OurFuture.org Blogs: Monica Sanchez

Senate Bill as Expected: Not as Progressive as House Bill in Key Areas

Monica Sanchez — Thu, 19 Nov 2009 08:05:35 -0800

Senator Harry Reid, the Majority Leader, has introduced the Senate's health reform bill. The Patient Protection and Affordable Care Act (PDF), H.R. 3590, is projected to reduce the federal budget deficit in the first 10 years. As The Washington Post reports:

"Democratic leaders were jubilant that the nonpartisan Congressional Budget Office determined that the Senate bill would cut federal deficits by $130 billion over the next decade. That projection, released shortly before midnight Wednesday, represents the biggest cost savings of any legislation to come before the House or Senate this year, but the measure's effective date also was pushed back by one year, to 2014."

The House bill takes effect a year earlier in 2013. According to The New York Times, that one-year "delay is intended primarily to reduce the cost of the legislation."

So, other than the start date, how does the final Senate bill stack up against the House bill in the categories I discussed in my previous post ("House Health Bill Should Be A Model For The Senate")? Pretty much as expected.

1. The Health Insurance Exchange.

Unlike the House bill, which gives the federal government the responsibility, the Senate bill puts the states in charge of creating their own health insurance exchanges. As The Washington Post explains:

"The Senate measure is similar in scope to legislation the House approved earlier this month. It would require most people to buy insurance, and if their employers did not offer affordable coverage, they would be able to shop for policies on new state-based 'exchanges' that would function as marketplaces for individual coverage. Insurance companies would have to abide by broad new rules that would ban practices such as denying coverage based on preexisting conditions."

2. The Public Health Insurance Plan.

The public option will work similar to one outlined in the House bill, except states can choose not to have the public plan offered in their health insurance exchange. Like in the House bill, the reimbursement rates for the public plan will not be tied to Medicare. Instead, the public plan will have to negotiate rates with providers. As The New York Times reports:

"Under Mr. Reid's bill, the government would establish a new public insurance plan, which would compete with private insurers. States could opt out of the public plan by passing legislation."

3. Insurer Transparency and Accountability.

The Senate bill falls far short of requiring the type of transparency from insurance plans that will be required to keep them truly accountable. According to the bill's short summary, this is what health plans would be required to disclose:

"The Patient Protection and Affordable Care Act will provide consumers with information about physician ownership of hospitals and medical equipment as well as nursing home ownership and other characteristics."

Read my blog post "Insurers Will Still Not Be Regulated Enough" to see what disclosures should be required of insurers.

4. Affordability.

The Senate bill expands eligibility for Medicaid to include all non-elderly Americans with income below 133 percent of the Federal Poverty Level (FPL), while helping the states with the cost of the expansion. The House bill expands Medicaid to 150 percent of Medicaid.

Both bills provide assistance to people with low incomes (up to 400 percent FPL) to help them afford the health insurance they will be mandated to have.

5. Employer Responsibility.

Unlike the House bill, the Senate bill does not require employers "play or pay" when it comes to providing health coverage to their employees. Instead, it includes a provision that could discourage employers from hiring low-income workers. As The New York Times explains:

"The Senate bill would not explicitly require employers to offer health insurance coverage. But if an employer with more than 50 employees does not offer coverage and if any worker qualifies for a federal subsidy, the employer would have to pay a penalty, typically $750 for each of its employees."

6. Financing.

Unlike the House bill, there's no surtax on the wealthy, but there is a 0.5 percent increase in the Medicare payroll tax for couples who earn more than $250,000 a year.

In addition, the Senate bill imposes a tax on high-premium plans. Health plans that cost more than $8,500 a year for individuals and $23,000 a year for family coverage would have to pay a 40 percent tax on the amount of the premium above those thresholds.

7. Funding of Abortion Coverage and Coverage of Undocumented Immigrants.

The Senate bill makes a less drastic attempt to ensure that there is no federal funding of abortion coverage than the House bill does. As The Washington Post reports:

"Reid took a different approach that may or may not pass muster with abortion opponents, proposing to establish a 'firewall' that would segregate private premiums from federal funding if abortion coverage were offered in the public insurance plan.

"Few details were available Wednesday, but Sen. Barbara Boxer (D-Calif.), an abortion rights advocate who was working to forge a compromise on the issue, said, 'I couldn't be happier. For those who want to keep abortion out of this bill, Senator Reid did it the right way.'

"The National Right to Life Committee, however, called the firewall 'completely unacceptable' and said it utilizes 'layers of contrived definitions and hollow bookkeeping requirements' to permit federal funding of abortion."

In addition, the bills treat undocumented immigrants slightly differently. As The Washington Post explains:

"The Senate bill would bar illegal immigrants from buying insurance through the exchanges, while the House would restrict access only to subsidies and federal programs such as Medicaid, which would be vastly expanded under both bills."

House Health Bill Should Be A Model for The Senate

Monica Sanchez — Thu, 12 Nov 2009 08:46:43 -0800

The House has passed its health reform bill and the Senate will soon bring a bill to a floor vote. While no draft of the final Senate bill is yet available, we know what is in the two committee bills that now have to be combined (the HELP Committee's and the Finance Committee's (PDF)). From those two bills we can see the ways the House bill is stronger and more progressive than the final Senate bill might be.

As Roger Hickey and Diane Archer of the Campaign for America's Future stated in their letter of support for the House's "Affordable Health Care for America Act of 2009" (H.R. 3962):

"While we would've preferred stronger provisions in some key areas, this legislation constitutes a momentous step toward making a guarantee of quality affordable health care a reality for all Americans. And we hope that it serves as a model for action by the Senate."

Below are key areas in which the Senate should follow the House's example:

1. The Health Insurance Exchange.

The House bill creates a national Health Insurance Exchange that will be open to small businesses (100 employees or less) and individuals who do not have employer coverage. Over time, more employers will be able to offer their employees insurance through the Exchange. States may opt to operate the national Exchange if they create their own Exchange that follows federal rules. The House bill designs the Exchange to be an active negotiator.

The Senate bill, on the other hand, will likely leave the creation of the Health Insurance Exchange to the states and relegates the Exchange to a passive price-taker role.

As Timothy Jost explains:

"HR 3692 creates a single national exchange (from which states can opt out if they meet stringent requirements) as compared to the state-based exchanges the Senate bills create. A national exchange should have greater bargaining power and lower administrative costs. Federal oversight and enforcement should be more effective than the approach of the Senate bills, which leave oversight and enforcement to the states. If history and experience tell us anything about insurance regulation, it is that big insurers will often out gun state regulators — assuming the states even have the will and resources to oversee the insurers...

"The most important feature of the House exchange, however, is that it would have the power to negotiate and contract with insurers. Insurers wishing to sell insurance through the exchange would have to justify their proposed premiums, which the Commissioner would review for their affordability with the power to deny excessive premiums or premium increases. By contrast, the exchanges in the Senate bills are passive price takers with no authority over premiums (indeed, the Senate Finance Committee rejected an amendment offered by Senator Kerry to give the exchanges negotiating authority). Negotiations could be an important lever for controlling health insurance premiums, although it must be remembered that a group health insurance market will continue to exist outside of the exchange, and there is nothing to keep insurers from refusing to negotiate if they are willing to give up the nongroup market."

