Monday, August 30, 2010

qotd: Private insurers shifting support to Republicans

August 26, 2010
Health Insurer Cash Shifts to Favor Republicans Before Election
By Drew Armstrong

Health insurers led by WellPoint Inc. are backing Republicans with campaign donations by an 8-to-1 margin, favoring the party that's promised to repeal President Barack Obama's health-care overhaul if it wins back Congress.

WellPoint, Humana, Aetna, Cigna and UnitedHealth Group Inc. have also been considering a $20 million-plus campaign fund to reward friends and punish enemies in Congress. That fund would target vulnerable Democrats who have spoken out against the industry, and would support candidates who are likely to argue for the industry's positions during future debate on the health overhaul.

Comment:  With private insurers supporting Republicans by an 8-to-1 margin, there is no question but that the insurers are supporting their own financial interests, regardless of the negative impact on people who need health care. 

The Republicans remain opposed to all forms of social insurance that would make health care accessible and affordable for everyone (not that the Democrats did much better this time around). Instead Republicans support measures such as high-deductible health plans, health savings accounts, elimination of mandated benefits such as mental health and maternity care, and promoting interstate sale of less regulated, Spartan plans.

Insurers prefer these plans because they are the most profitable. Many individuals in the large healthy sector of our population tend to prefer these plans because the premiums are lower. Unfortunately for the sick, these plans shift a burdensome amount of the health care costs to the patients in need, not to mention the fact that the insurers have been relatively successful in avoiding these higher-cost individuals in the first place.

Republicans support these proposals because of their ideological stance, believing that each person should be responsible for their own welfare, making exceptions only for those who are the most destitute, not of their own making. They oppose the social solidarity of "collectivist" approaches such as universal insurance programs, whether public or private.

A distinction should be made between the current, lock-step, obstructionist, party-of-NO Republicans, and the nearly extinct species of progressive Republican - many of whom have become independent. It is this obstructionist Republican bloc that serves so well the interests of the private insurers.

It's sad that the Democrats got into bed with these people. The Democrats ended up supporting the right-wing private insurance model of Mitt Romney and the Heritage Foundation to appease the Republicans and the private insurers. That resulted in the enactment of a terribly flawed program that will not adequately control costs, and will leave tens of millions uninsured and many more underinsured.

The insurers now want to send us more of these reactionary politicians. Aren't there enough of us who care about the health of all of our people to step up and counter this? Or is it merely all words (for the pollsters), and no action (on behalf of those with health care needs)?

Where are our activists?

Friday, August 27, 2010

qotd: Two year Medicare waiting period for those with disabilities

Kaiser Health News
August 27, 2010
Groups Press Congress To End Patients' Wait For Medicare
By Jessica Marcy

Under federal rules, most people with disabilities who are younger than 65 aren't eligible for Medicare until more than two years after they qualify for Social Security disability income. A coalition of more than 65 organizations led by the Medicare Rights Center has been pushing Congress to do away with the waiting period. But the effort has stalled because of the high cost to the federal government – an estimated $113 billion over 10 years, according to the Congressional Budget Office. That takes into account a $32 billion reduction in federal spending on Medicaid, the state-federal program for the poor and the disabled. Many people with disabilities go on Medicaid while they wait to become eligible for Medicare.

When Medicare expanded in 1972 to cover the disabled, Congress created the waiting period to help control costs and ensure that only people with severe, ongoing disabilities received coverage. About 17 percent of Medicare's total 47 million beneficiaries – just over 8 million people in 2010 – receive disability benefits, according to the Kaiser Family Foundation.

Still, the patient groups are pushing to end the Medicare waiting period because many people may still need government help. Currently, nearly 39 percent of patients are uninsured for at least some of the time during the Medicare two-year waiting period while 26 percent have no insurance for the entire time.

Discarding the Medicare waiting period "is always going to be an issue in Congress," said Edmund Haislmaier, senior health policy research fellow at the Heritage Foundation. "Some of it is money, some of it is politics, too. For members of Congress, irrespective of party or where they stand on the issue, it's kind of all-or-nothing because if they did it for some diseases, then they're immediately going to be inundated with 'Why didn't you do it for us?'"

Joseph Antos, health care policy scholar at the American Enterprise Institute, said that a total elimination of the waiting period was not going to happen. "Across the board eliminating the two years just doesn't seem practical," he said. "This really is a money issue."

Comment:  When Congress expanded Medicare to cover individuals under 65 with long-term disabilities, they specified a two year waiting period to be certain that only those with truly permanent disabilities would be admitted to the program. Obviously this creates a hardship for precisely those for whom the eligibility was established. Will the Patient Protection and Affordable Care Act (PPACA) adequately address this injustice?

PPACA did not include any adjustments in the two year waiting period. Consequently different groups representing specific chronic disorders are lobbying for exceptions to the two year wait. Even if some of these groups achieve legislative success, it will not help the others who must wait the two years.

Since many lose their insurance and their income during that two year wait, some may become eligible for the expanded Medicaid program. Yesterday's message explained how Medicaid may leave those with chronic disorders underinsured with impaired outcomes, so this is certainly not a satisfactory solution. Besides, many with inadequate incomes may still fall above the threshold for Medicaid eligibility.

For those who lose their insurance during the two year wait, the individual mandate would require that they purchase private plans. Even with premium subsidies, these plans may still not be affordable. Besides, their low actuarial values will not provide adequate protection for these individuals with high health care costs, even with out-of-pocket spending subsidies.

PPACA included the CLASS Act (Community Living Assistance Services and Supports Act) designed to provide long-term care insurance. Though you might think that this provides an out, there are significant problems with CLASS. The program is voluntary and the individual must pay premiums for five years before benefits are available. That alone will exclude those with modest incomes who might consider the premiums to be unaffordable, especially for a program they can't use for five years and may never need. Furthermore, the benefits are anticipated to be quite meager and likely will provide only a modest daily cash benefit. The CLASS Act will not fulfill the insurance need for the two year gap.

The comments from the representatives of the Heritage Foundation and the American Enterprise Institute describe the real hurdles: politics and money. It's not that we can't find the money, but the anti-government politics of today is driven by the philosophy that the government has been drained dry so that no funds are available. That is ridiculous. Our national health expenditures are already adequate, but the funds are inequitably and inefficiently distributed. We need more government involvement, not less, in providing stewardship over our health care funds.

The two year waiting period is yet one more example of the profound injustices inherent in our fragmented, dysfunctional health care financing system - a unsound and iniquitous system perpetuated by Congress through the enactment of PPACA. All of this evil nonsense would go away if they instead would enact a single payer, improved Medicare for all.

Thursday, August 26, 2010

qotd: Rampant underinsurance in children

The New England Journal of Medicine
August 25, 2010
Underinsurance among Children in the United States
By Michael D. Kogan, Ph.D., Paul W. Newacheck, Dr.P.H., Stephen J. Blumberg, Ph.D., Reem M. Ghandour, Dr.P.H., Gopal K. Singh, Ph.D., Bonnie B. Strickland, Ph.D., and Peter C. van Dyck, M.D., M.P.H.



Recent interest in policy regarding children's health insurance has focused on expanding coverage. Less attention has been devoted to the question of whether insurance sufficiently meets children's needs.


