Hawaii ending universal child health care

By Mark Niesse
The Miami Herald
October 17, 2008

Hawaii is dropping the only state universal child health care program in the country just seven months after it launched.

Gov. Linda Lingle’s administration cited budget shortfalls and other available health care options for eliminating funding for the program. A state official said families were dropping private coverage so their children would be eligible for the subsidized plan (Keiki Care).

“People who were already able to afford health care began to stop paying for it so they could get it for free,” said Dr. Kenny Fink, the administrator for Med-QUEST at the Department of Human Services. “I don’t believe that was the intent of the program.”

http://www.miamiherald.com/living/health/healthAP/story/729860.html

Comment:

By Don McCanne, MD

Although Hawaii’s Keiki Care for uninsured children was promoted as a program that would ensure that all children had health care coverage, it never would have achieved universality, partly because of various eligibility and enrollment issues. Also the coverage was not as comprehensive as coverage under Medicaid. Nevertheless, it did provide limited coverage for about 2,000 of the state’s uninsured children (out of an uncertain number estimated between 3,500 and 16,000).

In designing incremental reform measures, many in the policy community insist that programs must be designed to prevent crowd out. Crowd out is a phenomenon in which individuals will drop out or be pushed out of an existing program, such as employer-sponsored coverage, in order to be enrolled in another program, such as Keiki Care. Administrators who wish to minimize spending in public programs frown upon crowd out.

Although this program is only seven months old, and, to be eligible, children must have been uninsured for at least six months, it is unlikely that crowd out was a significant contributor to the very modest enrollment rates.

Most economists consider crowd out to be undesirable because the numbers of individuals crowded out of existing coverage are subtracted from the total in the alternative program to determine the net gain in numbers covered. That might be important if your only goal were to increase the numbers with coverage, but aren’t there other desirable goals? Hint: In 1966, was it really detrimental that Medicare crowded out coverage in the private insurance sector for those over 65?

Keiki Care is yet another example of an incremental program designed to approach the goal of universal coverage a single step at a time. Although these programs are reported as successes, the long-term trend is that almost all measurements continue to demonstrate deterioration in affordability and coverage.

As long as we continue down the path of patch-work incremental reform, we are going to continue to hear alarms sounded over crowd out, adverse selection, moral hazard, medical loss ratios, investor return, lack of price transparency, high premiums due to excess regulation of private plans, and on and on, and we will never reach our goal of affordable health care for everyone.

It’s time to dump the perverse policies that serve the interests of others, and adopt policies that would serve the interests of patients – a single payer national health program.

The Impact of Health Reform on Underinsurance in Massachusetts: Do the insured have adequate protection?

By Sharon K. Long
Urban Institute
October 2008
In an attempt to protect individuals from underinsurance, as part of that health reform effort Massachusetts established a standard for “minimum creditable coverage” (MCC) that outlines the key benefits that must be included in an individual’s health insurance plan if it is to satisfy the state’s new individual mandate for health insurance coverage. The required benefits, which are intended to protect those with insurance from high health care costs, include preventive and primary care, prescription drugs, a maximum on the annual deductible and a maximum on out-of-pocket spending, among other things.
In brief, underinsurance means that an individual’s health insurance does not adequately protect him or her from high health care costs in the event of a serious illness or accident. A complete assessment of the adequacy of insurance coverage requires detailed information on the coverage and cost-sharing provisions of the individual’s health insurance plan. Given the data available in our survey, we are limited to a narrower focus that considers the individual’s out-of-pocket (OOP) heath care costs. (Note that this is OOP costs for health care beyond the premium that the individual pays to purchase private coverage.) High OOP health care costs provides a conservative, lower-bound estimate of underinsurance as it only captures inadequate insurance coverage for those who had high health care costs in the last year. Consequently, this measure of underinsurance does not include any of the individuals with similar health insurance coverage who did not have high health care costs during the year.
We follow the approach used by Schoen et al. (2005, 2008) and use two standards to assess underinsurance:
(1) Having OOP costs of 10 percent or more of family income–a threshold that has been used in prior studies of underinsurance, and
(2) Having OOP costs of 5 percent or more of family income for low-income families (defined as those with family income less than 200 percent of poverty)–a threshold for financial risk that is consistent with cost-sharing provisions in the State Children’s Health Insurance Program (SCHIP).
Given the limitations of our data, the measure of underinsurance reported here provides a conservative measure of the extent of underinsurance in Massachusetts.
Drop in Underinsurance. In fall 2006, at least 4 percent of all working-age adults with full-year insurance coverage in Massachusetts were underinsured under the first definition of underinsurance (10 percent or more of family income in OOP health care costs) and at least 7 percent were underinsured under the second definition. Under health reform, the share of insured adults who were underinsured under both definitions dropped by about 2 percentage points between fall 2006 and fall 2007, down to about 3 percent and 6 percent underinsured, respectively.
http://www.urban.org/UploadedPDF/411771_mass_underinsurance.pdf
Results restated in a summary by The Commonwealth Fund:
In fall 2006, 7.3 percent of all Massachusetts adults were underinsured (using the definitions above: out-of-pocket costs equal to 10% or more of income for higher-income people, 5% or more for lower-income people). After the enactment of health reform, that share declined to 5.6 percent.
http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=711279

