By Margaret Flowers, M.D.

Today we celebrate the 45th anniversary of the enactment of Medicare. Events are happening across the nation to mark this significant occasion, and yesterday I and about 10 other single-payer health reform advocates walked the halls of Congress and distributed literature to underscore its importance.

Medicare is a true American legacy which has brought health security to many of the most vulnerable members of our society. Because of Medicare, fewer senior citizens are living in poverty. Because of Medicare, health disparities which are growing in younger populations begin to decline after the age of 65. Medicare serves as a model of a universal (for those 65 and older) health system which operates with significantly lower administrative costs as compared to commercial health insurance so that a greater proportion of Medicare dollars pay for direct patient care.

During the recent health reform process, it was puzzling to health advocates to hear members of Congress and the president say that we must keep what works and fix what doesn’t and then see them keep what doesn’t work – commercial insurance. It was puzzling to hear legislators say that we needed to keep the American legacy of employer-sponsored health insurance while they ignored the true American legacy of Medicare.

We took every opportunity to let legislators know that the most effective solution to our health care crisis is to improve and expand a Medicare-like health system to everybody. To the detriment of the people in this nation, while the single-payer movement did grow, our arguments were largely ignored by Congress. The result was increased privatization of health care with its inherent inequities and soaring costs.

Now that a health bill has passed, we face a new challenge altogether. Instead of pushing to expand Medicare, we will have to struggle just to keep our current Medicare, and other social insurances, from being further weakened and privatized. This is a struggle that must not be ignored. We cannot cede any more ground to those who profit at the expense of our human lives.

The president appointed a new commission in April of this year, close on the heels of the passage of the health bill. Known as the National Commission for Fiscal Responsibility and Reform, this group of 18 is packed with and sponsored by those who will gladly use this opportunity to gut our feeble social safety nets. The same marketing tools used so successfully in the health reform process are being employed again: scripted public events used to create the illusion of popular support, public hearings designed to give the appearance of public input and co-optation of progressive institutions in support of neoliberal policies.

The single-payer movement has once again, come together to stand united to oppose the actions of the deficit commission. Four representatives of organizations who are members of the Leadership Conference for Guaranteed Health Care (LCGHC) testified at the deficit commission public hearing in June. However, given the extent of influence being wielded by the billionaire Peter G. Peterson Foundation, it is unlikely that our testimony will influence the commission members.

Our greatest strength as a movement is to hold our legislators accountable by urging them to oppose changes that weaken Medicare, Medicaid and Social Security. To that end, members of the LCGHC spent July 29 walking the halls of Congress. We delivered a letter from the LCGHC, copies of our testimony to the commission, a pledge for members to sign and information about single payer to each of the 435 members in the House and to most of the senators.

In addition, we met with staff in the offices of the co-chairs of the Congressional Progressive Caucus to present them with nearly 1,000 postcards signed by people from across the nation asking them to oppose cuts to Medicare and instead to create improved Medicare for All. We asked that the caucus make a public statement confirming their commitment to not only oppose such cuts, but to actively work to defeat such recommendations.

The deficit commission is charged with the task of submitting their plan to Congress in early December and Congress has committed to vote on their recommendations. The timing of these events has been arranged to occur after the November elections when there will be a lame duck Congress. Such timing makes the task of holding elected officials accountable more difficult but it remains crucial that we attempt to do so.

The struggle for health justice will go on. We must plan now for the future. For this reason, I urge you to meet with your member of Congress and senators during the August break. They will be campaigning in their home districts. You can find information to use in these visits at www.pnhp.org. Ask your legislators to sign the pledge available at www.healthcare-now.org. Publicize the results. And let your legislators know that you will be watching. If they pledge to oppose cuts before the election and then turn around and vote for cuts, no matter what excuse they give, then you must pledge to withhold your vote for them in the 2012 election.

This is the power that we the people possess: the power of the vote. And having the courage to use this power, this tool, at this point in time will bend the arc of justice to the needs of the people of this country.

So, on this day of celebration, Medicare’s 45th, please pledge to yourself to be a defender of our much needed social insurance programs. Step up and join with us to preserve and protect Medicare, a true American legacy.

Margaret Flowers, M.D., is congressional fellow for Physicians for a National Health Program (www.pnhp.org).

The following text is an open letter to the single-payer community from Rep. Dennis Kucinich of Ohio, Rep. John Conyers Jr. of Michigan and Sen. Bernie Sanders of Vermont. It was released on the eve of Medicare’s 45th anniversary.

Congress of the United States
July 29, 2010

Dear friends of health care for all,

Now that a new health care bill has been signed into law, it has never been more important to have a strong movement behind Medicare for All.

Many health care experts have expressed concern that the Patient Protection and Affordable Care Act does not adequately contain costs for American families and businesses. If they are correct, and we believe they are, additional legislative cost containment measures will be necessary in the future.

When it is time for Congress to try to control health care costs again, the demand for Medicare for All must be undeniable. There is substantial support for a federal Medicare for All solution, embodied by H.R. 676, the National Health Care Act, and S. 703, the American Health Security Act, in the Congress and around the country. We believe that this support can and will continue to grow.

The truth is not enough. We already know that such a health care system has repeatedly proven to control costs more effectively, cover everyone or almost everyone, and deliver care of significantly higher quality than health care systems that tolerate the presence of private health insurance companies. Now we must make it so that the truth can no longer be ignored.

During the health care debate, the movement created significant momentum on which to build. Its voice was heard in multiple Congressional hearings – it won historic victories in a House vote to grant an ERISA waiver to a state that passes a Medicare for All-like plan and in a Senate provision allowing a waiver from the Exchanges for states to innovate with health coverage such as a state-based Medicare for All-like system that was included in the new law.

The latter victory created a new opening. Though the effective date for the Exchange waiver was pushed back to 2017 by the Congressional Budget Office to avoid driving up the estimated cost of the bill, the waiver’s presence sent a clear message: if a state thinks it can do better, Congress wants to see it.

We are encouraged by the progress already garnered in multiple states toward guaranteed health care and we will continue to work hard in Congress to clear any obstacles in the way. The 2017 date can be changed at the same time Congress considers all of the other waivers from federal laws that will be required for the state to move forward. That can happen either before or after a state passes a Medicare for All-like bill.

Regardless of the legislative path, we vow to continue to fight alongside you for health care justice at the both the federal and state levels. We believe that Medicare for All is inevitable in the United States. It is up to all of us to determine when the inevitable becomes the reality.

Sincerely,

Rep. Dennis J. Kucinich

Rep. John Conyers Jr.

Sen. Bernie Sanders

http://www.pnhp.org/news/2010/july/lawmakers-vow-to-continue-fight-for-medicare-for-all

On the 45th anniversary of Medicare it is reassuring to know that the vision of President Lyndon Johnson and the 89th Congress for an America that ensures health care for everyone, through a comprehensive Medicare for all, not only still lives, but is an inevitability.

Giving Our Kids the Care they Need

By Nancy-Ann DeParle
The White House
July 28, 2010

One important change in the new law is a provision that prevents insurance companies from discriminating against children with pre-existing conditions.

Some state insurance commissioners expressed concern that, without an open enrollment period that was widely communicated, people might wait until their children got sick to enroll them in coverage, causing plans’ costs to increase. And we were concerned when last week, some indicated that insurance companies would choose to stop offering policies for children rather than cover kids with pre-existing conditions.

Today, the Administration is releasing new guidance to health insurance plans to help ensure children get the high-quality care they need. The new FAQ document notes that insurance companies may establish an open enrollment period for children with pre-existing conditions.

http://www.whitehouse.gov/blog/2010/07/28/giving-our-kids-care-they-need

And…

Questions and Answers on Enrollment of Children Under 19 Under the New Policy That Prohibits Pre-Existing Condition Exclusions

U.S. Department of Health & Human Services
July 27, 2010

Question #2: Do these interim final rules require issuers in the individual health insurance market to offer children under 19 non-grandfathered family and individual coverage at all times during the year?

A: No.  To address concerns over adverse selection, issuers in the individual market may restrict enrollment of children under 19, whether in family or individual coverage, to specific open enrollment periods if allowed under State law.  This is not precluded by the new regulations.

http://www.hhs.gov/ociio/regulations/children19/factsheet.html

And…

Insurers back down on child-coverage stance

By Julian Pecquet
The Hill
July 29, 2010

Health insurance plans across the country on Wednesday began to backtrack on their decision to pull out of the child-only coverage market after the Obama administration addressed their concerns about the potential damage to their bottom lines.

The Department of Health and Human Services (HHS) on Tuesday clarified regulations mandating that insurance plans agree to cover sick children. HHS made it clear that plans are free to set up specific enrollment periods for their insurance plans if allowed under state laws.

“We think this policy will ensure that children get the comprehensive coverage they need while avoiding this unintended consequence,” Scott P. Serota, president and CEO of the Blue Cross and Blue Shield Association, said in a statement. “This is consistent with other public and private health insurance programs.”

Karen Ignagni, president and CEO of America’s Health Insurance Plans, followed suit.

“Today’s announcement will help ensure millions of children have access to affordable healthcare coverage,” she said. “For years, structured enrollment periods have been used in the Federal Employees Health Benefits Program, Medicare and in employer-based coverage to minimize disruption for families, seniors and small businesses. Health plans are committed to working with federal and state officials to ensure consumers are aware of all of their coverage options, including how and when they are able to sign up for coverage.”

http://thehill.com/business-a-lobbying/111535-insurers-backing-down-on-child-coverage-stance

A Quote of the Day message earlier this week described how private insurers were getting around the requirement to provide coverage to children with preexisting disorders. The insurers intended to avoid this obligation simply by closing enrollment to new applicants. It is important to understand the counter-response of the Obama administration because it exemplifies just how dysfunctional the private insurance model is that President Obama and Congress chose for us.