2. The Public Health Insurance Plan.

The House bill creates a national public health insurance option available through the Exchange to ensure choice, competition and accountability. Like other private plans, the public option must survive on its premiums. The public option would be administered by the Secretary of Health and Human Services and negotiate rates for providers that participate.

The Senate bill is likely to create a national public health insurance option available through the Exchange, but allow states to opt out of offering the public plan to their members in the state's Exchange.

According to Timothy Jost:

"State-based plans would inevitably become hostages to the vagaries of state politics, and the federal government has a poor track record in making the states comply with federal requirements. Consider the federal government's performance in getting the state's to comply with Medicaid requirements or in enforcing the HIPAA individual market insurance reforms. A national plan could get underway much more rapidly and should have lower administrative costs.

"The other significant strength of the House approach is that it would begin with the Medicare network of providers. One of the biggest barriers facing a new entrant into any health insurance market is assembling a provider network at competitive prices. The public option would start with the Medicare network, which exists in every part of the country, except insofar as providers opted out. The bill also encourages innovative approaches to provider payment and support for delivery system reforms and allows the plan to vary premiums by locality, permitting it to be more competitive in areas where private insurers offer lower rates.

"The House public option is weakened considerably, however, by the requirement that it negotiate rates with providers."

3. Insurer Transparency and Accountability.

The House bill gives the Commissioner of the Exchange the power to demand insurance companies provide clear information (PDF) about how they do business and what they are offering in order to participate in the Exchange:

"Sec. 233. Requiring information transparency and plan disclosure. Requires qualified plans to meet standards established by the Health Choices Commissioner relating to transparency and timely disclosure of plan documents and information, including providing health care providers with information regarding their payments. It also requires the use of plain language in the disclosures (including the issuance of guidance as to what 'plain language' means) and advance notice of changes to the plans."

The Senate bill may include very few such requirements.

As CQ Today reported on November 9th in its article "Insurers Object to Expanding Federal Reporting Power Over Industry":

"The legislation (HR 3962) — which narrowly passed the House on Nov. 7 — includes language that would broaden the FTC's power to issue reports not only on health and medical malpractice insurers but also on the insurance industry as a whole. Under current law, the FTC is barred from issuing reports on any part of the insurance industry unless a specific request is made by a congressional committee.

"More broadly, the insurance industry is overseen at the state level, not by federal regulators. The industry fears that bringing federal regulators into the mix, even just to write reports and studies, could create oversight problems and possibly add new regulatory costs.

"But proponents of the change, which would repeal an exemption granted by Congress in the early 1980s, say that to protect consumers, the FTC needs the ability to study the whole industry, not simply a part of it."

In her Congressional testimony (PDF), Diane Archer described the problem of lack of information currently available in the private health insurance market:

"The health insurance market is broken. In a competitive market, insurers would be marketing to health care users, demonstrating why they deliver the best value health care for people with cancer, diabetes and heart disease. Their message would appeal to the 20% of the population who consume 80% of health care dollars. Instead, if they deliver great care to people with costly needs, they don't want people to know. It's like the automobile companies marketing their cars to people who don't drive much.

"Twelve years ago, in a New York Times Magazine cover story, Helen Darling, then manager of health care strategy and programs for Xerox and now President of the National Business Coalition on Health made this point very succinctly: 'I have been sworn to secrecy by one plan that has the best AIDS program in the world. They don't want people knowing about it. They couldn't handle the results. Ideally, if we lived in a wonderful world, we would want a plan to win prizes for their wonderful care. But in reality that would kill them.'

"To maximize their profits, health plans compete for enrollees least likely to use their product. Therefore, health plans do not advertise the specific treatments and tests covered, the conditions under which they are covered or the price of services. This is precisely the information we need to know.

"Different private plans offer different value health care. The best of them come between doctors and their patients to ensure good care is received. Yet, their medical necessity and utilization review decisions are largely considered proprietary and unknown. And, we don't know whether their interventions add value, or simply increase their profits. For one example, a September New York State Medical Society survey revealed that 90% of doctors said they have had to change the way they treat patients based on restrictions from an insurance company; and 92% said insurance company incentives and disincentives regarding treatment protocols 'may not be in the best interest of the patients.' We need to be able to understand the conditions under which insurers direct the care doctors provide their patients and the extent to which insurer behavior reins in costs and drives value or keeps people from getting needed care."

4. Affordability.

The House bill makes health coverage and health care more affordable (PDF) by providing generous affordability credits and limiting their out-of-pocket costs:

"Sec. 341. Availability through Health Insurance Exchange. Creates affordability credits to ensure that people with incomes up to 400% of federal poverty have affordable health coverage. These credits are phased out according to a schedule defined in the act as individual and family incomes up to 400% of poverty and the credits apply only to Exchange-participating plans. Affordability credits reduce the costs of both premium and annual out-of-pocket spending."

The Senate bill may not be as generous.

As Timothy Jost explains:

"On the whole, the premium subsidies [in the House bill] are much more generous than those found in the Senate Finance Committee but less generous than those in the HELP bill, while the cost-sharing subsidies are generally more generous than those found in either of the Senate bills."

5. Employer Responsibility.

The House bill requires everyone — individuals, government and employers (PDF) — share in the responsibility of guaranteeing access to quality affordable health care to all.

"Employers [with annual payrolls above $500,000] must either provide health insurance to their employees or make a contribution to help fund affordable health insurance. Employers that choose to offer coverage contribute at least 72.5 percent of premium for workers, 65 percent for families. However, if the coverage is unaffordable for low-wage workers, that worker can choose subsidized coverage in the Exchange and the employer makes a contribution to the Exchange. Employers who do not offer qualified coverage contribute 8 percent of their payroll to help cover expenses of employees who seek coverage through the Exchange."

"Small businesses [with annual payrolls below $500,000] are exempt from requirements to offer or contribute to coverage, including the 8 percent payroll contribution for failure to provide health benefits to their workers... There is also a tax credit program to help low-wage small businesses offer coverage to their employees."

The Senate bill may impose few requirements on employers. According to Timothy Jost, "The Senate Finance bill has a much weaker [employer] mandate, but the final bill is likely to include a mandate of some sort."

6. Financing.

The House bill includes progressive financing by requiring the wealthiest one percent of Americans to pay their fair share instead of taxing health care benefits. The bill would impose a 5.4 percent surcharge on taxpayers with adjusted gross income in excess of $1 million (couples) or $500,000 (individuals).

The Senate bill may impose bad health policy by taxing high-premium plans that may simply provide good, comprehensive coverage to people in high-risk occupations like coal miners and firefighters.

One Area the Senate Should Not Follow

The Senate should not include the regressive language on abortion coverage added at the last minute to the House bill through the Stupak Amendment.

As an editorial in the Detroit Free Press explains:

"There are principled stands against abortion. And there are ways in which current law prohibits the kind of 'abortion on demand' decried by abortion opponents — strictures involving minors, the use of federal funds and procedures to end late-term pregnancies.

