Calif. Nurses Laud Passage of Single-Payer, SB 840, Seen as National Model for Guaranteed Healthcare for All

MarketWatch
September 1, 2008

The California Nurses Association/National Nurses Organizing Committee today hailed the California Legislature’s passage of a single-payer, expanded Medicare for all, style bill that would guarantee quality health care for all Californians — and called it a model for the national healthcare reform debate that is sure to emerge in 2009.

SB 840, authored by State Senator Sheila Kuehl, passed its final legislative hurdle with a vote in the State Senate today and is headed to the desk of Gov. Arnold Schwarzenegger who vetoed an earlier version of the bill two years ago.

“But a lot has changed since then, including the further implosion of our healthcare safety net, and the Governor’s own professed support for universal healthcare,” said CNA/NNOC co-president Malinda Markowitz, RN. Nurses will remind Schwarzenegger of that pledge, she said.

http://www.marketwatch.com/news/story/calif-nurses-laud-passage-single-payer/story.aspx?guid=%7B203DC8E2-395B-4836-99E8-2B1C81FFF4F2%7D&dist=hppr

Senate Bill No. 840:
http://info.sen.ca.gov/pub/07-08/bill/sen/sb_0801-0850/sb_840_bill_20080811_amended_asm_v95.pdf

And…

Governor Schwarzenegger’s Health Care Plan

Assembly Bill X1 1, the Health Care Security and Cost Reduction Act:

Requires that all Californians take responsibility for their health coverage (individual mandate).

Guarantees that no Californian will be turned away from buying insurance based on their age or medical history (guarantee issue).

Spreads responsibility across individuals, government, hospitals and employers (shared responsibility).

Makes coverage more affordable for individuals and families through tax credits and subsidies.

Helps keep hospitals and emergency rooms open by increasing Medi-Cal reimbursement rates.

Allows individuals to choose their health coverage and keep their current insurance.

http://www.fixourhealthcare.ca.gov/plan

Comment:

By Don McCanne, MD

Two years ago California’s Governor Arnold Schwarzenegger vetoed a prior version of this single payer bill stating, “I must veto SB 840 because I cannot support a government-run health care system.”

He then initiated an intensive effort to create legislation that would provide coverage for all Californians, but crafted to comply with his policy principles listed above. His efforts fell short and resulted in AB X1 1 – legislation that would better be characterized as a take-it-or-leave-it package of incremental reforms. There were many beneficial reforms in the package that have broad support, but there were many other severe deficiencies that provoked considerable opposition. The legislative battle was very painful for all of us who believe that everyone should have affordable access to all necessary health care. The bill essentially died in the Senate Health Committee when supporters could muster only one vote in favor of it.

In passing SB 840 once again, the California State Legislature is giving Gov. Schwarzenegger another opportunity to sign legislation that actually would provide health care for everyone through a model that would use our health care dollars much more efficiently. It will be a test to see if his goal of ensuring health care for all Californians is more important to him than his personal anti-government ideology. Let’s hope that he leaves his intellectual exercises on ideology in his cigar tent as he comes out and signs a bill that benefits the health of the people.

