News

Contra Costa Times
Apr. 29, 2004
Kaiser adds deductibles to some insurance plans
By Judy Silber

Kaiser Permanente is the last large insurer to add deductibles to individual insurance plans purchased by people without coverage through work. By forcing consumers to pay for more of their care, deductibles lower monthly premiums…

“If we don’t follow the market, people will lose access to health care”, said Christine Paige, Kaiser’s senior vice president of marketing. “We have members who have been here their entire lives. We don’t want to abandon them as the market changes.”

Kaiser has set its deductibles relatively low compared with what’s offered by other insurers. Other insurers offer plans with deductibles as high as $5,000. But Kaiser’s deductible will be $1,500 for individuals, $1,000 or less for small employers and $1,000 initially for large firms.

But Karen Pollitz, a senior health policy researcher at the Health Policy Institute at Georgetown University, noted that deductibles contradict Kaiser’s mission of removing — rather than erecting — barriers to care.

“It’s too bad because Kaiser wrote the book on managing health care and disease,” Pollitz said. “I think they just made their task a lot harder.”

For people who don’t visit the doctor often, deductibles can lower overall out-of-pocket costs by decreasing the amount paid for monthly premiums.

But for those in need of care, deductibles add to their cost burden. Pollitz worries that will discourage people, especially those with chronic diseases, from seeking care.

Kaiser felt pressure to offer the deductible plans because it was losing members, Paige said. They (high-deductible plans) are an industry standard for the individual market, and employers are increasingly considering them as an option to stabilize premiums.

http://www.contracostatimes.com/mld/cctimes/business/8547735.htm

Comment: Rather than addressing health care costs, insurers and purchasers have narrowed their attention to the price of health insurance premiums in order to make health insurance affordable. The tragedy is that, as health insurance plans become more affordable, health care is becoming much less affordable for precisely those individuals with significant health care needs because of the dramatic increases in out-of-pocket expenses that they are facing.

Kaiser Permanente did not have much choice. Their competitors, especially Blue Cross and Blue Shield, have dominated the market with low-premium,high-deductible plans. Individuals with significant needs were selecting Kaiser because of its comprehensive coverage. By concentrating high-cost patients within their plans, Kaiser was faced with the prospect of driving premiums up even further and then losing market share because of unaffordable premiums (the “death spiral” of insurance premiums). Using standard market principles, they were forced to offer a competitive-market insurance product.

The marketplace, by making health plans affordable, has made health care unaffordable for those who need it. The unintentionally perverse, amoral nature of market dynamics has established the principle that the marketplace is not the proper environment to guide the financing of health care.

In sharp contrast, a universal program of social insurance would ensure that health care would be affordable for all who are in need. Isn’t that what we should be striving for?

Posted by pnhp at 02:02 PM | Permalink

The Globe and Mail
April 29, 2004
Pettigrew clarifies health-care statements
By Campbell Clark and Brian Laghi

AND

Calgary Herald
April 29, 2004
From good to bad in hours
By Tom Olsen

Health Minister Pierre Pettigrew backtracked yesterday from his statements about allowing private health-care delivery…

Canada’s Health Minister Pierre Pettigrew:

“Unfortunately, I now realize that I have left the impression that I favour increased private delivery within the public health system. That was in no way my intent, nor is that the intent of the Government of Canada.

“To put it as plainly as I can, the ambition of the federal government is not to encourage private delivery even within the terms of the Canada Health Act. Quite the contrary, our ambition is to expand public delivery because, as Roy Romanow said it very well, public delivery provides Canadians with the best system possible.”

http://www.theglobeandmail.com/servlet/ArticleNews/TPStory/LAC/20040429/HEALTH29/TPHealth/

http://www.canada.com/calgary/calgaryherald/news/story.html?id=84d78fc4-0220-4ad5-aa0f-8f7b38c34cd7

Comment: Some construed yesterday’s message as an attack on the profits that can be realized in the health care delivery system. In my comment, I referred to “the perverse incentives created by including for-profit corporations and their passive investors in the health care delivery system.”

In discussing the problems with for-profit corporations, the operative term is not “profit” but rather “investor-owned corporations.” Profits are just as essential in health care as they are in any other sector of our economy. But the primary mission of health care providers should be to deliver the best possible health care services and products while retaining a fair profit.

The primary responsibility of a board of directors of an investor-owned corporation is to provide maximum shareholder value through stock appreciation and distributed dividends. And boards of for-profit corporations frequently reward themselves with significant ownership. This clear conflict of interest between shareholders and patients leads to a health care delivery system that, as Mme. Desjarlais indicated, is “more costly, less efficient and even more dangerous to patient care than the regular public system.”

It is a relief to see that Health Minister Pettigrew now sees that the Canadian citizens are quite serious when they say that they want a health care system dedicated to patients rather than investors.

Posted by pnhp at 03:07 PM | Permalink

The StarPhoenix (Saskatoon)
April 28, 2004
Ottawa opens up medicare
By Mark Kennedy

The federal government will not stand in the way of provinces that want to “experiment” with medicare by hiring for-profit private companies to deliver medical services within the publicly funded system, says Health Minister Pierre Pettigrew.

The declaration came Tuesday after an appearance before a House of Commons committee, where Pettigrew was grilled by MPs over his government’s commitment to enforcing the Canada Health Act and to allowing more privatization.

Pettigrew was remarkably blunt in his responses to MPs, providing what was likely the most direct statement in recent years by a federal health minister about private-sector delivery of medicare.

“Public administration is the principle, not public ownership. There’s a difference between public ownership and public administration.”

At the committee, New Democrat MP Bev Desjarlais pushed Pettigrew for a clear answer on whether the Liberal government will stop the growing trend of provinces using private firms to deliver medicare to patients.

But Pettigrew repeatedly stressed that the Canada Health Act does not forbid this.

It was also a hot political topic that Roy Romanow addressed in his royal commission report on health care two years ago. He warned about the “potential risks to the integrity and viability of our health-care system that might result from an expanded role for private providers.”

