News & Opinion

First, Do Less Harm

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.

Health insurers deny policies in some jobs

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.

(INFOBOX BELOW)

Drug tip-offs

Here are some drugs that could render users ineligible for individual health insurance, according to underwriting guidelines of several health plans.

----

TOP SELLERS

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


Jobs excluded

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

•  Firefighting

•  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

•  Roofing

•  Sandblasting
http://www.latimes.com/business/la-fi-reject8jan08,0,6430685,full.story?coll=la-home-headlines

California Nurses Statement on Gov. Health Plan

January 8, 2007

For Immediate Release

Contact: Charles Idelson, 510-273-2246

 

The California Nurses Association today said it welcomed the decision of Gov. Arnold Schwarzenegger to address the state’s escalating healthcare crisis. But, said CNA President Deborah Burger, the sum of his proposals may ultimately amount to “little more than a fresh coat of paint on a collapsing house.”

 

CNA commended portions of the governor’s plan that would require health plans to end denials of coverage based on age or health status and assurance of health services for the undocumented. But, overall, “the package has a number of gaping holes,” said Burger.

 

These begin with the call to “criminalize the uninsured by forcing them to buy insurance, a plan that shifts the costs and risk from the insurers to individuals, won’t work for millions of Californians, and is a huge gift to the insurance industry,” said Burger.

 

“What we don’t see is any discussion of what type of health coverage people will buy. There are no limits on skyrocketing health premiums, no requirements on what will be included in the required plans, and a new call to deregulate existing public protections.”

 

Consequently, Burger said, “it’s likely many Californians will end up with cut-rate plans that discourage people from using their health coverage, have huge out-of-pocket costs, and expose them to financial ruin in the event of a serious illness or accident.”

 

Burger also criticized the proposal to shift some $2 billion in tax funds currently in tax money that now goes to hospitals to cover indigent care and use it to buy insurance for the uninsured. “It takes money used for direct delivery of care, and hands it to the insurance industry, losing off the top the 25% to 30% now consumed by the insurers’ administrative waste. It is also likely to escalate privatization of healthcare by reducing revenues for public hospitals and clinics, leading to more closures of public facilities.”

 

Additionally, she added, the plan fails to address price gouging by the pharmaceutical industry. The bill enacted last year provides for only voluntary reductions by the drug companies.

 

Much of the plan resembles the Massachusetts health plan, where only 300,000 are uninsured compared to California’s 6.5 million, and which is already experiencing problems in funding and assuring people sign up, Burger noted.

 

“Ultimately, this won’t fix what’s wrong with our healthcare system – the reliance on the market that will continue to put its profits and revenues above the health and well being of Californians.

 

“If the governor is truly committed to a goal of universal coverage, effective cost controls, and improving the quality of care, he should join us in supporting a single-payer system, the only way to achieve those goals.” A single-payer bill, SB 840 by Sen. Sheila Kuehl, was vetoed by the governor last year. It will be reintroduced this year.

Bush Plots Health-Care Push

Employer-Plan Tax Change May Aid Coverage for the Needy

 

By JOHN D. MCKINNON and DEBORAH SOLOMON
Wall Street Journal, January 16, 2007; Page A6

 

WASHINGTON -- With health-care costs emerging as one of voters' biggest domestic concerns, President Bush is considering promoting a tax-code change making it easier for people to buy health insurance for themselves in the open market, rather than relying on employers.

 

The president's coming State of the Union address and annual budget proposal are likely to include other ideas for easing the crunch, Republicans close to the White House said. Those would build on the administration's efforts to encourage states to create special insurance pools for lower-income individuals and small businesses. The administration also is likely to make another push for expanding health savings accounts. The accounts, first authorized in 2003, allow people to save tax-free for health-care needs provided they choose low-cost, high-deductible coverage.

 

The ultimate idea is to expand health-care coverage while reducing cost pressures, in part by giving people more of a financial incentive to be smart shoppers.

 

Mr. Bush's emphasis on health issues comes as cost and coverage complaints are drawing attention in Washington -- and in state capitols throughout the country. As employers shift health coverage burdens to employees, state governors -- namely Republicans Mitt Romney of Massachusetts and Arnold Schwarzenegger of California -- as well as the new Democratic Congress have paid more attention to the issue, putting new pressure on the president to join the debate.

 

The examination of health care comes as Mr. Bush looks to define a domestic agenda in the final two years of a presidency that increasingly is being overshadowed by Iraq and hemmed in by newly empowered Democrats. In a recent op-ed in The Wall Street Journal, Mr. Bush listed "affordable health care" among "the biggest issues facing the American people" along with energy security and comprehensive immigration reform. He added "I look forward to working with Congress on these difficult issues." White House spokesman Tony Fratto declined to comment on specific proposals under consideration but said: "The President has said that for all Americans, we must confront the rising cost of care, strengthen the doctor-patient relationship, and help people afford the insurance coverage they need."

 

While President Bush advocated some health-care changes last year -- an expansion of health savings accounts and computerization of patient records -- they were more modest than what is currently under consideration.

 

The big new idea this year could involve tax changes around employer-provided plans. While officials said major decisions are still being made, the White House tax proposal likely would cap some taxpayers' ability to exclude employer-provided health care from their income, as part of an effort to broaden availability of health-care insurance.

 

Currently, health-care benefits aren't subject to federal income tax, no matter how generous the benefit -- a factor many economists have said has contributed to health-care inflation. The Bush administration is considering a change that would tax some executives' "gold-plated" plans and possibly even affect some rank-and-file union members with particularly generous benefits. The savings would be used to pay for tax credits for lower-income people who buy their own health insurance or for state insurance pools, or both. The effect could be relatively small now but could grow over time.

