January 24, 2007
By MERTON C. BERNSTEIN
Special to The Star
We have reached a national consensus on health insurance — it costs too much and covers too few. Most “reform” proposals, like California Gov. Arnold Schwarzenegger’s and the health insurance industry’s, camouflage their real costs with tax breaks and other subsidies.
But coverage and cost are not two separate problems. Repeated double-digit cost increases caused coverage of millions to disappear. To cover the uncovered, we must — and we can — make better use of the $2 trillion public and private medical-care programs now expend. Banishing unnecessary nonbenefit costs could generate funds to cover everyone.
It is not reform to make individuals insure themselves. An individual mandate would require establishing and maintaining records just to keep track of compliance; enforcement proceedings against every noncomplying individual; processing requests for exemptions; keeping tabs on those not exempted; and repeatedly updating all these steps.
It is not reform to condition subsidies on poverty. Such tests, which also would require repeated updating, would cost tens of billions when applied to millions of people. That helps explain why means-tested Medicaid costs almost 5 percent more to administer than nonmeans-tested Medicare. Nor is it reform to vary millions of individuals’ subsidies based on the inevitable variations in individual income — at great administrative cost.
These nonreforms only increase costs — massively reducing funds for essentials like vaccination. They pepper the much-heralded Massachusetts and Schwarzenegger health-care plan and the health-care-provider proposal, backed by AARP, to extend coverage. Understandably, that proposal omits to say who will pay.
Permitting physician ownership interests in testing laboratories, imaging facilities, hospitals, nursing homes and pharmacies would provide inducements to prescribe what they sell. Rather than assuming that everyone would resist temptation, medical societies and legislation should shut those cookie jars. That would improve care and reduce costs.
Reform will elude us if the public and policy-makers mistake what needs changing. For example, in a 2006 Kaiser Foundation opinion poll, “too many malpractice suits” tied for second as the largest cause of ballooning health-care costs. Yet analyses show that malpractice premiums and litigating costs constitute just 1 percent of medical- care outlays.
If Medicare covered us all, more of the health-care dollar would go for treatment and prevention. Currently, insurers and providers spend huge amounts to match billions of billings with thousands of private plans and many public programs with differing eligibility and benefit criteria.
Medicare for All would save most of those nonbenefit charges. Some object that savings would be slight because providers must maintain records for treatment. Yes, but that recordkeeping does not require clericals to determine what programs, if any, cover claimants, and if so, what is billable and how much is reimbursable.
To tame costs and extend coverage, we must harvest savings where now we sow and reap inefficiently. The Schwarzenegger and Massachusetts gimmicks and the plan shaped by the same people who designed the perplexing and inefficient Part D — health insurers and AARP — plow other fields. Instead of savings, they increase nonbenefit costs. That’s not reform.
Merton C. Bernstein is a Coles Professor of Law Emeritus at Washington University. He was principal consultant to the National Commission on Social Security Reform and is a founding board member of the National Academy of Social Insurance.
© 2007 Kansas City Star and wire service sources. All Rights Reserved.
Americans are paying more for medical insurance than they did a year ago, and many are avoiding important doctor visits simply because of the cost, an MSN-Zogby poll reports.
By MSN Money staff
1/30/2007 6:27 PM ET
More than a quarter of Americans have skipped or postponed an essential visit to a doctor because it was too expensive, a new MSN-Zogby poll says.
Nearly half (48%) say they pay more in health-insurance premiums than a year ago, and 37% say they pay more out of pocket for medical services or prescriptions.
The results of the poll of 9,765 adults suggest that medical expenses are becoming a heavier burden on household finances, even for middle-income Americans. They underscore the findings of other recent studies that the cost of health care is becoming a more widespread problem.
The ranks of the nation's uninsured have grown by 11.2% since 2000, according to a study by the Kaiser Commission on Medicaid and the Uninsured. Tens of millions of Americans lack insurance, and millions more are underinsured, with gaps in their coverage that leave them exposed to catastrophic medical bills.
Medical bills pile up
A recent Harvard University study said medical bills are a factor in about half of all consumer bankruptcies. Another study reported that more Americans are turning to credit cards to cover rising medical expenses, often leading to crippling debts.
"Too many working people are piling up debt on high-interest credit cards and risking financial security simply because they have the misfortune of getting sick," says Mark Rukavina, one of the authors of a study by nonpartisan public-policy group Demos, according to Bankrate.com.
More from MSN Money
Nearly three in 10 participants in the survey from low- and middle-income households with credit card debt say medical expenses contributed to their current credit card balances, according to the Demos report. The majority had a major medical expense within the past three years.
More families are struggling in the aftermath of a serious medical problem, and many try to repay debts by taking out second mortgages or cashing in their retirement accounts, says Elizabeth Warren, a Harvard law professor. "Many will still end up in bankruptcy, but only after they have run up even more debt and their last meager resources have been exhausted," she told Bankrate.com.
Squeeze for middle-income people
According to the MSN-Zogby poll, 91% say they have health insurance, and 73% say they're happy with their coverage. Yet household income has a major influence on coverage. About 30% of households with incomes below $25,000 go without coverage, compared with 3% of those with household income exceeding $100,000.
The interactive MSN-Zogby poll took place Jan. 17-22 and contains a margin of error of plus or minus 1 percentage point.
The poll suggests an increasing squeeze for middle-income Americans. People with household income of $25,000 to $75,000 report the highest level of dissatisfaction, with approximately one in four dissatisfied with their benefits.
Those in the $50,000-to-$75,000 range were most likely (51%) to say their premiums have climbed. Married adults say they've been hit especially hard: 51% are facing higher premiums over the past year, compared with 37% of single adults.
When it comes to out-of-pocket expenses, households with $25,000 to $35,000 in income say they are hardest hit, with 40% paying more.