Closing the Gap in a Generation: Health Equity through Action on the

Social Determinants of Health
World Health Organization
August 28, 2008
Inequities are killing people on a “grand scale” reports WHO’s Commission
“(The) toxic combination of bad policies, economics, and politics is, in large measure responsible for the fact that a majority of people in the world do not enjoy the good health that is biologically possible,” the Commissioners write in Closing the Gap in a Generation: Health Equity through Action on the Social Determinants of Health. “Social injustice is killing people on a grand scale.”
Wealth is not necessarily a determinant
Economic growth is raising incomes in many countries but increasing national wealth alone does not necessarily increase national health. Without equitable distribution of benefits, national growth can even exacerbate inequities.
Wealth alone does not have to determine the health of a nation’s population. Some low-income countries such as Cuba, Costa Rica, China, state of Kerala in India and Sri Lanka have achieved levels of good health despite relatively low national incomes. But, the Commission points out, wealth can be wisely used. Nordic countries, for example, have followed policies that encouraged equality of benefits and services, full employment, gender equity and low levels of social exclusion. This, said the Commission, is an outstanding example of what needs to be done everywhere.
Inequities within countries
In the United States, 886,202 deaths would have been averted between 1991 and 2000 if mortality rates between white and African Americans were equalized.
Universal Health Care
Access to and utilization of health care is vital to good and equitable health. The health-care system is itself a social determinant of health, influenced by and influencing the effect of other social determinants. Gender, education, occupation, income, ethnicity, and place of residence are all closely linked to people’s access to, experiences of, and benefits from health care. Leaders in health care have an important stewardship role across all branches of society to ensure that policies and actions in other sectors improve health equity.
The Commission advocates financing the health-care system through general taxation and/or mandatory universal insurance. Public health-care spending has been found to be redistributive in country after country. The evidence is compellingly in favour of a publicly funded health-care system. In particular, it is vital to minimize out-of-pocket spending on health care. The policy imposition of user fees for health care in low- and middle-income countries has led to an overall reduction in utilization and worsening health outcomes. Upwards of 100 million people are pushed into poverty each year through catastrophic household health costs. This is unacceptable. Health-care systems have better health outcomes when built on Primary Health Care (PHC) — that is, both the PHC model that emphasizes locally appropriate action across the range of social determinants, where prevention and promotion are in balance with investment in curative interventions, and an emphasis on the primary level of care with adequate referral to higher levels of care.
Recommendations
Based on this compelling evidence, the Commission makes three overarching recommendations to tackle the “corrosive effects of inequality of life chances”:
1. Improve daily living conditions, including the circumstances in which people are born, grow, live, work and age.
2. Tackle the inequitable distribution of power, money and resources — the structural drivers of those conditions — globally, nationally and locally.
3. Measure and understand the problem and assess the impact of action.
Press release:
http://www.who.int/mediacentre/news/releases/2008/pr29/en/index.html
Executive Summary (40 pages):
http://whqlibdoc.who.int/hq/2008/WHO_IER_CSDH_08.1_eng.pdf
Full report (256 pages):
http://whqlibdoc.who.int/publications/2008/9789241563703_eng.pdf

On this Labor Day weekend, a time that we celebrate the great contributions of American workers, the release of this report could not be more timely. Hard working Americans are experiencing the adverse consequences of the increasing inequities in the social determinants of health, inequities that really only society is equipped to address. Today, Hurricane Gustav is descending on our Gulf Coast, testing further whether we as a society can join together to meet our challenges, or if instead those affected are simply left on their own.
Please excuse me for a personal moment of introspection. For over ten years I’ve been a full-time volunteer for Physicians for a National Program. I remember well a conversation I had several years ago with David Himmelstein, a cofounder of PNHP. We observed that, while the task of achieving health care for everyone in the United States seemed almost arduous, it was a miniscule problem compared to the needs throughout the world. Ours was such a tiny task in comparison. We didn’t need more money. We merely needed to fix the way we finance health care as an essential first step to begin to address these inequities.
Ten years later one simple number gives us an inkling of the degree of our success. This report shows that over 800,000 African Americans have died prematurely in the United States in the past decade merely because we have failed to address these inequities in the social
determinants of health.
(moment of silence)
Hopefully we’ll do better with Gustav than we did with Katrina, having learned a lesson. But do we really need more lessons on the social determinants of health before we begin to act? Eight hundred thousand is far too many painful lessons for me.

Social Determinants of Health
World Health Organization
August 28, 2008

Inequities are killing people on a “grand scale” reports WHO’s Commission

“(The) toxic combination of bad policies, economics, and politics is, in large measure responsible for the fact that a majority of people in the world do not enjoy the good health that is biologically possible,” the Commissioners write in Closing the Gap in a Generation: Health Equity through Action on the Social Determinants of Health. “Social injustice is killing people on a grand scale.”

Wealth is not necessarily a determinant

Economic growth is raising incomes in many countries but increasing national wealth alone does not necessarily increase national health. Without equitable distribution of benefits, national growth can even exacerbate inequities.

Wealth alone does not have to determine the health of a nation’s population. Some low-income countries such as Cuba, Costa Rica, China, state of Kerala in India and Sri Lanka have achieved levels of good health despite relatively low national incomes. But, the Commission points out, wealth can be wisely used. Nordic countries, for example, have followed policies that encouraged equality of benefits and services, full employment, gender equity and low levels of social exclusion. This, said the Commission, is an outstanding example of what needs to be done everywhere.

Inequities within countries

In the United States, 886,202 deaths would have been averted between 1991 and 2000 if mortality rates between white and African Americans were equalized.

