PNHP

Private insurers cause health care heartbreak

Private insurers cause health care heartbreak

Letters to the Editor
Herald Leader (Lexington, KY)
Tuesday, Jul. 27, 2010

As a dedicated activist for single-payer health care, it has become crystal clear to me that the private, for-profit health insurance companies are the biggest detriment to having a health care system in the United States that is comparable to the rest of the developed nations of the world.

I have been exposed to thousands of heartbreaking stories and situations over the last two years; all unnecessary had we had a universal health care system without Wall Street-obligated private insurers.

Bruce Barry, a professor of management and sociology at Vanderbilt University, said it best: “Health insurance in a civilized society is a collective moral obligation, not a discretionary consumer good. It’s somewhat analogous to national defense: We strive to safeguard everyone from the unpredictable consequences of an unforeseen tragedy, not just those who can find room in their household budgets to pony up for defense spending.”

The private, for-profit insurance companies are evil, cruel and socially destructive. They are a parasitic middleman when they take your insurance dollar and suck out as much as they can (up to 31 percent) for administrative expenses. I have asked hundreds of people to give me one positive benefit that the private health insurers create for the individual health care consumer. So far, no one has been able give me an answer.

Medicare celebrates its 45th birthday July 30. This popular, publicly funded, privately managed single-payer system is the answer to let all our citizens exit the misery of our current health care system.

Bill Mahan
Lexington, KY

http://www.kentucky.com/2010/07/27/1364805/letters-7272010.html#ixzz0uuB7r8OU

John Geyman's "Hijacked"

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010
On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.
On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:
• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.
(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)
http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”
–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine
“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”
–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

John Geyman’s “Hijacked”

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010

On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)

http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”

–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine

“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”

–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

Private insurers shut doors on children with preexisting disorders

Insurers to Comply With Rules on Children

By Robert Pear
The New York Times
March 30, 2010

Under pressure from the White House, health insurance companies said Tuesday (March 30) that they would comply with rules to be issued soon by the Obama administration requiring them to cover children with pre-existing medical problems.

“Health plans recognize the significant hardship that a family faces when they are unable to obtain coverage for a child with a pre-existing condition,” said Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group. Accordingly, she said, “we await and will fully comply with” the rules.

The White House immediately claimed victory.

In a Twitter message, Robert Gibbs, the White House press secretary, scored the tug of war as “Kids 1, insurance 0.”

http://www.nytimes.com/2010/03/31/health/policy/31health.html?_r=1

And…

Some insurers stop writing new coverage for kids

By Ricardo Alsonso-Zaldivar
Philly.com
July 27, 2010

Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems – a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

The major types of coverage for children – employer plans and government programs – are not affected by the disruption. But a subset of policies – those that cover children as individuals – may run into problems. Even so, insurers are not canceling children’s coverage already issued, but refusing to write new policies.

In Florida, Blue Cross and Blue Shield , Aetna, and Golden Rule – a subsidiary of UnitedHealthcare – notified with the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.

(Blue Cross and Blue Shield of Florida) vice president Randy Kammer said the company’s experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.

“We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims,” said Kammer. “Guaranteed issue means you could technically buy it on the way to the hospital.”

Kammer said the company did not make the decision lightly. “We were looking at all our other individual policy holders who pay a lot for coverage, and we didn’t think it was fair to give them that kind of an increase to benefit a small population that receives a greater advantage than they do,” she said.

http://www.philly.com/philly/business/personal_finance/072710_no_new_kid_coverage.html

Comment:

By Don McCanne, MD

In several speeches about the Patient Protection and Affordable Care Act, President Obama extolled the immediate end of insurers denying coverage to children with preexisting conditions. He was wrong. His miscalculation stems from the fact that he seemed to trust the insurers to do the right thing for patients instead of continuing to place their own business interests first.

Although the insurers can no longer reject a child with preexisting disorders, they can close the plan to new enrollees. As a business decision, that is what many are doing. A social good is not part of their business model.

Although White House press secretary Robert Gibbs scored this as “Kids 1, Insurance 0,” it’s really “Insurance 1, Kids disqualified.”

That the insurers placed business first should come as no surprise to anyone. AHIP’s lobbyist Karen Ignagni continued with the “await and comply” position on the regulations that former WellPoint vice president Liz Fowler is helping to write. Compliance is easy for them when the rules are written to support the insurers’ business model.

