Blog entry

Hey Media! Giant Health Care News! In Front Of Yer Face!

Bill Scher — Thu, 11 Dec 2008 17:35:24 -0500

Today, President-Elect Barack Obama formally nominated former Senate Majority Leader Tom Daschle to be Secretary of Health and Human Services and Director of the new White House Office of Health Reform, with Dr. Jeanne Lambrew.as his deputy.

In his announcement, Obama made this major declaration:

The time has come this year. in this new administration, to modernize our health care system for the 21st century, to reduce costs for families and businesses, and to finally provide affordable, accessible health care for every single American.

In other words, he's planning to enact health care for all in 2009.

Not delaying it for later. Not going to be satisfied with incremental changes in his term and wait until a second term to take on a big fight. Now.

That's pretty big news.

But the first three (out of a total of four) questions Obama received from reporters were about the Blagojevich scandal. The fourth was simply how Obama would pay for health care reform. Nothing about what Obama and Daschle envision for legislation.

And of course, cable news all day long largely ignored the major news made today, and harped on the minor news Obama made about the scandal: he wants the Governor to resign and he directed his staff to release details of all contacts with the governor's office.

Granted, the Blagojevich scandal is major news too, but it's patently clear Obama had nothing to do with it. Why let it suffocate the news from Obama's press conference that will have a far greater impact on most Americans?

Selling Insurance Against Their Own Bad Practices

Monica Sanchez — Wed, 10 Dec 2008 15:09:52 -0500

Denying individuals coverage because they have a medical problem (‘pre-existing condition’) is one of the health insurance practices that most angers people. So what is UnitedHealth, the country’s second largest health insurance company, doing about it? Selling insurance to guarantee the individual has the ability to buy health insurance regardless of pre-existing conditions in the future.

The New York Times reports that this is a “first of its kind” product:

“Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own. They may expect to retire early, for example, before they qualify for Medicare. Or they are worried about the possibility of losing their job and their health coverage. People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future...”

Paying a monthly premium to receive no services but just get a guarantee that the company will sell you their product in the future? That is a truly deafening alarm that health care reform is needed NOW!

But that is exactly what UnitedHealth is betting won’t happen. NPR quotes Robert Laszewski, a health insurance industry consultant, who says:

“The product also assumes that efforts to overhaul the nation's health care system—including promises made by President-elect Barack Obama to ban the use of pre-existing condition exclusions in health insurance—will not come to pass.”

Let’s make sure they lose that bet. Tell us which side you are on! Are you with us for a guarantee of quality affordable health care for all? Or are you for leaving us on our own to buy private health insurance under insurance company rules?

Think Health Reform Should Be Put Off Because of the Economic Crisis? Think Again!

Monica Sanchez — Mon, 17 Nov 2008 11:31:18 -0500

Many have speculated that the health care reform promised during the election will have to be put off in the face of our severe economic crisis. Others warned that comprehensive reform will be impossible given the budget gaps and believe piece-meal reform is the most we can hope for. Still others believe the new president will not be able to tackle comprehensive health care reform in his first year for political reasons.

Many others believe, however, that the economic crisis makes health care reform all the more pressing. They believe it would help businesses and individuals.

Paul Krugman, the Nobel Prize winning economist, is on the side of taking action now:

"[S]tandard textbook economics says that it's O.K., in fact appropriate, to run temporary deficits in the face of a depressed economy. Meanwhile, one or two years of red ink, while it would add modestly to future federal interest expenses, shouldn't stand in the way of a health care plan that, even if quickly enacted into law, probably wouldn't take effect until 2011."

Former U.S. Treasury Secretary and advisor to Barack Obama, Lawrence Summers, has said the nation must tackle a variety of challenges that go beyond responding to the current financial crisis, including health care. He called for comprehensive health care reform to reduce the explosion of health care costs in the federal budget and to advance American competitiveness.

Gene Sperling, a Senior Fellow at the Campaign for American Progress Action Fund, testified before the House Energy and Commerce Committee Subcommittee on Health on the benefits of addressing health care in a second economic stimulus package:

"We should be looking for win/wins: places where investments can both have a strong stimulative impact and be an important down payment on major long-term priorities. We should be looking for sweet spots that can both jumpstart jobs and jumpstart the future... Health care initiatives can be a triple benefit in this context."

