PNHP

How much does President Obama expect us to pay for health care?

How much does President Obama expect us to pay for health care?

The President's Proposal

The White House
February 22, 2010

Policies to Improve Affordability and Accountability

Example for a family of four with income of $66,000:

Maximum percent of income paid for premiums: 9.5%

Percent of costs paid by health insurance plan: 70%

Penalty for remaining uninsured: (in 2016) the higher of $695 (with indexed increases) or 2.5% of income

Hardship exemption – threshold income below which the penalty is waived: The income tax filing threshold ($9,350 for a single or $18,700 for a married couple in 2009)

http://www.whitehouse.gov/health-care-meeting/proposal

Comment: 

By Don McCanne, MD

The greatest significance of President Obama’s health care reform proposal released today is that he has now formally placed his stamp of approval on the fundamental policies already contained in the House and Senate reform bills. While remaining silent on some of the third rail issues (public option, Medicare buy-in, pregnancy termination, etc.), he and his staff merely tweaked the bills and added insurance premium rate review, whatever that’s worth, and some rhetoric on waste, fraud, and abuse.

His proposal still falls far short on two of the most important goals of reform: 1) insuring everyone, and 2) ensuring that health care is affordable for each of us. Merely tweaking the Senate version, which is what they did, could not have attained these goals since the most effective policies were already traded away before serious negotiations began.

That said, let’s look at what the President expects a family of four with an income of $66,000 to pay for health care. The premium contribution would be 9.5% of income, or $6270 for the basic plan with an actuarial value of 70%. If they wanted or needed a better plan, they would have to pay the full difference in the premium. At an actuarial value of 70%, they would also have to pay an average of 30% of all health care costs. This can vary considerably because of plan design in the form of deductibles, copayments, coinsurance, non-covered benefits, stop loss, out-of-network care exempt from stop loss, and other factors. If they either elected not to or were unable to pay the premium, they would have to pay a penalty of $1650, but then, of course, they would have no protection at all against potential health care costs.

Clearly, President Obama has not done any better than Congress in protecting families from financial hardship should they have the misfortune of developing significant medical problems. Unaffordable underinsurance is not the change that we needed.

Put Single Payer Back on the Table

By Dr. Quentin Young
The Huffington Post
February 22, 2010

One year after its much-ballyhooed launch, the Obama administration’s approach to health reform is now in serious disarray.

The president’s health care summit on Feb. 25 is being portrayed as a last ditch bid to find some common ground with his “just say no” Republican opposition. He also faces an increasingly wary group of disgruntled Democrats, whose memory of the Massachusetts massacre — the election of a Republican to Sen. Edward Kennedy’s seat — remains fresh.

The summit proceedings, which will be televised in the name of “transparency,” will no doubt be laden with a formidable amount of stagecraft. They will be preceded by the unveiling of the president’s own legislative proposal — presumably the odious Senate bill with some tweaks — a few days before.

But it’s almost certain that this latest White House initiative, undertaken with the stated goal of salvaging and passing at least some elements of the stalled congressional bills, is foredoomed.

The House bill, contrary to many who believe otherwise, is disastrous. And if such a thing is possible, its Senate counterpart is even worse. Both would shovel hundreds of billions of taxpayer dollars into the coffers of the private health insurance industry. Both would make it a federal offense, with fines, for a person to fail to buy the insurers’ shoddy products.

Even so, at least 23 million people would remain uninsured under the new law. And those who have insurance would remain vulnerable to extort premium increases, not unlike Anthem Blue Cross’ recently announced premium hikes of up to 39 percent in California.

While one could imagine the enactment of certain piecemeal measures that might ameliorate our condition — e.g., a simple prohibition of insurance company denials of coverage because of pre-existing conditions — these are precisely the stand-alone measures most stubbornly opposed by Republicans, conservative Democrats and their corporate patrons. Such concessions, in their eyes, must be linked to shoring up the very culprits who are most responsible for our health care mess.

The presence of the for-profit health industry — the private health insurance conglomerate and the Big Pharma drug companies in the first place — in the legislative process has certainly been “transparent” from the get go. Through their lobbyists and campaign contributions, they shaped a bill that would enhance their domination of our health system. They are at the root of the catastrophe that passes for health care financing in the United States today.

Of course, the conspicuous omission in the debate has been single-payer national health insurance proposal, an improved Medicare for All. This was assured on the Senate side when the powerful chairman of its Finance Committee, Max Baucus, D-Mont., informed the world that everything was on the table but single payer.

How the chairman of a congressional committee, however powerful, can set the terms of debate in a democratic society by excluding such a popular and well-substantiated solution is hard to rationalize. Baucus did, of course, prevail, and what came out of the Senate was execrable. Like the House bill, it fails the three tests of genuine reform: universal coverage, quality improvement and cost control.

One can reasonably suspect that President Obama now wants something — anything — to pass in Congress as evidence of the fulfillment of his campaign pledge to accomplish health care reform. But if he looks to the House and Senate bills as the starting point, his efforts will be in vain.

It’s not too late for the president to re-embrace his earlier support for single-payer national health insurance and set the nation on the right path. Were he to lay out the facts to the American people and provide energetic leadership for this eminently rational proposal, he would get strong, grassroots support from the public.

We’re now spending $8,000 per capita annually on health care, $2.5 trillion in total. That’s nearly one-fifth of our GDP. Yet our health outcomes rank among the lowest in the industrialized world. Some 45,000 people die each year chiefly because they have no health insurance, and medical bills and illness are now linked to nearly two-thirds of personal bankruptcies. This reality in the richest country in the world is unnecessary and intolerable.

I suggest the president look to an improved and expanded Medicare program as the solution. Medicare, which was enacted in 1965 and which has served our elderly and the totally disabled so well, is a solid foundation to build upon.

Enactment of an improved Medicare for All would save our nation $400 billion annually by eliminating the bureaucracy and paperwork inflicted on our system by the private insurers. That’s more than enough to provide universal, comprehensive care to everyone and to eliminate all co-pays and deductibles. A single-payer system would also allow us to rein in costs and better allocate resources.

We have a talented health care workforce. But to fully unlock their potential, we need to get out from under the greedy dictates of the health industry.

Mr. President, it’s time to put single payer back on the table.

http://www.huffingtonpost.com/dr-quentin-young/put-single-payer-back-on_b_471811.html

Huntsville summit seeks remedies to impasse over health care reform

Bills have stalled amid growing public scorn over costs and political deal making, but many agree need for reform is still there.

By Dr. Oliver Fein, For The Times
The Huntsville (Ala.) Times, Feb. 21, 2010

President Obama’s health reform plan hasn’t stalled just because of one election in Massachusetts. The seeds for today’s impasse were planted long ago.

Early on, the president and Democratic leaders in Congress made a strategic decision to keep the for-profit, private health insurance industry at the heart of our system. In doing so, they precluded any chance of achieving a reform that was truly universal, comprehensive and affordable. It’s that simple.

Now, after months of watching the Democrats’ sordid deal-making with the big insurers and drug companies, and after getting a glimpse of some of the legislation’s deep flaws, the public’s support for the process has plummeted and the bills have stalled.

