PNHP

Schwarzenegger-Nunez Health Proposal for California Flawed

Schwarzenegger-Nunez Health Proposal for California Flawed

WHY YOU SHOULD VOTE NO ON ABX1 1

AB 1X 1 is a $14 billion health care expansion that is flawed and ill timed.

* The state faces a $14 billion dollar budget deficit and ABX1 1 has an estimated price tag of an additional $14 billion dollars. It would be imprudent for the state to implement this plan prior to addressing the budget crisis.

* AB X1 1 will expand health care to some, just as many children are being denied health care due to reductions in federal and state programs.

* A better approach is to address children’s health care and the budgetary shortfall at this time and craft a workable comprehensive health care proposal at a later time.

The bill forces individuals to purchase health care without stating the benefit level or the cost of the benefits.

* AB X1 1 contains an individual mandate with subsidies available to a very limited group of individuals. Employees who are offered health care, no matter how minimal or unaffordable, are denied all subsidies and access to the pool.

* There are no caps on what the insurance products can cost and there is no specificity about the quality of the products or the minimum benefit level required. Passage of this bill will force consumers to buy insurance they may not be able to afford. Accordingly, working families could be forced to buy worthless yet still unaffordable insurance.

The individual mandate is not accompanied with adequate affordability protections.

* Individuals with family income over 400% of the Federal Poverty Level (that’s about $80,000 for a family of four), have no cap on premiums or out of pocket expenditures. Individuals with family income between 250% and 400% of the FPL (about $50,000 to $80,000 for a family of four) are eligible for a tax credit to off-set premium expenditures above 5.5% of family income. This off-set does not provide any assistance for deductibles, co-pays, pharmaceuticals and other out of pocket expenses. Three quarters of bankruptcy is due to these health costs, not premiums. People don’t fail to buy health insurance because they want to play Russian Roulette, but rather because they can not afford to do so.

* Instituting an individual mandate in this economic climate without adequate affordability protections will only add to financial devastation for many working families. Projections are for a minimum policy costing $200/month with $2500 deductible per person. Under this plan individuals can be out of pocket almost $5000 every year before receiving any insured health care. As a result, they will delay necessary preventive to delay care.

We don’t know what the real price tag will be for individuals.

* We don’t know what products will be on the market and what they will cost, because there is no cap on costs and because costs continue to rise exponentially. We are forcing individuals in California to purchase products which may be financially unfeasible and may provide benefits that are inadequate.

Most individuals don’t have the ability to opt-out if obligation is un-affordable.

* Only individuals under 250% of FPL have the ability to opt-out. Everyone else is obligated under the mandate. While the bill does authorize establishment of an additional “hardship” exemption, eligibility and procedural steps for qualifying under the exemption is as of yet undetermined.

An employer can fulfill his obligation under the bill and still fail to provide assistance to the majority of employees.

* Because an employer’s obligation is in the aggregate there is no obligation on the employer to contribute towards each individual employee. Employers may fulfill their obligations under this bill by paying for their managers or high wage employees while providing no healthcare coverage for their lower wage workers. These employees can receive little or no employer assistance, but are still obligated under the mandate even though they are the least able to afford it!

This bill codifies the practice of high profit employers funneling their low wage earners into public assistance.

* If the employer does not “offer”, the individual can go into the pool. Accordingly, a large employer can meet its obligation by putting money towards the health care premiums of high wage employees and not put any money towards the health care premiums of low wage employees. Those employees can then go into the pool (with NO MONEY going into the pool from that employer) and get health care. If the individual meets specified economic criteria that individual may be able to get federal or state assistance in purchasing health care, otherwise that individual is completely on his own.

The employer fee can’t be increased without a 2/3 vote or ballot initiative, yet an individual’s obligation can be increased without limit with only 60 days notice.

* Every future increase in health care premiums will be borne by individuals.

There are penalties for individuals who fail to comply with the individual mandate but there are no penalties for employers who skirt their obligations.

* Individuals who fail to purchase insurance will be turned over to the Franchise Tax Board. Currently, the FTB has the authority to put liens on people’s homes or garnish wages when monies are owed the state.

* There are no such penalty provisions included in the measure for employers who fail to comply with their obligations or for employers who willfully misclassify individuals as independent contractors rather than employees so as to avoid their obligations.

Definition of “Offer” leaves many without any assistance.

* An employer has “offered” health care even if he’s only put one dollar towards an employee’s health care. This “health care” could be a gym club membership or a health savings account. Where an employer has made an “offer” an employee is ineligible for pool admittance. Accordingly, under the provisions of the bill a worker could be obligated to pay the entire cost of premium/deductible/co-pay’s etc… on the open market.

There are no real cost containment provisions.

* The only significant cost containment provision requires insurers to expend no more than 15% of premiums on administrative costs. Nothing prevents insurers from increasing costs in any amount they desire to insure profits.

* There are no other reasonable cost containment provisions such as limitations on annual increases. This means we will continue to face large premium increases.

There are significant process issues and funding questions with ABX1 1 that should not exist in a bill of this magnitude.

* There has been little public vetting of the actual bill, amendments and ballot initiative language. It is unclear why there is a rush on this bill given the ballot initiative in on the November ballot. The proponents are reasonably concerned about their financial investment in that process; but is that a good enough reason not to thoroughly vet the bill?

* There are many significant unanswered questions, such as severability between the bill and the ballot initiative; on and off triggers and their impact and practicality for a program of this magnitude and effects on the general fund, and whether the “pool” has a predictable chance to be adequately funded.

* This plan will reduce County Health Systems to the point that existing trauma and burn centers could be eliminated with no guarantees that the private sector will supply these services to communities as these are not mandated hospital services under current law nor under the bill.

For all the above reasons CNA, CSEA, The Teamsters, Machinists, United Food and Commercial Workers (UFCW), and the Engineer’s and Scientists of California urge a “NO” vote when this bill comes before you in committee.

