Health Care Now
As medical costs continue to rise, the annual health expenses for a family of four now exceed the typical of cost of their groceries during the same time period, according to a new report from consulting firm Milliman, Inc.
The firm estimates that a typical family of four with an employer-sponsored health plan will end up incurring about $22,030 for all of their medical costs in 2013. That represents a 6.3 increase from last year, when the typical family racked up $20,728.
Some of that total sum ends up being covered by the family’s health insurance plan — the firm’s analysts found that employers paid about 58 percent of the total health care costs — but a big chunk of it falls onto the family itself. The average family pays more than $9,000 in payroll deductions and out-of-pocket bills for their health care, which is more than they typically spend on groceries and gas for an entire year:
“It is a huge expense,” Chris Girod, principal and consulting actuary at Milliman Inc. said in an interview. “Although the trends are slowing down, the total dollar amount has risen $1,300 per year each of the last four years.”
Meanwhile, the share a family and employees pay continues to rise as employers push more costs onto their workers. Therefore, the total share of the overall costs continues to mount, surpassing other household milestones like food and a year’s worth of gas.
“The total share of this cost borne directly by the family — $9,144 in payroll deductions and out-of-pocket costs — now exceeds the cost of groceries for the (Milliman Medical Index’s) typical family of four,” the study says. “The out-of-pocket cost alone — $3,600 for co-pays, coinsurance and other cost sharing, is more than the average U.S. household spends on gas in a year.”
That’s been a consistent trend over the past several years. As the cost of health care increases, Americans’ contributions to their health plans have risen at a much faster rate than their employers’ share. Since 2003, workers in every single state have had to increase their contributions to their family health plans by nearly 75 percent. At the same time, workers’ wages have stagnated. As struggling Americans aren’t able to afford the treatment they need, they’re putting off doctor’s visits and skipping out on their medication.
And, if the regular health costs that a typical American family incurs over the course of the year already represent such a big expense, it’s easy to see how just one catastrophic medical event could plunge Americans into serious debt. The average trip to an emergency room costs 40 percent more than what most Americans spend on monthly rent. It’s even worse for those with ongoing conditions that need expensive treatment — for instance, the Americans who are battling cancer are twice as likely to go bankrupt, even if they have health insurance.
New Yorkers from across the state — including hundreds of doctors, nurses, patients, labor unions, community organizations, faith groups, and seniors — delivered 10,000 signatures supporting a single-payer health care bill sponsored by Assemblyman Richard Gottfried, D-Manhattan, and Sen. Bill Perkins, D-Harlem.
The press conference was coordinated with Healthcare-NOW NYC, Hunger Action Network of New York State, Physicians for a National Health Program (New York Metro chapter), Single Payer New York, and Statewide Senior Action.
“These signatures are a testament to the dedication of New Yorker all across this great state to reach out to members of their communities and help build the grassroots movement it will take to make healthcare a human right in New York,” said Katie Robbins, an organizer with Healthcare-Now.
The New York Health bill (A.5389-a/S.2078-a) —”an act to amend the public health law and the state finance law”— would expand health coverage to all New Yorkers regardless of age, income, or employment status, and would control costs by implementing a single-payer, universal healthcare system, its supporters say.
The bill has 74 co-sponsors in Assembly and 17 in the Senate.
“The affordable care act has made some important improvements in how we organize and pay for health care in this country but it still leaves us and our health care, and our wallets, in the hands of insurance companies—with their premiums, and their administrative costs, and deductibles, and co-pays, and limited network, and denials of payment for the care we need. We can do better and New York can do better,” said Gottfried, chair of the Assembly Health Committee.
“President Obama during [his] campaign said that no American should have to spend their golden years at the mercy of insurance companies, and I agree with that, but I want to know why that is only for golden years. We can get better health care, more affordable health care, more fairly paid for, for every single New Yorker if we enact the New York Health bill to provide universal, publicly sponsored, publicly funded, single-payer health coverage. We want to get this bill to the floor of the Assembly this year for a vote,” he said.
Under the legislation, there would be no premiums, co-payments, or deductibles, and coverage would be publicly funded. Advocates said they would like to see the bill passed in the Assembly, in the Senate, and signed by the governor.
Perkins began his speech with a call and response of “you’re heath is your wealth.”
“We not only want to get [the New York Health bill] passed in the Assembly, we also want to get it passed in the Senate, and most importantly, we want the governor to sign the bill. In fact if we could, we would ask the governor to advocate [and] make sure it gets passed in the Assembly; to advocate [and] make sure it gets passed in the Senate; to be standing there with us so that our wealth, our health, is not compromised,” Perkins said.
New York Hunger Action Network Executive Director Mark Dunlea said health care costs are “one of the three big bills” that send people to emergency food programs.
“When Massachusetts enacted their insurance mandate, many low-income residents found they had less access to health care services. It is immoral that the rich country in the world still refuses to treat health care as a basic human right, even while we spend far more money on health care per capita than countries with universal access,” Dunlea said.
The 10,000 signatures were delivered to the offices of Gov. Andrew Cuomo, Senate Republican Leader Dean Skelos, R-Rockville Centre, Independent Democratic Conference head Sen. Jeff Klein, D- Bronx, and Assembly Speaker Sheldon Silver, D-Manhattan.
Health Care for All Colorado will shoot for a 2014 statewide ballot vote rather than 2013, supporters have decided.
The progressive cause has launched an education effort across the state, but decided to take the extra year to gather support and earn enough of the tens of thousands of signatures it would need to make the ballot, said director Donna Smith.
One of the group’s slogans is that health care is a right, not a commodity. Most supporters are backers of “Obamacare” reforms passed by Congress in 2010, but argue they don’t go far enough to guarantee health care to all citizens. In Colorado alone, hundreds of thousands of people will remain without health insurance because of gaps left in undocumented residents, workers changing jobs, and those who risk a penalty in refusing to buy insurance.
Health Care for All would put a payroll tax on all residents according to their income and asset levels. It would also ask Medicare and Medicaid, which use federal and state dollars to pay for more than a million state residents, to issue waivers allowing their funds to be pooled with the health care tax. A single administration would then make payments to health care providers like doctors and hospitals, on a common set of benefits.
A separate effort for a somewhat similar system was dropped in this past Legislature by Sen. Irene Aguilar of south Denver, a Democrat who also believes Obamacare did not go far enough. Because she wanted the Legislature to refer the issue to voters, Aguilar would have needed a two-thirds vote, including highly reluctant Republicans. She apparently was not able to win that extra support.
By Kay Tillow –
The Affordable Care Act (ACA) of 2010, also known as Obamacare, presents challenges to the multi-employer plans through which some unions bargain collectively to provide health care insurance for their members. These plans, often called Taft Hartley Plans, currently cover about 26 million workers, families, and retirees. Unless there is a major regulatory change made by Health and Human Services, these union negotiated plans will be struck a harsh blow once the exchanges go into effect in 2014.
A quiet effort by many unions to persuade the Obama administration to make this change is now becoming very public.
In an Op Ed published in The Hill, Joseph T. Hansen, President of the United Food and Commercial Workers (UFCW), said,
“But as currently interpreted, the ACA would block these plans from the law’s benefits (such as the subsidy for lower-income individuals and families) while subjecting them to the law’s penalties (like the $63 per insured person to subsidize Big Insurance). This creates unstoppable incentives for employers to reduce weekly hours for workers currently on our plans and push them onto the exchanges where many will pay higher costs for poorer insurance with a more limited network of providers. In other words, they will be forced to change their coverage and quite possibly their doctor. Others will be channeled into Medicaid, where taxpayers must pick up the tab.
“In addition, the ACA includes a fine for failing to cover full-time workers but includes no such penalty for part-timers (defined as working less than 30 hours a week). As a result, many employers are either reducing hours below 30 or discontinuing part-time health coverage altogether. This is a cut in pay and benefits workers simply cannot afford. For example, a worker making $10 an hour that has his or her schedule cut by six hours a week would lose $3,100 a year in income. With millions of workers impacted, this would have a devastating effect on our economy.”
The effort of unions to persuade the Obama administration to change the regulations in order to resolve the problems was reported in the January 30, 2013, Wall St. Journal.
“Top officers at the International Brotherhood of Teamsters, the AFL-CIO and other large labor groups plan to keep pressing the Obama administration to expand the federal subsidies to these jointly run plans, warning that unionized employers may otherwise drop coverage.”