But the need for reform – for meeting the health care needs of the U.S. people – has never been more urgent, especially in view of our dire economic straits.

Some say the Senate health bill should be passed and then cleaned up later. But both the Senate and House bills would keep the for-profit private insurers – who cause us to spend about 31 cents of every health care dollar on administration, most of it on wasteful paperwork and bureaucracy – firmly in the driver’s seat. That’s a prescription for failure.

Others suggest a scaled-back reform, partial measures. But many of these proposals are deeply regressive, like making cuts to traditional Medicare to subsidize the purchase of private health insurance. (On the other hand, government steps like spending more money on community health centers or the primary care infrastructure would certainly help in the short term.)

But a recent CNN/Opinion Research survey shows about half the public would like to see our lawmakers start over. Doing so is not as implausible as it may first seem.

President Obama himself, in his State of the Union message, said if someone has a better idea, “Let me know. I’m eager to see it.”

Mr. President, we should start with a system that we know works well, is cost-efficient and could quickly be extended to cover everybody in the country – Medicare. Medicare presently covers 45 million people, mainly those over 65 and the totally disabled, but it could be improved upon and extended to people of all ages with relative ease.

Doing so would yield about $400 billion in annual savings from the reduced administrative costs in our system, thereby allowing us to give everyone comprehensive, high-quality coverage with no co-pays or deductibles.

A single-payer Medicare-for-All system would also give us cost-control tools like bulk purchasing, negotiated fees and capital investment planning, thereby providing a secure financial foundation for future generations, too.

Surveys show about two-thirds of the U.S. population support such an approach, and a recent study in the Annals of Internal Medicine showed that 59 percent of physicians want government action to establish national health insurance.

Dr. William Hsiao, a Harvard economist who has assisted several other nations in their health system reforms, recently said, “You can have universal coverage and good quality health care while still managing to control costs. But you have to have a single-payer system to do it.”

The remedy is clear. It’s time to drive that point home with our lawmakers.

Oliver Fein, M.D., is president of Physicians for a National Health Program (www.pnhp.org) and professor of clinical medicine and clinical public health at Weill Cornell Medical College in New York City. He will be visiting Huntsville next weekend.

Healthcare Reform Schedule

Oliver Fein, president of Physicians for a National Health Program, will be the keynote speaker at healthcare reform events next weekend in Huntsville. Here is the lineup of presentations.

Friday, Feb. 26, 6:00 p.m.
“Healthcare Reform 2010: Where Do We Go From Here?”
Speaker: Oliver Fein, MD, president, Physicians for a National Health Program, (www.pnhp.org)
Location: Shelby Center for Science and Technology, UA Huntsville Campus. Room 107 Auditorium. (near intersection of Sparkman Drive and Lakeside http://www.uah.edu/map/color_map.pdf )
Co-sponsors: UA Huntsville Political Science Department and Alabama A&M University Political Science Department

Saturday, Feb. 27, 10 – 11:30 a.m.
“Healthcare Justice: The Moral Imperative for Universal Healthcare from a Christian Perspective”
Location: Faith Presbyterian Church, 5003 Whitesburg Drive, Huntsville. Fellowship Hall.
Speakers: Oliver Fein, MD, president, Physicians for a National Health Program (New York, NY); Arthur Sutherland, MD, board member, Tennessee Health Care Campaign, and national board member of PNHP (Memphis, TN); Abi Carlisle-Wilke, M.Div., Senior Associate Pastor, Trinity United Methodist Church (Huntsville, AL)
Moderator: Rev. Frank Broyles, Interfaith Mission Service
Supported by: Interfaith Mission Service; Indian Creek Primitive Baptist Association; Greater Huntsville Interdenominational Ministerial Fellowship.

Saturday, Feb. 27, 1 – 3 p.m.
“Point / Counterpoint: Fixing the American Health System”
Physicians from opposite ends of the policy spectrum will present their solutions to our health care crisis. Dr. Oliver Fein, president of PNHP, will present the case for expanding and improving Medicare to all. Dr. Allan Goldstein, past president, Medical Society of the State of Alabama; and Alabama delegate to the American Medical Association, will focus on quality of healthcare as a way to reduce costs, and the reforms necessary to reach that goal.
Location: Crestwood Medical Center, One Hospital Drive, Huntsville. First floor auditorium.

All three events are FREE and open to the public.
For more information, visit http://northalabamahealthcareforall.org/

How much does President Obama expect us to pay for health care?

The President’s Proposal

The White House
February 22, 2010
Policies to Improve Affordability and Accountability
Example for a family of four with income of $66,000:
Maximum percent of income paid for premiums: 9.5%
Percent of costs paid by health insurance plan: 70%
Penalty for remaining uninsured: (in 2016) the higher of $695 (with indexed increases) or 2.5% of income
Hardship exemption – threshold income below which the penalty is waived: The income tax filing threshold ($9,350 for a single or $18,700 for a married couple in 2009)
http://www.whitehouse.gov/health-care-meeting/proposal

The greatest significance of President Obama’s health care reform proposal released today is that he has now formally placed his stamp of approval on the fundamental policies already contained in the House and Senate reform bills. While remaining silent on some of the third rail issues (public option, Medicare buy-in, pregnancy termination, etc.), he and his staff merely tweaked the bills and added insurance premium rate review, whatever that’s worth, and some rhetoric on waste, fraud, and abuse.
His proposal still falls far short on two of the most important goals of reform: 1) insuring everyone, and 2) ensuring that health care is affordable for each of us. Merely tweaking the Senate version, which is what they did, could not have attained these goals since the most effective policies were already traded away before serious negotiations began.
That said, let’s look at what the President expects a family of four with an income of $66,000 to pay for health care. The premium contribution would be 9.5% of income, or $6270 for the basic plan with an actuarial value of 70%. If they wanted or needed a better plan, they would have to pay the full difference in the premium. At an actuarial value of 70%, they would also have to pay an average of 30% of all health care costs. This can vary considerably because of plan design in the form of deductibles, copayments, coinsurance, non-covered benefits, stop loss, out-of-network care exempt from stop loss, and other factors. If they either elected not to or were unable to pay the premium, they would have to pay a penalty of $1650, but then, of course, they would have no protection at all against potential health care costs.
Clearly, President Obama has not done any better than Congress in protecting families from financial hardship should they have the misfortune of developing significant medical problems. Unaffordable underinsurance is not the change that we needed.

Campaign Finance Reform and Single Payer: The Fair Elections Now Act (HR 1826)

Adapted from an article by Frank Kirkwood

The powerful drug and insurance lobbies that oppose single payer national health insurance used their influence inside Washington to keep single payer “off the table” during the health care debate of 2009.  Now, the Supreme Court has ruled that corporations may donate even more to campaigns, further increasing their stranglehold over our democracy.  Campaign finance reform could curb the unrestrained growth of corporate influence and help restore our democracy.