 

The current policy of excluding employer-provided health insurance benefits from employees' tax returns costs the government more than any other tax policy -- about $900 billion between 2006 and 2010, counting all health-related breaks. That is more than either the mortgage-interest deduction or the various breaks for retirement savings. Thus, even tinkering around the edges of the exclusion could produce large amounts of revenue for subsidizing coverage for lower-income people.

 

Some of the administration's possible proposals, particularly the changes to the tax code, are likely to meet resistance from Democrats, who worry about further undermining the market for employer-provided coverage and driving up costs for those who remain in the system.

 

Helping states fix the problem of the uninsured could attract bipartisan support. Democrats said much depends on whether the Bush administration backs up its rhetoric with money. A few Democrats -- as with their Republican counterparts -- are willing to encourage a shift from employer-provided plans to state-sponsored ones.

 

State insurance pools have begun to appear in states such as Massachusetts in recent years, using funding from the federal government's insurance programs for low-income people, such as Medicaid. The trend has been fueled by looser federal restrictions on how funds from low-income health entitlement programs can be used. Experts have said they expect the administration to continue that in the coming reauthorization of one of the federal programs, the State Children's Health Insurance Program.

 

Mr. Bush's proposals likely will be the starting point for a Washington debate on health-care coverage plans.

 

Tomorrow, a bipartisan group including Sen. Jeff Bingaman (D., N.M.) and Sen. George Voinovich (R., Ohio) plans to introduce legislation that would provide grants to states to craft their own plans for helping the uninsured.

 

Last week, Massachusetts Sen. Edward Kennedy, who chairs the Health, Education, Labor and Pensions Committee, called for eventually expanding Medicare to all Americans, regardless of age, starting with people 55 to 65, and those younger than 20. Currently, Medicare generally guarantees health-care coverage to those age 65 and older.

 

Political experts have said the focus on health care reflects the effect that soaring costs are having on voters, particularly aging Baby Boomers, who are using more health care and worrying about costs. Polls show that, increasingly, people tend to rank health care among the biggest financial woes they face, says Karlyn Bowman, a polling expert at the American Enterprise Institute.

 

Write to John D. McKinnon at john.mckinnon@wsj.com3 and Deborah Solomon at deborah.solomon@wsj.com4

 

URL for this article:
http://online.wsj.com/article/SB116891100123377204.html

 

Hyperlinks in this Article:
(1) http://forums.wsj.com/viewtopic.php?t=211
(2) http://forums.wsj.com/viewtopic.php?t=211
(3) mailto:john.mckinnon@wsj.com
(4) mailto:deborah.solomon@wsj.com

Medicare for All: The Only Sound Solution to Our Healthcare Crisis

 

By Guy T. Saperstein, AlterNet
January 16, 2007
http://www.alternet.org/story/46550/

We all know that America's healthcare system is collapsing. Andy Stern has written that America's employer-based health insurance system is "dead." Auto executives troop to the White House complaining that they are not competitive with foreign automakers because they pay $1,500 per car for health insurance. Some of the biggest laughs in movies come when America's healthcare system is ridiculed. Politicians, even Republicans, are offering solutions.

 

 

In the Greenberg Quinlin poll of November 2006 voters, 22 percent ranked healthcare as the most important issue; likewise, MoveOn.org recently polled its members, received over 100,000 responses, and healthcare ranked as the No. 1 concern.

 

To add substance to these observations, consider the following: Not only are 47 million Americans uninsured (approximately 18.5 percent of the insurable market), 41 percent of Americans with incomes of $20,000 to $40,000 did not have health insurance for at least part of 2005, up from 28 percent in 2001; 53 percent with incomes under $20,000 lack health insurance.

 

The number of people without health insurance rose 16.6 percent from 2001 to 2005; average health insurance premiums for a family of four are $10,880, which exceeds the annual gross income of $10,712 for a full-time, minimum-wage worker; lack of insurance causes 18,000 excess deaths a year; people without health insurance have 25 percent higher mortality rates; and, 59 percent of uninsured people with chronic conditions such as asthma or diabetes skip medicine or go without care.

 

There are additional costs to the haphazard U.S. healthcare system: More than 50 percent of the U.S. population has medical debt problems; between 1981 and 2001, medical-related bankruptcies increased an astounding 2,200 percent and 55 percent of personal bankruptcies are now caused by illness or medical debts, despite the fact that over 75 percent of the bankrupts had health insurance at the onset of bankruptcy and illness.

 

Contrary to popular conceptions, the average medical bankrupt was a 41-year old woman with children, some college education; over half owned homes and over 80 percent were in the middle or working classes.

 

But for the insured, the United States has the best quality healthcare in the world, right? Wrong.

 

The World Health Organization ranks healthcare systems based on objective measures of medical outcomes: The United States' healthcare system currently ranks 37th in the world, behind Colombia and Portugal; the United States ranks 44th in the world in infant mortality, behind many impoverished Latin American countries. While infant mortality in the United States is skewed toward poor people, who have rates double the wealthy, the top quintile of the U.S. population has infant mortality rates higher than Canadians in the lowest quintile of wealth.

 

Out of 30 developed nations, life expectancy in the United States ranks 21st; life expectancy in the United States is 4.6 years less than Japan, 2.1 years less than France and 2.6 years less than Canada. The United States has fewer physicians, nurses and hospital beds than most developed nations. In the United States, 28 percent say it is "difficult to get care"; in most European countries, Japan, Australia and New Zealand, 15 percent say that. In terms of continuity of care (i.e., five-plus years with the same doctor), the United States is the worst of all developed nations. By every objective measure, the United States has a second-rate healthcare system.

 

OK, the U.S. healthcare system is not performing very well, but that must be a funding problem, right? Wrong.

 

The United States has the most expensive healthcare system on the planet. Even including the 47 million uninsured, the U.S. healthcare system costs almost double per capita what single-payer systems in Europe, Japan and Canada cost; in the United States, healthcare costs were $5,635 per person in 2005.

