Governor signs Ariz. budget-balancing bills

By Casey Newton
The Arizona Republic
March 18, 2010
Gov. Jan Brewer signed the fiscal 2011 budget on Thursday, enacting $1.1 billion in spending cuts and program eliminations.
The budget, passed last week by the Republican-led Legislature on largely party-line votes, drew criticism from opponents for what they called a disproportionate impact on the poor.
“I’m not sure how cutting three-quarters of a billion dollars from public education and kicking 300,000 people off of health care puts our state on the back on the road to recovery,” said Rep. Kyrsten Sinema, D-Phoenix. “In fact, it dismantles what we have been working for years to build in Arizona — a vibrant, healthy state where people want to live and work.”
One aspect of the budget expected to be challenged is a cut of $385 million to the state’s Medicaid program, the Arizona Health Care Cost Containment System.
The budget bills also eliminate KidsCare, which provided health care to 38,599 children of low-income parents.
Hours after she signed the budget, Brewer appeared at a news conference to urge opposition to federal health-care reform. Asked by reporters what the hundreds of thousands of Arizonans set to lose coverage this year should do, Brewer said they should use community health clinics and emergency rooms.
http://www.azcentral.com/news/election/azelections/articles/2010/03/18/20100318brewer-signs-budget-bills-arizona.html

Programs benefiting low income individuals and families, such as Medicaid and CHIP, are politically vulnerable to the whims of conservatives wielding budget cleavers. Gov. Jan Brewer of Arizona has just provided us with a prime example of that.  Yet popular programs benefiting everyone, such as Medicare, are relatively impenetrable to the weapons of the conservatives.
The reform proposal likely to be enacted by Congress is heavily dependent on the expansion of Medicaid. Since it is a federal/state program, it requires the support of the government on both levels. In spite of the proposed increases in federal support, Gov. Brewer continues to urge opposition to the reform proposal. Low income families will remain vulnerable in her state as long as she and her Republican colleagues remain in charge.
Suppose Congress had included single payer in their deliberations and eventually decided that the benefits were too great to pass up ,and so enacted an improved Medicare program that covered everyone. Gov. Brewer and her ilk on the state level would be powerless to stop it. It would be so popular that conservatives who managed to take over the federal government would never be able to shut the program down.
Whether or not the current bill passes, we need to make every effort to replace our expensive, fragmented, often cruel, and relatively ineffectual system of health care financing with one that works for all of us – a single payer national health program – an improved Medicare for everyone.
Or failing that, as Gov. Brewer says, we could all just go to the emergency room when we can’t get into the clinic.

By Mike Davis
The Nation
March 29, 2010

The biggest hole in California, with the exception of the current state budget, is Rio Tinto’s huge open-pit mine at the town of Boron, near Edwards Air Force Base, eighty miles northeast of Los Angeles.

The Boron pit, which replaced an underground mine, produces almost half the world’s supply of refined borates.

Once upon a time, there were several thousand mining communities in North America; perhaps fewer than a hundred still exist. Boron (unincorporated, population 2,000) is one of the survivors.

In last year’s contract negotiations, Rio Tinto (the British-Australian multinational acquired its Boron facility, U.S. Borax, in 1968 and renamed it Rio Tinto Borax) stunned members of the International Longshore and Warehouse Union, ILWU, Local 30 (Boron), by demanding abolition of the contractually enshrined seniority system and the surrender of any worker voice in the labor process.

The company wants a contract that would allow it to capriciously promote or demote; to outsource union jobs; to convert full-time to part-time positions with little or no benefits; to reorganize shift schedules without warning; to eliminate existing work rules; to cut holidays, sick leave and pension payments; to impose involuntary overtime; and to heavily penalize the union if workers file grievances against the company with the National Labor Relations Board.

“The company’s proposal,” union negotiators emphasize, “would destroy our union, lower our living standards, and give Borax total control over our jobs.” On January 30, Local 30 members unanimously rejected the concessions demanded by Rio Tinto.

The company deadline expired the next morning, when Terri Judd set off for work as usual with her lunchbox and thermos. At the locked front gate she and other day-shift workers encountered a phalanx of nervous Kern County sheriff’s deputies in full riot gear. Inside the plant, an elite “strike security team” hired by Rio Tinto had taken control of operations.