In a heated exchange Tuesday, Desjarlais told Pettigrew he is supporting the use of taxpayers’ dollars to help for-profit health companies — even though many studies have shown they are more costly, less efficient and even more dangerous to patient care than the regular public system.

“There needs to be a real outright honesty with Canadians,” she said. “The government should just come out and say, ‘We are going to promote for-profit health-care service delivery.’ “

Clearly angry by the charge, Pettigrew shot back: “You choose your words, and I’ll choose mine Mrs. Desjarlais. I have been making my position very clear and I am as honest with Canadians as you are. I know you like to be virtuous. I like to be very frank and honest as well.”

http://www.canada.com/saskatoon/starphoenix/story.asp?id=9D3D1B4E-2D2D-430E-AB6D-2C457D42A7B1

Comment: Two major themes permeate our health care reform efforts in the United States. Of greater importance, we clearly see the need to establish a method of financing health care that will enable access to affordable, comprehensive care for everyone. We believe that the single payer model of universal social insurance would be the most effective. The other issue that we address is the perverse incentives created by including for-profit corporations and their passive investors in the health care delivery system. As Mrs. Desjarlais indicated, “many studies have shown they are more costly, less efficient and even more dangerous to patient care than the regular public system.”

Our first task will be to establish an equitable, publicly funded and publicly administered, universal health insurance program. Then we can tackle the much more difficult problem of misuse of our resources that is designed to benefit investors.

Canada has already accomplished both of our goals, although there is still more for them to do. But it would be tragic if Canadian politics were effective in rejecting the “virtuous” in favor regressing to “frank” for-profit health-care service delivery.

Posted by pnhp at 01:57 PM | Permalink

Toward Openness in Drug Purchases
April 28, 2004
The New York Times

The veil of secrecy that shrouds the operations of the middleman companies that manage drug benefits for tens of millions of Americans was lifted a bit this week when the nation’s largest manager of pharmacy benefits agreed to greater transparency. If the settlement reached by that company, Medco Health Solutions, and litigators representing 20 states and the federal government becomes common practice, it may ease suspicions that the companies managing benefits make deals that favor their own financial interests rather than those of the patients or the health plans they serve.

In theory, the middleman companies are supposed to keep drug prices low by negotiating favorable deals with pharmaceutical manufacturers and passing on the savings to health plans, employers and other clients. But lawsuits filed by 20 states and the United States attorney in Philadelphia alleged that Medco had sometimes made deals to benefit itself and failed to pass on sufficient savings to its customers. Indeed, the suits contended that Medco, in return for higher rebates from manufacturers, had sometimes persuaded doctors to change patients’ prescriptions in ways that had actually increased the costs for the patients and their health plans. Medco was accused of pocketing a lot of the rebate money and failing to tell clients it had done so.

Without admitting any wrongdoing, Medco has agreed to pay a modest cash settlement and, more important, to change its business practices. The settlement prohibits Medco from seeking to switch drugs if the net result would be higher costs for the patients or the drug plans. Medco will also reveal to prescribers and their patients any financial incentives it receives for switching drugs. These and other requirements could help rein in these largely unregulated companies as they assume a major role in administering the new Medicare prescription drug benefit.

Copyright 2004 The New York Times Company

Posted by pnhp at 01:32 PM | Permalink

Daily Health Policy Report
[Apr 22, 2004]

Prescription Drugs | Sen. Dayton Criticizes Action by FDA To Stop Busload of Seniors Who Purchased Medicines in Canada

In a letter to FDA Commissioner Lester Crawford, Sen. Mark Dayton (D-Minn.) on Wednesday criticized FDA’s inspection last fall of a bus of seniors returning from a trip to a Winnipeg, Canada pharmacy to buy prescription drugs, the Minneapolis Star Tribune reports. On Oct. 22, FDA agents boarded the “Rx Express” bus as it returned to Minnesota and inspected medicines that passengers had purchased in Canada (Diaz, Minneapolis Star Tribune, 4/22). After a “cursory review,” FDA agents decided that the drugs could be imported and did not seize any of the products, John Taylor, FDA associate commissioner, said. FDA permits the importation of prescription drugs for personal use, though the practice is technically illegal. The U.S. Customs Service requested the inspection, according to Taylor (Frommer, AP/Philadelphia Inquirer, 4/22). In his letter to Crawford, Dayton wrote, “Until the FDA action, those trips were unimpeded by Customs or other federal officials,” adding that the inspection “was extremely stressful to some of the elderly riders and has caused alarm among prospective riders” (Minneapolis Star Tribune, 4/22). Dayton donates his entire Senate salary to finance bus trips between Minnesota and Canada, during which riders can purchase medicines in Canada, where they often cost less than in the United States. In his letter, Dayton, who only recently became aware of the incident, asked FDA officials whether the inspection was “the beginning of a new practice of harassment and intimidation against elderly citizens who are traveling themselves to Canada to make their prescription drug purchases.” Taylor said that the inspection was “an unusual event,” adding, “This is not consistent with our current practice. I would not expect it to happen again” (AP/Philadelphia Inquirer, 4/22)

Click here to view this article at Kaisernetwork.org.

Posted by pnhp at 01:20 PM | Permalink

Can we afford not to insure the uninsured?
ARNOLD BIRENBAUM
(Original publication: March 8, 2004)

The Journal News
The online information source for Westchester, Rockland, and Putnam

(The writer, a Larchmont resident, is a professor of pediatrics at Albert Einstein College of Medicine, Bronx.)

Sen. Bill Frist, U.S. Senate majority leader and a thoracic surgeon, recently predicted that many of the 43 million in America without insurance will remain uninsured. Dr. Frist believes that it is too expensive for the government to cover the entire population of the United States, particularly following the new expansion of Medicare-based drug benefits, the creation of financial incentives for managed-care plans to enroll senior citizens, and the taxes lost through the promotion of health savings accounts.