 

By contrast, in Japan, with life expectancy 4.6 years more than the United States (presumably a cost-increasing factor), healthcare costs were $2,139 per person; in the United Kingdom, $2,232; Sweden (the ultimate "welfare state"), $2,520; France, $2,903; and, Canada, $3,001.

 

And, this is not just an individual problem; this is a national problem. Healthcare system costs in the United States are 16 percent of GNP (and currently increasing 14 percent per year); no other country in the world has healthcare costs which exceed 11 percent of GNP and the average among developed nations is 9 percent. As noted above, these high costs are making the U.S. uncompetitive in many areas.

 

Why is the U.S. healthcare system so expensive? Administrative costs, marketing and profits account for 22 to 31 percent of the U.S. healthcare dollar (I recently heard Edward Kennedy say these costs were 33 percent, but I have not seen documentation of that number). By contrast, overhead costs in single-payer systems (including Medicare) typically are 3 percent.

 

In America's for-profit private insurance healthcare system, medical technicians must contend with hundreds of different forms, billing procedures, regulations and requirements from hundreds of insurance companies; U.S. healthcare companies spend money for advertising and marketing; and, the U.S. healthcare system is based on profit. Since 1970, the number of medical doctors in the United States has increased 40 percent, while the number of medical administrators has increased almost 3,000 percent.

 

We are paying for a massive, inefficient bureaucracy. The increasing cost of prescription drugs also is increasing the healthcare bill, and U.S. drug costs are the highest in the world; Americans pay 30 percent to 80 percent more for prescription drugs than citizens of any other country.

 

You might think that this excess money goes into developing new drugs, but you would be wrong: Only 13 percent of drug costs go to research and development, and little of that goes for pioneering new drugs to deal with life-threatening conditions; 51 percent goes to marketing, administration and profits.

 

Recently, one of my adult sons went to a medical office for testing. On completing the tests, he was handed a bill. The bill had two prices: One was the insurance price, $969.25, the second was the "cash pay price," $678.00 -- exactly 30 percent less than the insurance price. What more do you need to know about the excessive cost and inefficiency of the American private health insurance system than that it costs 30 percent more than the underlying medical services are worth?

 

The public understands this. In the California Field Poll released on Jan. 3, 2007, California voters were asked why healthcare costs are increasing: The No. 1 reason given by voters was "high profits" (65 percent); the number two reason was "waste, fraud and inefficiencies in the current system" (60 percent).

 

The answer to this problem is not simply "universal health insurance." "Universal healthcare" that does nothing more than bring more people into the most expensive and inefficient private insurance-based healthcare system on the planet would accelerate the total collapse of the system for everyone.

 

No credible economist thinks America can sustain healthcare costs exceeding 20 percent of GNP (itself a gigantic burden and drag on economic growth) and adding 47 million more people to the current decrepit system would bring the United States to the 20 percent threshold. Since the costs of our private insurance system currently are rising at the rate of 14 percent per year, the system is unsustainable, by any rational economic analysis.

 

Howard Dean recently identified healthcare as an emerging top-tier political issue and endorsed single-payer, saying at a Democracy Alliance conference in Miami, "It is obvious we are going to need to work toward some form of single-payer system, just like every other industrialized nation. In the next two years, we should expand Medicare and Medicaid to cover every uninsured person under 25." Dean is an M.D., by the way.

 

Surely the healthcare system which every other industrialized nation in the world relies on, which is both less expensive and offers improved medical outcomes, and which many think is the only viable and sustainable healthcare system, deserves serious consideration by American progressives and the public, but, to date, single-payer is not being researched and evaluated in America.

 

I am not arguing that the perfect must be the enemy of the good; there may be intermediate steps that could be taken, rather than proposing that America swallow the big enchilada in one bite. Clearly, Howard Dean's proposal to cover everyone under 25 is a step down the incremental path, and, as he suggested, probably not even a very expensive one.

 

What is unacceptable would be to have a political debate which could change healthcare in America for the next 20-30 years, or more -- in the process helping to decide elections -- without sound progressive ideas and input and without serious consideration of single-payer.

 

The biggest objection to single-payer I have heard from Democrats is not that single-payer is not a good system, or even the best system, but that it will be attacked as socialized medicine and therefore is not politically viable. Of course, a single-payer system is not socialized medicine.

 

Medicare is a single-payer system -- a very popular one, by the way -- and single-payer systems such as Medicare do not employ any doctors or own any hospitals or medical facilities, let alone create bureaucracies approximating the bloated, inefficient bureaucracy the private insurance model has created in America.

 

Rather than hundreds of payers (insurance companies) and thousands of different forms, regulations and procedures, there would be one payer and one set of forms and procedures. Single-payer also would offer more choice of medical providers; unlike the current system, where patients are limited to panels of providers, in a single-payer system, patients go to any doctor they want, submit a national health insurance card and the government pays -- just like Medicare.

 

Single-payer is the simplest, most efficient, system of all. While single-payer is a government-paid program, American taxpayers already pay more than 60 percent of healthcare costs in America (including tax subsidies). With that much money invested, can't we demand a system that covers everyone at reasonable cost and with improved performance? Why should we continue to allow 22 percent to 31 percent of healthcare costs to be swallowed by bureaucratic inefficiencies, marketing and profit?

 

John Garamendi, formerly California's insurance commissioner and now lieutenant governor, campaigned in favor of single-payer and said repeatedly on the stump: "Are you aware that for 40 years, the United States has had a universal single-payer healthcare system that allows every participant to choose their own doctor, its administrative cost is one-tenth the cost of private insurance and people do everything possible to get into the system (i.e., live to 65). It is Medicare, and no one calls it socialized medicine."

 

Of course, the real reason people back away from a single-payer system is fear of insurance industry wrath. We all remember the "Harry and Louise" ad campaign the health insurance industry unleashed on HillaryCare 12 years ago. So, is anyone not afraid of the insurance industry? Is anyone willing to challenge insurance industry profits?

