Resource – Page 660

The holes in the health care law

By Helen Redmond
The Socialist Worker, April 13, 2011

“HAPPY BIRTHDAY, Patient Protection and Affordable Care Act!” read the enthusiastic subject lines on millions of e-mails sent out last month by the union-backed Health Care for America Now coalition.

In Illinois, the Campaign for Better Health Care wrote in its celebratory statement: “It’s been a year since the historic vote that made the Affordable Care Act a law, putting America on the path towards a system of quality, affordable health care for all. From birth to death, Americans now enjoy health care security and protection in new ways.”

But is the one-year anniversary of PPACA, the health care law that President Barack Obama signed a year ago last month, something to celebrate? Is the U.S. really on the path to affordable health care for all?

Susan Aarup didn’t celebrate last month–and she has to have doubts about whether she’s on the path to quality affordable health care.

Aarup works as an employment advocate at Progress Center for Independent Living in Illinois and has been uninsured for eight months. Her job doesn’t provide health coverage because she works part time, although she often puts in close to 40 hours a week. Aarup has cerebral palsy and uses a power wheelchair for mobility. She has two personal assistants who help her with everything, from bathing and cooking, to getting into and out of bed.

A month ago, a severe pain in her leg forced Aarup to the emergency room at Northwestern Memorial in Chicago. She was admitted to the hospital and diagnosed with a blood clot. Doctors said if she’d waited much longer, she could have died.

Why did she wait as long as she did? “Because I don’t have insurance, and I don’t have any money, I wait and I wait, and I hope it’s not that bad,” Aarup said. She didn’t want to incur thousands of dollars in medical bills from an ER trip–which is exactly what happened. So far, Northwestern has billed her for more than $60,000.

Aarup is one of the tens of millions of uninsured in the U.S. who organizations like HCAN say will finally be covered because of last year’s health care law.

But the insurance exchanges that are supposed to be a place to buy health coverage for those who don’t have employer-based insurance won’t phase in for several years. In the meanwhile, people like Aarup are supposed to be able to qualify for so-called “high-risk insurance pools” established as a temporary stopgap under the PPACA. The Illinois Comprehensive Health Insurance Plan (ICHIP) is the Illinois high-risk pool.

But Aarup can’t afford ICHIP. Because the interim plans are still gender-, age- and smoking status-rated, Aarup was told she would have to pay a monthly premium of $575–only slightly less than the unaffordable $600 a month Aarup was paying for COBRA coverage before she become uninsured eight months ago.

Aarup applied for Medicaid, too–but was rejected. “I make too much money, and I work, so they don’t think I’m disabled,” she said, her voice full of frustration. “I’m caught in the cracks.”

– – – – – – – – – – – – – – – –

MEDICAID, THE federal government’s health care program for the poor, is another aspect of health care in the PPACA era that should inspire not celebration but fear and doubt.

Under the health care law, Medicaid is to expand in 2014 to cover people with incomes up to 133 percent of the official poverty level. Currently, the poverty line for a family of four is $22,350 a year, so four-person households with an income of up to $29,725 a year would qualify.

The expansion of Medicaid is the health care law’s solution for providing coverage for low-income people who won’t be able to afford plans offered by private companies through the insurance exchanges. Medicaid will become the de facto insurer of millions of people–its expansion accounts for almost half of the projected increase in health coverage under the PPACA.

But the obvious problem is that the Medicaid program is full meltdown right now as state governments cut away at spending in order to balance huge budget shortfalls.

Arizona under Republican Gov. Jan Brewer has gotten some notoriety for eliminating Medicaid coverage for organ transplants–two people have died since the cut went through. Brewer plans to ax up to 120,000 current Medicaid recipients and introduce mandatory co-payments and benefit limits.

But Republicans aren’t alone in going after Medicaid. New York’s new Gov. Andrew Cuomo pushed through a state budget that slashes Medicaid–which serves about one in every four residents in the state–by $2.1 billion.

At the federal level, the Obama administration not only isn’t defending Medicaid–White House officials are helping the states figure out how to cut. In a letter to state governors, Health and Human Services (HHS) Secretary Kathleen Sebelius assured them that the health care law will allow states to reduce Medicaid rolls if they face budget deficits. Sebelius suggested a range of cuts to “optional” benefits such as physical therapy, dental care, eyeglasses and prescription medications.

Compounding the funding problems are physicians who refuse to see Medicaid patients–in particular, specialists–because payment rates have been reduced, and further cuts are being proposed. A New York Times article interviewed a Louisiana nurse, Nicole Dardeau, who needs surgery for herniated discs, but can’t find anyone who will perform it. “My Medicaid card is useless for me right now, it’s a useless piece of plastic,” Dardeau said. “I can’t find an orthopedic surgeon or a pain management doctor who will accept Medicaid.”

States seeking to cut costs are also privatizing Medicaid by forcing recipients into managed care HMOs. In Illinois, Democratic Gov. Pat Quinn wants to transfer half of beneficiaries into plans run by Aetna and Centene–even though managed care HMOs have a notorious track record of restricting access to care.

And this is all happening now. How will Medicaid handle an influx of 16 million people in 2014 if state governments can cut benefits and change eligibility rules at will, and doctors are refusing to accept patients?

– – – – – – – – – – – – – – – –

MEDICAID EXPANSION is only one aspect of the health care law where problems are beginning to show up.

Another is the lobbying of federal agencies to “interpret” the provisions of the PPACA on terms that are most generous to insurers and Corporate America. For example, more than 1,000 corporations are still able to offer employees so-called “mini-med” health plans–stripped-down coverage that is inexpensive for workers to purchase, but that have benefits caps which would be easily used up by one hospital or even emergency room visit.

A provision of the PPACA requires insurers to gradually eliminate these kinds of annual caps on payments. But thanks to the Obama administration, giant corporations like McDonalds and Disney World are off the hook for now, because of waivers from HHS. “We don’t want to take away people’s health insurance before they have some realistic other choices,” explained Sebelius.

Liberal Democratic Rep. Jan Schakowsky of Illinois skipped over another flaw in the PPACA at a celebration of the one-year anniversary last month.

Schakowsky told the crowd, “Raise your hand and give a shout out if you are a woman!”–before explaining that under the PPACA, being female was no longer a pre-existing condition and that inequality in coverage was a thing of the past.

What Schakowsky didn’t mention was the provision in the law that will lead insurers to drop coverage for abortion procedures–a dramatic restriction on women’s right to choose.

At the urging of anti-abortion Democrats, the health care law contains a provision that requires companies to separate coverage for abortions under policies they sell through the
insurance exchange set up by the PPACA. Women will have to pay separately to be covered for abortions.

This arrangement is illogical because women don’t plan to have abortions or complicated pregnancies that result in termination–but if they don’t go along with the restricted coverage, they won’t be covered when they need it.