Though 16% of Americans say they have a health savings account, the popularity of the high-deductible plans increases as a person's income rises. Nearly a quarter (24%) of people with more than $100,000 in household income say they have a health savings account, compared with just 5% of those making less than $25,000. Such plans allow consumers to save money tax-free to pay for health services.
William W. McGuire’s Estimated Annual Retirement Benefit: $5,092,000*
*Calculated by The Corporate Library for the AFL-CIO Executive PayWatch
UnitedHealth Group CEO William W. McGuire will receive an annual supplemental retirement benefit for his lifetime. If he retires at age 65, his pension benefit will equal 65 percent of his average cash compensation over his past 36 months of employment. This special pension benefit is part of McGuire’s employment agreement. 
Ironically, this special pension guarantee probably will not be necessary for McGuire to have a secure retirement. On paper, McGuire is a stock option billionaire with $1,776,547,635 in unexercised stock options as of Dec. 31, 2005. 
Until 2005, UnitedHealth Group permitted McGuire to choose the day of his own option grants by giving “oral notification.”In 1997, 1999 and 2000 he received stock option grants on the day of the single lowest closing price of each year, and a grant in 2001 that came near the bottom of a sharp stock dip. According to The Wall Street Journal, “the odds of such a favorable pattern occurring by chance would be one in 200 million or greater.” 
On McGuire’s retirement, all his stock options will immediately vest. His employment agreement also provides for additional retirement perks. For the first 36 months of McGuire’s retirement, UnitedHealth Group will continue to pay his insurance premiums, provide him an office and a secretary and allow him personal use of the company jets. 
Should UnitedHealth Group need McGuire’s services after he retires, his employment contract provides for a consulting agreement for up to 36 months. During this period, he will be paid his full cash compensation that he earned as UnitedHealth Group’s CEO.  However, the provisions of his consulting agreement will ensure this consulting work does not impose on McGuire’s retirement.
Under McGuire’s contract, the UnitedHealth Group’s requests for consulting services “shall not unreasonably interfere with the personal, charitable or other business activities” of McGuire or interfere with him “pursuing other full time employment.” Moreover, UnitedHealth Group will continue to pay for McGuire’s consulting services to his beneficiaries in the event of his death during the consulting period. 
Lastly, McGuire’s contract requires that UnitedHealth Group provide him and his spouse with health care for the remainder of their lives at no cost to McGuire. Should UnitedHealth Group terminate its retiree health care plan, the company must reimburse McGuire for the full cost of alternative insurance coverage.  Unlike McGuire's coverage, the retiree health care of UnitedHealth Group’s 55,000 employees is not protected by law.
2006 UnitedHealth Group proxy statement, page 18.
2006 UnitedHealth Group proxy statement, page 16.
“The Perfect Payday,” The Wall Street Journal, March 18-19, 2006.
2006 UnitedHealth Group proxy statement, page 18.
Amendment to Employment Agreement Between UHG and William W. McGuire, M.D., Aug. 5, 2005.
Amendment to Employment Agreement Between UHG and William W. McGuire, M.D., Aug. 5, 2005.
[ William W. McGuire, M.D., Employment Agreement, Oct. 13, 1999.
By SALLY C. PIPES
Wall Street Journal, February 26, 2007; Page A19
Presidential hopeful John Edwards recently unveiled a plan for universal health care, proving that the bad idea of raising taxes on employers and forcing individuals to purchase insurance holds bipartisan appeal. Before others get carried away with this model, they should take a look at its most recent manifestation in Massachusetts.
When then-Gov. Mitt Romney, a Republican, introduced a universal health-insurance plan in the Bay State early last year, it was widely acclaimed. But less than a year after passage, RomneyCare is in the intensive care unit, soon to be wheeled into hospice.
The first signs of trouble appeared last August. In a filing to support general obligation bonds, officials projected that the new plan would increase state government health-care spending by $276.4 million in 2007. That's $151 million more than what the public had been told the plan would cost. Meanwhile, the state's new bureaucracy, busily signing up people for free care, has run into trouble finding affordable plans for those who have to pay. The premiums for subsidized plans would consume up to 6% of a person's income -- prompting calls from activists and echoes from politicians that they should be exempted from the individual mandate. So much for universal coverage.
Reality fully hit in late January of this year, when private insurers submitted bids to the bureaucracy that would administer the new program. The average premium for the unsubsidized plans was not $200 per month -- as Mr. Romney promised from the stump -- but rather $380. That's more than 15% of the target audiences' income -- and for a plan with a $2,000 deductible and a total cost sharing of $5,000. People were stunned, outraged. Naturally, "greedy" private insurers were blamed. Politicians called for price controls.
Interestingly, monthly premiums of $325 were forecast by insurers cited in an April 6, 2006 article in the Boston Globe entitled "Health Bill Premiums May Exceed Prediction." At the time, Romney administration consultant and MIT economist Jonathan Gruber, who helped design the plan and now advises the bureaucracy, dismissed the predictions.
There's a slim chance that the new Democratic governor Deval Patrick and the Democratic legislature will implement this plan and enforce the mandate. But if they do, an individual with a $30,000 income would be on the hook for 32% of his or her income before being fully covered by insurance. Yet there is an equally small chance that the politicians will deregulate the state's insurance market.
Regulators are however settling in comfortably to their jobs, dictating health-insurance design by creating the standards for Minimum Creditable Coverage (MCC) that individuals must meet to avoid paying the fine. If these standards are implemented, they would render illegal roughly 200,000 high-deductible policies currently in force -- exactly the sort of insurance that makes sense for the self-employed and young individuals.
