PNHP

KFF's three options includes single payer

KFF's three options includes single payer

Covering the Uninsured: Options for Reform

Kaiser Family Foundation
September 17, 2008

Options for Covering the Uninsured

1. Build on the current system:
Strengthen the employer-based system
Expand public coverage by building on Medicaid and SCHIP
Create new group insurance options for individuals and businesses

2. Revise the sponsorship and financing of health coverage through the tax system

3. Adopt a single-payer plan

http://www.kff.org/uninsured/h08_7813.cfm

Comment:

By Don McCanne, MD

Listening to the national dialogue on health financing reform, you would think that we have only two options: 1) Don’t start from scratch with a better program, but build on the current system (Obama), or 2) Reform the tax code to shift incentives for purchasing insurance from employers to individuals (McCain). Replacing our dysfunctional financing system with a single payer national health program, if even mentioned, is immediately dismissed from the dialogue.

As an example, yesterday Health Affairs released three new articles commenting on the reform proposals. An excellent article by Buchmueller et al explained why the McCain proposal would be relatively ineffective in expanding coverage to more individuals and would likely result in a deterioration of the effectiveness of health plans. An article by Antos et al explained why the Obama proposal will fail to slow the escalation in health care costs, besides falling short on universal coverage.

The third Health Affairs article should have been on how single payer would control costs while providing comprehensive coverage for everyone. It wasn’t. Instead it was an article by Mark “Moral Hazard” Pauly describing a compromise model incorporating features of the McCain and Obama plans. Although the Buchmueller and Antos articles were covered extensively by the media, I couldn’t help but notice that the Pauly article was ignored, and quite appropriately so.

Kaiser Family Foundation is precisely right. There are three options for reform. We know that only one of them will work: single payer. A discussion of the McCain and Obama plans is not complete without including an explanation of the effectiveness of single payer. It’s our job to be sure that it is included.

KFF’s three options includes single payer

Covering the Uninsured: Options for Reform

Kaiser Family Foundation
September 17, 2008

Options for Covering the Uninsured

1. Build on the current system:
Strengthen the employer-based system
Expand public coverage by building on Medicaid and SCHIP
Create new group insurance options for individuals and businesses

2. Revise the sponsorship and financing of health coverage through the tax system

3. Adopt a single-payer plan

http://www.kff.org/uninsured/h08_7813.cfm

Comment:

By Don McCanne, MD

Listening to the national dialogue on health financing reform, you would think that we have only two options: 1) Don’t start from scratch with a better program, but build on the current system (Obama), or 2) Reform the tax code to shift incentives for purchasing insurance from employers to individuals (McCain). Replacing our dysfunctional financing system with a single payer national health program, if even mentioned, is immediately dismissed from the dialogue.

As an example, yesterday Health Affairs released three new articles commenting on the reform proposals. An excellent article by Buchmueller et al explained why the McCain proposal would be relatively ineffective in expanding coverage to more individuals and would likely result in a deterioration of the effectiveness of health plans. An article by Antos et al explained why the Obama proposal will fail to slow the escalation in health care costs, besides falling short on universal coverage.

The third Health Affairs article should have been on how single payer would control costs while providing comprehensive coverage for everyone. It wasn’t. Instead it was an article by Mark “Moral Hazard” Pauly describing a compromise model incorporating features of the McCain and Obama plans. Although the Buchmueller and Antos articles were covered extensively by the media, I couldn’t help but notice that the Pauly article was ignored, and quite appropriately so.

Kaiser Family Foundation is precisely right. There are three options for reform. We know that only one of them will work: single payer. A discussion of the McCain and Obama plans is not complete without including an explanation of the effectiveness of single payer. It’s our job to be sure that it is included.

BC Calif creates dual networks to cheat patients and physicians

Physicians Urged to Carefully Review Blue Cross Contract Amendment

California Physician
September 15, 2008
Physicians contracted with Blue Cross of California were recently notified of the insurer’s intent to amend its Prudent Buyer contract to include Anthem’s Select PPO product, effective January 1, 2009.
The addendum in question requires contracted physicians to always refer Anthem Select PPO Members to other participating Select PPO providers, unless they have obtained authorization to refer out of network. Physicians should be aware that the underlying Prudent Buyer contract authorizes Blue Cross to unilaterally lower the physicians’ fee schedule as a penalty for referring to out of network providers. For this reason, it is important for physicians to determine if colleagues you frequently refer to and those who refer to you participate in the Select PPO network.
http://www.calphys.org/html/cc763.asp
Addendum:
http://www.calphys.org/assets/applets/bc_addendum_091508.pdf

