PNHP

Uwe Reinhardt on community rating and risk equalization in other nations

Uwe Reinhardt on community rating and risk equalization in other nations

How the World Balances Health Care Risk

By Uwe E. Reinhardt
The New York Times
January 8, 2010

In last week’s post I used a stylized illustration to throw into sharp relief the economic and ethical dimensions of community-rated premiums for health insurance.

I am gratified by the many comments that post drew, and even more so by their quality. (In fact, I have shared these comments with my students in a course on health policy.) The comments show that there is no consensus on the merits of community rating in this country.

Remarkably, in virtually all other industrialized nations, this issue is hardly ever raised. Community rating there has long been widely accepted and is unlikely to be abandoned in the foreseeable future.

The health systems of Switzerland, the Netherlands and Germany are frequently cited as potential models for a reformed American health system. All three countries offer their citizens a wide choice of health insurers — none of which is a government-run health plan. Yet in all three countries full community rating is de rigueur.

Swiss citizens, for example, are required to purchase insurance coverage for a comprehensive health-benefit package from a large menu of private health insurance companies that compete for customers on the basis of the premium they charge for that coverage.

Profits cannot be earned on insurance for the basic package. Premiums do vary among competing insurers, but for a given insurer they can vary only by the deductible and coinsurance rates of the different policies. Neither the individual’s health status nor age affects the premium charged the individual by a given insurer. Health insurers ending up with an older or sicker enrolled risk pool then receive compensation from a risk-equalization fund.

Similarly, Dutch citizens are mandated to purchase insurance coverage for a comprehensive benefit package from a menu of private for-profit or not-for-profit insurers.

Roughly half of the cost of this coverage is financed by a payroll tax — that is, it is based roughly on ability to pay. The other half comes from competitively set premiums collected directly from those enrolled.

The payroll taxes are paid into a national risk-equalization fund that then pays a risk-adjusted amount to the insurance carrier chosen by a particular individual. Among health services researchers, this risk-adjustment mechanism has long been viewed as one of the most sophisticated in the world.

The part of the premium collected by Dutch insurers directly from individuals is fully community-rated. Although these premiums vary among insurers, a given insurer must charge all comers, healthy or not, young or old, the same premium, which is community-rated over that insurer’s pool of those insured.

Germany’s statutory health insurance system, covering about 90 percent of the population, also has a national risk-equalization fund, which is fed by a flat payroll tax on gross income of about 14 percent paid by all employees insured by that system.

The risk-equalization fund makes a risk-adjusted payment to the health insurer (which is a nonprofit “sickness fund”) of the individual’s choice. That payment from the risk-equalization fund, of course, does reflect the individual’s health status and age. But the individual’s payroll-tax payment into the risk-equalization fund is completely independent of the individual’s age and health status. It is based strictly on ability to pay.

I could continue to describe the health insurance systems of other European countries, or Canada, Taiwan, Japan, Korea, Australia or New Zealand. We would find that in none of these health systems does the individual’s or family’s contribution to health insurance reflect that individual’s age or health status.

Community rating is so acceptable in these countries because citizens there view it not only as part of a larger social contract, but also as a vehicle for life-cycle economic planning.

The vast majority of citizens in these countries view health care as a so-called “social good” that is to be shared on the basis of need by all on roughly equal terms and is to be financed largely on the basis of ability to pay.

By contrast, Americans have never agreed on a shared social ethic that should govern their health system, as the current debate over health reform has made visibly and audibly clear.

Furthermore, younger and healthier people in these countries realize that, but for the grace of God, they might become chronically ill only a few years hence and that, in any event, one day they, too, will be older and sicker. By paying more than their actuarially expected cost for health insurance, young and healthy people in these countries join a club, so to speak, that offers them a valuable call option. That call option allows them to procure at age 55 health insurance at a premium much below their actuarially expected cost.

By contrast, Americans have been taught that health insurance is largely a private consumption item purchased year to year and customized to the individual’s circumstances. Indeed, the private health insurance industry in this country has never been able to offer individual Americans the kind of life-cycle health insurance citizens in virtually all other industrialized nations take for granted. With the exception of Medicare, all health insurance in the United States is basically temporary.

Curiously, however, although Americans often flatter themselves with the image of being self-reliant, rugged individualists, they actually tend to rely more than citizens in many other countries on government-run health insurance and pensions in their old age, or when they fall on hard times. It is what makes the creature called “American” so perplexing in the eyes of foreigners.

Furthermore, many Americans who oppose community-rated insurance in the current health-reform plan are themselves beneficiaries of community rating. I shall have something more to say about this oddity in my next post to this blog.

http://economix.blogs.nytimes.com/2010/01/08/how-the-world-balances-health-care-risk/

Posted response of Don McCanne, San Juan Capistrano, CA (response # 2):

Some of us were very disappointed when politicians rejected, up front, the administrative simplification of the single payer model of an improved Medicare for everyone. Nevertheless, in the decision to expand the role of private insurance, Congress still had the opportunity to create a rational system of social insurance which would have included important concepts such as community rating and risk equalization.

The concept of the insurance exchange provided that potential. Yet Congress erected firewalls which will prevent most individuals from purchasing plans within the exchange. They also delayed the initiation of the exchange for a few years, and it will require several more years after that to once again prove that our rejection of the concept of a truly effective social insurance program will perpetuate the inequities, inefficiencies and profound waste in our system.

Worse, in trying to patch together this dysfunctional system, Congress has decided that 20 million or so will be left out, a number destined to increase with continuing increases in health care costs. That’s roughly two-thirds the population of Canada, a country that we criticize merely because of its issues with queues for some elective services.

Proponents of this reform proposal say that we should pass it now, and we can fix it later. Unfortunately, this process almost assures that it will be at least another
decade before our nation takes another serious look at the policies required for an equitable and just health care financing system.

It’s too bad that we don’t have visionaries in power who can say that this isn’t going to work, and we have to move on with fixing it now. But then the citizens of the United States are used to living with our over-priced, dysfunctional system that accepts, as a given, financial hardship, physical suffering, and even death.