Many news reports now tout the success of the Massachusetts health care reform program in reducing the numbers of the uninsured, even though falling far short of universal coverage. This new report also suggests that the rate of underinsurance may have declined, an important point since it was feared that efforts to make the plans more affordable would defeat the financial security that the plans should provide.
Massachusetts already had higher regulatory standards for their insurance products, but to be certain that coverage would be adequate under this program, they established a standard for “minimum credible coverage,” with benefits “intended to protect those with insurance from high health care costs.” How well has that worked?
Using estimates that omit many instances of underinsurance, this study shows that the rate of underinsurance is still over three-fourths of the rate that existed before the program was initiated. A program that eliminates less than one-fourth of the problem targeted should not be considered a successful program.
Of particular concern is that those individuals who are currently healthy, the majority of all insured, were not considered to be underinsured even if their coverage is not adequate to protect them against financial hardship should they develop significant medical problems in the future. Since one of the most important functions of insurance is to protect against unforeseen losses, the incidence of underinsurance is far greater than this study would indicate.
Massachusetts really needs to take another look at the single payer model of reform. By design, single payer includes everyone and eliminates the financial hardships of underinsurance. Their current reform model will always fall short of those goals.

By Sharon K. Long
Urban Institute
October 2008

In an attempt to protect individuals from underinsurance, as part of that health reform effort Massachusetts established a standard for “minimum creditable coverage” (MCC) that outlines the key benefits that must be included in an individual’s health insurance plan if it is to satisfy the state’s new individual mandate for health insurance coverage. The required benefits, which are intended to protect those with insurance from high health care costs, include preventive and primary care, prescription drugs, a maximum on the annual deductible and a maximum on out-of-pocket spending, among other things.

In brief, underinsurance means that an individual’s health insurance does not adequately protect him or her from high health care costs in the event of a serious illness or accident. A complete assessment of the adequacy of insurance coverage requires detailed information on the coverage and cost-sharing provisions of the individual’s health insurance plan. Given the data available in our survey, we are limited to a narrower focus that considers the individual’s out-of-pocket (OOP) heath care costs. (Note that this is OOP costs for health care beyond the premium that the individual pays to purchase private coverage.) High OOP health care costs provides a conservative, lower-bound estimate of underinsurance as it only captures inadequate insurance coverage for those who had high health care costs in the last year. Consequently, this measure of underinsurance does not include any of the individuals with similar health insurance coverage who did not have high health care costs during the year.

We follow the approach used by Schoen et al. (2005, 2008) and use two standards to assess underinsurance:

(1) Having OOP costs of 10 percent or more of family income–a threshold that has been used in prior studies of underinsurance, and

(2) Having OOP costs of 5 percent or more of family income for low-income families (defined as those with family income less than 200 percent of poverty)–a threshold for financial risk that is consistent with cost-sharing provisions in the State Children’s Health Insurance Program (SCHIP).

Given the limitations of our data, the measure of underinsurance reported here provides a conservative measure of the extent of underinsurance in Massachusetts.