 

The answer, surprisingly, not only is yes, but the person apparently willing to take on the big ugly bear is a pro-business Republican -- The Terminator.

 

On Jan. 8, California Gov. Arnold Schwarzenegger unveiled his plan to insure all Californians, and while the proposal itself continues to rely on the private insurance model, it provides that insurance companies would be required to spend 85 percent of their revenues on medical services; in other words, insurance company overhead, marketing, administrative costs and profits, would be capped at 15 percent -- roughly half of what they currently are.

 

Does anyone think the insurance industry is not going to fight this incursion on its profits with all its might? Of course it will, and it will fight a halving of its profits just as vigorously as it will fight a single-payer system.

 

So, if a Republican, pro-business governor of a major state is willing to take on the insurance industry, should progressives be any less courageous in pursuit of real healthcare reform? In short, a very gifted Republican politician has made a calculated decision that fighting the insurance industry not only is not going to hurt him politically, it is going to get him elected to the United States Senate in 2010. It is good politics.

 

The other political objection to single-payer I have heard is that it is simply too big an idea and too big a proposal.

 

While this objection is debatable, single-payer need not be adopted whole in one bite; it can be adopted and implemented piece-meal, just as Howard Dean suggested when he said in the next two years we should work to cover the uninsured under age 25 in an expanded Medicare.

 

There are other inclusions which could be adopted incrementally, such as expanding Medicare to include everyone with incomes under $20,000 per year, then increasing income thresholds until everyone is covered; or, it would be possible to work in age-based increments by expanding Medicare into ever-younger categories of Americans. Conservatives understand the power and effectiveness of "slippery slope" proposals (banning partial birth abortion is one such "slippery slope").

 

Let's put the healthcare agenda on the "slippery slope" to Medicare for all, not work toward more private insurance and inevitable healthcare system insolvency -- where most current healthcare proposals (including Democratic) are headed.

 

Before leaving the subject of political viability, let me briefly address the healthcare proposal put out by the Center for American Progress, which threatens to become the Democratic Party proposal. In general, CAP's proposal would provide coverage for the uninsured through the existing private insurance system, funded by a national ad valorem (i.e., sales) tax. I had a long conversation with CAP's CEO, John Podesta, shortly after it was published, and while John is intellectually honest enough to recognize the advantages of single-payer, his advocacy of the CAP plan was more based on political viability than operational efficiency or effectiveness.

 

In any case, trying to impose a regressive national sales tax to fund insurance for 47 million people through an expensive, inefficient system not only makes no economic sense, I fail to see how it would be politically attractive, or even politically possible. It would make Democrats look like your daddy's Democratic Party -- you already can hear the Republicans, "Here they go again, another big, costly Democratic welfare program."

 

By contrast, a single-payer system could cover everyone, including the 47 million uninsured, at a net cost-savings, as the savings obtained by cutting overhead from 22-31 percent down to 3 percent would more than pay for providing coverage for the 47 million currently uncovered. It makes far more sense to approach healthcare reform as an issue which affects everyone, than it does approaching it as an issue that affects only the poor, to be solved by another welfare program, funded by more taxes -- in this case, a regressive tax.

 

America's current healthcare system works well for no one, and it would be better to seek a genuine progressive fix on the basis that we're all in this together and need to find solutions that work for everyone, rather than special pleading for some at the expense of others. The uninsured have to be covered, to be sure, but let's do it in the context of solving the real problems of American healthcare, not exacerbating the structural problems of the current system.

 

Healthcare is a $2 trillion industry in America, and we are fast approaching a "perfect storm," where individual consumers, voters, business and the government are beginning to realize the current healthcare system not only is not healthy, it is unsustainable. Is the range of discussion of "serious" healthcare proposals limited to proposals that offer only variations on the failed private insurance model? Howard Dean apparently doesn't think so.

 

If progressives are going to project progressive solutions and be part of this debate, they will need to do so quickly because the system is fast-collapsing and decisions are going to be made with or without us.

 

Guy T. Saperstein is a Democracy Alliance partner and past president of the Sierra Club Foundation; previously, he was one of the National Law Journal’s "100 Most Influential Lawyers in America."

© 2007 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/46550/

TEED UP

Health-Insurance Gap Surges as Political Issue

Democrats, Governors, Business Push Change,
But Fixes Vary Widely

 

By DEBORAH SOLOMON and DAVID WESSEL
Wall Street Journal, January 19, 2007; Page A1

 

Suddenly, the long-festering issue of providing health coverage to the one in six Americans who lack it seems to have leapt to the top of the national to-do list.

 

On Tuesday, an unlikely coalition of the Business Roundtable, AARP and the Service Employees International Union called for "affordable quality health care for all."

 

On Wednesday, Pennsylvania's governor became the latest to offer a way to cover the uninsured in his state.

 

Yesterday, another strange-bedfellows coalition, ranging from a health insurers' trade group to a liberal advocacy group, unveiled a plan to subsidize health premiums with a mix of tax credits and federal spending. And Oregon Sen. Ron Wyden dusted off a plan to make people buy insurance, with employers chipping in. On Tuesday, President Bush is expected to talk about his ideas for shrinking the ranks of the uninsured.

 

Thrusting the long-running issue to the fore are political and economic forces that have been building for years but are given new force by political events. Not only have the Democrats taken over Congress, but state political leaders, including Republicans such as California Gov. Arnold Schwarzenegger, are moving on their own to change the system. And U.S. companies increasingly complain that the current employer-paid insurance system puts some of them at a disadvantage -- either globally or vis-a-vis firms that won't provide insurance. (See related story.2)

 

A SURGING ISSUE

 

The News: Many Americans' lack of health insurance has abruptly become a hotter political issue, with proposed fixes proliferating and states taking action on their own.

