By Henry Aaron
The New Republic
September 29, 2008

A lot of Democrats want universal health care to be the next president’s top priority. But it shouldn’t be.

The ‘Big Bang’ Approach to Health Reform is the Wrong Strategy.

Congress is unlikely to change how the entire U.S. health care industry operates with one bill. And if it did so, it would probably make a hash of the job. Differences among the states in the cost and style of delivery of health care approximate those of the European Union. More importantly, apart from periods after major wars or depression, democracies typically make large social and economic changes gradually, through laws enacted successively over many years.

So, rather than ‘betting the administration’ on one shot, the sensible strategy would be to enunciate a broad vision for reform and propose practical steps to move in the envisioned direction. Get them through Congress, see what works and what doesn’t, and then move forward again.

http://www.tnr.com:80/politics/story.html?id=208db068-4a74-4083-b14c-79e8b21b97ae

And…

Health Care Financing Reforms in Germany: The Case for Rethinking the Evolutionary Approach to Reforms

By Percivil M. Carrera, Karen K. Siemens and John Bridges
Journal of Health Politics, Policy and Law
October 2008

Abstract (excerpt)

In this article, we document twelve significant attempts to reform health care financing in Germany and critically appraise them according to the principles of solidarity and subsidiarity on which SHI (social health insurance) systems were built. While the reforms in the aggregate offered the prospect of addressing the challenges faced by the system, the modest results of the reforms and remaining deficiencies of the system underscore the limitations of the evolutionary approach to reforms. This suggests that reformers should consider a more revolutionary approach.

Concluding Remarks (excerpt)

An appraisal of health care financing reforms in Germany since reunification offers three lessons. First, while evolutionary reforms may be more politically feasible than radical reforms, evolutionary reforms are inadequate in addressing the issue of the sustainability of health care financing. Second, the impact of evolutionary reforms can be substantial when they extend and build on and not contradict or undermine previous measures. Finally, the biggest challenge to health care financing reform is the aversion to take the revolutionary route.

http://jhppl.dukejournals.org/cgi/content/abstract/33/5/979?etoc

Comment:

By Don McCanne, MD

The logic of Henry Aaron and other incrementalists seems to be as follows: Comprehensive reform of health care financing is not feasible because, if it were, we would have it by now; therefore we should abandon any thoughts of a single comprehensive reform package and move forward with tinkering around with various steps to see “what works and what doesn’t.” Of course, the discontinuity of this framing belies the alleged logic.

Aaron suggests that history shows us that only “major wars or depression” motivate democracies to make “large social and economic changes.” Is our current war too small, with too few U.S. casualties? Is our current recession too shallow, with too few unemployed and bankrupt? Is the home foreclosure rate too low, and the meltdown of the financial services industries too limited? Perhaps, perhaps.

If these don’t concern us enough, then what about the sputtering of the engine of the great American Dream? You know, that Dream that everyone could have a home, educational opportunities, healthy food, transportation, retirement security, and… health care. That engine has been redesigned to produce wealth transfer – a transfer of wealth from the masses who have increased our nation’s productivity, to the few who commandeered the machinery of Wall Street. Isn’t the sunsetting of the American Dream a crisis of proportions that finally would make us demand action?

If we are going to make our economy work for everyone, we are going to have to have to take “the revolutionary route” to health care financing reform. If we don’t fix our health care financing system, we will continue to see further erosion of the other elements of the American dream.

We do know how to do it, but first we are going to have to send Henry Aaron and his ilk off to their policy laboratories to tinker with their evolutionary reforms that never get us there. We can’t allow them to stand in our way any longer.

We need to throw out the current health care financing system and replace it with a system that would pay for all necessary health care services for everyone: a single payer national health program.

As Katrina vanden Heuvel and Eric Schlosser stated in today’s Wall Street Journal, “A universal health care system would help American families, while cutting the nation’s long-term health care costs… A new New Deal… would simply ensure that federal spending is driven by the needs of every American. Anything less than this — any proposal that rewards those who created the problem and penalizes those who can least afford it — is a raw deal.”

America Needs A New New Deal
http://online.wsj.com/article/SB122246953790280655.html

Healthy Choice

By Henry Aaron
The New Republic
September 29, 2008

A lot of Democrats want universal health care to be the next president’s top priority. But it shouldn’t be.