The New America Foundation recently released a report highlighting "The Cost of Doing Nothing” on health reform:

“Our economy loses hundreds of billions of dollars every year because of the diminished health and shorter lifespan of the uninsured. Rising health care costs undermine the ability of U.S. firms to compete internationally, threaten the stability of American jobs, and place increasing strain on local, state, and federal budgets. As health care costs continue to rise faster than wages, health insurance becomes more and more unaffordable for more and more American families every day….

“We must reform our struggling health system not in spite of our economic crisis, but rather because of the impact health care has on the American economy. The economic and social impact of inaction is high and it will only rise over time.” [Emphasis added]

The data is on the side of those pushing for action on health care reform now.

Another report has come out showing people's lives are in jeopardy because health care is too expensive. The Commonwealth Fund released survey results that reveal more than half of chronically ill adults in the United States skip needed care because they can't afford it. The survey also reports U.S. patients face more medical errors and inefficient, poorly organized care than patients in seven other industrialized countries.

Karen Davis of the Commonwealth Fund told the Washington Post: "We cannot afford not to reform our health-care system. Investment in our health-care system will pay dividends in terms of a healthy workforce and economically secure families."

The need for immediate reform of our health care system is made even more starkly apparent by the projected costs of annual family health insurance premiums put out by Jennifer E. DeVoe, a physician and researcher at the Oregon Health and Science University. DeVoe estimates that health care premiums will top $80,000 by 2025, which will be higher than the projected average household income for the same year.

DeVoe based her projections on the most recent census figures and medical expenditure survey data. She added that factoring in the reality of high deductibles and co-payments, the average health care premium and out-of-pocket costs could exceed the average income before 2025.

Paying $80,000 a year for health insurance! THAT is an economic crisis!

A Progressive Plan for Health Care

Roger Hickey — Tue, 30 Sep 2008 14:21:30 -0400

Long before anyone had been nominated or elected, the voters of 2008 had gotten one message across loud and clear: Fix our dysfunctional health care system! For obvious reasons (and big reasons that aren't so obvious), the leaders of 2009 must heed that call.

America's health care system is in meltdown. More than 45.7 million of us have no health insurance. But even those with good insurance face rising costs and a growing risk of losing the protection they have. Every year, tens of millions of Americans go uninsured for long periods — when a layoff, a divorce, or illness itself disrupts their ability to get or pay for coverage. (Forty-one percent of working-age Americans making $20,000 to $40,000 per year lacked insurance for at least part of 2007.) Still more millions are seriously under-insured, though many don't realize it since insurance companies tend to be secretive about the conditions and procedures they refuse to cover — until we actually need the care.

Excerpted from New Progressive Voices: Values and Policies for the 21st Century, by the Progressive Ideas Network. Read the full chapter or download the PDF here.

In an economy that's gone bad and getting worse, countless American families — insured and uninsured alike — live in dread of being plunged into poverty or destitution by a major health problem. In fact, more than half of all individual and family bankruptcies are triggered by medical bills.

Health care is a momentous problem in its own right. It's also hugely important as part of the broader breakdown of economic security in our country, and as a symbol of political gridlock and unresponsive government. For all these reasons, it's an issue to be addressed boldly, decisively, and, at the same time, with an extra measure of care.

If we were starting from scratch, "single payer" might be the way to go. With one public insurance plan covering everyone, Americans could potentially realize hundreds of billions of dollars a year in savings on pointless bureaucracy and profits — more than enough to cover the uninsured and improve coverage for tens of millions of under-insured.

But we are not starting from scratch. During World War II, U.S. employers began providing health insurance as a way to attract scarce workers at a time of strict wage-price controls. Tax laws went on to codify our employer-based system, which even now provides health care for 160 million Americans — a majority of those not on Medicare. Their support was the critical missing piece in 1993. That's when the Clinton administration set out confidently down the path of health care reform — only to see its proposal cut to shreds by insurer-sponsored TV spots in which a middle-class couple called "Harry and Louise" warned of a sinister plot to "force us to pick from a few health care plans designed by government bureaucrats."