The Cause: Political winds shift and big companies say employer-paid insurance puts them at a global disadvantage.

Bottom Line: Disagreement over cures may prevent change, but issue will be hot in 2008 presidential race.


All this increases the chances that Washington will try to tackle at least a piece of a health-care problem that has only grown bigger since the Clintons' failure at comprehensive reform back in 1994. But it still doesn't necessarily mean anything big will happen, at least nationally, in the next couple of years. The primary reason: There's nothing approaching a consensus on what to do.

All this increases the chances that Washington will try to tackle at least a piece of a health-care problem that has only grown bigger since the Clintons' failure at comprehensive reform back in 1994. But it still doesn't necessarily mean anything big will happen, at least nationally, in the next couple of years. The primary reason: There's nothing approaching a consensus on what to do.

 

There is, for sure, a growing consensus that the rising number of Americans without health coverage is a problem, not just for them but also for employers and governments that pay the bills. U.S. auto companies "are paying for the emergency-room treatments of people who can't afford it," complains Tom Lasorda, chief executive of DaimlerChrysler AG's Chrysler unit. "I'm paying for it because the rates go up because I have to cover the cost."

 

But there is a splintering of approaches to the problem. Some favor bigger government. Others would bolster the decaying system of employer-sponsored insurance. Still others would make health insurance more like car insurance and have people buy their own, aided by various subsidies.

 

THIS WEEK IN HEALTH CARE

 

See a list of events and announcements related to health care coming up this week.

 

Those who are optimistic that the recent talk portends action see a harmonic convergence of interests that suggests the latest round of press conferences and plans offered by coalitions will produce something tangible. Andrew Stern, president of the Service Employees International Union, or SEIU, says that when the Clinton health initiative failed, "business believed that they could somehow manage health costs, and the economy was far less global." The world has changed. "Having had 13 more years of increasing costs...," he says, "people realize that you can't manage this as a company -- we have to manage this as a country."

 

The problem has long been apparent and is getting worse. The number of Americans without health insurance is growing, and rising premiums have lessened employers' willingness to provide it. Though a majority of Americans still get insurance through the workplace -- a practice tracing to the 1940s, when businesses offered fringe benefits in lieu of higher wages -- the fraction of employees offered coverage at work fell to 77.4% in 2005 from 81.2% in 2001.

 

At last tally, the Census Bureau said 15.9% of Americans, 46.6 million in all, lacked health insurance. Government programs -- Medicare, Medicaid and the 10-year-old State Children's Health Insurance Program -- pick up the elderly, the disabled and the very poor.

 

Nearly 70% of the uninsured are in families with at least one full-time worker. In some cases, the employer doesn't provide coverage. In others, the employee can't afford it or doesn't take the coverage that employers offer, according to the Kaiser Commission on Medicaid and the Uninsured, a private foundation-backed effort.

 

So by no means are the uninsured all poor; more than a fifth live in families with incomes above $40,000. And it would seem they or their employers can afford to pick up a part of the tab -- an important factor in making some of the proposals floating around feasible.

 

The heightened political focus on the issue reflects pressure from two sources. One is voters' anxieties, both about the cost of care and about the risk of losing insurance for reasons such as changing jobs. "A member of Congress goes home and two issues come up every time you get together with folks: One of them is Iraq, and one of them is health care," says Sen. Wyden, an Oregon Democrat. "A lot of people who have coverage think they're one rate hike away from losing their coverage."

 

The other is an ever-louder complaint from U.S. businesses that they can't compete in a global economy when companies from other countries don't have to pay for health care. Deere & Co. Chief Executive Robert Lane told Congress last year that failure to act could result in a "limiting of covered services, loss of employer-provided health care...and even a loss of American jobs, both in the manufacturing and service sectors."

 

The uninsured, of course, make up only one of the U.S. health-care system's issues, alongside quality and, especially, rapid rises in costs. But confronting the uninsured problem is politically appealing and it seems not quite as intractable. "Dealing with cost is really hard. It means leveling with the public. It means telling people you can't have everything you want or your doctor wants," says Paul Ginsburg, president of the Center for Studying Health System Change, a foundation-backed think tank in Washington.

 

Then there's raw partisan politics. Democrats believe they have the political wind at their backs and that one reason they do is public anxiety about health care. Republicans feel a need to respond, and often look for approaches that rely less on government and more on market forces.

 

At the same time, some proponents of free trade seek ways to ease workers' anxieties about globalization so they might be less hostile to it. Recent initiatives at the state level reflect the public pressure for some kind of governmental action -- and at the same time increase the pressure for some federal action.

 

"Legislators and governors are feeling pressure from small businesses," says Katherine Swartz, a professor at the Harvard School of Public Health. She has another idea for dealing with the problem: government-subsidized reinsurance pools that might make it more affordable for employers to offer insurance.

 

Ms. Swartz says that "nobody believes anything is going to come out of Washington. States are more willing to say let's try something." Flush state budgets help. A survey by the Kaiser Family Foundation found that one-third of states, 17 in all, increased access to health coverage in 2006, often to low-income children. For the first time in four years, no state restricted income eligibility in Medicaid or in the State Children's Health Insurance Program.

 

Last year, the then-governor of Massachusetts, Republican Mitt Romney, helped by Democratic Sen. Edward Kennedy, cut a deal with Democratic leaders of the state's legislature. It required state residents to obtain insurance, created a state-sponsored "connector" where they could go to buy it, and required all but the very smallest employers to provide insurance or pay a penalty.

 

Vermont and Maine also have enacted universal-coverage plans. Vermont aims to have 96% of state residents insured by 2010 through a mix of subsidies and employer contributions, plus a tobacco tax. Maine's program, aimed at insuring all by 2009, is grappling with inadequate funding, fewer people enrolling than anticipated and lawsuits from business over the financing mechanism.

