I must say that I am still happy about a number of elements of the Affordable Care Act that will still be intact, starting with wellness exams,” said Thompson. “The ACA pays for wellness exams for our Medicare population and that is huge. Plus, we’ll still be allowing young adults, up to the age of 26, to remain on their parents’ insurance, and also the court upheld the rule that keeps insurance carriers from rejecting coverage on pre-existing conditions.”

Thompson said insurance carriers remain the big winners.

“Administration and profit among insurance companies still totals $350 billion. If you think of it, that would pay for insurance coverage for everyone,” he said.

Thompson, co-chair of Idaho Health Care For All, the local chapter of Physicians for a National Health Program, will be sponsoring a ripped-from-the-headlines event on the evening of Wednesday, July 18, when Dr. Jim Girvan, professor emeritus at Boise State, will address today’s SCOTUS ruling. The event is scheduled for 7 p.m. at Boise’s Main Public Library.

http://www.boiseweekly.com/CityDesk/archives/2012/06/28/supreme-court-upholds-most-health-care-reforms-local-physician-has-mixed-feelings

After court ruling, single-payer advocates vow to continue fight

By Scott Harris
Between the Lines, July 4, 2012

Interview with Dr. Steffie Woolhandler, professor of public health at City University of New York, co-founder of Physicians for a National Health Program, conducted by Scott Harris.

In a long-awaited decision from the Supreme Court, the justices handed down a 5-4 ruling on June 28 that upheld the constitutionality of President Obama’s Affordable Care Act, which mandates that all citizens who are financially able purchase private health insurance, or be subject to a tax or penalty. Conservative Chief Justice John Roberts surprised many by siding with the court’s liberal members, providing a majority opinion that will allow the health care reform legislation to be implemented as planned by 2014. However, in writing the court’s opinion, Roberts explained that he upheld the legislation’s individual mandate as a tax, not as a valid exercise of Congress’ commerce clause power.

The court’s decision trimmed back the power of the federal government to impose the Affordable Care Act’s goal of expanding Medicaid eligibility in the states. By a 7-2 vote, the justices prohibited Washington from withdrawing all Medicaid funds to states that refuse to participate in the expansion.

Despite the court’s ruling, public opinion polls find that the nation remains largely split on their support or opposition to the health care reform law. However, the reasons many oppose the bill vary widely. Advocates for a single-payer universal health care system that exists in most other industrialized nations of the world, are critical of the Affordable Care Act for its severe limitations. They point out that once fully implemented, some 26 million Americans will not be covered under the law, and that the measure won’t do much to effectively contain sharply rising health care costs. Between The Lines’ Scott Harris spoke with Dr. Steffie Woolhandler, professor of public health at the City University of New York and co-founder of the group Physicians for a National Health Program. Here, she assesses the Supreme Court ruling on the Affordable Care Act, and the way forward for advocates of a single-payer health care system.

DR. STEFFIE WOOLHANDLER: You know it’s a good thing that the Supreme Court decided to obey the Constitution rather than play politics. I think them playing politics and overturning the law on really bogus grounds would’ve been a very bad thing. The law has some modest benefits, but they are modest indeed, and there are also some very big downsides to the ObamaCare law.

One of the biggest downsides is that when it’s fully implemented, the law will leave 26 million Americans completely uninsured. We know from some prior work we’ve done that when you have 26 million Americans you can expect to have about 26,000 deaths annually caused by lack of health insurance. So, 26 million uninsured Americans is simply unacceptable to me as a physician. And it means that we need to be moving forward to that single-payer, expanded, improved Medicare for all that you were talking about earlier.

BETWEEN THE LINES: Dr. Woolhandler, from your perspective of being an advocate of single-payer, is having the Affordable Care Act in place after the Supreme Court ruling a better place, a better starting point for universal coverage than if the law was struck down by the Supreme Court or repealed in the near future?

