Health Reform

COST: Even for Those With Insurance, Coverage Isn't What It Used To Be

Elizabeth Carpenter — Wed, 15 Oct 2008 19:29:00 -0400

Last week, we asked you to raise your hand if you knew how much your employer spent on your health care. Today, USA Today is asking you to raise your hand for another question—did you get a 9 percent raise this year?

When you are done chuckling to yourself and questioning the generosity of your employer, think about this: the average employee's health care costs, including premiums and out-of-pocket expenses, will increase 8.9 percent in 2009, according to Hewitt Associates. This is much higher than the rate at which economy-wide productivity or wages grow alone (or when combined). In other words, if you get your health care coverage through your employer, good for you. But if you think your employer-sponsored coverage is safe, think again.

You do the math. The money to pay for rising health care premiums has to come from somewhere. Many economists argue that it comes from your wages or your yearly raise. But as my colleagues Len Nichols and Sarah Axeen point out, health care costs have grown so rapidly and so unpredictably that employers have to deal with it in ways other than reducing your wage.

So what is happening?

Fewer employers are offering health insurance and those that do are offering less generous coverage. Deductibles are increasing and as the article points out, "...increasingly, employers are replacing co-payments with co-insurance in an effort to control costs, particularly for prescription drugs... If you're accustomed to paying $10 or $15 every time you fill a prescription, a switch to co-insurance could raise your out-of-pocket costs."

Remember this: health care costs are a problem for every American, regardless of where you get your coverage or if you have it at all. If we don't take serious steps to get more value for our health care dollar and control health care cost growth, employer-sponsored coverage as we know it will be a thing of the past. And for optimism's sake, let's hope 9 percent raises are a thing of the future!

HEALTH POLITICS: That's The Way You Debate (Health Policy)

Elizabeth Carpenter — Wed, 15 Oct 2008 16:47:00 -0400

Health care remains a top issue in the presidential race, despite the struggling economy. Health care issues received quite a bit of attention at last week's presidential town hall debate and the Obama Campaign has hammered the airwaves with ads about health care. This is likely because in many ways when people fear for their jobs, they fear for their health care coverage. And when they are worried about paying their bills, they are worried about paying their insurance premiums.

Obama and McCain have one last chance to debate how they would reform our struggling health system. Their approaches differ, but we here at the New Health Dialogue think the overall message about health care reform appeals to both sides of the aisle.

If we were part of the candidates' respective pre-debate huddles, here is what we would say:

Our struggling health care system is hurting U.S. businesses and the American workforce. U.S. manufacturing firms pay almost three times as much for health coverage as their foreign competitors. This has lead many employers to send jobs overseas. Meanwhile, sick workers are less productive. And the uninsured are more likely to remain sick unnecessarily for long periods of time. An improved U.S. health system is not just a moral imperative, it's an economic one.
We must reduce health care costs for every American family. Whether you have coverage or not, there is no doubt that insurance costs too much and costs are rising too fast. While we certainly must cover all Americans, we also need to begin to control the rate at which health care costs rise. Otherwise, none of us will be able to afford coverage for much longer.
We must improve the quality of care that patients receive. Bringing 21st century tools to our health system and paying clinicians in a way that makes sense will allow providers to spend more time with patients, cut down on preventable mistakes, and lead to better coordination of patient care.
Controlling health care costs is part of the solution to our entitlement crisis. Government analysts have said consistently that rising health care costs represent the single biggest fiscal challenge to our nation. Medicare and Medicaid spending continue to eat up a greater and greater share of our federal budgets. Providing a health care safety net is critical to protecting our nation's most vulnerable. Comprehensive health care reform will make our entitlement programs more sustainable and ensure that Medicare and Medicaid will be around to care for generations of Americans to come.
Improving our health care system is part of a comprehensive economic recovery plan. More and more Americans are simply unable to afford health coverage. More and more jobs are being sent overseas because of the employer health care burden. Rising health care costs place increasing strain on state, local, and federal governments. We must reform our health care system not in spite of our current economic crisis, but precisely because of the impact that health care costs have on our economy and our nation's fiscal future.