Those supporting health care reform based on the model of private health plans competing in the marketplace have looked to Blue Cross of California (BCC) as the nation’s leader in innovative market solutions. BCC has been very effective in providing insurance products with competitive premiums by using these innovations to limit what is paid for health care benefits, in an environment of ever-increasing health care costs.
By far the most important innovation was to establish preferred provider lists of physicians and hospitals that agreed to accept contracted reimbursement rates. The providers accepted lower rates, and patients were financially penalized if they used providers outside of the contracted networks. No attempt will be made to address here the many other innovations that allowed BCC to reduce what it pays for health care, but more does need to be said about this new innovation in its preferred provider networks.
Largely because of its competitive premiums made possible by its leverage in being able to sign up physicians and hospitals in its Prudent Buyer PPO plans, BCC has been one of the most successful programs in California, success being defined from a business perspective. Its success has been so great that it is now in a position to be able to make itself its own competitor, but, as we’ll see this is not competition that is designed to benefit the patient/consumer, but rather to benefit the Anthem/WellPoint shareholders of which BCC is a subsidiary.
In addition to its well established Prudent Buyer PPO, it now also has established Anthem Select PPO, a product designed to be more competitive by offering even lower premiums. The Anthem Select PPO has established a separate contract with a much smaller number of physicians and hospitals who have agree to even lower reimbursement rates (presumably lower, though that is proprietary information). Besides lower rates, BCC also benefits by making access more difficult for patients by sharply limiting the number of Select providers available.
Patients may not realize it, but they are penalized when they continue to use their Blue Cross Prudent Buyer providers if those providers have not also signed up to be part of Anthem Select PPO. They may think they have access to the Prudent Buyer PPO list, but if the corner of their card says “A Select Network Product,” they are restricted to a much more limited choice if they expect to receive the full benefits of their plan (that is, full underinsurance benefits).
The new BCC innovation spelled out in the addendum and in the underlying Prudent Buyer contract establishes financial penalties for physicians who continue to refer to their established Prudent Buyer colleagues and hospitals without first checking to be certain that they are on the much more exclusive Anthem Select PPO list.
BCC has provided a potential out. Physicians can obtain prior authorization to refer Select patients to the Prudent Buyer providers. But talk about abusive administrative excesses! BCC is requiring the burdensome prior authorization process merely to cross refer within its own two artificially segregated networks!
The process is hardly transparent. Most physicians and their staff members will not notice “A Select Network Product” on the corner of the card. They will make the Prudent Buyer referrals as usual. When the claim is paid, the disallowed amount will be adjusted off, without the staff realizing that the adjustment is greater than it would have been had a referral been made within the more restricted Select list. The patient will receive a statement of benefits with a larger amount listed as their own responsibility, not realizing that they are being penalized for using a Prudent Buyer provider who did not also have a Select contract.
Thus Blue Cross of California has set up within its own Prudent Buyer program two separate PPO lists that it uses to play against each other for the purpose of cheating the patient, cheating the physician, and cheating the hospital. Only the shareholders benefit.
Some may feel that “cheat” is too strong of a word, but cheating is depriving by trickery, and that is exactly what BCC is doing.
For those who still believe that we can patch together reform by using private insurance plans, please read John Geyman’s “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It” (Common Courage Press).

BC Calif creates dual networks to cheat patients and physicians

Physicians Urged to Carefully Review Blue Cross Contract Amendment

California Physician
September 15, 2008

Physicians contracted with Blue Cross of California were recently notified of the insurer’s intent to amend its Prudent Buyer contract to include Anthem’s Select PPO product, effective January 1, 2009.

The addendum in question requires contracted physicians to always refer Anthem Select PPO Members to other participating Select PPO providers, unless they have obtained authorization to refer out of network. Physicians should be aware that the underlying Prudent Buyer contract authorizes Blue Cross to unilaterally lower the physicians’ fee schedule as a penalty for referring to out of network providers. For this reason, it is important for physicians to determine if colleagues you frequently refer to and those who refer to you participate in the Select PPO network.

http://www.calphys.org/html/cc763.asp

Addendum:
http://www.calphys.org/assets/applets/bc_addendum_091508.pdf

Comment:

By Don McCanne, MD

Those supporting health care reform based on the model of private health plans competing in the marketplace have looked to Blue Cross of California (BCC) as the nation’s leader in innovative market solutions. BCC has been very effective in providing insurance products with competitive premiums by using these innovations to limit what is paid for health care benefits, in an environment of ever-increasing health care costs.

