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“The Best Health Care” Myth Debunked August 25, 2009

Posted by Kate Ryan in Health Care, Health Insurance, National Politics, Public Health, Public Option.
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healthcare_reform_crop380wI was waiting in a long line in the post office yesterday.  One poor clerk was working the desk and was being besieged by patrons with multiple packages, a mass mailing, and a pick-up of a certified letter that didn’t seem to be anywhere.  The wait seemed endless.  An elderly gentleman in front of me – obviously old enough to be enjoying his Medicare benefits – huffed and said, “And NOW they want to take over our health care!”

I stopped myself before publicly arguing with this old fool, but I wanted to tell him that while he’s enjoying his government-run health insurance, many other people would give their eye teeth to have whatever he had – even if it was inefficient.  It’s  a damn sight better than nothing.  I just figured he was a Republican, and left it at that.  And If you only know one thing about politics, know this  – if there is one thing that the Republicans are really good at, it is the “sound bite”, the succinct summing-up of any debate in three words or less.

 Rationing!  Death Panels!  Illegal Immigrants! Government Takeover!  The lies and disinformation campaign have controlled this debate for almost a month now.  Liberals, Progressives, and just plain Democrats that want health care reform have been stunned silent by the sheer numbers of people the other side has gotten to believe this.  They’ve even got elderly Americans believing that the Medicare that they love and revere so much, is NOT a government-run healthcare program.  I am losing faith in the intelligence of the American voter. 

What’s worse than the lies from the other side is the amount of time we are spending to tell the American people what health care reform is NOT, rather than what it is.  Is it any wonder that support for an Obama health care plan seems to be dwindling?  Nobody knows just what it is.  The administration MUST do a better job at letting Americans know what they are buying and what they can expect.  Any of these explanations must include the debunking of the more insidious health care myths – the ones that all of us seem to accept without question.  First and foremost of these is “The U.S. has the best health care in the world.” 

According to every agency that keeps statistics on health care about the only areas where the United States is tops are in financial indicators.  We are ranked #1 in how much money per capita we spend on health care (over $7,000 per year in 2008 – twice that of ANY other country), number one in the percentage of personal bankruptcies caused by health costs (50% in 2006), we have more medical equipment per capita than any other industrialized country in the world (MRI machines, CAT scanners, x-ray machines, etc.), and the highest rate of health management support workers (business managers, administrative workers, etc.) to providers (doctors, nurses, and pharmacists). 

What we do not have are outcomes.  Of 48 surveyed nations, the U.S. ranks 47th in life expectancy in the world (just below Costa Rica), 43rd in infant mortality (lower than Cuba), and 24th in the probability that you will die before the age of 60.

The fact is, our “best” and wonderful system of medical care is only available to those who can afford to pay.  From 2000 to 2006, overall inflation has increased 3.5%, middle-class wages have increased 3.8%, and health care premiums have increased 87%.  The family share of premiums plus cost sharing have been rising faster than inflation, causing access problems for some.  Current estimates are that about 47 million Americans – about 17% of the population – is uninsured.  Four out of five of the uninsured are families, and about two-thirds are low-income workers.  The most often cited reason for lack of health insurance is cost (over 50%), followed by lack of a job (24%).  Less than 10% of the uninsured are those that just don’t purchase it.  These chronically uninsured do not count those people that will face insurance gaps – temporary loss of coverage, usually due to unemployment.  Looking over the last two years, about 82 million Americans younger than 65 experienced a significant gap in insurance coverage.

This does not include the underinsured population – the Americans with insurance who find that the coverage is not adequate.  Several organizations estimate that about 16 million of the insured do not have sufficient coverage to protect them from crushing out-of-pocket expenses.  Of all the personal bankruptcies that were filed due to medical expenses, 75% of those were by individuals that had health insurance.  Finally, more than 40 million adults stated that they needed but did not receive one or more of these health services (medical care, prescription medicines, mental health care, dental care, or eyeglasses) in 2005 because they could not afford it. 

The most important feature of any health care reform legislation must be to provide universal coverage and health care access to all Americans.  Many proposals that the Republicans and “blue-dog” Democrats say that they can affirm are health INSURANCE reforms, not reforms to health care.  Eliminating denial of coverage for pre-existing conditions and prohibiting dropping an insured individual from coverage because they are sick are great ideas – but they do not improve access.  They are also a red herring.  No, they won’t deny you coverage with a pre-existing condition, they’ll just charge you three or more times what anyone else pays.  Insurance co-ops again will not improve access because they must compete within an industry model that only makes money by denying coverage.  A non-profit entity still has to cover its expenses and insurance reform does nothing to lower cost.

The only thing that is guaranteed to provide universal coverage, adequate access,  and lower costs to consumers is a public plan option.  Immediately, consumers would see savings over 20% due to less overhead costs.  More enrolled would mean lower costs as the risk would be spread through a larger population.  It would be Medicare for everyone – but younger working people would pay additional premiums.

It is time that we realize that it isn’t good enough to have the most expensive best health care in the world – that more and more citizens do not have access to. 