Sincerely,

Donna Gerber, Director
California Nurses Association

Dave Low, Assistant Director of Government Relations
California School Employees Association

Barry Broad, Partner
Broad & Gusman, LLP

cc: Senate Pro Tem Don Perata
Speaker Fabian Nunez

Harvard Study Finds Dangerous Increase in Emergency Department Waits Nationwide

Even the Severely Ill are Waiting Longer

Embargoed Until:
January 15, 2008
12:01 AM EST

Contacts:
Andrew P. Wilper, MD, 312-782-6006
Steffie Woolhandler, MD, MPH, 312-782-6006
David Himmelstein, MD, 312-782-6006

Waits To See An Emergency Department Physician: U.S. Trends And Predictors, 1997–2004

Waits for emergency care are getting longer each year, according to a study published online today by the journal Health Affairs. The study, which analyzed the time between a patient’s arrival in the emergency department (ED) and when they were first seen by a doctor, found that the increasing delays affected everyone, including those with and without health insurance, and people from all racial and ethnic groups.

Severely ill patients suffered the largest increases in ED waits. Between 1997 and 2004, waits increased 36% for all patients (from 22 minutes to 30 minutes, on average). However for those, whom a triage nurse classified as needing immediate attention, waits increased by 40% (from 10 to 14 minutes). Waits increased the most for emergency patients suffering heart attacks, who waited only 8 minutes in 1997, but 20 minutes in 2004, a 150% increase. A quarter of heart attack victims in 2004 waited 50 minutes or more before seeing a doctor. The authors state that the lengthening delay for care of heart attacks is dangerous, because chances of surviving a heart attack are known to worsen when treatment is delayed.

The research, carried out at the Cambridge Health Alliance/Harvard Medical School, is the first detailed analysis of national trends in ED waits. Using data from the National Center for Health Statistics (NCHS), the authors analyzed over ninety thousand ED visits nationwide between 1997 and 2004.

While all demographic groups experienced lengthening ED waits, waits were slightly longer for blacks (13.0% longer than non-Hispanic whites) and Hispanics (14.5% longer). Women also had longer waits (5.6% longer than men), while rural hospitals’ patients had the shortest waits.

The number of ED visits increased from 93.3 million in 1997 to 110.2 million in 2004. Meanwhile, the American Hospital Association reports that the number of hospitals operating 24-hour EDs decreased by 12% between 1994 and 2004. ED crowding in the remaining EDs causes one ambulance to be diverted away from a U.S. ED every minute according to the National Center for Health Statistics.

Dr. Andrew Wilper, lead author of the study, said “EDs close because, in our current payment system, emergency patients are money-losers for hospitals. Planned admissions of elective patients who need procedures are usually more lucrative for two reasons. First, elective patients can be scheduled more conveniently and efficiently, and second, they can be pre-screened for health insurance. Our study suggests that these perverse incentives are causing dangerous delays in potentially life-saving emergency care, even for those with insurance.”

“One contributor to ED crowding,” said Dr. David Himmelstein, Associate Professor of Medicine and senior author of the study, “is American’s poor access to primary and preventive care which could address medical issues before they become emergencies.”

Robert A. Lowe, MD, Associate Professor of Emergency Medicine at Oregon Health and Science University remarked, “This study shows how ED overcrowding affects all of us. If a loved one has a heart attack, it doesn’t matter whether he is well insured. He still has a 1-in-4 chance of waiting over 50 minutes, because of ED overcrowding, and this wait will only increase.”

Dr. Steffie Woolhandler, Associate Professor of Medicine at Harvard and study coauthor said, “Some policy makers, including President Bush, claim that everyone in America has access to health care through the ED. Our findings counter this notion. We have insurance company CEO’s making tens of millions of dollars per year, 47 million uninsured Americans, and worsening access to emergency care for everyone. Something is wrong here.”

Dr. Wilper was supported by a National Service Research Award.

Co-authors Drs. David Himmelstein and Steffie Woolhandler are also co-founders of Physicians for a National Health Program, www.pnhp.org.

For embargoed copies of the paper, contact Dave Howell at dave@pnhp.org, 312-782-6006

Commonwealth Fund on candidates’ reform proposals

Envisioning the Future: The 2008 Presidential Candidates’ Health Reform Proposals

By Sara R. Collins, Ph.D., and Jennifer L. Kriss
The Commonwealth Fund
January 15, 2008

This report analyzes the health care proposals of eight Democratic and Republican 2008 presidential candidates–Hillary Clinton, John Edwards, Rudolph Giuliani, Mike Huckabee, Dennis Kucinich, John McCain, Barack Obama, and Mitt Romney. Their approaches to health insurance reform fall into three categories: 1) proposals that emphasize tax incentives for obtaining insurance through the individual market (Giuliani, Huckabee, McCain, Romney); 2) proposals that build on existing private and public group insurance with shared responsibility for financing coverage (Clinton, Edwards, Obama); and 3) proposals that aim to cover everyone through publicly sponsored insurance systems like Medicare (Kucinich). The report examines differences among the proposals, and evaluates them against key principles like affordability, provision of essential services, financial protection, streamlined administration, and fair financing.

Which Proposals Hold the Greatest Promise?

To evaluate these new policies, The Commonwealth Fund Commission on a High Performance Health System identified several key principles to moving the health system toward high performance. They include:

* Provision of equitable and comprehensive insurance for all

* Provision of benefits that cover essential services with appropriate financial protection

* Premiums, deductibles, and out-of-pocket costs are affordable relative to family income

* Health risks should be broadly pooled

* The proposals should be simple to administer with coverage that is automatic and continuous

* Dislocation should be kept to a minimum–people could stay in the coverage they have if desired

* Financing would need to be adequate, fair, shared across stakeholders.

Measured against these principles, the mixed private-public group insurance with a shared responsibility for financing proposed by the leading Democratic candidates and the public insurance reform proposals put forward by Kucinich have the greatest potential to move the health care system toward high performance. Both approaches have the potential to provide everyone with comprehensive and affordable health insurance, achieve greater equity in access to care, realize efficiencies and cost savings in the provision of coverage and delivery of care, and redirect incentives to improve quality. However, from a pragmatic perspective, the mixed public-private approach, which allows the more than 160 million people who now have employer-based health coverage to retain it — and does not require them to enroll in a new program as in the public insurance models — would cause far less dislocation.

The Republican candidates’ proposals for reform that rely on tax incentives and voluntary purchase of coverage in an unregulated individual insurance market are, on their own, unlikely to achieve universal coverage. Buying coverage in the individual market will continue to be challenging if tax incentives are not coupled with an individual mandate, minimum benefit standards, regulations against risk selection, and premium and out-of-pocket spending limits as a share of income. Providing incentives for coverage in the individual market without an individual mandate or regulations against risk selection would not pool risks. Insurers would still write individual policies rather than policies for a broad group of people. Moreover, because of the substantially higher administrative costs in the individual market, covering more people this way will only increase U.S. annual spending on insurance administration.

