By Merton C. Bernstein
Special to The Kansas City Star
Posted on Sun, Nov. 06, 2005
Faced with daunting health insurance costs, American enterprises are eliminating coverage or passing along more of the cost to employees and retirees.
State legislatures, particularly in Missouri, are shrinking Medicaid eligibility and benefits.
There is a better way to tame health-care budgets — eliminate administrative costs by covering everyone through Medicare.
Imagine if the electronics industry used thousands of differently shaped plugs on their appliances, each requiring a matching socket before they could be used. Absurd! But this describes American health insurance: doctors, hospitals, labs and other providers must match their billions of bills with thousands of differing insurance plan provisions, many designed to promote sales rather than sound treatment. Intelligent design? Hardly.
The resulting chaos is unnecessarily costly, with as much as 30 percent of our medical care payments going to process claims. In contrast, in 2004, Medicare administrative costs were 1.9 percent. If Medicare applied to everyone, insurers and care providers would be saved most of what they spend on trying to fit their innumerable plugs into that almost-infinite number of sockets.
Medicare-for-All is the practical answer to the double-digit health-insurance cost increases we’ve faced over the last four years. What’s standing in the way is the outmoded and discredited ideology that the market will discipline health-care costs.
In reality, health-care costs rage out of control. More and more individuals and families lose insurance protection, and medical care charges constitute one of the three major causes of personal bankruptcy. Health-care costs are strangling business and threaten the very existence of many employers with costs that competitors in countries with national health insurance do not face.
State budgets are staggered by the double whammy of having to increase Medicaid outlays for the poor while confronting surging health-care costs of government employees, including teachers.
Health maintenance organizations, touted as a cure, became a disease. Many HMOs collapsed, shriveled or bugged out, stranding their participants. Tax-favored medical savings plans have proven useless, except perhaps to the wealthy.
Tax breaks and other subsidies to encourage coverage only add to total medical care costs, delaying the goal of universal coverage. And as costs escalate out of control, that goal becomes more and more unattainable.
Applying Medicare to everyone would achieve annual savings on the order of $300 billion, enough to cover everyone with a comprehensive plan that surpasses most private coverage and means-tested public programs, even Medicaid.
Establishing and periodically recertifying eligibility for tens of millions of individuals and families under Medicaid incurs administrative costs 5 percent greater than Medicare’s administrative costs. Other federal and state means-tested programs produce similarly unnecessary costs.
For example, Massachusetts operates means-tested programs that use eight different formulas for eligibility and benefits despite similar program goals. Consolidating those programs into Medicare would save tens of billions in administrative costs and give greater assurance that individuals, especially children, would receive timely medical care.
Medicare uses private insurers as intermediaries between providers and patients. These private insurers, under Medicare, operate efficiently and at low cost. Their inclusion in Medicare-for-All would prevent the allegation of “too much government.”
Medicare-for-All would tame costs and make coverage universal. We can readily pay for it by pooling what we already spend on health care. That means no new taxes.
Business, government, individuals and families cannot afford the current costly chaos. It makes economic sense to cut nonbenefit outlays rather than eligibility and benefits.
Those avoidable costs are present but unseen in what we buy or cannot afford. Those unnecessarily higher prices reduce the ability to pay for other needed and desired goods and services. Healthier people incur lower health-care bills, work more productively and avoid the absences and other dislocations that sickness usually brings,
Everyone would be in better hands with Medicare-for-All.
Merton C. Bernstein is a Coles Professor of Law Emeritus at Washington University and a founding board member of the National Academy of Social Insurance.
© 2005 Kansas City Star and wire service sources. All Rights Reserved.
The New York Times
November 7, 2005
By PAUL KRUGMAN
General Motors is reducing retirees' medical benefits. Delphi has declared bankruptcy, and will probably reduce workers' benefits as well as their wages. An internal Wal-Mart memo describes plans to cut health costs by hiring temporary workers, who aren't entitled to health insurance, and screening out employees likely to have high medical bills.
These aren't isolated anecdotes. Employment-based health insurance is the only serious source of coverage for Americans too young to receive Medicare and insufficiently destitute to receive Medicaid, but it's an institution in decline. Between 2000 and 2004 the number of Americans under 65 rose by 10 million. Yet the number of nonelderly Americans covered by employment-based insurance fell by 4.9 million.
The funny thing is that the solution - national health insurance, available to everyone - is obvious. But to see the obvious we'll have to overcome pride - the unwarranted belief that America has nothing to learn from other countries - and prejudice - the equally unwarranted belief, driven by ideology, that private insurance is more efficient than public insurance.
Let's start with the fact that America's health care system spends more, for worse results, than that of any other advanced country.
In 2002 the United States spent $5,267 per person on health care. Canada spent $2,931; Germany spent $2,817; Britain spent only $2,160. Yet the United States has lower life expectancy and higher infant mortality than any of these countries.
But don't people in other countries sometimes find it hard to get medical treatment? Yes, sometimes - but so do Americans. No, Virginia, many Americans can't count on ready access to high-quality medical care.
The journal Health Affairs recently published the results of a survey of the medical experience of "sicker adults" in six countries, including Canada, Britain, Germany and the United States. The responses don't support claims about superior service from the U.S. system. It's true that Americans generally have shorter waits for elective surgery than Canadians or Britons, although German waits are even shorter. But Americans do worse by some important measures: we find it harder than citizens of other advanced countries to see a doctor when we need one, and our system is more, not less, rife with medical errors.
Above all, Americans are far more likely than others to forgo treatment because they can't afford it. Forty percent of the Americans surveyed failed to fill a prescription because of cost. A third were deterred by cost from seeing a doctor when sick or from getting recommended tests or follow-up.
Why does American medicine cost so much yet achieve so little? Unlike other advanced countries, we treat access to health care as a privilege rather than a right. And this attitude turns out to be inefficient as well as cruel.