The good news is that Americans are much more suspicious of the insurance industry now than they were then. Many people have wised up to the way insurers compete by cherry-picking younger, healthier workers and employing armies of agents to deny claims — sometimes even when it means condemning someone to premature death or a lifetime of chronic illness. Of all the world's nations, the United States spends by far the most money on health care per capita and in total. Our health care system is enormously wasteful and chaotically organized — and Americans know it. About two-thirds of all voters are prepared to see taxes increase in order to provide high-quality health insurance for everyone. Even a majority of those who are satisfied with their coverage now grasp the need for major reform.

The sticking point for many, however, is the ability to keep the insurance they have. The answer is to guarantee that option, building it into a plan that also lets people choose from a menu of private insurance alternatives (with regulated benefits and costs) or sign up for a Medicare-like public plan, which can act as a benchmark for its private competitors. That's the concept behind Health Care for America, a proposal put together by the political scientist Jacob Hacker with the support of the Economic Policy Institute.

Health Care for America is simple and flexible enough to appeal to a majority of Americans, but bold enough to do the job of covering everyone and controlling health price inflation. And it holds the promise of becoming better over time, as more and more Americans shift over to the public plan, lured by its higher efficiency and more generous benefits.

Four Holiday Gift Ideas for Progressives

David Sirota — Sun, 21 Dec 2008 15:53:55 -0500

If you're a procrastinator like me, then you are frantically scurrying at the last minute to pick up holiday gifts for friends and family. So let me suggest four great gifts for you or any progressives you know - gifts that make great presents and that also help build and support the progressive movement. Here they are in no particular order:

1. A SUBSCRIPTION TO IN THESE TIMES: For more than three decades, In These Times magazine has been a leading independent progressive voice, featuring news, reporting and analysis from a constellation of progressive movement stars. As Cornel West says, "In These Times is the most creative and challenging news magazine of the American Left." A one year subscription to this monthly magazine is just $24.95. Subscribe here.

2. THE UPRISING OR HOSTILE TAKEOVER: Forgive the shameless self-promotion, but I wouldn't be doing my job as a writer if I didn't suggest my books, The Uprising and Hostile Takeover, as solid holiday gifts. The Uprising, just released this summer, looks at the populist uprising on both the right and left that clearly impacted the 2008 campaign and promises to shape our politics in the next months and years. The Rocky Mountain News calls it "the perfect tome for rebels of all persuasions." Hostile Takeover, released in 2006, examines the corporate forces that still have a stranglehold on our government and that threaten to crush this potential era of change. The late great Molly Ivins says the book provides "handy weapons for progressives to fight back." You can order both books at your local bookstore, or online.

3. THE PROGRESSIVE BOOK CLUB: For an ongoing stream of progressive books at discounted prices, join the new Progressive Book Club, or give a gift membership. You can join online here.

4. SALON.COM PREMIUM MEMBERSHIP: Salon is one of the best progressive publications out there and it's premium membership gets you its full content. Get a premium membership here. It's worth it.

In these difficult economic times, it is more important than ever to build and support a strong progressive movement that helps move our country in a different direction. These are four different ways to give gifts and support the movement at the same time. I hope you'll consider them - and pass the ideas on to your friends. Happy holidays!

Public Health Insurance Plan Option "Non-Negotiable"

Bill Scher — Wed, 17 Dec 2008 17:07:08 -0500

Earlier today, we at Institute for America's Future hosted a media conference call to release the new report from Prof. Jacob Hacker, "The Case for Public Plan Choice in National Health Reform." (Audio of the session is here) And ABC picked up on the big news:

Advocates of a government alternative to private health insurance fired the first shot of the new battle to reform the nation’s health-care system on Wednesday, saying that efforts to water down this key component of Barack Obama’s health-care plan should be rejected by members of Congress.

“In the absence of a public plan you would have to so strictly regulate [private] health plans that they would all have to become public plans,” said Rep. Pete Stark, D-Calif., chairman of the House Ways and Means Health sub-committee.

Stark spoke out on Wednesday because he is concerned that any effort to reform the private health-insurance market will prove ineffective if Americans are not offered the kind of Medicare-style government option contained in Obama’s 2008 campaign proposal.

Stark’s concerns were echoed by Health Care Now, a liberal advocacy group.