Watch out David Axelrod and Rick Davis...hardly. But nevertheless, stay tuned for our post debate recap, where we will translate the professionals' politics into health care policy.

COVERAGE: Into the Wild? Additional Risks of Selling Insurance Across State Lines

Paul Testa — Wed, 15 Oct 2008 16:29:00 -0400

We used to cross state lines to buy fireworks, but recent analysis by the New America Foundation suggests that selling health insurance across state lines—far from providing more "bang for our buck"—might cause the insurance market to go up in smoke.

Yesterday, we looked at the direct impact of such proposals on the insurance market. The bottom line of the de facto deregulation was not pretty, leading to higher premiums for many Americans, decreased benefits and less access to care. Today, we'll look at the effects of such proposals on market competition, as well as what would happen if selling health insurance across state lines was also paired with a proposal to eliminate the tax preference for employer-provided health coverage.

Proponents of selling insurance across state lines claim it would increase competition among insurers leading to lower premiums for consumers. Such reasoning falls short on two main accounts:

It's unclear how much new competition selling insurance across state lines would generate. Insurers with large market shares are able to negotiate considerable discounts from providers within their state. An insurer deciding whether to sell their product in another state would not have the same leverage to negotiate such discounts. If an insurer can't offer a cheaper product, then it's unlikely to enter a new market.
Selling insurance across state lines would undermine the ability of some insurers, especially the Blues and integrated health plans, to compete successfully. Integrated health plans, like Kaiser, would not be able to relocate to parts of the country where their network of doctors and hospitals doesn't exist. Blue plans would also not be able to relocate because they are state-chartered plans. The Blues and integrated health systems have been leaders in improving care delivery and disease management, but both would be put at a significant disadvantage compared to smaller insurers who could domicile in loosely-regulated states and aggressively underwrite.

Some proponents of selling health insurance across state lines, including Senator John McCain, would also eliminate the tax exclusion for employer-sponsored health care. Reducing or eliminating the employer tax exclusion could be helpful in financing a system of coverage, but not without significant market reforms that extend the advantages of the large group market—administrative effecies, economies of scale, large risk pools—to all Americans. Without such changes, removing the tax exclusion would exacerbate the problems of selling insurance across state lines for consumers. Fewer employers would offer insurance. More individuals would have to buy insurance in the individual market. In a world where insurance was sold across state lines, many would find higher premiums, which would now also be based on their health status. Coverage for many Americans would be more expensive and less generous than their previous employer-sponsored plans—if they could find coverage at all.

Later today, we'll take a look at the limitations of high risk pools and guaranteed renewal for solving the inherent problems of selling health insurance accross state lines.

QUALITY: The View From the Emergency Room

Joanne Kenen — Tue, 14 Oct 2008 19:16:00 -0400

We posted recently about a New America event on health care quality, but we wanted to highlight in more detail some of the points made by one of our speakers, Brent Asplin, MD, MPH. Dr. Asplin is the head of emergency medicine at Regions Hospital in St Paul. Minn, and he talked about what the quality challenges look like from the ER. He called the ER, "a room with a view," and noted, "If there's a problem with quality or access in your community, you will see it first in the ER." US ERs get about 115 million visits a year, he said. Behind that number are 115 million individual patient stories.

There's a common perception that the ER crisis is largely due to the uninsured who have no place else to go. There's an element of truth in that; the uninsured are a burden on the ER. But that's just one of many problems—lack of access to primary care, poor management of chronic disease, shrinking numbers of ER beds, and inefficient "flow," meaning if that beds aren't freed up efficiently in the rest of the hospital, patients needing admission pile up in the ER.

Some of this should be familiar to our readers by now. But one point Dr. Asplin stressed that was new to us was the shortage of psychiatric beds. I had seen this first hand when I visited hospitals in New Orleans after Katrina, but I hadn't realized it was reaching crisis proportions even in states like Minnesota, where health care overall is pretty good. After hearing Dr. Asplin discuss this, I tracked down a report by the American College of Emergency Physicians last June that found that psychiatric patients waiting twice as long as other patients. Often they are getting little or no psychiatric care while they wait. Our mental health infracture is too weak, and our ERs are too overwhelmed to fill in the gaps.