Currently, 87 percent of private health insurance plans offer abortion coverage, but thanks to the Democrats’ health care law, that percentage is bound to fall. “The PPACA extends the damaging effects of the Hyde Amendment into all health plans and will limit access to abortion for millions of middle class women,” said Dr. Diljeet Singh, co-director of the Northwestern Ovarian Cancer Early Detection and Prevention Program and a member of Physicians for a National Health Program. “It further institutionalizes into national health policy the religious ideology and moral views of the minority.”

Supporters of genuine health care reform are uncovering more holes in the health care law. For example, the PPACA doesn’t forbid insurers from raising premiums–it only demands that they show that increases are deemed “reasonable” by state regulators. But in California, even if a rate hike is deemed “unreasonable,” regulators don’t have the power to block or modify it.

The truth is the Patient Protection and Affordable Care Act will not end the crisis in health care–far from it. Millions of people will be forced to buy “unaffordable underinsurance” from profit-hungry insurers who will receive billions in taxpayer subsidies. When they get sick, they will face the same nightmares–like being bankrupted by high premiums, deductibles, co-pays, gaps in coverage and uncovered services–that this law was supposed to end.

Meanwhile, Susan Aarup had to go to the ER again. This time she didn’t wait. She thinks the American health care system is “insane.”

http://socialistworker.org/2011/04/13/holes-in-the-health-care-law

Physicians still pushing for health care for all

By NCBR staff
Northern Colorado Business Report, April 12, 2011

FORT COLLINS — Even as a bill that would create health insurance exchanges for Colorado is set for a crucial vote on Wednesday morning, Margaret Flowers, M.D., is bringing the case for a single-payer health care system to the state.

“Physicians for a National Health Program supports work on systems at the state level, but we think it’s important to keep pushing at the national level as well,” she told about 50 health professionals and community members at Poudre Valley Hospital Tuesday afternoon. “The only model we had (during the debate over the federal Affordable Care Act in 2009) was Massachusetts; we need a better model than Massachusetts.”

That model might be evolving in Vermont, where during the last gubernatorial race, candidates ran on who supported a single-payer system more, she said. But even there the effort is running into problems, since federal waivers are required to implement state programs.

Senate Bill 200, co-sponsored by Rep. Amy Stephens, R-Monument, and Sen. Betty Boyd, D- Lakewood, would create an Internet portal where Colorado individuals and small businesses could shop for health coverage. It has received support from business groups including the Colorado Association of Commerce and Industry, NFIB, the Denver Metro Chamber of Commerce and others, but an amendment proposed last week in a Senate committee that would only allow it to be enacted if the state rejected all provisions of federal health-care legislation.

SB 168, sponsored by Sen. Irene Aguilar, M.D., which would create a Colorado Health Care Cooperative, is currently stalled in the Senate.

Flowers is a pediatrician who left her Baltimore practice in 2007 to work on health-care reform full-time. When efforts to include a single-payer option in the federal health care debate were unsuccessful, she and seven others confronted the Senate Finance Committee in May 2009 and was arrested. She testified before the Senate Health, Education, Labor and Pensions Committee in June 2009.

Flowers told the group at PVH that House Resolution 676, which has been introduced every year since 2003, has 37 co-sponsors this year, less than half of the 80 it attracted in 2009 while the reform debate raged. She said it would provide automatic, universal coverage for everyone living in the United States — regardless of immigration status — in an expanded, improved Medicare for all. Everyone is in a unified risk pool and pays based on ability. All medically necessary care is covered, everyone has a choice of physician, and by getting private insurance companies and employers out of the picture, saves about $400 billion in administrative costs each year.

“Any increase in a progressive income tax to fund the system would be offset by individuals no longer paying co-pays, premiums and the cost of care,” Flowers said.

The reason she keeps working for a single-payer plan, she told the health professionals, is that even a year into reform, “health care is headed in the wrong direction in this country,” she said. “We’re essentially paying for universal coverage (through emergency room care) but we aren’t getting the benefits. People look to us as health professionals for information and guidance, and we can help turn it around and put it on the right track the same way we treat patients — one on one.”

As congressional fellow for the 18,000-member PNHP, she travels throughout the United States, spending four or five days in each state, making the case for a national single-payer plan.

“People in Colorado are more fired up than I expected,” she told the Business Report Daily. “They really want to do something.”

Flowers has two more talks scheduled in Fort Collins today. At 5 p.m., she will speak at a reception at the Rocky Mountain Innosphere, 320 E. Vine Drive, and then again at 7:30 p.m. at Colorado State University in Yates Hall, Room 104. She has already appeared in Denver, Pueblo, Boulder, and has additional appearances scheduled for Denver and Frisco.

For more information, go to Health Care for All Colorado, http://heatlhcareforallcolorado.org

http://www.ncbr.com/article.asp?id=57089

Medicare-for-all plan would unite U.S. workers

Letters, Lexington Herald-Leader, March 11, 2011

The goings on in Wisconsin should be of interest to all of us. The battle between the “public” worker versus the rest of us, those who work for a nongovernmental entity, the huge majority of Americans, is now grabbing the headlines.

As I interpret the events, “the rest of us” are jealous of the more generous benefits the public sector may enjoy. And by benefits, I believe we are mainly talking about health insurance.

It seems to me the rest of us should demand and strive for the same benefits the public sector enjoys, not demand that government workers be dragged kicking and screaming down to our level.

Health insurance benefits could easily and affordably be provided by adopting a Medicare-for-all plan.

The enormous savings of a single-payer health insurance program would finance plans superior to what the public worker now enjoys without increasing the premiums for the nongovernmental sector.

We can and should do it. The current health reform law will not.

Ewell G. Scott, M.D.
Morehead, KY

Vermont news, Medicare threatened, new PNHP slide show

April 8, 2011

Dear PNHP colleagues,

Spring is here, and PNHP activities are bursting out all over. We can only recount a few of them here. But April could indeed shape up to be “the cruelest month” if the opponents of single payer are allowed to have their way.

In this e-issue:
– Current Vermont legislation falls far short of single payer, battle moves to Senate
– Opportunity to push single payer in response to Ryan plan to eliminate Medicare
– Teleconference on Ryan plan to eliminate Medicare: Monday, April 11, 7 p.m. eastern. RSVP online here.
– New PNHP slide show available now
– Corvallis City Council endorses single-payer system

In Vermont, single-payer advocates are in their toughest fight yet

Despite the election of a pro-single-payer governor and Legislature, the health reform legislation that emerged from Vermont House falls far short of single payer. See the statement on the current bill by the PNHP Board, below.

Characterized by some as a “road map to single payer,” the legislation largely stalls after the creation of an insurance exchange, as required by federal health law, by 2014. The very term “single payer” has been stripped from the bill.