From a business perspective, the insurers’ complaint was quite valid. If a child was guaranteed insurance no matter the circumstances, it would be a wise decision to save money by forgoing insurance while healthy, but then purchasing the coverage only when needed. Adverse selection (concentrating high-cost patients within a plan) results in the death spiral of insurance premiums (shutting down the plan because it is no longer economically viable).

The insurers said that they could provide coverage for children with preexisting disorders only if open enrollment periods were established. As an example, December could be set aside as the one month in which a child could enroll for the following year. If the parents decided not to enroll the child that month, they could not change their minds during the next twelve months. If something serious came up, that’s too bad. They should have known better than to gamble with their child’s health.

Whoa! Wasn’t the original intention of the reform effort to be sure that each and everyone of us could have the health care that we need without having to face financial hardship? But now the Obama administration is giving its stamp of approval to a policy that will make access worse, not better.

“Open enrollment” is a business concept that serves the insurance industry well, but it is a very deceptive term. Instead of having open enrollment throughout the year, the insurers have really established the concept of “closed enrollment” for most of the year. From the patient’s perspective, instead of improving access to insurance products, it greatly impairs access – the opposite of what reform was supposed to bring us. We should change the rhetoric to “closed enrollment,” because that’s really what they are promoting.

As expected from the industry, the statements of Scott Serota of the Blue Cross and Blue Shield Association and Karen Ignagni of America’s Health Insurance plans are very supportive of closed enrollment. Of course, it’s in their business interests, even if not in the interests of patients who are shut out.

Suppose we had a single payer national health program – an improved Medicare for all. The concept of closed enrollment totally vanishes since everyone is automatically enrolled.

Imagine a couple of generations from now explaining to someone that there was a time in America that private companies prohibited you from having the insurance you needed because of a quirky rule that closed enrollment for most of the year. Isn’t that weird? I mean… like… enrollment is only once… for life!

Hijacked: Stolen Health Care Reform V

By John Geyman
The Huffington Post
July 27, 2010

On the positive side of the ledger, the PPACA (Patient Protection and Affordable Care Act) brings some welcome changes.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

(Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. John Geyman is Professor Emeritus of Family Medicine at the University of Washington School of Medicine.)

http://www.huffingtonpost.com/john-geyman/hijacked-stolen-health-ca_b_660904.html

Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform

by John Geyman
http://www.commoncouragepress.com/index.cfm?action=book&bookid=402
(Hijacked can be ordered now, at discount, for delivery in September.)

“A trenchant and highly readable account of how the special interests sabotaged health reform, leading to a law that won’t provide universal care nor control escalating costs. Geyman shows us the way to real reform when the current law implodes. An eye-opening book.”

–Marcia Angell, M.D., Senior Lecturer in
Social Medicine, Harvard Medical School,
former editor-in-chief, New England Journal of Medicine

“By reading John Geyman’s very timely Hijacked, those who are uncomfortable with the reform process that took place will be able to understand more precisely what went wrong. He explains why our concerns are fully warranted, but, instead of abandoning hope, he provides us with a road map for reform that will ensure that all of us will have the health care that we need.”

–Don McCanne, M.D., family physician, Senior Health Policy Fellow,
Physicians for a National Health Program (PNHP)

Insurers to Comply With Rules on Children

By Robert Pear
The New York Times
March 30, 2010

Under pressure from the White House, health insurance companies said Tuesday (March 30) that they would comply with rules to be issued soon by the Obama administration requiring them to cover children with pre-existing medical problems.

“Health plans recognize the significant hardship that a family faces when they are unable to obtain coverage for a child with a pre-existing condition,” said Karen M. Ignagni, president of America’s Health Insurance Plans, a trade group. Accordingly, she said, “we await and will fully comply with” the rules.

The White House immediately claimed victory.

In a Twitter message, Robert Gibbs, the White House press secretary, scored the tug of war as “Kids 1, insurance 0.”

http://www.nytimes.com/2010/03/31/health/policy/31health.html?_r=1

And…

Some insurers stop writing new coverage for kids

By Ricardo Alsonso-Zaldivar
Philly.com
July 27, 2010

Starting later this year, the health care overhaul law requires insurers to accept children regardless of medical problems – a major early benefit of the complex legislation. Insurers are worried that parents will wait until kids get sick to sign them up, saddling the companies with unpredictable costs.

The major types of coverage for children – employer plans and government programs – are not affected by the disruption. But a subset of policies – those that cover children as individuals – may run into problems. Even so, insurers are not canceling children’s coverage already issued, but refusing to write new policies.

In Florida, Blue Cross and Blue Shield , Aetna, and Golden Rule – a subsidiary of UnitedHealthcare – notified with the insurance commissioner that they will stop issuing individual policies for children, said Jack McDermott, a spokesman for McCarty.

(Blue Cross and Blue Shield of Florida) vice president Randy Kammer said the company’s experts calculated that guaranteeing coverage for children could raise premiums for other individual policy holders by as much as 20 percent.

“We believe that the majority of people who would buy this policy were going to use it immediately, probably for high cost claims,” said Kammer. “Guaranteed issue means you could technically buy it on the way to the hospital.”

Kammer said the company did not make the decision lightly. “We were looking at all our other individual policy holders who pay a lot for coverage, and we didn’t think it was fair to give them that kind of an increase to benefit a small population that receives a greater advantage than they do,” she said.

http://www.philly.com/philly/business/personal_finance/072710_no_new_kid_coverage.html

In several speeches about the Patient Protection and Affordable Care Act, President Obama extolled the immediate end of insurers denying coverage to children with preexisting conditions. He was wrong. His miscalculation stems from the fact that he seemed to trust the insurers to do the right thing for patients instead of continuing to place their own business interests first.

Although the insurers can no longer reject a child with preexisting disorders, they can close the plan to new enrollees. As a business decision, that is what many are doing. A social good is not part of their business model.

Although White House press secretary Robert Gibbs scored this as “Kids 1, Insurance 0,” it’s really “Insurance 1, Kids disqualified.”

That the insurers placed business first should come as no surprise to anyone. AHIP’s lobbyist Karen Ignagni continued with the “await and comply” position on the regulations that former WellPoint vice president Liz Fowler is helping to write. Compliance is easy for them when the rules are written to support the insurers’ business model.

Proving that the private insurers have learned nothing, Blue Cross and Blue Shield of Florida vice president Randy Kammer repeats the long held position of private insurers that they didn’t think that it was fair to increase premiums for all of the policy holders merely “to benefit a small population that receives a greater advantage” than the rest of the policy holders. Because it interferes with their business model, they refute the fundamental principle that the primary purpose of health insurance is to transfer funds from the many willing who are healthy to the few who have greater health care needs.

The exchanges won’t be in effect until 2014, and yet we’re already seeing this sterile, perverse behavior on the part of the insurers. Denying children with health care needs the right to buy insurance is only the bare beginning. There is absolutely no way that the regulators can preempt the negative impact of the unlimited innovations that insurers will introduce, especially after the insurance exchange infrastructures are solidly in place.

Businesses do what businesses have to do. Voters need to do what voters have to do. We have to eliminate the private business intermediaries and establish our own public insurance program that has a social mission of patient service.

Implementing Medical Loss Ratio (MLR) Requirements to Improve Quality, Promote Choice, and Avoid Disruptions in Coverage

America’s Health Insurance Plans (AHIP)
July, 2010

The “Patient Protection and Affordable Care Act” (PPACA) requires health plans, beginning in 2011, to meet a medical loss ratio (MLR) requirement of 80 percent in the individual and small group markets and 85 percent in the large group market. This means that plans must spend a specified percentage of premium revenue on either reimbursement for clinical services provided to enrollees or “activities that improve health care quality.”

Goal #1

Ensure That Existing Efforts to Improve Quality are Allowed to Continue and New Initiatives to Support the Goals of PPACA are Not Discouraged

(Examples: nurse care managers, maternity managed care programs, and imaging managed care programs, as programs that improve quality)

Goal #2

Recognize That Quality Improvement Efforts Will Be Advanced By ICD-10 Implementation

The startup costs associated with implementing the International Classification of Diseases 10 classification system (ICD-10) by 2013 should be defined as an “activity that improves health care quality.”

ICD-10 is a quality, not a claims payment, initiative.

Goal #3

Include Fraud Prevention and Detection Activities that Improve Quality

The definition of “activities that improve health care quality” should include the expenses health plans are required to make for fraud prevention activities.

Goal #4

Implement a Transition Plan to Maximize Consumer Choice

PPACA provides for the implementation of comprehensive insurance market reforms in 2014, including the creation of state health insurance exchanges. Until that time, consumers in the individual market will rely on brokers to review their insurance options and consider which ones best suit their needs. For health plans, four-fifths of the individual market will remain medically underwritten, guided by the rules and regulations in each state. A transition policy is needed to move from the current system to the new system that will be created in 2014 and to allow individuals to maintain their coverage.

The NAIC (National Association of Insurance Commissioners) is charged with the responsibility to develop MLR methodologies that take into account special circumstances. This means that Congress intended for the NAIC to exercise its expertise to make adjustments to the MLR to ensure that consumers are not harmed and that competition is not decreased.

http://americanhealthsolution.org/assets/Uploads/Blog/AHIP-MLR-Paper.pdf

In what might be perceived as private insurer chicanery, the industry’s lobby organization, AHIP, is capitalizing on phrasing in the Patient Protection and Affordable Care Act that defines the minimum percent of benefits that the insurers must pay out (medical loss ratio or MLR) as including not only reimbursement for clinical services but also for “activities that improve health care quality.”

Thus any of their administrative functions that they can pass off as improvements in quality will not apply to the 15 percent (large group) or 20 percent (individual or small group) caps on administrative spending. That allows the industry to perpetuate its pattern of profound administrative excesses and very high profits (outrageously high when considered as a percentage of their actual product – the administrative services that they are selling us).

