There's lots of talk about how the economic crisis (and the bailout, still in flux) will impact the prospects of major health reform in 2009.
There are some who think hopes for reform are scotched, including Robert Laszewski at the Health Care Marketplace and Policy Review, and Jeff Goldsmith at The Health Care Blog. And maybe Jim Lehrer, given the implications of his question that the candidates will have to "give up" portions of their plans. A down economy (and/or a bailout) would dry up the money that would be needed to pass health reform.
Parts of the counter-argument are made by Jane Sarasohn-Kahn at The Health Care Blog, and Ezra Klein at the American Prospect, and others. They argue that the economic times would create the political will and need for health reform, both from the public, and from the government that needs to find structural ways to address the issues in the existing health programs.
I would also say that this past week re-asserted a key concept in our political discourse: that government matters. Regardless of what you think of the substance of the bailout, or even the final outcome, there was bipartisan agreement that government action on big issues are possible and in fact necessary, that there are some things that only government can do. And if Congress can consider a $700 billion rescue of our financial markets, the leap for health reform is no longer so radical.
We should remember that the major social programs and leaps--Social Security, Medicare--happened during similarly tumultuous times. And to those who argue that a new President will have other issues on his plate (two wars, the economy, housing, energy, etc) to worry about, let's also remember that transformational moments in American history are not single-issue events. The New Deal, the Great Society did not only focus on one issue. When we argue that health reform needs to be a priority, it is not at the exclusion of other issues: rather, the change that comes will be on several fronts. It is our job to insure that health care is part of that wave.
The Governor's vetoes actively harm California health care consumers. * Over one thousand consumers will continue be uninsured and uninsurable at any price, on a waiting list, without the reforms the Governor vetoed. * Patients will be retroactively denied coverage by their insurer with no independent review. * Insured consumers will be balance billed after going to an emergency room, with their credit and financial future at risk. * All consumers will continue to wonder if their premiums are going to profit and overhead, rather than patient care.
In addition, we vehemently disagree with the Governor's opposition to a starting the process to create universal, single-payer health care system, or with bills that would set basic benefits for insurance coverage. But many of these vetoes were unexpected, and go against the themes and policies that the Governor had advocated earlier in the year.
The Governor's stubborn approach to health care has meant that California has actually taken big steps backward, away from the goals of health reform. With his vetoes and combined with his action on the budget, the Governor has made health care less available, less affordable, and less secure for California consumers.
The governor has just followed up signings with some vetoes...
SB 840 (Kuehl) would have established single-payer health system in California. Schwarzenegger vetoed this last year, so this was not unexpected.
A couple of bills that were part of the original ABx1 1 legislation, which the governor supported this year were also vetoed, arguing that he could not support piecemeal health reform.
SB 973 (Simitian) would have established a statewide public insurer, connecting existing regional, county-based health care plans, which would compete with private health care plans and provide consumers with more affordable coverage choices.
SB 1440 (Kuehl) would have set a minimum medical loss ratio – requiring every insurer to spend at least 85 percent of premiums on patient care.
In the absence of comprehensive health reform, we needed to shore up and make some modest changes to our high risk pool -- which allows people who are denied coverage because of pre-existing conditions -- to get health care. The governor vetoed that too, saying he wanted a comprehensive solution. Of course -- since that stalled this year, why wouldn't he want to at least put in place some thing that could tie some consumers over while we work toward a comprehensive solution?
AB 2 (Dymally) would reform the Managed Risk Medical Insurance Program, which provides coverage for “un-insureables” who have “pre-existing conditions.’’ It would make the high risk pool more affordable and available and eliminate the annual $75,000 annual cap on benefits.
The governor also vetoed legislation -- AB 1945 (De La Torre) -- that would have established an independent review process if an insurer wants to rescind coverage, and raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history. The governor's office, this year, has been working hard on addressing this area, demanding the reinstatement of thousands of policies that were wrongly rescinded. The higher standard for rescission was something the administration had previously exprsesed reservations about.
And lastly, not surprisingly, a number of bills that would have guaranteed maternity coverage (AB 1962 (DeLaTorre), mental health parity, AB 1887 (Beall) and SB 1198 (Kuehl) which required durable medical equipment to be offered, were all vetoed, with the excuse that it would cost money --even while actually providing people with health care they desperately need.
AB 1203 (Salas) would prevent emergency departments – which do not have a contract with a patient’s insurance company -- from directly billing the patient if they remain their after they are stabilized. It would require the hospital to seek payment directly from insurers.
AB 2569 (De Leon) would require brokers who take applications to attest, under penalty of perjury, that the information is complete and accurate to the best of their knowledge. Also ensures that family members whose coverage depends on that of the rescinded person may be offered another individual policy.
SB 1379 (Ducheny) would direct some of the fines levied on insurers for improper recissions to subsidize MRMIP and repay loans for physicians working in underserved areas.
Of course, now i'm a little scared what that means to our other bills that are related to some of these that he *hasn't* signed yet....
The United States Court of Appeal for the Ninth Circuit ruled today for the City and County of San Francisco, and against the Golden Gate Restaurant Association, which had sued to block the new Healthy San Francisco program, and particularly, the employer contribution provisions.
According to Judges Alfred T. Goodwin, Stephen Reinhardt, and William A. Fletcher: "We hold that ERISA does not preempt the Ordinance."
Many opponents of health reform, including SB2, Prop 72, SB840, AB8, AB x1 1, and other efforts, have cited the ERISA bogeyman. This decision is the highest and most affirmative ruling yet that there are ways for states and localities to address health reform, including employer-based coverage, without being preempted by the federal ERISA law.
Once again, California leads the way. More to come!
So tomorrow, we are likely to see a whole bunch of signatures and vetoes from the Governor, on the 300 bills still on his desk.
Here's more reporting about what the Governor is weighing, courtesy of Jordan Rau of the Los Angeles Times, which focuses on mandating insurers to cover certain procedures. As my colleague Beth Capell points out, if insurers don't cover some of these basic treatments, then those costs get passed on to the patients, and in many cases, the taxpayer.
He signed SB 1168 by Senator George Runner (R-Lancaster), to allow older students to keep on their parents' group coverage if they have to take an academic leave for medical reasons, which would normally mean they lose coverage.
Another bill Health Access California supported was SB 1351 by Senator Ellen Corbett (D-San Leandro), which would provide more oversight over ownership changes of district hospitals. See attached veto message.
Governor Schwarzenegger also vetoed AB 2697 by Assemblymember Jared Huffman (D-San Rafael), which would have studied the impact of "boutique hospitals"--those facilities that focus on a few specific services, rather than providing the standard range of community services.
The question is whether such facilities provide more "competition" to the health care market, or whether they only "cherry-pick" a few profitable services, while putting the existing full-service hospitals at financial risk, left with just the necessary-but-unprofitable services. The bill didn't do anything but provide more information to make such assessments of our changing health care system, to better inform policymakers in the future.
According to his veto message, the Governor doesn't want to know the impacts one way or another. Information is "anti-competitive." Wow.
He also says some of this data is available through the Office of Statewide Health Planning and Development (OSHPD), but the data is not timely, not complete (as the careful parsing of the statement admits), and they don't take the data to do the needed analysis.
The Governor today vetoed SB 1633 by Senator Sheila Kuehl (D-Santa Monica), a bill sponsored by Western Center for Law and Poverty (WCLP), and supported by Health Access California, Consumers Union, and many other consumer groups working together against medical debt.
This consumer protection bill attempted to remedy a growing problem, as identified by legal services advocates around the state. Some dentists signing people up for credit to pay for their treatment, but a few are charging them (with interest!) before the patients gets the service, or other dubious practices (signing people up under anathesia!). With the good work of Elizabeth Landsberg and others at WCLP, a compromise was reached with the dentists association, it had Republican Senator Sam Aanestad, a dentist, as a co-author, and it passed the Senate 35-3, and the Assembly 79-0. Arbor Day legislation doesn't get votes like that.
The historic delay in passing the 2008-2009 State Budget has forced me to prioritize the bills sent to my desk at the end of the year’s legislative session. Given the delay, I am only signing bills that are the highest priority for California. This bill does not meet that standard and I cannot sign it at this time.
That's the weakest excuse I've ever heard. The budget delay made me do it? What an abdication of responsibility.