Executive Summary:
http://www.commonwealthfund.org/publications/publications_show.htm?doc_id=647708

Full report (58 pages):
http://www.commonwealthfund.org/usr_doc/Collins_envisioningfuture2008candplans_1092.pdf?section=4039

Comment:

By Don McCanne, MD

The policy principles listed above are key to moving us toward a high-performance health system – except one. Avoiding “dislocation” by allowing an individual to elect to continue with a private plan that limits choice of providers, limits benefits, and requires greater cost sharing does not move us closer to a high-performance system but is included for pure political reasons to appease those individuals who remain uncomfortable with the concept of a public insurance program that they don’t fully understand. All of the other principles listed should be an integral part of comprehensive reform.

Of the three basic models for reform, the Republican proposals that would use tax incentives for purchasing private, individual health plans can be dismissed as being non-responsive to the key principles listed.

In contrast, the concluding comments of this report seem to equate the private-public group insurance model of the three leading Democratic candidates with the public insurance model of Dennis Kucinich in their potential to move the health care system toward high performance. They conclude that pragmatism favors the private-public model since it would result in less “dislocation.” But you need to read the full report to see if they have made a case for equivalence of the private-public and the public models of reform.

The quotations in the following comments are from the Commonwealth Fund report.

“Both Republican and Democratic candidates, with the exception of Kucinich, envision a health insurance system that continues to be structured around private insurance markets with a supporting role played by public insurance programs.”

“With respect to affordability, all the leading Democrats (Clinton, Edwards, and Obama) have said that enrollees would pay a set percentage of their income on premiums, but have not specified the percentage or what would happen if affordable plans are not available. They have also focused exclusively on premiums when determining affordability, despite the fact that out-of-pocket costs can and do comprise a substantial share of family incomes, particularly in low- and moderate-income households.”

“The complexity and fragmentation of the current health insurance system often makes obtaining and retaining insurance difficult. Kucinich’s National Health Insurance program would provide the most seamless enrollment of the current proposals. The Democratic candidates that have proposed mixed private–public approaches would fill the gap in the current system with new group insurance ‘connectors.’ However, these proposals would not make enrollment easier or more seamless and would retain the complexity in the system.”

“Achieving universal coverage or expanded health insurance coverage will require a significant financial investment by federal and state governments, employers, households, and other stakeholders. Such a shared responsibility among stakeholders should be fair, based on ability to pay. None of the Republican candidates has identified a source of financing. The leading Democratic candidates would either roll back the tax cuts of the past few years or allow them to expire for households with incomes above $200,000 (Edwards) and $250,000 (Clinton and Obama). They have also identified other more minor sources of financing, as well as savings achieved through improved efficiency. The lack of details in their proposals on many key features — the size of the premium subsidies for low- and moderate-income families, the employer contribution, the increase in Medicaid and SCHIP income eligibility standards — means it is unclear whether the amount of identified financing will be sufficient.”

So how do the public-private and public models actually score on the principles for high performance?

* Provision of equitable and comprehensive insurance for all

The public model would be equitable by design, whereas the private-public model would use administratively complex mechanisms to attempt to achieve partial equity in the multi-payer system. The public model would provide comprehensive benefits, whereas the private-public model would likely establish a benchmark of basic coverage. The public model would automatically include everyone, whereas the private-public model would continue to leave out individuals who cannot pay the entry fees into a system that attempts to balance premiums, public subsidies, out-of-pocket expenses, and income qualifications.

* Provision of benefits that cover essential services with appropriate financial protection

The public model would include all essential services while eliminating financial barriers to care, whereas the private-public model would vary benefits and cost sharing in an attempt to keep premiums affordable (just as FEHBP does now).

* Premiums, deductibles, and out-of-pocket costs are affordable relative to family income

The public model shifts financing to the tax system which eliminates problems of affordability for the family, whereas the private-public model cannot ensure affordability for the family since the thresholds for premiums and out-of-pocket costs overlap, on a sliding scale, with family income, which also frequently is not stable.

* Health risks should be broadly pooled

The public model establishes a single, universal risk pool that includes everyone, whereas the private-public model continues to fragment risk pools while introducing cumbersome administrative mechanisms to attempt to reduce the perversities of adverse selection.

* The proposals should be simple to administer with coverage that is automatic and continuous

The public model is noted for its administrative simplicity, and it is automatic and continuous for life, whereas the private-public model perpetuates the administrative complexities of the multi-payer system, preventing enrollment from being automatic (a problem for a system that promises choice of plans from multiple potential sources), and resulting in inevitable interruptions in coverage.

* Financing would need to be adequate, fair, shared across stakeholders

The public model would financed through the tax system, ensuring adequate funding and fairness of contributions by all residents based on ability to pay, whereas the private-public model would be financed through an administratively complex system not unlike our current multi-payer system which would likely result in continued underfunding of safety-net programs for lower-income individuals, not to mention other deficiencies.

* Dislocation should be kept to a minimum — people could stay in the coverage they have if desired

So minimizing “dislocation” from existing private insurance coverage is the one principle wherein the private-public model is alleged to offer higher performance than the public model. But when you look at all of the other principles listed, The Commonwealth Fund got it wrong in their conclusion. Expanding multi-payer coverage through the private-public model of reform sacrifices the beneficial health policies of all of the other principles listed, in exchange for a political principle that provides no health system benefit.

But then maybe dislocation is a concept that we could still make use of. We should maximize the dislocation of the politicians who are standing between us and genuine reform.

Employers spend more to insure fewer

How employers save on health care: auditing workers

By Katherine Reynolds Lewis
Houston Chronicle
January 12, 2008

Meet the insurance audit. Increasing numbers of employers are requesting personal documents to ensure that all the dependents in their health care plans are entitled to coverage.

With insurance costs rising faster than inflation for a decade, they want to verify that you’re actually married to the person receiving spousal benefits, or that your 19-year-old son really is enrolled as a full-time student. If you can’t produce proof, the dependent loses coverage.

“There has been a significant growth of interest in conducting these types of reviews,” said Daniel Priga, a Pittsburgh-based principal for the Mercer workplace consulting firm, where the workload conducting audits has doubled in each of the past two years. “This is a hot one.”