"But there's nothing principled about the position U.S. Rep. Bart Stupak, D-Menominee, took when he insisted that health care reform include an abortion restriction that goes far beyond current federal law.

"Stupak's amendment, which passed as part of the landmark bill and is credited with bringing along several anti-abortion Democrats (including U.S. Rep Dale Kildee, D-Flint), will make it more difficult for poor women to obtain abortions. The amendment in effect prevents insurance companies from participating in the bill's insurance exchanges — where many low-income families and small businesses will go for their policies — unless they exclude abortion coverage from any policy that might be purchased by someone who qualifies for a federal subsidy.

"It went further than a compromise already written into the health care legislation that would have segregated federal funds in the exchange to comply with existing laws that prohibit federal funding of discretionary pregnancy terminations."

GOP Health Reform Bill Shifts More Costs to You

Monica Sanchez — Thu, 05 Nov 2009 09:12:18 -0800

The New York Times reported yesterday that

"House Republicans have come up with an answer to Speaker Nancy Pelosi, drafting an alternative health care bill that would reward states for reducing the number of uninsured, limit damages in medical malpractice lawsuits and allow small businesses to band together and buy insurance exempt from most state regulation."

That, in a nutshell is the House GOP bill (PDF) to reform our health care system. Same old, same old. There is nothing new in their plan. It is a rehash of the Republican party's answer to every problem:

Deregulate the industry involved as much as possible;

Put the burden of cost and risk on consumers and taxpayers ("buyer beware"); and

Protect business from injured consumers.

Here is how this tired Republican formula plays out in their health care reform plan.

Deregulate the industry involved as much as possible

The Republican bill calls for allowing insurers to sell insurance across state lines, making policies subject to laws in the company's home state but exempt from consumer protection laws, rating rules and benefit mandates in other states where the company sells coverage. It would also allow small businesses to pool their insurance buying power through association health plans, sponsored by trade and professional associations and chambers of commerce, which would be exempt from state consumer protection laws as well.

This would likely allow insurers to offer low-premium health insurance policies because they would have lousy benefits and leave people unprotected when they need health coverage most. What's the use of having insurance with a low premium if it won't pay for anything when you get sick? (Listen to me explain why allowing insurers to sell health insurance across state lines is a bad idea on the Rick Smith Show.)

To understand why circumventing state regulations is a problem, it is important to understand how insurance is regulated. States are the primary regulators of health insurance. The rules vary from state to state and also based on individual, small or large-group markets. The Employee Retirement Income Security Act of 1974, or ERISA, bars states from regulating employer-sponsored health plans. As a result of this federal law, coverage provided by employers that self-fund (i.e., pay for their share of employee health care costs out of their own general assets) is not subject to any additional insurance regulation by the states. Therefore, state laws generally apply to small-group policies sold to small employers with less than 50 employees and policies sold to individuals.

In general, state laws are more comprehensive than federal laws. Almost all states, for instance, provide limits on the amount by which all small group health insurers in the state can vary the premiums among small employer groups for the same coverage. In at least 10 of these states, insurers cannot consider health status at all in setting a small employer group's premiums (called community rating). In addition, many states require insurers to cover certain conditions or providers. States may also enact laws such as those that require insurers to permit physicians to make standing referrals and to have adequate provider networks.

Currently, health insurers are licensed in each state in which they operate and are subject to the insurance laws of those states, including laws regarding access to coverage, premiums, and scope of coverage. The proposed GOP plan would allow insurers to circumvent state health insurance regulations.

That gives insurers virtually unfettered discretion in their practices. This approach would mean that each insurer operating in a state could be subject to dramatically different standards. This will further fragment the health insurance market and eviscerate the viability of markets that guarantee access, restrict premiums, limit coverage exclusions, and/or mandate benefits, especially in states such as Maine, Massachusetts, New Jersey, New York, and Vermont which have the most comprehensive consumer protections. It will likewise undermine the laws of other states that have some protections and effectively bar these and other states from strengthening any protections.

And this is not a new idea. Republicans have proposed this time and time again. For example, they have repeatedly submitted the Health Care Choice Act (H.R. 4460) and the Small Business Health Fairness Act (H.R. 241), which would allow insurers to sell health policies across state lines, circumventing state regulations and consumer protections.

The Small Business Health Fairness Act would have created Association Healthcare Plans (AHPs), which allow small businesses to band together and buy insurance exempt from most state insurance regulations and consumer protections. According to the Drum Major Institute for Public Policy (PDF):

"Enhancing the ability of small businesses to offer quality health insurance would go a long way towards reducing the number of uninsured Americans. But the devil is in the details. By exempting AHPs from state regulations, studies indicate that this bill would increase average health care costs for small businesses and reduce the number of workers with health insurance. For example, state laws prevent insurance plans from cherry-picking only the healthiest people for insurance coverage, allowing businesses with relatively healthy employees to join for less money while charging higher rates to those with older and sicker workers. Exemption from these laws would destabilize the health care marketplace: state-regulated health care plans would see their healthy workers siphoned off to the AHPs, leaving them with a disproportionate number of older and sicker employees who are more expensive to cover. Health care premiums for all small businesses, except for those with the healthiest workforce would soar, and companies unable to cope with the increased costs would leave their employees at risk of becoming uninsured. For this reason, the Congressional Budget Office has projected that AHP legislation, if enacted, would result in higher premiums for four out of five small employers."

Even the National Small Business Association (NSBA) is against AHPs. Back in 2005, Todd McCracken, NSBA president said:

"AHP legislation would likely increase premiums for small employers and their workers and make it much harder, if not impossible, for small business owners with older, sicker workers to get access to affordable health coverage. We need a better solution for small businesses. This is not the answer."

In 2004, the National Governors' Association also came out against these types of plans writing that they:

"would seriously undermine states' ability to provide their citizens with access to affordable health insurance coverage by exempting AHPs from important state regulations. The legislation would raise already skyrocketing health care premiums on our most vulnerable populations while watering down states' existing financial oversight and consumer protection measures."

Such "pick-your-regulator" provisions were also central to John McCain's health reform proposals during his 2008 presidential campaign. (See my blog post "Deregulate, Baby, Deregulate: McCain's Health Reform Plan.")

Not surprisingly, allowing insurers to circumvent state regulations was also part of the reform proposal put out by America's Health Insurance Plans (AHIP), the lobbying arm of the health insurance industry. (See my blog post "Too Little, Too Late: The Health Insurance Industry Unveils a New Plan to Reform Health Care.")

(What are some of state-based regulations you could lose if health insurance companies are allowed to circumvent state insurance regulations? Find out here.)

Put the burden of cost and risk on consumers and taxpayers ("buyer beware")

The Republican health reform bill would continue to allow health insurance companies to deny people coverage because of pre-existing medical conditions and, if they deign to sell them a policy, to charge people more based on their health status or exempt coverage for anything related to their pre-existing condition.