In this report, what are they trying to pass off as quality? 1) Intrusive care managers who are employed to save money. 2) Implementation of diagnostic codes used for claims payments. 3) Administrative functions to detect fraud. 4) Perpetuating medical underwriting during the transition to cover “special circumstances” to ensure that “consumers are not harmed and that competition is not decreased.” That’s code for perpetuating the perversities of adverse selection.

The impact of this relabeling of administrative services as quality improvements is to allow the insurers to retain a greater percentage of the premium dollars for their own intrinsic purposes. The consumer pays for this either through higher premiums or decreased health care benefits.

An extremely important unintended consequence of fixed medical loss ratios has been mentioned here before, but seems to have escaped the mainstream media, so it is being repeated: Once the MLR rules are established, the primary method by which insurers can increase the services they sell us, while increasing their profits, is by increasing gross revenues, since they are guaranteed a fixed percentage of those revenues. The most effective way to increase gross revenues is to increase the amount of health care services authorized and paid for.

If the insurers change provider incentives to double the amount of health care that is being delivered, they can double their own total revenues, keeping even more as profit because of the smaller marginal administrative costs of paying for more care. This incentive of the insurers to increase total health care spending is the exact opposite of the reform goal of slowing future health care cost increases

All of this is good business. But that’s the problem. Our elected representatives chose a business model to finance health care when what we desperately need is a service model.

“Medical loss ratio” is a term that needs to be moved into the history books of failed policy concepts. Instead, we need our own public service model – an improved Medicare for everyone.

Democrats spar over health care claim

WCAX.com
July 21, 2010

The gloves are off in the fight for the Democratic nomination for governor (Vermont). Former State Senator Matt Dunne is calling out Senator Peter Shumlin for what he says is a troubling misstatement.

Peter Shumlin first said it two weeks ago in an online questionnaire, then again this week in a mailing to voters: “I am the only candidate who sponsored a single-payer health care bill.” Dunne says that is simply not true.

“The facts are that I also sponsored a single-payer health care bill,” Dunne told reporters outside the Statehouse Wednesday.

He did. During the 1993-1994 legislative session when Dunne was serving as a State Representative he co-sponsored a bill that would have created a single-payer system. He wants a public retraction of Shumlin’s claim and is requesting that Shumlin send out another mailer with the correction.

“It is critically important that Peter Shumlin take action and take action quickly to correct the record, to be clear in public that he was factually wrong,” says Dunne.

http://www.wcax.com/Global/story.asp?S=12850303

When two candidates for governor are engaged in a political skirmish as to which one is the bona fide single payer supporter, then we know that single payer is back on the table (at least in Vermont).

Our last four posts have examined the PPACA from the perspectives of the four main goals of health care reform — cost containment, affordability, improved access and quality of care. Here we draw these goals together in asking whether this legislation delivers enough to be worth the $1 trillion investment over the next 10 years, and whether it will really work.

On the positive side of the ledger, the PPACA brings some welcome changes:

• Will extend health insurance to 32 million more people by 2019.
• Provides subsidies to help many lower-income Americans afford health insurance.
• Starting in 2014, expands Medicaid to cover 16 million more lower-income people.
• Provides new funding for community health centers that could enable them to double their current capacity.
• Eliminates cost-sharing for many preventive services.
• Phases out the “doughnut hole” coverage gap for the Medicare prescription drug benefit.
• Will create a new national insurance plan for long-term services: Community Living Assistance Services and Supports (CLASS) program.
• Will establish a nonprofit Patient-Centered Outcomes Research Institute to assess the relative outcomes, effectiveness and appropriateness of different treatments.
• Initiates some limited reforms of the insurance industry, such as prohibiting exclusions based on pre-existing conditions and banning of annual and lifetime limits.
• Contains some provisions to improve reimbursement for primary care physicians and expand the primary care workforce.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

How did this latest reform effort get so far off track? Here are three of the major reasons:

• The issues and policy options were framed as the political process was hijacked by the very interests that are largely responsible for today’s cost, access and quality problems in health care. As examples, the drug industry lobbied successfully to avoid any price controls of drugs, as the VA does so well; the insurance industry avoided real rate controls over their premiums and ended up with other loopholes to game the new system; and all of the corporate stakeholders will gain subsidized new markets without significant regulation of the market.
• The quest for bipartisanship was futile as reform got run over in the middle of the road. The big questions cannot be answered in the political center, such as whether health care should be a right or a privilege, or whether health care resources should be allocated based on ability to pay or medical need.
• Market failure was not recognized as the wellspring of our system problems. When it was agreed to “build on the strengths of the present system” instead of more fundamental reform, corporate stakeholders and their lobbyists found willing legislators to craft centrist “remedies” which could be sold to the public as  reform. But the various incremental tweaks of our existing system, such as employer and individual mandates, have failed over the last 20 or 30 years to remedy cost, access and quality problems.  In the absence of real health care reform, we can now expect these kinds of unfavorable outcomes in coming years:

• soaring costs without effective price controls throughout the system.
• managed care fails to control costs or improve quality.
• persistent financial and other access barriers for many millions of Americans.
• growing backlash by physicians and consumers.
• gaming of private plans and adverse selection in public plans.
• consolidation among hospitals sustaining high prices.
• increased cost-sharing for employees as employers cut back benefits.
• continued high levels of inappropriate and unnecessary care.
• added bureaucracy and waste in an even more fragmented and dysfunctional system.

We have yet to learn that an unfettered health care marketplace can only perpetuate our problems, not fix them. Most industrialized nations have learned this many years ago, and are able to achieve better quality of care with improved outcomes for their populations even as they spend much less on health care than we do. We have to conclude that a larger role of government will be required to assure real and sustainable health care reform.

There is a fix in plain sight for our problems — single-payer financing coupled with a private delivery system. The private insurance industry has outlived its usefulness, and is only being kept alive by government subsidies, whether by overpayments of private Medicare plans or this latest provision in the PPACA to pay out nearly half of a trillion dollars in subsidized premiums for their inadequate coverage.

When will we have the political will to face up to our real problems in health care and show that the democratic process can still work?

Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. http://commoncouragepress.com/index.cfm?action=book&bookid=402

In our last three posts, we examined how the Patient Protection and Affordable Care Act of 2010 (PPACA) stacks up against the goals of reform for cost containment, affordability and access to care. Here we consider what its likely impact will be on the quality of care, the fourth major goal of the reform effort.

For starters, quality of care in the U.S. is highly variable, and is unsatisfactory for many millions of Americans, as these cross-national comparisons against other nations with one or another form of universal access clearly show:

• The U.S. ranks last among 19 industrialized countries in “amenable mortality rates,” deaths that could have been prevented by timely and effective health care; that translates to about 101,000 excessive deaths per year in this country. (Nolte, E, McKee, CM. U.S. has most preventable deaths among 19 nations. Health Affairs 27 (1):58-71, 2008)

• The U.S. ranks last among 23 industrialized nations on infant mortality, with rates double those of Iceland, Japan and France. (Schoen, C, Davis, K, How, SKH, Schoenbaum SC. U.S. health system performance: A national scorecard. Health Affairs Web Exclusive, W457-475, 2006) http://www.commonwealthfund.org/Content/Publications/In-the-Literature/2006/Sep/U-S–Health-System-Performance–A-National-Scorecard.aspx

• Lower-income people in this country receive worse care than their higher- income counterparts on 21 of 30 primary care quality measures, four to five times higher rates of disparity compared to Australia and Canada. (Huynh, P, et al. The U.S. health care divide. Commonwealth Fund, April 2006)

On the plus side, the PPACA does make some attempts to improve the quality of care through such provisions as these: expanded access to care; elimination of cost-sharing for preventive services; establishing a comparative effectiveness research initiative; expansion of health information technology (HIT); and modification of payment mechanisms (e.g. accountable care organizations, or ACOs, and “value modifiers” for physician reimbursement).

But these are important ways that will largely cancel out the impact of these efforts to improve the quality of care:

• We can expect an increase in cost-sharing (with reduced affordability) as employers downgrade the actuarial value of their coverage and as insurers market their underinsurance products in the individual market and through exchanges. A recent study of Medicare Advantage plans found that increased co-payments resulted in fewer outpatient visits, more hospital admissions and longer hospital stays for patients with hypertension, diabetes and a history of acute myocardial infarction. (Trivedi, AN, Moloo, H, Mor, V. Increased ambulatory care copayments and hospitalizations among the elderly. N Engl J Med 363 (4):320-8, 2010)

• The critical shortage of primary care physicians and an underfunded primary care infrastructure persist as our specialist-dominated workforce continues to provide more care than is appropriate or necessary, with less coordination and worse outcomes. For optimal quality of care, patients need both primary care and appropriate specialist care. (Parchman, M, Culter, S. Primary care physicians and avoidable hospitalization. J Fam Pract 39: 123-6, 1994) (Beal, AC, Doty, MM, Hernandez, SE, Shea, KK, Davis, K. Closing the divide: How medical homes promote equality in health care: results from the Commonwealth Fund 2006 Health Care Quality Survey)

• The new Patient-Centered Outcomes Research Institute lacks the authority to mandate or even endorse coverage and reimbursement rules for any particular test or treatment. (Kaiser Health News staff. True or false: Seven concerns about the new health care law. March 31, 2010)

• Perverse incentives will still permeate the system because of largely unchanged reimbursement policies (mostly fee-for-service) and coverage decisions influenced more by politics and lobbying by industry than hard scientific evidence of efficacy and cost-effectiveness. Procedures will continue to be over-reimbursed, primary and cognitive care services will remain under-reimbursed, and there will be little restraint over excess volume of services in most practice settings. These are examples of how big this problem is:

• One-third of U.S. births today are by Caesarian section (compared to a national average of just 5 percent in the 1960s). (Neergaard, L. Overtreated: More medical care isn’t always better. Associated Press, June 7, 2010)

