Aetna and Partners in Care Test New Approach to Health Care Services

Aetna
News Release
November 13, 2008

New Model Creates a “Medical Home” for Patients that is Based on a Strong Primary Care Relationship and Close Coordination with Other Care Providers

Aetna (NYSE: AET) and Partners In Care, Corp. (PIC) today announced a pilot program to test an innovative new health care model that will make the health care system an easier place for patients. Called a “Patient-Centered Medical Home” the model emphasizes the role of the primary care physician (PCP) in managing and coordinating patient care across a range of care providers, including specialists and hospitals.

The Patient-Centered Medical Home concept of care has been under development since the mid-90s and is based on a patient having an ongoing relationship with a personal physician trained to provide first contact and continuous, comprehensive care. This personal physician leads a team of care providers at the practice level who collectively take responsibility for the ongoing care of patients, looking beyond the walls of their own office, and communicating with the patient’s other providers to assure the treatment plans are followed. The concept is designed to nurture and strengthen the relationship between the patient and physician.

“PIC sees its role as a physician organization as finding ways to support the practicing physicians in their effort to improve the overall quality of care provided to their patients, and by rewarding physicians for achieving national certification standards. This joint effort will have a significant impact,” said Kevin O’Brien, President & CEO, Partners In Care.

http://www.aetna.com/news/newsReleases/2008/1113_PICCorp.html

And…

Partners in Care, Corp.

Constituted as a for-profit, closely held, New Jersey corporation, the equity is held by seventy individual shareholders belonging to the United Medical Group (UMG).

Using the techniques developed under full-risk contract management, PIC has bundled patient health advocacy, managed care administration, and medical informatics into a series of customizable product and service lines. Our customer base includes individual physician practices, large physician organizations, mid-sized employers, health plans, and benefit consultants / brokers.

http://www.piccorp.com/aboutus.htm

Comment:

By Don McCanne, MD

Our very expensive but highly dysfunctional system of financing health care has resulted in serious deficiencies and neglect of the infrastructure of our health care delivery system. Foremost amongst these problems is the rapid deterioration of the primary care infrastructure.

It is not as if we have remained unaware of this very serious deficiency. In fact, the American Academy of Family Physicians, the American College of Physicians, the American Academy of Pediatrics, and the American Osteopathic Association have supported the medical home concept as a model for reinforcing primary care. The label is not important. What is important is the concept that everyone should have available a primary care entry point that improves access to coordinated, comprehensive health care services. This is not about gatekeepers. It’s about everyone receiving the health care that they need.

Our dysfunctional, fragmented, multi-payer and no payer system of financing health care has been incapable of realigning incentives and appropriately allocating resources to build and maintain the primary care structure that we need. We spend more money and we get less.

Don’t worry. Aetna, in partnership with Partners in Care, has usurped the “medical home” label to… provide us with a comprehensive primary care system? Well… No. On top of our flawed systems of financing and delivering care, they are adding “customizable product and service lines.” With our system already weighted down with an excess of egregiously wasteful administrative services, they are using the medical home label to sell us even more egregiously wasteful administrative services!

Why Does U.S. Health Care Cost So Much? (Part I)

