News & Opinion

No Rx in Massachusetts

by TRUDY LIEBERMAN

[from the September 18, 2006 issue of The Nation]

 

Senator Ted Kennedy, Governor Mitt Romney, the medical establishment of Massachusetts and the state's consumer advocacy groups could hardly resist congratulating themselves on passing a new health insurance law this past spring--a so-called individual mandate requiring the uninsured to buy coverage from private carriers under penalty of paying higher income taxes if they don't. The media called the law a model for states to replicate and praised such diverse groups for coming together to solve a seemingly intractable problem. A headline in the New York Times proclaimed, A Health Fix That Is Not A Fantasy.

 

 

A close look, however, reveals that the new law may well be a fantasy and a triumph for special interest politics after all. "It's absolutely worthless," says Dr. Marcia Angell, former editor in chief of The New England Journal of Medicine and author of The Truth About the Drug Companies. "There is no magic in Massachusetts."

 

The law is yet another patchwork attempt to dodge the main obstacle to reform--a fundamental lack of agreement about equity in healthcare. Americans still don't share equity as a universal value, so every endeavor to cover more people results in a complicated, contorted and underfinanced scheme. Massachusetts's latest move is no exception. It pushes the country further away from national health insurance--with its essential ingredients of universal access, low administrative costs and limits on what medical providers can charge. Instead the law embodies much of the right's approach to health reform, which continues to make the world safe for big insurance, big hospitals, and Big Pharma while palming off on the working poor the task of covering themselves. Indeed, a document distributed by Romney's staff says the organizing principles of the new law are "a culture of insurance" and "personal responsibility"--exactly the opposite of what's needed if the United States is ever to join the rest of the world in providing medical coverage for all its people.

The law, on a speedy track for implementation next March, leaves the current dysfunctional system intact, tinkering around the edges with insurance market reform. In Massachusetts that means, among other things, no new coverage mandates for two years, merging the individual and small-group markets to enlarge the risk pool and encouraging more policies with health savings accounts--not what people need for really good coverage. The core of American health insurance--the principle of letting private carriers select those they will insure--is firmly in place. Advocacy groups signed on believing that more people would be covered, that the state would make sure insurance was affordable and that compromise would move the debate forward.

Hospitals and employers emerged in fine shape too. Hospitals will receive about $500 million in higher Medicaid payments and a new revenue stream--in effect, they will be freed from the burden of offering charity care to the poor, who will now have insurance to pay their bills. Employers escaped without swallowing an employer mandate; that is, a requirement to cover all their workers. Those with eleven or more employees who fail to offer insurance will be assessed $295 per worker per year--a pittance compared with what they would have had to pay for real insurance, estimated by Hewitt Associates, a benefits consulting firm, to be about $9,000 per worker in 2006. For employers, the puny assessment was a far better deal than a real mandate, which had been headed for a ballot initiative this fall.

Rather than force employers who have deeper pockets to pay for coverage, the law requires the state's 550,000 uninsured to come up with the money. Recognizing that Massachusetts has the costliest medical care in the country--spending $9,200 per person, compared with the national average of $7,250--the legislature created an elaborate mechanism of subsidies to help the poorest folks, an arrangement the governor's press materials call a "glide-path to self sufficiency." For individuals with incomes at the poverty level, about $10,000 ($20,000 for a family of four), the state subsidy will cover all the cost; for single people with incomes between $10,000 and $30,000, it will cover some of the cost, more for those at the low end. Those with incomes greater than $30,000 will be on their own and subject to tax penalties if they don't spring for a policy.

It will be up to a new, $25 million quasi-state agency, the Commonwealth Health Insurance Connector, a concept born at the Heritage Foundation, to certify whether new policies--likely with very high deductibles, high cost sharing and less comprehensive benefits--will be affordable and who can afford them. Determining affordability will be a difficult, politically charged job in a climate where there are more doctors per person than the national average and the state's hospitals spend 44 percent more on care than the national average. "The affordability standard is the most fragile part of the legislation. We don't know to whom it will apply," admits Nancy Turnbull, president of the Blue Cross Blue Shield of Massachusetts Foundation. (Blue Cross Blue Shield of Massachusetts and Partners HealthCare, a big hospital system, paid for a report by the Urban Institute, a Washington, DC, think tank, which became the road map for the new law.)

