Ezra Klein at The American Prospect lists the reasons why employers seem to be wedded to our system of employer-provided health coverage, and his commenters add on. For those who support a shift to either a single-payer system or an "you're on your own" individual market-based system, it's worth considering.
Saying the budget situation is “unprecedented”, high level Schwarzenegger Administration officials said today in a conference call to health and human services advocates that the Governor will propose major cuts to health and human services as part of a package of proposals to address the growing State budget crisis that he wants the Legislature to approve when they meet in special session next week. Administration officials also said that the Governor will also propose ways to increase the State’s revenues...
Herb Shultz, senior advisor to the Governor, Vickie Bradshaw, the Governor’s cabinet secretary, and Secretary Kim Belshe of the California Health and Human Services Agency were among Administration officials who provided the briefing. The officials said that details of the Governor’s proposals are not yet available at this point, but will be when the Governor issues his formal proclamation soon, that officially calls the Legislature back into special session.
Bradshaw said that the State’s revenue loss is “far beyond what we expected” and that the budget shortfall is significantly larger and “dramatic”.
“We are in a state of fiscal crisis” said Bradshaw and that “short term fixes” cannot solve the enormous state budget shortfall.
She said that given the enormous crisis, the Governor viewed it as important to call special session of the Legislature now, to correct the problems this year, but warned that it will mean “significant cuts to all of our major programs”.
“None of the cuts will be easy,” Bradshaw said and urged that advocates and other Californians to help policymakers “look for as many alternatives as possible”.
Belshe, who oversees 12 state departments that have major responsibility for many critical health and human service programs that serve children and adults with disabilities, mental health needs, seniors and low income families, said “we would agree that the situation we face today is without precedent”.
“Very often health and human services becomes the focal point” for cuts because of the size of the budget, but that the size and magnitude of the problem means every budget area will be impacted, including health and human services. She said it will mean controlling costs and caseload growths in programs but that “it won’t come without pain and difficulty” and will be a challenge for “all of us to address”
Belshe said that many of the reductions that will be proposed in health and human services would, if approved by the Legislature, take effect this budget year in order to have impact on the State’s growing deficit.
Both Shultz and Bradshaw said several times that the Governor is not looking at closing the gap between what the State spends and what it takes in as revenue this year or next year with spending cuts only but ways to increase revenues.
Bradshaw, said that “whatever we don’t get in revenue generation” would mean getting it in spending reductions.
So not lots of detail on the substance of the cuts, but some on process.
The special session will start November 5th, the day after election day. Governor Schwarzenegger will propose a package that includes both cuts and revenues, not just a cuts-only approach... which is an improvement from last year, but we'll see what that actually means. He will seek revenues that require a "bipartisan" vote, so he will be seeking a 2/3 vote, or at least 2 Republican Senators, and 6 Republican Assemblymembers in addition to all Democrats.
While the legislature is not required to act, the Governor will push for action by November 30th, when this legislative session ends, since the newly-elected Legislature starts on December 1st.
Finally, there was significant discussion about the need for a federal economic stimulus package that includes an increase in federal Medicaid matching funds. For those who care about health care, our advocacy will need to be at both the state and federal level.
I think we are making the same point, but coming at it from different directions. Wright is absolutely correct that young people are disproportionately uninsured, and for the reasons he says. But that's true under the current system as well.
Here's what I meant with my suggestion that McCain's plan might actually encourage people to drop their coverage voluntarily. Say you are 23 years old and in good health, and lucky enough to be working for an employer who provides you health coverage. Under McCain's plan, the amount that your employer spends on your health insurance suddenly gets added to your taxable income. McCain provides a tax credit to offset that, and if it covers your additional tax liability, the chances are you would continue to take coverage under your employer's plan. But if you live in a state where health care costs are high, or your employer has a particularly expensive plan (because the benefits are great, or because the workers in your company are sicker, or older, increasing the costs of their coverage), the tax credit might not cover it. In that instance, you would be tempted just to drop it and take your chances on not getting sick.
In economic terms, that would be a completely rational decision. Unless you get in a car accident. And the departure of a worker who is a relatively good risk would leave your employers with a workforce that is, on average, even more expensive to insure--which might ultimately force the company to drop coverage for everyone.
And here's my agreeable response, cross-posted from Swampland's comments section.
Much thanks, KT, for the link, and the dialogue, and your evident and appreciated interest in health issues, in all their complexity. I actually agree with you: the McCain plan will leave some young (or more relevantly, newer, entry-level, and lower-income) workers without employer-based coverage, and uninsured as a result.
* I agreed with your earlier point, too. My beef was more with Gov. Romney, who made inaccurate assumptions about this segment of the uninsured. Instead of seeing the additional barriers to coverage they face and thus trying to make group coverage more available to young workers, like bolstering employer-based coverage, he put the burden on the individual to sign up, as if that was the main problem. (In fact, he even vetoed the small fee on employers who didn't provide health coverage to their workers--the legislature has to override his veto to pass that part of "his" health plan.)
* Again, young people take up employer-based coverage at roughly similar rates as older folks. Without the group rate and employer subsidy, younger folks with lower-incomes find coverage on the individual market not affordable, either the premium, or the out-of-pocket costs.
* A number of the comments (cliff, calkate, kevpvp) here raise another key point: Health coverage should not just *available* and *affordable*, but *administratively simple*. Another reason why employer-based coverage is so prevalent (and largely taken up, by young and old workers alike) is that it is easy to sign up at work. In contrast, trying to understand and navigate the individual market is a nightmare, and takes a lot of pro-active thought and action. Another reason why the individual market is least efficient, most expensive way to get coverage.
* There's been a lot of attention to behaviorial economics, and commentor "chucksname" referred to 401Ks. In fact, the research suggests that a major factor on enrollment is not as much income as simply whether signing up for a 401K plan is automatic or not, or if the choices are too numerous or complex.
* In California, we have sought reforms to make the individual market more transparent and understandable, to allow for apples-to-apples comparisons, etc. But the real lesson is to focus expansions on group coverage instead, either through public programs or employers.
As the article points out, Baucus has a mixed health record, siding with Republicans on some issues like Medicare Part D (which most consumer groups, including Health Access California, opposed) and President Bush's first tax cut, working closely with the ranking Republican, Chuck Grassley. Yet he led the fight against the privatization of Social Security, and for SCHIP reauthorization and Medicare payment reforms earlier this year.
The article ends with optimism:
In June, Baucus assembled his whole committee in the Mumford Room of the James Madison Building for a daylong health-care conference called "Prepare for Launch." The event began with Baucus standing before a projection screen that showed a space shuttle firing its way into orbit. "I think that video captures the essence of what we're trying to do today," said Baucus proudly. "Which is prepare for the launch of health reform."