We estimated underinsurance among U.S. children on the basis of data from the 2007 National Survey of Children's Health (sample size, 91,642 children) regarding parents' or guardians' judgments of whether their children's insurance covered needed services and providers and reasonably covered costs. Data on adequacy were combined with data on continuity of insurance coverage to classify children as never insured during the past year, sometimes insured during the past year, continuously insured but inadequately covered (i.e., underinsured), and continuously insured and adequately covered. We examined the association between this classification and five overall indicators of health care access and quality: delayed or forgone care, difficulty obtaining needed care from a specialist, no preventive care, no developmental screening at a preventive visit, and care not meeting the criteria of a medical home.


We estimated that in 2007, 11 million children were without health insurance for all or part of the year, and 22.7% of children with continuous insurance coverage — 14.1 million children — were underinsured. Older children, Hispanic children, children in fair or poor health, and children with special health care needs were more likely to be underinsured. As compared with children who were continuously and adequately insured, uninsured and underinsured children were more likely to have problems with health care access and quality.


The number of underinsured children exceeded the number of children without insurance for all or part of the year studied. Access to health care and the quality of health care are suboptimal for uninsured and underinsured children. (Funded by the Health Resources and Services Administration.)

From the Discussion

We found that inadequate coverage of charges was far and away the most common source of underinsurance. We also found that children enrolled in private plans were more than three times as likely as their counterparts in public plans to have inadequate coverage of charges. This dramatic difference is probably the result of federal rules that permit only very limited cost sharing under Medicaid and modest cost sharing under the Children's Health Insurance Program.


The New England Journal of Medicine
August 25, 2010
Treating Underinsurance
By James M. Perrin, M.D.

Health care reform, through the Patient Protection and Affordable Care Act of 2010, may improve access to needed health care services for people with chronic health conditions, including children. Key private insurance reforms, including the removal of provisions imposing lifetime limits or unreasonable limits on annual benefit, the removal of discriminatory premium rates, guaranteed availability of coverage, and dependent coverage for young people up the age of 26 years, may go a long way toward improving coverage for Americans and lowering out-of-pocket costs.

However, the growth in child and adolescent disability, combined with the problem of underinsurance and its effects on the quality of care and access to care, also highlights gaps that will remain in public insurance coverage even after the institution of safeguards affecting private coverage. The basic Medicaid program, unlike Medicare, includes long-term care benefits, such as care at home or in nursing homes and specialized therapies, and it serves as a vital source of financing for nursing home care (about 41% of current total nursing home support). The assumption that most children are healthy, however, has led policymakers to limit long-term care and coverage of a number of other benefits for chronic conditions in other programs for children. SCHIP provided a less generous benefit package — and excluded coverage of services for many chronic conditions (e.g., respiratory therapy, speech and language services, and home-based services) on the basis of the belief that the SCHIP population would not need such benefits. Research conducted since the enactment of SCHIP has indicated that substantial numbers of enrolled children have chronic conditions and could benefit from these services.

The Affordable Care Act calls for a major expansion in Medicaid, especially to provide insurance for a large number of currently uninsured and ineligible adults — that is, those under 65 years of age who have incomes below 133% of the federal poverty line (an estimated 12 million to 17 million people). Here, too, the benefit package will resemble the SCHIP (now CHIP) benefit, with an emphasis on coverage of care for acute conditions and less generous coverage of long-term care. Yet the members of the low-income adult population who will become eligible under this Medicaid expansion include substantial numbers of people with chronic conditions, especially mental health conditions. Here, too, for cases in which long-term care is needed, the Medicaid expansion may leave many newly insured people underinsured. For those instances in which the major epidemics of chronic conditions among adolescents have already begun to affect the young adult population, it is unlikely that many of these young people, even with their new Medicaid coverage, will receive the coverage they need for long-term care.

Comment:  Being underinsured often results in the same or similar adverse outcomes as not being insured at all. This study demonstrates that the problem of underinsurance amongst children is even more widespread than being uninsured. Does the Patient Protection and Affordable Care Act (PPACA) adequately address this shameful injustice?

PPACA does expand coverage for children through the individual mandate to purchase private insurance, though this study demonstrates that private insurance plans were three times as likely as public insurance plans to have inadequate coverage of charges. Thus PPACA, while reducing the numbers who are uninsured, actually increases the incidence of underinsurance. Most will still be insured through private employer-sponsored plans. For those purchasing their plans through the exchanges, the subsidies will provide some relief but still will not be not adequate to eliminate underinsurance.

PPACA also expands Medicaid, though primarily for adults. Although Medicaid and CHIP cover out-of-pocket expenses better than do the private plans, the editorial by James Perrin explains how lower-income individuals in these programs may still be underinsured. This is particularly true of those with chronic conditions who may need long-term care.

An appropriately designed single payer system eliminates the problem of underinsurance by eliminating significant cost sharing for all appropriate health care services. The efficiencies and policies of the single payer model create enough savings to pay these costs equitably without increasing our national health expenditures.

As long as we remain content with merely tweaking PPACA, we will continue to live in a society that tolerates exposing individuals and families to the hardships created by underinsurance or by having no insurance at all. Certainly we must be a better nation than that.

Wednesday, August 25, 2010

qotd: Affordable Care Act is wrong framework to fix adverse selection

Center on Budget and Policy Priorities
August 17, 2010
States Should Structure Insurance Exchanges to Minimize Adverse Selection
By Sarah Lueck

The health reform law (the Affordable Care Act) relies primarily on states to establish health insurance exchanges — marketplaces that provide affordable, good-quality coverage options to individuals and small businesses. But it gives states substantial flexibility in how they structure the exchanges.

Adverse selection — the separation of healthier and less-healthy people into different insurance arrangements — will occur if a disproportionate number of people who are in poorer health and have high health expenses enroll in coverage through the insurance exchanges, while healthier, lower-cost people disproportionately enroll in plans offered through the individual and small-business markets outside the exchanges. If that occurs, the cost of exchange coverage will be higher than the cost of plans offered in outside markets. That would drive up costs not only for consumers and small firms purchasing coverage through the exchanges, but also for the federal government, which must provide premium subsidies to enable low- and moderate-income people to afford coverage in the exchanges.

Higher premiums would depress participation in the exchanges by individuals and small businesses, particularly by those people and firms that can obtain better deals in outside markets. That, in turn, could raise premiums even higher in the exchanges and could ultimately result in their failure over time.

Risk Adjustment and Risk Pooling Will Reduce But Not Prevent Adverse Selection

The law also requires use of a risk-adjustment system, in which plans with sicker-than-average overall enrollments receive payments to compensate them for their resulting higher costs. The payments would come from plans that enroll healthier-than-average people that do not cost as much to cover.

As CBO has warned, the inability of current risk-adjustment systems to fully adjust for differences in health care costs between low- and high-cost groups means that, among plans in the same risk-adjustment system, "premiums for enrollees in plans that attract higher-cost beneficiaries [could] rise substantially over time."

Another potentially helpful provision of the Affordable Care Act requires a "single risk pool," meaning that each insurer operating inside and outside of an exchange will be required to treat all of its enrollees as a single group when setting premiums.