The U.S. system is much more bureaucratic, with much higher administrative costs, than those of other countries, because private insurers and other players work hard at trying not to pay for medical care. And our fragmented system is unable to bargain with drug companies and other suppliers for lower prices.
Taiwan, which moved 10 years ago from a U.S.-style system to a Canadian-style single-payer system, offers an object lesson in the economic advantages of universal coverage. In 1995 less than 60 percent of Taiwan's residents had health insurance; by 2001 the number was 97 percent. Yet according to a careful study published in Health Affairs two years ago, this huge expansion in coverage came virtually free: it led to little if any increase in overall health care spending beyond normal growth due to rising population and incomes.
Before you dismiss Taiwan as a faraway place of which we know nothing, remember Chile-mania: just a few months ago, during the Bush administration's failed attempt to privatize Social Security, commentators across the country - independent thinkers all, I'm sure - joined in a chorus of ill-informed praise for Chile's private retirement accounts. (It turns out that Chile's system has a lot of problems.) Taiwan has more people and a much bigger economy than Chile, and its experience is a lot more relevant to America's real problems.
The economic and moral case for health care reform in America, reform that would make us less different from other advanced countries, is overwhelming. One of these days we'll realize that our semiprivatized system isn't just unfair, it's far less efficient than a straightforward system of guaranteed health insurance.
Notes on International Comparisons of Health Care
Trends in employer-based insurance
: The underlying data
come from the Census. Here is a shorter, useful summary of the data
.(pdf).International comparisons of health spending
: The Factbook of the Organization for Economic Cooperation and Development, an international research organization supported by member governments, is available at www.sourceoecd.org
. It provides comparative data on many economic, environmental, and social trends. Data on health care spending per capita are measured using “purchasing power parities” – that is, they are adjusted for international differences in the cost of living.
Two things stand out. First, the United States is off the scale in terms of the amount we spend per person. Second, the U.S. system is unique in its reliance on private spending.Quality of Health Care
: “Taking the Pulse of Health Care Systems: Experiences of Patients With Health Problems in Six Countries
(pdf),” is a new study published in Health Affairs. Check out Exhibits 6 and 7, in particular. Taiwan
: A very interesting study, also online, is “Does Universal Health Insurance Make Health Care Unaffordable? Lessons from Taiwan
(pdf).” Since it’s predictable that some of the usual suspects will attack my column by citing newspaper articles about runaway costs in Taiwan, it’s particularly interesting to read the paper’s discussion of how “political theater” – overstating the quite mild financial difficulties of the Taiwanese system – was used to sell a modest increase in premiums.
Nov. 8, 2005
On "Pride, Prejudice, Insurance": Health Care Crisis in the U.S.
Nell Farr, Elk Grove, Calif.
: Your fine column contained this line: “. . . Americans too young to receive Medicare and insufficiently destitute to receive Medicaid . . .” This implies that those under 65 receive Medicaid if only they are poor enough. Many people believe this is true. It is not. Only if a person under 65 is on some Federal aid program such as AFDC or a disability program is he/she eligible for Medicaid. Others have an option of a free clinic, if available, or an E.R. for an emergency condition. However, E.R.’s only stabilize a person if further care or diagnostic work is indicated, such as a mammogram or even chemo for cancer, usually such a person is totally out of luck. They die.
Your columns are usually 100 percent factually correct, and I was disappointed to see this line that reinforces the mistaken belief of most Americans.
Paul Krugman: It's a bit more complicated than that. As I understand it Medicaid covers many children even if the parents aren't on AFDC, and in some cases covers parents too. But you're right that an American can easily be ineligible for Medicaid no matter how desperate his or her financial straits. In fact, that's a big part of the awfulness of how the government is responding to the aftermath of Katrina. But I didn't have space to go into all of that. Remember, 700 words.
Michael Pistorio, Des Plaines, Ill.: While I completely agree that it is a travesty for Americans to be devoid of a national health care solution, I question the rationale of comparing the costs of an American system to that of a foreign system. My reasoning lies behind the simple fact that the U.S. has a population considerably larger than the most populated country that you mentioned, and with this said, I would think that the reason other countries have lower costs is due to the smaller number of prospective participants. Please help me understand.
Paul Krugman: All of these comparisons are per capita: spending per person. So population is taken into account. Or, if you prefer, add up total spending by Western European countries, which have about the same combined population as the United States; you'll find that they spend only about 60 percent as much on health care, but that everyone is insured, life expectancy is higher, and infant mortality is lower.
Philip Lohman, Lakewood, Calif.: You missed making your best argument: the huge difference between levels of overhead in health systems. Somewhere around 30 percent of all expenditures on health care in the U.S. are for administration. This money buys hundreds of millions of pieces of paper and phone calls, plus the salaries of the legions of employees of insurance companies, H.M.O.’s, P.B.M.’s and all the others who are required to make the whole creaky, maddeningly complex mess function. What i t doesn’t buy is a single office visit or prescription.
Similar administrative costs in other countries are around a third of this. Compared to private insurance, Medicare, perpetually described as a boondoggle by conservatives, is a model of efficiency. I was managememt consultant in healthcare for twenty years. Some days I couldn't bring myself to believe the lunacy of the whole system.
Paul Krugman: I agree, but I'm puzzled that you think I missed your point. The column clearly identifies administrative costs as a key problem with the U.S. system.
Carol Bouville, Gaithersburg, Md.: Why is the obvious so hard for us Americans to accept? We used to not want any government-sponsored child care either because it was too socialistic. I suspect that has a lot to do with not getting government involved in universal health coverage. After all, our leaders are my age and came of age when anything that mimicked socialism was verboten. I lived in France for 18 years. Yes, it was cumbersome sometimes to get around in the health care system, but at least it was very cheap and available — and good, too. We never had to worry about losing our coverage or about not being able to pay for necessary treatment or meds. I argue that because of that peace of mind, we had a better quality of life than most Americans. Why don't people demand access to health coverage and refuse to vote for anyone who doesn't pledge to make the single-payer system a reality? What do we have to do to make that happen?