In this, he is proving the opposite of the finance chair who last presided over a major attempt at health reform: Daniel Patrick Moynihan, who aggressively opposed Clinton's health-care plan in 1994. Moynihan went as far as to appear on Meet the Press to accuse Clinton of using "fantasy numbers" and declare that "there is no health-care crisis." By contrast, Baucus has spent the last year holding a series of hearings meant to convince his committee and the country that there is a health-care crisis. He's staffed up his health-policy team, consulted with outside experts, and held individual meetings with his members. And if Barack Obama wins in November, Baucus, unlike Moynihan, is likely to enjoy a good relationship with the incoming administration. The Obama campaign's chief of staff, Jim Messina, was hired out of Baucus' office. "If you asked what would Baucus be doing this summer," says one liberal health reformer who's long been skeptical of Baucus' commitment to the issue, "I could not have mapped out a better strategy for him to follow. He's doing it."
Baucus seems interested and invested in health reform, but it is unclear on what type of reform. He does have moderate, if not conservative, tendencies. If Senator Obama wins, he may be especially pushing for a win, or at least a good showing, in Montana. To the extent that Obama does well in Montana (and Iowa), he can show a mandate for his health plan to Baucus (and Grassley) in their home state.
The San Jose City Council will soon consider a "living wage'' that would increase wages for airport workers. For those with health benefits, the wage would be $12.83 an hour. For those without benefits, the wage would be $14.03 an hour.
The difference, then, between having benefits and going without is $1.20 an hour. Over the course of a year, that's an extra $2,400 in your pocket, assuming employees work 2,000 hours. That's $200 extra dollars a month. But that also means that a worker would have to go out and find insurance on their own.
Airport workers, the ones that push wheelchairs and check baggage, are not young. In a Google search, I find that in Dallas, the average age of an airport worker is 45, so I'm going to use that for my illustration.
It is possible to find an individual health insurance plan for a 45-year-old woman in San Jose for less than $200 a month. However, it also means
paying deductibles ranging from $500 to $5,000;
paying high co-pays for limited doctor's visits (and for a 45-year-old with a physically taxing job, that may not be a wise choice. Not to mention the regular health needs of a 45-year-old woman.);
having *only* generic prescription drug coverage;
paying the full cost of labs and X-rays until the deductible is met;
These are bills that make your stomach ache. They're not fun to pay, but you need to pay them because you need to stay healthy. And for a person earning about $28,060 a year, these costs represent, proportionally, an even bigger financial sacrifice. The premium alone is 9.5 percent of wages.
Of course, the big question, is whether a person $28,060 can really afford -- with housing, food and gas expenses -- to spend another $200 a month on a skimpy health care plan.
It appropriately takes Governor Arnold Schwarzenegger to task for vetoing AB2 (Dymally) this year, that would have improved and expanded the program, and as Rau points out, was supported by the program's governing board, most of whom the Governor appointed. And it can be read as a devastating critique of the McCain plan, which would rely on these high risk pools, and by shifting more people into individual market, and allowing more people to be denied for "pre-existing conditions," make the problem much worse.
Changing the tax treatment wouldn't hurt the employer-sponsored system and would allow more of the uninsured to buy their own coverage, they say. Also, his advisers say a McCain administration would keep an eye on the credit to make sure it didn't lag behind the cost of coverage, while also working to lower the rate of medical inflation.
Younger, healthier workers likely wouldn't abandon their company-sponsored plans, said Douglas Holtz-Eakin, McCain's senior economic policy adviser.
"Why would they leave?" said Holtz-Eakin. "What they are getting from their employer is way better than what they could get with the credit."
The quote is right. If we discourage employer-based health coverage by removing the current tax advantages, some employers will drop coverage (there's been an ongoing trend of employers scaling back coverage & reducing eligibility, even without a change in the tax incentives.) This will leave their workers to fend for themselves in the individual market, where coverage is more expensive and less efficient.
The McCain tax credit will not make up the difference of either the employer's contribution to health care, or the benefits and negotiating power of group purchasing.
In short, what people get from their employer is "way better" than what they will get with a credit to buy on the individual market--whether in terms of out-of-pockets costs, benefits, or all-around value. (Here's Jon Gabel's study on the California HealthCare Foundation website to provide the appropriate apples-to-apples comparison.)
There's an additional "adverse selection" argument, which is that some workers might be tempted to leave their employer-based health coverage to buy in the individual market (which is less expensive for younger, healthier workers). If too many do, this will leave older, sicker workers in their group plans, causing the the employers' premiums to go up, leading to a "death spiral," causing the employer to drop coverage.
If this was only about removing the tax benefits from employer-based coverage, Holtz-Eakin would be right, although not to credit of the McCain plan. Even still, an employer would have to offer pretty skimpy benefits (high deductibles, a large share-of-premium, annual caps) for somebody to think they can do better on the individual market.
Some critics of health reforms (from SB2 to AB x1 1 to the Obama plan) suggest that purchasing pools would be negatively impacted by adverse selection, making them cost more, as opposed to being able to negotiate down the cost of health care using its bargaining power. And that's been the case for some voluntary small business purchasing pools. But it's a different story for subsidized pools, where even the youngest, healthiest person will stay in the employer group to get the implicit employer subsidy. As a result, the employer group then has the negotiating leverage to negotiate for all their workers, and the insurer has a much harder time just trying to cherry-pick only the customers they want.
The tax credit would have to be significant (and expensive) to allow for this; and so the policymakers would have a perverse incentive to make the credit less attractive. So the McCain plan is less vulnerable to this issue, but only by creating a much more obvious problem: giving many workers worse health coverage than they have now.
Karen Tumulty at Time.com's Swampland take the argument another step, and suggests that young, healthy people will just become uninsured. She's right, but for the wrong reason. She suggested that young people would "choose" to go uninsured, as Gov. Romney suggested. As I wrote in her comments section:
Much of the differential in insurance coverage in age groups is accounted for if you hold for income and job-type. Think of the young person just starting their career, or working for McDonald's or Wal-Mart.
In other words, young people will become more uninsured under the McCain plan because they are more likely to be the entry level or lower-income workers impacted first as employers further drop coverage. Some might buy coverage with the tax credit, but many won't be able to afford the difference, some would be denied for pre-existing conditions, and some would find that what they could buy with the tax credit (a $5,000 deductible plan, say) doesn't make sense for a young person with no assets, who would go into bankruptcy before the coverage kicks in.
Let's not blame the victims. The plan is still bad, just in a different way.