Meanwhile, California Gov. Arnold Schwarzenegger has introduced an even more comprehensive plan to guarantee universal coverage. The $12 billion plan includes individual and employer mandates, expansion of Medi-Cal and Healthy Families, and a tax on doctors and hospitals. If enacted, Californians will face higher taxes, a much larger bureaucracy and increased spending. And I predict the problem of the uninsured will not be solved.
Ms. Pipes is president and CEO of the Pacific Research Institute.
Rose Ann DeMoro
Union members have a huge stake in the present debate on health care reform.
At a time when employers routinely slash or eliminate health benefits for workers and their families or force union members on strike to preserve those benefits, when insurance plans routinely restrict workers’ choice of doctors and prescription drugs, and when more working families declare bankruptcy due to medical debt, only one reform can provide the health care security working people need: single-payer.
Under single-payer, you don’t face the loss of health benefits if you lose your job or are forced out on strike. You don’t face employers constantly shifting costs onto your back. You don’t have to worry about retiree health care if you are able to retire before age 65. And you are no longer at the mercy of the insurance industry predators who routinely deny care.
NOT A DREAM
Single-payer is not a dream. It’s legislation—House Resolution 676, introduced by Congressmen John Conyers and Dennis Kucinich, with dozens of co-authors. It also has the backing of 235 labor organizations in 40 states, including 17 AFL-CIO state federations and 60 county/regional central labor councils. Several states, including California and Illinois, also have single-payer bills in the hopper.
Does single-payer work? Every industrialized nation in the world except the U.S. has either a single-payer system, like Medicare, or a national health system, like our veterans health system. That’s why the U.S. stumbles along at 37th in the world in overall health care quality, according to the World Health Organization.
Under single-payer, all health care revenues go into one publicly administered pool of money that pays for all medically necessary services delivered by doctors, hospitals, and other providers.
Its guiding principles are:
• Universality: Everybody in, nobody out.
• Portability: Even if you lose your job or never had one, you still have health coverage, guaranteed.
• Comprehensive, uniform benefits: No Cadillac plans for the wealthy, no tricycle plans—with high deductibles, limited services, and caps on coverage—for everyone else.
• Choice of physician, hospital, clinic, and other caregivers: Most private plans restrict where you can go.
• Cost controls and cost savings: 30 percent of every dollar that currently goes to insurance companies pays for their administrative costs—and their profits. Under single-payer, savings accrue from eliminating this overhead.
• Public oversight: The public sets policies and administers the system, instead of high-priced CEOs meeting in secret and making decisions based on what inflates their compensation packages or company profits.
Single-payer is such an obvious solution that one might wonder why there is not overwhelming accord by labor, liberal, and progressive organizations and politicians to campaign for it.
One reason is the enormous economic and political clout of the health care industry. The 20 largest HMOs in the U.S., for example, made $10.8 billion in profits in 2005. Drug companies make even more; the world’s 13 biggest reported $62 billion in profits in 2004.
Health care corporations employ that wealth to block real reform in Washington and in state capitols. They promote “solutions” for the health care crisis that throw more money to the private marketers who created the present mess by putting revenues and profits ahead of the health and well-being of patients.
Thus, we’re presented with a series of market-based approaches masquerading as “universal” coverage, along with browbeating campaigns designed to lower public expectations and promote the conventional wisdom that only substandard solutions are feasible.
We’ve heard this before. From abolition of slavery to women’s suffrage to enacting Social Security and Medicare to ending legal segregation, our history is filled with achievements that the political “realists” repeatedly dismissed as unrealistic.
Most of the alternatives offered instead are based on expanding the role of the insurance industry. Among the ideas now being touted by, among others, liberal advocacy groups and a few Presidential candidates, are mandates that everyone be required to buy insurance, tax deductions to encourage people to buy insurance, taxes on employers to pay for more insurance, and expansions to existing federal or state programs to buy insurance for the low income.
No wonder that Stephen Hemsley, chief executive of health care giant UnitedHealth Group, calls one such scheme, by California Governor Arnold Schwarzenegger, “an interesting set of proposals that represent real opportunities for our business.”
Both the Schwarzenegger plan and the Massachusetts law on which it is modeled have as their central premise the requirement that all state residents buy health insurance.
Yet neither places any limits on skyrocketing premiums, and in both states individuals and families will face huge deductibles with even the cut-rate plans the law will force them to buy. The result is that many will end up paying for virtually all their medical expenses or gamble with their health by avoiding most services.
On the other hand, the California and Massachusetts models are welcome news in the corporate boardrooms of the insurance industry. Insurers stand to make hundreds of millions more just in California.
Another favored scheme, especially by some in labor, is employer mandate “pay or play” plans that require businesses to provide health benefits or pay into a state pool to buy insurance for the uninsured.
But in addition to being another windfall for the insurers, a federal court ruling throwing out a Maryland law based on this approach cast doubt as to whether any employer mandate will withstand legal challenge.
The health care industry and conservative ideologues hardly need our help. It’s time for labor activists to unite behind the only health care reform that is universal, comprehensive, and assures one standard of quality care for all.
Rose Ann DeMoro is executive director of the California Nurses Association/National Nurses Organizing Committee.
Source URL: http://labornotes.org/node/662
By Phil Mattera,
Corporate Research Project
February 26, 2007
Healthcare reform is in the air.
Ideas for dealing with the 46 million Americans without medical insurance seem to be popping up faster than new cases of the winter flu. President Bush proposes to use tax deductions to help people buy individual plans. California Governor Arnold Schwarzenegger wants to make it mandatory for everyone in his state to obtain insurance and would force employers who don't provide coverage to pay into a fund.
Democratic Presidential candidate John Edwards would raise taxes on the affluent to pay for subsidies to help those with low incomes obtain policies. Some members of Congress are promoting insurance purchasing pools for small businesses. An odd bedfellows coalition including the Business Roundtable, AARP, the Service Employees International Union and Wal-Mart is pushing for some kind of expansion of coverage but is not saying what form it should take.