Neeta Moonka, MD, Demarest, N.J.: Thank you for this column. I am a physician who has been convinced of the need for a single-payer plan in this country since before I went to medical school in 1981. Please know the patchwork of employer based insurance, Medicare, Medicaid, not to mention the uninsured, takes its toll on doctors as well.
Bill Hess, Wasilla, Alaska: Your comments on nationalized insurance resonate with me. I am sitting here, feeling a notable amount of pain, thinking it would be good to go see a doctor and ask about it, but I dare not — I can't afford to. Not because I don't have insurance, but largely because I do. I am 55 years old and when I first got my insurance over a decade ago, it was a good deal. In the time since, my insurers have continually forced me to pay more for less, to drop my dental care altogether, to increase my deductible while still cutting back on my medical benefits. Yet the rate I pay has more than doubled to over $600 a month — that's just for me. Fortunately, my wife and grown children receive care under the U.S. Indian Health Service.
I have a prostate problem for which I take three medications, all of which I must purchase myself along with any other medications I might find myself needing at any time. Last spring, my urologist ordered up a cat scan to double check a few things, which turned out okay. Two weeks later, I was struck by some intense abdominal pain. The physician who saw me felt it necessary to order up still another cat scan, which revealed nothing that wasn’t on the original, but did add several thousand to the medical bills I was already facing, bills denied by my insurance company.
So I have been trying to pay off this big debt and now I dare not go see a doctor again, as long as I am able to function and move around. I simply cannot afford to. An older brother recently had part of his colon removed due to cancer and another brother suffers a variety of often severe colon ailments. My father has had part of his colon removed as well. This puts me in the group of at-risk people who are advised to get a colonoscopy, but I checked into it and, even with my insurance, I would be facing a few more thousand in additional medical debt that would be uncovered by my insurance.
I know what happens when my insurance company receives one of my medical bills — they do not say, “Let's see what we can do to help this guy and keep him healthy for as long as we can.” They say, “Let's see if we can deny all of this, or as much as possible, and lets keep raising his rate dramatically every few months so that, hopefully, by the time he really needs care and we would have to put out some bucks we will already have forced him to drop our coverage.”
They may not actually vocalize it in those terms, but I sincerely believe both scenarios to be an accurate reflection of their policy.
Mark Sengel , Banglamung, Thailand: Thanks for your focus on health care. I am 50 and teach in Thailand. The hospitals here are excellent and tens if not hundreds of thousands of foreigners are coming here from all over the world to have root canals, colonoscopies, and back surgery. Meanwhile, everyone I know in America feels their choices are limited. They choose to stay in jobs they don't like, they don't start businesses, and they live in places they don't really want to in order to get health care. Most have no idea how they are going to retire, estimating they need hundreds of thousand dollars just for health care if they are going to retire in their early 60's. And these are people that are way ahead of the average American. What is the endgame?
Lynne Koester, Yuba City, Calif.: Would it be feasible to convert Medicare into a national health insurance system? I realize that its present per-patient cost is high because of the age of those who qualify for Medicare, but if the pool were enlarged by including most all Americans, wouldn't the per-patient cost decrease? By eliminating the profits built into private health insurance companies, we could save even more money. Plus, when ill, many uninsured people presently use a hospital emergency room because they do not have medical insurance, but if they were covered by a national health insurance, they could be treated in a doctor's office, which is less costly than a hospital.
Paul Krugman: Yes, indeed. One way to implement national health care would simply be to expand Medicare to everyone.
Of course, doing that would require additional funds, probably in the form of an increase in the payroll tax. And that would elicit howls from the right. But the apparent rise in tax rates would be an illusion: it would simply substitute an explicit tax for the implicit tax that companies and workers pay in the form of insurance premiums. Given international experience, I have no doubt that overall spending on health care would actually fall, and that job creation would actually rise, after the supposed tax increase.
It's a simple solution, building on a program that we already know works. It would make the vast majority of Americans better off. And it's considered a complete non-starter politically. Now why is that?
At least 18 states have introduced universal health care bills, most based on a single-payer model
By Amy Snow Landa
Oct. 24/31, 2005
From Vermont to California, proponents of single-payer health care have been busy introducing legislation, circulating ballot petitions and broadening their coalitions — all with the hope that at least one state will enact legislation that can be used as a model for national health care reform.
But opponents of single-payer health care, including state medical societies, say they are not worried that all of the activity means that government-run health care will be enacted any time soon.
“We’re not ringing the alarm bell yet,” said Tim Maglione, senior director of legislative affairs at the Ohio State Medical Assn.
Although Ohio has one of the most active single-payer movements in the country, there is little chance that a single-payer bill will pass the state’s Republican-controlled Legislature or be signed into law by Republican Gov. Bob Taft.
“We feel pretty confident the Legislature doesn’t have any interest in pursuing this,” Maglione said.
Single-payer advocates, having drawn the same conclusion, have turned their efforts to a petition drive, said Johnathon Ross, MD, a Toledo internist and a leader of the Single-Payer Action Network of Ohio.
The group is attempting to collect about 100,000 signatures on its petition, which directs the Legislature to vote on the Health Care for All Ohioans Act. So far, they have collected “tens of thousands” of signatures, Dr. Ross said.
If the Legislature then refuses to take action on the bill, supporters will collect a second round of signatures to put single-payer legislation directly on the ballot.
“Our target [for putting it on the ballot] is November 2006 at the earliest,” Dr. Ross said. But the group may put it off if they need more time to prepare for what is likely to be a formidable challenge waged by the insurance industry and other opponents, he said. Single-payer ballot initiatives have been tried in Oregon and California but were unsuccessful when they faced the opposition’s overwhelming resources.
Single-payer advocates don’t want to see that happen in Ohio. “We have to make sure we have a movement” established before taking single-payer health care to the ballot box, Dr. Ross said. “We’re using the petition to drive this movement.”
In addition to Ohio, at least 17 other states have introduced universal health care measures, most of them based on a single-payer model, according to the National Conference of State Legislatures. But so far, none of the bills has been enacted.