As a man with religious faith in the free market, he has seen a rosy future, but it does not work for the uninsured.

Other public leaders with less of a will to believe have seen further and call for action now with regard to the uninsured. In January, the Institute of Medicine, one of three congressionally chartered national academies functioning since 1970 as an adviser to the federal government, issued “Insuring America’s Health: Principles and Recommendations,” the last in a series of five reports on uninsurance — a social condition resulting from the rising cost of health care and increased family stress, as well as the individual health risks of having one out of seven Americans without insurance. These well-crafted studies and their recommendations were subject to review by national experts.

The status quo second, even third-class status for the uninsured is an unsustainable option for our society. What we see now are the lowlights of our health-care system.

People without insurance find private insurance unaffordable and put off necessary visits to the doctor. While they may be young and relatively healthy, they sometimes, like most of the insured, need access to care. Additionally, the uninsured do not seek preventive care or screening for disease. When hospitalized, those without insurance may not receive all the tests that the insured get.

Clearly, the quality of care of the uninsured does not match that received by those with private or public insurance.

The presence of uninsured patients in the health-care system is now more than ever destabilizing since cross-funding is no longer available. Private insurance payments became less generous when medicine entered the era of managed care. Inpatient and outpatient providers had to offer deep discounts to gain contracts from insurance plans. Thinner margins made charity care less possible.

Consequently, there is a personal and societal price for lack of access. The authors of “Insuring America’s Health” estimate that the cost of poorer health and shorter lives is somewhere between $65 billion and $130 billion, a bill that comes due down the road. Some of this extraordinary cost is the result of discontinuities in coverage — gaps that arise when workers lose their coverage when they become unemployed or beneficiaries are removed from state Medicaid rolls.

Other countries do more with less money. Most of the advanced industrial nations to which the United States is compared have universal coverage, either through a social insurance system or progressive taxation. Currently, the United States spends almost 14 percent of its gross domestic product on health care, and that is expected to increase by 2013 to more than 18 percent! No other country comes close to this share of GDP.

How long can we afford to ignore the conclusion that these costs are unsustainable in the long run?

And, by all standard public-health measures (e.g., infant mortality, life expectancy), these systems of financing found in Canada, Great Britain, France or Japan, to name but a few countries, do just as well as we do, or better. Continuity of coverage means better access to health care. Changing jobs or losing jobs does not mean that a German citizen, for example, has to go without health insurance and access to care.

Our country, unlike other advanced societies, does not have in place safety nets that generate cost benefits to society as well as to its citizens. There is no universal entitlement to health-insurance coverage in the United States. The recent recession has led more employers to eliminate health-care benefits for their employees and/or their dependents. This trend will only lead to more churning and reduced access to needed care.

There are long-run savings from universalizing coverage, even with subsidies for low-income workers. Otherwise, we will pay for the neglect of the health care of the growing number the uninsured in coming decades.

What kind of a future is that, Senator? Shall the last to gain insight into our predicament be the Frist?

Posted by pnhp at 01:15 PM | Permalink

USA TODAY
April 26, 2004
Out of pocket costs may soar
By Julie Appleby

Sharply higher health insurance deductibles may hit workers in the next two years as employers embrace newly created tax-free Health Savings Accounts (HSAs).

Nearly three-quarters (73%) of employers asked by Mercer Human Resource Consulting said they were likely to offer the new accounts to their workers by 2006, according to a survey to be released this week.

“We’re looking at a major market change,” says Linda Havlin, Mercer’s Midwest health care practice leader, noting that a 73% interest in adopting a new program within two years “is unprecedented.”

(HSAs) must be coupled with insurance policies with annual deductibles of at least $1,000 for individuals and $2,000 for families. Widespread adoption of the plans could drive up the average annual deductible paid by workers, which is now about $300 for single employees and $600 for families, according to data from Mercer and the Kaiser Family Foundation.

Mercer’s survey of 991 employers found that 61% would set the individual annual deductible for an HSA plan at $1,000. But 17% chose $1,500, 11% said $2,000 and 10% were above $2,000.

Don’t expect employers to pay that deductible: The Mercer study also found that 39% would not put any money into the savings accounts for workers, while 24% would put in $500 a year, leaving it up to the workers to fund the rest.

http://www.usatoday.com/money/industries/health/2004-04-25-hsas_x.htm

Comment: It certainly did not take long to expose the real reason behind the HSA provisions in the Medicare bill. Now that HSAs are here, health care costs are being shifted from insurers and from employers who sponsor plans to the patients who need health care services. The HSAs were merely an excuse to shift to high deductible coverage. The HSAs themselves have very limited benefit for moderate and low income individuals since many do not have the resources to fund these accounts, and they wouldn’t receive nearly the tax benefit, if any, that higher income individuals would.

Health policy analysts should take note of the “unprecedented” interest of employers in adopting HSAs. Although it is understandable why employers want to escape the rising costs, their decision to shift these costs to their employees is a clear signal that it is time to end our national policies that have favored employer-sponsored coverage. Control should no longer be left with employers.

A vastly superior alternative is for all of us to assume control by adopting our own universal program of social insurance. We’ll design our program so that it will ensure financial security for everyone when faced with health care needs. We’re already paying more than enough for such a system. We’re entitled to have it.

Posted by pnhp at 01:02 PM | Permalink

The Washington Post
April 26, 2004
Some Finding No Room at the ER
Screening Out Non-Urgent Cases Stirs Controversy
By Ceci Connolly

University of Colorado Hospital is leading the way on a controversial solution — weeding out the people with bumps and scrapes so it can devote more time and resources to serious, life-threatening traumas and, also, to paying customers.

Under the new policy, University hospital demands partial payment up front from non-emergency patients who seek treatment in the ER. For some, including Medicare and Medicaid beneficiaries, the fee is a small cash co-payment; insurance pays the rest. For the uninsured, however, the charge can be a few hundred dollars — money many don’t have. So they leave, toting a list of low-cost clinics in the area.

