This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
The Perennial Quest to Lower Health Care Spending
By Uwe Reinhardt
The New York Times
September 24, 2010… the nation bravely set upon the mission of reducing the left-hand side of the dreaded health care equation — that is, National Health Care Spending = National Health Care Incomes — without the temerity of touching its right side. For obvious reasons, touching the right side always turns out to be the third rail of health reform.
Last year, health care spending in the United States absorbed slightly more than 17 percent of G.D.P. (For most other industrialized nations, the figure is still around 10 percent or less.)
What would the critics have the president and Congress do?
To explore that question, let us deconstruct national health spending, as shown in the chart below. Here we artificially assume that there is a well-defined thing called “health care,” measurable in standard units that have a defined single price per unit. Thus the rendering is merely conceptual, a guide to order the discussion.
NHE = Pg x Qg x Ng + Pp x Qp x Np
where
NHE = national health expenditures
Pg = prices for health care paid by public insurers
Pp = prices for health care paid by private insurers
Qg = volume of health care used per capita under public insurance
Qp = volume of health care used per capita under private insurance
Ng = number of persons served under public insurance
Np = number of persons served under private insuranceWhat, then, can any president and Congress do to the variables on the right side of that equation to reduce the future trajectory of national health spending on the left-hand side, especially in the current political climate?
As we have learned in the last year, any attempt to bend down the future trajectory of public-sector fees (Pg) will be met with outcries:
(1) that hospitals and doctors will be driven into bankruptcy;
(2) that publicly-insured individuals will lose access to physicians who will refuse to work for the low public-sector fees;
(3) that doctors, hospitals and other providers who do treat publicly-insured patients have no choice but to recover more of their costs from private payers, who are assumed to have little countervailing market power to resist such increased charges.Therefore, strike Pg from a strategy of bending the cost curve.
The future trajectory of the volume variable, Qg, might possibly be bent down ever so slightly through cost-effectiveness analysis of alternative therapeutic approaches, or by more widespread use of living wills – an idea once actively promoted by Newt Gingrich.
But those ideas were met in the past year by dark allusions to “rationing,” to Nazi-style death panels and to “killing Granny.” Therefore, strike lowering Qg, as well, from a strategy for bending the cost curve.
Another option is to reduce the time path of the number of people served by public insurance (Ng).
This could be done by raising eligibility thresholds for Medicaid, or raising the eligibility age for Medicare, or partially privatizing Medicare through Medicare Advantage plans, or by converting the program from a defined benefit to a defined contribution program. But any of these options would merely move health spending off the books of government and into private-sector health spending.
There is no robust empirical evidence to suggest that such a shift would lower national health spending, unless the move increased the number of uninsured Americans for whom, on average, per capita health spending is less than half of the spending incurred on similarly situated insured Americans.
In fact, shifting Medicare beneficiaries out of traditional Medicare into private Medicare Advantage plans in past years is known to have increased the burden on taxpayers and is apt to have increased overall health spending. Therefore, strike Ng as well, unless we want the number of uninsured to climb.
In sum, any attempt to reduce health spending on the public-spending side (Pg x Qg x Ng) is limited by powerful political constraints and is unlikely to reduce overall health spending – especially if the providers of health care have the market power to recoup from private payers any reductions in public health spending coming their way.
This leaves private-sector spending as a potential source of reductions in health spending. But what control does any president or Congress have over those variables (Pp x Qp x Np)?
The last president with the temerity to control spending in the private sector directly was Richard Nixon, who imposed outright price controls on the sector the mid-1970s. One can only imagine what storm of protest that approach would unleash today.
Can private insurers or patients be counted on to bend down the future path of private-sector health care prices Pp? I doubt it.
For one, neither has left a stellar record in this regard over the last three decades. Furthermore, the cost-shift argument alluded to above suggests that in most local health care markets, private payers have rather limited power to exert much downward pressure on the prices they are charged for health care.
Thus, if the future path of private-sector health spending will be deflected downward at all, it will most likely come through reductions in the per-capita utilization (Qp). That may be achieved through ever-higher cost-sharing by patients at point of service – that is, through ever-higher deductibles and ever-higher coinsurance, if not outright lack of health insurance.
Some analysts think that higher cost-sharing will also force down prices (Pp), as patients, using their own money, shop around for a deal. But that could happen only if the veil of secrecy that has traditionally kept private-sector prices opaque from patients could be lifted.
So far the quest to get this done has had only limited and temporary success.