What these varied plans have in common is the assumption that, at least for the foreseeable future, most of the working population (and their dependents) will continue to receive coverage through private insurance carriers. Public officials across the political spectrum are, in effect, seeking to expand the customer base for a highly profitable industry.
Surely, it is a good thing to provide coverage to the uninsured, but it is remarkable that almost everyone assumes that coverage has to come from for-profit (or, in some cases, private non-profit) providers. Despite the overwhelming evidence from other industrial countries -- and even domestic programs such as Medicare -- that government-run health plans are much more efficient, the U.S. political class seems to be on a mission to save private insurance.
A Paternalistic Reform?
To understand the current debate, it is helpful to recall some of the tortured history of health insurance in the United States. In the late 19th Century European countries began adopting government-funded social insurance plans, but the U.S. failed to follow suit. When progressives made a push in the 1910s there was opposition not only from corporate interests but also from organized labor. AFL President Samuel Gompers denounced national health insurance as a paternalistic reform, fearing that its adoption would weaken the role of unions in improving the living conditions of workers.
Consequently, Americans both rich and poor continued to pay the vast majority of medical costs out of pocket. That began to change in the 1930s. While the Roosevelt Administration focused on retirement benefits and unemployment insurance at the expense of health coverage, physicians and hospitals struggling to survive the Depression set up private group insurance plans to bolster demand for their services. The most successful of these were the non-profit multi-hospital plans that grew under the rubric of Blue Cross. These were later followed by Blue Shield plans, which covered outpatient physician services. Once the Blues paved the way, commercial insurers also entered the field, though their coverage tended to be more restricted.
After the end of World War II, there was great momentum toward expanding the portion of the population with some form of sickness insurance. In 1945 President Harry Truman proposed a national program establishing a right to medical care and protection from the "economic fears" of illness. But once again, opposition to government involvement in healthcare emerged, this time reinforced by a Cold War hysteria about "socialized medicine" stoked by groups such as the American Medical Association.
As Truman's plan went down to defeat, what grew in its place was a system of employer-provided coverage, stimulated by aggressive bargaining on the part of unions that had come to regard improving employee benefits as a mission as important as increasing wages. This put pressure on non-union employers to follow suit, and by the mid-1950s, about two-thirds of the country was getting coverage through either their own jobs or those of spouses or parents. The Blues, which held the largest share of this booming market in the early postwar period, began to fall behind the commercial carriers by the late 1950s.
Around that same time, there was growing concern about the large number of retired workers who were left out of this workplace-oriented system. This eventually led to the 1965 creation of the federal Medicare program for seniors, along with the federal-state Medicaid program for the poor, but most of those with insurance continued to get it from the private sector.
In the wake of these significant expansions of coverage, liberals renewed calls for comprehensive
national health insurance. These efforts, however, were drowned out by a rising chorus of concern about escalating health costs -- a problem that was greatly exacerbated by the growth of for-profit hospital chains. During the 1980s, Congress created a cost-control system for Medicare, while growing numbers of employers transferred their workers from traditional plans into health maintenance organizations (HMOs) -- both non-profit and for-profit. The Clinton Administration tried to reach the goal of universal coverage through a complex system that preserved the role of HMOs and other private insurers, but it was crushed by business interests and the medical establishment.
Awash In cash
The failure once again to create a system of universal care left the American people at the mercy of the market. The ranks of the uninsured swelled as many employers solved their health finance problems by eliminating coverage or by shifting premium and co-payment costs to workers to such an extent that they opted out. Many of those who tried to obtain individual coverage found themselves priced out of the market or rejected because of a pre-existing condition. Those workers who retained workplace coverage increasingly had to confront HMOs and other purveyors of "managed care," whose business plan depended on restricting the use of medical services. A 1994 Wall Street Journal article stated: "Health maintenance organizations are all about penny pinching, yet they are so awash in cash that they don't know what to do with it all."
At the forefront of these service (non)providers was U.S. Healthcare, which grew out of the first for-profit HMOs in the 1970s. By the early 1990s, it was the largest publicly traded HMO, with annual revenues of more than $1 billion. The company -- a notorious proponent of gag clauses in physician contracts that prevented doctors from giving patients a thorough description of their treatment options -- took on the mission of revolutionizing the insurance industry. In a 1992 interview with Business Week , U.S. Healthcare founder and chairman Leonard Abramson expressed scorn for traditional carriers, calling them "dinosaurs" and saying they operated in "a dying world."
Four years later, U.S. Healthcare agreed to be acquired by one of those dinosaurs, Aetna Inc., for $9 billion. It was clear from the start that Aetna was going to be adopting the style of U.S. Healthcare and not vice versa. "Strong forms of managed care, gated managed care, is really coming into its own," said Aetna chief executive Ronald Compton, who also announced that Abramson would join the board of the parent company.
Aetna's marriage with U.S. Healthcare was part of a larger consolidation of the industry and a shrinkage of the non-profit portion. Aetna itself went on to acquire healthcare operations from New York Life and Prudential Insurance, while rivals such as United Healthcare (later UnitedHealth Group) also bought various competitors to rise rapidly in the field. For-profit hospital chains such as Columbia-HCA gobbled up insurers. Even the Blues were abandoning all pretenses that their main mission was to serve the community. Some set up their own HMO subsidiaries, and by the late 1990s a bunch were preparing to take the next step: abandoning their non-profit status and becoming for-profit enterprises. A few such as Anthem Inc., formerly Blue Cross and Blue Shield of Indiana, went yet further, becoming publicly traded companies.
