Thursday, December 14, 2006

Wyden's not so democratic universal health care plan

Dec 14, 2006

By DrSteveB
dr.steveb@verizon.net

As a matter of policy the Wyden bill is bad, as explained below.

But politically, if it moves forward, then it signals a sell-out by the Democratic congressional leadership.

Why should the Wyden bill be getting support & publicity, when the much longer standing "Medicare for All" proposal, currently packaged in Conyers HR-676 languishes on the backbench? Conyers, Dingell (prior years' sponser) along with Senate co-sponser Kennedy, are all more senior than Wyden. The bill has been circulated gathering congressional, grassroots and labor support... and that of lots of our new congresscritters. If it is shunted aside for Wyden's bill, then it means either Conyers and Kennedy and their co-sponsers have not been serious with us, or the Democratic congressional leaderhip is not serious about them.

It also ignores the Overton Window: Wyden, like Clinton's proposal before, doesn't even bring single-payer to the negotiating table. They compromise from the get go, without negotiation with or making demands of, the insurance industry. Rather than start with what we really want, they start off with an already triangulated camel compromise.

Single Payer is the way to go, and feeding tax dollars to the multi-payer multi-private for profit trough is not.

But per USA Today Wyden explains himself...

Seemingly from nowhere,

Oregon Sen. Ron Wyden is readying a proposal to provide health care coverage to all Americans through a pool of private insurance plans.

Wyden's proposal, which he planned to unveil on Wednesday, is an outgrowth of work by the Citizens' Health Care Working Group, a 14-member panel that went to 50 communities around the country and heard from 28,000 people about how to reform health care.

The group, created in 2003 by legislation sponsored by Wyden and Sen. Orrin Hatch, R-Utah, recommended that the government take steps to guarantee all Americans have basic health insurance coverage by 2012.

Wyden said his plan would allow workers to carry their health insurance from job to job without penalty and would cost the federal government no more than it's paying today for health insurance coverage. It would cover all Americans except those on Medicare or those who receive health care through the military.

Called the "Healthy Americans Act," the plan would require that employers "cash out" their existing health plans by terminating coverage and paying the amount saved directly to workers as increased wages. ,Workers then would be required to buy health insurance from a large pool of private plans.

After two years, companies would no longer have to pay the higher wages. Instead, Wyden said, they would pay into an insurance pool, based on annual revenues and the number of full-time workers.

The Lewin Group, a Virginia-based health care consulting firm that reviewed Wyden's plan, said it would reduce health spending by private employers by nearly three-quarters, and would save $1.4 trillion in total national health care spending over the next decade.

Increases in premium payments for individuals and families would be offset by higher wages and subsidies provided under the plan, the report said. As an example, Wyden cited a worker who earned $60,000 last year, and received about $12,000 worth of health care coverage.

The worker's health insurance would be terminated, but his salary would increase to $72,000, which would cover his health care coverage. The plan would bar workers from buying a "bare-bones" health package and pocketing the savings, Wyden said.

"You can't take your $9,000 and go to Hawaii," Wyden said, adding that the tax code would be adjusted so that workers who earn more money would not be thrust into a higher tax bracket.

Wyden said he's aware of the political pitfalls of health care reform, but believes the time has come to address the issue again.

"I think the country wants health care fixed," he said, citing skyrocketing costs and an estimated 46 million people who are uninsured. "There's been lots of rhetoric and position papers. It's time for action."

So... did you hear about the phony bipartisan commission stacked to deliver predetermined outcome? No, not the Iraq Study Group, but rather the so-called Citizens' Health Care Working Group which was was created as a provision in the Medicare Prescription Drug Bill (not a good sign already). Although officially bipartisan, in fact Comptroller General, David Walker carefully appointed 14 of the 15 members (the 15th being Bush's Secretary of Health & Human Services) and himself as chair, working with the infamous Repubolican congressman Bill Thomas who gave us Medicare part D. Prior to getting started Walker expressed that he believes in incremental reforms in the marketplace that place a greater emphasis on increasing price sensitivity for patients while decreasing the financial insulation provided by insurance.

Anticipating the formula of the ISG, CHCWG did a fair job of analyzing the current problem, acknowledging that the current system, of employment based insurance with a multitude of private insurers, is broken and did indeed solicit the opinion of citizens nationwide... but then disingenuously ignored its own analysis when it came time to propose next steps:

As documented by PNHP:

  • An overwhelming majority (96.8%) of the persons attending the community meetings felt that the health care system is in crisis or constitutes a major problem;
  • Over 94% thought that affordable health care should be part of national public policy; and
  • When faced with different priorities competing for public spending, respondents ranked "Guaranteeing that all Americans have health coverage/insurance" as the highest.
  • Similarly, when asked to evaluate different proposals for expanding access to care, respondents ranked "Create a national health insurance program, financed by taxpayers, in which all Americans would get their insurance" as the highest.

However the recommendations that came out can be summarized as follows: VERY high deductible coverage (reinsurance without coverage of primary benefits) at $30,000; support for integration of systems; contemplating the definition of core benefits; admiring quality; and encouraging humane end-of-life care. These are the recommendations that have been presented to the President and will be forwarded to Congress. No serious person can contend that these recommendations represented the comprehensive reform that Americans seek.