“We agree with Congressman Stark that a health care solution that does not include a public plan would be a non-starter,” said Richard Kirsch, the national campaign manager for Health Care for America Now. “President-elect Obama ran on the promise of giving consumers a choice of keeping the private insurance they have or opting in to a newly-created public insurance plan, and it is the second part of this hybrid reform that ensures we are no longer at the mercy of the private insurance industry which keeps charging us more, giving us less, and lining its own pockets with profits.”

That red line is being drawn for a reason. Insisting upon a public plan option is not ideology for ideology's sake. It's critical to achieve quality, affordable health care for all.

As Hacker's report explains:

A health care system that contains costs and drives value must include a good public plan if the broad goals of reform—universal insurance and improved value—are to be achieved. Private insurance and public insurance have distinct strengths and weaknesses, and thus should be encouraged to compete side by side to attract enrollees on a level playing field that rewards plans that deliver better value and health to their enrollees. Public insurance has a better track record at reining in costs, while preserving access; it has pioneered key quality and payment innovations that have often set the standard for private plans; it is essential to set a standard against which private plans must compete to drive value and can be a source of stability for people.

Of course, the private insurance lobby is fervently against having to compete with public plans (see Ezra Klein's interview with the lobby's chief spokesperson), so this issue will likely be the key flashpoint in the months to come.

Which is why it is critical to understand why the public plan option is so important, so we can all defend it against the inevitable attacks. Read the report and listen to the conference call.

Insurance Companies and Hospitals Join Forces to Protect their Profits and Bash Public Plan

Monica Sanchez — Thu, 11 Dec 2008 17:23:25 -0500

Three industry trade groups, America's Health Insurance Plans (AHIP), the Blue Cross Blue Shield Association (BCBSA), and the American Hospital Association (AHA), commissioned a report to bash Medicare and Medicaid in an underhanded attempt to discredit the idea of including a new public plan option in health care reform.

The report, Hospital & Physician Cost Shift: Payment Level Comparison of Medicare, Medicaid, and Commercial Payers, tries to make the case that Medicare and Medicaid payments to providers are too low, which forces the providers to charge the private insurance companies more, which in turn raises the costs of health insurance premiums.

Prepared by the actuarial and consulting firm Milliman, the report only compares how much different payers reimburse providers for the same service. It makes no attempt to determine how much is appropriate payment for any given service. Even the press release for the report makes that very clear:

"The study does not assess appropriate levels of payment, but rather the disparities among current payment rates."

Richard Umbdenstock, President and CEO of American Hospital Association apparently didn't read the report or even the press release about it very carefully. He started the press conference releasing the report with the following unsubstantiated claim:

"Medicare and Medicaid are paying less than the cost of caring for beneficiaries...When Medicare and Medicaid don't pay their share, privately insured patients must make up the difference, otherwise the hospital can't make ends meet."

Not surprisingly, Mr. Umbdenstock ignores the fact that Millman did not attempt to figure out if hospitals and other health care providers are charging fair prices or delivering care in a cost efficient way. It only looked at what private insurers pay on average and compared it to what Medicare and Medicaid pay on average, and concluded that the public programs should pay more.

I have to assume if Millman compared what people pay for a flat screen television in a high-end store on Fifth Avenue to what people pay for the same flat screen television at Wal-Mart, Millman would conclude people at Wal-Mart need to pay more so the manufacturer doesn't shift the cost of making the television to those Fifth Avenue customers.

But most people understand that the manufacturer makes a profit either way. The question is how big a profit and how much is the middleman getting in the process.

Listening to Mr. Umbdenstock you might conclude hospitals are on the brink of bankruptcy. But don't cry for them just yet. According to Mr. Umbdenstock's own organization, in 2007 the country's community hospitals saw "the largest single-year jump in profit margins in at least 15 years," posting $43 billion more in revenue than expenses.

And don't feel bad for the insurance companies who claim they are "having to make up the shortfall." The top seven for-profit health insurers had combined profits of $12.6 billion in 2007, an increase of 170.2% from 2003.

Anyway, do you really think the hospitals would charge private insurance companies less if Medicare paid the hospitals higher rates? They would just continue increasing their profits. In addition, if insurers were really concerned about cost-shifting, they would disclose what each insurer is paying, not an average. The reality is big insurance plans must get better rates from providers than small plans so, using their methodology, cost-shifting must be happening between private plans as well.