The American Medical Association has opposed the establishment of single-payer health care both at the state and federal levels. It has long advocated for using tax credits and other market-based reforms to make health care coverage more affordable.Vermont’s close call
The state that came closest this year was Vermont, where the Legislature passed a bill in June that would put the state on the road to establishing a single-payer system called Green Mountain Health.
The measure, called an Act Relating to Universal Access to Health Care in Vermont, would have phased in a single-payer system funded through taxes levied on individuals and employers. But Republican Gov. James Douglas vetoed the legislation.
Despite the veto, the Legislature was able to appropriate funds for the Commission on Health Care, a legislative panel that is studying a number of issues related to health care reform, such as governance and financing.
Both the commission and Douglas are holding hearings to solicit recommendations on health care reform. The Vermont Medical Society has been developing its own proposal, which it plans to submit in mid-October, Executive Director Paul Harrington said.
Rather than promote a single-payer system, the VMS proposal would keep in place existing insurance coverage paid for by employers, Medicare and Medicaid. It would offer residents in the individual market a basic benefit plan at an affordable cost through the Office of Vermont Health Access, the agency responsible for the state’s Medicaid and other health programs. The proposal also would subsidize premiums for low-income Vermonters and provide new incentives to encourage employers to offer health insurance to their employees.Eyes on the prize
Of all the states where single-payer supporters are most active, California is considered the biggest prize because of its sheer size, both in terms of population and health care spending. Nearly $200 billion is spent in California each year — about 13% of the entire nation’s spending on health care, according to the UCLA Center for Health Policy Research.
Activists there have been working for years to enact single-payer legislation, but supporters and opponents have differing views on whether the movement has crested or continues to grow.
“As far as we know, their efforts are not any more prevalent today than they were a year ago or 10 years ago,” said Larry Akey, a spokesman for America’s Health Insurance Plans.
But that’s not the view of Ida Hellander, MD, executive director of the Chicago-based Physicians for a National Health Program. The single-payer movement in California “just continues to grow,” she said. “They have a pretty broad-based movement; they’ve educated a lot of people, and very large, well-organized groups like the California Nurses Assn. are on board.”
In the California Legislature, a single-payer bill passed the Senate in May but faces an uncertain future in the General Assembly. Even if the full Legislature approves the bill, Republican Gov. Arnold Schwarzenegger is likely to veto it.
“The bill is dead for the moment,” said Michael Sexton, MD, president of the California Medical Assn., which opposes the legislation. “We don’t think there should be an ability to ration care based on a global budget,” he said.
Instead, the CMA is working to advance its own proposal, which would cover the uninsured but preserve a public-private system of health care coverage, he said. The plan includes refundable tax credits for the purchase of health care.ADDITIONAL INFORMATION:
The Vermont Legislature, for information on H 524, an Act Relating to Universal Access to Health Care (www.leg.state.vt.us
California legislative information page, for information on SB 840, the California Healthcare Insurance Reliability Act (www.leginfo.ca.gov
The Ohio General Assembly, for information on, HB 263 and SB 263, the Health Care for All Ohioans Act (www.legislature.state.oh.us
October 22, 2005
By Robert Kuttner
The United Autoworkers union has agreed to save General Motors over a billion dollars a year in health insurance costs. This is a disguised pay-cut, since workers will now pay more out of pocket for their healthcare.
The union agreed to this desperation deal to help keep GM alive. The once-dominant auto-maker posted a record $1.1 billion loss in the third quarter; and its former parts division, Delphi, with 34,000 union jobs, has just gone into bankruptcy. If and when it emerges, Delphi's $26-an-hour workers will be cut to something like $12. That gets your attention.
The union leadership was so eager to help GM survive that the UAW filed an unusual suit intended to block its own union retirees from challenging the negotiated health-benefit cuts. Now Ford has just reported a $284 million third-quarter loss, and wants the same kind of deal the UAW gave GM.
Even with these concessions, the industry that once was the core of America's blue-collar middle class is continuing its downward spiral, cutting jobs and cutting the pay and benefits of the workers that remain. General Motors, which a generation ago had about half a million union workers, will soon be down to 84,000.
But it would be a mistake to conclude that high wages or excess health benefits are bankrupting US industry. Look at our competitors. Japanese labor costs in the auto industry are comparable to American ones and German wages are far higher.
There are, however, two offsetting differences. First, the Japanese and Germans are ahead technologically and have a knack for making reliable cars that consumers want to buy. Second, their healthcare is financed socially.
So GM's biggest problem is not labor costs; it's that except for its profitable SUVs (which are becoming white elephants as gas prices rise), too few consumers are buying GM's products. When management makes dumb decisions about design, quality, or marketing, autoworkers end up paying the price.
GM spends also $5.6 billion a year on healthcare -- more than it spends on steel. Its foreign competitors spend nothing on healthcare. So GM and the UAW are common victims of America's failure to have national health insurance.
The UAW, to its credit, has advocated national health insurance since the days of its first president, Walter Reuther. General Motors, like the rest of American big business, has fiercely resisted it -- preferring to bear billions in expenses to having a national policy it considers socialistic. But it would be another mistake to conclude that autoworkers have had too good
a deal on health insurance. The reality is that most Americans have had too bad a deal.
Somehow, the rest of the industrial world can provide health coverage for everyone, and only spend an average of about 10 percent of its national income, while we spend 14 percent and leave over 44 million people without health insurance.
How is that possible? Simple: we squander hundreds of billions of dollars processing claims, having dozens of competing insurers spend a fortune on marketing, paying HMO reviewers to second-guess physicians, evaluating who is "insurable," and otherwise wasting about 30 cents on every premium dollar paying middlemen who provide no healthcare.
And we overpay dearly for treatment in emergency rooms, where tens of millions of poor people go when they get really sick, having been unable to afford cheaper and more cost-effective routine care. Other nations spend more efficiently on preventive care, because everyone can afford to see the doctor.