One common theme was that comprehensive health care must be affordable for all Americans. At no time did the pubolic call for support for the concept that we only need to "guard against VERY HIGH health care costs." Never was there the suggestion that the deductible be in the range of $30,000. Although there was very strong support for single payer social insurance, none of the advocates suggested a deductible that would in fact be 20 percent of income over the federal poverty level! The citizen at the meetings clearly called for Americans want a system that provides reasonably comprehensive coverage for absolutely everyone, that prevents financial hardship and is funded in an equitable manner. The group’s own data show attendees favored a national health program over any other option by an average of 3 to 1.

In summary:

The group created by Congress to listen to Americans’ ideas for improving the health system has ignored their overwhelming advice to create a national health insurance program. Although a national health program was by far the most favored option at 86 percent (25 of 29) of the meetings of the Citizens’ Health Care Working Group (CHCWG), the group’s recommendations avoid the clear public preference for government-guaranteed health coverage.

When given a choice of ten reform options at public hearings held by the CHCWG, participants clearly favored a national health program by a margin of at least 3 to 1. At meetings where participants were asked to rank the 10 options, national health insurance was ranked first 16 of 19 times (Billings, MT; Denver; Des Moines; Detroit; Eugene, OR; Jackson, MS; Kansas City, MO; Memphis; Miami; New York, NY; Philadelphia; Phoenix; Providence, RI; Sacramento; and Seattle). At two meetings participants were neither polled nor options ranked.

Despite the clear public mandate, the CHCWG’s report makes no mention of the vast support for a national health program. Instead, the group’s official recommendations include only generic suggestions such as promoting "efforts to improve quality of care and efficiency." and finding a way to protect "against very high health costs."

Okay, so that was one source for the background to the Wyden plan. Next...

As for the Massachusetts Plan, it...

...includes three key provisions meant to expand coverage. First, it would modestly expand Medicaid eligibility. Second, it would offer subsidies for the purchase of private coverage to low-income individuals and families, though the size of the subsidies has yet to be determined. Finally, those making more than three times the poverty income (about $30,000 for a single person) would have to buy their own coverage or pay a fine.

To help make coverage more affordable, a new state agency will connect people with the private insurance plans that sell the coverage, and allow people to use pre-tax dollars to purchase coverage (a tax break that mostly helps affluent tax payers who are in high tax brackets). This new agency is also supposed to help design affordable plans.

Businesses that employ more than 10 people and fail to provide health insurance will be assessed a fee (not more than $295) to help subsidize care. Additionally, hospitals won a rate hike assuring them better payments from state programs, and several provisions were included that are meant to attract additional Federal funding to help pay for the Medicaid expansion.

What’s Wrong With This Picture?

First, the politicians assumed that only about 500,000 people in Massachusetts are uninsured. The Census Bureau says that 748,000 are uninsured. Why the difference? The 500,000 figure comes from a phone survey conducted in English and Spanish. Anyone without a phone or who speaks another language is counted as insured. The 748,000 figure comes from a door-to-door survey carried out in many languages (including Portuguese and Haitian Creole, common languages in Massachusetts). In sum, the reform plan wishes away 248,000 uninsured people who don’t; have phones or don’t speak English or Spanish. It provides no funding or means to get them coverage.

Second, the linchpin of the plan is the false assumption that uninsured people will be able to find affordable health plans. A typical group policy in Massachusetts costs about $4500 annually for an individual and more than $11,000 for family coverage. A wealthy uninsured person could afford that, but few of the uninsured are wealthy. A 25 year old fitness instructor can find a cheaper plan. But few of the uninsured are young and healthy. According to Census Bureau figures, only 12.4% of the 748,000 uninsured in Massachusetts are both young enough to qualify for low-premium plans (under age 35) and affluent enough (incomes greater than 499% of poverty) to readily afford them. Yet even this 12.4% figure may be too high if insurers are allowed to charge higher premiums for persons with health problems; only half of uninsured persons in those age and income categories report that they are in excellent health.

The legislation promises that the uninsured will be offered comprehensive, affordable private health plans. But that’s like promising chocolate chip cookies with no fat, sugar or calories. The only way to get cheaper plans is to strip down the coverage, boost copayments, deductibles, uncovered services etc.

Hence, the requirement that most of the uninsured purchase coverage will either require them to pay money they don’t have, or buy nearly worthless stripped down policies that represent coverage in name only.

Third, the legislation will do nothing to contain the skyrocketing costs of care in Massachusetts, already the highest in the world. Indeed, it gives new infusions of cash to hospitals and private insurers. Predictably, rising costs will force more and more employers to drop coverage, while state coffers will be drained by the continuing cost increases in Medicaid. Moreover, when the next recession hits, tax revenues will fall just as a flood of newly unemployed people join the Medicaid program or apply for the insurance subsidies promised in the reform legislation. The program is simply not sustainable over the long - or even medium - term.

Okay so those are Wyden's origins, one process and another plan, both promoted by Republicans.