“Being locked out,” says Terri, “is different from going on strike. Initially there’s disbelief that the company is actually serious about booting you out the door. Hey, my granddad worked in this mine. But then you see that caravan of scabs coming to take your jobs, and the betrayal cuts like a knife in your heart.”

http://www.thenation.com/doc/20100329/davis/single

Comment: 

By Don McCanne, MD

Empathetic souls will find the full version of this article to be very tough reading. When the 560 wage earners unanimously rejected the demands of Rio Tinto to give up much of their job security, the company terminated all of them in a job lockout. The impact on their small community of Boron is devastating.

Even though this story is not about health care, there is a very important health policy lesson here.

These people lost company support of their health benefits program at termination. With loss of their paychecks, many of these individuals are struggling to pay their rent and to buy food. Extension of health coverage through COBRA, even with subsidies, is of no benefit if they don’t have the funds to pay for it.

And President Obama’s promise of being able to keep the insurance you have if you want to? He left off the part that says you can keep it until your COBRA runs out, and at that only if you can pay your share (and all of the other reasons why hardly anyone still has the insurance they had twenty years ago, even if they wanted to keep it).

The policy lesson is that a health care financing system should be designed to cover absolutely everyone automatically throughout life. Individuals unfortunate enough to lose their jobs shouldn’t be further penalized by losing their health care as well.

Labor War in the Mojave

By Mike Davis
The Nation
March 29, 2010
The biggest hole in California, with the exception of the current state budget, is Rio Tinto’s huge open-pit mine at the town of Boron, near Edwards Air Force Base, eighty miles northeast of Los Angeles.
The Boron pit, which replaced an underground mine, produces almost half the world’s supply of refined borates.
Once upon a time, there were several thousand mining communities in North America; perhaps fewer than a hundred still exist. Boron (unincorporated, population 2,000) is one of the survivors.
In last year’s contract negotiations, Rio Tinto (the British-Australian multinational acquired its Boron facility, U.S. Borax, in 1968 and renamed it Rio Tinto Borax) stunned members of the International Longshore and Warehouse Union, ILWU, Local 30 (Boron), by demanding abolition of the contractually enshrined seniority system and the surrender of any worker voice in the labor process.
The company wants a contract that would allow it to capriciously promote or demote; to outsource union jobs; to convert full-time to part-time positions with little or no benefits; to reorganize shift schedules without warning; to eliminate existing work rules; to cut holidays, sick leave and pension payments; to impose involuntary overtime; and to heavily penalize the union if workers file grievances against the company with the National Labor Relations Board.
“The company’s proposal,” union negotiators emphasize, “would destroy our union, lower our living standards, and give Borax total control over our jobs.” On January 30, Local 30 members unanimously rejected the concessions demanded by Rio Tinto.
The company deadline expired the next morning, when Terri Judd set off for work as usual with her lunchbox and thermos. At the locked front gate she and other day-shift workers encountered a phalanx of nervous Kern County sheriff’s deputies in full riot gear. Inside the plant, an elite “strike security team” hired by Rio Tinto had taken control of operations.
“Being locked out,” says Terri, “is different from going on strike. Initially there’s disbelief that the company is actually serious about booting you out the door. Hey, my granddad worked in this mine. But then you see that caravan of scabs coming to take your jobs, and the betrayal cuts like a knife in your heart.”
http://www.thenation.com/doc/20100329/davis/single

Empathetic souls will find the full version of this article to be very tough reading. When the 560 wage earners unanimously rejected the demands of Rio Tinto to give up much of their job security, the company terminated all of them in a job lockout. The impact on their small community of Boron is devastating.
Even though this story is not about health care, there is a very important health policy lesson here.
These people lost company support of their health benefits program at termination. With loss of their paychecks, many of these individuals are struggling to pay their rent and to buy food. Extension of health coverage through COBRA, even with subsidies, is of no benefit if they don’t have the funds to pay for it.
And President Obama’s promise of being able to keep the insurance you have if you want to? He left off the part that says you can keep it until your COBRA runs out, and at that only if you can pay your share (and all of the other reasons why hardly anyone still has the insurance they had twenty years ago, even if they wanted to keep it).
The policy lesson is that a health care financing system should be designed to cover absolutely everyone automatically throughout life. Individuals unfortunate enough to lose their jobs shouldn’t be further penalized by losing their health care as well.

The Health Care Letdown

By William F. Pewen
The New York Times
March 15, 2010

Should they succeed in blocking reform, Republicans should take no consolation. When Congress next attempts reform, in a decade or more, health costs and the number of uninsured and underinsured will have escalated — and the likely outcome will be the single-payer system that Republicans most abhor.

