Managing Care for the Poor, They Prosper by Cutting
Beleaguered States' Costs
Dr. Polack Seeks an Antibiotic
By BARBARA MARTINEZ
November 15, 2006; Page A1
Some 55 million poor and disabled Americans are covered by Medicaid. With an annual price tag topping $300 billion, it's among the biggest government programs around.
It's also a lucrative business for some private companies that act as middlemen between the government and patients. Instead of directly paying the bills when a Medicaid patient goes to the doctor, state governments increasingly outsource the job to private contractors. More than one in three Medicaid beneficiaries now receive care through a private insurer.
The potential gains are big. Four years ago, a private-equity fund in which George Soros was the largest investor took a 70% stake in WellCare Health Plans Inc., a leading Medicaid health-maintenance organization. The fund finished cashing out the stake this August, bringing in a total of $870 million for an investment that originally cost $220 million.
Four of the biggest Medicaid HMOs -- WellCare, Centene Corp., Molina Healthcare Inc. and Amerigroup Corp. -- have seen their shares surge on the New York Stock Exchange over the past few years, although prices of the latter three have been volatile. WellCare's stock price has tripled since it began trading in July 2004, bringing the value of stock and options held by its chief executive, Todd S. Farha, to $77 million.
The companies are growing fast. Centene boasts nearly 1.2 million members and posted $1.5 billion in revenue last year. That compares with 142,000 members and $200 million in revenue six years earlier.
With the growth has come criticism from some doctors and patients who accuse Medicaid HMOs of scrimping on care. Even as they restrict medical tests and use of prescription drugs, the companies spend the money they get from states on items that don't have an obvious connection to patients. Centene has funded a multimillion-dollar arts center in St. Louis and paid to put its name on stadiums in Montana and Missouri. The HMOs are also big donors to political campaigns.
Executives say their profits are justly earned and don't come at patients' expense. Traditional Medicaid is a fee-for-service program: The government pays each medical bill the patient racks up, with little or no effort to manage the costs. Medicaid HMOs, like other HMOs, seek to save money by eliminating unnecessary care and paying for preventive treatments. Centene Chief Executive Michael Neidorff says the company sometimes gives free child-safety car seats to pregnant women who attend all of their prenatal exams. "We save millions" by preventing premature births, he says.
Mr. Neidorff earned $1.85 million in salary and bonus last year and as of the end of last year held restricted stock valued at $26 million. The company also recorded $135,547 last year in compensation for Mr. Neidorff representing the value of personal trips he took on the corporate jet, a Bombardier Challenger that features an espresso machine on board, according to the lease agreement.
Centene spokesman Robert Schenk declined to say how much the company pays to lease the jet. He said the jet is needed because many of Centene's operations are hard to reach by commercial carriers, and the company's board requires Mr. Neidorff to use corporate transportation even on personal travel to ensure that he is secure and accessible.
Centene's business is managing the care of patients such as Melissa Bishop, 39 years old, of Phillipsburg, N.J. When she needed radiation for cancer near her pancreas this summer, she called Centene, her Medicaid HMO. She says she tried three facilities suggested by the company, but none of them were part of Centene's plan. "I was going round and round and round," says Ms. Bishop. "I was getting so aggravated."
After she got an appointment at a fourth place, an administrator there told her it didn't accept her plan either. The administrator, Barbara Tofani of Hunterdon Regional Cancer Center in Flemington, N.J., says she called a dozen other centers in the region and struck out every time. Finally, Ms. Tofani called Centene and negotiated an ad-hoc deal to cover Ms. Bishop's treatment, although Ms. Tofani says the center will be lucky to break even.
Andrew Greenberg, Ms. Bishop's radiation oncologist, says that if it hadn't been for the special effort, "Melissa would have gotten lost in the system." Centene didn't provide comment on Ms. Bishop's case.
Each state runs its own Medicaid program but the majority of funding generally comes from the federal government. When states sign up HMOs to manage care, they often calculate what they would spend on Medicaid patients directly and pay the HMOs a per-patient premium below that amount. Florida, for instance, sets its HMO premium rates about 8% below what it would cost the state. WellCare, a big operator in Florida, says it saves the state $75 million a year. HMOs have an incentive to keep their costs under the premium because they keep the difference as profit.
After several years of spiraling growth in Medicaid costs, there's some evidence that the tide is turning, although it's unclear how much HMOs have contributed. Total Medicaid spending grew in fiscal 2006 by just 2.8%, according to a report last month by the Kaiser Commission on Medicaid and the Uninsured. That was the lowest rate of growth since 1996. The commission said that for the first time in years many states aren't feeling pressure to cut people off Medicaid rolls.
Are Medicaid HMOs slashing necessary care to achieve cost savings and raise profits? Yes, says Jerry Flanagan, health-care policy director of a California group that wants to stop state governments from moving Medicaid beneficiaries into private managed care. "What's good for shareholders is bad for patients," he says. "What's really happening is we're giving less money for far, far fewer services."
Private companies "deliver a good-quality product at a reasonable price," counters Ruben Jose King-Shaw Jr., a former top federal Medicaid and Medicare official who joined WellCare's board in 2003. He notes that states often require private HMOs to achieve high rates of vaccination and other quality standards that weren't met when bureaucrats did all the work. Mr. King-Shaw, whose final annual salary in government was $142,500, has sold WellCare shares for $1.8 million. He owns shares and options valued at an additional $1.5 million. "You only do well in health care if you deliver value," he says.
States began experimenting with using managed care for Medicaid patients in the early 1980s, and the idea took off in the 1990s. Now many states are moving aggressively to put more Medicaid patients in HMOs. Last month, Ohio chose the winning bidders to provide Medicaid HMO services to 120,000 of the state's aged, blind and disabled population -- a group that traditionally hasn't been placed in HMOs.
When states run their own Medicaid programs, they spend on average 4% to 6% on administrative costs, according to Martha Roherty, director of the National Association of State Medicaid Directors. The rest -- 94% to 96% -- goes to paying for medical care. At Medicaid HMOs, only 80% to 85% of premium dollars generally go for medical costs. The rest covers other costs -- including executive compensation, entertainment and political contributions -- or becomes profit for shareholders.
States monitor the profit margins of Medicaid HMOs, which are generally reported as 5% or less. State officials say that with such a thin margin there's little room for further savings, although a review in New Jersey questioned whether one HMO was overcharging its subsidiary in the state for services. That could make the subsidiary's profits look lower.
While they spend fewer dollars on medical care, companies say they are more efficient and improve the health of patients. Elizabeth Douglas of Chicago says her 11-year-old son has kept up on his immunizations thanks to a WellCare program that gives her a free ride to the doctor's office.
Some patients and doctors have a different view. Kuldeep Singh, an internist in Valdosta, Ga., says that when Georgia began to move more than a million Medicaid recipients into HMOs this year, he suddenly faced hurdles not imposed by regular Medicaid. Recently, he says, one of his assistants had to wait on hold to get approval from WellCare for a hospital chest X-ray on a patient suspected of having pneumonia. "It was ridiculous," says Dr. Singh. A spokesman for WellCare says it sometimes requires such approval because hospital-based X-rays cost two to three times as much as those done in a doctor's office or imaging center.
Many doctors refuse to take patients in Medicaid HMOs because reimbursements are so low. (The same problem occurs in traditional Medicaid.) Noha Polack, a pediatrician in Union City, N.J., has an arrangement under which Centene pays her a fixed monthly sum per child to handle basic medical needs. Until a few months ago, that sum was $11.50 per month, equal to $138 a year -- about half of what other Medicaid insurers pay, says Dr. Polack. A child who had a few colds or scrapes during a year would quickly put her in the red.
Dr. Polack threatened to drop all her Centene patients and recently got a raise -- the amount of which is confidential, she says -- but she still stopped accepting new Centene patients.
The HMO is stingy about drugs that others approve with little question, says Dr. Polack, naming the antibiotic Ceftin as an example. "Many times we have to make treatment decisions not depending on what would be best for the patient but what the patient can afford," she says. While she could ask for an exception to use Ceftin, "they are so notorious for not getting back to you" and there's little time when a child has an infection, she says.