Further comment:  Although my published response acknowledges that social insurance programs that depend on private health plans, such as the European programs that Professor Reinhardt describes, can achieve important policy goals such as community rating and risk equalization, I cannot overemphasize the fact that our goal for reform should remain the golden standard of a single payer national health program – an improved Medicare program that includes everyone.

The single payer model has unique features, not found in an exchange of private plans, that improve efficiency, effectiveness, and equity while insuring that absolutely everyone is included.

Private health plans, especially those in the United States that have evolved throughout the past three-quarters of a century, provide a negative value in administration of our health care funds because of their high costs, inefficiency, inequity, and their inability to improve the resource allocation that is needed for a high-performance health care system. They are not a suitable vehicle for a social insurance program.

Although some who read the letter from PNHP to our Senators fixated on the negative message of rejecting the flawed proposal before Congress, many seemed to miss our positive message which is reframed in my comment above: We need “visionaries in power who can say that this isn’t going to work, and we have to move on with fixing it now.” (The PNHP letter stated, “… immediately move to consider… “)

now: at the present time or moment (Merriam-Webster)

immediately: without interval of time (Merriam-Webster)

“Now” and “immediately” are terms that we used to communicate the fact that we need to avoid the decade or so of inevitable torture that so many will experience as we watch this experiment with reform fail us miserably. We need a bona fide program of social insurance now… immediately!

As probation ends for 'Baucus 8,' group vows to press for single-payer health reform

FOR IMMEDIATE RELEASE
Jan. 8, 2010

Contact:
Margaret Flowers, M.D., mdpnhp@gmail.com
Carol Paris, M.D.
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org
       
WASHINGTON – Members of the “Baucus 8,” a group of doctors and health advocates who were arrested at a Senate Finance Committee meeting last May for standing up and asking why single-payer proponents were not being allowed to testify, appeared at the H. Carl Moultrie Courthouse today for their final hearing following six months of probation and, for three of them, 40 hours of community service.

Dr. Pat Salomon, a retired pediatrician, commented on the circumstances that prompted their original action. “When we looked at the list of 41 people testifying in the three days of the Finance Committee’s roundtable on health care, we saw that not a single witness was an advocate of the principle that health care should be a fundamental human right for all in America, nor was there anyone to speak for the majority of the American people who support single-payer Medicare for All,” she said.

Senator Max Baucus, D-Mont., chair of the Senate Finance Committee, had convened the May 5 roundtable to kick off the public consideration of the 111th Congress’ legislative proposals for health care reform. Weeks before, the Leadership Conference for Guaranteed Health Care, a coalition of nurses, doctors, labor, faith, health advocate and community groups representing over 20 million people nationwide, had sent a request to the Finance Committee for one of its leaders testify.

When the request was denied, thousands of single-payer supporters across the nation contacted the committee to request that single payer be included in the discussion of health reform proposals, Salomon said.

“Despite the outpouring of requests, we were clearly told that we would be excluded,” said Katie Robbins of Healthcare-NOW. “This cemented our growing impression that the health care debate was at best, political theater, and that we would have to try a different tactic in order that the only really affordable health reform solution that addresses the real health care needs of 100 percent of our nation be heard.”

Robbins and the seven others then decided to stand up and speak out in a dignified way, one by one, at the Finance Committee and risk arrest for committing nonviolent civil disobedience. They were taken into custody by the Capitol Police, charged with “disruption of Congress” and released several hours later. Another five single-payer advocates were arrested the following week after taking similar action.

Kevin Zeese of ProsperityAgenda.US called the committee “pay to play” because, as he said, “Every seat at the roundtable was bought by the lobbyists. Sen. Baucus received nearly $2 million in campaign contributions from the health industry in 2008 and the entire Senate Finance Committee received over $13 million in 2008.”

“Congress and the White House keep calling the medical industry corporations ‘the stakeholders’ in this reform process,” said Dr. Margaret Flowers of Physicians for a National Health Program (PNHP). “But we know that the true stakeholders are those who provide and receive medical care, not those who profit off the current situation.”

Russell Mokhiber of Single Payer Action said, “After we were arrested, Senator Baucus admitted that it was a mistake to take single payer off the table. Clearly it was. Both the House and Senate bills would require Americans to buy a junk insurance at an inflated price. This bill is a bailout of the insurance industry. Instead of bailing out the private insurance companies, we ought to get rid of them and replace them with one public insurance pool. Everybody in, nobody out. Congress ought to defeat this monstrosity, start from scratch and pass single payer. We will get single payer sooner or later. Better sooner.”

Dr. Carol Paris, also of PNHP and a practicing physician in southern Maryland, said, “Wendell Potter, formerly of CIGNA and Humana, calls the legislation pending in Congress ‘The Private Health Insurance Profit Protection and Enhancement Act.’ And we agree, because the final legislation will benefit the medical corporations, further strengthening their ability to buy members of Congress, and will continue the expensive and complicated health situation that we have in this country right now which makes it difficult for patients and doctors to focus on health care.”

In fact, as an example of the revolving door between those who are lobbyists and those who are staff, several members of the group pointed to Liz Fowler, former vice president of public policy at WellPoint, one of the largest health insurers in the nation. Fowler left her lucrative position to work as the point person in the Senate Finance Committee to oversee the legislation, they said, and her name appears as the creator of a Baucus document titled “Framework for Comprehensive Health Reform” issued last September.

Mark Dudzic of the Labor Campaign for Single Payer said the group’s action has been vindicated by the subsequent actions in the Senate. “The current deplorable proposals for health care reform under consideration in Congress show what happens when you start bargaining by conceding all of the terrain to your opponent. Any shop steward in America would have done a better job than the leaders of the political party in control of overwhelming majorities in both houses of Congress.”

In addition to requesting that the eight be put on probation, the prosecutor insisted that the three defendants who lived in the Washington area also perform 40 hours of community service.

“I spend every day serving my community,” said Adam Schneider, who is employed by Health Care for the Homeless. “I’m proud of the stand we took and had no problem doing an extra 40 hours of service to my community. But if there was any justice in the world, Sen. Baucus and his corporate sponsors would have also been required to spend 40 hours with my clients to understand their desperate need for access to health care before they give a $500 billion bailout to the private health insurance industry.”