After the election, health advocates have a multi-pronged budget battle ahead in the next year: 1) fighting the mid-year cuts that will be proposed in November; 2) fighting the additional cuts that will be proposed as part of the 09-10 budget that will be proposed in January and May, and that will be slated to start July 09; 3) working to support revenues to sustain health and other vital services, and prevent severe cuts; 4) opposing the budget proposals on the ballot in 2009 that siphon money away from health and other vital services, such as the so-called "rainy day" fund; and 5) supporting real budget reforms for the future.
And that's just on the budget, and is not including health policy reforms...
The Sacramento Bee this weekend told the very real story of counties stepping in to provide medical care when people find themselves without health insurance.
What struck me is the very palpable sense of vulnerability -- that at any moment, you or someone you know could become uninsured and wait in this line. That at any moment, you or someone you know could be layed off and lose your benefits. Could lose all access to credit and a way to pay for medication and other necessary care.
"I think people have a misconception about who the medically indigent are," Pitman said. (Dr. Dorothy Pitman is the medical director of the Sacramento County clinic branches).
On some days, cars circle the clinic's parking lot.
Some patients arrive in beat-up Toyotas or late-model cars, others in SUVs and, occasionally, even a Lexus or an aging Mercedes.
"Folks lost the house, but kept their fancy cars," said Fred Heacock, the clinic manager.
His point: Bad things can happen to anyone at anytime.
The sense vulnerability -- of exposure -- is also echoed in this LA Times story -- about Wall Streeters having to tighten their belts. Most of the story is about how even the investment bankers on Wall Street earning $400,000 will have to scrimp some. But what jumped out at me, was this vignette:
A few weeks ago, a wife, six months pregnant and about to enter the operating room to have a masectomy for cancer, does not talk to her husband about her imminent surgery. Her husband worked at Lehman brothers. The discussion was about whether she would still have health coverage for *that day* if Lehman Bros. declared bankruptcy.
As an advocate, I see academic research coming across my desk that says higher income earners do worry about the *big event* that will eviscerate their savings. But it has never been spelled out as starkly as this...
And no one polled on the street would likely guess that a family with a $400,000-a-year income would also have to worry about how they will pay for medical care.
The Wall Street Journal health blog reports that Barack Obama has $113 million -- or 68% of his total ad budget -- on health care-related ads. Add to that $13 million in drug company spending in favor of SCHIP (children's health coverage) and Health Care for America Now's ads advocating health reform (not John McCain-style reform) and we have an electorate with a higher consciousness of health issues, and fertile political environment perfectly primed for next year's fight.
The last of the LA Times' three-part series on the health industry yesterday centered around insurers' aggressive and willful denial of claims from providers. This practice means providers -- rather than giving medical care, billing for it, and then getting paid -- have to spend lots of money, time, and hire extra staff to chase down reimbursement from insurance companies.
It means that insurance companies hire lots of staff for the specific purpose of denying claims submitted by doctors and hospitals, who have already treated patients.
It eventually means that some providers -- like Centinela hospital (in the story) go out of business.
"Insurers have found a very creative way of denying, delaying or slowing payments in a way that is having a real impact on patient care and some of our survival," said Von Crockett, Centinela's chief executive. "Every single doctor and hospital is writing off money they are legally owed but don't collect. It's an insane situation."
And just when you thought it couldn't really get any worse......
PR newsire reports that providers are also feeling them impacts of the newfangled Consumer Directed Health Plans on their bottom lines. With many consumer-directed health care plans, consumers are on the hook for more of their care. Premiums for these plans tend to be cheaper. In exchange, co-pays, co-insurance and deductibles are high. The study suggests that billing offices will need to revamp the way they do collections in order to get the money their owed.
Sadly, for consumers, it looks like we lose in all this. Insurance companies will continue to get their premium dollar. Providers will bone up on their collections savvy. And consumers will be chased into courthouse for collections.
As a Yankees fan from the Bronx, it's weird to see the Tampa Bay Rays in the World Series, with the second-lowest payroll in baseball, especially given the enormous mismatch between the money the teams spend.
In health care, there's also a mismatch between how much we spend, and the results.
Remarkably, a doctor today can get more data on the starting third baseman on his fantasy baseball team than on the effectiveness of life-and-death medical procedures. Studies have shown that most health care is not based on clinical studies of what works best and what does not — be it a test, treatment, drug or technology.
This is why we have fought so hard for better transparency, like in last session's AB2967(Lieber), so we have better data on the cost and quality of the care provided by California doctors and hospitals.
Let's be clear: some insurers inappropriately use "evidence-based" arguments to deny needed care and treatments (some treatments haven't had full study, but still work); some policymakers use the lack of correlation between costs and outcomes as an excuse to cut, not recognizing the significant consequences (after all, the As or Rays in the Series is the exception, not the rule.)
But there should be no debate that we need much better information about the care we receive, and that we pay for. We'll be back on this issue next season.
The San Francisco Chronicle today has an interesting story that essentially translates into this: healthy people = healthier economy.
Global microfinance leaders touched on something very basic. A person who is healthy can repay their loans and can't grow the economy in other ways. Duh. But not so Duh.
It sounds like a simple enough concept, but economic sectors don't often collide. A banker just wants to make sure that their money is repaid. But, as these leaders pointed out, a person has to worry about paying their child's hospital bill -- they're not going to invest in their business, which won't grow, which will make it harder to pay back the loan. This microfinance group mainly focuses on loans in poor countries. But the idea can obviously be applied here -- in the US.
A healthy child can pay attention in school, do well, go to college, graduate, get a job or open a business, earn money and spend money.
A healthy business owner, likewise, can grow a business -- or simply stay in business -- support some employees, earn money and spend money.
A chronically ill business owner could get sicker, dip into his business coffers to pay for medical care, and in turn decide to operate his/her business on a shoestring -- which means no employees.
The saddest case --and what happens too often, as in the case of my father's independent bookstore friend, a business owner could die. Then there would be no business, no employees, and no life.
The LA Times has been running an excellent series the past two days on the insurance industry.
Yesterday's piece was about the horrors of the individual insurance market, a place where many more people would end up if employer-based health coverage was to continue to erode -- as it has been -- and would be hastened if John McCain's health plan were put into place.
Today's installment is about insurance companies that also double as bankers, managing consumers' Health Savings Accounts - a very, very lucrative business and exactly the wrong way we want to go -- putting every patient in his/her own silo rather than spreading risk, as insurance is supposed to do.
* For family health coverage provided through the workplace in California, annual health insurance premiums in the 2000-2007 period rose from $6,227 to $12,194—an increase of $5,967, or 95.8 percent. * Between 2000 and 2007, the median earnings of California’s workers increased from $25,740 to $30,702—an increase of $4,962, or 19.3 percent.