Imagine the shock to a worker at a Rockport clam shack when he realizes that his taxes are going up because he can't afford the state's "affordable" policy. The law does provide for appeal rights and a waiver of the penalty if people can prove that buying a policy is a financial burden. (Imagine the new bureaucracy and costs that will entail.)

Money for the estimated $725 million in subsidies needed by the third year comes mostly from federal funds available through the state's Medicaid waiver. These waivers, available to all states, allow them to expand coverage by leveraging Medicaid dollars. Besides the federal dollars, Massachusetts expects to cover the subsidies with money redirected from the state's uncompensated care fund, which pays hospitals for serving the uninsured; $125 million in new funds from general revenues; and the new assessment on employers. That may not be enough. A House-Senate conference committee report projects a deficit of $162 million by the third year. Even John McDonough, executive director of Health Care For All, a strong supporter of the new law, worries about future funding. "At some point the program will require additional infusions of money to meet its promise," he says.

Where that money will come from is unclear. Relying on Medicaid is dicey; the state's Medicaid waiver expires in two years. The employer assessment may not stick. Romney vetoed the provision once, but the legislature overturned the veto. And there's virtually nothing in the law that will stem the rising cost of care, the greatest threat to the program. A new report by health policy researchers at Boston University shows that the state's healthcare costs will exceed $62 billion this year, one-third above the national average. "Without cost control, they are bringing the uninsured into the same mess that the rest of us are in," says Dr. Mark Chassin, executive vice president at Mount Sinai Medical Center in New York.

Instead of strong cost controls, which would have kept the hospitals and insurance companies from agreeing to the bill, the law bets on market competition to bring down the price of medical care and thus the cost of insurance. It sets up a plan for collecting price information and data about quality of services so patients can become wise shoppers, and it contemplates that the new affordable policies with their higher deductibles and co-insurance will make people think twice about using medical services--approaches that don't touch the use of unproven technology, a major culprit in healthcare inflation. The law also envisions electronic medical records and computerized physician order systems in hospitals to address the cost problem. These may make healthcare safer, but the payoff on the cost side is a long way off, if it comes at all.

 

 

Massachusetts led the way in healthcare reform once before, by passing a reasonable employer mandate in 1988 during the Dukakis Administration. The plan, which would have required employers to pay nearly $2,000 per worker each year for coverage, went nowhere in the state but later became a model for Clinton's pay-or-play plan. The state's individual mandate may suffer the same fate. If it becomes a national model, American healthcare, already on life support, will take a turn for the worse.

Businesses May Move Health Care Overseas

November 02, 2006 4:47 PM ESTNEW DELHI, India - Businesses and insurance companies are starting to eye the potential savings of outsourcing health care from the world's richest country to the developing world.

 

"It's just one of the many ways in which our world is flattening," said Arnold Milstein, chief physician at New York-based Mercer Health & Benefits, who's researching the feasibility of outsourcing medical care for three Fortune 500 corporations. "Many companies see it as a natural extension of the competition they've faced in other aspects of their business."

 

With an estimated 45 million uninsured Americans, some 500,000 trekked overseas last year for medical treatment, according to the National Coalition on Health Care. Asian hospitals in Thailand, India and Singapore have long been swarmed by medical tourists looking for tummy tucks and face lifts, but many glitzy, marble-floored facilities are now gaining reputations for big-ticket procedures including heart surgery, knee and back operations.

 

Some American hospitals already rely on places like India for X-ray readings and other diagnostics, while also importing foreign doctors and nurses. But the U.S. health care industry has been largely immune to overseas competition - just one reason behind soaring costs.

 

Premiums for employer-sponsored health coverage have surged 87 percent over the past six years, according to the Kaiser Family Foundation, putting a huge burden on both companies and employees. Family health coverage now runs about $11,500 annually, with workers themselves forking out nearly $3,000.

 

But just as shipping U.S. manufacturing to China and call centers to India initially created loud opposition, some critics are already preparing to fight any possible mass exodus of Americans packing their bags to go under the knife overseas.

