Healthy Policy

Goodbye, and, Health Insurance: A Primer

After my Uninsured primer earlier this week, I had a few requests to compile a profile on those with insurance.  This is also my last day blogging, so I figured a round up of my favorite health policy issue is appropriate.

Insurance has seen substantial changes and shifts in the last five years, and these are due to the explosive growth of health spending.  As costs rise ever further, employees are hurting.  The pain is dual -- due to delayed treatment for illness or lost coverage for various procedures, as well as a hole in the pocketbook that's become meteor-sized.

The basic facts:

• The average annual cost for insurance in 2004 was $3,695 for individuals and $9,950 for families.

• Employer-sponsored premiums are growing at an immense rate: 8.2% in 2000, 10.9% in 2001, 12.9% in 2002, 13.9% in 2003.

• The average monthly premium for individuals from 1988 to 2004 has increased from $8 to $47, for families it has increased from $52 to $222.  While that increase seems significant, the percent contribution has hardly gone up : in 1988 the $8 contribution was 11% of the total premium cost; today the $47 is 16% of total premium cost.  And for families the 1988 amount was 28%; the current amount is 29%.  The stats essentially tell us that while the percent employees are contributing has remained steady, the total cost has increased greatly to both the employee and employer. 

• The number of employers providing health insurance has dropped 9% in five years; from 69% in 2000 to 60% in 2005. 

• For those who have to pay them, annual deductible size has greatly increased as well.  For individuals they've increased by 60% in five years to $414, for families they've increased 67% to $861. 

• The dollar amount of co-pays is increasing as well; for HMO participants the number paying at least $20 for office visits has increased from 1% in 1998 to 22% in 2004.

• The major problem with affordable health insurance right now is the total health spending increase, which is making premiums cost more and more every year.  And as health expenditures are estimated to be $2.16 trillion in 2006, and are projected to rise to over $4 trillion in 2015, it's showing no signs of slowing. Per person health spending is $7,110 this year and is projected to increase to $12,320 by 2015.  And unless you predict your wages will double during that time, be prepared to shell out more and more.
 

• Although many policy analysts encourage greater cost sharing in the form of higher deductibles and copays, the average insured person already pays 34% of their health costs out of pocket.  Don't count on greater cost sharing to reign in the expected increase to solve our spending crisis.  Americans can only afford so much more out of pocket without forgoing care altogether, which creates crises in worker productivity and absenteeism.

**********************

So there you have it.  The major driver of higher premiums and employee contributions to health care is the increased cost of care itself.  And while employees are putting ever more money away into their insurance premiums, they're paying no greater proportion of the total cost than they were in 1988.  It's just gotten that much more expensive.  With only 60% of employers now providing health care, we can only expect to see more cost sharing and dropped coverage, because costs are not slowing.  In fact, they're expected to almost double in just nine years. 

And that's why I started on the health policy venture in the first place -- these statistics are frightening.  Health care has become a beast, and the United States is unsure how to restrain it from eating its weight in income every day. 

But as the richest country in the world, surely every one of our citizens deserves comprehensive, affordable, and quality health care.  And while I'm leaving blogging, rest assured I'll be out there working and thinking about the ways to tame the beast, everyday. 

Evidence

And if you want to know why the things I discussed in my last post make me so angry, it's because arugments like those keep us from doing anything about this:

The percentage of moderate-income U.S. adults who do not have health insurance during any part of the year increased to 41% in 2005, up from 28% in 2001, according to a study by the Commonwealth FundAP/Houston Chronicle reports (Agovino, AP/Houston Chronicle, 4/25). For the study, researchers surveyed 4,350 adults, focusing on those ages 19 to 64, using 25-minute telephone interviews between August 2005 and January 2006. According to the study, 41% of adults with annual incomes between $20,000 and $40,000 did not have health insurance for at least part of 2005, compared with 35% in 2003 and 28% in 2001. In addition, the study finds that 18% of adults with annual incomes between $35,000 and $60,000 were uninsured for part of 2005, up from 16% in 2003 and 13% in 2001 (Whitehouse, Dow Jones Newswires, 4/26).

It's getting worse, and instead of coming up with workable, real solutions for reform, we're arguing over waiting lists in Canada. 

More on McGuire

There's new developments related to yesterday's post on United Health Group's CEO, William McGuire (a good discussion is getting going in the comments, as well). 

The Wall Street Journal is reporting that McGuire has called for a suspension of his and other executives' compensation packages.  Despite its unprecedented  nature, this is a noteworthy move as the vast majority of McGuire's compensation package exists in stock options (an estimated $1.6 billion). 

But there's more to the story.  Because of UHG's lax restrictions on when CEO's can choose to receive stock options, it appears that McGuire greatly increased the value of his compensation package.  In fact, a statistical analysis by WSJ found that the chances of McGuire's options attaining their current value, if new options packages were chosen at random, was approximately two hundred million to one. 

The SEC is looking into it, and there's another lawsuit in Minnesota from allegedly wronged shareholders.

Apparently I'm not the only one feeling a bit uncomfortable with that level of compensation...

United Health Group and You

It's anecdotes like these that make me seriously question if profit should be in the health care industry at all.