Dr. Asplin told us about a depressed, suicidal 72-year-old patient with multiple medical problems who was at the ER when Dr. Asplin arrived at 8:30 a.m. on a Saturday. He was still waiting for a bed at 4:30 that afternoon, when Dr. Aplin left. And he was still waiting when Dr. Asplin returned to work on Sunday. And on Tuesday. He ultimately spent 75 hours in the emergency department waiting for a psych bed. (Asplin remembers too that this occurred precisely as some Institute for Healthcare Improvement experts were at Regions that very day helping them address their patient flow problem...)

Dr. Asplin maintains that we can and should be able to improve emergency departments through some internal changes in hospitals—his own hospitals is already working on patient flow and related problems that lead to the crowding that concerns him every time he looks up at the board and sees how many patients are waiting for a hospital bed and how long they have been waiting. But the big fix for ERs nationally needs a big fix for the health care system as a whole—how we cover people, how we pay for care, how we treat patients. Dr. Asplin wishes we had health care counterpart to the NIH—a National Institute on Health Care Delivery. And he supports health reform proposals that change the payment and delivery systems, so that we pay for good care, not just lots of care, and can reward doctors who effectively manage high-cost patients. He's happy to see them in his ER when they belong there. But he'd rather that we have a health care system that keeps them healthy outside of the hospital, outside the ER, when they don't.

COVERAGE: Ask Your Doctor, Insurance Matters

Elizabeth Carpenter — Tue, 14 Oct 2008 17:42:00 -0400

We have blogged and written before about the importance of health insurance coverage when it comes to access to care and treatment. For example, the uninsured:

Remain sick longer and die prematurely
Are more likely than the insured to forgo preventive screening, which leads to a higher probability of late stage, untreatable diagnoses
Are more likely than the insured to go without medical care because of cost.

Yet, a piece in the Washington Post today brought us a new take on why health insurance really matters...from a physician's point of view. Dr. Manoj Jain detailed first and second hand accounts of patients who suffered life and death consequences because they did not have access to the care that health insurance affords. In addition to the real-life examples, however, a couple of comments in the article hit home:

There may be a few among the uninsured who prefer to buy $149.99 sneakers than health insurance. Far more common are stories of preexisting conditions that make insurance unaffordable or jobs that offer none.

Translation: Most people are uninsured simply because they cannot afford or access health coverage, not because they are choosing to spend their money on something else. And this number is growing. About half of Americans would need to spend more than 17 percent of their income to secure health insurance for their family. Meanwhile, fewer and fewer employers are providing health insurance and those that do are offering less generous coverage.

To compensate for the cost of treating uninsured patients (about 10 percent of my practice), I inflate my charges for all patients, thus increasing my income from commercial insurance.

Translation: Uncompensated care for the uninsured forces providers to raise rates for services. Insurers then raise premiums. This vicious cycle inextricably links the uninsured to health care costs and by extension premium rates. While estimates vary, the hidden tax is likely between three and 11 percent of health care premiums. In terms of premium costs, this adds between $360 and $1300 to the price of a family's health insurance coverage per year.

Covering all Americans is the right thing to do, but it is also the smart thing to do. The cost to the economy of the poor health and shorter lifespan of the uninsured is greater than the cost of covering all Americans. Sick workers are less productive and U.S. businesses are shipping more and more jobs overseas because of the employer health care burden.

The current economic crisis has cast a shadow of doubt over our nation's ability to embark upon new domestic initiatives. But as Len Nichols points out on the National Journal's new health blog, "We must take action not in spite of our current economic crisis but precisely because of health care's financial impact on American families and businesses."

A Health Reform Initiative Next Year in California?

Joe Mathews — Tue, 14 Oct 2008 13:52:00 -0400

I've spent the past 24 hours in Sacramento. The main piece of scuttlebut, from several sources: that Gov. Schwarzenegger, as part of the special election he's expected to call next year (likely fall), will pursue an initiative that would put in place the health care compromise he reached with then-Assembly Speaker Fabian Nunez in late 2006.