What is most remarkable, however, is not that for-profit companies (hospitals and insurance companies alike) want to keep out of the market a public plan that can break the stranglehold of the large hospital conglomerates to demand a fair payment rate, it is that no one seems to know how much it actually costs hospitals to provide services or whether they are operating efficiently. According to A Study of Hospital Charge Setting Practices, a report, prepared by the Lewin Group for the Medicare Payment Advisory Commission:

"The Medicare Payment Advisory Commission (MedPAC) has expressed concerns about the accuracy and fairness of the current Medicare hospital in- and out-patient prospective payment systems (PPSs). Payment rates for these systems are based, to varying degrees, on hospital charges. However, little is known about how hospitals set their charges...

"Disparities between charges and costs has been growing over time as many existing charges were set before hospitals had a good idea of their costs and/or were set in response to budgetary and competitive considerations rather than resource consumption. Hospital charges are set within the context of hospitals' broader communities, including their competitors, payers, regulators, and customers. These factors vary significantly depending on an individual hospital's market position, mission, ability to estimate costs, and overall financial circumstances. These competing influences and hospitals' efforts to address them often produce charges which may not relate systematically to costs. For instance, outside of supplies and pharmacy, hospitals did not seem to have a system for tracking or adjusting for falling costs of equipment and technology as they became more widely used. Thus, when charges are initially set high for a new technology, they may not be lowered later when the equipment or procedure is no longer as expensive, unless there are market pressures to do so.

"The fact that charges are often not closely tied to costs implies that the current Medicare payment systems may not be closely tied to resource utilization. The findings from this study suggest that in certain instances, relative charges may not accurately proxy relative costs. Therefore, the impact of using charges to set payment rates in Medicare should be investigated more closely." [Emphasis added.]

As Dean Baker, Co-Director of the Center for Economic Policy and Research put it:

"Where public health care plans, like Medicare, have competed directly against private plans, they have almost always had lower costs. Remarkably, the private insurance sector is now blaming the public plans for being more efficient. It is understandable that the private sector plans would prefer to make public sector plans less efficient so that they can more effectively compete, but the public has no interest in wasteful health care spending."

Don't believe their hype! Support a public plan option as part of comprehensive health care reform.

Surprise! Insurance Companies Don't Want to Cover Sick People

Monica Sanchez — Fri, 05 Dec 2008 11:29:23 -0500

Karen Ignagni is the CEO of America's Health Insurance Plans (AHIP), a trade association representing 1,300 health insurance companies. AHIP has launched the Campaign for an American Solution, which is collecting health care stories at gatherings across the country.

KCPW, a public radio station serving the greater Salt Lake Metropolitan area, reported on one of these meetings where small business owners gathered at the Salt Lake Chamber of Commerce “to share their frustrations about health insurance.” The owner of a small confection broker, Rocky Snow, brought up the problem he faces with Utah's Comprehensive Health Insurance Pool (the state’s high-risk pool, which provides health coverage to people insurance companies refuse to cover because they have a pre-existing condition).

"The premium I face with this particular program is $648 a month and basically covers nothing. I've got to be just about dead before they're gonna step in and do anything. My wife, because she is on two different medications, was denied coverage. I finally worked with SelectHealth on that, and got them to where they will cover her, but it's basically after a $3,000 deductible. Basically, she's gotta be dead, too, before she gets any coverage."

According to KCPW, Snow went on to explain that he still pays much higher premiums than he did a decade ago even though he's much healthier now.

This is how Karen Ignani responded to his concerns:

"We've been working on ways to improve risk pools. In Utah, you've done an important thing in creating a system of risk pools plus private coverage behind the risk pool. What we're trying to do is to say to Washington that they need to identify resources to send to states so we can reduce the premiums you're paying in risk pools. That would help materially what you're dealing with."

In other words, let’s not fix the insurance industry’s inability to provide good coverage to the people who need it most—those with pre-existing conditions. Let’s just keep them segregated in a separate group and get more taxpayer money to subsidize their care so it doesn’t cut into insurance industry profits.

Clearly, the insurance industry cannot be trusted to fix our broken health care system. They’ve had decades to do it and this is where we are. It’s time for a new solution.

