Category Archives: Insurers

The Academic Buzz around Health Care

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Being a young whippersnapper, it never occurred to me that health care policy was a relatively new field of study within our universities. But when Health Beat reader Bradley Flansbaum passed along the  Reuters story below to Maggie (original here)  and she passed it on to me, I gained a new perspective on the issue. It turns out that until very recently, health care used to just mean medicine. But today, thinking about health care demands thinking about  a lot of different things, like public policy, public administration, economics, politics, and even sociology.

This mixed bag is reflected in the diverse academic offerings at colleges and universities—as well as the swell of students interested in them. The Reuters story below suggests that there are three main motivations for the increased student interest: fascination, idealism, and profit. That sounds about right. You can either be genuinely interested in the complexities of health care or the politics surrounding it; want to fix the system for the greater good; or want to learn as much as you can about the system to better navigate it for GlaxoSmithKline.

There’s obviously a lot of good to be had from generations growing up understanding more about our insanely complex and counter-productive health care system. Teaching college students about the system now might instill a long-term openness to reform and improvement that wasn’t present in generations who never knew about health care until they got sick.

But I can’t help but wonder about the faddishness of it all. After all, health care isn’t the only broken system that could use some attention. Consider the criminal justice system. Back in the day, law and order meant being a lawyer or a cop. But today there are criminology and criminal justice programs around the world that focus on issues like incarceration, community policing, cost, risk management, and more. Yet the buzz surrounding these issues hasn’t been comparable to the much louder debate about health care—even though one out of 32 Americans is currently in the corrections system and a black male is more likely to have served time in jail than have a college degree. This too is a crisis.

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Health Care Spending: The Basics

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JUST HOW MUCH DO PRIVATE INSURERS ADD TO THE NATION’S HEALTH CARE BILL?

As a nation, we are spending well over $2 trillion a year on health care. This includes: all of the money that you and I pay out-of pocket to cover co-pays, deductibles and drugs; the dollars that you and I (and our employers) fork over for private insurance; the money Medicare, Medicaid and SCHIP lay out to reimburse doctors, hospitals and patients; the billions taxpayers chip in to fund veterans’ health programs, public hospitals, school programs, and health insurance for government employees as well as the money private charities contribute to health care.

What exactly are we paying for? How much of that money is used to pay the CEOs of drug companies salaries that read like telephone numbers? How much do hospitals eat up?  How much is spent on insurance company ads? How much is used to provide healthcare for the poor?

I’ve decided to do a series of posts spelling out exactly where the money goes. Today, I’m going to start with private insurance.

Many people believe that if we just eliminated the private insurance industry, healthcare would become much more affordable. There is a general sense that the “administrative costs” of private insurance are siphoning off a sizable share of our health care dollars.

There is some truth to that: because we  have  multiple insurers—not to mention so many solo practitioners, small hospitals, clinics, and individuals filing for reimbursement—the paperwork is enormous. If we had only one big insurance company that used just one set of forms we could simplify the paperwork greatly. People who want a “single payer” system, with the government paying all of the bills,  point out that the savings would be enormous.

And we could cut costs even more if, instead of having tens of thousands of health care providers filing for separate reimbursements, doctors, hospitals and clinics joined together into, say, eight our ten large organizations like Kaiser Permanente, each with its own back office.  The doctors would be on salary, so rather than filing for payment for each service they performed, they would receive a monthly check for taking care of their patients, just as they do at Kaiser Permanent or the Mayo Clinic (where doctors are on salary).

In other words, it is not only a fragmented multi-payer insurance industry that generates so much paperwork; on the other side of the transaction a fractured network of separate providers adds to a mind-boggling stack of paper. Unlike most other developed countries, we have turned healthcare into a  cottage industry. This gives us lots of choices: we can select from a Chinese menu of insurance plans and proviers. But it also means higher administrative costs. In this post I would like to focus first on just on how much our huge private insurance industry is costing us. (In a later post, we’ll look at the price we pay for a fee-for-service system of independent providers.)

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New CDC Report: The Nail in the Coffin for Health Care Myths

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On Monday the CDC released a landmark, and in many ways devastating, report on health care in the U.S. The report contains a wealth of data that, while not surprising to some, should help silence the dwindling few who insist that America’s health care system is doing just fine. As a public service, I thought it’d be helpful to list some of the myths that the report demolishes (with some help from other sources as needed).

Myth: If people don’t have health insurance or get medical care, it’s because they don’t want it.