As if you didn't know from your personal experience, rising insurance costs are vastly outpacing the take-home pay of workers. And what's worse, workers are paying more, and getting less. These premiums are not just costing more, but they are buying less, in terms of benefits. Workers are being asked to pay more, both in terms of share-of-premium, and in terms of out-of-pocket costs, such as co-payments and deductibles. As much as employers are feeling this increase, they are even passing a bigger percentage of the costs along to the worker.
One of the reporters asked if there was advice, but the big solutions to rising health care costs are not individual actions, but collective policy reforms. And that's the challenge for the next few years, at both the state and federal level.
If you are, find at least one person who may not be registered (for example, someone who recently turned 18, or moved, or just a politically disconnected friend), and make sure they are. Send them the link to the California Secretary of State's office: http://www.sos.ca.gov/elections/elections_vr.htm
Why does this matter for health care?
Key issues will be decided about the future of the health care system in the next few years, at the state and federal levels, and all citizens need to be involved in choosing a direction. California's debate on health reform has been hindered by the fact that the voting electorate differs from the actual population.
The Public Policy Institute of California has a report a couple of years back called "California's Exclusive Electorate," indicating "the likely voters who decide who's elected and the fate of the state's many ballot initiatives, but who do not represent the size, the makeup, or the preferences of the state's adult population."
That's why I'm stunned by the attacks on ACORN this political season for its voter registration effort, to bring over 1.3 million citizens around the country into the political process. In an effort that big, there's bound to be problems: applications not properly filled out (and state law appropriately requires even those to be turned in.) As impartial observers point out, there's no evidence that these errors translate to fraudulent or inappropriate voting. (After all, "Mickey Mouse" is not showing up at a polling place on Election Day.)
I can't claim any direct knowledge about any issues with ACORN's voter registration effort, but I know its incredibly important. And so while I can't say I know all their activities and policy positions, I know that ACORN, with their representation of low-income communities, is an important voice in health care. Many of their members are uninsured, underinsured, and otherwise exactly the folks that need to be part of the deliberations on health reform.
I am proud to have ACORN on the Health Access California board, as one of twenty-five member consumer and constituency organizations that direct our public policy agenda. In recent years, ACORN had increased their attention on health care issues, responding to their members. We have worked with them on the issue of prescription drug prices, medical debt, and particularly around hospital overcharging issues, with local campaigns around inappropriate billing practices of specific hospitals. They have been a key ally for coverage expansions and health care reform in the last few years, both at the state and federal level.
It's the word that single-payer opponents often use to scare people from supporting the idea.
In "those countries" with "socialized medicine,'' people have to "wait in line'' to see a doctor (kind of like we do here. Of course if our Timely Access to Care legislation from 2002 could actually ben enacted...ahem).
Also, in countries where the "government runs" things, you may not be able to get the care you need because a nameless, faceless bureaucrat will stand in your way. (Again, that's kind of like here in the US. But because we're #1, we have lots of choices when it comes to being denied care. A 'private insurer' can then deny you care. You can be uninsured and be unable to afford care. Or, if you have health coverage your private insurer can also retroactively cancel your coverage.)
In California, lawmakers have argued the same thing on many occasions. In one hearing, Assemblywoman Audra Strickland, a Moorpark Republican called universal healthcare a “Las Vegas buffet,’’ where “everyone eats for the same price; everyone waits in the same long lines. Some of those more sought after foods.... some people get them, some people don't.”
Then, rationing occurs, she explained at another hearing:
“Preferential treatment – that’s a big problem that happens when the government gets to decide things,’’ she said. For instance, a sports athlete with a torn rotator cuff could jump in line ahead an older person who had the same injury.
Opponents of universal healthcare, however, fail to see -- or acknowledge that the current system also rations -- those who can afford healthcare and "Cadillac coverage" get care. Those who can't don't -- and often suffer mightily. Rationing would become ever more pronounced under McCain's healthcare plan.
From the debate Wednesday night:
Now, 95 percent of the people in America will receive more money under my plan because they will receive not only their present benefits, which may be taxed, which will be taxed, but then you add $5,000 onto it, except for those people who have the gold-plated Cadillac insurance policies that have to do with cosmetic surgery and transplants and all of those kinds of things.
A kidney transplant, so that a person can live, is "Cadillac" coverage? Maternity benefits, so that a woman can receive prenatal care and have a healthy newborn is "Cadillac" coverage?
McCain and his supporters cloak his healthcare plan in patriotic ideas like "choice'' and the ability for Americans to "decide'' what's best for them and their families. The fundamental problem with this is, is that there is no choice. The market has already "chosen'' for us -- and that choice is profits over over people.
It wasn't a huge surprise that the Economic Policy Institute reported this week that employer-based coverage is continuing to erode. Since 2000, 3 million fewer workers are insured through work -- the place where 61 percent of Americans get their coverage.
For those Americans who are still lucky enough to get their coverage through work (19 million in California), is it any surprise that you're paying more? A new report released today by Families USA shows health premiums for workers rose five times (5) more quickly than earnings. Here's the Sacramento Bee's story on the report.
These reports, together, tell us that our foundation of employer-based insurance coverage is in trouble. Already, fewer Californians get their coverage through work as contrasted with the rest of the country (52.3% versus 61%). Fast-escalating premiums make it harder for both employer and employee to afford coverage, especially if the insurance products get worse and worse every year.
And if people are finding coverage through work unaffordable, wait until they hit the individual insurance market, where they would be responsible for 100% of the premium costs and not buying as part of a group that can leverage lower rates. Further erosion in job-based coverage just means more uninsured.
Meanwhile, in other health news. The LATimes reports on the United States' abysmal infant mortality rates. I can't seem to find the CDC report that the Times is referencing, but looking at the OECD numbers reflects our same sorry state. We spend the most of any industrialized country on health care (15.3% of our gross domestic product, and $6,700 per person), yet our infant mortality rates are high -- 6.9 deaths per 1,000 infants -- compared to Sweden, which has the lowest infant mortaliy and spends less than half what we do per capita.
All this leads to cheery comments written by the director of the Congressional Budget Office today -- Peter Orszag, a health reform champion.
Many observers have noted that addressing the problems in financial markets and the risks to the economy may displace health care reform on the policy agenda — and that may well be the case for some period of time. ...
Although it may not seem immediately relevant given our current difficulties, it will be crucial to address the nation’s looming fiscal gap — which is driven primarily by rising health care costs — as the economy eventually recovers from this current downturn.
Translation: Failure to keep health care costs in check will make things even worse.
