PNHP

An interview with PNHP Senior Health Policy Fellow Dr. Don McCanne on McCain and Obama's health care proposals.

An interview with PNHP Senior Health Policy Fellow Dr. Don McCanne on McCain and Obama's health care proposals.

Dr. McCanne served as PNHP President in 2003-2004 and writes a daily health policy “quote of the day” for single payer advocates. Subscribe by dropping a note to don@mccanne.org.

PNHP: How would you characterize Sen. McCain’s health care plan?

Dr. Don McCanne: Of the two candidates, McCain would rely more on the private sector and market forces to produce changes in the health care system. He says he would free up the market to allow private insurers to compete with each other to create plans with premiums we could afford.

Compared to Obama’s proposals, McCain’s program represents a much greater change from what we have now. He would shift responsibility for health care from employers to individuals by providing tax incentives for people to move to a deregulated, individual private insurance market.

What would be the impact?

McCain’s plan will likely result in many more people being uninsured and underinsured.

First of all, with workers receiving a government subsidy for health insurance – $2,500 for individuals, $5,000 for a family – employers are going to be motivated to terminate their health insurance programs and turn people over to the individual market.

McCain is basically proposing to change health insurance from a defined benefit to a defined contribution. In today’s market, what kind of family health insurance can be purchased with a $5,000 defined contribution? The average family premium is about $12,000, and that doesn’t include deductibles, co-pays and other out-of-pocket expenses.

I believe the private insurance companies will treat people in the marketplace very shabbily. Many people will be unable to afford any insurance – and it won’t only be those who are older or who have pre-existing conditions, sectors the insurance companies don’t want to cover at all.

Second, his proposal for less regulation of the insurance industry means that industry will be offering grossly inadequate insurance products to people in order to compete on price. The insurers can’t afford to provide real, comprehensive insurance and at the same time make their premiums affordable.

As a result, there will be a huge increase in the underinsured population. People will be losing their employer-based insurance and will be swelling the ranks of the uninsured and underinsured. This will result in a massive, catastrophic failure of the system. It will be horrible.

What about his claim that he’s not turning his back on people who have difficulty getting insurance, e.g. those with pre-existing conditions?

McCain proposes to cover such people through his “guaranteed access plan”, but that’s just a continuation of the state high-risk pools that we already have in place for individuals who typically can’t obtain insurance. These plans don’t work.

States are supposed to do their part in this scenario. But currently only about 190,000 people nationally are in these pools of high-risk individuals. These are very expensive pools. States just don’t have the funds to adequately finance them. So turning to the states – that’s no solution at all. It’s not a serious approach.

Would McCain’s plan give people more choice or control costs?

No.

Most insurance companies have preferred provider lists and most HMOs have closed panels that restrict patients to doctors in the HMO. Although McCain touts the freedom to choose your insurer or HMO, these institutions actually take away your freedom to choose who your doctor is or which hospital you can use – the choice we really want.

McCain’s proposals for containing costs are very weak.

The greatest source of administrative waste in U.S. health care today is our dysfunctional, fragmented private insurance system. That’s where the largest administrative costs are. And the individual insurance market – the market that McCain wants to expand – involves even higher administrative costs. So costs will likely go up.

Cost control is only achieved when you have real control over the health dollars. Only then can you develop incentives, for example, to expand primary care. Only then can you realign financial incentives away from an array of excessive, non-beneficial high-tech services that yield little value, and redirect it to primary care, which delivers greater value at lower cost.

What about Sen. Obama’s proposals?

Obama’s plan emphasizes increased government regulation and oversight of private and public insurance plans, leading to an incremental expansion of the existing system. As part of this, he would introduce a new Medicare-like plan for persons under 65 to serve as an alternative to private health insurance plans.

In terms of universal coverage, Obama’s plan probably will not expand coverage very much, mainly because his plan doesn’t do much to bring down the cost of health care. It continues to use the defective private insurance model.

The problem is that private insurers will not accept everyone in the risk pool, lest their costs go up. Even if regulations require them to do so, they still game the system through measures such as selective marketing. So people who are at higher risk will head for the new public or semi-public plans.

These plans, which under Obama’s proposal would be available through a new National Health Insurance Exchange, would be required to accept people with pre-existing conditions. But they would still involve payment of premiums, co-pays and deductibles.

He says these plans will be as good as what members of Congress get, right?

Obama says they would be patterned after the Federal Employee Health Benefits Program, but that may not be all that great. The plans that are offered to federal employees vary in price and a Senator can afford a plan that has far better benefits that his staffers. The FEHBP plans are not totally stripped down, but they still have deductibles, co-pays and other out-of-pocket expenses, and restrict people to a limited list of providers. In fact, 100,000 federal workers eligible for the FEHBP plans remain uninsured primarily because they cannot afford their share of the costs. Obviously that program wouldn’t work for far too many of us.

Additionally, the program Obama describes will be costly. He says individuals who can’t afford the premiums offered through the health insurance exchange plans will receive subsidies. But I think these subsidies will have to be much larger than estimated and will have to be provided to a much larger number of people than he currently estimates – not only low-income, but middle-income people and even those at the lower end of the high-income group.

So Obama’s stated goal of universal coverage will be foiled by the lack of availability of affordable plans that have adequate benefits. His approach is flawed because the private health plans are not going to be able to have enough benefits if they’re going to have affordable premiums.

Some say Obama’s new public plan could lead to something bigger and better.

The offering of a public plan option, which, incidentally, he shares with Sen. Hillary Clinton and professor Jacob Hacker, is not as simple as it would seem. Depending on the details and amount of funding, it has the potential to be the most important feature of his plan, or it could be a disaster. But even so, it alone won’t lead to anything even close to universal coverage. Obama has stated repeatedly that he knows that single payer is a superior solution for health care reform.