Reality: Actually, the big issue with access is cost. According to the CDC report, more than 40 million Americans—almost one in five Americans over the age of 18—have foregone one of the following in the past year because they couldn’t afford it: medical care, prescription medicines, mental health care, dental care, or eyeglasses.

It’s not that uninsured people don’t understand the value of coverage. Last year a study from the Urban Institute found that less than 3 percent of uninsured adults and children have never had insurance or report having no need for insurance. That same report also found that the high cost of coverage alone explained over 50 percent of those cases where people are uninsured 

And even when the uninsured cite job-related difficulties as the reason why they can’t access employer sponsored coverage, the problem isn’t just that they can’t get it through work—it’s also that they can’t afford individual policies. (Individual policies are much more expensive than group policies, and in many states private insurers can charge individuals astronomical premiums if individuals have any “pre-existing conditions.)  According to the Urban Institute, for 79 percent of adults and 74 percent of children who are uninsured because of job-related problems, the high cost of individual insurance is a major problem.

Myth: The American system relies mostly, if not exclusively, on private enterprise to support health care.

Reality: Yes and no. While the U.S. does have the biggest private sector share of health expenditures in the world, making up 55 percent of our funding, personal health care expenditures (i.e. spending on actual patient care) is mostly public. The CDC reports that in 2005 the federal government and state and local governments combined paid 45 percent of personal health care expenditures; private insurers only paid 36 percent, with 15 percent coming from out-of-pocket payments. So much for the libertarian utopia.

There’s also a bigger public sector coverage presence than many would like to admit. Though two-thirds of insurance policyholders have private coverage, a Census bureau report from earlier this year noted that more than one quarter of Americans (about 27 percent) are covered by government insurance. The American model is much more of a private-public mix than some pundits—and candidates—are willing to admit.

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Obama Says No One Should Be Forced to Sign up For Insurance; Edwards Says If You Don’t, He’ll Garnish Your Wages—Who is Right?

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John Edwards’ declaration that under his health reform proposal anyone who refuses to sign up for health insurance will be subject to having their wages garnished has led to a blogstorm of often confusing debates.  Under national health reform, should everyone be required to enroll? The Edwards and Clinton plans have mandates insisting that all Americans purchase insurance; the Obama plan has a mandate for children, but not for adults

New York Times columnist Paul Krugman stirred controversy Friday by defending Edwards, and criticizing Barack Obama: “Under Obama’s health care plan, healthy people could choose not to buy insurance—then sign up for it if they developed health problems later,” Krugman observed. “As a result, people who did the right thing and bought insurance when they were healthy would end up subsidizing those who didn’t sign up for insurance until or unless they needed medical care.”

On Sunday former FCC Commissioner Reed Hundt called Krugman out on TPM Cafe in a post headlined “Ease up, Dr. Krugman.” According to Hundt: “The very idea of government mandates directed to individuals evokes a command-and-control model that disturbs citizens who want to enjoy certain freedoms in choosing health care.” As of yesterday, Hundt’s post had drawn some 60 comments—some on point, others muddying the waters.

Meanwhile, at TNR Jonathan Cohn weighs in with a long discussion of just how many people Obama’s plan might leave uncovered—and suggests that one of Obama’s advisers has information showing that under Edwards’ plan, even more Americans would be left “going naked.”

Because the conversation in the blogosphere has become such a mix of good information, misinformation and false assumptions, I’ve decided to try to spell out, as clearly as possible, why we need a mandate. Very simply, it addresses a serious defect in our health care system:  under existing rules, you don’t have to buy insurance, but you can be priced out of the insurance system if you are sick.

After examining that problem–and looking at how requiring insurance solves it– I’d like to answer a sensible question that observers like the Washington Monthly’s Kevin Drum have raised: Why force people to buy insurance? Why not just tax everyone, put the money in a pool similar to the Medicare Trust Fund, and use it to buy universal insurance?

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Is State-Level Health Care Reform Doomed?

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It’s a waste of breath to say that health reform is a big issue in the states. But is it also the case that health reform in the states is a waste of time?

With health reform experimentation popping up across the nation, conventional wisdom has become, as Massachusetts State Senator Richard T. Moore put it in a blog post for the Commonwealth Fund, that states are “critical laboratories for quality and innovation.”

Yet while Moore is right to say that “common elements of success will serve as a useful learning experience for other states and national leaders in considering more comprehensive health care reform,” there’s another side of the issue to consider: there may be some states that can’t sustain universal coverage without more comprehensive federal reform—no matter how insurance programs are designed. There’s also a danger that failure at the state level could be used to argue that comprehensive health reform is simply an impossible goal.