“We are going back to the administration to say that this is not acceptable,” said Ken Hall, general secretary-treasurer for the Teamsters, according to the WSJ article.
Many unions have been working through the National Coordinating Committee for Multi-employer Plans (NCCMP) to find a solution. In a memorandum to the Department of Health and Human Services, the NCCMP stated:
“If subsidies are available only for plans purchased through Exchanges, employers contributing to multi-employer plans will face tremendous economic pressure to stop contributing to multi-employer plans…. Many employers will feel the need to drop coverage and access the subsidies to remain competitive.”
On April 16, 2013, the United Union of roofers, Waterproofers and Allied Workers International President Kinsey M. Robinson issued a statement calling for a repeal or complete reform of President Obama’s Affordable Care Act (ACA). He stated that the union has supported President Obama for both terms in office but that the union’s concerns “over certain provisions in the ACA have not been addressed, or in some instances, totally ignored.”
“In the rush to achieve its passage, many of the Act’s provisions were not fully conceived, resulting in unintended consequences that are inconsistent with the promise that those who were satisfied with their employer sponsored coverage could keep it. These provisions jeopardize our multi-employer health plans, have the potential to cause a loss of work for our members, create an unfair bidding advantage for those contractors who do not provide health coverage to their workers, and in the worst case, may cause our members and their families to lose the benefits they currently enjoy as participants in multi-employer health plans,” Robinson stated.
The Cornell University Industrial and Labor Relations School recently held a special workshop on The Affordable Care Act: Impact on Multi-employer Plans. The materials from that educational event are available here.
So far there is no adequate answer from the Obama administration to the efforts of unions to resolve the issues. The state exchanges must be in place by October of 2013 so that they are ready to go by January 1, 2014.
Many of the unions involved contend that regulations for the ACA could be written to allow the employers that pay into these union negotiated plans to receive the same subsidies that employers will receive in the exchanges. So far, that has not happened.
This is one of many conundrums that face unions as the costs of health care in our corporate-controlled, profit-oriented system make the maintenance of health benefits increasingly difficult to achieve.
This growing crisis underlines the need for unions to press for passage of HR 676, Expanded and Improved Medicare for All, national single payer health insurance. HR 676 has been reintroduced by Congressman John Conyers (D. MI) into the 113th Congress and has 41 cosponsors. This real solution awaits a dynamic, massive, in-the-streets movement that makes sound health policy also politically feasible.
Such a solution would improve the lives of all workers by assuring that everyone has all medically necessary care with no co-pays and no deductibles. Even dental care and long term care are covered.
Private for-profit health insurance companies and the massive waste they cause would be removed. Unions would free their health care from corporate control as labor has done in other industrialized countries where some form of publicly funded single payer care is guaranteed. Care would be expanded and costs brought under control. By leading this fight for universal care, unions would once again prove that social justice can be achieved through the leadership of the nation’s organized workers.
With all of labor harmed by the attacks in Wisconsin, the “right to work for less” in Michigan and Indiana, a host of Koch-sponsored legislation in states across the country, and the brutal assault on pensions, what better way to fight back than to use labor’s vast grass roots mobilizing clout to promote HR 676?
The union movement will grow as it leads this vital struggle. Labor has always led progress for workers, and that progress also lifts up the nation.
Labor unions are breaking with President Obama on ObamaCare.
Months after the president’s reelection, a variety of unions are publicly balking at how the administration plans to implement the landmark law. They warn that unless there are changes, the results could be catastrophic.
The United Food and Commercial Workers International Union (UFCW) — a 1.3 million-member labor group that twice endorsed Obama for president — is very worried about how the reform law will affect its members’ healthcare plans.
Last month, the president of the United Union of Roofers, Waterproofers and Allied Workers released a statement calling “for repeal or complete reform of the Affordable Care Act.”
UNITE HERE, a prominent hotel workers’ union, and the International Brotherhood of Teamsters are also pushing for changes.
In a new op-ed published in The Hill, UFCW President Joe Hansen homed in on the president’s speech at the 2009 AFL-CIO convention. Obama at the time said union members could keep their insurance under the law, but Hansen writes “that the president’s statement to labor in 2009 is simply not true for millions of workers.”
Republicans have long attacked Obama’s promise that “nothing in this plan will require you to change your coverage or your doctor.” But the fact that unions are now noting it as well is a clear sign that supporters of the law are growing anxious about the law’s implementation.
Many UFCW members have what are known as multi-employer or Taft-Hartley plans. According to the administration’s analysis of the Affordable Care Act, the law does not provide tax subsidies for the roughly 20 million people covered by the plans. Union officials argue that interpretation could force their members to change their insurance and accept more expensive and perhaps worse coverage in the state-run exchanges.
Hansen, who is also the head of the Change to Win labor federation, told The Hill that his members often negotiate with their employers to receive better healthcare services instead of higher wages. Those bargaining gains could be wiped away because some employers won’t have the incentive to keep their workers’ multi-employer plans without tax subsidies.
“You can’t have the same quality healthcare that you had before, despite what the president said,” Hansen said. “Now what’s going to happen is everybody is going to have to go to private for-profit insurance companies. We just don’t think that’s right. … We just want to keep what we already have and what we bought at tremendous cost.”
If the administration were to expand the subsidies to cover the Taft-Hartley plans, it’s likely that the price tag for ObamaCare would rise, though it’s unclear by how much.
Union angst over the healthcare law is being matched by some Democrats on Capitol Hill. Senate Finance Committee Chairman Max Baucus (D-Mont.) has said the law’s implementation could be a “train wreck,” while other senior Democrats, including House Minority Whip Steny Hoyer (D-Md.), have expressed reservations.
Both parties agree that ObamaCare is going to be a major issue in the 2014 midterm elections, especially because the bulk of the law is scheduled to go into effect on Jan. 1 next year.
Labor recently shared its concerns with senior Democrats.
Earlier this month, the subject of how multi-employer health plans would be treated under ObamaCare was brought up at a private May 8 meeting between union leaders and the Senate Democratic Steering and Outreach Committee.
“A number of people were making this point at that meeting. People said that their members are upset about this and the more they learn about it, the more upset they are,” said one union official.
“I was pretty blunt about it,” said Hansen. “I told them it was a very serious issue. That it was wrong. Taft-Hartley plans should be deemed as qualified healthcare providers and I also said it’s going to have political repercussions if we don’t get this fixed.”
Hansen wants the Obama administration to use its regulatory powers to address the matter; a legislative remedy is all but impossible in the divided 113th Congress.
“When [the Obama administration] started writing the rules and regulations, we just assumed that Taft-Hartley plans — that workers covered by those plans, especially low-wage workers — would be eligible for the subsidies and stay in their plans and they’re not,” Hansen said.
Union anger on multi-employer plans has been percolating for months. In January, The Wall Street Journal reported that UNITE HERE and the Teamsters were pressing the administration. UFCW was also mentioned in that report.
Asked why he decided to raise the volume on his worries about ObamaCare, Hansen said he needed to speak out in support of his members.
“I owe it to my members to do everything I can to see if we can make this law better,” Hansen said.
He added, “[Administration officials] have given us a lot of time and attention. We just don’t agree and I still think that I have taken the correct position. They have been responsive as far as trying to get the meetings. It’s just we can’t get it across the finish line and we need to do that.”
Hansen, however, said he has no regrets about endorsing Obama or supporting the healthcare reform law. UFCW is a major Democratic donor, contributing to several of the party’s candidates and giving to last year’s convention in Charlotte, N.C., and this year’s inauguration.
The union president said changes to his members’ health insurance might lead to problems at the ballot box for candidates.
“What happens in 2014 could be at issue here. … There is going to be a lot of disenchantment with how did this happen and who was in power when it happened. No matter what I say, that’s going to be there,” Hansen said. “They are upset already and it hasn’t even taken effect already.”
In Oregon, a separate measure, giving state sponsorship of a comprehensive study on universal healthcare financing, makes its way through the Committee on Ways & Means.
May 15, 2013 — Wes Brain was uninsured last winter when a tonsillectomy showed signs of throat cancer. He qualified for the high-risk Oregon Medical Insurance Pool, which the state has administered through Regence BlueCross BlueShield.
But gaining access to that insurance soon proved a big obstacle for the Ashland resident, when Regence erroneously told him he hadn’t submitted his driver’s license.