 

Several other states are mulling ways to increase coverage for their residents. Some mix expanded government programs with mandates on individuals to purchase insurance -- along with subsidies for low-income people, new insurance pools to share risks, and mandatory employer contributions.

 

Last week, California Gov. Schwarzenegger outlined a plan that would make uninsured residents purchase insurance, and require businesses with 10 or more employees to either offer insurance or pay 4% of their payroll into a fund for the uninsured. The plan would levy new taxes on doctors and hospitals to help pay for the state's estimated 6.5 million uninsured, a number that includes illegal immigrants.

 

On Wednesday, Pennsylvania's Democratic governor, Edward Rendell, became the latest recruit, with a plan to cover his state's nearly one million uninsured. He stopped short of a Massachusetts-style mandate, instead proposing to phase in a requirement that those with incomes above 300% of the poverty level ($60,000 a year for a family of four) purchase health insurance, along with full-time college and graduate students. His proposal would also penalize employers that didn't offer insurance and would provide money to help individuals afford it.

 

On Wednesday, Pennsylvania's Democratic governor, Ed Rendell, became the latest recruit, with a plan to cover his state's nearly one million uninsured. He stopped short of a Massachusetts-style mandate but would penalize employers that didn't offer insurance and would provide money to help individuals afford it.

 

As things stand, Mr. Rendell said, "It is a tremendous deterrent for businesses that are considering locating in Pennsylvania to know that in addition to paying for their own employees' health coverage, they will be subsidizing the costs of the uninsured" as hospitals charge them more to cover the free care the hospitals must give.

 

From the perspective of big companies, the mandatory-employer-contribution programs at least level the playing field within the U.S., though they don't do much to ease the problem of competing globally.

 

In Washington, it's far easier to get agreement on the goal -- "affordable, quality health care for all" is the mantra -- than on the way to get there.

 

One camp, almost entirely Democrats, sees the current turmoil and dissatisfaction with job-linked insurance as hastening a single-payer national system. It's an idea many Democrats have pushed since the days of Franklin Roosevelt and Harry Truman.

 

Sen. Kennedy, head of the Committee on Health, Education, Labor and Pensions, is proposing to expand Medicare beyond the elderly and disabled to all Americans, beginning with children and those aged 55 to 64. To many, that still seems politically unrealistic, especially given problems that Canada and Britain have run into with their national systems, including long waits and rising costs. But expanding the State Children's Health Insurance Program, which was created in 1997 to help states provide coverage to more low-income children, strikes some Democrats as a feasible step in this direction.

 

Another camp, including some Bush administration officials, sees the turmoil and decay of job-linked health insurance as a reason to go in a very different direction. They would let individuals shop for health care much as they do for other things. They would use tax breaks and vouchers to help people afford insurance, preferably high-deductible policies that prod citizens to make wise choices.

 

The government already is taking steps to make Americans better consumers of health care. To encourage people to be more cautious in using health care, the Bush administration is seeking ways to wean Americans off generous schemes that pay for almost anything. In their place, it favors high-deductible policies that cover the big expenses, plus ways to let people pocket the savings if they avoid unnecessary treatment or shop for lower-priced care. Health Savings Accounts are a way to do this, offering tax breaks to people who take high-deductible policies and allowing them to escape taxes on wages set aside for health care, keeping the money if they don't spend it.

 

Mr. Bush is expected to continue pushing in this direction. Among possible proposals: ways to make the market for individually purchased insurance more efficient, and encouragement to small businesses to help employees buy bare-bones policies. Administration officials argue that current tax law imprudently encourages employers to provide unlimited amounts of health care to workers who aren't taxed on that as income. One possible change would be to limit that tax break and devote any revenue raised by the change to subsidizing coverage for lower-income Americans.

 

In a recent op-ed piece in The Wall Street Journal, Mr. Bush listed "affordable health care" among the biggest issues facing the American people.

 

A third camp, borrowing from what's going on at the state level, essentially would widen existing sources of health insurance -- government, employers and individual policies -- so that they cover everyone. Such plans sometimes require that everyone get insurance; penalize employers that don't offer it; and subsidize coverage for people who can't easily afford it yet don't qualify for programs for the poor.

 

Although state experimentation is in favor now, one obstacle to state-by-state reform is a federal law, the Employee Retirement Income Security Act, or Erisa, that limits states' maneuvering room. It has thwarted an attempt by Maryland to force Wal-Mart Stores Inc. to offer health insurance to employees. This week, the Fourth U.S. Circuit Court of Appeals upheld an earlier decision that Maryland had violated Erisa. Legal experts said the decision could pose problems for states considering health-care changes but suggested that it wouldn't cripple efforts in states like Massachusetts, where the overhaul is broad and not targeted at a single employer.

 

Some veterans of health-care battles past smile at the enthusiasm for tackling the problem. Recalling high-profile press conferences of years past -- and proposals shredded by partisan politics or budget realities -- they say the most likely federal action is none of the above. There's also likely to be a big debate over health care in the coming presidential campaign.

 

But Mr. Stern, the union leader, thinks that view underestimates the current ground swell and unusual political opening. "I'm not sure Congress is yet recognizing the tidal wave that is building," he says. "It's the perfect time. You have an evenly divided Congress in Democratic control and a presidency in Republican control. You have everyone lined up on the side of universal coverage."

 

Doing nothing is costly too, says Henry Simmons, president of the National Coalition on Health Care, a collection of companies and interest groups that has agitated for major health-care change since 1990. "We can afford health-care reform," he says. "What we cannot afford is a continued failure to address the crisis in health care."

 

This Week in Health Care:

 

Tuesday

 

Who: Business Roundtable, Service Employees International Union, AARP

What: These unlikely allies launched a group called "Divided We Fail" and proclaimed that health care costs have gotten out of control. They said they plan to force lawmakers to begin confronting the issue of health care reform as we head towards the 2008 election.