It’s likely that the public plan will be impacted by adverse selection – i.e. that individuals who are sick, or small businesses who have workers with costly disorders such as diabetes or cancer, will tend to seek out the public plans because the private plans would likely withdraw from markets that include high-cost individuals – markets in which they would be losing money. These individuals and small businesses will end up in relatively high-risk pools. It is essential those pools be adequately funded.

To fund the public high risk pools, either the private insurance companies would have to shift some of their funds into the public program through risk adjustment, or, as the public program uses up its funds, the government would have to make a greater contribution. To compete with the private plans, the public program and private plans would have to be funded at the same levels accurately corrected for the level of risk in their pools. That’s not technically feasible. Nobody has a way to do that. So insurers are always able to game the system.

Even if you could get private insurers to compete with the public program on a level playing field, that still leaves a lot of problems. You still don’t get the administrative savings you would under a single-payer system. Providers would still have to deal with multiple insurers. And both the Organization for Economic Cooperation and Development and the World Health Organization say systems that leave private plans in place are more expensive, less efficient and less equitable than a single public system.

What about cost control?

Again, Obama’s proposals, like McCain’s, are weak in this area. The defective private insurance model, to the extent in remains in place, drives up costs and blocks effective group bargaining and health planning.

The private health insurance plans of the 21st century have decided that they should cover only the healthy, putting an end to risk pools that enable a transfer from the many who are healthy to those with sickness or injury. They also realize that they should avoid competing with each other based on lower premiums, but should instead use their oligopolies to push premiums up to the maximum that the market will bear.

Only this month the two largest publicly traded health insurers, WellPoint and UnitedHealth Group, said they would not try to hold down premiums in the name of getting more members. “We will not sacrifice profitability for membership,” said one WellPoint official.

Yet both McCain and Obama propose to leave this industry in charge.

What’s the alternative?

What we really need is a system that removes the financial burden from patients and more effectively pools our funds into a public program that is able to address costs more effectively by introducing greater efficiency and value into our health care system.

Such a system would guarantee comprehensive health care to everyone by replacing the private insurance industry with a tax-supported government agency or agencies that would pay all medical bills, similar to the way Medicare operates today, but even better than Medicare. People would have the freedom to choose their own doctors and hospitals.

That’s a single-payer system. Such a system is embodied in H.R. 676, the “U.S. National Health Insurance Act,” introduced by Rep. John Conyers. It currently has 90 co-sponsors in Congress, more than any other health reform proposal.

How do you reply to those who say single payer is politically infeasible?

There are some in the political arena and health policy field who say the 2008 policy debate is over. They say single payer has lost out, and it’s time to move on.

The only problem is that single payer is the only plan that will work.

Keep in mind that any health care reform will have to be crafted and enacted by Congress. Whatever bill Congress comes up with will most likely not resemble either of the presidential candidates’ proposals very much. Only the general concepts will come into play. Congress will need to enact the specifics.

So it’s important to continue to educate people on basic health policy, contrasting the defective private insurance model with single-payer national health insurance. For members of groups like Physicians for a National Health Program, that means continuing to speak at forums and grand rounds, to write op-eds and letters to the editor, and to attend campaign-related events and raise the issue of why we need single payer.

At a glance

McCain’s proposal

* Increases number of uninsured and “underinsured”
* Increases administrative overhead (currently 31 percent of health spending)
* No effective cost containment
* Relies on private insurance market to shape system
* Moves people away from employer-based system to the individual market by offering tax credits ($2,500 individual, $5,000 family) that can be used to buy individual insurance
* Deregulates insurance markets, e.g. by dropping state-defined standards
* Encourages Health Savings Accounts
* Offers vague “Guaranteed Access Program” to address problem of the historically uninsurable – e.g. people with pre-existing conditions – that involves state-based risk pools

Obama’s proposal

* Partially reduces number of uninsured with $100 billion in new public funding
* Requires some employers to provide insurance or pay into a public insurance program, i.e. “play or pay”
* No effective cost-containment
* Mandates that all children be insured
* Expands Medicaid and State Children’s Health Insurance Program
* Sets up public insurance program as alternative to private insurers
* Sets up “National Health Insurance Exchange” through which insurers could not deny coverage to people with pre-existing conditions with tax subsidies to low-income
* Provides government reinsurance to employers for handling catastrophic illness or injury

An interview with PNHP Senior Health Policy Fellow Dr. Don McCanne on McCain and Obama’s health care proposals.

Dr. McCanne served as PNHP President in 2003-2004 and writes a daily health policy “quote of the day” for single payer advocates. Subscribe by dropping a note to don@mccanne.org.

PNHP: How would you characterize Sen. McCain’s health care plan?

Dr. Don McCanne: Of the two candidates, McCain would rely more on the private sector and market forces to produce changes in the health care system. He says he would free up the market to allow private insurers to compete with each other to create plans with premiums we could afford.

Compared to Obama’s proposals, McCain’s program represents a much greater change from what we have now. He would shift responsibility for health care from employers to individuals by providing tax incentives for people to move to a deregulated, individual private insurance market.

What would be the impact?

McCain’s plan will likely result in many more people being uninsured and underinsured.

First of all, with workers receiving a government subsidy for health insurance – $2,500 for individuals, $5,000 for a family – employers are going to be motivated to terminate their health insurance programs and turn people over to the individual market.

McCain is basically proposing to change health insurance from a defined benefit to a defined contribution. In today’s market, what kind of family health insurance can be purchased with a $5,000 defined contribution? The average family premium is about $12,000, and that doesn’t include deductibles, co-pays and other out-of-pocket expenses.

I believe the private insurance companies will treat people in the marketplace very shabbily. Many people will be unable to afford any insurance – and it won’t only be those who are older or who have pre-existing conditions, sectors the insurance companies don’t want to cover at all.

Second, his proposal for less regulation of the insurance industry means that industry will be offering grossly inadequate insurance products to people in order to compete on price. The insurers can’t afford to provide real, comprehensive insurance and at the same time make their premiums affordable.