“The high turnover industries are the most likely to do them: service, retail, banking,” adds Susan Johnson, a senior consultant with Watson Wyatt Worldwide in Chicago. “Everybody’s at least talking about them. It’s grown exponentially in the last 18 months.”

An employer’s savings quickly dwarfs the expense of conducting an audit, as each dependent costs an average $3,000 a year to cover, said Michael Watson, a senior vice president for Budco.

http://www.chron.com/disp/story.mpl/headline/biz/5448912.html

Comment:

By Don McCanne, MD

Under our current system of financing health care, it certainly seems only fair that an employer who is generous enough to offer dependent coverage (even if nudged by union negotiators) should not be expected to cover additional relatives or friends of employees if those individuals are not eligible dependents.

But step back and look at the problem phrase in that sentence: “Under our current system of financing health care…”

Under our current system, which is already weighted down with administrative excesses, yet more wasteful administrative services are being provided in order to achieve the exact opposite of one of the most important goals of health care reform. These administrative services are being provided for the purpose of reducing the numbers of individuals with health care coverage. We really do need to change to a health care financing system in which absolutely everyone automatically receives comprehensive, affordable coverage for life.

As the consultant from Mercer said, “This is a hot one.” Yes… for the administrators. But not for those who lose their coverage.

A health care system for all, that works for all

Portsmouth Herald
January 12, 2008

To the Editor:

A lot of words have been spoken about health care during this campaign, but I doubt anyone could describe what any particular plan would do for their family. Confusion reigns. The Republicans want to maintain the current system with a myriad of tax credits and deductions and subsidies. Democrats want “universal” health care, which provides you with insurance but no guarantee of access or affordability. Both maintain the private insurance industry, providing them a lot more customers but without any more regulation.

A simpler approach is evident in the bill which passed in the California Senate (but vetoed by Arnold). This called for a 7 percent payroll tax on every business and a 3 percent income tax — really a premium substitute assessment, since this would be your only health care expense. This approach would cover everyone with no co-pays, deductibles and especially no pre-existing conditions. You would never see a bill from your doctor or hospital.
Evidence-based medicine is how a doctor is supposed to practice today, and it makes a lot of sense to look at these guidelines followed by physicians around the country.

No one likes the current system with 47 million uninsured, an equal number under-insured, 50 percent of bankruptcies related to medical debt and heartbreaking story after story in the newspapers about local citizen’s problems with the health care system. So how about evidence-based governance? All you have to do is look at the systems in Canada, Britain, France and other nations to see that it is possible to devise a health care program that covers everyone the same way, without any middlemen, and where there is never any worry about being able to afford a doctor’s visit or an operation. You don’t need “choice” because these plans are similar for each citizen.

Want to know more? Visit the Physicians for a National Health Program Web site at pnhp.org, watch the 20-minute “One Care” video at onecarenow.org, and treat yourself to a home showing of “Sicko.” Then you will know that health care doesn’t have to be the complicated mess it is now.

Thomas Clairmont, M.D.
Pamela Clairmont, R.N.
Portsmouth

Countering arguments by pharmaceutical industry

San Diego Union-Tribune
Letters to the editor
January 12, 2008

As the old saying goes, a lie told often enough becomes the truth. In this case, that it cost $1 billion to develop new drugs (Letters, Jan. 7). Over the past 20 to 30 years, the pharmaceutical industry has averaged net profits three times that of other Fortune 500 companies. It spends more on marketing and lobbying than on research, often including marketing research in its calculations.

It develops far more me-too drugs than breakthrough drugs. The majority of breakthrough drugs and almost all the basic research are developed at government labs and/or universities funded by government grants.

The true cost of developing drugs is closer to $120 million to $140 million, about one-eighth of what the industry claims. There are a number of excellent books on this subject available at the San Diego Public Library, including John Abramson’s “Overdo$ed America: The Broken Promise of American Medicine” (2004) and “The $800 Million Pill: The Truth Behind the Cost of New Drugs” (2004).

JOEL A. HARRISON
San Diego

ABX1 1: Universal health insurance without health care

by Claudia Chaufan
Indybay.org/news
Saturday, Jan 12th, 2008

The “Health Care Security and Cost Reduction Act”, also known as ABX1 1, and described by New York Times reporter Kevin Sack as a “bipartisan blueprint” conceived by Republican governor Arnold Schwarzenegger and Democratic Assembly speaker Fabian Nunez to bring “near-universal coverage to the country’s most populous state”, will neither provide health care security nor reduce costs of medical care. This article explains why.

Virtually everybody agrees that the American health care system is broken: costs are rising well in excess of the rate of inflation [1], insured and uninsured alike are often an illness away from bankruptcy [2], and too many go without medical care altogether – and roughly 18,000 die each year for this reason [3]. With over 20% of its population uninsured and growing, California exemplifies well the sorrowful state of health care in the country [4]. As a result, it has become fashionable, for politicians and corporate executives alike, including CEOs of health insurance companies, to call for universal coverage. As Jonathan Cohn noted recently in the New York Times Magazine, universal coverage is today the “one thing Big Business and the Left have in common” [5]. And Cohn must be right, because, at least in California, traditionally opposed interest groups are about to tie the knot in Assembly Bill X1 1 (ABX1 1), the “Health Care Security and Cost Reduction Act”. According to New York Times reporter Kevin Sack, this act is a “bipartisan blueprint” drawn up by Republican governor Arnold Schwarzenegger and Democratic Assembly speaker Fabian Nunez to bring “near-universal coverage to the country’s most populous state” [6]. So, should we not be raising our glasses in celebration? Not really.

However wonderful it would be for this well-meaning legislation to provide health security and reduce costs, there is little if any reason to believe it will do either.

For one, it cannot keep at least half of its promise, controlling costs of medical care, because not only does it not remove the private insurers that created the current nightmare, it actually gives them a central role in the new system and no incentive to control such costs — let us remember that the extraordinary administrative costs to private insurers, up to 34 cents out of each health care dollar [7], are for them no great burden, because they are easily offset, as they finance systems which allow insurers to never pay more in medical care than they collect in premiums. This is precisely the reason of the long-lasting love affair between private insurers and complex combinations of co-pays, cost-sharing, deductibles, exclusion clauses, and eligibility criteria, whose goal is not to control the cost of medical care in order to provide more and better of it to more people, but to control the costs of running insurers’ profit-maximizing business, while leaving enough spare change to shower high-level executives with generous salaries and compensation packages.