But the desire to redirect minor cases to more appropriate treatment facilities only goes so far. In a perversion of the system, insured patients are welcome to stay, no matter how trivial the problem.

Many in the community say they would not have an issue with triaging patients out of the ER if University could make them appointments at a more appropriate facility, as the city-funded Denver Health does.

“We do over-utilize our emergency rooms”, said Lorez Meinhold, executive director of the Colorado Consumer Health Initiative. “But a piece of paper listing local clinics is not access to care.”

“It’s an incredibly mean, nasty time to be in medicine”, said Mark Earnest, a general internist at University and vice president of the Colorado Coalition for the Medically Underserved. “There is not a consensus on how we are going to take care of people, and the result is everybody having to worry about their own survival”.

http://www.washingtonpost.com/wp-dyn/articles/A41995-2004Apr25.html

Comment: Triage is an absolutely essential, fundamental function of
emergency rooms. A properly functioning emergency room will have triage decisions based strictly on medical need, and it will provide an accessible pathway based on that need.

But when an individual’s insurance status becomes a part of the triage equation, we realize just how perverse our system of financing health care has become. Allowing insured patients to elect to receive unwarranted, excessive services is wasteful of our resources, while sending an uninsured patient away without adequate access to affordable care is an inequitable underutilization of these same resources. Equipping emergency rooms with a one-way back door to the alley is not an adequate solution for the uninsured.

If everyone had comprehensive insurance coverage, then triage decisions could be made strictly on the basis of medical need. With a rational system of financing care, we would certainly still have many challenges in our efforts to reform health care. But without a rational system of funding, we can’t even have dreams of moving closer to a health care Utopia.

Posted by pnhp at 12:10 PM | Permalink

Atlanta Journal Constitution
Editorial
Health care system needs doctoring
Published on: 04/24/04

The American health care system is in some ways like the Titanic. It is big and luxurious and a showplace for the last word in technology. It is committed to its clientele, especially those in the upper decks. Many of the people bidding the ocean liner farewell from the shore wish that they could come aboard, but even though they work hard, sometimes holding down two jobs at a time, they just can’t afford it.

Our titanic medical delivery system is the envy of the world, embraced and patronized by kings and potentates. Surely its future is guaranteed.

Or is it?

Critics of our $1.6 trillion health care industry warn of real trouble ahead. We spend more per capita than any nation in the world, yet the CIA World Fact Book rates us 48th in life expectancy, compared to 11th for neighboring Canada. We annually squander some $135 billion in lost productivity due to illness, much of it preventable, and an estimated 15 percent of our population — some 43.6 million people — lived without health insurance for all of 2002. According to Census Bureau figures, 25.6 million of those without insurance worked either part time or full time.

But the truly big iceberg looming dead ahead is the rising cost of health care, including prescription drugs and hospital care. That is driving some employers to drop job-related health insurance, and is putting others at a serious disadvantage with foreign competitors that do not have to cover health insurance costs for their employees.

In the fierce, globally competitive auto industry, for instance, accountants estimate that health insurance costs for U.S. manufacturers add $1,300 to the price of each vehicle, even more than the cost of steel. European manufacturers, in contrast, often benefit from government health insurance plans that keep companies off the hook. The lure of avoiding health insurance costs also helps account for the outsourcing of jobs overseas.

Technology also poses a threat to the current U.S. health care system. Genetic research, for example, may soon identify which of us are prone to certain diseases, thereby making preventive care possible. But it will also help insurance companies identify which of us are at higher risk of illnesses that threaten to be chronic and even catastrophic, allowing the companies to deny coverage for those people. After all, as one traditional insurance source put it, “We are not in the habit of insuring burning houses.”

A decade ago, the Clinton administration made a well-intended but poorly handled bid to introduce universal, single-payer coverage, an effort that ended in political disaster for Democrats and took the issue off the national agenda. The passage of time, however, has only confirmed the initial attractions of that approach. In a lengthy piece in the April 18 New York Times Sunday Magazine, former first lady Hillary Clinton, now a U.S. senator from New York, argues for an overall system that pools risk and directs funds to a comprehensive plan that takes care of health needs and focuses on health maintenance.

Such a plan could focus on efficiencies of delivery and mandate research on illnesses that are neglected because the numbers of the sick are small” for instance, serious diseases such as epilepsy and killers such as scleroderma. A managed health care program could also guide and finance research into overarching health problems such as asthma and other pulmonary diseases.

Inevitably, a single-payer system would create challenges of its own, and may not be the ultimate answer. But the business community that bitterly opposed the concept a decade ago is now beginning to see financial merits in the approach. Doctors, hospitals and patients struggling to deal with an ever-more complex private insurance scheme may prove more open to the idea as well. And the inescapable truth is that for all of its technology and know-how, the United States gets less cure for its health care buck than any other highly advanced nation.

Surely that’s sufficient cause to rethink what we’ve been doing.

LIFE EXPECTANCY

The United States ranks 48th out of 225 countries surveyed.

Posted by pnhp at 11:56 AM | Permalink

National health care to be discussed
Herald Staff Report
April 21, 2004

A free public teach-in on a single-payer national health-care system will be presented from 6:30 to 9 p.m. Wednesday, May 5, in 130 Noble Hall at Fort Lewis College.

“Recent polls have revealed that most Americans favor a system of national nonprofit insurance to finance care by doctors in private practice for every man, woman and child in the country,” said Ray Parker, a local supporter of a single-payer health system, in a news release.

The teach-in is part of a nationwide observance of “Cover the Uninsured Week, May 10-16, designed to draw attention to the nearly 44 million Americans who have no health insurance. Former presidents Jimmy Carter and Gerald Ford are honorary co-chairmen.

Dr. Donald Bader, head of Mercy Medical Center’s emergency staff, will be the featured speaker. He will present a slide show explaining how the system would work and why it has been adopted in various forms by other industrialized nations.