By far the most important innovation was to establish preferred provider lists of physicians and hospitals that agreed to accept contracted reimbursement rates. The providers accepted lower rates, and patients were financially penalized if they used providers outside of the contracted networks. No attempt will be made to address here the many other innovations that allowed BCC to reduce what it pays for health care, but more does need to be said about this new innovation in its preferred provider networks.

Largely because of its competitive premiums made possible by its leverage in being able to sign up physicians and hospitals in its Prudent Buyer PPO plans, BCC has been one of the most successful programs in California, success being defined from a business perspective. Its success has been so great that it is now in a position to be able to make itself its own competitor, but, as we’ll see this is not competition that is designed to benefit the patient/consumer, but rather to benefit the Anthem/WellPoint shareholders of which BCC is a subsidiary.

In addition to its well established Prudent Buyer PPO, it now also has established Anthem Select PPO, a product designed to be more competitive by offering even lower premiums. The Anthem Select PPO has established a separate contract with a much smaller number of physicians and hospitals who have agree to even lower reimbursement rates (presumably lower, though that is proprietary information). Besides lower rates, BCC also benefits by making access more difficult for patients by sharply limiting the number of Select providers available.

Patients may not realize it, but they are penalized when they continue to use their Blue Cross Prudent Buyer providers if those providers have not also signed up to be part of Anthem Select PPO. They may think they have access to the Prudent Buyer PPO list, but if the corner of their card says “A Select Network Product,” they are restricted to a much more limited choice if they expect to receive the full benefits of their plan (that is, full underinsurance benefits).

The new BCC innovation spelled out in the addendum and in the underlying Prudent Buyer contract establishes financial penalties for physicians who continue to refer to their established Prudent Buyer colleagues and hospitals without first checking to be certain that they are on the much more exclusive Anthem Select PPO list.

BCC has provided a potential out. Physicians can obtain prior authorization to refer Select patients to the Prudent Buyer providers. But talk about abusive administrative excesses! BCC is requiring the burdensome prior authorization process merely to cross refer within its own two artificially segregated networks!

The process is hardly transparent. Most physicians and their staff members will not notice “A Select Network Product” on the corner of the card. They will make the Prudent Buyer referrals as usual. When the claim is paid, the disallowed amount will be adjusted off, without the staff realizing that the adjustment is greater than it would have been had a referral been made within the more restricted Select list. The patient will receive a statement of benefits with a larger amount listed as their own responsibility, not realizing that they are being penalized for using a Prudent Buyer provider who did not also have a Select contract.

Thus Blue Cross of California has set up within its own Prudent Buyer program two separate PPO lists that it uses to play against each other for the purpose of cheating the patient, cheating the physician, and cheating the hospital. Only the shareholders benefit.

Some may feel that “cheat” is too strong of a word, but cheating is depriving by trickery, and that is exactly what BCC is doing.

For those who still believe that we can patch together reform by using private insurance plans, please read John Geyman’s “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It” (Common Courage Press).

McCain's Radical Agenda

By BOB HERBERT
New York Times
Published: September 16, 2008

Talk about a shock to the system. Has anyone bothered to notice the radical changes that John McCain and Sarah Palin are planning for the nation’s health insurance system?

These are changes that will set in motion nothing less than the dismantling of the employer-based coverage that protects most American families.

A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan.

There is nothing secret about Senator McCain’s far-reaching proposals, but they haven’t gotten much attention because the chatter in this campaign has mostly been about nonsense — lipstick, celebrities and “Drill, baby, drill!”

For starters, the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on.

“It means your employer is going to have to make an estimate on how much the employer is paying for health insurance on your behalf, and you are going to have to pay taxes on that money,” said Sherry Glied, an economist who chairs the Department of Health Policy and Management at Columbia University’s Mailman School of Public Health.

Ms. Glied is one of the four scholars who have just completed an independent joint study of the plan. Their findings are being published on the Web site of the policy journal, Health Affairs.

According to the study: “The McCain plan will force millions of Americans into the weakest segment of the private insurance system — the nongroup market — where cost-sharing is high, covered services are limited and people will lose access to benefits they have now.”