(William F. Pewen is a former senior health policy adviser for Senator Olympia Snowe, Republican of Maine.)

http://www.nytimes.com/2010/03/16/opinion/16pewen.html

Comment: 

By Don McCanne, MD

William Pewen expresses the view of the majority of well informed moderates and conservatives: The likely eventual outcome of further deterioration in health care financing will be a single payer system, like it or not.

Although they may be opposed to single payer based on ideology, they understand simple math. A decade from now a family with an income of $100,000 will not be able to pay an insurance premium of $25,000 plus a $25,000 deductible plus a coinsurance of 30% of the balance of the medical expenses.

The private insurance industry never has been and never will be capable of reining in health care costs. Health care costs are now so high that the reliance on pure market forces can never be effective in ensuring that everyone receives the health care that they should have. Only the government has the capability of slowing spending and improving the allocation of our health care resources so that everyone is taken care of.

A decade from now costs will be so high that almost every informed individual will recognize that we can no longer afford the additional waste inherent in our fragmented, dysfunctional financing system. In all reality, only a single payer system will work. Opposition will be limited to the “I got mine” folk who do not accept the enlightened, civilized view that we are all in this together.

We likely are now about to begin an experiment to see if a combination of greater government regulation of private insurers along with a system of government subsidies can provide everyone with the health care that they need without busting the budgets of families, businesses and the government. It is an unfortunate delay since the results are in before the experiment has even begun. Tens of millions will be left out of the system, and by selecting the most expensive model of reform, budget busting will only compound.

So as William Pewen states, if the bill before Congress is blocked, the likely outcome a decade from now will be a single payer system. But health policy science tells us that, if this bill passes, the likely outcome a decade from now will be a single payer system.

We really don’t have to wait another decade. People already understand that health care costs are too high. What they need to understand is that they cannot rely on being able to keep the insurance they have if it becomes unaffordable for themselves or their employers, and they cannot rely on being able to purchase it though an exchange if the premiums are too high and the subsidies are too low. They also need to understand that, even if they have insurance, the relatively low actuarial value of basic coverage will leave them exposed to financial hardship should they develop significant health care needs, so the insurance they have won’t work as it should.

Regardless of the results of the vote on the reform bill, we need to intensify our efforts to inform the public. Health care justice in America is ultimately their decision.

The Health Care Letdown

By William F. Pewen
The New York Times
March 15, 2010
Should they succeed in blocking reform, Republicans should take no consolation. When Congress next attempts reform, in a decade or more, health costs and the number of uninsured and underinsured will have escalated — and the likely outcome will be the single-payer system that Republicans most abhor.
(William F. Pewen is a former senior health policy adviser for Senator Olympia Snowe, Republican of Maine.)
http://www.nytimes.com/2010/03/16/opinion/16pewen.html

William Pewen expresses the view of the majority of well informed moderates and conservatives: The likely eventual outcome of further deterioration in health care financing will be a single payer system, like it or not.
Although they may be opposed to single payer based on ideology, they understand simple math. A decade from now a family with an income of $100,000 will not be able to pay an insurance premium of $25,000 plus a $25,000 deductible plus a coinsurance of 30% of the balance of the medical expenses.
The private insurance industry never has been and never will be capable of reining in health care costs. Health care costs are now so high that the reliance on pure market forces can never be effective in ensuring that everyone receives the health care that they should have. Only the government has the capability of slowing spending and improving the allocation of our health care resources so that everyone is taken care of.
A decade from now costs will be so high that almost every informed individual will recognize that we can no longer afford the additional waste inherent in our fragmented, dysfunctional financing system. In all reality, only a single payer system will work. Opposition will be limited to the “I got mine” folk who do not accept the enlightened, civilized view that we are all in this together.
We likely are now about to begin an experiment to see if a combination of greater government regulation of private insurers along with a system of government subsidies can provide everyone with the health care that they need without busting the budgets of families, businesses and the government. It is an unfortunate delay since the results are in before the experiment has even begun. Tens of millions will be left out of the system, and by selecting the most expensive model of reform, budget busting will only compound.
So as William Pewen states, if the bill before Congress is blocked, the likely outcome a decade from now will be a single payer system. But health policy science tells us that, if this bill passes, the likely outcome a decade from now will be a single payer system.
We really don’t have to wait another decade. People already understand that health care costs are too high. What they need to understand is that they cannot rely on being able to keep the insurance they have if it becomes unaffordable for themselves or their employers, and they cannot rely on being able to purchase it though an exchange if the premiums are too high and the subsidies are too low. They also need to understand that, even if they have insurance, the relatively low actuarial value of basic coverage will leave them exposed to financial hardship should they develop significant health care needs, so the insurance they have won’t work as it should.
Regardless of the results of the vote on the reform bill, we need to intensify our efforts to inform the public. Health care justice in America is ultimately their decision.