A panel of experts will then join Bader onstage with volunteer moderator Marsha Porter-Norton. Audience members will be invited to ask questions and offer comments.

The experts from various health organizations include:

• Betty Lyerle, professor emeritus of sociology and human services at Fort Lewis College.

• Lynn Westberg, director of San Juan Basin Health.

• Jim Tatten, director of state advocacy for Catholic Health Initiatives, which operates 17 hospitals nationwide, including Mercy.

• Bern Heath, president/chief executive officer of Southwest Colorado Mental Health Center, which serves Archuleta, Dolores, La Plata, Montezuma and San Juan counties.

The teach-in will be co-sponsored by the local Citizens for Single Payer Health Care and the League of Women Voters of La Plata County.

Click here to read the article at DurangoHerald.com.

Posted by pnhp at 07:09 PM | Permalink

By ROBERT PEAR
Published: April 23, 2004
The New York Times

WASHINGTON, April 22 — The Equal Employment Opportunity Commission voted Thursday to allow employers to reduce or eliminate health benefits for retirees when they become eligible for Medicare at age 65.

The agency approved a final rule saying that such cuts do not violate the civil rights law banning age discrimination. The vote was 3 to 1, with Republicans lining up in favor of the rule and a Democrat opposing it.

Employers and some labor unions supported the change, saying it would help preserve coverage for early retirees. But AARP, which represents millions of Americans age 50 and older, strenuously objected.

The new rule creates a potentially explosive political issue, because it will create anxiety for many of the 12 million Medicare beneficiaries who also receive health benefits from their former employers.

“We are aware of the anxieties and misperceptions that have taken root,” said Cari M. Dominguez, chairwoman of the commission, which was deluged with letters opposing the rule from more than 50,000 AARP members.

Employer-sponsored health plans help retirees pay medical expenses not covered by Medicare. Those expenses could include co-payments and deductibles, the catastrophic costs of severe illness and the cost of preventive care and prescription drugs, beyond what Medicare might pay.

Debate over the rule highlights the tradeoffs employers make as they decide what benefits, if any, to provide workers and retirees at a time when health care is gobbling up a growing share of total compensation.

The rule creates an explicit exemption to the Age Discrimination in Employment Act of 1967. In practice, it allows employers to reduce health benefits for retirees when they become eligible for Medicare at the age of 65.

A federal appeals court ruled in 2000 that such age-based distinctions were unlawful.

No law requires employers to provide health benefits to workers or retirees. Employers can legally provide benefits to active workers and not to retirees. Courts have said that if an employer provides benefits, it cannot discriminate among retirees on the basis of age.

But the commission said that under the age discrimination act it had authority to make “reasonable exemptions” to the law in the public interest. The law does not define “reasonable.”

Leslie E. Silverman, a member of the commission, said the appeals court decision had confronted employers with an all-or-nothing choice: “Give all of your retirees the exact same benefits, which is incredibly difficult, or eliminate your retiree health benefits altogether.”

Several commission members said that employers were more likely to continue providing health benefits to retirees under 65 if they were allowed to reduce or eliminate benefits for those 65 and older.

A preamble to the final rule says it “is not intended to encourage employers to eliminate any retiree health benefits they may currently provide.”

But Michele Pollak, a lawyer at AARP, said that might well occur.

“This rule will allow employers to reduce or eliminate retiree health benefits for anyone over the age of 65,” Ms. Pollak said. “More than 12 million Medicare beneficiaries currently receive retiree health benefits from employers and could potentially be affected.”

Ms. Pollak said the commission did not have authority to create such an exemption. Ms. Dominguez insisted that it did, though she said the power was rarely used.

Paul W. Dennett, vice president of the American Benefits Council, a trade group for large employers, welcomed the rule, saying, “It removes a cloud that has been hanging over retiree health coverage since the court decision in 2000.”

The American Federation of Teachers and the National Education Association also supported the rule. School employees often retire early and rely on employer-provided health benefits until they become eligible for Medicare.

Alfred Campos, a lobbyist for the National Education Association, praised the rule, saying, “It will encourage school districts to continue providing health insurance to retired teachers under 65.”

Stuart J. Ishimaru, who cast the only no vote, said: “I came to the commission as a civil rights lawyer. Before making an exemption to a major civil rights law, you need a compelling reason, which I have not seen.”

The proper role of the commission, Mr. Ishimaru said, is not to make health policy, but to protect people from discrimination.

The rule is subject to comment by other federal agencies, and it will be reviewed by the Office of Management and Budget. But it is within the jurisdiction of the employment commission and is expected to stand.

The rule reverses a position that the commission took in the court case and in a national policy statement issued in October 2000.

Under the rule, employers can coordinate retiree health benefits with Medicare.

Opponents could challenge the rule in court. AARP said it would “explore a range of different steps, including litigation,” to block the rule if it is not changed.

Congress considered the issue in debating Medicare legislation last year. The Senate version of the Medicare bill included a provision similar to the commission’s rule, but it was dropped from the measure ultimately signed by President Bush.

AARP insisted on elimination of that provision before it announced its support for the bill in November. That endorsement played a critical role in passage of the measure.

In recent years, many employers have reduced health benefits for retirees, in part because of soaring health costs.

Employers said that uncertainty caused by the court decision, involving retired government workers in Erie County, Pa., would accelerate the erosion of retiree health benefits if the commission did not take action.

Posted by pnhp at 02:23 PM | Permalink

U.S. Equal Employment Opportunity Commission
April 22, 2004
EEOC Approves Proposal to Exempt Retiree Health Plans from Age Discrimination in Employment Act

During a public meeting today, the U.S. Equal Employment Opportunity Commission (EEOC) voted to approve a proposed final rule that would permit employers, under the Age Discrimination in Employment Act (ADEA), to lawfully coordinate retiree health benefit plans with eligibility for Medicare or a comparable state-sponsored health benefit. This common and long-standing employer practice was called into question in 2000, when the U.S. Court of Appeals for the Third Circuit (Erie County Retirees Association v. County of Erie) held that the federal statute requires employers to assure that pre- and post- Medicare eligible retirees receive health benefits of equal type and value.

http://www.eeoc.gov/press/4-22-04a.html

The New York Times
April 23, 2004
Commission to Allow Insurance Cuts for Retired Employees
By Robert Pear

The Equal Employment Opportunity Commission voted Thursday to allow employers to reduce or eliminate health benefits for retirees when they become eligible for Medicare at age 65.