This raises all kinds of questions. One is a practical question: how to turn massive legislation into an initiative short enough that signature gatherers won't hurt their backs carrying it around California? Others are: 1. how the initiative might be structured to reduce the budget impact, given the international economic crisis and the state's budget woes. 2. And what kind of counter-initiatives might liberal groups such as the California Nurses Assn. (advocates of single payer) or more conservative groups (who don't like the fees or the mandates in Schwarzenegger's plan) pursue on the same ballot?

COVERAGE: Into the Wild? The Likely Impact of Selling Insurance Across State Lines

Paul Testa — Mon, 13 Oct 2008 21:43:00 -0400

Residents of Madison County Florida, one of five dry counties in the Sunshine State, can drive across state lines into Georgia to purchase alcohol. Shouldn't they also be able to purchase health insurance from Georgia, or any state that meets their needs?

Health care, however, is not a normal commodity (like bourbon?), and purchasing health insurance across state lines would not be the panacea some claim it to be, (unfortunately, also like bourbon).

Proponents of allowing insurance companies to sell their products across state lines have claimed it will lower costs and expand access by removing "unnecessary" regulation. A new paper released by the New America Foundation, however, makes clear that proposals to sell insurance across state lines would not work as advertised.

For example, proponents of selling health insurance across state lines believe the costs of health insurance can be reduced by allowing firms to relocate to states where they are not mandated by state regulation to include certain benefits (i.e. maternity coverage or emergency care) or sell plans to anyone who applies (guaranteed issue).

Yet, the CBO estimates that benefit mandates account for only a small portion of the costs of health insurance premiums. Texas estimated its own benefit mandates accounted for zero to three percent of small group premiums. A survey in California found that it's 44 mandated benefits it accounted for no more than 4.8 percent of premium costs. As the Wonk Room's Igor Volsky writes: "insurance companies lose money covering serious illnesses, not complying with benefit mandates."

Furthermore, insurers operating in guaranteed issue states would find it difficult to compete in a world where insurers were allowed to sell accross state lines. The number of guaranteed issue policies would decline and the price of those available would rise considerably.

The alleged savings, from such accross state lines proposals, come not from dropping benefit mandates but by creating a marketplace that promotes even more risk selection and market segmentation than currently exists. If insurance is allowed to go the way of the credit card industry, those who are healthy and are seeking the most basic coverage may be able to find lower premiums, but the rest of Americans would likely face higher costs and reduced access to care. This de facto deregulation undermines the essence of comprehensive health insurance. While most of us feel healthy on a given day, we all get sick eventually. Insurance isn't about servicing current needs, it's about a covering future risks. Pooling those risks is what helps make insruance affordable for all of us. Snatching up young and healthy customers may be profitable for some insurers, but it's unpalatable for most of us.

Tomorrow, we'll look at some of the impact of across state lines proposals would have beyond insurance market regulation, spefically relating to market competition and the employer tax exclusion.

COSTS: When Belt-Tightening Means Giving Up ... Chemo

Joanne Kenen — Mon, 13 Oct 2008 20:57:00 -0400

For millions of Americans, an economic slump doesn't mean belt-tightening. It means going without health insurance. Cutting back on preventive care. Foregoing chemotherapy

News stories from across the country describe how those scary gyrations on Wall Street hit health care on Main Street. USA Today reports on a study (not a random sample but still informative) that found that one-in-eight people with advanced cancer turned down recommended care because of the cost. For people with income under $40,000 the rate was one-in-four. New cancer treatments are often expensive, but more of the costs are shifted to patients, even those with insurance. From 2003 to 2006, insurers' cancer care costs rose a very steep 53 percent. But patients share of the costs more than doubled.

McClatchy newspapers profiled a couple in Pennsylvania, where both the husband and wife have chronic conditions. She's now living off Social Security disability payments because of her autoimmune disease; his rare nerve disorder causes attacks of debilitating pain that has interfered with his ability to work steadily as a carpenter. They are insured, for at least a few more months, but they are still paying about $25,000 out-of-pocket each year.