SB 1058 by Senator Elaine Alquist (D-San Jose) establishes the Medical Facility Infection Control and Prevention Act or “Nile’s Law,” which requires hospitals to develop more comprehensive policies and procedures to improve and ensure effective infection control practices. It also requires the Department of Public Health to establish a health care acquired infection program that will receive reports from hospitals on specified hospital-acquired infection rates. In addition, hospitals would be required to screen certain high-risk patients for Methicillin-Resistant Staphylococcus Aureus (MRSA) and to provide instructions regarding aftercare and precautions to prevent the spread of the infection to others.
SB 158 by Senator Dean Florez (D-Shafter) expands upon the current responsibilities of the existing California Department of Public Health’s (CDPH) Healthcare Associated Infections Advisory Committee. The bill requires hospitals and skilled nursing facilities to establish plans to improve patient safety. This bill also contains detailed training requirements for hospital infection control committee chairs, clinicians, and all licensed and non-licensed hospital staff.
The Center for Disease Control (CDC) estimates that every year two million patients contract a hospital acquired infection while being treated for something else, and almost 100,000 die every year from these infections.
Americans - feeling poorer and dejected -- are cutting health care out of their budgets for the first time in a decade. The article was in the Wall Street Journal this week.
Here's a striking paragraph:
The number of prescriptions filled in the U.S. fell 0.5% in the first quarter and a steeper 1.97% in the second, compared with the same periods in 2007 -- the first negative quarters in at least a decade, according to data from market researcher IMS Health. Despite an aging and growing U.S. population, the number of physician office visits also has been declining since the end of 2006. Between July 2007 and 2008, the most recent month for which data are available, visits fell 1.2%, according to IMS.
And that survey only counts the first six months of this year. I can only imagine how the numbers will slide after the economic mayhem of this quarter.
In a survey by the National Association of Insurance Commissioners last month, 22% of 686 consumers said that economy-related woes were causing them to go to the doctor less often. About 11% said they've scaled back on prescription drugs to save money. Some of the areas being hit include hip and knee replacements, mammograms, and visits to the emergency room, according to a survey conducted by D2Hawkeye Inc., a Waltham, Mass., medical data analytics firm, on behalf of The Wall Street Journal.
Unfortunately, health care reform will become a casualty of the current banking crisis at the national level, and has already become a casualty of state and local budget crises -- at a time when public options for health care and more efficient, quality and affordable health care are needed most.
In 1986, Maxicare with over two million members in 26 states was touted as the best managed HMO in the industry: within three years, its founder had resigned, it had filed for bankruptcy protection…It dispelled the myth that HMO failures was restricted to new HMOs with few enrollees.
From 1986-1990, nationally 5%-10% of HMOs failed every year—and another 5%-10% were acquired or merged into another entity: mergers and acquisitions sometimes are undertaken to avoid insolvency. That means that 10%-20% of all HMOs failed or were acquired. Not a great record of financial stability. Indeed only a third of HMOs were profitable in 1988.
Second, failures and scams have left tens of thousands responsible for hundreds of millions in medical bills, according to Mila Kaufman et al in an article on Association Health Plans: What’s All the Fuss About? (Health Affairs 2006). For example:
Between 2000 and 2002, 144 scams left more than 200,000 policyholders with more than $252 million in medical bills. The most prevalent way to sell phony insurance continues to be either through real or phony associations.
Finally, why do insurers and banks become insolvent rather than bankrupt and what is the difference?
Banks and insurers are exempt from federal bankruptcy laws and good thing they are. Insolvency regulation puts first those who are insured or those who have deposits in banks while the bankruptcy law is intended to protect creditors. Hand in hand with this go regulations designed to require financial solvency by requiring adequate reserves.
A side note: insurer insolvencies are not limited to health insurance or HMOs. In recent years, California and other states have seen numerous failures of workers compensation carriers. In California, rates for workers compensation were deregulated; insurers offered much lower premiums, and guess what? They failed to provide for adequate reserves to meet claims, leading to (surprise!) carrier insolvencies.
To add insult to injury, the Governor also eliminated funding for the UC Berkeley Labor Center. It was the only line item veto in the UC budget. The Governor did this even though his Administration relied on the work of the Labor Center in doing health reform in 2007. The UC Labor Center did numerous publications on health care which all of us who struggled with health reform rely upon, publications on the impact of an employer mandate and important work done jointly with UCLA on affordability for individuals that separated out those who are in the individual market from those who are employees. (No surprise: those who are in the individual market suffer from lack of affordability much more than those who get coverage on the job.) You can find these publications at www.laborcenter.berkeley.edu.
I guess we should not be surprised: a Governor who would once again delay funding for one of his own signature programs, the prescription drug discount program for the uninsured, and who would toss a quarter million kids or more off Medi-Cal, is the kind of Governor who would single out a research effort that had worked with his Administration on health reform. Of course, he did not veto funding for any of the business schools on the various UC campuses.
Speaker Bass in her media release said it well:
“The Governor has also broken his promise, again, to fund the Miguel Contreras Labor Institute. I am deeply disappointed in his actions today, and they set the stage for yet another difficult budget in the year ahead.”
Erasing the gains on kids coverage, drug discounts, etc.
Tuesday, September 23, 2008
With his line item vetoes, the Governor has made an already bad budget even worse. The additional cuts would deny discounts on drugs for potentially millions of Californians, and make it even harder to get and stay on Medi-Cal coverage. There are also significant additional cuts in human services.
In health care, the passed budget already had severe cuts to health care, including: * hundreds of millions of dollars of cuts to doctors, hospitals, and other health providers we all rely on; * increased premiums per month per child in the Healthy Families program; and * additional reporting requirements on low-income families (every six months) for the purpose of having over a quarter-million California children drop off of health coverage.
The Governor's line-item vetoes also included: * Eliminating the funding in the budget year for a program to negotiate needed discounts for prescription drugs for millions of Californians (a much-heralded program the Governor has touted nationally that has already been delayed once); and * Cuts to county administration of Medi-Cal, at the same time that paperwork requirements are increasing, making it harder for counties to process enrollments, and for patients to get assistance to get on and stay on coverage.
On children's health coverage, prescription drug prices, and other health issues, the Governor has erased any gains made his term, and in fact has taken steps backward on what was supposed to be his signature issue.
With gimmicks that steal from future years to paper over this year's hole, with his reduction of taxes and revenues to get us in this mess, and with his rainy day fund that will siphon even more dollars from health care, the Governor's legacy is to further damage the already broken health system.
Gov. Arnold Schwarzenegger signed the 85-day late budget today and vetoed an additional $510 million in spending. You can see the reductions here.
AT first glance, this is what I see:
Discount Prescription Drugs: In 2006, in a signing ceremony in the Capitol Rotunda, Schwarzenegger signed this measure which would give up to 5.4 million uninsured Californians a discount of as high as 60% for prescription drugs. Currently they pay the sticker price. The program's startup has been delayed year after year, though, because of budget constraints. The Assembly this year retooled the program to fund itself -- skimming a portion of the rebates to pay for its administration at no cost to the state except the initial seed money. That seed money was vetoed today. ($11.7 million total reduction)
Counties: Cuts to local governments, who administer Medi-Cal.
This story from the satirical newspaper, The Onion, is actually supposed to be a joke -- but really, it's dead on:
After years of battling crippling premiums and agonizing deductibles, local resident Michael Haige finally succumbed this week to the health insurance policy that had ravaged his adult life. Haige, who had suffered from limited medical coverage for nearly a decade, passed away early Monday morning. According to sources, the 46-year-old was laid to rest at Fairplains cemetery, surrounded by friends, family members, and more than $300,000 of mounting debt. ...
According to an independent study released last month by the Mayo Clinic, health insurance is the nation's No. 2 cause of death, claiming the lives of some 400,000 Americans each year. A silent killer, health insurance often strikes without warning, its harmful and profit-based policies avoiding detection until it is far too late. Although the cruel bureaucratic disorder does not discriminate, statistics have shown that senior citizens, young dependents, and those woefully underemployed are most at risk.
Actually, there is a statistic, which relates to the uninsured. According to the Institute of Medicine, it's more like 18,000 annually who die from lack of insurance, making it the sixth most common cause of death
We also agree that guaranteed issue isn't enough: she worries about a potential increase in costs if insurers are required to take the sick, and not just the healthy. Some argue for an individual mandate to get a broader base of contributions that would help lower the cost for the sick. I worry, with or without a mandate, that the individual market is still inherently unfriendly for individual consumers, leaving them at the mercy of the big insurers, without the bargaining power of subsidized group coverage.
