For Profit Insurance
The Public Option: Popular Everywhere But the U.S. Senate
Published September 14, 2009 @ 10:34PM PT
Many sound notes of exasperation that the public option continues to be the focal point of the health care fight, both on the right and the left. But at this point, their exasperation is itself becoming exasperating. At its core, we’re talking about a policy point that, despite eight months of pummeling, remains popular except in the halls of the United States Senate and the corridors of the headquarters of the insurance companies. It is the latest incarnation of the people vs. the powerful -– and I’d say folks have a right to be angry that the people seem to be losing.
Two bits of news today reinforce the unmistakable trends of continues popularity and support. Washington Post-ABC News released their latest poll, finding support for health care reform in general is split right down the middle. But giving people the choice of private insurance or the ability to voluntarily buy into a high-quality, government-administered public health insurance plan, similar to Medicare, scores better at 55%. But that’s the tip of the iceberg! When actually described correctly as being an option available only to those who don’t already have insurance, support jumps to 76%. It’s like the August of our discontent never happened.
One of the canards about the public option is that physicians won’t support it because they’ll refuse its presumably lower negotiated payment rates. But today’s New England Journal of Medicine should put the lie to that once and for all. A survey by email and phone of 2,130 physicians (well above the 800-1,000 sampling of most polls) finds tremendous support among doctors for the public option -– 63% of doctors support health reform that incorporates a choice between public and private coverage, whereas only 27% prefer reform where private insurance is the only option. Even surgeons, slightly more conservative and skeptical of reform by nature, come in at 59%.
Oh, and tomorrow the AFL-CIO is set to endorse a public option formally, after their incoming president has warned darkly about primary challenges for Democrats who vote against it.
Now I should note that popularity does not always correlate to the right policy, particularly on something as complex as health care. But let’s review. All three major Democratic nominees for president endorsed a public option two years ago. This year, so did the leadership in the House and the Senate, as did all but one committee chair with jurisdiction over health care. The last committee chair released a blueprint with a public option months ago, before changing his mind. 100 members of the House are threatening to vote against a health care bill that doesn’t contain it. The Senate Majority Leader is for it, as are the number two (Durbin) and the number three (Schumer) Democrats in the Senate. A still-popular President of the United States devotes a significant portion of his health care stump speech to it. Progressives are for it. Labor is for it. Doctors are for it. The American people are for it.
What’s on the other side? Entrenched Republican resistance that has already said jettisoning the public option isn’t enough for them to vote for the bill. And an insurance industry that’s dishing to Business Week about their ability to influence centrist senators like Baucus and Conrad and Blue Dog congressman like Ross.
It’s one thing to year in and year out lost to the lobbyists and special interests whose money and influence control the levers of power. It’s quite another to have our noses rubbed in it.
(Photo credit: The White House, via Sen. Max Baucus' web site.)
9 New Surprises in President Obama's Speech
Published September 09, 2009 @ 11:09PM PT
A week ago, before tonight’s presidential address before Congress was even confirmed, I asked if President Obama had anything new to say about health care reform. I asked it even knowing that in many ways, it was the wrong question. The reality was he didn’t need to say anything new -- all it needed to be was new for most of the country. All he needed to do was say it better.
Not that the content of the speech being mostly rehash is at all a bad thing. If you read this blog regularly, or even every-so-often, you’re far more deeply enmeshed in the contours of this debate than, I believe, most Americans are. Although Obama’s town halls have been televised, although there was the press conference dedicated to health care, and the night of Q&A on ABC, although there have been op-eds, and blog posts, and Web casts and radio interviews a-plenty, most people just haven’t had the time to follow it. As a result, not everyone knows that the uninsured aren’t just sad unfortunate folks completely unconnected to us, but that our skin is in that game as well, with at least $1,000 hidden cost for uncompensated care for those of us with insurance.