When William McGuire switched careers in 1986, he was so restless that a pay cut of more than 30% didn't faze him. Health maintenance organizations were booming, and Dr. McGuire wanted to help run one. So he jettisoned a six-figure income as a pulmonologist in favor of an HMO management job that paid about $70,000 a year.

Savvy move. Today, the 58-year-old Dr. McGuire is chief executive officer of UnitedHealth Group Inc., one of the nation's largest health-care companies. He draws $8 million a year in salary plus bonus, enjoying perks such as personal use of the company jet. He also has amassed one of the largest stock-options fortunes of all time.

Unrealized gains on Dr. McGuire's options totaled $1.6 billion, according to UnitedHealth's proxy statement released this month. Even celebrated CEOs such as General Electric Co.'s Jack Welch or International Business Machines Corp.'s Louis Gerstner never were granted so much during their time at the top.

Dr. McGuire's story shows how an elite group of companies is getting rich from the nation's fraying health-care system. Many of them aren't discovering drugs or treating patients. They're middlemen who process the paperwork, fill the pill bottles and otherwise connect the pieces of a $2 trillion industry.

What's come of this $8 million a year, plus an estimated $1.6 billion in stock options?  Think how many extra people could be covered a year with that $1.6 billion.  Especially when the company also did this:

The Arizona Department of Insurance on Friday ordered United Healthcare to pay civil penalties totaling $364,750 — the largest fine in the department's history — for violations of state insurance laws. State regulators said United Healthcare illegally denied more than 63,000 claims by doctors without receiving all of the information needed to accept or deny a claim. The company also failed to follow state laws for promptly notifying doctors and patients about about decisions and appeals, the state said. United also violated a 2002 agreement to correct previous violations, the state said.
 

And the fact that they're doing this while the rest of us see our premiums rise 10%/year (if our employers don't drop coverage, that is):

The "risk" business has been a particular gold mine for UnitedHealth and its rivals in recent years. As health-care inflation eased, insurers still raised premiums at double-digit rates. UnitedHealth's stock price tripled between January 2003 and January 2006, helped by acquisitions, although it has fallen back somewhat since the beginning of this year. UnitedHealth's net income in 2005 totaled $3.3 billion, nearly four times the figure in 2001.

No, this all makes me quite angry, and really puts to question insurer's claims that health care costs are rising so quickly that they can't keep up with them. 

This is the kind of money I'd expect to see from an oil CEO (who are doing similarly well right now).  But in health care, this kind of profit is disgusting.  We have 45 15 (sorry quoted the percent on accident) million uninsured people in this country, we have a health care industry trying it darndest to shift costs to consumers with health savings accounts and high deductible plans, and we have insurance CEO's valued over a billion dollars for their efforts.  Not hospital groups, or entire organizations, but individuals. 

Is this the kind of system that fits with our ideals?  If health care is an expensive necessity, one that we join together to ensure for everyone, should health insurers be making these kinds of profits?

Employees take GM/Ford for all they can

So those plans to cut retiree health benefits?  They're backfiring:

The auto industry's efforts to rein in employee health costs is drawing an expensive reaction, as union workers and their spouses hurry to Michigan doctors for knee replacements and other elective procedures before they lose their comprehensive medical benefits.

Hospitals, doctors and insurers have all noticed a surge in demand for elective surgery since last year when Rick Wagoner, the chief executive of General Motors, led a public relations campaign to prepare auto workers for health care cutbacks, and  Delphi, the G.M. parts supplier, filed for bankruptcy protection. Hip, knee and shoulder replacements at the Henry Ford Health System were "up 20 percent in the second half of last year and remain strong," said Robert Riney, chief operating officer of the system, the largest hospital group in the Detroit area.

On the other hand, it remains much cheaper than covering all these workers' benefits for the long term.  And in some weird way, it probably gives the auto industry a sense that they've fulfilled some obligations, if they're able to say,"Listen, we paid for x number of joint replacements and elective procedures before dropping coverage.  And they've got Medicare."

Walmart to extend insurance

Maybe they think their new banking scheme will pay for this:

Wal-Mart Stores said today it will relax eligibility requirements for part-time employees who want health insurance, allowing an additional 150,000 workers to gain coverage if they choose.

Until now, the employees have had to work for Wal-Mart for two years to qualify for employer-sponsored insurance. Beginning next month, they will have to work at the company for one. The coverage also will extend to their children.

This addresses part of the problem -- relaxing eligibility rules to one year of employment is fairly significant, and the monthly premiums are quite affordable: purportedly $23 per month, with the option to extend coverage to children for an extra $15 per month. 

But there's a catch: the plans have a $1,000 deductible for individuals, and up to a $3,o00 deductible for families. 

Uwe Reinhardt is well known for discussing health savings accounts in the context of a waitress who makes $30,000 dollars a year.  But let's take your average Wal-Mart employee, makes significantly less than our $30,000 dollar a year waitress.

The average Wal-Mart worker makes $8.23 an hour and typically works less than 24 hours a week. The average Wal-Mart employee working 40 hours a week would earn only $17,118 a year, but a more realistic annual wage for a Wal-Mart worker is about $10,000.