Vickie Vickers, a 39-year-old Trenton, N.J., single mother on disability and Medicaid, learned about the difficulty of finding a doctor this year. She hurt her hand on Mother's Day while stooping to pick up playing cards that fell on the floor. She went to the hospital for a temporary cast but spent weeks with Centene trying to find an orthopedic doctor.
She finally found one an hour away. She says the orthopedist told her she needed an MRI or CT scan, but Centene wouldn't approve it. It took until late June for an orthopedist to fit her with a splint with metal bars.
Ms. Vickers rents a house in a run-down part of Trenton with a rusty fence outside and a leaky roof that has caused big water stains in the attic, bedroom, bathroom and kitchen. She wishes the old Medicaid were back because in the 1990s "you didn't have to call 50 doctors" to get an appointment.
Centene didn't provide comment on the complaints by Dr. Polack and Ms. Vickers.
Research on the quality of care in Medicaid HMOs is thin. A study of infant health last year by researchers at the University of Illinois-Chicago and the Urban Institute found that Medicaid managed care was correlated with a slight increase in inadequate prenatal care in some women but in general showed little difference from traditional Medicaid.
While some doctors and patients complain of Centene's stinginess, the company has been generous in regions where it has offices. Centene last year was the biggest donor for a $9.5 million renovation of an arts building in St. Louis, now called the Centene Center for Arts and Education, according to a spokeswoman for the center. The company paid $200,000 last year for the naming rights of a minor-league baseball stadium in Montana, where Centene employs 100 claims processors but doesn't have Medicaid clients. Centene also pledged $400,000 this year to the school district in Clayton, Mo., where the company has its headquarters, to rename the district's stadium.
Cynthia Schultz, director of the Great Falls International Airport in Montana, says Mr. Neidorff, the Centene CEO, once walked through the airport and heard that it couldn't afford artwork. Centene then commissioned and donated a $7,000 welded-metal sculpture of an eagle with a 16-foot wingspan that now hangs prominently in the airport, she says. The company confirmed the donation. "It's a great gift from someone who doesn't even live here," says Ms. Schultz.
Mr. Schenk, the Centene spokesman, said the donations show Centene is a "responsible and publicly focused corporation" and they help make the communities better places to live.
A few big U.S. insurers that serve large employers, including UnitedHealth Group and WellPoint Inc., also compete in the Medicaid HMO market. Many others don't. Medicaid HMOs assemble doctor networks in places with many people on Medicaid -- such as big cities and poor rural areas -- and deal with a single kind of customer, state governments. Those skills "are importantly different than what most commercial insurers have," says John W. Rowe, the former chief executive at Aetna Inc. and now a professor at Columbia University.
Medicaid HMOs have donated to candidates in state political races who support their existence. In 2005, five WellCare subsidiaries together donated $125,000 to Illinois Gov. Rod Blagojevich, a Democrat who won re-election this month. WellCare has 92,000 members in Illinois.
This year, 20 WellCare subsidiaries each donated the legal maximum of $500 to the campaign of Republican Tom Lee, who was narrowly defeated in his bid to become chief financial officer of Florida, WellCare's biggest market. WellCare donated $34,000 to the Republican Governors Association this year and contributed $100,000 to President Bush's second inaugural festivities in 2005.
"I call a governor, I usually get a call back within 24 to 48 hours," says Centene's Mr. Neidorff.
States keep track of the finances of Medicaid HMOs to ensure that the HMOs are spending a sufficient part of their revenue on medical costs. However, the numbers are subject to interpretation. A review of Centene's New Jersey subsidiary in 2004, by a unit of Marsh & McLennan Cos., said hundreds of thousands of dollars that Centene counted as medical costs should have been considered administrative costs.
The report also questioned cases where Centene's New Jersey subsidiary pays a national Centene subsidiary for specialized services such as mental-health or a nurse hotline. It said the New Jersey subsidiary was paying an above-market rate for some of these services. That would tend to increase the state subsidiary's medical costs and reduce its profit, without affecting the bottom line of Centene as a whole. Mr. Schenk of Centene declined to discuss the report in detail but said Centene has used the findings "to strengthen its operational efficiencies."
In Illinois, the state and the Justice Department asserted in a lawsuit that Amerigroup spent only $131 million on medical care from 2000 to 2004 despite taking in $243 million from the state. The lawsuit accused Amerigroup of fraudulently trying to exclude pregnant and sick patients to reduce its medical costs. A jury in Illinois state court agreed last month, finding Amerigroup liable to the government for $144 million. Internal Amerigroup emails filed in court show managers contemplated disciplinary action for employees who signed up women in the third trimester.
Amerigroup said it will appeal. The company says it discouraged transfers by pregnant women so their care wouldn't be disrupted. A spokesman said the figures in the suit are "extremely misleading," in part because they don't account for preventive health programs.
---- Raymund Flandez contributed to this article.
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December 3, 2006
By DANIEL GROSS
WHEN Democrats assume control of Congress next month, they may be dusting off some long-dormant proposals on how to deal with the growing disconnect between health insurance and employment. From 2000 to 2005, the proportion of workers aged 18 to 64 with employment-based health benefits fell to 70.6 percent from 74.5 percent, according to the Employee Benefits Research Institute. A record 46.6 million Americans lacked health insurance last year; of them, more than 82 percent lived in households headed by someone holding a job.
Any efforts to expand government’s role in providing insurance will likely be opposed by the Bush administration, which says it opposes excessive direct government involvement in an industry that constitutes about 14 percent of the gross domestic product. Michael O. Leavitt , the secretary of health and human services, recently dismissed a proposal to have the government negotiate drug prices for the Medicare benefit, arguing that “it’s a surrogate for a much larger issue, which is really government-run health care.”
While the administration may oppose government-run health care in principle, the government’s role in the vast health industry has been expanding. By various measures, the United States is about halfway toward a system in which the government and taxpayers fully fund health care. And trends are pushing the government to become more involved each year.
Out of a total population of about 300 million, 35.6 million elderly Americans were on Medicare in 2005. Of the working-age population, which reached 257.8 million in 2005, some 45.5 million were covered by Medicare, Medicaid or military health programs, according to the benefits institute. An additional 18.2 million workers had health insurance through jobs in the public sector, which includes state, federal and local governments, public schools and state universities, according to Paul Fronstin, director of the institute’s health research and education program. Millions of those workers’ dependents are covered as well. Even if those dependents are not included in the tally, taxpayers paid the bill for almost two-fifths of all Americans with insurance in 2005.
But that’s not the full extent of government and taxpayer involvement. Employer-provided health insurance premiums are a form of compensation, yet are not subject to federal payroll or income taxes and are exempt from many state and local taxes. Economists consider these exemptions a form of subsidy. Thomas M. Selden, economist at the federal Agency for Healthcare Research and Quality, estimates that the tax subsidy for employment-related coverage at $208.6 billion in 2006, or 35.4 percent of the amount spent on premiums.
“The tax subsidy is one of the largest public expenditures on health care,” Mr. Selden said. In fiscal 2006, by comparison, spending on Medicare was $378.7 billion and federal spending on Medicaid was $180.6 billion.
Viewed strictly in terms of dollars and cents, the government already accounts for more than half of the nation’s health care spending. Mining data from the National Health Expenditures Accounts, Mr. Selden found that public expenditures on health care — Medicare, Medicaid, military health care and federal employee benefits — accounted for $888 billion of the $1.96 trillion spent on health care in 2004. Adding in the aforementioned subsidies, and premiums paid for public-sector employees, the total comes to $1.2 trillion, or 61 percent.
Uwe E. Reinhardt, the James Madison professor of political economy at Princeton, suggests adding 5 percent for the federal mandate that hospitals provide free health care to the uninsured. “So government accounts for about two-thirds of health care spending,” Mr. Reinhardt said.