People may know about pre-existing conditions, but they haven’t heard the story of Robin Beaton, the Texas nurse whose acne years prior was used an excuse to drop her health insurance precisely when she needed it the most to fight breast cancer. People know costs are going up but don’t realize, as the president said, “Our health care problem is our deficit problem -- nothing else even comes close.”
And they don’t hear nearly enough, nowhere nearly enough about the moral deficit of not fixing health care reform: “That is heart-breaking, it is wrong, and no one should be treated that way in the United States of America.”
Health care reform doesn’t exist in a vacuum. It’s not a good idea because it’s ideological or because the Obama plan is how anyone would build a system from scratch. It’s a good idea only to the extent that it solves an immediate problem. The structure of Obama’s speech was therefore elementary: you need to know the problem first, then you need to know how the solution relates to it, and then you need to be shown how all the stuff the media fixates on -- bipartisanship, “death panels,” illegal aliens, you name it -- how that doesn’t even relate to either the solution or the problem. Did Obama get a big enough audience or make a big enough impression to sway public opinion? Time will tell.
But since novelty is the spice of life, I have to share the nine things that I had legitimately not heard before, either from a policy or political perspective. Not all of them were positive, mind you, but I have to confess that the answer to the question of my earlier post -- does Obama have anything new to say about health care -- is yes.
The New Baucus Health Care Plan: Less Is Less
Published September 07, 2009 @ 12:30PM PT
I’ll admit to growing tired of seeing news stories based on leaked documents from Sen. Max Baucus and his Senate Finance Committee. Yet here we go again. Check out the New York Times and you’ll see a story which gravitates towards the only real news in the latest leaked documents: “New Fee on Health Insurance Companies Is Proposed to Help Expand Coverage”. And yet even that isn’t news, since this funding option was first suggested months ago. The more Baucus and the Senate Finance Committee release these trial balloons, the less it changes, and the more it looks like the past two months have just been an exercise in circling the drain.
Of course, we haven’t seen the full draft of anything, ever. Last time the leak consisted of PowerPoint slides, for crying out loud. This time, we only have NY Times reporter Robert Pear's description of the plan. So the first presumption is that Baucus’ plan will operate along similar lines as the House bill and the Senate HELP bill: a mixture of new regulations to curb abusive practices by insurance companies, tools to trim out the waste in Medicare and Medicaid while improving quality, investments in generating new primary care doctors and nurses, and some help for small businesses to purchase insurance. None of this is clear from the article, but all of this was what he was working on before. Similarly, we’re presuming Baucus still wants a Health Exchange – an open marketplace with a minimum standard benefits, transparency so you can compare like to like, and subsidies for those who can’t afford it. It's what the Senate Finance Committee has been working on all along.
Yet the real issues for which the Senate Finance Committee has been stuck in park and Baucus’ “Gang of Six” bipartisan negotiators has been stuck in neutral are over the questions of how good the coverage will be, how generous the subsidies, and how to pay for it. Baucus’ gang of six have determined the best way to pay for it is to be less generous for the coverage and the subsidies. The House bill and the Senate Health, Education, Labor and Pensions bill each would require insurance plans in the exchange to pay for 70-80% of medical costs, which is what most employer-based plans do. The gang of six is coming in way under that – which is something we know United Health’s lobbyists have been pushing for. The gang of six also only gives subsidies for those under 300% of the poverty line (about $32,000 for an individual or $66,000 for a family of four), and has higher caps on premiums and out-of-pocket expenses for individuals than any other bill.
All of that is pretty technical, but it translates to one word: less. Less coverage, less generous subsidies, less regulation of the insurance industry, less protection on out-of-pocket expenses, fewer choices (no public option), etc. You’ll get a lower price tag, sure. But what you are spending on doesn’t go as far or help as much. The real benefit of the lower price tag is entirely political: you can skip some tough choices on savings and new revenue. The proposed funding mechanism -- a tax on costly insurance plans -- won’t raise as much money as the controversial surtax on the richest 1.2% of Americans, a charitable deduction cap on the richest 2% of Americans, or any of the other proposed funding plans from the other committees. But it’s also the one funding mechanism guaranteed to hit the lower and middle class – in that the insurance companies have guaranteed they’ll pass it on in the form of higher premiums.