Proving that the private insurers have learned nothing, Blue Cross and Blue Shield of Florida vice president Randy Kammer repeats the long held position of private insurers that they didn’t think that it was fair to increase premiums for all of the policy holders merely “to benefit a small population that receives a greater advantage” than the rest of the policy holders. Because it interferes with their business model, they refute the fundamental principle that the primary purpose of health insurance is to transfer funds from the many willing who are healthy to the few who have greater health care needs.

The exchanges won’t be in effect until 2014, and yet we’re already seeing this sterile, perverse behavior on the part of the insurers. Denying children with health care needs the right to buy insurance is only the bare beginning. There is absolutely no way that the regulators can preempt the negative impact of the unlimited innovations that insurers will introduce, especially after the insurance exchange infrastructures are solidly in place.

Businesses do what businesses have to do. Voters need to do what voters have to do. We have to eliminate the private business intermediaries and establish our own public insurance program that has a social mission of patient service.

The Luck of the Irish: Why we Need National, Single-Payer Health Care in the U.S.

By Helen Redmond LCSW
FireDogLake
July 26, 2010

As a medical social worker, I followed the story of Natasha McShane with horror and hope.

The luck of the Irish was not with 23 year-old Natasha McShane on the night of April 23rd. The exchange student from Belfast, Northern Ireland, was beaten with a bat and suffered a traumatic brain injury (TBI). She was rushed to Illinois Masonic Medical Center in critical condition and doctors weren’t sure she would live. Natasha did live and so began her odyssey through the for-profit American health care system.

Natasha was a student at the University of Illinois at Chicago when she was attacked. Students at UIC are required to have health insurance and many have CampusCare  a bare bones HMO. The coverage is expensive; $471 a semester. If Natasha had CampusCare, she was out of luck the second the bat crashed into her cranium. That’s because there’s a lifetime maximum benefit of $500,000 and a $2500 maximum drug benefit per year. The injuries Natasha sustained were catastrophic (she was in a medically induced coma for the first month) and required a vast array of medical resources: surgeries, anesthesia, x-rays, IV medications and round-the-clock monitoring by a coterie of highly trained specialists. In less than four weeks in the intensive care unit she would have reached the cap on the lifetime benefit and the drug benefit, in one hour.

Natasha was transferred to Northwestern Memorial Hospital and finally to the Rehabilitation Institute of Chicago. At RIC, Natasha began rehab with a team of physical and occupational therapists, speech language pathologists, social workers, nurses, neurologists and physiatrists.

The health care professionals that treated Natasha saw one thing only: a patient in need of treatment. The three hospital billing departments on the other hand saw the need to send bills which reached astronomical levels. If Natasha was a resident of the United States she probably would have declared bankruptcy. Instead, her parents Liam and Sheila McShane did what thousands of uninsured and under-insured Americans do when they can’t pay medical bills; start fundraising. All over the country medically indigent Americans plan pancake breakfasts, backyard barbecues, bake sales, bar nights, raffles and walk-a-thons. They set up websites that reveal diagnosis and cost of treatment in order to solicit donations. In the richest country in the world, people have to beg, borrow and plead for charity to pay for health care. It is humiliating.

With the help of the Irish community, the McShane’s organized a fundraiser at Cans Bar and Canteen with 15 percent of the bar’s sales given to Natasha. There was a silent auction and a “Natasha McShane Day.” A website titled, Natasha McShane Fund (http://mcshanefund.com) was launched. An astonishing $400,000 was raised and is an example of the enormous amount of sympathy and solidarity ordinary people have for someone in need.

The McShane’s had to wonder why the American health care system doesn’t confer health care as a right for all because they are from Ireland which does. Ireland has a government run, national health care system funded by taxes that covers everyone. Fundraisers at pubs to save people from medical bankruptcy are unheard of. Not even a bad Irish joke.

The luck of the Irish returned to Natasha the second week of July. She was medavaced back home to Ireland. The staff at the Royal Victoria Hospital in Belfast was waiting to admit her. The family must have sighed with collective relief when the plane touched down at Belfast International Airport. The McShane’s wouldn’t get one single bill for the medical care their daughter would now receive. They could focus exclusively on Natasha’s rehabilitation and planning for her future.