One should, of course, not labor under the illusion that reducing use of health care (Qp) through higher cost-sharing by patients would avoid rationing health care. As every economist knows, using price and ability to pay is merely one of several approaches to rationing scarce resources among unlimited wants.
Thus, absent some miracle – for example, that bundled payments per episode of illness to so-called Accountable Health Organizations will actually serve to bend down the future time path of health spending noticeably – the nation is likely to rely in the years ahead on rationing more and more of health care by income class.
Perhaps this is what the legendary “median voter” now wants.
http://economix.blogs.nytimes.com/2010/09/24/the-perennial-quest-to-lower-health-care-spending/
Of course, other nations do provide all of their citizens with health care at a much lower level of national health expenditures (NHE). So what is there in this conceptual rendering (Professor Reinhardt’s formula) that other nations have discovered and applied that we haven’t?
In his May 8, 2009 blog, Professor Reinhardt provided a taxonomy of public and private financing and health insurance. Essentially all other nations have found success by using some form of social insurance. Even when private insurers are used, they function much more in the G (government) portion of the equation than they do in the P (private) portion.
Professor Reinhardt also co-authored a landmark article titled, “It’s the Prices, Stupid.” Thus the secret of other nations: Even if they use private insurance plans, they control national health expenditures through various means of government control of prices. In contrast, the volume of health care and number of persons remain relatively fixed. Private control of prices (market control) has played a negligible role in controlling NHE.
Although Professor Reinhardt can describe several models through which this can be accomplished, some of us remain convinced that the simplest and most efficient model would be a single payer national health program – an improved Medicare that covered everyone. Regardless, the Patient Protection and Accountable Care Act won’t get us there.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
States Ask for Phase-In on Insurance Change
By Robert Pear
The New York Times
September 22, 2010State insurance regulators told the White House on Wednesday that health insurance markets in some states would be disrupted unless President Obama gave insurers a temporary dispensation from one major provision of the new health care law.
The provision requires insurance companies to spend at least 80 cents of every premium dollar on medical care, rather than administrative expenses, executive salaries and profits.
State officials said they feared that some companies would withdraw from the individual insurance market next year because they could not meet the 80 percent requirement.
Kevin M. McCarty, the Florida insurance commissioner and vice president of the National Association of Insurance Commissioners, said the new law was causing “a paradigm shift” in the insurance industry, and he predicted: “Some companies’ business plans simply will not be successful. There will be some casualties. They either have to adjust their business plans or perish.”
And…
Distribution of National Health Expenditures, by Type of Service, 2008
Kaiser Slides
30.7% – Hospital care
21.2% – Physician and clinical services
10.0% – Prescription drugs
5.9% – Nursing home care
2.8% – Home health care
12.9% – Other personal health care
16.5% – Other health spendinghttp://facts.kff.org/chart.aspx?ch=857
CMS, Office of Actuary, National Health Statistics Group:
http://www1.cms.gov/NationalHealthExpendData/downloads/tables.pdf
It is mind-boggling to think that 21 percent of our national health expenditures (NHE) are directed to physicians and clinical services, whereas many private insurers are now protesting that they cannot survive on 20 percent of the funds which they control – the insurance premiums that they collect.
Taking a closer look at those numbers, one-fifth of all health expenditures go to physicians and clinical services, whereas these insurers who are having difficulties complying with an 80 percent medical loss ratio are consuming over one-fifth of the funds used only for benefits covered by their plans – not one-fifth of the NHE. In fact, 30.9 percent of private insurance premiums do go to physicians and clinical services.
Since these numbers are more comparable, let’s look at them to see the value that we are receiving.
Physicians make most of the decisions on what care their patients receive, thus they are controlling much of spending of the insurance premiums. Not only are they making these spending decisions, they are also providing their professional expertise and clinical skills for which they are compensated – 31 percent of the premium dollars. In a sense, the physicians are making the business decisions of health care spending as an uncompensated additional service – decisions which are very important for the patients’ health.
What about these insurers who need more than 20 percent of the premiums for their own intrinsic needs? They are using two-thirds as much of the premiums as physicians are receiving, but for what? It’s not for making decisions on how the funds will be spent; physicians are doing that. Do they really need that much just for claims processing? What other important services do they provide? Taking away our choices by establishing restrictive provider networks? Why should we be paying for a detrimental service that we don’t even want?
What’s the solution? What will give us greater value? Shall we pay these insurers half again as much and throw out the doctors and have the insurers take over the practice of medicine? Or shall we throw out the insurers and replace them with public stewards who can provide better administrative services at a small fraction of the cost?