In stating the case for the individual market, Louise makes two points: One assertion is that the individual market is cheaper than the group market. That's only true if you compare apples and oranges, or healthy 20-year olds and sicker 60-year olds. It's simply not applicable to compare a plan that only accepts healthy folks, to those who also covers everyone.
And more importantly, when premiums are cheaper in the individual market, so are the benefits. Last year's study by Jon Gabel (on the California Health Care Foundation website) shows the value of individual insurance policies have sunk, with such plans paying only around half of the health costs of their subscribers. Louise's examples suggest that the cheaper policies left the consumer with significant bills.
The fundamental question is value: how to get the best price for a plan that will actually cover a consumer's health expenses. And the individual market has built-in costs and inefficiencies. It's more administratively burdensome and expensive to sell policies one-at-a-time versus to large groups, whether through advertising or brokers. There's the cost of underwriting individuals. And then there's just the issue of market power, where a large group can negotiate a better deal than an individual.
The second point is about portability, as opposed to the status quo where people lose their coverage (or have to switch providers) when they change jobs. Louise suggests that perhaps we can provide the benefits of group coverage without creating the "job lock"--and I think there are ways to do that: from a large purchasing pool that many employers buy into (and which provides a range of options, as do large employers), as envisioned in SB2 or AB x1 1, or even a state-financed health plan. There's been lots of talk, at the state and federal level, of offering a public plan option for people, which could potentially be available in multiple situations.
It seems we should be able to move to a system of seamless, portable coverage without having to give up all the other benefits of group coverage.
There's renewed interest in reforming the budget process, from "consequences" for legislators for not passing a budget (like having them lose their pay for every day the budget is late), to changing the abnormally high 2/3 threshold to pass a budget and taxes (so that a minority of legislators don't have a veto over the entire process).
As Aurelio Rojas reports in the Sacramento Bee, a previous initiative attempted these and other reforms, but that effort, Proposition 56 in March 2004, only got 36% of the vote. But it is also important to remember context, including a recall election a few months earlier in October 2003 where Californians had a chance to vent their anger and believe that a new Governor was enough to fix the problem, and competing budget initiatives that had bipartisan support, which hindered attempts at making the case for the need of additional reform.
While health care was not on the ballot, this past election has significant impact on health care, and the shape of the budget debate moving forward. Propositions 57 & 58 passed by a wide margin, while Proposition 56 failed.
SETBACK ON 56: The defeat of Proposition 56, to be clear, was a setback for health care advocates. The reforms were needed to stop the ongoing cycle of late and irresponsible budgets, and to change the dynamic of the budget process that has gotten us into our current crisis. Advocates will have to find different ways to keep legislators accountable to budget decisions, including decisions to cut health programs. In the long term, the lack of reform continues to make it difficult to win the broad reforms needed to meet the health care needs of all Californians, and the ultimate goal of quality, affordable health care for all.
ELECTION ANALYSIS: A combination of factors conspired against Proposition 56. With no real contest in the presidential primary contest, it was a remarkably low turnout election, with an electorate seemingly exhausted from the historic recall election just a few months ago. The recall and change in Administrations also changed the dynamic of the race: much of the voter demand for change had dissipated. The reform agenda in the Budget Accountability Act was overwhelmed by the focus on Propositions 57 & 58, which were similar sounding and were also billed as the solution to the state’s budget crisis. Among the choices, Proposition 56 was the only initiative that had a funded opposition, which was successful in raising questions about the provisions. When voters are confused about an issue, they tend to vote “no." And in this case, they felt they did their part to address the budget problem by supporting 57 & 58, something that was supported by most political leaders.
This is not to say that a new effort at budget reform and accountability will be successful, but just to indicate that the results in early 2004 are not predictive: Prop 56 was a victim of uniquely bad timing.
Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.
McCain wants to eviscerate consumer protections--including fiscal solvency standards--for health insurers, which seems only to invite the disaster we now see on Wall Street. As Beth indicates, there's lots of history to suggest what the problems would be with such lack of oversight.
We need more, not less, oversight over the banking, financial, and insurance industry. $700 billion is just the latest figure of what the price of such lack of oversight is.
We have already commented on the bail-out of AIG this week and what it says about our values.
It also says something important about the value of regulation. Apparently AIG’s problems were in its “bond wrap business” which some regard as an insurance product, others as a financial product--and we wonder whether it was something designed to escape normal regulatory scrutiny.
What the AIG failure and the failure of several major financial firms remind us is that financial solvency requirements, including adequate capital, are basic consumer protections. Think about George Bailey in It’s a Good Life. Think about a run on the bank, something most of us have only seen in Mary Poppins but that caused the failure of thousands of banks in the Depression. Financial solvency is a basic consumer protection: it says that your money, your insurance will be there when you need it.
What does this have to do with health care? Well, apparently it is another one of the things that John McCain forgot when he proposed his health plan. Or overlooked.
Financial solvency of health insurers is regulated state by state. Capital requirements for health insurers and plans vary by state.
California is no angel when it comes to financial solvency and health insurance. Let me recount a bit of history.
The Knox-Keene Act (authored by two legislators named Jack Knox and Barry Keene, both good guys who did lots of good work) was enacted in 1975 because some HMOs were taking capitation payments from employers and individuals and sending them to the Bahamas. Literally. So all that language about adequate networks and timely access to care was devised to assure that the HMOs actually HAD contracts with doctors, hospitals and other needed services. And equally important Knox-Keene set real and enforceable standards for tangible net equity and other measures of financial solvency so that HMOs had enough money on hand to pay the doctors, hospitals and other providers. Gee, whiz, pretty basic.
Well, not basic enough. In the mid-1990’s, some managed care plans “delegated” responsibility for managing care to medical groups. These medical groups were not five doctors down on the corner: these medical groups included hundreds or thousands of doctors and took responsibility for the care of tens of thousands or even hundreds of thousands of consumers. In some cases it was just care provided by physicians but in other cases it included hospital care as well as care now provided on an outpatient basis, like chemotherapy and most surgery. And guess what had happened by the late 1990’s? Yup, many of the medical groups were not adequately capitalized and lacked basic financial management so they were going upside down left and right. So part of HMO reform was new regulation of the financial solvency of medical groups. The very first act of Daniel Zingale as the HMO czar was to require all medical groups to have financials audits. Shockingly, some medical groups responsible for the care of literally tens of thousands of Californians lacked something so basic as financial audits. Zingale who had run various non-profits was as shocked as we were that medical groups handling millions of dollars lacked routine financial audits.
And in between 1975 and 1999, California joined many other states in having similar experiences with MEWAs. What is a MEWA? A multiple employer welfare arrangement created by non-union employers that cannot participate in labor-management trusts. Milo Kaufman, now Insurance Commissioner in Maine, wrote a 2004 paper for the Commonwealth Fund titled “MEWAs: The Threat of Plan Insolvency and Other Concerns” that highlights the lack of financial solvency as one of the basic problems with MEWAs. California fixed its problem by grandparenting in a handful of financially solvent MEWAs and closing the barn door. The classic MEWA Ponzi scheme involves an entrepreneur of some sort cobbling together a bunch of employers by promising them big discounts on health coverage, then failing to collect enough premiums to meet claims when they come in. Who loses? Well, everybody but the entrepreneur. Sound familiar? Sound just like Wall Street in the past few months?
There is a long history of various schemes in which insurers or entities standing in the place of insurers attempt to lower premiums by failing to collect enough to pay claims. While those of us who worry about insurance may argue about what constitutes an adequate reserve, everyone who understands insurance agrees that adequate reserves are basic to insurance.
So what does all this have to do with John McCain? Well, his plan allows “people to buy health insurance nationwide instead of limiting them to in-state companies”. Most of the discussion has focused on the consumer protections that consumers have won---whether it is mental health parity (47 states), reconstructive surgery after breast cancer (49 states), mammograms (50 states), maternity stays (50 states), well child care (31 states) or coverage of newborns and adopted children. (If you are thinking, good grief, people had to get legislation to cover stuff this basic! Then you know why we fought so hard for HMO reform.) (Source: Council for Affordable Health Insurance: www.CAHI.org)
All those consumer protections are important. But making sure that insurers are financially solvent is a basic consumer protection as well. And just as states vary in the consumer protections they provide, they vary in the financial solvency requirements they impose on insurers.
John McCain has now decided that perhaps a bit more regulation would have been in order to prevent the debacle on Wall Street. But the premise of the McCain health plan is that deregulation will solve the problems of health insurance. Really? Or will we just end up with another debacle like the one we are witnessing in the financial markets?