I humbly apologize to Natasha McShane for the double assault she endured in my country – the assault with the bat that changed her life forever and the assault of the bills her parents are still trying to pay.

http://seminal.firedoglake.com/diary/61988

Who Tells the Dead Patient Stories Now?

by Donna Smith
CommonDreams.org
Tuesday, July 27, 2010

Since the health insurance reform bill passed this past spring, you’d think we suddenly stopped having American patients die and suffer unimaginable horror at the hands of the corporate owned and operated healthcare business system in the United States.  No one tells the stories. The reality is that patients were props, and they just aren’t needed as props any more.

An estimated 45,000 preventable deaths occurring in these United States annually due to the lack of access to appropriate healthcare marches on.  That does not account for those dead from other preventable causes like medical error.  45,000 every year.  That’s 123 dead every day.  Today’s dead: 123.  Have you seen that reported anywhere?  Yesterday’s dead?  123.  Any reports?  Tomorrow’s dead?  123.  Is anyone trying to save those pending dead?

Though more Americans die preventable deaths every day without access to healthcare right here at home than die in weeks on any foreign battlefield, no one is searching for them in the wilderness of greed and profit-driven medicine.  No one needs their painful realities right now.

123  Dead today.

Patient stories were used as props by elected officials, mainstream and alternative media members and groups, advocacy groups and think tanks.  Relatives of dead patients made especially good fodder for the debates.  Moms and dads of dead kids were prime targets to stand up on stages, sit at witness tables and have their names and details of the loved-one’s death shared with the world.   Cancer patients who could not access care were pretty valuable too.  If they could still stand, think and talk, cancer patients made for great photo-ops for all and better fundraising tools for others.

123 dead tomorrow.

Some may say this is to be understood as the nation has moved on to other issues following the passage of the health insurance bail-out bill –  we are now worried about jobs, the oil spill,  the Arizona immigration bigotry, the leak of documents on the Afghan war.  All critical issues to be sure. Some may add that we’ll just have to wait and see if those numbers drop in 2014 or 2016 or 2018 as parts of the health insurance reform bill unfold

123 dead yesterday. Those insistent dead just don’t stop dying.  They aren’t waiting for a third political party to emerge.  They are the dead and the dying.

Patients are dying and suffering every single day in larger numbers even as the weeks of recession roll on and medical providers become even more tightly controlled about uncompensated and undercompensated care – meaning they are protecting their bottom lines too and uncompensated care is the term used for patients who come without any means of payment or with inadequate means of payment.  Patients are suffering more, not less.  Payments are demanded up front.  Patients cannot pay the thousands or even the hundreds required for treatment.  More death, not less.

123 people today will not die pretty, gentle, fade away in their sleep deaths with tearful loved ones at their sides.  They may have spent weeks or even months begging for someone to treat them.  They may have been working even weeks ago or days ago but unable to get past the co-pay and deductibles of their insurance to get early treatment and unable to slack off for even one moment on their jobs lest an opportunistic employer decide to lay people off based on unspoken measures of value, like use of sick time for doctor visits.  They will die after arguments and struggles with those they leave behind as the financial pressures mounted and their illnesses deepened.

I searched every news outlet page I could find to see if anyone was reporting on yesterday’s dead.  No one did.  123 people died, and few people even noticed their passing.  I searched to see if anyone was reporting the impending slaughter of 123 innocents in the United States today, and no one is reporting on it.

Along with the 45,000 dead, we allowed 700,000 patients and their families to go belly-up financially in 2009. In the U.S., medical crisis leads to more than 50 percent of the personal bankruptcies (and of those patients, 75 percent had health insurance).  So, as we saw personal bankruptcy filings rise 31.9 percent overall in 2009, we also added more patients and their families into our deadbeat files.  Even if those folks get well physically, we’ll punish them forever for having gone broke.  Bankruptcy bruised credit takes years to repair.

123 dead today. 1,917 going broke today in the midst of medical crisis.  In this nation. Yet no one reports.  No one.

The one thing I know for sure is that the patient horror stories were certainly an integral part of the fuel that moved any debate on health reform to take place at all.  The dead and dying made for a better frame for press pieces than simply selling health reform as a way to bail out the private, for-profit health insurance industry and bolster the medical-industrial complex overall.  Patients are necessary in this system and in the debate only to the extent that without them you cannot run the engines of medical profit.

123 dead.  1,917 in financial collapse.  Homes lost.  Futures torn apart.  And no one reports.

There are those who still clamor for real transformation of the U.S. healthcare system from the for-profit model to a social insurance model like extending and improving Medicare for all.  But even many of those people have somehow decided that it’s only the money arguments that need to be made – only the profit-takers who need convincing with the language of more profit and fortunes still to be made.