The agency approved a final rule saying that such cuts do not violate the civil rights law banning age discrimination.

“This rule will allow employers to reduce or eliminate retiree health benefits for anyone over the age of 65,” (Michele Pollak, a lawyer at AARP) said. “More than 12 million Medicare beneficiaries currently receive retiree health benefits from employers and could potentially be affected.”

Alfred Campos, a lobbyist for the National Education Association, praised the rule, saying, “It will encourage school districts to continue providing health insurance to retired teachers under 65.”

http://www.nytimes.com/2004/04/23/politics/23RETI.html?hp

Comment: Relaxing the age discrimination rules for retirement health plans threatens programs that expand benefits for retirees on Medicare. On the other hand, relaxation of the rules provides financial relief for employers who provide benefits to retired employees not yet eligible for Medicare, by eliminating the age discrimination rules once they are eligible for Medicare. Are we really reduced to choices in deciding who gets the shaft?

What we do need is better benefits for Medicare beneficiaries, and for everyone else as well. The 15.5% of our GDP that we are spending on health care would fund comprehensive benefits for everyone. Instead of moving backwards by enabling age discrimination in health care, let’s move forward by adopting an equitable, comprehensive program for everyone.

Note: If the above New York Times link does not take you straight to the article, you may view the text under ‘Recent Articles of Interest’.

Posted by pnhp at 02:02 PM | Permalink

HCA (Hospital Corporation of America)
Press Release
April 14, 2004
HCA Previews First Quarter Results

Jack O. Bovender, Jr., HCA Chairman and CEO:

“As I have commented on many occasions over the past two years, the most significant challenge the hospital industry faces is the growing numbers of uninsured and under-insured in this country. Hospitals have become the ultimate safety net for health care services for the vast majority of America’s more than 44 million uninsured. Unfortunately, this is a cost the hospital industry is increasingly bearing alone. It is time for all sectors of society, both public and private, health care and non-health care, to participate in solving this societal issue, by providing affordable health insurance for all Americans and more equitably sharing this growing cost to society.”

http://ir.thomsonfn.com/InvestorRelations/PubNewsStory.aspx?partner=8847&storyId=111472

Comment: Some may question the motivation behind this comment by the CEO of the nation’s largest hospital company. Supporting an equitable system of health insurance for all Americans is certainly self-serving for the hospital industry. But wouldn’t it also be self-serving for all of us?

As founders and major shareholders in HCA, hopefully Sen. Frist’s family will listen to their CEO. Enacting a program of health insurance that is universal, equitable, and affordable certainly limits the possibilities for reform. Sen. Frist should discard some of his bad ideas and begin working on reform that benefits us all.

Posted by pnhp at 11:33 AM | Permalink

USA Today, April 16, 2004
Letters
Cure for health woes: National insurance

USA TODAY’s article, ‘Hospital bills spin out of control,’ raises the question: What control? America doesn’t have a health care system; it has a non-system with no public accountability (Cover story, News, Tuesday).

The hospital-funding system is a jobs program for an army of paper pushers. Some hospitals report that they employ more administrative staff than caregivers. Most of these bureaucrats chase the money needed to keep hospitals open. This unstable financing system is unfair to the 43 million Americans with no insurance. Health care bills, often disguised as credit card debt, are the top reason for personal bankruptcy, according to a 2000 study. Still, these bills are paid. It’s the main job of the health bureaucracy: shifting costs to those with insurance.

Our nation suffers a higher rate of death, disability and lost productivity because we fail to provide national health insurance. Every other industrial democracy manages to cover all of its citizens at half the cost with comparable or better quality. Each has accountability within the programs, unlike our byzantine mess of private insurers.

Improved Medicare for all Americans, not just those over age 65, could replace our inefficient system of multiple private insurers. The administrative savings and simplicity of a single-payer system would allow comprehensive coverage for all, with no new spending. National health insurance will save lives and money. It is the right thing to do.

Johnathon S. Ross, MD
Past President
Physicians for a National Health Program
Toledo, Ohio

Posted by pnhp at 11:19 AM | Permalink

Southwest Nebraska News
4/14/2004
Nelson Unveils Proposal to Expand Insurance Coverage, Lower Health Care Premiums

With health care costs spiraling and the number of uninsured expanding, Nebraska’s Senator Ben Nelson today unveiled a plan to reduce health care premiums so that more Americans can purchase and retain health insurance.

The Nelson plan would:

Create a federal “backstop” to provide coverage for catastrophic claims, with the insurer paying noncatastrophic claims up to a certain cost. This is known as “stop-loss coverage” and provides a dollar limit to the insurer’s exposure to either an individual claim or aggregate multiple claims.

Require the insurer to reduce premiums if they want to participate in the program.

Create a certification process by which insurance companies could be reimbursed for these catastrophic costs. The proposal allows for flexibility as insurees would continue to work through their insurance companies, but also requires accountability from the insurance companies.