“Denial and delay, denial and delay are the way these insurance companies work. They make money this way,” Brain vented to the House Health Committee on Tuesday. He had previously lost his daughter after a nine-year struggle with leukemia while contending with insurance companies over access to necessary healthcare services.
Eventually, his policy was approved. He paid $2400 — three month’s premium. His doctor ordered a PET scan for March 1. But then Regence came back and told him no, he’d have to wait until March 1 to even begin authorization.
His clock was ticking. His throat cancer could be spreading.
He enlisted his local Rep. Peter Buckley, D-Ashland, to help him. He got the state Insurance Division on his case.
They came through. He received his PET scan, and spent four days at Oregon Health & Science University, receiving additional tonsil surgery. “They cut the hell out of me,” said Brain, who’s now cancer-free.
“There is no way that Regence should have delayed my care at all,” Brain added. “That’s how they do business. They kill people doing it. Let’s get them the hell out of it, and let’s pass this bill.”
Buckley and 23 other Democrats have signed on to support House Bill 2922, which would throw out the private health insurance industry and set up a single-payer health insurance system administered by the Oregon Health Authority.
The bill has no chance of passage this session, but House Health Committee Chairman Rep. Mitch Greenlick allowed fellow Portland Democrat and chief sponsor Rep. Michael Dembrow to lead single-payer health care advocates in an informational public hearing.
Brain and other activists aired their support for a privately delivered, government-sponsored health system that would revolutionize Oregon healthcare and make it similar to health systems in Japan, Europe, Canada and the rest of the developed world.
HB 2922 closely parallels House Bill 3510 from the 2011 session, but at 76 pages, it’s 30 percent longer than the previous measure, repealing newly acted reforms such as Cover Oregon, which offers subsidized private insurance for people with moderate incomes.
No Republicans have yet come on board as supporters, but the single-payer bill has twice as many sponsors this session from Democrats across the state, including rural districts as well as Portland and Eugene. Two of the state’s largest unions – the Oregon Nurses Association and the Oregon Education Association – have also thrown their support behind the measure.
Study Bill Moves Forward
Dembrow has also sponsored House Bill 3260, which had a budget hearing on Tuesday. That bill, which passed unanimously earlier this session from the House Health Committee, would solicit $250,000 to $600,000 in private funds to comprehensively study how best to implement universal healthcare in Oregon.
The study will look at several different options, including single-payer, a public option and the basic health plan envisioned for low-income people who wouldn’t qualify for Medicaid by the Affordable Care Act.
Chunhuei Chi, a professor at Oregon State University’s College of Public Health and Human Sciences, told The Lund Report the study would aim for transparency, be replicable and available for peer review. The Oregon Health Authority could either choose Oregon State or another entity to conduct the study.
Previously, Health Care for All Oregon, which supports the single-payer bill, had considered asking the Northwest Health Foundation to conduct such a study. But according to Dembrow, a state-sanctioned study would lend more credibility.
Earlier, he told The Lund Report that while he expects single payer the best route to universal healthcare, he believes the underlying bill is written well enough to turn into the best solution for Oregon, and he will support its recommendations.
“This is exactly the way it’s done,” said Sen. Elizabeth Steiner Hayward, D-Portland, who favors doing such a study but has not come out in support of the single-payer option. “I like that you’ve laid out a menu of options, and that it doesn’t make a predetermined decision,” she added, calling the study outcome-based rather than motivated by political ideology.
Alan Journet, a retired professor and dual British-U.S. citizen, pointed out that in Great Britain, socialized medicine is so popular even Conservative icon, former Prime Minister Margaret Thatcher, was a big supporter.
While living in the U.S., he came down with cancer and was given two months to live, absent treatment. “Thanks to insurance, I didn’t have to worry much about the cost of treatment, but I did constantly have to worry about the insurance company approving doctor-recommended treatment,” Journet said.
Journet said he felt lucky — his insurance company approved his treatment, unlike his sister-in-law who fell ill earlier.
“Her insurance company denied treatment, and she died,” Journet said. “We often hear the complaint that we should fear government functionaries making decisions on treatment, as though we are better served having insurance company functionaries make such decisions, employees whose income encourages denying treatment and generating a sizable profit.”
Dembrow said his passion for single-payer healthcare started following the birth of his two children. His daughter, who was born in France, received exemplary care, including house calls from physicians for just a small co-payment and a tax taken out of the family paychecks.
His son, on the other hand, was born in Indiana. At the time, insurance companies weren’t required to cover infants for the first 30 days of their life. His son had a digestive abnormality called pyloric stenosis that required surgery. A graduate student at the time, Dembrow and his wife had to deplete their savings to pay for the care.
“The contrast of those experiences have committed me to try to do things differently in this country,” Dembrow said.
Dembrow praised the reform efforts of Gov. Kitzhaber to deliver healthcare for the poor through coordinated care organizations and also lauded many of the aspects of the Affordable Care Act, including the expanded Oregon Health Plan and the insurance exchange. Yet, he said these reforms fall far short of an equitable universal healthcare system.
“We’ll continue to have jobs kept temporary or part-time for no good reason other than to keep workers from being eligible for coverage,” he said. “Our system will still rely on private insurance companies who charge high administrative fees, create administrative burdens for doctors and other healthcare professionals, and whose primary interest is their own profits. … At best what we’re going to continue to have an expensive, complicated patchwork system.”
Healthcare-NOW! is pleased to join with Progressive Democrats of America to support a nationwide call-in day today to increase awareness and co-sponsors in Congress for HR 676–the Expanded and Improved Medicare for All Act.
Call the U.S. Capitol Switchboard toll-free at (866) 220-0044, ask for your representative’s office, and then ask them to sign as a co-sponsor of HR 676. Don’t know your Rep? Put your ZIP in here.
The current cosponsors (42) are listed here.
Once you call and email, please ask your friends and contacts to do so as well.
HR 676 would create a publicly financed, privately delivered healthcare system that uses the already existing Medicare program by expanding and improving it to all U.S. residents, and all residents living in U.S. territories.
Healthcare-NOW! is committed to building the movement for national, single-payer healthcare and we sincerely hope that you will call and email your Representative to ask them to become a cosponsor of the bill.
In recent days, many of us have read and tried to follow the reports that Congressional offices are engaged in discussions about how to make sure their health insurance coverage available under the Affordable Care Act (Obamacare) remains affordable for Congresspersons and their staff members. If you’d like to read more about the hullabaloo, this piece from the Washington Post probably explains it as clearly as any.
Basically, a mischievous amendment drafted and inserted by Republicans and later agreed to by Democrats anxious to pass the ACA leaves some challenging issues to be resolved regarding the employer’s (in this case the Federal government, a.k.a., you and me) contributions to paying their share of premiums for Congressional members and their staff members. Negotiations and discussions continue, but some fear that some Congressional staff may leave their positions rather than take on the bigger financial burdens of paying more of their health insurance premiums. Stay tuned, if you are worried about how this plays out.
For the human beings involved who have health needs and families to support just as the rest of us do, I hope a fair resolution is reached in the short term. In the longer term, this should serve as yet another reinforcement of the need to move well beyond the incredibly unaffordable Affordable Care Act to the common sense, common decency, and simplicity of a single-payer, Medicare for all for life model for our dysfunctional health care system.
If Congressional members and their staffs are having difficulties comprehending and navigating the details of the ACA, imagine the millions and millions of “average” Americans who will face incredible confusion, expense, and delays of access to needed health care as we slog through the details of the ACA. Most of us will not have anyone to negotiate or advocate for us when we try to make decisions about health coverage. We will have “navigators” who will explain various plans available on the exchanges but that’s vastly different from having true advocates to make sure we aren’t overburdened with costs or enrolling in coverage that really isn’t coverage at all but simply compliance with the mandate to carry the financial product that is insurance. I am already worried, just as millions of others are.
Why would single-payer, Medicare for all for life be so much better? Simplicity – everybody is in, nobody is out. Vastly reduced administrative costs – strip out the profit made on misery and deception and advertising and claims denials and delays. Incredibly improved access to providers of our choice. No need to navigate me to one plan or another. No need to bankrupt me with co-pays, deductibles and out-of-pocket expenses. No need for anyone in charge of profit-making to lemon drop (get rid of those with costly medical conditions or who are aging) or cherry pick (keep the healthy, less costly folks enrolled). We all have one single standard of high quality care under a social insurance model, not a model aimed at maximizing profits.