When insured patients find themselves going to an emergency room or ER doctor that is not contracted with their health plan, there is sometimes a dispute between the provider and the insurer about what the payment should be. The problem is that the patient is then sometimes used as a pawn in these billing disputes. The patient, who pays their premiums and is doing everything right, gets the bills for the disputed--or whole--amount, which also gets sent to collections and court.
So patients have their credit and their financial future ruined. The last few weeks have proved the essential importance of credit in today's economy, and the practices of some providers have created a crisis for many California families.
As Lisa Girion at the Los Angeles Times reports, there is significant opposition from health care providers to these regulations. There's a real need to resolve these provider-insurer disputes, fairly. Health Access California and other consumer groups supported SB921(Perata), a compromise measure to help resolve these differences, but the Governor vetoed it.
The regulations focus on the appropriate role of the agency, which is consumer protection: making balance billing an unfair billing practice, subject to civil penalties and "cease-and-desist" court actions. Nevertheless, these regulations are a good first step... but more work is needed.
I meant to comment on this piece in the San Diego Union Tribune last week about testing that would show genetic predispositions to heart disease, cancer or diabetes. The hope of scientists and officials at Scripps Health System in San Diego is that consumers would change their eating/exercise habits if they knew they were at risk.
I understand the desire to get as much information as possible into consumers' hands about their health history so that they can be conscientious. What makes me uncomfortable about discussions about "individual responsibility" is that it takes out of the debate other social causes for health problems. It alarms me when discussion about healthy habits does not also include a more full-throated discussion about the environmental, geographical, socio-economic and cultural influences that affect a person's health.
Many lower income families live in neighborhoods where there are fewer stores stocked with fresh, healthy produce -- and those items are often too expensive. McDonald's and Taco Bell provide inexpensive meals with enough calories to nourish a family, though we all know its content is less than high quality and more like high fat. These families also live in neighborhoods where there are fewer parks available where children can safely play and get exercise. These children, because of their environment (living close to where pesticides are sprayed or an industrial area), are susceptible to asthma and diabetes.
An inspiring article, though, was Michael Pollan's (of Omnivore's Dilemma) New York Times Magazine piece about -- okay, food policy -- but it talks about it more holistically, and how we all (and our desire for cheap, abundant food) have played a role in the way our food is delivered now. We can change that now. We are all responsible and can be responsible for getting safe, fresh healthy foods to everyone.
On September 30, Governor Schwarzenegger, who supports John McCain for president, vetoed AB2, a measure to help shore up California’s high risk pool—even though high risk pools are a key concept in John McCain’s health proposal.
California’s high risk pool serves about between 7,000 and 9,000 people, a small fraction of the medically uninsurable population under the current system. Academic experts tell us that 3%-5% of the under-65 population is uninsurable while insurance company actuaries say the right range is more like 7%-10%. California currently has 2-2.5 million people in the individual market so that means that one rough estimate of the number of uninsurable Californians would be 200,000-300,000 people, literally twenty or thirty times as many as currently get coverage through California’s high risk pool, MRMIP.
We know the McCain plan would increase the number of people in the individual market substantially. The new estimates by the Economic Policy Institute say that McCain plan would double the number of people in the individual market in California, adding 2.5 million people. That means that the number of uninsurable Californians would climb to a half million or more. Where on earth are we going to get the money to subsidize coverage for these Californians? Budget deficit. Fiscal meltdown. Stock market tanking. We can barely find the money to help 9,000 medically uninsurable Californians buy coverage: how will we help fifty times that many?
Or maybe the McCain plan is actually what it seems—health coverage for the healthy and the rest of us are just out of luck.
And as for Governor Schwarzenegger’s plea that we should not fix the high risk pool absent comprehensive reform, we ask what reform plan is that? The plan of the presidential candidate he supports? Or the very different plan (or should we say, plans) he supported in 2007? As we look forward to 2009, both in California and nationally, we keep in mind the hundreds of thousands of Californians who cannot buy health insurance at any price.
Judging from some surprised E-mails that I have received, there are some needed corrections and clarifications to Dan Walters' recent Sacramento Bee column on health care policies and politics. He mentions "health-access advocates" but has never called anyone at our organization, so perhaps he's reporting third- or fourth-hand.
The biggest misrepresentation is his declaration of an "unspoken consensus is to wait to see what Congress and the next president, whoever he may be, can devise before taking up the Sacramento battle again with a new governor."
It's unspoken because it's untrue. There's lots of conversations about how to proceed at the state level, through bills, budget efforts, or ballot measures, and how to integrate state and federal efforts for reform. The political and policy landscape is changing, and we all need to adapt to it, but the planning is actively going on: the notion that any health stakeholders are in a "wait and see" is simply wrong.
Walters has been wrong before, having written several articles hostile to health reform over the last few years, much of the time declaring that that any health reform was doomed to be pre-empted by the federal ERISA law. He has stated that these reform proposals that included a required employer contribution to health coverage "illegal," that a previous court decision on ERISA was "a potentially fatal blow," and that elected leaders attempting reform were "in denial."
Yet last week, the Ninth Circuit Court of Appeals upheld the Healthy San Francisco plan which included just such a employer contribution component. This was predicted by many health reform supporters, but never fully acknowledged as a possibility by Walters in his reporting, until this article. And he characterizes the unanimous decision as "seemingly daring the Supreme Court to take up health care," rather than just ruling on the merits of the case. He doesn't acknowledge that the Supreme Court already had a chance to weigh in regarding an injunction of the SF law, and Justice Anthony Kennedy declined.
There's a lot of avenues to pursue health reform, at the local level, state, and federal level, and through various venues and strategies. But it's not an either/or proposition.
McCain's Plan IS a Tax Increase on the Middle Class
Friday, October 10, 2008
Ron Brownstein, a journalist who pays special attention to health policy and politics, writes today on the McCain plan. He says rightly that the erosion of risk sharing is one of the worst features of the plan—that it encourages younger, healthier workers to leave employment-based coverage for the individual market, thus destabilizing the more efficient risk pooling of employer coverage. Brownstein also rightly says that “the bedrock goal of Obama’s plan is to reinforce sharing of risk and cost between healthy and sick, young and old.”
But Brownstein says that the Obama’s campaign’s description of the McCain plan as the “largest middle-class tax increase in history” is just “flat wrong”. Usually Brownstein makes a lot of sense but this time it is Brownstein that is wrong.
The McCain plan would say that if you get health insurance on the job, you would have to pay income taxes on the value of what your employer contributes to your health insurance. And until a few days ago, the McCain folks seemed to be saying it would also be subject to payroll taxes like FICA (Social Security and Medicare taxes). It was only after Obama called this the largest middle class tax increase in history that the McCain folks clarified (or shifted) their position so that employee health benefits would only be subject to income taxes.