I disagree.  I think someone must have the courage to keep reporting the healthcare war dead.  In fact, I believe their faces and their names ought to be more prominent as we go forward as measures of what we are allowing to be done to our fellow human beings in this nation.

123 dead yesterday.  123 dead today.  123 yet to die tomorrow.  Since the passage of the health insurance reform bill in March 2010, 14,670 American patients are dead.  And no one spoke their names.   The day we become a nation that turns its back on that much death and suffering is the day we have lost much more than a political battle — we’ve lost our collective soul.

Donna Smith is a community organizer for National Nurses United (the new national arm of the California Nurses Association) and National Co-Chair for the Progressive Democrats of America Healthcare Not Warfare campaign.

http://www.commondreams.org/view/2010/07/27-0

Private insurers shut doors on children with preexisting disorders

Insurers to Comply With Rules on Children

By Robert Pear
The New York Times
March 30, 2010
Under pressure from the White House, health insurance companies said Tuesday (March 30) that they would comply with rules to be issued soon by the Obama administration requiring them to cover children with pre-existing medical problems.
“Health plans recognize the significant hardship that a family faces when they are unable to obtain coverage for a child with a pre-existing condition,” said Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group. Accordingly, she said, “we await and will fully comply with” the rules.
The White House immediately claimed victory.
In a Twitter message, Robert Gibbs, the White House press secretary, scored the tug of war as “Kids 1, insurance 0.”
http://www.nytimes.com/2010/03/31/health/policy/31health.html?_r=1

And…

Some insurers stop writing new coverage for kids

By Ricardo Alsonso-Zaldivar
Philly.com
July 27, 2010
Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems – a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.
The major types of coverage for children – employer plans and government programs – are not affected by the disruption. But a subset of policies – those that cover children as individuals – may run into problems. Even so, insurers are not canceling children’s coverage already issued, but refusing to write new policies.
In Florida, Blue Cross and Blue Shield , Aetna, and Golden Rule – a subsidiary of UnitedHealthcare – notified with the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.
(Blue Cross and Blue Shield of Florida) vice president Randy Kammer said the company’s experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.
“We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims,” said Kammer. “Guaranteed issue means you could technically buy it on the way to the hospital.”
Kammer said the company did not make the decision lightly. “We were looking at all our other individual policy holders who pay a lot for coverage, and we didn’t think it was fair to give them that kind of an increase to benefit a small population that receives a greater advantage than they do,” she said.
http://www.philly.com/philly/business/personal_finance/072710_no_new_kid_coverage.html

In several speeches about the Patient Protection and Affordable Care Act, President Obama extolled the immediate end of insurers denying coverage to children with preexisting conditions. He was wrong. His miscalculation stems from the fact that he seemed to trust the insurers to do the right thing for patients instead of continuing to place their own business interests first.
Although the insurers can no longer reject a child with preexisting disorders, they can close the plan to new enrollees. As a business decision, that is what many are doing. A social good is not part of their business model.
Although White House press secretary Robert Gibbs scored this as “Kids 1, Insurance 0,” it’s really “Insurance 1, Kids disqualified.”
That the insurers placed business first should come as no surprise to anyone. AHIP’s lobbyist Karen Ignagni continued with the “await and comply” position on the regulations that former WellPoint vice president Liz Fowler is helping to write. Compliance is easy for them when the rules are written to support the insurers’ business model.
Proving that the private insurers have learned nothing, Blue Cross and Blue Shield of Florida vice president Randy Kammer repeats the long held position of private insurers that they didn’t think that it was fair to increase premiums for all of the policy holders merely “to benefit a small population that receives a greater advantage” than the rest of the policy holders. Because it interferes with their business model, they refute the fundamental principle that the primary purpose of health insurance is to transfer funds from the many willing who are healthy to the few who have greater health care needs.
The exchanges won’t be in effect until 2014, and yet we’re already seeing this sterile, perverse behavior on the part of the insurers. Denying children with health care needs the right to buy insurance is only the bare beginning. There is absolutely no way that the regulators can preempt the negative impact of the unlimited innovations that insurers will introduce, especially after the insurance exchange infrastructures are solidly in place.
Businesses do what businesses have to do. Voters need to do what voters have to do. We have to eliminate the private business intermediaries and establish our own public insurance program that has a social mission of patient service.