All of this would constitute "news" -- if it weren’t the exact same ideas they telegraphed two months ago. The delay hasn’t won any additional “bipartisan” magic -- Snowe is the only Republican likely to vote for it. If this is all the “gang of six” can give us, we’ve just wasted two months of the legislative process for literally less than nothing.
(Photo credit: http://www.flickr.com/photos/greaterfalls/ / CC BY-ND 2.0)
Single-Payer Health Care in Cartoons
Published September 05, 2009 @ 07:49AM PT
About once a year, someone makes the universal health care argument in the form of a cartoon and puts it on YouTube. This is a worthy entry into that genre. Clearly part of the appeal of single-payer health care, a system where all health insurance is paid for by the government out of a central fund to private hospitals and physicians, is its simplicity – you have the whole thing explained in about 4.5 minutes, maybe 10 if you want to get into “What If?” scenarios. But also exposed well in the cartoon format is the Looney Tunes-style contortions we put ourselves through now in order to keep up with the perverse incentives of for-profit insurance.
The comparison of firefighters as a government paid and provided service vs. a for-profit “fire insurance” industry was also taken up in an op-ed by NY Times columnist Nicholas Kristof. New York City, in fact, used to have a disastrous private industry fire-fighting system. Instead of efficiencies through competition, it bred corruption and the threat of future financial pain for those who had just lost their possessions, usually because of a stroke of fortune. We wouldn’t stand for someone privatizing our police or our army or our fire-fighters or even our water treatment centers. But somehow, despite no other industrialized country standing for a system that makes a profit on basic health (some of them allow insurance companies to make a profit on add-ons and non-essentials, but the essentials are non-profit), we are convinced there’s value to a profit motive with incentives to deny care and avoid customers that are likely to need it that actually enhances our health. Although, when pressed, we’re not sure what that value is.
Sometimes it takes a cartoon to realize how much of our argument is about inertia.
What Do We Mean by "Individual Rating?"
Published September 01, 2009 @ 03:52PM PT
Let’s review: insurance companies make money by finding ways to attract younger and/or healthier customers who are less likely to need medical care. They frequently couple that with finding subtle and not-so-subtle ways to avoid customers who are more likely to require care -- including keeping the customer but denying coverage. The “individual rating” system, whereby young people are charged substantially lower prices than older people for premiums, accomplishes both goals at once. But how far is too far?
It didn’t use to be like this. In the early days of insurance through Blue Cross Blue Shield associations, everyone got the same “community rating” price, regardless of age, gender, health status, whatever. In some places, it still isn’t like this. Switzerland, for example, which operates its universal health care system entirely through private insurance companies, has only three age “bands” -- under 18, 19-25, and 25 and up. A 30 year-old and a 60 year-old Swiss citizen pays the same rate, and it’s affordable for each of them. Finally, a helpful chart from Georgetown Health Policy Institute shows that some states are more equitable in their “individual rating” than others: New York has no variance whatsoever, Vermont a mild 1.2:1, Minnesota and Maine 1.5:1. However, these are clearly the exceptions. America’s Health Insurance Plans, the lobbying arm of the insurance industry, is pushing hard for a cap of no less than 5:1.
It comes down to this: is it fair to charge a 25 year-old $4,500 a year for a comprehensive plan, and then to charge a 60 year-old $22,500 for the exact same plan? Certainly, if you’re older, you’re more likely to need care. If you have developed a chronic condition, it’s likely to be a persistent and possibly even expensive cost. But the Agency for Healthcare Research and Quality (as cited in an article on Kaiser Family Foundations’ Health Watch) pegs the average medical cost of Americans aged 45-64 at only $4,866 per year – for this, they’ll charge you five times as much?