 

In September, Canton, N.C.-based Blue Ridge Paper Products Inc., was set to send one of its employees to India for a gall bladder operation. Carl Garrett would have been the first U.S. employee sent abroad for medical care through an employer-sponsored pilot program, which would have allowed him to share the company's savings.

 

Shortly before Garrett was set to leave, the United Steelworkers, America's largest union, pulled the plug.

 

"We don't want to expose our members to the risks associated with providing health care in the Third World," said Stan Johnson, a union spokesman. "This is perceived to be voluntary, but voluntary programs tend to lead to mandatory programs."

 

Blue Ridge ultimately scrapped its plan for union members, but several other U.S. businesses and insurance companies are starting to explore the option of exporting patients.

 

"I get the impression that they're all waiting for someone else to take the first step," said Jason Yap, director of health care service for the Tourism Board in Singapore, another major medical tourism destination. "They're all interested in doing the homework now so they can move ahead when the time comes."

 

United Group Programs, a Boca Raton, Fla.-based company that sells self-insurance policies to small businesses, is already offering a plan that sends patients to Bumrungrad International hospital in Bangkok, Thailand. UGP says the plan will save employers more than 50 percent on major medical costs and slash employees' out-of-pocket expenses to zero.

 

Blue Shield of California and Health Net of California also both offer lower-cost policies allowing members to seek medical care in Mexico.

 

In June, David Boucher, an assistant vice president at BlueCross BlueShield of South Carolina, traveled to Bangkok for a close-up look at Bumrungrad. The Thai hospital began heavily recruiting overseas patients after the 1997 Asian financial crisis. It drew 400,000 foreigners last year - including 55,000 Americans.

 

"I was thoroughly impressed," Boucher said. "We're taking a serious look at this as an alternative" for the health plan's 1.5 million members.

 

In addition, West Virginia lawmaker Ray Canterbury plans to propose legislation next year that would give government employees the option of traveling abroad for necessary procedures, which could save the state up to $2 million annually. He wants to offer incentives, including extra sick leave and 20 percent of the cash saved by going abroad - allowing workers to actually make money on the deal.

 

Dodie Gilmore is a rodeo barrel-racing champion who runs a 180-acre ranch in Oklahoma when she's not bouncing across back roads selling farms. Gilmore is a spry 60-year-old who loves the outdoors, but when she could no longer straddle her faithful horse, River, she knew it was time for a new hip.

 

But how could she afford it? As an independent contractor for a small Coldwell Banker real estate franchise in Durant, Okla., she knew her privately purchased health plan would never pay up to $40,000 for the operation.

 

So she asked her boss about traveling to India where hip resurfacing alone would cost just $7,000. He not only gave her his blessing but offered to foot the bill, minus travel and hotels - making Gilmore one of the very first Americans sent overseas for surgery by an employer.

 

"The doctors were wonderful," Gilmore said days after being discharged, sipping coffee at a New Delhi roadside cafe with her sister, Carol, who was along for whole trip. "The overall care was pretty darn good."

 

More and more patients like Gilmore - who had never held a passport or even tasted Indian food before her trip - are returning home and spreading the word about an alternative to America's ailing health system.

 

Gilmore's boss, Martin VanMeter, who owns a Coldwell Banker office with about 24 workers, wasn't obligated to pay anything toward the hip surgery. But he sees his employees as family, and if they're too hurt or sick to work, no one benefits.

 

"I've invested so much money in them," he said by telephone. "All she's got to do is make one transaction for us, and we've got our money back."

 

But even with the growing momentum, big questions must be asked by anyone considering treatment abroad.

 

Despite the five-star facades of some hospitals - fountains, white marble floors, even a Starbucks and McDonald's inside Bumrungrad's lobby - the comfort of having a major surgery near home with family at the bedside is a far cry from the experience in the developing world, where culture shock alone can be stressful.

 

Pollution, poverty and insane traffic are all part of the experience when visiting hospitals like the Indian-owned Max Healthcare facilities in New Delhi, where it's not uncommon to see people urinating along roadsides. Jet lag, traveler's diarrhea and strange foods also can be coupled with the unpredictable, such as September's bloodless military coup in Thailand, which ultimately had little impact on daily life.