By Uwe E. Reinhardt
The New York Times
November 14, 2008
The graph (available at the link below) tells a compact story of United States health spending relative to that of other nations.
Shown on the horizontal axis is the gross domestic product per capita in 2006. The vertical axis represents 2006 health spending per capita. The data points in the graph represent two dozen developed countries that are members of the Organization for Economic Cooperation and Development (O.E.C.D.).
The data are expressed in Purchasing Parity Dollars (PPP$). This metric is designed to adjust for cross-national differences in the purchasing power of national currencies relative to the real goods and services. One can think of PPP$s as dollars that buy roughly the same basket of real goods and services in different countries.
You’ll notice that there is enormous variation in health spending per capita in different countries within the O.E.C.D. But the graph also indicates that there exists a very strong relationship between the G.D.P. per capita of these countries (roughly a measure of ability to pay) and per-capita health spending.
Just knowing the G.D.P. per capita of nations helps us explain about 86 percent of the variation in how much different countries pay for health care for the average person. Canada, for example, on average spent only PPP$3,678 on health care per person in 2006, which is about 55 percent of the amount the United States paid per person. But Canada’s G.D.P. per capita in 2006 was also smaller than the comparable United States figure, although not that much smaller (it was 84 percent of the American level).
The line helps us estimate that roughly $1,141 of the $3,036 difference between Canadian and American health spending per capita — or 38 percent — can be explained by the underlying difference in G.D.P. per capita alone.
An additional insight from the graph, however, is that even after adjustment for differences in G.D.P. per capita, the United States in 2006 spent $1,895 more on health care than would have been predicted after such an adjustment. If G.D.P. per capita were the only factor driving the difference between United States health spending and that of other nations, the United States would be expected to have spent an average of only $4,819 per capita on health care rather than the $6,714 it actually spent.
Health-services researchers call the difference between these numbers, here $1,895, “excess spending.” That term, however, is not meant to convey “excessive spending,” but merely a difference driven by factors other than G.D.P. per capita. Prominent among these other factors are:
1. higher prices for the same health care goods and services than are paid in other countries for the same goods and services;
2. significantly higher administrative overhead costs than are incurred in other countries with simpler health-insurance systems;
3. more widespread use of high-cost, high-tech equipment and procedures than are used in other countries;
4. higher treatment costs triggered by our uniquely American tort laws, which in the context of medicine can lead to “defensive medicine” — that is, the application of tests and procedures mainly as a defense against possible malpractice litigation, rather than as a clinical imperative.
There are three other explanations that are widely — but erroneously — thought among non-experts to be cost drivers in the American health spending. To wit:
1. that the aging of our population drives health spending
2. that we get better quality from our health system than do other nations, and
3. that we get better health outcomes from our system
I will comment in more detail on factors that do and do not drive health spending in subsequent posts.
http://economix.blogs.nytimes.com/2008/11/14/why-does-us-health-care-cost-so-much-part-i/

Whoa. This one’s pretty heavy, but you really don’t have to understand Purchasing Parity Dollars and the other economic lingo to be able to understand the take-home message.
There is an important reason to present the economic data, and that is that we need to approach health care reform using highly credible factual data. Many individuals have an opinion as to why heath care costs in the United States are so high, but those views are often based on nothing more than hearsay, and often are incorrect. Reform must be based on solid facts.
So what is Prof. Reindardt’s take-home message? Although somewhat repetitive, it is worth emphasizing these points again.
What does NOT increase costs:
1. Living longer does NOT contribute significantly to health care costs. Most health care spending occurs near the end of life, and we are allocated only one death apiece. That spent on chronic diseases during the additional years of life expectancy is negligible when compared to end-of-life spending.
2. Higher quality of health care in the United States is NOT a cause of increased health care costs for the simple reason that the quality of our health care is quite mediocre, on average, when compared with other nations.
3. Better health outcomes are NOT a reason for higher health care costs simply because our outcomes are not better by most measures, and on several measures we are worse.
What DOES increase costs:
1. Nations with a high GDP have more money to spend on health care, and they spend it. (The graph in the original article demonstrates this point well. It also demonstrates that the United States is the single outlier of the two dozen nations, with much higher per capita spending than would be projected by our very high GDP.)
2. The United States pays higher prices for health care services and products than do other nations for the same services and products. This was demonstrated in the Health Affairs article, “It’s the Prices, Stupid.” Our dysfunctional system of financing health care has not been capable of optimizing prices (think of pharmaceuticals). We could do much better using negotiated pricing through a single financing system.
3. Our fragmented, multi-payer system has resulted in profound administrative waste, adding significantly to our high health care costs. Proposals to limit administrative costs of private insurers to 15 percent of their revenues will have very little impact since many are already at that level, and this limit will not provide any relief for the administrative burden that our multi-payer system has placed on the health care delivery system. Administrative savings would be possible only by adopting a simpler health insurance system.
4. Our costs are higher because of our greater use of expensive, high-tech services and equipment that all too often provides no benefit and may even be detrimental. We need to identify those services not providing value so that we can redirect our resources elsewhere (a complex but doable task).
5. Our American tort system has provoked the use of flat-of-the-curve defensive medicine that wastes resources, thereby increasing costs. How we should reform the tort system remains controversial, but it must be addressed.
6. The contraction of our primary care infrastructure has contributed indirectly to our high health care costs. Primary care environments provide quality care at a lower cost. Shifting health care access to specialized environments increases costs through some of the mechanisms listed above. Overuse of emergency departments is a problem because of the strain on the capacities of the system, but it is not much of a contributor to increased costs since the marginal costs of the additional load are quite small.
Everyone agrees that health care reform must address the high costs of health care. Most current proposals merely expand the way we are already paying for care without changes that will have any major impact on these cost drivers.
Instead of expanding our current dysfunctional financing system and then attempting to transform it into a social insurance model, it would be so much easier and much less expensive to simply replace it with a single payer national health program.