The net effect of the plan, the study said, “almost certainly will be to increase family costs for medical care.”

Under the McCain plan (now the McCain-Palin plan) employees who continue to receive employer-paid health benefits would look at their pay stubs each week or each month and find that additional money had been withheld to cover the taxes on the value of their benefits.

While there might be less money in the paycheck, that would not be anything to worry about, according to Senator McCain. That’s because the government would be offering all taxpayers a refundable tax credit — $2,500 for a single worker and $5,000 per family — to be used “to help pay for your health care.”

You may think this is a good move or a bad one — but it’s a monumental change in the way health coverage would be provided to scores of millions of Americans. Why not more attention?

The whole idea of the McCain plan is to get families out of employer-paid health coverage and into the health insurance marketplace, where naked competition is supposed to take care of all ills. (We’re seeing in the Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch fiascos just how well the unfettered marketplace has been working.)

Taxing employer-paid health benefits is the first step in this transition, the equivalent of injecting poison into the system. It’s the beginning of the end.

When younger, healthier workers start seeing additional taxes taken out of their paychecks, some (perhaps many) will opt out of the employer-based plans — either to buy cheaper insurance on their own or to go without coverage.

That will leave employers with a pool of older, less healthy workers to cover. That coverage will necessarily be more expensive, which will encourage more and more employers to give up on the idea of providing coverage at all.

The upshot is that many more Americans — millions more — will find themselves on their own in the bewildering and often treacherous health insurance marketplace. As Senator McCain has said: “I believe the key to real reform is to restore control over our health care system to the patients themselves.”

Yet another radical element of McCain’s plan is his proposal to undermine state health insurance regulations by allowing consumers to buy insurance from sellers anywhere in the country. So a requirement in one state that insurers cover, for example, vaccinations, or annual physicals, or breast examinations, would essentially be meaningless.

In a refrain we’ve heard many times in recent years, Mr. McCain said he is committed to ridding the market of these “needless and costly” insurance regulations.

This entire McCain health insurance transformation is right out of the right-wing Republicans’ ideological playbook: fewer regulations; let the market decide; and send unsophisticated consumers into the crucible alone.

You would think that with some of the most venerable houses on Wall Street crumbling like sand castles right before our eyes, we’d be a little wary about spreading this toxic formula even further into the health care system.

But we’re not even paying much attention.

Small book on 'single payer' packs surprising wallop

FOR IMMEDIATE RELEASE
Sept. 16, 2008

Contact:
Mark Almberg, (312) 782-6006, mark@pnhp.org

10 Excellent Reasons for National Health Care

Edited by Mary E. O’Brien, M.D., and Martha Livingston, Ph.D.
Foreward by Rep. John Conyers Jr.
The New Press, August 2008
Paperback, 176 pp., $13.95

While the public is accustomed to seeing a fresh crop of books by presidential candidates during each election cycle — autobiographies, collections of platitudes or sometimes more visionary musings — it’s less common for them to come across popular and well-researched policy books on the burning issues of the day.

Even rarer are election-year policy books that are well-written, widely accessible and likely to have staying power long after the last vote is cast.

“10 Excellent Reasons for National Health Care,” however, is just such a book. Edited by Mary O’Brien, M.D., and Martha Livingston, Ph.D. — both health policy experts and leaders of Physicians for a National Health Program (PNHP) — this new offering from The New Press delivers exactly what it promises: 10 persuasive, evidence-based arguments for a single-payer national health insurance program in the United States.

Sixteen contributors, including Rep. John Conyers (D-Mich.), United Methodist Church leader James Winkler, California Nurses Association leader Rose Ann DeMoro and Steelworkers President Leo Gerard, make the case for single payer in a compact, pocket-sized paperback.

National health insurance is good for our health, they say. It’s cost effective and will save money. It will assure high-quality care for all, rich or poor. It’s the moral thing to do. It will let doctors and nurses focus on patients, not paperwork. It will diminish racial disparities. It will reduce medical debt. It will benefit both labor and business.

And, as Joanne Landy and Dr. Oliver Fein of PNHP argue, single payer is what nearly two-thirds of Americans want.

In each case, the argument is fleshed out with facts and statistics, sometimes accompanied by charts and even the occasional cartoon. Several contain dramatic patient stories. Dr. Claudia Fegan, for example, relates her frustration with trying to get an insurance company to approve an urgently needed detox treatment for a patient, ultimately finding herself pleading with an emergency room physician to administer a time-critical injection.