Meanwhile, there was a growing effort to tame HMOs through the courts. In 1999 several of the country's leading trial lawyers announced plans to bring a wave of racketeering lawsuits to pressure companies to provide better coverage. Some physician groups also sued managed-care firms over restrictions on their members. The legal assault was counting on the fact that HMOs had become the most reviled industry in the United States, but the judiciary was a harder sell.
In 2002 a federal judge in Miami hearing the consolidated cases granted class-action status to claims that managed-care plans systematically denied and delayed payments to more than 600,000 doctors, but he rejected that status on behalf of some 145 million members of the plans. Five companies ended up paying nearly $650 million in settlements with the doctors and their lawyers, while two others (including UnitedHealth) went to court and had the charges against them dismissed.
What ails private insurance
These lawsuits may have shaken the industry somewhat, but they did not put an end to the abuses that characterize managed care. Here are some of the key remaining issues that surround the business:
Consolidation has continued unabated. There are now two superproviders that increasingly dominate the for-profit healthcare field. One is UnitedHealth, which capped a long series of acquisitions with the 2005 purchase of Pacificare for some $8 billion. In 2006 United's health services revenues reached an astounding $64 billion, and its medical enrollment rose to about 28 million individuals.
The other giant is Wellpoint Inc., created through the blockbuster 2004 merger of Anthem Inc. and Wellpoint Health Network, formerly Blue Cross of California. Wellpoint later spent $6.5 billion to acquire WellChoice, the publicly traded parent of New York's Empire Blue Cross Blue Shield. By 2006 Wellpoint controlled the Blues in 14 states, had some 34 million members and took in annual revenues of about $52 billion.
The second tier consists of Aetna (2006 revenues and members, respectively: $25 billion and 15 million), Humana ($21 billion and 11 million), Cigna ($16 billion and 9 million) and Health Net ($13 billion and 7 million). The non-profit wing of the industry also has big players, led by Kaiser Permanente with 8.6 million members.
There is no evidence that the consolidation has enhanced efficiency or improved the quality of coverage. Instead, the big carriers simply accumulate more power over healthcare providers and patients, using it to their own advantage.
While millions remain uninsured or underinsured, the industry's profits swell. Last year, the top six health insurance companies had combined profits of more than $10 billion. What's amazing is that they netted so much after spending prodigious amounts on marketing and administration. In 2006 Wellpoint alone burned up nearly $9 billion in such costs -- nearly one quarter of what it paid out in actual benefits. By contrast, in Canada's government-run single-payer system, administration accounts for only about 3 percent of total costs.
Legal controversies continue to plague the industry. Lawsuits over the denial of care are still being filed against the big insurers. For example, two hospitals in Queens, NY recently sued UnitedHealth, alleging a "pattern of racketeering activity." At the same time, UnitedHealth has been the subject of a federal investigation following reports last year that the company was routinely backdating stock options awarded to executives, especially long-time chief executive William McGuire, who -- on top of annual salary and bonuses totaling $10 million -- had accumulated some 29 million shares through option awards. Thanks to the backdating scheme, McGuire had racked up paper gains of more than $1 billion on those shares. In October McGuire was forced to resign and to give up an undisclosed portion of those gains.
McGuire's excesses are emblematic of the fundamental conflict in the industry -- the clash between maximizing gains for executives and shareholders, and the need of its customers for services that are often a matter of life and death. Public officials should abandon the mission of saving commercial insurance and devote themselves instead to creating a healthcare system that substitutes the public interest for private profit.
Philip Mattera heads the Corporate Research Project, an affiliate of Good Jobs First. (c) 2007 Independent Media Institute. All rights reserved.
View this story online at: http://www.alternet.org/story/48371/
February 27, 2007
Diane Archer is the founder and past president of the Medicare Rights Center. She is an attorney and a national expert on Medicare.
The health insurance industry is full of surprises, but history and experience show that insurers will never surprise us with a good, affordable health care system for America. No cocktail of regulations, subsidies and tax credits will provide health security to the uninsured, underinsured and anxiously insured—virtually all Americans.
Two dirty little secrets about the insurance industry reveal why offering Americans a publicly administered alternative like Medicare is the only way to guarantee Americans good, affordable health care:
Dirty Little Secret #1: If for-profit insurers were forced to provide good health care coverage to all Americans, they would still try as hard as possible to avoid insuring the people with the costliest conditions and charge premiums even higher than they currently charge.
That’s why Medicare was established. The health insurance industry was either unwilling or unable to offer affordable coverage to half of America’s seniors. It’s too costly for them. So, to rein in costs and ensure every older adult had coverage, the federal government offered the coverage directly.
As predicted, Massachusetts is now seeing that requiring insurers to cover everyone in the state costs almost twice as much as projected. The way to reduce costs is not to eliminate benefits as some are suggesting , it is to eliminate insurance industry waste.
Dirty Little Secret #2: Eliminating insurance industry waste in our health care system—administrative waste and excessive prices—would cut our health care costs substantially.
Check out the health insurance systems in France, Germany and Japan. They spend half as much as we on health care and deliver better results by relying on a publicly administered integrated health care system that pools risk and negotiates rates on behalf of their entire citizenry. (To learn more, read Sager and Socolar, Durable Health Care for all Will Require Cost Conrol.)
Right here in the U.S., Medicare demonstrates that we can eliminate some 17 percent in administrative expenses alone through a publicly administered system. Medicare also shows the power of large group purchasing to achieve substantially lower health care prices; Medicare pays about 15 percent less than private insurers for the same services.
Unlike private insurance, Medicare works for older and disabled Americans because it pools risk and does not punish people financially because they need costly health care services. It works because it has predictable benefits and offers reliable coverage. And it works because coverage is automatic, unlike Medicaid and SCHIP, ensuring all eligible persons coverage and protecting them against the risk of losing coverage for failing to sign up or recertify.