What will the White House decide? Let the insurers have as much as the physicians are receiving? Right now they’re listening to the whining of the insurers, and single payer advocates are still not welcome.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Products at Risk
Gregory D. Curfman, M.D., Stephen Morrissey, Ph.D., and Jeffrey M. Drazen, M.D.
Editorial, The New England Journal of Medicine
September 19, 2010In this issue of the Journal, we publish the results of a clinical trial investigating step-up control in adult patients with asthma whose disease was not well controlled by low-dose inhaled glucocorticoids. This study, which compared the utility of treating such patients with inhaled tiotropium bromide, inhaled salmeterol, or higher doses of inhaled glucocorticoids, was conceived and implemented by the National Heart, Lung, and Blood Institute’s Asthma Clinical Research Network (ACRN). The study constitutes comparative effectiveness research, in which the products of a number of different companies are compared in a well-defined clinical setting. Simply put, the companies’ products are put “at risk” in a trial to determine whether the various treatments are superior or noninferior to one another.
The study design, a three-way crossover, required that the investigators have active drug and placebo for tiotropium and salmeterol. As is common is such situations, the investigators took a mature version of the study protocol to the manufacturers of these drugs and asked them to supply active drug and matching placebo inhalers. Boehringer Ingelheim (the manufacturer of tiotropium) agreed to provide the materials, but GlaxoSmithKline (the manufacturer of Salmeterol) refused. Because of Glaxo’s refusal, the investigators had to spend $900,000 from the National Institutes of Health (NIH) — and therefore from taxpayers — to repackage the active drug and to create a visually identical placebo for use in the trial. The NIH deserves credit for providing the funds to obtain the Glaxo drug when the company declined. In the end, the study results provided the truth — that tiotropium is not inferior to salmeterol for this indication.
Many drug companies realize that it is in their best interest to provide these materials, not only because the research that is completed by an independent group may show findings in their favor, but also because it is part of their responsibility to the community to allow their products to be tested against the competition by legitimate third parties. They recognize that their mission, like GlaxoSmithKline’s stated goal, is “to improve the quality of human life” rather than to simply increase market share.
The most precious commodity that drug manufacturers possess is the trust of their research subjects, and to maintain this trust they need to be willing to put their products at risk. When they refuse to provide their drugs to legitimate investigators, the researchers will get their studies done without company help. It will take more time and cost more money, but in the end, the research will be done and the company will be perceived as having acted in its own self-interest rather than having worked to enhance the health of the community.
Everyone agrees, or should agree, on the need for more comparative effectiveness research. We need more information about which medications provide greater benefit to patients, and which ones provide greater value – lower costs without compromises in therapeutic benefit.
During the process of creating the Patient Protection and Affordable Care Act (PPACA), it was not only the private insurance industry that was given carte blanche by the White House, but it was also the pharmaceutical industry. The representatives of both industries professed to supporting solutions that would benefit the American patient, and, in return, they were given legislation that will infuse hundreds of billions of dollars into their own coffers.
GlaxoSmithKline now gives us a hint of their sincerity. Although they state that their mission is “to improve the quality of human life,” it is clear that increasing market share is a much higher priority for them. They will not participate in a study that potentially could dent the sales of a blockbuster product.
The pharmaceutical firms and the private insurance industry got a great deal from President Obama and Congress, and patients got a bad deal. We desperately need to set aside the health care financing structure of PPACA, and enact a program that would benefit patients first – an improved Medicare for all.
Originally published in the Berkshire Eagle.
“Employers pushed costs for health on workers,” The New York Times revealed this month, citing a survey released by the Kaiser Family Foundation, a non-profit research group. Although the cost of an average insurance policy rose 3 percent, the worker’s share of the cost of a family policy jumped 14 percent. Workers are absorbing more of the costs of health insurance premiums as well as facing higher deductibles, thus paying a larger share of their overall health care costs.
Helen Darling, president of the National Business Group, says that companies expect their costs to go up more under the new health care law, the Patient Protection and Affordable Care Act (PPACA), which requires them to provide more benefits. She says businesses “can’t afford to subsidize what’s happening.” Meanwhile, in 2009, profits increased 56 percent for the nation’s five largest health insurers to $12.2 billion. Insurance company CEO compensation keeps rising as well. Stephen Helmsley, CEO of United Health Group, received an income of $107.5 million last year.
Not only are health insurance companies squandering our hard-earned health care premiums on profits, they are often doing so illegally. The California Department of Insurance is seeking fines from PacifiCare, a subsidiary of United Health Group, for nearly one million violations of state law from 2006-2008. The attorney for the Department of Insurance stated, “It’s a story of intense corporate greed.”