Drs. Olveen Carrasquillo and Jaime Torres vividly describe what they call “medical apartheid” in our present setup, a multi-tiered “system of segregated care and unequal access faced by poor and predominantly minority patients,” including undocumented immigrants.

All of these problems would be effectively resolved under an expanded and improved Medicare for all, the contributors argue. The main obstacle to achieving this goal, however, is the influence of the for-profit, private health insurance industry.

Despite the obstacles to reform, “10 Excellent Reasons” is pervaded by a spirit of confidence that national health insurance can be won, an optimism that most readers will find contagious. It’s a powerful tool for single-payer advocacy. It also includes a valuable list of additional resources at the end.

In his foreword, Rep. Conyers sums it up: “This insightful book will provide you with the information you need to be an informed participant in the public debate about how to achieve health care for all, [and] work toward the only sensible solution to our health care crisis: a single-payer national health insurance program.”

* * * *

Mary O’Brien, M.D., is a board-certified attending physician at Columbia University Health Services and a faculty member at the Columbia College of Physicians and Surgeons. She is on the board of directors of the New York Metro chapter of Physicians for a National Health Program.

Martha Livingston, Ph.D., is associate professor of health and society at the State University of New York College at Old Westbury. She is vice-chair of the board of directors of the New York Metro chapter of PNHP.

“10 Excellent Reasons for National Health Care” can be ordered from your local bookseller or from Amazon.com, among other places. In searching for the book on Amazon, use the numeric 10 as the first word in the title or search under the names of Mary O’Brien, Martha Livingston or John Conyers.

To inquire about ordering multiple copies, call Physicians for a National Health Program at (312) 782-6006.

McCain’s Radical Agenda

By BOB HERBERT
New York Times
Published: September 16, 2008

Talk about a shock to the system. Has anyone bothered to notice the radical changes that John McCain and Sarah Palin are planning for the nation’s health insurance system?

These are changes that will set in motion nothing less than the dismantling of the employer-based coverage that protects most American families.

A study coming out Tuesday from scholars at Columbia, Harvard, Purdue and Michigan projects that 20 million Americans who have employment-based health insurance would lose it under the McCain plan.

There is nothing secret about Senator McCain’s far-reaching proposals, but they haven’t gotten much attention because the chatter in this campaign has mostly been about nonsense — lipstick, celebrities and “Drill, baby, drill!”

For starters, the McCain health plan would treat employer-paid health benefits as income that employees would have to pay taxes on.

“It means your employer is going to have to make an estimate on how much the employer is paying for health insurance on your behalf, and you are going to have to pay taxes on that money,” said Sherry Glied, an economist who chairs the Department of Health Policy and Management at Columbia University’s Mailman School of Public Health.

Ms. Glied is one of the four scholars who have just completed an independent joint study of the plan. Their findings are being published on the Web site of the policy journal, Health Affairs.

According to the study: “The McCain plan will force millions of Americans into the weakest segment of the private insurance system — the nongroup market — where cost-sharing is high, covered services are limited and people will lose access to benefits they have now.”

The net effect of the plan, the study said, “almost certainly will be to increase family costs for medical care.”

Under the McCain plan (now the McCain-Palin plan) employees who continue to receive employer-paid health benefits would look at their pay stubs each week or each month and find that additional money had been withheld to cover the taxes on the value of their benefits.

While there might be less money in the paycheck, that would not be anything to worry about, according to Senator McCain. That’s because the government would be offering all taxpayers a refundable tax credit — $2,500 for a single worker and $5,000 per family — to be used “to help pay for your health care.”

You may think this is a good move or a bad one — but it’s a monumental change in the way health coverage would be provided to scores of millions of Americans. Why not more attention?

The whole idea of the McCain plan is to get families out of employer-paid health coverage and into the health insurance marketplace, where naked competition is supposed to take care of all ills. (We’re seeing in the Bear Stearns, Fannie Mae, Freddie Mac, Lehman Brothers and Merrill Lynch fiascos just how well the unfettered marketplace has been working.)

Taxing employer-paid health benefits is the first step in this transition, the equivalent of injecting poison into the system. It’s the beginning of the end.

When younger, healthier workers start seeing additional taxes taken out of their paychecks, some (perhaps many) will opt out of the employer-based plans — either to buy cheaper insurance on their own or to go without coverage.