Drop in Underinsurance. In fall 2006, at least 4 percent of all working-age adults with full-year insurance coverage in Massachusetts were underinsured under the first definition of underinsurance (10 percent or more of family income in OOP health care costs) and at least 7 percent were underinsured under the second definition. Under health reform, the share of insured adults who were underinsured under both definitions dropped by about 2 percentage points between fall 2006 and fall 2007, down to about 3 percent and 6 percent underinsured, respectively.

http://www.urban.org/UploadedPDF/411771_mass_underinsurance.pdf

Results restated in a summary by The Commonwealth Fund:

In fall 2006, 7.3 percent of all Massachusetts adults were underinsured (using the definitions above: out-of-pocket costs equal to 10% or more of income for higher-income people, 5% or more for lower-income people). After the enactment of health reform, that share declined to 5.6 percent.

http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=711279

Comment:

By Don McCanne, MD

Many news reports now tout the success of the Massachusetts health care reform program in reducing the numbers of the uninsured, even though falling far short of universal coverage. This new report also suggests that the rate of underinsurance may have declined, an important point since it was feared that efforts to make the plans more affordable would defeat the financial security that the plans should provide.

Massachusetts already had higher regulatory standards for their insurance products, but to be certain that coverage would be adequate under this program, they established a standard for “minimum credible coverage,” with benefits “intended to protect those with insurance from high health care costs.” How well has that worked?

Using estimates that omit many instances of underinsurance, this study shows that the rate of underinsurance is still over three-fourths of the rate that existed before the program was initiated. A program that eliminates less than one-fourth of the problem targeted should not be considered a successful program.

Of particular concern is that those individuals who are currently healthy, the majority of all insured, were not considered to be underinsured even if their coverage is not adequate to protect them against financial hardship should they develop significant medical problems in the future. Since one of the most important functions of insurance is to protect against unforeseen losses, the incidence of underinsurance is far greater than this study would indicate.

Massachusetts really needs to take another look at the single payer model of reform. By design, single payer includes everyone and eliminates the financial hardships of underinsurance. Their current reform model will always fall short of those goals.

Florida’s Medicaid Reform: Informed Consumer Choice?

By Teresa A. Coughlin, et al
Health Affairs
October 14, 2008
Until recently, Medicaid recipients within a state typically had access to the same set of benefits. Recent federal changes, however, move Medicaid in a new direction by allowing states to offer different benefit packages to different Medicaid recipients and to emphasize consumer choice and personal responsibility.
Under reform, participating plans are now allowed to offer different benefit packages and impose different levels of cost sharing for nonpregnant adult enrollees, subject to state approval. Although plans must include all mandatory Medicaid benefits and most optional benefits, services can vary in amount, duration, and scope.
As a result, enrollees are newly required to consider differences in benefit packages when making a choice of plans. They must also consider other plan differences such as preferred drug lists, provider networks, and prior authorization requirements.
After Florida implemented reforms, a sizable minority of recipients were not even aware that they were enrolled in a reform plan, and many did not understand how their plan worked.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.6.w523v1

Medicaid was designed as a welfare program to pay for all necessary care for those who could not otherwise afford it. The program has not worked as well as it should, primarily because of chronic underfunding. Access has been impaired because of the lack of providers willing to participate in a program that often doesn’t even pay overhead expenses.
With the problem defined as such, the most obvious solution would be to increase funding to a level that would pay expenses and provide fair compensation. That is not a realistic solution since welfare programs are highly vulnerable to political efforts to control government spending.
Another solution would be to remove the welfare stigma by eliminating Medicaid and enrolling the participants in a program with comprehensive benefits that would cover all of us. We do keep talking about that, but political inertia continues to prevail.
So now we have an element in our society which suggests that we should shift the spending decisions to the individual, not only for Medicaid beneficiaries, but for all of us. Since almost none of us could afford the costs of significant health problems, we still need to rely on risk pooling. Understanding that, the consumer-directed advocates then suggest that our choice be amongst various health plans as a proxy for decisions on health spending.
With a market of various plans from which to choose, all we need to know is what unknown major acute or chronic disorder we will develop next year, if any. Once we know that, we can choose a plan that includes the specialists who have expertise in our undetermined problem. We can choose a plan with a hospital that provides the specific services that we will need and will be accessible to us. We can choose a plan that includes in its formulary the unknown expensive drugs that we will need. Finally, if we were to develop an expensive problem, we can avoid plans with high deductibles and other cost sharing provisions that might wipe out our personal assets.
What nonsense! Since none of us can predict the future, we cannot possibly choose the precise plan that eventually we may or may not need. Yet we are already headed down that path. The individual market is rife with these ridiculous choices, and employers are headed in that direction as they shift to high deductible plans and small individual cash accounts that could never pay for major medical problems.
Haven’t we had enough of these screwball ideas? We already have the money to pay for comprehensive, high quality care for everyone. Let’s throw out the crackpots and establish our own program that actually would work: a single payer national health program.
(Please do not confuse my use of “screwball” and “crackpot” as insensitive terms that in the past have been used inappropriately to describe unfortunate individuals with mental health problems. Here the terms simply refer to cruel, inhumane, and sometimes greedy humanoid life forms that may be found groveling around in Washington, D.C.)