With the passage of the new health care law (PPACA), health insurers can only spend 15 percent of premiums from large groups, and 20 percent of premiums from individual policies on administrative expenses. As might be expected, health insurers are gaming the system by pushing as many of their administrative expenses as possible to the medical side so they can preserve CEO salaries and profits, while beleaguered businesses and struggling workers continue to fill the coffers of the health insurance industry.
The for-profit private insurance system, with its multiple insurance plans and micro-management, creates an additional administrative burden for providers of health care, consuming another 12 percent of the premium dollars, which brings total administrative costs up to 32 percent of insurance premiums. Doctors spend hours on paperwork every day.
A national single-payer health insurance program, like an improved Medicare system for everyone, would save $400 billion a year by eliminating the private health insurance industry. According to a recent report from the U.S. House Committee on Energy and Commerce, Medicare administrative expenses are less than 1.5 percent, which means that 98.5 percent of premiums are actually spent on health care. Businesses would be freed from paying rising health insurance costs or passing them on to their workers, because health insurance coverage would not be tied to employment. Everyone would have health insurance coverage, paid for by a modest payroll tax, which would be less than current health care premiums.
In 2009, President Obama stated, “I want to cover everybody. Now the truth is unless you have a single-payer system in which everyone’s automatically covered, you’re probably not going to reach every single individual.” He’s right. Official estimates this week from the Census Bureau show a dramatic spike in the number of Americans without health insurance in 2009 to a record 50.7 million. The rise in the number of uninsured was almost entirely due to a sharp decline in the number of people with employer-based coverage, which has declined for the ninth consecutive year.
In 2014, when PPACA is finally implemented, 23 million Americans will remain uninsured. In Massachusetts, 295,000 citizens still do not have insurance four years after the passage of our own state reform bill. Health insurance must be divorced from employment, and a single-payer program established to cover everyone in a cost-effective manner.
In Massachusetts, there will be a non-binding referendum on the ballot in 14 districts in November, including districts 2 and 4 in the Berkshires. Question 4 reads, “Shall the representative from this district be instructed to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?”
By voting “yes” on question 4, voters will send a clear message to our state government, proclaiming their support for single-payer health care reform.
Susanne L. King, M. D., is a Lenox-based practitioner.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Wrangling over ‘wrapping’: Insurers raise rates for employers who use cost-cutting plan
By Jay Greene
Crain’s Detroit Business
September 19, 2010Some health insurers in Southeast Michigan are beginning to charge higher premiums to employers who offer high-deductible employee health plans and then “wrap” the plans by buying gap insurance or giving workers subsidies to cover the deductibles.
The reason? Insurers say usage of health care services is going up because employees bear little or no responsibility for health care costs.
“Often, employers go the high-deductible route and then cover the deductible by funding an employee’s (health savings account) to a point where the employee no longer has any skin in the game,” said Steve Selinsky, director of sales and marketing with BeneSys, a Troy-based third-party administrator of insurance services.
Wrapping refers to when employers increase their health plan deductible, which lowers premium costs, and then reimburse employees for all, or a part, of their health expenses falling under the increased deductible.
This differs from the original concept of high-deductible plans, in which employees were responsible for deductibles of up to $5,000, but typically $1,000-$2,500, and so had a financial incentive to eliminate unnecessary care and seek lower-cost, higher-quality treatments. John Dunn, vice president of middle- and small-group sales for Blue Cross, said Blue Cross data shows that there is a 4 percent to 8 percent difference in utilization and expenses between those plans that are wrapped and those that are not.
He said Blue Cross in January will start charging employers that wrap between 4 percent and 8 percent more to account for the expected higher utilization.
Don Whitford, vice president of sales with Priority Health, said the health plan earlier this year began charging higher rates — 12 percent to 18 percent more — for companies that wrap their high-deductible health plans.
(Jon Clement, vice president of finance of Health Alliance Plan) said HAP decided five years ago to price its high-deductible plans to assume a higher utilization rate that would accommodate employer decisions to wrap their plans.
As more employers are moving to high-deductible health plans to take advantage of the lower premiums, private insurers, being the market innovators that they are, were not going to stand by as they watch potential premium dollars move into health savings accounts or other options such as flexible spending accounts or health reimbursement arrangements.
From the insurers’ perspective, the high deductible is for the purpose of creating financial barriers to health care access. If the patient is forced to pay a significant amount out of pocket – the deductible – before insurance coverage kicks in, then the patient is going to forgo health care, much of it beneficial, simply because it is too expensive. Since it is less likely that the deductible threshold would be met, that reduces the chances of the insurer having to pay out any benefits at all.