“I could tell how bad it was when I saw how happy the lobbyists for the insurance companies and hospitals looked,” says former PNHP President Dr. Deborah Richter of Vermont. She says the fight is on to strengthen the bill in the Senate, where the governor presumably has more influence as former speaker.

Don McCanne, PNHP’s senior health policy fellow, comments on the Vermont developments here.

While the challenges facing single-payer advocates in Vermont are steep, PNHP members are united in the struggle for single payer for the long-term. (We reported on the health-professional student rally for a single-payer system in our last message to you; however, since then we’ve published a few of the speeches at the Vermont Statehouse here.) Stay tuned for more updates from the “battle of Vermont.”

Nationally, the Medicare privatization ‘zombie’ is back

Canadian health economist Robert Evans, Ph.D., defines a health policy “zombie” as an idea that has been thoroughly discredited but keeps coming back.

In the U.S., eliminating and privatizing Medicare by turning it into a voucher program is this season’s zombie. The House budget committee chair, Rep. Paul Ryan, R-Wis., is aggressively promoting the dismantlement of Medicare as a social insurance program and is pushing new, draconian Medicaid cuts as deficit-cutting “necessities.”

Dr. Don McCanne swiftly commented on Ryan’s proposals here. Dr. Margaret Flowers, PNHP’s congressional fellow, also quickly responded to Ryan’s proposals in an article titled “Ryan turns knife on Medicare, Medicaid” here.

PNHPers are encouraged to write letters to the editor and opinion pieces on these developments. Medicare’s benefits are already inadequate, and the program doesn’t doesn’t have all the tools it needs to control costs (e.g. the ability to negotiate drug prices with drug firms, to slash administrative bloat system-wide and globally budget hospitals). Private insurers have raised, not lowered, costs in Medicare (by 14 percent per beneficiary).

The only way to control costs in the Medicare program is, paradoxically, to adopt a universal single-payer program that covers everyone. If you’d like help polishing a letter or opinion piece on this or other topics, please contact Mark Almberg, PNHP’s communications director, at mark@pnhp.org.

(In Canada, the zombie that won’t stay dead is that Canada’s health system is unsustainable and that privatization would cut spending. Robert Evans’ recent paper on this topic is worth reading, below. We’re delighted to note that Evans will be speaking at PNHP’s 2011 Annual Meeting in Washington, D.C., on Saturday, October 29. Save the date!).

Teleconference Monday, April 11, on proposed changes to Medicare and Medicaid with Dr. Margaret Flowers, others at 7 p.m. eastern

PNHP and Healthcare-Now are co-hosting an emergency one-hour teleconference on Rep. Ryan’s proposal to eliminate and privatize Medicare. RSVP for the call here.

With Spring’s arrival, we have a new edition of the PNHP slide show!

The new PNHP slide show is available to paid-up members at www.pnhp.org/slideshows. (If you haven’t already renewed your membership, please do so today.)

PNHP co-founders Drs. Steffie Woolhandler and David Himmelstein have updated the PNHP slide set for 2011. While the presentation is geared towards grand rounds and other medical audiences, community groups are extremely receptive as well. The health care debate has been characterized by more rhetoric than substance, and people really appreciate how much they learn from PNHP speakers and materials. You may wish to use fewer slides and leave more time for Q and A with community groups, however.

If you use the new slides, please drop us a note. We’d love to hear who you have been speaking to!

Finally, PNHP was pleased to learn that the Corvallis (Ore.) City Council endorsed a resolution in support of a single-payer system on April 4. The council endorsed both their state single-payer bill and the national “Expanded and Improved Medicare for All Act,” H.R. 676. Thanks and congratulations to Oregon PNHPer Dr. Hank Elder!

Best regards,

Ida Hellander, M.D.
Executive Director

FOR IMMEDIATE RELEASE
April 7, 2011

Contact:
Garrett Adams, M.D., president PNHP
David Himmelstein, M.D., co-founder PNHP
Andrew Coates, M.D., board member PNHP
Mark Almberg, communications director, (312) 782-6006, mark@pnhp.org

Vermont health bill mislabeled ‘single payer’: doctors’ group

Physicians for a National Health Program says draft legislation gives wide berth to private insurers, falls far short of single-payer reform

The following statement was released today by the national board of Physicians for a National Health Program.

Health reform legislation initiated by Vermont Governor Peter Shumlin was recently passed by that state’s House of Representatives and awaits action in the Senate.

Many journalists and commentators have portrayed this bill as fully embracing the single-payer appr
oach to reform. We write to clarify the views of Physicians for a National Health Program on the Vermont legislation.

We appreciate the enthusiasm for progressive health reform shown by Gov. Shumlin and the many dedicated single-payer supporters in Vermont. However, it is important to note that the bill passed by the Vermont House falls well short of the single-payer reform needed to resolve the health care crisis in that state and the nation. Indeed, as the bill moved through the House the term “single payer” was entirely removed, and restrictions on the role of private insurers were loosened.

In its present form, the legislation lays out in considerable detail a structure to implement Vermont’s version of the federal reform passed in March of 2010, which would expand coverage by private insurers and Medicaid. However, it offers only a vague outline of the additional reform promised by the governor and Legislature at such time when states will be allowed to experiment with alternatives to the federal program in 2017 (or 2014, if the effort to move up the date succeeds).

The Vermont plan promises a public program open to all residents of the state in 2017, but even then it would allow a continuing role for private insurance. This would negate many of the administrative savings that could be attained by a true single-payer program, and opens the way for the continuation of multi-tiered care.

Within the public program, the plan would continue to lump together payments for operating and capital costs, allowing hospitals and the newly established Accountable Care Organizations (ACOs) to use funds not spent on care for institutional expansion. Meanwhile, those with operating losses would shrink or close even if they were meeting vital health needs. This would perpetuate incentives for hospitals and ACOs to cherry-pick profitable patients and services, and hobble the health planning needed to assure rational investments in new facilities and high-technology care.

Under the legislation, many patients would continue to face co-payments that obstruct access to care, and the bill makes no mention of expanding coverage of long-term care. The legislation fails to proscribe the participation of for-profit hospitals and other providers (e.g. ACOs and dialysis clinics), which research has shown deliver inferior care at inflated prices.

Finally, the bill offers no concrete funding plan or structure for the public program that it promises.

We applaud the sentiments expressed by the governor and legislative leaders and remain hopeful that the legislation’s rhetorical commitment to further reform will become a reality. We urge the Vermont Senate to address the shortcomings in the House bill.

Much work, including efforts to enact federal enabling legislation – and continued advocacy by single-payer supporters – will be needed in the years ahead to achieve Vermont’s goal of universal access to high quality, affordable care.