As a result, there will be a huge increase in the underinsured population. People will be losing their employer-based insurance and will be swelling the ranks of the uninsured and underinsured. This will result in a massive, catastrophic failure of the system. It will be horrible.

What about his claim that he’s not turning his back on people who have difficulty getting insurance, e.g. those with pre-existing conditions?

McCain proposes to cover such people through his “guaranteed access plan”, but that’s just a continuation of the state high-risk pools that we already have in place for individuals who typically can’t obtain insurance. These plans don’t work.

States are supposed to do their part in this scenario. But currently only about 190,000 people nationally are in these pools of high-risk individuals. These are very expensive pools. States just don’t have the funds to adequately finance them. So turning to the states – that’s no solution at all. It’s not a serious approach.

Would McCain’s plan give people more choice or control costs?

No.

Most insurance companies have preferred provider lists and most HMOs have closed panels that restrict patients to doctors in the HMO. Although McCain touts the freedom to choose your insurer or HMO, these institutions actually take away your freedom to choose who your doctor is or which hospital you can use – the choice we really want.

McCain’s proposals for containing costs are very weak.

The greatest source of administrative waste in U.S. health care today is our dysfunctional, fragmented private insurance system. That’s where the largest administrative costs are. And the individual insurance market – the market that McCain wants to expand – involves even higher administrative costs. So costs will likely go up.

Cost control is only achieved when you have real control over the health dollars. Only then can you develop incentives, for example, to expand primary care. Only then can you realign financial incentives away from an array of excessive, non-beneficial high-tech services that yield little value, and redirect it to primary care, which delivers greater value at lower cost.

What about Sen. Obama’s proposals?

Obama’s plan emphasizes increased government regulation and oversight of private and public insurance plans, leading to an incremental expansion of the existing system. As part of this, he would introduce a new Medicare-like plan for persons under 65 to serve as an alternative to private health insurance plans.

In terms of universal coverage, Obama’s plan probably will not expand coverage very much, mainly because his plan doesn’t do much to bring down the cost of health care. It continues to use the defective private insurance model.

The problem is that private insurers will not accept everyone in the risk pool, lest their costs go up. Even if regulations require them to do so, they still game the system through measures such as selective marketing. So people who are at higher risk will head for the new public or semi-public plans.

These plans, which under Obama’s proposal would be available through a new National Health Insurance Exchange, would be required to accept people with pre-existing conditions. But they would still involve payment of premiums, co-pays and deductibles.

He says these plans will be as good as what members of Congress get, right?

Obama says they would be patterned after the Federal Employee Health Benefits Program, but that may not be all that great. The plans that are offered to federal employees vary in price and a Senator can afford a plan that has far better benefits that his staffers. The FEHBP plans are not totally stripped down, but they still have deductibles, co-pays and other out-of-pocket expenses, and restrict people to a limited list of providers. In fact, 100,000 federal workers eligible for the FEHBP plans remain uninsured primarily because they cannot afford their share of the costs. Obviously that program wouldn’t work for far too many of us.

Additionally, the program Obama describes will be costly. He says individuals who can’t afford the premiums offered through the health insurance exchange plans will receive subsidies. But I think these subsidies will have to be much larger than estimated and will have to be provided to a much larger number of people than he currently estimates – not only low-income, but middle-income people and even those at the lower end of the high-income group.

So Obama’s stated goal of universal coverage will be foiled by the lack of availability of affordable plans that have adequate benefits. His approach is flawed because the private health plans are not going to be able to have enough benefits if they’re going to have affordable premiums.

Some say Obama’s new public plan could lead to something bigger and better.

The offering of a public plan option, which, incidentally, he shares with Sen. Hillary Clinton and professor Jacob Hacker, is not as simple as it would seem. Depending on the details and amount of funding, it has the potential to be the most important feature of his plan, or it could be a disaster. But even so, it alone won’t lead to anything even close to universal coverage. Obama has stated repeatedly that he knows that single payer is a superior solution for health care reform.

It’s likely that the public plan will be impacted by adverse selection – i.e. that individuals who are sick, or small businesses who have workers with costly disorders such as diabetes or cancer, will tend to seek out the public plans because the private plans would likely withdraw from markets that include high-cost individuals – markets in which they would be losing money. These individuals and small businesses will end up in relatively high-risk pools. It is essential those pools be adequately funded.

To fund the public high risk pools, either the private insurance companies would have to shift some of their funds into the public program through risk adjustment, or, as the public program uses up its funds, the government would have to make a greater contribution. To compete with the private plans, the public program and private plans would have to be funded at the same levels accurately corrected for the level of risk in their pools. That’s not technically feasible. Nobody has a way to do that. So insurers are always able to game the system.

Even if you could get private insurers to compete with the public program on a level playing field, that still leaves a lot of problems. You still don’t get the administrative savings you would under a single-payer system. Providers would still have to deal with multiple insurers. And both the Organization for Economic Cooperation and Development and the World Health Organization say systems that leave private plans in place are more expensive, less efficient and less equitable than a single public system.

What about cost control?

Again, Obama’s proposals, like McCain’s, are weak in this area. The defective private insurance model, to the extent in remains in place, drives up costs and blocks effective group bargaining and health planning.

The private health insurance plans of the 21st century have decided that they should cover only the healthy, putting an end to risk pools that enable a transfer from the many who are healthy to those with sickness or injury. They also realize that they should avoid competing with each other based on lower premiums, but should instead use their oligopolies to push premiums up to the maximum that the market will bear.

Only this month the two largest publicly traded health insurers, WellPoint and UnitedHealth Group, said they would not try to hold down premiums in the name of getting more members. “We will not sacrifice profitability for membership,” said one WellPoint official.

Yet both McCain and Obama propose to leave this industry in charge.

What’s the alternative?

What we really need is a system that removes the financial burden from patients and more effectively pools our funds into a public program that is able to address costs more effectively by introducing greater efficiency and value into our health care system.