The group is unanimous that no matter what passes this year, the push for genuine health care reform is not over. Patients will continue to suffer and die needlessly, families will continue to face bankruptcy and foreclosure because of medical debt until we have a national publicly financed and privately delivered single-payer, Medicare-for-All health system. Such a system would be transparent and accountable to the public, unlike the current situation in which private insurers are experts at hiding information from the public and at violating their own written rules without recourse.

This year saw tremendous growth in a national movement for Medicare for All, they said. They vowed to continue to do whatever it takes, even facing arrest again, to get an honest and open-minded debate about what type of health system is best, so that people of the United States can be healthy and productive and stop worrying about what they will do if accident or illness strikes.

Obama demands tax on Cadillac plans

Obama Urges Excise Tax on High-Cost Insurance

By David M. Herszenhorn
The New York Times
January 6, 2010
President Obama told House Democratic leaders at a meeting on Wednesday that they should include a tax on high-priced insurance policies favored by the Senate in the final version of far-reaching health care legislation, aides said.
The White House has long expressed a preference for the excise tax on high-cost plans, which health economists say could be an important tool in controlling long-term health care spending for the government and for individuals and families.
http://www.nytimes.com/2010/01/07/health/policy/07health.html

And…

Taxing Cadillac Health Plans May Produce Chevy Results

By Jon Gabel, Jeremy Pickreign, Roland McDevitt and Thomas Briggs
Health Affairs
December 3, 2009 (online)
It’s often assumed that high-cost health insurance plans — sometimes called “Cadillac” plans — provide rich benefits to plan subscribers. Health reform provisions that treat these plans like luxuries may be misguided. Only 3.7 percent of variation in the cost of family coverage can be explained by benefit design (actuarial value). Benefit design plus plan type (HMO, PPO, POS, or high-deductible plans) explains 6.1 percent of this variation. Industry type and medical costs in the region also play a role. Most variation in premiums, however, remains largely unexplained.
Our inquiry suggests, however, that analysts should not equate high-cost plans with Cadillac plans, but that in fact other factors — industry and cost of medical inputs — are as important in predicting whether a plan is a high-cost plan. Without appropriate adjustments, a simple cap may exacerbate rather than ameliorate current inequities.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2008.0430

And…

Nation’s Largest RN Organization Blasts Bid to Tax Benefits…

National Nurses United
Press Release
January 6, 2010
The nation’s largest union and professional organization of registered nurses today called on House members to hold the line in opposing a tax on workers’ healthcare benefits.
“It is unconscionable that workers and families with employer-sponsored health plans, who receive virtually no benefits from the proposed legislation, would have their health coverage taxed and seriously eroded,” said Deborah Burger, RN, co-president of the 150,000 member National Nurses United, formed last month through a unification of the California Nurses Association/NNOC, United American Nurses, and the Massachusetts Nurses Association.
“Advocates of the tax have made clear their intent: to force working people into cheaper, high deductible plans that provide less coverage and shift more costs to employees. The inevitable effect will be more people skipping needed medical care, enduring much higher out-of-pocket costs and risking financial ruin due to medical bills,” said NNU Co-president Karen Higgins, RN.
“Enactment of the tax, whose central premise is to control healthcare costs by reducing utilization of needed medical care while failing to control the pricing practices of the healthcare industry, would symbolize a central failing of the proposed legislation, ceding far too much to the insurers and the rest of the healthcare industry,” Burger added.
http://www.calnurses.org/media-center/press-releases/2010/january/nation-s-largest-rn-organization-blasts-bid-to-tax-benefits-urges-other-reforms-to-protect-patients-families-in-final-talks-on-healthcare-reform-legislation.html

What is the deal on the excise tax on high-premium “Cadillac” health plans, and why is President Obama pushing this tax so vigorously in the final stages of enacting health care reform?
Well, he is pushing it because his advisers tell him that it would help to achieve his first and foremost goal of slowing the increase in health care spending. The rhetoric being used implies that taxing high-premium plans would reduce the waste of paying for extravagant, non-essential benefits that are of little practical value. We’ll first dismiss this misperception and then follow with an explanation of why this form of cost management results in detrimental health outcomes.
The so-called Cadillac plans are merely plans with high premiums. The Health Affairs article by Jon Gabel and his colleagues demonstrates that only 3.7 percent in the variation in premiums can be explained by the actuarial value inherent in the benefit design. In most instances, the higher premiums are not due to “Cadillac” benefits, but they are due to other factors, such as the type of industry providing the employment and the medical costs in the region. In most instances, the higher premiums cannot even be explained. We can speculate that our reliance on our dysfunctional system of financing care through relatively unregulated private insurer pricing may be the most important culprit in providing Chevy plans at Cadillac prices.
So if the excise tax is going to push premiums down anyway, how could this be detrimental? Employers will not want to pay the excise tax, so they will demand from the insurers premiums that are at or below the tax threshold. Insurers will not simply reduce the premiums and continue to offer the same benefit packages. They will lower their benefits, lowering the actuarial value of the plans. There is absolutely no doubt that high and ever-increasing deductibles will be the norm.
A plethora of studies has demonstrated that individuals with high-deductible plans reduce their use of beneficial health care services. Although the RAND HIE data has been inappropriately misused to suggest that a reduction in beneficial services causes no harm, in fact many other studies have shown that health outcomes are worse when people don’t receive the health care that they should have.
The philosophy of controlling health care spending by shifting the financial burden to individuals and families is the most serious defect in the legislation before Congress. The excise tax on high-premium plans is only an example of this shift. The most glaring example is that the national standard proposed for basic plans has an actuarial value set at the unacceptably low level of 70 percent or even less. Making insured individuals pay money they don’t have to access care that is unaffordable is the worst way to control health care spending, that is, except for designing a program that deliberately leaves tens of millions of individuals with no insurance at all, just to satisfy budget hawks who understand only spending and not revenues.
Instead of enacting cruel policies that negatively impact patients on the demand side of the equation, we need to enact policies on the supply side that would benefit patients – all patients. That is precisely what a single payer national health program would be designed to do.
Isn’t it time that we told the lobbyists for the special interests and our elected leaders who revere them where they can stuff their Cadillacs?