*******

Physicians for a National Health Program (www.pnhp.org) is an organization of 18,000 doctors who support single-payer national health insurance, an improved Medicare for all. A March 26 rally at the Vermont Statehouse organized by medical and other health-professional students from PNHP and the American Medical Student Association drew over 200 attendees in support of single-payer health reform.

Public health care as sustainable as we want it to be

By Robert G. Evans
Toronto Star, Tue Jun 01 2010

“There are stark and unpalatable choices that we face with respect to health care, but there is no magic solution. We absolutely must have an adult debate about how we deal with this.” That’s what David Dodge, former governor of the Bank of Canada and former deputy finance minister, told the Liberal policy conference last March.

Dodge joined a list of economists and other pundits who predict that public health care will be financially unsustainable in coming years as Canada faces an aging population and escalating costs for scientific advances in care and treatment. But an “adult debate” on the sustainability of public health care must start from who and what drives health-care spending.

It’s true that total health-care spending in Canada has risen in recent years, taking larger shares of both government revenues and budget allocations. This has led to accusations of “crowding out” other public programs by those favouring further privatization of health care.

The data tell a much more nuanced story. The central fact is that, recession years apart, medicare spending — hospitals and physicians’ services — has fluctuated between 4 per cent and 5 per cent of gross domestic product since 1975. After the introduction of medicare in the late 1960s these costs stabilized because universal, comprehensive coverage consolidated expenditures in the hands of a single payer. The cost of health services not covered by medicare has risen from 3 per cent of GDP in 1975 to 7 per cent in 2009.

Today, Canada’s expenditures on health care match those by other OECD countries. The public share of overall health costs in Canada is relatively low for high-income OECD countries, around 70 per cent. Private insurance, primarily for prescription drugs and dentistry, now accounts for 12.7 per cent of Canadian health spending, 14th highest in the world. The OECD outlier is the United States, where extensive private finance supports uncontrollable cost escalation (now over 16 per cent of GDP). Getting these costs under control will be the major task facing Obama’s health-care reform.

Provincial governments’ spending on health care over the past 15 years has taken increasingly larger bites out of their expenditure budgets. But this is a simple consequence of large cuts in non-health programs, not of out-of-control medicare spending. These cuts in non-health spending are traceable to substantial cuts in personal and corporate income taxes by the federal and most provincial governments, particularly since 1997. Between 1997 and 2004, these tax cuts removed an estimated $170.8 billion from public sector revenues. Total provincial revenues are by now roughly $35 billion per year less, or about half provincial spending on medicare. Cumulative federal cuts are at least as large.

The provinces’ revenue shortfalls were not all self-inflicted. The federal government’s large cuts in financial transfers since the mid-1990s also left big holes in provincial budgets. Subsequent increases have not fully made up the loss.

What are the real motives behind the claims of financial unsustainability? Two, I think. First, under Canada’s universal tax-financed medicare, higher-income people contribute proportionately more to supporting the health-care system, without receiving preferred access or a higher standard of care. Any shift to more private financing would reduce the relative burden on those with higher incomes and offer (real or perceived) better or more timely care for those willing and able to pay.

Second, every dollar of health-care expenditures is also a dollar of someone’s income. The Ontario government’s recent change in reimbursement for generic drugs made this clear: the shares of Shoppers’ Drug Mart fell 10 per cent overnight. Privatization is a way to avoid cost containment, reopening greater income opportunities for providers of care (and private insurers) outside public control. Expenditures
would accordingly rise, as in the United States, but public budgets might (in the short term) be contained. “Unsustainable” public spending magically becomes sustainable when shifted from taxpayers to patients.

It is time, long past time, for an “adult conversation” about these motivations, and for a clear identification of the winners and losers from eroding or dismantling medicare. (Economists who evade this issue should be shamed.)

But it is also time for an adult conversation about the real drivers of cost escalation. Researchers have known for decades that population aging is a real but a minor factor. Its impact will certainly increase, but it will remain secondary to increases in intensity and costliness of care. This is the real issue. Where is the money going, both public and private, and are we getting value? Again the Ontario generic drug initiative makes the point. Rising expenditures are not a law of nature; several hundred millions will be cut at a stroke. The real issue is political; those millions are also cut from pharmacy’ incomes.

Are there other opportunities? Yes. Medical imaging and laboratory testing are currently the major sources of cost escalation. What are the benefits? No one knows. Ultrasound for low-risk pregnancies is up 50 per cent in 10 years. Why? Patterns of medical practice and hospital use vary widely across the country, for no apparent reason. Toronto’s Institute for Clinical Evaluative Science, among others, has tracked some of these large unexplained variations, but they are largely ignored. These are what we need to discuss, not “stark choices” about relieving the burdens on and improving the benefits for high-income taxpayers — and, incidentally, opening new markets for private insurers. Panic-mongering about a “grey tsunami” is simply a distraction.

Canadians consistently show that they support public health care. In May, a national poll by Nanos Research confirmed that 90 per cent of Canadians feel that health care is the most important national issue, and almost 90 per cent support public solutions to problems in the health-care system. They are right. Canada’s health-care system is as sustainable as we want it to be.

Robert G. Evans is a member of UBC’s university’s Centre for Health Services and Policy Research. He is an officer of the Order of Canada, and a fellow of the Royal Society of Canada and the Canadian Academy of Health Sciences.

http://www.thestar.com/opinion/editorialopinion/article/817249–public-health-care-as-sustainable-as-we-want-it-to-be

Don’t let Walker dismantle SeniorCare

Editorial
Capital Times (Madison, Wis.), April 6, 2011

Under Republican and Democratic governors, Wisconsin has for the better part of a decade been an innovator — and a national leader — when it comes to providing senior citizens with affordable access to prescription medications. Wisconsin’s approach has made these prescriptions available at a significantly lower cost and with better coverage than the federal Medicare Part D scheme.

Unfortunately, in his rush to dismantle public services and the social safety net that Wisconsin has constructed as a bipartisan legacy, Gov. Scott Walker now proposes to make damaging changes to the state’s SeniorCare program — changes that would harm older Wisconsinites. Those changes would rob the nation of an outstanding model for containing health care costs while ensuring that needed drugs are accessible and affordable to our most vulnerable citizens.

A review by the Wisconsin chapter of Physicians for a National Health Program — a group with deep roots in the state’s medical community — has determined: “Walker’s proposed budget would change and effectively dismantle SeniorCare so that it would only fill in gaps in private insurance coverage, at a higher cost to seniors and with continued gaps in coverage. If this change is allowed to take place, many seniors will not be able to afford needed medications, leading to more illness, suffering and death.”

That’s a tough assessment but, to our view, the physicians group has raised legitimate concerns.

By any reasonable measure, SeniorCare is not just a success but a public policy jewel.