Fair Rule:

A public alternative to insurance company coverage that is accountable to us.
Fair regulation and oversight of insurance companies, with government as a watchdog.

Learn More

Too Little, Too Late: The Health Insurance Industry Unveils a New Plan to Reform Health Care

Monica Sanchez — Wed, 03 Dec 2008 17:11:45 -0500

After decades of controlling the dialogue on health care and thwarting health care reform with the now infamous Harry and Louise ads, the health insurance industry is vying for control of the conversation at the health reform table. Today America's Health Insurance Plans (AHIP), the insurance industry's trade association, released a "new" reform proposal. But it's essentially more of the same. They have made many of the same proposals before.

Not surprisingly, the main focus of their proposals is protecting their profits.

Let's take a look at the proposals they highlighted in their press release.

AHIP's first proposal is to create an advisory group to make recommendations on how to control health care costs:

"Controlling costs: A financially sustainable and affordable health care system can only be achieved by bringing underlying medical costs under control...To achieve these goals, health plans are proposing that a public-private advisory group be created to provide specific policy recommendations to Congress on reducing health care costs. This new advisory group would include input from a wide variety of stakeholders to provide objective, independent recommendations."

This delaying tactic shows the health insurance industry is still very behind on health reform policy. Many recommendations on how to bring down health care costs already exist, from offering a public plan to compete on a level playing field with the private plans, to making better use of health information technology, to paying providers based on performance instead of based on the number of procedures they perform, to allowing the government to negotiate with drug companies for lower drug prices.

The option they are most afraid of is a public insurance plan option that creates true competition in the health insurance and provider markets. Data shows that a few private plans have quasi-monopoly power in most states and the smaller plans are engaged in shadow pricing keeping costs high and driving up their profits with total disregard for the health care needs of people with costly conditions.

In addition, even the largest insurers are either unwilling or unable to negotiate fair rates with large provider groups, further driving up our health care costs. A public plan could break these quasi-insurer and provider monopolies to drive competition and rein in costs.

An advisory group will only delay and likely kill action. We need true competition as soon as possible from a public plan that puts the public's interest first.

AHIP's second proposal gives insurers the ability to do an end-run around state consumer protections so they can offer stripped down plans with high deductibles that have "affordable" premiums but leave people without access to affordable health care, while asking tax-payers to pick up the slack:

"Helping consumers and purchasers:... Health plans propose that a new portable health plan be available to individuals and small businesses in all states. This affordable "essential benefits plan" would provide coverage for prevention and wellness as well as acute and chronic care. To maintain affordability, the essential benefits plan would not be subject to varying and conflicting state benefit mandates... The proposal also calls for protecting low-income individuals and working families from medical bankruptcy by making available tax credits to those who spend a set percentage of their income on out-of-pocket health care expenses, including premiums and cost-sharing."

Everyone should have health insurance that covers their foreseeable and unforeseeable health care needs, while guaranteeing them financial security. But stripped down health plans with low-cost premiums that force people to gamble that they will stay healthy is no solution.

The issue is not simply about having affordable coverage, it is about getting affordable health care. Too many people with health insurance go broke paying for needed care.

The portable plan that AHIP proposes appears to give insurance companies more freedom to limit benefits and shift health care costs to individuals than they currently have by allowing them to bypass strong state consumer protections. That is the opposite of what we need. We need the insurance industry to be more accountable to Americans—not less. We need strong, fair national regulations that protect individuals and ensure they have access to quality affordable care; not a plan that leaves the insurance companies free from the few consumer protections currently available in some states.

In addition, tax credits are a costly and inefficient way to make coverage more widely available and do nothing to rein in health care costs. In fact, they are a sure way to increase insurance company profits with no accountability. Research shows creating a public plan option is a more cost-effective use of tax-payer money.

AHIP's third proposal is that insurers will agree to cover people with pre-existing conditions if everyone is forced to buy one of their policies. The insignificance of that self-serving "concession" was the subject of last week's blog post, so there is no need to go into again here.

The last proposal AHIP highlights in its press release is a catchall promise to "add value" to the costly and poor value products they have been selling us. Nice of them to decide to do so now that they see health reform is inevitable.