Brownstein cites the Tax Policy Center, another outfit we have a lot of respect for, to prove his point that the McCain plan is not a tax increase. Economists seem to be overlooking two key points:
First, Americans, especially those below median income, have faced wage stagnation in the last decade. The notion that somehow employers will make up the difference if health benefits are taxed is just not plausible to many real people given their actual experience in the real world of work. Economists assume that health benefits are just part of compensation and that if health benefit costs decline, wages will increase. That may be true for the upper end of the labor market but is it true for most of the middle class that has faced stagnating wages and declining benefits? Or will it be a new tax with no compensating increase in income?
Second, for many of us, a tax credit of $5,000 for a family is nowhere near enough to cover the cost of coverage. If the average job-based premium is now almost $13,000, there are lots of places in this country where health care costs are higher than average. And there are lots of people for whom premiums are higher than average---if you are over 40 or 45 or if you have health conditions like high blood pressure or asthma or diabetes or if you are overweight. In 45 states, insurers price premiums higher based on age and health status. The McCain plan not only does not fix that problem, it encourages insurers to do the worst version of that because it allows insurers to compete nationwide, sweeping aside whatever protections advocates have won in the various states.
Sen. Obama says that with one hand the McCain proposal gives you a tax credit but with the other, it imposes taxes on your health benefits. That is true. And what is also true is that many people will not come out ahead on the deal—and that is even before the implosion of employer-based coverage that not only Brownstein, but the US Chamber of Commerce and other business groups consider likely. posted by Beth Capell | Permalink | 3:41 PM
Big differences between them, and bigger impacts in California
HEALTH ACCESS CALIFORNIA ALERT Friday, October 10, 2008
HEALTH PLANS OF PRESIDENTIAL CANDIDATE WOULD HAVE SIGNIFICANT IMPACTS ON CALIFORNIANS' COVERAGE
* Under McCain Health Plan, Over 2.4 Million Californians Would Lose On-the-Job Health Benefits
* New reports reveal McCain's plan that would strip away consumer protections, raise taxes, and leave many California families to fend for themselves at mercy of insurers * New chart shows Obama’s framework similar to Nunez/Schwarzenegger proposal, with expansion of employer coverage, public programs, and insurer oversight
California, because of its specific demographics and policies, will be more acutely impacted by the health proposals of the two presidential candidates, according to new information released today by Health Access California, the statewide health care consumer advocacy coalition, and Health Care for America Now!, a national campaign to win quality, affordable health care for all Americans.
Risks of the McCain Plan:Health Access California and Health Care for America Now released two new reports from the Center for American Progress Action Fund and the Economic Policy Institute which find that 2.4 million Californians would lose employer-sponsored health insurance under the McCain health care plan. The reports conclude that McCain’s health care plan would accelerate the deterioration of employer-sponsored benefits by both removing current tax incentives and, at the same time, taxing employee benefits as if they were salary.
In California , Senator McCain’s plan would: * Threaten the coverage of over 17 million people in California who receive health benefits through work. The Economic Policy Institute projects as many as 2.4 million could lose their job-based coverage. McCain’s plan eliminates the employer health care tax benefits that enable many businesses, especially small businesses, to provide group insurance to their employees. * Put at special risk coverage for the 6.2 million non-elderly people in California struggling with diseases like cancer and diabetes who are now covered through their jobs. Under McCain’s plan, insurance companies would be free to “cherry pick” only those individuals for coverage who do not have costly health conditions and avoid state regulations that keep health care accessible and affordable. * Raise taxes on the health insurance benefits paid by millions of California families. A typical California family could pay almost $1,300 more in taxes by 2013 if McCain imposes both income and payroll taxes on their health coverage.
At least one in 13 people would lose his/her employer-sponsored health insurance benefits and be forced out into the private insurance market where premiums are more expensive and coverage is less comprehensive. Anyone with a pre-existing condition – as defined by the insurers themselves – could be denied coverage altogether.
Comparison with California Proposals: Some of the provisions of the plans of the two presidential candidates, Senator Barack Obama and Senator John McCain, have been extensively discussed in California . As indicated by a chart prepared by Health Access California, Senator Obama’s plan follows a very similar framework as AB x1 1, a plan negotiated between Speaker Nunez and Governor Schwarzenegger, and the plan’s antecedents in the legislature.
The provisions of Senator McCain’s plan has gotten less state-level attention, except for one bill, SB x1 16 by state Senator Tom McClintock, to allow insurers to sell across state-lines, and thus avoid state oversight and consumer protections.
California Consumer Impacts: In each of the three ways that consumers get coverage, the McCain and Obama plans have radically different strategies, each on with significantly different results:
* On Employer-Based Coverage: Just around half of Californians (nearly 18 million) have employer-based coverage, but Californians are less likely to get job-based benefits than in the rest of the country. · The McCain plan would tax health benefits offered by employers, and offer a tax credit instead for those on the, individual health projects. This would result in the 1.3 to 3.3 million Californians losing their health coverage through work, according to EPI. · Given the lower expectation of on-the-job benefits in California , there is fear that the state is reaching a “tipping point” in some industries, where if more leading employers drop coverage due to different tax incentives, that would force all competitors to follow. · The Obama plan would bolster on-the-job benefits by setting an as-yet-determined minimum requirement for employers to contribute to health care for their workers, and also provide financial assistance to small business, and new purchasing pool options for all employers. * On Public Programs: Under a third of Californians--over 10 million--have public program coverage: over 6.6 million low-income children, parents, seniors and people with disabilities through Medicaid (Medi-Cal in California ), and another remaining 4 million seniors and people with disabilities in Medicare. There is another 800,000 children in SCHIP (Healthy Families in California ). * The McCain campaign recently changed the health plan, saying it would require a $1.3 trillion cut to Medicaid and Medicare. (This was prompted by the McCain’s plan shift, in saying that the plan would eliminate only some, rather than all, of the tax deductions for employer-based care.) * Such a cut to Medicare and Medicaid would mean significant reductions in benefits or access to medical providers for these children, seniors, and people with disabilities. It also would force additional cuts at the state level. California has already made significant cuts to Medicaid due to the current budget crisis, and such a cut at the federal level would compound the budget problem. * The Obama plan would fund and expand programs like Medicaid and SCHIP: California would be first “in line” to take advantage of resources that might be available, especially since our state and county efforts already have more expansive eligibility. In short, public program expansions at the federal level will allow California to claim additional federal marching funds.