DR. STEFFIE WOOLHANDLER: Well, it’s hard to say. At this point, the Obamacare is the law of the land. I doubt it’s going repealed, so I think that’s the base we’re starting from. So, the slogan we’re using is “Forward to Single-payer.” Whether you think Obamacare was a slight step forward, a step backward, a step to the side, is somewhat irrelevant now because this is what we have, and it’s clear that it’s not a solution. That we’re still going to have 26 million uninsured people, that we’re still going to have tens of millions more middle-class people who buy health insurance in good faith only to find that when they get serious illness and their insurance fails them. There’s too many gaps like co-payments, deductibles and uncovered services so that despite having health insurance, they still can’t afford the care. And the health care costs are still going to go through the roof. And, all of those things are going to push us to a new round of reform.

I don’t expect to hear much about that until 2014, when the law goes into effect and people get a chance to look at what it is and say, “Wow, this is in effect? It’s fully implemented and there’s nothing here for my family and there’s nothing for me. My health care’s still too (un)affordable and I can’t get the health care I need and deserve. So we do expect the debate to re-open after full implementation in 2014. Until then, I think a lot of folks will continue to be very confused about what’s in the bill and what isn’t. Some of that confusion is by this crazy talk that the Republicans have been doing. But some of the confusion actually is done by people who support President Obama and feel that they can’t say a word that’s bad about anything he’s doing. I certainly hope Obama beats Romney in the next election, but I don’t think it’s reasonable for people to keep their mouths shut and not tell the truth about the problems in some of these laws that Obama passed.

BETWEEN THE LINES: The political reality in the estimation of many observers is that the giant insurance and pharmaceutical companies call the shots in Washington. The question really is, “How can their power and money be defeated and allow a single-payer or Medicare-for-all system to go forward? What’s the focus of your work going to be in the coming months and years?

DR. STEFFIE WOOLHANDLER: We think we need to build a movement. The way we got civil rights in this country was not a bunch of politicians talking about it, but building a movement to win civil rights. The way we ended the Vietnam War in this country wasn’t persuading politicians; it was a political movement. And the American people are really suffering under the current health care system. They may like the doctors in hospitals, but they’re tormented by the payments, knowing that when they get sick they could be bankrupted, that if they somehow manage to get care, they’re ruining their grandkids’ future by spending all the family assets. So people really suffer under the current health care system and I think it’s really not possible, but probable that we’ll be able to build a movement of the American people to demand a single-payer movement. I’m very unhappy with corporate power in Washington, but we’re not giving up on democracy. We still think we can make democracy work if people get involved.

http://www.btlonline.org/2012/seg/120713af-btl-woolhandler.html

Why Pennsylvania should opt for single-payer health system

By David Steil
Erie Times-News, July 6, 2012

When asked, almost all Americans will say that access to health care is of major concern to them. But access means different things to different people. For some who have chronic illnesses, it is how to pay for the continuing costs of treating the illness. That may mean paying for health care insurance and its deductibles and co-pays, or it may mean having the ability to acquire health care insurance even if cost is not an issue. For others it may mean having the ability to manage one’s own health care along with their medical professionals and not having to subject themselves to the dictates of the health insurance carrier.

Those who do not have health care insurance and do not have the financial ability to pay for it must live in the constant fear of injury or illness, which would devastate their personal finances and potentially destroy the economic future of themselves and their family.

There is no question that this country has the finest medical care in the world. Our ability to identify, manage and treat injury and disease is without peer. But, all of that is valueless if one does not have access to the system. While it is true that everyone will ultimately be treated, even if they do not have health care insurance, it is not free. Someone has to absorb the cost. That normally means that doctors, hospitals, government and insurance carriers (through higher premium costs for their policy holders) all share the costs in some proportion.

In March 2010 Congress passed the Patient Protection and Affordable Care Act. This landmark legislation addressed some health care issues, but also left many questions and legal challenges. The U.S. Supreme Court has upheld the constitutionality of the act which means that the various provisions will continue to be implemented, mostly by 2014 but also continuing through the end of the decade. One provision is that states may propose their own innovations in health care, provided that those innovations do not fall below the requirements of the PPACA. As the law is written, this cannot occur until 2017.

In Pennsylvania citizens from all walks of life have banded together in an organization known as Health Care 4 All PA. We believe that resolution of the health care issue begins with allowing the states to adopt health care programs tailored to the needs of their residents. Moreover we believe that a single-payer system is the most cost-effective and economical method of delivering that health care. Research data and economic analysis supports that conclusion. Huge costs of the present health care system are eliminated through reducing or eliminating extensive administrative, marketing and management costs.