"Adding value: ... Health plans commit to streamlining administrative processes and propose making targeted investments in our public health infrastructure. The plan also calls for refocusing our health care system on keeping people healthy, intervening early, and providing coordinated care for chronic conditions; adopting uniform standards for quality, reporting, and information technology; and investing more in research to better understand which treatments and therapies work best—for the nation as a whole and for specific patients."

Health insurers have had decades to streamline their administrative processes, and improve preventive care and disease management among their members. They have failed miserably to do so.

The data show there is no economic incentive for them to make these investments.
In fact, they benefit financially from complex administrative protocols that keep people from getting needed care and providers from getting paid in a timely manner. A study from Case Western Reserve and Carnegie Mellon University shows that since people change health plans regularly, insurers have no incentive to invest in people's long-term health through preventive care and disease management because the individual will likely be in another plan by the time the investment pays off in lower health care costs.

A public plan, on the other hand, does have the incentive to invest in prevention and disease management, because everyone will end up in a public plan when they get older—Medicare.

Health insurers have had their chance. They have not been able to deliver cost-effective, affordable health care. It is time for them to stop putting their bottom line above the interests of all Americans and for Congress and the President to take charge on behalf of the American people. It is time for fair rules:

A public alternative to insurance company coverage that is accountable to us.

Fair regulation and oversight of insurance companies, with government as a watchdog.

Health Insurance Companies Agree to Cover Everyone If…

Monica Sanchez — Tue, 25 Nov 2008 11:30:51 -0500

On November 19, 2008 the insurance industry tried to position itself as a driver of health care reform by putting out a proposal that appears bolder then what it has proposed in the past. Two insurance industry trade groups, America's Health Insurance Plans and the Blue Cross and Blue Shield Association, announced that their members are now willing to do away with their long-standing practice of denying coverage to people with pre-existing medical conditions. But there is a big "if" to their offer.

In return for their largesse, the industry wants Congress to require all Americans to buy one of their policies under the terms and at a price the insurers set. The industry says this type of 'individual mandate' is needed to keep healthy people from delaying buying health insurance until they get sick.

According to The New York Times:

"In many cases, people with cancer, diabetes, traumatic brain injuries or other serious afflictions have found that they cannot obtain health insurance at any price.

"Research suggests that some insurers turn down 10 percent or more of applicants for individual coverage because of their pre-existing medical conditions."

What is wrong with that? As The New York Times put it:

"While insurers would be required to sell insurance to any applicant, nothing would guarantee that consumers could afford it.
"At present, insurance premiums are generally regulated by the states and often vary according to a person's age, sex, medical history and place of residence within a state. In the individual market in most states, a person with a history of serious or chronic illness can be charged much more than a healthy person of the same age and sex."

Ezra Klein of the American Prospect explains how little a 'concession' this actually is:

"Some deal. They're basically saying that if we legislate that every American must purchase insurance coverage, they will sell insurance coverage, at some price, to every American. Their 'concession' here is something called 'guaranteed issue,' and it's an important step, but not a sufficient one. The question is not whether they'll offer to sell coverage at all, but at what price? Selling insurance products that no one can afford may mean you're not technically denying people access to insurance, but it doesn't guarantee accessibility, which is a necessary precondition for a universal system. For that, you need 'community rating,' which would force insurers to offer coverage at the same price to everyone, spreading risk equally and ensuring that coverage is no less affordable for the sick than the well.

So I e-mailed Robert Zirkelbach, AHIP's spokesman, to ask if this proposal had a community rating provision: 'The proposal we issued yesterday was for guarantee issue combined with an individual mandate. We also need to take steps to ensure coverage is affordable for all. There needs to be an adequate safety net and we should provide tax credits to low and moderate income workers. We also have to address the key medical cost-drivers that drive up the cost of coverage.'

"In other words, no. At least not yet."

Bob Laszewski of the Health Care Policy and Marketplace Review expressed a similar disdain for the industry's 'compromise':

"The industry's proposal glosses over the real issue—figuring out how to make health insurance affordable so that a mandate that everyone buy coverage is practical and enforceable.