Here is one good idea, proposed by environmental activists Michael Shellenberger and Ted Nordhaus, and sponsored by Senator Barack Obama of Illinois as the Competitiveness and Accountability Act. Congress would offer automakers the following deal: If they invest substantially in fuel-efficient technology, Congress will relieve them of the health insurance burden of their retirees.
Isn't this a bailout? As Shellenberger and Nordhaus observe, after 9/11, Congress bailed out the airlines and asked nothing in return. This proposed subsidy would insist, in return, that auto-makers help themselves, their workers and consumers -- by building more competitive and fuel-efficient cars. A bankruptcy is also a bailout -- investors and workers bail out failing management.
If we could think more creatively, we wouldn't have to choose between saving the auto industry and having decent health coverage for its workers -- and everyone.
(c) Copyright 2005 The New York Times Company
Thursday, November 17, 2005 - 12:00 AM
Froma Harrop / Syndicated columnist
Listen to the elders complain about their new Medicare drug benefit. You'd think that for $724 billion over 10 years, the taxpayers could have bought them more happiness.
But no, they are angry over the program's complexity. They must choose among dozens of plans. The plans cover different drugs, and charge different premiums, deductibles and co-payments. Medicare beneficiaries are now attending three-hour drug-benefit seminars and hurling questions at their pharmacists. There are reports of people breaking down in tears of frustration.
Such was not the vision of the free-market swingers who created this extravaganza of confusion. They opposed adding a simple "one-size-fits-all" drug benefit — bland as Al Gore — onto the existing Medicare program. Instead, they would lead Medicare's 43 million beneficiaries into the promised land of choice. As the swingers painted it, private insurers would compete for the elders' affections by offering exactly the drugs they wanted at low cost.
Only 39 percent of older Americans can figure out the options, according to a survey by the Kaiser Family Foundation and the Harvard School of Public Health. The questionnaire also found that 37 percent were simply not going to sign up, and 43 percent didn't know whether they would.
That's what happens when people are overwhelmed by choice, according to Barry Schwartz, author of "The Paradox of Choice: Why More Is Less." They don't make a choice. They opt out.
"The only good thing about this plan is it's better than nothing," says Schwartz, a professor of psychology at Swarthmore College. "So if you have nothing, you can throw a dart and you're better off. People who already have drug coverage (say, from an employer or through Veterans Affairs) could throw a dart and be worse off."
The Medicare Prescription Drug Finder (at www.medicare.gov
) is supposed to help you compare plans. The finder lets you type in your medications and up come the plans that offer them.
Several problems here. One is that the listed drugs often come with asterisks. An asterisk may lead to the words "quantity limits," which means you can get only a certain number of pills a month. It may instruct you to "call the plan." People calling plans say they've been put on hold for 40 minutes, then gave up.
Let me interrupt this column with a minute of silence for the taxpayers. The discussion so far has centered on the beneficiaries' displeasure. What about the people who will be picking up most of the extravagant bills?
During the 2000 presidential campaign, the conservative media jumped all over Al Gore for proposing a drug benefit with an estimated price tag of $253 billion over 10 years. "Mr. Gore seems unconcerned about costs," opined The Wall Street Journal.
The newspaper much preferred George Bush's magic-of-the-marketplace proposal. Bush insisted his "conservative" plan — much like what we now have — would require only $158 billion over 10 years. That was less than one-quarter of what it will really cost.
No doubt Gore's plan would have exceeded his estimate. But its numbers would have been far closer to the mark than Bush's fantasy. The plan's simplicity made it harder to conceal its true costs.
And it was based on the proven assumption that Medicare is a very efficient health-insurance program. Medicare's indirect expenses are only 2 percent. The overhead for private insurance companies is 25 percent. Unlike Medicare, private insurers must advertise, enrich their top execs and deliver a profit to investors.
These very rough calculations also assume that the time of the beneficiaries, their children, their pharmacists, their doctors, Medicare officials, state health and elderly affairs workers, et al., is not worth anything. How many man-hours have gone into explaining "creditable coverage," "true out-of-pocket costs" or "Medicare Advantage" plans? How many gray hairs have been pulled out in trying to get a live human being at Medicare's toll-free number? (If you want to bother, it's 800-633-4227.)
Is no one happy with the new Medicare prescription-drug benefit? Actually, the insurance and drug companies are happy. The insurers have been generously cut into the deal. And Medicare law forbids the government to negotiate prices with drug manufacturers.
June 25, 2006
When organized labor's most inventive union president and the Republican lawmaker in line to chair the powerful House Ways and Means Committee are both touting the same revolutionary idea, it may be time to bend an ear.
Andrew Stern, the liberal president of the Service Employees International Union, and conservative Rep. Jim McCrery (R-La.), favored to succeed Rep. Bill Thomas (R-Bakersfield) as head of Ways and Means if Republicans keep control of the House, don't agree on much.
But both believe it's time to replace the central arch of the American healthcare system: the link between health insurance and work. Their arguments may represent the opening notes of the first significant domestic debate of the 2008 presidential campaign.
The connection between health insurance and employment dates to World War II.
After President Franklin D. Roosevelt imposed wage and price controls, companies could not compete for workers by offering bigger paychecks. Instead, they provided richer benefits, including health insurance. After the war, the big unions reinforced the trend by bargaining for health coverage in their contracts with major employers.
Congress cemented the connection between work and health coverage in 1954 by creating a generous tax subsidy for employer-provided coverage. Employers that provide health insurance for their workers can deduct the cost of the premiums as a business expense, the same way companies write off the wages they pay to workers. But although workers pay taxes on the wages they receive, Congress decided they would not be taxed on the value of the insurance their employers purchased for them. That subsidy encouraged employers to shift more of a worker's total compensation from wages to health benefits.
Linking health coverage to work had other benefits. It created insurance pools that shared risk between workers who were young and old, healthy and sick. And it allowed employers to handle the headache of administering insurance plans, rather than requiring workers to bargain directly with insurance companies.