The Salt Lake Tribune noted that Utahns are skipping preventive and dental care, and even letting diseases like diabetes getting out of control because they can't afford to see a doctor. Demand for treatment of stress and depression is up as the economy has declined, but people can't afford it, and the nonprofit community resources can't match the growing need.

We hope that policymakers are reading these stories too. They remind us why the economic crisis can't squeeze health care off the agenda. They are one and the same.

QUALITY: Gone to Carolina, Where I Know Patients Have a Medical Home

Joanne Kenen — Mon, 13 Oct 2008 19:01:00 -0400

We've mentioned Community Care, North Carolina's innovative Medicaid program for chronic disease management, briefly in the past but today's News and Observer takes a detailed look. Community Care has been shown to save money —and improve the quality of care for Medicaid patients with conditions such as diabetes and asthma. The savings are impressive—$100 million a year, or $2 for every $1 the state spent on the program, which covers 810,000 Medicaid patients in "medical homes" through 14 nonprofit networks around the state.

The patients are monitored closely, so that conditions are kept in check and complications and hospitalizations are minimized. Case managers work with physicians and other providers, hospitals, public health and social service agencies to coordinate comprehensive care and make sure that patients don't fall through the cracks and that transitions—say after a hospital admission—are handled smoothly. Doctors get paid a fee to compensate them for the time-consuming aspects of care coordination and management that are often go not reimbursed.

"What's different about this is that the doctors, the pediatricians, the family physicians are really in charge," Adam Searing, director of the N.C. Justice Center's Health Access Coalition told the newspaper. "Health providers are getting reimbursed for the time they take in providing the care. If the doctor gets some monthly amount, and you have enough patients, that adds up to another person in your office that can handle [case management]."

North Carolina's approach offers many lessons (including the fact that state officials stuck with it during the early years, when it needed some tweaking and experimenting). Other states apparently want to learn; the newspaper reported that at least 32 states had contacted North Carolina to hear more about the system, and North Carolina is working with federal officials to see if they can expand the program to Medicare beneficiaries as well. Private insurers and businesses have also shown growing interest in the medical home approach, and not just for the poor in the Medicaid program. The growing interest is encouraging; medical homes address some of the cost and quality gaps in our system—and can address the needs of millions of Americans with chronic diseases. The concept has bipartisan support and we hope the public and private sector alike press ahead with lots more of these patient-centered models.

COST: Your Employer Spends How Much on Your Health Insurance?!

Elizabeth Carpenter — Fri, 10 Oct 2008 20:30:00 -0400

If you get your health insurance through your job, raise your hand if you know how much your employer spends on your coverage? Stumped? So am I.

Many Americans have no idea how much their health insurance costs because their employer is picking up most of the tab. This could change. Senate Finance Committee Chairman Max Baucus, Finance Committee Ranking Member Chuck Grassley and Senators Enzi, Wyden and Nelson have proposed requiring employers to put how much they spend on an employee's health care, vision, and dental coverage on his or her W-2.

Some analysts, including CBO Director Peter Orszag, believe that more transparency about employer spending on health could motivate more Americans to demand changes to create a more efficient system. (And by more efficient system, we mean one that delivers higher quality care per health care dollar).

According to Senator Grassley, "The point of the proposal is to inform people about their health care costs. Once informed, they might seek changes including improved efficiency, reduced waste and fewer unnecessary procedures, balanced with the natural need to have good coverage."

As we approach a national conversation about comprehensive health care reform, it is crucial for Americans to know the facts. And it seems that even in the face of an economic crisis, Congress is preparing for that conversation.

At a recent public event, Senator Baucus, whose committee is central to potential health care legislation, said, "We clearly are going to have to address health care front and center next year irrespective of some of the issues of the day because health will always be with us." He went on to say, "This is a national problem, clearly. Everybody is involved. And I am doing what I can initially by going around to senators and others suggesting hey, we are in this together. This has to be bipartisan. This cannot be partisan. Let's find a way that we are all working together to find a solution."

We'll raise both hands for that!