By Uwe E. Reinhardt
The New York Times
November 14, 2008

The graph (available at the link below) tells a compact story of United States health spending relative to that of other nations.

Shown on the horizontal axis is the gross domestic product per capita in 2006. The vertical axis represents 2006 health spending per capita. The data points in the graph represent two dozen developed countries that are members of the Organization for Economic Cooperation and Development (O.E.C.D.).

The data are expressed in Purchasing Parity Dollars (PPP$). This metric is designed to adjust for cross-national differences in the purchasing power of national currencies relative to the real goods and services. One can think of PPP$s as dollars that buy roughly the same basket of real goods and services in different countries.

You’ll notice that there is enormous variation in health spending per capita in different countries within the O.E.C.D. But the graph also indicates that there exists a very strong relationship between the G.D.P. per capita of these countries (roughly a measure of ability to pay) and per-capita health spending.

Just knowing the G.D.P. per capita of nations helps us explain about 86 percent of the variation in how much different countries pay for health care for the average person. Canada, for example, on average spent only PPP$3,678 on health care per person in 2006, which is about 55 percent of the amount the United States paid per person. But Canada’s G.D.P. per capita in 2006 was also smaller than the comparable United States figure, although not that much smaller (it was 84 percent of the American level).

The line helps us estimate that roughly $1,141 of the $3,036 difference between Canadian and American health spending per capita — or 38 percent — can be explained by the underlying difference in G.D.P. per capita alone.

An additional insight from the graph, however, is that even after adjustment for differences in G.D.P. per capita, the United States in 2006 spent $1,895 more on health care than would have been predicted after such an adjustment. If G.D.P. per capita were the only factor driving the difference between United States health spending and that of other nations, the United States would be expected to have spent an average of only $4,819 per capita on health care rather than the $6,714 it actually spent.

Health-services researchers call the difference between these numbers, here $1,895, “excess spending.” That term, however, is not meant to convey “excessive spending,” but merely a difference driven by factors other than G.D.P. per capita. Prominent among these other factors are:

1. higher prices for the same health care goods and services than are paid in other countries for the same goods and services;

2. significantly higher administrative overhead costs than are incurred in other countries with simpler health-insurance systems;

3. more widespread use of high-cost, high-tech equipment and procedures than are used in other countries;

4. higher treatment costs triggered by our uniquely American tort laws, which in the context of medicine can lead to “defensive medicine” — that is, the application of tests and procedures mainly as a defense against possible malpractice litigation, rather than as a clinical imperative.

