PNHP

Medicare Advantage patients for sale on Wall Stree

Medicare Advantage patients for sale on Wall Stree

How much are you worth to HMOs?

By Carol Gentry
Health News Florida, October 28, 2011

Medicare health plan members are worth more than any other category of enrollee in a merger or acquisition deal, Wall Street analysts say.

In fact, they’re worth four times as much as members of employer-based plans and five times as much as members of Medicaid plans, according to a report from Goldman Sachs researchers Matthew Borsch and Samuel Wass.

By their calculations, Medicare Advantage (HMO or similar managed-care plan) enrollees have a “value per member” of $6,000 in a merger or acquisition.

That compares with $1,500 for commercial plans – the ones that employers offer but in which the insurer takes the financial risks – and $1,200 per member for Medicaid plans.

The researchers prepared the analysis in the wake of Monday’s announcement that Cigna will buy HealthSpring, a holding company that includes Medicare plans in 11 states and Washington, D.C. that encompass 340,000 members.

Other analysts have also noted the mega-insurers’ growing desire to acquire Medicare customers. As Carl McDonald of CitiGroup wrote today in a note about Universal American: “It’s hard to overstate how much the attitude of the largest plans …has changed toward the Medicare business in just the last six months.”

United Health Group was first to discover the pot of gold Medicare plans offered and bought PacifiCare in 2005, as McDonald notes, but now WellPoint, Cigna and Aetna are waking up.

http://www.healthnewsflorida.org/top_story/read/how_much_are_you_worth_to_an_hmo

Bet you didn’t realize that by signing up with a taxpayer-financed, private Medicare Advantage plan you can command a price of $6000 for the sale of yourself when your plan is acquired by another plan. Well, actually you don’t get the $6000. Neither does it revert to Medicare and the taxpayers. No, it goes to the top 1 percent, while leaving the 99 percent of us once again dumbfounded.

What price does a person in the traditional Medicare program command? What a ridiculous question. Medicare doesn’t buy and sell patients. That happens only when Medicare patients are privatized. Selling patients is a function limited to private plans, not public social insurance programs.

When are we finally going to say that we are not for sale to the 1 percent? Since it was Congress that arranged the sale, let’s Occupy Congress!

Insurers obliterate distinction between health plans and stop-loss insurance

Self-funded health plans under attack in New Jersey

By Joanne Wojcik
Business Insurance, October 30, 2011

In an Oct. 25 letter to Thomas Considine, commissioner of the New Jersey Department of Banking and Insurance, the Self-Insurance Institute of America Inc. asked the department to rescind a bulletin it issued this month that alleges stop-loss insurers are “cherry-picking” employer groups with good claims experience.

The Oct. 3 bulletin alleges that the insurers, which write excess coverage for self-funded group benefit plans, are “selectively marketing coverage to small employers on the basis of health history of that employer’s employees, and denying coverage to employers based on employee health status. The result of this selective underwriting is to “cherry-pick’ groups less likely to incur claims, leaving the groups more likely to incur claims to the state’s guaranteed-issue insured market. This, in turn, drives premiums up for small employers purchasing insured plans.”

Because stop-loss insurance is excluded from the state’s definition of a health benefit plan, it is not subject to the same regulations as fully insured health coverage, the bulletin states. Therefore, the department has invoked New Jersey’s unfair trade practice law, asserting that “the selective marketing and underwriting described herein constitutes an unfair trade practice.”

Simpsonville, S.C.-based SIIA asserts that the department’s contention is “inflammatory and without merit. Stop-loss insurance is a completely different product than commercial health insurance, so it is misguided to conclude that “unfair competition’ exists,” SIIA said in its letter.

The Employee Retirement Income Security Act’s “regulatory exemption for self-insured (self-funded) plans is a persistent thorn in the side of state insurance regulators,” according to a September statement by Timothy Stoltzfus Jost, a law professor from Washington and Lee University School of Law in Lexington, Va., to the NAIC’s ERISA (B) Subgroup.

“This may be acceptable for large employer groups, which have the bargaining power and expertise to protect their employees. But when small-employer packages purchase “self-insured’ packages from insurers, including stop-loss coverage with very low attachment points and administrative services, they are essentially purchasing conventional health insurance, except that it is free from state regulation,” Mr. Jost said.

Moreover, he said “insurers have always had an incentive to market “self-insurance’ to healthy groups, and small businesses with healthy enrollees have always had an incentive to purchase it. The Affordable Care Act, however, increases these incentives…Insurers understand this and are very actively marketing “self-insured’ products to small groups.”

http://www.businessinsurance.com/article/20111030/NEWS05/310309989?tags=%7C74%7C305%7C339

Comment:

By Don McCanne, MD

For smaller employers who want to self-insure their health benefit programs, stop-loss insurance is an imperative. A very large medical bill for one employee or family member could bankrupt a small business. This need to protect against large losses has created a thriving market in self-insured packages from insurers, which escape health plan regulation, yet are beginning to look more like conventional health insurance with extremely high deductibles.