The Health Care Letdown

By William F. Pewen
The New York Times
March 15, 2010

Should they succeed in blocking reform, Republicans should take no consolation. When Congress next attempts reform, in a decade or more, health costs and the number of uninsured and underinsured will have escalated — and the likely outcome will be the single-payer system that Republicans most abhor.

(William F. Pewen is a former senior health policy adviser for Senator Olympia Snowe, Republican of Maine.)

http://www.nytimes.com/2010/03/16/opinion/16pewen.html

William Pewen expresses the view of the majority of well informed moderates and conservatives: The likely eventual outcome of further deterioration in health care financing will be a single payer system, like it or not.

Although they may be opposed to single payer based on ideology, they understand simple math. A decade from now a family with an income of $100,000 will not be able to pay an insurance premium of $25,000 plus a $25,000 deductible plus a coinsurance of 30% of the balance of the medical expenses.

The private insurance industry never has been and never will be capable of reining in health care costs. Health care costs are now so high that the reliance on pure market forces can never be effective in ensuring that everyone receives the health care that they should have. Only the government has the capability of slowing spending and improving the allocation of our health care resources so that everyone is taken care of.

A decade from now costs will be so high that almost every informed individual will recognize that we can no longer afford the additional waste inherent in our fragmented, dysfunctional financing system. In all reality, only a single payer system will work. Opposition will be limited to the “I got mine” folk who do not accept the enlightened, civilized view that we are all in this together.

We likely are now about to begin an experiment to see if a combination of greater government regulation of private insurers along with a system of government subsidies can provide everyone with the health care that they need without busting the budgets of families, businesses and the government. It is an unfortunate delay since the results are in before the experiment has even begun. Tens of millions will be left out of the system, and by selecting the most expensive model of reform, budget busting will only compound.

So as William Pewen states, if the bill before Congress is blocked, the likely outcome a decade from now will be a single payer system. But health policy science tells us that, if this bill passes, the likely outcome a decade from now will be a single payer system.

We really don’t have to wait another decade. People already understand that health care costs are too high. What they need to understand is that they cannot rely on being able to keep the insurance they have if it becomes unaffordable for themselves or their employers, and they cannot rely on being able to purchase it though an exchange if the premiums are too high and the subsidies are too low. They also need to understand that, even if they have insurance, the relatively low actuarial value of basic coverage will leave them exposed to financial hardship should they develop significant health care needs, so the insurance they have won’t work as it should.

Regardless of the results of the vote on the reform bill, we need to intensify our efforts to inform the public. Health care justice in America is ultimately their decision.

Massachusetts Hospital Spending Reached 55.4% Per Person Above the U.S. Average in 2007

Most of Excess is Unjustified, and State’s Health Reform Law Is Negligible Factor

Report by Alan Sager and Deborah Socolar
Boston University School of Public Health
March 16, 2010
This report documents and investigates the excess in Massachusetts hospital costs per person above the average for the United States. It examines the recent rise in this excess after a prolonged earlier decline, analyzes the many causes of the excess, assesses their reasonableness, and offers recommendations for addressing the state’s resurgent hospital cost crisis.
http://sph.bu.edu/images/stories/scfiles/healthservices/health_reform/Mass_hospital_cost_55.4_Excess_15Mar10_FINAL.pdf

It is difficult to reduce this complex 211 page report on the very high level of spending by Massachusetts’ hospitals into a few paragraphs, but the title and subtitle alone deliver the dominant messages. For those who would like more insight without reading the full report, there is an excellent 30 page summary at the beginning the report.
For those following the health care reform process, one observation stands out. The Massachusetts health reform – a hybrid model of reform not unlike the proposal before Congress – was not a significant cause of the excesses in hospital costs. More importantly from the perspective of those of us concerned about reform, it played no role in slowing cost increases.
All nations struggle with rising health care costs, but all except the United States have been able to maintain a lower trajectory in those increases. Financing systems do make a difference, and they must enable strong government oversight to be effective. Fragmented hybrid systems such as that in Massachusetts, and, more importantly, that in the proposed federal legislation, are not particularly effective. The authors do not discuss this other than to state that in the United States, “Nationally, neither competitive forces of a market nor regulatory actions by government have succeeded in reining in health care costs generally or hospital costs specifically.”
Sager and Socolar do reemphasize an important point that they have made many times about controlling costs: “it is fundamentally about liberating, enabling, and persuading physicians to spend money more carefully on behalf of their patients.” That sure seems like it would be much easier in a single, publicly administered system devoid of the third party money manipulators.