What is worse, ABX1 1 creates new eligibility categories — the poor, the not-so-poor, the non-poor, and several levels within each category — and imposes “fines” for misbehavior (e.g. failing to purchase health insurance) that will have to be enforced, all of which will increase administrative costs — and waste. And in its attempt to regulate industry, whether or not it succeeds, the legislation creates yet another layer of expensive bureaucracy that will divest resources from actual medical care.

Last, ABX1 1 will not control costs because it prevents Californians from using a major cost-containment mechanism: the purchasing power of large pools, which allows single payer systems like Canadian Medicare, the Veteran’s Administration, or even American Medicare (when it is not forced to outsource benefits to the private sector) to negotiate for best prices of medical goods and services through combinations of global budgets, fee schedules or drug formularies. This failure to control costs will prevent ABX1 1 from meeting the other half of its promise: providing health care security to Californians. It cannot provide “health care security” because it does not guarantee a comprehensive package of medical services at prices that are affordable for prospective patients. And in truth, it provides nothing: it merely mandates individuals to buy a policy in the market, whether or not the policies they can afford truly meet their medical needs. And we should note that the promised subsidies to individuals in certain income brackets, likely to increase as more people become impoverished by raising medical costs they cannot afford, thus becoming “eligible” for subsidies, are not gratis: they are borne collectively by all taxpayers.

If we are to go by the experience of other states, the prospects of ABX1 1, at least for those who would like to have the health care security and cost control of medical care that the legislation promises, are grim: a similar, individual mandate in Massachusetts is already running $147 million over the $472 million budgeted for fiscal year 2007, collections of fines from employers who fail to provide coverage are 80% below the original projections, and barely 7% of the uninsured who are not poor enough to receive subsidies have enrolled in any plan at all. Yet we should refrain from throwing the first stone to those who fail to comply with the law: the cheapest plan that meets the mandate’s requirement for a couple in their fifties costs $8,200 per year, with $2,000 deductible per person, so “choosing” to not enroll in any plan, even at risk of being fined, is not unreasonable [8]. Nor is it unreasonable to request, as many have done, a “compassionate exemption”, which by April of 2006 was already being granted to approximately 20% of those who failed to comply with the mandate (about 60,000 individuals) [9].

All of the above gives us reason to believe that an individual mandate such as the one proposed by ABX1 1 will no more protect individuals from financial ruin due to medical expenses than bare bones drivers’ insurance protects anybody from the the costs of a car accident. We do not count on those policies to get our cars back in shape, but we need them to comply with the law and protect ourselves against the claims of others. So for now, no reason to raise our glasses. And yet, some Californians are surely celebrating: among them are high level executives and shareholders in the private health insurance sector, which, if ABX1 1 becomes law, will count on a captive pool of clients for years to come. Indeed, Blue Shield California and colleagues must be following closely the smashing success of the Massachusetts plan. They must be particularly excited about the surplus of $1 million a day that Blue Cross Massachusetts is collecting. Or about the $16.4 million retirement bonus recently awarded its chairman, even as he continues to draw a $3 million dollar salary [8].

Which is why we do not need to think too hard to understand why this marriage of Republicans and Democrats must already be celebrated in so many places. We can only speculate, however, why health care reporters insist on calling ABX1 1 and similarly ill-conceived legislation “near-universal” or “universal” health coverage. Or why they are dismissing single payer, the only viable option for controlling costs and securing health care [10], as having “limited political support” [11], as editors in the New York Times recently did, despite evidence to the contrary among the public [12] and even among physicians [13]. Or why the same editors refer to single payer as “no panacea” as “indicated” by the “problems” of Medicare, clearly confusing the symptom — Medicare’s financial struggles — with the disease — the irrationalities forced upon Medicare by business-friendly legislation, which include, yet are not limited to, the generous subsidies Medicare has to pay to private insurers to “encourage” them to “compete”, at the same time that this legislation forbids Medicare itself to bargain for best prices of drugs for seniors [14].

But maybe we are missing something?

Claudia Chaufan received her medical degree from the University in Buenos Aires and her PhD from the University of California at Santa Cruz, where she currently teaches sociology of health and medicine and health policy. She is the Vice President of California Physicians Alliance, the Californa Chapter of Physicians for a National Health Program, and an active member of the national group.

References
1. Anderson, G.F., et al., It’s The Price, Stupid: Why The United States Is So Different From Other Countries. Health Affairs, 2003. 22(3): p. 89-105.
2. Woolhandler, S. and D.U. Himmelstein, Paying for health insurance-and not getting it. Health Affairs, 2002. 21(4): p. 88-98.
3. Institute of Medicine, Hidden Costs, Value Lost: Uninsurance in America. 2003, National Academies Press: Washington D.C.
4. California Health Care Foundation, Snapshot: California’s Uninsured. 2004, California Health Care Foundation: Oakland. p. 1-18.
5. Cohn, J., What’s the One Thing Big Business and the Left Have in Common?, in The New York Times Magazine. 2007.
6. Sack, K., States’ Widening of Health Care Hits Roadblocks, in The New York Times. 2007: New York. p. 1, 16.
7. Kahn, J.G., et al., The Cost Of Health Insurance Administration In California: Estimates For Insurers, Physicians, And Hospitals. Health Affairs, 2005. 24(6): p. 1629-1639.
8. Woolhandler, S. and D.U. Himmelstein, An Open Letter to the Nation from Massachusetts Physicians: Early Outcomes from Massachussetts’ Health Care Plan. 2008, https://pnhp.org.
9. Center for Studying Health Systems’ Change, Massachusetts Health Reform: Employers, Lower-Wage Workers, and Universal Coverage (Issues Brief). 2007, Center for Studying Health Systems’ Change: Washington D.C. p. Report No113 p. 1-6.
10. Sheils, J.F. and R.A. Haught, The Health Care for All Californians Act: A Cost and Economic Impacts Analysis: Executive Summary. 2005, The Lewin Group. p. 1-10.
11. Editorial, The High Cost of Health Care, in The New York Times. 2007: New York. p. 9.
12. Kuhnhenn, J. and T. Tompson, Pocketbook worries outweigh voters’ concerns over war in Iraq, in http://news.yahoo.com/page/election-2008-political-pulse-voter-worries. 2007, Associated Press.
13. Trapp, D., Internist society sees single-payer as option. 2007 December 24/31, Amednews.com.
14. Baker, D., Waste in the Medicare Drug Benefit: Why the Doughnut Hole is Unnecessary. 2006, Center for Economic and Policy Research: Washington, DC. p. 1-10.