Universal Health Care

Access to and utilization of health care is vital to good and equitable health. The health-care system is itself a social determinant of health, influenced by and influencing the effect of other social determinants. Gender, education, occupation, income, ethnicity, and place of residence are all closely linked to people’s access to, experiences of, and benefits from health care. Leaders in health care have an important stewardship role across all branches of society to ensure that policies and actions in other sectors improve health equity.

The Commission advocates financing the health-care system through general taxation and/or mandatory universal insurance. Public health-care spending has been found to be redistributive in country after country. The evidence is compellingly in favour of a publicly funded health-care system. In particular, it is vital to minimize out-of-pocket spending on health care. The policy imposition of user fees for health care in low- and middle-income countries has led to an overall reduction in utilization and worsening health outcomes. Upwards of 100 million people are pushed into poverty each year through catastrophic household health costs. This is unacceptable. Health-care systems have better health outcomes when built on Primary Health Care (PHC) — that is, both the PHC model that emphasizes locally appropriate action across the range of social determinants, where prevention and promotion are in balance with investment in curative interventions, and an emphasis on the primary level of care with adequate referral to higher levels of care.

Recommendations

Based on this compelling evidence, the Commission makes three overarching recommendations to tackle the “corrosive effects of inequality of life chances:”

1. Improve daily living conditions, including the circumstances in which people are born, grow, live, work and age.

2. Tackle the inequitable distribution of power, money and resources — the structural drivers of those conditions — globally, nationally and locally.

3. Measure and understand the problem and assess the impact of action.

Press release:
http://www.who.int/mediacentre/news/releases/2008/pr29/en/index.html

Executive Summary (40 pages):
http://whqlibdoc.who.int/hq/2008/WHO_IER_CSDH_08.1_eng.pdf

Full report (256 pages):
http://whqlibdoc.who.int/publications/2008/9789241563703_eng.pdf

Comment:

By Don McCanne, MD

On this Labor Day weekend, a time that we celebrate the great contributions of American workers, the release of this report could not be more timely. Hard working Americans are experiencing the adverse consequences of the increasing inequities in the social determinants of health, inequities that really only society is equipped to address. Today, Hurricane Gustav is descending on our Gulf Coast, testing further whether we as a society can join together to meet our challenges, or if instead those affected are simply left on their own.

Please excuse me for a personal moment of introspection. For over ten years I’ve been a full-time volunteer for Physicians for a National Program. I remember well a conversation I had several years ago with David Himmelstein, a cofounder of PNHP. We observed that, while the task of achieving health care for everyone in the United States seemed almost arduous, it was a miniscule problem compared to the needs throughout the world. Ours was such a tiny task in comparison. We didn’t need more money. We merely needed to fix the way we finance health care as an essential first step to begin to address these inequities.

Ten years later one simple number gives us an inkling of the degree of our success. This report shows that over 800,000 African Americans have died prematurely in the United States in the past decade merely because we have failed to address these inequities in the social
determinants of health.

(moment of silence)

Hopefully we’ll do better with Gustav than we did with Katrina, having learned a lesson. But do we really need more lessons on the social determinants of health before we begin to act? Eight hundred thousand is far too many painful lessons for me.

Medicare-for-All: Why We Should Say Yes, Not “Yes But”

by Merton Bernstein and Theodore Marmor
Health Affairs Blog
August 28, 2008
Many health policy experts regard Medicare-for-All as a model for reform of America’s indisputably troubled and costly medical arrangements. They express admiration for its administrative efficiency and the resulting savings that could pay for extending coverage, perhaps to all. For example, in a June 2008 Health Affairs article, Commonwealth Fund authors said: “Compared to a Medicare-for-All approach, our [Building Blocks] framework does not achieve the simplicity, consolidated risk, administrative overhead, and provider payment net savings of covering nearly everyone through Medicare.”
Sometimes even Medicare-for-All admirers succumb to the “yes but” syndrome, as in “yes, but Medicare-for-All is politically impractical.” For example, after praising Medicare-for-All, The Health Care Mess concluded that “political reality compels us to ask whether there are not other ways” (besides Medicare-for-All) and answered that question “yes.” Princeton economist Paul Krugman, who had extolled Medicare-for-All in 2006, put a foot in the “yes but” camp in 2007. He welcomed the Edwards, Massachusetts, and Schwarzenegger plans to compel individuals to select from among insurance plans, thereby forgoing Medicare-for-All’s economies. The Edwards and Obama plans required a Medicare-like plan as one option. Krugman argued that such a plan’s lower cost will eventually crowd out more expensive private plans. This overlooks private insurance’s history of cutting prices to gain market share, later returning to double-digit boosts. Also, the Massachusetts program actually is not universal; it omits children, among others, and it is having real trouble meeting its costs. The California legislature as well rejected the “Governator’s” plan as too costly.
Though the political “yes, buts” surrounding Medicare-for-All prove groundless, they deserve discussion. However, the “yes, buts” should not preempt discussion of Medicare-for-All’s substantive advantages, as they all too often do. For example, the May/June 2008 issue of Health Affairs, a 200-page-plus compendium on health reform and expanding coverage, does not contain a single article devoted to Medicare-for-All. In this post, we first describe the advantages of Medicare-for-All, then demonstrate that the evidence behind the political “yes, buts” is exaggerated and flawed.
http://healthaffairs.org/blog/2008/08/28/medicare-for-all-why-we-should-say-yes-not-yes-but/