These pooling requirements, however, have significant limitations — for example, the risk-pooling requirement would apply only to insurers that choose to sell products both inside and outside an exchange. And as noted below, even in cases when insurers do sell products in both markets, it is likely to be difficult to enforce the requirement and ensure that risk is actually being pooled. In addition, the requirement that insurers offering identical plans in both markets charge the same premium in both places is weakened by the fact that the Affordable Care Act does not require insurers participating in both markets to offer the same plans inside and outside the exchange.

Some Elements of the Affordable Care Act Leave Exchanges at Risk for Adverse Selection

Under the Affordable Care Act, the existing individual and small-group markets can continue to operate outside the exchanges. Many of the law's requirements relating to individual and small-group insurance plans will apply regardless of whether the plans are offered inside or outside the exchanges. For example, all new plans offered — whether through the exchanges or through outside markets — will have to provide a package of "essential benefits" and a minimum level of coverage (as measured by actuarial value). In addition, the law's new "rating rules," including those that prevent insurers from charging different prices based on a person's health status, will apply to new individual-market and small-group plans regardless of whether the plans are offered inside or outside the exchanges.

But various other Affordable Care Act requirements apply only to health plans offered through an exchange, such as requirements related to the adequacy of provider networks, reporting on health care quality, grievance procedures, marketing practices, and benefit design. In addition, the law allows the Secretary of the U.S. Department of Health and Human Services to set additional standards for plans offered through the exchange, which plans sold outside an exchange are not required by federal law to meet.

This leaves substantial opportunity for adverse selection because insurers in these external markets will effectively be competing for enrollees against the exchange plans, but will not have to comply with standards that are as strict. Insurers operating outside the exchanges could seek to take advantage of these looser rules to attract healthier people and businesses, while leaving sicker people to enroll in coverage through the exchanges. As a result, the differences in rules would likely create an unlevel playing field and thereby increase the likelihood of adverse selection against the exchanges unless states institute protective measures.

In addition, under the Affordable Care Act, states have the option of setting up two separate exchanges — one for individuals and another for small businesses. States that do so may find that the exchanges lack the necessary volume to attract a sufficient number of insurers, ensure a large enough pool of enrollees that is well-balanced between the healthy and the sick, and achieve the economies of scale that can keep an exchange's administrative costs low.

(This paper focuses on the risk of adverse selection between a health insurance exchange and outside health insurance markets. Another type of adverse selection could occur among plans within an exchange; this will be the subject of a future analysis.)

Comment:  Any health care financing system that divides health care funds into separate risk pools inevitably experiences adverse selection. In fact, private insurers do all that they can to see that their own risk pools contain low-cost healthier individuals while shifting higher-cost individuals into other public or private risk pools. As this article indicates, numerous regulations can be introduced that may reduce the magnitude of these differences, but they can never be eliminated.

When Medicare was financed using a single risk pool, adverse selection did not exist. Once private insurers were allowed to offer options to the traditional Medicare program (Medicare + Choice and then Medicare Advantage), multiple risk pools were established providing an opening for private insurers to game the system - and game it they did. They skirted the rules to selectively market the healthier sector of the Medicare population. They further pushed up their overpayments by upcoding the diagnoses - creating the deception that their enrollees were sicker than they actually were so that they wouldn't be subject to risk adjustment (adjusting payments to reflect the health status of those in the pool).

Who suffers? Individuals, employers, taxpayers, health care providers. Who benefits? The private insurers.

Adverse selection was not simply an inconvenient policy problem that the legislators had to fiddle with merely because they rejected the concept of a single universal risk pool that eliminates the problem of adverse selection. Far worse, it was a deliberate policy decision supported by the leadership of the private insurance industry who held the hands of the legislators as they led them down the primrose path to the everlasting bonfire that they call reform.

The Center on Budget and Policy Priorities (CBPP) report lists a few policy tweaks that are an attempt to patch some of the loopholes, but there are two major problems with their recommendations. 

First, since the insurance exchanges are established on a state by state basis, each and every state must have its own enlightened and caring leadership that would oversee the intensive oversight efforts that will be required to reduce (but not eliminate) these injustices. That will never happen in most states.

The greater problem with the CBPP analysis and recommendations is that they completely excluded any consideration of the solution that really would work - a single universal risk pool through a single payer national health program, such as an improved Medicare for all.

Tuesday, August 24, 2010

qotd: Bill Moyers on John Geyman's "HIJACKED"

Bill Moyers on John Geyman's "HIJACKED"

"You think the battle for real health care reform is over? John Geyman says 'Not on your life!' And, by the way, your life is what's at stake. This former Republican country doctor and long-time respected scholar, editor, and advocate for reform that puts the patient, not the industry, first, has issued an informed, convincing, and passionate account of why the battle has just begun, and how we, the people, can win."

Bill Moyers, author of "Moyers on Democracy"


HIGHJACKED - The Road to Single Payer in the Aftermath of Stolen Health Care Reform
by John Geyman

Everyone needs to read this book. Order your copy now. (I'm ordering ten copies - to share with others.):

To order:

Monday, August 23, 2010

qotd: Soft-pedaling reform

August 19, 2010
Dems retreat on health care cost pitch
By Ben Smith

Key White House allies are dramatically shifting their attempts to defend health care legislation, abandoning claims that it will reduce costs and the deficit and instead stressing a promise to "improve it."

The messaging shift was circulated this afternoon on a conference call and PowerPoint presentation organized by FamiliesUSA.

The Herndon Alliance, which presented the research, is a low-profile group that  coordinated liberal messaging in favor of the public option in health care.


Implementing Health Reform: A Communications Perspective
August 19, 2010
By Lake Research Partners, Greenberg Quinlan Rosner Research, and The Herndon Alliance

Challenging Environment (Slide 4):

Straightforward "policy" defenses fail to be moving voters' opinions about the law.

Public is disappointed, anxious, and depressed by current direction of country - not trusting.

Voters are concerned about rising health care costs and believe costs will continue to rise.

Women in particular are concerned that health law will mean less provider availability - scarcity an issue.

Many don't believe health reform will help the economy.

Strategic Recommendations: The "Do Nots" (Slide 24):

Don't assume public knows the  health reform law passed or if they know it passed understand how it will affect them

Don't list benefits outside of any personal context

Don't barrage voters with a long list of benefits

Don't use complex language or insider jargon

Don't use heated political rhetoric or congratulatory language

Don't say the law will reduce costs and deficit

PowerPoint presentation


Herndon Alliance
Herndon Alliance Statement on Politico Story

Our research reaffirms that the more the public hears about the specific reforms in the law, the more they like it. The strategy of informing and educating the public about the law continues to be the right strategy.  The Politico story (Aug 19, 2010)  is wrong when it says groups supporting affordable health care for the American people are dramatically changing their strategy.  There is no reason to do so — our research reaffirms that the more the public hears about the specific reforms in the law, the more they like it.  And our research finds that there is a need to cut the political flak and give real information to the public.  Americans are tired of the partisan spin that many opponents continue to throw at the health reform law. Hard-working people are thinking about the economy and just want to know how the law will help them and their families. That is what the President and the administration have been doing — it is the approach we support.

Comment:  The conclusions and recommendations presented during the Families USA conference call were based on polls and focus groups conducted by Herndon's research partners. In spite of Herndon's positive spin, the research confirms that the Obama administration and the Democrats in Congress face a very "challenging environment" as they attempt to sell the benefits of the Patient Protection and Affordable Care Act.