If there's one thing you read about the presidential election related to all the happenings on Wall Street, take a look at Ron Brownstein in the National Journal. It makes the link between the financial sector crisis and policy on retirement, health care, and other hot-button issues. He quotes Jacob Hacker, author of the The Great Risk Shift, and soon-to-be-professor at UC-Berkeley, about the fundamental question in this election. Read the whole thing, but's here's a few paragraphs:
Although neither McCain nor Obama has framed the situation this way, their reactions to this transfer of risk and responsibility represent a fundamental dividing line between them. Like President Bush, who touted an "ownership society," McCain has welcomed these shifts of responsibility as giving individuals more control over their financial future. On several fronts, McCain in fact wants to accelerate these trends.
Today, most Americans still receive their health insurance through group coverage (either from government or employers) that shares risk and cost between the healthy and the sick. Relatively few obtain insurance in the individual market, which exposes consumers to much wider variations in cost and coverage depending on their health. McCain's proposal would push more people toward the individual market (perhaps 20 million more, according to an independent study released this week) by replacing the tax break that promotes employer-based coverage with an individual tax credit....
Obama, by contrast, wants to strengthen the institutions that promote the sharing of risk. His health care plan aims to buttress group-based coverage, either through employers or new government-sponsored purchasing networks. He adamantly opposes private accounts under Social Security and would instead offer tax incentives for workers to invest for retirement in accounts intended to supplement Social Security's guaranteed benefits.
In all these respects, the McCain-Obama contest represents a fork in the road that will likely determine whether the nation continues to shift more financial responsibility to individuals, or seeks opportunities to restore more sharing of risk. This week's chaos on Wall Street, which rattled millions of workers relying on the markets to fund a decent retirement, shows how much average Americans have at stake in that choice. "This is a critical watershed moment," Hacker correctly notes, "because it really captures in sharp relief both the stakes and what the core of this debate is."
Brownstein overlooks that Obama did explicitly counter the "you're on your own" philosophy of the so-called "ownership society" in his convention speech, which didn't get much attention because of the announcement of Sarah Palin's selection the next day.
In Washington, they call this the Ownership Society, but what it really means is - you're on your own. Out of work? Tough luck. No health care? The market will fix it. Born into poverty? Pull yourself up by your own bootstraps - even if you don't have boots. You're on your own.
But the rest of the analysis by Brownstein and Hacker is spot-on. This debate is bigger than all of us, including Obama and McCain.
"We are running all Medi-Cal payments now and will move those payments early Monday to the State Controller's Office (SCO) for producing checks. The SCO is making this a very high priority and will have checks and direct deposits to providers out on an expedited basis. "
This is a bad budget for health care in California. This is a cut-and-cut-and-run budget, which makes steep cuts this year and sets us up for even worse cuts in future years.
Focusing on specific cuts: * The cuts in this budget would impose onerous paperwork burdens on low-income families, for the cynical purpose of having over a quarter-million children drop off of health coverage. * This budget would cut hundreds of millions of dollars from the doctors, hospitals, and other health providers on which we all rely. This means California also loses hundreds of millions of dollars in federal matching funds, further harming our health care system, and our economy.
These cuts impact everyone, regardless if they are insured or uninsured, have public coverage or private coverage. We all rely on the same health system. If a hospital loses millions of dollars of reimbursement from Medi-Cal, that means reduced staffing or services, or increased costs, for everybody.
What's worse is that the budget just doesn't defer the problem--this budget actively makes the problems worse, next year and into the future. It robs money from future years to paper over this year's hole--that's money that won't be there for existing health and education needs. It has corporate giveaways that will further put the squeeze on services.
And on that rainy day fund...
The Governor made a bad budget worse. He prioritized a so-called rainy day fund, but didn't raise the funds to pay for it. This rainy day fund will siphon funds from existing services like health and education, making the budget squeeze even worse. The Governor's budget demands will lead to more, not less, cuts to vital services.
HEALTH ACCESS UPDATE Friday, September 19th , 2008
LEGISLATURE PASSES BUDGET: NEXT YEAR'S FIGHT BEGINS NOW • Assembly and Senate end 81-day impasse, pass budget with little fanfare • Governor forces spending restrictions that would force deeper cuts to health & other services • Next year's budget battle begins again
Click for What's New on the Health Access WeBlog: More on Budget Back-and-Forth; Full Commentary on the Budget Deal; Links to Health Wonk Review and Other Blogs; The Gov Makes a Bad Budget Deal Worse; $85 Billion for AIG--How About for Kids Coverage?; The Individual Market Makeover--Is It Worth It?; and more...
The Legislature met Friday in two anticlimactic and short sessions to pass the budget, nearly three months late. The budget, with its $104 billion general fund is expected to be signed by Gov. Arnold Schwarzenegger on Monday.
With a budget, clinics and hospitals will now get paid. Providers caring for Medi-Cal patients have not received any state payments since August 1st. Some have been forced to close. Payments, however, will be at lower rates pending a court case challenging reduced reimbursements to Medi-Cal providers.
The budget closes a $15 billion shortfall between revenues and spending, but mainly through cuts, shuffling of money, and one-time infusions – such as back taxes and penalties owed by companies who skipped out on their obligations. No permanent sources of new revenues were approved and will likely be the subject of a massive battle next year. This year, as in years past, no taxes were increased because Republicans have steadfastly pledged to vote against any tax increase. Republicans hold a minority in both houses, but their votes are needed to approve a budget by a two-thirds majority.
The budget would require the state to stash away an uncommonly high amount of revenues into a rainy day fund, and put restriction on how and when the money could be used. That would mean less money for state priorities, such as education, health, social services, road building and park maintenance.
Already this year, immediate health cuts in the budget deal include: * increased reporting (every six months in Medi-Cal) with the purpose of having over 250,000 children lose coverage; * increased Healthy Families premiums per child per month for low-income families; * delayed restoration of the 10 percent Medi-Cal provder rate, leading to a loss of hundreds of millions of federal matching funds.
The California State Senate passed the supplementary aspects of the budget just now. The Assembly is expected to follow suit shortly.
At the end, Senator Romero announced that "the desk is clear" and Senator Perata concluded, "We're finished." No speech or final comment, because what is there to say? There was an awkward pause, and some Senators started clapping, as if waiting for the curtain to come down.
Step right up. Get yer knee replacement right here....
The Wall Street Journal recently had a story about employers encouraging their workers to stay in the US for medical care rather than travel abroad.
The upshot is this: Some US companies had been negotiating deals with providers overseas for certain procedures because it's so much cheaper. An example in the story: hip replacements in the US cost about $43,000 versus $9,000 in Singapore.
To keep business in the US, some providers are saying they can match the third-world pricing. These providers are now collected in a nationwide network: Healthplace America. This company wouldn'thealth insurance coverage, which gives workers access to routine medical care where they live. It specializes in a network of certain high-dollar procedures -- heart, spinal, bariatric procedures, cancer treatments, etc. The company is able to extract deep discounts -- as much as 50% from providers -- because they pay for procedures up front, saving providers the headache of billing insurance companies for the procedures and chasing down the payments.
I'm not sure what I think about this policywise. But reading it brought two things to mind.
First, what an elaborate thing for an employer to have to do. It just reinforces what a silly system we have. Healthplace America is a third-party contractor doing most of the work, but for businesses, which are in business to do something entirely different, like produce skateboard wheels, what a headache to have to deal with this as well.
Secondly: a 50% discount to get insurers out of the picture? I'll take that.
But now, the Governor has made a bad budget deal worse. (More in the Fresno Bee.) The changes would force even steeper cuts for health care and other vital services in the future.
The budget now prioritizes a so-called "rainy day fund" without raising any money to put into it. Where will those funds come from? Already-underfunded health, education and other needs.
So this budget makes steep cuts (including a quarter-million children uninsured), and does not balance these cuts with revenues. It not only defers the problem, but actively makes the budget worse by taking money from future years that will not longer be available to pay for existing services. And it introduces another priority--the so-called rainy day fund--that will further squeeze health, education, and other vital services.
Legislative leaders and the governor have reached a newbudget deal and boy is it a stinker.
Lawmakers gave in to the governor's demand that would make it harder to draw on money locked away in a rainy day fund. Effectively, it means it will be harder to pay for health, education, social services, transporation -- all the things we pay the state to take care of.