Such a system would guarantee comprehensive health care to everyone by replacing the private insurance industry with a tax-supported government agency or agencies that would pay all medical bills, similar to the way Medicare operates today, but even better than Medicare. People would have the freedom to choose their own doctors and hospitals.

That’s a single-payer system. Such a system is embodied in H.R. 676, the “U.S. National Health Insurance Act,” introduced by Rep. John Conyers. It currently has 90 co-sponsors in Congress, more than any other health reform proposal.

How do you reply to those who say single payer is politically infeasible?

There are some in the political arena and health policy field who say the 2008 policy debate is over. They say single payer has lost out, and it’s time to move on.

The only problem is that single payer is the only plan that will work.

Keep in mind that any health care reform will have to be crafted and enacted by Congress. Whatever bill Congress comes up with will most likely not resemble either of the presidential candidates’ proposals very much. Only the general concepts will come into play. Congress will need to enact the specifics.

So it’s important to continue to educate people on basic health policy, contrasting the defective private insurance model with single-payer national health insurance. For members of groups like Physicians for a National Health Program, that means continuing to speak at forums and grand rounds, to write op-eds and letters to the editor, and to attend campaign-related events and raise the issue of why we need single payer.

At a glance

McCain’s proposal

* Increases number of uninsured and “underinsured”
* Increases administrative overhead (currently 31 percent of health spending)
* No effective cost containment
* Relies on private insurance market to shape system
* Moves people away from employer-based system to the individual market by offering tax credits ($2,500 individual, $5,000 family) that can be used to buy individual insurance
* Deregulates insurance markets, e.g. by dropping state-defined standards
* Encourages Health Savings Accounts
* Offers vague “Guaranteed Access Program” to address problem of the historically uninsurable – e.g. people with pre-existing conditions – that involves state-based risk pools

Obama’s proposal

* Partially reduces number of uninsured with $100 billion in new public funding
* Requires some employers to provide insurance or pay into a public insurance program, i.e. “play or pay”
* No effective cost-containment
* Mandates that all children be insured
* Expands Medicaid and State Children’s Health Insurance Program
* Sets up public insurance program as alternative to private insurers
* Sets up “National Health Insurance Exchange” through which insurers could not deny coverage to people with pre-existing conditions with tax subsidies to low-income
* Provides government reinsurance to employers for handling catastrophic illness or injury

Employers shift to underinsurance

Health benefit cost growth predicted to ease slightly in 2009 as employers shift cost

Mercer
September 4, 2008
After three years of double-digit growth in the first half of the decade, annual health benefit cost increases slowed to about 6 percent in 2005 and have stayed there ever since.
Mercer’s complete survey results won’t be released until later in the year, but for the 1,317 employer health plan sponsors that have responded so far, the total cost to renew their current health plans — if they were to make no changes — would grow by nearly 8 percent on average. Small employers (those with 10-499 employees) would see an even higher increase, of about 10 percent. However, the majority of respondents say they will take action to lower their actual cost increases.
“It’s a relief to see cost growth trending down, even slightly,” said Blaine Bos, a senior Mercer health and benefits consultant based in Minneapolis. “But this is not an unqualified success story. While some employers are holding down cost growth with innovative methods of improving health care quality and efficiency, more typically employers struggling with increases they can’t handle resort to the tried and true method of shifting cost to employees.”
Well over half (59 percent) of employers taking action to reduce their 2009 cost increase will raise deductibles, copayments, coinsurance or employee out-of-pocket spending limits. Employee cost-sharing has risen sharply over the past five years.
http://www.mercer.com/summary.htm?idContent=1319885

Is it good news that employers’ health benefit cost growth is easing slightly? No. If you look at the full picture, it’s terrible news. Health care costs are continuing to increase at an unsustainable rate, but employers are dumping the problem onto the backs of their employees by “the tried and true method of shifting cost to employees.”
Products available in the individual insurance market are no longer providing adequate protection because of increases in deductibles, copayments and coinsurance that trade off affordable premiums for unaffordable access to health care – the very definition of underinsurance.
Employers are now seeking relief from the costs of their health benefit programs by following the lead of the individual market and converting their programs into underinsurance plans.
Reform proposals that would expand competition of plans in the individual market won’t work because most of the plans will be underinsurance products if the premiums are to be competitive. Reform proposals that would expand on employer-sponsored coverage won’t work if that sector becomes saturated with similar underinsurance plans.
If we regulate the markets to prevent the sale of underinsurance products, then the increase in health care costs will continue to make premiums unaffordable for either employers or individuals.
If we really do want everyone to have affordable access to all necessary health care, we have no option but to establish a universal risk pool that is equitably funded, and then to take advantage of our own monopsony to provide us with greater value in our health care purchasing. We are already at that point, and there is nowhere else to turn.

Employers shift to underinsurance

Health benefit cost growth predicted to ease slightly in 2009 as employers shift cost

Mercer
September 4, 2008

After three years of double-digit growth in the first half of the decade, annual health benefit cost increases slowed to about 6 percent in 2005 and have stayed there ever since.

Mercer’s complete survey results won’t be released until later in the year, but for the 1,317 employer health plan sponsors that have responded so far, the total cost to renew their current health plans — if they were to make no changes — would grow by nearly 8 percent on average. Small employers (those with 10-499 employees) would see an even higher increase, of about 10 percent. However, the majority of respondents say they will take action to lower their actual cost increases.

“It’s a relief to see cost growth trending down, even slightly,” said Blaine Bos, a senior Mercer health and benefits consultant based in Minneapolis. “But this is not an unqualified success story. While some employers are holding down cost growth with innovative methods of improving health care quality and efficiency, more typically employers struggling with increases they can’t handle resort to the tried and true method of shifting cost to employees.”