Their recommendations for communicating the benefits of reform might best be characterized as "keep it simple, stupid," relying heavily on personal anecdotes. Don't confuse the public with the actual policies that are now law, and certainly don't claim that the law will reduce costs or the deficit.

Many will remember that these are the same partners that pushed the message of choosing your own health plan, while actively suppressing any references to single payer or Medicare for all. They seemed to have the view that the message was of prime importance and policy be damned. Obviously they haven't changed.

This next time, let's first define optimal policy (single payer) and then develop a message that fits. As Herndon states, we "need to cut the political flak and give real information to the public."

Friday, August 20, 2010

qotd: Insurance trade group sues to protect rescissions

San Francisco Chronicle
August 19, 2010
Trade group sues over new Calif. insurance rules
By Shaya Tayefe Mohajer

A new regulation that makes it harder for health insurance companies to drop individual policyholders in California is being challenged in court by an industry trade group.

The California Department of Insurance's new regulations, which took effect Wednesday, require insurers to investigate the medical histories of those seeking individual policies before accepting any premiums.

The Association of California Life and Health Insurance Companies sued to stop the rules on Monday, accusing the state of acting "in excess of its jurisdiction and authority" by creating regulation that conflicts with the state's insurance code.

Insurance Commissioner Steve Poizner on Thursday called the lawsuit "shortsighted and morally wrong."

"Sometimes I think representatives in this industry have their heads permanently stuck in the sand. Illegal rescissions are a repugnant industry practice," said Poizner.

Comment:  One of the most egregious offenses of the health insurance industry has been to retroactively revoke an insurance policy after the insured individual files a medical claim, a process known as rescission. Public outrage over this injustice helped to drive the process that brought us the Patient Protection and Affordable Care Act (PPACA). 

Apparently the insurance industry has learned nothing. Their trade organization in California has the gall to infuriate all of us by suing to protect their right to do their underwriting after a claim is filed rather than before the policy is issued, whacking the patients when they are down.

Since PPACA will make rescissions more difficult, you would think that the industry would be quiet and accept the inevitable. No. Instead they reveal that they are not simply an amoral industry but rather a truly immoral one by insisting on their right to retroactively deny payment of medical bills run up by the hapless patient, merely to save the costs of timely underwriting.

This is not the industry that should be managing our health care financing. We need our own public financing entity - a single payer national health program.

Thursday, August 19, 2010

qotd: Why are large employers unable to control their costs?

National Business Group on Health
August 2010
Large Employers' 2011 Health Plan Design Changes
By Karen Marlo, Dannel Dan, and Craig Lykens

The National Business Group on Health conducted its annual plan design survey with members in the spring/summer of 2010.

Changes as a Result of Health Care Legislation

While there was uncertainty about the regulations determining grandfathered plan status, the majority of employers (53%) were still planning to make changes to their plan designs.

Medical Plan Costs

Employers estimated an average increase in health care costs of 7.0% for 2010, with reported estimates ranging from a 2.7% decrease to a 14.0% increase. For 2011, employers are estimating a slightly larger increase, an average trend of 8.9%.

In 2011, 63% of employers will be increasing the employee percentage contribution to premium costs, and 46% will increase out-of-pocket maximums, while 44% will increase in-network deductibles.

Consumer-Directed Health Care

Of the respondents, 61% will offer a CDHP in 2011. Of those offering a CDHP, 20% indicated that they will or have moved to a full replacement plan (i.e., no other option), up from 10% in 2010. The most common type of CDHP employers will offer in 2011 is a high-deductible health plan (HDHP) with a health savings account (HSA) (64%).

Pharmacy Benefits

To manage pharmacy benefits, the techniques employers are most likely to use are prior authorization (73%), followed by step therapy (63%), three-tier design (63%), and mandatory mail order for maintenance medications (47%).

Retiree Health

Very few employers offer retiree health benefits for new hires, with 18% offering coverage to pre-65 retirees and 11% offering post-65 supplemental coverage to new hires.

The top strategies being used to control retiree health care costs are caps on company contributions (46%), increasing employee contributions (37%), and eliminating coverage for future retirees (33%).

Comment:  The National Business Group on Health represents primarily Fortune 500 companies and large public-sector employers with self-insured health benefit programs. Because of their market power and their ability to eliminate the risk pooling function of private insurer intermediaries, you would think that these large employers would be immune from the high health care costs inflicted on the rest of us by our dysfunctional system of financing health care, but you would be wrong.

This report shows that escalating health care costs continue to plague our nation's largest employers, so much so they they are turning to some of the same ill-advised cost containment measures used throughout our system. Amongst the most perverse is that they are shifting ever more costs to those individuals who most need to be protected by the benefit programs - their employees and family members who have health care needs. It is bad enough to have health problems, but it is even worse to be financially penalized for having them.

Why is it that these large employers, with their tremendous purchasing power and ability to bypass the extortion of risk-bearing private insurers, have been unable to control their health care costs? The reason is quite simple. Our fragmented, dysfunctional, multi-payer system permeates the entire health care delivery system, and these employers are unable to function in an isolated delivery system that has not been damaged by the financing perversities.

Let's look at some of the excess costs that they face. First, U.S. health care prices are the highest in the world. Even with their purchasing clout, the employers are not able to slow the unrelenting escalation in health care prices; they still have to pay prices close to those negotiated by the private insurance industry. In fact, most of them use private insurers for administrative functions such as claims processing, so they're playing the same ball game.

Second, and most importantly, the health care delivery system has built into it very high administrative costs due to the necessity of interacting with a multitude of payers, each with different contract requirements. There is no way that large employers can avoid paying these excess costs because they are fixed costs built into the delivery system.

It is true that large employers escape some of the costs of private insurance, such as the expense of marketing health plans, or the necessity of paying profits to investor-owned insurance companies. However they are exposed not only to the massive indirect administrative costs imposed on the health care delivery system, they also have their own excessive administrative costs. 

The U.S. model of health care financing depends on provider networks, and these large employers must either establish their own networks, or, much more likely, rent these networks from the private insurers. It defies logic that they should pay extra to take choice away from patients, but they do. (Keep in mind that Medicare controls prices without the need of establishing restrictive provider networks.)

They also must either establish their own claims processing system, or again more likely, use private insurers or claims processing managers which profit from the services they are selling to the employers.

With the increase in consumer-directed health care plans employers have increased administrative responsibility for managing the various cost sharing provisions, ranging from tallying services before the deductible is met to management of payments from health savings accounts.

It is easy to see why being self-insured has not protected these large businesses. Their direct insurance-type administrative costs may be comparatively low, but the costly burden of our dysfunctional financing infrastructure has been placed upon the entire health care delivery system, and they must pay for that. (Yes, I repeat myself, but this is the crucial take-home message.)

Although some might want to give the private insurers a pass because the employers are not dependent on them for risk pooling, that would be a mistake. The private insurers and their political supporters are very much to blame because they have perpetuated this dysfunctional financing system that the large employers have been unable to penetrate. The politicians perhaps bear the greatest blame because they have supported the private insurance industry at a great cost to the rest of us.

What the United States lacks that all other industrialized nations have is a monopsony (single purchaser) to purchase health care. Even in those nations with multiple payers, government oversight pulls them together as a de facto single purchasing entity. In the private sector, a monopsony can be as evil as a monopoly, but a public monopsony is different because it purchases health care for the benefit of the nation's patients.