Additional cuts will also be coming. If this budget passes (as it is expected to tomorrow) and is sent to the governor, Gov. Schwarzenegger still has the ability to use his line-item veto power to reduce spending even further. Watch out everyone (!) -- especially in light of the fact that lawmakers caved to businesses and ix-nayed a tax amnesty program that would have forced thousands of businesses delinquent on their taxes to pay up.
Of course, we have no *additional* permanent sources of revenue, which means we'll be fighting this same thing again in a few months.
I ran into a former Republican staffer today who opined that Republicans had "warned '' of this kind of death and destruction five years ago.... Would that have been the five years ago when a $6 billion hole was blown in the budget because the Vehicle License Fee was reversed?
So I know that we're just loaning American International Group, Inc. $85 Billion (that's with a B) for two years while they sort out the mess they're in. And I know it comes from the federal governments reserve fund, not the main fund that pays for all of our programs. I get that.
And to be sure, officials are not sanguine about their decision to rescue the insurance giant. They came to it reluctantly after careful deliberation. That said, I still can't help but notice that the $85 billion that the feds are putting up to keep the gigantic insurer AIG from roiling the markets is about the same amount (actually, it's a little more) than what health and children's advocates have been asking for the past couple of years to help fund children's health insurance (SCHIP) -- and provide universal children's coverage -- that's the remaining 10 million uninsured children -- for five (5) years.
It's interesting to look at the panicked language associated with the decision to rescue the insurer. From the New York Times:
If A.I.G. had collapsed — and been unable to pay all of its insurance claims — institutional investors around the world would have been instantly forced to reappraise the value of those securities, and that in turn would have reduced their own capital and the value of their own debt. Small investors, including anyone who owned money market funds with A.I.G. securities, could have been hurt, too. And some insurance policy holders were worried, even though they have some protections.
“It would have been a chain reaction,” said Uwe Reinhardt, a professor of economics at Princeton University. “The spillover effects could have been incredible.” (Uwe Reinhardt, by the way, is also very interesting and entertaining when speaking of health policy and economics...)
Ok. We're worried there's going to be lots of pain everywhere. Lots of people with investments aren't going to have as much anymore. Lots of people, who have been paying for insurance, on the case that their factory goes down in flames would be SOL if their factory went down in flames after AIG declared bankruptcy. It's very sad when people lose their money. I don't like losing money, ESPECIALLY when I've played by the rules. It took regulators a couple days, but the came to the table and said they said, "We have to do this. It's too important not to do.''
The public is annoyed, but gets it. We don't want the economy to get any worse. We want to be number 1 again.
By contrast, the issue of whether to insure children -- with roughly the same amount of public resources (Again, i recognize it's a totally different process and comes from a totally different fund) remains a subject of intense debate. Ten million children, the majority of whom are in working families who play by the rules, need health coverage. But there is no rush to their side. I would argue that the "spillover effects" of uninsurance are just as tragic as a fallen market.
Children can't see a dentist to get cavities filled. They get abscesses and die. Children can't get to an eye doctor. They can't see the chalkboard. They get behind and frustrated in school. They can't live up to their intellectual potential. Children get asthma. They can't see a doctor. They can't get an inhaler. They miss school. They get behind. Schools lose money.
I'm not saying that money used to rescue AIG should be redirected to children's healthcare. I'm just miffed at the level of frenzy surrounding financiers, and I'm not sure why that frenzy and drive to take action is not as strong when it comes to those born to families that can't afford health insurance.
HEALTH ACCESS UPDATE Wednesday, September 17th, 2008
BUDGET PASSES LEGISLATURE; GOV VOWS VETO; OVERRIDE LIKELY * Legislature passes budget 78 days late; Budget includes steep cuts, gimmicks, no taxes * Governor vows to veto budget, demands more cut authority; Legislature likely to override * ACTION: Health advocates to Legislature: Fix budget & raise revenues to prevent cuts
Click for What's New on the Health Access WeBlog: More on Budget Back-and-Forth; Assessing the Deficit Reduction Act Reporting Requirements; Healthy San Francisco Examined; Governor Palin and Health Care; House Parties for Health Care and More...
The Legislature ended its 78-day budget impasse in the wee hours Tuesday morning, passing a spending plan with biparisan votes for the plan, but no lawmaker in favor. The final votes was 61-1 in the Assembly (54 votes were needed) and 28-12 in the Senate (27 votes were needed).
Assemblyman John Laird, the Assembly Budget Committee Chairman said, “This isn’t what everyone liked…but everyone had a greater fear that they are not realizing in this budget.’’
The budget bridges a $15.2 billion shortfall through significant cuts to education, health care and other vital services; and by various gimmicks, including claiming tax returns a little bit earlier (only to lose those earnings in the *following* fiscal year), borrowing against future lottery income, and limiting tax writeoffs for businesses in the short-run (but losing income in future years).
Many advocates observe that the budget not only makes tough cuts this year, but actually makes the budget crisis worse in future years, forcing additional pressure for cuts to health and other vital services.
Governor’s veto threat
Gov. Arnold Schwarzenegger, however, almost immediately vowed to veto the measure, accusing lawmakers of “living in debt and denial’’ and said the budget “takes our problems and makes them even worse.’’
Schwarzenegger is calling for even sharper spending restrictions, which include a 12.5 percent reserve, and further restrictions on when the money is used. Health advocates have noted that the "rainy day" fund would be an additional spending priority without any new funding, and thus would compete with health and other existing programs, increasing the pressure for cuts.
Legislature likely to override
The governor’s veto announcement prompted Legislative leaders to declare that they would unite to override his veto. “If we bring 120 legislators up here to override a veto, I’m pretty confident we’re not going to have difficulty doing that and we would do it in rapid fire,’’ said Assembly Speaker Karen Bass.
ACTION: At press conferences in Sacramento and elsewhere, several education, health care, and human services organizations, including Health Access California, will call on Legislative leaders this morning to not override the veto, and instead get back to work on a budget that provide ongoing solutions for the budget crisis, including increased revenues to prevent cuts now and in the future.
Legislative leaders, however, say they have little hope of raising revenues this year as Republicans have pledged -- as they have in past years -- to vote against any tax increases whatsoever.
Budget impacts on Health Care
The effect of the current budget -- or any budget that does not contain a permanent new revenue source -- is that California will continue to face structural deficits. That means budget fights, such as the ones Californians have been subjected to this past decade, will continue until the state finds a permanent way to pay for its needs.
The immediate cuts in the budget deal include: * increased reporting (every six months in Medi-Cal) with the purpose of having over 250,000 children lose coverage. * increased Healthy Families premiums. * delayed (until March 2009) restoration of the 10 percent Medi-Cal provder rate cut, leading to an additional loss of hundreds of millions of dollars in federal matching funds.
The individual market makeover: mend it, end it, or both?
Last week, I attended a conference with fellow state-based health consumer advocates and now-notorious "community organizers," and was impressed by the range in activity around the country.
Even as we see what is likely at the federal level next year with a new President and reconfigured Congress, state legislators and advocates are not waiting around: they are actively pursuing health reforms, from Albany to Harrisburg, from Augusta to Springfield, from Trenton to Salem.
Much of that advocacy has traditionally focused on expanding public coverage programs like Medicaid and SCHIP. Yet I spoke on a panel on private coverage--which states are currently in charge of regulating--and that leads us to the current policy debate in DC and elsewhere.
There's big divide in health policy: One mainstream, proven way is to provide for subsidized group coverage, whether through an employer (how most get coverage now), a public program (how nearly a third get coverage), or even a universal single-payer system.
Another theory is to switch people into a more functional individual market. For example, President Bush (and now, Senator McCain as a candidate) would shift tax policy to discourage employers from providing coverage, and rather encourage people to buy coverage on their own. These proposals are obviously flawed, because they don't even attempt to fix the most glaring problem in the individual market: that insurers can deny patients for "pre-existing conditions" which would amazingly (and ironically, if it wasn't so sad) leave the sick out of their health coverage.
But there are more reasoned, thought-through proposals that at least try to take an individual market approach seriously, that recognize the flaws of the individual market, but seek to remake the market as they expand it. This includes relatively progressive legislators at the state and federal level, including Senator Ron Wyden of Oregon, who has an ambitious proposal, and Governor Schwarzenegger, based on his original proposal in January 2007. These efforts include significant regulation of the insurance industry and changing the way they do business. To be serious, they at least include guaranteed issue--that insurers must take all patients, regardless of health status--and some form of community rating--restricting variation in what is charged between patients.