AHIP on medical loss ratios

Implementing Medical Loss Ratio (MLR) Requirements to Improve Quality, Promote Choice, and Avoid Disruptions in Coverage

America’s Health Insurance Plans (AHIP)
July, 2010

The “Patient Protection and Affordable Care Act” (PPACA) requires health plans, beginning in 2011, to meet a medical loss ratio (MLR) requirement of 80 percent in the individual and small group markets and 85 percent in the large group market. This means that plans must spend a specified percentage of premium revenue on either reimbursement for clinical services provided to enrollees or “activities that improve health care quality.”

Goal #1

Ensure That Existing Efforts to Improve Quality are Allowed to Continue and New Initiatives to Support the Goals of PPACA are Not Discouraged

(Examples: nurse care managers, maternity managed care programs, and imaging managed care programs, as programs that improve quality)

Goal #2

Recognize That Quality Improvement Efforts Will Be Advanced By ICD-10 Implementation

The startup costs associated with implementing the International Classification of Diseases 10 classification system (ICD-10) by 2013 should be defined as an “activity that improves health care quality.”

ICD-10 is a quality, not a claims payment, initiative.

Goal #3

Include Fraud Prevention and Detection Activities that Improve Quality

The definition of “activities that improve health care quality” should include the expenses health plans are required to make for fraud prevention activities.

Goal #4

Implement a Transition Plan to Maximize Consumer Choice

PPACA provides for the implementation of comprehensive insurance market reforms in 2014, including the creation of state health insurance exchanges. Until that time, consumers in the individual market will rely on brokers to review their insurance options and consider which ones best suit their needs. For health plans, four-fifths of the individual market will remain medically underwritten, guided by the rules and regulations in each state. A transition policy is needed to move from the current system to the new system that will be created in 2014 and to allow individuals to maintain their coverage.

The NAIC (National Association of Insurance Commissioners) is charged with the responsibility to develop MLR methodologies that take into account special circumstances. This means that Congress intended for the NAIC to exercise its expertise to make adjustments to the MLR to ensure that consumers are not harmed and that competition is not decreased.

http://americanhealthsolution.org/assets/Uploads/Blog/AHIP-MLR-Paper.pdf

Comment: 

By Don McCanne, MD

In what might be perceived as private insurer chicanery, the industry’s lobby organization, AHIP, is capitalizing on phrasing in the Patient Protection and Affordable Care Act that defines the minimum percent of benefits that the insurers must pay out (medical loss ratio or MLR) as including not only reimbursement for clinical services but also for “activities that improve health care quality.”

Thus any of their administrative functions that they can pass off as improvements in quality will not apply to the 15 percent (large group) or 20 percent (individual or small group) caps on administrative spending. That allows the industry to perpetuate its pattern of profound administrative excesses and very high profits (outrageously high when considered as a percentage of their actual product – the administrative services that they are selling us).

In this report, what are they trying to pass off as quality? 1) Intrusive care managers who are employed to save money. 2) Implementation of diagnostic codes used for claims payments. 3) Administrative functions to detect fraud. 4) Perpetuating medical underwriting during the transition to cover “special circumstances” to ensure that “consumers are not harmed and that competition is not decreased.” That’s code for perpetuating the perversities of adverse selection.

The impact of this relabeling of administrative services as quality improvements is to allow the insurers to retain a greater percentage of the premium dollars for their own intrinsic purposes. The consumer pays for this either through higher premiums or decreased health care benefits.

An extremely important unintended consequence of fixed medical loss ratios has been mentioned here before, but seems to have escaped the mainstream media, so it is being repeated: Once the MLR rules are established, the primary method by which insurers can increase the services they sell us, while increasing their profits, is by increasing gross revenues, since they are guaranteed a fixed percentage of those revenues. The most effective way to increase gross revenues is to increase the amount of health care services authorized and paid for.

If the insurers change provider incentives to double the amount of health care that is being delivered, they can double their own total revenues, keeping even more as profit because of the smaller marginal administrative costs of paying for more care. This incentive of the insurers to increase total health care spending is the exact opposite of the reform goal of slowing future health care cost increases

All of this is good business. But that’s the problem. Our elected representatives chose a business model to finance health care when what we desperately need is a service model.

“Medical loss ratio” is a term that needs to be moved into the history books of failed policy concepts. Instead, we need our own public service model – an improved Medicare for everyone.