  The Fair Elections Now Act (H.R.1826 and S.752) would establish a system of public funding for congressional candidates.  Qualifying candidates would be provided with public funding matching their private contributions, as long as they agree to take no contribution larger than $100.  Passage of this bill would provide members of Congress and those seeking to challenge an incumbent with an alternative source of campaign funding.  H.R.1826 already has over 125 co-sponsors.

Now that the Supreme Court has ruled that corporations are free to donate corporate money   in support of or in opposition to candidates for office, it is absolutely necessary that every candidate for Congress have available to them an alternative source of campaign money sufficient to make themselves known to the voters, make their positions known to the voters, and to be able to respond to attacks.

How can Single-Payer supporters support the Fair Elections Now Act?

1. If your member of the House of Representatives is a co-sponsor of H.R. 676 but not yet a co-sponsor of H.R. 1826 (see table below), call them and ask them to co-sponsor  HR1826.  Reducing corporate control of our Congress will help advance the cause of real health care reform.

2. If your members of Congress are not co-sponsors of H.R. 676 or S. 703, see if they are already co-sponsors of the Fair Elections Now Act here in the House and  Senate  If not, ask them to co-sponsor legislation in support of single payer and campaign finance reform, for the health of the nation and the health of our democracy.  Call the Congressional switchboard at 202-224-3121

In the left column are the 88 House members who are co-sponsors of H.R. 676 (listed in alphabetical order.)

The majority of them are also co-sponsors of H.R. 1826, the Fair Elections Now Act.

If your representative has not yet become a co-sponsor of H.R. 1826, please contact them and urge them to do so.

Call the Congressional switchboard at 202-224-3121 or use a toll-free number.

Cosponsors of HR676:

Cosponsors of H.R.1826:

Neil Abercrombie [D-HI1]
Joe Baca [D-CA43]
Tammy Baldwin [D-WI2]
Xavier Becerra [D-CA31]
Howard Berman [D-CA28]
Sanford Bishop [D-GA2]
Robert Brady [D-PA1]
Corrine Brown [D-FL3]
Michael Capuano [D-MA8]
Donna Christensen [D-VI]
Judy Chu [D-CA32]
Yvette Clarke [D-NY11]
William Clay [D-MO1]
Emanuel Cleaver [D-MO5]
Steve Cohen [D-TN9]
Jerry Costello [D-IL12]
Elijah Cummings [D-MD7]
Danny Davis [D-IL7]
William Delahunt [D-MA10]
Norman Dicks [D-WA6]
Michael Doyle [D-PA14]
Donna Edwards [D-MD4]
Keith Ellison [D-MN5]
Eliot Engel [D-NY17]
Sam Farr [D-CA17]
Chaka Fattah [D-PA2]
Bob Filner [D-CA51]
Barney Frank [D-MA4]
Marcia Fudge [D-OH11]
Al Green [D-TX9]
Raul Grijalva [D-AZ7]
Luis Gutiérrez [D-IL4]
Phil Hare [D-IL17]
Alcee Hastings [D-FL23]
Maurice Hinchey [D-NY22]
Mazie Hirono [D-HI2]
Rush Holt [D-NJ12]
Michael Honda [D-CA15]
Jesse Jackson [D-IL2]
Sheila Jackson-Lee [D-TX18]
Henry Johnson [D-GA4]
Marcy Kaptur [D-OH9]
Patrick Kennedy [D-RI1]
Dale Kildee [D-MI5]
Carolyn Kilpatrick [D-MI13]
Dennis Kucinich [D-OH10]
Barbara Lee [D-CA9]
John Lewis [D-GA5]
David Loebsack [D-IA2]
Zoe Lofgren [D-CA16]
Ben Luján [D-NM3]
Carolyn Maloney [D-NY14]
Edward Markey [D-MA7]
Eric Massa [D-NY29]
James McDermott [D-WA7]
James McGovern [D-MA3]
Kendrick Meek [D-FL17] (withdrawn)
Gregory Meeks [D-NY6]
George Miller [D-CA7]
Gwen Moore [D-WI4]
John Murtha [D-PA12]
Jerrold Nadler [D-NY8]
Grace Napolitano [D-CA38]
Eleanor Norton [D-DC]
John Olver [D-MA1]
Edward Pastor [D-AZ4]
Donald Payne [D-NJ10]
Chellie Pingree [D-ME1]
Jared Polis [D-CO2]
Nick Rahall [D-WV3]
Lucille Roybal-Allard [D-CA34]
Bobby Rush [D-IL1]
Timothy Ryan [D-OH17]
Janice Schakowsky [D-IL9]
Robert Scott [D-VA3]
José Serrano [D-NY16]
Bennie Thompson [D-MS2]
John Tierney [D-MA6]
Paul Tonko [D-NY21]
Edolphus Towns [D-NY10]
Nydia Velázquez [D-NY12]
Maxine Waters [D-CA35]
Diane Watson [D-CA33]
Anthony Weiner [D-NY9]
Peter Welch [D-VT]
Robert Wexler [D-FL19]
Lynn Woolsey [D-CA6]
John Yarmuth [D-KY3]