* On the Individual Insurance Market: Roughly 2 million Californians-- less than 10 percent—buy coverage as individuals, but it is a bigger share of the population than other states. As a result, Californians are more likely to be denied for “pre-existing conditions.” Unlike some states, California does not have “guaranteed issue” and in fact has had many cases of rescission, where patients are denied for coverage retroactively. For those who are denied, California has a small and underfunded high-risk pool that currently has a waiting list. In terms of benefits and other policies, California has stronger consumer protections compared to other states. * Senator McCain’s health care plan would expand the individual market, and more Californians would be at risk for being denied for “pre-existing conditions.” Senator McCain’s plan would ask patients who are denied to rely on the state’s “high-risk” pool, but the pool is inadequate for the existing population, much less a greatly expanded individual market. * Senator McCain’s plan would also strip away consumer protections by allowing insurers to sell across state lines, avoiding California ’s existing consumer protections. According to CAPAF, insurers could avoid over 40 benefit requirements and other state laws. These laws currently require insurance companies to cover benefits like breast cancer and cervical cancer screenings and to ensure other consumer protections, from fiscal solvency standards, to providing the opportunity for an independent medical review. California consumers who want a second opinion about the denial of a treatment might not be able to go to the California Department of Managed Health Care, as is their right now, but to the insurance commissioner of another state. * Senator Obama’s plan would institute additional insurance oversight and consumer protections, including “guaranteed issue,” and keep existing state protections, like independent medical review.
Health Care for America Now is a national grassroots campaign currently asking Members of Congress, “Which Side Are You On? – the side of quality, affordable health care for all or the side of leaving us alone to fend for ourselves in the bureaucratic, unregulated insurance market? HCAN’s Statement of Common Purpose includes 10 principles the campaign believes will lay the foundation for effective, comprehensive health care reform in 2009.
Health Access California (www.health-access.org) is the statewide health care consumer advocacy coalition, working for the goal of quality, affordable health care for all. Health Access California was the sponsor of the many HMO consumer protection bills passed in the past decade, including the creation of the Department of Managed Health Care and independent medical review. Health Access has also been actively involved in supporting numerous coverage expansion efforts, through bills and ballot measures. Health Access is a lead partner organization in California for the Health Care for America Now! campaign.
Health Care for America Now is made up of millions of individuals and more than 275 organizations nationwide. It’s steering committee includes ACORN, AFSCME, Americans United for Change, Campaign for America’s Future, Center for American Progress Action Fund, Center for Community Change, MoveOn.org, National Education Association, National Council of La Raza, National Women’s Law Center, Planned Parenthood, SEIU, UFCW, and USAction.
Health Care for America Now and Health Access California are both section 501(c)(4) issue advocacy organizations, HCAN and each of its members conducts and funds only activities appropriate to its tax and election law status. This statement was not funded or endorsed by HCAN’s 501(c)(3) members. ###
Several of the analyses of the Obama plan repeat the old canard that an obligation for employers to pay for health benefits for their employees, either by providing health coverage or by paying into a purchasing pool, are job killers. Joseph Antos, Gail Wilensky and Hanns Kuttner in a recent Health Affairs piece say, “Wages and employment would fall….The pay or play mandate, which is meant to help workers who do not have insurance gain coverage, could instead undermine their chances for economic success.” In a recent piece in the New England Journal of Medicine, Antos opines that the added cost of a pay-or-play mandate “would be covered by lowering wages or benefits or reducing employment.”
This is precisely the same argument that is made against the minimum wage in its various incarnations, including minimum wage increases and living wage ordinances. It is not true for the minimum wage. And it is not true for an employer obligation to pay for health benefits.
Moderate minimum wage increases are now widely recognized to have little or no effect on employment. Economists David Card and Alan Krueger who did the original studies on the impact of the minimum wage (and the further studies when many other economists tried to rip their research apart) found that the minimum wage increases had little or no impact on employment. Why? Low income workers spend what they make. And one of the places they spend that money is at fast food restaurants.
This should not be a surprise. It is why we have unemployment insurance: so when people are unemployed, they have some income so they can keep paying the rent and buying groceries. Unemployment insurance is one of the social insurance mechanisms that prevent recessions from turning into Great Depressions. That is why unemployment insurance was part of the original Social Security Act in 1935.
What about health care? The UC Berkeley Labor Center has done a series of pieces on the impact of employer mandates in various health reform proposals in California. A piece they did in July 2007 found modest positive economic impacts from both the health reform proposal by Governor Schwarzenegger and the competing measure, AB8 by then-Assembly Speaker Nunez and then-Senate President Pro Tem Perata. As economist Michael Reich observes in his foreword,
The authors find that the leading health reform proposals for California have been crafted in a manner that is not likely to generate adverse employment impacts. According to their findings, most firms will experience little or no net change in business operating costs after a short adjustment period. Consistent with the best research on the minimum wage, payroll and cost increases of these magnitudes are unlikely to reduce employment in California, while improving the health status of many Californians. Moreover, both health reform packages analyzed would boost productivity as workers take fewer sick days due to poor health and as workers are more able to work where they are most valuable, with their job mobility less hindered by health insurance concerns.
Just as with the minimum wage, thoughtfully designed employer obligations to pay for health benefits do not cost jobs—and in fact may have positive economic impacts.
We would postulate that the economic benefits go beyond those cited by Michael Reich. In the same way that unemployment insurance, Social Security and Medicare help to underpin economic security for millions of low and moderate income Americans and to contribute to the prosperity of the business community which depends so heavily on consumer spending, an obligation on employers to pay for health benefits may also help to contribute to economic prosperity. This is especially true when we look at low and moderate income working families, precisely those families whose wages have stagnated over the last decade.
Again, it is low and moderate income Californians (and Americans) who are mostly likely to face high health care costs, because they are more likely to be uninsured or underinsured---and providing affordable health benefits will increase their disposable income, helping to revitalize the economy. This is not fanciful: we report here on study after study showing that low and moderate income people suffer most from medical bills and medical debt problems. A recent study by the Commonwealth Fund found that more than half of all low and moderate income Americans (defined as incomes under $40,000 annually) had problems with medical bills or medical debt.
And it is low and moderate income workers that lack power in the labor market, as demonstrated both by the lower compensation they command and wage stagnation over the last decade. (Lower wages usually accompany less generous benefits: this is not perfectly so but generally true.) Providing these lower income workers affordable health benefits and minimizing problems with medical bills and medical debt so that they have adequate access to care, means they would have more money to spend on other things. And live healthier and longer.