The benefit of only having to pay premiums for noncatastrophic coverage is that it is predictable-the insurer knows in advance what the maximum claim amount per person will be.

http://www.swnebr.net/newspaper/cgi-bin/articles/articlearchiver.pl?155723

John Kerry for President
John Kerry’s Plan to Make Health Care Affordable to Every American

(1) Creating a new approach to control spiraling health care costs - and passing the savings on to workers

John Kerry believes that health care is becoming too expensive. He has a proposal for a new ‘premium rebate’ pool that will make health care more affordable for all employers and employees by helping out with certain high cost health cases. Under this proposal the pool would reimburse employee health plans for 75 percent of the catastrophic costs they incur above $50,000 as long as they guarantee such savings are used to reduce the cost of workers’ premiums. Helping out with catastrophic costs would strengthen the employer-based market by making health care more affordable for purchasers.

http://www.johnkerry.com/pdf/kerry_health_plan.pdf

Comment: There is bipartisan support for providing government subsidies for stop-loss coverage of catastrophic medical events. The intent is to keep health insurance premiums affordable, thereby protecting our current system heavily dependent on private employer-sponsored and individual health insurance plans. Since almost everyone is concerned about affordability of health care, this seems like a very reasonable approach. But there are serious problems with it.

This solution addresses only insurance premium prices. It does absolutely nothing to control the actual health care costs, which would continue to escalate well beyond the rate of inflation. In fact, by turning attention to premium prices, there is significant risk that true cost escalation will continue to be ignored. We’ll all be paying much more, but the catastrophic subsidies will make these increases less visible.

This program also will compound the problems of the administrative waste which currently plagues our system. We would have a new layer of complex accounting which would be required to establish eligibility for the catastrophic funding. Each insurer currently establishes their own reimbursement rules based on provider lists, allowed services, fee schedules, tiering of coverage and other specifications. A national stop-loss program would have a different set of criteria for establishing when the catastrophic deductible kicks in. Obviously this will add further to the costs and wastes of our current administrative nightmare.

And surely the national catastrophic insurance would have its own version of allowed charges. The disallowed charges would not be paid by patients, norby the health plans, but the losses would be absorbed by the health care providers. We do need cost containment in health care, but through sound policies. This guillotine approach could threaten the solvency of the providers.

We also need to ask who this is really protecting. It’s not protecting the patient-consumer because we’ll have to bear the additional costs in the form of higher taxes. The insurance industry has been trying to escape exposureto risk as they sell us more and more administrative services. This proposal dramatically reduces their exposure by essentially eliminating the costs of catastrophic care. Routine costs are much more predictable and easily factored into the premiums. Why should we be supporting policies that protect this industry that has been a source of much of the waste and inefficiency in our current system of funding health care, while allowing them to abandon much of their traditional role of risk pooling? Instead of adopting policies that support this industry, we need policies that eliminate it.

This deceptively attractive proposal will increase administrative waste, fail to control cost escalation, and protect the insurance industry, at a greater financial cost to all of us. Let’s reject this highly flawed concept and, instead, base reform on truly sound health policy.

Posted by pnhp at 11:12 AM | Permalink

By JEFF MADRICK
Published: April 15, 2004

In widely reported comments before a Congressional committee in February, Alan Greenspan, the Federal Reserve chairman, suggested that President Bush’s tax cuts should not be even partly rescinded. Rather, Mr. Greenspan said, the nation should cut future domestic spending, including Social Security benefits, to balance the budget. Higher spending or higher taxes would deter economic growth, he warned.

The committee should have asked the statistically oriented chairman for the evidence. A comprehensive analysis by the economic historian Peter H. Lindert, published in a new book, “Growing Public” (Cambridge University Press), contends that there simply is none. His analysis is partly a broad extension of other studies by economists like Joel B. Slemrod of the University of Michigan, but he adds considerably to the argument.

Mr. Lindert is a professor at the University of California, Davis; former president of the Economic History Association; and an associate of the National Bureau of Economic Research. He has examined levels of taxes, public investment in education, transportation and health care, and social transfers like Social Security, and finds a stark contradiction between conventional wisdom and the evidence. “It is well known that higher taxes and transfers reduce productivity,” he writes. “Well known - but unsupported by statistics and history.”

He compares the level of social spending over nine decades up to 2000 in 19 developed nations, including most of Western Europe, Japan, Australia, the United States and Canada. His analysis differs from many studies in part because he focuses on social programs, not overall government spending.

He finds that high spending on such programs creates no statistically measurable deterrent to the growth of productivity or per capita gross domestic product. As many nations in Europe built welfare states after World War II, they continued to grow faster than the United States, a nation with low social spending.

For many people, this defies common sense. Higher taxes to support social programs surely deter investment or the willingness to work to some degree. As Mr. Lindert points out, estimates by some economists, like Martin Feldstein, a Harvard professor and president of the National Bureau of Economic Research, find that extra government spending leads to a large reduction in gross domestic product.

In fact, taken literally, these studies suggest that the gross domestic product of Sweden, to take an example of a nation with heavy social spending, should have been reduced by up to 50 percent. But nothing remotely like that has happened.

The principal problem with such studies, Mr. Lindert writes, is that they are simulations of a highly simplified world. The economists recreate an economy where almost all incentives lead to slower growth, Mr. Lindert said, but that world does not exist.

Why, then, have high levels of social spending proved no deterrent to growth in the real world? Mr. Lindert has several explanations, some of them surprising.

First, he says, the tax systems of countries with high social spending are less antigrowth than is realized because nations in Scandinavia and Continental Europe typically derive so much tax revenue from regressive consumption taxes. In fact, these nations do not penalize profits and capital investment any more than the United States or Japan does, and possibly even less.

Mr. Lindert cannot be pigeonholed as a conservative or a liberal. He says he believes that less tax on capital will promote growth. But nations with high social spending typically tax alcohol, tobacco and gasoline highly, he notes, which contributes to better health and environmental quality. Healthier workers are more productive, and cleaner air requires fewer expensive environmental regulations.

Second, he finds that social programs in nations with high welfare levels usually include everyone. Because benefits are generally not cut off as incomes grow, the disincentive to get jobs or invest is reduced.

But third, he finds, much of the public spending in these nations is also conducive to economic growth. Among such spending is that for education and health. Mr. Lindert argues firmly that under comprehensive public health programs, people are healthier and live longer, which also makes them more productive. He cites a study by the economist Zeynep Or for the Organization for Economic Cooperation and Development that finds that in nations where a higher proportion of all health outlays are public, life spans are significantly increased.