A single parent Wal-Mart employee working part time and electing family coverage would have an annual deductible equal to over 30% of their income.  Let's keep in mind, as well, that a $3,000 family deductible is on the lower end of HDHP/HSA style deductibles, which can run up to $10,000.  (That really makes HDHPs seem like the solution for low income workers, no?)

It's great that Wal-Mart is taking the leap and offering more coverage, and surely some will take advantage of it and enjoy the benefits they deserve.  But when a large percentage of workers elect not to sign up (because they can't afford it), I hope Wal-Mart doesn't claim,"they just don't want it."

Messing with Texas

Texas is seeing some unintended consequences:

The number of children enrolled in Texas' SCHIP program fell by more than 9,000 in the beginning of April, marking the fourth straight month of decreased enrollment, state officials announced on Tuesday, the AP/Austin American-Statesman reports. More than 30,000 children have left the program since Dec. 1, 2005, according to the Texas Health and Human Services Commission. About 292,700 children -- the lowest number of beneficiaries since 2001 -- are currently enrolled in the program, according to the AP/American-Statesman. More than half of the children who left the program in the beginning of April were cut because their families did not pay a new enrollment fee of up to $50. The fee, which the state began collecting this year, is based on a family's income and is intended to replace monthly premiums. Families must renew their SCHIP coverage every six months (Austin, AP/Austin American-Statesman, 4/12). According to the Houston Chronicle, the enrollment drop comes "as officials announced a $3 million program to educate families on how to keep their children insured." The state Health and Human Services Commission in May is launching a campaign to explain new application requirements, including proof of income and new enrollment and renewal fees. The enrollment drop "has alarmed children's advocates because Texas has the highest rate of uninsured children in the nation," with about 25% of children without coverage.

This is really unfortunate.  I tend to think it's a bad idea to make people renew coverage every six months, as well.  It's hard enough to get them to sign up in the first place.

And as the rate of the uninsured has been rising, the drop-outs don't reflect a rash of children now with health insurance  from another location. 

Also, it says that children were cut who didn't pay the $50 fee.  I'll bet most of those families had no idea/paid no attention to the fact that this was going on. 

Aetna is going to kick some diseased butt

Good news for public health advocates:

Aetna officials on Wednesday announced plans to expand the number of disease management programs offered by the company from six to 30, the Hartford Courant reports. Aetna currently offers disease management programs for asthma, chronic heart failure, coronary artery disease, diabetes, end-stage renal disease and lower back pain. Under the expansion, Aetna will begin to offer disease management programs for conditions such as cancer, HIV, hypertension, migraines, peptic ulcers, rheumatoid arthritis, sickle cell disease and stroke. Aetna will group the disease management programs into categories such as pulmonary, orthopedic, oncology, "neuro" and gastrointestinal under the name Aetna Health Connections.

This makes me very happy.

Massachusetts Mandate

Apparently someone was listening to my post from Monday, as Massachusetts has taken the leap and mandated health insurance for all of its residents. Ok, kidding, I know it's been in the works for months.  But I'm thrilled to see a state take such a drastic step in solving insurance problems.

Gov. Mitt Romney (R) supports the proposal, which would require all uninsured adults in the state to purchase some kind of insurance policy by July 1, 2007, or face a fine. Their choices would be expanded to include a range of new and inexpensive policies -- ranging from about $250 per month to nearly free -- from private insurers subsidized by the state.

Romney said the bill, modeled on the state's policy of requiring auto insurance, is intended to end an era in which 550,000 people go without insurance and their hospital and doctor visits are paid for in part with public funds.

"We insist that everybody who drives a car has insurance," Romney said in an interview. "And cars are a lot less expensive than people."

The health insurance as compared to auto insurance is a common meme, although I take issue with the author's phrasing elsewhere in the article that goes, "[this is] the first state to tackle the problem of incomplete medical coverage by treating patients the same way it does cars."  You know, or it's the first state to open up real options to make sure everyone can afford health insurance.  They make it sound like patients are going to treated like automobiles going through factory assembly when put like that.

In any case, this is a huge first step, and it makes allowances like I laid out in my earlier post: opening up low-cost insurance to everyone, subsidies for those who can't afford insurance, and financial punishment for those who continue to go without insurance.

In Iowa they've started a program (Iowa Care) where the uninsured are given all the information for signing up for the low cost insurance whenever they go to the hospital.  I hope lawmakers will adopt similar tactics in MA to get as many people enrolled before the deadline as possible.

What's more; this is a major experiment.  It will demonstrate how affordable these programs are, what major flaws the program didn't for see, what major benefits the program brought, even how easy or difficult it is to get the chronically uninsured into insurance.  Everything that goes on under the program will be carefully watched by universal insurance advocates. 

I would, however, really like to see an EMR initiative along with this legislation, but I guess that's too many birds to kill at once.  Hopefully HIT pushes can be adopted in the next few years.

Also, Shadowfax has more.

Raising enrollment

Alright, done with the errands, onto the article.

California is one of the most generous states in terms of funding for getting the uninsured, particularly children, enrolled in health programs.  But Healthy Families, which is supposed to help fill in the gap between Medical (California's Medicaid program) and those who can afford insurance, has had a fairly low adoption rate. 