 

Language and cultural barriers also can make communication with doctors and nurses frustrating for some Americans, who are used to being direct with their physicians, often peppering them with tough questions and expecting straightforward answers.

 

Some Asian cultures also rely more on hints and subtleties to communicate, and doctors in some countries are regarded as authority figures who often aren't questioned. Follow-up care back in the U.S. also can be an issue for some patients.

 

"There are a lot of risks," said Rick Wade, a senior vice president at the American Hospital Association. "What happens if something goes wrong?"

 

In countries like Thailand and India, medical malpractice claims are rare and multimillion dollar awards are nonexistent.

 

"If there's a mistake, we fix it," said Curtis Schroeder, an American who is group CEO of Bumrungrad hospital, which requires all doctors to carry malpractice insurance. "But the idea of suing for multimillions of dollars for damages is not going to be something you can do outside the U.S."

 

In February, Joshua Goldberg, a 23-year-old American who was traveling in Thailand, died at Bumrungrad after seeking care for a leg injury. His father, James Goldberg, has set up a Web site alleging the hospital administered a deadly drug cocktail to a patient with a history of substance abuse.

 

Bumrungrad insists the care given was appropriate. Thai authorities are investigating the case, as is standard with all unexpected hospital deaths. No conclusions have been reached.

 

"What I'm dedicated to doing is to try to alert people to at least do their homework and consider very carefully what they're getting into. Why is this such a good deal?" Goldberg said by telephone. "You might not walk away. That's what happened to my son."

 

It's ultimately up to patients themselves to investigate hospitals and physicians before considering surgery abroad. The Internet is loaded with resources that range from doctor bios to patient blogs, detailing the positives and negatives.

 

As the phenomenon grows, more countries are trying to get in on the action. The Philippines began a campaign this year aimed at attracting Filipinos living abroad and Asians within the region. Packages offering city tours, day spas and even golf have been combined with health checkups and cosmetic surgery.

 

Some experts predict greater access to options like these will eventually drive more people to take control of their own health care.

 

Medical tourism facilitators like California-based PlanetHospital are banking on it, already working to make the journey less stressful for patients traveling abroad by arranging everything from visas and airport pickup to sightseeing.

 

Many doctors working in facilities catering to medical tourists are trained abroad, often in the U.S. or Europe. About 100 foreign hospitals have been approved by the international arm of the Chicago-based Joint Commission on Accreditation of Healthcare Organizations, which also accredits American hospitals.

 

Six countries in Asia have accredited facilities, including Bangkok's Bumrungrad; five in India, with three belonging to the Apollo Hospital group; and 11 in Singapore.

 

The Max Super Speciality Hospital where Gilmore had her surgery on Oct. 10, is working to become accredited, but she said she felt comfortable from the very beginning. Even if her boss had refused to pay for the surgery, she said she likely would have made the two-day flight on her own because her insurance would never have paid to fix the pre-existing condition.

 

"It's either that, or do it in the States for $28,000 to $40,000," she said. In the U.S. do you not sign forms? They're not responsible. The risk of it didn't really weigh on me."

 

In addition to saving thousands - the three-week trip totaled about $12,000, including the surgery, travel and lodging for two and a tour of the Taj Mahal - she also underwent a new technique just approved this year in the U.S.

 

Instead of total hip replacement, which limits mobility and requires the top of the femur to be cut off and a long shaft inserted, hip resurfacing uses only a small ball-and-socket device that enables patients to maintain their flexibility for activities like yoga, praying or even racing horses.

 

Gilmore's Indian physician, Dr. S.K.S. Marya, chief surgeon at the Max Institute of Orthopedics & Joint Replacement, has performed some 150 hip resurfacing operations over the past two years. About one American comes to him for the surgery each week, and Gilmore is just the latest in a growing number of satisfied patients who plan to keep their passports renewed.

 

"Every day I feel better. I can get around on one crutch now," said Gilmore, who plans to be back in the saddle within six months and out selling ranches soon after returning home. "I don't have near the pain. I can already move my leg a lot more than I could before. I can actually go up the stairs without pain, that's something I couldn't do before."