Single-payer means, simply, that every Pennsylvania citizen would be provided health care with the expectation that every citizen and every business would contribute to its cost. It is clear that those costs would be significantly less in total than the costs of the current system, which leaves many Pennsylvanians without health care protection.

Our organization is committed to moving forward with a single-payer model and to be prepared to join other states including Vermont, Hawaii, Montana and Washington by 2017 with the implementation of the proposal.

Legislation has already been introduced in the Pennsylvania House (HB 1660) and Senate (SB 400). Even though PPACA is now the law of the land, it still leaves many Americans and many Pennsylvanians unprotected. Therefore, now is the time for new efforts and new ideas to ensure that all of our citizens have the comfort of knowing they will be able to utilize the best health care system in the world when they need it.

But it will not happen until and unless the people of Pennsylvania make it happen. Learn about the single-payer option. Study the alternatives and then decide what works best for you and your family. Finally, contact your state representatives and state senators and ask them for their ideas. Remember that this is an election year. They will listen. Ask them to support and fight for the health care solutions that will benefit every Pennsylvanian.

David Steil, of Yardley, is president of Health Care 4 All PA and owner of a manufacturing business. A Republican, his 27 years of experience in government includes serving as township planning commission, a township supervisor and in the Pennsylvania House of Representatives.

http://www.goerie.com/article/20120706/OPINION09/307069993/Why-Pennsylvania-should-opt-for-single-payer-health-system

Private insurers have more administrative services to sell us

How to split the health care dollar (America’s Health Insurance Plans meeting)

By Emily Berry
American Medical News, July 9, 2012
Payers are well aware that physicians and hospitals need the kind of business expertise that insurers have held almost exclusively until now: how to track claims, coordinate care, administer case management and deploy a new records system.
Health insurers are offering physicians and health systems access to that expertise — for a price. UnitedHealth Group’s enormously profitable Optum subsidiary is one example of that business angle. Indeed, Dr. Safavi said, some hospitals and doctors may be in a position of paying Optum for consulting and information technology expertise so they can be prepared for the demands that United and other insurers will make under new payment models. They will have to pay United before they can get paid by United.
http://www.ama-assn.org/amednews/2012/07/09/bisa0709.htm

What did you expect? As long as private insurers are left in charge, as they are under the Affordable Care Act, they will always figure out a way to work the system to benefit themselves. We really do need to replace them with a single payer system.

Single-payer system better

By Kay Tillow
Courier-Journal (Louisville, Ky.), June 29, 2012

The Supreme Court, in declaring the Affordable Care Act (ACA) constitutional, has endorsed a flawed attempt to solve the nation’s health care problem. Moreover, the court’s decision will only prolong many of our current health care issues.

This is the opinion of Kentuckians for Single Payer Healthcare (KSPH). The decision has saved the individual mandate which requires many uncovered persons to buy a private health insurance policy. KSPH is not about to weigh in with an opinion one way or the other on the constitutionality of mandated purchases. However, we do believe that the ACA is still deeply flawed — no matter that it has some good features — because it includes the private, for-profit health insurance industry at the center of its system.

Not only does this industry not provide an answer to many of the medical problems, it is a major problem itself. The insurance industry is responsible for extracting up to 31 cents of the American health dollar without providing any direct medical benefits.

A single-payer system would basically be an expanded and improved version of Medicare, but it would cover every age, every person. This system would negate the need for profit-driven insurance companies. And it would be a major jump-start in controlling soaring medical costs.

We think the Affordable Care Act will ironically become not affordable because the insurance industry is already finding ways to limit the coverage while charging more, and the bulk of the ACA doesn’t even kick in until 2014. Higher deductibles and higher premiums and skimpy under-coverage are on the horizon for most patients following the court’s decision. Skyrocketing medical costs will continue because the ACA doesn’t have effective controls.

In sum, the court threw a life buoy to a law that needed a rescue boat. The real remedy would be H.R. 676, the bill that would expand and improve Medicare, a type of system that every other developed nation has in place. This means that citizen activists must start right now to bring it to pass.

Kay Tillow is chair of  Kentuckians for Single Payer Healthcare. She resides in Louisville.