Take this stat from the LA Times article:   

About two-thirds of the uninsured children in California could, if only they'd apply, qualify for Medi-Cal or Healthy Families, according to the UCLA Center for Health Policy Research.

italics mine.  But that's exactly the problem.  Take a look at this chart with the income guidelines for Healthy Families eligibility.  They sure as hell don't make sense to me, let alone your average low-income worker (assuming they found this website period).  We haven't made it particularly easy for people to sign up, and in the place of an immediate punishment for not doing so, low adoption of programs is what you get.

This Health Affairs article is a great place to start if you want to learn more about the insane and illogical income requirements for Medicaid enrollment.  Authors Etheredge and Moore found that Medicaid  defines twenty-eight different categories of people and allows states to cover up to twenty-one optional eligibility groups.   And keep in mind that your average American has no conception of how Medicaid actually works -- the majority think that if you're poor and unemployed, you can go sign up.  Sure, if you're poor, pregnant, work x hours per week, have x children...

While a Medicaid overhaul is necessary and would make a huge difference in terms of getting people into health insurance, it's not politically favorable.  A call to remake our nations health system for the poor, with no mention of the plight everyone else faces with rising premiums, would not be greeted well. 

That's why I've always felt one of the key ways to proceed needs to be an insurance mandate.  Until people are fiscally punished for not enrolling in insurance, they will have a million reasons to remain uninsured.  Now, any mandate must be accompanied by a floor of care opened to everyone, whether that's an extension of FEBHP or a "Medicare for the rest" kind of arrangement; we have to offer a lower-cost option than many families have now.  But in the absence of a mandate that every citizen be enrolled in health insurance, we'll continue to see less than desirable enrollment rates in programs like Healthy Families.  Simplification of enrollment procedures would help, but there will always be a portion of families who won't enroll without more immediate disincentives. 

Read me

This article looks worth a read at first glance; I've got an errand to run this morning but when I come back I'll give my thoughts.

In a few...

Small businesses and AHPs

More on AHPs from Business Week:

This week, for the first time, the Senate Committee on Health Education Labor and Pensions passed the Health Insurance Marketplace Modernization and Affordability Act. The bill -- which had passed the House several times, but had been stalled at the Senate until now -- allows for the creation of Small Business Health Plans, or SBHPs. Such plans would give small-business owners the opportunity to take advantage of economies of scale by banding together across state lines, and through trade and professional organizations, to garner savings with insurance policies.

With the Senate Committee passage, it appears that small businesses are one step closer to affordable health care.

Ignoring the key critique of AHPs (that insurers will offer paltry benefits and there will be a race to the bottom), there's another elephant in the room. 

Let's say insurers band together and buy insurance.  How many more years will they be able to afford this insurance, as premiums rise across the board?  In this case, getting it is not half the battle, as premiums could quickly become unaffordable. 

One part of the article perplexes me.  If the following is true (and I've no reason to believe it isn't),

In 1998, Butler made the decision to go with an outsourcing company that would provide her employees with benefits. Butler-Burgher has an employee-leasing arrangement with Gevity, a Bradenton, Fla.-based human resources firm, which has a network of hundreds of thousands of staffers.

Here's how it works: Butler pays a fee to Gevity (in this case, $950 per employee per year), and Gevity technically becomes Bulter's employer. Under that arrangement, Gevity handles all of Butler's human resources, payroll, and legal issues. By taking advantage of the economies of scale, Butler's employees receive a menu of health and other benefits, such as 401(k) plans. "We went to a model that was able to provide Fortune 500 benefits at a reasonable cost," says Butler, who estimates that her company saves 20% to 25% on health coverage as a result of the arrangement.

Isn't this a fairly compelling argument against AHPs?  This employer has already found a way around regulation and has been completely able (and seeminlgy satisified with the arrangement) to provide insurance with a company across state lines.

Association Health Plan Primer

cross-posted from tpm

The Senate Health, Education, Labor and Pensions Committee on Wednesday voted along party lines to approve an association health plan (AHP) bill.  President Bush pointed to AHP’s in his state of the union address as one of many reforms to help individuals attain health insurance.  But AHP’s expose individuals to another frontier of risk, where their health benefits are paltry, uncertain, and expensive. 

The key complaint driving the creation of AHP’s is that state regulation bars insurers from offering affordable health plans.  If insurers could offer plans on a national market, bypassing any state regulations, more plans would be offered and more individuals would become insured. Unfortunately, this type of thinking isn’t supported by reality.

Bare-bones plans have been offered for years, and people don’t want them.  But more than that, Ezra Klein takes a look at why we have state regulations in the first place:

The reason states mandate that insurers cover certain procedures is so insurers can't price folks who are likely to need those treatments out of the market. Insuring young women, if you didn't need to cover anything related to pregnancy, would be relatively cheap. Pricing the pregnancy package through the roof would be relatively easy. And denying the claims of those who bought the base package and then got pregnant would be trivial -- and would save you a ton of money. So almost all states mandate that you cover maternal care. And this goes across the board, from procedures the old use but the young don't need to packages that target specific lifestyles. If you allow the insurance companies to subdivide the market by treatment needs, what you'll have is bargain-basement pricing for the young and healthy coupled with unbelievable premiums for their less-lucky friends.