 

----

 

AP Business Writer Malcolm Foster reported from Bangkok, and AP Medical Writer Margie Mason reported from New Delhi. AP writers Tom Breen in Charleston, W.Va., and Teresa Cerojano in Manila contributed to this report.

THE INSURANCE COMPANIES’ PRE-EMPTIVE STRIKE

In a plan revealed November 13th, less than a week after the historic election of a new Congress, America’s Health Insurance Plans (AHIP) called for more hundreds of billions of dollars to be provided by the federal government to pay for the uninsured – and to pay for them in ways that would continue to line their own pockets.  They call it “Hope for Millions.”

 

Here are some of the questions that were not addressed.  Why would the insurance companies who are raking in hundreds of billions of dollars in excess profits and basically standing in the way of a national non-profit healthcare program for all create a new plan to cover the uninsured?  Why haven’t they done it before?  What do they stand to gain?  What do they stand to lose?

 

The follow-up story should explore the fact that a national healthcare program is the number one domestic priority of the voters.  According to some statistics, 83% of the people want such a program and recognize that we are the only industrialized country in the world that doesn’t have such a program.  People expect Congress to take decisive action to provide a national healthcare system.

 

Most of the people want such a program because the healthcare crisis isn’t primarily about the uninsured. We are all close to being uninsured, and even when we are insured we face the growing costs of insurance policies, the co-pays and deductibles, the potential of losing our job, and worst of all, the fact that insurance companies cancel insurance policies when people get really sick.

 

It doesn’t have to be that way.

 

Reporters ought to talk with Congressman John Conyers whose bill, the United States National Health Insurance Act, H.R. 676, was introduced during the last Congress and has 78 co-sponsors on it.   There is a growing constituency of millions of people who understand and support this bill. It would provide comprehensive, quality healthcare for all residents of the United States including payment for all physicians and hospital costs, dental, optical, mental health, prescription drugs for all and long-term care, among other benefits.  You would never receive another healthcare bill.  There would be no co-pays, deductibles, or denials.  There would never be any more bankruptcies caused by healthcare costs.

 

Congressman Conyers has jurisdiction over bankruptcy as a part of his Judiciary Committee duties.  About 50% of the bankruptcies in the U.S. are caused by healthcare crises.  People are losing their homes and their jobs and their livelihood, children are missing a college education, and businesses are going bankrupt and/or cutting out healthcare coverage entirely because of the rising cost of insurance.

 

It would be good for reporters to check out Conyers’ bill and see how it would be financed by all of us, employers and employees,  paying a small premium based on our income, and that all of us except 5%, the ultra rich, would be spending less money than we are now paying for healthcare.

 

The cost of high-priced insurance companies would be eliminated because we wouldn’t need them. They don’t provide any healthcare at all.    This would save almost $300 billion each year.   Insurance companies just take the money, make a huge profit, and pay out a reduced amount, too little for the healthcare of the people.  They are money-managers, not healthcare professionals.  They even invest our money in tobacco and other detrimental corporations. They control the doctors, the Congress, and our healthcare at the moment.  They want to keep that control.  So they are scurrying about to try to get their own survival plan firmly entrenched in Congress.

 

President Bush’s Health Savings Accounts and ownership plans are also promoted in the AHIP plan.  These would provide money to managers and put more money into Wall Street.  The affluent who would then get tax breaks for saving money for future healthcare needs. Because of their tax-breaks, government money sorely needed for a healthy society would be used to further enrich the money managers.  People would be urged to pay as much as possible out of pocket into the system before accessing their Health Savings Accounts.

 

Healthcare-NOW is a national movement made up of hundreds of organizations challenging this kind of continuing government subsidy for the health insurance industry. We need healthcare – not insurance companies. AHIP represents those 1300 insurance companies that would be replaced by a single payer such as an improved Medicare for All.  At present, they benefit from the increasing privatization of Medicare Part D and Medicaid and Medicare reimbursements for their management costs.   That’s why they are proposing to “help the uninsured” by providing more tax money to Medicare and Medicaid.