Among the biggest problems with universal coverage is cost: how can we afford to insure everybody? One answer is to require that everyone buy coverage.  By mandating insurance, a state can spread the cost across a larger pool of people that includes low-risk individuals who can help share the burden of insuring high-risk individuals.

Without a mandate, no one would buy insurance until they were sick or elderly; the pool would be made up of people who are expensive to insure, and soon coverage would become unaffordable. The only alternative would be to pass laws saying that if you don’t sign up before you become sick, insurers have the right to refuse to cover you –or to charge you five times what they would charge a healthy person. This is what happens in many states today, which is why one serious illness can send a family into bankruptcy. If we want to say that insurers can’t leave anyone out in the cold—even if they are very sick –then we also have to say that everyone must participate in the system.

The question remains:  will mandates work at the state level?

Consider Maine. In 2005, Maine launched the nation’s first experiment
in universal health coverage through the “Dirigo Health Act,” named
after Maine’s state motto, “Dirigo,” Latin for “I lead.” Dirigo is
entirely voluntary, and as a result only 18,800 people (most of which
already had private sector insurance) have signed up for DirigoChoice,
the main arm of the program devoted to small businesses and
individuals. Meanwhile, some 130,000 Maine residents remain uninsured.

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Health Care Reform: What Do Americans Want? (Or Think They Want?)

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On the surface, it seems that American voters have made their will clear.  Poll after poll shows that they are calling for a major overhaul of our health care system.

But when you look closer, their responses bristle with contradictions, contradictions that I think the reform-minded presidential candidates will have to consider when deciding how to approach health care reform. 

In a poll reported in Health Affairs at the end of last year, sixty-nine percent of respondents rated the US system as “fair” or “poor.” Yet in the same survey, when asked about their own experience with receiving medical services or with their own physician, 80 percent who had received care in the last year ranked their care as “excellent” or ”good.”

Other polls reveal the same pattern.

According to a survey released by Greenberg Quinlan Rosner in July, voters express doubts about the quality of the American health care system (with 49 percent dissatisfied), while 74 percent were dissatisfied with the cost.   Yet, “at another, more personal level,” the pollsters note, “a slightly different picture emerges. Fully eight in ten (82 percent) describe themselves as satisfied with the quality of the health care they receive personally. This number jumps to 90 percent among seniors (64 percent very satisfied), but includes impressive majorities of nearly all groups…”

Nevertheless, when the pollsters asked the same group about health care reform, three-quarters called for “major changes” or “completely rebuilding” the system. 

If they are satisfied with the care they are receiving, why would they want radical change? Because they don’t feel secure that they will be able to keep what they have:  “There’s a precariousness to Americans’ contentment with their own health insurance coverage,” the Kaiser Family Foundation reported after looking at a number of polls at the end of last year.  “Among the insured, six in ten are at least somewhat worried about being able to afford the cost of their health insurance over the next few years, and nearly as many (56 percent) said they worry that by losing a job, they or their family might be left without coverage.”

This, then, is why so many Americans want universal health care: it would guarantee that they and their families would always be covered.

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Conditional Cash Transfers: An Interim Model for Health Care Reform?

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This past September, New York City’s Mayor Bloomberg welcomed 5,000 families into the pilot program of Opportunity NYC– the nation’s first conditional cash transfer (CCT) program. Based on a Mexican program called Oportunidades, CCT programs like Opportunity NYC (ONYC) provide financial incentives for poor households to “meet specific targets” in three areas: education, employment/training, and health.

I recently spoke with Héctor Salazar-Salame, Advisor to the Center for Economic Opportunity, which operates ONYC, about the health components of the program. I wanted to get an idea of the aims and strategy behind ONYC—and also to learn more about CCT as a potential model for thinking strategically about health care reform. 

According to the city’s press release, ONYC’s health incentives will be offered “to maintain adequate health coverage for all children and adults in participant households as well as age-appropriate medical and dental visits for each family member.” In terms of coverage, families can earn “$20 or $50 per adult per month for maintaining health insurance and $20 or $50 for maintaining health insurance for all the children in the family.”

The point is to encourage low-income families to enroll in health insurance plans. “Many families work for employers that offer insurance,” Salazar-Salame explains, but “many times the necessary employee contribution is quite high for low-income families. We’re providing an incentive for families to opt into their work-based, private health plan—and hoping that the incentives will help them offset the cost of the employee contribution.”