• About one-third of tests and treatments are inappropriate or unnecessary and often harmful. (Wennberg, JB, Fisher, ES, Skinner, JS. Geography and the debate over Medicare reform. Health Affairs Web Exclusive W-103, February 13, 2001)

• Investor-owned hospitals, HMOs, nursing homes and mental health centers provide more expensive care of lower quality than not-for-profit facilities. (Geyman, JP. The Corrosion of Medicine: Can the Profession Reclaim its Moral Legacy? Monroe, ME. Common Courage Press, 2008, p 37)

• Well-reimbursed imaging procedures are greatly overused, thereby increasing risk of cancer; as an example, a recent report found that Illinois hospitals are using twice as many double CT scans (one with dye, the other without) than the national average, believed by many experts to be unwarranted. (Graham, J. New government report raised questions about CT scans at Illinois hospitals. Chicago Tribune, July 12, 2010)

• Wider adoption of health information technology has not been demonstrated to improve outcomes of care in most non-integrated parts of our health care “system”; most of the increase in medical computing has been driven by financial and billing reasons, not quality of care. And most quality improvement efforts have been based on process measures, such as use of beta blockers after a heart attack or use of hemoglobin A1C in diabetes, without good correlation with actual outcomes. (Chaudhry, B, Wang, J, Wu, S, Maglione, M, Mojica, W, et al. Systematic review: Impact of health information technology on quality, efficiency and costs of medical care. Ann Int Med 144 (10):742-52, 2006) (Himmelstein, DU, Wright, A, Woolhandler, S. Hospital computing and the costs and quality of care: A national study. Amer J Med 123 (1):40-6, 2010)

• The long-delayed experiments with accountable care organizations and bundled payments are likely to be ineffective in improving quality of care in non-integrated practice settings which involve non-salaried physicians. So despite what we are being asked to believe by supporters of PPACA, we cannot really expect much, if any, improvement in the quality of care for the U.S. population as a result of this legislation.

Adapted from Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform, 2010, with permission of the publisher Common Courage Press. www.commoncouragepress.com

H.R. 5808 – To amend the Patient Protection and Affordable Care Act to establish a public health insurance option.

Introduced July 21, 2010 by Rep. Lynn C. Woolsey, with 128 cosponsors
The Library of Congress

SEC. 1325. PUBLIC HEALTH INSURANCE OPTION.
(a) (1)  ESTABLISHMENT- For years beginning with 2014, the Secretary of Health and Human Services (in this subtitle referred to as the `Secretary’) shall provide for the offering through Exchanges established under this title of a health benefits plan (in this Act referred to as the `public health insurance option’) that ensures choice, competition, and stability of affordable, high-quality coverage throughout the United States in accordance with this section. In designing the option, the Secretary’s primary responsibility is to create a low-cost plan without compromising quality or access to care.

http://thomas.loc.gov/

And…

Letter from Douglas W. Elmendorf, Director

To: Honorable Fortney Pete Stark, Chairman, Subcommittee on Health, Committee on Ways and Means
Congressional Budget Office
July 22, 2010

Under the proposal (H.R. 5808), a public health insurance plan would be established and administered by the Secretary of Health and Human Services (HHS), and it would have to charge premiums that fully cover its costs for benefit payments and administrative expenses.

The Congressional Budget Office (CBO) estimates that the public plan’s premiums would be 5 percent to 7 percent lower, on average, than the premiums of private plans offered in the exchanges.

In deciding whether to enroll in the public plan, potential subscribers would consider those premium differences along with various other factors, including the number of providers who chose to participate in that plan. CBO expects that some providers would decline to participate in the public plan because its payment rates would be lower, on average, than private plans’ payment rates. Even so, many providers would be likely to participate, in part because they would expect a plan administered by HHS to attract a substantial number of enrollees.

Taking into account all of the relevant factors, CBO estimates that roughly one-third of the people obtaining coverage through the insurance exchanges would enroll in the public plan. CBO estimates that about 25 million people would purchase coverage individually through the exchanges in the 2017–2019 period under the proposal; in addition, about 13 million people would be expected to obtain employment-based coverage through the exchanges — so total enrollment in exchange plans would be about 38 million. Total enrollment in the public plan would thus be roughly 13 million.

Compared with projections of enrollment under current law for the 2017–2019 period, CBO estimates that about three-quarters of a million more people would obtain individually purchased coverage and about three-quarters of a million fewer would have employment-based coverage. The proposal would have minimal effects on the number of people with other sources of coverage and on the number of people who would be uninsured.

CBO and the staff of the Joint Committee on Taxation (JCT) estimate that the proposal would reduce federal budget deficits through 2019 by about $53 billion. That estimate includes a $37 billion reduction in exchange subsidies and a $27 billion increase in tax revenues that would result from changes in employment-based coverage, partly offset by an $11 billion increase in costs for providing tax credits to small employers.

http://www.cbo.gov/ftpdocs/116xx/doc11689/Stark_Letter-HR_5808-07-22.pdf

So here is the stand-alone bill for the public insurance option that created so much controversy during the reform process. As we look closer at this option, we can see that the great tragedy of the public option debate was that this almost worthless proposal diverted our attention away from the debate that we should have been having – a debate over whether or not we should enact a single, universal public insurance program.

Let’s look first at the very narrow impact of the features of the public option, and then we’ll look at the very broad and crucial implications of returning to this debate instead of the one that we should be having.

First of all, what impact would this have on the numbers of insured? The additional three-quarters of a million individuals net who would obtain individually purchased coverage would be offset by approximately the same number who would no longer have employer-sponsored coverage. Enacting the public option will produce no net gain in the numbers of individuals insured.

CBO estimates that premiums for the public option will be 5 to 7 percent lower than the premiums for the private plans offered in the exchanges. This savings is from a combination of lower administrative costs for the public option, and the ability of the government to extract greater price and fee concessions from the providers of health care. Paying a slightly lower premium may not be wise if the providers start bailing out of the system.

Also, the supporters of this measure shouldn’t pretend that the very modest reduction in administrative costs of these public plans somehow addresses the profound administrative waste throughout our system. The single payer model would be effective in reducing this waste by hundreds of billions of dollars, whereas H.R. 5808  merely takes a paring knife to plans that would cover only about 4 percent of us, while neglecting the profound administrative waste of the other insurers and the administrative burden that they place on the health care delivery system. The public option is merely another plan in the insurance exchange markets, and, as such, fails to provide the fundamental structural financing reform that we need.

Further, the 5 to 7 percent difference could easily be lost in the fog of comparing the government subsidies for the exchange plans with the employers’ contributions to the premiums of employer-sponsored plans. A policy that has a very modest benefit for 13 million people is unimpressive when we are trying to fix a system so that it takes care of all 310 million of us.

CBO estimates that the measure would reduce the federal budget deficits through 2019 by about $53 billion, partly by decreasing subsidies in the exchanges and increasing income and payroll taxes for those losing employer-sponsored coverage. This reduction in government spending results in increased costs to individuals – a trend that already is having a negative impact on affordable access to health care. Nevertheless, 53 billion dollars is hardly a blip when you consider that we’ll be spending about 30,000 billion dollars on health care through 2019. Besides, though CBO is required to estimate the impact on the federal budget, what we really care about is our total national health expenditures (NHE) and not the portion that passes through a government budget.

So the narrow impact is that the public option fails to meet the goals of reform since it does nothing to increase the net numbers of individuals with insurance, and it doesn’t even provide a blip in our NHE.

The broader impact of H.R. 5808 is much more consequential. Considerable political capital will be consumed in efforts to enact it. The managers of the bill would understand that any consideration of a single payer national health program would have to be left off of the table since that model actually would accomplish the goals of reform. To go through another process that alienates so many colleagues in the health care justice camp risks creating an impasse to real reform that could last many years or perhaps even a decade or two.

The financing infrastructure of the Patient Protection and Affordable Health Care Act cannot work to achieve equitable health care financing for everyone. We can’t afford to waste political capital on a legislative amendment that merely appeases those who lost the public option debate, but does nothing to build the solid financial infrastructure that we need.

Let’s spend all of our political capital on real reform: a single payer national health program – an improved Medicare for everyone.

Cigna Medical Group Announces Grand Opening of CMG CareToday Clinic in South Chandler, Ariz.

Cigna Medical Group
July 19, 2010

Cigna Medical Group has announced the opening of its newest CMG CareToday convenience care medical clinic in South Chandler, Ariz. This brings the total number of clinics to 10 since CMG CareToday’s launch in 2007.

Staffed by board-certified nurse practitioners and physician assistants, the clinics offer walk-in medical care for unscheduled patients with low acuity conditions such as colds, flu, sore throat, lower back pain, ear aches, bladder infections and pink eye. In addition, the clinics offer pregnancy tests and child and adult immunizations, including flu shots. School, sports and camp physicals are also available.

“CMG CareToday is a convenient alternative that can accommodate local residents who may be unable to see their primary care physician because of time or other issues,” said Corinne Bell, DO, MBA, medical director of CMG CareToday. “Expanding the number of clinics Valleywide gives residents a place to go for non-emergency care and provides quick relief for common illnesses.”

First time visits to any CMG CareToday location are $29 retail; subsequent visits are $59. Lab services range from $10 to $15 and a select number of generic prescription medications are available for $10 or $15. CIGNA customers, and individuals covered under other accepted health plans, pay only their office visit co-pay or co-insurance. Additionally, Cigna Medical Group patients who visit CMG CareToday will have their medical records transferred seamlessly through an electronic health record directly to their primary care physician for future follow-up.

About Cigna Medical Group

Cigna Medical Group, the multi-specialty group practice division of CIGNA HealthCare of Arizona, Inc., is one of the Valley’s largest group practices with more than 30 offices located throughout Metropolitan Phoenix, including three Urgent Care centers and 10 CMG CareToday convenience care clinics. To learn more about Cigna Medical Group and the services they provide, please visit www.CignaMedicalGroup.com.