Well over half (59 percent) of employers taking action to reduce their 2009 cost increase will raise deductibles, copayments, coinsurance or employee out-of-pocket spending limits. Employee cost-sharing has risen sharply over the past five years.

http://www.mercer.com/summary.htm?idContent=1319885

Comment:

By Don McCanne, MD

Is it good news that employers’ health benefit cost growth is easing slightly? No. If you look at the full picture, it’s terrible news. Health care costs are continuing to increase at an unsustainable rate, but employers are dumping the problem onto the backs of their employees by “the tried and true method of shifting cost to employees.”

Products available in the individual insurance market are no longer providing adequate protection because of increases in deductibles, copayments and coinsurance that trade off affordable premiums for unaffordable access to health care – the very definition of underinsurance.

Employers are now seeking relief from the costs of their health benefit programs by following the lead of the individual market and converting their programs into underinsurance plans.

Reform proposals that would expand competition of plans in the individual market won’t work because most of the plans will be underinsurance products if the premiums are to be competitive. Reform proposals that would expand on employer-sponsored coverage won’t work if that sector becomes saturated with similar underinsurance plans.

If we regulate the markets to prevent the sale of underinsurance products, then the increase in health care costs will continue to make premiums unaffordable for either employers or individuals.

If we really do want everyone to have affordable access to all necessary health care, we have no option but to establish a universal risk pool that is equitably funded, and then to take advantage of our own monopsony to provide us with greater value in our health care purchasing. We are already at that point, and there is nowhere else to turn.

A feasible health care plan

By ALWIN STEINMANN
Albany Times Union
Thursday, September 4, 2008

There have been a number of recent items on the opinion pages regarding the important and timely topic of health care, in particular, the issue of a single-payer system. Both Dr. John Bennett (Aug. 22) and Joel Margolis (Aug. 21) are critical of this potential solution for the problems that plague our nation’s medical system. Mr. Margolis implies that the nation can’t afford a Medicare-like system that would cover all Americans, yet the facts would argue otherwise. If one were to add up all the public monies currently spent on health care in the U.S. and applied it across our entire population, on a per capita basis, we already spend more than many industrialized countries do to cover all their citizens.

Dr. Bennett cites the shortfalls of the current Medicare system, but a “Medicare-for-all” product would look very different from the Medicare that we have been dealing with for four decades. A single-payer system based on Medicare would utilize its financial and administrative infrastructure to provide benefits that are better suited to a wider spectrum of patients and reward preventive care and chronic disease management. He closes by concluding that not-for-profit health insurers are the most qualified entities to tackle our broken health care system by virtue of their “proven track record of keeping costs down and managing the delivery of medical services.”

Given the fact that the U.S. spends nearly twice as much per capita on health care as any other industrialized nation and ranks well below those nations in the overall quality of care delivered, I am wondering what record he is referring to. The “proven track record” of our current system is the best argument for a major overhaul.

A number of medical professional societies, have called for health care reforms to provide universal coverage including the possibility of a single-payer system. An article published in the Annals of Internal Medicine showed that the majority of polled physicians (59 percent) supported the notion of a single-payer system. Given that 15 percent of our population lacks health insurance, and our overall expenditures on health care is in excess of $2.1 trillion, a single-payer system is no longer a fringe idea to be thought of as a dream. It’s instead a realistic solution to a health care system that rewards excessive care and administrative infrastructure while ignoring the real needs of its patients and providers.

Alwin Steinmann is a doctor. He lives in Slingerlands.

America Un-Covered

With 47 million uninsured, how does this nation care for its people?

by Cheryl SooHoo
Ward Rounds
Northwestern University Feinberg School of Medicine
Summer 2008, Volume 25, Number 2

(Excerpts)


Dr. Quentin Young, PNHP National Coordinator

In the April 1 issue of the Annals of Internal Medicine, two physician researchers from Indiana University revealed results from their 2007 survey of physicians whom they queried on the subject of government-organized national health insurance (NHI). A follow up to a 2002 survey, the new poll indicated that a larger percentage of doctors–59 versus 49 percent five years ago–supported health care reform to achieve greater coverage for individuals living in the United States. Numerous media outlets reported on the survey’s results, prompting the American Medical Association (AMA), among others, to weigh in on the universal health care discussion. …

… For recently retired internist Quentin D. Young, MD ’48, championing the creation of a singlepayer NHI plan that would expand the existing Medicare model and essentially eliminate private insurance has led to conversations with members of Congress, including Senator Barack Obama (D-Ill.), the Democratic Party’s presumptive nominee for the highest office in the land.

“We’ve talked, because I wanted to know what his views were on the single-payer proposal. In fact, I’ve known Obama for a long time. He sees a colleague physician in my Hyde Park practice,” shares Dr. Young, national coordinator of Chicago-based Physicians for a National Health Program (PNHP). And what does Dr. Young think of Congressman Obama’s health care platform? “In my opinion it’s bad because it maintains employer-based private insurance! Although he no longer does, Obama did support singlepayer in the past.”

With some 15,000 members, PNHP describes itself as a physicians group that believes all people have a right to access high-quality comprehensive care. Achieving that particular vision begins with educating physicians on the need for a single-payer NHI plan, through vehicles the medical profession finds credible such as peer-reviewed journals and grand rounds lectures.

“Doctors by definitrd. “Many consider them the most knowledgeable elements in the equation and, not least, they have earned inion are involved in the health system,” remarks Dr. Young, the 2008 recipient of the Feinberg School’s Distinguished Alumni Awafluence as discussants on health issues.”

One “scholarly” coup for the group and others was an article that appeared in the August 2003 issue of the Journal of the American Medical Association. In that piece, the Physicians’ Working Group for Single-Payer National Health Insurance, which included faculty members from Harvard University as well as Dr. Young, a faculty member at the University of Illinois and former chair of internal medicine at Cook County Hospital, methodically laid out their NHI proposal.