Doctors Give Massachusetts Health Reform a Failing Grade – Poor Early Outcomes Raise Red Flags, Only Private Insurers Profit

For Immediate Release

Contacts:
Dr. Rachel Nardin, 617.667.4382
Dr. David Himmelstein, 617.665.1032
Todd Main, 312.782.6006

Over 250 Massachusetts doctors have signed an open letter to the country warning that the health reform model enacted by Massachusetts is failing and that a single payer program is the only alternative.

“It is urgent that the rest of the country know that Massachusetts is a living laboratory for the health care reforms being pushed in California and by the Obama/Clinton/Edwards campaigns. Right now the Gov. Romney/Massachusetts’ plan gets a failing grade on the ground,” said Dr.Rachel Nardin, Assistant Professor of neurology at Harvard Medical School.

An Open Letter to the Nation from Massachusetts Physicians:
Early Outcomes from Massachusetts’ Health Care Reform

We write to alert colleagues and the nation to the disturbing early outcomes of Massachusetts’ widely-heralded approach to health care reform. Although we wish that the current reform could secure health insurance for all, its failings reinforce our conviction that only a single payer program can assure patients the care they need.

In 2006, our state enacted a law designed to extend health coverage to virtually all state residents. Political leaders in other states as well as several Democratic presidential candidates have embraced this model.

Massachusetts’ law mandates that uninsured individuals must purchase private insurance or pay a fine. The law established a new state agency to ensure that affordable plans were available; offered low income residents subsidies to help them buy coverage; and expanded Medicaid coverage for the very poor. (Immigrants are mostly excluded from these subsidized programs.) Moneys that previously funded free care for the uninsured were shifted to the new insurance program, along with revenues from new fines on employers who fail to offer health benefits to their workers. In addition, the federal government provided extra funds for the program’s first two years.

Starting January 1, 2008 Massachusetts residents face fines if they cannot offer proof of insurance. Yet as of December 1, 2007 only 37% of the 657,000 uninsured had gained coverage under the new program. These individuals often feel well served by the reform in that they now have health insurance. However, 79% of these newly insured individuals are very poor people enrolled in Medicaid or similar free plans. Virtually all of them were previously eligible for completely free care funded by the state, but face co-payments under the new plan. In effect, public funds for care of the poor that previously flowed directly to hospitals and clinics now flow through insurers with their higher administrative costs.

Among the near poor uninsured (who are eligible for partial premium subsidies) only 16% had enrolled in the new coverage. And barely 7% of the uninsured individuals with incomes too high to qualify for subsidies had enrolled according to the official state figures. Few can afford premiums for even the skimpiest coverage; the lowest cost plan offered for a couple in their fifties costs $8,200 annually, and carries a $2,000 per person deductible.

Moreover, the state’s cost for subsidies is running $147 million over the $472 million budgeted for fiscal year 2007. Meanwhile, collections from fines on employers who fail to provide coverage are 80% below the original projections. The funding gap will widen in future years as health care costs escalate and insurers raise premiums. Already, state officials speak of making up the shortfall by forcing patients to pay sharply higher co-pays and deductibles, and by slashing funds promised to safety net hospitals.

While patients, the state and safety net providers struggle, private insurers have prospered under the new law, and the costs of bureaucracy have risen. Blue Cross, the state’s largest insurer, is reaping a surplus of more than $1 million each day, and awarded its chairman a $16.4 million retirement bonus even as he continues to draw a $3 million salary. All of the major insurers in our state continue to charge overhead costs five times higher than Medicare and eleven-fold higher than Canada’s single payer system. Moreover, the new state agency that brokers private coverage adds its own surcharge of 4.5% to each policy it sells.

A single payer program could save Massachusetts more than $9 billion annually on health care bureaucracy, making universal coverage affordable. But because the 2006 law deepened our dependence on private insurance, it can only add coverage by adding costs. Though politically feasible, this approach is already proving fiscally unsustainable. The next economic downturn will push up the number of uninsured just as the tax revenues needed to fund subsidies fall.

The lesson from Massachusetts is that we still need real health care reform: single payer, non-profit national health insurance.

High burden hits middle-income America

Financial Burden Of Health Care, 2001-2004

The same affordability issues that low-income families experienced a decade ago have begun to affect middle-income families today

By Jessica S. Banthin, Peter Cunningham and Didem M. Bernard
Health Affairs
January/February 2008

In the first part of this decade, health care costs continued to increase at rates far above general inflation, and employers increasingly shifted these higher costs to workers in the form of higher out-of-pocket payments for premiums, deductibles, and copayments. Adding to the pressure on families was slower economic growth during 2001-2004, which resulted in increases in poverty rates and the number of uninsured people.

Families’ health care burden

We define health care burden as the ratio of total family out-of-pocket spending for health care services and premiums over total family income.

High-burden individuals

People who live in families that spend more than 10 percent of family income on health care are defined as individuals with high burdens.

Study Results

Financial burden of health care

The financial burden of health care increased for American families during the first part of this decade as a result of rising out-of-pocket spending for health care and stagnant family incomes. Between 2001 and 2004, the percentage of the nonelderly population living in families with high out-of-pocket health care burdens rose from 15.9 percent to 17.7 percent. By 2004, 45.4 million people lived in families with high burdens—an increase of almost six million from 2001.

Increases in out-of-pocket spending between 2001 and 2004 were driven by both increases in health insurance premium payments and spending on health care services. Even after general inflation is accounted for, total out-of-pocket spending on health care rose by $373 to $2,656 in 2004, an increase of about 16 percent over the three-year period. In contrast, average family incomes not only failed to keep pace with rising out-of-pocket spending during this period but were largely unchanged after general inflation was accounted for.

Health insurance coverage and financial burden

The increase in families’ financial burdens was driven entirely by people with private (employer-sponsored) insurance: 17 percent (or twenty-nine million people) faced high burdens in 2004, an increase of 2.3 percentage points from 2001. Together, out-of-pocket spending for premiums and services rose $553 to $3,211, a 21 percent increase over the period.

Although relatively small in number, people covered by private policies purchased in the nongroup market were much more likely than those in any other insurance group to bear high financial burdens during 2001-2004. This was because people with private nongroup insurance must pay the entire premium, and benefits in such plans are often less generous than those in employer-sponsored plans. Moreover, the percentage of people with nongroup plans experiencing high out-of-pocket burdens rose dramatically, from 39 percent in 2001 to 52.7 percent in 2004.