Instead the bill would provide funding to states to establish high-risk pools in which private companies cover people who cannot otherwise obtain coverage with subsidies from the state. It also offers states funding to establish reinsurance programs under which a state pays a large share of the cost of private health insurance companies if claims exceed a certain threshold. Both of these have the effect of shifting the risk and the cost of covering costly individuals to taxpayers, leaving the inexpensive healthy individuals to be insured by private insurance companies, thus privatizing profits and socializing risk.

High-risk pools are not new and experience with them shows that they make health insurance problems worse by further fractioning the risk pool. As this "Health Insurance: A Primer," (PDF) by Bernadette Fernandez of the Congressional Research Service puts it:

"The main objective of insurance is to spread risk across a group of people. This objective is achieved in health insurance when people contribute to a common pool ("risk pool") an amount at least equal to the average expected cost resulting from use of covered services by the group as a whole. In this way, the actual costs of health services used by a few people are spread over the entire group. This is the reason why insuring larger groups is considered less risky-the more persons participating in a risk pool, the less likely that the serious medical experiences of one or a few persons will result in catastrophic financial loss for the entire pool."

High-risk pools offer people a choice of private insurance plans with the state subsidizing a portion of the costly premium. The inevitable consequence has been that high-risk pools suffer from a myriad of problems that keep the medically uninsurable from accessing good, affordable health care. A study published in Health Affairs found that in most state high-risk pools:

"Coverage is expensive, the waiting period for coverage of pre-existing conditions is long, and benefits may be limited... most discourage enrollment in the high-risk pool in myriad ways and fail to ensure access to the individual market for persons with health problems."

Yet none of these deficiencies would be addressed by the GOP bill. Insurers offering high-risk coverage would continue to be allowed to deny people coverage for treatment related to the person's pre-existing condition--the very condition that made them eligible for the high-risk pool in the first place.

Nor does the House Republican bill help people pay for coverage if they cannot afford it. The bill does not offer any tax credits, subsidies, benefit guarantees or out-of-pocket maximum protections.

At least the bill does not force individuals to buy insurance they are unlikely to be able to afford. But that does leave us with just about as many uninsured as we have now since it also does not require employers to contribute to the system in any way. As The Washington Post reported today:

"The long-awaited Republican entry in the health care debate received its assessment late Wednesday from congressional budget analysts, who concluded that the proposal would barely dent the ranks of the uninsured.

"The measure would cover only 3 million additional people at a cost of $60 billion through 2019, according to an analysis by the nonpartisan Congressional Budget Office. It would leave more than 52 million Americans uninsured a decade from now."

Protect business from injured consumers

The Republican bill's main plan for lowering overall health care costs is another of their health reform mainstays: "tort reform." The bill imposes new restrictions on patient lawsuits against doctors, hospitals, and makers of drugs and medical devices. It sets a $250,000 limit on non-economic damages for physical and emotional pain and suffering, establishes new hurdles for consumers to get punitive damages, and limits contingency fees for plaintiffs' lawyers. It does not put any restrictions on how insurance companies can set their premiums.

This focus on medical malpractice liability reform is due to the fact that conservatives believe frivolous lawsuits drive up health care costs and require doctors to practice defensive medicine that is costly and wasteful.

It is a bizarre place to focus on to lower costs, however, given that medical malpractice costs are only a small fraction of total health care costs in the U.S., two to three percent at most. Therefore, even large savings in medical malpractice premiums can have only a small direct impact on total health care spending.

In addition, judgments account for less than 4 percent of all medical malpractice payments, and the significant increase in premiums for medical malpractice liability insurance is not attributable simply to an increase in medical malpractice payments. Other contributing factors (PDF) include reduced competition among insurers and a decline in insurers' investment income.

CQ Today reported yesterday that the CBO believes the changes in the changes to medical malpractice laws "would reduce health care costs directly by reducing premiums for medical liability insurance and associated costs."

But that ignores evidence from the states that have already enacted tort reform:

The Medical Liability Monitor... publishes the latest information on medical liability insurance rate. Its annual rate survey, reported by state and by medical specialty (e.g., internal medicine, general surgery, ob/gyn) reports the medical liability insurance rates of all the major insurers of physicians in the United States. Its data is the most comprehensive anywhere and is cited by government agencies, legislative bodies and major media. It found that:

States with caps on damages have average insurance premiums that are 9.8% higher than insurance premiums in states without caps on damages. (Medical Liability Monitor, October, 2004)

In the five states that recently passed new medical malpractice caps, premiums rose at nearly double the rate as states that did not pass a damage cap. Those states are: MS, NV, OH, OK and TX. (Medical Liability Monitor, October, 2004)

Most importantly, as Tom Baker explains in his book The Medical Malpractice Myth, most people who are injured by medical malpractice do not sue:

“First, we know from the California study, as confirmed by more recent, better publicized studies, that the real problem is too much medical malpractice, not too much litigation. Most people do not sue, which means that victims—not doctors, hospitals, or liability insurance companies—bear the lion’s share of the costs of medical malpractice.”

The bottom line

The GOP health reform bill does very little to expand health coverage to more Americans, very little to lower overall health care costs, and very little to ensure people will be able to afford the health care they need when they need it.

So where's the reform?

(If you would like to see how the House Democratic bill compares, read this summary of the bill (PDF) H.R. 3962.)

Health Insurance Monopolies Are Legal

Monica Sanchez — Thu, 29 Oct 2009 07:34:11 -0700

Merriam-Webster's Dictionary of Law defines antitrust as:

“of, relating to, or being legislation against or opposition to business trusts or combinations; specifically : consisting of laws to protect trade and commerce from unlawful restraints and monopolies or unfair business practices.”

What few people realize is that health insurance companies are exempt from federal antitrust laws. Not surprisingly, they have become near monopolies. (See my blog post, True Competition a Myth in the Private Health Insurance Marketplace.)

As Phillip Cryan noted:

“[I]n nearly every local market in the country a very small number of insurers exercise what economists call ‘oligopoly’ power (the ability to charge prices higher than their costs, because of the absence of robust competition).”

A report by Health Care for America Now, Premiums Soaring in Consolidated Health Insurance Market (PDF), details this oligopoly power and its consequences:

“In the past 13 years more than 400 corporate mergers have involved health insurers, and a small number of companies now dominate local markets. The American Medical Association reports that 94 percent of insurance markets in the United States are now highly concentrated. Contrary to industry assertions, these mergers have undermined market efficiency; premiums have skyrocketed, increasing more than 87 percent, on average, over the past six years. Families and employers—and the U.S. economy as a whole—cannot sustain that kind of cost growth.” [Emphasis added]

The problem is finally being discussed on Capitol Hill. Congressional Quarterly Today reported this month that:

“Leading congressional Democrats want to partially repeal a 60-year-old exemption from antitrust law enjoyed by health insurers... Under the bills, the federal government would be authorized to prosecute insurers for violations of antitrust law if they are found to be engaged in ‘price-fixing, bid-rigging or market allocations.’ Democrats backing the bills say they aim to prevent behaviors that could drive up health care costs.”

However, even if health insurance companies’ exemption from federal antitrust laws was removed and the federal government moved to enforce those laws, the break up of these oligopolies could take years.