Professor Bernstein and Professor Marmor are amongst the most qualified and experienced experts on both health policy and the politics of Medicare and social insurance in general. We need to listen to what they have to say. Be sure to click the link above to read their full message.
Everyone knows that the U.S. health care financing system is in critical condition, and that we once again are entering a political window in which reform is possible. Never has it been more important to understand all of our options.
Yet where are we? Those controlling the serious dialogue on reform (e.g., Health Affairs) have limited the options to proposals that would merely tweak our dysfunctional, fragmented system of financing health care, leaving the private insurance industry as the dominant player in health care misfinancing. Perpetuation of our current system will further expand our almost unbearable costs, and leave us far short of the goal of ensuring that every single individual receives the health care that she or he needs.
Health policy is not rocket science. We know precisely what will work. Most in the policy community (including politicians), who believe that we must seize this opportunity for reform, largely agree that a universal, single payer, Medicare-like program would be the most efficient and effective model of reform. And their response?
Yes but… (UNSPOKEN: let’s not even bring that into the discussion).
Talk about health policy malpractice!

by Merton Bernstein and Theodore Marmor
Health Affairs Blog
August 28, 2008

Many health policy experts regard Medicare-for-All as a model for reform of America’s indisputably troubled and costly medical arrangements. They express admiration for its administrative efficiency and the resulting savings that could pay for extending coverage, perhaps to all. For example, in a June 2008 Health Affairs article, Commonwealth Fund authors said: “Compared to a Medicare-for-All approach, our [Building Blocks] framework does not achieve the simplicity, consolidated risk, administrative overhead, and provider payment net savings of covering nearly everyone through Medicare.”

Sometimes even Medicare-for-All admirers succumb to the “yes but” syndrome, as in “yes, but Medicare-for-All is politically impractical.” For example, after praising Medicare-for-All, The Health Care Mess concluded that “political reality compels us to ask whether there are not other ways” (besides Medicare-for-All) and answered that question “yes.” Princeton economist Paul Krugman, who had extolled Medicare-for-All in 2006, put a foot in the “yes but” camp in 2007. He welcomed the Edwards, Massachusetts, and Schwarzenegger plans to compel individuals to select from among insurance plans, thereby forgoing Medicare-for-All’s economies. The Edwards and Obama plans required a Medicare-like plan as one option. Krugman argued that such a plan’s lower cost will eventually crowd out more expensive private plans. This overlooks private insurance’s history of cutting prices to gain market share, later returning to double-digit boosts. Also, the Massachusetts program actually is not universal; it omits children, among others, and it is having real trouble meeting its costs. The California legislature as well rejected the “Governator’s” plan as too costly.

Though the political “yes, buts” surrounding Medicare-for-All prove groundless, they deserve discussion. However, the “yes, buts” should not preempt discussion of Medicare-for-All’s substantive advantages, as they all too often do. For example, the May/June 2008 issue of Health Affairs, a 200-page-plus compendium on health reform and expanding coverage, does not contain a single article devoted to Medicare-for-All. In this post, we first describe the advantages of Medicare-for-All, then demonstrate that the evidence behind the political “yes, buts” is exaggerated and flawed.

http://healthaffairs.org/blog/2008/08/28/medicare-for-all-why-we-should-say-yes-not-yes-but/

Comment:

By Don McCanne, MD

Professor Bernstein and Professor Marmor are amongst the most qualified and experienced experts on both health policy and the politics of Medicare and social insurance in general. We need to listen to what they have to say. Be sure to click the link above to read their full message.