The ‘Big Bang’ Approach to Health Reform is the Wrong Strategy.

Congress is unlikely to change how the entire U.S. health care industry operates with one bill. And if it did so, it would probably make a hash of the job. Differences among the states in the cost and style of delivery of health care approximate those of the European Union. More importantly, apart from periods after major wars or depression, democracies typically make large social and economic changes gradually, through laws enacted successively over many years.

So, rather than ‘betting the administration’ on one shot, the sensible strategy would be to enunciate a broad vision for reform and propose practical steps to move in the envisioned direction. Get them through Congress, see what works and what doesn’t, and then move forward again.

http://www.tnr.com:80/politics/story.html?id=208db068-4a74-4083-b14c-79e8b21b97ae

And…

Health Care Financing Reforms in Germany: The Case for Rethinking the Evolutionary Approach to Reforms

By Percivil M. Carrera, Karen K. Siemens and John Bridges
Journal of Health Politics, Policy and Law
October 2008

Abstract (excerpt)

In this article, we document twelve significant attempts to reform health care financing in Germany and critically appraise them according to the principles of solidarity and subsidiarity on which SHI (social health insurance) systems were built. While the reforms in the aggregate offered the prospect of addressing the challenges faced by the system, the modest results of the reforms and remaining deficiencies of the system underscore the limitations of the evolutionary approach to reforms. This suggests that reformers should consider a more revolutionary approach.

Concluding Remarks (excerpt)

An appraisal of health care financing reforms in Germany since reunification offers three lessons. First, while evolutionary reforms may be more politically feasible than radical reforms, evolutionary reforms are inadequate in addressing the issue of the sustainability of health care financing. Second, the impact of evolutionary reforms can be substantial when they extend and build on and not contradict or undermine previous measures. Finally, the biggest challenge to health care financing reform is the aversion to take the revolutionary route.

http://jhppl.dukejournals.org/cgi/content/abstract/33/5/979?etoc

Comment:

By Don McCanne, MD

The logic of Henry Aaron and other incrementalists seems to be as follows: Comprehensive reform of health care financing is not feasible because, if it were, we would have it by now; therefore we should abandon any thoughts of a single comprehensive reform package and move forward with tinkering around with various steps to see “what works and what doesn’t.” Of course, the discontinuity of this framing belies the alleged logic.

Aaron suggests that history shows us that only “major wars or depression” motivate democracies to make “large social and economic changes.” Is our current war too small, with too few U.S. casualties? Is our current recession too shallow, with too few unemployed and bankrupt? Is the home foreclosure rate too low, and the meltdown of the financial services industries too limited? Perhaps, perhaps.

If these don’t concern us enough, then what about the sputtering of the engine of the great American Dream? You know, that Dream that everyone could have a home, educational opportunities, healthy food, transportation, retirement security, and… health care. That engine has been redesigned to produce wealth transfer – a transfer of wealth from the masses who have increased our nation’s productivity, to the few who commandeered the machinery of Wall Street. Isn’t the sunsetting of the American Dream a crisis of proportions that finally would make us demand action?

If we are going to make our economy work for everyone, we are going to have to have to take “the revolutionary route” to health care financing reform. If we don’t fix our health care financing system, we will continue to see further erosion of the other elements of the American dream.

We do know how to do it, but first we are going to have to send Henry Aaron and his ilk off to their policy laboratories to tinker with their evolutionary reforms that never get us there. We can’t allow them to stand in our way any longer.

We need to throw out the current health care financing system and replace it with a system that would pay for all necessary health care services for everyone: a single payer national health program.

As Katrina vanden Heuvel and Eric Schlosser stated in today’s Wall Street Journal, “A universal health care system would help American families, while cutting the nation’s long-term health care costs… A new New Deal… would simply ensure that federal spending is driven by the needs of every American. Anything less than this — any proposal that rewards those who created the problem and penalizes those who can least afford it — is a raw deal.”