Two-thirds of Americans support Medicare for all

By Kip Sullivan
PNHP Blog, December 2009

This six-part series, originally posted on PNHP’s blog, explores the research on American attitudes about a single-payer (or Medicare-for-all) system to evaluate the truth of the new version of the “yes but” argument. We will see that the research demonstrates that approximately two-thirds of Americans support a Medicare-for-all system despite constant attacks on Medicare and the systems of other countries by conservatives. The evidence supporting this statement is rock solid. The evidence against it — the focus group and polling “research” commissioned by the “option” movement’s founders — is defective, misinterpreted, or both.

Click here to download “Two-thirds of Americans support Medicare for all” (pdf)

AHIP on medical loss ratios

Implementing Medical Loss Ratio (MLR) Requirements to Improve Quality, Promote Choice, and Avoid Disruptions in Coverage

America’s Health Insurance Plans (AHIP)
July, 2010
The “Patient Protection and Affordable Care Act” (PPACA) requires health plans, beginning in 2011, to meet a medical loss ratio (MLR) requirement of 80 percent in the individual and small group markets and 85 percent in the large group market. This means that plans must spend a specified percentage of premium revenue on either reimbursement for clinical services provided to enrollees or “activities that improve health care quality.”
Goal #1
Ensure That Existing Efforts to Improve Quality are Allowed to Continue and New Initiatives to Support the Goals of PPACA are Not Discouraged
(Examples: nurse care managers, maternity managed care programs, and imaging managed care programs, as programs that improve quality)
Goal #2
Recognize That Quality Improvement Efforts Will Be Advanced By ICD-10 Implementation
The startup costs associated with implementing the International Classification of Diseases 10 classification system (ICD-10) by 2013 should be defined as an “activity that improves health care quality.”
ICD-10 is a quality, not a claims payment, initiative.
Goal #3
Include Fraud Prevention and Detection Activities that Improve Quality
The definition of “activities that improve health care quality” should include the expenses health plans are required to make for fraud prevention activities.
Goal #4
Implement a Transition Plan to Maximize Consumer Choice
PPACA provides for the implementation of comprehensive insurance market reforms in 2014, including the creation of state health insurance exchanges. Until that time, consumers in the individual market will rely on brokers to review their insurance options and consider which ones best suit their needs. For health plans, four-fifths of the individual market will remain medically underwritten, guided by the rules and regulations in each state. A transition policy is needed to move from the current system to the new system that will be created in 2014 and to allow individuals to maintain their coverage.
The NAIC (National Association of Insurance Commissioners) is charged with the responsibility to develop MLR methodologies that take into account special circumstances. This means that Congress intended for the NAIC to exercise its expertise to make adjustments to the MLR to ensure that consumers are not harmed and that competition is not decreased.
http://americanhealthsolution.org/assets/Uploads/Blog/AHIP-MLR-Paper.pdf

In what might be perceived as private insurer chicanery, the industry’s lobby organization, AHIP, is capitalizing on phrasing in the Patient Protection and Affordable Care Act that defines the minimum percent of benefits that the insurers must pay out (medical loss ratio or MLR) as including not only reimbursement for clinical services but also for “activities that improve health care quality.”
Thus any of their administrative functions that they can pass off as improvements in quality will not apply to the 15 percent (large group) or 20 percent (individual or small group) caps on administrative spending. That allows the industry to perpetuate its pattern of profound administrative excesses and very high profits (outrageously high when considered as a percentage of their actual product – the administrative services that they are selling us).
In this report, what are they trying to pass off as quality? 1) Intrusive care managers who are employed to save money. 2) Implementation of diagnostic codes used for claims payments. 3) Administrative functions to detect fraud. 4) Perpetuating medical underwriting during the transition to cover “special circumstances” to ensure that “consumers are not harmed and that competition is not decreased.” That’s code for perpetuating the perversities of adverse selection.
The impact of this relabeling of administrative services as quality improvements is to allow the insurers to retain a greater percentage of the premium dollars for their own intrinsic purposes. The consumer pays for this either through higher premiums or decreased health care benefits.
An extremely important unintended consequence of fixed medical loss ratios has been mentioned here before, but seems to have escaped the mainstream media, so it is being repeated: Once the MLR rules are established, the primary method by which insurers can increase the services they sell us, while increasing their profits, is by increasing gross revenues, since they are guaranteed a fixed percentage of those revenues. The most effective way to increase gross revenues is to increase the amount of health care services authorized and paid for.
If the insurers change provider incentives to double the amount of health care that is being delivered, they can double their own total revenues, keeping even more as profit because of the smaller marginal administrative costs of paying for more care. This incentive of the insurers to increase total health care spending is the exact opposite of the reform goal of slowing future health care cost increases
All of this is good business. But that’s the problem. Our elected representatives chose a business model to finance health care when what we desperately need is a service model.
“Medical loss ratio” is a term that needs to be moved into the history books of failed policy concepts. Instead, we need our own public service model – an improved Medicare for everyone.