One Nation, Uninsured

By Paul Krugman
The New York Times
June 13, 2005
Harry Truman tried to create a national health insurance system. Public opinion was initially on his side: Jill Quadagno’s book “One Nation, Uninsured” tells us that in 1945, 75 percent of Americans favored national health insurance. If Truman had succeeded, universal coverage for everyone, not just the elderly, would today be an accepted part of the social contract.
But Truman failed. Special interests, especially the American Medical Association and Southern politicians who feared that national insurance would lead to racially integrated hospitals, triumphed.
Sixty years later, the patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.
So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.
But special interests will, once again, stand in the way. And the big debate among would-be reformers is how to deal with those interests, especially the insurance companies. These companies played a secondary role in Truman’s failure but have since become a seemingly invincible lobby.
Let’s ignore those who believe that private medical accounts – basically tax shelters for the healthy and wealthy – can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.
A system in which the government provides universal health insurance is often referred to as “single payer,” but I like Ted Kennedy’s slogan “Medicare for all.” It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly. It shows that we’re talking about government insurance, not government-provided health care. And it makes it clear that like Medicare (but unlike Canada’s system), a U.S. national health insurance system would allow individuals with the means and inclination to buy their own medical care.
The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don’t devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured.
Nonetheless, most reform proposals out there – even proposals from liberal groups like the Century Foundation and the Center for American Progress – reject a simple single-payer approach. Instead, they call for some combination of mandates and subsidies to help everyone buy insurance from private insurers.
Some people, not all of them right-wingers, fear that a single-payer system would hurt innovation. But the main reason these proposals give private insurers a big role is the belief that the insurers must be appeased.
That belief is rooted in recent history. Bill Clinton’s health care plan failed in large part because of a dishonest but devastating lobbying and advertising campaign financed by the health insurance industry – remember Harry and Louise? And the lesson many people took from that defeat is that any future health care proposal must buy off the insurance lobby.
But I think that’s the wrong lesson. The Clinton plan actually preserved a big role for private insurers; the industry attacked it all the same. And the plan’s complexity, which was largely a result of attempts to placate interest groups, made it hard to sell to the public. So I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained.
We need to do this one right. If reform fails again, we’ll be on the way to a radically unequal society, in which all but the most affluent Americans face the constant risk of financial ruin and even premature death because they can’t pay their medical bills.
http://www.nytimes.com/2005/06/13/opinion/13krugman.html?hp

With today’s announcement that Paul Krugman is the 2008 recipient of the Nobel Prize, it seems appropriate to distribute once again one if the most important articles he has ever written, and the message could not be more timely.
Although economics is considered to be an amoral science, Paul Krugman and Uwe Reinhardt have proven to us that even economists can have a heart.
Celebrate Paul Krugman’s award by sharing his single payer article with others. Economics with a heart. Now isn’t that something.

By Paul Krugman
The New York Times
June 13, 2005

Harry Truman tried to create a national health insurance system. Public opinion was initially on his side: Jill Quadagno’s book “One Nation, Uninsured” tells us that in 1945, 75 percent of Americans favored national health insurance. If Truman had succeeded, universal coverage for everyone, not just the elderly, would today be an accepted part of the social contract.

But Truman failed. Special interests, especially the American Medical Association and Southern politicians who feared that national insurance would lead to racially integrated hospitals, triumphed.