America Needs A New New Deal
http://online.wsj.com/article/SB122246953790280655.html

Health Insurance Costs to Spike an Average 8 Percent

By Joe Davidson
The Washington Post
September 26, 2008
Health insurance premiums for federal employees will jump almost 8 percent… the Office of Personnel Management announced yesterday.
Premiums for most workers, however, will climb even more next year — about 13 percent — which is the increase for enrollees in the Blue Cross and Blue Shield plans. Sixty percent of federal workers are enrolled in one of the Blue Cross and Blue Shield plans.
Colleen M. Kelley, president of the National Treasury Employees Union, was not impressed. “It is very discouraging to see average increases of this magnitude,” she said, “particularly given the bargaining power OPM should be able to exercise as manager of the nation’s largest group health plan.”
http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092502677.html?hpid=sec-business

So you want the health insurance program that the members of Congress have? This is it: the Federal Employees Health Benefits Program (FEHBP). This is the plan that several politicians have supported as an option to purchase in place of your current coverage, if you should no longer want to keep that.
Prior studies have questioned whether FEHBP is an appropriate option for moderate income individuals. The employees’ portion of the premiums plus the out-of-pocket cost sharing is not affordable for them should they have significant health care needs. In fact 100,000 federal employees eligible for FEHBP are not covered by the program, many because they cannot afford their portion of the premiums.
The politicians frequently discuss guaranteeing basic coverage, “without the bells and whistles,” and refer to the FEHBP Blue Cross/Blue Shield plans as a model. The premiums for this basic coverage will increase 13 percent for 2009. 13 percent!
The Office of Personnel Management, the largest purchaser of health benefits in the nation, has been ineffective in containing runaway costs in the FEHBP program. We desperately need a new model of health care financing. It is time to seriously consider adopting a single payer monopsony. Then everyone could have affordable health care.

By Joe Davidson
The Washington Post
September 26, 2008

Health insurance premiums for federal employees will jump almost 8 percent… the Office of Personnel Management announced yesterday.

Premiums for most workers, however, will climb even more next year — about 13 percent — which is the increase for enrollees in the Blue Cross and Blue Shield plans. Sixty percent of federal workers are enrolled in one of the Blue Cross and Blue Shield plans.

Colleen M. Kelley, president of the National Treasury Employees Union, was not impressed. “It is very discouraging to see average increases of this magnitude,” she said, “particularly given the bargaining power OPM should be able to exercise as manager of the nation’s largest group health plan.”

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/25/AR2008092502677.html?hpid=sec-business

Comment:

By Don McCanne, MD

So you want the health insurance program that the members of Congress have? This is it: the Federal Employees Health Benefits Program (FEHBP). This is the plan that several politicians have supported as an option to purchase in place of your current coverage, if you should no longer want to keep that.

Prior studies have questioned whether FEHBP is an appropriate option for moderate income individuals. The employees’ portion of the premiums plus the out-of-pocket cost sharing is not affordable for them should they have significant health care needs. In fact 100,000 federal employees eligible for FEHBP are not covered by the program, many because they cannot afford their portion of the premiums.

The politicians frequently discuss guaranteeing basic coverage, “without the bells and whistles,” and refer to the FEHBP Blue Cross/Blue Shield plans as a model. The premiums for this basic coverage will increase 13 percent for 2009. 13 percent!

The Office of Personnel Management, the largest purchaser of health benefits in the nation, has been ineffective in containing runaway costs in the FEHBP program. We desperately need a new model of health care financing. It is time to seriously consider adopting a single payer monopsony. Then everyone could have affordable health care.