Uwe Reinhardt on community rating and risk equalization in other nations

How the World Balances Health Care Risk

By Uwe E. Reinhardt
The New York Times
January 8, 2010
In last week’s post I used a stylized illustration to throw into sharp relief the economic and ethical dimensions of community-rated premiums for health insurance.
I am gratified by the many comments that post drew, and even more so by their quality. (In fact, I have shared these comments with my students in a course on health policy.) The comments show that there is no consensus on the merits of community rating in this country.
Remarkably, in virtually all other industrialized nations, this issue is hardly ever raised. Community rating there has long been widely accepted and is unlikely to be abandoned in the foreseeable future.
The health systems of Switzerland, the Netherlands and Germany are frequently cited as potential models for a reformed American health system. All three countries offer their citizens a wide choice of health insurers — none of which is a government-run health plan. Yet in all three countries full community rating is de rigueur.
Swiss citizens, for example, are required to purchase insurance coverage for a comprehensive health-benefit package from a large menu of private health insurance companies that compete for customers on the basis of the premium they charge for that coverage.
Profits cannot be earned on insurance for the basic package. Premiums do vary among competing insurers, but for a given insurer they can vary only by the deductible and coinsurance rates of the different policies. Neither the individual’s health status nor age affects the premium charged the individual by a given insurer. Health insurers ending up with an older or sicker enrolled risk pool then receive compensation from a risk-equalization fund.
Similarly, Dutch citizens are mandated to purchase insurance coverage for a comprehensive benefit package from a menu of private for-profit or not-for-profit insurers.
Roughly half of the cost of this coverage is financed by a payroll tax — that is, it is based roughly on ability to pay. The other half comes from competitively set premiums collected directly from those enrolled.
The payroll taxes are paid into a national risk-equalization fund that then pays a risk-adjusted amount to the insurance carrier chosen by a particular individual. Among health services researchers, this risk-adjustment mechanism has long been viewed as one of the most sophisticated in the world.
The part of the premium collected by Dutch insurers directly from individuals is fully community-rated. Although these premiums vary among insurers, a given insurer must charge all comers, healthy or not, young or old, the same premium, which is community-rated over that insurer’s pool of those insured.
Germany’s statutory health insurance system, covering about 90 percent of the population, also has a national risk-equalization fund, which is fed by a flat payroll tax on gross income of about 14 percent paid by all employees insured by that system.
The risk-equalization fund makes a risk-adjusted payment to the health insurer (which is a nonprofit “sickness fund”) of the individual’s choice. That payment from the risk-equalization fund, of course, does reflect the individual’s health status and age. But the individual’s payroll-tax payment into the risk-equalization fund is completely independent of the individual’s age and health status. It is based strictly on ability to pay.
I could continue to describe the health insurance systems of other European countries, or Canada, Taiwan, Japan, Korea, Australia or New Zealand. We would find that in none of these health systems does the individual’s or family’s contribution to health insurance reflect that individual’s age or health status.
Community rating is so acceptable in these countries because citizens there view it not only as part of a larger social contract, but also as a vehicle for life-cycle economic planning.
The vast majority of citizens in these countries view health care as a so-called “social good” that is to be shared on the basis of need by all on roughly equal terms and is to be financed largely on the basis of ability to pay.
By contrast, Americans have never agreed on a shared social ethic that should govern their health system, as the current debate over health reform has made visibly and audibly clear.
Furthermore, younger and healthier people in these countries realize that, but for the grace of God, they might become chronically ill only a few years hence and that, in any event, one day they, too, will be older and sicker. By paying more than their actuarially expected cost for health insurance, young and healthy people in these countries join a club, so to speak, that offers them a valuable call option. That call option allows them to procure at age 55 health insurance at a premium much below their actuarially expected cost.
By contrast, Americans have been taught that health insurance is largely a private consumption item purchased year to year and customized to the individual’s circumstances. Indeed, the private health insurance industry in this country has never been able to offer individual Americans the kind of life-cycle health insurance citizens in virtually all other industrialized nations take for granted. With the exception of Medicare, all health insurance in the United States is basically temporary.
Curiously, however, although Americans often flatter themselves with the image of being self-reliant, rugged individualists, they actually tend to rely more than citizens in many other countries on government-run health insurance and pensions in their old age, or when they fall on hard times. It is what makes the creature called “American” so perplexing in the eyes of foreigners.
Furthermore, many Americans who oppose community-rated insurance in the current health-reform plan are themselves beneficiaries of community rating. I shall have something more to say about this oddity in my next post to this blog.
http://economix.blogs.nytimes.com/2010/01/08/how-the-world-balances-health-care-risk/

