Tag Archives: individual mandate

The elephant in the room, real cost controls missing in healthcare bills

For anyone not interested in slogging through the debate on the 500-odd amendments to the Baucus bill, it has become increasingly and painfully apparent that the healthcare legislation soon to emerge from at least the Senate will fall far short in reigning in out of control health care costs.

That lapse is especially ironic in that “affordability” is perhaps the only goal that seems to top everyone’s to do list, from President Obama to the “keep the government hands off my (government-financed) Medicare” crowd.

But as long as our policy makers refuse to throw the elephant out of the room, the insurance company pirates and their predatory pricing practices,  all their subsidies and tweaking will amount to little more than an umbrella in a hurricane.  

First some ugly reminders as to why this is such a critical issue.

Annual family premiums now average $13,375. If current trends continue, by some accounts the average family plan is expected to hit $30,083 in just 10 years.

Over the past decade, premiums have increased by 138 percent, about three and a half times greater than inflation or incomes.

That, of course is just premiums. Most people now also have unsightly co-pays on office visits and other transactions, deductibles you must pay before your insurance pays anything, and co-insurance, such as a 20 percent charge on lab tests, outpatient procedures, and other medical services.

Those fees are especially large in high deductible plans, increasingly pushed by employers who face their own financial woes with rising premiums, and families juggling mortgage, food, and health insurance costs. Average deductibles for employer-sponsored high deductible plans were $1,973 for individuals and $3,883 for family policies in 2007.

Add it all up, and the results are tragic, if not predictable.

* The number of uninsured is up to 46 million; millions more are under-insured (people with limited plans that leave them vulnerable in the event of unexpected health emergencies).

* More employers are shifting costs to employees, or dropping coverage entirely.

* Medical bills are now the principle factor in 62 percent of personal bankruptcies.

* More than half of Americans, the majority of them people with insurance, are skipping needed care due to high out-of-pocket costs.

* Business is booming in emergency rooms for those who forgo needed primary care, increasing overall healthcare costs, not to mention the added pain and suffering.

A few examples of the self-rationing. The Los Angeles Times reported in April, mammography screenings among women in the vulnerable age group of 50-64 have declined 7 percent and dental business in Southern California is down 15 to 30 percent. The New York Times reported in March a drop in elective surgeries of nearly 50 percent in New Jersey and Georgia, and a drop in cataract surgeries of 5 percent in Ohio.

With their super majority now restored in the Senate, following the appointment today in Massachusetts, and a similar margin in the House, the Obama administration and Congress could have taken the strongest step to reverse these disastrous trends.

By eliminating the middle man role of the private insurance industry (as they are proposing to do with banks and student loans), and the insurers built-in incentive to continually raise prices and fees to increase profits and waste up to 30 cents of every healthcare dollar, much of it on paperwork to avoid paying claims for care that cut into those profits.

But, since our elected leaders decided not to pursue the most effective and efficient way to control costs through a single-payer system such as expanding Medicare to cover everyone, they have had to come up with some other convoluted and far less effective approaches, and ones with some ominous consequences.

1. Individual mandate.

Everyone not presently covered will be required to buy insurance under the dubious theory that giving the insurers a larger risk pool in which everyone has a health policy, the insurers will no longer have to continually raise premiums to cover the costs for the uninsured.

That assumes insurers will act conscientiously to limit price gouging. They won’t; in fact, under federal law, for-profit insurance companies have a fiduciary obligation to maximize profits for their shareholders.

While mandating everyone to buy insurance, Congress and the administration are not mandating insurers to stop price gouging or proposing price controls. To see how that will turn out, look at Massachusetts today, which has the model for this idea.

In Massachusetts, the number of uninsured is again rising, after it initially fell when the law was passed, as more people are opting to pay the penalty rather than pay the rising premiums they can’t afford. Some 42 percent of those buying policies through the state exchange (the same model proposed by Congress and Obama) are choosing plans with higher cost sharing requirements.

Moreover, Massachusetts lets insurers charge the 50 somethings, the pre-Medicare age group, more than younger people, with the result that demographic is gobbling up the bare bones, least comprehensive coverage just when they need medical care more; the Congressional bills repeat this disastrous flaw. Baucus initially wanted to let insurers charge this age bracket five times more, but has since relented and reduced it to four times more.

Further, without effective cost controls, Massachusetts has found the subsidies for low and moderate income are bankrupting the budget. To adjust, they have reduced covered services and groups eligible people, such as legal immigrants (for anyone who thinks the right wing will be satisfied with just eliminating coverage for the undocumented).