Suit seeks to open Canadian health care to privatizers

By Frances Russell
Winnipeg Free Press
September 24, 2008
Canada’s growing flirtation with private for-profit health care has led to the first legal assault on Canadian medicare under the investor-state clause of the North American Free Trade Agreement.
Alone among the world’s trade treaties, NAFTA allows foreign investors to sue the Canadian government directly if any public policy or governmental action denies them investment or profit opportunities.
Now, a group of 200 private investors led by Arizona businessman Melvin J. Howard is planning to use the NAFTA national treatment mechanism to pry open Canadian medicare — often described by neoconservatives as “the last great uncracked oyster in the North American marketplace.”
Howard and his partners want to open a private surgical centre in B.C. similar to the Cambie Clinic owned by Dr. Brian Day, past-president of the Canadian Medical Association, but are facing what they call anti-American roadblocks in several municipalities.
The use of NAFTA’s Chapter 11 to put medicare out of business — more accurately, to make it a for-profit, private, and likely American, business — has long been feared by medicare’s supporters. They have never believed government assurances that NAFTA grandfathered medicare beyond the reach of foreign insurance companies and health maintenance organizations (HMOs) seeking to replace it with U.S. private for-profit medicine.
It’s significant to note that NAFTA’s Chapter 11 effectively gives foreign investors greater rights than Canadian investors, because Canadians are restricted in their ability to sue their own government.
(Mike McBane, co-ordinator of the pro-medicare National Health Coalition) says privatizers and foreign investors are emboldened by what he calls a “perfect storm:” a federal government that believes in provincial autonomy, not national standards; the 2005 Supreme Court Chaoulli decision that private medical services do not abridge medicare and are a fundamental human right; and the CMA’s new support for two-tier medicine.
He cites a speech Prime Minister Stephen Harper gave in 2001 when he was president of the National Citizens Coalition in which he stated: “(W)hat we clearly need is experimentation — with market reforms and private delivery options within the public system. And it is only logical that, in a federal state where the provinces operate the public health care systems and regulate private services, that experimentation should occur at the provincial level.”
Continues McBane: “The dangerous thing is, you establish a private clinic and then it gets sold… We know why foreign investment wants it because they see public health care budgets as a cash cow.”
http://www.winnipegfreepress.com/subscriber/columnists/top3/story/4229990p-4871159c.html

Canadians, who much prefer their public medicare system to the U.S. private-market version of health care, have long feared that NAFTA would open up their health care system to an invasion of U.S.-style, investor-owned, market-based insurers and providers. The U.S. experience has proven that these entrepreneurs can cause health care costs to skyrocket, while greatly impairing equitable coverage and access.
The door has been opened; the “oyster has been cracked.” The U.S. entrepreneurial invaders have invoked NAFTA to force the introduction of expensive, corporate, for-profit, upper-tier health care to serve Canada’s more affluent citizens. Once in place, the public medicare program will see a gradual decline in funding because of the lack of a strong political voice (moneyed voice) representing lower-income individuals.
Chronic underfunding of Canada’s medicare will convert it into a bottom-tier, U.S.-style Medicaid program with impaired access since providers will bail out of the public sector and move into the lucrative, upper-tier private sector. (Just as with Medicaid, some dedicated physicians will remain in the public sector simply because it is the right thing to do, but they will have to work with much more limited resources.)
Tommy Douglas, the father of Canadian medicare, was selected by the people as “The Greatest Canadian.” The people must now consider what Tommy Douglas would have had to say about investor-owned health care. Perhaps it’s time for the citizens of Canada to demand that their political leadership revisit NAFTA.

Suit seeks to open Canadian health care to privatizers

By Frances Russell
Winnipeg Free Press
September 24, 2008

Canada’s growing flirtation with private for-profit health care has led to the first legal assault on Canadian medicare under the investor-state clause of the North American Free Trade Agreement.

Alone among the world’s trade treaties, NAFTA allows foreign investors to sue the Canadian government directly if any public policy or governmental action denies them investment or profit opportunities.

Now, a group of 200 private investors led by Arizona businessman Melvin J. Howard is planning to use the NAFTA national treatment mechanism to pry open Canadian medicare — often described by neoconservatives as “the last great uncracked oyster in the North American marketplace.”

Howard and his partners want to open a private surgical centre in B.C. similar to the Cambie Clinic owned by Dr. Brian Day, past-president of the Canadian Medical Association, but are facing what they call anti-American roadblocks in several municipalities.

The use of NAFTA’s Chapter 11 to put medicare out of business — more accurately, to make it a for-profit, private, and likely American, business — has long been feared by medicare’s supporters. They have never believed government assurances that NAFTA grandfathered medicare beyond the reach of foreign insurance companies and health maintenance organizations (HMOs) seeking to replace it with U.S. private for-profit medicine.

It’s significant to note that NAFTA’s Chapter 11 effectively gives foreign investors greater rights than Canadian investors, because Canadians are restricted in their ability to sue their own government.

(Mike McBane, co-ordinator of the pro-medicare National Health Coalition) says privatizers and foreign investors are emboldened by what he calls a “perfect storm:” a federal government that believes in provincial autonomy, not national standards; the 2005 Supreme Court Chaoulli decision that private medical services do not abridge medicare and are a fundamental human right; and the CMA’s new support for two-tier medicine.