That will leave employers with a pool of older, less healthy workers to cover. That coverage will necessarily be more expensive, which will encourage more and more employers to give up on the idea of providing coverage at all.

The upshot is that many more Americans — millions more — will find themselves on their own in the bewildering and often treacherous health insurance marketplace. As Senator McCain has said: “I believe the key to real reform is to restore control over our health care system to the patients themselves.”

Yet another radical element of McCain’s plan is his proposal to undermine state health insurance regulations by allowing consumers to buy insurance from sellers anywhere in the country. So a requirement in one state that insurers cover, for example, vaccinations, or annual physicals, or breast examinations, would essentially be meaningless.

In a refrain we’ve heard many times in recent years, Mr. McCain said he is committed to ridding the market of these “needless and costly” insurance regulations.

This entire McCain health insurance transformation is right out of the right-wing Republicans’ ideological playbook: fewer regulations; let the market decide; and send unsophisticated consumers into the crucible alone.

You would think that with some of the most venerable houses on Wall Street crumbling like sand castles right before our eyes, we’d be a little wary about spreading this toxic formula even further into the health care system.

But we’re not even paying much attention.

F. A. Hayek on social insurance

The Road to Serfdom

By Friedrich A. Hayek
Quote from the condensed version as it appeared in the April 1945 edition of Reader’s Digest
There is no reason why, in a society which has reached the general level of wealth ours has, (the certainty of a given minimum of sustenance) should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.
http://www.iea.org.uk/files/upld-publication43pdf?.pdf
The Road to Serfdom
http://www.press.uchicago.edu/presssite/metadata.epl?mode=synopsis&bookkey=206047

“The Road to Serfdom,” the work of Nobel Laureate F. A. Hayek, has been one of the most influential books of the last century. It has been an inspiration to those who are opposed to socialism and who support free markets and libertarianism. The teachings of Hayek are frequently cited by those opposing government involvement in health insurance markets. But what did Hayek actually say?
He acknowledges that there are “common hazards of life against which few can make adequate provision.” All other nations have decided that the potential need for health care is one of those common hazards.
He recognizes that such hazards can be provided for by “a comprehensive system of social insurance.” Although the specifics of social insurance programs for health care can vary, they have in common a fund that provides for the payment of health care, an equitable source of payments made into that fund, and automatic inclusion of the individuals for which the fund was designed. It appears from his statement that Hayek would include all members of a society except perhaps those who are capable of making adequate provision for themselves.
He recognizes that the state should help organize such a comprehensive system of social insurance. Hayek was quite familiar with social insurance since his country of birth, Austria, had social insurance programs dating back to the nineteenth century.
Although an avid supporter of free markets, Hayek understood that even in a wealthy society the state should help organize a comprehensive system of social insurance.
Perhaps we should ask the free market advocates opposed to comprehensive social insurance to retrieve from their libraries their copies of “The Road to Serfdom,” and read them again. Although they don’t listen to us, just perhaps they may listen to Friedrich Hayek.

F. A. Hayek on social insurance

The Road to Serfdom

By Friedrich A. Hayek

Quote from the condensed version as it appeared in the April 1945 edition of Reader’s Digest:

There is no reason why, in a society which has reached the general level of wealth ours has, (the certainty of a given minimum of sustenance) should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.

http://www.iea.org.uk/files/upld-publication43pdf?.pdf

The Road to Serfdom
http://www.press.uchicago.edu/presssite/metadata.epl?mode=synopsis&bookkey=206047

Comment:

By Don McCanne, MD

“The Road to Serfdom,” the work of Nobel Laureate F. A. Hayek, has been one of the most influential books of the last century. It has been an inspiration to those who are opposed to socialism and who support free markets and libertarianism. The teachings of Hayek are frequently cited by those opposing government involvement in health insurance markets. But what did Hayek actually say?

He acknowledges that there are “common hazards of life against which few can make adequate provision.” All other nations have decided that the potential need for health care is one of those common hazards.

He recognizes that such hazards can be provided for by “a comprehensive system of social insurance.” Although the specifics of social insurance programs for health care can vary, they have in common a fund that provides for the payment of health care, an equitable source of payments made into that fund, and automatic inclusion of the individuals for which the fund was designed. It appears from his statement that Hayek would include all members of a society except perhaps those who are capable of making adequate provision for themselves.