About CIGNA Corporation

CIGNA (NYSE: CI), a global health service company, is dedicated to helping people improve their health, well being and sense of security. CIGNA Corporation’s operating subsidiaries provide an integrated suite of medical, dental, behavioral health, pharmacy and vision care benefits, as well as group life, accident and disability insurance, to approximately 46 million people throughout the United States and around the world. To learn more about CIGNA, visit www.cigna.com.

http://www.prnewswire.com/news-releases/cigna-medical-group-announces-grand-opening-of-cmg-caretoday-clinic-in-south-chandler-ariz-98780589.html

Cigna is no longer simply one of the largest, for-profit, private insurance corporations in the nation, it is now a component of the health care delivery system. From the Cigna Medical Group website: “CIGNA is the only managed care organization in Arizona that operates multi-specialty centers designed to help you conveniently receive care and move on with your busy day.”

With tighter regulation under the Patient Protection and Affordable Care Act, the private insurers are looking for innovative solutions that will ensure a bright future for their executives and shareholders. What better opportunity is there than to expand their intrusion into health care delivery? Imagine the expansion of a chain of nurse practitioner- and physician assistant-staffed convenience care clinics with CIGNA branding in bright neon lights.

What next? Accountable care organizations (ACOs) with full control of physicians and hospitals? Imagine each hospital in your community with a building-top mounted branding neon sign – WELLPOINT, UNITEDHEALTH, AETNA, CIGNA, HEALTH NET, HUMANA, though further consolidation could leave us with maybe just three market choices: WellPoint, UnitedHealth, and Kaiser Permanente. Maybe we could end up with only one: UnitedWellPoint.

Though this seems farcical, instead of simply controlling the puppet strings of health care – the insurance function – these national corporations would like to take over the puppets as well.

You say that’s impossible? I remember telling my colleagues what we could expect when the legislation passed that enabled the managed care revolution. They said that the scenario I described was impossible, and, besides, they would never sign the contracts anyway. It didn’t take long.

How could we end up with one or more UnitedWellPoints? The steamrollers for ACOs are fired up and beginning to roll. Physicians will have almost no say in this transformation. The fight for control will be between the hospitals and the major private insurers. What kind of a contest will that be with thousands of local hospitals competing for control with a few large national insurance companies that already hold the money?

Wouldn’t it be much safer to give entire control of the purse strings to an improved Medicare? At least then any redesign of the health care delivery system would benefit patients rather than shareholders.

Medicaid Provision Could Turn Into ‘Another SGR,’ Some Advocates Fear

By Amy Lotven, Inside Health Reform
America’s Health Insurance Plans (AHIP)
June 23, 2010

Under the reform law, starting in 2013 Medicaid payments for primary care physicians must equal 100 percent of Medicare payments, but Congress only funded the policy for two years due to fiscal constraints.

The Republican Study Committee (RSC), in a March 26 policy brief on the health reform law, calls the payment boost a “budget gimmick” and notes that “history has shown that this two-year increase will likely be increased every year after the ’sunset date,’ thus hiding the true cost of the provision.”

“While many conservatives may believe that physicians in Medicaid should be paid more, many may believe that we should not be expanding this flawed program to begin with.”

The RSC also notes that the provision could be seen as “just another SGR,” referring to the annual congressional move to stave off physician payment cuts resulting from Medicare’s sustainable growth rate.

But primary care stakeholders are already working to mitigate the issue. The American Academy of Family Physicians says that it will be asking lawmakers to extend the provision to cover a longer period. “It is likely that any extension will be of specified duration because of its impact on the federal budget,” AAFP writes on its web site. “Nonetheless, physicians are not likely to begin taking Medicaid patients if they know that the higher payment rates are not going to continue. As Medicaid coverage expands, this will create an untenable situation in which more patients will be covered but have no physician practice that can take them,” the site adds.

The provision in the final legislation was obviously crafted so as to address fiscal constraints, AAFP President Lori Heim said. Essentially, the legislation expands Medicaid to an estimated 17 or so million people starting in 2014 and as of now the funding is slated to end that same year. If all of these people gain access to physicians at that point, what will happen in 2015? Heim asked.

http://www.ahiphiwire.org/LearningCenter/Feature.aspx?channel=Medicaid&doc_id=604516&page=1

And…

Physician Participation in Medi-Cal

California HealthCare Foundation
July 2010

While 90% of California physicians are accepting new patients and 73% accepting new Medicare patients, only 57% reported accepting new Medi-Cal patients.

Medi-Cal patients are concentrated in a small share of practices, with 25% of physicians providing care to 80% of Medi-Cal patients.

http://www.chcf.org/publications/2010/07/physician-participation-in-medical

Medicaid, being a welfare program with piddling political support, has been chronically underfunded. Yet, in the reform legislation, expansion of Medicaid eligibility is one of the more salient policies, designed to extend Medicaid coverage to perhaps 17 million more individuals. Will we have enough willing primary care professionals to take care of them?

Close to half of physicians already are unwilling to accept any Medicaid patients at all, and the patients who do receive care tend to be concentrated amongst one-fourth of physicians.

Congress recognized that there would be a reluctance on the part of primary care physicians to absorb this influx of Medicaid patients, so they increased payment rates for primary care services to the same level as Medicare. But the increase is scheduled for only two years merely because an arbitrary federal spending limit constrained the reform policies.

The increased fees will apply the year before and the first year of the Medicaid expansion. Physicians are already unhappy with the continued uncertainties over the future of Medicare payments since Congress has repeated failed to enact a revision to the SGR formula (sustainable growth rate), without which physicians could see dramatic reductions in Medicare payments. Physicians do not see Congress as reliable partners.

Why would any physician sign up a large number of new Medicaid patients in 2014, if the next year rates will be reduced to levels that already have caused physicians to refuse to participate in the program? It is likely that the one-fourth of physicians who already are dedicated to caring for Medicaid patients will be inundated, and at a time when we already have a serious primary care crisis.

The increased funding for community health centers may provide some relief, but serious logistical problems may impair adequate access – problems such as health center location and transportation to it, the shortage of primary care professionals to staff the centers, and the continual struggle with funding. Also, whether Medicaid patients are seen in primary care practices or community health centers, access to specialized care is very limited, primarily because of a lack of willing providers.

Medicaid is branded with the stigma of being a welfare program because it is a welfare program, quite unlike Medicare which is a social insurance program. Not only is Medicaid humiliating for the patients, it also creates fiscal problems for the health care delivery system because of chronic underfunding.

The Medicaid problem could be eliminated quite easily. It would be much more efficient, equitable, and less costly overall to have a social insurance program that covered absolutely everyone – an improved Medicare for all.

Insurers Push Plans That Limit Choice of Doctor

By Reed Abelson
The New York Times
July 17, 2010

As the Obama administration begins to enact the new national health care law, the country’s biggest insurers are promoting affordable plans with reduced premiums that require participants to use a narrower selection of doctors or hospitals.

The plans, being tested in places like San Diego, New York and Chicago, are likely to appeal especially to small businesses that already provide insurance to their employees, but are concerned about the ever-spiraling cost of coverage.

But large employers, as well, are starting to show some interest, and insurers and consultants expect that, over time, businesses of all sizes will gravitate toward these plans in an effort to cut costs.

The tradeoff, they say, is that more Americans will be asked to pay higher prices for the privilege of choosing or keeping their own doctors if they are outside the new networks. That could come as a surprise to many who remember the repeated assurances from President Obama and other officials that consumers would retain a variety of health-care choices.

But companies may be able to reduce their premiums by as much as 15 percent, the insurers say, by offering the more limited plans.

Many insurers also expect the plans to be popular with individuals and small businesses who will purchase coverage in the insurance exchanges, or marketplaces that are mandated under the new health care law and scheduled to take effect in 2014.

Prominent officials like Mr. Obama and Hillary Rodham Clinton learned to utter the word “choice” at every turn as advocates of overhauling the system.

But choice — or at least choice that will not cost you — is likely to be increasingly scarce as health insurers and employers scramble to find ways of keep premiums from becoming unaffordable. Aetna, Cigna, the UnitedHealth Group and WellPoint are all trying out plans with limited networks.

The size of these networks is typically much smaller than traditional plans. In New York, for example, Aetna offers a narrow-network plan that has about half the doctors and two-thirds of the hospitals the insurer typically offers. People enrolled in this plan are covered only if they go to a doctor or hospital within the network, but insurers are also experimenting with plans that allow a patient to see someone outside the network but pay much more than they would in a traditional plan offering out-of-network benefits.

The insurers are betting these plans will have widespread appeal in the insurance exchanges as individuals gravitate toward the least expensive options.

The new health care law offers some protection against plans offering overly restrictive networks, said Nancy-Ann DeParle, head of the office of health reform for the White House. Any plan sold in the exchanges will have to meet standards developed to make sure patients have enough choice of doctors and hospitals, she said.

How widespread these plans will become is anybody’s guess, and some benefits consultants wonder if these plans represent any real solution to high medical costs. The narrow network, if it is based on the insurers’ ability to demand low prices, may be “just another short-term fix,” warned Barry Schilmeister, a consultant at Mercer.

But many insurers say they are still figuring out how to persuade people to choose these plans rather than force them to enroll. “What’s not changed are the old techniques of black-belt managed care,” said Mark T. Bertolini, Aetna’s president. “We have to create the same kind of model without the ‘Mother, may I.’ What we want is the ‘Mother, should I.’ ”

http://www.nytimes.com/2010/07/18/business/18choice.html?pagewanted=all

The managed care revolution brought us restricted networks of physicians, hospitals and other health care services. These restrictions, which limited patients’ choices of their health care professionals and facilities, did produce a one-time notch in the curve of rising health care costs. The insurers did this by contracting lower rates with health care providers, and then imposing financial penalties on patients who chose their care outside of the networks.

Patients were not pleased with limitations placed on their choices, but generally were not rebellious since they were often able to continue to see their own physicians, or, if not, were usually satisfied with their in-network substitutes.