Ezra Klein at first glance liked it:

Here's how it would work: The Healthy Americans Act of 2007 would begin by dissolving all employer-based insurance. Instead, it would mandate that every employer who had covered his employees in 2006 convert the total they spent on insurance into salary increases creating, in one day, the single largest pay raise America has ever seen. Now, why would employers go along with that? Well, legislatively they'd have to, but, as Len Nichols explained to me, they'll also want to: Health costs are accelerating, every year costs 10 or so percent more than they ear before. By freezing the total at what employers paid in 2006, Wyden's plan would exempt them from 2007's increase.

Meanwhile, an individual mandate would be implemented, forcing every American to purchase one of the options offered by their state's newly formed Health Help Agency (HHA). The HHA's will have a menu of private insurance plans, all of which must provide coverage equal to or better than the Blue Cross Blue Shield Standard Plan used by Congress. All plans will be community rated by the state, meaning an end to adverse selection and preexisting condition problems. The only acceptable variables for price will be geography, family size, and smoking status. Subsidies will be offered up to 400 percent of the poverty line, will full coverage provided to those below 100 percent. Employers will contribute through a set equation related to business size and yearly profits. There's quite a bit more, but that's the basic outline.

...It isn't everything I'd want, but imposing the combination of community rating and an insurance floor will be a huge step forward. The cost stability offered to employers seems very, very savvy, as does the forced conversion of 2006 health costs into salary increases. The Lewin Group, the gold standard in health care actuarial data (I can't believe I just wrote that sentence), has evaluated the plan. Their conclusion? The plan would cover more than 99 percent of Americans, we'd save $4.8 billion in the first year and $1.48 trillion over the next decade. How's that sound? To me, it sounds like precisely the sort of big thinking Democrats need to be doing now that they're back in the majority.

Some of his commenters were less enthusiastic:

Reminds me of HillaryCare. Same bending over backwards to keep the useless private insurance companies in business, plus complex mandates such as employers having to pay amounts based on whatever formulae, to employees as well as to fund things going forward. (Notice that since this is based on 2006 health care payments, it continues to penalize companies that pay for health insurance and reward those that don't.)

Rather than go with this Rube Goldberg stuff, why not just do single payer like all the rest of the world does?

One thing that struck me right off was that the employer contribution is based in part on # of full-time employees. So it keeps one of the features I dislike about the current system: there is a perverse incentive to minimize full-time headcount in favor of temp and part-time workers.

I'm not so sure I'm for individual mandates. Where's the incentive to keep down the rising cost of health care? You're only transferring future increases onto individuals- although that will surely fuel the demand for more subsidies, tax deductions, etc. And if the Feds are going to pay even more of the health care bill than they do now, why do they have to cycle it though the insurance companies?

Reminds me of HillaryCare. Same bending over backwards to keep the useless private insurance companies in business, plus complex mandates such as employers having to pay amounts based on whatever formulae, to employees as well as to fund things going forward. (Notice that since this is based on 2006 health care payments, it continues to penalize companies that pay for health insurance and reward those that don't.)

Rather than go with this Rube Goldberg stuff, why not just do single payer like all the rest of the world does?

Initial analysis by Profs. Himmelstein and Woolhandler of Harvard (and PNHP; email communication) suggests that:

This seems to us a lightly warmed over version of the Massachusetts plan mixed with some elements of Clinton's failed proposal. Interestingly, they fine low income families who fail to buy health insurance an amount greater than the usual fines for drunk driving, domestic battery, or making a terrorist threat. They would also punish people for tobacco addiction (dying from an MI or lung cancer is apparently not bad enough) - an addiction largely determined before the age of 18 and inversely correlated with income, hence the poor pay more for this. Similar penalties are envisioned for the overweight (again, disproportionately the poor).

There is not even a hint of effective cost control in this plan. The
administrative savings are pure illusion, as are the projected savings from prevention (people end up living longer and costing more later on), avoiding ER use (unless you plan to shut down EDs), and disease management. Several other oddities are included - e.g. the requirement that every hospital have an urgent intervention team which has been promulgated by IHI, but has not been shown to improve outcomes in trials.

In sum, the plan stinks and particularly punishes low income families. We
should say so publicly.

So, is this the best we can do, even as a strategic opening move?

Addendum 1: I was somewhat shocked that David Sirota of all people does not get this as being just another case of corporatist Dems selling out cheap and early. David, David, David...

Addendum 2: PNHP analyzed this clearly as AHIP's welfare plan for private insurers as a rapid response to AHIP's initial press conference. It is hard to believe that any Democrat would take their marching order from AHIP, but Wyden is pretty close.

Addendum 3: Somebody reports that Wyden is on teevee and responded to a question about his plan vs. single payer by in effect red baiting single payer by knocking the Canadian system. That pretty much says it all. Anybody serious on this issue knows that there are many single payer systems out there... France, Germany, etc. I was blown away yesterday by incoming freshman Democrat John Yarmuth (KY-3) on NPR yesterday (link is to audio stream). He was the clearest, eloquent politician I have ever heard on single payer, and he got the "everybody else" not just Canada. And by the way, Canada-care is whole lot better than our current plan or Wyden's.

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