Of course, every health policy expert out there knows that a publicly administered system would guarantee all Americans good, affordable health care at far less cost than we can ever achieve through private insurers, and they’ll say so at the dinner table. It’s time they went public.
The truth about the health insurance industry should be at the heart of the public debate, not the short-sighted and misguided calculus of what people think is feasible. While they keep silent, an ever-growing number of Americans are pushed into bankruptcy because of a medical need or, worse still, forced to forego necessary care. And employers who offer good coverage to their workforce see their ability to compete in the global marketplace, and their profits, eroding.
It would be un-American to force Americans to give up their private insurance coverage if they like it or to undo a multi-trillion dollar insurance industry in one fell swoop. But, it is inhumane and unconscionable to offer solutions that we know will not work and wish this health care crisis away, while tens of millions of Americans suffer. That’s why recent polls show that an overwhelming majority of Americans—including white, middle-class Republican men—favor health care reform that gives them the option of a publicly administered health plan as an alternative to private insurance.
That’s the route offered by Yale Professor Jacob Hacker in his Health Care for America plan: let the private insurers continue as they will for anyone who wants their coverage but force them to compete with a publicly administered plan that pools risk, negotiates rates and guarantees affordable coverage to the tens of millions of Americans who elect it. Through this American solution, we could rein in costs and ensure that everyone in the country has good affordable health care.
This is also what former Senator Edwards has proposed. In exchange for paying your fair premium share, you get coverage, choice of doctors and hospitals, reliable benefits at an affordable price and, if you would prefer, you can buy private insurance to cover your care. It makes so much sense.
So here’s a call to arms for a publicly administered health care plan for America. Join the action. Email Jeff Cruz at firstname.lastname@example.org and visit www.ourfuture.org
By Mary Otto
Washington Post Staff Writer
Wednesday, February 28, 2007; Page B01
Twelve-year-old Deamonte Driver died of a toothache Sunday.
A routine, $80 tooth extraction might have saved him.
Deamonte Driver, sitting next to his mother, Alyce, shows the scars
from incisions for his brain surgery. (By Linda Davidson -- The
If his mother had been insured.
If his family had not lost its Medicaid.
If Medicaid dentists weren't so hard to find.
If his mother hadn't been focused on getting a dentist for his brother,
who had six rotted teeth.
By the time Deamonte's own aching tooth got any attention, the bacteria
from the abscess had spread to his brain, doctors said. After two
operations and more than six weeks of hospital care, the Prince George's
County boy died.
Deamonte's death and the ultimate cost of his care, which could total
more than $250,000, underscore an often-overlooked concern in the debate
over universal health coverage: dental care.
Some poor children have no dental coverage at all. Others travel three
hours to find a dentist willing to take Medicaid patients and accept the
incumbent paperwork. And some, including Deamonte's brother, get in for
a tooth cleaning but have trouble securing an oral surgeon to fix deeper
In spite of efforts to change the system, fewer than one in three
children in Maryland's Medicaid program received any dental service at
all in 2005, the latest year for which figures are available from the
federal Centers for Medicare and Medicaid Services.
The figures were worse elsewhere in the region. In the District, 29.3
percent got treatment, and in Virginia, 24.3 percent were treated,
although all three jurisdictions say they have done a better job
reaching children in recent years.
"I certainly hope the state agencies responsible for making sure these
children have dental care take note so that Deamonte didn't die in
vain," said Laurie Norris, a lawyer for the Baltimore-based Public
Justice Center who tried to help the Driver family. "They know there is
a problem, and they have not devoted adequate resources to solving it."
Maryland officials emphasize that the delivery of basic care has
improved greatly since 1997, when the state instituted a managed care
program, and 1998, when legislation that provided more money and set
standards for access to dental care for poor children was enacted.
About 900 of the state's 5,500 dentists accept Medicaid patients, said
Arthur Fridley, last year's president of the Maryland State Dental
Association. Referring patients to specialists can be particularly
Fewer than 16 percent of Maryland's Medicaid children received
restorative services -- such as filling cavities -- in 2005, the most
recent year for which figures are available.
For families such as the Drivers, the systemic problems are often
compounded by personal obstacles: lack of transportation, bouts of
homelessness and erratic telephone and mail service.
The Driver children have never received routine dental attention, said
their mother, Alyce Driver. The bakery, construction and home
health-care jobs she has held have not provided insurance. The
children's Medicaid coverage had temporarily lapsed at the time Deamonte
was hospitalized. And even with Medicaid's promise of dental care, the
problem, she said, was finding it.
When Deamonte got sick, his mother had not realized that his tooth had
been bothering him. Instead, she was focusing on his younger brother,
10-year-old DaShawn, who "complains about his teeth all the time," she
DaShawn saw a dentist a couple of years ago, but the dentist
discontinued the treatments, she said, after the boy squirmed too much
in the chair. Then the family went through a crisis and spent some time
in an Adelphi homeless shelter. From there, three of Driver's sons went
to stay with their grandparents in a two-bedroom mobile home in
By September, several of DaShawn's teeth had become abscessed. Driver
began making calls about the boy's coverage but grew frustrated. She
turned to Norris, who was working with homeless families in Prince
Norris and her staff also ran into barriers: They said they made more
than two dozen calls before reaching an official at the Driver family's
Medicaid provider and a state supervising nurse who helped them find a
On Oct. 5, DaShawn saw Arthur Fridley, who cleaned the boy's teeth,
took an X-ray and referred him to an oral surgeon. But the surgeon could
not see him until Nov. 21, and that would be only for a consultation.
Driver said she learned that DaShawn would need six teeth extracted and
made an appointment for the earliest date available: Jan. 16.