Our nation's largest employers, with all of their purchasing power, still lack the strength of a monopsony. They are making a tragic mistake in trying to solve their problems by passing more of the health care burden onto their workers.

If the leadership of the business community had just a little bit more vision, they would realize that it is time to establish a monopsony that would not only control their costs, but would work for all of us. The ideal monopsony for this nation, of course, would be an improved Medicare that covers everyone.

Wednesday, August 18, 2010

qotd: Is NAIC agreement on medical loss ratios in patients' interests?

August 17, 2010
Commissioners OK health rate plan
By Sarah Kliff

The National Association of Insurance Commissioners approved Tuesday morning (by a unanimous vote) a preliminary outline of what insurers will be able to count as medical costs, a document necessitated by the health reform bill's requirement that insurers spend at least 85 percent of subscriber premiums on medical costs in the large group market and 80 percent for small group and individual plans.

While insurance commissioners moved forward unanimously, familiar fault lines emerged between consumer advocates and industry over the document and how it categorizes medical spending.

"In general, we are very pleased," said NAIC consumer advocate Timothy Jost, a professor of health policy at Washington & Lee University. "The process has been very open and participatory. We feel like our concerns have been listened to."

"The NAIC is conducting a transparent and thorough process as it develops the [medical loss ratio] MLR definition, but the current proposal could have the unintended consequence of turning back the clock on efforts to improve patient safety, enhance the quality of care and fight fraud," AHIP president Karen Ignagni said in a statement.

NAIC approved reporting form (blank):

Letter from AHIP's Karen Ignagni:

Comment:  The National Association of Insurance Commissioners (NAIC) has finally come to agreement on the reporting form that likely will be used to determine whether or not the private insurers are in compliance with the required medical loss ratios (MLRs). The agreement is being reported as a victory for health care consumers and a defeat for the private insurance industry, but this ignores the crucial overriding issue.

The debate was over how much of their administrative costs the private insurers would be able to pass off as quality improvements that could be classified as medical expenses. Such reclassifications would allow the insurers to spend more for other non-medical purposes such as marketing and profits. Much of their attempted overreach - some described in Karen Ignagni's letter - was rejected.

This is not a victory for the health care consumer. We are still stuck with a middleman industry that has been granted the right to keep 15 to 20 percent of our premium dollars to use for their own purposes. Congress and the President rejected a model of reform - an improved Medicare for all - that would have eliminated much of this waste plus the waste of the excess administrative burden that the insurers place on physicians and hospitals. The insurers get to include the latter as medical costs, further padding their margins, but administrative waste doesn't benefit anyone's health.

With all of the attention being given to the details of implementing the Patient Protection and Affordable Care Act (PPACA), too many have forgotten about the fact that the financing model in PPACA is irreparably flawed and can never bring us affordable health care for everyone. Instead of frittering away our efforts in the peripheral skirmishes, we need to pull together and win this war.

Tuesday, August 17, 2010

qotd: Economic crises and cost sharing don't mix

National Bureau of Economic Research
Working Paper 15843
March, 2010
The economic crisis and medical care usage
By Annamaria Lusardi, Daniel J. Schneider, Peter Tufano

We use a unique, nationally representative cross-national dataset to document the reduction in individuals' usage of routine non-emergency medical care in the midst of the economic crisis. A substantially larger fraction of Americans have reduced medical care than have individuals in Great Britain, Canada, France, and Germany, all countries with universal health care systems. At the national level, reductions in medical care are related to the degree to which individuals must pay for it, and within countries are strongly associated with exogenous shocks to wealth and employment.

Comment:  This five-nation study of the impact of the financial crisis on usage of routine medical care demonstrates that both a decline in employment and a decline in wealth are strongly associated with reductions in medical care. But once again, the United States is an outlier.

U.S. citizens pay the highest out-of-pocket amounts for health care, and therefore were two to five times more likely than Europeans to reduce their use of health care. In difficult economic times, higher cost sharing has a greater negative impact on health care access.

The Patient Protection and Affordable Care Act (PPACA) will intensify this problem because most of the subsidized private plans will have low actuarial values, requiring larger deductibles, higher coinsurance (percentage of costs paid by the patient), and higher copayments (dollar amount paid by the patient).

The health care financing system should be designed to allow individuals to have the health care that they need without exposing them to financial hardship, and that protection certainly should extend into times of economic crises. 

Now that PPACA has established underinsurance as the norm, we can anticipate greater reductions in necessary care, especially during difficult economic times. Or instead we could ensure that people receive the care that they need by replacing our financing system with a single payer national health program. As voters, it's our choice.

Monday, August 16, 2010

qotd: Is WellPoint's business model viable?

American Medical News
August 16, 2010
Big and beleaguered: WellPoint's bad image
By Emily Berry

Thus far, WellPoint and insurance trade group America's Health Insurance Plans have responded to criticism about rate increases with variations on the same theme: Medical costs, driven by physicians and hospitals, are rising so dramatically that insurers cannot avoid raising rates.

The argument doesn't appear to work if WellPoint and AHIP are trying to elicit sympathy or understanding from the public or policymakers.

As it went on the defensive using studies demonstrating higher medical costs, WellPoint reduced payment for physicians in most of its markets by double-digit percentages for certain procedures, and the cuts were across all specialties, said Susanne Madden, CEO of the consulting firm Verden Group in Nyack, N.Y.

"They've done a spectacular job destroying customer loyalty and physician loyalty at the same time, and they're not making any friends in government," she said. "They don't seem to have a grasp on the fact that if they do not have physicians as allies in some way, shape or form, they're going to have a hard time."

If it cannot raise rates, WellPoint -- and other national insurers -- will have to cut costs, experts said. This is where physicians might be affected. WellPoint is likely to cut costs by further reducing payments for hospitals and physicians and restricting networks, experts said.

Comment:  WellPoint's phenomenal business success has been largely due to its ability to offer competitive premiums by limiting what it has had to pay out in health care benefits. Will WellPoint's business model continue to be viable?

It has targeted its marketing to the healthy workforce and their young, healthy families, and to the portion of the individual market that can pass underwriting standards. Under the Patient Protection and Affordable Care Act (PPACA) WellPoint will no longer be able to exclude individuals with greater health care needs, neither by favorable selection nor by retroactive rescissions. Without other innovative cost controls, premium increases will be inevitable.

Under PPACA, WellPoint will also be required to provide a standard package of benefits, preventing them from reducing health care spending by cutting benefits. They will also be required to provide plans with tiered actuarial values, prohibiting them from requiring ever greater out-of-pocket cost sharing by the patient. Thus premiums will have to reflect the actual increases in health care costs.

It would be possible for WellPoint to slash reimbursement rates for physicians and hospitals, but that would be a terrible business decision wince it would risk a massive exodus from their provider networks.

It is likely that WellPoint and other insurers will establish more restrictive networks with providers who are willing to accept payment reductions in exchange for greater volume, but that loss of choice would certainly further alienate their plan subscribers, also threatening their market.

The plans may search for other innovations, including some of those in PPACA, but at this time there is little prospect that cost savings could be achieved without creating greater animosity amongst patients and providers. 