There are three other explanations that are widely — but erroneously — thought among non-experts to be cost drivers in the American health spending. To wit:

1. that the aging of our population drives health spending

2. that we get better quality from our health system than do other nations, and

3. that we get better health outcomes from our system

I will comment in more detail on factors that do and do not drive health spending in subsequent posts.

http://economix.blogs.nytimes.com/2008/11/14/why-does-us-health-care-cost-so-much-part-i/

Comment:

By Don McCanne, MD

Whoa. This one’s pretty heavy, but you really don’t have to understand Purchasing Parity Dollars and the other economic lingo to be able to understand the take-home message.

There is an important reason to present the economic data, and that is that we need to approach health care reform using highly credible factual data. Many individuals have an opinion as to why heath care costs in the United States are so high, but those views are often based on nothing more than hearsay, and often are incorrect. Reform must be based on solid facts.

So what is Prof. Reindardt’s take-home message? Although somewhat repetitive, it is worth emphasizing these points again.

What does NOT increase costs:

1. Living longer does NOT contribute significantly to health care costs. Most health care spending occurs near the end of life, and we are allocated only one death apiece. That spent on chronic diseases during the additional years of life expectancy is negligible when compared to end-of-life spending.

2. Higher quality of health care in the United States is NOT a cause of increased health care costs for the simple reason that the quality of our health care is quite mediocre, on average, when compared with other nations.

3. Better health outcomes are NOT a reason for higher health care costs simply because our outcomes are not better by most measures, and on several measures we are worse.

What DOES increase costs:

1. Nations with a high GDP have more money to spend on health care, and they spend it. (The graph in the original article demonstrates this point well. It also demonstrates that the United States is the single outlier of the two dozen nations, with much higher per capita spending than would be projected by our very high GDP.)

2. The United States pays higher prices for health care services and products than do other nations for the same services and products. This was demonstrated in the Health Affairs article, “It’s the Prices, Stupid.” Our dysfunctional system of financing health care has not been capable of optimizing prices (think of pharmaceuticals). We could do much better using negotiated pricing through a single financing system.

3. Our fragmented, multi-payer system has resulted in profound administrative waste, adding significantly to our high health care costs. Proposals to limit administrative costs of private insurers to 15 percent of their revenues will have very little impact since many are already at that level, and this limit will not provide any relief for the administrative burden that our multi-payer system has placed on the health care delivery system. Administrative savings would be possible only by adopting a simpler health insurance system.

4. Our costs are higher because of our greater use of expensive, high-tech services and equipment that all too often provides no benefit and may even be detrimental. We need to identify those services not providing value so that we can redirect our resources elsewhere (a complex but doable task).

5. Our American tort system has provoked the use of flat-of-the-curve defensive medicine that wastes resources, thereby increasing costs. How we should reform the tort system remains controversial, but it must be addressed.

6. The contraction of our primary care infrastructure has contributed indirectly to our high health care costs. Primary care environments provide quality care at a lower cost. Shifting health care access to specialized environments increases costs through some of the mechanisms listed above. Overuse of emergency departments is a problem because of the strain on the capacities of the system, but it is not much of a contributor to increased costs since the marginal costs of the additional load are quite small.

Everyone agrees that health care reform must address the high costs of health care. Most current proposals merely expand the way we are already paying for care without changes that will have any major impact on these cost drivers.

Instead of expanding our current dysfunctional financing system and then attempting to transform it into a social insurance model, it would be so much easier and much less expensive to simply replace it with a single payer national health program.

Lessons from the U.K.