Administered by a single public agency that organizes health financing but leaves the delivery of care largely private, NHI would feature universal, comprehensive coverage and a free choice of providers. The plan backed by PNHP would call for physicians to receive fee-for-service payments dictated by a negotiated formulary or draw salaries from hospitals or nonprofit HMO/group practices. A global budget would take care of each hospital’s operating costs. Financing for the system would come from taxes and bidding adieu to private insurers. Recapturing the administrative “waste” of large corporations currently managing the mosaic of health plans available in the United States would more than pay for NHI as evidenced by a current U.S. government program, believes Dr. Young.

“America already has singlepayer national health insurance. It’s called ‘Medicare,'” he explains. “Medicare is the most successful program in the country, outshining any of the private sector insurance companies with their high administrative costs. Thirty-one percent of all health care dollars now go to absorbing the administrative costs of the big carriers. Medicare has an administrative cost of 3 percent. When you are dealing with a system where every percentage point is 21 billion dollars, the costs are fairly significant.”

PNHP has faced many critics, from those who consider the group’s plan tantamount to “socialized” medicine to those who fear rationing of health care services. And using the Medicare program as a model raises its own serious financial issues as Medicare’s hospital insurance trust fund, on its present course, is expected to run out of money in 2019, according to a report from the Board of Trustees for Medicare released this March.

Yet octogenarian Dr. Young remains optimistic. His enthusiasm for NHI continues to be bolstered by growing legislative support for House Resolution (H.R.) 676–the “Expanded and Improved Medicare for All Act.” Rep. John Conyers (D-Mich.) first introduced the bill in 2005, after inviting Dr. Young and other NHI proponents to Washington to present their proposal for possible legislation. Additionally, Dr. Young’s observation that “American doctors have learned that there is something worse than government, and it is called corporations” has him convinced that PNHP’s vision finally is reaching the mainstream.

“Until quite recently, we were considered irrelevant because we were unfeasible,” he says. “That’s over now. There have been enough victories and public discussion so that we have become the ‘undesirable’ alternative. Doesn’t sound like much, but that’s upward mobility!”

Dr. Claudia Fegan, "Everybody In Nobody Out"

Dr. Claudia Fegan speaks on single payer health care and HR 676 at the HR 676 Congressional caucus reception during the Democratic National Convention, August 26, 2008 in Denver, CO.

Supreme Court acknowledges insurers' conflict of interest

MetLife V. Glenn: The Court Addresses A Conflict Over Conflicts In ERISA Benefit Administration

by Timothy Stoltzfus Jost
Health Affairs
September 3, 2008
In its June 2008 decision in MetLife v. Glenn, the Supreme Court held that federal courts reviewing claim denials by Employee Retirement Income Security Act (ERISA) employee benefit plan administrators should take into account the fact that plan administrators (insurers or self-insured plans) face a conflict of interest because they pay claims out of their own pockets and arguably stand to profit by denying claims.
As a practical matter, the cost of health benefits to employers and their value to employees are first determined when the employer settles on a benefit, cost-sharing, and premium package for a benefit year. But it is also determined daily as plan administrators (either insurers, self-insured plans, or third-party administrators) make benefit determinations. Although plan coverage is sometimes clear, claims adjudication often involves application of vague terms such as “medically necessary” or “experimental” care to specific situations. Approximately 1.9 million claims are denied by employee benefit plans each year. Each denial potentially decreases the cost of coverage–immediately for self-insured and prospectively for insured employers (which usually pay an experience-rated premium). But denials also potentially decrease the value of coverage to the individual employee.
Claim determinations are ultimately reviewable in the federal courts. The courts’ approach to reviewing these determinations could, therefore, affect the cost of employee benefits. If, on the one hand, courts routinely overturn claim denials, the cost of coverage will increase, not just because plans will lose more appeals, but also because plans will have to litigate more appeals of adverse determinations as members see their chances of appeal improve. Moreover, plans will likely approve more claims initially instead of risking litigation. An increase in the cost of coverage may in turn lead to more employers’ abandoning coverage. On the other hand, if courts routinely defer to plan determinations, upholding most, plans will in all likelihood be more aggressive and confident in denying claims. This could make coverage more affordable but also put employees at risk.
Interpreting an earlier ERISA decision, the Court articulated the question as to what extent courts should defer to the decision of the plan administrator when the administrator faces a conflict of interest because it is essentially paying the claim out of its own pocket and stands to profit if the claim is denied. The Court decided that this conflict must be taken into account as a “factor” in judicial review. This paper analyzes the Court’s decision, the background of the decision, and its potential effect on American health policy.
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.5.w430

In this important decision the Court affirmed the obvious. Employer-sponsored plans and their administrators, whether private insurers or self-insured plans, have a conflict of interest when making benefit decisions. Denial of claims benefit the employers and/or insurers, and approval of claims benefit the employees. On this, the justices were in unanimous agreement.
Much of the criticism of private insurance has been directed toward the flagrant, egregious abuses in the individual insurance market. Far more is wasted on administrative services that are designed to weight the conflict of interest heavily in favor of the insurer at the cost of patient-beneficiary. Those who support reform based on private insurance acknowledge that the individual plans would have to be replaced with options that more closely resemble employer-sponsored plans. Is that wise from a health policy perspective?
An important implication of this Supreme Court decision is that costs for employer-sponsored plans will likely increase. Legal costs may rise because of an increase in challenges to claims decisions, which may cause an increase in benefit costs because of employer/insurer decisions to avoid the effort and legal costs of challenging claims for non-beneficial and non-contract services.
Would a single payer national health program eliminate the conflict of interest between the payer of benefits (the government) and the recipient of benefits (the patient)? Of course not. But, as a society, this conflict should work to our benefit.
Our own public program would have a mission to finance all necessary care for all of us. At the same time, it would have a responsibility as stewards of our tax funds to not waste money on non-beneficial services and products. Although disputes would be inevitable in marginal circumstances, the decisions would be based on balancing the needs of the patient with efficiency in the use of our public funds.
Employers would no longer have to face the awkward decisions of saving money by denying care for their employees.
In contrast, private insurers welcome the opportunity to reduce their overhead by denying care to patients. That might be good business, but it’s terrible health policy.