Using single payer to establish political credibility

Democrats spar over health care claim

WCAX.com
July 21, 2010

The gloves are off in the fight for the Democratic nomination for governor (Vermont). Former State Senator Matt Dunne is calling out Senator Peter Shumlin for what he says is a troubling misstatement.

Peter Shumlin first said it two weeks ago in an online questionnaire, then again this week in a mailing to voters: “I am the only candidate who sponsored a single-payer health care bill.” Dunne says that is simply not true.

“The facts are that I also sponsored a single-payer health care bill,” Dunne told reporters outside the Statehouse Wednesday.

He did. During the 1993-1994 legislative session when Dunne was serving as a State Representative he co-sponsored a bill that would have created a single-payer system. He wants a public retraction of Shumlin’s claim and is requesting that Shumlin send out another mailer with the correction.

“It is critically important that Peter Shumlin take action and take action quickly to correct the record, to be clear in public that he was factually wrong,” says Dunne.

http://www.wcax.com/Global/story.asp?S=12850303

Comment: 

By Don McCanne, MD

When two candidates for governor are engaged in a political skirmish as to which one is the bona fide single payer supporter, then we know that single payer is back on the table (at least in Vermont).

James K. Galbraith Blasts Deficit Commission

We print below excerpts on Social Security, Medicare and the nature of the Deficit Commission itself from the testimony of James K. Galbraith, Lloyd M. Bentsen, Jr., Chair in Government/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin, before the Commission of Deficit Reduction, June 30, 2010.  Professor Galbraith’s full statement can be found here: http://www.angrybearblog.com/2010/07/professor-jamie-galbraiths-testimony-to.html

”Mr. Chairmen, members of the commission, thank you for inviting this statement.

I am a professional economist, but I have served in a political role, as Executive Director of the Joint Economic Committee of the United States Congress. I am offering this statement on behalf of Americans for Democratic Action, an organization co-founded in 1949 by (among others) Eleanor Roosevelt, John Kenneth Galbraith, Arthur M. Schlesinger, jr., and Ronald Reagan. Accordingly I would like to begin with a political comment.

1. Clouds Over the Work of the Commission.

Your proceedings are clouded by illegitimacy. In this respect, there are four major issues.

First, most of your meetings are secret, apart from two open sessions before this one, which were plainly for show. There is no justification for secret meetings on deficit reduction. No secrets of any kind are involved. Nothing you say will affect financial markets. Congress long ago — in 1975 — reformed its procedures to hold far more sensitive and complicated meetings, notably legislative markups, in the broad light of day.

Secrecy breeds suspicion: first, that your discussions are at a level of discourse so low that you feel it would be embarrassing to disclose them. Second, that some members of the commission are proceeding from fixed, predetermined agendas. Third, that the purpose of the secrecy is to defer public discussion of cuts in Social Security and Medicare until after the 2010 elections. You could easily dispel these suspicions by publishing video transcripts of all of your meetings on the Internet, and by holding all future meetings in public. Please do so.

Second, there is a question of leadership. A bipartisan commission should approach its task in a judicious, open-minded and dispassionate way. For this, the attitude and temperament of the leadership are critical.

I first met Senator Simpson when we were both on Capitol Hill; at Harvard he became friends with my late parents. He is admirably frank in his views. But Senator Simpson has plainly shown that he lacks the temperament to do a fair and impartial job on this commission. This is very clear from the abusive response he made recently to Alex Lawson of Social Security Works, who was asking important questions about the substance of the commission’s work, as well as calling attention to the illegitimate secrecy under which you are operating.

A general cannot speak of the President with contempt. Likewise the leader of a commission intended to sway the public cannot display contempt for the public. With due respect, Senator Simpson’s conduct fails that test.

Third, most members of the Commission are political leaders, not economists. With all respect for Alice Rivlin, with just one economist on board you are denied access to the professional arguments surrounding this highly controversial issue. In general, it is impossible to have a fair discussion of any important question when the professional participants in that discussion have been picked, in advance, to represent a single point of view.