Posted response of Don McCanne, San Juan Capistrano, CA (response # 2):
Some of us were very disappointed when politicians rejected, up front, the administrative simplification of the single payer model of an improved Medicare for everyone. Nevertheless, in the decision to expand the role of private insurance, Congress still had the opportunity to create a rational system of social insurance which would have included important concepts such as community rating and risk equalization.
The concept of the insurance exchange provided that potential. Yet Congress erected firewalls which will prevent most individuals from purchasing plans within the exchange. They also delayed the initiation of the exchange for a few years, and it will require several more years after that to once again prove that our rejection of the concept of a truly effective social insurance program will perpetuate the inequities, inefficiencies and profound waste in our system.
Worse, in trying to patch together this dysfunctional system, Congress has decided that 20 million or so will be left out, a number destined to increase with continuing increases in health care costs. That’s roughly two-thirds the population of Canada, a country that we criticize merely because of its issues with queues for some elective services.
Proponents of this reform proposal say that we should pass it now, and we can fix it later. Unfortunately, this process almost assures that it will be at least another decade before our nation takes another serious look at the policies required for an equitable and just health care financing system.
It’s too bad that we don’t have visionaries in power who can say that this isn’t going to work, and we have to move on with fixing it now. But then the citizens of the United States are used to living with our over-priced, dysfunctional system that accepts, as a given, financial hardship, physical suffering, and even death.
Further comment: Although my published response acknowledges that social insurance programs that depend on private health plans, such as the European programs that Professor Reinhardt describes, can achieve important policy goals such as community rating and risk equalization, I cannot overemphasize the fact that our goal for reform should remain the golden standard of a single payer national health program – an improved Medicare program that includes everyone.
The single payer model has unique features, not found in an exchange of private plans, that improve efficiency, effectiveness, and equity while insuring that absolutely everyone is included.
Private health plans, especially those in the United States that have evolved throughout the past three-quarters of a century, provide a negative value in administration of our health care funds because of their high costs, inefficiency, inequity, and their inability to improve the resource allocation that is needed for a high-performance health care system. They are not a suitable vehicle for a social insurance program.
Although some who read the letter from PNHP to our Senators fixated on the negative message of rejecting the flawed proposal before Congress, many seemed to miss our positive message which is reframed in my comment above: We need “visionaries in power who can say that this isn’t going to work, and we have to move on with fixing it now.” (The PNHP letter stated, “… immediately move to consider… “)
now: at the present time or moment (Merriam-Webster)
immediately: without interval of time (Merriam-Webster)
“Now” and “immediately” are terms that we used to communicate the fact that we need to avoid the decade or so of inevitable torture that so many will experience as we watch this experiment with reform fail us miserably. We need a bona fide program of social insurance now… immediately!

Obama demands tax on Cadillac plans

Obama Urges Excise Tax on High-Cost Insurance

By David M. Herszenhorn
The New York Times
January 6, 2010

President Obama told House Democratic leaders at a meeting on Wednesday that they should include a tax on high-priced insurance policies favored by the Senate in the final version of far-reaching health care legislation, aides said.

The White House has long expressed a preference for the excise tax on high-cost plans, which health economists say could be an important tool in controlling long-term health care spending for the government and for individuals and families.

http://www.nytimes.com/2010/01/07/health/policy/07health.html

And…

Taxing Cadillac Health Plans May Produce Chevy Results

By Jon Gabel, Jeremy Pickreign, Roland McDevitt and Thomas Briggs
Health Affairs
December 3, 2009 (online)

It’s often assumed that high-cost health insurance plans — sometimes called “Cadillac” plans — provide rich benefits to plan subscribers. Health reform provisions that treat these plans like luxuries may be misguided. Only 3.7 percent of variation in the cost of family coverage can be explained by benefit design (actuarial value). Benefit design plus plan type (HMO, PPO, POS, or high-deductible plans) explains 6.1 percent of this variation. Industry type and medical costs in the region also play a role. Most variation in premiums, however, remains largely unexplained.

Our inquiry suggests, however, that analysts should not equate high-cost plans with Cadillac plans, but that in fact other factors — industry and cost of medical inputs — are as important in predicting whether a plan is a high-cost plan. Without appropriate adjustments, a simple cap may exacerbate rather than ameliorate current inequities.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.2008.0430

And…

Nation’s Largest RN Organization Blasts Bid to Tax Benefits…

National Nurses United
Press Release
January 6, 2010

The nation’s largest union and professional organization of registered nurses today called on House members to hold the line in opposing a tax on workers’ healthcare benefits.

“It is unconscionable that workers and families with employer-sponsored health plans, who receive virtually no benefits from the proposed legislation, would have their health coverage taxed and seriously eroded,” said Deborah Burger, RN, co-president of the 150,000 member National Nurses United, formed last month through a unification of the California Nurses Association/NNOC, United American Nurses, and the Massachusetts Nurses Association.

“Advocates of the tax have made clear their intent: to force working people into cheaper, high deductible plans that provide less coverage and shift more costs to employees. The inevitable effect will be more people skipping needed medical care, enduring much higher out-of-pocket costs and risking financial ruin due to medical bills,” said NNU Co-president Karen Higgins, RN.

“Enactment of the tax, whose central premise is to control healthcare costs by reducing utilization of needed medical care while failing to control the pricing practices of the healthcare industry, would symbolize a central failing of the proposed legislation, ceding far too much to the insurers and the rest of the healthcare industry,” Burger added.

http://www.calnurses.org/media-center/press-releases/2010/january/nation-s-largest-rn-organization-blasts-bid-to-tax-benefits-urges-other-reforms-to-protect-patients-families-in-final-talks-on-healthcare-reform-legislation.html

Comment:

By Don McCanne, MD

What is the deal on the excise tax on high-premium “Cadillac” health plans, and why is President Obama pushing this tax so vigorously in the final stages of enacting health care reform?

Well, he is pushing it because his advisers tell him that it would help to achieve his first and foremost goal of slowing the increase in health care spending. The rhetoric being used implies that taxing high-premium plans would reduce the waste of paying for extravagant, non-essential benefits that are of little practical value. We’ll first dismiss this misperception and then follow with an explanation of why this form of cost management results in detrimental health outcomes.

The so-called Cadillac plans are merely plans with high premiums. The Health Affairs article by Jon Gabel and his colleagues demonstrates that only 3.7 percent in the variation in premiums can be explained by the actuarial value inherent in the benefit design. In most instances, the higher premiums are not due to “Cadillac” benefits, but they are due to other factors, such as the type of industry providing the employment and the medical costs in the region. In most instances, the higher premiums cannot even be explained. We can speculate that our reliance on our dysfunctional system of financing care through relatively unregulated private insurer pricing may be the most important culprit in providing Chevy plans at Cadillac prices.

So if the excise tax is going to push premiums down anyway, how could this be detrimental? Employers will not want to pay the excise tax, so they will demand from the insurers premiums that are at or below the tax threshold. Insurers will not simply reduce the premiums and continue to offer the same benefit packages. They will lower their benefits, lowering the actuarial value of the plans. There is absolutely no doubt that high and ever-increasing deductibles will be the norm.