In sum, the entire individual mandate scam is a huge windfall for the insurance industry, tens of millions of new customers forced by the government to buy private policies, and public subsidies for some sub-section of the moderate income, another government bailout to a big industry.

Though a final bill is expected to include caps on what people will be expected to pay in out-of-pocket costs, and exemptions in co-pays for preventive care, both laudable ideas, the failure to stop the insurers pricing practices on the front end spells long term trouble, and probably failure for the “affordability” of the mandated insurance.

2. Taxing “Cadillac” plans.  

A centerpiece of the Baucus bill, taxing more expensive health policies under the again questionable thesis that a- insurers will lower overall charges if not selling policies that offer more coverage (who thought that up, Sponge Bob?) and b- patients will be more selective in seeking supposedly unnecessary medical care when they have cheaper plans that force them to spend more out of pocket.

Some in the media have already done a good job deconstructing this fiasco.  

Columbia Journalism Review’s Trudy Lieberman noted that more workers will have “less coverage for medical care which will mean they could be underinsured when serious illness strikes” and the looming prospect of medical bankruptcy “when the stack of bills gets too high.”

Some, and not just the nutters at Fox News, aren’t apparently troubled by this. Rightwing policy wonks have long cited over utilization of medical care  as the reason why health costs are so much higher in the U.S. than anywhere else in the world, as if we can’t wait for those colonoscopies and dental work and so abuse our “gold plated” insurance plans to get them more often.

Far too many liberals and progressives are in this camp as well, missing the point which is not to shift costs around but to actually control them.

Reed Abelson of the New York Times  pointed out another major flaw. The tax penalizes small employers who she noted:

“tend to pay more for their insurance than bigger employers that can negotiate better premiums. And because they do not have large pools of workers to help spread the risk, small employers tend to pay even higher amounts if they have older or sicker workers.”

Additionally, without strong price controls, premiums will continue to rise, pushing the cost of more plans every year into the bracket that will be taxed. The labor movement has, to their credit, understood the many flaws with this scam and led the attacks on it.

3. A variety of gimmicks to stop the dreaded overutilization and reduce costs through comparable research, information technology, best practices, and other lingo.

Some technology promotes better care when it complements and assists the work of care delivery, not replace it. A lot of it doesn’t. What has yet to be proven is that it is effective in substantially reducing overall healthcare costs.

Would enactment of a robust public option be sufficient to address all these myriad shortcomings? Perhaps. But not if all its levers, such as the ability to negotiate lower rates or open its doors to all comers, are stripped out, as several proposals do.

In any event, the larger question is will the reforms now proposed actually solve this healthcare crisis, even on the critical issue of cost?   Four years from now, our policy makers, and those who say pass a bill no matter what it contains can’t say they haven’t been told.

Patriot Act-Esque: Rushing Through Health Care Reform Over Labor Fed Objections

Arnold Schwarzenegger and Fabian Nuñez have made agreements behind closed doors on a new $14 billion dollar health care plan, and despite the fact that we’re on the brink of a fiscal emergency, even though Don Perata has favored a go-slow approach, asking to deal with the burgeoning budget deficit before a new health package, it appears that we’re going to have a vote in the Assembly on Monday.  And that has displeased some key stakeholders.

Assembly Speaker Fabian Nuñez’s effort to speed a healthcare overhaul plan through the Legislature is being opposed by the trade group that represents California’s labor unions, which is taking the rare step of urging Democratic legislators to defy their own leader.

In a letter obtained Saturday, the California Labor Federation’s leader, Art Pulaski, urged Assembly members to postpone the Monday vote on the bill, which Nuñez (D-Los Angeles) submitted Friday after reaching agreements with Gov. Arnold Schwarzenegger on the scope of a plan to require almost all Californians to hold healthcare insurance.

Writing that “we are dismayed at the process,” Pulaski complained that neither labor nor lawmakers had had enough time to vet the complex measure and decide whether it offered adequate protections against middle-class workers’ being forced to purchase insurance policies they could not afford.

“We feel cheated of the opportunity to take a position on a bill that will impact the lives of every working family in California,” Pulaski wrote. “We do not know whether this bill will protect working families who cannot afford a healthcare mandate or whether families will be driven into low-quality, high-deductible plans.”

So we have a bill submitted on a Friday which lawmakers are expected to vote coming Monday.  It’s 239 pages long and completely unclear, not just on affordability for the insurance itself, but on the floor for basic coverage and the ceiling for deductible costs.  Health care experts have not fully made that determination.  Add onto that the struggles of states to manage large-scale universal plans with their particular constraints, mainly on constitutionally mandated balanced budgets.  We are in a $14 billion dollar budget hole and with a Governor itching to balance that on the backs of poor and elderly Californians with a 10% across-the-board budget cut.  There simply aren’t all that many areas you can cut that aren’t protected by voter initiatives other than those in the health and human services sector.  Does that factor in to this parallel plan at all?  Not to mention the fact that so much of the funding option is predicated on federal funding at a time when the Democrats can’t get SCHIP past the President’s veto pen, which will result in tens of thousands of California children being denied coverage within a matter of weeks.