These plans not only provide stop loss coverage at a “low attachment point,” they are now providing administrative services for the employers’ self-insured plans, paying employees’ medical expenses using the employers’ funds. The attachment point – the level at which losses begin to be covered by the insurer – may be $40,000. That is a very low level for a stop-loss plan. Some conventional health plans have deductibles of $50,000. That blurs the distinction between a high deductible in a health insurance plan and a low attachment point in a stop-loss plan.

What is happening is obvious. The insurers are selling these “self-insured packages” as stop-loss plans, avoiding the regulatory oversight for health plans. Yet they actually function as health plans with very high deductibles.

Why does it matter? The insurers can avoid new regulations that prohibit medical underwriting. They are able to cherry pick – limiting the sale of these plans only to businesses with healthy employees, shifting the costs of higher risk employee pools to other programs with guaranteed issue. As Timothy Stoltzfus Jost states, “insurers have always had an incentive to market ‘self-insurance’ to healthy groups, and small businesses with healthy enrollees have always had an incentive to purchase it. The Affordable Care Act, however, increases these incentives…Insurers understand this and are very actively marketing ‘self-insured’ products to small groups.”

The private insurers have an absolute moral obligation to enhance value for their investors, and they must always make every effort to do so. The fault lies not with the private insurers themselves but with a financing model that is dependent on insurers. We need to change the model, switching to a single public insurer.

Insurers obliterate distinction between health plans and stop-loss insurance

Self-funded health plans under attack in New Jersey

By Joanne Wojcik
Business Insurance, October 30, 2011

In an Oct. 25 letter to Thomas Considine, commissioner of the New Jersey Department of Banking and Insurance, the Self-Insurance Institute of America Inc. asked the department to rescind a bulletin it issued this month that alleges stop-loss insurers are “cherry-picking” employer groups with good claims experience.

The Oct. 3 bulletin alleges that the insurers, which write excess coverage for self-funded group benefit plans, are “selectively marketing coverage to small employers on the basis of health history of that employer’s employees, and denying coverage to employers based on employee health status. The result of this selective underwriting is to “cherry-pick’ groups less likely to incur claims, leaving the groups more likely to incur claims to the state’s guaranteed-issue insured market. This, in turn, drives premiums up for small employers purchasing insured plans.”

Because stop-loss insurance is excluded from the state’s definition of a health benefit plan, it is not subject to the same regulations as fully insured health coverage, the bulletin states. Therefore, the department has invoked New Jersey’s unfair trade practice law, asserting that “the selective marketing and underwriting described herein constitutes an unfair trade practice.”

Simpsonville, S.C.-based SIIA asserts that the department’s contention is “inflammatory and without merit. Stop-loss insurance is a completely different product than commercial health insurance, so it is misguided to conclude that “unfair competition’ exists,” SIIA said in its letter.

The Employee Retirement Income Security Act’s “regulatory exemption for self-insured (self-funded) plans is a persistent thorn in the side of state insurance regulators,” according to a September statement by Timothy Stoltzfus Jost, a law professor from Washington and Lee University School of Law in Lexington, Va., to the NAIC’s ERISA (B) Subgroup.

“This may be acceptable for large employer groups, which have the bargaining power and expertise to protect their employees. But when small-employer packages purchase “self-insured’ packages from insurers, including stop-loss coverage with very low attachment points and administrative services, they are essentially purchasing conventional health insurance, except that it is free from state regulation,” Mr. Jost said.

Moreover, he said “insurers have always had an incentive to market “self-insurance’ to healthy groups, and small businesses with healthy enrollees have always had an incentive to purchase it. The Affordable Care Act, however, increases these incentives…Insurers understand this and are very actively marketing “self-insured’ products to small groups.”

http://www.businessinsurance.com/article/20111030/NEWS05/310309989?tags=%7C74%7C305%7C339

For smaller employers who want to self-insure their health benefit programs, stop-loss insurance is an imperative. A very large medical bill for one employee or family member could bankrupt a small business. This need to protect against large losses has created a thriving market in self-insured packages from insurers, which escape health plan regulation, yet are beginning to look more like conventional health insurance with extremely high deductibles.

These plans not only provide stop loss coverage at a “low attachment point,” they are now providing administrative services for the employers’ self-insured plans, paying employees’ medical expenses using the employers’ funds. The attachment point – the level at which losses begin to be covered by the insurer – may be $40,000. That is a very low level for a stop-loss plan. Some conventional health plans have deductibles of $50,000. That blurs the distinction between a high deductible in a health insurance plan and a low attachment point in a stop-loss plan.

What is happening is obvious. The insurers are selling these “self-insured packages” as stop-loss plans, avoiding the regulatory oversight for health plans. Yet they actually function as health plans with very high deductibles.

Why does it matter? The insurers can avoid new regulations that prohibit medical underwriting. They are able to cherry pick – limiting the sale of these plans only to businesses with healthy employees, shifting the costs of higher risk employee pools to other programs with guaranteed issue. As Timothy Stoltzfus Jost states, “insurers have always had an incentive to market ‘self-insurance’ to healthy groups, and small businesses with healthy enrollees have always had an incentive to purchase it. The Affordable Care Act, however, increases these incentives…Insurers understand this and are very actively marketing ‘self-insured’ products to small groups.”