By Roland McDevitt, Ph.D., Director of Health Research, Watson Wyatt Worldwide
California HealthCare Foundation
October 2008

Actuarial value is a summary measure of likely payments by a plan. It measures the percentage of medical expenses paid by a health plan for a standard population, ranging from 0.00 for a plan that pays nothing to 1.00 for a plan that pays all medical expenses.

Actuarial value only measures benefit payments. To fully assess whether a plan is a good purchase, consumers would want to know both the premium and the actuarial value. They may also want to consider other aspects of the plan, such as whether specific benefits like maternity are covered, whether the plan offers a broad choice of providers, and whether the plan has a good record of administrative performance.

Individual market plans in Los Angeles County, 2006
32 plans listed at ehealthinsurance.com
Actuarial value and premium for a 32-year-old

0.86 – $194
0.83 – $289
0.83 – $242
0.82 – $204
0.70 – $257
0.69 – $198
0.67 – $56
0.67 – $448
0.64 – $186
0.63 – $110
0.62 – $62
0.62 – $403
0.59 – $244
0.58 – $222
0.57 – $81
0.56 – $50
0.56 – $69
0.49 – $193
0.49 – $283
0.47 – $244
0.46 – $83
0.46 – $111
0.46 – $278
0.46 – $87
0.45 – $77
0.44 – $298
0.44 – $72
0.44 – $166
0.41 – $93
0.41 – $60
0.39 – $149
0.34 – $75

If the policy goal is to provide a single number that consumers can use to compare the relative value of different benefit packages, actuarial value presents a more robust measure than any single cost-sharing provision.

http://www.chcf.org/documents/insurance/HealthPlanActuarialValue.pdf

And…

H.R. ____

House of Representatives
March –, 2010

To provide for reconciliation…

Table of premium percentage limits and actuarial value percentages based on income tier

Family income of 350% through 400% of federal poverty level (FPL)
Final premium percentage – 11%
Actuarial value percentage – 70%

Reference premium amount – average premium for the 3 basic plans in the area for the plan year with the lowest premium levels

http://budget.house.gov/doc-library/FY2010/03.15.2010_reconciliation2010.PDF

Comment: 

By Don McCanne, MD

An important finding in this Watson Wyatt report is that the premium paid for a private insurance plan has a very poor correlation with the percentage of medical expenses that are paid by that plan on average, as represented by the actuarial value. In this list from 2006, a plan that paid 86% of the medical expenses had a premium of $194, whereas another plan that paid 44% of expenses had a premium of $298.

Another important observation is that most of these plans in the individual market have a comparatively low actuarial value. Almost half of them don’t even pay one-half of the medical expenses on average. Think of the burden on the typical family of a year’s worth of premiums plus one-half of all medical expenses.

Although following the numbers reminds you of a shell game, it is instructive to look at the reconciliation bill released by the House Budget Committee last night (link above). With a family income of 350% to 400% of the federal poverty level, the family would be required to purchase a plan with an actuarial value of 70%, and they would be required to pay up to 11% of their income for the premium. Thus the family would  be responsible for 11% of their income plus, on average, 30% of the medical expenses covered by the plan, plus all other costs not covered by the plan.

That family also would be limited to providers selected by the private insurer. In addition, that 11% of income cap on premiums applies only to the average of the three cheapest plans with a 70% actuarial value. Seeing the poor correlation with actuarial value, the family may feel compelled to purchase a much more expensive plan with the same 70% actuarial value if the cheapest plans do not include their personal health care professionals with whom they have an established relationship.

Furthermore, most would prefer to have a plan that has benefits closer to typical employer-sponsored plans which until now have had an actuarial value of about 80%, and sometimes more. The family would be responsible for the full additional costs of any such plan if they should upgrade. (Upgrade really isn’t the best choice of terms since all trends today actually constitute a downgrade from the traditional standard.)

The bottom line is that a family at 400% FPL is being priced out of health care, and a major factor contributing to this is that we are relying on an incompetent private insurance industry that can’t even price its products properly. And Congress is… yes… cramming that down our throats!