Neil Abercrombie [D-HI1]
Robert Andrews [D-NJ1]
Michael Arcuri [D-NY24]
Tammy Baldwin [D-WI2]
Timothy Bishop [D-NY1]
Earl Blumenauer [D-OR3]
John Boccieri [D-OH16]
Bruce Braley [D-IA1]
Michael Capuano [D-MA8]
Michael Castle [R-DE]
Ben Chandler [D-KY6]
Judy Chu [D-CA32]
William Clay [D-MO1]
Steve Cohen [D-TN9]
Gerald Connolly [D-VA11]
John Conyers [D-MI14]
Jim Cooper [D-TN5]
Jerry Costello [D-IL12]
Joe Courtney [D-CT2]
Elijah Cummings [D-MD7]
Kathleen Dahlkemper [D-PA3]
Danny Davis [D-IL7]
Peter DeFazio [D-OR4]
William Delahunt [D-MA10]
Rosa DeLauro [D-CT3]
Lloyd Doggett [D-TX25]
Michael Doyle [D-PA14]
Donna Edwards [D-MD4]
Keith Ellison [D-MN5]
Eliot Engel [D-NY17]
Anna Eshoo [D-CA14]
Sam Farr [D-CA17]
Chaka Fattah [D-PA2]
Bob Filner [D-CA51]
Bill Foster [D-IL14]
Barney Frank [D-MA4]
John Garamendi [D-CA10]
Alan Grayson [D-FL8]
Raymond Green [D-TX29]
Raul Grijalva [D-AZ7]
Luis Gutiérrez [D-IL4]
Deborah Halvorson [D-IL11]
Phil Hare [D-IL17]
Jane Harman [D-CA36]
Alcee Hastings [D-FL23]
Martin Heinrich [D-NM1]
James Himes [D-CT4]
Maurice Hinchey [D-NY22]
Mazie Hirono [D-HI2]
Paul Hodes [D-NH2]
Rush Holt [D-NJ12]
Michael Honda [D-CA15]
Steve Israel [D-NY2]
Jesse Jackson [D-IL2]
Sheila Jackson-Lee [D-TX18]
Eddie Johnson [D-TX30]
Henry Johnson [D-GA4]
Walter Jones [R-NC3]
Steve Kagen [D-WI8]
Marcy Kaptur [D-OH9]
Patrick Kennedy [D-RI1]
Dale Kildee [D-MI5]
Ronald Kind [D-WI3]
Larry Kissell [D-NC8]
Suzanne Kosmas [D-FL24]
Dennis Kucinich [D-OH10]
James Langevin [D-RI2]
Barbara Lee [D-CA9]
John Lewis [D-GA5]
David Loebsack [D-IA2]
Zoe Lofgren [D-CA16]
Nita Lowey [D-NY18]
Ben Luján [D-NM3]
Daniel Maffei [D-NY25]
Carolyn Maloney [D-NY14]
Betsy Markey [D-CO4]
Edward Markey [D
-MA7]
Eric Massa [D-NY29]
Doris Matsui [D-CA5]
Carolyn McCarthy [D-NY4]
Betty McCollum [D-MN4]
James McDermott [D-WA7]
James McGovern [D-MA3]
Jerry McNerney [D-CA11]
Michael Michaud [D-ME2]
Bradley Miller [D-NC13]
George Miller [D-CA7]
Walter Minnick [D-ID1]
James Moran [D-VA8]
Christopher Murphy [D-CT5]
Scott Murphy [D-NY20]
Jerrold Nadler [D-NY8]
Grace Napolitano [D-CA38]
Eleanor Norton [D-DC]
John Olver [D-MA1]
Solomon Ortiz [D-TX27]
William Owens [D-NY23]
William Pascrell [D-NJ8]
Thomas Perriello [D-VA5]
Gary Peters [D-MI9]
Chellie Pingree [D-ME1]
Todd Platts [R-PA19]
Jared Polis [D-CO2]
David Price [D-NC4]
Charles Rangel [D-NY15]
Silvestre Reyes [D-TX16]
Steven Rothman [D-NJ9]
Lucille Roybal-Allard [D-CA34]
Dutch Ruppersberger [D-MD2]
Linda Sánchez [D-CA39]
John Sarbanes [D-MD3]
Janice Schakowsky [D-IL9]
Robert Scott [D-VA3]
José Serrano [D-NY16]
Joe Sestak [D-PA7]
Carol Shea-Porter [D-NH1]
Louise Slaughter [D-NY28]
Adam Smith [D-WA9]
Jackie Speier [D-CA12]
Fortney Stark [D-CA13]
Betty Sutton [D-OH13]
Harry Teague [D-NM2]
Bennie Thompson [D-MS2]
Paul Tonko [D-NY21]
Niki Tsongas [D-MA5]
Christopher Van Hollen [D-MD8]
Timothy Walz [D-MN1]
Diane Watson [D-CA33]
Melvin Watt [D-NC12]
Peter Welch [D-VT]
Lynn Woolsey [D-CA6]
David Wu [D-OR1]
John Yarmuth [D-KY3]

The Obama administration's confidence game on administrative savings

Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System

HealthReform.gov, U.S. Department of Health & Human Services
February 18, 2010

Recently, Anthem Blue Cross of California, an insurance company owned by the for-profit company WellPoint, Incorporated, announced that its individual market premiums would rise by as much as 39 percent in the coming months. This shocking increase isn’t unique. Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue.

A Broken Health Insurance System Works for Insurance Companies – Not Families

The “value gap” in the health insurance market is evident not just in overall premium hikes, but also in the use of those premium dollars. Over the past decade, the amount private insurance companies spent on administrative costs grew faster than the amount spent on prescription drugs, a trend that is projected to continue through the next decade. Three of the top five insurers cut the proportion of premiums they spent on customers’ medical care last year, committing more to salaries, administrative expenses, and profits.

Lower Premiums.

The Congressional Budget Office estimates that reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent. (25)

(25) Congressional Budget Office. Letter to Senator Bayh. November 30, 2009.

http://www.healthreform.gov/reports/insuranceprospers/index.html

And…

Letter to Senator Bayh

Congressional Budget Office
November 30, 2009.
(Reference 25, above)

Nongroup Policies

CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.

• Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained.

• Average premiums would be 7 percent to 10 percent lower because of a net reduction in costs that insurers incurred to deliver the same amount of insurance coverage to the same group of enrollees. Most of that net reduction would stem from the changes in the rules governing the nongroup market.

• Average premiums would be 7 percent to 10 percent lower because of a shift in the types of people obtaining coverage. Most of that change would stem from an influx of enrollees with below-average spending for health care, who would purchase coverage because of the new subsidies to be provided and the individual mandate to be imposed.

New Market Rules Would Reduce Administrative Costs

Compared with plans that would be available in the nongroup market under current law, nongroup policies under the proposal would have lower administrative costs, largely because of the new market rules:

• The influx of new enrollees in response to the individual mandate and new subsidies—combined with the creation of new insurance exchanges—would create larger purchasing pools that would achieve some economies of scale.

• Administrative costs would be reduced by provisions that require some standardization of benefits—for example, by limiting variation in the types of policies that could be offered and prohibiting “riders” to insurance policies (which are amendments to a policy’s terms, such as coverage exclusions for preexisting conditions); insurers incur administrative costs to implement those exclusions.

• Administrative costs would be reduced slightly by the general prohibition on medical underwriting, which is the practice of varying premiums or coverage terms to reflect the applicant’s health status; nongroup insurers incur some administrative costs to implement underwriting.

• Partly offsetting those reductions in administrative costs would be a surcharge that exchange plans would have to pay under the proposal to cover the operating costs of the exchanges.

http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

Comment: 

By Don McCanne, MD

Although the Obama administration continues to advocate for reform based on private health plans, they have seized on the current outrage over skyrocketing insurance premium increases to to demonstrate why reform is essential. Although they are attacking the private insurance industry, they continue to push for a reform model that provides this market with tens of millions of new customers.

Do the proposed reforms of the insurance market really provide us with the assurance that everyone will have access to affordable health care? We already know that they could not achieve the goal of covering everyone, and will leave about 25 million with no coverage (RAND 2/10). Also there is doubt that other measures in the legislation will have much impact in containing costs. But what about the egregious administrative waste in our dysfunctional financing system?

In their report released yesterday, the administration claims that “reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent.” They cite the CBO letter to Sen. Bayh as their source for this statement.

And what does the CBO say? First, the premiums will actually be 10 to 13 percent higher because of the offsetting requirement for increased benefits in these plans that would increase premiums by 27 to 30 percent. For those who say that the improved benefits are worth this increase, keep in mind that the benefits move from the current actuarial value of 60 percent to an actuarial value of 70 percent. That is still significantly below the 80 percent actuarial value of current employer-sponsored plans. These individual plans will continue to leave many people who need health care exposed to unaffordable out-of-pocket expenses.

What does CBO say about the 14 to 20 percent administrative savings claimed by the Obama administration? Half of it (7 to 10 percent) isn’t even administrative savings but merely represents a dilution of the risk pool with healthy individuals mandated to purchase private health plans.