He recognizes that the state should help organize such a comprehensive system of social insurance. Hayek was quite familiar with social insurance since his country of birth, Austria, had social insurance programs dating back to the nineteenth century.

Although an avid supporter of free markets, Hayek understood that even in a wealthy society the state should help organize a comprehensive system of social insurance.

Perhaps we should ask the free market advocates opposed to comprehensive social insurance to retrieve from their libraries their copies of “The Road to Serfdom,” and read them again. Although they don’t listen to us, just perhaps they may listen to Friedrich Hayek.

Look before you leap into McCain's idea of health coverage

By James C. Mitchiner
Other Voices
The Ann Arbor News
September 11, 2008

At first glance, it sounds like a great idea: Scrap the employer-based health insurance system in favor of individually chosen private health plans, allow individuals to purchase such plans across state borders and from groups that currently don’t sell insurance (such as faith-based organizations), and use refundable income tax credits to help pay the premiums.

Hold down costs through strategies such as competition between plans, disease management programs, prevention and wellness initiatives, and expansion of information technology. Make people prudent health care consumers by expanding Health Savings Accounts. And for those with chronic diseases, who are medically uninsurable, give them “guaranteed access plans” through federally blessed (but state-subsidized) high-risk pools. For those of you who don’t recognize this radical approach to reforming American health care, it is the gist of the plan offered by Republican presidential candidate John McCain.

Unfortunately, it won’t work.

Let’s look first at the income tax credits. The idea is for individuals and families to use these credits to purchase health insurance plans in the non-group market, i.e., from a private insurer not sponsored by your employer. Premiums would be kept reasonable because plans would compete with each other to sell health insurance to those who valued it, or at least to individuals deemed “good risks” (read: healthy people).

And what level of credits are we talking about? Senator McCain proposes credits of just $2,500 per individual, or $5,000 per family.

Given that the average annual family health insurance premium in 2007 was over $12,000, it seems to me that $5,000 is woefully inadequate. Some, in fact, have compared the effect of these tax credits to that of throwing a 10-foot rope to a man stuck in a 40-foot hole. Just to make up the difference between the credit and the premium cost, a middle class family of four with a household income of $70,000 would have to fork over 10 percent of that income, a commitment that would seriously impact the family budget.

Let us suppose, however, that a worker could find and purchase a policy for only $5,000 per year. What would it look like? My guess is that it would have either multiple coverage restrictions (non-coverage for pre-existing conditions, a prolonged waiting period before insurance became effective) or significant financial limitations (high deductibles or co-pays, puny lifetime maximums), which defeat the purpose of having insurance in the first place. Clearly, private insurers cannot make a profit by selling comprehensive insurance at premiums the average individual can afford.

Perhaps the most significant objection to tax credits, however, is that they don’t address the serious flaws inherent in for-profit insurance.

Credits would be used to purchase the same policies currently sold by private insurers, policies that are rife with administrative waste, limit which doctors you can see, restrict when and where you can be hospitalized, and impose considerable cost-sharing responsibilities on their policyholders.

The economic literature appears to back me up. In 1999, MIT economist Jonathan Gruber and colleague Larry Levitt did a simulation analysis of tax credits. They found that a subsidy of $2,000 per individual and $4,000 per family would cover no more than 30 percent of the uninsured, at a cost of almost $40 billion. More recently, the Employment Policies Institute looked at the economic impact of tax credits in terms of reducing the number of uninsured and the attendant costs. The EPI found that the credit would be used by seven times as many already insured individuals as it would by newly insured persons, at a public cost of $19.8 billion. Overall, only 1.6 million would gain coverage, at an economically inefficient price tag of $12,644 each.

Beyond tax credits, other aspects of the McCain plan are flawed.

Disease management programs, personal health and wellness programs, and electronic medical recordkeeping, while pushed by insurers and intuitively conducive to cost control, nonetheless have not been shown to have a widespread effect on holding down health care expenses.

Neither have Health Savings Accounts, which have an affinity for the healthy and wealthy, who tend to use them as convenient tax shelters.

And any guaranteed access plan for the medically uninsurable that depends on state funding is suspect, given the current precarious situation with most state budgets.

The time has come for us to stop pretending that we can reform American health care through incremental tweaks in the current system. I really see no way to accomplish the three goals of reform – expanded access, consumer choice and cost control – without ending the hegemony of the for-profit insurance industry.