He cites a speech Prime Minister Stephen Harper gave in 2001 when he was president of the National Citizens Coalition in which he stated: “(W)hat we clearly need is experimentation — with market reforms and private delivery options within the public system. And it is only logical that, in a federal state where the provinces operate the public health care systems and regulate private services, that experimentation should occur at the provincial level.”

Continues McBane: “The dangerous thing is, you establish a private clinic and then it gets sold… We know why foreign investment wants it because they see public health care budgets as a cash cow.”

http://www.winnipegfreepress.com/subscriber/columnists/top3/story/4229990p-4871159c.html

Comment:

By Don McCanne, MD

Canadians, who much prefer their public medicare system to the U.S. private-market version of health care, have long feared that NAFTA would open up their health care system to an invasion of U.S.-style, investor-owned, market-based insurers and providers. The U.S. experience has proven that these entrepreneurs can cause health care costs to skyrocket, while greatly impairing equitable coverage and access.

The door has been opened; the “oyster has been cracked.” The U.S. entrepreneurial invaders have invoked NAFTA to force the introduction of expensive, corporate, for-profit, upper-tier health care to serve Canada’s more affluent citizens. Once in place, the public medicare program will see a gradual decline in funding because of the lack of a strong political voice (moneyed voice) representing lower-income individuals.

Chronic underfunding of Canada’s medicare will convert it into a bottom-tier, U.S.-style Medicaid program with impaired access since providers will bail out of the public sector and move into the lucrative, upper-tier private sector. (Just as with Medicaid, some dedicated physicians will remain in the public sector simply because it is the right thing to do, but they will have to work with much more limited resources.)

Tommy Douglas, the father of Canadian medicare, was selected by the people as “The Greatest Canadian.” The people must now consider what Tommy Douglas would have had to say about investor-owned health care. Perhaps it’s time for the citizens of Canada to demand that their political leadership revisit NAFTA.

Trade-Offs Getting Tougher: Problems Paying Medical Bills Increase for U.S. Families, 2003-2007

By Peter J. Cunningham
Center for Studying Health System Change
September 2008
About 57 million Americans were in families with problems paying medical bills in 2007–an increase of 14 million people since 2003, according to a new national study by the Center for Studying Health System Change (HSC). Problems paying medical bills increased for both nonelderly insured and uninsured people. Although the rate of medical bill problems is much higher for uninsured people, most people with medical bill problems–42.5 million–had insurance coverage. About 2.2 million people with medical bill problems were in families that filed for bankruptcy as a result of their medical bills, and a much larger number reported other financial consequences, such as problems paying for other necessities and having to borrow money. The increase in medical bill problems–especially among insured people–is the main reason why more people reported unmet medical needs because of cost in 2007 than in 2003.
http://www.hschange.org/CONTENT/1017/

And…

Health Benefits In 2008: Premiums Moderately Higher, While Enrollment In Consumer-Directed Plans Rises In Small Firms

By Gary Claxton, Jon R. Gabel, et al
Health Affairs
September 24, 2008
Average annual premiums in 2008 are $4,704 for single coverage and $12,680 for family coverage. These amounts are about 5 percent higher than premiums were last year. Enrollment in high-deductible health plans with a savings option increased to 8 percent of covered workers, up from 5 percent in 2007. Deductibles in preferred provider organizations, the plan type with the largest enrollment, increased from 2007 levels.
http://content.healthaffairs.org/cgi/content/full/hlthaff.27.6.w492/DC1

And…

Studies Show Strain of Medical Bills

By Reed Abelson
The New York Times
September 24, 2008
Even as Washington and Wall Street debate the best way to avert an economic meltdown, increasing numbers of Americans are struggling with another financial crisis: the growing burden of unpaid medical bills.
Two studies released Wednesday morning provide further evidence of the toll health care is increasingly placing on working families, even for those who have health insurance. And as employees are paying more medical expenses out of their own pockets, they are having a harder time coming up with the money.
While policy analysts acknowledge that finding any new money to expand coverage may prove difficult, some also say the terms of the debate may be changing as policy makers and the public rethink their positions on the need for regulation and the role of the government in industry — including the health care system.
“We can now imagine a government takeover that we could not imagine before,” (said Len Nichols, a health economist at the New America Foundation).
http://www.nytimes.com/2008/09/25/business/25health.html?_r=1&hp&oref=slogin