But this statement from Committee Chair Mike Enzi (R-WY) on the purpose of AHPs is the most revealing:

Let us put the power in the hands of small employers and family-owned businesses, rather than in the hands of insurance companies or the government. Let the consumers band together to drive the change that we want to see happen

Enzi is completely wrong about where the power in this situation is going.  It’s funneled directly to the insurers!  They’ll be offering bare-bones plans to these small businesses, who will have no ability to negotiate higher benefits.  Why?  Because there’s nothing barring them from trying to negotiate plans with insurers now.  Insurers simply aren’t interesting in offering an affordable but comprehensive product to small businesses. 

But why trust history?  Enzi wants consumers to band together and force doctors/ hospitals/ insurers/ employers to provide them with cheaper health care.  Because they surely haven’t had enough time to do so the last forty years. 

The bill has already passed committee.  If it passes the Senate, it will only continue to weaken health insurance as we know it.  The way to solve our health insurance problems isn't by cutting benefits, it's by fixing our fragmented system that costs twice as much as our more generous international counterparts.

Holt and Reinhardt

Matthew Holt is quite enamored with Uwe Reinhardt's discussion of HSA's at a recent KFF event.  Matt pasted the transcript over at THCB, but the gist is that using HSA's as a way of controlling costs actually shifts the responsibility of cutting back on health services principally on the backs of the lower third of the U.S. income bracket.  It's well put and worth reading if you have a few minutes.

Uwe Reinhardt also spoke at the National Health Policy Conference in February.  He's a fantastic, engaging speaker.  I don't think I've ever seen someone able to make health policy so funny.  Any Democratic candidate with health reform on the brain would be genius to just bring him along on campaign stops to go after HSA's.  He's damn convincing.

The Deserving Sick

(cross posted from tpm)

I second Graham.

ABC's new reality show, Miracle Workers is the wrong take on health care.   The show, following in Extreme Home Makeover's footsteps, creates a construction that Bad Things happen to people, and a choice handful will be lucky enough to come under the lens of millions and deemed worthy of assistance.  It's a revival of the notion of the deserving poor -- this family’s house is crumbling from foundation to roof, but because the mother also rescues turtles from the highway, they've done something to deserve help. 

But the Miracle Worker conception of the deserving poor is much more insidious.  As the show sets out to:

give ordinary people who do not have the network, access to the necessary medical community or in some cases the resources to these procedures. Their seemingly overwhelming medical problems will be taken in hand by a renowned team of medical specialists. The patients’ lives will be transformed before viewers’ eyes as the professionals employ cutting-edge medical technology to heal those who need it most.

It’s taking the uninsured and making them special cases to nurture and heal.  It’s ignoring the fact that 46 million people are in the same place as the two patients featured every week on this show.

It would be prohibitively expensive to rebuild every crumbling home across the nation, but the added cost of covering the uninsured is quite small.  There’s a variety of ways to go about it; some involving small changes, others monumental shifts.  But this problem isn’t uncurable; it’s not a fact of life (or doesn’t have to be).  It’s fixable.  This show could really make leaps and bounds for health care if it discussed these cases in the context of what they are: the lucky few of an addressable problem.  Every person in this nation deserves access to this kind of care, and there’s any number of ways we can go about ensuring that.  We should take that joy and hope the sick enjoy when they get adequate care, and use that as reason to cover everyone.

Instead Americans will blissfully sit in front of their television, eyes a little wet as the “miracles” progress, little thought given to the rest of the uninsured and how they’ll never see doctors like this.

Let Them Eat Mangoes

This is just infuriating.

Wal-Mart and health insurance

Ezra has a great post on the logic of Walmart-directed outrage.  Responding to this:

Just out of curiousity, why should taxpayers be outraged? This is after all, precisely what the Democratic party has been arguing for for decades. For a half-century, Democrats have been arguing that what America really needs is a universal health-care system, funded by taxes. Indeed, the only reason why Wal-Mart employees are eligible for Medicaid in the first place is because Democrats made a push to amend Medicaid so that the working poor could get Medicaid benefits, even though they are employed.

So, it's a little silly to be complaining that Wal-Mart employees are using Medicaid benefits when the goal of the Democratic Party is ensure that everyone gets taxpayer-funded benefits.

Ezra writes:

Yep. In fact, it's probably a helluva lot more efficient for the government to be picking up the tab. What taxpayers should be outraged by is that Wal-Mart isn't following their ethos to its logical conclusion and loudly advocating for a universal health care system. They should be angry at the hypocrisy, not the usage of federal/state health programs.

Bingo.  What's bad here is that people can work full time and still be unable to afford health insurance.  It's not that Wal-Mart isn't spending enough on health insurance; they don't spend enough on wages.  Higher wages, more than anything, would make a huge difference.  Piddling over whether Wal-Mart spends 7% or 9% on health insurance is pointless.

How much do we charge smokers?

There's been a lot of talk about charging smoking employees more for their health insurance.  Several companies charge employees an extra $20 to $50 dollars a month for their habit.  But how do they come up with that?

Are there numbers somewhere that say smokers cost an extra $x/month on average?  Or is this an arbitrary way of estimating how much extra smokers should pay?