The private insurers have an absolute moral obligation to enhance value for their investors, and they must always make every effort to do so. The fault lies not with the private insurers themselves but with a financing model that is dependent on insurers. We need to change the model, switching to a single public insurer.

Obama administration approves virtual destruction of Medicaid

California gets OK for large cuts to Medi-Cal

By Anna Gorman
Los Angeles Times, October 28, 2011

The Obama administration will allow California to cut hundreds of millions of dollars from Medi-Cal, a move doctors and experts say will make it harder for the poor to get medical treatment.

California plans to reduce rates by 10% to many providers, including physicians, dentists, clinics, pharmacies and most nursing homes, the Centers for Medicare and Medicaid Services announced Thursday.

Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services, told reporters the action gives California the flexibility it had requested to address its budget shortfall. “We know that the reductions that are being approved today will have significant impact on affected providers, and we regret the very difficult budget circumstances that have led to their implementation,” she said.

California, which already spends less per beneficiary than any other state, has led the way in aggressively slashing its programs. Now the government’s decision to allow California to move forward with its plans sets a precedent for other states seeking to reduce their Medicaid bills.

The California Medical Assn. expressed frustration over the new cuts, saying that physicians could receive as little as $11 a visit. Doctors will have no choice but to stop seeing Medi-Cal patients, said CEO Dustin Corcoran. “You can’t pay the bills at these rates,” he said. “They are unconscionably low.”

Federal healthcare reform, which includes a massive expansion of Medicaid, also could be seriously hampered by this new round of cuts, Corcoran said.

“They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation,” he said. “We have a hard time seeing how healthcare reform has a chance of being successful in the state of California after these cuts are implemented.”

http://www.latimes.com/news/local/la-me-medicaid-20111028,0,4273464.story

Comment: 

By Don McCanne, MD

One of the most important components of the Affordable Care Act is the expansion of Medicaid coverage for uninsured, low-income individuals. Does the Obama administration seriously believe that this will be an effective step toward bringing affordable health care to everyone?

Look at what they just approved for California. The state already spends less per Medicaid (Medi-Cal) beneficiary than any other state, yet the Obama administration has approved another 10 percent reduction. Just wait until the budget cutters in other states get wind of this!

Theoretically, drastic payment reductions are met by further ratcheting down overhead expenses. At $11 per office visit, only a fraction of expenses can be covered, no matter how stringent the budgeting. In essence, the government is asking providers to help finance Medicaid through their own personal charity. Trying to cover 7.6 million Medi-Cal patients in the state by depending on provider charity is asking more than the system can bear.

Two quotes above need to be repeated.

Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services: “We know that the reductions that are being approved today will have significant impact on affected providers.”

Dustin Corcoran, CEO of the California Medical Association: “They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation.”

And the other major component of the Affordable Care Act? A mandate for individuals to purchase inadequate coverage by paying unaffordable premiums.

The Obama administration officials and their co-conspirators in Congress could not have been serious about bringing us real reform. If they were, we would have an improved Medicare covering everyone.

Physicians for a National Health Program and the American Public Health Association are currently holding their national meetings in Washington, D.C. We need to go to Freedom Plaza and join the Occupy Movement.

Obama administration approves virtual destruction of Medicaid

California gets OK for large cuts to Medi-Cal

By Anna Gorman
Los Angeles Times, October 28, 2011

The Obama administration will allow California to cut hundreds of millions of dollars from Medi-Cal, a move doctors and experts say will make it harder for the poor to get medical treatment.

California plans to reduce rates by 10% to many providers, including physicians, dentists, clinics, pharmacies and most nursing homes, the Centers for Medicare and Medicaid Services announced Thursday.

Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services, told reporters the action gives California the flexibility it had requested to address its budget shortfall. “We know that the reductions that are being approved today will have significant impact on affected providers, and we regret the very difficult budget circumstances that have led to their implementation,” she said.

California, which already spends less per beneficiary than any other state, has led the way in aggressively slashing its programs. Now the government’s decision to allow California to move forward with its plans sets a precedent for other states seeking to reduce their Medicaid bills.

The California Medical Assn. expressed frustration over the new cuts, saying that physicians could receive as little as $11 a visit. Doctors will have no choice but to stop seeing Medi-Cal patients, said CEO Dustin Corcoran. “You can’t pay the bills at these rates,” he said. “They are unconscionably low.”

Federal healthcare reform, which includes a massive expansion of Medicaid, also could be seriously hampered by this new round of cuts, Corcoran said.

“They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation,” he said. “We have a hard time seeing how healthcare reform has a chance of being successful in the state of California after these cuts are implemented.”

http://www.latimes.com/news/local/la-me-medicaid-20111028,0,4273464.story

One of the most important components of the Affordable Care Act is the expansion of Medicaid coverage for uninsured, low-income individuals. Does the Obama administration seriously believe that this will be an effective step toward bringing affordable health care to everyone?