The rationale of the health savings accounts, which pay health care costs before the deductibles are met, is that patients would be better shoppers since they are using their own funds from the accounts which they own, achieving the same purpose as the deductibles alone. In theory, the health savings accounts are funded by the premium savings – savings that reduce insurer revenues.
Now the insurers contend that the accounts allow patients to be spendthrifts. They insist that patients are much more likely to spend the funds if they come from a delegated savings account than they would if they came from other personal savings or current income. They are using this as an excuse to recover the premium discount for the high-deductible plans – in essence, reaching into the health savings accounts and stealing the employees’ own funds (though indirectly through higher premiums paid by the employee in payroll deductions or forgone wage increases).
Although this is yet one more addition to the litany of reasons that high-deductible plans with health savings accounts are a highly flawed method of financing health care, it is much more a further indictment of the private insurance industry which will always find a way to make another buck off of our health misfortunes.
An improved Medicare for all would eliminate these thieves.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Shumlin – Picture of Health
YouTube
“… Vermont needs a single payer system. Get the insurance companies out of the picture. Let health benefits follow you, not depend on your employer, and reward doctors for making you better. As governor, I’ll deliver real health care reform.”
Peter Shumlin, candidate for Governor of Vermont
YouTube video:
http://www.youtube.com/watch?v=8yFUbkVCsZ4
And…
Brian Dubie: Pure Vermont
YouTube
“… set priorities, reduce regulations, roll the economy so that we can continue to make opportunities happen in our state.”
Brian Dubie, candidate for Governor of Vermont
And…
On the Money, Sept. 15: Dubie has $410,269 in cash; Shumlin has $61,965 on hand
By Anne Galloway
Vtdigger.org
September 16, 2010The numbers are in, and Lt. Gov. Brian Dubie, the Republican candidate for governor of Vermont, is the winner in the money race. Dubie has raised nearly three times more money than his Democratic opponent in the last campaign finance reporting period.
Dubie’s supporters donated $150,215 to his campaign in the last month; Sen. Peter Shumlin, D-Windham, who recently emerged as the winner of a five-way Democratic primary race after a two-week recount, has raised $58,964 in the last 30 days.
Peter Shumlin for Governor:
http://www.shumlinforgovernor.com/Brian Dubie for Governor:
http://briandubie.com/
PNHP does not endorse political candidates.
Today’s message is of significance because it demonstrates once again that the single payer message can be carried beyond the party primaries and into the general election. Just as U.S. Senator Bernie Sanders (I-VT) has never abandoned the single payer message, so now Vermont State Senator Peter Shumlin is carrying the single payer message forward in his campaign for governor.
Peter Shumlin already had a track record on single payer, having been an original sponsor of S.88, a bill that would have established a single payer system in Vermont. He continued to support S.88 when it was modified to authorize a study on comprehensive reform for Vermont (Act 128), including an evaluation of the single payer model. That study is currently under way by Harvard Professor William Hsiao and his colleagues, and will be reported out in the near future.
In the money race for the campaign, Sen. Shumlin is well behind his opponent, Lt. Gov. Brian Dubie, since Democratic funds were split amongst five candidates in the primary, followed by a period of uncertainty because of a recount. This election provides the citizens of Vermont the opportunity to express their views on single payer reform, whether in support or opposed. It would be a shame if lack of funds prevented the voters from knowing that single payer is an important issue in this election.
Although we are very excited that the issue of single payer is moving further into mainstream politics, it must be emphasized that THIS MESSAGE IS NOT AN ENDORSEMENT NOR A SOLICITATION OF FUNDS FOR ANY POLITICAL CANDIDATE. Rather it is a plea for us to make every effort we can to be sure that we have a fully informed electorate.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Income, Poverty, and Health Insurance Coverage in the United States: 2009
U.S. Census Bureau
September 2010Health Insurance Coverage in the United States
Highlights
* The percentage of people without health insurance increased to 16.7 percent in 2009 from 15.4 percent in 2008. The number of uninsured people increased to 50.7 million in 2009 from 46.3 million in 2008.
* The number of people with health insurance decreased to 253.6 million in 2009 from 255.1 million in 2008. This is the first year that the number of people with health insurance has decreased since 1987, the first year that comparable health insurance data were collected. The number of people covered by private health insurance decreased to 194.5 million in 2009 from 201.0 million in 2008. The number of people covered by government health insurance increased to 93.2 million in 2009 from 87.4 million in 2008.