By Martin Roland, D.M.
The New England Journal of Medicine
November 13, 2008
The United Kingdom takes the importance of primary care for granted. The U.K. government is effectively the country’s single payer, and successive administrations have been convinced by mounting evidence that primary care promotes high-quality, cost-effective, and equitable health care. If anything, the U.K. government has become more convinced over the past 15 years that strong primary care needs to be at the heart of the country’s health care system — quite the reverse of the situation in the United States. U.K. primary care physicians now have average earnings of $220,000 (in U.S. dollars), which is more than many specialists earn.
Having a single-payer system helps a great deal in terms of organizing quality-improvement activities.
U.K. primary care physicians increasingly work in multidisciplinary teams, with nurses taking on an increasing proportion of the work. Nurses see patients with minor illnesses and assume responsibility for the routine management of chronic diseases.
Having a single-payer system also means that U.K. primary care physicians hold each patient’s lifelong record, which includes a letter regarding every visit to a specialist. Virtually all primary care physicians use electronic medical records, and laboratories now generally download lab results directly into family practitioners’ computer systems. Again, the government took advantage of having a single-payer system to define common standards to which all suppliers of electronic medical records must adhere.
It is hard to discuss U.K. medical care without mentioning universal coverage. Although it may not be politically achievable in the United States, universal access to care is probably the key factor behind findings that U.K. citizens have better health outcomes than their U.S. counterparts despite having health care costs that are a fraction of those in the United States.
http://content.nejm.org/cgi/content/full/359/20/2087-b

What can we learn from the U.K.? Through a single payer system the U.K. has been able to build a strong primary care infrastructure with teams organized to provide high-quality coordinated care for everyone. They have done this at a fraction of the costs of U.S. health care, while compensating their primary care physicians very generously.
And how is the U.S. going to use this information? We are going to reject it because it is not a uniquely American solution. Instead, we are about to expand our dysfunctional, fragmented, wasteful, costly system of financing health care, simply because it is uniquely American!?
The U.K. system, like that of many other nations, uses their power as a monopsony to purchase much greater value in health care. The United States now wants to use our tax dollars as credits to help us purchase individual plans that do not cooperate but compete. That competition not only results in tremendous administrative waste, it also destroys any prospect of creating an effective monopsony.
So we are going to tax ourselves to provide even more funds to our unique, corporate-model private insurers to allow them to burn up more resources while establishing a barrier to much needed delivery system reform (a barrier because the financing is fragmented).
We do have a very weak monopsony in the form of Medicare. Can’t we learn lessons from Medicare, and then project the improvements that we could make if it were converted into a strong monopsony? Maybe as a single payer that wouldn’t be uniquely American, but couldn’t we pretend it is until we achieve the structural reform that we desperately need?

By Martin Roland, D.M.
The New England Journal of Medicine
November 13, 2008

The United Kingdom takes the importance of primary care for granted. The U.K. government is effectively the country’s single payer, and successive administrations have been convinced by mounting evidence that primary care promotes high-quality, cost-effective, and equitable health care. If anything, the U.K. government has become more convinced over the past 15 years that strong primary care needs to be at the heart of the country’s health care system — quite the reverse of the situation in the United States. U.K. primary care physicians now have average earnings of $220,000 (in U.S. dollars), which is more than many specialists earn.

Having a single-payer system helps a great deal in terms of organizing quality-improvement activities.

U.K. primary care physicians increasingly work in multidisciplinary teams, with nurses taking on an increasing proportion of the work. Nurses see patients with minor illnesses and assume responsibility for the routine management of chronic diseases.

Having a single-payer system also means that U.K. primary care physicians hold each patient’s lifelong record, which includes a letter regarding every visit to a specialist. Virtually all primary care physicians use electronic medical records, and laboratories now generally download lab results directly into family practitioners’ computer systems. Again, the government took advantage of having a single-payer system to define common standards to which all suppliers of electronic medical records must adhere.

It is hard to discuss U.K. medical care without mentioning universal coverage. Although it may not be politically achievable in the United States, universal access to care is probably the key factor behind findings that U.K. citizens have better health outcomes than their U.S. counterparts despite having health care costs that are a fraction of those in the United States.

http://content.nejm.org/cgi/content/full/359/20/2087-b

Comment:

By Don McCanne, MD

What can we learn from the U.K.? Through a single payer system the U.K. has been able to build a strong primary care infrastructure with teams organized to provide high-quality coordinated care for everyone. They have done this at a fraction of the costs of U.S. health care, while compensating their primary care physicians very generously.