The government spends money as if there were a national health insurance program. In 2004, government spending on health care equaled 9.6 percent of the gross domestic product, compared with 6.9 percent in Canada, which has a single-payer universal health care program, said David Himmelstein, associate professor of medicine at Harvard Medical School. And yet some significant components of federal support are not efficient methods of providing health insurance to the people who most need it. Higher-income workers are likely to have higher rates of coverage, higher premiums and higher taxes, all of which means that the tax break for compensation disproportionately helps the well-off.
“We’re paying for national health insurance, but we’re not getting it,” Dr. Himmelstein added.
Taxpayers also don’t get as much bang for their bucks because the government guarantees coverage for the elderly and the poor, groups that account for a disproportionately large amount of expenditures.
“A rough rule holds that private insurance covers two-thirds of the population and pays for only one-third of all health care,” Mr. Reinhardt said.
THE raw figures may be worrisome, but the trends behind the data are clearly troubling. Despite five consecutive years of economic growth, the private sector has continued to reduce its role in providing insurance. As the population ages, the ranks of Medicare recipients grow. And if the price of health insurance keeps rising at a much faster rate than the average earnings of lower-income people, more and more of the working poor will be priced out of the market.
So even as politicians rail against the pernicious effects of government-run health care, taxpayers, one way or another, are likely to be footing more of the nation’s huge and mounting medical bills.
Daniel Gross writes the “Moneybox” column for Slate.com.
New Health Plans Move More Than Costs to Employees
By Amy Joyce
Washington Post Staff Writer
Sunday, November 26, 2006; F06
For many workers trying to decide which health plan to choose, this year's open enrollment season comes down to two options: higher costs or higher risk. Rising costs are old news, but the higher risk is new, compliments of a growing trend to push more employees into "consumer-driven plans," in which employees assume more responsibility for their health-care budget.
Either way, you pay -- whether taking on higher risk or taking more dollars out of each paycheck. And with health costs rising ever higher and more employers saying they can't take on the entire burden, the squeeze is on each of us.
The best many can hope for, it seems, is that the blow will be blunted.
Ajay Sathuluri, a senior Web and database engineer for TeraTech, a Rockville software firm, began feeling the pain last year. The company's health-care costs had gone up 25 percent, prompting Michael Smith, the president of the 15-person firm, to make some changes.
His solution: offer options that switch health-spending decisions on to the employee and find other ways to make the company a more attractive place to work.
Smith switched the firm from a CareFirst Blue Cross Blue Shield plan to a health savings account. The consumer-driven plan allows workers to set aside money before taxes to help with medical expenses. Total annual out-of-pocket health expenses, not counting premiums, can be as much as $5,250 for a single person or $10,500 for a family.
"This is their money," Smith said. "So if they want to go to the doctor three times a week, fine, go spend the money. If they want to do preventive stuff, go spend your money on that."
Sathuluri, who has been with the firm for seven years, said he and his wife were "very worried" about the change. They were planning to have a second child. And Sathuluri wondered whether he should consider moving to a larger company that offered better, more affordable benefits.
Instead, he started a flexible spending account -- a set-aside of pretax money to pay for medical expenses -- in which he has $3,000. He also bought insurance through CareFirst to help with his wife's appointments. That costs him an additional $125 each biweekly paycheck and has a deductible of $2,500 per year, paid through his flexible spending account.
According to estimates, the average pregnancy from test through delivery costs $6,500 to $10,500.
Smith, meanwhile, wanted to find some way to ease his employees' pain -- without incurring heavy costs. He provides free healthy drinks and flexible work schedules.
That was enough to persuade Sathuluri to forget about job hunting.
His wife is due around Christmas, and he is happy he stayed. On Fridays he works from home to spend more time with their 2-year-old daughter.
Health-care benefits are an increasing concern among workers, though managers do not seem to realize just how big a worry they are.
In a recent survey by Watson Wyatt Worldwide Inc., a benefits consulting firm, no employer thought health-care coverage was a key reason top performers leave. When top-performing employees were asked the same question, 22 percent said they would consider leaving if coverage was lacking or too expensive.
"The job market is booming," said Jane Weizmann, a senior consultant with Watson Wyatt. "When you look at it that way and think of health care as a satisfier or dissatisfier, you think, 'If I have to pass higher costs on, how do I package that and make sure the deal feels balanced?' "
Some companies, such as Marriott, are offering free preventive care to take the edge off higher health costs. This approach works toward two goals: The employee sees a bonus, and it helps improve employee health, which may in the end help cut the costs of health care.
Marriott employee health-care costs have risen about 5 percent this year, according to Jill Berger, vice president of health and welfare benefits.
Stephanie Hampton, a company spokesman, is due to have her second child after Christmas. This time around, because of Marriott's Active Health Management program, she has not had to pay anything for her pregnancy appointments. The program is still growing and is not yet offered to every employee. "We're trying to get it everywhere," Berger said.
Employees with chronic conditions, or conditions that can be managed, such as pregnancy, diabetes or heart disease, don't have to pay for regular appointments related to those conditions. The assumption is the more the employees go for preventive care, the fewer expensive hospital visits and longer-term health conditions they will have.
In addition, drugs related to those conditions are free.
"If you have a chronic condition," Berger said, "one of the problems that we identified is compliance. A lot of drugs every month and co-pays add up. So if that becomes a barrier, people might stop taking it."
Many companies are turning to their employees to make the right health choices to keep everyone's cost down.
In some cases, employees get incentives to complete health risk appraisals and to use generic drugs.
"Employers are very interested in this because by making employees healthy, they are also more productive. It's also a more efficient way to pay for health care," said Tracy Watts, a principal with Mercer Human Resource Consulting.
Maryland's Black & Decker provides its employees with up to $300 to spend on such things as exercise equipment, gym memberships or on-site Weight Watchers programs.
Raymond Brusca, vice president of benefits, said health-care costs have been reined in by an aggressive program aimed at making employees responsible for what he calls "health consumerism." Employees are encouraged to take charge of what they eat, how they exercise, and whether they should agree to multiple X-rays and medical tests.
In addition to the $300 fund, employees can get $50 to complete an online health assessment. They may also be assigned a free health coach. Starting next year, workers can get up to an additional $150 for such activities as exercising three times a week, taking part in disease management programs and accessing health information on their insurance carrier's Web site.
For the first time next year, employees will have to pay 20 percent of the cost of the prescriptions. In the past, they had a fixed co-pay. The company hopes once employees see how much their prescriptions cost, they will choose generic drugs. Of Black & Decker's total health-care costs, prescriptions account for 21 percent, Brusca said.
The company is raising rates next year, but employees can get a lower rate if they sign an agreement certifying they do not use tobacco, Brusca said.
A payment for exercising, or for not smoking, may not dramatically offset the rising premiums and higher deductibles, but at least it helps some people feel their company cares. But there is no question people miss the old system that now seems so easy.
"A lot of this is carrot and sticks," Brusca said. "Some would say carrot and club."
Lost in U.S. Health-Care Maze,
Her Coverage Was Ended
As Her Illness Worsened
Skipping a $2,000 CT Scan
By JANE ZHANG
Wall Street Journal, December 5, 2006; Page A1
BRISTOL, Tenn. -- On her 32nd birthday just over a year ago, Monique "Nikki" White had such severe pain from lupus, a disease in which the immune system attacks healthy tissue, that she couldn't open her presents. Three weeks later, as skin lesions spread over her body and her stomach swelled, she couldn't sleep.
"Mama, please help me! Please take me to the E.R.," she howled, according to her mother, Gail Deal. "OK, let's go," Mrs. Deal recalls saying. "No I can't," the daughter replied. "I don't have insurance.
"In the morning, she had a seizure and had to be rushed to the hospital anyway. Doctors found that her kidney had failed, her liver wasn't much better and her intestines were perforated, a symptom of pancreatitis. Those can be life-threatening side effects of lupus or of a drug she was taking. Her rheumatologist prescribed it in June, telling Ms. White to return every four to six weeks and undergo a CT scan so that he could check for signs of infection or organ damage.
But Ms. White didn't go back. In July, she received a notice that she was being thrown off the Tennessee Medicaid program, known as TennCare, which launched an ambitious expansion in 1994 to cover people like her. Now, it was being scaled back because annual costs more than doubled over 10 years.