My take? I still remain skeptical. As the least efficient, most expensive way to get coverage, the individual market seems a poor platform from which to rebuild a health system. Individual consumers simply don't have the group purchasing power of large employers or public programs, and are simply at the mercy of the big insurers. It's confusing and complex, and hard to compare and to sign-up for coverage.
When debating health reform last year in California, Health Access detailed a chart ofwhat would be consumer advocates would want "Beyond Guaranteed Issue," from subsidies to standards, minimum benefits to easy enrollment, rate regulation to medical loss ratios. The chart looks at what regulations exist in California and Massachusetts--where more still needs to be done.
Some of the real problems and provisions to address them included in the negotiated agreement of AB x1 1, and also discussed this year in SB1522 (Steinberg), to standardize the individual market. What we learned in this debate even makes me more alarmed, that consumers are getting a raw deal, paying premiums without proper protections in place.
Some of the bills that were passed this year, from AB1945 (De La Torre) to AB2 (Dymally) deal with other issues in the individual market, from rescissions to what happens after people are denied for "pre-existing conditions." But there's so much more to do.
My overall takeaway is that I would focus efforts at reform on expanding group coverage, which is thankfully where Senator Obama is (and where Senators Clinton and Edwards previously were), where Jacob Hacker and other academics are, and even where Rep. Conyers and other single-payer advocates are.
In virtually all reforms, an ancillary market of individual coverage will exist (like in the current "system"), and such regulations, oversight, and consumer protections are, and will be, desperately needed. I absolutely believe that we can improve the individual market; I appreciate those with the confidence to remake it altogether. I'm not sure we can fix everything about the individual market--it requires a lot more than guaranteed issue. As a consumer advocate, I am hesistant to shift people there wholesale unless we can prove that it can work. It's one of the main policy debates of the next few months.
Upon further questioning, he clarified he'd only veto the ones he considered "job killers'' or would cost the state more money. I wonder if this could set off a veto override frenzy - with Democrats and Republicans united against the governor ....
Overall, though, I'm not really sure why the Legislature wants to defend its crappy budget so vigorously. While I don't agree with the governor's policy direction -- demanding a stricter rainy day fund and making it harder to even use the money -- rhetorically what he says makes sense: "Just get it over with already!" To us, it means finding a stable source of revenue so that we don't have to keep dealing with this day in and day out. We already have the Republicans admitting that cuts-only doesn't work. If gimmicks and cuts don't work either...what's left?
Even the legislators themselves admit it's a dumb budget that doesn't resolve any issues. They're stuffing the big budget mess in the closet and slamming the door -- only, when they reopen it again, in a day, a week, a couple months, the big mess of dismembered dolls and deflated balls will come tumbling out.
The Governor just announced that he will veto the budget bills, when they come to him.
Should he veto it? The proposed budget not only fails to fix the ongoing budget crisis, but places health and other vital services at even more risk in future years. Let's be clear: This doesn't just defer the issue for another next year: it makes severe, harmful cuts this year, and makes the budget problem much worse in future years. The budget steals revenues from future years to patch together this year's problem, but now that's money that won't be there in those future years. And it's not like there will be less demand for health and education.
The Governor would be right to veto this budget for not raising the revenues needed to prevent cuts to health, education and other vital services.
Instead, the Governor seeks to make a bad budget worse, by placing another funding priority to compete with existing services, without any new resources. A rainy day fund is not a bad thing, but if the Governor wants one, he should raise the revenues to fund one. The Governor's budget proposals would lead to more, not less, cuts to vital services.
The Legislature needs to get back to work... but not with what the Governor has proposed.
Governor is having a press conference at 3 p.m. to "discuss the budget.'' It's likely that he'll announce his intention to veto the budget. Such an action, Legislative leaders have said, would cause Republicans and Democrats to unite and override this veto.
McCain's plan, according to health policy academics, would result in more than 20 million people losing their work-sponsored health coverage -- leaving them to fend for themselves in the individual insurance market. I'm not sure how this improves anyone's lot -- especially in a state like California, where it would be an exagerration to say the individual market was regulated.
Meanwhile, the critiquers of the Obama plan (which includes an adviser to the McCain campaign), opine that it amounts to more regulation (because deregulation works sooooo well) and more spending (duh, it's expensive to pay for health care.)
A budget was sent to the Governor early today, supported in the Senate on a 29-11 vote, and in the Assembly on a 61-1 vote.
The more we find out about the budget, the more we see how it digs a bigger hole in future years. Severe health cuts were made, and while some of the worst of the proposed health care cuts were rejected, the overall budget creats a scenario where even those cuts are much more likely in future years.
The Governor's demands made it even worse, by locking away more funds, away from the underfunded needs of education,, health care and other vital services--creating even more pressure for substantial cuts in the future.
The Assembly failed to pass the budget moments ago (it's still pending) after Assemblyman John Laird and Roger Niello both got up and spoke about how horrible the budget was -- but was better than the worst case.
“This isn’t what everyone liked…but everyone had a greater fear that they are not realizing in this budget,’’ Laird said.
Contrasted against other budget votes (and accompanying histrionics), the Assembly's presentations which took less than two minutes, must have set a record for brevity. Of course, they *were* called into session at 4 p.m., which means we had to wait around for nearly five hours to appreciate the short speeches..
So the Senate and Assembly are voting on the budget sometime this evening.
Everyone's unhappy with the final product -- including the governor who has sent a strongly worded letter threatening to veto the budget unless it contains a budget reserve of at least 12.5 percent, with a two-thirds majority required to spend money from it. Essentially, such a reserve would cap programs and severely curtail the state's ability to continue providing essential services -- like Medi-Cal and Healthy Families.
Stay tuned...we'll have more later.
UPDATE: The LATimes has posted a copy of the governor's letter to lawmakers.
Also, i just heard (at 8:30 p.m.) Speaker Pro Tem Sally Lieber call everyone into session. The Senate appears to still be dawdling.
I'm going to re-emphasize what Anthony was saying in his latest post just because I'm really *really* grouchy about the state of our budget. In the latest iteration of a budget deal, legislative leaders are crowing about the fact that there are no taxes raised, no more *additional* borrowing.
They're crowing about how there are no cuts to health care "beyond the Conference Committee'' budget, which already (as my colleague Anthony points out) leaves more than a quarter-million children without health coverage, increases Healthy Families premiums and continues the paycut to Medi-Cal healthcare providers through next year even while the cut continues to be litigated.
All this leaves me in a foul mood. Why? Because they'll be at it again next year and they *know* it. We have gone through this exercise nearly every year of this decade and every year we end up in worse shape. The gimmicks allow them to *pretend* to balance the budget in 08-09, but opens up an equivalent (and often larger) hole in 09-10. What's even more harmful, is it's a huge distraction that keeps policymakers from advancing the state's goals.
It means that next year, we're going to be fighting the same fight -- REconvincing lawmakers that trying to take away podiatry services and eyeglasses for people earning $1,000-a-month is a really dumb idea, leaving people sicker and less able to independent. It means we're going to have to re-remind them that, No, $18,000-a-year income is not enough to allow a person to go buy health insurance on the private market. Yes, it's actually a really big pain-in-the-ass burden for people whose lives are in constant flux to have to re-convince the State of California that they are still eligible for Medi-Cal every 90 days. Heck - it's annoying enough to have to renew my driver's license every five years.
For every minute that we are fighting back those cuts, it's another minute that we cannot work to advance real health reform -- health reform we desperately need that would help all families, by allowing them financial and health security. For every shred of emotional and intellectual energy that we have to use preventing the budget from rolling backwards, it's energy that we can't divert to moving our state forward.
There's apparently a budget deal among the legislative leadership, both Democrat and Republican, Senate and Assembly. The question is whether the rank-and-file legislators go along. If they do, a vote can come as early as Monday, although it might be later, as they get the paperwork in order.
There is no breakthrough or celebration here. The proposed budget cuts would cut hundreds of millions of dollars from California's hospitals, clinics and providers, and deny coverage to over a quarter-million children. It makes these cuts, but worse, the proposal apparently does not balance these cuts with the taxes needed to prevent future cuts.
Speaking of paperwork, no one has seen any actual budget. The immediate cuts in the budget deal are expected to include: * increased reporting (every six months in Medi-Cal) with the purpose of having over 250,000 children lose coverage. * increased Healthy Families premiums. * delayed restoration of the 10 percent Medi-Cal provder rate, leading to a los of hundreds of millions of federal matching funds.