To comply with PPACA, WellPoint will have to increase premiums and market primarily plans with low actuarial values of 60 or 70 percent, leaving excessive out-of-pocket costs for those with health care needs. The subsidies in PPACA are too small to prevent financial hardship, and there is little political will to expand the federal budget by increasing the subsidies.

The situation can only grow worse with time. The WellPoint model will inevitably end up in the trash heap of failed policies as it is replaced with a single payer national health program - a program that would meet the needs of patients and their health care professionals.

Wednesday, August 11, 2010

qotd: Corporate perquisites and drug testing the left

Los Angeles Times
August 11, 2010
Executives at health insurance giants cash in as firms plan fee hikes
By Noam N. Levey

The top executives at the nation's five largest for-profit health insurance companies pulled in nearly $200 million in compensation last year — while their businesses prepared to hit ratepayers with double-digit premium increases, according to a new analysis conducted by Health Care for America Now.


Los Angeles Times
August 11, 2010
White House spokesman blasts liberal critics
By Peter Nicholas and Tom Hamburger

Festering tensions between the White House and liberal activists flared Tuesday, with presidential Press Secretary Robert Gibbs scolding what he called "the professional left" for its vocal objections to President Obama's record.

"These people ought to be drug tested," Gibbs said. "They will be satisfied when we have Canadian healthcare and we've eliminated the Pentagon. That's not reality. They wouldn't be satisfied if Dennis Kucinich was president."

The backlash against Gibbs was swift.

Dr. Quentin Young, a Chicago physician and national coordinator of Physicians for a National Health Program, which advocates for single-payer health insurance, said he was "incredulous" when he first heard of Gibbs' comments. Young, an early supporter of Obama, immediately wrote Gibbs.

"I believe that unless you retract the insulting description of deeply committed citizens you will drive off those of us who supported the president's campaign and have anguished over the fruitless lurches to the right that have characterized the first half of the president's first term," Young wrote.

Comment:  It is no secret what the Democrats under the leadership of President Obama did when it came time to fix our health care system. They left the big corporations in charge of the health care funds. The report on the very high compensation for the top executives of the nation's five largest for-profit health insurance companies at a time of double digit premium increases leaves no doubt as to who the financing infrastructure is designed to benefit. It is a sickening example of our national priorities which result in a massive transfer from the ordinary people to the wealthy.

Liberals who care are becoming less tolerant. The message has been received by The White House. Their response? We should be "drug tested" for wanting "Canadian healthcare."

PNHP's Quentin Young has responded appropriately to presidential Press Secretary Robert Gibbs, as quoted above.

It isn't that those on the left who wanted a better deal for all Americans are poor losers. It's that the administration of Change who greased the conduits for the upward flow of societal funds are bad winners.

How effective the mind is in dealing with perceptions and realities brings us to asking another question. Who is it that needs to be drug tested?

Tuesday, August 10, 2010

qotd: Private insurers' double contracting

American Medical News
August 9, 2010
Dropping an insurer requires care and analysis
By Victoria Stagg Elliott

Approximately 55.8% of medical practices surveyed earlier this year by the Medical Group Management Assn. said they were renegotiating or eliminating low-paying commercial payer contracts as a way of dealing with the recession.

But deciding which insurer to drop and then, if appropriate, actually taking them off the rolls requires careful analysis and handling.

Questions to consider include: What are the rates that a particular insurer is paying? How does what the insurer actually pays compare with what is billed? How long does it take an insurer to pay? What is the denial rate? Are preauthorization procedures onerous and frequently required? Is there something about a payer that makes it more difficult to work with than others?

Experts suggest next looking at how many patients would be affected.

Other issues to consider include how dropping an insurer may affect referrals from other clinicians, and whether cutting a plan from the rolls means that another will cover more than a quarter of a practice's patient volume. Most experts say that particular ratio would give one insurer too much sway over a practice. However, they acknowledge that it may be unavoidable in some areas of the country because of insurance industry consolidation.

Physicians should then contact referring physicians as well as affected patients.

Any communication with patients should avoid badmouthing a particular insurance company and include information about possible options, such as staying with the practice and paying an out-of-network rate, or transferring to another physician, experts said.

Comment:  Had President Obama and Congress selected an improved version of Medicare to provide stable, life-long health care financing for everyone, they would have eliminated the injustices, inequities, and especially the instability of the double contracting processes required by the private insurance model of health care financing.

What is meant by double contracting? Much attention has been given to the purchase of a health care contract - a private health insurance plan - but little attention is paid to the private insurer contracts extracted from physicians and other providers in the health care delivery system.

Whether it is individuals or employers who purchase the private plans, everyone is acutely aware of the perpetual changes in premiums, benefits and cost sharing, which often requires a change in plans or even a change in insurers. Contracting on the patient side is quite unstable, which has allowed the insurers to surreptitiously shift ever more of the financial responsibility to the patient who needs to access care.

Now look at the other contract - the one that the provider of health care services signs with the private insurer. As insurers adopt ever more innovations, the desire and even the ability of the physician or other providers to accept or renew the contracts diminishes. That creates instability in the physician and hospital networks which can very directly impact the insurer/patient contract. Patients may end up stuck with insurance plans that have terminated relationships with their health care professionals.

Instead of being stuck with a single, one-size-fits-all, government program (that would cover all legitimate beneficial services for all of us), we were given choice - choice of unstable, double-contracted private plans offered by the double-crossing private insurance industry. Nice choice.

Monday, August 9, 2010

qotd: Private equity funds are out to make money

American Medical News
August 9, 2010
Health plan acquisitions target small- to medium-sized companies
By Emily Berry

As a newly reformed health system takes shape, private equity firms are eyeing investments in health plans.

"Private equity funds are out to make money, to invest money, and they've got money they want to put to work now," said Chip Clark, partner in the provider care sector in Ernst & Young's North America Transaction Advisory Services practice.

Investments are likely to target small- to medium-size plans that won't elicit intense regulatory scrutiny, as well as Medicaid contractors likely to continue making money from growing Medicaid rolls and cash-strapped states, observers said.

"Sustainability is going to require companies that can operate on thinner margins with a wider portfolio of products and services," said Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions, the health research services arm of Deloitte LLP. "A substantial amount of consolidation is very likely."

He said private equity investors he advises are watching for good opportunities in the health care industry, including health insurance plans. A business in the midst of a wave of change isn't necessarily a bad thing in their eyes, he said. "It's exactly what private equity looks for: sectors that are volatile, sectors where there's tremendous opportunity for synergy, sectors where you could pick up a pretty strong management team."

Comment:  The Patient Protection and Affordable Care Act (PPACA) has provided expanded investment opportunities for the private equity firms. Two of the greatest opportunities include: 1) consolidation through acquisition of small and medium-size health insurance companies, and 2) takeover of Medicaid contractors in an environment of expanding programs in cash-strapped states.

As Ernst and Young's Chip Clark says, "Private equity funds are out to make money, to invest money, and they've got money they want to put to work now."

Health care money managers very understandably have always placed business first, even if it harms patients and the original sources of payments - be it individuals, employers or government. Instead of giving us a financing infrastructure that placed patients first, PPACA has greatly expanded the business opportunities for the money managers.

This theme is getting old. 