Not really insurance

Kaiser reports:

With rising health costs, "mini-medical" or "limited-benefit" plans that cover only routine physician visits and offer little to no coverage for hospitalization or emergency care have become popular options for some U.S. companies as an alternative to more comprehensive plans, the Wall Street Journal reports.

This is just genius. On top of all the other crap insurance companies and businesses are coming up with not to pay for health insurance, now we have insurance that excludes the whole point of having insurance! You know -- not being liable if you get in a terrible accident or have an awful disease. Remember how much my surgery cost? These plans cap at $10,000 annually. That's nothing you if you have a semi-serious health problem. It's a false sense of security, and until we have a viable catastrophic care market to accompany it, these kind of plans will just leave people open to huge financial risk.

Better ways to enroll kids

Kaiser reports on a new study that found assigning community-based care managers to uninsured Latino children instead of traditional Medicaid/SCHIP methods resulted in higher rates of enrollment and retention. How much higher? Significantly so, according to the study -- the intervention group was more likely to obtain health insurance (96% vs 57%), and 78% remained insured after one year, compared to 30% in the control group. Parents also reported higher levels of satisfaction with the process.

A few weeks ago I talked about problems enrolling uninsured but eligible children in California. I argued that the current methods in place may have reached their limit in terms of being able to enroll new kids, and creative thinking was needed to get the rest into programs. The majority of uninsured kids in California are Latino, so this study, carefully considered, could help state workers get a much bigger chunk of kids insured.

The only question is cost. It's not cheap to assign a care manager to every family, but nobody said the important things in life come free...

And now for a little history

Matthew Holt has a fabulous column with a brief history of U.S. health care:

Although shamans and faith healers have been around since the dawn of civilization, the prominence of "my son, the doctor" in American culture is relatively recent. Up until the early years of last century a visit to the doctor was statistically as likely to harm a patient as to help them, and a hospital was a place poor people went to die. Like much else that's familiar to today's cognoscenti, it was technology that made the difference, and the technologies that mattered were mostly anti-biotics and anesthesia, which enabled doctors to correct disease with drugs and defects with surgery. Following an age of development in the 1920s and 1930s, a combination of government financing (the Hill-Burton Act) and hospital and physician-organized pre-payment systems (Blue Cross and Blue Shield plans) fueled an explosion in hospital construction and health care spending. The new technologies gave them something to spend that money on.

Go read it and brush up.

Shifts in Retiree Benefits

Kaiser just released its report on the status of Retiree benefits. It's jam-packed with important and interesting stats, so here's your guide to the shape of Retiree health care, courtesy of Healthy Policy:

• More than nine in 10 (93 percent) surveyed firms that offer retiree health benefits provide coverage for both pre-65 retirees and age 65+ retirees

• The total cost of providing retiree health benefits increased by an estimated 10.3 percent, on average, for surveyed employers between 2004 and 2005.

• Nearly two-thirds of all surveyed firms (63 percent) report having a cap on their firms’ contributions to retiree health benefits in any plan offered to retirees in 2005.

• Among those employers with a cap on the largest age 65+ plan, 59 percent said they have already hit the cap and another 27 percent say they expect to hit the cap within the next 1-3 years

• The weighted average total premium (employer and retiree) for newly retiring age 65+ retirees in the largest plan is $340 per month, and the weighted average retiree contribution for new age 65+ retirees is $128 per month (including firms that do not require retiree contributions to the premium)

• Nearly three in four employers (71 percent) increased retiree contributions to premiums between 2004 and 2005. Employers also reported that they increased retiree cost sharing (34 percent), raised deductibles (24 percent) and increased retiree out-of-pocket limits (19 percent)

• Virtually all surveyed employers (99 percent) provide prescription drug coverage to age 65+ retirees.

• 79 percent of surveyed employers – representing 89 percent of age 65+ retirees in the largest plans – expect to continue to offer prescription drug coverage and accept the tax- free subsidy for their largest group of age 65+ retirees

So the key things to take away from this survey aren't surprising, with the exception that most employers will continue to offer drug coverage in the face of Part D. Similiar to the rest of the health insurance sector, costs increased 10% and employers responded by shifting costs onto employees. The average premium is standard, at $340 a month, although retirees pay a bigger portion than the average individual ($1,536 a year vs. $610 for single).

We all know getting old is expensive, and boy is it showing: 59% of retirees have already exceeded their spending cap, coupled with 27% who will follow in the next few years. Thank God for Medicare --spending caps aside, the number of firms offering health insurance is dwindling:

Between 1988 and 2005, the share of employers with 200 or more employees offering retiree health benefits declined from 66 percent to 33 percent, which is likely to increase the number of future retirees without such coverage.

Just one more reason the drug benefit with it's black donut hole is totally ridiculous. Fewer and fewer retirees will have insurance coverage through their employer, so we decide to give them a convoluted program with a huge hole in the middle. Well done.

The benefit is designed to help employers as well by giving them a 28% tax subsidy if they discourage their employees from signing up for plans:

On average, surveyed employers are estimated to receive savings of about $644 per individual retiree in 2006, with the level of savings varying according to the type of strategy pursued and the degree to which employers subsidize the current drug benefit. Those savings are significant, but when placed in the context of spending for all retiree health benefits, both medical and prescription drugs, and for pre-65 and age 65+ retirees, the savings represent a relatively modest share of the total cost.