Despite all of these questions and concerns, the Assembly is being asked to rush through legislation that they probably haven’t read or vetted.  I think health care is simply too important to do so.

One-Sided Negotiations

Boy, if you managed to stumble upon pages M8 and M9 of Sunday’s LA Times yesterday, you sure picked up a great deal of information.  On M8 was our buddy Robert’s excellent critique of the Times’ coverage of tax policy.  And on M9 was a column by Anthony York of Capitol Weekly, which seeks to explain why legislative Democrats appear to be negotiating with themselves on health care reform.  We learn that the Governor is basically holding his endorsement of Prop. 93 hostage in exchange for getting his way on health care.

Nuñez is scheduled to be termed out of the Assembly in November. If Proposition 93 passes, however, he could serve in the Assembly — and presumably as speaker — for six more years. If the measure fails, Nuñez would immediately become a lame-duck speaker, and talk of a successor would begin Feb. 6.

That’s why he desperately needs Schwarzenegger’s endorsement of Proposition 93. Most observers believe that voters will defeat the measure if it lacks the governor’s seal of approval.

But Schwarzenegger’s support comes at a price. The governor has consistently used Nuñez’s desire to change the term-limits law as leverage in his negotiations with the speaker about healthcare reform, and it seems to be paying off.


We all suspected this was the case, but this appears to be more informed than opinion.  So now we have a negotiation that’s going to affect millions of Californians being predicated on the political career of one man.  Nuñez is completely compromised, not only by needing to get a legislative victory to tout to the electorate, but by receiving the Schwarzenegger endorsement.  Personally, I’m unconvinced that his endorsement is such a slam-dunk; it sure wasn’t in 2005.

We see the direction that the negotiations have taken.  First the Democrats were fully opposed to an individual mandate.  Then they agreed to a mandate with cost controls (exemptions if coverage costs more than 6.5% of income).  Then they’ll drop that number.  First the plan was that businesses would pay 8% in fees; then it became a sliding scale up to 6%; then it’ll be down to 4, or 3, or really whatever the Governor wants.  This is no way to negotiate.  The Governor has absolutely no reason to budge off his numbers.

The Governor clearly cares about leaving a legacy on healthcare reform, and a smart negotiating strategy would tie that legacy to specifics that could not be compromised.  But that’s clearly not how it’s being waged.  And York even explains how a savvy negotiator could turn this right around.

If a (health care funding) plan ends up on the ballot, it would be a tough sell. All previous healthcare initiatives have been defeated. And with current budget forecasts for 2008 putting the revenue shortfall at $10 billion, an expensive reform plan — some estimates put the price tag at $12 billion — would face even more trouble. To win passage, Schwarzenegger will need help from unions and Nuñez. But if Proposition 93 fails in February, the lame-duck Nuñez could be ousted as speaker, losing his bully pulpit to campaign for reform.That would leave Republican Schwarzenegger as the face of a campaign relying heavily on unions and other Democratic-friendly groups while confronting stiff opposition from many business groups.

The Governor actually needs the Legislature as much as the Legislature needs the Governor.  But that’s not how the battle is being fought, because the Democrats have decided to put themselves in a position of weakness.

Bringing Your Messages to the Governor

(Disclosure: I am an online organizer for It’s OUR Healthcare!)

Governor Arnold Schwarzenegger’s healthcare ‘proposal’ — to require everyone to buy insurance, whether or not they can afford it and regardless of whether it actually protects them — will be heard before the Assembly Health Committee in Sacramento today.

While the Governor’s proposal gets further scrutiny from California lawmakers, none of whom from either party is willing to carry, Californians have already made up their mind. $5,000 deductibles is not “affordable healthcare.”

It’s OUR Healthcare! is currently holding a rally on the steps of the State Capitol. Can’t make it to Sacramento? Text IOH to 30644. We are displaying your text messages sent in by thousands of Californians here at the Capitol and streaming them on the web.

Snag the code for the really cool text message display seen on the live feed over the flip.