The CT scan would cost Ms. White at least $2,000 if TennCare wouldn't pay. Each visit to the rheumatologist would cost another $80 and each blood test at least $183. Ms. White had been too sick to work regularly for four years, and she told her primary physician that she couldn't afford to see the specialist again.
Many Americans have health insurance, and 47 million don't. But lots of people are in a messy middle -- sometimes insured by employers, sometimes by government, sometimes not at all. Ms. White was left without health insurance just as her disease took a turn for the worse. While battling to stay alive and going from doctor to doctor, she had to navigate among government programs, private insurance rules and hospital charity.
Her case illustrates how arduous the American health-care system can be, even for an educated person in a middle-class family. Unique among developed countries, the U.S. delivers medical care through a patchwork of public and private entities, paid for by another patchwork of public and private insurers. Coverage is tied to the workplace or to intricately crafted government programs. For some, the system can offer more flexibility and better health care than that offered by national health regimes, but others can get lost in the tangles.
• 'A Small Amount of My Suffering':2 Excerpts from Nikki White's diaries and other writings as she grew increasingly ill from lupus.
• Finding Health Insurance for Adult Children3
Ms. White's rheumatologist, Chris Morris, says follow-up tests he recommended would have turned up danger signs. The primary-care doctor, Amylyn Crawford, says: "If she had insurance, she would have gone to the emergency room sooner."
Ms. White's rheumatologist, Chris Morris, says follow-up tests he recommended would have turned up danger signs. The primary-care doctor, Amylyn Crawford, says: "If she had insurance, she would have gone to the emergency room sooner."
Nikki White had more advantages than many patients. She went to college, once aspired to be a doctor and worked in a hospital trauma ward. She researched her disease painstakingly. "She always went to doctors with a list of do's and recommendations," her mother says.
Her mother and stepfather, both retired managers at a unit of the pharmaceutical firm GlaxoSmithKline PLC, helped her pick her way through the medical maze. She saw at least a dozen doctors and got care from at least five hospitals. One Tennessee hospital estimates it spent $900,000 on her for which it was never reimbursed.
But the state Medicaid bureaucracy dropped her, only to reverse itself months later. Meanwhile, miscommunication with a doctor kept her from getting follow-up care when she needed it. The family didn't always understand every option available to Ms. White. A proudly independent woman, she sometimes refused to seek assistance. All this proved fateful in her struggle against a serious disease.
Nikki White grew up in Bristol, in the Appalachian Mountains in northeastern Tennessee. Her parents divorced when she was 18 months old; her mother remarried when Nikki was five. An only child, tall and lanky, she liked to water-ski, took ballet lessons and played soccer and basketball.
At age 13, she started having severe stomach pains that forced her to quit basketball. She was sick so often that some teachers thought the honor student had gotten lazy, her mother recalls. Mrs. Deal took her daughter to doctor after doctor, but none came up with a definitive diagnosis for lupus, a disease that's often hard to recognize. By the time she graduated from high school, the 5-foot-11-inch blonde weighed just 120 pounds.
Ms. White became convinced through her own research that she had lupus long before she was diagnosed in 1994 at age 21. When the doctors made the diagnosis, Ms. White told her mother, "I'm not crazy," her mother recalls.
Though lupus can be fatal and has no cure, most people who have it live normal life spans, according to the Lupus Foundation of America. Mary K. Crow, past president of the American College of Rheumatology, puts the figure at 80% to 90%. Doctors manage it by adding or subtracting medications and changing dosages to prevent complications. "All different organ systems are involved and the disease changes over time and there are various complications people can have," says Dr. Crow, a professor at Cornell University's medical school.
After her diagnosis, Ms. White stopped dating. She dropped her ambition to be a doctor. After studying psychology in college, in 1999 she worked at a Barnes & Noble bookstore and then began at an Austin, Texas, hospital trauma unit evaluating patients before treatment. The hospital job came with health benefits.
In 2001, her lupus worsened, and Ms. White quit her job and moved back into a garage apartment next to her parents' home in Tennessee. She couldn't get private health insurance at any cost, her mother says. "I would have sold my house but she wouldn't hear of it," her mother recalls. "We would've depleted everything. We would've done everything it took to get her better."
To try to counter lupus' effects, Ms. White exercised. She continued to study the disease obsessively. "She was totally involved with her health care and she knew better than any one of us what should be done," says her stepfather, Tony Deal. She wrote a novel, never published, about a psychiatrist with lupus. She stayed well enough to occasionally help her parents with establishing a tree farm -- their business after retirement -- and to take her cranky dog Hugo for morning walks while singing, "You Are My Sunshine."
For a while, Ms. White resisted her mother's pleas that she enroll in TennCare, the Tennessee version of Medicaid. In 1994, Tennessee had expanded its program beyond the federally mandated coverage of low-income children, pregnant women and the disabled -- broadening it to cover uninsured adults and those who found it difficult then to get private insurers because of pre-existing conditions. The young woman said she didn't want to be on welfare, her mother recalls. But she finally applied and was accepted in October 2003.
She started seeing Dr. Crawford at a federally funded health clinic. The young doctor says she was impressed with the patient's knowledge of her disease and often took her recommendations.
When Ms. White's condition worsened in early 2005, Dr. Crawford turned to Dr. Morris, one of the few rheumatologists in the area willing to treat TennCare patients. He agreed to accept TennCare payments that he says were below his costs, as well as the program's restrictions on visits and prescription drugs. He saw Ms. White frequently between February and July.
He became concerned that lesions on her chest were signs of an inflammation of the blood vessels that threatened her kidneys and other organs. He prescribed azathioprine, an immunosuppressant sold under the brand name Imuran, to treat the symptoms. He ordered the follow-up CT scan, return visits and blood tests to watch for any signs of danger: Both the disease and drugs used to treat it can damage the liver, blood and pancreas.
During the summer of 2005, TennCare warned Ms. White in several letters that changes to the program would eliminate her coverage. TennCare overall had ballooned to cover nearly a quarter of the state population and was contributing to a budget deficit, causing a political firestorm. Gov. Phil Bredesen, a conservative Democrat who inherited the program, tried first to reduce benefits. When a lawsuit stopped that, he eventually eliminated 170,000 Tennesseans from the expanded program, roughly one-third of them people who had been rejected by private insurers. TennCare suggested they go to federally funded clinics, and offered new subsidies to hospitals coping with a surge in charity cases.
Ms. White's concern was mounting over the drug she was taking. On July 31, she appealed her termination in a handwritten letter to TennCare. "If left on these medications without medical supervision or for an extended period of time, these drugs could lead to the formation of cancer," Ms. White wrote.
Meanwhile, she somehow got the azathioprine prescription refilled, even though pharmacy receipts show a refill required a doctor's OK. Ms. White underlined the drug label's warning that she needed regular blood tests.
With Ms. White's health deteriorating, her mother says she and her daughter called Dr. Morris at least 10 times separately or together without reaching him. "His office would never let us talk to him and we would always leave a message for him to call us back," Mrs. Deal says. Dr. Morris says he received only two phone calls and asked a nurse to return them.
Dr. Morris says his office learned in August that TennCare would not pay for the CT scan he had ordered. But if he had realized Ms. White was avoiding care because of the cost, he says, he would have asked her to come in anyway or at least see her primary physician, Dr. Crawford.
Ms. White also applied for Supplemental Security Income, a federal program for the disabled administered by the Social Security Administration. Tennessee is one of about 30 states in which disabled SSI recipients, by law, qualify for regular Medicaid. But the agency determined that she didn't, at the time, meet its strict definition of disability.
Because she had been insured by TennCare for more than 18 months, she should have been protected by a federal law adopted in 1996 to try to prevent private insurers from rejecting applicants based on pre-existing conditions, with some caveats. A three-page TennCare form letter she received in July 2005 alluded to that protection only indirectly, saying, "You have special rights if you apply for health insurance within 63 days."
Ms. White didn't know about the details of the federal law until four months later, in December, when TennCare mentioned it in another form letter eight days after the rejection of her appeal. TennCare spokeswoman Marilyn Wilson says the agency waits to send such details to rejected applicants until it can include the precise date their Medicaid coverage ended.