Some of us will face harsh realities more quickly than Congressional members of staffers on the Hill. In just four days, I must decide once and for all whether or not to spend more than $800 a month on my coverage for the next several months or just go bare until the exchange (more stealthily named the “marketplace”) is up and running here in Colorado in January 2014. No matter what I, as a two time cancer survivor and 58 year old, think is possible financially for me or even wisest from a health standpoint over the next eight months, once I get to October of this year, I will be able to begin exploring what I may be able to find under the ACA for my coverage. I am so grateful that my husband is covered under Medicare and a supplemental (as are many member of Congress, I suspect).
When my time comes to decide about my health and my life, there will be no committee convened that worries about my costs or my coverage as is the case with the current effort on behalf of the Congressional members and staffs my tax dollars cover. I will decide alone, likely in front of my computer screen, making calculations about paying my bills and other living expenses. And I guarantee that my coverage will be bare bones as no one will want to cover me and though under the ACA they will not be able to deny me coverage, insurance companies will be able to age-rate my premiums and make sure they factor in my health history. My premiums will likely be so high that I will either have to opt to pay a penalty for not having coverage or I will be grossly under-insured.
None of this is necessary. None of it. Under a Medicare for all for life, single-payer model, we are all in one risk pool, we all pay a fair and progressive tax or premium for our coverage, and our medical and health decisions will no longer be business calculations. We will be free of this mess. We must thunder forward through the confusion of this difficult transition to the unnecessary complexity of the ACA to the day when we all are covered simply as a matter of human right and public good.
Donna Smith is the Executive Director of Health Care for All Colorado and the Health Care for All Colorado Foundation.
By Gerald Friedman –
America’s health care system is collapsing, and we can blame the Economics profession. Most economists approach health care in the wrong way, viewing it as a commodity like shoes or the laptop on which I write. Instead, health care is an idiosyncratic commodity, subject to uncertainty and “asymmetric information” leading to destructive behavior. Trying to force health care into a box, treating it like other commodities, economists have promoted cost sharing, market competition, and insurance oversight of health care providers that have inflated the administrative burden while denying ever more Americans access.
Health care spending has been rising throughout the world as aging and more affluent populations spend on their health. Nowhere, however, has the cost of health care risen as fast as in the United States where costs soared because of rising administrative expense. Compared with other affluent countries in the Organization for Economic Cooperation and Development (the OECD), the United States spends over twice as much per person as is spent elsewhere. Before 1971 when Canada enacted its Medicare program, a single-payer government funded health care system, Canada spent a higher share of its national income on health care than did the United States; since then, however, while Canada has controlled costs, spending has soared in the United States so that we now spend over $3000 more per person. That is $12,000 for a family of four that is not available for travel, education, housing, or food.
Elsewhere, increases in health care spending have been associated with improvements in the provision of health care and, therefore, go with increasing life expectancy. In the United States, however, spending has increased because of rising administrative costs and increases in the price of prescription drugs and, therefore, has yielded relatively few benefits in improvements in care. Comparing changes in health-care spending and life expectancy between 1971 and 2008, other affluent OECD members gained a year of life expectancy for every $453 in spending; in the United States, however, life expectancy has increased less and spending has risen sharply more so that each year of increased life expectancy has cost over twice as much as in these other countries. Health care spending in the United States has increased by $1283 for every additional year of life expectancy; had our spending per year of added life increased at only the rate of other countries we would be spending over $4500 less per person, $18,000 saved for the average family of four. Most of the difference in relative expenditures, most of the growing waste in spending in the United States, is due to increasing administrative costs in the provision of private health insurance and in the billing and insurance operations within doctors’ offices and in hospitals. The average physician in the United States now spends four-times as much interacting with insurance companies as does the average physician in Ontario, Canada, over $80,000 per physician compared with a little over $20,000 in Ontario. Prescription drug prices and administrative expenses have been the fastest rising costs in the United States health care system; from 1980 to 2005, administrative costs rose by 1300% while drug prices rose by nearly 2000%. There are now 2.5 million administrative support personnel in the American health care system; more than the number of nurses, and five times the number of physicians. We now have more health-care managers than physicians and surgeons.
Rising costs drive up health insurance premiums so that a family health insurance plan now costs about 40% of the average family wage income, up from 7% in 1960. Rising costs are denying ever more Americans access to health care even while businesses and governments wrestle with rising health care spending that squeezes resources available for other purposes. While other countries have controlled health care costs by restraining administrative expenses and drug prices, ballooning costs in the United States come from policies promoted by economists who have urged governments and providers to control costs by making consumers responsible for more of the costs even while raising administrative costs and ignoring monopolistic pricing of pharmaceuticals. Viewing the injured, sick, and disabled as “consumers,” economists see insurance as the source of rising costs because they are not responsible for the costs of care they receive and, therefore, overuse health care. Rising copayments and deductibles are intended to discourage “consumers” from “abusing” health care, as if the victims of auto accidents or cancer should shop around for cheaper, and competition among insurers while limiting provider services by providing more administrative supervision. Ignoring evidence that Americans are less likely to see doctors and other health providers than are residents of other affluent countries, these economists have blamed the high cost of our health care on insurance which, they assume, leads to wasteful over-practice and the provision of unnecessary health care services. Their solution is greater cost sharing, more regulation of providers, capitation, and even the end to insurance by substituting medical savings accounts for insurance.
For 40 years, many economists’ have promoted increasing cost sharing through higher copayments and deductibles, the replacement of fee-for-service payment systems with capitation where providers are paid a fixed amount for patients as in Health Maintenance Organizations, and competition where multiple insurers offer a variety of plans catered to individual consumer’s interests and in competition with each other. Far from limiting health care cost increases, these practices have produced the worst of all worlds, rising costs along with restrictions on access. Costs have risen because these recommendations have inflated the administrative burden in health care, the costs of the billing and insurance activities within provider offices as well as the cost of the health insurance industry itself. While restricting access, limiting the benefit to Americans of some of the dramatic improvements in health care practice of the last decades, these practices have not bent the cost curve or slowed health care inflation even while denying more and more Americans access to affordable health care.
The failure of price incentives and competition to control health care costs could have been predicted had economists appreciated that health insurance is not a commodity and the sick are not consumers like those shopping for the best pair of sandals or brand of peanut butter. Producers of commodities might try to accommodate consumer wishes because they can profit by selling more. Health insurers, on the contrary, can better increase their profits by selling less, by identifying people likely to need care and driving them away (“lemon dropping”) even while attracting the lucky and healthy (“cherry picking”). Most health care expenditures go to a relatively few people, the unlucky who develop an illness or suffer an accident; insurers, therefore, can dramatically lower their costs by finding those who will be expensive and getting rid of their business; encouraging them to find another insurance plan or even to die.
A form of “adverse selection,” or screening of potential customers by insurance companies, can be profitable for the individual firm but it comes at the cost of raising costs for the community as a whole. As a country, we now spend almost $200 billion administering the health insurance industry and over $800 billion in administering the health care industry, or over a quarter of total spending. Add to this the inefficiency in delivery that comes from a fragmented finance system that inhibits coordination of care, and the inflated prices for prescription drugs, and easily a third of total spending is wasted or going to monopolistic profits.
The waste involved in the current system has a redeeming feature: it provides abundant space for an improved system that could improve access and services even while dramatically lowering costs by eliminating administrative waste. If we lowered administrative costs and drug prices to the Canadian level, we could save nearly $600 billion dollars, more than enough to provide coverage to all of the uninsured while improving access for the millions of underinsured. If we see past the bad recommendations of market-fundamentalists, we can improve health care and save money. An outcome that even economists should favor.
Gerald Friedman Professor of Economics University of Massachusetts at Amherst, Amherst, MA. 01003
Professor Friedman has written extensively on single payer health care and HR 676. His article explaining the economics of single payer is available here:
About half of United States adults ages 19 to 64 didn’t have health insurance for at least part of last year or were underinsured, a new report from the Commonwealth Fund says.
The fund, a private nonprofit organization that finances research into health care and health policy issues, conducts the health insurance survey every two years.
One bright spot, the report found, is that the proportion of young adults without health insurance fell significantly over the last two years, probably because of a provision of the Affordable Care Act that allows young adults to stay on their parents’ health plans until age 26. The rule took effect in September 2010.