With all these advantages, the employer-based system grew enormously over the last half a century. Today, more than 174 million workers and their families receive health insurance on the job.
But the system is cracking. As the cost of insurance rises, fewer small employers are offering it. Almost all large employers still provide coverage. But more of them argue that the rising cost is hurting their ability to compete against companies from other countries that spread the cost more broadly through government-provided healthcare.
As these pressures have converged, the share of Americans who receive coverage at work has fallen in each of the last five years — from nearly 64% in 2000 to just under 60% in 2004. Most experts project continued declines. Stern sees in these trends the writing on the wall.
"We have to recognize that employer-based healthcare is ending; it is dying before our very eyes," he said at a recent forum sponsored by the Brookings Institution think tank.
Stern didn't endorse a specific plan to replace employer-provided coverage. But he flagged the obvious two options: a government-run, single-payer healthcare regime versus a system that would require individuals to purchase insurance with subsidies from government and, perhaps, mandated contributions from employers.
McCrery, not surprisingly, prefers the latter option, minus the employer mandate.
In an essay published this month in the new journal Democracy, Jason Furman, a visiting scholar at New York University and former economic policy aide to President Clinton, said that tax policy would be the key to any shift away from the employer-based healthcare system.
The existing tax subsidy for insurance, Furman said, perversely benefits upper-income workers more than lower-income ones. The reason is that under the progressive income tax, the affluent pay higher tax rates on their income. So it would cost them more than low-income workers if government taxed the value of employer-provided insurance.
Furman wants to reverse that equation. He says that if government eliminated the current tax subsidy for employer-provided coverage (which costs Washington about $200 billion a year), the savings could fund a tax credit that would help all Americans purchase basic health insurance. That structure, he said, would provide the biggest subsidy to the least affluent.
"We should spend less subsidizing more expensive insurance … for higher-income people and spend more to help moderate-income families obtain the health insurance they lack," Furman wrote.
A first step, he said, might be to limit the amount of insurance employers could provide tax-free, and to use the savings to fund coverage for some of the nearly 46 million uninsured.
Any system that affects as many people as employer-based health coverage won't be changed quickly, nor should it be.
"We have to work incrementally toward getting to a point where we can slowly shift insurance from the workplace," McCrery said.
Likewise, most big-business executives aren't clamoring to jettison their role.
"We're not giving up on this system and saying it needs to be thrown out," said John J. Castellani, president of the Business Roundtable, which represents the nation's largest companies. "We think it can be improved from both a cost and quality standpoint, and that's what we are focusing on."
The critics haven't assembled an irrefutable case against the employer-based system; refurbishing it might well make more sense than dismantling it. Any replacement system would need to guarantee affordability and preserve the sharing of risk.
But the tough, thoughtful questions from such voices as Stern, McCrery and Furman are an encouraging sign that the nation finally may be ready to reexamine a healthcare system that costs too much and covers too few.
Published on Thursday, April 6, 2006 by CommonDreams.org
by Steffie Woolhandler, M.D., M.P.H. and David U. Himmelstein, M.D.
It’s a stirring scene. The Governor, legislative leaders and leaders of Health Care For All standing in the State House Rotunda declaring victory in the fight for universal health coverage. Unfortunately, this week’s tableau merely repeats one from 20 years ago when Governor Dukakis was celebrating passage of his universal healthcare bill. That plan imploded within two years, and today about 250,000 more people are uninsured in Massachusetts than the day it was signed. Unfortunately, Massachusetts’ new health reform legislation looks set to repeat that disaster.
What’s in the New Bill?
The new bill includes three key provisions meant to expand coverage. First, it would modestly expand Medicaid eligibility. Second, it would offer subsidies for the purchase of private coverage to low-income individuals and families, though the size of the subsidies has yet to be determined. Finally, those making more than three times the poverty income (about $30,000 for a single person) would have to buy their own coverage or pay a fine.
To help make coverage more affordable, a new state agency will connect people with the private insurance plans that sell the coverage, and allow people to use pre-tax dollars to purchase coverage (a tax break that mostly helps affluent tax payers who are in high tax brackets). This new agency is also supposed to help design affordable plans.
Businesses that employ more than 10 people and fail to provide health insurance will be assessed a fee (not more than $295) to help subsidize care. Additionally, hospitals won a rate hike assuring them better payments from state programs, and several provisions were included that are meant to attract additional Federal funding to help pay for the Medicaid expansion.
What’s Wrong With This Picture?
First, the politicians assumed that only about 500,000 people in Massachusetts are uninsured. The Census Bureau says that 748,000 are uninsured. Why the difference? The 500,000 figure comes from a phone survey conducted in English and Spanish. Anyone without a phone or who speaks another language is counted as insured. The 748,000 figure comes from a door-to-door survey carried out in many languages (including Portuguese and Haitian Creole, common languages in Massachusetts). In sum, the reform plan wishes away 248,000 uninsured people who don’t have phones or don’t speak English or Spanish. It provides no funding or means to get them coverage.
Second, the linchpin of the plan is the false assumption that uninsured people will be able to find affordable health plans. A typical group policy in Massachusetts costs about $4500 annually for an individual and more than $11,000 for family coverage. A wealthy uninsured person could afford that – but few of the uninsured are wealthy. A 25 year old fitness instructor can find a cheaper plan. But few of the uninsured are young and healthy. According to Census Bureau figures, only 12.4% of the 748,000 uninsured in Massachusetts are both young enough to qualify for low-premium plans (under age 35) and affluent enough (incomes greater than 499% of poverty) to readily afford them. Yet even this 12.4% figure may be too high if insurers are allowed to charge higher premiums for persons with health problems; only half of uninsured persons in those age and income categories report that they are in “excellent health”.
The legislation promises that the uninsured will be offered comprehensive, affordable private health plans. But that’s like promising chocolate chip cookies with no fat, sugar or calories. The only way to get cheaper plans is to strip down the coverage – boost copayments, deductibles, uncovered services etc.