The other half of the premium savings, also 7 to 10 percent, stems from a slight reduction of administrative costs since the plans would be sold through an insurance exchange eliminating some of the costs such as underwriting and brokers’ fees. When you look at the CBO explanation of where the administrative savings would occur, it is clear that there is not much there, and some of it would be offset by the additional administrative costs of the new exchanges.

Although the Obama administration is using this to claim administrative savings, the total reduction in our national health expenditures (NHE) would be so infinitesimal that it wouldn’t even warrant a footnote in the annual NHE report.

The profound administrative waste in our system is not limited to the outrageous excesses of the private insurers but it permeates the entire system, including the very high costs of the burden that private insurers place on physicians, hospitals and other sectors of the health care delivery system.

Although the amount of the recoverable waste is disputed, everyone agrees that it is profound. Very solid data demonstrates that somewhere around $4 trillion could be recovered over the next decade merely by changing to a single payer national health program – an improv
ed Medicare that covered everyone. Those who argue that it is only half that need to explain why we should therefore refuse the $2 trillion in savings ($ 2,000,000,000,000).

Most of us have tired of conspiracy theories. But think about this. The Obama plan (to be formally released Feb. 22) is a gift of our tax funds to the private insurance industry. Recent events have suggested that the plan may not survive the legislative process. Polls and focus groups show that the public is outraged by insurance company abuses. The insurers have chosen the most inopportune time in the reform process to cram outrageous premiums into the faces of their customers. Or is it inopportune? Look at the platform that it has given President Obama and the cover that it provides for members of Congress. It is giving them an avenue that will allow them to push through this program that the insurance industry understands that it must have for its own survival.

The Obama plan will leave tens of millions uninsured. It will not adequately control health care spending. It will perpetuate the profound administrative waste in our system. Above all, it will revitalize the private insurance industry for decades to come. If we’re not going to react, then we’re simply going to have to learn to live with it.

The Obama administration’s confidence game on administrative savings

Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System

HealthReform.gov, U.S. Department of Health & Human Services
February 18, 2010

Recently, Anthem Blue Cross of California, an insurance company owned by the for-profit company WellPoint, Incorporated, announced that its individual market premiums would rise by as much as 39 percent in the coming months. This shocking increase isn’t unique. Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue.

A Broken Health Insurance System Works for Insurance Companies – Not Families

The “value gap” in the health insurance market is evident not just in overall premium hikes, but also in the use of those premium dollars. Over the past decade, the amount private insurance companies spent on administrative costs grew faster than the amount spent on prescription drugs, a trend that is projected to continue through the next decade. Three of the top five insurers cut the proportion of premiums they spent on customers’ medical care last year, committing more to salaries, administrative expenses, and profits.

Lower Premiums.

The Congressional Budget Office estimates that reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent. (25)

(25) Congressional Budget Office. Letter to Senator Bayh. November 30, 2009.

http://www.healthreform.gov/reports/insuranceprospers/index.html

And…

Letter to Senator Bayh

Congressional Budget Office
November 30, 2009.
(Reference 25, above)

Nongroup Policies

CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.

• Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained.

• Average premiums would be 7 percent to 10 percent lower because of a net reduction in costs that insurers incurred to deliver the same amount of insurance coverage to the same group of enrollees. Most of that net reduction would stem from the changes in the rules governing the nongroup market.

• Average premiums would be 7 percent to 10 percent lower because of a shift in the types of people obtaining coverage. Most of that change would stem from an influx of enrollees with below-average spending for health care, who would purchase coverage because of the new subsidies to be provided and the individual mandate to be imposed.

New Market Rules Would Reduce Administrative Costs

Compared with plans that would be available in the nongroup market under current law, nongroup policies under the proposal would have lower administrative costs, largely because of the new market rules:

• The influx of new enrollees in response to the individual mandate and new subsidies—combined with the creation of new insurance exchanges—would create larger purchasing pools that would achieve some economies of scale.

• Administrative costs would be reduced by provisions that require some standardization of benefits—for example, by limiting variation in the types of policies that could be offered and prohibiting “riders” to insurance policies (which are amendments to a policy’s terms, such as coverage exclusions for preexisting conditions); insurers incur administrative costs to implement those exclusions.

• Administrative costs would be reduced slightly by the general prohibition on medical underwriting, which is the practice of varying premiums or coverage terms to reflect the applicant’s health status; nongroup insurers incur some administrative costs to implement underwriting.

• Partly offsetting those reductions in administrative costs would be a surcharge that exchange plans would have to pay under the proposal to cover the operating costs of the exchanges.

http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

Comment: 

By Don McCanne, MD

Although the Obama administration continues to advocate for reform based on private health plans, they have seized on the current outrage over skyrocketing insurance premium increases to to demonstrate why reform is essential. Although they are attacking the private insurance industry, they continue to push for a reform model that provides this market with tens of millions of new customers.

Do the proposed reforms of the insurance market really provide us with the assurance that everyone will have access to affordable health care? We already know that they could not achieve the goal of covering everyone, and will leave about 25 million with no coverage (RAND 2/10). Also there is doubt that other measures in the legislation will have much impact in containing costs. But what about the egregious administrative waste in our dysfunctional financing system?

In their report released yesterday, the administration claims that “reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent.” They cite the CBO letter to Sen. Bayh as their source for this statement.

And what does the CBO say? First, the premiums will actually be 10 to 13 percent higher because of the offsetting requirement for increased benefits in these plans that would increase premiums by 27 to 30 percent. For those who say that the improved benefits are worth this increase, keep in mind that the benefits move from the current actuarial value of 60 percent to an actuarial value of 70 percent. That is still significantly below the 80 percent actuarial value of current employer-sponsored plans. These individual plans will continue to leave many people who need health care exposed to unaffordable out-of-pocket expenses.

What does CBO say about the 14 to 20 percent administrative savings claimed by the Obama administration? Half of it (7 to 10 percent) isn’t even administrative savings but merely represents a dilution of the risk pool with healthy individuals mandated to purchase private health plans.

The other half of the premium savings, also 7 to 10 percent, stems from a slight reduction of administrative costs since the plans would be sold through an insurance exchange eliminating some of the costs such as underwriting and brokers’ fees. When you look at the CBO explanation of where the administrative savings would occur, it is clear that there is not much there, and some of it would be offset by the additional administrative costs of the new exchanges.

Although the Obama administration is using this to claim administrative savings, the total reduction in our national health expenditures (NHE) would be so infinitesimal that it wouldn’t even warrant a footnote in the annual NHE report.

The profound administrative waste in our system is not limited to the outrageous excesses of the private insurers but it permeates the entire system, including the very high costs of the burden that private insurers place on physicians, hospitals and other sectors of the health care delivery system.

Although the amount of the recoverable waste is disputed, everyone agrees that it is profound. Very solid data demonstrates that somewhere around $4 trillion could be recovered over the next decade merely by changing to a single payer national health program – an improved Medicare that covered everyone. Those who argue that it is only half that need to explain why we should therefore refuse the $2 trillion in savings ($ 2,000,000,000,000).