Look at what they just approved for California. The state already spends less per Medicaid (Medi-Cal) beneficiary than any other state, yet the Obama administration has approved another 10 percent reduction. Just wait until the budget cutters in other states get wind of this!

Theoretically, drastic payment reductions are met by further ratcheting down overhead expenses. At $11 per office visit, only a fraction of expenses can be covered, no matter how stringent the budgeting. In essence, the government is asking providers to help finance Medicaid through their own personal charity. Trying to cover 7.6 million Medi-Cal patients in the state by depending on provider charity is asking more than the system can bear.

Two quotes above need to be repeated.

Cindy Mann, deputy administrator of the Centers for Medicare and Medicaid Services: “We know that the reductions that are being approved today will have significant impact on affected providers.”

Dustin Corcoran, CEO of the California Medical Association: “They built federal healthcare reform on the foundation of Medi-Cal, and they just destroyed that foundation.”

And the other major component of the Affordable Care Act? A mandate for individuals to purchase inadequate coverage by paying unaffordable premiums.

The Obama administration officials and their co-conspirators in Congress could not have been serious about bringing us real reform. If they were, we would have an improved Medicare covering everyone.

Physicians for a National Health Program and the American Public Health Association are currently holding their national meetings in Washington, D.C. We need to go to Freedom Plaza and join the Occupy Movement.

"Family penalty" built into reform

Healthcare reform penalizes married couples, says report

By Julian Pecquet
The Hill, October 27, 2011

The report concludes that fewer than 2 million couples — out of 60 million nationwide — are projected to benefit from the insurance subsidies, while “almost half of the beneficiaries of the tax credit will be unmarried individuals without dependent children.”

One reason is that subsidies, which start in 2014, are tied to the federal poverty level, which does not increase proportionally along with household size.

Another problem is a snafu in the law that The Hill first reported back in July.

The law offers insurance subsidies for workers if their employer doesn’t provide affordable coverage, but proposed regulations released in August peg that affordability to individual, not family, coverage. As a result, a worker’s spouse and children would not have access to subsidies if that worker were offered affordable coverage — even if the worker could not afford the family coverage offered by the employer.

The American Academy of Pediatrics is spearheading a sign-on letter to the Centers for Medicare and Medicaid Services (CMS) that decries a “family penalty” that will “negatively impact the opportunity to access quality health insurance for significant numbers of children.”

http://thehill.com/homenews/house/190105-healthcare-reform-penalizes-married-couples-says-report

Comment: 

By Don McCanne, MD

This is yet one more example of the fundamental strategic flaw of trying to design reform to fit a fragmented system of private health plans and public programs. Instead of a complex set of rules which are designed to protect the insurance industry, it would have been so much easier and much more efficient to design reform around the patient instead by simply declaring that everyone is covered by a single comprehensive program that is equitably funded. We can still do that.

“Family penalty” built into reform

Healthcare reform penalizes married couples, says report

By Julian Pecquet
The Hill, October 27, 2011

The report concludes that fewer than 2 million couples — out of 60 million nationwide — are projected to benefit from the insurance subsidies, while “almost half of the beneficiaries of the tax credit will be unmarried individuals without dependent children.”

One reason is that subsidies, which start in 2014, are tied to the federal poverty level, which does not increase proportionally along with household size.

Another problem is a snafu in the law that The Hill first reported back in July.

The law offers insurance subsidies for workers if their employer doesn’t provide affordable coverage, but proposed regulations released in August peg that affordability to individual, not family, coverage. As a result, a worker’s spouse and children would not have access to subsidies if that worker were offered affordable coverage — even if the worker could not afford the family coverage offered by the employer.

The American Academy of Pediatrics is spearheading a sign-on letter to the Centers for Medicare and Medicaid Services (CMS) that decries a “family penalty” that will “negatively impact the opportunity to access quality health insurance for significant numbers of children.”

http://thehill.com/homenews/house/190105-healthcare-reform-penalizes-married-couples-says-report

This is yet one more example of the fundamental strategic flaw of trying to design reform to fit a fragmented system of private health plans and public programs. Instead of a complex set of rules which are designed to protect the insurance industry, it would have been so much easier and much more efficient to design reform around the patient instead by simply declaring that everyone is covered by a single comprehensive program that is equitably funded. We can still do that.

PNHP supports Occupy Wall Street because we want our patients to be healthy.

Statement from PNHP N.Y. Metro chapter

We support OWS because the private health insurance industry exemplifies the central complaint of the OWS movement: unchecked corporate greed threatens human needs.

We support OWS because economic and social inequalities make our patients sick.

We support OWS because we’re tired of being ashamed when we have to treat our patients differently based on the types of insurance they have and what kinds of treatments they can “afford.”

We support OWS because we believe in facts and evidence, and facts and evidence show us that a profit-driven health insurance industry is unhealthy for everyone except for CEOs and stockholders of those companies.