CA Labor Fed Proves It: Individual Mandates are Unaffordable

The California Labor Federation has crunched the numbers, and delivered the verdict on Arnold Schwarzenegger’s health care plan: “Unfair, Unaffordable, and Unacceptable”. Frank Russo has a comprehensive summary posted:

Any Californian earning over $36,000 a year (just over 350% of the poverty level) will receive no help paying for insurance. Similarly, an uninsured single mother with two children, earning $61,000 a year, would be left to pay all her household expenses and the full cost of health care for her family….

Recent research has shown that the expected levels of family contributions in Governor Schwarzenegger’s health proposal are high enough to wipe out the life savings of 60% of California families…

Governor Schwarzenegger’s proposed health care plan looks like it will cost the average middle class family between $8,100 and $13,000 a year, forcing many Californians to choose between their financial security or breaking the law.

The Labor Fed’s analysis is damning. Coming on the heels of the California Budget Project study that showed a family of four needs to make at least $70,000 to meet its basic costs, this analysis should prove that Arnold’s plan is not a reform at all – but a bombshell that will shove millions of Californians into bankruptcy.

The individual mandate would require Californians to spend money they don’t have, for coverage that lacks firm deductible caps and has an out-of-pocket limit ($10,000) that would ruin many families well before they reached that limit. It also “would fail to shield 60% of the state” from catastrophic illness costs, even while forcing them to fork over their life savings and a crippling chunk of their paycheck.

There should be little argument now – Arnold’s plan, like any individual mandate plan, is an unaffordable disaster that California must avoid. If we are truly interested in helping Californians get affordable health care, we need to put all our effort behind universal single-payer care. That is the only method by which everyone will get health care they can afford.

“These Are Not The Final Numbers”

Remember, the Governor said that he had a plan to fix the state’s health care system in October, 2006.  He said he’d tell everyone about it after the election.  ONE YEAR LATER, Schwarzenegger announced at a big press conference yesterday that the bill is almost ready.  It’s not a bill being carried to the Legislature by anyone, at least not yet, although I expect the leadership will bring it along just to have something to negotiate against.  But this is a complete waste of time and energy, to wait 12 months to present something that has no earthly hope of passing.  And paying for it, in part, by privatizing the lottery, which is a long-term money-loser for California.

I mean, this is ridiculous:

Every time he was asked about the numbers, he revealed that this proposal is still a ways from being fully cooked, starting with this response to a question about the financing of the bill–where the money comes from: “This is our proposal. We think that’s the best way to go. But this is not final because it is still being negotiated. A lot of this stuff is still being negotiated.”

Counting on money from the Feds seems tricky to me, given the veto of SCHIP by President Bush. That will leave a gaping hole as far as children’s coverage, and paying for it, are concerned.

When asked about affordability and what Californians at different income levels would have to pay out of pocket, he said: “Well first of all, the numbers that I have given you–this is our proposal. So these are not the final numbers. Because like I said, with the numbers, those things are still being discussed–what the numbers should be.” Maybe we should be happy that the exact shape and form of affordability, a key part of the bill, are not yet written in stone. With an individual mandate, that seems to me to be an area to really scrutinize.

There’s a summary of the plan, which ISN’T THE FINAL PLAN SO DON’T CRITICIZE IT, at the link.  It seems to me that the deal here is to try and avoid all specifics so there can be absolutely no discussion about the biggest domestic issue facing the state and the nation, so Arnold can evade all responsibility for whatever transpires until the moment he signs a bill, at which point it’s entirely because of his leadership.

That’s post-partisan, baby.

Health Care Special Session Update – A Document Appears

So out of the “magic fax” in Sacramento where all bills without authors are created comes new “legislative language” on a compromise health care proposal, language that nobody has claimed as their own and that everyone is disavowing, but which looks mysteriously like the Governor’s handiwork.  You can take a look at this language yourself here.

We are disappointed that we seem to back to square one with something very similar to the Governor’s January proposal, with only a few of our comments and concerns raised over the course of the year addressed. While we would have preferred having the Governor’s language much earlier in the year, we do appreciate having the language to seriously respond and react to–if that is what it takes to move the conversation forward.

It’s like when you work really hard on a document, but then the computer crashed, and you have to reboot and start again. It’s frustrating, but the goal doesn’t change.


This could have played out over the regular session if the governor would have distributed this and negotiated at that time.  But as he jets off to China, this gets dropped in everyone’s lap – and look what’s in there:

• The elimination of quarterly complaint and greivance reporting for HMOs, which seems to remove an important oversight over insurers.

• The apparent increase in the permissible premium, for those making 150-200%FPL (federal poverty level), at a level that is still too high–5%, which does not include out-of-pocket costs.

• The lack of any standards for out-of-pocket costs in the subsidized pool. Given that one can drive the cost of a premium down by raising deductibles and cost-sharing, the limit of premiums provides small comfort.