Nearly eight out of 10 (79 percent) young adults reported that they were insured, up from 69 percent in 2010. That marks “an abrupt reversal in a decadelong climb” in the number of uninsured young adults, the report said.
Uninsured rates for other age groups, however, either rose or stayed the same. About half of adults ages 19 to 64 didn’t have health insurance for all of 2012 or were underinsured, meaning that they had insurance but struggled to pay for medical costs anyway.
At the time of the survey, about 30 percent said they were uninsured or were insured but hadn’t been at some point during the year. Another 16 percent had insurance, but had such high out-of-pocket medical costs relative to their income that they were effectively uninsured.
The survey also found that people are increasingly skipping needed health care because they can’t afford it (about 43 percent answered yes to that question). That’s up from 37 percent in 2003, the report noted.
The report found that about two out of every five adults had trouble paying medical bills last year or were paying off medical debt over time, and that many of those struggling with medical debt (42 percent) said they had received a lower credit rating as a result.
The results are based on a telephone survey of 4,432 adults by Princeton Survey Research Associates International from April 25 to August 19, 2012. The margin of sampling error is plus or minus 2 percentage points.
The report is the last one the fund will conduct before the major provisions of the Affordable Care Act are scheduled to go into effect, in January 2014.
Did you have a gap in insurance coverage last year? Do you expect the health care law to help provide you with coverage?
How a Single-Payer System Can Save US Health Care
As Minnesota’s physicians, health care leaders and legislators grapple with the complex changes brought by the Affordable Care Act (ACA), many are concerned that even after the law is fully implemented, hundreds of thousands of people will remain uninsured while health care costs continue to spiral.
What if there were a simple, streamlined solution that would guarantee health coverage for every Minnesotan while saving the state billions of dollars? A growing number of Minnesota physicians are endorsing what they consider to be such a solution: single-payer health care. Weary of having to comply with hundreds of different insurance plans’ administrative requirements while their patients are denied needed tests and treatments, these physicians are drawn to the simplicity, cost-effectiveness and truly universal coverage offered by a single-payer system.
Their views were supported by an independent analysis last year demonstrating that with a state-based single-payer system, every Minnesotan could have comprehensive coverage while the state would save billions annually.
A deeply flawed system
The desire for meaningful reform comes in the face of the U.S. health care system’s long-recognized dysfunction. Despite health care accounting for 18 percent of the nation’s economy—twice that of other wealthy democracies—48 million Americans lack health coverage. Another 29 million are underinsured, having poor coverage that exposes them to unaffordable out-of-pocket expenses. Health insurance premiums have doubled over the past decade, with the average annual cost for family coverage now exceeding $15,700; and health care costs now account for two-thirds of personal bankruptcy filings in the United States.
At the root of these problems is the fact that we have a fragmented, highly inefficient system. Employed Americans younger than 65 years of age have job- based insurance, if their employer chose to provide it; the elderly and disabled are covered through Medicare; the poor by Medicaid; military veterans through the Veterans Administration; and American Indians through the Indian Health Service. Persons who do not fall into any of those categories must try to purchase individual coverage in the private market, where it is often prohibitively expensive or unobtainable if they have a pre-existing health condition.
Owing largely to this fragmentation and inefficiency, a staggering 31 percent of U.S. health care spending goes toward administrative costs, rather than care itself. Inefficiency exists at both the provider and payer level. To care for their patients and get paid for their work, physicians and hospitals must contend with the intricacies of numerous insurance plans—which tests and procedures they cover, which drugs are on their formularies, which providers are in their network. Meanwhile, private health insurance companies divert a considerable share of the premiums they collect toward advertising and marketing, sales teams, underwriters, lobbyists, executive salaries and shareholder profits. The top five private insurers in the United States paid out $12.2 billion in profits to investors in 2009, a year when nearly 3 million Americans lost their health coverage.
The ACA of 2010, known widely as Obamacare, is expected to extend coverage to 32 million more Americans But it accomplishes this goal primarily by expanding the current fragmented, inefficient system and maintaining the central role of the private insurance industry in providing coverage. As a result, the ACA is expected to do little to rein in health care spending. Furthermore, it will fall far short of achieving universal coverage, as tens of millions of Americans (including 262,000 Minnesotans) will remain uninsured after its full implementation.
The central feature of a single-payer health care system would be one health plan that covers all citizens, regardless of their employment status, age, income or health status. Having a public fund that pays for care would slash administrative inefficiencies and eliminate profit-taking by the private insurance industry.
Under a single-payer system, the way society pays for health care would change, but the market-based health care delivery system would remain. Physicians and hospitals would continue to compete with one another based on service, quality of care and reputation. The chief difference is that they would bill a single entity for their services, rather than numerous insurers.
Individuals would benefit immensely by having continuous coverage that is decoupled from their employment. This would alleviate “job lock,” in which people remain in undesirable employment situations in order to maintain coverage. In a single-payer system, individuals could choose to see any provider, in contrast to the current system in which choice is restricted to those who are in-network. Deductibles and copays would be minimal or eliminated, removing cost as a barrier to obtaining needed care.
A single-payer system would be funded through savings on administrative costs, along with modest taxes that would replace the premiums and out-of-pocket expenses currently paid by individuals and businesses. The cost savings to individuals, businesses and government would be considerable. The nonpartisan U.S. General Accounting Office concluded that single- payer health care would save the United States nearly $400 billion per year, enough to cover all of the uninsured.
Physician support for a simplified, universal health care system is robust and growing. A 2008 survey published in Annals of Internal Medicine found that 59 percent of physicians supported a national health insurance system—up from 49 percent in 2002. Physicians for a National Health Program, a national organization advocating for single-payer reform, reports a membership of 18,000. In Minnesota, single payer has been formally endorsed by nearly 800 physicians, other providers and medical students.
The Minnesota model
Recognizing the implausibility of achieving single-payer reform at the national level in the current political climate, many single-payer advocates have turned their attention to state-level reform. The ACA provides for “state innovation waivers” to be granted beginning in 2017, allowing states to implement creative plans they believe would work best for them. With this in mind, organized single-payer movements have taken root in states as varied as Colorado, Hawaii, Illinois, New York, California, Oregon and Vermont. Vermont’s governor and Legislature passed a law in 2011 setting the path for the state to move toward single payer.
In Minnesota, two advocacy organizations—Health Care for All Minnesota and the Minnesota chapter of Physicians for a National Health Program—are garnering public support for a single-payer system. Gov. Mark Dayton has expressed support for single payer, and Sen. John Marty (DFL-Roseville) has authored legislation to establish such a system in Minnesota. Known as the Minnesota Health Plan, it would replace the current inefficient patchwork of private and public health plans with a single statewide fund that would cover the health needs of all Minnesotans—inpatient and outpatient services, preventive care, prescription drugs, medical equipment and mental health and dental care. A 2012 study by the Lewin Group confirmed the feasibility of single payer in Minnesota. It concluded that adoption of a single-payer system would provide coverage to every Minnesotan, including the 262,000 left uncovered by the ACA, while saving the state $4 billion in the first year alone. The average Minnesota family would save $1,362 annually in health costs, while the average Minnesota employer that currently provides insurance would realize savings of $1,214 per employee per year. The analysis showed these savings came primarily from administrative simplification; provider compensation remained unchanged.
With nearly 50 million uninsured people in the United States and skyrocketing health costs, the need for profound reform of our health system could not be more clear. The ACA is a start, but it will fall far short of achieving universal coverage, and it allows unsustainable spending growth to continue. Single-payer health care would eliminate administrative waste and inefficiency, thereby creating an opportunity to achieve truly universal, cost-effective health care.
This article originally appeared in the April 2013 issue of Minnesota Medicine.
By Benjamin Day, Director of Organizing, Healthcare-NOW! –
The Boston area, where I live and grew up, has been feeling smaller and smaller since the Marathon bombings and unprecedented manhunt for those responsible. When the names of victims were gradually released to the public, I was astonished by how many I knew or were known by friends. Krystle Campbell, who lost her life in the bombing, was an acquaintance of mine and a coworker of my closest friends a number of years ago. It took an unthinkable act of violence to realize how closely knit our community already was – rarely more than one or two relationships removed from one another – and we had just never needed to rely on the full extent of our community for support until now.