And how is the U.S. going to use this information? We are going to reject it because it is not a uniquely American solution. Instead, we are about to expand our dysfunctional, fragmented, wasteful, costly system of financing health care, simply because it is uniquely American!?

The U.K. system, like that of many other nations, uses their power as a monopsony to purchase much greater value in health care. The United States now wants to use our tax dollars as credits to help us purchase individual plans that do not cooperate but compete. That competition not only results in tremendous administrative waste, it also destroys any prospect of creating an effective monopsony.

So we are going to tax ourselves to provide even more funds to our unique, corporate-model private insurers to allow them to burn up more resources while establishing a barrier to much needed delivery system reform (a barrier because the financing is fragmented).

We do have a very weak monopsony in the form of Medicare. Can’t we learn lessons from Medicare, and then project the improvements that we could make if it were converted into a strong monopsony? Maybe as a single payer that wouldn’t be uniquely American, but couldn’t we pretend it is until we achieve the structural reform that we desperately need?

Senator Takes Initiative on Health Care

By Robert Pear
The New york Times
November 11, 2008
Without waiting for President-elect Barack Obama, Senator Max Baucus, the chairman of the Finance Committee, will unveil a detailed blueprint on Wednesday to guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for health benefits.
… would eventually require everyone to have health insurance coverage, with federal subsidies for those who could not otherwise afford it.
… broadly compatible with Mr. Obama’s campaign promises. But Mr. Baucus’s 35,000-word plan would go further than Mr. Obama’s in one respect, eventually requiring all people — not just children — to have coverage.
… create a nationwide marketplace, a “health insurance exchange,” where people could compare and buy insurance policies. The options would include private insurance policies and a new public plan similar to Medicare.
Insurers could no longer deny coverage to people who had been sick. Congress would also limit insurers’ ability to charge higher premiums because of a person’s age or prior illness.
People would have a duty to obtain coverage when affordable options were available to all through employers or through the insurance exchange. This obligation “would be enforced, possibly through the tax system,” the plan says.
People age 55 to 64 should be able to buy Medicare coverage if they do not have access to a public insurance program or a group health plan.
Medicaid would be available to everyone below the poverty level…
The State Children’s Health Insurance Program would be expanded to cover all uninsured youngsters in families with incomes at or below 250 percent of the poverty level …
He would offer tax credits to small businesses to help them defray the costs of providing health benefits to employees.
To make insurance more affordable for those who buy coverage on their own, Mr. Baucus would offer tax credits to individuals and families with incomes at or below four times the poverty level…
http://www.nytimes.com/2008/11/12/washington/12health.html

And…

Call to Action, Health Reform 2009

Senator Max Baucus, Chairman, Senate Finance Committee
November 12, 2008
Individual Responsibility
Once affordable, high-quality, and meaningful health insurance options are available to all Americans, it will be each individual’s responsibility to have coverage. This step is necessary to make the entire health care system function properly.
Premium Subsidies
In order to make health coverage affordable for all Americans, refundable tax credits would be available to individuals and families with incomes at or below four times the Federal poverty level. These tax subsidies would be available to individuals and families who purchased coverage through the Health Insurance Exchange. The Independent Health Coverage Council would define what an “affordable” premium is, taking into account the reasonable percent of income to be spent on health care coverage. The premium subsidy would make up the difference between the amount suggested by the Council and the premium amount charged by the plan. The amount of the subsidy could be based on a benchmark that would be equal to a locally adjusted, average premium in the Exchange. This construct would encourage individuals to be prudent purchasers of health care policies.
Conclusion
Each of the key challenges facing our health care system — lack of access to care, the cost of care, and the need for better-quality care — must be addressed in concert. Covering millions of uninsured through a broken health system will be fiscally unsustainable. Attempting to address the inefficiencies plaguing our system and the perverse incentives in the delivery system without covering the uninsured will fail to alleviate the burden of uncompensated care and cost shifting. The time for incremental improvements has passed; health care reform must be comprehensive in scope.
This Call to Action provides a starting point for the upcoming health care reform debate. It is a vision and not a legislative proposal. It is comprehensive but not an exhaustive exploration of every health care issue that can or should be considered.
The next crucial step is a constructive dialog on policy priorities among policymakers, stakeholders, health policy thought leaders and the public. Consensus will be difficult to achieve, but common ground from which to build can and must be found.
Call to Action, Health Reform 2009 (98 pages):
http://finance.senate.gov/healthreform2009/finalwhitepaper.pdf