Hence, the requirement that most of the uninsured purchase coverage will either require them to pay money they don’t have, or buy nearly worthless stripped down policies that represent coverage in name only.
Third, the legislation will do nothing to contain the skyrocketing costs of care in Massachusetts – already the highest in the world. Indeed, it gives new infusions of cash to hospitals and private insurers. Predictably, rising costs will force more and more employers to drop coverage, while state coffers will be drained by the continuing cost increases in Medicaid. Moreover, when the next recession hits, tax revenues will fall just as a flood of newly unemployed people join the Medicaid program or apply for the insurance subsidies promised in the reform legislation. The program is simply not sustainable over the long – or even medium – term.
What Are the Alternatives?
The legislation offers empty promises and ignores real – and popular - solutions.
A single payer universal coverage plan could cut costs by streamlining health care paperwork, making health care affordable. Massachusetts Blue Cross spends only 86% of premiums paying for care. It spends the rest - more than $700 million last year - on billing, marketing and other administrative costs. Harvard Pilgrim and Tufts Health Plan – our other big insurers - are little better; each took in about $300 million more than it paid out. That’s ten times as much overhead per enrollee as Canada’s national health insurance program. And our hospitals and doctors spent billions more fighting with insurers over payments for each bandaid and aspirin tablet.
Overall, Massachusetts residents will spend $13.3 billion on health care bureaucracy this year – nearly one third of our total health bill. If we cut bureaucracy to Canada’s levels we could save $9.4 billion annually, enough to cover all of the 748,000 uninsured in Massachusetts and to improve coverage for the rest of us.
Study after study – by the Congressional Budget Office, the General Accounting Office and even the Massachusetts Medical Society - have confirmed that single payer is the only route to affordable universal coverage.
And single payer is popular. The Massachusetts Nurses Association supports it along with dozens of other labor, seniors and consumer groups; so do 62% of Massachusetts physicians according to a recent survey. National polls find that almost two-thirds of Americans favor a tax-funded plan like Medicare that would cover all Americans.
But single payer national health insurance threatens the multi-million dollar paychecks of insurance executives, and the outrageous profits of drug companies and medical entrepreneurs.
It’s time for politicians to stand up to the insurance and drug industries and pass health reform that can work.
Steffie Woolhandler and David Himmelstein are primary care physicians at Cambridge Hospital and Associate Professors at Harvard Medical School. They co-founded Physicians for a National Health Program
New York Times
November 28, 2005
Many eulogies were published following the recent death of Peter Drucker, the great management theorist. I was surprised, however, that few of these eulogies mentioned his book "The Age of Discontinuity," a prophetic work that speaks directly to today's business headlines and economic anxieties.
Mr. Drucker wrote "The Age of Discontinuity" in the late 1960's, a time when most people assumed that the big corporations of the day, companies like General Motors and U.S. Steel, would dominate the economy for the foreseeable future. He argued that this assumption was all wrong.
It was true, he acknowledged, that the dominant industries and corporations of 1968 were pretty much the same as the dominant industries and corporations of 1945, and for that matter of decades earlier. "The economic growth of the last twenty years," he wrote, "has been very fast. But it has been carried largely by industries that were already 'big business' before World War I. ... Every one of the great nineteenth-century innovations gave birth, almost overnight, to a major new industry and to new big businesses. These are still the major industries and big businesses of today."
But all of that, said Mr. Drucker, was about to change. New technologies would usher in an era of "turbulence" like that of the half-century before World War I, and the dominance of the major industries and big businesses of 1968 would soon come to an end.
He was right. Consider, for example, what happened to America's steel industry. In the 1960's, steel production was virtually synonymous with economic might, as it had been for almost a century. But although the U.S. economy as a whole created lots of wealth and tens of millions of jobs between 1968 and 2000, employment in the U.S. steel industry fell 60 percent.
And as industries went, so did corporations. Many of the corporate giants of the 1960's, companies whose pre-eminence seemed permanent, have fallen on hard times, their places in the business hierarchy taken by new players. General Motors is only the most famous example.
So what? Meet the new boss, same as the old boss: why does it matter if the list of leading corporations turns over every couple of decades, as long as the total number of jobs continues to grow?
The answer is the reason Mr. Drucker's old book is so relevant to today's headlines: corporations can't provide their workers with economic security if the companies' own future is highly insecure.
American workers at big companies used to think they had made a deal. They would be loyal to their employers, and the companies in turn would be loyal to them, guaranteeing job security, health care and a dignified retirement.
Such deals were, in a real sense, the basis of America's postwar social order. We like to think of ourselves as rugged individualists, not like those coddled Europeans with their oversized welfare states. But as Jacob Hacker of Yale points out in his book "The Divided Welfare State," if you add in corporate spending on health care and pensions - spending that is both regulated by the government and subsidized by tax breaks - we actually have a welfare state that's about as large relative to our economy as those of other advanced countries.
The resulting system is imperfect: those who don't work for companies with good benefits are, in effect, second-class citizens. Still, the system more or less worked for several decades after World War II.
Now, however, deals are being broken and the system is failing. Remember, Delphi was once part of General Motors, and its workers thought they were totally secure.
What went wrong? An important part of the answer is that America's semi-privatized welfare state worked in the first place only because we had a stable corporate order. And that stability - along with any semblance of economic security for many workers - is now gone.
Regular readers of this column know what I think we should do: instead of trying to provide economic security through the back door, via tax breaks designed to encourage corporations to provide health care and pensions, we should provide it through the front door, starting with national health insurance. You may disagree. But one thing is clear: Mr. Drucker's age of discontinuity is also an age of anxiety, in which workers can no longer count on loyalty from their employers.
New York Times
December 4, 2005
By JOHN M. BRODER
LOS ANGELES, Dec. 3 - The number of American children without health care coverage has been slowly but steadily declining over the past several years even as health care costs continue to rise and fewer employers provide insurance, creating a breach that states have stepped in to fill with new programs and fresh money.