* Between 2008 and 2009, the percentage of people covered by private health insurance decreased from 66.7 percent to 63.9 percent. The percentage of people covered by employment-based health insurance decreased to 55.8 percent in 2009, from 58.5 percent in 2008. The percentage of people covered by employment-based health insurance is the lowest since 1987, the first year that comparable health insurance data were collected. The number of people covered by employment-based health insurance decreased to 169.7 million in 2009, from 176.3 million in 2008.
* The percentage of people covered by government health insurance programs increased to 30.6 percent in 2009, from 29.0 percent in 2008. This is the highest percentage of people covered by government health insurance programs since 1987. The percentage and number of people covered by Medicaid increased to 15.7 percent or 47.8 million in 2009, from 14.1 percent or 42.6 million in 2008. The percentage and number of people covered by Medicaid is the highest since 1987. The percentage and number of people covered by Medicare in 2009 (14.3 percent and 43.4 million) were not statistically different from 2008.
* In 2009, 10.0 percent of children under 18, or 7.5 million, were without health insurance. These estimates were not statistically different from the 2008 estimates. The uninsured rate for children in poverty (15.1 percent) was greater than the rate for all children.
* Between 2008 and 2009, the uninsured rate and the number of uninsured for non-Hispanic Whites increased from 10.8 percent and 21.3 million to 12.0 percent and 23.7 million. The uninsured rate and the number of uninsured for Blacks increased from 19.1 percent and 7.3 million to 21.0 percent and 8.1 million.
* The percentage and number of uninsured Hispanics increased to 32.4 percent and 15.8 million in 2009, from 30.7 percent and 14.6 million in 2008.
http://www.census.gov/prod/2010pubs/p60-238.pdf
Census Bureau press release:
http://www.census.gov/newsroom/releases/archives/income_wealth/cb10-144.htmlPNHP press release:
http://www.pnhp.org/news/2010/september/number-of-uninsured-skyrockets-43-million-to-record-507-million-in-2009
Highlights of the 2009 health insurance highlights:
* Uninsured increased to 50.7 million – 16.7 percent of the population
* Private insurance decreased to 194.5 million – 63.9 percent
* Employment-based insurance decreased to 169.7 million – 55.8 percent
* Medicaid increased to 47.8 million – 15.7 percent
* Uninsured children remain at 7.5 million
* Racial and ethnic disparities in coverage have compounded
Those who oppose government solutions to the health care crisis will likely pass these worsening numbers off as an expected consequence of the sputtering economy and the new age of unemployment. They will pay little heed to the fact that the numbers are still intolerable when the economy is thriving; that isn’t their concern.
Supporters of the Patient Protection and Affordable Care Act (PPACA) will no doubt be disturbed by these numbers, but it is very likely that they will make the most of them in selling PPACA by showing how it will dramatically reduce the numbers of uninsured. That is true. Many will be covered by Medicaid and by private health plans, even if far too many will still remain uninsured.
This Census Bureau report remains silent on one of the most important issues in health insurance – the numbers who are underinsured – those who will face financial hardship should medical needs arise.
PPACA is an underinsurance program. Employers will see little relief and will expand their present trend of shifting more insurance and health care costs onto their employees. Individuals buying plans in the new insurance exchanges will select underinsurance products with low actuarial values (30 to 40 percent of costs to be paid by the patient) with subsidies that are inadequate to avoid financial hardship. Many will move into the Medicaid program which has more expansive coverage, but which reimburses providers at such a low rate that far too many will not be willing to accept patients under this program. With Medicaid chasing away providers, it too has become another form of underinsurance.
Thus the touted increase in insurance enrollment under PPACA will be more than offset by the explosion in underinsurance – affecting the majority of Americans. At this point looking forward, this nefarious outcome is not obvious to most. But as underinsurance sneaks up on us, and more and more individuals are feeling the pain, they’ll be ready. Ready for what? Ready for an improved Medicare that will always be there for us – in both good and bad economic times.
The PNHP press release (link above) provides a reality-based perspective of just what these numbers mean.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Teachers sue over health plan
By Susan Essoyan
Star Advertiser
September 15, 2010Hawaii public school teachers filed suit yesterday in Circuit Court to block changes in their health coverage, saying that the state’s plan to do away with their health benefit trust fund is unconstitutional.
The suit, Kono et al. v. Lingle et al., seeks to represent more than 15,000 active and retired school teachers with health benefits in the Hawaii State Teachers Association Voluntary Employees’ Beneficiary Association Trust.