And…

2009 Health Reform Plan

Sen. Max Baucus
C-SPAN
November 12, 2008
News Conference
Sen. Baucus: “Some people suggest the United States should have a single payer system. I disagree. I don’t think a single payer system makes sense in this country.”
http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=282373-1

As the powerful chairman of the Senate Finance Committee, and as a person passionately dedicated to comprehensive health care reform, we need to listen to what Sen. Max Baucus has to say. “Call to Action, Health Reform 2009” is his white paper describing serious problems with our health care system, and includes a collection of legislative proposals to address those problems. It is an important report because it does represent what seems to be the prevailing views in Washington, D.C. on the direction for reform.
There are many valuable recommendations in this report. Some of them should be enacted soon as possible as urgent measures to hold us over while we are pressing forward with comprehensive reform. Others can be enacted independently of the comprehensive legislative package. But some represent flawed policy concepts and should never be enacted.
Only one of the major flaws will be touched on here: the mandate for individuals to purchase their own health plans should they not be covered under their employers’ plans.
Under this proposal, a family of four will have to fully fund their own coverage if their income is over $84,800 (four times the poverty level). According to the 2008 Milliman Medical Index, a family of four is already paying an average of $15,600 for health care. That means that this family would be paying over 18 percent of their income for health care. Since this is average, many families would be paying a much higher percentage.
Many in the policy community believe that health care expenditures over 10 percent of income expose individuals or families to the potential of financial hardship. To keep expenditures at 10 percent, a family of four with average medical expenses would require an income over $156,000. Those with above average expenses would require even greater incomes.
Financing health care with private health plans no longer makes sense. We need a single universal risk pool that is funded equitably using progressive tax policies. Sen. Baucus says that he doesn’t think that a single payer system makes sense in this country, but it’s the only system that does.

By Robert Pear
The New york Times
November 11, 2008

Without waiting for President-elect Barack Obama, Senator Max Baucus, the chairman of the Finance Committee, will unveil a detailed blueprint on Wednesday to guarantee health insurance for all Americans by facilitating sales of private insurance, expanding Medicaid and Medicare, and requiring most employers to provide or pay for health benefits.

… would eventually require everyone to have health insurance coverage, with federal subsidies for those who could not otherwise afford it.

… broadly compatible with Mr. Obama’s campaign promises. But Mr. Baucus’s 35,000-word plan would go further than Mr. Obama’s in one respect, eventually requiring all people — not just children — to have coverage.

… create a nationwide marketplace, a “health insurance exchange,” where people could compare and buy insurance policies. The options would include private insurance policies and a new public plan similar to Medicare.

Insurers could no longer deny coverage to people who had been sick. Congress would also limit insurers’ ability to charge higher premiums because of a person’s age or prior illness.

People would have a duty to obtain coverage when affordable options were available to all through employers or through the insurance exchange. This obligation “would be enforced, possibly through the tax system,” the plan says.

People age 55 to 64 should be able to buy Medicare coverage if they do not have access to a public insurance program or a group health plan.

Medicaid would be available to everyone below the poverty level…

The State Children’s Health Insurance Program would be expanded to cover all uninsured youngsters in families with incomes at or below 250 percent of the poverty level …

He would offer tax credits to small businesses to help them defray the costs of providing health benefits to employees.