Everyone knows that the U.S. health care financing system is in critical condition, and that we once again are entering a political window in which reform is possible. Never has it been more important to understand all of our options.

Yet where are we? Those controlling the serious dialogue on reform (e.g., Health Affairs) have limited the options to proposals that would merely tweak our dysfunctional, fragmented system of financing health care, leaving the private insurance industry as the dominant player in health care misfinancing. Perpetuation of our current system will further expand our almost unbearable costs, and leave us far short of the goal of ensuring that every single individual receives the health care that she or he needs.

Health policy is not rocket science. We know precisely what will work. Most in the policy community (including politicians), who believe that we must seize this opportunity for reform, largely agree that a universal, single payer, Medicare-like program would be the most efficient and effective model of reform. And their response?

Yes but… (UNSPOKEN: let’s not even bring that into the discussion).

Talk about health policy malpractice!

Medicare-for-All: Why We Should Say Yes, Not “Yes But”

by Merton Bernstein and Theodore Marmor
Health Affairs Blog
August 28, 2008

Many health policy experts regard Medicare-for-All as a model for reform of America’s indisputably troubled and costly medical arrangements. They express admiration for its administrative efficiency and the resulting savings that could pay for extending coverage, perhaps to all. For example, in a June 2008 Health Affairs article, Commonwealth Fund authors said: “Compared to a Medicare-for-All approach, our [Building Blocks] framework does not achieve the simplicity, consolidated risk, administrative overhead, and provider payment net savings of covering nearly everyone through Medicare.”

Sometimes even Medicare-for-All admirers succumb to the “yes but” syndrome, as in “yes, but Medicare-for-All is politically impractical.” For example, after praising Medicare-for-All, The Health Care Mess concluded that “political reality compels us to ask whether there are not other ways” (besides Medicare-for-All) and answered that question “yes.” Princeton economist Paul Krugman, who had extolled Medicare-for-All in 2006, put a foot in the “yes but” camp in 2007. He welcomed the Edwards, Massachusetts, and Schwarzenegger plans to compel individuals to select from among insurance plans, thereby forgoing Medicare-for-All’s economies. The Edwards and Obama plans required a Medicare-like plan as one option. Krugman argued that such a plan’s lower cost will eventually crowd out more expensive private plans. This overlooks private insurance’s history of cutting prices to gain market share, later returning to double-digit boosts. Also, the Massachusetts program actually is not universal; it omits children, among others, and it is having real trouble meeting its costs. The California legislature as well rejected the “Governator’s” plan as too costly.

Though the political “yes, buts” surrounding Medicare-for-All prove groundless, they deserve discussion. However, the “yes, buts” should not preempt discussion of Medicare-for-All’s substantive advantages, as they all too often do. For example, the May/June 2008 issue of Health Affairs, a 200-page-plus compendium on health reform and expanding coverage, does not contain a single article devoted to Medicare-for-All. In this post, we first describe the advantages of Medicare-for-All, then demonstrate that the evidence behind the political “yes, buts” is exaggerated and flawed.

http://healthaffairs.org/blog/2008/08/28/medicare-for-all-why-we-should-say-yes-not-yes-but/

Comment:

By Don McCanne, MD

Professor Bernstein and Professor Marmor are amongst the most qualified and experienced experts on both health policy and the politics of Medicare and social insurance in general. We need to listen to what they have to say. Be sure to click the link above to read their full message.

Everyone knows that the U.S. health care financing system is in critical condition, and that we once again are entering a political window in which reform is possible. Never has it been more important to understand all of our options.

Yet where are we? Those controlling the serious dialogue on reform (e.g., Health Affairs) have limited the options to proposals that would merely tweak our dysfunctional, fragmented system of financing health care, leaving the private insurance industry as the dominant player in health care misfinancing. Perpetuation of our current system will further expand our almost unbearable costs, and leave us far short of the goal of ensuring that every single individual receives the health care that she or he needs.

Health policy is not rocket science. We know precisely what will work. Most in the policy community (including politicians), who believe that we must seize this opportunity for reform, largely agree that a universal, single payer, Medicare-like program would be the most efficient and effective model of reform. And their response?

Yes but… (UNSPOKEN: let’s not even bring that into the discussion).

Talk about health policy malpractice!