 

The uninsured must be covered. It is a mandate.  But the rest of us need a good healthcare system too. It could be so simple and so beneficial if we went for a single payer national non-profit healthcare system instead of more money to the insurance companies.

 

If you would like more information, please check our website, www.healthcare-now.org. Marilyn Clement, National Coordinator, Healthcare-NOW

 

 

Co-Chairs: Leo Gerard, President of the United Steelworkers (largest industrial union in North America); Jim Winkler, General Secretary of the United Methodist Board of Church and Society; Dr. Quentin Young, National Coordinator of Physicians for a National Health Program

SPAN Ohio Resolution

COMPREHENSIVE LIFETIME HEALTH CARE FOR ALL OHIOANS

 

WHEREAS every person who lives or works in Ohio is entitled to quality health care as a fundamental human right; and

 

WHEREAS there is an escalating crisis in access to health care in the State of Ohio as massive layoffs and plant shutdowns cause alarmingly high numbers of workers and retirees to lose health care benefits; and

 

WHEREAS existing for-profit insurance plans often fail to deliver adequate, timely coverage to the insured and fail to provide any coverage at all to more and more Ohioans; and

 

WHEREAS inefficiency and unnecessary overhead and profits inherent in the existing failed system divert hundreds of millions of dollars from the taxpayers of Ohio, from Ohio businesses attempting to provide employees with health benefits, and from state and local government entities and taxpayers, and impede the efforts of health care providers to deliver quality health care to their patients; and

 

WHEREAS individual Ohioans and Ohio businesses continue to be subjected to large, unchecked increases in insurance premiums, prescription drug prices and other medical costs, imposing hardships on millions of individual Ohioans and driving many businesses and individuals to eliminate or curtail desperately needed coverage and benefits; and

 

WHEREAS a comprehensive, publicly-funded not-for-profit program will provide higher quality care for all Ohioans at much lower cost (as is the case in all of the nine largest industrialized countries except for the United States, according to the World Health Organization); now, therefore, be it

 

RESOLVED:

 

1.  That the Ohio General Assembly enact without delay the Health Care For All Ohioans Act (HCFAOA), which is HB 186 and SB 168, and which provides comprehensive lifetime coverage for all Ohioans;

 

2.  That pursuant to the HCFAOA, every person covered by it would have the same uniform schedule of benefits, including inpatient and outpatient hospital care, preventive care, doctors' visits, prescription drugs, vision, hearing, mental health, dental, home care, emergency care, medical devices, and all other necessary medical services determined by any state licensed medical provider;

 

3.  That pursuant to the HCFAOA, an independent elected agency of State government be created to implement and administer the HCFAOA;

 

4.  That pursuant to the HCFAOA, any person displaced from employment as a result of implementation of the Act shall be eligible to receive up to $60,000 for two years for subsistence and training, with the understanding that many of such displaced persons will find alternative employment administering the HCFAOA;

 

5.  That pursuant to the HCFAOA, funding will be provided by the mechanisms specified by the Act, with the understanding that any claimed inequities will be subject to change by the Ohio General Assembly.

 

 

Sponsored by the Single-Payer Action Network Ohio (SPAN Ohio).  For copies write us at 3227 West 25 Street, Cleveland, OH 44109 or call 216-736-4766. Please send endorsements of this resolution to the above address or email span@spanohio.org.

 

In Medicaid, Private HMOs Take a Big, and Profitable, Role

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.

 

Write to Barbara Martinez at Barbara.Martinez@wsj.comBarbara.Martinez@wsj.comBarbara.Martinez@wsj.com1

 

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National Health Care? We’re Halfway There

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.

Shifting Risk, Responsibility

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."

Amid Fight for Life, A Victim of Lupus Fights for Insurance

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.

 

1CHRONIC CONDITION

 

'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."

 

 

Write to Jane Zhang at Jane.Zhang@wsj.comJane.Zhang@wsj.comJane.Zhang@wsj.com4

 

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The slippery slope of market-based medicine

By Rose Ann DeMoro
Sacramento Bee
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.

Health Care Problem? Check the American Psyche

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

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