The teachers are objecting to the state’s plan to transfer their health benefit plans from “the financially sound” VEBA to the “insolvent or nearly insolvent” Employer-Union Health Benefits Trust Fund, according to the lawsuit.
“The forced transfer of the teachers into EUTF is designed to prop up that failing system on the backs of the teachers,” said Paul Alston, attorney for the plaintiffs. “What they will get if they are forced to transfer is higher costs and inferior benefits. It is clearly unconstitutional to take away the valuable benefits the teachers have.”
The suit contends that the change amounts to a breach of contract and violates the Hawaii Constitution by “diminishing or impairing” accrued benefits in the employees’ retirement system. After the switch, teachers will face higher co-payments and curtailed drug coverage and services, it said.
The lawsuit also alleges that the state improperly took $3.96 million from the VEBA trust surplus, which otherwise would have been used as reserves, and put it into the general fund.
The Legislature passed a law to phase out the VEBA trust on Dec. 31, and assign teachers to Employer-Union Health Benefits Trust, which covers more than 94,000 state and county employees and retirees.
The court filing included an April 12 letter from Gov. Linda Lingle to legislators in which the governor called the Employer-Union Health Benefits Trust “insolvent,” adding that “its governance is untenable.” She noted that Aon Consulting, the trust’s consultant, warned on March 31 that the trust fund would likely run out of money to cover expenses later this year.
Aon Consulting recommended a 26 percent increase in premiums as of July 1, but the Employer-Union Health Benefits Trust’s board of trustees has voted to keep rates and benefits the same through December of this year.
http://www.staradvertiser.com/news/hawaiinews/20100915_Teachers_sue_over_health_plan.html
During Q&A at some of my speaking engagements, a common question from the audience: “Under a single payer, Medicare for all program, would I have to give up my excellent retired teachers’ health benefit program that we fought so hard for all of these years?”
That’s a very good question. These programs are often more comprehensive than Medicare. In fact, that is why we specify an improved Medicare as the framework for a single payer national health program. All essential health benefits would be included; deductibles, co-payments and coinsurance would be eliminated, and the administration of the program would be streamlined. There would be no need to maintain the teachers’ health benefit program as a separate entity.
What is alarming about this report from Hawaii is that these sacrosanct programs are now vulnerable. The teachers’ well-funded voluntary employees’ beneficiary association trust (VEBA) is about to be dumped into the near-bankrupt health benefit trust established for other government employees. The double tragedy is that the teachers lose, and other government employees who should have the most secure of health benefit plans are also losing as more of their health care costs inevitably will be dumped on them.
If our best and most stable health insurance programs are facing this uncertain future, what does that say about the security of other private insurance programs within our fragmented system of financing health care?
The Patient Protection and Affordable Care Act (PPACA) rewards employers who dump their health benefit programs by requiring health care assessments that are only a fraction of what they pay in premiums for their existing insurance programs. Their employees then are forced, by mandate, to purchase plans within the exchanges. Though purchased through exchanges, these plans are merely a slightly more regulated reincarnation of the individual market – the least stable and least reliable of private insurance plans. The subsidies for these plans are the equivalent of vouchers, providing a mechanism for shifting ever more of health care costs to those individuals with the greatest health care needs.
The teachers of Hawaii are right to be concerned. They need to fight hard to protect their VEBA, at least long enough for us to enact an even better program for them and everyone else – an improved Medicare for all.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Blacks with muscular dystrophy die 10-12 years younger than whites: new study
PNHP
September 13, 2010African Americans with muscular dystrophy die 10 to 12 years younger than their white counterparts, according to research published in today’s (Tuesday, Sept. 14) issue of Neurology, the medical journal of the American Academy of Neurology.
The black-white mortality gap, which was calculated on the basis of 20 years of data, is among the largest ever observed in the annals of research into racial disparities in health care, say Dr. Nicte Mejia and Dr. Rachel Nardin, co-authors of the editorial. “Furthermore,” they write, “white patients with MD [muscular dystrophy] enjoy increasing survival, while survival of black patients with MD barely budges,” leading to an ongoing widening of that gap.
“Inequities in the health delivery system – and the multiple ways in which race constrains access to care – seem the most likely explanation for the observed MD black-white mortality gap,” Mejia and Nardin write in their editorial. But they add that inadequate access to care due to lack of good quality health insurance may also be part of the picture.
“Nonelderly African Americans are 1.5 times more likely than whites to lack any type of insurance and about twice as likely to rely on Medicaid,” they write, noting that lack of health insurance is linked to lack of access to care.