As Ms. White's skin lesions spread to her hands, she had to wear gloves to use a pen. Still, she jotted down symptoms on whatever happened to be close at hand -- journals, napkins, little pieces of paper that marked her place in her Bible. In an Oct. 10 note, she wrote, "Awake choking on blood running down back of throat; nose bleed ensued shortly afterward. Good amount of blood covering my face, teeth, in my mouth. Lasted about 10 minutes...Surging pains in my head, but deeper, as if in my brain. Pulsing pain continued intermittently. Really frightened, tried not to panic."
"She would tell me that if she didn't get any kind of medical help, she wouldn't last much longer," says Brittney Hill, who roomed with her both in Austin and Bristol.
Then came the emergency visit to Wellmont Bristol Regional Medical Center on Nov. 21. She survived a series of surgeries that day to clean up dead tissue in her stomach, and seemed like she was bouncing back.
Over the next 10 weeks, Dr. Michael Rowell at Bristol Regional had to perform more than two dozen additional operations to clean up recurring dead tissue. Her stomach remained open throughout that time. Doctors told Ms. White's parents several times that she wouldn't survive. But when she woke, her mother recalled, she said repeatedly, "I don't want to die. Don't let me die."
Thomas W. Green Jr., an internist who coordinated her care, says, "The whole hospital got very, very emotionally involved with this girl and this family. She didn't give up. They didn't give up. There were minor, major miracles, major setbacks."
The hospital kept going even though Ms. White had no insurance. Bristol Regional spent about $900,000 on Ms. White's care. Her tab was one of the nonprofit hospital's largest charity cases that year. In all, it wrote off nearly $19 million in 2006. "We spent a lot of money on this girl and nobody complained about it," Dr. Green says.
The family hired a lawyer to appeal her rejection as disabled by the Social Security Administration. And when the final TennCare rejection letter came in early December, the family recruited help from friends and acquaintances to help find private insurance. In early February 2006, BlueCross BlueShield of Tennessee agreed to accept an application.
On Valentine's Day, just when her family was confident that Ms. White would eventually go home from the hospital, doctors found a fungal growth near a heart valve. Dr. Green says it was a side effect of the heavy doses of antibiotics she had taken in connection with the long series of surgeries.
Bristol Regional didn't have the resources to perform the new surgery, Dr. Green says, but if the growth wasn't removed, the infection could spread to her brain and trigger strokes. "She was saying, 'I don't want to die,' " Mr. Deal says. "She's a fighter. She wants to live. We want to give it all to make sure she has the best chance to survive."
By early March -- eight months after TennCare's letter first announcing it was ending her insurance -- Ms. White was informed that her BlueCross coverage was in place, and would cover expenses from February. It was an expensive policy: $6,000 a year with a $2,000 deductible and a cap on out-of-pocket spending of $5,500 for care outside the BlueCross network.
Dr. Green tried to get her admitted to Nashville's Vanderbilt University Medical Center, but, according to Vanderbilt spokesman Craig Boerner, surgeons there "determined that she was too sick for surgery." Eventually, she was flown to Duke University Medical Center in Durham, N.C., on March 5. Mr. and Mrs. Deal rented a furnished apartment near the hospital for $1,685 a month. Mr. Deal drove 240 miles each way between Duke and Bristol to take care of the tree farm.
On March 31, the family's appeal to the Social Security Administration was successful. Ms. White, sicker than when she previously applied, was declared a disabled person -- and thus eligible for standard Medicaid in Tennessee.
But by that point, "her illness was extraordinarily complex," says Michael Cuffe, chief medical officer at Duke University Health System. Ms. White had "an overwhelming" fungal infection, respiratory failure and acute pancreatitis -- which was causing the "death and decay of body parts," he says. Because her immune system was so weak, doctors couldn't operate to remove the fungal growth.
On April 29, her mother found her lying in a pool of blood in her hospital bed, bleeding that Dr. Cuffe says was caused by infections and perforated intestines. On May 1, Ms. White asked her mother where she was going to be buried.
About 10 days later, Ms. White had a stroke. Doctors say it wasn't a surprise; lupus patients are prone to blood clots. Ms. White managed to sign a Mother's Day card on Sunday, May 14. But at 3:20 p.m. on May 28, her heart stopped.
A few days later, Dr. Morris's office staff read her obituary in a newspaper. "She would have survived longer had we been able to provide care the way I wanted -- do the proper monitoring and adjust the medicine accordingly," he says. "It's a sad situation all around."
Dr. Crawford is more emphatic. "She'd probably have stayed [alive] if she had TennCare," she says. "No one can say that it caused the problems. It did have an impact on her, on her stress level and on her access to medical care, particularly specialty care. There's a difference between the death of a 20-something versus somebody who's 70 or 80 years old."
Mr. and Mrs. Deal have kept Ms. White's cellphone active so they can keep listening to her voice mail greeting. They wonder if they might somehow have overcome their daughter's independent streak and done something that would have saved her life. "If I had my life to live over," her mother says, "I would have forced Nikki to go to the emergency room that night. If I could've forced her to go, I would have. But I couldn't."
Ms. Wilson, the TennCare spokeswoman, says that trying to expand Medicaid coverage beyond traditional definitions "nearly bankrupted our state." Litigation over the TennCare cutbacks persists. She notes that "if there's a silver lining," it's that for 10 years before the program was curtailed, the state "was able to pay the insurance bills for some Tennesseans who would not have had access to Medicaid payments in any other state."
On June 5, eight days after she died, the state of Tennessee put Ms. White on the traditional Medicaid rolls.
The form letter was sent after TennCare received updated Social Security records showing that Ms. White had been certified as disabled, says Patti Killingsworth, chief administrative officer at TennCare.
"You don't have to wait until you get your TennCare card to get care or medicine," the letter said. "Just take this letter with you."
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By Rose Ann DeMoro
December 30, 2006
As Gov. Arnold Schwarzenegger recovers from his fractured leg, he has access to the finest medical care California has to offer, as he should. But don't all Californians deserve the same degree of medical attention and health care security?
In a few days, the governor is expected to unveil a sweeping health care proposal, following the leaders of the Senate and Assembly, who already have proposed changes to the state's dysfunctional system.
Yet for all the talk of a "bipartisan" consensus for reform -- following years of inaction despite a worsening crisis -- it appears most options being suggested will exacerbate the problem, retard efforts to achieve genuine reform and further enrich the corporate elite in the health care industry who produced the present shambles.
If your head is spinning from reading all the various ideas being thrown around, here's a Cliffs Notes version. Essentially, all the choices can be distilled into two general areas -- patient-based reform with public accountability, or market-based approaches.
In the market category fall most of the alternatives being swooned over today by the insurance companies and others invested in pure market-based solutions, the politicians who cater to them and those pundits who counsel us to lower our expectations. Among these proposals are laws to force individuals to purchase their own insurance; starting health savings accounts; and expanded mandates that employers provide benefits for their employees or pay into a pool for coverage for those without insurance.
Their common theme is a reliance on commercial mechanisms that created the present crisis by sacrificing quality, affordability and access for private profit. And all these solutions are doomed to repeat that cycle.
Consider the current fashion of the moment, the Massachusetts model. Every adult in that state is required to buy insurance coverage by July or face penalties. Subsidies are provided for low-income residents.
But the plan has gaping holes. Parents are not obligated to buy insurance for their children. Moderate-income or even middle-income adults who would have to spend hundreds of dollars more each month for full family coverage may choose to gamble with their children's health or just cut back on other basic needs.
Further, the plans available to middle-income residents typically have deductibles that can run into thousands of dollars. Consumers are likely to foot the bill for many health care services in addition to the premiums the law would require them to pay. And, in the event of a serious illness or accident, they may find their cut-rate plan abandons them to financial ruin.
Consumers are even likely to lose the choice of a physician because they will be forced to pick among the doctors whose services are covered by the low-cost plan they can afford.
The Massachusetts plan is loved by the health care industry because it transfers huge pots of public money to private health care corporations.