Conflicts of interest constitute the fourth major problem. The fact that the Commission has accepted support from Peter G. Peterson, a man who has for decades conducted a relentless campaign to cut Social Security and Medicare, raises the most serious questions. Quite apart from the merits of Mr. Peterson’s arguments, this act must be condemned. A Commission serving public purpose cannot accept funds or other help from a private party with a strong interest in the outcome of that Commission’s work. Your having done so is a disgrace.

In my view you also should not have accepted help from the Economic Policy Institute, even though EPI’s positions on the merits are substantially closer to mine.

Let me now turn to the economic questions….

6. Social Security and Medicare “Solvency” is not part of the Commission’s Mandate.

I note from Chairman Simpson’s conversation with Alex Lawson that the Commission has taken up the questions of the alleged “insolvency” of the Social Security system and of Medicare. If true, this is far outside any mandate of the Commission. Your mandate is strictly limited to matters relating to the deficit, debt-to-GDP ratio and fiscal stability of the U.S. Government as a whole. Social Security and Medicare are part of the government as a whole, so it is within your mandate to discuss those programs — but only in that context.

To make recommendations about the matching of benefits to payroll taxes — now or in the future — would be totally inappropriate. Within your mandate, the levels of payroll taxes and of Social Security benefits are relevant only insofar as they influence the current and future fiscal position of the government as a whole. Their relationship to each other is not relevant. You are not a “Social Security Commission” and there is no provision in your Charter for a separate discussion of the alleged financial condition of either program taken on its own. Such discussions, if they are occurring, should be subjected to a point of order.

The usual “solvency” arguments directed at the Social Security system and at Medicare as separate entities are in any event complete nonsense. These programs are just programs, like any others, in the Federal Budget, and the Social Security and Medicare “systems” are thus fully solvent so long as the Federal Government is. Further, as explained below, under our monetary arrangements there is no “solvency” issue for the federal government as a whole. The federal government is “solvent” so long as U.S. banks are required to accept US. Government checks — which is to say so long as there is a Federal authority in the Republic. This point has been demonstrated repeatedly in times of stress, notably during the Civil War and World War II.

7. As a Transfer Program, Social Security is Also Irrelevant to Deficit Economics.

Political discussions of “long-term fiscal sustainability” — including in the Charter for this Commission — make an economic error when they loosely use the word “entitlements” and suggest that supposed economic dangers of federal deficits (for instance, rising real interest rates) can be reduced by “entitlement reform.” As a matter of economics, this is not true.

“Government Spending” — as any textbook will verify — is a component of GDP only insofar as the spending is directly on purchases of goods and services. That alone is what economists mean by the phrase “government spending.” GDP is the final consumption of produced goods and services, and government is one of the major consuming sectors; the others being private business (investment) and households (consumption).

Social Security is a transfer program. It is not a spending program. A dollar “spent” on Social Security does not directly increase GDP. It merely reallocates a dollar from one potential final consumer (a taxpayer) to another (a retiree, a disabled person or a survivor). It also reallocates resources within both communities (taxpayers and beneficiaries). Specifically, benefits flow to the elderly and to survivors who do not have families that might otherwise support them, and costs are imposed on working people and other taxpayers who do not have dependents in their own families. Both types of transfer are fair and effective, greatly increasing security and reducing poverty — which is why Social Security and Medicare are such successful
programs.

Transfers of this kind are also indefinitely sustainable — in fact there can intrinsically be no problem of sustainability with transfer programs. Apart from their effect on individual security, a true transfer program uses (by definition) no net economic resources. The only potential macroeconomic danger from “excessive” transfers is that the transfer function may be badly managed, leading to excessive total demand and to inflation. But there is no risk of this so long as the financial crisis remains uncured. Under present conditions Social Security and Medicare are bulwarks for stabilizing a total demand that would otherwise be highly deficient.

Similarly, cutting Social Security benefits, in particular, merely transfers real resources away from the elderly and toward taxpayers, and away from the poor toward those less poor. One can favor or oppose such a move on its own merits as social policy – but one cannot argue that it would save real resources that are otherwise being “consumed” by the government sector.

The conclusion to be drawn is that Social Security should in any event be off the agenda of your Commission, as it is a transfer program and not a program of public spending in the economic sense. In particular it does not use capital resources and will not drive up interest rates. This is true whether the “Social Security System” is in internal balance or not….”

Distributed by:
All Unions Committee For Single Payer Health Care–HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217