Supreme Court acknowledges insurers' conflict of interest

MetLife V. Glenn: The Court Addresses A Conflict Over Conflicts In ERISA Benefit Administration

by Timothy Stoltzfus Jost
Health Affairs
September 3, 2008

In its June 2008 decision in MetLife v. Glenn, the Supreme Court held that federal courts reviewing claim denials by Employee Retirement Income Security Act (ERISA) employee benefit plan administrators should take into account the fact that plan administrators (insurers or self-insured plans) face a conflict of interest because they pay claims out of their own pockets and arguably stand to profit by denying claims.

As a practical matter, the cost of health benefits to employers and their value to employees are first determined when the employer settles on a benefit, cost-sharing, and premium package for a benefit year. But it is also determined daily as plan administrators (either insurers, self-insured plans, or third-party administrators) make benefit determinations. Although plan coverage is sometimes clear, claims adjudication often involves application of vague terms such as “medically necessary” or “experimental” care to specific situations. Approximately 1.9 million claims are denied by employee benefit plans each year. Each denial potentially decreases the cost of coverage–immediately for self-insured and prospectively for insured employers (which usually pay an experience-rated premium). But denials also potentially decrease the value of coverage to the individual employee.

Claim determinations are ultimately reviewable in the federal courts. The courts’ approach to reviewing these determinations could, therefore, affect the cost of employee benefits. If, on the one hand, courts routinely overturn claim denials, the cost of coverage will increase, not just because plans will lose more appeals, but also because plans will have to litigate more appeals of adverse determinations as members see their chances of appeal improve. Moreover, plans will likely approve more claims initially instead of risking litigation. An increase in the cost of coverage may in turn lead to more employers’ abandoning coverage. On the other hand, if courts routinely defer to plan determinations, upholding most, plans will in all likelihood be more aggressive and confident in denying claims. This could make coverage more affordable but also put employees at risk.

Interpreting an earlier ERISA decision, the Court articulated the question as to what extent courts should defer to the decision of the plan administrator when the administrator faces a conflict of interest because it is essentially paying the claim out of its own pocket and stands to profit if the claim is denied. The Court decided that this conflict must be taken into account as a “factor” in judicial review. This paper analyzes the Court’s decision, the background of the decision, and its potential effect on American health policy.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.5.w430

Comment:

By Don McCanne, MD

In this important decision the Court affirmed the obvious. Employer-sponsored plans and their administrators, whether private insurers or self-insured plans, have a conflict of interest when making benefit decisions. Denial of claims benefit the employers and/or insurers, and approval of claims benefit the employees. On this, the justices were in unanimous agreement.

Much of the criticism of private insurance has been directed toward the flagrant, egregious abuses in the individual insurance market. Far more is wasted on administrative services that are designed to weight the conflict of interest heavily in favor of the insurer at the cost of patient-beneficiary. Those who support reform based on private insurance acknowledge that the individual plans would have to be replaced with options that more closely resemble employer-sponsored plans. Is that wise from a health policy perspective?

An important implication of this Supreme Court decision is that costs for employer-sponsored plans will likely increase. Legal costs may rise because of an increase in challenges to claims decisions, which may cause an increase in benefit costs because of employer/insurer decisions to avoid the effort and legal costs of challenging claims for non-beneficial and non-contract services.

Would a single payer national health program eliminate the conflict of interest between the payer of benefits (the government) and the recipient of benefits (the patient)? Of course not. But, as a society, this conflict should work to our benefit.

Our own public program would have a mission to finance all necessary care for all of us. At the same time, it would have a responsibility as stewards of our tax funds to not waste money on non-beneficial services and products. Although disputes would be inevitable in marginal circumstances, the decisions would be based on balancing the needs of the patient with efficiency in the use of our public funds.

Employers would no longer have to face the awkward decisions of saving money by denying care for their employees.

In contrast, private insurers welcome the opportunity to reduce their overhead by denying care to patients. That might be good business, but it’s terrible health policy.

Single-payer health care would benefit all

By JAMES J. BARBA
Albany Times Union
Wednesday, September 3, 2008

When the topic of universal health care for all Americans is discussed, I have often felt that the space separating the United States from the rest of the industrialized nations, all of which have universal coverage, is occupied by a brick wall. The wall symbolizes ignorance — not merely ignorance of the benefits of insuring all citizens, but ignorance of the component parts of a universal system: parts that can make a critical difference in how we can establish one; in what it will cost and in the issue of convenient access to care.

Dr. John Bennett, the new CEO of Capital District Physicians’ Health Plan, is to be commended for his Aug. 22 op-ed piece, “Is single payer the right Rx?” He answers that question by asserting that universal coverage is the ideal all of our citizens. While Dr. Bennett doesn’t believe the country needs to move to a single-payer system to get there, his concession in supporting universal coverage all but knocks that wall down.

Why? First, saying universal health care is ideal moves away from the shibboleth that such coverage is socialized medicine — which, by its very term, must be evil. Next, to have a physician of Dr. Bennett’s stature adopt this position marks a departure from the days of old when the American Medical Association fought such coverage. And, finally, it is the giant political step that, once taken, leaves the remainder of the debate to mechanics: how do we pay for such coverage; what is the mechanism for such payment and how we phase it in.

Against this significant concession, the issue of a single payer versus a multiplicity of payers is an easier matter, and I think that we can resolve it rather quickly. There appears to be no debate whatever that our current means of delivering health care has become cripplingly expensive. To devote more than 16 percent (and climbing) of our gross domestic product to a single service, no matter how important, is not sustainable. Once we decide that we will have universal coverage, the only approach that will allow actual and substantial savings is a single payer. There are many reasons for this:

Multiple payers have multiple rules for authorizing services, billing and the supply of requested data on the care actually delivered. A single set of rules, which everyone in the provider community follows, will eliminate most of this costly bureaucratic expense.