• An exemption from the minimum level of coverage for any and all employer plans. The draft still has, as a placeholder, an unacceptable $5,000 deductible (and $10,000 out-of-pocket max) plan as a minimum level of coverage under the individual mandate… but that even that low minimum does not apply to individuals who take up employer-based coverage, meaning they could have coverage with very skimpy benefits, or no out-of-pocket maximum.

• A weak definition of the minimum Medical Loss Ratio (the amount spent on patient care rather than administration and profit), so that it applies to an insurers’ entire portfolio of business, meaning this rule would no longer provide assurance that any specific product is of good actuarial value. A limit that was product-by-product, or even market-by-market, would be more helpful to consumers.

• The Healthy Action benefit seems to be less than advertised as well, since it only requires an insurer to offer such a product, but does not include smoking cessation or obesity programs as a mandated benefit. With no requirement, the policy seems more likely to be a way for insurers to identify risk, rather than a viable new benefit for consumers. If this is truly a priority, it needs to be a mandated benefit.

• And most concerning, the guaranteed issue protections in the individual market seem hollow with the new details. Only a few high-deductible, low-benefit products will be guaranteed issue to begin with–so those with “pre-existing conditions” will only have access to the coverage in the market that is least suited to them. There would be little assurance that we would ever get to a second phase of having the full market guaranteed issue. Insurers will be able to use benefit design, marketing, and pricing to avoid those California customers that have health risks and needs. In particular, we believe older Californians will simply be priced out of the individual market, and the guaranteed access an illusion.

I can live with an individual mandate if it included guaranteed issue and significant cost controls, in addition to a baseline of coverage for the insured and a cap on prices.  But this proposal seeks to eliminate practically all of those checks on the insurance companies while maintaining the individual mandate.  This is nothing but a license to print money for the insurers.

Since nobody will claim this document, it’s hard to know whether or not this is the result of any negotiation or if it’s the Governor’s response to AB8.  Therefore, it’s hard to know whether or not the end result will be something in the middle, or something pretty close to this orphan document.  If the latter is the case, health reform should be torpedoed in the special session without delay.  These terms are unacceptable.

When Universal Health Care is neither Universal nor Healthy

(cross posted to MyDD and dKos. – promoted by Brian Leubitz)

It’s now been one year (ok, one year tomorrow, but who’s quibbling?) since the passage of Massachusetts’s supposed “universal” health care plan, and perhaps we could learn a little from the experiment.  Now, Massachusetts and California are very different states. First of all, prior to passage MA had about 375,000 uninsureds. California has over 6.5 million uninsureds.  That’s a lot.  Throw in demographic differences and the shape of the government budget, and you have some fairly different situations. 

But, there are still some lessons available in our cross-continent counterpart.  Flip it!

First, universal is a state of mind. More of a nirvana like concept that will only be attained by single payer.  Face it, it’s just not going to happen as long as private insurance companies are acting as bagmen for Wall Street to victimize the nation’s infirmed. Since enactment, the rate of uninsured has gone down by 110,000 or about 1/3! Whoop-de-frickin’ doo.

Now, the “individual mandate part has still yet to go into action, so that will make things all better right? Right? I mean, forcing people to buy insurance from the bagmen will work, right? Well, I should hope so, as it’s going to cost the middle class dearly:

Marilyn Glazer-Weisner, 55, of Swampscott is one of those feeling squeezed. Glazer-Weisner said she and her husband Alan, 56, earn too much to qualify for subsidized plans.

Glazer-Weisner says she’s paying $534 a month for a plan with a $2,000 deductible.

“It’s way too much money. I’m self-employed and my husband is self-employed. We’re both in our 50s. We can’t afford it. We’re getting killed,” she said. “I’m a cancer survivor for seven years and I’d like to stay that way.” (AP@Boston Globe 4/11/07)

See, that’s the thing about individual mandate, it uses revenue from healthy, formerly uninsureds, to pay for money-losing patients.  And that’s fine, and dandy, but why do we need a middle man in there? See, who are these healthy uninsureds that we are propping up Blue Cross and Kaiser with? They are young and lower to middle class. Individual mandate is a tax that strikes the middle class. It is an overwhelmingly regressive tax.

And even if you could stomach a regressive tax, where does the money go? Not to be reinvested in the health care system, but to Wall Street corporatists (like Bill Frist, MD). SO, Massachusetts imposes a regressive tax and then hands it over to the insurance industry aka what Harry Reid calls the “enemy of most everything we do today.” 

So, sure, if that’s what you’re into, break out the bubbly. But make sure you’ve got $553 left over to pay for your monthly health insurance premium.