A plethora of studies has demonstrated that individuals with high-deductible plans reduce their use of beneficial health care services. Although the RAND HIE data has been inappropriately misused to suggest that a reduction in beneficial services causes no harm, in fact many other studies have shown that health outcomes are worse when people don’t receive the health care that they should have.

The philosophy of controlling health care spending by shifting the financial burden to individuals and families is the most serious defect in the legislation before Congress. The excise tax on high-premium plans is only an example of this shift. The most glaring example is that the national standard proposed for basic plans has an actuarial value set at the unacceptably low level of 70 percent or even less. Making insured individuals pay money they don’t have to access care that is unaffordable is the worst way to control health care spending, that is, except for designing a program that deliberately leaves tens of millions of individuals with no insurance at all, just to satisfy budget hawks who understand only spending and not revenues.

Instead of enacting cruel policies that negatively impact patients on the demand side of the equation, we need to enact policies on the supply side that would benefit patients – all patients. That is precisely what a single payer national health program would be designed to do.

Isn’t it time that we told the lobbyists for the special interests and our elected leaders who revere them where they can stuff their Cadillacs?

President Obama asks for greater affordability

Premiums are key issue for health care negotiators

By Ricardo Alonso-Zaldivar
The Washington Post
January 6, 2010

Congressional Democrats and President Barack Obama began work in earnest Tuesday on difficult issues still standing in the way of their national health care overhaul after months of tortuous debate. Topping the list: How to help Americans pay for insurance premiums.

Obama “… stated his intention to work with leaders to strengthen affordability … beyond what is in the Senate bill,” said a House leadership aide, who spoke on condition of anonymity because the meeting was private.

(House Speaker Nancy) Pelosi said she wants the final product “to ensure affordability for the middle class, accountability for the insurance companies, (and) accessibility by lowering costs at every stage.”

http://www.washingtonpost.com/wp-dyn/content/article/2010/01/05/AR2010010501560.html

Comment:

By Don McCanne, MD

From the very beginning of his political campaign President Obama stressed that his highest priority in health care reform was to make health care affordable. He even rejected universal coverage through an individual mandate, insisting that you can’t require individuals to purchase a private insurance plan that they can’t afford.

In his meeting with the Democratic leadership yesterday, during the final stages of the reform process, he stressed again that affordability must be further strengthened.

The question of affordability has often been framed as a balance between what is affordable for employers, for individuals, and for the government. But it is really individuals, collectively, that bear the costs of health care. Individuals pay for insurance premiums and out-of-pocket expenses. Individuals also pay for employer-sponsored health plans through foregone wage increases. Those who dispute that will have to admit that the cost of premiums that are not supported by lower wages would then be passed on to individuals as consumers of the products or services provided by the businesses. And of course the government is financed by individuals though taxes, either paid directly or paid by higher consumer prices for taxes collected from businesses.

Why is it important to acknowledge that the individual is the source of all health care financing? It’s simply because our entire national health expenditures (NHE) represent the financial burden for which individuals bear the collective responsibility, and it is that burden that must be made affordable.

Unfortunately, most attention was directed to making health care affordable for the government. Rather than doing that by controlling our NHE, Congress merely played shell games with the budget, shifting the flow of funds in different directions, creating only the false appearance of affordable reform that was fully paid for. Balancing a government budget on the backs of others has almost nothing in common with the concept of affordability.

What is most unfortunate is that President Obama, right from the very beginning, rejected the model of financing reform that would make health care affordable for everyone. The model he selected is the most expensive model and falls far short on effectiveness, equity, and universality. Where his model saves money is in policies that are designed to place more financial barriers between the patients and the care that they need – policies that are primarily business tools of the private insurance industry, especially the low actuarial values of the plans.

It has been proven repeatedly, through simulations and through real-life experiences, that a single payer national health program or a national health service are the only models that would actually slow health care cost increases while truly covering everyone through equitable financing of a universal risk pool. They are truly effective in controlling spending through mechanisms such as reduction in administrative waste, global budgeting for hospitals, negotiation of pricing, and budgeting of capital improvements. These are the least expensive and most effective models of ensuring that everyone receives the health care that they need.

Although Americans remain uncomfortable with the concept of a government owned and operated national health service, they are very receptive of the concept of an improved Medicare that would cover everyone. That would be affordable for businesses, for the government, and, most importantly, for the individuals who really are paying all of the bills anyway.

President Obama needs to sit down with the Democratic leadership and say, “Hey, it’s absolutely imperative that we make health care affordable, so let’s look at this single payer thing again.”

Here's the needed reform you won't find in the House bill

By Louis Schlickman
Idaho Statesman, Reader’s View
Dec 31, 2009

From Rep. Walt Minnick’s Web site: “… I believe that health care reform must reduce costs, rely on the private sector, prevent restrictions based on age or employment status or preconditions, and must ensure coverage for all Americans.”

I agree. The combined House bill will not achieve those stated goals. However, I would like to explain why I think we can get you to the forest through the trees.

1. Reform must reduce the ridiculous $2.5 trillion health care spending bill we have in the United States. We could save up to $400 billion by getting rid of private health insurance companies and their wasteful marketing, underwriting, claim denials, and exorbitant CEO payments. They provide no health care benefit whatsoever.

Another $700 billion could be saved by modeling our system after clinically integrated health systems like the Mayo Clinic and Kaiser Permanente. They offer credible cost savings and improved patient outcomes.

2. The segments of the private sector we should rely on are businesses and individuals that provide actual patient-related care. Our doctors, clinics, hospitals, etc., are the core private sector to save.

3. We must abolish restrictions on age, employment and pre-existing conditions. Private insurers, however, will just pass on the increased costs to the public purchasing their insufficient products. An improved Medicare for everyone would have enrollment at birth and disenrollment at death – very simple. No increased cost to cover marketing, underwriting or profit and CEO waste.

4. Rep. Minnick wants to ensure coverage for all Americans. However, he doesn’t want a one-size-fits-all plan with comprehensive benefits for every citizen at birth up until death. He prefers we choose from among a multitude of private plans that offer us underinsurance products that leave most of us just one severe illness or injury away from bankruptcy. A single-payer-financed system doesn’t have those fake choices. You would have the real choice of any doctor or hospital for your care.