Clearly the reasons for keeping the individual rating have more to do with marketing and politics than they do policy. We’ve been warned by the insurance industry since the days of Harry & Louise ads that charging everyone a fair price means most of our premiums will go up. It’s likely that they will, in fact, increase for the youngest and the healthiest, at least a little. It’s pretty hard to go anywhere but up from the cheapest prices available. But there’s little conclusive evidence that this is cause and effect, rather than insurance companies charging more because, well, they say so. Remember -- although the health care costs of Minnesota (home to a fair community rating ratio) have gone up over these past few years, they haven’t gone up as much as Idaho, Wyoming or the other “wild wests” of insurance deregulation. And, as mentioned, the costs for older patients isn’t that dramatically different than younger – about 2.3 : 1, on average. The most expensive patients are on Medicare, which doesn’t factor into the equation.
So what rating system will emerge in our latest health care effort? The House and Senate Health, Education, Labor and Pensions bills would set it at 2:1 not just for insurance in the Exchange, but also for plans outside the Exchange. The AARP is pushing for 2:1. The Wyden-Bennett Healthy Americans Act wouldn’t allow any individual rating on age -- only on the basis of geography, smoking or family size. Clearly, there’s bipartisan support for doing away with individual rating. But the health insurance industry is pushing for 5:1. And we’ve heard rumors from the Senate Finance Committee that they’re looking at as high as 6:1.
Where the final bill winds up on this question will help answer whether reform is looking out for the American people or the American insurance industry.
(Photo credit: tomeppy on Flickr.)
Why Hospitals Are Loving Health Care Reform
Published August 27, 2009 @ 11:23PM PT
We talk all the time about health care reform from the perspective of doctors, insurance companies, pharmaceutical companies. But hospitals get overlooked. More than that – they're keeping a low profile. When the White House announced its deal with the American Hospital Association, Catholic Health Association, and the Federation of American Hospitals, it didn’t even warrant the President showing up for the photo-op – they used Joe Biden instead. One can be forgiven for not knowing where hospitals stand on the push for comprehensive health care reform.
But the answer is quite simple. They get a lot of money. So yes, they’re for it.
Part of the confusion is so many others are speaking on behalf of hospitals – including, weirdly enough, insurance companies. In their attempt to find examples of how a public health insurance option would be harmful to anything else besides their own profit margins, released a report suggesting that if a public option were based on Medicare rates, every hospital in California would go broke. Sounds like a joke, right? The analysis was disingenuous in the extreme – no version of the public option in current legislation is based on Medicare rates at all. But it gave me a case of whiplash to see Big Insurance sticking up for hospitals when just a few months ago they were throwing them under the bus. In reaction to a Health Care for America Now report tying the consolidation and monopolization of the insurance industry to increased premiums, AHIP lashed out at hospitals: “Studies over many years have shown clearly that rising health care costs are the result of increases in hospital costs, increases in physician expenses, and increases in the cost of pharmaceuticals.”
Confusing, right? But whether hospitals are greedy money leeches causing rising health care costs, or innocent victims of imaginary government-run health care gone mad, the impression is they’d be against the bills moving in Congress.
Except, as evinced by the White House deal, they’re prepared to support reform, even if they haven’t endorsed specific legislation. Bloomberg explains the simple math behind the decision:
Community Health Systems Inc., HCA Inc. and other hospital groups would receive $171 billion over 10 years in reimbursements for the newly insured under legislation to provide medical coverage for all U.S. citizens, the AHA said in a report to industry and lawmakers. The benefit would more than offset $155 billion in proposed cost cuts during the same period that hospitals promised in a deal with the White House.
As much as hospitals may complain about Medicare rates or low rates from HMOs, the fact is that uncompensated care is actually a larger drag. In my own Congressional district, hospitals and providers lose $135 million in uncompensated care each year. Sure, the Obama Administration is asking them to take on some cuts, particular in subsidies that they currently receive for caring for the uninsured – money that they won’t need if the uninsured have quality health care plans. Unmentioned in the Bloomberg article are the other goodies. After all, many of the more aggressive long-term cost-cutting measures actually involve compensating hospitals for something new – a social worker to follow-up with a recently-hospitalized patient to make sure they’re following instructions and preventing costly re-admissions. Medicaid rates - a much sorer spot for hospitals - would be increased under the House bill. And, of course, a national push for Health IT and new residency slots for primary care will benefit hospitals directly.