Most of us have tired of conspiracy theories. But think about this. The Obama plan (to be formally released Feb. 22) is a gift of our tax funds to the private insurance industry. Recent events have suggested that the plan may not survive the legislative process. Polls and focus groups show that the public is outraged by insurance company abuses. The insurers have chosen the most inopportune time in the reform process to cram outrageous premiums into the faces of their customers. Or is it inopportune? Look at the platform that it has given President Obama and the cover that it provides for members of Congress. It is giving them an avenue that will allow them to push through this program that the insurance industry understands that it must have for its own survival.

The Obama plan will leave tens of millions uninsured. It will not adequately control health care spending. It will perpetuate the profound administrative waste in our system. Above all, it will revitalize the private insurance industry for decades to come. If we’re not going to react, then we’re simply going to have to learn to live with it.

Single payer health care rally for Obama visit: The concept is better for everyone except those getting rich off current, broken system, organizer says

By Michael Roberts
Denver Westword 
Denver News Blog, Thu., Feb. 18 2010

President Barack Obama’s visit to Denver today is prompting [several events].

Health Care For All Colorado (HCFAC) is behind a “Medicare For All” march co-starring Dr. Margaret Flowers, a Maryland pediatrician who was briefly arrested outside a Baltimore hotel where Obama was speaking while advocating for the issue.

Flowers’s point, according to Jim Worthy, a HCFAC board member and co-organizer of today’s march, is a simple one: “President Obama, in his address to the Republican caucus, recently suggested that if anyone had a better idea for health care reform, they should come to him and let him know. And Medicare For All is a better plan.”

How do we know? Experience, Worthy argues.

“Single payer is a better solution because it’s been tried,” he says. “It’s in effect in a number of other developed countries around the world, and it achieves lower costs and better outcomes than any other alternatives out there. And this is not policy-wonk speak. There’s real-world, on-the-ground evidence that it delivers real health care to people at lower cost.”

Moreover, he continues, expanding the current Medicare plan to cover the U.S. public as a whole makes practical sense on a number of levels. “It’s a proven system,” he stresses. “I understand that there are funding issues and a lot of mechanical issues in terms of making it work better. But if you ask physicians, they’re perfectly content with the claims, processing and effectiveness of Medicare. Their prime issue is reimbursement rates. And if it works for our nation’s seniors, it’s a perfectly workable model for the rest of the American citizenry.”

If all that’s true, why isn’t single payer being seriously considered in Congress or the White House?

“I remember that during the campaign, back in July of 2008 in Albuquerque, President Obama said that if he was starting from a blank page, single payer would be the way to go,” Worthy says. “But he felt it would be too disruptive.”

Worthy’s take? “What it disrupts are the people who make money off the current situation. It’s plainly that simple. People are protecting their profits, and they’re doing so at the expense of citizens’ health.”

Given the opposition by the powers-that-be to single payer, then, Worthy believes moving the proposal forward “will require true democracy as represented by actions of individual citizens in this country to make an ethical or moral choice for the kind of democracy they want to live in.”

Those who feel likewise are encouraged to gather at 1:30 p.m. today at a location that practically screams “health care” — the parking lot of Argonaut Liquors, 760 East Colfax, across the street from the Fillmore Auditorium, where the Obama event will take place. There, Flowers and others will address what Worthy calls “the fundamental question developed countries have asked and answered is: ‘Is access to health care a human right or not?’

“In other developed countries other than the U.S., they’ve said, ‘Yes, it is a human right,'” he goes on. “Our representatives haven’t quite figured out that the American people have come to the same conclusion, so we need to remind them of that. And that’s part of what today’s rally is all about.”

http://blogs.westword.com/latestword/2010/02/single_payer_health_care_rally.php

The Obama administration's confidence game on administrative savings

Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System

HealthReform.gov, U.S. Department of Health & Human Services
February 18, 2010
Recently, Anthem Blue Cross of California, an insurance company owned by the for-profit company WellPoint, Incorporated, announced that its individual market premiums would rise by as much as 39 percent in the coming months. This shocking increase isn’t unique. Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue.
A Broken Health Insurance System Works for Insurance Companies – Not Families
The “value gap” in the health insurance market is evident not just in overall premium hikes, but also in the use of those premium dollars. Over the past decade, the amount private insurance companies spent on administrative costs grew faster than the amount spent on prescription drugs, a trend that is projected to continue through the next decade. Three of the top five insurers cut the proportion of premiums they spent on customers’ medical care last year, committing more to salaries, administrative expenses, and profits.
Lower Premiums.
The Congressional Budget Office estimates that reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent. (25)
(25) Congressional Budget Office. Letter to Senator Bayh. November 30, 2009.
http://www.healthreform.gov/reports/insuranceprospers/index.html

And…

Letter to Senator Bayh

Congressional Budget Office
November 30, 2009.
(Reference 25, above)
Nongroup Policies
CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.
• Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained.
• Average premiums would be 7 percent to 10 percent lower because of a net reduction in costs that insurers incurred to deliver the same amount of insurance coverage to the same group of enrollees. Most of that net reduction would stem from the changes in the rules governing the nongroup market.
• Average premiums would be 7 percent to 10 percent lower because of a shift in the types of people obtaining coverage. Most of that change would stem from an influx of enrollees with below-average spending for health care, who would purchase coverage because of the new subsidies to be provided and the individual mandate to be imposed.
New Market Rules Would Reduce Administrative Costs
Compared with plans that would be available in the nongroup market under current law, nongroup policies under the proposal would have lower administrative costs, largely because of the new market rules:
• The influx of new enrollees in response to the individual mandate and new subsidies—combined with the creation of new insurance exchanges—would create larger purchasing pools that would achieve some economies of scale.
• Administrative costs would be reduced by provisions that require some standardization of benefits—for example, by limiting variation in the types of policies that could be offered and prohibiting “riders” to insurance policies (which are amendments to a policy’s terms, such as coverage exclusions for preexisting conditions); insurers incur administrative costs to implement those exclusions.
• Administrative costs would be reduced slightly by the general prohibition on medical underwriting, which is the practice of varying premiums or coverage terms to reflect the applicant’s health status; nongroup insurers incur some administrative costs to implement underwriting.
• Partly offsetting those reductions in administrative costs would be a surcharge that exchange plans would have to pay under the proposal to cover the operating costs of the exchanges.
http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