The major insurers have been experimenting for some time with much more restrictive networks – networks in which they could contract for much lower rates in exchange for a higher patient volume. Individuals and employers have not responded to these market efforts because the restrictions were too severe. They excluded popular health care professionals and hospitals, sometimes completely, or sometimes by requiring unaffordable coinsurance payments by the patients.

But the environment has changed. The premiums for health plans are now very close to being truly unaffordable for most individuals and employers. With individuals being mandated to purchase insurance, and employers being exposed to penalties if their employees purchase plans in the exchanges, the market for plans with affordable premiums is being forced. The insurers must come up with plans that will meet the test of the market. The deeply-discounted, more tightly restricted plans are now finding their market.

These plans are terrible. Many will lose their primary care professionals. They will often not be able to use their local hospitals and many of their local specialists. Most referrals to centers of excellence will be prohibited. Although the Patient Protection and Affordable Care Act (PPACA) will require that provider networks provide choice, the law does not prohibit intolerably Spartan networks.

This, of course, is a setup for the death spiral of adverse selection for the plans with more adequate networks. Individuals with more significant problems will select plans that can better meet their needs, while the healthy will flee to the plans with Spartan networks once the premiums skyrocket.

When individuals shift to the more restricted plans, what will happen to the large number of physicians and hospitals that are denied contracts? Obviously their financial viability would be threatened, and many would shut down. As if we didn’t already have enough problems with the deterioration in our primary care infrastructure, much of the entire health care delivery infrastructure could begin to crumble.

PPACA contains many measures designed to improve the functioning of the private insurers, but most of them will drive premiums even higher. Insurance innovations such as the Spartan provider networks were fully predictable.

What should really alarm us is that the business world thrives on innovation. Think of the possibilities that the private insurance industry can devise. Actually, it is very difficult for us who are trying to figure out how to get patients the care they need to come up with innovative concepts that will protect the business model of the private insurance industry, no matter the cost to patient care. It isn’t in our DNA.

But there is absolutely no doubt whatsoever that we will see innovation, and it won’t be healthy for patients, nor for their health care professionals.

TAKE ACTION: The article provoked a large number of responses on The New York Times website, many supportive of Medicare for all, single payer, national health program, and health care justice in general. ADD YOUR RESPONSE. Go to the article and post your opinion, even if only a sentence or two. If you are not registered, it is easy to do, so don’t let that deter you. The New York Times needs to hear from us so that they will investigate why there is such broad support for a national health program. (At least click “Recommend” on response #232.)

Public sector workers paying more of their health care costs

By Bobby Caina Calvan
The Sacramento Bee
July 15, 2010

Workers in private industry have felt the sting of rising health insurance premiums and out-of-pocket costs for decades. Now, as government budgets bleed, public employees are starting to share the pain.

In the past year, Sacramento’s largest school districts have trimmed health care coverage. Local and state government officials also are looking for ways to save.

And while public employee unions have made preserving health benefits a priority, they have been pressed to give ground or face more layoffs.

In his proposed budget, Gov. Arnold Schwarzenegger is seeking to cut $152.8 million in health premium expenses by requiring the California Public Employees’ Retirement System to offer lower-cost coverage, possibly with fewer benefits, or give the state authority to do so.

Health insurance costs have “reached the point where we can’t sustain those benefits,” said Lynelle Jolley, spokeswoman for the state Department of Personnel Administration.

http://www.sacbee.com/2010/07/15/2891358/public-sector-workers-paying-more.html

Private employers have continued to shift more of the costs of health care to their individual employees. This has had deleterious financial and health impacts since it has made health care access less affordable. Now, even with union representation, public employees also are experiencing deterioration in their coverage.

That’s a one-way street. Plans for public employees will never improve but will likely further deteriorate to match the 60 to 70 percent actuarial value plans to be offered by the state insurance exchanges.

“After all, why should we taxpayers have to buy these people good insurance when we have to put up with our lousy plans?” But those who express this sentiment have it backwards. Why should they have put up with crappy insurance when we could all have a program that works even better than most plans for public employees?

As we’ve said many times, the private insurance model doesn’t work anymore. We can have that program that works for all of us, if we, as voters, demand it.

Health Insurance Exchanges and the Affordable Care Act: Key Policy Issues

By Timothy Stoltzfus Jost, J.D.
The Commonwealth Fund
July 15, 2010

Health insurance exchanges are the centerpiece of the private health insurance reforms of the Patient Protection and Affordable Care Act of 2010 (ACA). If they function as planned, these exchanges will expand health insurance coverage, improve the quality of such coverage and perhaps of health care itself, and reduce costs. Previous attempts at creating health insurance exchanges, however, produced only mixed results. This report identifies the earlier attempts’ problems, enumerates the key issues that are critical for overcoming those problems, analyzes in detail the ACA’s provisions addressing these issues, and discusses further policy options.

As part of successfully implementing the new exchanges, the U.S. Department of Health and Human Services (HHS) and the states must address issues that undermined the earlier attempts. These issues are:

• Adverse selection.
• Numbers of participants.
• Market coverage and structure.
• Choice without complexity.
• Transparency and disclosure.
• Competition.
• Administrative costs.
• Market or regulator?
• Administering subsidies and mandates.
• State, regional, or national exchanges?
• Governance.
• Relationships with employers.
• Cost control.

http://www.commonwealthfund.org/~/media/Files/Publications/Fund%20Report/2010/Jul/1426_Jost_hlt_insurance_exchanges_ACA.pdf

“Health Insurance Exchanges and the Affordable Care Act: Key Policy Issues,” by Timothy Stoltzfus Jost, should be read in full (44 pages) by everyone who cares about the future of our health care system. The Executive Summary alone is not adequate to understand the implications of the issues he discusses. Every page requires attentive reading since each is covered with red flags, far too many to cover in a qotd commentary.

It is an especially important report for those who believe that the health insurance exchange model is a satisfactory compromise for moving forward, while dismissing further efforts to create a public national health program. It is also important for single payer advocates (improved Medicare for all) since it is important to understand the red flags raised by this report, and be able to debate them with others.

Many of the issues listed would disappear under a single payer system. For instance, in spite of the measures in the law, adverse selection (concentrating high-cost patients in health plans) cannot be eliminated by the insurance exchanges, yet it would disappear in a single universal risk pool. That is especially important since adverse selection has destroyed previous insurance exchanges in numerous states.

The numbers of participants in the exchange plans are also crucial. A few unhealthy individuals can wipe out a plan if there isn’t a large number of healthy individuals to absorb the costs through the plan premiums. It has been estimated that 24 million people will obtain their coverage through the exchanges. Distribute that amongst the fifty states, and then divide those numbers up amongst the “large” selection of plans in the “robust” markets of the exchanges, and you can see that many plans would likely fail due to the small numbers of insured.

Although an important goal of reform was administrative simplification, insurers will still have most of their administrative costs, as will the physicians and hospitals, and yet another layer of administration is added in the operation of the exchanges.

The premium subsidies, cost-sharing subsidies, and the mandates and penalties, in a system with ever-shifting eligibilities, creates a complex financing structure that is totally unnecessary. It is far simpler to finance the entire health care system through equitable taxes.

The reform act was designed to perpetuate the employer role in providing health care coverage, but increasing costs and increasing fragmentation through various public and private programs is increasing the complexity of the decision process for employers, creating an uncertain future for employer-sponsored plans. It would be far easier to remove the employer as keeper of the health plan, and simply provide a single, comprehensive public plan for everyone.

And cost control? It didn’t happen.

You likely don’t have time to read the full report now, but download it and read it this weekend, or at any other time that you have a break.

The Patient Protection and Affordable Care Act of 2010 (PPACA) is being touted by its proponents as moving the country to near-universal coverage and a great step ahead in U.S. health care. But what does this really mean? Are the many barriers to care almost a thing of the past?

On the plus side, the PPACA does offer these welcome provisions:

• Extending health insurance to 32 million more people by 2019.

• Allowing parents to keep their children on their policies until age 26.

• Expansion of Medicaid to cover 16 million more lower-income Americans.

• New funding for community health centers that could allow them to double their patient volume.

However, on the other side of the ledger, there are many problems that will render restricted access to care for tens of millions of Americans, an ongoing and even increasing problem. These examples show how far short of the mark the PPACA falls on access to care:

• There will still be 23 million people without any kind of health insurance in 2019.

• Federal support for Medicaid expansion will not kick in until 2014.