Employers considering defined contribution for health care

With health care law upheld, employers weigh shift to defined contribution insurance plan

By Peter Frost
Chicago Tribune, July 3, 2012

Many Chicago-area employers have remained on the sidelines with their employee health plans, waiting for the U.S. Supreme Court to determine whether the 2010 health care overhaul passed constitutional muster.

But with the court’s decision last week to uphold most of the law, companies may pursue a historic change.

Many employers are quietly considering a move away from traditional defined benefit plans and toward defined contribution plans, which set aside a fixed amount of money each year for employees to use toward health care costs.

Under the structure of defined contribution plans, companies hand an employee a set amount — say $9,000 — and employees use that money to buy or help pay for a health insurance plan they choose themselves.

At the heart of the shift is a desire of companies to reduce their exposure to health care costs by shifting the risk of unpredictable expenses to their workers.

Few employers, particularly large companies, are eager to discuss their internal deliberations on the issue because they don’t want to raise concerns among employees before final decisions are made, said Paul Keckley, executive director of the Deloitte Center for Health Solutions, the health care research arm of consulting firm Deloitte LLP.

“The only thing that’s certain right now is (companies are) doing everything that’s legal to shift cost to employees,” Keckley said.

Employees of companies that pursue the defined contribution route may be funneled into so-called corporate health care exchanges, which function in much the same way as state-run exchanges.

The private exchange market “is really emerging and growing, largely because of all the interest in the state exchanges,” said Michael Thompson, a principal in PricewaterhouseCoopers LLC’s global human resources practice.

Inside the exchanges, employees will be offered more choices on what types of coverage they desire — and how much they’re willing to pay.

“If you value broad access and you’re willing to pay for it, that’s fine,” Thompson said. “If you’re willing to live with a narrower network (of providers) and possibly a higher deductible, you would have the ability to save significant money on your premiums.”

On private exchange GoHealth.com, consumers can shop and ask for advice. Michael Mahoney, GoHealth’s vice president of marketing, said the company has explored a corporate health care exchange for its employees, but it will continue offering its “traditional and robust” health insurance plan for the time being.

His reason? “If you give control to the employees, they could choose to save money and possibly choose something where they’re not completely covered, so they end up in a pinch. Right now, we’re going to overspend on our employees and give them more than they want so they’re always covered.”

http://articles.chicagotribune.com/2012-07-03/business/ct-biz-0703-corp-exchanges–20120703_1_health-care-health-insurance-deloitte-center

Comment: 

By Don McCanne, MD

Just as they did with employee pension plans, employers are now gearing up to convert employee health benefit programs from defined benefit to defined contribution. What does that mean?

Over the past few decades, employers passed on the risks of their pension plans to their employees by switching from a defined benefit (a guaranteed dollar amount that employees would receive monthly in retirement) to a defined contribution such as 401(k) plans (a set dollar amount contributed to the pension account, but with no guarantee of the amount received in retirement – the employee thus bearing the full risk of the uncertain investment returns on the pension funds).

Now many employers plan to do the same with their health benefit programs. They intend to pay a set dollar amount for the premiums, whereas the employees will have to bear the the costs of health care inflation plus the costs of any benefits in excess of the basic program to be offered  by the employer.

This will be disastrous. Employees are already being stuck with higher deductibles in order to slow the rate of premium increases for the employer. With defined contribution, premiums can be contained further by limiting the benefits covered, by further increasing the out-of-pocket cost sharing of deductibles, copayments and coinsurance, by tiering cost sharing of different levels of products and services, and by further restricting the panels of approved health professionals and institutions.

When the employee uses the defined dollar amount to purchase plans from the choices offered, but must pay the full balance of the premium, most will choose lower cost plans that place them at very high risk for out-of-pocket expenses should they or their family members need health care. This is the disaster that is pending. Employees will not be able to afford the care that they or their families need, in spite of being nominally insured by their employers.

From a policy perspective, we can understand why employers would want to control their overhead expenses, in this case by protecting themselves from health care inflation, but we can’t understand why policymakers would want to keep employers in charge of health care financing for the majority of Americans, and then add further insult by perpetuating regressive tax policies that favor wealthier employees over those with lower incomes.