These are severe cuts that will hurt not just hundreds of thousands of patients, but our state's health system and our economy.
Some may say that the cuts could have been worse, and that's certainly true. But the proposed budget fails to fix the ongoing budget crisis, it places health and other vital services at even more risk in future years. This is a cut-and-run budget, but like any bad slasher movie, it comes with the certainty of a worse movie next year, with more cuts. Given the gimmicks used, there will be more pressure on the general fund, starting immediately and into the future, to make cuts to health and human services.
As we get more information about this, we'll publish it, but the outlines don't look good for health care, now or in the future. It hardly meets the test of a fair budget, a compassionate budget, or a budget that includes a long-term fix for the future.
Today, over 250 house parties in 38 states in over 120 cities were held around the nation, by volunteers and leaders of the Health Care for America Now! campaign--which included house parties by Health Access California, California ACORN, and other partners hear in the Golden State.
The point is to get Americans to contact their Congressional representatives, to urge them to make health reform a top priority in 2009, and to commit to a reform that places consumers' interest first. The Health Care for America Now! website has the Statement of Common Purpose, which outlines the direction health reform should go, and a "Which Side Are You On?" statement, asking Representatives where they stand on the central debates in health policy.
Here's the trailer for the video shown at the house parties... We have a chance to make history on health reform, but only if we do this right...
A chart today in the Sacramento Bee compares the three budget plans, but somehow completely misses the biggest changes regarding the health care: the main cuts in Medi-Cal eligibility and enrollment. The difference is significant, both in the budget year, and in the out year.
They may have missed it because the changes don't look in the big in the first year, but as the cuts get fully implemented, they balloon in the out years.
The Conference Committee * Increase Medi-Cal reporting requirements on children to every six months * Increase Healthy Families premiums and suspend enrollment reforms Coverage Impact in 3 Years: Over 250,000 children denied coverage Long Term Impact: Additional revenues (upper-income & corporate taxes to sustain programs in long term)
Governor Schwarzenegger's August Budget: * Increase Medi-Cal reporting requirements on children to every six months * Increase Healthy Families premiums and suspend enrollment reforms * Delay restoration of Medi-Cal provider rates Coverage Impact in 3 Years: Over 250,000 children denied coverage Long Term Impact: Temporary revenue to prevent cuts in next three years; Tax cut after 3 years to force future cuts; Spending cap proposal to force future cuts
Republican Alternative Budget: * Increase Medi-Cal reporting requirements on children and parents to every three months * Increase Healthy Families premiums and suspend enrollment reforms * Make cuts to some Medi-Cal providers * Limit Medi-Cal eligibility to low-income working parents, and other Californians * Eliminate benefits to over 3 million adults on Medi-Cal Coverage Impact in 3 Years: Over 250,000 Californians denied coverage Long Term Impact: Additional borrowing to force future cuts; Strict spending cap proposal to force future cuts
Just looking at the cuts, the difference between the Democrats and Republicans is the difference betwen denying coverage to 250,000 Californias, versus denying coverage to 1 million Californians.
Looking at the long-term structural issues, both the Governor's proposal and the Republican proposal would force significant future cuts to health and other vital services. Only the Conference Committee proposal raises the ongoing revenues needed to prevent these severe cuts in the future.
A rundown of how health bills fared during the last days of session is covered by Dan Walters at the Sacramento Bee, with specific references to SB840, SB1522, AB1945, and SB981. It goes to show that health care continues to be a major topic of debate, even without the intensity of the white-hot "year of reform" spotlight.
After a few hours of "debate" the Senate just voted down the Republican version of the budget 15-21. It was no big surprise since it mainly consisted of cuts and borrowing. In health services, the Republican version made an additional $43.2 million in cuts beyond the governor's $830 million cuts to health care services.
The zinger, though, in the Republican cuts is $30.3 million for family planning services, such as contraceptive care, counseling cancer and STD screening and annual exams. That cut would have resulted in $272.7 million in lost federal dollars (The federal government gives $9 for every $1 the state spends on certain family planning services.)
Should a Republican budget be enacted (thankfully not) it would result in a loss of more than $1.7 billion in federal matching dollars -- all dollars that would go to other states....
A special Blog post from our Director of Administrative Advocacy, Beth Abbott:
I attended a forum on Thursday to evaluate the effectiveness of requiring applicants and current beneficiaries to prove their U.S. citizenship and identity to receive Medicaid (Medi-Cal in California) under the federal Deficit Reduction Act. The U.S. Congress, operating on the speculation that many illegal immigrants in the U.S. were claiming to be citizens to become eligible for Medi-Cal, proposed this provision into the eligibility requirements for Medicaid for all states in 2005.
The Government Accountability Office (GAO) did a study to evaluate that premise. Their study found no evidence to support that undocumented people falsely asserted that they were citizens, and there was no basis for establishing a requirement to prove citizenship or identity when applying for Medicaid. Congress was undeterred and inserted this provision in the law affecting all states effective July 1, 2006.
This forum in Sacramento showcased the experience of California’s Department of Health Care Services (who lay out the rules for Medi-Cal in California), California counties (who implement these new rules throughout the state), as well as the experience of other states, foundations, and public policy institutes.
The Good: Our state and counties were consistently complimented about their thoughtful and even-handed implementation of this onerous law. California sought input from a wide variety of stakeholders to minimize the harm of these requirements, communicate as clearly as possible about the complexities of the law, and build into the state rules as much flexibility as they were able to get.
The Bad: California and the counties said: • They had not uncovered any fraudulent attempts to claim U.S. citizenship. • The state admitted that so far they had spent about $80 million dollars to implement this new law. (This is serious money!) • The counties had not included the costs to pay for training, longer interviews, additional computer coding or file documentation, or help obtaining proofs. • Although this law affects only U.S. citizens, it has had a chilling effect and these additional administrative hurdles discourage applicants.
The Ugly: Based on the first two years of its implementation, many attendees believed this was evidence of a misguided, but costly attempt to deal with U.S. immigration problems through the back door, to the detriment of our citizens. However, if this early experience were not enough, Congress is considering expanding this requirement to such programs as Healthy Families, CAL-Works, and others. The consensus was that these requirements did nothing to contribute to the expansion of public health programs, streamline efficiency of the administration of government programs, or add meaningful deterrents to fraud or abuse in public benefits.
Mercer Consulting reports that -- again -- employers are likely going to be shifting more health care costs to their workers. As businesses gear up for open enrollment, when workers have to re-enroll, switch health plans, they're finding that health care costs have continued to escalate at unsustainable levels (thrice the rate of inflation.)
To keep premiums down, 59% of employers are deciding they'd rather make copays, deductibles and co-insurance more expensive. This trend has not been going our way -- over the past five years, the average deductible has increased from $1,000 to $1,500 annually.
There's ample evidence out there, like here, here, here and here, that shows higher cost sharing means that patients get less care, which results in them getting sicker and needing more care later. So why does the industry keep returning to their old tricks?
In calls with analysts and investors, WellPoint executives have stressed that it is working to keep its more-profitable business and that the customers leaving tend to be costlier ones. "We're keeping good members and healthy lives that we had been concerned about [losing] in the past," Ms. Braly told analysts last month.
Translation: "Awesome. We won't have to spend money paying for sick people.'' (This is how Sarah Palin thinks the market should work?)
The story, however, touches on a familiar trend throughout the insurance industry -- the loss of employer-sponsored plans. Since 2001, the percentage of firms offering coverage has slipped nearly 10% in less than a decade to 59%.
Nevertheless, Wellpoint increased premiums yesterday to placate investors and as a result expects about 150,000 more business members (on top of the 189,000 business members they've already lost this year) to drop coverage.
Sidenote: Of course, we can expect the number of employers that would drop coverage to *increase* if McCain/Palin win office, as their plan allows insurers to run amok and tax businesses for providing this basic benefit to workers, making the individual market (least efficient, most expensive) more attractive.
The Wall Street Journal today contains an analysis of Rep. Veep candidate Sarah Palin's policy record. Here are the relevant health portions:
Gov. Palin didn't make health care one of her top priorities, but where she did take a strong stand on health, it was for the free market.
"Health care must be market- and business-driven, rather than restricted by government," her office said in a January statement.
Her overall approach is much like Sen. McCain's -- loosen government regulations to allow for greater competition, along with more information for patients to make good choices.