From the retiree perspective, employer-sponsored benefits are relatively generous when compared with the standard Medicare drug benefit, suggesting it may often be in retirees’ best interests to remain in employer plans.

I'm sorry. What is the point of this legislation again? We are discouraging people from signing up for it, making it horribly complicated to do so for those who have no other coverage, and then make a big hole for people to fall into in the middle of their drug coverage (which might not even cover their pharmacy or medications in the first place). And it's still going to cost $700 billion over the next decade. I think I need to go lie down.

Questions

Anyone know some good resources on dental care and insurance? My usual stash is remarkably unhelpful on this topic...

Ignorance Goes On...

Today I attended a lunch for society ladies. Interesting stories always emerge when I tell society people about wanting to work in health policy, and this meal was no exception.

The current display of ignorance was on the reality of being uninsured. The woman I talked with didn't truly understand what it meant to be uninsured until her housekeeper had a health problem and couldn't get seen by a doctor.

She turned to me, "Did you know that if you're uninsured the hospital and doctors won't see you? Isn't that unbelievable? I had no idea! I just thought they'd see you!"

I responded, yes I knew that. Hospitals and doctors are only required to see you if you are in immediate danger of dying or giving birth. And even then they're allowed to bill you for the services you used. There are 46 million people in this country without health insurance, and that's how hard it is for them to get care.

"But we cover kids, right? Kids have insurance."

"Yes, we cover kids. Not that it does a lot of good if their parent is so sick they can't work or if they die. A healthy kid doesn't mean much without a family. So what happened to your housekeeper?"

"Oh, we got her into see [insert well known wealthy KC doc here]. He saw her no problem."

That was the real kicker -- this woman was unlucky enough to be uninsured, but lucky enough to work for some of the wealthiest people in the city, and therefore go in to see a family friend for treatment. If the housekeeper needed surgery or expensive treatment, this family wouldn't help her. Not that they should -- $70,000 is a lot to spend on your housekeeper. But the simple fact that she's employed by them is one major reason she doesn't have health care. I didn't get the impression that the housekeeper was an immigrant. Maybe she wouldn't have been able to find a job that provided insurance -- but she certainly has no chance staying where she is.

It's unbelievable that people in this country still don't realize how serious it is to be uninsured. A member of the upper echelons of Kansas City wealth was shocked, shocked that her housekeeper might not be able to go to the doctor at all. I hope she lost sleep over it.

Changing Markets

I've recently discovered InsureBlog, which covers mainly insurance issues (surprise, surprise). The principal author, H.G. Stern, writes eloquently on a variety of interesting health care issues and I highly recommend you click over and check him out.

This week InsureBlog delves into the life insurance market for cancer survivors and finds it's changing:

Historically, carriers have either declined cancer survivors outright, or placed such onerous additional premium requirements that plans were unaffordable. But in a nod to increased recovery rates, carriers are beginning to reassess how they price policies. For example, one trend is toward limiting how long these rate-ups (commonly called “flat extra’s”) remain in force. By automatically dropping off after a few (usually 2 to 3) years, they encourage folks to stick with the plan, and ultimately reward them for doing so by permanently reducing the premiums. Very much a win-win.

It shows you how health policy focused I am that it doesn't even occur to me to consider life insurance as something people might be trying to get along with health insurance. Unfortunately, the health insurance insurance market isn't making sweeping changes just yet:

The health insurance side has also seen some improvement, although not as dramatic. Since this type of policy allows for potential repeat claims (as opposed to life insurance plans), underwriters tend to be more circumspect. Still, there seems to be an acknowledgement that at least some survivors can be underwritten. The more information an underwriter has, the more likely he (or she) is to take a serious look a survivor’s insurance application.

I always felt the idea that we refuse to insure cancer survivors abhorrent. Honestly, what kind of a society lets that happen? Why can't we get these people covered under Medicaid or Medicare (right now that's only the case if they can prove permanent disability and inability to work under the state). I understand the economic risks involved with insuring cancer survivors, but honestly, this is something our government should help provide for.

I'll never forget the first time I learned there was even such a thing as refusing to insure people. It was during a discussion in my core seminar freshman year of college. For those of you out of school for a little while, I imagine core is pretty much the same -- a class of 15 students sitting around discussing the same old classics written by even older dead white men. My professor, a woman in her early 50's, was outstanding -- insightful, empathetic, brimming with knowledge. One day we started discussing health and she revealed not only that she is a breast cancer survivor, but that she is uninsurable because of it. Surprised by this admission (I just couldn't believe that someone wouldn't give my favorite professor health insurance), I looked into it more and realized there was a whole host of people in this country deemed uninsurable. And then I stood up right from my library table and yelled, "Eureka, HEALTH POLICY!!!!" Just kidding. I wish I'd figured out I loved policy four years ago -- instead I stubbornly continued with premed and generally made studying miserable for myself.

In any case, pardon my digression. Good to see that the market is changing a bit, but I wonder that it will ever be sufficient for people with major illness and no employer-based insurance.