We support OWS because most of our legislators, held hostage by corporate money, consistently refuse to pass health policies that save lives and money, like single-payer legislation.

We support OWS because the health care economy—like the overall economy—has more than sufficient resources to take care of everyone, but everyone is not taken care of due to the unfair siphoning of resources by profit-driven corporations.

We support OWS because we took the oath to do no harm, and our corrupt political and economic systems are doing all of us harm.

We support OWS because we are hopeful that we can change our society.

Gov. Shumlin and the Push for Single-Payer Health Care

By John Buntin
Governing, Oct. 25, 2011

At a time when states are struggling to comply with the provisions of the Affordable Care Act (ACA), Vermont’s ambitious plan to create the nation’s first single-payer health financing system might be hard to comprehend. Vermont Gov. Peter Shumlin sees this initiative as common sense. I recently had a chance to talk with Shumlin, an experienced legislator and small business owner, about why he thinks such radical change in health care is a necessity. An edited transcript follows.

Earlier this year you signed legislation making Vermont the only state in the nation to move toward a single-payer system. Why?

Good question. I guess what I keep wondering is, why not? The rising cost of health care in America and in Vermont is unsustainable. If we don’t get health-care costs under control, we will bankrupt our small businesses and use the precious resources that we need to invest in job growth and innovation and spend them on health care.

We’re trying to pass the first health-care system in the country where health care is a right and not a privilege. Where it falls on the individual and isn’t the burden of the employer. Where it’s publicly financed. And most importantly, where we spend our health-care dollars on preventive care — not on waste, insurance company profits, bureaucracy and a payment system that rewards providers for the quantity of work they do to you, not the quality of work they do for you.

It’s an ambitious plan, but if Vermont can get this one right, we’ll get the jobs, we’ll get economic growth and we’ll save our small businesses.

One of the big questions that people ask about Vermont’s approach is: Why are you acting now? After all, just two years ago, Congress passed ACA. What is Vermont trying to do that Congress didn’t do?

I’ve been working on health-care reform as a House member, as a state senator and now as a governor, for years. I’ve become convinced that piecemeal reform will cause more problems than it solves. I’ve learned that the hard way. If you’re not willing to reform, if you’re not willing to address the way we spend dollars, you’re not going to solve the problem.

I think the federal bill is a step in the right direction. But what government has done wrong almost every single time is confuse the need for access with the need for cost containment. We constantly come up with schemes to make it possible for those who can’t afford it to have coverage. We have never done universal reform where we actually stop spending like a bunch of drunken bandits on the delivery of health care. We’ve got to do that.

Listen, the rest of the world spends a fraction of what we spend and they have better health care outcomes than we do. If we don’t attack the cost problem, the spending problem, we will bankrupt our nation. We’ve watched all of this with tremendous frustration from almost any political perspective. We’ve watched the ineptitude of Congress over the past few months. If you took all of the proposals that were made for cost containment, for cutting budgets by the Tea Party folks in Congress and you took all the suggestions for revenue, going back to the Clinton tax rates [from] Democrats, you would still be right back where you are in three years because health care spending is rising so uncontrollably. My question is: How can public officials from both parties continue to ignore the real problem? It’s called rising health-care costs and spending.

Could you explain how the system Vermont is setting up, Green Mountain Care, will actually work?

Well, for consumers, it would mean you would get a Green Mountain health-care card, assuming you’re a resident of the State of Vermont. That card will give you health-care coverage for a defined-benefit package [which will be administered by a single insurer the state contracts with to run the system]. With that card, you’ll adjudicate your bill with the single payer when you come out of the provider’s office.

After Vermonters go in for their doctors’ visit, they’ll check out with the receptionist and be told, “You owe us X dollars,” and that will be that?

Right. With everybody in a single system, the insurer will tell you on the spot how much you’re paying and how much they’re paying. You’ll pull out a check, cash or credit card, and you’ll pay that before you leave the provider’s office. That saves 8 to 9 cents to the dollar according to Dr. [Bill] Hsiao [of the Harvard School of Public Health].

That same card will be a pipeline to your medical records so that when you go to the next doctor, the next provider will know exactly what all of the providers in your medical history have done to you. That stops waste, inefficiency and unnecessary health-care services.

Finally, and this is the most difficult and challenging but most important, we’re going to move from a fee-for-service payment system to one where providers get reimbursed for keeping you healthy. Outcomes-based medicine is going to replace the fee-for-service payment system.

And how will this work for health-care providers?

For the provider, what it means is getting the insurance company off their back. They get to spend their time making you healthy instead of dealing with billing bureaucrats. So, we think Vermont will be a better and more attractive place to practice medicine since providers really want to make people healthy. That’s what they’re trained to do.

You often talk about health-care reform in the context of economic competitiveness. What’s the connection?