And while Medicaid, the public health program for the poor, compares favorably with private insurance in providing access to primary care, it falls short when it comes to providing access to the standard-of-care treatments needed to manage conditions like muscular dystrophy, they say.
These shortcomings of Medicaid coverage are “particularly worrisome because more than half of the new health coverage under the 2010 National Health Reform will be Medicaid.”
In a separate comment made today, Nardin said, “Replacing the current U.S. health care financing system with a single-payer system that would ensure comprehensive insurance coverage for every American, regardless of race, would go a long way toward reducing this type of disparity.”
Neurology: Widening gap in age at muscular dystrophy–associated death between blacks and whites, 1986–2005
http://www.neurology.org/cgi/content/abstract/75/11/982
It is shameful that we have tolerated for so long a health care system that has failed to address the inequities and injustices exemplified by a widening black-white mortality gap in patients with muscular dystrophy – an inherited disorder inflicted on blameless victims.
Opponents of true reform (based on principles of health care justice) often blame the victim, implying that it is not the deficiencies in our health care system that are to blame, but it is the patients’ own personal failures that result in their predicaments, and we have no responsibility to intervene.
Even the most callous opponents of reform may acknowledge that there are exceptions in which the victims cannot be blamed, but even in those instances, the unfavorable outcome is often attributed to other socioeconomic factors over which we have no control. The “leave me out of this” mentality certainly contributes to our national inertia.
Maybe we can’t fix everything that’s wrong with our health care system and with society in general, but what we can do is reject the message of the passive obstructionists who contend that we’re each on our own, and join together in solidarity to address our societal deficiencies that have permitted terrible injustices such as sentencing muscular dystrophy patients to die a decade early merely because of their personal circumstances associated with being black.
The Patient Protection and Affordable Care Act will provide many of these unfortunate individuals with access to an insurance program, Medicaid, but as a chronically underfunded welfare program, that in no way ensures access to the actual medical care that they need. Many of them are already on this program, yet it doesn’t prevent them from dying a decade earlier than they might otherwise.
Although we have much to repair in this nation, a very good place to start would be to enact a health care financing system that would ensure that all of us receive the health care that we need – an improved Medicare for all. Furthermore, since collectively we are multi-tasked, we can revitalize and expand simultaneously our work on all of the other social justice issues as well.
This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.
Low Costs Of Defensive Medicine, Small Savings From Tort Reform
By J. William Thomas, Erika C. Ziller and Deborah A. Thayer
Health Affairs
September 2010In this paper we present the costs of defensive medicine in thirty-five clinical specialties to determine whether malpractice liability reforms would greatly reduce health care costs. Defensive medicine includes tests and procedures ordered by physicians principally to reduce perceived threats of medical malpractice liability. The practice is commonly assumed to increase health care costs.
Across all specialties, reductions in medical malpractice premiums would lead to statistically significant savings in 2.0 percent of the conditions analyzed, but these are high-volume situations, comprising 35.8 percent of all episodes. However, the magnitude of savings that could be realized is small, accounting for less than 1 percent of medical care costs in every specialty. Across all thirty-five specialties, savings associated with a 10 percent premium reduction in medical malpractice premiums would be just 0.132 percent. Even if medical malpractice premiums were to be reduced as much as 30 percent, defensive medicine costs would decline no more than 0.4 percent.
Will bringing an end to defensive medicine reduce our national health expenditures? According to this and other studies, yes, but not by much.
Defensive medicine represents those tests and procedures that physicians order for the purpose of reducing the risk of medical malpractice liability. These are not random tests, but they are tests selected to prevent the patient from suffering harm – an essential component of malpractice.
If there were no liability exposure, why would a physician decide against ordering a test that might prevent a harmful outcome for the patient? Do physicians really believe that it is acceptable to gamble with the health of the patient by omitting potentially beneficial tests, yet is is not acceptable to place that same bet if a malpractice suit might ensue? Are these tests really for the benefit of the doctor and not for the benefit of the patient?
How often have you heard a physician confess to ordering a test that the patient didn’t need, but the test was still necessary to prevent a lawsuit? That is a non sequitur. If the physician could be sued for not ordering the test, then the test was absolutely essential.
The point of today’s message is that we keep looking in the wrong places for ways to try to control health care spending. Though we need malpractice reform for other reasons, we can’t look at it as a source of significant health care savings.
The most important first step to begin to control runaway health care costs would be to replace our wasteful, dysfunctional health care financing system with a single payer national health program – an improved Medicare for everyone – a Medicare that provides us with the financial tools with which we could slow the rate of health care spending increases.
Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.
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