This means we have to replace our shamefully inefficient multipayer system with a national, single-payer alternative, one that creates affordable access to medical care for those who are locked out, eliminates racial and ethnic disparities, and allows Americans (rather than insurers or the government) to choose their own physicians and hospitals. Doing so will not come fast and will not be easy. But when it does come, and I believe it will, the result will be well worth the effort expended.

The writer, an Ann Arbor resident, is the president of the Washtenaw County Medical Society.

No on Prop. 101: It's a false pitch that blocks reform

By Phil Lopes and George Pauk
Tucson Citizen
Guest Opinion: Health Care Choice
Published: 09.15.2008

When Arizona voters cast their ballots this November, one of the questions they face is whether to vote yes or no on Proposition 101, the misnamed Freedom of Choice in Health Care Act. They should definitely vote no.

Prop. 101 is a constitutional amendment that would forbid restrictions on “a person’s freedom of choice of private health care systems or private plans of any type.”

Sounds like more freedom, doesn’t it? In fact, Prop. 101 protects the private health insurance industry.

Its passage would give the industry a privileged place in our state’s basic law. The result would be less freedom for average Arizonans, not more.

Remember, this is the industry that diverts about 31 cents of every health care dollar toward administrative costs, including big payouts for shareholder profits, marketing expenses and outlandish executive salaries.

Prop. 101 would limit Arizonans’ choices to plans offered by these private insurers, and it would block any steps toward badly needed health care reform.
Let’s step back for a moment and ask: What kind of choices do people want in health care?

They want access to comprehensive, affordable, high-quality care. They want to choose their health practitioner. They want to choose their hospital or other service delivery site.

Under our current health insurance system, Arizonans have none of these choices.

The U.S. Census Bureau reported last month that 45.7 million Americans – including 1.2 million Arizonans – lacked health insurance in 2007.

Employer-sponsored coverage continues to shrink, as do employee health benefits. Access to care, and availability of care, especially in rural areas, is diminishing.

The Commonwealth Fund, a research group, estimates that another 25 million people were “underinsured” last year – i.e., they had insurance but still wouldn’t be able to afford care in the event of a serious illness or injury.

Health insurers are further restricting what they cover – what they’ll pay for and what they won’t – and they increasingly impose big deductibles and co-pays.

They are also constantly changing their lists of “in-network” doctors and hospitals.

Choice of doctor or hospital? What a quaint idea! Just see what happens when you go “out of network.”

Thus, in the name of “freedom” and “choice,” Prop. 101 would give us neither. It would further push Arizonans into the iron grip of an industry that is failing us – an industry in which many put profits above the delivery of sorely needed health care.

There are many potential unintended consequences of Prop. 101.

For instance, if the Arizona Department of Insurance determines that a particular health insurance carrier does not meet set criteria for fiscal solvency and wants to bar it from offering unsound policies, the department would be prohibited from doing so if only one person in the state wanted to purchase this policy.

Wouldn’t it be better if every resident were guaranteed comprehensive, high-quality health care – at least as good as what is offered to our state employees?

If each person could choose his own health practitioner, hospital or clinic (working within our private delivery system), allowing continuity of care, better follow-ups and fewer medical errors?

Wouldn’t it be better if our state’s residents didn’t have to worry about crushing medical bills because they knew a social insurance fund would cover the costs? If every Arizonan were in one big pool, spreading the risk more equitably?

If health care costs were controlled by, for example, bulk purchasing of drugs and medical supplies?

Such a plan exists: the Arizona Health Security Act. Its enactment by our Legislature would go a long way toward curing our state’s health care ills.

It’s practical, fair and eminently realistic.

But take note: The passage of Prop. 101 would prevent Arizonans from choosing that better path, among others. And it’s being bankrolled by at least $434,000 – mainly from business interests, much of it from out-of-state.

In a recent newspaper interview, Dr. Eric Novack, a Phoenix-based orthopedic surgeon and leading proponent of the measure, conceded that Prop. 101 would constitutionally preclude “certain options.”

So the real aim is to preclude certain choices, Dr. Novack?

Arizona voters should not be deceived. They should vote “no” on Prop. 101.

State Rep. Phil Lopes represents Legislative District 27 (central, west and southwest Tucson), is leader of the House Democrats and is the sponsor of the Arizona Health Security Act. George Pauk is an internal medicine physician in Phoenix and a member of Physicians for a National Health Program (www.pnhp.org).