I was struck that our community’s first concern was about the ability of those injured to afford their long-term health care costs. Even among the 282 injured who have health insurance, many will face unaffordable costs since what is seen as quality coverage in the United States typically imposes strict limits on physical therapy, mental health visits, and contributions towards things like prosthetic limbs or modifications to homes necessary to accommodate new disabilities. A “One Fund Boston” set up by the City and State has raised over $10 million in its first week to help pay for these costs. Friends of the victims’ families have set up their own online fundraising drives in the hopes that they will be able to receive comprehensive treatment. A “Bucks for Bauman” fund established to help Jeff Bauman, who lost both of his legs in the blast, has raised over $600,000 in response to the Fund’s plea that “Medical bills are going to start rolling in, let’s get a head start on helping out Bauman and his family! Every dollar counts!!” Similar funds for Brittany Loring; Nicole and Michael Gross; Celeste and Sydney Corcoran; Patrick Downes and Jess Kensky; Ann and Eric Whalley; William, Mary Jo, and Kevin White; and others who were severely injured, have raised millions from small donors across the country.
It’s an inspiring moment of community togetherness for me, but also bittersweet, since we are the only country in the developed world where victims of a terrorist attack have to appeal for charity to receive needed medical care. Every other developed nation provides universal health care for residents as a human right, so that in times of tragedy, accident, or severe illness, patients and their families can focus on recovery without having to worry about medical costs bankrupting them.
In my job I get to see many, similar, moving acts of community support – fundraiser events and online appeals to help patients pay for cancer treatment, or accident recovery. I also unfortunately get to hear about the cases where patients lack access to broad charitable communities, and face medical debt and collections agencies alone. I recall receiving a $5,000 hospital bill myself in 2005 after a three-day inpatient stay, at a time when I was earning $16,000 a year. The day I stepped out of the hospital, facing a difficult recovery, I could barely spare time for my health as the anxiety of having to declare bankruptcy – or to ask my friends and extended family to empty their savings accounts to help me – was all I could think about.
These moments bring out the best in our communities, and the worst in our inhumane health care system. I hope that in addition to rising in support of these victims of an atrocious crime, we also rise to swiftly establish a public, universal health plan that will protect the victims and patients of the future, so that no one has to suffer the quieter, more isolated tragedy of losing their entire savings, sometimes their homes, and eventually their access to desperately needed care.
Kevin is fasting for 30 days, using the money he would normally spend on food to help pay his hospital bill.
He asks you to sign on to this email to LewisGale Hospital telling them not to engage in predatory billing.
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Please read this message from Kevin, and support his 30 day fast to pay off unfair medical bills by signing this email the President of the hospital he visited.
My name is Kevin Jarvis; I am currently a seminary student living in Elliston, Virginia. When I briefly visited LewisGale Hospital last October to have a dislocated shoulder put back in place, I had no idea that LewisGale would charge an extraordinary price for this simple procedure leaving me with a $1,500 deductible that my wife and I cannot pay without being unable to afford other basic necessities.
Like many, we are faced with mounting medical bills. Therefore, I have decided to pay LewisGale the only way I am able to: by fasting publicly for thirty days, using the money I would otherwise spend on food to pay off my medical bill.
LewisGale has a history of unethical price gouging. Such as a $26,000 charge for treatment of a cat bite. Health Corporation of America (HCA) – the parent company that owns LewisGale and over 160 other hospitals – has paid the largest fraud settlement ($2 billion) in the history of the United States for overcharging patients. It has become the most profitable hospital chain in the country by aggressively billing, turning patients with less profitable conditions away at their emergency rooms, and keeping staff levels dangerously low.
Having to choose between healthcare and food would not be possible in any other developed country in the world, where universal healthcare is provided at half the cost through a “single-payer” system, such as embodied in H.R. 676.
Until we find the moral courage as a country to recognize healthcare as basic to human dignity, instead of treating it as a commodity, please sign this email to the President of LewisGale Hospital asking him not to engage in predatory billing with patients who will be forced to choose between basic human necessities and receiving necessary care.
A note from Healthcare-NOW!: Kevin decided to go on a 30-day fast on his own. He contacted Healthcare-NOW! and we do not suggest that others follow his example without taking necessary precautions.
$26,000 Cat Bite, Roanoke Times
HCA’s record fraud settlement, Department of Justice
HCA’s rise to prominence and record profit levels through aggressive billing, New York Times
From USA Today –
The availability of employer-sponsored insurance has fallen by about 10% over the past decade, which has spurred an increase in the overall number of Americans without health insurance, according to a report released today.
“This documents that in virtually every state across the country, there has been a steady decline in employers that provide coverage over the past 10 years,” said Andrew Hyman, director of the Robert Wood Johnson Foundation’s health care coverage team. “It would be a real stretch to say this was caused by anticipation of the Affordable Care Act,” President Obama’s 2010 health care law.
The universal coverage requirement and the state health insurance exchanges needed to make it work will start Jan. 1. Some employers have said they may drop health insurance because it would be cheaper to pay a $2,000 fine and have employees buy insurance through the exchanges instead of paying an average of $15,000 to buy that employee health insurance.
Other employers have said they will drop employees’ hours below 30 a week to avoid the requirement to provide insurance or pay a fee.
If so, employers would be following a trend that started before the health care law passed in 2010. The new study found that employer-sponsored coverage dropped from 69% to 60% between 1999 and 2010. The amount each employee paid annually for insurance more than doubled in that period from $435 to $1,056 for an individual and from $1,526 to $3,842 for a family.
The Johnson foundation’s State Health Access Data Assistance Center conducted the research.
Coverage also varied from state to state, based on state law, regional employment rates and average employer size.
Hyman said the steady decline in coverage has come in spite of changes in the economy and employment rates throughout the decade.
“So now we’re all wondering how it will change with the implementation of the ACA,” he said. The “silver lining,” he said, is that with the new law, even those who don’t receive coverage through their employer will be able to get a plan through the health exchange system.
Predictions vary on the law’s effects. The Congressional Budget Office says between 3 million and 5 million fewer people will have employer-subsidized insurance. A Towers Watson survey of more than 500 companies with more than 1,000 employees found none of the companies plan to drop insurance because of the law. A House Ways and Means Committee study found that 71 Fortune 100 companies said they could save $28.6 billion by dropping health insurance and paying the $2,000-per-employee fine.
However, health insurance brokers say their business clients are “staying the course” on their current health plans, said John Torinus, co-founder of Successful Entrepreneur Investors and who has served on several health care reform task forces. As a former CEO, he said he considered health coverage a benefit not just to the employee, but also to the employer.
In a presentation to the World Health Care Congress Wednesday, Torinus said corporations have the power to turn the tide of rising health care costs. Consumer-driven plans, as well as employers who help employees make good decisions about spending and lifestyle, are a better answer than dropping employees’ insurance. Healthy employees are more productive, take less time off and are happier.
He said more employers are offering health care at the workplace so they can ensure employees receive preventive checks to keep them healthy, the employer isn’t saddled with unnecessary referrals and procedures and the employee goes to a less-expensive, better-quality specialist when there are several options from which to choose.
Kent Bradley, senior vice president and chief medical officer of grocery store giant Safeway, proposed that employers could address the rising costs of Medicare by pushing back the time in a person’s life that he or she starts being unhealthy.
Employers are better able to provide incentives — employees at Safeway pay premiums based on their behaviors, and they can save up to $760 per person — as well as a supportive workplace to help people make healthy lifestyle choices. So rather than having a population of seniors dealing with chronic disease from obesity, such programs could stave off illness until a population turns 75 or older, he said.
Hyman said he expects employers to continue to offer insurance.
“I think, frequently, employers are thinking and projecting based on one or two factors,” he said. “But it will be interesting to see what they do with a range of considerations.”
Please go here to thank the “Medicare 111″ and encourage them to stand strong on their commitment to protect Social Security and Medicare.
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Today, President Obama released a budget that would reduce Social Security benefits and shift healthcare costs onto seniors enrolled in Medicare.
This proposed budget includes a “chained CPI” for Social Security, which Sen. Elizabeth Warren called “just a fancy way to say ‘cut benefits for seniors, the permanently disabled, and orphans.’” Additionally, his budget would shift Medicare costs onto seniors by introducing new premiums for some, cutting safety net payments to providers serving low-income communities, and penalizing the purchase of comprehensive Medigap coverage.