Although the Obama administration continues to advocate for reform based on private health plans, they have seized on the current outrage over skyrocketing insurance premium increases to to demonstrate why reform is essential. Although they are attacking the private insurance industry, they continue to push for a reform model that provides this market with tens of millions of new customers.
Do the proposed reforms of the insurance market really provide us with the assurance that everyone will have access to affordable health care? We already know that they could not achieve the goal of covering everyone, and will leave about 25 million with no coverage (RAND 2/10). Also there is doubt that other measures in the legislation will have much impact in containing costs. But what about the egregious administrative waste in our dysfunctional financing system?
In their report released yesterday, the administration claims that “reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent.” They cite the CBO letter to Sen. Bayh as their source for this statement.
And what does the CBO say? First, the premiums will actually be 10 to 13 percent higher because of the offsetting requirement for increased benefits in these plans that would increase premiums by 27 to 30 percent. For those who say that the improved benefits are worth this increase, keep in mind that the benefits move from the current actuarial value of 60 percent to an actuarial value of 70 percent. That is still significantly below the 80 percent actuarial value of current employer-sponsored plans. These individual plans will continue to leave many people who need health care exposed to unaffordable out-of-pocket expenses.
What does CBO say about the 14 to 20 percent administrative savings claimed by the Obama administration? Half of it (7 to 10 percent) isn’t even administrative savings but merely represents a dilution of the risk pool with healthy individuals mandated to purchase private health plans.
The other half of the premium savings, also 7 to 10 percent, stems from a slight reduction of administrative costs since the plans would be sold through an insurance exchange eliminating some of the costs such as underwriting and brokers’ fees. When you look at the CBO explanation of where the administrative savings would occur, it is clear that there is not much there, and some of it would be offset by the additional administrative costs of the new exchanges.
Although the Obama administration is using this to claim administrative savings, the total reduction in our national health expenditures (NHE) would be so infinitesimal that it wouldn’t even warrant a footnote in the annual NHE report.
The profound administrative waste in our system is not limited to the outrageous excesses of the private insurers but it permeates the entire system, including the very high costs of the burden that private insurers place on physicians, hospitals and other sectors of the health care delivery system.
Although the amount of the recoverable waste is disputed, everyone agrees that it is profound. Very solid data demonstrates that somewhere around $4 trillion could be recovered over the next decade merely by changing to a single payer national health program – an improved Medicare that covered everyone. Those who argue that it is only half that need to explain why we should therefore refuse the $2 trillion in savings ($ 2,000,000,000,000).
Most of us have tired of conspiracy theories. But think about this. The Obama plan (to be formally released Feb. 22) is a gift of our tax funds to the private insurance industry. Recent events have suggested that the plan may not survive the legislative process. Polls and focus groups show that the public is outraged by insurance company abuses. The insurers have chosen the most inopportune time in the reform process to cram outrageous premiums into the faces of their customers. Or is it inopportune? Look at the platform that it has given President Obama and the cover that it provides for members of Congress. It is giving them an avenue that will allow them to push through this program that the insurance industry understands that it must have for its own survival.
The Obama plan will leave tens of millions uninsured. It will not adequately control health care spending. It will perpetuate the profound administrative waste in our system. Above all, it will revitalize the private insurance industry for decades to come. If we’re not going to react, then we’re simply going to have to learn to live with it.

The Obama administration’s confidence game on administrative savings

Insurance Companies Prosper, Families Suffer: Our Broken Health Insurance System

HealthReform.gov, U.S. Department of Health & Human Services
February 18, 2010

Recently, Anthem Blue Cross of California, an insurance company owned by the for-profit company WellPoint, Incorporated, announced that its individual market premiums would rise by as much as 39 percent in the coming months. This shocking increase isn’t unique. Across the country, families have seen their premiums skyrocket in recent years, and experts predict these increases will continue.

A Broken Health Insurance System Works for Insurance Companies – Not Families

The “value gap” in the health insurance market is evident not just in overall premium hikes, but also in the use of those premium dollars. Over the past decade, the amount private insurance companies spent on administrative costs grew faster than the amount spent on prescription drugs, a trend that is projected to continue through the next decade. Three of the top five insurers cut the proportion of premiums they spent on customers’ medical care last year, committing more to salaries, administrative expenses, and profits.

Lower Premiums.

The Congressional Budget Office estimates that reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent. (25)

(25) Congressional Budget Office. Letter to Senator Bayh. November 30, 2009.

http://www.healthreform.gov/reports/insuranceprospers/index.html

And…

Letter to Senator Bayh

Congressional Budget Office
November 30, 2009.
(Reference 25, above)

Nongroup Policies

CBO and JCT estimate that the average premium per person covered (including dependents) for new nongroup policies would be about 10 percent to 13 percent higher in 2016 than the average premium for nongroup coverage in that same year under current law.

• Average premiums would be 27 percent to 30 percent higher because a greater amount of coverage would be obtained.

• Average premiums would be 7 percent to 10 percent lower because of a net reduction in costs that insurers incurred to deliver the same amount of insurance coverage to the same group of enrollees. Most of that net reduction would stem from the changes in the rules governing the nongroup market.

• Average premiums would be 7 percent to 10 percent lower because of a shift in the types of people obtaining coverage. Most of that change would stem from an influx of enrollees with below-average spending for health care, who would purchase coverage because of the new subsidies to be provided and the individual mandate to be imposed.

New Market Rules Would Reduce Administrative Costs

Compared with plans that would be available in the nongroup market under current law, nongroup policies under the proposal would have lower administrative costs, largely because of the new market rules:

• The influx of new enrollees in response to the individual mandate and new subsidies—combined with the creation of new insurance exchanges—would create larger purchasing pools that would achieve some economies of scale.

• Administrative costs would be reduced by provisions that require some standardization of benefits—for example, by limiting variation in the types of policies that could be offered and prohibiting “riders” to insurance policies (which are amendments to a policy’s terms, such as coverage exclusions for preexisting conditions); insurers incur administrative costs to implement those exclusions.

• Administrative costs would be reduced slightly by the general prohibition on medical underwriting, which is the practice of varying premiums or coverage terms to reflect the applicant’s health status; nongroup insurers incur some administrative costs to implement underwriting.

• Partly offsetting those reductions in administrative costs would be a surcharge that exchange plans would have to pay under the proposal to cover the operating costs of the exchanges.

http://www.cbo.gov/ftpdocs/107xx/doc10781/11-30-Premiums.pdf

Although the Obama administration continues to advocate for reform based on private health plans, they have seized on the current outrage over skyrocketing insurance premium increases to to demonstrate why reform is essential. Although they are attacking the private insurance industry, they continue to push for a reform model that provides this market with tens of millions of new customers.

Do the proposed reforms of the insurance market really provide us with the assurance that everyone will have access to affordable health care? We already know that they could not achieve the goal of covering everyone, and will leave about 25 million with no coverage (RAND 2/10). Also there is doubt that other measures in the legislation will have much impact in containing costs. But what about the egregious administrative waste in our dysfunctional financing system?

In their report released yesterday, the administration claims that “reform will streamline administrative costs of insurance companies and bring more people into the insurance market, lowering premiums of a comparable plan in the individual market by 14 to 20 percent.” They cite the CBO letter to Sen. Bayh as their source for this statement.

And what does the CBO say? First, the premiums will actually be 10 to 13 percent higher because of the offsetting requirement for increased benefits in these plans that would increase premiums by 27 to 30 percent. For those who say that the improved benefits are worth this increase, keep in mind that the benefits move from the current actuarial value of 60 percent to an actuarial value of 70 percent. That is still significantly below the 80 percent actuarial value of current employer-sponsored plans. These individual plans will continue to leave many people who need health care exposed to unaffordable out-of-pocket expenses.

What does CBO say about the 14 to 20 percent administrative savings claimed by the Obama administration? Half of it (7 to 10 percent) isn’t even administrative savings but merely represents a dilution of the risk pool with healthy individuals mandated to purchase private health plans.