I’m a business person. I came to government from business. Like many Vermont businesses, my biggest challenge as a business person is that every year, I get from one of our three payers (MVP Healthcare, Blue Cross Blue Shield, or Cigna) my premium increase. It’s never a decrease. It’s anywhere between a 12 and 32 percent increase every single year. I have no way to control that cost. As a small business person, we’re too small to run an ERISA plan. Some 80 percent of Vermont’s businesses are 50 employees or less. It’s a cost that gets forced upon us as employers. Our response is to pay more and more money to insurance companies, sign up for less and less coverage and ask our employees to pay a larger and larger share. It’s not sustainable.

My point is this: If we can design the first health-care system in the country that delivers better quality care for less money, I think that Vermonters will be delighted to pay for that system versus the current system which they know they can’t afford. How would we pay for it? We’ll come up with a package that spreads the burden equally among all Vermonters. We’re not going to ask business alone to pay the bill.

Did you feel like the current system puts Vermont at a competitive disadvantage with the Canadian provinces?

Absolutely. [Quebec Premier Jean Charest] and I are pretty good friends. I was up there recently. After we had a couple of glasses of wine, he turned to me and he said, “You know I love eating your lunch on jobs. I love eating your lunch every single time on job growth, new jobs.”

I said, “What do you mean?”

He said, “You know, I meet employers that are thinking about settling in Quebec or Vermont or New York or Maine, and I get them every time.”

I said, “Well, how do you do that?”

He said, “Well, I just explain that it’s $8,000 to $9,000 an employee for them to go across the United States border. Or, up here, they won’t have any of that cost. It seems to convince them every time.”

I said, “Premier Charest, that’s not nice. That’s not fair. I want to fix that.”

As the ACA is currently written, it would not be until 2017 when you could actually opt out of the mandated system of e
xchanges and create a single-payer system.

We’re shooting for 2014. The one act that we need from Congress is to change the date by which they allow single-payer assistance from 2017 to 2014. Sen. Leahy, Sen.Sanders and Rep. Welch are working hard on that. President Obama has been extraordinarily open to the suggestion. At the [National Governors Association] January meeting, at my urging, he said to all 50 governors, “I believe that your states should be the laboratories for change. As long as you’re not reducing standards, I’m with you. And we want to give you that flexibility, including supporting moving the 2017 date to 2014 for single-payer health care.”

What are Vermont’s next steps?

Really, the next step is to design the system that I just described that no one has ever done before in America. A system that has the technology to adjudicate the bill on the spot. That has the technology to get all of the medical records into a single form and card. Most importantly, that has a payment system that rewards — that allows doctors, providers, to practice medicine again by promoting healthy living, good diet, early prevention, and preventative care instead of the current system that rewards financially for quantity of care.

What do you see as the most challenging obstacles to actually doing this?

I think the most daunting task is to be inclusive enough with providers, consumers, the health-care community and the business community, so that we can actually make this happen without fear of the unknown and eroding public confidence.

Has there been a lot of concern about this in the business community?

To be honest, most businesses understand that they’re paying a health-care tax right now and it’s rising much faster than they can afford. They understand that the current system isn’t sustainable. So I think most of them are grateful that we’re trying to solve a real problem. I think what puzzles many of us in Vermont is: How can so many others pretend that this isn’t the biggest threat to job growth, to economic expansion and the economic security of the middle class?

I’ve got 625,000 Vermonters. We only have 40,000 to 50,000 uninsured. That’s pretty remarkable. But I’ve got 150,000 who are underinsured. What’s that mean? That means that every single day middle-class families know that if they get really, really sick or one of the family members get really, really sick, they’re bankrupt. They’re done. The party’s over. They can’t pay the bill.

And you obviously feel like ACA doesn’t do enough to address that problem?

Right. It’s a great start. It’s going to help us tremendously because it’s a bridge to the single-payer system. But the challenge of the Affordable Care Act is like most of what happens in Washington. By the time you compromise and water it down, it doesn’t solve the real problem which is health-care costs, health-care spending. It’s not sustainable.

Even the biggest critics of my plan, and I’ve got plenty of them as you can imagine, if you ask them, “Hey, what if we do nothing?” They say, “Oh, we can’t do that. It’s not sustainable. The system’s not sustainable.” Now, we’re not talking about the corner grocery store here that’s not sustainable, or the corner laundromat. We’re talking about our health-care system.

We understand that in a small rural state, our providers and our small hospitals are the first to go. I mean, we’ve got health-care providers in small hospitals that are struggling to stay alive in this state right now. They know that the current system is going to bankrupt them. We have docs every year that can’t stay in private practice because they have a lot of Medicaid and Medicare patients and they just can’t pay their bills. It’s not that they don’t want to deliver health care. It’s that they’re not getting paid enough to do it. So we’ve got real challenges and we’re trying our best to solve them. I say, if we can get this one right, it’ll be a huge lift for Vermont both in terms of job growth and in terms of quality of life.

http://www.governing.com/columns/gov-shumlin-push-single-payer-healthcare.html

Curing the economy: health consumer spending

It’s Consumer Spending, Stupid

By James Livingston
The New York Times, October 25, 2011

AS an economic historian who has been studying American capitalism for 35 years, I’m going to let you in on the best-kept secret of the last century: private investment — that is, using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.