• More than 32 million other Americans will be under-insured in 2019, as a result of these kinds of circumstances:

1. Many younger healthier people, the “Young Invincibles,” will opt out of coverage until they have an accident or get sick.
2. Many people will not be able to afford coverage through either exchanges (which won’t be operational until 2014) or high-risk pools.
3. The new federal temporary high-risk pool is already underfunded and plagued with many problems; at best, it will be available for up to 7 million uninsured people, but more likely for only about 200,000 or 3 percent of the target population. (Merlis, M. Health coverage for the high-risk uninsured: Policy options for design of the temporary high-risk pool. National Institute for Health Care Reform. May 27, 2010.)
4. The actuarial value of insurance plans for most of the newly “insured” will be as low as 60 to 70 percent (i.e. insurers leave 30 percent to 40 percent of the bill with patients and their families).
5. Even those fortunate enough to have employer-sponsored (ESI) coverage will find their plans costing more, covering less, and more difficult to afford; the Congressional Budge Office projects that the average family premium in the ESI market in 2016 will cost more than $20,000, not including deductibles and other out-of-pocket expenses. (Congressional Budget Office. An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act. Nov. 30, 2009.)
6. Access to care will further deteriorate as a result of 36 billion in Medicare and Medicaid cuts to safety-net hospitals. We can expect closure of some of these critical facilities that provide a wide range of services that other hospitals find too unprofitable to provide, including kidney dialysis, cancer treatment and mental health care.
7. Although the PPACA does call for an increase in reimbursement for primary care physicians, that won’t happen until 2013, and will then last only two years — just a small gesture toward the nation’s growing crisis in primary care.
8. The U.S. is facing a shortage of 35,000 to 44,000 primary care physicians for adults by 2025 (Colwill, J, Cultice, JM, Kruse, RL. Will generalist physician supply meet demands of an increasing and aging population? Health Affairs [Millwood] 27: w232-41, 2008.) An increasing number of people with insurance coverage cannot find a primary care physician to take care of them, especially those on Medicare or Medicaid, due to low reimbursement in those programs.
9. Since the PPACA calls for phased cuts in overpayments to private Medicare Advantage plans over the next few years, enrollees will face cuts in benefits and rising premiums.
10. As they confront deficits of 127 billion over the next two fiscal years, states are making draconian cuts in Medicaid across the country that will only aggravate current barriers to care. State appeals to the federal government for relief of Medicaid costs are now caught in a political crossfire threatening further unraveling of Medicaid funding. (Solomon, D. States face new pinch as stimulus ebbs. Wall Street Journal, June 23, 2010: A5.)
11. A majority of states outsource their Medicaid programs to private insurers that frequently create profits by cutting services. A recent report found that 2.7 million children on Medicaid in nine states were not receiving required screenings and immunizations. In Florida, the insurer WellCare paid 40 million in restitution to the state after it acknowledged that it had set up a subsidiary to make it appear that it was spending more on health care than it actually was. (MacGillis, A. Some states say they’re not receiving the Medicaid services they’re paying for. The Washington Post on line, July 8, 2010.)

Despite the hype we hear about “near-universal” access just down the road with PPACA, the above leads us to believe that access to care will remain inadequate for much of the population. In our next post, we will look at what this year’s health care “reform” legislation means for the quality of care Americans receive.

Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. www.commoncouragepress.com

What Conservatives Are Winning

By Drew Altman, Ph.D., President and CEO
Kaiser Family Foundation
July 14, 2010

But for all of the frustration and even anger within the conservative movement about where health care is headed, the fact of the matter is that they are winning more than even they may realize in the current health care equation. That’s because the nature of health insurance itself is being redefined and moving gradually but seemingly inexorably in the direction conservatives have long advocated: more consumer “skin in the game” through higher patient deductibles.

Item: In our recent survey of people in the non-group insurance market, we found that the average deductible for an individual policy is now $2,498, and for families it’s $5,149. These are very high thresholds by any standard. Consider, for example, that a family with median income facing such a deductible would be spending almost 10% of their annual income just for their deductible before their insurance kicked in.

Item: The percentage of workers facing high deductibles — $1,000 or more for single coverage –  has been growing rapidly. It doubled from 10 percent to 22 percent between 2006 and 2009, and increased from 16 percent to 40 percent in small firms.

Item: Indications are that the share of workers with high deductibles is continuing to grow, a trend I expect our 2010 employer survey to confirm when we release it in September as we have every year for more than a decade now. And a substantial number of these high deductible plans are paired with tax-advantaged savings accounts, which conservatives have long advocated. Facing cost pressures without alternative answers, employers are moving to plans with less comprehensive coverage to reduce their expenses for employee benefits.

Item: Health reform is unlikely to reverse these trends. Large employers will continue to look for ways to address the rising cost of health care. And, for the basic “bronze” insurance plan that people will be required to buy, deductibles could run several thousand dollars for individuals and double that for families. To be sure, other aspects of health reform cut the other way. For example, there will be no cost sharing for preventive services in newly-purchased plans, and insurers will be required to cap consumer out-of-pocket costs at defined levels. And, of course, there are substantial subsidies to reduce premium and out-of-pocket costs for lower-income people. But, for the first time, the government will be defining the threshold that decent insurance must meet, and that minimum coverage will have the kind of high deductibles that conservatives favor.

For several years we have seen moderate increases in premiums for employment-based health insurance. I suspect that rising deductibles and other out-of-pocket costs are one explanation for this. It’s simple arithmetic that employers can buy down premium increases by switching to less comprehensive coverage and shifting more costs to workers. Plus, these higher out-of-pocket costs exert downward pressure on utilization – in some cases for the better, in some cases for the worse — and thus on premiums as well. At the same time, people have never been more upset about their own rising health care costs, as the coverage they get offers less and less financial protection.

Looked at through a political lens, liberals have gained through passage of major health reform legislation, including expanded coverage and increased government oversight of the health insurance system. But increasingly, the insurance itself is looking more and more like the vision advanced by conservatives – less comprehensive with more skin in the game. That’s where conservatives may be winning more than they realize in the ongoing battle over the future of health care.

http://www.kff.org/pullingittogether/071410_altman.cfm

Regular readers of the Quote of the Day have seen this theme expressed relentlessly in these weekday messages: We are experiencing a massive shift to underinsurance products, and this policy of making individuals sensitive to health care costs through greater out-of-pocket spending has long been on the agenda of the conservatives.

The importance of today’s message is that it comes from a highly credible individual, Drew Altman, President and CEO of Kaiser Family Foundation, which serves as a “non-partisan source of facts, information, and analysis for policymakers, the media, the health care community, and the public.” It is a very objective observation of the reality of the reform that is now law, and it’s the same message that we have been delivering over and over.

Building on the current system, which we just did, is the most expensive and one of the least effective models of achieving the goal of affordable, high quality care for everyone. Yet one of the least expensive and most effective models is a single payer national health program – an improved Medicare for all. Most of the measures in the enacted legislation have not yet taken place. We can still change course and do it the right way.

Conservative leader David Cameron on the NHS

Quote of the Day
August 17, 2009

“One of the wonderful things about living in this country is that the moment you’re injured or fall ill – no matter who you are, where you are from, or how much money you’ve got – you know that the NHS will look after you. That’s why we as a Party are so committed not just to the principles behind the NHS, but to doing all we can to improve the way it works in practice.”

(Since this quote, Conservative David Cameron was elected Prime Minister.)

http://pnhp.org/blog/2009/08/17/conservative-leader-david-cameron-on-the-nhs/

And…

NHS shake-up grants new powers to doctors and patients

By Rebecca Smith
Telegraph.co.uk
July 12, 2010

GPs are to be handed £80bn of the NHS budget to buy care from hospitals and other doctors for patients in their area, as hundreds of middle-management organisations are swept away.

Family doctors will be responsible, in consortiums, for commissioning the care for patients in their area by buying treatment from hospitals, charities and other doctors.

Under the new Coalition government’s health white paper, ministers will step back from the day-to-day running of the health service and hand power to the front line.

Andrew Lansley, Health Secretary, said the white paper represented a “vision based on the principles of freedom, fairness and responsibility”.

However, there was immediate criticism from Labour and the unions, saying handing £80bn to GPs who are private contractors was a mistake and that the plan was a ‘Trojan horse’ for widespread privatisation.

The document entitled Equity and Excellence: Liberating the NHS includes wide-ranging reforms covering all aspects of the NHS and healthcare.

Mr Lansley said ‘process-driven’ Labour government targets, such as the 18-week waiting time between GP referral and hospital treatment, will be scrapped and the focus will instead be on quality of outcomes for patients.

All hospitals are to become a Foundation Trust or part of one, giving them far greater freedoms from Whitehall and allowing them to earn more money from private patients.

Management costs are to be cut in half but the Government has already admitted that the NHS would be forced to make staff redundant. It is estimated that around 25,000 jobs could be lost.

Nigel Edwards, acting chief executive of the NHS Confederation, which represents all NHS organisations, said the changes would represent a huge upheaval.

“It is hard to stress just how radical this is. The NHS will look much more like the gas, electricity or telecom’s market than it will the monolithic state bureaucracy we have come to understand,” he said.

Dr Jennifer Dixon, director of the think thank, the Nuffield Trust, said handing billions of pounds of taxpayer’s money to GPs was ‘risky’ and is a significant change from their current role.

Andy Burnham, Shadow Health Secretary, called the white paper a ‘giant political experiment’ and warned that the government were taking an ‘£80bn gamble with the great success story that is out National Health Service today’.

“At a stroke, you are removing public accountability and opening the door to unchecked privatisation; you are demoralising NHS staff at just the time you need them at their motivated best,” he told Mr Lansley in the House of Commons.

David Fleming of Unite, said: “This is an untested, expensive Trojan Horse in political dogma that will give private companies an even greater stake in the NHS – this way of operating has already happened in the USA.

“Before the election, the Tories promised no major reorganisation of the health service – within three months that pledge to the British people, the majority of whom did not vote for further privatisation of the NHS – has been broken. So much for the ‘new politics’.”

http://www.telegraph.co.uk/health/healthnews/7885753/NHS-shake-up-grants-new-powers-to-doctors-and-patients.html

And…

Equity and excellence: Liberating the NHS

Department of Health (England)
July 2010

5. Cutting bureaucracy and improving efficiency

The scale of the NHS productivity challenge may prompt calls during this Parliament for even bigger increases in NHS resources; but the reality is that there is no more money.

So our first task is to increase the proportion of resource available for front-line services, by cutting the costs of health bureaucracy. Over the past decade, layers of national and regional organisations have accumulated, resulting in excessive bureaucracy, inefficiency and duplication. The Government will therefore impose the largest reduction in administrative costs in NHS history. Over the next four years we will reduce the NHS’s management costs by more than 45%.

The Department will shortly publish a review of its arm’s-length bodies. Subject to Parliamentary approval, we will abolish organisations that do not need to exist. We will streamline those functions that need to remain, to cut cost and remove duplication and burdens on the NHS. In future, the Department will impose tight governance over the costs and scope of all its arm’s-length bodies.

The Government will cut the bureaucracy involved in medical research. We have asked the Academy of Medical Sciences to conduct an independent review of the regulation and governance of medical research. In the light of this review we will consider the legislation affecting medical research, and the bureaucracy that flows from it, and bring forward plans for radical simplification.