The best way to quickly infuse competition into health insurance markets is by adding a strong, national public health insurance plan option.

Sign the petition! Help get as many signatures as possible supporting health insurance reform with a public option in the Senate.

We Should All Have 'Cadillac' Health Coverage

Monica Sanchez — Thu, 22 Oct 2009 10:08:08 -0700

Some in Congress want to pay for health care reform in part by taxing so-called ‘Cadillac plans.’ As the Center for Budget and Policy Priorities explains it:

“Starting in 2013, the Finance Committee bill would impose a 40-percent excise tax on the portion of the value of health insurance coverage that exceeds $8,000 for single individuals and $21,000 for families.”

But what exactly is a ‘Cadillac’ health plan? According to Len Burman of the Tax Policy Center:

“There's some plans for which almost everything is paid for. So you go to the doctor, you don't worry about what's prescribed or how much is being spent, because you're not responsible for any of it.”

Does that sound so terrible? Other industrialized countries give all their residents Cadillac coverage, and spend half as much as we do in the process. For example, do you know any U.S. resident who can claim the kind of treatment — and out-of-pocket costs — this proud Canadian received?

“After a recent accident, I phoned up to see my doctor (who is in Toronto) for a checkup. It wasn’t an emergency, so it took me a few days to see her. (Somedays I have gotten in on the same day, but she is busy, so it usually takes me a day or two. And by the way, I have a harder time getting a haircut appointment or a plumber.) I had to get an X-ray and an ultrasound. I literally walked out the door to the office building 1 minute away and put my name down for both. They said the wait would be an hour. I went and had lunch and then got it done. I was called by the nurse with the results in two days. Total cost for all this care: $0.” [Emphasis added]

One objective behind the excise tax on high-premium health plans is to tax plans that the wealthy enjoy, but in fact many middle class Americans would be affected by the tax.

As Ezra Klein explains:

“But though extremely high-cost health-care plans are concentrated among the wealthy, they're not limited to the wealthy. Workers in high-risk professions, or workers laboring in high-cost areas (insurance is more expensive in New York than in Montana), have pricier health-care plans. Older workers, or workers who have negotiated really good benefits, also have pricier health-care plans. And unions represent a lot of folks who fit some or all of these boxes.”

In addition, plans offered by small employers are more likely to be hit with the excise tax. According to Beth Umland, director of research for Mercer, a consulting firm that conducts an annual survey of employee benefits:

“About 14 percent of small employers, counted as those with fewer than 500 workers, now offer policies that would be subject to the excise tax. That compares with just 5 percent of large employers with 500 or more workers.”

That the tax will end up affecting more than just the rich is only part of the problem with such a policy. The other part is that the tax is strictly based on the cost of the premium and does not distinguish between the types of coverage offered. Simply not having a deductible or a copay when you get medical care should not be seen as an extravagance.

It would be different if they were talking about taxing non-medically necessary benefits, for example if a plan offers coverage of cosmetic surgery. Few would be opposed to taxing the portion of a benefit that pays for face lifts — if such coverage exists. But that is not what is being planned here.

Truthfully, the ideology behind the excise tax comes down to the bizarre belief that if people don’t have to pay much out of pocket for their health care, they will be flocking to the doctor for unnecessary tests and raising the cost of health care for all of us. By discouraging such comprehensive plans, they therefore believe, overall costs will be lowered.

Such a belief, though apparently widespread, seems rather illogical. I don’t know anyone who enjoys being poked and prodded by his or her physician and thinks a trip to the lab for a full work up would make for a delightful excursion. And none I can think of would prefer a stay at the hospital to a resort.

Yes, I realize there are some hypochondriacs out there who would like to see their doctor every time they sneeze, but doctor visits are not where most of our health care dollars go. Most go to expensive hospital care and tests, all of which must be ordered by a physician and approved by the health insurance plan as medically necessary.

A report by the federal Agency for Healthcare Research and Quality (AHRQ) shows that most of our nation's health care spending goes toward hospitalizations: Inpatient hospitalization costs comprise 33 cents out of every dollar spent on health care.

In addition, the AHRQ also reports that — surprise — sick people use up most of our health care dollars:

The 15 most expensive health conditions account for 44 percent of total health care expenses.

Patients with multiple chronic conditions cost up to seven times as much as patients with only one chronic condition.

These are not healthy people getting unnecessary care. These are people who will get sicker if they don’t get the care they need.

The famous RAND Health Insurance Experiment showed that cost sharing — making people pay more out of pocket — can be a blunt tool, reducing both needed and unneeded health services in roughly equal proportions:

“Cost sharing reduced the use of health services at all levels of effectiveness, from highly effective care to less effective care, and in roughly equal amounts among most groups of participants. Both the proportion of inappropriate hospitalizations and the proportion of inappropriate use of antibiotics were the same for cost-sharing and free-plan participants...

“Nonetheless, subsequent RAND work has reaffirmed that cost sharing alone, while reducing costs and waste, neither improves the overall appropriateness of care sought by patients nor raises the quality of care delivered by doctors. But perhaps appropriateness, quality, and even savings could all be increased if cost sharing were reduced for people with conditions for which treatment is cheap and effective.” [Emphasis added]

Such evidence appears to have been taken to heart in other countries. As the AARP European Leadership Study: Health Care Cost Containment (PDF) found:

“Patient cost sharing, which is used in all study countries, is for the most part low and generally used to encourage cost-effective behavior rather than to suppress demand. If the cost sharing is high enough, it can change behavior by suppressing demand, which affects lower-income individuals more than others. This does not appear to be a goal in these countries. While increased cost sharing may lead to less use of unnecessary care, it may also reduce access to needed services.”

If we want to encourage our health policies to be evidence-based, then we should not be punishing plans that provide good comprehensive health coverage. We should be trying to lower cost sharing for everyone — in other words providing ‘Cadillac’ coverage to all.

To raise funds for health care reform, Health Care for America Now (HCAN) supports President Obama’s plan for having people who earn more than $250,000 pay their fair share:

“That's what the House bill does and it's what the President's initial proposal to fund health care through lowering tax deductions for people who earn more than $250,000 does too.”

Such a policy directly targets the wealthy, as the excise tax on high-premium plans purports to do, but more directly, without discouraging good coverage and unwittingly affecting middle class families.

Insurers Will Still Not Be Regulated Enough

Monica Sanchez — Wed, 21 Oct 2009 08:58:04 -0700

We’ve heard a lot about how much health insurers will be regulated after health reform. The claim is that insurers will be regulated so much that a public health insurance plan will not be needed to compete with them to keep them honest.

The fact is, however, that neither of the Senate health reform bills regulate health insurers enough and, even if they did, we would still need a public health insurance plan option because insurers cannot be trusted to abide by regulations.

First, the regulations included in the Senate bills apply only to plans in the newly created health insurance exchange. They do not apply to the insurers that contract with companies to provide health benefits to their workers. That means nothing will change for most Americans — those who get insurance through an employer.