Friday, August 6, 2010

qotd: Rationing by inconvenience

The New England Journal of Medicine
August 5, 2010
Immigrants' Experience with Publicly Funded Private Health Insurance

To the Editor:

On October 31, 2009, Massachusetts involuntarily transferred about 30,000 legal immigrants (mostly "green card" holders) from Commonwealth Care, the state-subsidized insurance program, to a new private insurance plan. CeltiCare, a subsidiary of the out-of-state, for-profit insurer Centene, agreed to take over their care for only $1,300 per person, one third of the state's previous cost and well below the average cost of adequate care nationally. CeltiCare excluded several hospitals (and their affiliated community health centers) that have traditionally provided safety-net care for immigrants, including Boston Medical Center and Cambridge Health Alliance (CHA), where we work.

We used internal hospital data to determine the characteristics of patients who were transferred to CeltiCare and who had formerly received their primary care at CHA. A total of 1325 patients who had visited a primary care provider at CHA during the past year were moved to CeltiCare. Of these patients, 73% speak a primary language other than English, including Portuguese (24%), Spanish (20%), and Haitian Creole (9%); 19% have hypertension, and 10% have diabetes mellitus. A psychiatric disorder has been diagnosed in at least 9%.

We then evaluated the adequacy of the provider network for these patients. During the second and third months after the switch to CeltiCare, we searched CeltiCare's Web site for primary care providers within 5 miles of CHA's ZIP Code. The search returned 326 providers, of whom 217 were nonduplicate adult generalists. Of these providers, 25% could not be reached at the telephone number provided. Of those available by telephone, only 37% were actually accepting new CeltiCare patients, and the average wait for an appointment was 33 days. In all, only 60 providers were accepting new CeltiCare patients, and only 38 could provide service for even one of the three major linguistic minorities.

Given these findings, we believe that patients who were switched from Commonwealth Care to CeltiCare had inadequate access to primary care 3 months into this new program. We fear that such "rationing by inconvenience" shuts patients out of care to the detriment of their health but to the benefit of CeltiCare's bottom line. Policymakers, in Massachusetts and nationally, should reassess the role of profit-driven insurers in the provision of safety-net care.

Ruth Hertzman-Miller M.D., M.P.H.
Malgorzata Dawiskiba M.D.
Cassie Frank M.D.
Cambridge Health Alliance, Cambridge, MA 

NEJM 1989: Health Care Rationing through Inconvenience, by Gerald W. Grumet, M.D.

Comment:  Of all of the industrialized nations, the United States has the greatest amount of health care rationing, and we do that through a unique mechanism. We ration based on ability to pay. As this NEJM report shows, our flawed financing system also results in rationing by inconvenience. This is a unique tool used by the private insurance industry - a tool that serves the interests of the insurers, at the cost of the patients.

The 1989 NEJM article by Grumet describes some of the rationing-by-inconvenience mechanisms used during the managed care revolution. Not much has changed. The Patient Protection and Affordable Care Act calls for greater regulation of the private insurance industry, but it contains only a paucity of meager safeguards against policies of inconvenience. Therefore, it will be relatively ineffective in protecting us from this unscrupulous form of rationing.

Why do we leave the private insurance industry in charge?

Thursday, August 5, 2010

qotd: Quentin Young and Cory Franklin on Medicare for all

Chicago Tribune
August 4, 2010
Excerpts from Pro and Con op-eds on Medicare for all


Rx for Medicare's birthday: Expand it
By Quentin Young

I was in active medical practice on July 30, 1965, when Medicare was signed into law by President Lyndon B. Johnson. Its impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors' offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America's seniors and their children. You could almost hear a collective sigh of relief.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It lacks authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the "doc fix") over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems — and to bring down skyrocketing health care costs at the same time — is to improve the program and, most important, to expand it to cover every person in the United States.

That's right: Extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on unnecessary paperwork and bureaucracy. That's enough money to cover everyone who is currently uninsured and to upgrade everyone else's coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They'd be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we'd acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program's sustainability over the long haul.

It's never too late to do the right thing. So when naysayers urge cuts to Medicare, don't buy it. Tell them to ask Congress to enhance Medicare and to extend it to all.

Dr. Quentin Young is national coordinator of Physicians for a National Health Program.


Patients will end up receiving less care
By Cory Franklin

No physician in the United States has been a more articulate spokesman for the medically disenfranchised in the last half century than Quentin Young; his ideas on health care merit our attention. But he is simply mistaken that the best remedy for our health care problems is to expand Medicare to every American.

Medicare, adopted in 1965, has been a success — albeit a qualified one. Many of its advantages are indisputable, but some are oversold.

Medicare expansion raises the untested arguments of single-payer advocates — savings accrued through lower administrative costs, negotiating fees, global budgets, centralized planning and purchasing.

The biggest problem in expanding Medicare is essentially solving what economist Greg Mankiw calls the trilemma, the three problems of health care delivery — cost, access and quality. Any two might be achieved but the third necessarily suffers. Expanding Medicare could certainly improve access but no one has figured out how to prevent escalating costs or diminishing quality (e.g. less subspecialty care). The question must be asked: Under universal Medicare might the country pay more and see patients receive less?

Dr. Cory Franklin is a physician with NorthShore University HealthSystem.

Comment:  Supporters of Medicare for all are already familiar with the Pro position expressed so well by Quentin Young, but you may want to download the full article anyway to share it with others who may be less informed.

The full article on the Con position, written by Cory Franklin, also provides passive support for the Medicare for all position. He argues that 1) Medicare is going broke, 2) physicians are unhappy with Medicare reimbursement rates, 3) there have been many extensive technological advances in the past 45 years, 4) aging and obesity would put a strain on Medicare, 5) patients no longer pay 50 percent of total costs out of pocket, and that 6) there are unintended consequences in a massive government assumption of costs.

The reason that his arguments support Medicare for all is that he provides no alternative to address these issues other than the "untested" policies of the single payer model. In fact, the policies listed have been tested extensively in other nations and proven to be effective in both controlling costs and ensuring health care access for everyone.

A word needs to be said about the oft-repeated common wisdom that cost, access and quality are interdependent and that an improvement in one automatically results in an impairment of one or both of the others. Improve access and costs will go up and quality will go down, they say. This meme has been repeated so often that it is no longer questioned. Even Cory Franklin advances it with his statement: "Expanding Medicare could certainly improve access but no one has figured out how to prevent escalating costs or diminishing quality."

What is the truth? As a universal program, Medicare for all would eliminate financial barriers to access for everyone. Expanded coverage would be paid for initially by the recovery of the profound administrative waste that uniquely characterizes our dysfunctional, fragmented system of financing health care. Not only would costs not increase, but single payer policies that would be put in place would slow the growth in costs to sustainable levels far into the future. A single payer system is also much more adept at identifying and incentivizing beneficial health care practices, thereby improving the quality of care delivered.

The opponents of Medicare for all are locked into the framing of the three-legged stool of cost, access and quality - reinforce one leg and the other two destabilize. We can show them how we can use Medicare for all to reinforce all three legs - proving universal access to higher quality care while controlling costs - to provide a solid, permanent structure of affordable, high quality care for everyone.