Health savings accounts, marketed as "consumer-directed" solutions because they pair a high-deductible plan with a tax-free personal spending account, are similarly catastrophic. HSAs simply shift the cost of coverage from insurers to individuals, promote rationing of care and do nothing to reduce the number of uninsured.
Rather than reduce the bloated 30 percent of every health care dollar spent on administrative overhead and waste, HSAs actually increase administrative costs with servicing fees paid to the financial institutions that are climbing over each other to grab their chunk of this new lucrative market.
By contrast, consider the approach in every other industrialized nation in the world: either a national health system with public administration and public hospitals and clinics, or a single-payer system, with one entity that pays for all health care services with adequate funding to the private caregiver, hospital and clinic of the consumer's choice.
Poll after poll documents that Americans overwhelmingly support either approach. A single-payer system is not just a dream, it's legislation -- HR 676 in Congress, and a measure in California by Democratic state Sen. Sheila Kuehl of Santa Monica, Senate Bill 840, which was vetoed by Schwarzenegger in September. It will be reintroduced in 2007.
While politicians clamor to come up with inferior alternatives, it will be up to all of us to remind them why this country's inferior market-based plans will simply extend our national disgrace.
New York Times, December 31, 2006
By ANNA BERNASEK
WHAT is the most pressing problem facing the economy? A good case can be made for the developing health care crisis. Soaring costs, growing ranks of uninsured and a steady erosion of corporate health benefits add up to a giant drag on the nation’s future prosperity.
While the outlook seems scary, it doesn’t have to be. There is a solution, proven effective for hundreds of millions of people: single-payer health insurance.
Yes, single-payer — that much-maligned idea that calls for everyone to pay into one insurer, typically the government or a public agency. The insurer then pays doctors, pharmacists and hospitals at preset rates. Patients who want unapproved procedures and doctors not willing to accept the standard payment remain free to deal with one another directly, outside the system.
Such a system makes it much easier to deal with the growing costs of medical care, like administrative expenses and prescription drugs. It could also reduce the mountains of paperwork plaguing the current system and provide insurance coverage for the 46 million Americans now doing without it
What’s more, as demonstrated in France, Britain, Canada, Australia and other countries with functioning single-payer systems, significant savings can come without hurting the overall health of the population.
There’s only one catch. Most Americans just don’t believe it can be done. The health care crisis may turn out to be more of a problem of ideology than economics.
The economic case for a single-payer system is surprisingly strong. Start with what we already know. Countries with single-payer systems have long records of spending less on health care than the United States does. The United States spent an average of $6,102 a person on it in 2004, according to the Organization for Economic Cooperation and Development, while Canada spent $3,165 a person, France $3,159, Australia $3,120 and Britain just $2,508.
At the same time, life expectancy in the United States, a broad measure of health, was slightly lower than it was in those other countries in 2004, the latest year for which complete figures are available. And the United States had a higher rate of infant mortality.
To be sure, a single-payer system has plenty of critics. Unattractive features of some such systems, including waiting lists for particular types of care, are often highlighted by skeptics. But supporters note that the overall health of people fares well in those countries.
“The story never changes,” said Gerard F. Anderson, a professor at the Johns Hopkins Bloomberg School of Public Health. “The United States is twice as expensive with about the same outcome.
“As a consumer, I don’t mind paying more if I’m getting more, but that’s just not the case in the U.S.,” said Professor Anderson, who publishes an annual review comparing the American health care system with those of its peers.
What may be less well known is the level of administrative waste in the United States health care system, versus that of well-designed systems elsewhere. Although Americans tend to equate efficiency with private enterprise, that’s not the case with the current system.
The American system, based on multiple insurers, builds in more unnecessary costs. Duplicate processing of claims, large numbers of insurance products, complicated bill-paying systems and high marketing costs add up to huge administrative expenses.Then there’s an enormous amount of paperwork required of American doctors and hospitals that simply doesn’t exist in countries like Canada or Britain.
“There’s little disagreement among economists today that a single-payer system would lead to lower administrative costs,” said Len Nichols, a health economist with the New America Foundation, a policy research organization in Washington. But he said that estimates varied widely over how big the savings could be.
One of the first major studies to quantify administrative costs in the United States was published in August 2003 in The New England Journal of Medicine by three Harvard researchers, Steffie Woolhandler, Terry Campbell and David U. Himmelstein. It concluded that such costs accounted for 31 percent of all health care expenditures in the United States.
More recently, in 2005, a study by the Lewin Group, a health care consulting firm commissioned to examine a proposal to provide universal health coverage in California, estimated that administrative costs consumed 20 percent of total health care expenditures nationwide.
Then there’s the test of time. Health care costs tend to rise over time as new technology and procedures are introduced. Yet here, too, government-funded systems appear to help contain long-term costs.
Consider Canada’s system. Professor Anderson points out that in the 1960s, Canada and the United States spent roughly the same per person on health care. Some three decades later, though, Canada spent half as much as America. How did Canada manage this? By controlling the use of medical equipment and hospital resources, which statistics show has helped Canadians keep a lid on costs without measurably compromising the overall health of the population.
Economic studies also show that a government-funded system could reduce costs while providing coverage for everyone. The Lewin report on the proposal to provide universal health coverage in California calculated that if such a system had been operating in 2006, it would have saved $8 billion, or around 4.3 percent of total health spending in the state. From 2006 to 2015, it estimated, savings would total $343 billion. Currently, California spends about $180 billion a year on health care.
Despite everything that is known about the economic benefits of a single-payer system, there’s one big stumbling block: many Americans don’t believe in it. They have heard horror stories from abroad, often spread by partisan advocates, focusing on worst-case examples. Such tales play upon the aversion of many Americans to government involvement in the economy.
Victor R. Fuchs, an economics professor at Stanford and a specialist in health care economics, explained it this way: “The Canadian system is a nonstarter for the U.S. even though it’s a good system for Canadians. You’re dealing with two very different countries. We were founded on life, liberty and the pursuit of happiness. They were founded on peace, order and good government. It’s a difference of values.”
Others in the field echo his skepticism. But that raises questions about how well Americans understand the system they have, and what the alternatives are.
JUDGING from other countries, many features that Americans really like — being able to choose their own doctor, for example — would remain available in a well-designed single-payer system. And a single-payer system need not mean government-provided care: it often means government-provided insurance that encourages competition among providers.
Much of the resistance to a single-payer system appears to stem from a lack of confidence in the nation’s ability to make positive change. With all of its prowess in research and technology, can’t the United States match the efficiency of other developed nations, or do even better?
Changing the minds of so many millions of people isn’t done overnight. But sooneror later, persuading people to do something that’s in their own economic interest ought to succeed.
Copyright 2006The New York Times Company
January 1, 2007
New York Times
By PAUL KRUGMAN
The U.S. health care system is a scandal and a disgrace. But maybe, just maybe, 2007 will be the year we start the move toward universal coverage.
In 2005, almost 47 million Americans — including more than 8 million children — were uninsured, and many more had inadequate insurance.
Apologists for our system try to minimize the significance of these numbers. Many of the uninsured, asserted the 2004 Economic Report of the President, “remain uninsured as a matter of choice.”
And then you wake up. A scathing article in yesterday’s Los Angeles Times described how insurers refuse to cover anyone with even the slightest hint of a pre-existing condition. People have been denied insurance for reasons that range from childhood asthma to a “past bout of jock itch.
”Some say that we can’t afford universal health care, even though every year lack of insurance plunges millions of Americans into severe financial distress and sends thousands to an early grave. But every other advanced country somehow manages to provide all its citizens with essential care. The only reason universal coverage seems hard to achieve here is the spectacular inefficiency of the U.S. health care system.
Americans spend more on health care per person than anyone else — almost twice as much as the French, whose medical care is among the best in the world. Yet we have the highest infant mortality and close to the lowest life expectancy of any wealthy nation. How do we do it?
Part of the answer is that our fragmented system has much higher administrative costs than the straightforward government insurance systems prevalent in the rest of the advanced world. As Anna Bernasek pointed out in yesterday’s New York Times, besides the overhead of private insurance companies, “there’s an enormous amount of paperwork required of American doctors and hospitals that simply doesn’t exist in countries like Canada or Britain.”