Lessons From the Evolution of 401(k) Retirement Plans for Increased Consumerism in Health Care: An Application of Behavioral Research

By Jodi DiCenzo and Paul Fronstin
Employee Benefit Research Institute (EBRI)
August 2008
Retirement and health benefits following a similar evolution:
The private sector’s shift away from “traditional” company-financed pension plans toward individual 401(k) accounts illustrates how benefit decision-making and responsibility have shifted from the employer to the worker. The current trend in health care design toward “consumer-driven” health plans illustrates the same trend with health benefits.
Health plan design is encountering the same obstacles as 401(k)s did:
Efforts to make workers more involved and responsible for their health benefits have run into the same problems that 401(k) plans did: Workers tend to delay or be disengaged from both retirement and health care decisions, these issues require long-term planning, and workers see both retirement and health care decisions as complex and difficult.
Among the behavioral lessons learned from retirement plans:

• More choice is not always better: Behavioral research, particularly with 401(k) retirement plans, has shown that increased choice can have negative consequences: More is not always better and may even be worse in some cases. Many people remain disengaged from matters they do not have an immediate need to address, and by the time the need becomes immediate, it is often too late. Many, if not most, workers are probably not capable of making the most appropriate retirement planning or health care choices — it is simply too difficult.

• Education and information are not enough: Research has shown that education has resulted in little to no improvement in workers’ knowledge of retirement saving and investing. In addition, empirical evidence suggests that even when “educated” employees know, most of them fail to act on their knowledge. The heavy investment that many employers have made in retirement education and information programs often fails to produce the desired results.

• Financial incentives don’t always work: Financial incentives, such as an employer match in a 401(k) plan and tax breaks, also fall short of motivating optimal behaviors. Despite the tax-favored status of contributions and the existence of employer matching contributions, a significant portion of eligible workers still do not contribute to a 401(k) plan.

http://www.ebri.org/pdf/briefspdf/EBRI_IB_08-2008.pdf

The theme of this report is that lessons can be learned from the behavior of employees regarding their individual 401(k) retirement plans that can be applied to their participation in consumer-driven health plans, but the importance of these observations is far greater than merely providing suggestions to “nudge” employees into these programs. The behavioral observations are precisely those that would be anticipated in programs that are designed to shift the responsibility for retirement and health security from the employer to the individual.
Traditionally many employers provided generous health and retirement benefits to their employees. Participation was automatic and was welcomed by the employees as part of their employment compensation packages.
Once employers became concerned about the costs of these programs, they responded by shifting the responsibilities to the individual employees. First the traditional pension plans were shifted to individual 401(k) plans, and now health plans are being shifted to consumer-driven plans, especially health savings accounts or health reimbursement arrangements coupled with a high-deductible health plan. As the authors state, the decisions required tend to be complex and difficult, which tend to delay or disengage the employee from these decisions.
Compare this with Medicare and Social Security. These are retirement and health benefit programs in which enrollment is automatic, and with benefits that are so popular every politician has learned not to touch this third rail.
Employers should be relieved of their responsibility to develop and manage these programs, but placing that responsibility in the hands of each individual would be disastrous. With a median household income of $50,000 most simply cannot afford either adequate health benefit plans or retirement income security. A new study by Elizabeth Warren reveals that this is already at a crisis level – personal bankruptcy for retirees has skyrocketed.
The missing ingredient is social solidarity. Through social insurance programs we could all have both health security and retirement security that is completely automatic. We already have the money. But solidarity? That doesn’t take money; that takes will.

By Jodi DiCenzo and Paul Fronstin
Employee Benefit Research Institute (EBRI)
August 2008

Retirement and health benefits following a similar evolution:

The private sector’s shift away from “traditional” company-financed pension plans toward individual 401(k) accounts illustrates how benefit decision-making and responsibility have shifted from the employer to the worker. The current trend in health care design toward “consumer-driven” health plans illustrates the same trend with health benefits.

Health plan design is encountering the same obstacles as 401(k)s did:

Efforts to make workers more involved and responsible for their health benefits have run into the same problems that 401(k) plans did: Workers tend to delay or be disengaged from both retirement and health care decisions, these issues require long-term planning, and workers see both retirement and health care decisions as complex and difficult.

Among the behavioral lessons learned from retirement plans:

* More choice is not always better: Behavioral research, particularly with 401(k) retirement plans, has shown that increased choice can have negative consequences: More is not always better and may even be worse in some cases. Many people remain disengaged from matters they do not have an immediate need to address, and by the time the need becomes immediate, it is often too late. Many, if not most, workers are probably not capable of making the most appropriate retirement planning or health care choices — it is simply too difficult.