Wednesday, August 4, 2010

qotd: The impact of Taiwan's single payer system on amenable mortality

BMC Health Services Research
August 4, 2010
The impact of universal National Health Insurance on population health: the experience of Taiwan
By Yue-Chune Lee, Yu-Tung Huang, Yi-Wen Tsai, Shiuh-Ming Huang, Ken N Kuo, Martin McKee and Ellen Nolte


Taiwan established a system of universal National Health Insurance (NHI) in March, 1995. Today, the NHI covers more than 98% of Taiwan's population and enrollees enjoy almost free access to healthcare with small co-payment by most clinics and hospitals. Yet while this expansion of coverage will almost inevitably have improved access to health care, however, it cannot be assumed that it will necessarily have improved the health of the population. The aim of this study was to determine whether the introduction of National Health Insurance (NHI) in Taiwan in 1995 was associated with a change in deaths from causes amenable to health care.


Identification of discontinuities in trends in mortality considered amenable to health care and all other conditions (non-amenable mortality) using joinpoint regression analysis from 1981 to 2005.


Deaths from amenable causes declined between 1981 and 1993 but slowed between 1993 and 1996. Once NHI was implemented, the decline accelerated significantly, falling at 5.83% per year between 1996 and 1999. In contrast, there was little change in non-amenable causes (0.64 percent per year between 1981 and 1999). The effect of NHI was highest among the young and old, and lowest among those of working age, consistent with changes in the pattern of coverage. (This result is consistent with our expectations as 77% of the working age population were already covered by the pre-existing social insurance; thus they were inevitably going to be affected less by the introduction of NHI.) NHI was associated with substantial reductions in deaths from circulatory disorders and, for men, infections, whilst an earlier upward trend in female cancer deaths was reversed.


NHI was associated in a reduction in deaths considered amenable to health care; particularly among those age groups least likely to have been insured previously.

Policy Implications

These findings have implications for other countries that do not have universal health insurance coverage. The implementation of NHI in Taiwan was associated with a sustained reduction in deaths from causes amenable to health care, which surpassed the underlying decline in other causes. It is reasonable to expect that the introduction of universal coverage elsewhere might also have beneficial effects.

Looking ahead, while the Taiwanese NHI has succeeded in terms of cost (3.4% of GDP), satisfaction (77.5% satisfied in 2007), low administrative cost (1.49%), and equitable financial burden, the system is not without problems. For example, as a publicly-managed program, it is difficult to insulate it from political interference, a factor that has contributed to a continuing financial deficit. Thus, the existing budget may be inadequate to sustain the current level of performance.

Full article (provisional):

United States has worst rate of amenable mortality:

Comment:  Taiwan's 1995 introduction of a single payer system of universal National Health Insurance provides us with a natural experiment on the impact of single payer reform on health outcomes. The results are dramatic. The rate in reductions of deaths due to disorders that are amenable to health care were nine times the reductions in deaths from non-amenable causes. Nine times!

The United States should be especially interested in these results since, in a study of nineteen industrialized nations, we have the worst rate of amenable mortality (link above). We have over 100,000 excess deaths per year due to disorders amenable to health care.

Will the Patient Protection and Affordable Care Act (PPACA) erase this blemish on our health care system? Most of our dysfunctional financing system will remain in place. Some will receive care under an expansion of Medicaid, but as a chronically underfunded program with insufficient numbers of willing providers, access problems are inevitable. Others will receive care under the private plans in the insurance exchanges, but financial barriers to access will remain because of the low actuarial values of the plans and inadequate subsidies. There is little reason to believe that the tweaks of PPACA will have much impact on amenable mortality.

After enacting a single payer system, Taiwan not only greatly reduced amenable mortality, but it was done at a fraction of our spending, with great patient satisfaction, with extremely low administrative costs, and with a financing system that is equitable. Maybe Taiwan needs to spend more, but just think of what we could have with the amount that we are already spending. Besides, saving 100,000 lives a year seems to be a worthy policy goal.

Tuesday, August 3, 2010

qotd: Threat of destabilization of the private insurance market

The New York Times
August 2, 2010
Covering New Ground in Health System Shift
By Robert Pear

Administration officials are eager to demonstrate and deliver what they see as the benefits of the new law (Patient Protection and Affordable Care Act). But they face a delicate task: they do not want to destabilize or disrupt the existing market in a way that makes insurance less available or more expensive to consumers.

For the moment, President Obama has the upper hand. Congress gave him sweeping power to regulate the industry for the benefit of consumers. Administration officials said they would be tough on the industry, but, for the law to succeed, they need large numbers of insurance companies to compete in the new regulated marketplace.

Sabrina Corlette, a research professor at the Health Policy Institute of Georgetown University, said: "In 2014, we can say good riddance to bottom-feeder insurance plans, which have built a business around selling policies to healthy young people. They often provide inadequate coverage when people get sick. But if these plans pull out of the market before 2014, we want to be sure that viable alternatives are available."

Comment:  "...bottom-feeder insurance plans, which have built a business around selling policies to healthy young people (and which) often provide inadequate coverage when people get sick..." That quotation describes the products being sold in the individual insurance market by WellPoint, the largest insurer in the nation. 

Imagine WellPoint improving those plans so that they do provide adequate benefits, with a choice of physicians and hospitals, without excessive cost sharing, and that they would include everyone regardless of preexisting conditions. Imagine the premiums that they would have to charge. Then imagine many companies developing similar quality insurance products to create a robust market of plan choices within the insurance exchanges.

Keep imagining because these products will have to exist only in our minds since the private insurance industry will never again be able to make them a reality if they are going to cover everyone with premiums we can afford.

For those who have employer-sponsored plans that seem to be working, keep in mind that these plans have cherry picked the large but highly select group of the inexpensive healthy workforce and their young healthy families. Also keep in mind that the employee cost of these plans is not only the payroll deduction, but also the forgone wage increases that pay for the employer contribution, and now to be added are the taxes that will be paid to support the subsidies for those who purchase their plans through the exchanges. Nobody is getting off cheap.

If the Obama administration is going to "regulate the industry for the benefit of consumers," then they can't help but "destabilize or disrupt the existing market in a way that makes insurance less available or more expensive to consumers."

Why should we worry about a destabilized market of private plans, when our real concern is how are we going to pay for the health care that any of us might need? The obvious solution would be to replace the private plans with a single payer national health program - an improved Medicare for all. The fate of the private insurers should be the least of our concerns.

Monday, August 2, 2010

qotd: Sen. Sanders to introduce bill for single payer waiver

Rutland Herald
August 1, 2010
Sanders promises to seek health care waiver from Obama for Vermont
By Susan Smallheer

U.S. Sen. Bernard Sanders, I-Vt., pledged to personally take Vermont's case for a statewide single-payer health care system to President Obama if the Legislature authorizes it next year.

Sanders, speaking at a health care rally at the Hetty Green Park in downtown Bellows Falls on Saturday afternoon, said that he and other members of Congress would also introduce legislation that would roll back to 2014 the current 2017 restriction for states to apply for a waiver in order to implement their own systems. He said Democratic Reps. Dennis Kucinich of Ohio and John Conyers of Michigan would be co-sponsoring the legislation with him.

Comment:  Although the Patient Protection and Affordable Care Act would allow states to apply for waivers to implement their own systems, they cannot do so until 2017, three years after they are required to implement the private insurance exchanges. Many have asked if Sen. Sanders still intends to introduce legislation to move that date up so that states would not have to set up the exchanges only to replace them soon thereafter with a single payer system. The answer is yes.