But she had to cancel after learning Jan. 8 that the children had lost
their Medicaid coverage a month earlier. She suspects that the paperwork
to confirm their eligibility was mailed to the shelter in Adelphi, where
they no longer live.
It was on Jan. 11 that Deamonte came home from school complaining of a
headache. At Southern Maryland Hospital Center, his mother said, he got
medicine for a headache, sinusitis and a dental abscess. But the next
day, he was much sicker.
Eventually, he was rushed to Children's Hospital, where he underwent
emergency brain surgery. He began to have seizures and had a second
operation. The problem tooth was extracted.
After more than two weeks of care at Children's Hospital, the Clinton
seventh-grader began undergoing six weeks of additional medical
treatment as well as physical and occupational therapy at another
hospital. He seemed to be mending slowly, doing math problems and
enjoying visits with his brothers and teachers from his school, the
Foundation School in Largo.
On Saturday, their last day together, Deamonte refused to eat but
otherwise appeared happy, his mother said. They played cards and watched
a show on television, lying together in his hospital bed. But after she
left him that evening, he called her.
"Make sure you pray before you go to sleep," he told her.
The next morning at about 6, she got another call, this time from the
boy's grandmother. Deamonte was unresponsive. She rushed back to the
"When I got there, my baby was gone," recounted his mother.
She said doctors are still not sure what happened to her son. His death
certificate listed two conditions associated with brain infections:
"meningoencephalitis" and "subdural empyema."
In spite of such modern innovations as the fluoridation of drinking
water, tooth decay is still the single most common childhood disease
nationwide, five times as common as asthma, experts say. Poor children
are more than twice as likely to have cavities as their more affluent
peers, research shows, but far less likely to get treatment.
Serious and costly medical consequences are "not uncommon," said Norman
Tinanoff, chief of pediatric dentistry at the University of Maryland
Dental School in Baltimore. For instance, Deamonte's bill for two weeks
at Children's alone was expected to be between $200,000 and $250,000.
The federal government requires states to provide oral health services
to children through Medicaid programs, but the shortage of dentists who
will treat indigent patients remains a major barrier to care, according
to the National Conference of State Legislatures.
Access is worst in rural areas, where some families travel hours for
dental care, Tinanoff said. In the Maryland General Assembly this year,
lawmakers are considering a bill that would set aside $2 million a year
for the next three years to expand public clinics where dental care
remains a rarity for the poor.
Providing such access, Tinanoff and others said, eventually pays for
itself, sparing children the pain and expense of a medical crisis.
Reimbursement rates for dentists remain low nationally, although
Maryland, Virginia and the District have increased their rates in recent
Dentists also cite administrative frustrations dealing with the
Medicaid bureaucracy and the difficulties of serving poor, often
transient patients, a study by the state legislatures conference found.
"Whatever we've got is broke," Fridley said. "It has nothing to do with
access to care for these children."
Ohio Attorney General Jim Petro has certified our petition to get the Health Care For All Ohioans Act on the ballot, opening the door for us to start collecting signatures. Click to see full text of the Petition. For a handy guide to the most important provisions of the Petition, click INDEX. For commentary that clarifies and expands upon the Act's funding formula, click FUNDING FORMULA.
New York Times, March 5, 2007
By ROBERT PEAR
SALISBURY, N.C. — Vicki H. Readling vividly remembers the start of 2006.
“Everybody was saying, ‘Happy new year,’ ” Ms. Readling recalled. “But I remember going straight to bed and lying down scared to death because I knew that at that very minute, after midnight, I was without insurance. I was kissing away a bad year of cancer. But I was getting ready to open up to a door of hell.”
Ms. Readling, a 50-year-old real estate agent, is one of nearly 47 million people in America with no health insurance.
Increasingly, the problem affects middle-class people like Ms. Readling, who said she made about $60,000 last year. As an independent contractor, like many real estate agents, Ms. Readling does not receive health benefits from an employer. She tried to buy a policy in the individual insurance market, but — having had cancer — could not obtain coverage, except at a price exceeding $27,000 a year, which was more than she could pay.
“I don’t know which was worse, being told that I had cancer or finding that I could not get insurance,” Ms. Readling (pronounced RED-ling) said in an interview in her office, near the tree-lined streets and stately old homes of this city in the Piedmont region of North Carolina.It is well known that the ranks of the uninsured have been swelling; federal figures show an increase of 6.8 million since 2000.
But the surprise is that the uninsured are not necessarily the poor, the unemployed and the undocumented. Solidly middle-class people like Ms. Readling are one of the fastest growing subgroups.
And that is one reason, according to a recent New York Times/CBS News poll, that the problems of the uninsured have jumped to the top of the domestic political agenda in Washington and on the campaign trail.
Today, more than one-third of the uninsured — 17 million of the nearly 47 million — have family incomes of $40,000 or more, according to the Employee Benefit Research Institute, a nonpartisan organization. More than two-thirds of the uninsured are in households with at least one full-time worker.
Ms. Readling’s experience is typical; people who have had serious illnesses often have difficulty obtaining insurance. If coverage is available, the premiums are often more than they can afford.While the government does not have an official definition of “middle class,” one commonly used point of reference is the median household income, which was $46,326 in 2005.
Katherine Swartz, a professor of health policy and economics at Harvard, said the soaring cost of health care was a major reason for the increase in the number of uninsured. She said it also reflected long-term changes in the economy, like the decline in manufacturing jobs and the growth in the share of workers in service industries and small businesses, which are less likely to provide health benefits.
Moreover, Ms. Swartz said, “Companies have become more aggressive in hiring people as temporary or contract workers with no fringe benefits.”
The National Association of Realtors says 28 percent of its 1.3 million members are without health insurance.