Established as a result of the health care initiatives of former Gov. Tommy Thompson (who also served as President George W. Bush’s secretary of Health and Human Services) and extended in 2007 and again in 2009 with bipartisan support from Wisconsin’s congressional delegation, SeniorCare now has an enrollment of 91,000 Wisconsin seniors. With a $30 annual enrollment fee, co-payments ranging from $5 to $15, and no gaps in coverage, the physicians’ analysis argues, “SeniorCare is a proven program that works. In addition to providing exceptional drug coverage, the program also saves taxpayers tens of millions of dollars by negotiating for discounts from drug companies.”

For that reason, the physicians group has called on U.S. Secretary of Health and Human Services Kathleen Sebelius to block any federal waivers that would undermine the program.

The call to Sebelius notes: “SeniorCare is financially solvent. It currently runs a $20 million surplus and saved $50 million in drug costs in 2009 alone. There is no need to dismantle this program except for political ideology.”

Sebelius should heed the call, as should members of Wisconsin’s congressional delegation. We have no doubt that members such as Sen. Herb Kohl, D-Wis., and Congresswoman Tammy Baldwin, D-Madison, will defend SeniorCare. But we genuinely hope that Republican members of the delegation will stand with them. Even in these times of so much political and ideological wrangling, all reasonable officials — no matter what their politics — should be able to agree on the necessity of extending access to affordable care while at the same time containing costs. That’s what SeniorCare does, and Scott Walker should not be allowed to dismantle it.

http://host.madison.com/news/opinion/editorial/article_d0e97b6a-1aa1-5d6f-b340-60d4acf95d96.html

Public health care as sustainable as we want it to be

By Robert G. Evans
Toronto Star, Tue Jun 01 2010

Second, every dollar of health-care expenditures is also a dollar of someone’s income. The Ontario government’s recent change in reimbursement for generic drugs made this clear: the shares of Shoppers’ Drug Mart fell 10 per cent overnight. Privatization is a way to avoid cost containment, reopening greater income opportunities for providers of care (and private insurers) outside public control. Expenditures would accordingly rise, as in the United States, but public budgets might (in the short term) be contained. “Unsustainable” public spending magically becomes sustainable when shifted from taxpayers to patients.

Robert G. Evans University Killam Professor in the Department of Economics at the University of British Columbia

http://www.thestar.com/opinion/editorialopinion/article/817249–public-health-care-as-sustainable-as-we-want-it-to-be

Insurers see banking future

Many have found that managing customers' money is more profitable than underwriting medical coverage.

By Michael A. Hiltzik
Los Angeles Times, October 22, 2008

WellPoint Inc., the nation’s largest health insurance company, ran into a snag last year while pursuing an important new business initiative.

Federal banking regulators insisted on classifying WellPoint as a healthcare company. And that was interfering with its efforts to open a bank.

The Federal Reserve Board eventually agreed that the company’s core insurance business could be considered financial services. But what about its mail-order pharmacy and its program for managing chronic diseases, which was overseen by WellPoint doctors and nurses? Wasn’t that healthcare?

WellPoint finally convinced the Fed that those activities were merely “complementary” to its main business — financial services. It pledged to limit them to less than 5% of total revenue.

That a medical insurer would agree to keep a lid on healthcare expenditures so it could get approval to open a bank illustrates a fundamental change in the industry: Insurers are moving away from their traditional role of pooling health risks and are reinventing themselves as money managers — providers of financial vehicles through which consumers pay for their own healthcare.

Like home and auto insurance, traditional health coverage is based on shared risks within broad populations of customers: a small proportion with big medical expenses and a large majority with few or none. Premiums paid by the latter help pay the costs incurred by the others and provide a margin of profit. In theory, this system serves everyone’s interests, because people generally can’t know in advance which group they’ll fall into.

For several decades, health insurance has been retreating from this paradigm.

A sea change occurred in the 1970s, when large employers began self-insuring medical costs, in part because a new federal law exempted self-insured plans from state regulation.

Insurance companies began remaking themselves as administrators, providing employers with expert help in processing claims and negotiating rates with doctor groups and hospitals. Profit margins on these services are high because the companies can charge fees without assuming the cost of underwriting customers’ medical needs.

A similar change is now rippling through the rest of the health insurance market, driven by federal tax breaks for individuals who pay for their own routine medical care.

“This is a turning point,” said Jacob Hacker, a professor of political science at UC Berkeley who has written extensively on healthcare reform. “It’s a fundamental shift away from the idea of broadly shared risk. It’s going to lead to a complete transformation of the health insurer, which will be increasingly focused on providing management of money.”

Wealth in health savings accounts

Among the signs of the change is the growth in health savings accounts, which allow individuals and families to pay out-of-pocket medical expenses from tax-exempt savings. As with individual retirement accounts and 401(k) plans, the money in HSAs tends to sit for long periods and can be invested in mutual funds and securities.

HSAs are different from flexible spending accounts, which allow employees to set aside tax-free dollars to pay deductibles and other medical expenses. At the end of the year, any unspent money in a flexible spending account is lost. In contrast, money in an HSA can carry over year after year indefinitely.

Federal tax rules for HSAs were liberalized in 2003, making them very attractive to well-heeled taxpayers. Commercial banks such as Bank of America and Mellon Bank, seeing the opportunity to collect management fees on the accounts, jumped into the business.

“Every bank wants to increase its share of HSAs,” said John Casillas, director of the Medical Banking Project, a Franklin, Tenn., organization that helps medical administrators develop financial service systems.

“There’s fees for managing the account, transaction fees, fees for investing the funds,” Casillas said. “You’re going to see many billions of dollars moving from premium payments to professionally managed investment funds under HSA rules. Some people think that banks are going to threaten health plans by replacing them in the marketplace.”

Hence the rush by medical insurers to open their own banks.

“This is an offshoot of what’s going on in the market,” said Kelvin Anderson, chief executive of OptumHealthBank, founded in 2005 by UnitedHealth Group, owner of PacifiCare and other health insurance plans.

“Our choice was either to start a bank or partner with a third party,” Anderson said in an interview. UnitedHealth chose to start its own bank, he said, to “provide better service to the customer.”

The company also stands to collect fees for maintaining the accounts, handling some disbursements and investing the balances — and for overdrafts, electronic transfers, even printed checks and monthly statements.

OptumHealthBank has attracted $600 million in health savings account deposits from nearly 400,000 customers. The bank collected more than $34 million in service charges on those deposits in the year that ended June 30, according to its reports to federal banking regulators. Over the same period, it earned $46 million in interest and produced a profit of nearly $33 million for its parent company.

That’s a small fraction of UnitedHealth’s $4.6 billion in overall profit last year, but it required a capital investment of just $35 million. Moreover, the business is growing fast: Deposits have more than doubled in the last 18 months.