In addition, insurers often refuse to pay for preventive care, even though such care saves a lot of money in the long run, because those long-run savings won’t necessarily redound to their benefit. And the fragmentation of the American system explains why we lag far behind other nations in the use of electronic medical records, which both reduce costs and save lives by preventing many medical errors.
The truth is that we can afford to cover the uninsured. What we can’t afford is to keep going without a universal health care system.
If it were up to me, we’d have a Medicare-like system for everyone, paid for by a dedicated tax that for most people would be less than they or their employers currently pay in insurance premiums. This would, at a stroke, cover the uninsured, greatly reduce administrative costs and make it much easier to work on preventive care.
Such a system would leave people with the right to choose their own doctors, and with other choices as well: Medicare currently lets people apply their benefits to H.M.O.’s run by private insurance companies, and there’s no reason why similar options shouldn’t be available in a system of Medicare for all. But everyone would be in the system, one way or another.
Can we get there from here? Health care reform is in the air. Democrats in Congress are talking about providing health insurance to all children. John Edwards began his presidential campaign with a call for universal health care.
And there’s real action at the state level. Inspired by the Massachusetts plan to cover all its uninsured residents, politicians in other states are talking about adopting similar plans. Senator Ron Wyden of Oregon has introduced a Massachusetts-type plan for the nation as a whole.
But now is the time to warn against plans that try to cover the uninsured without taking on the fundamental sources of our health system’s inefficiency. What’s wrong with both the Massachusetts plan and Senator Wyden’s plan is that they don’t operate like Medicare; instead, they funnel the money through private insurance companies.
Everyone knows why: would-be reformers are trying to avoid too strong a backlash from the insurance industry and other players who profit from our current system’s irrationality.
But look at what happened to Bill Clinton. He rejected a single-payer approach, even though he understood its merits, in favor of a complex plan that was supposed to co-opt private insurance companies by giving them a largely gratuitous role. And the reward for this “pragmatism” was that insurance companies went all-out against his plan anyway, with the notorious “Harry and Louise” ads that, yes, mocked the plan’s complexity.
Now we have another chance for fundamental health care reform. Let’s not blow that chance with a pre-emptive surrender to the special interests.
By Marcia Angell | Boston Globe, December 31, 2006
IN SEPTEMBER, an ABC News/Kaiser Family Foundation/USA Today survey found that 56 percent of Americans preferred a government-run universal health system "like Medicare" to our current employment-based system run by private insurers. That is, they want a single-payer system. Among the causes of rising costs, respondents were most likely to name private insurance and drug company profits.
If this were a presidential election, it would be a landslide. Yet policy makers and the media dismiss single-payer by telling us the public doesn't want it. They falsely raise the specter of rationing and restricted choice of doctors. So we end up with schemes like Massachusetts's squeeze-blood-from-a-turnip health plan, which preserves the insurance industry while requiring individuals to pay most of the costs.
Why is this? The insurance lobby has succeeded not only in blocking single-payer health care, but in keeping it out of public discourse. We are the only advanced country with market-driven private health care. Other countries spend about half as much per person, cover everyone, and get better health results. Shouldn't this option be on the table?
Marcia Angell, MD, is senior lecturer in social medicine at Harvard Medical School.
© Copyright 2006 Globe Newspaper Company.
New York Times
January 5, 2007
By PAUL KRUGMAN
Universal health care, much as we need it, won’t happen until there’s a change of management in the White House. In the meantime, however, Congress can take an important step toward making our health care system less wasteful, by fixing the Medicare Middleman Multiplication Act of 2003.
Officially, of course, it was the Medicare Modernization Act. But as we learned during the debate over Social Security, in Bushspeak “modernize” is a synonym for “privatize.” And one of the main features of the legislation was an effort to bring private-sector fragmentation and inefficiency to one of America’s most important public programs.
The process actually started in the 1990s, when Medicare began allowing recipients to replace traditional Medicare — in which the government pays doctors and hospitals — with private managed-care plans, in which the government pays a fee to an H.M.O. The magic of the marketplace was supposed to cut Medicare’s costs.
The plan backfired. H.M.O.’s received fees reflecting the medical costs of the average Medicare recipient, but to maximize profits they selectively enrolled only healthier seniors, leaving sicker, more expensive people in traditional Medicare. Once Medicare became aware of this cream-skimming and started adjusting payments to reflect beneficiaries’ health, the H.M.O.’s began dropping out: their extra layer of bureaucracy meant that they had higher costs than traditional Medicare and couldn’t compete on a financially fair basis.
That should have been the end of the story. But for the Bush administration and its Congressional allies, privatization isn’t a way to deliver better government services — it’s an end in itself. So the 2003 legislation increased payments to Medicare-supported H.M.O.’s, which were renamed Medicare Advantage plans. These plans are now heavily subsidized.
According to the Medicare Payment Advisory Commission, an independent federal body that advises Congress on Medicare issues, Medicare Advantage now costs 11 percent more per beneficiary than traditional Medicare. According to the Commonwealth Fund, which has a similar estimate of the excess cost, the subsidy to private H.M.O.’s cost Medicare $5.4 billion in 2005.
The inability of private middlemen to win a fair competition against traditional Medicare was embarrassing to those who sing the praises of privatization. Maybe that’s why the Bush administration made sure that there is no competition at all in Part D, the drug program. There’s no traditional Medicare version of Part D, in which the government pays drug costs directly. Instead, the elderly must get coverage from a private insurance company, which then receives a government subsidy.
As a result, Part D is highly confusing. It’s also needlessly expensive, for two reasons: the insurance companies add an extra layer of bureaucracy, and they have limited ability to bargain with drug companies for lower prices (and Medicare is prohibited from bargaining on their behalf). One indicator of how much Medicare is overspending is the sharp rise in prices paid by millions of low-income seniors whose drug coverage has been switched from Medicaid, which doesn’t rely on middlemen and does bargain over prices, to the new Medicare program.
The costs imposed on Medicare by gratuitous privatization are almost certainly higher than the cost of providing health insurance to the eight million children in the United States who lack coverage. But recent news analyses have suggested that Democrats may not be able to guarantee coverage to all children because this would conflict with their pledge to be fiscally responsible. Isn’t it strange how fiscal responsibility is a big concern when Congress is trying to help children, but a nonissue when Congress is subsidizing drug and insurance companies?
What should Congress do? The new Democratic majority is poised to reduce drug prices by allowing — and, probably, requiring — Medicare to negotiate prices on behalf of the private drug plans. But it should go further, and force Medicare to offer direct drug coverage that competes on a financially fair basis with the private plans. And it should end the subsidy to Medicare Advantage, forcing H.M.O.’s to engage in fair competition with traditional Medicare.
Conservatives will fight fiercely against these moves. They say they believe in competition — but they’re against competition that might show the public sector doing a better job than the private sector. Progressives should support these moves for the same reason. Ending the subsidies to middlemen, in addition to saving a lot of money, would point the way to broader health care reform.
Common medications also can be deemed too risky in California.
By Lisa Girion
Times Staff Writer
January 8, 2007
Health insurers in California refuse to sell individual coverage to people simply because of their occupations or use of certain medicines, according to documents obtained by The Times.
Entire categories of workers — including roofers, pro athletes, dockworkers, migrant workers and firefighters — are turned down for insurance even if they are in good health and can afford coverage, according to the confidential underwriting guidelines of four health plans.
Although Blue Cross of California, the state's top seller of individual policies, does not exclude applicants based on occupation, three others do: Blue Shield of California, PacifiCare Health Systems Inc. and Health Net Inc. Actuarially speaking, they say, certain workers pose too big a risk.
All four health plans look at prescription drug use to decide to whom they will sell individual policies. Dozens of widely prescribed medications — including Allegra, Celebrex and Prevacid — may lead to rejection, according to the underwriting guidelines that the health plans provide to insurance brokers but not to the public.
In fact, eight of the 20 top-selling prescription drugs in the U.S., including No. 1 Lipitor, a cholesterol fighter that racked up $12.9 billion in global sales in 2005, make the lists of two health plans.