He can see the trees but can’t seem to find the forest. The real solution is the U.S. National Health Care Act, HR 676 (the House bill). You enroll at birth and have comprehensive benefits for all medically necessary care. No tricky claims departments or waste on advertising and underwriting. Our health care dollars would go to actual health care, not investors and CEOs. The private-sector competition to provide quality care and achieve growth would occur where it should – in the small-business physician’s office, clinic, lab or hospital culture. We are not a commodity; we are a necessary social infrastructure benefit keeping our communities and our nation healthy and strong. This is arguably more important than our police, fire and military protection.

A publicly financed health care system with predominantly privately delivered health care in our excellent U.S. facilities is easily achievable, would be highly ethical, and would provide profound economic benefits to our local and national businesses in competing with other companies that previously did not provide health care benefits because of costs.

Briefly: An improved Medicare For All is the most fiscally conservative and socially responsible reform option. It would reduce costs; rely predominantly on the private health care delivery system; categorically eliminate restrictions based on age, employment or pre-existing conditions; and would include all Americans at birth until death. It could save upwards of $1 trillion in the first year or two. That’s a pretty sweet one-size-fits-all program. And no deficit increase for our fiscal conservative hawk, Walt Minnick.

Visit www.idahohealthcareforall.org/ or www.pnhp.org for more information.

Dr. Louis Schlickman is a practicing internal medicine physician in Meridian and a member of Idaho Health Care For All, the state chapter of Physicians for a National Health Program.

Here’s the needed reform you won’t find in the House bill

By Louis Schlickman
Idaho Statesman, Reader’s View
Dec 31, 2009

From Rep. Walt Minnick’s Web site: “… I believe that health care reform must reduce costs, rely on the private sector, prevent restrictions based on age or employment status or preconditions, and must ensure coverage for all Americans.”

I agree. The combined House bill will not achieve those stated goals. However, I would like to explain why I think we can get you to the forest through the trees.

1. Reform must reduce the ridiculous $2.5 trillion health care spending bill we have in the United States. We could save up to $400 billion by getting rid of private health insurance companies and their wasteful marketing, underwriting, claim denials, and exorbitant CEO payments. They provide no health care benefit whatsoever.

Another $700 billion could be saved by modeling our system after clinically integrated health systems like the Mayo Clinic and Kaiser Permanente. They offer credible cost savings and improved patient outcomes.

2. The segments of the private sector we should rely on are businesses and individuals that provide actual patient-related care. Our doctors, clinics, hospitals, etc., are the core private sector to save.

3. We must abolish restrictions on age, employment and pre-existing conditions. Private insurers, however, will just pass on the increased costs to the public purchasing their insufficient products. An improved Medicare for everyone would have enrollment at birth and disenrollment at death – very simple. No increased cost to cover marketing, underwriting or profit and CEO waste.

4. Rep. Minnick wants to ensure coverage for all Americans. However, he doesn’t want a one-size-fits-all plan with comprehensive benefits for every citizen at birth up until death. He prefers we choose from among a multitude of private plans that offer us underinsurance products that leave most of us just one severe illness or injury away from bankruptcy. A single-payer-financed system doesn’t have those fake choices. You would have the real choice of any doctor or hospital for your care.

He can see the trees but can’t seem to find the forest. The real solution is the U.S. National Health Care Act, HR 676 (the House bill). You enroll at birth and have comprehensive benefits for all medically necessary care. No tricky claims departments or waste on advertising and underwriting. Our health care dollars would go to actual health care, not investors and CEOs. The private-sector competition to provide quality care and achieve growth would occur where it should – in the small-business physician’s office, clinic, lab or hospital culture. We are not a commodity; we are a necessary social infrastructure benefit keeping our communities and our nation healthy and strong. This is arguably more important than our police, fire and military protection.

A publicly financed health care system with predominantly privately delivered health care in our excellent U.S. facilities is easily achievable, would be highly ethical, and would provide profound economic benefits to our local and national businesses in competing with other companies that previously did not provide health care benefits because of costs.

Briefly: An improved Medicare For All is the most fiscally conservative and socially responsible reform option. It would reduce costs; rely predominantly on the private health care delivery system; categorically eliminate restrictions based on age, employment or pre-existing conditions; and would include all Americans at birth until death. It could save upwards of $1 trillion in the first year or two. That’s a pretty sweet one-size-fits-all program. And no deficit increase for our fiscal conservative hawk, Walt Minnick.

Visit www.idahohealthcareforall.org/ or www.pnhp.org for more information.

Dr. Louis Schlickman is a practicing internal medicine physician in Meridian and a member of Idaho Health Care For All, the state chapter of Physicians for a National Health Program.

Atul Gawande’s Recent New Yorker Article on Health Care Reform

By Suzanne Gordon
January 3rd, 2010

Boston surgeon Atul Gawande has become one of the most acclaimed mainstream media critics of American health care.  An elegant writer with first-hand hospital experience, he has pointed out, in many articles for The New Yorker and several books, a number of ways that patient care could be improved.  My major concern about his reporting has been its consistent failure to acknowledge the critical role that nurses and other non-physicians play in our health care system. For more details of this critique, see ” The Cure: Can Doctors Change How They Think?” (http://bostonreview.net/BR33.2/gordon.php).  I now have another.  In his December 14, 2009  New Yorker commentary, entitled “Testing, Testing,” (http://www.newyorker.com/reporting/2009/12/14/091214fa_fact_gawande?currentPage=2) Gawande discusses the fact that  Administration backed health care plan about to be enacted by Congress will fail to address medical cost inflation.  ”Does the bill end medicine’s destructive piecemeal payment system? Does it replace paying for quantity with paying for quality? Does it institute nationwide structural changes that curb costs and raise quality?,” he askss.  ”It does not,” is the obvious reply.

 The author points out that these fundamental flaws have drawn heavy  flak from a right-wing determined to block “ObamaCare” in any form. Progressive economists and single-payer advocates have also sharply criticized both the House and Senate health care reform bills—that are currently awaiting joint-committee “reconciliation”–for their deeply flawed incrementalism.