OptumHealthBank was the first bank to be chartered by a medical insurer, but it did not have the field to itself for long. Blue Healthcare Bank, funded by 33 of the 39 member plans of the Chicago-based Blue Cross and Blue Shield Assn., was chartered as a Utah-based thrift last year, and WellPoint’s Arcus Bank received approval from the Federal Deposit Insurance Corp. this year.

Arcus is still awaiting formal approval from state regulators in Utah, its home state, but expects to be in operation within six months, said Chief Executive James Rowan.

Utah has been the state of choice for the new charters because state law allows non- financial companies to establish state banks without subjecting the parent company to supervision of federal bank regulators.

Last year, however, the FDIC imposed a moratorium on granting deposit insurance to such banks unless they were owned by a financial services company — hence WellPoint’s attempt to show that its principal business was financial services, not healthcare.

WellPoint had to make that case to the Federal Reserve Board to get a waiver of the FDIC moratorium. In the end, the company reached an agreement that allows it to obtain no more than 15% of its revenue from pharmacy services and disease management, triple the limit initially set by the Fed.

Rowan and Anderson say their banks will benefit customers by offering health savings accounts and healthcare coverage under one roof.

“We want the customer to be empowered,” Rowan said.

Consumer-driven healthcare

Whether these new services represent a solution to the nation’s healthcare crisis is widely debated.

Health savings accounts are “a step backward,” said George Halvorson, chief executive of the giant Kaiser health plan system and outgoing chairman of America’s Health Insurance Plans, the health insurance industry’s Washington-based lobbying arm. He calls the medical banking trend “off the point of where we need to go” to provide medical coverage to all Americans.

That’s because HSAs and their related health insurance policies, which carry high deductibles and offer bare-
bones coverage, are particularly beneficial to healthier, younger and wealthier customers. If these customers abandon the conventional insurance market, they will trap those with chronic or serious conditions in a shrinking, high-cost insurance pool.

“Eventually it will be harder and harder to find individual policies that aren’t high-deductible plans,” said Timothy S. Jost, a law professor at Washington and Lee University in Lexington, Va., and a critic of health savings accounts. “Those plans are great if you’re healthy. Other people will find that they have access to health insurance but not healthcare.”

HSAs are rooted in a conservative principle called “consumer-directed healthcare,” the notion that healthcare expenses have been rising in part because most American consumers, who receive health coverage as an employment benefit, don’t know how much their care actually costs.

If Americans paid for more healthcare out of their own pockets, the argument goes, they would become more frugal and discriminating. They would avoid seeing doctors for trivial complaints, insist on generic drugs rather than costlier brand names and seek out cost-effective treatments, not fashionable or experimental therapies, even for serious conditions.

To help foster this change, the insurance industry developed a new form of health plan carrying a low premium and a deductible — the amount a customer must pay out of pocket each year before the insurance kicks in — of $5,000 or more.

The new plans offer fewer overall benefits than traditional plans. They are designed to cover chiefly catastrophic medical expenses. Routine medical care becomes the responsibility of the consumer. Some of the plans exclude maternity benefits, preventive care and mental health services.

The federal rule changes in 2003 required anyone opening a health savings account to be covered by a qualified high-deductible plan, giving the insurance industry a convenient hook to market the products in tandem. The idea was that the tax break provided by HSAs would give individuals a greater incentive to buy a high-deductible plan.

Among the earliest promoters of HSAs were John Goodman of the National Center for Policy Analysis, a Dallas think tank that was instrumental in pushing President Bush’s Social Security privatization plan, and J. Patrick Rooney, a libertarian insurance executive who had promoted a school voucher program in his hometown of Indianapolis.

Their first victory came in 1996, when Congress approved a four-year pilot program providing limited tax relief for what were then known as medical savings accounts. Rooney and his supporters pressed Congress to expand the concept. In 2003 they succeeded. Contribution limits were raised sharply and indexed to inflation. (In 2008, the limits are $2,900 for individuals and $5,800 for couples.)

Under the rules, contributions to HSAs are tax-exempt, as are their investment gains. Withdrawals are also tax-exempt if they are used for qualified medical expenses. Over time, HSA balances could grow to hundreds of thousands of dollars.

Already, HSAs and high-deductible plans have made strong gains in the marketplace. America’s Health Insurance Plans, the industry lobbying group, reported that 6.1 million Americans were covered by high-deductible plans by the end of 2007, a 35% gain from a year earlier.

Only a fraction of those customers have also opened an HSA, however. That has led to charges from critics that the savings accounts function more as a tax shelter for wealthy taxpayers than as a tool to manage healthcare costs. A study this year by the Government Accountability Office found that the average taxable income among HSA holders as of 2005 was $139,000, more than double the average for all taxpayers.

The GAO also found that average withdrawals per year were less than half of contributions, suggesting that the account holders were building up retirement savings.

‘Nothing is covered, absolutely nothing’

There is evidence that enrollment in high-deductible plans has grown not because the plans offer greater value but because they are often the only plans that customers can afford — and sometimes the only plans an insurer will offer applicants with chronic conditions such as asthma, diabetes or depression.

That reflects the experience of Alex Kipper, 55, of Campbell, Calif., an engineer who lost his employer-provided health insurance during the dot-com bust when he was laid off by a Silicon Valley company. Since then he has eked out a living translating Russian medical and technical papers on a freelance basis, earning roughly $30,000 a year.

Because he has high blood pressure, Kipper found himself virtually uninsurable. Fearing that he could be financially wiped out in a medical emergency, he signed up for a bare-bones policy that provides no coverage until his medical expenses exceed $8,000 in a year.

His health plan’s concession to preventive care was a $25 discount on a physical. Once diagnostic tests were included, the fee for the checkup came to more than $300, Kipper said — which the health plan declined to pay.

He hasn’t returned to a doctor’s office in three years. He gets his blood pressure medicine from the discount retailer Costco, which charges him $15 for a month’s supply. To renew his prescription, he goes to a local free clinic.

Although the policy costs only $200 a month, “nothing is covered, absolutely nothing,” Kipper said. “This plan would be fine if it was really cheap, like $25 a month. But not $200.”

A 2006 survey by the Kaiser Family Foundation found that although customers in high-deductible plans did cut back on medical services overall, they tended to avoid arguably beneficial services as well as purportedly wasteful ones.

They were more likely than participants in conventional plans to avoid filling a prescription or to take less than the prescribed dose, to skip a test, treatment or follow-up visit recommended by a doctor, or to skip a checkup.

“The basic premises of consumer-driven healthcare are seriously flawed,” said Mark Hall, a professor of law and public health at Wake Forest University Medical School, who contends that people with serious medical conditions have little time or inclination to search for the most cost-effective treatment.