Thankfully, 107 House members signed a letter to Obama saying: “We write to affirm our vigorous opposition to cutting Social Security, Medicare, or Medicaid benefits in any final bill to replace sequestration.”
Remind them that Medicare costs less than private health insurance. Expanding it to everyone in the US through a single-payer plan, like HR 676, would eliminate the federal deficit.
If you want to tell Obama how unhappy you are with his budget, call the White House at 202-456-1111.
The House members on the letter are here: Majority of House Democrats Call on President Obama to Reject Benefit Cuts to Medicare, Medicaid, and Social Security Benefits
- President Obama’s budget will include cuts to Social Security, Medicare
- Majority of House Democrats Call on President Obama to Reject Benefit Cuts to Medicare, Medicaid, and Social Security Benefits
- Obama budget splits Medicare cuts between patients and providers
- 2.3 Million Petitioners Urge Rejection of ‘Chained-CPI’ Social Security Cut
From the New York Times –
President Obama next week will take the political risk of formally proposing cuts to Social Security and Medicare in his annual budget in an effort to demonstrate his willingness to compromise with Republicans and revive prospects for a long-term deficit-reduction deal, administration officials say.
In a significant shift in fiscal strategy, Mr. Obama on Wednesday will send a budget plan to Capitol Hill that departs from the usual presidential wish list that Republicans typically declare dead on arrival. Instead it will embody the final compromise offer that he made to Speaker John A. Boehner late last year, before Mr. Boehner abandoned negotiations in opposition to the president’s demand for higher taxes from wealthy individuals and some corporations.
Congressional Republicans have dug in against any new tax revenues after higher taxes for the affluent were approved at the start of the year. The administration’s hope is to create cracks in Republicans’ antitax resistance, especially in the Senate, as constituents complain about the across-the-board cuts in military and domestic programs that took effect March 1.
Mr. Obama’s proposed deficit reduction would replace those cuts. And if Republicans continue to resist the president, the White House believes that most Americans will blame them for the fiscal paralysis.
By Don McCanne for PNHP –
U.S. to boost rather than cut payments to health insurers
By Sandhya Somashekhar
The Washington Post, April 1, 2013
The Obama administration reversed itself Monday, scrapping plans to cut by 2.2 percent the rates paid to health insurers that take part in the Medicare Advantage program.
The insurance industry and more than 100 members of Congress had objected to the cut in the per capita growth rate, which was proposed in February. The insurers mounted a vigorous campaign, using television ads and phone banks, to persuade lawmakers to oppose the reduction.
On Monday, the Centers for Medicare and Medicaid Services (CMS) announced that it was changing its method of calculating reimbursement rates. Instead of cutting payments for Medicare Advantage plans, it will increase them by 3.3 percent.
“The policies announced today further the agency’s goal of improving payment accuracy in all our programs, while at the same time ensuring program stability and preserving beneficiary choice,” Jonathan Blum, the CMS’s acting principal deputy administrator, said in a statement.
By Don McCanne, M.D.
The private Medicare Advantage plans, offered as options to the traditional government-run Medicare program, were to have their egregious overpayments reduced by provisions of the Affordable Care Act. This year they were to have a 2.2 percent reduction in their rates, but instead received a 3.3 percent increase. That is a rate 5.5 percent higher than scheduled, which increases the payments to the Medicare Advantage plans by over $5 billion! What happened?
It is easier to understand why when you realize that the program was established as an effort to privatize Medicare. The previous effort – private Medicare + Choice plans – didn’t work since the insurers were unable to provide profitable plans at a cost comparable to the traditional Medicare program.
Recognizing that, Congress established the Medicare Advantage program, authorizing payments averaging 14 percent over the costs of traditional Medicare. This would allow the private plans to offer a more attractive option with greater benefits and lower our-of-pocket costs. Once enough people were enrolled in the private plans then they could start to make the traditional Medicare program even less attractive through greater cost sharing, through means testing that chases away the more affluent beneficiaries, and through reducing payment rates causing a further decline in the number of willing providers.
Originally, the private Medicare + Choice plans were successful in enrolling healthier, lower cost patients. With time, many of those patients required more care, and the insurers started dropping out of markets in which they experienced losses. So the next phase – Medicare Advantage.
With Medicare Advantage, risk adjustment was used to transfer funds from insurers that cornered healthier patients to insurers that enrolled more patients with greater needs. Soon it was evident that the insurers became masters at enrolling patients who were not very ill but who could be coded as having expensive problems. Although efforts have been made to further refine the risk adjustments, our government’s payment accuracy website reveals that the insurers are still able to game the system, such that 14 percent of payments remain improper – over $13 billion.
Another one of the methods used to improve payments – but not reduce payments since the proposal was to be revenue neutral – was to retain some of the funds for the Medicare Advantage plans and then use them to reward plans with higher quality ratings, 4 or 5 star. Well, when they were ready to start reducing the overpayments, as required by the Affordable Care Act, the insurers protested that they couldn’t afford the reductions. So the administration revised the quality awards to include 3 star plans, thus assuring that 80 percent of Medicare Advantage plans would have their required reductions largely offset with the quality awards. But this was not revenue neutral. No problem. The administration declared these expanded awards to be a “demonstration,” and thus drew funds from their demonstration project kitty (our tax funds). That diversion of funds will continue through 2014.
So now we’re down to this year, and, of course, the insurance industry said that they would not be able to tolerate the scheduled reductions of 2.2 percent. They called out the forces. They even had more than 160 Representatives and Senators of both parties lobbying the administration to reverse these cuts. Yesterday, it became evident that they were successful – increasing payments 5.5 percent over the scheduled 2.2 percent cut – a $5 billion bonanza. How did they do it?
The sustainable growth rate (SGR) was a formula designed to slow the growth of spending on physician care down to sustainable levels. In response, physicians adjusted the frequency and intensity of their services to make up for what they perceived to be a reduction in their reimbursement rates. The formula would require a reduction in rates that would especially impact primary care physicians. Congress has deferred the reductions for fear of losing too many physicians from the program, but that has resulted in a 25 percent deficit for which Congress needs to enact a “doc fix.” Here’s where the shell game comes in.
In violation of the standards of the Office of the Actuary, CMS decided that Congress inevitably would enact a doc fix, which then they could say represents an increase in the cost of providing care to all Medicare beneficiaries. Thus the phantom increase has been applied to the new Medicare Advantage rates. Little does it matter that there was no increase since Congress has continued to authorize the suspension of the SGR reductions. It is specious for CMS to claim that payments went up this year because of the not-yet-enacted doc fix when they have been up the whole time. Also it seems not to matter that the doc fix which they used in their calculations has not been fixed, and the money will have to come from somewhere… but certainly not from the $5 billion bonus they just gave the Medicare Advantage plans – money that never existed but will have to be drawn from Medicare payroll taxes, from general funds for Part B, and from increases in Part B Medicare premiums that will be paid by Medicare beneficiaries in the traditional plan who are not receiving any of the extra benefits that enrollees in the Medicare Advantage plans are receiving. Unfair.
But it’s worse than this. Not only is the administration bending over backwards to take good care of the private Medicare Advantage insurers, they are now engaged behind the scenes to further impair the traditional Medicare program – a strategy to further push privatization.
The Ryan/Wyden and Frist/Breaux/Thomas premium support voucherization of Medicare has proven to be too hot for the privatizers, considering the backlash that they have experienced. So premium support is off the table during the Obama administration’s negotiations with Congress over the next manufactured fiscal crisis. So what has replaced the vouchers?
It has been leaked, presumably deliberately, that Obama is proposing to combine the Part A (hospital) and Part B (physician) deductibles into one deductible for Parts A & B combined. The intent is twofold – to reduce the amount that the federal government is paying for Medicare, and to increase the sensitivity of Medicare beneficiaries to prices paid for Medicare benefits – making them empowered health care shoppers. This increase in out-of-pocket spending will especially impact the majority who do not require hospitalization and thus have lower total costs. This strategy will make those who have fewer health care needs wonder why they are paying so much more than they thought they would once they were on Medicare.
Bu that’s not all. About 90 percent of Medicare beneficiaries are protected from excessive cost sharing through Medigap plans or through employer-sponsored retirement health benefit programs. The consumer-directed camp has long wanted to bash the Medigap plans so patients would be exposed more directly to the costs. Obama’s team is proposing just that. They want to prohibit the Medigap plans from providing protection for the deductible – removing it, or at least reducing it, as a Medigap benefit. Another option that they are considering is to assess a 15 percent tax on Medigap premiums which would have a similar net financial impact as prohibiting coverage of the deductible.