Nevertheless, Gawande remains quite bullish about this emerging Capitol Hill mishmash because, despite its many troubled compromises,  “what it offers is . . . pilot programs.” Gawande  reassures New Yorker readers that a watered-down, piece-meal approach to governmental reorganization of private markets (in this case, for health insurance) may not be so bad, after all.  To make his case, he takes us down legislative memory lane and recounts the fitful 20th century evolution of public intervention in agriculture.

In the early 1900’s, the U. S. Department of Agriculture began to sort out—for better or worse, depending on your point of view—the problem of food in America. Like health care today, the crisis then involved a big disconnect between widespread social need and affordable private provision.Gawande recounts how a patchwork quilt of  federal regulation and costly tax-payer subsidies ended up producing safer, cheaper, more plentiful food stuffs for the nation. Meanwhile,   farmers were forced or helped to “innovate,” just like doctors and  hospitals must do now, as part of the “reform” process.

Gawande does acknowledge, in passing, that U.S. farm policy has had a few glitches of its own over the years. But that is a political understatement of massive proportions. Our special interest-driven reshaping of agriculture has placed the bulk of it firmly under the control of “agri-business.” Its first cousins include all the big drug and insurance companies now expecting to reap a very profitable harvest from federally-mandated private medical coverage.  Just as the medical industry has largely driven the solo physician practitioner out of business, federally supported agri-business driven the family farmer into near extinction. The overall result of what Gawande applauds, down on the farm, has already proved to be pretty disastrous, in different ways, for small family farmers, consumers, and the environment, it has also had disaterous medical side effects.   And there is a direct link between this public policy back-fire and one major contributor to rising health care costs—namely, obesity and its myriad medical side-effects. Has the obviously well-read Dr. Gawande never bothered to peruse Michael Pollan’s The Omnivore’s Dilemma , with its a well-documented indictment of the public health consequences of tax-supported industrial agriculture?

For decades, the heavily-subsidized production of corn, corn and more corn has unleashed a sugary flood of Katrina proportions that’s now nationwide in scope. As Pollan points out, our millions of  overweight corn syrup, and corn fed meat and chicken (and now farm- fed fish) “survivors” face an epidemic of heart attacks, high-blood pressure, and diabetes—each condition a costly hospital stay waiting to happen. (see  Annual Medical Spending Attributed to Obesity.  Health Affairs http://content.healthaffairs.org/cgi/content/short/hlthaff.28.5.w822) And, speaking of “testing, testing,” that  list doesn’t even include the current and future casualties of USDA-approved meat eating! 

 Among the threats facing carnivores these days (and I’m one of them) is a stream of contaminated food items, from here and abroad.  On December 31, 2009, The New York Times ran a front-page story exposing the failure of federal inspectors to stop Beef Products Inc. from sending large quantities of tainted hamburger to the market. Officials at the United States Department of Agriculture endorsed the firm’s ammonia treatment process as a way of keeping deadly E. coli  bacteria “to an undetectable level.”  In 2007, they decided it was so effective that the firm should be exempted from routine USDA testing. Unfortunately, some Beef Product burgers turned out to be very unsafe to eat.  http://www.nytimes.com/2009/12/31/us/31meat.html.  This article followed an even more horrific NYTimes front page story about E.coli tainted hamburgers produced by Cargill that crippled a 22 -year- old dance instructor.  http://www.nytimes.com/2009/10/04/health/04meat.html.

Anyone concerned about the overall health and well-being of Americans   is faced with a tremendous dilemma when it comes to the current health care bills wending their way through Congress.  These bills promise to address the problem of the uninsured.  The problem is they do little to protect   the American public and American patients from the rapaciousness of the private, for-profit insurance and pharmaceutical industries.  That’s why people genuinely concerned about the fate of reform should be wary of  hyping the kind of  regulatory “reform” and industry restructuring process that helped many of us get heavier and sicker in the first place. But that’s exactly what Gawande does with his ahistorical cheerleading for the two-(or three?)headed calf that’s headed for birthing sometime this month on  Capitol Hill.  As a lont-time advocate of  real health care restructuring, Gawande’s article, ironically, makes me even more worried about the future we face under ObamaCare.  If it’s going to be just a replay of America’s costly, century-long, and still out-of-control experiment with “market reform” in agriculture, then will things get better or worse?

http://www.suzannegordon.com/?p=233

Only Insurance Fat Cats Win

BRUCE TRIGG, M.D.
Letter to the editor, Albuquerque Journal
January 6, 2010

H. EDWARD HANWAY, the chairman and CEO of Cigna Corporation, one of the largest private insurance companies, has a great deal to be thankful for this holiday season. Cigna, which had a profit of over $1 billion in 2007 and paid Hanway $30.16 million in 2008, has fared quite well in both the House and Senate health reform plans.

Rather than eliminating this and other administrative waste, not a dime of which goes for patient care, from the health system, Congress is bailing them out with billions of our tax dollars. In fact, the state will use its power to force people, both employers and employees, to purchase health insurance from Cigna or one of its small group of competitors. If they don’t they will face steep fines.

And the insurance that they are forced to purchase will only cover 60 percent of medical costs, meaning that millions of Americans will still continue to face bankruptcy for unpaid medical bills. The booming insurance stock prices on Wall Street are their reward for investing hundreds of millions of dollars for lobbying Congress. …

From the very beginning of this corrupt process, when the Democratic leadership declared that single-payer — a not-for-profit health payment system used in other countries that would eliminate private health insurers — was “off the table,” it has been obvious where this race to the bottom was headed.

 The health care syst em should be run solely for the benefit of patients. The most ardent supporters of this legislation are the insurance companies and pharmaceutical industries, not the majority of patients, doctors and nurses who polls show support a single-payer, improved Medicare-for-All national health plan.

These congressional health bills are a boondoggle for the private insurance industry and a despicable sell-out of women’s reproductive health rights. Congress should start again from scratch — this time with single-payer at the table.