Financial burden and income

The burdens were highest among poor (less than 100 percent of the federal poverty level) and low-income (100-199 percent of poverty) people with private insurance, a subgroup of particular policy concern. We found that 53.5 percent of poor and 37.4 percent of low-income people with private insurance faced high financial burdens in 2004, about two times as high as middle-income people faced and four times as high as high-income people faced. Moreover, financial burdens increased between 2001 and 2004 for low-income people, which indicates that private coverage was becoming less affordable for this group. At the same time, one out of five privately insured people with incomes of 200-399 percent of poverty (middle income) spent more than 10 percent of their income on health care, a rate that is twice as high as that for higher-income people.

Discussion

Compared to poor and low-income people, the prevalence of high financial burdens during our study period was much lower for privately insured people in middle-income families. Still, one out of five privately insured people in middle-income families faced high financial burdens, and this number is likely to increase in future years as health care costs continue to outpace growth in family incomes. Thus, the same affordability issues that low-income families experienced a decade ago might affect middle-income families in the future.

http://content.healthaffairs.org/cgi/content/full/27/1/188

Comment:

By Don McCanne, MD

The policy lesson? One-fifth of privately insured, middle-income people are already classified as “high-burden individuals” because they live in families that spend more than ten percent of their family income on health care, “and this number is likely to increase in future years as health care costs continue to outpace growth in family incomes.”

The failure of private insurance to provide affordable health care has already become a crisis for middle-income America. Current proposals to provide us with even more deteriorating private insurance plans amount to no more than a cruel joke by the policy/political community. But who’s laughing? Listen carefully. It sounds like sobbing to me.

Make that 22,000 uninsured deaths

Uninsured and Dying Because of It:

Updating the Institute of Medicine Analysis on the Impact of Uninsurance on Mortality

By Stan Dorn
Urban Institute
January 2008

The absence of health insurance creates a range of consequences, including lower quality of life, increased morbidity and mortality, and higher financial burdens. This paper focuses on just one aspect of this harm–namely, greater risk of death–and seeks to illustrate its general order of magnitude.

In 2002, the Institute of Medicine (IOM) estimated that 18,000 Americans died in 2000 because they were uninsured. Since then, the number of uninsured has grown. Based on the IOM’s methodology and subsequent Census Bureau estimates of insurance coverage, 137,000 people died from 2000 through 2006 because they lacked health insurance, including 22,000 people in 2006.

Much subsequent research has continued to confirm the link between insurance and mortality risk described by IOM. In fact, subsequent studies and analysis suggest that, if anything, the IOM methodology may underestimate the number of deaths that result from a lack of insurance coverage.

More broadly, these estimates should be viewed as reasonable indicators of the general magnitude of excess mortality that results from lack of insurance, not as precise “body counts.” The true number of deaths resulting from uninsurance may be somewhat higher or lower than the estimates in this paper, but that number is surely significant.

http://www.urban.org/UploadedPDF/411588_uninsured_dying.pdf

Comment:

By Don McCanne, MD

More numbers…

Is this what the health care reform movement is all about?

Do we just keep tallying casualties? Body counts that aren’t real body counts? Policy studies from statistical tables that are devoid of any references to real human beings that we knew and loved?

Well, yes. This is work that has to be done to better understand the flaws in our health care system. The Institute of Medicine and the Urban Institute are to be commended for quantifying the consequences of lack of insurance in terms of the lethality of that health care financing deficiency. We now know that the 18,000 deaths per year due to lack of insurance has become 22,000 – a new number for us to use in our advocacy work.

But what are we doing with these studies? Since the IOM study was designed to isolate the single factor of uninsurance as a cause of mortality, it is clear that these lives would not have been lost had the individuals been insured. But is that true? Our response has been to attempt to cover more individuals by expanding the use of underinsurance, even though other studies are now showing that underinsurance is resulting in many of the same adverse outcomes as uninsurance. So simply being insured is no longer enough.

So where is the momentum on reform currently headed? State efforts and the proposals of leading candidates for president would have us all covered by individual private health plans, even though premiums for comprehensive plans are no longer affordable for average-income individuals. But instead of supporting financing systems that would provide comprehensive coverage for everyone (i.e., single payer), the policy/political community is supporting the shift to affordable private plans. The policy challenge has been to design underinsurance plans that are still comprehensive enough to avoid adverse outcomes because of financial barriers to care. It is a challenge they cannot meet. In order to make the premiums affordable for average-income individuals, the plans must be stripped of their function of removing financial barriers to care.

Do we really have to go through another decade or two of sterile examination of the statistical tables to calculate the mortality rates of the consequences of uninsurance and now underinsurance? Will the body counts that aren’t real body counts because they’re devoid of any references to real human beings provide us with any more motivation for honest reform? The numbers will be much larger, but will that really induce change?

Forgive me for being personal for a moment, but my current career as a full-time volunteer activist in the health care reform movement has a basis in my prior career. For over three decades, as a family physician, I saw real people who were uninsured and died merely because they didn’t have insurance. They died primarily because they delayed accessing the system because they didn’t have the money to pay for health care. I also saw many “underinsured” patients in the form of Medicaid, a program with such low reimbursement rates in California that it resulted in a lack of willing providers, with consequent impaired access and outcomes for the patients.

Was my practice about body counts? These were real people…

(I’m sorry. I can’t finish this…)

150 rally for health care bill

By Daniel Barlow
The Barre Montpelier Times Argus
Vermont Press Bureau
January 10, 2008

MONTPELIER — Doctors, nurses and other health professionals led a rally of more than 150 people at the Statehouse on Wednesday in support of a once under-the-radar bill that would create a “single-payer” system for covering hospital care in Vermont.

Support for the Vermont Hospital Security Plan was clearly felt during the second day of the new legislative session as advocates for a single-payer system packed rooms for rambunctious rallies and pressured their local lawmakers to support the bill.

Wearing white stickers reading “I support H.304,” activists described the bill sponsored by Rep. Francis “Topper” McFaun, R-Barre Town, as surgery for the health care industry, as opposed to what they see as a series of band-aids sponsored by other Statehouse lawmakers.