Secondly, the most talked about regulations in the reform bills — mandating that insurers cannot deny anyone coverage because of a pre-existing condition, that they cannot charge someone more because of their health status, and that they cannot cancel someone’s coverage when they get sick — already apply to employer insurance. Such new regulations only really help people who cannot get insurance through an employer and are at the mercy of the individual insurance market — about 5 percent of the population.

Lastly, the regulations included in both the Senate Health, Education, Labor and Pensions (HELP) Committee bill (PDF) and the Senate Finance Committee bill (PDF) for plans in the exchange are still insufficient to ensure people will get the care they need when they need it.

It is easy to see how inadequate the regulations in the Senate committee health reform bills are when they are compared to the Bipartisan Patient Protection Act (PDF) (informally known as the McCain-Edwards-Kennedy Patients' Bill of Rights). Senate Bill S.1052 of the 107th session of the U.S. Senate was an attempt to provide comprehensive protections to all Americans with private health insurance. The House of Representatives and the Senate passed slightly differing versions of the bill in 2001, but a final bill was never passed.

This summary of the Bipartisan Patient Protection Act outlines the rights the bill would have provided to everyone covered by a private health insurance company (unless otherwise noted below, the insurance regulations detailed are not included in either Senate committee health reform bill). The Bipartisan Patient Protection Act would have:

Applied to all Americans in all health plans.

Ensured a swift internal review process and a fair and independent external appeals process.

The HELP committee bill includes mention of external appeals process but leaves the details to be decided by the Secretary of Health and Human Services and applies only to plans in the exchange.

The Finance committee bill includes details of an external appeals process but applies only to plans in the exchange.

Allowed patients to hold their managed care plan accountable when plan decisions to withhold or limit care result in injury or death.
Guaranteed access to necessary specialists — even if it means going out of the plan's provider network.

The HELP committee bill leaves definition of adequate networks the Secretary of Health and Human Services and applies only to plans in the exchange.

The Finance committee bill leaves it to states to address network adequacy.

Ensured that chronically ill patients receive the specialty care they need by mandating they have access to standing referrals to specialists and allowed them to designate a specialist as their primary care provider if the specialist could better coordinate their care.

Ensured that patients could access emergency room care in or out of the plan's network and without prior authorization under the ‘prudent layperson’ standard.

The Finance committee bill includes the right to seek emergency care in or out of the plan’s network but it does not include the ‘prudent layperson’ standard — which is recommended by the American College of Emergency Physicians — and applies only to plans in the exchange.

Ensured women could choose an OB-GYN as their primary care provider and allowed women to obtain routine ob-gyn care from a participating health care professional who specializes in obstetrics and gynecology without prior authorization or referral.
Ensured that children could have a pediatrician as their primary care provider.
Mandated that plans provide for exceptions from the prescription drug formulary when medically indicated and that formulary restrictions be disclosed to enrollees and providers on request.
Mandated that plans cover the costs of treatment that would normally be covered by the plan of participation in certain clinical trials if the patient has a life-threatening or serious illness for which no standard treatment is effective.
Ensured continuity of care by mandating that plans provide a transitional period of coverage during which a patient can keep their doctor even if they are forced to changed plans or their doctor is dropped from their plan's network.
Made sure that people have the information they need about their health plan benefits through detailed disclosure requirements that included: plan benefits; limitations and exclusions; how out-of-network services are covered; how to select and obtain referrals to providers; emergency medical care coverage and definitions; prior authorization rules; and grievance and appeals procedures.

The HELP committee bill mentions the need for information to compare plans but provides no specific information disclosure requirements.

The Finance committee bill has limited information disclosure requirements for plans in exchange.

Assured that health plans could not prevent doctors and nurses from discussing all treatment options with their patients.

Ensured that doctors would not face excessive financial incentives limiting necessary care.

Protected health care providers from the threat of retaliation or firing when they advocate on behalf of their patients or report quality issues to the appropriate regulatory agencies.

Clearly, the claim that new regulations in the reform bills will be enough to protect people covered by a private health insurance company are unfounded. More regulations are needed that will apply to all health insurance plans, not just those in the exchange. But even then, we cannot trust insurance companies to not continue to try to get around regulations (PDF) as they always have.

We need a public health insurance plan option to set a benchmark against which the performance of private insurers can be measured.

As Wendell Potter, a 20-year public relations executive in the health insurance industry turned whistle blower, explains:

“Back in 1993, 95 cents of every premium dollar was used to pay medical claims. Now, it's down to about 80 cents. That is a direct result of the demands of Wall Street.

“What I'm talking about here is something that's referred to in the industry as a medical-loss ratio. Insurance companies consider what they pay in medical claims to be a loss, so they want to lose less money. In other words, they want to spend less and less of every premium dollar on claims, and that's been happening. So more and more is available to pay executives and to reward shareholders. That's why it's been bad for us.

“That's why we really need to have a public health insurance option as part of health care reform, to be a counter to the pressure and expectations from Wall Street and try to reverse that trend.”

If you doubt him, see this chart of private insurers' medical loss ratios over the years:

Make insurance companies compete:

Sign the petition demanding a public health insurance plan option: Tell Washington to pass real health care reform for the people, not insurance company executives.

Medicare is the Leader in Health Insurance Innovation

Monica Sanchez — Thu, 15 Oct 2009 06:58:08 -0700

In it’s effort to keep a public health insurance plan option from being created to compete with private insurers, the industry’s lobbying arm, America’s Health Insurance Plans (AHIP), is claiming Medicare "has had virtually zero innovation since its inception."

A look at the facts, however, shows that Medicare leads and private insurers follow.

As the Center for Budget and Policy Priorities explains:

“As the largest U.S. purchaser and regulator of health care, Medicare exerts a major influence on the rest of the health care system. As a purchaser, Medicare provides health coverage to 45 million people age 65 and over or with disabilities, or 1 out of every 7 Americans. Its reimbursement and coverage policies have been widely adopted by private insurers and other public programs.”

A Commonwealth Fund survey found that health care opinion leaders agree. Majorities of the health care opinion leader survey respondents said Medicare has been successful in accomplishing several goals, including spreading new medical technologies and improving quality of care:

A wide majority (92%) said Medicare has been successful in providing stable, predictable coverage and guaranteed access to basic medical care for seniors and disabled beneficiaries.
Four of five (80%) said Medicare has been successful in providing support for medical education and training programs.
Over two-thirds (71%) said Medicare provides financial protection for those who are vulnerable due to low income and/or poor health.
Two-thirds (67%) think that Medicare has been successful in improving the health status of beneficiaries.
Nearly two-thirds (64%) said Medicare has been successful in helping spread new medical technology and treatment methods.
Three-fifths (61%) say Medicare has helped decrease racial disparities through improved access to care for minority beneficiaries.
Three-fifths (60%) say Medicare has helped ensure the financial stability of providers and their ability to serve the poor and uninsured.

One example of how Medicare has led the way in access to quality care and in medical innovations is research (PDF) that has found the introduction of Medicare was associated with increased adoption of cardiac technologies.