Addressing the uninsured was less of an issue for Gov. Palin, much as it is less significant for Sen. McCain. She was reluctant to support a significant expansion of the state's version of the Children's Health Insurance Program, called Denali KidCare. She signed a bill that raised eligibility to allow families with incomes up to 175% of the poverty level -- stingy compared with other states.
Great. So she doesn't *really* think addressing the uninsured is an issue. Yet, Alaska, according to the latest Census Report, her state (and it's teeny tiny population of 664,000) has nearly the same proportion of uninsured as California -- 17.3 percent (to our 18.6 percent). The number of uninsured in her state could populate the entire town of Costa Mesa -- home to South Coast Plaza and 113,955 Orange Countians. (AK's uninsured is 115,000).
We were obviously disappointed that some big, important consumer bills stalled. But there's still a lot of good bills heading to the Governor's desk, ones help people have a little more confidence in their coverage: that benefits will be covered; that their policies won't be retroactively yanked away; that they won't be balance billed when going to an emergency room; that their premium dollars goes to patient care rather than administration and profit; and that if they seek coverage, they won't be left with no place to turn if denied for "pre-existing conditions." Health advocates will make their case for the Governor to sign them.
LEGISLATIVE UPDATE: HEALTH BILLS HEADING TO GOVERNOR'S DESK * Bills pass on high-risk pool, benefit mandates, rescission review, and single-payer * Some bills stall, including standards for individual insurance, transparency * ACTION ALERT: Get letters of support into Governor’s Office ASAP
Click for What's New on the Health Access WeBlog: More on Budget Negotiations, A Late Budget Record; The Republican Budget, Revealed; The Last Days of Legislative Session; Medi-Cal at the DNC; "Voila, Problem Solved!"; More on MRMIP, and Much More...
The Legislature ground to a slow halt on Sunday, August 31st, the constitutionally imposed deadline for all bills in the 2007-08 legislative session to pass.
Now, Gov. Arnold Schwarzenegger has 30 days to sign the bills – midnight September 30th. Complicating matters this year, however, is the fact that the governor has vowed he would veto all bills until a state budget has passed. The state budget is a record 63 days late with no signs of compromise. It’s unclear whether the governor will actually follow through on that promise, given that the Governor made an exception last month to sign the high speed rail initiative (which he sponsored) to get it on the ballot.
Health advocates however, should still submit letters to the governor’s office urging him to sign bills. Letters should be sent to:
Gov. Arnold Schwarzenegger State Capitol, Governor’s Office Sacramento, CA 95814
HEALTH CONSUMER BILL UPDATE
Following is a list of how bill that were still alive at the end of the legislative session fared:
BILLS HEADED TO THE GOVERNOR
Insurer Oversight: * CAPPING ADMINISTRATION AND PROFIT: SB 1440 (Kuehl) would set a minimum medical loss ratio – requiring every insurer to spend at least 85 percent of premiums on patient care. * INDEPENDENT REVIEW: AB 1945 (De La Torre) would establish an independent DMHC/DOI review process if an insurer wants to rescind coverage, and raises the standard in existing law so that coverage can only be rescinded if a consumer willfully misrepresents his health history. * BROKER ACCOUNTABILITY AND FAMILY COVERAGE AFTER RESCISSION: AB 2569 (De Leon) would require brokers who take applications to attest, under penalty of perjury, that the information is complete and accurate to the best of their knowledge. Also ensures that family members whose coverage depends on that of the rescinded person may be offered another individual policy.
Benefit Mandates: * MENTAL HEALTH PARITY: AB 1887 (Beall) Would require health plans to provide coverage for all diagnosable mental illnesses. * MATERNITY COVERAGE: AB1962 (De La Torre) would require all individual insurance policies to cover maternity services. * DURABLE MEDICAL EQUIPMENT: SB 1198 (Kuehl) would require group health plans andinsurers to offer coverage for durable medical equipment, such as wheelchairs and shower seats.
Improved Insurance Options: * HIGH-RISK POOL: AB 2 (Dymally) would reform the Managed Risk Medical InsuranceProgram, which provides coverage for “un-insureables” who have “pre-existing conditions.’’ Efforts would make the high risk pool more affordable and available. * USE OF INSURER PENALTIES: SB 1379 (Ducheny) would use the fines levied on insurers for improper rescissions to subsidize MRMIP and repay loans for physicians working in underserved areas * PUBLIC INSURER: SB 973 (Simitian) would create a statewide public insurer, connecting existing regional, county-based health care plans, to compete with private health careplans and provide consumers more affordable coverage choices.
Consumer Protections: * DENTAL PREDATORY LENDING: SB 1633 (Kuehl) Would prohibit dentists’ offices from offering high-interest loans to patients while they are under the influence of anesthesia. Would also prohibit dental offices from charging lines of credit before services have been rendered. * UNFAIR BUSINESS PRACTICES: AB 2842 (Berg) would protect Californians from insurance agents trying to sell them private Medicare plans through cold calls and bait-and-switch tactics.
Hospital Transactions: * HOSPITAL CLOSURES: AB 2400 (Price) would require public notice before closing a hospital. * BOUTIQUE HOSPITALS: AB 2697 (Huffman) would require so-called “boutique hospitals’’ to assess their impact on a community’s health system annually, specifically whether they siphon doctors, workers, providers from hospitals caring for less affluent populations.
Balance Billing: * EMERGENCY ROOM BILLS: AB 1203 (Salas) would prevent emergency departments – which do not have a contract with a patient’s insurance company -- from directly billing the patient, requiring the hospital to seek payment directly from insurers. * ER DOCTOR BILLS: SB 981 (Perata) would prevent emergency physicians – who do not have a contract with a patient’s insurance company -- from directly billing the patient, requiring providers to seek reimbursement directly from insurers.
Coverage Expansions: * DEPENDENT CARE: SB 1168 (Runner) would allow adult dependent children, who are still covered under their parents’ health plan, to stay on that coverage even if the child takes a medically necessary leave of absence from school. * UNIVERSAL COVERAGE SINGLE PAYER: SB 840 (Kuehl) would establish a single-payer health care system in California that would enable all residents to have health coverage.
BILLS THAT WILL NOT ADVANCE THIS YEAR * INSURANCE MARKET STANDARDS: SB 1522 (Steinberg) would sort health insurance policies into five coverage categories, ranging from “comprehensive’’ to “catastrophic.’’ Organization of plans into these categories would enable consumers to better track premium, benefits and cost-sharing, and assist consumers in making apples-to-apples comparisons between plans. Would weed out “junk’’ insurance by developing minimum benefit standards. * TRANSPARENCY AND DISCLOSURE OF COST AND QUALITY DATA: AB 2967 (Lieber) Would require public reporting of cost and quality by hospitals, HMOs and others in the health care industry. Was substantially amended against the author’s wishes at the end of the year, and was ultimately opposed by health advocates. * CONFIDENTIALITY CLAUSES: SB 1300 (Corbett) would prohibit confidentiality clauses, which keep secret information on pricing and health care quality from consumers, in contracts between providers and insurers.
Healthy San Francisco gets the full treatment in a paper by Community Catalyst. "Healthy San Francisco: A Case Study of City-Level Health Reform" is a description of the politics and policy of the groundbreaking effort, written for health advocates in other states and nationally to learn lessons and take inspiration for their efforts.
Even in tough week, we see that California can lead the way. It's up to us not to give up...
We have now gone longer than we ever have in California history in not passing a budget...it's a record!, write Matthew Yi of the San Francisco Chronicle, and Evan Halper at the Los Angeles Times.
Can we say "we told you so?" on Proposition 56, which stopped salaries to legislators for every day the budget is late, and reduced the 66% threshold to pass a budget to 55%? On the repeal of the car tax, which dug us deeper into this multi-billion hole?
We have to stay focused on being very clear about the consequences of the cuts in the budget the Republicans are crafting, and support the revenues needed to prevent such cuts.
So the legislative session ends, even if the budget battle continues. Lots of disappointments this year on health care, including the failure of bills that would have required greater transparency for insurers--SB1522(Steinberg)--and providers--AB2967(Lieber), SB1300(Corbett). There's more to write about those and other bills in the days ahead.
AB2(Dymally) to improve the high-risk pool; AB1945(De La Torre) to have independent review of recissions; SB1440(Kuehl) to requirement that 85% of premiums go to patient care, rather than administration or profit; SB981(Perata) and AB1203(Salas) to restrict balance billing; SB840(Kuehl) to establish a universal single-payer health system;
There's others, and we'll have a full report early in the week.