Dr. Deb Richter, the lead organizer of Wednesday’s rally, told a standing-room-only crowd that high premium costs for health insurance is bankrupting Vermonters and hurting businesses.

“This has become a huge problem for everyone,” Richter said. “It’s costing us all at this point. We are paying more and more and every year getting less and less.”

Under the plan, Vermont would establish a state budget for its network of hospitals that would fund all inpatient and outpatient trips for state residents to these facilities. Vermonters would still need insurance for their primary care and medications, but all visits to the hospital would be free.

Vermont now spends about $776 million annually on hospital care, according to Richter, and this shift to a single-payer system would cost $66 million less and cut insurance premiums by 40 percent.

“I’m not from planet Mars and I know this will not be free,” Richter said, explaining that there would be a cost shift for Vermonters away from insurance premiums and to a new state tax. “We have to raise the money to put it in a fund for hospital care.”

Wednesday’s rally focused heavily on health insurance horror stories.

Kate Youngdahl of Granville, who said she is self-employed, said that her health insurance is so inefficient that three medical procedures for family members three years ago resulted in $13,000 in out-of-pocket medical costs.

“We’re not wealthy people and that is a significant portion of our annual income,” she said. “It has pushed us into debt that we are only now coming out of.”

Despite the outpouring of support Wednesday, the single-payer hospital legislation faces an uphill battle. The House Health Care Committee has agreed to discuss the proposal this year, although the Democratic leaders of the Vermont House and Senate are putting their efforts instead toward an expansion of Catamount Health for small businesses.

McFaun said the strong support from Vermonters for the bill has led to the committee agreeing to “take a look at the principles” of the proposal. If enacted, Vermonters could rest up and heal after a hospital visit instead of worrying out to pay the bills, he said.

Rep. Hilda Ojbiway, D-Hartford, who along with Rep. Michael Obuchowski, D-Rockingham are also sponsoring McFaun’s bill, told supporters to keep the pressure on their lawmakers throughout the year.

“Letters and e-mails are nice, but face-to-face works better. Find a page and then rage and engage,” she said, referring to the Statehouse’s system of legislative pages who track down lawmakers during the session.

As Gov. James Douglas gave his weekly press conference in his ceremonial office at the Statehouse, the crowd gathering in support of the single-payer hospital plan could clearly be heard just around the corner.

Douglas said he is interested in lowering premium costs for Vermonters and would listen to any idea, although he said he is “skeptical of capping hospital costs.” He added that he has serious concerns about the funding mechanism for the single-payer hospital plan.

“We can’t continue going to the well,” Douglas said, referring to the burden Vermonters are feeling from state taxes.

The Vermont Hospital Security Plan does not come with a suggested funding source. Richter said that detail would be worked on in committee, but she suggested one way would be a $225 annual fee on all Vermonters and a 5.5 percent payroll tax.

Paul Millman, the CEO of Rockingham’s Chroma Technology, said he supports the bill because he is already paying about $11,000 per employee each year in health care costs. Under the payroll tax funding scenario, that cost would drop down to less than $3,000.

The health care system now in place is a “drag on business development,” he added. He said Douglas should keep that in mind as he considers the proposal.

“If this governor really wants to build up business in the state, he should stop thinking ideologically and start thinking practically,” Millman said.

Supporters of the single-payer hospital system will return to the Statehouse on Feb. 7 to again lobby lawmakers to support the proposal, Richter said. Another rally is also planned for March to keep the pressure going.

Contact Daniel Barlow at Daniel.Barlow@rutlandherald.com.

United States has worst rate of amenable mortality

Measuring The Health Of Nations: Updating An Earlier Analysis

By Ellen Nolte and C. Martin McKee
Health Affairs
January/February 2008

We compared trends in deaths considered amenable to health care before age seventy-five between 1997-98 and 2002-03 in the United States and in eighteen other industrialized countries. Such deaths account, on average, for 23 percent of total mortality under age seventy-five among males and 32 percent among females. The decline in amenable mortality in all countries averaged 16 percent over this period. The United States was an outlier, with a decline of only 4 percent. If the United States could reduce amenable mortality to the average rate achieved in the three top-performing countries, there would have been 101,000 fewer deaths per year by the end of the study period.

… although ranking fifteenth in 1997-98 and performing considerably better than Ireland, the United Kingdom, and Portugal, by 2002-03 the United States had the highest rate of amenable mortality, just above Ireland and the United Kingdom but far above countries such as France, Japan, and Australia.

The concept of amenable mortality captures the potential impact of health care on population health only; thus, assessment of overall health system performance also requires analyses of indicators that measure the relative success of policies outside the direct control of the health care sector that also affect the public’s health, such as tobacco and alcohol policies. Although such an analysis would enrich the picture painted here, it clearly goes beyond the scope of this paper. Even in the absence of such an analysis, it is important to highlight the comparatively slow U.S. progress in reducing mortality from IHD and other circulatory diseases, largely stroke. Further interpretation of these observations must remain speculative. It is, however, difficult to disregard the observation that the slow decline in U.S. amenable mortality has coincided with an increase in the uninsured population, an issue that is now receiving renewed attention in several states and among potential presidential candidates from both parties.

http://content.healthaffairs.org/cgi/content/full/27/1/58

Comment:

By Don McCanne, MD

Amenable mortality is defined in this study as “deaths from certain causes that should not occur in the presence of timely and effective health care.”

Those who still claim that the United States has the best health care system in the world need a reality check. Of the nineteen OECD nations studied, the United States has the highest rate of deaths that “should not occur in the presence of timely and effective health care.”

Further, in the time interval studied, the United States ranked last in the reduction of amenable mortality. The other eighteen nations were more effective in reducing these preventable premature deaths.

The opponents of reform will provide alternative explanations for these numbers, likely blaming a lack of personal responsibility (poor nutrition, smoking, lack of exercise, etc.). But what they will suppress is the fact that these are amenable death rates. Interventions through public health services and personal health care can prevent many of these deaths.

In the United States we are spending more than enough to accomplish these goals. The other eighteen nations have done so with far less health care spending, but with financing systems that are more efficient, more effective, and more equitable.

When the reform process is disrupted by those who wish to shift the topic to individual responsibility, we can agree that individuals should be encouraged to adhere to optimal health habits, and that we should use our abundant resources to help accomplish that. But we cannot digress from our advocacy for an efficient, effective, equitable financing system that is the essential first step toward providing timely, effective health care for everyone. One hundred thousand lives depend on it.