The bad (but not unexpected) news is that there is no relief from the unrelenting increases in health care costs for individuals and their families. But there is one number that should alarm all of us: 42.5 million people WITH INSURANCE COVERAGE have medical bill problems in spite of their coverage.
Whereas most advocacy efforts for reform have been directed towards expanding health care coverage to include more individuals, the proposals have included compromises designed to make health insurance more affordable. These compromises, involving fewer benefits and greater cost sharing, have made health care LESS affordable. Just ask those 42.5 million insured individuals who have medical bill problems.
It is time for us to get past the process of trying to bring everyone under the private insurance umbrella that leaks like a sieve. We need to adopt a financing system that is effective in preventing individuals with health care needs from having to face the additional burden of medical debt.
The private insurance industry covers primarily the relatively healthy: the healthy workforce, their healthy families, and the healthy sector of the individual insurance market. But some of these healthy individuals do develop significant medical problems, and for tens of millions of them, the private plans have not prevented medical debt. Shouldn’t that be the purpose of health insurance?
A government takeover of health care financing could provide us with the coverage that actually would work: a single payer system that would enable each of us to access the health care that we need, without exposing us to the additional burden of medical debt. If the government can serve as responsible stewards of our mortgage markets, surely they can become responsible stewards of our health care financing.

By Peter J. Cunningham
Center for Studying Health System Change
September 2008

About 57 million Americans were in families with problems paying medical bills in 2007–an increase of 14 million people since 2003, according to a new national study by the Center for Studying Health System Change (HSC). Problems paying medical bills increased for both nonelderly insured and uninsured people. Although the rate of medical bill problems is much higher for uninsured people, most people with medical bill problems–42.5 million–had insurance coverage. About 2.2 million people with medical bill problems were in families that filed for bankruptcy as a result of their medical bills, and a much larger number reported other financial consequences, such as problems paying for other necessities and having to borrow money. The increase in medical bill problems–especially among insured people–is the main reason why more people reported unmet medical needs because of cost in 2007 than in 2003.

http://www.hschange.org/CONTENT/1017/

And…

Health Benefits In 2008: Premiums Moderately Higher, While Enrollment In Consumer-Directed Plans Rises In Small Firms

By Gary Claxton, Jon R. Gabel, et al
Health Affairs
September 24, 2008

Average annual premiums in 2008 are $4,704 for single coverage and $12,680 for family coverage. These amounts are about 5 percent higher than premiums were last year. Enrollment in high-deductible health plans with a savings option increased to 8 percent of covered workers, up from 5 percent in 2007. Deductibles in preferred provider organizations, the plan type with the largest enrollment, increased from 2007 levels.

http://content.healthaffairs.org/cgi/content/full/hlthaff.27.6.w492/DC1

And…

Studies Show Strain of Medical Bills

By Reed Abelson
The New York Times
September 24, 2008

Even as Washington and Wall Street debate the best way to avert an economic meltdown, increasing numbers of Americans are struggling with another financial crisis: the growing burden of unpaid medical bills.

Two studies released Wednesday morning provide further evidence of the toll health care is increasingly placing on working families, even for those who have health insurance. And as employees are paying more medical expenses out of their own pockets, they are having a harder time coming up with the money.

While policy analysts acknowledge that finding any new money to expand coverage may prove difficult, some also say the terms of the debate may be changing as policy makers and the public rethink their positions on the need for regulation and the role of the government in industry — including the health care system.

“We can now imagine a government takeover that we could not imagine before,” (said Len Nichols, a health economist at the New America Foundation).

http://www.nytimes.com/2008/09/25/business/25health.html?_r=1&hp&oref=slogin

Comment:

By Don McCanne, MD

The bad (but not unexpected) news is that there is no relief from the unrelenting increases in health care costs for individuals and their families. But there is one number that should alarm all of us: 42.5 million people WITH INSURANCE COVERAGE have medical bill problems in spite of their coverage.