"All we need to do is to look to Massachusetts to see how hard this is.
"Under the new Mass health law, there was to be a mandate that everyone have health insurance. But Mass was only able to afford to provide subsidies for families making less than about $60,000 a year. With the cost of a family policy—that included a $2,000 deductible—often between $10,000 and $13,000 a year the state had to back off on the mandate. It was simply unrealistic to force most middle-class families to pay such high costs."

We can learn a lot from Massachusetts about the problems with making health insurance offered by private insurance companies affordable, both in premiums and in out-of-pocket costs.

The state reports that of the 5% of people still uninsured in Massachusetts, nearly 100,000 chose to pay the fine rather than purchase insurance they did not believe they could afford. Another 64,000 got a waiver from having to buy insurance because the state agreed that their insurance options were not affordable for them.

Karen Pollitz, director of the Health Policy Institute at the Georgetown Public Policy Institute, demonstrated the need for community rating by analyzing the premiums people of different ages in Massachusetts have to pay for the same plan after health care reform was passed. She found wide variation. For example, one plan offering the "bronze" plan, which offers the least coverage, charged an individual in his or her 20's $6,972 a year in premiums with a $4,000 deductible. That same plan cost a person in his or her 40's $9,552 a year with the same $4,000 deductible. Someone in his or her early 60's would be charged $13,944 year. (Family coverage for the same policy comes with a $10,000 annual deductible and an additional $10,000 a year in premiums at each age level.)

But just making premiums affordable is not enough. Even for those who did get insurance, many still cannot afford care. A fall 2008 survey of Massachusetts residents on healthcare conducted by the Boston Globe and the Blue Cross Blue Shield of Massachusetts Foundation shows many people are still struggling to pay for healthcare despite more people having health insurance:

13 percent of insured residents said they couldn't pay for some health services in the past year;

13 percent of insured residents said they couldn't afford to fill a prescription in the past year because it cost too much or their copay was too high; and

30 percent of those surveyed ranked the cost of care their biggest health concern.

The fact is 'guarantee issue' and 'community rating' are necessary basic features of any health care reform package, but they are not enough to make quality health care affordable to all. We need strong and fair regulation of the insurance industry, as well as a public insurance plan option to compete with the private plans.

Researchers from the Urban Institute make a powerful case for the need to break the quasi-monopoly private insurers currently have on health care costs. They show how a public insurance option promotes value, can help reduce overall health care costs, and improves private insurance.

"Having a competing public plan will neither destroy the private insurance market nor lead to a government takeover. Private plans are attractive because of their ability to be responsive to consumer demands for choice and their innovations resulting from both the profit motive and desire to attract a larger enrollment base. Public plans are attractive because they can offer better access to necessary care for diverse populations, they have lower administrative costs, and they can be large-scale purchasers with a strong negotiating position with providers. The presence of both types of plans should allow the advantages of each to enhance a reformed insurance marketplace while protecting the markets from the potential negative consequences of each type acting alone."

Alison Bass and her family illustrate the problem of the unaffordability of care for people with insurance in Massachusetts' private insurance marketplace perfectly. She wrote about her experience with high out-of-pocket health care costs in the Boston Globe earlier this year:

"THE NEARLY 300,000 Massachusetts residents who signed up for health insurance under the state's new initiative are in for a rude awakening. They may now have some form of coverage, but many of them, even the very poor who used to get free care, are going to be socked with steep medical bills...

"By last fall, [my family] owed nearly $3,000 in medical expenses. The bills had begun accumulating shortly after my husband, a social worker, switched jobs and we were forced to change health insurance from a local Blue Cross plan to a for-profit national plan. My husband was not offered a choice of health plans, and when we signed up it was not made clear that our deductible for the year would be $3,000 (for in-network expenses; $4,500 for out-of-network expenses).

"Nor did we understand that once we met the deductible (i.e., spent $3,000 to $4,500 of our own money), we would then have to pay co-insurance: 15 percent of every in-network expense we incurred and 45 percent of any out-of-network expenses...

"Instead of counting the full amount of our medical bills toward the deductible, the company only included a lower 'discounted' amount and excluded the cost of our co-insurance charges. According to the Access Project, such tactics are not that unusual. But they often go unnoticed because of the sheer complexity of the system. This experience has taught me that our system of private health insurance is badly broken and individual states cannot institute reform alone. We need universal healthcare on a federal level..."