The other half of the premium savings, also 7 to 10 percent, stems from a slight reduction of administrative costs since the plans would be sold through an insurance exchange eliminating some of the costs such as underwriting and brokers’ fees. When you look at the CBO explanation of where the administrative savings would occur, it is clear that there is not much there, and some of it would be offset by the additional administrative costs of the new exchanges.

Although the Obama administration is using this to claim administrative savings, the total reduction in our national health expenditures (NHE) would be so infinitesimal that it wouldn’t even warrant a footnote in the annual NHE report.

The profound administrative waste in our system is not limited to the outrageous excesses of the private insurers but it permeates the entire system, including the very high costs of the burden that private insurers place on physicians, hospitals and other sectors of the health care delivery system.

Although the amount of the recoverable waste is disputed, everyone agrees that it is profound. Very solid data demonstrates that somewhere around $4 trillion could be recovered over the next decade merely by changing to a single payer national health program – an improved Medicare that covered everyone. Those who argue that it is only half that need to explain why we should therefore refuse the $2 trillion in savings ($ 2,000,000,000,000).

Most of us have tired of conspiracy theories. But think about this. The Obama plan (to be formally released Feb. 22) is a gift of our tax funds to the private insurance industry. Recent events have suggested that the plan may not survive the legislative process. Polls and focus groups show that the public is outraged by insurance company abuses. The insurers have chosen the most inopportune time in the reform process to cram outrageous premiums into the faces of their customers. Or is it inopportune? Look at the platform that it has given President Obama and the cover that it provides for members of Congress. It is giving them an avenue that will allow them to push through this program that the insurance industry understands that it must have for its own survival.

The Obama plan will leave tens of millions uninsured. It will not adequately control health care spending. It will perpetuate the profound administrative waste in our system. Above all, it will revitalize the private insurance industry for decades to come. If we’re not going to react, then we’re simply going to have to learn to live with it.

L.A. County slashes doctors' reimbursement rate

L.A. County slashes doctors' reimbursement rate

By Molly Hennessy-Fiske and Ron-Gong Lin II
Los Angeles Times
February 17, 2010

Emergency room doctors and on-call specialists treating poor, uninsured patients at private hospitals in Los Angeles County saw their reimbursement rate slashed by county supervisors Tuesday.

The rate cut could lead private hospitals to close emergency rooms and send more patients to crowded county hospitals, officials said.

L.A. County reimburses doctors 27% of estimated fees for patients’ first three days of care at private hospitals under the Physician Services for Indigents Program. Supervisors voted unanimously Tuesday to reduce the rate to 18% as of July 1.

The county had expected to pay doctors with $9 million from the state’s Emergency Medical Services Appropriation. But state lawmakers eliminated the fund, and as the number of uninsured grows, private doctors are expected to file more claims than ever with the county this year, Meyer said.

More than half of Los Angeles County’s 72 hospitals are operating at a deficit and two are in bankruptcy, Lott said (Jim Lott, executive vice president of the Hospital Assn. of Southern California). Countywide, 11 hospitals have closed since 2002, all of which had emergency rooms, he said.

http://articles.latimes.com/2010/feb/17/local/la-me-supes-uninsured17-2010feb17

Comment:

By Don McCanne, MD

“The County” – a hospital to which emergency patients with no money and no insurance are shipped. Most of us remember when The County was always the provider of last resort.

No longer. Any hospital with an emergency room, for humane reasons, must now provide emergency services to any person who presents with a bona fide emergency, regardless of the ability to pay. Unfortunately, the change in attitude of some occurred only after it became a criminal offense to fail to recognize that “ship ’em to The County” fell short of a humane response. The fact that this legislation was needed should not reflect on the great many dedicated professionals who have always been ready to help, without any regard to the financial status of the patient.

But what about paying for this care? Should the private hospitals and physicians write this off as charity? When operating at a deficit with bankruptcy around the corner, that won’t work. Should the county, as the health care provider of last resort, pay for at least the costs of the care? State and local governments are struggling with deficits in their budgets. The 18 percent payment by Los Angeles County’s Physician Services for Indigents Program obviously won’t cover costs. And the state certainly is not helping by eliminating their Emergency Medical Services Appropriation.

There is a way we could do this. We could establish a single payer national health program – an improved and expanded Medicare that includes everyone. Under such a system, even those physicians who have had difficulty understanding a humane health care system would change their response. When that emergency call comes in that always means another paying patient, it will become natural for those physicians to say, “Ship ’em here!”

L.A. County slashes doctors’ reimbursement rate

L.A. County slashes doctors’ reimbursement rate

By Molly Hennessy-Fiske and Ron-Gong Lin II
Los Angeles Times
February 17, 2010

Emergency room doctors and on-call specialists treating poor, uninsured patients at private hospitals in Los Angeles County saw their reimbursement rate slashed by county supervisors Tuesday.

The rate cut could lead private hospitals to close emergency rooms and send more patients to crowded county hospitals, officials said.

L.A. County reimburses doctors 27% of estimated fees for patients’ first three days of care at private hospitals under the Physician Services for Indigents Program. Supervisors voted unanimously Tuesday to reduce the rate to 18% as of July 1.

The county had expected to pay doctors with $9 million from the state’s Emergency Medical Services Appropriation. But state lawmakers eliminated the fund, and as the number of uninsured grows, private doctors are expected to file more claims than ever with the county this year, Meyer said.

More than half of Los Angeles County’s 72 hospitals are operating at a deficit and two are in bankruptcy, Lott said (Jim Lott, executive vice president of the Hospital Assn. of Southern California). Countywide, 11 hospitals have closed since 2002, all of which had emergency rooms, he said.

http://articles.latimes.com/2010/feb/17/local/la-me-supes-uninsured17-2010feb17

Comment:

By Don McCanne, MD

“The County” – a hospital to which emergency patients with no money and no insurance are shipped. Most of us remember when The County was always the provider of last resort.

No longer. Any hospital with an emergency room, for humane reasons, must now provide emergency services to any person who presents with a bona fide emergency, regardless of the ability to pay. Unfortunately, the change in attitude of some occurred only after it became a criminal offense to fail to recognize that “ship ’em to The County” fell short of a humane response. The fact that this legislation was needed should not reflect on the great many dedicated professionals who have always been ready to help, without any regard to the financial status of the patient.

But what about paying for this care? Should the private hospitals and physicians write this off as charity? When operating at a deficit with bankruptcy around the corner, that won’t work. Should the county, as the health care provider of last resort, pay for at least the costs of the care? State and local governments are struggling with deficits in their budgets. The 18 percent payment by Los Angeles County’s Physician Services for Indigents Program obviously won’t cover costs. And the state certainly is not helping by eliminating their Emergency Medical Services Appropriation.

There is a way we could do this. We could establish a single payer national health program – an improved and expanded Medicare that includes everyone. Under such a system, even those physicians who have had difficulty understanding a humane health care system would change their response. When that emergency call comes in that always means another paying patient, it will become natural for those physicians to say, “Ship ’em here!”