If parents are unemployed—or work for employers that don’t offer coverage—the family can still be eligible for health incentive rewards that keep them enrolled in Medicaid. “We know that to recertify for Medicaid can be a challenging yearly process that takes a lot of time,” says Salazar-Salame. (It’s worth keeping in mind that roughly 30 percent of parents who don’t manage to enroll or re-enroll their children in Medicaid have less than a high school education).  “We’re hoping the incentive will help them maintain the insurance that they’re eligible for,” Salazar-Salame explains.

Maintaining insurance is harder than it sounds. In October, Maggie wrote about  just how difficult it can be to stay enrolled in Medicaid and SCHIP, pointing to a Health Affairs article titled "Why Millions of Children Eligible for Medicaid and S-Chip Are Uninsured."

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The Truth about the Politics of National Health Reform

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For the past year, progressives have begun to talk about health care reform as if it is inevitable. Listen to the Democratic Party’s presidential candidates, and it seems just a question of what form the health care revolution will take, how quickly it will happen, and how we’ll finance it. After all, the polls show that the majority of taxpayers, employers and even most doctors want to see a major change.  Moreover, health care research shows that if we cut the waste in our system, we could fund universal coverage. What, then, is stopping us?

As regular readers know, I recently attended a Massachusetts Medical Society Leadership Forum where what I heard about the Massachusetts plan made my heart sink. While everyone in Massachusetts wants health care reform, no one wants to pay for it. Those who are receiving state subsidies to buy insurance are enthusiastic. But uninsured citizens earning more than 300% of the poverty level are expected to purchase their own insurance. The state hoped that 228,000 of its uninsured citizens would sign up; as of last month, just 15,000 had enrolled. Many have decided that they would rather pay the penalty than buy health insurance.

At the forum, Robert Blendon, professor of health policy and political analysis at Harvard’s Kennedy School of Government, talked about what Massachusetts’ experience might mean for the national health care debate: “Massachusetts is the canary in the coal mine,” Blendon, who is also a professor at Harvard’s School of Public Health, declared bluntly. “If it’s not breathing in 2009, people won’t go in that mine.”  If the Massachusetts plan unravels, he suggested, Washington’s politicians will say “If they can’t do it in a liberal state like Massachusetts, how can we do it here?” 

I’m not writing Massachusetts off. The state’s leaders are behind the plan and they may be able to persuade the Commonwealth’s citizens to come on board. But it won’t be easy. 

In the meantime, this week I decided to ask Blendon some follow-up questions: Just what would it take, politically, to achieve national health care reform sometime in the next two to four years?  How many seats would reformers have to capture in Congress?  Is this likely?   Some observers say that if a reform-minded president hopes to succeed, he or she will have to ram a plan through Congress sometime in 2009. But health care is complicated; wouldn’t it make more sense for a new administration to take its time and explain what it is doing to the public, while trying to create a sustainable, affordable, high quality health care system?

Finally, what are the biggest barriers to reform?  If major change proves impossible, what more modest back-up plans should a new president have in mind? What other health care legislation could he or she hope to pass?

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Race and Health Coverage: Medical Apartheid?

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I’ve invited Niko Karvounis, a colleague at The Century Foundation, to guest-blog. Niko is currently a Program Assistant at the Foundation and an Alumnus Senior Fellow with the Roosevelt Institution. His post follows below.

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Recently I was handed a report from Bronx Health Reach (BHR) entitled “Separate and Unequal: Medical Apartheid in New York City” that reveals some startling inequities right here in the so-called capital of the world.

Bronx Health Reach is a coalition formed by the Institute for Urban Family Health, with the mission of examining and addressing racial and ethnic health disparities in the southwest Bronx portion of NYC.

At the local level in the Big Apple, these disparities play out through discriminatory care tied to health coverage. Since “health insurance is a major determinant of access to medical care,” poor insurance increases the probability of “delayed care and poorer health outcomes.” And in NYC, health insurance status is closely linked to race: “52 percent of blacks, 63 percent of Latinos” and only “24 percent of whites are uninsured or publicly insured.”  This skewed distribution of health coverage ultimately “creates a de facto sorting of patients by race.”

The most compelling evidence of apartheid can be found in the records of medical institutions which reveal the characteristics of patients that they admit and discharge.

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HILLARY CLINTON’S NEW PLAN

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   I have written two posts analyzing Hillary Clinton’s healthcare plan. You will find them on www.tpmcafe.com (where I am a contributor). You can comment there.