A single information system would allow all providers to manage and supply data to the payer. The current system, whereby each payer requires health care providers to spend significant resources on billing information systems in order to get their bills paid, is extraordinarily expensive and wasteful.

A single-payer would have a single set of protocols for negotiating fees for services and for supplies, including drugs. Providers do not, as Dr. Bennett suggests, resent the federal government setting such fees as much as they object to having little ability to negotiate each year with dozens of private payers, each one of which has its own agenda and its own bottom lines to support. Allowing a single payer to establish reimbursements that flow from drug negotiations and similar competitive market actions can satisfy the providers and eliminate substantial expense.

Finally, and most important, nothing in Dr. Bennett’s article addressed the issue of the uninsured. Unless we are willing to deal with those 46 million citizens, we have no real hope of taking the largest single cost out of American health care.

Far too many of uninsured individuals receive no preventive care, and, instead, crowd hospital emergency rooms when their health issues have become aggravated — and much more expensive to deal with. Our experience with managed care payers over the last 20 years has demonstrated that they are incapable of providing preventive care and/or disease and case management in any meaningful way, evidenced by the fact that premiums continue to rise. A study done five years ago, indicates that if the nation were to move to a single-payer system, the cost savings would be in the $200 to $300 billion dollar range. From that savings, the highest estimate I have seen for giving adequate health insurance coverage to all uninsured Americans is $125 billion.

A single payer can both create a rational and universal system for all Americans and save significant amounts of money. Whether we call that system “Medicare” or something else is not relevant. Whether we can afford to deliver access and care to every citizen is.

Dr. Bennett has conceded that universal coverage for all citizens is “the ideal.” I know of no cost-effective way of reaching that ideal other than through a single payer.

James J. Barba is president and chief executive officer of Albany Medical Center.

Supreme Court acknowledges insurers’ conflict of interest

MetLife V. Glenn: The Court Addresses A Conflict Over Conflicts In ERISA Benefit Administration

by Timothy Stoltzfus Jost
Health Affairs
September 3, 2008

In its June 2008 decision in MetLife v. Glenn, the Supreme Court held that federal courts reviewing claim denials by Employee Retirement Income Security Act (ERISA) employee benefit plan administrators should take into account the fact that plan administrators (insurers or self-insured plans) face a conflict of interest because they pay claims out of their own pockets and arguably stand to profit by denying claims.

As a practical matter, the cost of health benefits to employers and their value to employees are first determined when the employer settles on a benefit, cost-sharing, and premium package for a benefit year. But it is also determined daily as plan administrators (either insurers, self-insured plans, or third-party administrators) make benefit determinations. Although plan coverage is sometimes clear, claims adjudication often involves application of vague terms such as “medically necessary” or “experimental” care to specific situations. Approximately 1.9 million claims are denied by employee benefit plans each year. Each denial potentially decreases the cost of coverage–immediately for self-insured and prospectively for insured employers (which usually pay an experience-rated premium). But denials also potentially decrease the value of coverage to the individual employee.

Claim determinations are ultimately reviewable in the federal courts. The courts’ approach to reviewing these determinations could, therefore, affect the cost of employee benefits. If, on the one hand, courts routinely overturn claim denials, the cost of coverage will increase, not just because plans will lose more appeals, but also because plans will have to litigate more appeals of adverse determinations as members see their chances of appeal improve. Moreover, plans will likely approve more claims initially instead of risking litigation. An increase in the cost of coverage may in turn lead to more employers’ abandoning coverage. On the other hand, if courts routinely defer to plan determinations, upholding most, plans will in all likelihood be more aggressive and confident in denying claims. This could make coverage more affordable but also put employees at risk.

Interpreting an earlier ERISA decision, the Court articulated the question as to what extent courts should defer to the decision of the plan administrator when the administrator faces a conflict of interest because it is essentially paying the claim out of its own pocket and stands to profit if the claim is denied. The Court decided that this conflict must be taken into account as a “factor” in judicial review. This paper analyzes the Court’s decision, the background of the decision, and its potential effect on American health policy.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.27.5.w430

Comment:

By Don McCanne, MD

In this important decision the Court affirmed the obvious. Employer-sponsored plans and their administrators, whether private insurers or self-insured plans, have a conflict of interest when making benefit decisions. Denial of claims benefit the employers and/or insurers, and approval of claims benefit the employees. On this, the justices were in unanimous agreement.

Much of the criticism of private insurance has been directed toward the flagrant, egregious abuses in the individual insurance market. Far more is wasted on administrative services that are designed to weight the conflict of interest heavily in favor of the insurer at the cost of patient-beneficiary. Those who support reform based on private insurance acknowledge that the individual plans would have to be replaced with options that more closely resemble employer-sponsored plans. Is that wise from a health policy perspective?

An important implication of this Supreme Court decision is that costs for employer-sponsored plans will likely increase. Legal costs may rise because of an increase in challenges to claims decisions, which may cause an increase in benefit costs because of employer/insurer decisions to avoid the effort and legal costs of challenging claims for non-beneficial and non-contract services.

Would a single payer national health program eliminate the conflict of interest between the payer of benefits (the government) and the recipient of benefits (the patient)? Of course not. But, as a society, this conflict should work to our benefit.

Our own public program would have a mission to finance all necessary care for all of us. At the same time, it would have a responsibility as stewards of our tax funds to not waste money on non-beneficial services and products. Although disputes would be inevitable in marginal circumstances, the decisions would be based on balancing the needs of the patient with efficiency in the use of our public funds.

Employers would no longer have to face the awkward decisions of saving money by denying care for their employees.

In contrast, private insurers welcome the opportunity to reduce their overhead by denying care to patients. That might be good business, but it’s terrible health policy.