Mr. Lindert also contends that higher levels of government support for child care and requirements to re-employ women after maternity leave at the same job can enhance economic growth. Business considers such workers long-term employees and is likely to invest more in their training and place them on a faster track. Workers probably expend more time and effort on their long-term careers.

The statistical probability that some women will leave work creates a bias against all women. Ample government support apparently reduces this bias. The difference between pay for men and women is higher in the United States than in most of Europe, and is especially narrow in Sweden, which provides generous child support.

This summary does not do justice to Mr. Lindert’s book. He also, for example, provides a valuable history of social spending and proposes a theory about why some nations spend more than others that is closely related to how well democracy works. This is a piece of research that is rich in insight and grounded in empirical evidence. There will be challenges. But the upshot is unmistakable. Government spending, if administered wisely, can have great value for everyone, including but not limited to the especially disadvantaged.

Jeff Madrick is the editor of Challenge Magazine, and he teaches at Cooper Union and New School University.E-mail: challenge@mesharpe.com.

Posted by pnhp at 03:52 PM | Permalink

The New York Times
April 15, 2004
Economic Scene
By Jeff Madrick

In widely reported comments before a Congressional committee in February, Alan Greenspan, the Federal Reserve chairman, suggested that President Bush’s tax cuts should not be even partly rescinded. Rather, Mr. Greenspan said, the nation should cut future domestic spending, including Social Security benefits, to balance the budget. Higher spending or higher taxes would deter economic growth, he warned.

The committee should have asked the statistically oriented chairman for the evidence. A comprehensive analysis by the economic historian Peter H. Lindert, published in a new book, “Growing Public” (Cambridge University Press), contends that there simply is none.

Mr. Lindert is a professor at the University of California, Davis; former president of the Economic History Association; and an associate of the National Bureau of Economic Research. He has examined levels of taxes, public investment in education, transportation and health care, and social transfers like Social Security, and finds a stark contradiction between conventional wisdom and the evidence. “It is well known that higher taxes and transfers reduce productivity,” he writes. “Well known - but unsupported by statistics and history.”

He compares the level of social spending over nine decades up to 2000 in 19 developed nations, including most of Western Europe, Japan, Australia, the United States and Canada. His analysis differs from many studies in part because he focuses on social programs, not overall government spending.

He finds that high spending on such programs creates no statistically measurable deterrent to the growth of productivity or per capita gross domestic product. As many nations in Europe built welfare states after World War II, they continued to grow faster than the United States, a nation with low social spending.

For many people, this defies common sense. Higher taxes to support social programs surely deter investment or the willingness to work to some degree. As Mr. Lindert points out, estimates by some economists, like Martin Feldstein, a Harvard professor and president of the National Bureau of Economic Research, find that extra government spending leads to a large reduction in gross domestic product.

In fact, taken literally, these studies suggest that the gross domestic product of Sweden, to take an example of a nation with heavy social spending, should have been reduced by up to 50 percent. But nothing remotely like that has happened.

The principal problem with such studies, Mr. Lindert writes, is that they are simulations of a highly simplified world. The economists recreate an economy where almost all incentives lead to slower growth, Mr. Lindert said, but that world does not exist.

Why, then, have high levels of social spending proved no deterrent to growth in the real world? Mr. Lindert has several explanations, some of them
surprising.

First, he says, the tax systems of countries with high social spending are less antigrowth than is realized because nations in Scandinavia and Continental Europe typically derive so much tax revenue from regressive consumption taxes. In fact, these nations do not penalize profits and capital investment any more than the United States or Japan does, and possibly even less.

Mr. Lindert cannot be pigeonholed as a conservative or a liberal. He says he believes that less tax on capital will promote growth. But nations with high social spending typically tax alcohol, tobacco and gasoline highly, he notes, which contributes to better health and environmental quality. Healthier workers are more productive, and cleaner air requires fewer expensive environmental regulations.

Second, he finds that social programs in nations with high welfare levels usually include everyone. Because benefits are generally not cut off as incomes grow, the disincentive to get jobs or invest is reduced.

But third, he finds, much of the public spending in these nations is also conducive to economic growth. Among such spending is that for education and health. Mr. Lindert argues firmly that under comprehensive public health programs, people are healthier and live longer, which also makes them more productive. He cites a study by the economist Zeynep Or for the Organization for Economic Cooperation and Development that finds that in nations where a higher proportion of all health outlays are public, life spans are significantly increased.

This summary does not do justice to Mr. Lindert’s book. He also, for example, provides a valuable history of social spending and proposes a theory about why some nations spend more than others that is closely related to how well democracy works. This is a piece of research that is rich in insight and grounded in empirical evidence. There will be challenges. But the upshot is unmistakable. Government spending, if administered wisely, can have great value for everyone, including but not limited to the especially disadvantaged.

http://www.nytimes.com/2004/04/15/business/15scene.html

Comment: One of the arguments made against the adoption of a national health insurance program is that the increase in taxes required would deter economic growth. Implicit in that argument is that fact that our health care system, currently 15.5% of our Gross Domestic Product, somehow is not part of our economy. Tax spending on health care might deter economic growth in the private health insurance industry, but it would stimulate growth in the health care delivery system and in the health technology industries that support it. Also considerable evidence indicates that tax dollars spent on health care provide a significantly greater value in our health care purchases than when those dollars are spent through our current wasteful, fragmented system of funding care.

An equitable tax that funds equitable access to an efficient, comprehensive system of health care is a good tax, and is not a deterrent but is a stimulant to economic growth in the health care service industry. If the private sector sources of those tax revenues cannot survive in the marketplace because of the tax burden (shared by all), then perhaps it is because their product or service is not providing adequate value. Marketplaces have little sympathy for products or services without value.

Tax policies that favor health care over mediocre products and services are tax policies that we should support.

Note: If the above link does not take you straight to the article, you may view the text under “Recent Articles of Interest”.