With this defined contribution threat looming, we should once and for all remove the employer from the equation. Let’s replace our health care financing system with a much more sensible and equitable single payer national health program, which would remove from employers the burden of having the responsibility of supervising health benefit programs.

Employers considering defined contribution for health care

With health care law upheld, employers weigh shift to defined contribution insurance plan

By Peter Frost
Chicago Tribune, July 3, 2012
Many Chicago-area employers have remained on the sidelines with their employee health plans, waiting for the U.S. Supreme Court to determine whether the 2010 health care overhaul passed constitutional muster.
But with the court’s decision last week to uphold most of the law, companies may pursue a historic change.
Many employers are quietly considering a move away from traditional defined benefit plans and toward defined contribution plans, which set aside a fixed amount of money each year for employees to use toward health care costs.
Under the structure of defined contribution plans, companies hand an employee a set amount — say $9,000 — and employees use that money to buy or help pay for a health insurance plan they choose themselves.
At the heart of the shift is a desire of companies to reduce their exposure to health care costs by shifting the risk of unpredictable expenses to their workers.
Few employers, particularly large companies, are eager to discuss their internal deliberations on the issue because they don’t want to raise concerns among employees before final decisions are made, said Paul Keckley, executive director of the Deloitte Center for Health Solutions, the health care research arm of consulting firm Deloitte LLP.
“The only thing that’s certain right now is (companies are) doing everything that’s legal to shift cost to employees,” Keckley said.
Employees of companies that pursue the defined contribution route may be funneled into so-called corporate health care exchanges, which function in much the same way as state-run exchanges.
The private exchange market “is really emerging and growing, largely because of all the interest in the state exchanges,” said Michael Thompson, a principal in PricewaterhouseCoopers LLC’s global human resources practice.
Inside the exchanges, employees will be offered more choices on what types of coverage they desire — and how much they’re willing to pay.
“If you value broad access and you’re willing to pay for it, that’s fine,” Thompson said. “If you’re willing to live with a narrower network (of providers) and possibly a higher deductible, you would have the ability to save significant money on your premiums.”
On private exchange GoHealth.com, consumers can shop and ask for advice. Michael Mahoney, GoHealth’s vice president of marketing, said the company has explored a corporate health care exchange for its employees, but it will continue offering its “traditional and robust” health insurance plan for the time being.
His reason? “If you give control to the employees, they could choose to save money and possibly choose something where they’re not completely covered, so they end up in a pinch. Right now, we’re going to overspend on our employees and give them more than they want so they’re always covered.”
http://articles.chicagotribune.com/2012-07-03/business/ct-biz-0703-corp-exchanges–20120703_1_health-care-health-insurance-deloitte-center

Just as they did with employee pension plans, employers are now gearing up to convert employee health benefit programs from defined benefit to defined contribution. What does that mean?
Over the past few decades, employers passed on the risks of their pension plans to their employees by switching from a defined benefit (a guaranteed dollar amount that employees would receive monthly in retirement) to a defined contribution such as 401(k) plans (a set dollar amount contributed to the pension account, but with no guarantee of the amount received in retirement – the employee thus bearing the full risk of the uncertain investment returns on the pension funds).
Now many employers plan to do the same with their health benefit programs. They intend to pay a set dollar amount for the premiums, whereas the employees will have to bear the the costs of health care inflation plus the costs of any benefits in excess of the basic program to be offered  by the employer.
This will be disastrous. Employees are already being stuck with higher deductibles in order to slow the rate of premium increases for the employer. With defined contribution, premiums can be contained further by limiting the benefits covered, by further increasing the out-of-pocket cost sharing of deductibles, copayments and coinsurance, by tiering cost sharing of different levels of products and services, and by further restricting the panels of approved health professionals and institutions.
When the employee uses the defined dollar amount to purchase plans from the choices offered, but must pay the full balance of the premium, most will choose lower cost plans that place them at very high risk for out-of-pocket expenses should they or their family members need health care. This is the disaster that is pending. Employees will not be able to afford the care that they or their families need, in spite of being nominally insured by their employers.
From a policy perspective, we can understand why employers would want to control their overhead expenses, in this case by protecting themselves from health care inflation, but we can’t understand why policymakers would want to keep employers in charge of health care financing for the majority of Americans, and then add further insult by perpetuating regressive tax policies that favor wealthier employees over those with lower incomes.
With this defined contribution threat looming, we should once and for all remove the employer from the equation. Let’s replace our health care financing system with a much more sensible and equitable single payer national health program, which would remove from employers the burden of having the responsibility of supervising health benefit programs.