Another example is how Medicare has led the way in reducing racial and ethnic disparities:

“Its leverage was demonstrated in 1966 — the year of Medicare’s inception — when hospitals desegregated as a condition for receiving Medicare reimbursement. Since then, Medicare has contributed to dramatic improvement in the health of the elderly and disabled minority population.”

In addition, according to the Center for Budget and Policy Priorities:

“In its regulatory role, Medicare influences the provision of care through its conditions of participation for hospitals and health plans, reporting requirements, claims review practices, and other administrative procedures.”

Medicare leads the way in coverage decisions. According to The New York Times, “Private insurers tend to follow the government’s lead in matters of coverage.”

Jacob Hacker, Professor of Political Science at Yale University and Resident Fellow at the Institution for Social and Policy Studies, agrees (PDF):

“Commercial insurers also look to Medicare to make initial technology approval decisions and to initiate more-aggressive payment denials—for example, for ‘never’ events and medically ineffective treatments.”

In fact, Medicare coverage is vital to the success of new technologies. As an article in the American Journal of Roentgenology explains:

“Introducing promising, innovative technologies into medical practice and achieving their maximum clinical impact require more than solid concepts, good science, and United States Food and Drug Administration (FDA) marketing approval. In an age in which high technology frequently means high cost, it is crucial that physicians and the institutions in which they practice receive appropriate reimbursement from third-party payers for new technologies. Arguably the most important of these entities is the Health Care Financing Administration (HCFA) [now CMS], which administers the federal Medicare program and is the largest such payer. As such, HCFA's coverage and reimbursement decisions are often followed by other government and private third-party payers. Understanding how HCFA makes its coverage decisions is critical to developing strategies that will result in the timely, appropriate reimbursement of new medical therapies, ultimately achieving improved patient care.” [Emphasis added]

Medicare also leads the way in payment innovations. Health policy experts looking into health care payment system reforms have found private insurers follow Medicare’s example.

As Rick Mayes, associate professor of public policy in the University of Richmond’s Department of Political Science and a faculty research fellow at the Petris Center on Healthcare Markets & Consumer Welfare at the University of California, Berkeley, makes clear:

“The biggest and most intense battle within the U.S. health care system during the past two decades has been over two inter-related questions: (1) who will control the manner in which medical care is paid for and, (2) how much will it cost? … [T]he private sector neither initiated this battle nor provided the critical innovation that transformed health care in the U.S. Instead, it was Medicare’s transition to a prospective payment system (PPS) that both triggered and repeatedly intensified the economic restructuring of the U.S. health care system… Roughly akin to Wal-Mart, in terms of purchasing power, the key to Medicare’s role as the leading catalyst for change in the U.S. health care system is the program’s immense size and influence. As the single largest individual buyer of health care and the ‘first mover’ in the annual payment game between those who provide medical care and those who pay for it, Medicare invariably drives the behavior of both medical providers and private payers.” [Emphasis added]

Jacob Hacker reiterates that point:

“Over the last two decades, moreover, Medicare has increasingly emphasized improved payment methods and rigorous reviews of technology and treatment, and it has made increasing investments in quality monitoring and improvement. Revealingly, private plans generally use the public Medicare plan’s criteria for covering treatments as their standard of medical necessity, and they have adopted many of Medicare’s innovations in payment methods. As Robert Berenson and Bryan Dowd note in a recent Health Affairs article, ‘Traditional Medicare has been the source of important payment innovations, moving many payment systems away from fee-for-service to prospective payment, such as the diagnosis-related group (DRG) prospective payment system (PPS) for inpatient services. The resource-based relative value scale (RBRVS) for physician fees, despite its flaws, has been adopted widely by private plans.’” [Emphasis added]

Even the health insurance industry has admitted it looks to Medicare when making payment policy decisions. As The New York Times reports:

“Medicare will no longer pay the extra costs of treating preventable errors, injuries and infections that occur in hospitals, a move they say could save lives and millions of dollars. Private insurers are considering similar changes, which they said could multiply the savings and benefits for patients… Susan M. Pisano, a spokeswoman for America’s Health Insurance Plans [AHIP], a trade group, said, ‘Private insurers will take a close look at what Medicare is doing, with an eye to adopting similar policies.’” [Emphasis added]

What can be discerned from Medicare’s history as an industry leader is that a large, national — not state-based — public health insurance plan, competing with private insurers, will lead the way in quality and payment innovations that will help ensure we all have access to quality affordable health care.

Is it any wonder AHIP is trying to make us believe Medicare "has had virtually zero innovation since its inception"? I don’t know about you, but I smell desperation in the air as insurers struggle to discredit the idea of creating a public health insurance plan option.

We Need A Public Health Insurance Plan to Keep Us S.A.F.E.

Monica Sanchez — Tue, 06 Oct 2009 07:18:56 -0700

I’ve written several posts about why regulation alone is not enough to curb health insurance company abuses (Get Sick. See Health Insurance Vanish. Watch States Fail to Curb Insurance Company Practice.; Nothing Intimidates Health Insurers Like the Public Health Insurance Plan; Nation’s Two Largest Health Insurance Companies Chastised).

The fact that insurance companies continually break regulations (PDF) is one of the reasons we need a public health insurance plan to compete with them. As President Obama has said:

“I have no interest in putting insurance companies out of business. They provide a legitimate service, and employ a lot of our friends and neighbors. I just want to hold them accountable. And the insurance reforms that I've already mentioned would do just that. But an additional step we can take to keep insurance companies honest is by making a not-for-profit public option available in the insurance exchange.”

The Washington Post recently gave us a look at how insurance companies will likely continue to discriminate against people with pre-existing conditions even if laws are passed laws to prevent such practices. The article, “Discrimination by Insurers Likely Even With Reform, Experts Say”, predicts “new biases against prior conditions” will rise up in response to a new regulatory framework:

“Any health-care overhaul that Congress and President Obama enact is likely to have as its centerpiece a fundamental reform: Insurers would not be allowed to reject individuals or charge them higher premiums based on their medical history.

“But simply banning medical discrimination would not necessarily remove it from the equation, economists and health-care analysts say.

“If insurers are prohibited from openly rejecting people with preexisting conditions, they could try to cherry-pick through more subtle means. For example, offering free health club memberships tends to attract people who can use the equipment, says Paul Precht, director of policy at the Medicare Rights Center.

“Being uncooperative on insurance claims can chase away the chronically ill. For people who have few medical bills, it is less of a factor, said Karen Pollitz, research professor at the Georgetown University Health Policy Institute.

“And to avoid patients with costly, complicated medical conditions, health plans could include in their networks relatively few doctors who specialize in treating those conditions, said Mark V. Pauly, professor of health-care management at the University of Pennsylvania's Wharton School.

“By itself, a ban on discrimination would not eliminate the economic pressure to discriminate.

“‘It would probably increase the incentive for cherry-picking,’ Pauly said. ‘I'm strongly motivated to try to avoid you if I'm not allowed to charge you extra.’

The article goes on to name some ways to stop the discrimination, but we know from experience with Medicare, that none of them can completely stop insurance companies from trying to avoid insuring people who actually need insurance. As Karen Pollitz made it clear to The Washington Post:

"In a competitive market, a good-guy insurer is a patsy. The race is to the bottom."