Such restrictions are legal in California, and state regulators have no authority to stop them. Health plans defend their restrictions as necessary to keep premiums down.
"This is something that has been actuarially determined to keep insurance affordable for a very, very broad range of people," said David Olson, a spokesman for Woodland Hills-based Health Net.
But at a time when Gov. Arnold Schwarzenegger and state lawmakers are seeking ways to expand coverage to many of the 6.6 million uninsured Californians, consumer advocates said such policies were too restrictive."This isn't cherry picking; this is ignoring whole orchards of people," said Jamie Court, president of the Foundation for Consumer and Taxpayer Rights.
Underwriting in question
At issue is individual insurance, the type of coverage purchased by people who do not have job-based group health benefits. Unlike group coverage, individual insurance is granted case by case, meaning in effect that health plans are free to choose whom to cover and what to charge them.
The broker guidelines shed new light on the array of considerations that go into those decisions. It had not been widely known outside the industry that occupation and a list of prescription drugs were key determinants in who gets health insurance and who does not — regardless of an applicant's willingness to pay.
As employers cut back on health benefits, many policymakers view individual coverage as an increasingly important part of the mix. Some states already promote individual coverage by requiring insurers to offer it to all comers through what are known as guarantee-issue laws.
Schwarzenegger, poised to unveil his proposal for expanding coverage today, has not said what role, if any, individual insurance might play in that effort.
"Everything is on the table," said Sabrina Lockhart, a spokeswoman for the governor. "And the governor recognizes healthcare reform is complicated."
Schwarzenegger has said he favors requiring individuals to obtain health insurance in the same way drivers must carry automobile coverage. People familiar with the development of his ideas say he also seems to understand that such a mandate wouldn't work if insurers were allowed to exclude all but the healthiest customers.
Still, the governor also sees affordability as key to expanding coverage, but insurers say loosening their underwriting policies would only drive prices up.
Studies show "guaranteed issue can price people out of the market, and, as public policy, it achieves the opposite goal of getting more people insured," said Shannon Troughton, a spokeswoman for WellPoint Inc., the Indianapolis-based parent company of Blue Cross of California.One health plan believes that private insurers ought to share the risk and that selective underwriting ought to be abolished.
"We think it's a bad system," said David Seldin, a spokesman for Blue Shield of California, a nonprofit health plan that favors universal coverage but nonetheless currently underwrites based on medical condition, prescription use and occupation.
"We operate the same way as everybody else in the marketplace does, using the same actuarial data that everyone else in the marketplace does, because it's the only way to remain economically viable," he said. "But we would really like to see the system changed."
The Times was unable to obtain the underwriting guidelines of Kaiser Foundation Health Plans Inc., the state's largest health maintenance organization, but those familiar with its practices say the guidelines are at least as restrictive as those of other health plans.
Some state lawmakers and consumer advocates say the health plans' confidential underwriting documents help explain why the ranks of the uninsured have expanded over the last decade.
Health plans are engaging in a form of redlining, said state Sen. Sheila Kuehl (D-Santa Monica), who last week became chairwoman of the Senate Health Committee. She was referring to the now-banned practice by home and auto insurers of refusing customers based on where they live.
"We've seen that in every area of insurance; the companies engage in redlining unless we pass a law that says they can't do that," Kuehl said. "So it's not surprising at all that health insurance companies who have been showing very healthy profits have engaged in very serious risk avoidance."
Kuehl said she planned to reintroduce her bill, vetoed by Schwarzenegger last session, that calls for universal coverage in a so-called single-payer system under which one entity — a government-run organization — would collect all healthcare fees and manage all healthcare claims.
Senate President Pro Tem Don Perata (D-Oakland) has proposed a bill that would extend coverage by creating a purchasing pool that would require participating plans to offer coverage to people with preexisting conditions or who are priced out of the market.
"The current system is broken and getting worse," Perata said. "Instead of competing on the basis of cost and quality, we're seeing health insurers denying coverage to the people who need it the most. This is scandalous."
Screening out risk
The health plans' underwriting guidelines are designed to help their commissioned sales agents find the right clients for their products. The documents range from a few pages to more than 50.
They all have tables that run several pages long outlining the probable decision — accept, accept with a premium surcharge or decline — for scores of conditions, from acne to varicose veins, with caveats for severity and other factors. All include a height and weight table. The under- and overweight need not apply.
Blue Cross, the only health plan of the four that does not make decisions based on occupation, declined to say why.
Blue Shield considers occupation only in applications for its short-term, nonrenewable health coverage sold for periods of a few months or less and aimed at people between jobs or in some other transition. Ineligible occupations include workers in heavy construction, iron and steel workers, telecommunications installers and furniture makers.
PacifiCare and HealthNet include pyrotechnicians, crop dusters and stunt pilots on their lists of occupations that are ineligible for individual coverage. PacifiCare's no-sell list also includes police officers and firefighters.
The problem with adding even one high-risk member to an insurance plan is that the costs go up for everybody, said Tyler Mason, a spokesman for PacifiCare, a division of Minneapolis-based UnitedHealth Group Inc. "It's the whole risk-pool thing, and one affecting the hundreds."
Though many firefighters are covered through their jobs, thousands are volunteers and many work as ranchers, farmers and small-business operators. Some of them have had a hard time finding affordable coverage, said Richard Reed, who is on the board of the California State Firefighters' Assn.
Reed said he was surprised to learn that denying them coverage was a written policy.
Workers' compensation would cover firefighting-related injuries, such as a hernia from carrying someone out of a burning building, he said. Beyond that type of condition, he said, he couldn't understand how a firefighter posed a bigger risk than someone else.
"I'd really be curious to see what the grounds are, why they are denying them," Reed said. "What's the rationale that someone is doing a community service and gets nothing for doing it?"
The health plans' actuarial determinations are not always the same. In the case of firefighters, PacifiCare lists them as ineligible, but HealthNet recently agreed to sell them coverage through the state firefighters association.
"This is one of the features of our polyglot system of health insurance," Health Net's Olson said. Health plans "have different approaches. Our view would be that's a good thing."
Prescription medications used by millions of people also are a potential stumbling block. All of the health plans' guidelines warn brokers that prescription drug use could render an individual uninsurable, and some of the plans list about four dozen problematic medications by brand name.
In some cases, individuals are denied coverage because a drug they are using costs more than the premium an insurer charges for the coverage.
In other cases, a prescription medication — and even the dosage and length of use — are clues for underwriters on the nature, persistence and severity of an underlying condition that could result in more-expensive treatment, such as hospitalization. And in other cases, the potential side effects of the drugs themselves are more risk than the insurers are willing to take on.
Here are some drugs that could render users ineligible for individual health insurance, according to underwriting guidelines of several health plans.
Eight of the 20 top-selling prescription drugs, ranked by their 2005 U.S. sales:
• Lipitor (cholesterol)
• Zocor (cholesterol)
• Nexium (heartburn, ulcers)
• Prevacid (heartburn, ulcers)
• Advair (asthma)
• Zoloft (depression)
• Singulair (asthma)
• Protonix (heartburn, ulcers)
ALSO ON THE LIST
• Accutane (acne)
• Allegra (allergies)
• Celebrex (arthritis)
• Celexa (depression)
• Concerta (attention deficit)
• Famvir (herpes)
• Imdur (angina)
• Imitrex (headaches, migraines)
• Lamisil (fungal infections)
• Parolodel (menstrual disorders)
• Prozac (depression)
• Ritalin (attention deficit)
• Tagamet (heartburn, ulcers)
• Tapazole (hyperthyroid)
• Topamax (epilepsy, migraines)
Source: Health plans' broker guidelines
Here are some occupations that could render workers ineligible for health insurance under the policies of some insurance companies.
• Air traffic control
• Building, moving
• Chemical/rubber manufacturing
• Circus or carnival work
• Concrete or asphalt work
• Crop dusting
• Furniture and fixtures manufacturing
• Lumber work, including wood chopping, timber cutting and working in a sawmill
• Migrant labor
• Oil well or refinery work
• Police work