Vermonters respond to Supreme Court ruling on ACA

By the editor
Vtdigger.org, June 28, 2012

The following is an excerpt of a roundup of reactions by prominent individuals and organization in Vermont to the Supreme Court’s ruling on the Affordable Care Act. For the full article, click on the link at the end.

Vermont Physicians for a National Health Program

The U.S. Supreme Court has upheld the bulk of the Patient Protection and Affordable Care Act, including the individual mandate. They affirmed that health care may be financed through taxation. The worst insurance abuses are being curtailed. Americans will benefit from reforms Vermont has enjoyed for years. Many people without insurance, especially young adults and people with low incomes, will gain health care coverage.

Unfortunately, the PPACA institutionalizes “unaffordable underinsurance” at taxpayer expense. Millions will have to buy overpriced policies with limited coverage and high deductibles and copayments. Ignoring the root of the problem—private health insurance—this legislation hands them an estimated $557 billion in taxpayer money through 2020, strengthening their ability to block future reform. And over 26 million people will remain uninsured.

Insurance companies currently add cost to the health care system: more than ten percent in direct costs and additional millions due to administrative burdens on Vermont patients and providers. Green Mountain Care will replace them with a single, non-profit payer. Health planning, resource allocation, care coordination, new payment methodologies, and drug price negotiation may all help to control costs. Vermonters will get the care they need without risking bankruptcy. Business, town, school, and state budgets will find relief.

In contrast to the PPACA, there was never any debate over the constitutionality of Medicare. In its 47 years, this publicly funded system has allowed millions of seniors and people with disabilities to access health care that would otherwise have been unaffordable. What we need is a Medicare expansion, not the Medicaid expansion of the PPACA. We urge Congress to extend Medicare coverage to every American, regardless of age. And Congress should support state innovation like Vermont’s.

The Affordable Care Act provides some funding for Vermont’s health reform effort. Like other single-payer systems, Green Mountain Care will provide universal coverage, improve access, and control costs. Patients will choose which clinicians will care for them; medical decisions will be in the hands of patients and clinicians. On the downside, without the PPACA, Vermont could have done a single-payer system at its own pace; now we must delay up to six years.

The members of Vermont PNHP know that a system dominated by private insurers and Big Pharma—as envisioned by the PPACA—cannot be universal and affordable. Polls have repeatedly shown that a solid majority of Vermonters and Americans favors single-payer. Our federal representatives should continue their efforts to gain appropriate waivers so that Vermont’s vision of Green Mountain Care can be realized as soon as possible. And Congress should extend improved Medicare coverage to every American.

http://vtdigger.org/2012/06/28/supreme-court-decision-everyones-got-something-to-say/

A ‘greater good’

By Elizabeth Frost, M.D.
The Pioneer Press (St. Paul, Minn.), Letters, June 30, 2012

I think it is interesting that the Supreme Court has upheld the idea that the individual mandate as a tax is constitutional. What does this mean? First of all, it means that we as a nation have decided that health care is a “greater good” — that everybody deserves health care. Second, we have decided that everyone pays in to health care. We have already decided to do this in Medicare, but now we are extending the concept to everyone.

The next step as a society is to decide how best to meet everyone’s health care needs. Unfortunately, the Affordable Care Act does not do that well; it leaves 25 million Americans, at least, without health care and many more paying too much. It turns out that our for-profit, inefficient system based on private insurance is not a good way to provide health care for all, and that Medicare is much more efficient. What if we tried Medicare for All in a state first? That way a state could be a “laboratory” for more comprehensive reform. Of course, Medicare for All would be constitutional, as it is also a tax.

We need to keep moving beyond the Affordable Care Act and work to establish a just, equitable and universal health system; maybe Minnesota will lead the way.

Dr. Elizabeth Frost of Minneapolis is a physician at Hennepin County Medical Center.

http://www.twincities.com/opinion/ci_20974425/greater-good