* Education and information are not enough: Research has shown that education has resulted in little to no improvement in workers’ knowledge of retirement saving and investing. In addition, empirical evidence suggests that even when “educated” employees know, most of them fail to act on their knowledge. The heavy investment that many employers have made in retirement education and information programs often fails to produce the desired results.

* Financial incentives don’t always work: Financial incentives, such as an employer match in a 401(k) plan and tax breaks, also fall short of motivating optimal behaviors. Despite the tax-favored status of contributions and the existence of employer matching contributions, a significant portion of eligible workers still do not contribute to a 401(k) plan.

http://www.ebri.org/pdf/briefspdf/EBRI_IB_08-2008.pdf

Comment:

By Don McCanne, MD

The theme of this report is that lessons can be learned from the behavior of employees regarding their individual 401(k) retirement plans that can be applied to their participation in consumer-driven health plans, but the importance of these observations is far greater than merely providing suggestions to “nudge” employees into these programs. The behavioral observations are precisely those that would be anticipated in programs that are designed to shift the responsibility for retirement and health security from the employer to the individual.

Traditionally many employers provided generous health and retirement benefits to their employees. Participation was automatic and was welcomed by the employees as part of their employment compensation packages.

Once employers became concerned about the costs of these programs, they responded by shifting the responsibilities to the individual employees. First the traditional pension plans were shifted to individual 401(k) plans, and now health plans are being shifted to consumer-driven plans, especially health savings accounts or health reimbursement arrangements coupled with a high-deductible health plan. As the authors state, the decisions required tend to be complex and difficult, which tend to delay or disengage the employee from these decisions.

Compare this with Medicare and Social Security. These are retirement and health benefit programs in which enrollment is automatic, and with benefits that are so popular every politician has learned not to touch this third rail.

Employers should be relieved of their responsibility to develop and manage these programs, but placing that responsibility in the hands of each individual would be disastrous. With a median household income of $50,000 most simply cannot afford either adequate health benefit plans or retirement income security. A new study by Elizabeth Warren reveals that this is already at a crisis level – personal bankruptcy for retirees has skyrocketed.

The missing ingredient is social solidarity. Through social insurance programs we could all have both health security and retirement security that is completely automatic. We already have the money. But solidarity? That doesn’t take money; that takes will.

Thousands of California children are in danger of losing health insurance

By Jordan Rau
Los Angeles Times
August 24, 2008
California’s promising strides toward extending medical coverage to all its children, a longtime goal of Gov. Arnold Schwarzenegger and one advocates believed was in reach by decade’s end, has stalled — and thousands of kids are in danger of losing insurance.
…legislative budget negotiators this year have decided to increase premiums for the state’s Healthy Families program (SCHIP), which pays for medical care for more than 850,000 children of low-income workers who are above the federal poverty line. The state estimates that the parents of 19,000 children will end up dropping out of the program by July…
Lawmakers also have decided to require the parents of 3.4 million Californians who are below the federal poverty line to renew their Medi-Cal health coverage every six months. The Schwarzenegger administration expects that rule will pare Medi-Cal rolls by about 196,000 children over the next two years.
The changes to subsidized or free health programs come as private health initiatives that pay for the care of children are running out of money, causing them to limit the number they cover. These privately run initiatives exist in 30 counties, arranging medical care for children who are not legal residents or whose families earn slightly more than the threshold for public programs. Enrollment in the initiatives has dropped by 8,000 in the last two years, to 80,000, according to Wendy Lazarus, co-president of the Children’s Partnership, a nonprofit advocacy group.
http://www.latimes.com/news/local/la-me-kidshealth24-2008aug24,0,4590020,full.story

The good news in yesterday’s Census Bureau release was that increased enrollment in government health programs more than offset the decline in private insurance coverage, especially for children. Nationally, there were 512,000 fewer uninsured children in 2007 than there were in 2006, primarily because of increased Medicaid and SCHIP enrollment.
Only one year later, over 200,000 children in California alone are projected to lose their coverage.
Think about that.
If SCHIP and Medicaid expansion represent the successes of incrementalism, then how do you define failure?
Try this one. Failure is the perpetuation of policies that do not ensure that everyone is automatically included, for life, in a program that enables affordable access to all necessary health care.
Success would be easy – merely adopt a single payer national health program. So why are we so fixated on perpetuating failure?