So what is a person to do? You can accept the traditional Medicare program, but you will face higher deductibles, perhaps a Medigap tax, an even higher Part B Medicare premium, and perhaps means-tested premiums and benefits which will gradually shift down to middle-income individuals. This will not be pleasing to the majority who have only modest health care needs. The other option? You can enroll in a Medicare Advantage plan with greatly reduced cost sharing plus expanded benefits, and perhaps not even a plan premium, all thanks to Congress and the administration who are using our tax funds to provide very generous subsidies to the private Medicare Advantage plans.
A crummy traditional Medicare program with high out-of-pocket costs, or a slick private plan with most costs prepaid, by the government no less? It is presumed that the majority will rush over to the private plans, especially when they see what extra bennies they get.
What then? Congress can then continue to ratchet down government spending on the traditional program, causing an exodus of willing providers – stripping the program down to worse-than-Medicaid. After the private plans have become the standard and Medicare is in the tank, then what? Premium support vouchers! The government gradually pares down the support for the premium you select, so you are now really an empowered shopper – empowered to buy whatever meager benefits you can afford with your measly premium subsidy.
Excuse the length of today’s message, but I hope you understand why. It’s not that I’m a soothsayer… but maybe I am.
A little-known loophole in President Obama’s landmark legislation enables health insurers to extend existing policies for nearly all of 2014.
A new fight is brewing over health insurance companies letting millions of Americans renew their current coverage for another year — and thereby avoid changes under the federal healthcare law.
That may offer a short-term benefit for certain consumers and shield some of those individual policyholders from potentially steep rate increases. But critics say this maneuver could undermine government efforts to remake the insurance market next year and keep premiums affordable overall.
At issue is a little-known loophole in President Obama’s landmark legislation that enables health insurers to extend existing policies for nearly all of 2014. This runs contrary to the widespread belief that all health insurance must immediately comply with new federal rules starting Jan. 1, when most provisions of the law take effect.
“Insurers are onto this, and the big question is how many will try to game the system,” said Timothy Stoltzfus Jost, a law professor and health policy expert at Washington and Lee University.
Some of the nation’s biggest health insurers are looking to take advantage of this delay, and Arkansas officials are encouraging companies to do this by resetting customers’ renewal dates for the end of December. There’s also concern that some insurers and agents could rush to sell more individual policies before year-end so they could be extended in 2014.
Some policy experts are expressing concern about this practice for fear that insurers will focus on renewing younger and healthier policyholders and hold them out of the broader insurance pool next year. Their absence could leave a sicker and older population in new government insurance exchanges, driving up medical costs and premiums there.
“This could undermine the Affordable Care Act, and it opens the door for exacerbating potential rate shock in the exchanges,” said Christine Monahan, a senior analyst at Georgetown University’s Health Policy Institute. “The health insurers can cherry-pick some healthy people and it raises prices for everyone else.”
This issue could affect some of the 15 million people nationwide who purchase their own coverage and millions more of the uninsured who are expected to join government exchanges next year. It would not pertain to the 150 million Americans who get health benefits through their employers.
Many health insurers are still mulling over their options on how to handle these individual renewals.
“Some carriers will require everyone to switch plans Jan. 1, and other carriers will allow customers to stay on their existing plan as long as possible,” said Bob Hurley, senior vice president of carrier relations at online site eHealthInsurance. “We are trying to nail this down with the carriers. I think it would be better for consumers to have that choice to carry their policy forward.”
The nation’s largest health insurer, UnitedHealth Group Inc. of Minnetonka, Minn., said, “We are currently looking at the best way to serve our customers’ best interests while continuing to comply with the Affordable Care Act going into 2014.”
WellPoint Inc., the Indianapolis insurance giant that runs Blue Cross plans in California and 13 other states, said its renewal practices will vary by state. In California, the company said its Anthem Blue Cross unit may allow individual policyholders to renew through March 31.
Kaiser Permanente, a major nonprofit health plan based in Oakland, said it doesn’t plan to renew policies beyond Jan. 1 in California and most of the other states where it sells coverage.
Richard Kern and his wife, a retired couple in Los Angeles, say they would welcome the flexibility to keep their individual policy from Aetna Inc. for another year amid so much uncertainty over next year’s rates.
“We don’t even know what the prices and alternatives are under Obamacare,” Kern said. “We are waiting for the other shoe to drop.”
If an insurer offers this option, it would then be up to consumers to decide whether they want to renew an existing policy into 2014. The length of any renewal may depend on what month their annual plan year begins.
Many lower-income people will qualify for federal premium subsidies, which will be available only when purchasing new coverage available in state- or federal-run insurance exchanges. It would make financial sense to take advantage of that government aid. Individuals earning less than $46,000 or families below $94,000 annually would be eligible for subsidies.
However, many people who are middle income or above could face significantly higher premiums next year with no subsidies. Those premium increases are tied to federal requirements that insurers accept all applicants regardless of their medical condition and the inclusion of more comprehensive benefits.
Renewing an older policy could mean forgoing some of those richer benefits and new limits on out-of-pocket medical expenses.
Last week, California officials estimated that premiums may rise 30% on average for about 1.3 million existing policyholders primarily because of those changes in the federal law. Insurers have warned that some customers could see their premiums double depending on their age and other factors.
Citing that threat of higher rates, Arkansas officials issued a bulletin to insurers last month describing how they could extend individual policies until Dec. 30, 2013, and then renew them for another year.
These health plans “would not be required to comply with the [Affordable Care Act] market reforms until 12/31/2014,” according to the Arkansas bulletin.
“For those folks who don’t qualify for subsidies, this is a consumer-friendly thing because the premium rates for 2014 will be substantially higher,” said Dan Honey, deputy commissioner of compliance for the Arkansas Insurance Department. “You will be exposed to rate shock.”
Other states may oppose that approach, further underscoring the uneven implementation of the federal healthcare law across the country. Oregon Insurance Commissioner Louis Savage said these renewals could be problematic and his office issued a rule barring any extension beyond March 31, 2014.
“We want to get as many people as possible into the exchange,” Savage said. “I think having renewals go deep into 2014 is counterproductive to the goals of the federal healthcare law.”
In California, state lawmakers are working on legislation that could address this renewal issue and other details about how individual policies comply with the federal overhaul.
These questions over renewals are separate from “grandfathered” health policies that existed before the federal law passed in March 2010. Those plans don’t have to meet all the requirements of the healthcare law as long as insurers or employers don’t make significant changes to them.
Searchable and free at www.healthpacbulletin.org.
From HealthPACBulletin.org –
Before there was an internet, with blogs, listservs and web pages to turn to, there was the Health/PAC Bulletin, the hard-hitting and muckraking journal of health activism and health care system analyses and critiques. A new web site, www.healthpacbulletin.org, is a complete and searchable digital collection of Health/PAC’s influential publication, which was published from 1968 through 1993. Health/PAC staffers and authors in New York City and briefly, a West Coast office in San Francisco, wrote and spoke to health activists across the country on every issue from free clinics to women’s health struggles to health worker organizing to environmental justice. Health/PAC both reported on what was going on and reflected back on a wide variety of strategies and tactics to build a more just health care system – a conversation that continues today.
Health/PAC coined the terms “medical empire” and “medical industrial complex” to capture the ways the profit motive distorted priorities in the American health care system. It critiqued big Pharma and rising health care costs, explored the differing forms of health activism, and made it clear that a seemingly disorganized health care system was in fact quite organized to serve ends other than health care. Its first book, The American Health Empire (1970), published by Random House, brought its analysis to national attention. Other edited collections of the Bulletins followed: Prognosis Negative (1976) and Beyond Crisis (1994). Many of today’s leading health activists, reformers and policy scholars got their start at Health/ PAC.
The website adds immeasurably to the resources documenting the history of mid- to late- 20th century American health policy and politics. Activists, scholars, journalists, practitioners, professors, and students will all find these Bulletins a sources of useful analysis and information.. This is not only a way to learn about the late 20th century history, but to consider why certain issues continue to plague our health system.
The site is a work in progress and we welcome your feedback and suggestions. It was a real labor to get these collected and available and we hope you find the site a useful resource.