“They’re not consumers, they’re patients. And when you’re a patient, you’re not in a shopping mode. You have other things on your mind.”

michael.hiltzik@latimes.com

Ryan's proposals — Pay attention to insurers behind the curtain

By Wendell Potter
The Center for Public Integrity, April 07, 2011

Democrats who think Paul Ryan and his Republican colleagues have foolishly wrapped their arms around the third rail of American politics by proposing to hand the Medicare program to private insurers will themselves look foolish if they take for granted that the public will always be on their side.

Rep. Ryan’s budget proposal would radically reshape both the Medicare and Medicaid programs. It would turn Medicaid into a block grant, which would give states more discretion over benefits and eligibility. And it would radically redesign Medicare, changing it from what is essentially a government-run, single-payer health plan to one in which people would choose coverage from competing private insurance firms, many of them for-profit.

Poll numbers would seem to give the Democrats the edge in what will undoubtedly will be a ferocious debate over the coming months and during the 2012 campaigns. An NBC/Wall Street Journal poll conducted February 27-28 showed that 76 percent of Americans considered cuts to Medicare unacceptable. The public is almost as resistant to cutting Medicaid, at least for now: 67 percent of Americans said they found cutting that program unacceptable as well.

According to a story in Politico this week, Democrats “with close ties to the White House” think Ryan has handed them a gift that will keep on giving. They believe the Ryan blueprint will enable them to portray Republicans as both irresponsible and heartless, hell-bent on unraveling the social safety net that has protected millions of Americans for decades. That message will be the centerpiece of the Democrats’ advertising and fundraising efforts, unnamed party strategists told Politico.

Perhaps. But know this: Ryan et al would never propose such a fundamental reshaping of those programs unless they were confident that corporate America stands ready to help them sell their ideas to the public. Like big business CEOs, Congressional Republicans wouldn’t think of rolling out Ryan’s budget plan without a carefully crafted political and communications strategy and the assurance that adequate funding would be available to carry it out.

Republicans know they can rely on health insurance companies—which would attract trillions of taxpayer dollars if Ryan’s dream comes true — to help bankroll a massive campaign to sell the privatization of Medicare to the public.

Four years ago, in a secret insurance industry meeting in Philadelphia, I saw numbers that were similar to those in the NBC/Wall Street Journal poll. The industry’s pollster, Bill McInturff of Public Opinion Strategies, told insurance company executives, who had assembled to begin planning a campaign to shape the health care reform debate, that Americans were rapidly losing confidence in the private health insurance market.

For the first time ever, he said, more than 50 percent of Americans believed that the government should do more to solve the many problems that plagued the U.S. health care system. In fact, he said, a fast-growing percentage of Americans were embracing the idea of a government run “Medicare-for-All” type program to replace private insurers.

The executives came to realize at the meeting that the industry’s very survival was dependent upon the successful execution of a comprehensive campaign to change public attitudes toward private insurers. They needed to convince Americans they “added value” to the health care system, and that what the public should fear would be more government control.

Knowing that a campaign publicly identified with the industry would have little credibility, the executives endorsed a strategy that would use their business and political allies — and front groups — as messengers.

The main front group was Health Care America It was set up and operated out of the Washington PR firm APCO Worldwide. The first objective was to discredit Michael Moore’s documentary, SICKO, which was about to hit movie screens nationwide. Moore’s film compared the U.S. health care system to those in countries that had “Medicare-for-all” type programs run by governments. The American system, dominated by private insurers, did not fare well in Moore’s cinematic interpretation.

The front group painted Moore as a socialist but also went about the larger task of scaring the public away from “a government takeover of the health care system.” Part of that work involved persuading Americans that any reform bill expanding Medicare or including a “public option” would represent a government takeover.

The industry knew it had to enlist the support of longtime allies such as the U.S. Chamber of Commerce, the National Federation of Independent Business and the National Association of Health Underwriters to repeat the term “government takeover” like a mantra. It also had to get conservative talk show hosts, pundits and politicians to play along. And play along they did. In the debate preceding one key House vote involving a public option, a parade of Republicans took to the floor to repeat the industry’s favorite term: government takeover.

To help make sure the term stuck, America’s Health Insurance Plans (AHIP), the insurers’ lobbying group, funneled $86 million to the Chamber of Commerce to help finance its advertising and PR campaign against any reform legislation that included the public option. It worked like a charm. Polls showed during the course of the debate that public opinion was increasingly turning against the Democrats’ vision of reform. By the time the bill reached President Obama in March 2010, the public option had been stripped out, and public support for reform was well below 50 percent.

As a testament to the success of the industry’s campaign, PolitiFact, the St. Petersburg Times’independent fact-checking website, chose “a government takeover of health care” as its “Lie of the Year” in 2010. (The 2009 Lie of the Year was the fabrication that the Democrats’ reform bill would create Medicare “death panels.”)

While they were leading the effort to torpedo the public option, the insurers were lobbying hard for a provision in the bill requiring all of us to buy coverage from them if we’re not eligible for a public program like Medicare or Medicaid. They won that round, too. That provision alone will guarantee billions of dollars in revenue the insurers would never have seen had it not been for the bill the president signed.

But even that is not enough for the insurers. For many years, they’ve lobbied quietly for privatization of Medicare, with significant success. They were behind the change in the Medicare program in the 1980s that allowed insurers to offer what are now called “Medicare Advantage” plans. The federal government not only pays private insurers to market these plans, it pays them an 11 percent bonus. That’s right: people enrolled in Medicare Advantage plans cost the taxpayers 11 percent more than people enrolled in the basic Medicare program.

During the Bush administration, the insurers persuaded lawmakers to allow them to administer the new Medicare Part D prescription drug program. That has been a major source of new income for the many big for-profit insurers that participate in the program.

Rest assured that insurers have promised Ryan and his colleagues a massive industry-financed PR and advertising campaign to support his proposed corporate takeover of Medicare. If Democratic strat
egists really believe that Ryan has all but guaranteed the GOP’s demise by proposing to shred the social safety net for some of our most vulnerable citizens, they will soon be rudely disabused of that notion. The insurers and their allies have demonstrated time and again that they can persuade Americans to think and act — and vote — against their own best interests.

http://www.publicintegrity.org/articles/entry/3127/

Corvallis (Ore.) City Council endorses single-payer system

PNHP note: Nancy Raskauskas of the Corvallis Gazette-Times, in her April 4 story about the Corvallis City Council’s meeting that same day, notes: “The council voted 6-3 in favor of supporting House Bill 3510 which would create a single payer health care system for Oregon.” The text of the council’s resolution follows. A list of other city governments who have endorsed single payer can be found here.