Whereas most advocacy efforts for reform have been directed towards expanding health care coverage to include more individuals, the proposals have included compromises designed to make health insurance more affordable. These compromises, involving fewer benefits and greater cost sharing, have made health care LESS affordable. Just ask those 42.5 million insured individuals who have medical bill problems.

It is time for us to get past the process of trying to bring everyone under the private insurance umbrella that leaks like a sieve. We need to adopt a financing system that is effective in preventing individuals with health care needs from having to face the additional burden of medical debt.

The private insurance industry covers primarily the relatively healthy: the healthy workforce, their healthy families, and the healthy sector of the individual insurance market. But some of these healthy individuals do develop significant medical problems, and for tens of millions of them, the private plans have not prevented medical debt. Shouldn’t that be the purpose of health insurance?

A government takeover of health care financing could provide us with the coverage that actually would work: a single payer system that would enable each of us to access the health care that we need, without exposing us to the additional burden of medical debt. If the government can serve as responsible stewards of our mortgage markets, surely they can become responsible stewards of our health care financing.

A.M. Best Revises Rating Outlook of U.S. Life/Health Companies to Negative

MarketWatch
September 18, 2008
Although fundamentals for the vast majority of life/health companies are currently sound, uncertainty continues to be widespread in terms of the future direction of the economy, real estate values, interest rates, equity markets–both domestically and globally–and liquidity. All of these factors have had an impact on life/health insurers’ balance sheet strength and operating performance.
As the federal government takes unprecedented steps to promote stability in financial markets and limit damage to the broader economy, A.M. Best notes both the political uncertainty of the upcoming Presidential election as well as the enhanced regulatory scrutiny that currently pervades the life/health industry. These issues are most prevalent across health insurance product lines, which are influenced significantly by regulation at both the federal and state levels. As a result, A.M. Best has revised the rating outlook on the health insurance industry to negative.
With employers dropping coverage, and politicians and regulators seeking ways to provide coverage for the uninsured, the individual medical market has become ultra competitive. A.M. Best has similar concerns with the small group medical market as large, national managed care companies compete despite low profit margins.
Moreover, the current economic environment is placing additional pressures on the managed care sector. The commercial market has been extremely competitive for some time with limited growth potential. Layoffs and bankruptcies will impact commercial enrollment, while cost factors could pressure employees to drop coverage. Many publicly traded managed care companies have increased their financial leverage over the past year mainly for share repurchase and acquisitions (with goodwill), all of which increase balance sheet risk. While A.M. Best acknowledges that managed care companies tend to have more liquid and conservative investment portfolios due to the short-tailed nature of the claims, the issues that have emerged on Wall Street, and in the real estate market, are expected to result in writedowns of certain investments.
http://www.marketwatch.com/news/story/am-best-revises-rating-outlook/story.aspx?guid=%7B4190EA15-8E83-466A-8FD1-5C44D3E63F4A%7D&dist=hppr

When the economy goes South, and unemployment rates increase, publicly financed programs face budget constraints because of the decline in tax revenues. Think of our public education system. Publicly financed health programs (over half of all health care spending today) face similar constraints.
So we should look at the stability of the financing of health care through private health plans. This report from A.M. Best indicates that market volatility will have a negative impact on the participation in their health insurance products and on the insurers’ return on their investments.
A shift away from large employer coverage and towards individual and small group insurance products has made these markets “ultra competitive,” resulting in narrower profit margins. It is ironic that increased competition is considered to be a threat to the insurers’ business model. At the same time “enhanced regulatory scrutiny” is also a threat. It seems that the health insurance industry will have difficulties no matter whether free market or government regulation policies prevail.
In addition, a significant portion of insurers’ profits comes from their investments that have nothing to do with health care. As their investment revenues decline they must make up the difference by increasing the spread between their revenues and costs. Since their high administrative costs are relatively fixed, they must turn to increases in premiums and decreases in benefits paid. The decrease in benefits is accomplished by reducing the health benefits which are covered, and by increasing cost-sharing by the patients. Underinsurance is already a major problem, and it will expand further under current trends.
Any financial crisis would impact both publicly and privately financed programs, but the private investor-owned programs are more severely impacted. Looking at the current financial crisis, it’s clear that only our government has the capability and resources to ensure health security for all of us… forever.