Tidbit: The group got off to a rough start with a full-page ad in the Washington Post announcing the group somehow failing to include the word "Divided," leaving the ad to read simply: "We Fail"

 

www.dividedwefail.org3

 

Wednesday

 

Who: A bipartisan group of Senators and members of the House

What: Unveiled the "Health Partnership Act" which is aimed at providing grants to states that are crafting their own health care reform plans. Under the plan, Congress would create a State Health Innovation Commission to review and approve grants

Quote: "There is no single prescription to solving our nation's serious uninsured problem. Extending health care to the millions of Americans who are uninsured will require the innovation of governors and other leaders in all 50 states. Our legislation simply helps each state implement the solution that is right for them," said Sen. Jeff Bingaman, (D-NM), a sponsor of the bill.

Tidbit: The bill doesn't call for a specific amount of money to fund the program.

 

Wednesday

 

Who: Pennsylvania Gov. Edward Rendell

What: Became the latest governor to propose a plan to cover the state's uninsured residents

Quote: "We can no longer stand by while health care costs spiral out of control … It is no longer a question of whether we can afford to act – the cost of inaction is far greater; both in terms of individual health consequences and from the increasing burden on taxpayers," Mr. Rendell said.

Tidbit: The plan will phase in a mandate requiring health insurane for those with incomes more than 300% of the federal poverty level ($60,000 for a family of four) and require that full-time four-year college and grad students have coverage.

 

http://www.gohcr.state.pa.us/4

 

Thursday

 

Who: Strange bedfellows including Families USA, the US. Chamber of Commerce and America's Health Insurance Plans

What: Announced a two-step approach to providing coverage to children and adults. The plan would use of mix of tax credits, subsidies and an expansion of existing federal programs aimed at low-income individuals.

Tidbit: Perhaps to signal how grandiose they view their plan, the group unveiled it in the cavernous foyer of Washington, D.C.'s Union Station.

 

www.coalitionfortheuninsured.org5

 

Thursday

 

Who: Sen. Ron Wyden (D-Oregon)

What: Introduced the Healthy Americans Act. The plan is to de-link health care from the employer-sponsored model and move towards a system where individuals purchase coverage and employers help foot the bill

Quote: "Americans really don't have health care at all. They have sick care," said Mr. Wyden. "We are going to change that. We are going to change that by giving seniors incentives to stay healthy, rewarding parents who enroll their youngsters in wellness programs and pushing private insurers to put a new emphasis on prevention and wellness in the plans they offer."

Tidbit: The plan has gained endorsements from Safeway CEO Steve Burd, as well as SEIU President Andy Stern.

 

www.wyden.senate.gov6

 

---- Kris Maher contributed to this article.Write to Deborah Solomon at deborah.solomon@wsj.com7 and David Wessel at david.wessel@wsj.com8

 

RL for this article:
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America's Agenda: Health Care for All

GOOD NEWS! Labor, business and medical leaders have launchedAmerica's Agenda: Health Care for All. Their stated goal  is to "break the insurance lobby choke-hold on health care." See full text of announcement.

 

If you're not yet convinced that something needs to be done about access to health care in the USA, click here to read Barbara Ehrenreich's commentary: A Society That Throws the Sick Away.

 

A lengthy but enlightening article by Morton Mintz appeared recently in The Nation magazine. It is well worth your time to read: Single-Payer: Good for Business.

 

"We need to view health care in terms of a social movement, like we looked at slavery. We need to come to that realization about health care ... We have to fix it."— Michael Connelly, president and CEO of Catholic Healthcare Partners. Click to see full Article, "45 Million and Growing," published in the May 6, 2005 Catholic Universe Bulletin.

Gold-Plated Indifference

January 22, 2007

Op-Ed Columnist

New York Times

By PAUL KRUGMAN

 

President Bush’s Saturday radio address was devoted to health care, and officials have put out the word that the subject will be a major theme in tomorrow’s State of the Union address. Mr. Bush’s proposal won’t go anywhere. But it’s still worth looking at his remarks, because of what they say about him and his advisers.

 

On the radio, Mr. Bush suggested that we should “treat health insurance more like home ownership.” He went on to say that “the current tax code encourages home ownership by allowing you to deduct the interest on your mortgage from your taxes. We can reform the tax code, so that it provides a similar incentive for you to buy health insurance.”

 

Wow. Those are the words of someone with no sense of what it’s like to be uninsured. Going without health insurance isn’t like deciding to rent an apartment instead of buying a house. It’s a terrifying experience, which most people endure only if they have no alternative. The uninsured don’t need an “incentive” to buy insurance; they need something that makes getting insurance possible.

 

Most people without health insurance have low incomes, and just can’t afford the premiums. And making premiums tax-deductible is almost worthless to workers whose income puts them in a low tax bracket.

 

Of those uninsured who aren’t low-income, many can’t get coverage because of pre-existing conditions — everything from diabetes to a long-ago case of jock itch. Again, tax deductions won’t solve their problem.

 

The only people the Bush plan might move out of the ranks of the uninsured are the people we’re least concerned about — affluent, healthy Americans who choose voluntarily not to be insured. At most, the Bush plan might induce some of those people to buy insurance, while in the process — whaddya know — giving many other high-income individuals yet another tax break.

 

While proposing this high-end tax break, Mr. Bush is also proposing a tax increase — not on the wealthy, but on workers who, he thinks, have too much health insurance. The tax code, he said, “unwisely encourages workers to choose overly expensive, gold-plated plans. The result is that insurance premiums rise, and many Americans cannot afford the coverage they need.”

 

Again, wow. No economic analysis I’m aware of says that when Peter chooses a good health plan, he raises Paul’s premiums. And look at the condescension. Will all those who think they have “gold plated” health coverage please raise their hands?

 

According to press reports, the actual plan is to penalize workers with relatively generous insurance coverage. Just to be clear, we’re not talking about the wealthy; we’re talking about ordinary workers who have managed to negotiate better-than-average health plans.