(sources:  World Health Organization, Center for American Progress, U.S. Census Bureau, National Center for Health Statistics)

Busting The Health Insurance Exchange Myth August 19, 2009

Posted by Kate Ryan in Health Care, Health Care Co-Op, Health Care Exchange, National Politics, Politics, Public Health, Public Option.
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fehbpRaging through the current health care debate is this idea that if the government supported not-for-profit health care cooperatives and insurance exchanges, there would be adequate market competition and no need for public health insurance.  I have heard countless Republicans say that the uninsured should be allowed to purchase insurance across state lines or buy into one of the largest health insurance exchanges – the Federal Employees Health Benefit Plan (FEHB).  These arguments seem to be gaining traction as public support for a public health insurance option seems to be dwindling.

 Last night, Joe Klein of Time Magazine appeared on The Ed Show on MSNBC.  The host, Ed Schultz, has been crazy over the Obama administration’s giving up on single-payer health care and seemingly caving in on a public insurance plan option.  Schultz spent yesterday’s show railing against health care co-ops.  Indeed, studies have shown the effectiveness of cooperatives at controlling costs and improving access to be limited, at best.  Klein said that the public insurance option could be eliminated from health care reform in favor of these exchanges.  He stated – with Schultz strongly dissenting – that  they would achieve the goals of improving access, improving quality of care, reducing cost, and potentially provide universal coverage.  Perhaps this is possible in the parallel universe that Mr. Klein lives in, but here on this earth, not so much.

FEHB is an enormous health insurance exchange plan where federal employees have the “choice” of picking the plan that best suits their needs.  The costs are based upon community ratings and nobody can be denied for pre-existing conditions.  The choice, however, is an illusion.  In the FEHB program, the employee gets to choose during one open enrollment period per year.  So, if the insurance stinks and doesn’t suit your needs, you are stuck living with it and cannot change until the next open season. 

Usually the lowest-cost options are HMOs and other individual-practice plans.  The employee is presented with a set of “options” specific to the state and/or county or city in which he lives.  In New York, where I live, there are 20 plans set out in the state.  Because of where I specifically live, however, my choice is narrowed down to 5 plans.  Of those 5 plans, the employee portion of a family premium can cost anywhere from $67.73 to $107.36 bi-weekly for high-deductible plans; from $194.06 to $449.33 bi-weekly for zero deductible plans.  All of the plans include co-pays for doctor visits and prescription drugs.  All of the prescription drug plans are “formulary” plans that penalize you for brand-name pharmaceuticals by charging very large co-pays (upwards of $25.00).

Looking at just the costs, it would seem as though choice is real.  But if you look deeper, the rates are lower in high deductible plans because these buyers are generally younger and have less illness.  Instead of pushing the community risk through the entire population, insurers “cherry-pick” single people, younger people, people with no children, and can keep their prices artificially low.  The “high deductible” on these plans, however, is often $8,000 to $10,000 per family that must be paid prior to receiving benefits.  So, in addition to paying $67.00 every two weeks for coverage – you’re not covered until you spend $8,000 out of your own pocket – making your cost $9,742 per year.  And don’t forget, the government is paying about $5,300 for your insurance – making the grand total of premiums, employer contributions, and deductibles over $15,000 per year.  Had you joined a more expensive plan with no deductible at $104.20 biweekly you would spend $2,700 out-of -pocket for premiums.  The government would have paid about $8,400 in premiums, making your insurance cost $13,700 per year.  Add in co-pays for prescription drugs and doctor visits and it wouldn’t be hard to spend the extra $1,300 to make a grand total of $15,000 per year.  Some choice.

But what about buying over state lines?  New York must be a high cost state.  Wouldn’t it be cheaper for me to buy insurance in, say, Mississippi?  Not if you prefer an HMO.  These plans, because they include networks of certain physicians, hospitals, and pharmacies, can not effectively operate in all 50 states.  Administrative costs would skyrocket.  Also, Mississippians only have two “options”, both with high deductibles, and costing between $67.73 and $91.19 bi-weekly.  When the government’s share of premiums and the deductibles are factored in, lo and behold, the yearly cost of these plans is around $15,000.

The only plans that are feasible to purchase over state lines are traditional fee-for-service plans.  In these plans, you visit the doctor, submit a claim, and the insurance company pays your doctor or hospital according to a fee schedule they have set out.  You are responsible for any balance.  The FEHB offers 10 national fee-for service plans open to all and 4 plans open only to specific individuals (members of a union or trade association, etc.).  The fee-for service plans all include deductibles and range from $77.89 bi-weekly to $244.56 bi-weekly.  Magically, when deductibles and the government share of premiums are worked in, the amount per year is around $15,000.   

When one looks at these figures, it is clear that the “open market” of the health insurance exchange is not open at all.  Every single one of these companies is making about the same amount of money on every federal policy they sell.  There is not one iota of competition to make them provide care at a lower cost.  Where is the insurance company that thinks it can sign up enough members at $10,000 per year per family plan and provide coverage?  They could probably sell enough policies to do it, too, but they won’t.  Why?  Because they couldn’t make obscene profits every year and pay their CEOs millions.  There is no incentive to do it. 

A public option could provide coverage at two-thirds the cost per family plan.  If it is paid for in the same way the FEHB is paid for, each family would pay about $50 a week for coverage.  The government could subsidize the remaining premiums through a combination of tax increases, efficiency gains, and other financial instruments that do not necessarily have to fall on individuals (stock transaction taxes, VAT taxes, penalties to employers not providing insurance).

The best way to cure the health insurance mess in the United States is to go to a single-payer system.  Failing that, the only way to achieve the administration’s goals of providing access, controlling costs, and improving quality is to provide a public option – “Medicare For All.”