Medicare already does everything proposed in health reform legislation to curb cherry-picking in the private plans that contract with the government to provide benefits to people with Medicare, but the plans continue to do so, as the article explains:

“There are myriad ways health plans can attract healthier members, from the messages they advertise to the overall level of coverage they provide and the smallest enticements they add to their benefits packages...

“[A]ds for private health plans serving senior citizens on Medicare seldom feature people who are sick, said Tricia Neuman, who has studied the ads for the Kaiser Family Foundation. Many of the plans have offered benefits such as health club memberships, help buying eyeglasses, and preventive dental care, which may be more likely to sway healthy seniors than seniors who have severe and complex medical needs.

“Some private Medicare plans have offered relatively inexpensive enticements while requiring members to pay more out of pocket than they would under conventional Medicare for major expenses, said the Medicare Rights Center's Precht. In 2008, a quarter of the private Medicare plans charged members more out of pocket for Part B medications, which include chemotherapy drugs for cancer patients, according to a March study for the AARP Public Policy Institute.”

When I worked at the Medicare Rights Center we even had a few hotline callers say a private Medicare plan had told them they could not enroll because they have cancer. That is completely illegal, but they did it anyway. How many people do you think have been turned away from a Medicare Advantage plan because of pre-existing conditions who didn’t know their rights and simply took no for an answer, never calling anyone for help?

That is one of the many reasons we need a public health insurance plan. It may not keep the insurance companies from continuing to do everything in their power to avoid people who need care, but it will give us all a safe harbor from insurance company abuses.

Call your Senators and tell them you demand a public health insurance option to keep you S.A.F.E. (PDF): giving us stability, accountability, financial security and efficiency.

UPDATE: MSNBC's Dr. Nancy explored the problem of cherry-picking:

Visit msnbc.com for Breaking News, World News, and News about the Economy

Medicare Disadvantage Update

Monica Sanchez — Thu, 01 Oct 2009 07:19:41 -0700

In a previous post I asked “Who’s Getting the Advantage from Medicare Advantage?” (See that post for background on the Medicare Advantage program and the controversy over cutting overpayments to the private insurance companies that operate them.)

The answer to my question continues to be answered from the pages of The Wall Street Journal, which proclaimed this past August: ”Humana 2Q Profit Rises 34% On Medicare Business.”

But some still bemoan that people in Medicare Advantage plans will suffer horribly if the $149 billion we will give these plans in overpayments over the next ten years are cut, like in this letter to the editor of the Palm Beach Post:

“Medicare Advantage is an option that serves 22 percent of the 45 million Medicare beneficiaries. The key is its innovative and coordinated approach to health and wellness. These plans offer enhanced benefits and added value.”

Just what is this 'added value'? Austin Frakt, a health economist at Boston University, provides hard evidence that the extra benefits to people in Medicare Advantage plans are highly overrated — and overpaid:

“My work (with Steve Pizer and Roger Feldman) shows that for each additional dollar spent by the federal government (taxpayers) on the program since 2003, just $0.14 of it can be attributed to additional value (consumer surplus) to beneficiaries (see also: findings brief).

How can anyone possibly claim that 14 cents on the dollar is a good deal?

These overpayments are particularly unfair to the majority of people who prefer the public Medicare program but must help pay for those who enroll in the private plans. As the Center on Budget and Policy Priorities explains:

“Under Medicare Part B, beneficiaries are charged a monthly premium equal to 25 percent of the costs of Part B-related services, which include physician visits and other types of outpatient care. Because private-plan overpayments increase Medicare costs under both Part A (hospital and nursing home services) and Part B, they increase the Part B premiums that beneficiaries must pay. According to both MedPAC and the Chief Actuary at the Centers for Medicare and Medicaid Services, the Medicare Advantage overpayments have raised the Part B premiums by $2 per month per person, or $48 a year for a couple, in 2007.

To quote Dr. Frakt, “Cuts to MA [Medicare Advantage] should be a no brainer.”

The American People Say Their Voice Is Not Being Heard In Health Debate

Monica Sanchez — Wed, 30 Sep 2009 09:19:01 -0700

A new survey (PDF) found that 71 percent of people think members of Congress are paying too little attention to what people like them are saying about changes to the health care system.

Sounds like the people are paying attention! (Actually, the survey, which was conducted by NPR, the Kaiser Family Foundation and the Harvard School of Public Health, also found that 66 percent of respondents say they are ‘very closely’ or ‘somewhat closely’ following discussions in Washington about proposed changes to the health care system.)

And the people were proven right by yesterday’s vote in the Senate Finance Committee on Senator Rockefeller’s and Senator Schumer’s amendments (PDF) to add a public health insurance plan option to the health care reform bill proves they are right.

Despite the fact that poll (76%) after poll (66%) after poll (83%) after poll (77%) shows a vast majority of the American people wants the choice of a public health insurance plan, Senators from both parties voted ‘Nay’ to giving them that choice.

As The New York Times reported:

“The votes, in the Senate Finance Committee, underscored divisions among Democrats and were a setback for President Obama, who has endorsed the public plan as a way to ‘keep insurance companies honest.’

“The first proposal, by Senator John D. Rockefeller IV of West Virginia, was rejected 15 to 8, as five Democrats joined all Republicans on the panel in voting no. The second proposal, by Senator Charles E. Schumer of New York, was defeated 13 to 10, with three Democrats voting no.”

Among the Democrats who voted no on both amendments were Senator Conrad and Senator Baucus who, as The Bismark Tribune reports, have received millions of dollars in campaign contributions from health care special interests, including health insurance companies:

“Conrad has received $1.6 million in health contributions since 1989, 35th among lawmakers, while Sen. Max Baucus, a leader in the troubled effort in Congress to write a health care overhaul bill, has received more campaign donations from the health industry than any elected federal official except President Barack Obama and three other senators... Baucus, D-Mont., has received some $3.9 million in contributions from the health care industry since 1989.”

Sixty-four percent of people in the NPR/Kaiser Family Foundation/Harvard School of Public Health survey said they have none to little confidence that health insurance companies will recommend the right thing for the country when it comes to health care. Yet these Senators are willing to bet their constituents’ physical and financial health on those same health insurance companies being able to fix the health care system on their own.

Senator Rockefeller, Chairman of the Senate Finance Subcommittee on Health Care, has not been deterred though. He put out the following statement after the vote:

“Today’s vote is progress toward a strong public option in health care reform. We solidified a strong majority of Democrats who believe that true health care reform cannot be realized without a strong public insurance option that works for American families.

“I have traveled across West Virginia talking with people about their health care, and what I hear is that they need another option to buy affordable insurance — one that actually covers their medical care and helps drive down costs.

“Our job is to protect the American people, not protect insurance company profits. The American people have asked for real solutions that protect their families and their economic security — a public option does just that.”

You should not be deterred either. This was just the first of many votes to come on this issue. Make your voice heard!

Call your senators today to insist that they support a public health insurance plan option.