Sixty years later, the patchwork system that evolved in the absence of national health insurance is unraveling. The cost of health care is exploding, the number of uninsured is growing, and corporations that still provide employee coverage are groaning under the strain.

So the time will soon be ripe for another try at universal coverage. Public opinion is already favorable: a 2003 Pew poll found that 72 percent of Americans favored government-guaranteed health insurance for all.

But special interests will, once again, stand in the way. And the big debate among would-be reformers is how to deal with those interests, especially the insurance companies. These companies played a secondary role in Truman’s failure but have since become a seemingly invincible lobby.

Let’s ignore those who believe that private medical accounts – basically tax shelters for the healthy and wealthy – can solve our health care problems through the magic of the marketplace. The intellectually serious debate is between those who believe that the government should simply provide basic health insurance for everyone and those proposing a more complex, indirect approach that preserves a central role for private health insurance companies.

A system in which the government provides universal health insurance is often referred to as “single payer,” but I like Ted Kennedy’s slogan “Medicare for all.” It reminds voters that America already has a highly successful, popular single-payer program, albeit only for the elderly. It shows that we’re talking about government insurance, not government-provided health care. And it makes it clear that like Medicare (but unlike Canada’s system), a U.S. national health insurance system would allow individuals with the means and inclination to buy their own medical care.

The great advantage of universal, government-provided health insurance is lower costs. Canada’s government-run insurance system has much less bureaucracy and much lower administrative costs than our largely private system. Medicare has much lower administrative costs than private insurance. The reason is that single-payer systems don’t devote large resources to screening out high-risk clients or charging them higher fees. The savings from a single-payer system would probably exceed $200 billion a year, far more than the cost of covering all of those now uninsured.

Nonetheless, most reform proposals out there – even proposals from liberal groups like the Century Foundation and the Center for American Progress – reject a simple single-payer approach. Instead, they call for some combination of mandates and subsidies to help everyone buy insurance from private insurers.

Some people, not all of them right-wingers, fear that a single-payer system would hurt innovation. But the main reason these proposals give private insurers a big role is the belief that the insurers must be appeased.

That belief is rooted in recent history. Bill Clinton’s health care plan failed in large part because of a dishonest but devastating lobbying and advertising campaign financed by the health insurance industry – remember Harry and Louise? And the lesson many people took from that defeat is that any future health care proposal must buy off the insurance lobby.

But I think that’s the wrong lesson. The Clinton plan actually preserved a big role for private insurers; the industry attacked it all the same. And the plan’s complexity, which was largely a result of attempts to placate interest groups, made it hard to sell to the public. So I would argue that good economics is also good politics: reformers will do best with a straightforward single-payer plan, which offers maximum savings and, unlike the Clinton plan, can easily be explained.

We need to do this one right. If reform fails again, we’ll be on the way to a radically unequal society, in which all but the most affluent Americans face the constant risk of financial ruin and even premature death because they can’t pay their medical bills.

http://www.nytimes.com/2005/06/13/opinion/13krugman.html?hp

Comment:

By Don McCanne, MD

With today’s announcement that Paul Krugman is the 2008 recipient of the Nobel Prize, it seems appropriate to distribute once again one if the most important articles he has ever written, and the message could not be more timely.

Although economics is considered to be an amoral science, Paul Krugman and Uwe Reinhardt have proven to us that even economists can have a heart.

Celebrate Paul Krugman’s award by sharing his single payer article with others. Economics with a heart. Now isn’t that something.

Candidates Disagree On Primary Flaws Of Health Care Financing

By Don McCanne
The Huffington Post
Off the Bus
October 10, 2008
John McCain and Barack Obama both recognize that there are serious problems with our health care system, and that the voters want something done about it. They would both use public policies to modify the private health insurance market to accomplish their goals. Although it would seem that their goals are similar, the specifics are quite different because they have started from very dissimilar perceptions of the primary flaws in health care financing.
http://www.huffingtonpost.com/don-mccanne/candidates-disagree-on-pr_b_133118.html

As we near election time, we are seeing numerous reports, some excellent and some distorted, on how effective the McCain and Obama proposals would be in reducing the numbers of uninsured. Rather than digressing into disputes over the details of these analyses, it would be more instructive to step back and look at the fundamental goals of each proposal.
Rather than repeating the theme here, it would be simpler to read the brief article at the link above.