This is, to put it mildly, a controversial claim. Economists will tell you that private business investment causes growth because it pays for the new plant or equipment that creates jobs, improves labor productivity and increases workers’ incomes. As a result, you’ll hear politicians insisting that more incentives for private investors — lower taxes on corporate profits — will lead to faster and better-balanced growth.

The general public seems to agree. According to a New York Times/CBS News poll in May, a majority of Americans believe that increased corporate taxes “would discourage American companies from creating jobs.”

But history shows that this is wrong.

Between 1900 and 2000, real gross domestic product per capita (the output of goods and services per person) grew more than 600 percent. Meanwhile, net business investment declined 70 percent as a share of G.D.P. What’s more, in 1900 almost all investment came from the private sector — from companies, not from government — whereas in 2000, most investment was either from government spending (out of tax revenues) or “residential investment,” which means consumer spending on housing, rather than business expenditure on plants, equipment and labor.

In other words, over the course of the last century, net business investment atrophied while G.D.P. per capita increased spectacularly. And the source of that growth? Increased consumer spending, coupled with and amplified by government outlays.

The architects of the Reagan revolution tried to reverse these trends as a cure for the stagflation of the 1970s, but couldn’t. In fact, private or business investment kept declining in the ’80s and after. Peter G. Peterson, a former commerce secretary, complained that real growth after 1982 — after President Ronald Reagan cut corporate tax rates — coincided with “by far the weakest net investment effort in our postwar history.”

President George W. Bush’s tax cuts had similar effects between 2001 and 2007: real growth in the absence of new investment. According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested are now close to 8 percent of G.D.P., a staggering sum in view of the unemployment crisis we face.

So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.

Why, then, do so many Americans support cutting taxes on corporate profits while insisting that thrift is the cure for what ails the rest of us, as individuals and a nation? Why have the 99 percent looked to the 1 percent for leadership when it comes to our economic future?

A big part of the problem is that we doubt the moral worth of consumer culture. Like the abstemious ant who scolds the feckless grasshopper as winter approaches, we think that saving is the right thing to do. Even as we shop with abandon, we feel that if only we could contain our unruly desires, we’d be committing ourselves to a better future. But we’re wrong.

Consumer spending is not only the key to economic recovery in the short term; it’s also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending. (The increased trade deficit that might result should not deter us, since a large portion of manufactured imports come from American-owned multinational corporations that operate overseas.)

We don’t need the traders and the C.E.O.’s and the analysts — the 1 percent — to collect and manage our savings. Instead, we consumers need to save less and spend more in the name of a better future. We don’t need to silence the ant, but we’d better start listening to the grasshopper.

(James Livingston, a professor of history at Rutgers, is the author of “Against Thrift: Why Consumer Culture Is Good for the Economy, the Environment and Your Soul.”)

http://www.nytimes.com/2011/10/26/opinion/its-consumer-spending-stupid.html

Comment: 

By Don McCanne, MD

According to Professor James Livingston, the key to economic recovery is to use tax policy and government spending to redistribute income away from profits and toward wages so that it can be spent on products and services. So what does this have to do with health care?

Our current national policies have moved us in the wrong direction. The tax burden in the United States is one of the lowest of OECD nations. We are told that taxes need to be reduced further to enhance profits that can then be reinvested in our economy. Yet those profits are not being directed to consumer spending. Instead this surplus capital has been used in financial markets to wreak havoc on our economy. The billionaires scoop up more funds while the consumers have even less income to spend. What we need is an infusion of more funds into the economy – spending on real products and services, not on destructive financial instruments.

Health care is one of the most, if not the most, valuable sectors of our economy. Spending on health care is one of the better things that we can do. Yet our current policies are directed to shifting more of the costs to individuals with health care needs, with the result that there will be a decrease in health care purchasing simply because the health care consumer doesn’t have enough money.

Cutting back on spending in Medicare and Medicaid, and shifting to the new standard of unaffordable private underinsurance plans called for in the Affordable Care Act will deprive this important, beneficial sector of our economy of much needed consumer/government funds.

It has long been recognized that health care financing must be progressive if we are going to provide essential care for everyone. The retained corporate earnings and other stashes of wealth are crying out to be tapped to be moved back into our economy, whether it’s for health care or for the multitude of other essential needs that should be met in a well functioning society.

For the health care sector of our economy, we need equitable tax policies and government spending. An improved Medicare for all would work just fine. It would be good for our economy, and good for the health of each and everyone of us.

Curing the economy: health consumer spending

It’s Consumer Spending, Stupid

By James Livingston
The New York Times, October 25, 2011

AS an economic historian who has been studying American capitalism for 35 years, I’m going to let you in on the best-kept secret of the last century: private investment — that is, using business profits to increase productivity and output — doesn’t actually drive economic growth. Consumer debt and government spending do. Private investment isn’t even necessary to promote growth.