To make insurance more affordable for those who buy coverage on their own, Mr. Baucus would offer tax credits to individuals and families with incomes at or below four times the poverty level…

http://www.nytimes.com/2008/11/12/washington/12health.html

And…

Call to Action, Health Reform 2009

Senator Max Baucus, Chairman, Senate Finance Committee
November 12, 2008

Individual Responsibility

Once affordable, high-quality, and meaningful health insurance options are available to all Americans, it will be each individual’s responsibility to have coverage. This step is necessary to make the entire health care system function properly.

Premium Subsidies

In order to make health coverage affordable for all Americans, refundable tax credits would be available to individuals and families with incomes at or below four times the Federal poverty level. These tax subsidies would be available to individuals and families who purchased coverage through the Health Insurance Exchange. The Independent Health Coverage Council would define what an “affordable” premium is, taking into account the reasonable percent of income to be spent on health care coverage. The premium subsidy would make up the difference between the amount suggested by the Council and the premium amount charged by the plan. The amount of the subsidy could be based on a benchmark that would be equal to a locally adjusted, average premium in the Exchange. This construct would encourage individuals to be prudent purchasers of health care policies.

Conclusion

Each of the key challenges facing our health care system — lack of access to care, the cost of care, and the need for better-quality care — must be addressed in concert. Covering millions of uninsured through a broken health system will be fiscally unsustainable. Attempting to address the inefficiencies plaguing our system and the perverse incentives in the delivery system without covering the uninsured will fail to alleviate the burden of uncompensated care and cost shifting. The time for incremental improvements has passed; health care reform must be comprehensive in scope.

This Call to Action provides a starting point for the upcoming health care reform debate. It is a vision and not a legislative proposal. It is comprehensive but not an exhaustive exploration of every health care issue that can or should be considered.

The next crucial step is a constructive dialog on policy priorities among policymakers, stakeholders, health policy thought leaders and the public. Consensus will be difficult to achieve, but common ground from which to build can and must be found.

Call to Action, Health Reform 2009 (98 pages):
http://finance.senate.gov/healthreform2009/finalwhitepaper.pdf

And…

2009 Health Reform Plan

Sen. Max Baucus
C-SPAN
November 12, 2008
News Conference

Sen. Baucus: “Some people suggest the United States should have a single payer system. I disagree. I don’t think a single payer system makes sense in this country.”

http://www.c-spanarchives.org/library/index.php?main_page=product_video_info&products_id=282373-1

Comment:

By Don McCanne, MD

As the powerful chairman of the Senate Finance Committee, and as a person passionately dedicated to comprehensive health care reform, we need to listen to what Sen. Max Baucus has to say. “Call to Action, Health Reform 2009” is his white paper describing serious problems with our health care system, and includes a collection of legislative proposals to address those problems. It is an important report because it does represent what seems to be the prevailing views in Washington, D.C. on the direction for reform.

There are many valuable recommendations in this report. Some of them should be enacted soon as possible as urgent measures to hold us over while we are pressing forward with comprehensive reform. Others can be enacted independently of the comprehensive legislative package. But some represent flawed policy concepts and should never be enacted.

Only one of the major flaws will be touched on here: the mandate for individuals to purchase their own health plans should they not be covered under their employers’ plans.

Under this proposal, a family of four will have to fully fund their own coverage if their income is over $84,800 (four times the poverty level). According to the 2008 Milliman Medical Index, a family of four is already paying an average of $15,600 for health care. That means that this family would be paying over 18 percent of their income for health care. Since this is average, many families would be paying a much higher percentage.

Many in the policy community believe that health care expenditures over 10 percent of income expose individuals or families to the potential of financial hardship. To keep expenditures at 10 percent, a family of four with average medical expenses would require an income over $156,000. Those with above average expenses would require even greater incomes.

Financing health care with private health plans no longer makes sense. We need a single universal risk pool that is funded equitably using progressive tax policies. Sen. Baucus says that he doesn’t think that a single payer system makes sense in this country, but it’s the only system that does.