The overall ranks of the uninsured continue to swell, to nearly 46 million Americans at the beginning of this year. But a landmark federal program begun in 1997 to provide health coverage to poor and working-class children and additional measures taken by states have provided health insurance to millions of children who might otherwise go without.
In the past year, 20 states have taken steps to increase access to health coverage for children and their parents and nine states have reversed actions they took during the 2001-3 economic downturn to limit benefits, according to the Kaiser Commission on Medicaid and the Uninsured, part of the Kaiser Family Foundation, which tracks health care trends. Among them are Illinois, which just signed a child health bill, and Vermont, with its "Dr. Dynasaur" health program, both of which broadened coverage for children.
As a result of these and other steps, there are 350,000 fewer uninsured children in the United States than there were in 2000, the foundation reported. Over the same period, the overall number of uninsured rose by six million.
While elected officials cannot agree on how to provide or pay for health coverage for uninsured adults, there seems to be a consensus in many states that covering children is medically wise and politically smart.
However, even the situation for children is not uniformly favorable. Eleven states facing political and financial pressure, including Maryland, Pennsylvania and Tennessee, made it more difficult for eligible children to retain coverage.
The movement to expand coverage for children dates to the mid-1990's, after the Clinton administration devised a complex plan to provide all Americans with health care coverage. That plan failed, and advocates of wider coverage began pursuing more incremental changes at the federal level and lobbying legislatures to expand coverage.
Alan R. Weil, executive director of the National Academy for State Health Policy, a nonpartisan research group, said children's health was one area of state spending that had consistently risen. Mr. Weil said it was much easier for officials to approve spending "for the kids" than to expand welfare programs for adults, even in times of hardship.
"It goes back to the Elizabethan poor laws that drew a conceptual distinction between the deserving and the undeserving poor," he said. "It's very hard to call kids undeserving, even if you don't like the parents' behavior."
Illinois took the most far-reaching step this fall, enacting a law intended to provide coverage to all children in the state, extending low-cost or free coverage to the 250,000 Illinois youngsters who are now uninsured.
But even states unwilling to go as far as Illinois are moving to provide insurance for children.
New Jersey, which imposed sharp restrictions on publicly financed health care for families during the economic slowdown, restored eligibility this year to some 75,000 low-income families.
In Washington State, where 39,000 children were dropped from state-financed health care programs in 2003 and 2004, officials reversed course this year. The state eased health care eligibility requirements for families with children and delayed a plan to charge premiums.
And Texas, which has one of the nation's highest rates of uninsured children, took steps this year to stop a decline in the number of children with health coverage. The state eliminated premiums for the poorest families enrolled in state health care programs and stopped cutting off families with higher incomes that failed to keep up with premiums.
As of the beginning of this year, 16 percent of all Americans lacked health insurance, but only 12 percent of children under 18 went uncovered, although that still amounts to nine million children, according to the Kaiser commission. That gap has been widening over the years as fewer employers offer health care coverage, federal spending fails to keep pace with rising costs, and states limit eligibility to balance budgets.
The picture is brighter for children than for adults in large part because of the enactment of the State Children's Health Insurance Program, or Schip, in 1997. The program provides federal money for child health care to states, which determine eligibility, income limits and covered benefits within federal guidelines. The number of children covered under the federal-state program grew rapidly, from 897,000 children nationwide in 1998 to 3.95 million in the middle of 2003, before leveling off.
The percentage of uninsured children ranges from less than 5 percent in Vermont to almost 20 percent in Texas. The differences reflect state policies, the poverty rate, the number of immigrants, and the percentage of children covered by employers and other programs.
The chief factor determining how many children are covered is the income eligibility level set by the states under Schip. The federal government requires coverage for families at or below the federal poverty level, about $20,000 for a family of four. Only a few states set the limit that low. In some states, including Minnesota, Rhode Island and Vermont, families with incomes at 250 percent or even 300 percent of the federal poverty line qualify.
California is witnessing a battle that is also playing out in Washington and other states. State officials here and private groups are trying to bring health coverage to more than a million California children who now go without it. A bill that passed the Legislature this year would have eased eligibility requirements for the poorest families, bringing coverage to hundreds of thousands of children. Gov. Arnold Schwarzenegger
, a Republican, vetoed the bill, saying that he agreed with its aims but that the sponsors had not come up with a way to pay for it.
Partly in reaction, a coalition of health groups including the American Cancer Society and the American Heart Association are proposing a ballot initiative to raise the state cigarette tax to finance universal health care for children. Sponsors say that the estimated $1.4 billion raised by the new tax would pay for health coverage for more than 800,000 California children.
Vermont leads the nation in the percentage of its children who are insured through state and federal programs and private insurance, with almost 95 percent coverage.
In 1989, Madeleine M. Kunin, then the governor, created a state-financed program for pregnant women and for children up to age 6 who did not have private insurance and did not qualify for Medicaid. The program, which came to be known as Dr. Dynasaur, was expanded in 1992 under Gov. Howard Dean
to cover children through age 17. Families with incomes up to 300 percent of the federal poverty level, or nearly $60,000 a year, qualify, and the program covers doctor visits, dental care, immunizations
, vision care, medicines and mental health
Financing comes from the federal government, tobacco taxes and general state revenues.
Despite the fading fortunes of the auto industry, 93 percent of Michigan children are covered, several percentage points higher than the national average. But that still leaves 200,000 Michigan youngsters uninsured.
Even though Ms. Granholm intends to ask for significant cuts in some state programs in her budget next month, she said she would propose increasing spending to address the problem of uninsured children.
"Let's get real about it," Ms. Granholm said. "Let's design a public system that truly reflects where we want to be, so states are not twisted into pretzels to try to insure their most vulnerable citizens. I don't think we want to be a nation where you go to Dunkin' Donuts to put a quarter in a jar for Aunt Linda's mastectomy. We need a national solution for competitiveness and moral reasons. And Washington is utterly silent."