Uninsured but Eligible

Last summer I worked at the Venice Family Clinic, the largest free clinic in the nation, in Los Angeles. It's an incredible organization that provides care to almost 20,000 people a year through at network of 7 clinic locations. Most patients are Latino immigrants without health insurance, but a fair number are homeless and a slim number are white but not homeless. I worked with the director of programs (the Clinic has dozens), and doing so immersed me in the contemporary debates surrounding health care in California. This, more than working at the clinic itself, was the formative experience I took from that summer.

California, with its enormous population, ballot initiatives and liberal minded legislation faces hurdles unlike most other states. The state Medicaid system is called "Medi-Cal" and covers 6.5 million people. That coverage joins another state initiative, Healthy Families, and a network of county and private orgs (like VFC) to cover the state's enormous uninsured population.

One thing we discussed often at VFC was the number of uninsured-but-eligible children in California. Numerous initiatives were undertaken in the last few years to get these kids enrolled in appropriate state programs but they met mostly failure. On Sunday, the New York Times reported that the number of uninsured children had fallen by 350,000 since 2000.

350,000 seems like a lot of kids. Until you hear how many kids remain unenrolled and think about how many billions went in to enroll less than half a million children in insurance programs. According to the American Academy of Pediatrics:

More than 6 million of the 9 million uninsured children in this country are eligible to receive health care coverage through Medicaid or the State Children's Health Insurance Program (SCHIP), but are not enrolled. The American Academy of Pediatrics (AAP), a national supporter of "Cover the Uninsured Week" (May 1-8), promotes outreach efforts and advocates for simplifying the enrollment process and other paperwork burdens so that eligible families can easily participate. In 2003, 4.1 million uninsured children were eligible for Medicaid, and 2.2 million uninsured children were SCHIP eligible, yet none of these children was enrolled.

Approximately 750,000 eligible but uninsured children live in California. Major initiatives to enroll these kids have basically thrown money down the drain as families continue to resist enrollment.

Why? Why are so many kids still without health insurance? Many in the California policy world argue that immigration status causes many families to avoid authorities altogether, and especially anything that involves taking detailed family information. The complex paperwork process forms another barrier.

And then there's a theory that my mentor ascribed to, and I'm not entirely sure she's wrong. There might be a saturation point, or a limit where, barring legal action to the contrary, the number of people who will sign up for free or low-cost health insurance is reached. Whether the parents work too much to try and sign their kids up, whether they are abusive, strung out, or otherwise, California may have reached a point of diminishing returns, where little benefit will come from additional input.

To those of us with the economic means, it seems crazy to not enroll one's children in free or low-cost health insurance. But we have to realize, despite the New York Times article's claims of extending coverage, that the efforts aren't really working. 6 million kids remain eligible for health insurance but don't have it, and the approaches we've tried thus far might have reached their limit.

Update: Ezra has more. For clarification vis a vis his arguments, I don't think we've reached a saturation point in terms of parents being too [insert negative trait here] to sign up their kids. I do think, however, that the paperwork and system involved in signing up is still too complicated and needs major simplification. I also believe that we need new outreach approaches and that the ones in place since SCHIP are almost stretched to the limit (which is why states like Illinois are passing new major legislation and programs).

False Security

InsureBlog has a great post on so-called "discount health plans":

As I mentioned in my reply, such plans are often wrongly sold as alternatives to insurance, or even as insurance products (which they are not). This is dangerous because, as I told my correspondent, it may give the purchaser a false sense of security.

I wasn't aware of the existence of these discount plans. You should really read the post, especially if you're interested in insurance issues. These plans should be on your radar.

File Under: Bad Ideas

Via Ezra, Steve Pearlstein has some interesting ideas:

Rather than falling back into the political set-piece of defending the status quo and demonizing Republicans for another round heartless budget and tax cuts, Democrats might have used the opportunity to change the terms of the debate. With the governors at their side, they could have pushed Congress to take the next step in transforming Medicaid from an entitlement program for the poor into a means-tested health insurer of last resort for all Americans.

Italics mine.

How, exactly, does this represent a good idea for Democrats? Announcing a plan to create a health insurer of last resort isn't a homerun for taking back the senate or getting a president elected. "Last resort" doesn't signify quality; it signifies disaster (i.e. I tried that parking break as a last resort before driving off a cliff). Nor is it something that middle class Americans want to be involved in.

Fortunately, other members of the punditocracy (i.e. Ezra) have a scenario that's much more appealing:

Expand FEHBP, the program that currently insures nine million government employees and uses community rating (which means everyone, no matter their health issues, gets charged the same premiums, so nobody is priced out), by opening it to small businesses and individuals . . . Then, once this quasi-national health system is running parallel to the patchwork of private insurers, let Americans make their own choice on what looks most attractive. Let the new FEHBP and the old system compete and see which consumers prefer.

FEHBP, the Federal Employees Health Benefits Program, provides excellent comprehensive coverage at reasonable prices. An extension of high quality insurance is something a wide group of the population would support, without associations of poverty and "last resorts". Not only would they get behind it -- they deserve no less than the quality of insurance we give our elected representatives. The longer we fool around with programs that cover the most marginalized parts of society (we already have one!), the longer until we can fix the problem affecting everyone -- inadequate care, increased cost shifting to patients, and loss of health insurance.