Resolution as proposed by Dr. Hank Elder to the City Council of the City of Corvallis on March 23, 2011:

WHEREAS, the City Council of the City of Corvallis believes that every citizen and family in our city, county, the state of Oregon, and the United States will benefit from affordable, quality health care, and the City Council believes that disruptive health care costs to local economies and governments would be reduced thereby; and

WHEREAS, over 85 million Americans have major health care insurance problems, including 40 million Americans currently uninsured and more than 45 million Americans nationwide currently under-insured; the burden on both small and large employers, both private and public, of providing employee health insurance is becoming increasingly difficult and prohibitively expensive, which impacts their ability to remain competitive; and

WHEREAS, as a major local employer, the City of Corvallis provides health insurance for over 400 employees and their families and has worked for many years to provide cost effective, responsive health care insurance through an investment in health strategy and partnerships with other employers, and yet has still experienced rapid increases in health care premiums and expenses; and

WHEREAS, such matters as health care affordability and access ultimately are community issues with local importance and long-term impacts that strain local government budgets in diverse ways, such as public safety and school health issues; and

WHEREAS, the Corvallis Vision 2020 Statement references such impacts and sets a community goal for comprehensive health services that are easily accessible and available to all residents; and

WHEREAS, Americans spend more for health care as a percentage of Gross Domestic Product than any other industrially developed nation; and America unlike other developed nations has a fragmented health care delivery system, which contributes to higher costs and inefficiencies; and

WHEREAS, even those people who have health insurance experience high medical debt, and medical costs are a frequent cause of filing personal bankruptcy for those that are insured as well as those who lack insurance; and

WHEREAS, numerous reports show that private insurance systems have significantly higher administrative costs compared to public single-payer systems such as Medicare and the Veterans Administration and that bills have been filed in Congress seeking single-payer comprehensive health system reform, including H.R. 676 (Improved Medicare for All); and

WHEREAS polls taken among American physicians show that a significant majority believe that single-payer systems offer the best method of securing affordable health care and these opinions are shared by other health care professionals as indicated by endorsements from the National Medical Association, American Medical Women’s Association, American Medical Student Association, American Association of Community Psychiatrists, American Nurses Association, California Nurses Association/National Nurses Organizing Committee, Oregon Chapter Academy of American Family Physicians, and the American Public Health Association; and

WHEREAS, single-payer systems have been endorsed by local governmental units such as the U.S. Conference of Mayors and the Lane County Board of Commissioners; and

WHEREAS, the City of Corvallis is involved in health reform discussions through its membership in the Oregon Healthcare Purchasers Coalition and its own health care and wellness programs as well as providing services to the community in support of healthy and active living; and

WHEREAS, health care reform efforts are aimed at improving access and affordability of health care as well as transparency of cost and performance information and provider and consumer incentives for wise use of health care and engagement in wellness and prevention;

NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF CORVALLIS RESOLVES that the City Council, in order to support access for all Americans especially the citizens of Corvallis like citizens of other developed nations to higher quality and effective health care urges the Oregon Congressional Delegation and the United States Congress to enact H.R. 676 or a modification thereof.

That the City Council urges the Oregon state legislature to enact H.B. 3510 or S.B. 888 or a modification thereof.

That the City Council hereby direct the Mayor to send a copy of this resolution to the Corvallis Gazette-Times and the Oregon State University Barometer, radio and television stations and to our federal representatives and state representatives for their due consideration and enactment.

CBO: Medicare privatization would increase costs

Long-Term Analysis of a Budget Proposal by Chairman Ryan

Congressional Budget Office
April 5, 2011

A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization stemming from two sources. First, private health insurers would probably impose greater utilization management than occurs in Medicare. Second, private plans might restrict enrollees’ ability to purchase supplemental insurance plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare, and that increased cost sharing would encourage lower utilization. On net, for a typical 65-year-old in 2011, CBO estimates that average spending in traditional Medicare will be 89 percent of (that is, 11 percent less than) the spending that would occur if that same package of benefits was purchased from a private insurer.

http://www.cbo.gov/ftpdocs/121xx/doc12128/04-05-Ryan_Letter.pdf

Comment:

By Don McCanne, MD

House Budget Chair Paul Ryan’s proposal for Medicare has two primary goals. It would end Medicare as a government program and shift it to private insurers, and it would reduce the government’s payments to the program, shifting more of the costs to the Medicare beneficiaries.

This analysis by the Congressional Budget Office demonstrates that not only would the Medicare beneficiaries receive less care and have to pay more for it, but in the first year alone, the total costs would be significantly higher using private plans than it would be using the traditional Medicare program. Medicare is able to provide health care for 11 percent less than the total costs through private insurers.

In a way we can thank Congressman Ryan for showing us once again why we should abandon the private insurers and adopt an improved Medicare program that covers everyone.

CBO: Medicare privatization would increase costs

Long-Term Analysis of a Budget Proposal by Chairman Ryan

Congressional Budget Office
April 5, 2011

A private health insurance plan covering the standardized benefit would, CBO estimates, be more expensive currently than traditional Medicare. Both administrative costs (including profits) and payment rates to providers are higher for private plans than for Medicare. Those higher costs would be offset partly but not fully by savings from lower utilization stemming from two sources. First, private health insurers would probably impose greater utilization management than occurs in Medicare. Second, private plans might restrict enrollees’ ability to purchase supplemental insurance plans; enrollees would thus face higher out-of-pocket costs than they do in Medicare, and that increased cost sharing would encourage lower utilization. On net, for a typical 65-year-old in 2011, CBO estimates that average spending in traditional Medicare will be 89 percent of (that is, 11 percent less than) the spending that would occur if that same package of benefits was purchased from a private insurer.

http://www.cbo.gov/ftpdocs/121xx/doc12128/04-05-Ryan_Letter.pdf

In a way we can thank Congressman Ryan for showing us once again why we should abandon the private insurers and adopt an improved Medicare program that covers everyone.

For evidence-based health policy in Vermont

By Kip Sullivan, J.D.

The link below will take the reader to a March 28 letter from Kip Sullivan, J.D., to the Health and Welfare Committee of the Vermont Senate. It contains his reply to follow-up questions asked by several senators in the wake of his official testimony before them on March 24 in Montpelier, Vt.

The letter addresses questions such as the fee-for-service method of paying doctors; the overuse or underuse of health care; the impact of managed care programs (including HMOs) on quality of care; “pay for performance” proposals; the role of prevention, disease management, electronic medical records, and quality improvement measures; and the likely role of “accountable care organizations” (ACOs). Sullivan’s letter contains extensive data and documentation and is therefore a valuable resource for anyone who is more broadly interested in these matters, not only as they apply to Vermont.

Kip Sullivan is a health policy researcher and member of the steering committee of the Minnesota chapter of Physicians for a National Health Program.

Click here to read the letter.

Comment:

Long-Term Analysis of a Budget Proposal by Chairman Ryan

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