This is, to put it mildly, a controversial claim. Economists will tell you that private business investment causes growth because it pays for the new plant or equipment that creates jobs, improves labor productivity and increases workers’ incomes. As a result, you’ll hear politicians insisting that more incentives for private investors — lower taxes on corporate profits — will lead to faster and better-balanced growth.

The general public seems to agree. According to a New York Times/CBS News poll in May, a majority of Americans believe that increased corporate taxes “would discourage American companies from creating jobs.”

But history shows that this is wrong.

Between 1900 and 2000, real gross domestic product per capita (the output of goods and services per person) grew more than 600 percent. Meanwhile, net business investment declined 70 percent as a share of G.D.P. What’s more, in 1900 almost all investment came from the private sector — from companies, not from government — whereas in 2000, most investment was either from government spending (out of tax revenues) or “residential investment,” which means consumer spending on housing, rather than business expenditure on plants, equipment and labor.

In other words, over the course of the last century, net business investment atrophied while G.D.P. per capita increased spectacularly. And the source of that growth? Increased consumer spending, coupled with and amplified by government outlays.

The architects of the Reagan revolution tried to reverse these trends as a cure for the stagflation of the 1970s, but couldn’t. In fact, private or business investment kept declining in the ’80s and after. Peter G. Peterson, a former commerce secretary, complained that real growth after 1982 — after President Ronald Reagan cut corporate tax rates — coincided with “by far the weakest net investment effort in our postwar history.”

President George W. Bush’s tax cuts had similar effects between 2001 and 2007: real growth in the absence of new investment. According to the Organization for Economic Cooperation and Development, retained corporate earnings that remain uninvested are now close to 8 percent of G.D.P., a staggering sum in view of the unemployment crisis we face.

So corporate profits do not drive economic growth — they’re just restless sums of surplus capital, ready to flood speculative markets at home and abroad. In the 1920s, they inflated the stock market bubble, and then caused the Great Crash. Since the Reagan revolution, these superfluous profits have fed corporate mergers and takeovers, driven the dot-com craze, financed the “shadow banking” system of hedge funds and securitized investment vehicles, fueled monetary meltdowns in every hemisphere and inflated the housing bubble.

Why, then, do so many Americans support cutting taxes on corporate profits while insisting that thrift is the cure for what ails the rest of us, as individuals and a nation? Why have the 99 percent looked to the 1 percent for leadership when it comes to our economic future?

A big part of the problem is that we doubt the moral worth of consumer culture. Like the abstemious ant who scolds the feckless grasshopper as winter approaches, we think that saving is the right thing to do. Even as we shop with abandon, we feel that if only we could contain our unruly desires, we’d be committing ourselves to a better future. But we’re wrong.

Consumer spending is not only the key to economic recovery in the short term; it’s also necessary for balanced growth in the long term. If our goal is to repair our damaged economy, we should bank on consumer culture — and that entails a redistribution of income away from profits toward wages, enabled by tax policy and enforced by government spending. (The increased trade deficit that might result should not deter us, since a large portion of manufactured imports come from American-owned multinational corporations that operate overseas.)

We don’t need the traders and the C.E.O.’s and the analysts — the 1 percent — to collect and manage our savings. Instead, we consumers need to save less and spend more in the name of a better future. We don’t need to silence the ant, but we’d better start listening to the grasshopper.

(James Livingston, a professor of history at Rutgers, is the author of “Against Thrift: Why Consumer Culture Is Good for the Economy, the Environment and Your Soul.”)

http://www.nytimes.com/2011/10/26/opinion/its-consumer-spending-stupid.html

According to Professor James Livingston, the key to economic recovery is to use tax policy and government spending to redistribute income away from profits and toward wages so that it can be spent on products and services. So what does this have to do with health care?

Our current national policies have moved us in the wrong direction. The tax burden in the United States is one of the lowest of OECD nations. We are told that taxes need to be reduced further to enhance profits that can then be reinvested in our economy. Yet those profits are not being directed to consumer spending. Instead this surplus capital has been used in financial markets to wreak havoc on our economy. The billionaires scoop up more funds while the consumers have even less income to spend. What we need is an infusion of more funds into the economy – spending on real products and services, not on destructive financial instruments.

Health care is one of the most, if not the most, valuable sectors of our economy. Spending on health care is one of the better things that we can do. Yet our current policies are directed to shifting more of the costs to individuals with health care needs, with the result that there will be a decrease in health care purchasing simply because the health care consumer doesn’t have enough money.

Cutting back on spending in Medicare and Medicaid, and shifting to the new standard of unaffordable private underinsurance plans called for in the Affordable Care Act will deprive this important, beneficial sector of our economy of much needed consumer/government funds.

It has long been recognized that health care financing must be progressive if we are going to provide essential care for everyone. The retained corporate earnings and other stashes of wealth are crying out to be tapped to be moved back into our economy, whether it’s for health care or for the multitude of other essential needs that should be met in a well functioning society.

For the health care sector of our economy, we need equitable tax policies and government spending. An improved Medicare for all would work just fine. It would be good for our economy, and good for the health of each and everyone of us.