 

What’s driving all this is the theory, popular in conservative circles but utterly at odds with the evidence, that the big problem with U.S. health care is that people have too much insurance — that there would be large cost savings if people were forced to pay more of their medical expenses out of pocket.

 

The administration also believes, for some reason, that people should be pushed out of employment-based health insurance — admittedly a deeply flawed system — into the individual insurance market, which is a disaster on all fronts. Insurance companies try to avoid selling policies to people who are likely to use them, so a large fraction of premiums in the individual market goes not to paying medical bills but to bureaucracies dedicated to weeding out “high risk” applicants — and keeping them uninsured.

 

I’m somewhat skeptical about health care plans, like that proposed by Gov. Arnold Schwarzenegger, that propose covering gaps in the health insurance market with a series of patches, such as requiring that insurers offer policies to everyone at the same rate. But at least the authors of these plans are trying to help those most in need, and recognize that the market needs fixing.

 

Mr. Bush, on the other hand, is still peddling the fantasy that the free market, with a little help from tax cuts, solves all problems.

 

What’s really striking about Mr. Bush’s remarks, however, is the tone. The stuff about providing “incentives” to buy insurance, the sneering description of good coverage as “gold plated,” is right-wing think-tank jargon. In the past Mr. Bush’s speechwriters might have found less offensive language; now, they’re not even trying to hide his fundamental indifference to the plight of less-fortunate Americans.

Physicians and Nurses Decry Bush Health Plan, Reject Reform Based on Private Insurance

Unite in Call for National Health Insurance - "Medicare for All"
New Congress to Introduce Plan and Hold Hearings

Washington, DC - The 75,000-member California Nurses Association and the 14,000-member Physicians for a National Health Program will announce their opposition to President Bush's feeble health reform proposal at the National Press Club on Wednesday, January 24 at 1:00 p.m. The groups will call on Congress to pass single-payer legislation that will provide real coverage to all Americans.

Unite in Call for National Health Insurance - "Medicare for All"
New Congress to Introduce Plan and Hold Hearings

Washington, DC - The 75,000-member California Nurses Association and the 14,000-member Physicians for a National Health Program will announce their opposition to President Bush's feeble health reform proposal at the National Press Club on Wednesday, January 24 at 1:00 p.m. The groups will call on Congress to pass single-payer legislation that will provide real coverage to all Americans.

"There are only two real choices in the present healthcare debate, plans that continue to push the defective products of the private insurance industry, and the one plan that would expand Medicare to all Americans (HR 676) . Caregivers know that this patient-based model is the most effective and humane approach," said Deborah Burger, RN, president of the California Nurses/National Nurses Organizing Committee.

Let's skip the gimmicks and enact real reforms

January 24, 2007

By MERTON C. BERNSTEIN
Special to The Star

We have reached a national consensus on health insurance — it costs too much and covers too few. Most “reform” proposals, like California Gov. Arnold Schwarzenegger’s and the health insurance industry’s, camouflage their real costs with tax breaks and other subsidies.

But coverage and cost are not two separate problems. Repeated double-digit cost increases caused coverage of millions to disappear. To cover the uncovered, we must — and we can — make better use of the $2 trillion public and private medical-care programs now expend. Banishing unnecessary nonbenefit costs could generate funds to cover everyone.

It is not reform to make individuals insure themselves. An individual mandate would require establishing and maintaining records just to keep track of compliance; enforcement proceedings against every noncomplying individual; processing requests for exemptions; keeping tabs on those not exempted; and repeatedly updating all these steps.

It is not reform to condition subsidies on poverty. Such tests, which also would require repeated updating, would cost tens of billions when applied to millions of people. That helps explain why means-tested Medicaid costs almost 5 percent more to administer than nonmeans-tested Medicare. Nor is it reform to vary millions of individuals’ subsidies based on the inevitable variations in individual income — at great administrative cost.

These nonreforms only increase costs — massively reducing funds for essentials like vaccination. They pepper the much-heralded Massachusetts and Schwarzenegger health-care plan and the health-care-provider proposal, backed by AARP, to extend coverage. Understandably, that proposal omits to say who will pay.

Permitting physician ownership interests in testing laboratories, imaging facilities, hospitals, nursing homes and pharmacies would provide inducements to prescribe what they sell. Rather than assuming that everyone would resist temptation, medical societies and legislation should shut those cookie jars. That would improve care and reduce costs.

Reform will elude us if the public and policy-makers mistake what needs changing. For example, in a 2006 Kaiser Foundation opinion poll, “too many malpractice suits” tied for second as the largest cause of ballooning health-care costs. Yet analyses show that malpractice premiums and litigating costs constitute just 1 percent of medical- care outlays.

If Medicare covered us all, more of the health-care dollar would go for treatment and prevention. Currently, insurers and providers spend huge amounts to match billions of billings with thousands of private plans and many public programs with differing eligibility and benefit criteria.

Medicare for All would save most of those nonbenefit charges. Some object that savings would be slight because providers must maintain records for treatment. Yes, but that recordkeeping does not require clericals to determine what programs, if any, cover claimants, and if so, what is billable and how much is reimbursable.

To tame costs and extend coverage, we must harvest savings where now we sow and reap inefficiently. The Schwarzenegger and Massachusetts gimmicks and the plan shaped by the same people who designed the perplexing and inefficient Part D — health insurers and AARP — plow other fields. Instead of savings, they increase nonbenefit costs. That’s not reform.

http://www.kansascity.com/mld/kansascity/news/opinion/16529363.htm

Merton C. Bernstein is a Coles Professor of Law Emeritus at Washington University. He was principal consultant to the National Commission on Social Security Reform and is a founding board member of the National Academy of Social Insurance.

© 2007 Kansas City Star and wire service sources. All Rights Reserved.
http://www.kansascity.com

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