“Because real estate agents are independent contractors, they are forced into the individual insurance market, where there is no negotiating or leverage,” said Pat V. Combs, president of the association.
As an independent contractor with a Century 21 real estate brokerage, Ms. Readling had bought insurance on her own, a temporary extension of coverage from a prior job. But she was unable to renew it after she had surgery for breast cancer in 2005. Most insurers would not offer her coverage, she said, and one carrier quoted a price of $2,300 a month for coverage with a deductible of $5,000 a year.
Concerns about health insurance permeate her life.
To save money, Ms. Readling said, she defers visits to the doctor and stretches out her cancer medication, which costs her about $300 a month. She takes the tiny pills three or four times a week, rather than seven days a week as prescribed.
“I really try to stay away from the doctor because I am so scared of what everything will cost,” said Ms. Readling, who is divorced and has twin 18-year-old sons. Before every doctor’s visit and test, she asks, “How much are you going to charge me?” She says she tries to arrange “the best deals I can.” But in many cases, the price is still unaffordable, and “I have to do without.”
Even those with insurance have reason to be concerned, economists say, because they end up paying for the uninsured in various ways. Some of the costs are also passed on to taxpayers and employers. To help cover the cost of treating the uninsured, hospitals often increase charges to other patients. Insurers then increase premiums for companies that provide health benefits, and they in turn shift some costs to employees.
Ms. Readling is engaged to be married in June, to another real estate agent. But she said she may postpone the wedding because she would not want her husband to be legally responsible for her medical bills.
“I am scared to get married because I don’t have insurance,” Ms. Readling said. “If I have to go to the hospital and I can’t pay my hospital bills, what happens? Do they go after him? Can they take your home?”
To collect unpaid medical bills, health care providers often obtain judgments against a patient’s spouse, as well as the patient, and file liens against their homes. Ms. Readling says she does not own a house, but her fiancé does.
The idea of universal coverage, in the form proposed by President Bill Clinton, proved politically untenable. Since the Clinton plan collapsed in 1994, the politics of health care have changed because of the steady rise in health costs, the increase in the number of uninsured and the erosion of employer-sponsored insurance. Politicians are once again speaking about universal coverage as a goal, though opinion polls show that many voters still oppose the idea of a government-run health care system.
Ms. Readling said it was stressful enough visiting doctors every few months for her cancer follow-ups. Without coverage, she said, the experience is even more stressful.
“When you go to any medical person and they ask for your insurance card, you are so ashamed because you have to say, ‘I don’t have insurance,’ ” Ms. Readling said. “You just feel like you are dirt.”
Ms. Readling said she often woke up at night, terrified of the cost of getting sick without insurance.
“Anything that goes wrong with my health could destroy me financially,” Ms. Readling said. “I could be ruined.”
She said she had never voluntarily allowed her insurance to lapse and could not understand why she was being blackballed.
“What did I do wrong?” Ms. Read-ling asked. “Why am I being punished? I just don’t understand how I could have fallen through this horrible, horrible crack.”
Knowing her health benefits from her prior job would expire in January 2006, she began shopping for a new policy in May 2005. But in June 2005, she learned she had cancer.“At that point,” Ms. Readling said, “I called everybody I could think of, begging for help. But no insurer would touch me.
”Barbara Morales Burke, the chief deputy insurance commissioner of North Carolina, said state law did not guarantee the availability of health insurance for individuals. “Most insurers decline to issue policies to those individuals whom they deem to be too risky because of their medical history,” Ms. Morales Burke said.
Blue Cross and Blue Shield of North Carolina will sell to anyone, regardless of the person’s medical condition, she added, but the premiums may be very high for people who have had serious illnesses.
Heidi Deja, a spokeswoman for Blue Cross and Blue Shield of North Carolina, said, “Rates are based on the anticipated cost of providing care.” For people who have had serious illnesses, she said, monthly premiums “can run into the thousands of dollars.”
A 1996 federal law limited the ability of insurers to discriminate against people because of pre-existing conditions. But consumer protections are much more extensive in the group health insurance market.
“In the individual market, the federal protections provide precious little help to people seeking coverage,” said Karen L. Pollitz, a research professor at the Georgetown University Health Policy Institute.
When Ms. Readling was shopping for insurance, she found two responses particularly galling. One insurer, she said, suggested she return to her prior job, at a furniture company, so she could participate in its group health plan, though she loved her work as a real estate agent. Another insurer suggested she remarry her former husband to get back on his insurance plan.
Working with her doctors, Ms. Readling raced to get as many tests as possible before her coverage expired. She recalled her anxiety in the final months: “It’s like a freight train coming at you, and it’s going to get you. And there was nothing I could do.”
Ms. Readling said she was mystified by the inability of real estate agents to band together and buy health insurance as a group.
“Why can’t Realtors in North Carolina, or a few counties, have coverage under one umbrella?” she asked. “You would think that some insurance company would want our business.”
Janet S. Trautwein, executive vice president of the National Association of Health Underwriters, which represents insurance agents and brokers, said employee groups were more attractive to insurers for several reasons.
“In a group health plan,” Ms. Trautwein said, “the employer typically pays a large share of the premium, so most employees sign up as soon as they are eligible, regardless of their health status.”
“The health plan covers a mix of sick and healthy workers,” she said. “By contrast, individuals and independent contractors are more likely to defer coverage until they need it, so the pool of people insured is, over all, less healthy. Sick people consume more health care. As a result, the cost to insure them is higher.”
Though satisfied with her care, Ms. Readling continually wonders if doctors and nurses treat her differently because she is uninsured.
“Are they going to turn their nose up at you because you don’t have insurance?” Ms. Readling asked. “Will they take care of other people first? They can make more money on patients with insurance. What am I? I am just a financial loss to them.”