We are moving to a system of control based on quality and economic regulation, commissioning and payments by results, rather than national and regional management. Within that context, we are committed to reducing the overall burdens of regulation across the health and social care sectors. We will therefore undertake a wide-ranging review of all health and social care regulation, with a view to making significant reductions.

Equity and excellence: Liberating the NHS (61 pages):
http://www.dh.gov.uk/prod_consum_dh/groups/dh_digitalassets/@dh/@en/@ps/documents/digitalasset/dh_117352.pdf

The British National Health Service (NHS) is one of the most effective health care systems in the world. That is a remarkable achievement considering that they devote only half as much funds to their health care as does the United States (percent of GDP in 2008: UK 8.7% versus US 16.0%). Yet in their white paper, “Equity and excellence: Liberating the NHS,” the Conservative government of Prime Minister David Cameron states, “the NHS productivity challenge may prompt calls during this Parliament for even bigger increases in NHS resources; but the reality is that there is no more money.”

No more money!? Excuse the vulgarity, but… bullshit!

The Cameron government is using this false claim to dramatically pull back the government’s role in the NHS, and to push privatization. They are not only cutting back on essential government administrative functions (as opposed to the profound administrative waste in the U.S. system), but they are also failing to honor their duty as stewards of the taxpayers’ funds to maintain adequate regulatory oversight of their public health care system.

They are even going so far as to reduce the government’s role in medical research. Could you imagine the Congress of the United States defunding our National Institutes of Health merely because it is a composite of government bureaucracies?

Is this really what the people of England voted for?

Plan-Provider Collaborations Promise Improved Care Delivery

By Louise Kertesz
America’s Health Insurance Plans
July 12, 2010

“Despite many challenges, health plans are well positioned to drive improvements” in care delivery through collaborations with providers. “Health plans have an enormous amount of assets” in the form of data and relationships they can leverage to improve care, said Jeremy Nobel, MD, adjunct lecturer, health policy and management, Harvard School of Public Health.

To drive improvement, plans can contract with providers to deliver value-based care, with reimbursement linked to performance. Plans can help establish medical homes, accountable care organizations, and episode pricing, he said.

They can also offer providers online tools to improve care delivery effectiveness and efficiency, such as e-prescribing, registries, computerized order entry, and electronic health records. Plans can “be an active infomediary between members and providers, supporting collaborative and value-based care through care gap alerts and shared personal health records.”

Rushika Fernandopulle, MD, a principal at Renaissance Health, has been involved in installing disease management processes for patients with chronic conditions in physician practices in Seattle and Atlantic City. His group has used predictive modeling to identify patients, brought in health coaches, and set up a three-tier payment model (in Seattle) and global budgets (in Atlantic City).

Putting DM processes – usually reserved for health plans and DM vendors – into physician offices is “next-generation disease management,” he said.

“This sort of close payer-provider partnership is not easy, but it is very rewarding when done right. It’s a very active process—more than writing a check and walking away. Plans need to be willing to invest enough, and be patient. There needs to be strong, ongoing connections at multiple levels, including personal relationships; one person needs to own this and go between” physicians and plan, he said.

http://www.ahiphiwire.org/News/Default.aspx?channel=HealthIT&doc_id=617027&utm_source=7/12/2010&utm_medium

Now that Congress has codified a permanent role in health care for the private insurance industry, what will be the next entrepreneurial innovations of the private insurance/managed care industry? “Plan-provider collaborations” that are “not easy” but “very rewarding when done right.”  Be afraid. Be very afraid!

In our last post, we looked at some of the uncontrolled drivers of rapidly rising health care costs despite all the assurances of our politicians supporting the new health care law, the Patient Protection and Affordability Care Act of 2010 (PPACA).

During the long run-up to this bill, President Obama told us that it would save the average American family $2,500 a year on insurance premiums (a claim that the Congressional Budget Office later dispelled as untrue, instead projecting a $2,300 increase in premium costs for the average family). (1) (Hemingway, M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner on line, March 10, 2010)

The inconvenient fact is that premiums for families enrolled in employer-sponsored health plans from 2000 to 2008 increased by 97 percent, while those enrolled in individual plans increased by 90 percent; during this period, insurers’ payments to providers rose by 72 percent, medical inflation increased by 39 percent, wages grew by 29 percent and overall inflation went up by 21 percent. (2) (Health Care for America Now! (HCAN). Insurance industry inflates rates while falsely blaming new health care law. June 2010)

According to a recent survey by the Council of Insurance Agents and Brokers, more than one-half of smaller employers with 50 or fewer employees will face premium hikes for group policies in the 11 percent to 20 percent range for 2011. (3) (Wojcik, J. Group health insurance rates on the rise: Survey. Business Insurance, June 3, 2010)

So how in the world can we expect the new health care “reform” legislation to actually make health care and health insurance more affordable?

The new law promised not only cost savings but also provided for $476 billion (almost one-half of the total $1 trillion cost of the law in its first 10 years) in new federal subsidies to help lower- and middle-income Americans to pay for health insurance. We need to ask whether the promised cost savings are likely to materialize and whether the subsidies will help that much.

For openers, cost savings are an illusion. Supporters of PPACA assure us that several approaches will contain health care costs – such as an increase in wellness and prevention programs, wider application of health information technology, and experimentation with such initiatives as “accountable care organizations” and tweaks to the fee-for-service reimbursement system. Most are delayed for years into the future and none have yet been demonstrated to save money for patients and their families.

The cost of health care is certain to rise exponentially as far as we can see, since the market controls prices and the volume of services in a deregulated non-system. And insurance premiums are also certain to rise rapidly at rates way above the cost of living and median household income based on various industry-friendly loopholes in the law and gaming by the industry. These examples show how easy it will be for the industry to continue to exploit the public through both private and public programs:

• Under the new law, insurers can raise premiums based on age (by a 3:1 ratio), by geographic area, by the number of family members, and by tobacco use (by a 1.5 to 1 ratio).

• Many insurers are now aggressively marketing “wellness plans” in both private and public plans. One example is the Healthways SilverSneaker’s membership fitness plan for seniors enrolled in Medicare Advantage plans. This is a clever strategy for insurers in two ways – they cherry-pick healthier seniors without infirmities that prevent their participation in such programs and then they charge 20 percent higher premiums to those seniors not enrolled in fitness programs. (4) (Blue Shield of California. Blue Shield of California to offer award-winning fitness program to Medicare beneficiaries in San Bernardino. January 18, 2010) (5) (Britt, R. Experts: Critical loophole in Senate health bill. Market Watch. January 7, 2010)

• Many healthier younger people will gamble with being uninsured until they get sick, in order to avoid paying fines for noncompliance with the individual mandate. This has already happened in Massachusetts over the four years since the “Massachusetts Miracle” was adopted in 2006. Since then, the number of short-term insurance buyers has increased by four-fold, getting insurance only after they have health care problems, then dumping coverage after they get care. This has increased the cost of insurance for other people and costs the state’s program an additional $300 million a year. (6) (Lazar, K. Short-term insurance buyers drive up cost in Mass. The Boston Globe, June 30, 2010) (6) (Lazar, K. Short-term  insurance buyers drive up cost in Mass. The Boston Globe, June 30, 2010)

People with employer-sponsored group coverage will also take hits. As employers confront hikes in the costs of group coverage, they will pass along these costs to their employees in the form of increased co-payments and deductibles, often with other restrictions in coverage. Middle-income families will be especially hard-hit if they have so-called Cadillac plans – those with annual premiums in excess of $8,500 for individuals and $23,000 for families. Employers will be faced with a tax on such plans beginning in 2013, when we can expect them to avoid the tax by limiting coverage and forcing more cost-sharing on their employees. (7) (Herbert, B. Op-Ed. A less than honest policy. New York Times, December 29, 2009)

But won’t the nearly half a trillion dollars in federal subsidies over 10 years make health care affordable for lower- and middle-income Americans? Here too the story is not what we are being led to believe by pundits and supporting politicians. Subsidies will not start until 2014, and then are not available to people already covered by employer-sponsored insurance, those qualifying for Medicaid (incomes less than 133 percent of the federal poverty level, or FPL) and those earning more than 400 percent of FPL. Subsidies can only be obtained by those purchasing coverage on their own on an Exchange.

The Commonwealth Fund has established useful criteria to assess affordability of health care vs. other costs of living. When put up against other basic necessities of life, such as food, housing, and one car to get to work, health care costs above 10 percent of family income become a hardship level, as are medical expenses above 5 percent of family income for lower-income adults below 200 percent of the federal poverty level and those with health plan deductibles above 5 percent of income. (8) (Schoen, C, Doty, M, Collins, SR, Holmgren, AL. Commonwealth Fund. Insured but not protected: How many adults are underinsured, the experiences of adults with inadequate coverage mirror those of their uninsured peers, especially among the chronically ill. Health Affairs Web Exclusive, June 14, 2005)

The Kaiser Family Foundation has developed a useful Health Reform Subsidy Calculator, by which people can readily determine their own health care costs. As an example, a family of four in with an income of $60,000 in 2014 can expect to be responsible for an insurance premium of $16,858 as well as $6,250 in out-of-pocket costs, which together would account for 18.6 percent of their household income. And those costs may well be higher due to restricted coverage of their own plan and changes in cost-sharing requirements. By comparison, seniors were paying an average of 15 percent of their annual income on premiums and out-of-pocket health care costs in 1965 when Medicare was enacted. (Blumenthal, D., et al. “Renewing the Promise: Medicare & its Reform.” New York, Oxford University Press, 1988.)

So far we have found little evidence that health care “reform” circa 2010 will contain health care costs or make health care more affordable. In our next post we will consider how much we can believe about claims of improved access to care.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.” This posting is partially based on materials in his forthcoming book, “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” soon to be released by Common Courage Press in both print and e-book format. http://www.commoncouragepress.com