So don’t listen to the insurance companies. Hospitals are going to be just fine when health care reform gets passed. In fact, they’re quite likely to come out ahead in the game.
(Photo credit: Chealion on Flickr.)
Why Health Insurance Dergulation Ain't Enough
Published August 22, 2009 @ 09:37PM PT
It was a central piece of John McCain’s health care plan and is usually offered as one of the conservative alternatives to health insurance reform. Instead of adding additional regulations to prevent discrimination on the basis of pre-existing conditions, rescissions, and the practice of charging different premiums on the basis of gender, age and health status, the argument goes, let’s do the opposite. Let’s open up insurance so it can be bought across state lines. What this means is bypassing the various state laws and regulations that require all insurers within that state to provide minimum coverage for "optional" items like mental health, mammograms, prostate cancer screenings or hearing aids. The basic theory is people should be able to purchase less insurance, no matter what the state says. Less regulation means less cost, right?
The problem with this theory of deregulation is it’s testable. We know what the different configurations of state mandates for health insurance look like right now. We also have a good estimate from the Congressional Budget and other sources on what these mandates cost. Removing them wouldn’t drive costs in aggregate down. It would just lead to more underinsured and likely more medical debt-related bankruptcies. (Swell.)
The state with the fewest mandates and regulations is Idaho. In theory, if you opened up insurance to be purchased across state lines to avoid mandates, here’s where you’d shop. So let me start with the bad news. Between 2000 and 2007, Idaho’s premiums have gone up 122%. That’s four times the increase in people’s wages. Ah, but wait, let’s compare free market Idaho with the cruel government regulation in Minnesota, the state with the most regulations. During 2000-2007, Minnesota actually added a couple of mandates, yet their premiums went up 74%. The net result is that Idaho is still cheaper for an average family of 4, but it’s hardly a bargain: $11,432 to $12,090 for Minnesota. Although it has more mandates than Idaho, Wyoming is generally considered one of the least regulated states for insurance – they don’t even restrict insurance companies for denying you at any time, for any reason. The reward for their loose hand on the reins is that premiums have gone up 129%.
So why isn’t less regulation leading to cheaper insurance? In no small part, because these mandates mostly apply to the individual insurance market – the most abusive market, but also the one with the fewest enrollees. Employer-based insurance, by contrast, tends to insist on things like coverage for chemotherapy (only mandated in MN, NY, OR and TN). So long as approximately 160 million Americans continue getting their coverage through work, you’re not going to see much in terms of transformative change. But you’re also not going to see much savings, even within the individual market. The CBO took a look at the most expensive state-based regulations, including coverage for alcoholism and drug abuse treatment, mental health parity (now a federal regulation, then a state one), seeing a chiropractor, and continuation of coverage/guaranteed renewal. Their bottom line: “Those calculations suggest a range of 0.28 percent to 1.15 percent as the effective marginal cost of state mandates.”
But one thing we can be guaranteed – removing consumer protections and regulations by allowing for the purchase of insurance across state lines will lead to more people being underinsured. Medical debt-related bankruptcies is up to 62.7% of all personal bankruptcies. 78% of those families had insurance – just not the right kind or not enough. The sad fact is until you actually get sick, you’re unlikely to know which of these state mandates you’re giving up is going to eventually apply to you.
Deregulation isn't always a bad idea. It can even be inspiring in that whole “Let the market decide” kind of way. But it's not going to work for health insurance. Put it another way: if you’re going to convince me to shred our consumer protections on health insurance and trade in my New York regulations for Idaho’s, I’m going to need to see that it actually solves the problem first.
(Photo credit: Great Beyond on Flickr.)