Is there a benefit to our economy from providing affordable health benefits to low and moderate income working families? Do reform proposals, like that by Obama or those we supported in California, have an economic impact similar to unemployment insurance, Social Security and Medicare, the social insurance programs which help to underpin our economy? Particularly when we look at lower income working families, we ask whether adequate, affordable health benefits would help them to have a foundation of income security, the kind of income security that helped to power the American economy for so many decades and that today is lacking for so many.
Lots of stories today about how California's budget has slid out of balance -- already -- just weeks after it was signed after an 81-day impasse. The state's income is even *lower* than expected ($1.1 billion) opening up a $3 billion to $5 billion deficit (already).
Frankly -- I'm shocked that anyone is shocked.
What did anyone expect from a budget that only balanced if you cocked your head to the side and squinted at the numbers. Only one very modest change to the yacht tax -- amounting to 0.17% of the revenue solutions -- is a permanent revenue source. The rest of the nearly $10 billion in revenues is made up of borrowing or one-time increases, the benefits of which are quickly reversed in subsequent years.
Meanwhile, children, seniors and others relying on state services bear the highest burdens in our continuing budget problems, experiencing longer waiting lists for medical care -- if they are lucky enough to get *access* to medical care.
What's scary, though, is the governor is already talking about more cuts. Why aren't we talking about a real solution... Or maybe he secretly likes having to re-live negotiations with the Legislature every two weeks.
After this week, it's clear that health care is a presidential-level issue. We have everything from television attack ads to key Paul Krugman op-eds on the health proposals. It got lots of conversation in the presidential debate tonight.
In answered to Tom Brokaw's question, I would say that health care should be a right (as Obama answered, and his plan moves in that direction), and a responsibility (as McCain an answered, but whose plan shifts responsbility to the individual, rather than employers and others). Unfortunately, right now, to use other terms from the debate, health care is currently a privilege enjoyed by a shrinking majority, and a commodity that is costing us dearly.
Merrill Goozner at GoozNews asks if this is the first time a presidential candidate fully embraced the notion of health care as a right for every American. Regardless, it's certainly progress. posted by Anthony Wright | Permalink | 12:16 AM
Prez debate on health care
Tuesday, October 07, 2008
Obama just killed McCain on the health care question in the presidential debate and shows his mastery of the issue over McCain.
Obama explained why we can't go across state lines -- because insurers could shop around for a juridiction that did not guarantee cancer screenings or other basic health care.
Obama explained why government needs to get involved to go after insurers whose abusive business models leave people with hundreds of thousands in medical debt, and begging for treatment on their deathbeds.
And most importantly, Obama insisted that health care was a right -- not, as McCain said, a responsibility. posted by Hanh Kim Quach | Permalink | 7:00 PM
It's ALL bad....
I missed this story yesterday, but the Wall Street Journal reported that we've got it all wrong -- McCain's plan wouldn't tax the health care benefits we get from our jobs. Wouldn't think about it! And in fact, Obama is lying about it!
(By the way: McCain didn't seem to contest the idea that he was taxing employer-sponsored coverage when it was brought up by others, such as the Commonwealth Fund in their January 2008 analysis, this story in the New York Times from May 2008, or this description of his plan from his own website from February 2008, (which I handily printed out at the time, made into a pdf and highlighted for relevant comparisons). I noticed on his current website, he actually uses slightly different phraseology so he doesn't mention the 'bias toward employer-sponsored health insurance' that he previously references.)
Here's a quick summary:
McCain's health care plan is based on the idea that individuals should have more "choices" when choosing their health insurance, so he gives everyone a $2,500 tax credit ($5,000 for families). That way, people can "choose'' which plans work best, thus "fostering competition and innovation.'' But analyses have revealed that the tax credits would cost $3.6 billion, after he claimed it wouldn't cost the government anything at all (leading many to surmise that the money came from the tax he would impose on employer-sponsored coverage). Forward to this past week, when Obama has begun hitting hard with ads like this against McCain's health plan, and that makes him really mad. So that's what leads to his policy director saying McCain would not tax the middle class. Instead -- McCain's campaign says it wants to target and reduce Medicare (and the 41 million seniors on it) and Medicaid (with its 60 million enrollees).
Is that supposed to make it better?
So basically, rather than tax middle-class Americans -- we're weakening the system that the parents of working middle class Americans rely on? On top of that, we're weakening the safety net that millions of children, disabled, seniors also rely on.
I just finished watching Obama's half-hour speech on health care delivered this past weekend in Virginia. (I've tried to embed, but if that doesn't work, here's the link: http://www.youtube.com/watch?v=g9PIN03qGjg)
What struck me about his speech is two things about how he framed the McCain plan. First, there's the anticipated connection to higher income taxes -- because McCain's plan would essentially tax as income the amount employers pay for your health care.
But beyond that, Obama also links to that the notion that it'll be harder to keep the insurance that you have already. The idea that people would lose what they have scares the bejeezus out of them. But it's true. McCain's plan would be a disincentive for employers and some employees to take up employer-sponsored healthcare. The result is as many as 20 million Americans who currently have insurance would lose it.
In the long run, this court decision trumps all the unfortunate vetoes made in the past week in importance, in terms of the boost that the decision provides to state health reform around the country. It was a tough week here in California, but the court decisions makes it easier to do reform in Sacramento and around the country, and that's a positive outcome amidst the negativity. So the issue for state health reform refocuses on being able to pass a proposal, rather than to defend it in court.
For the record, Obama's plan does NOT mandate health coverage, as Gov. Palin suggested last night. That was the big "difference'' between his plan and the Clinton plan.
Also, McCain's plan would leave an additional 20 million uninsured, not 5 million as Gwen Ifill had suggested. Biden later corrected this point. It's significant because -- in context -- it would result in a 150% increase in the uninsured.
That's allI can remember, at this very moment, that annoyed me (on health care specifically)....I guess ....other than the fact that Palin didn't answer the question about why the McCain health care plan would increase taxes on the middle class.
Health care, according to the New York Times, remains a bright spot in the economy producing 17,000 jobs in September.
Too bad we just cut $1.1 billion out of California's health care budget -- about half of those dollars were federal dollars that will now go to other states. The cut will mean a loss of nearly 11,000 jobs. It will also mean a loss of $485 million in income for families that work in the health care sector, which means they won't be buying couches, or pizza and will barely be able to fill up their tanks. It means an additional loss of $1.3 billion for California's economy because families won't be spending more.
Ezra Klein at The American Prospect said "Joe Biden just offered the most lucid and concise demolition of McCain's health care plan that I've heard. He hit the taxation of employer benefits, the fact that 20 million would lose their health coverage, the failures of the individual market, and all the rest. It was [beautifully] put."
Marie Cocco at the Washington Post, perhaps watching a different debate than Ezra, said that "Biden countered with a convoluted explanation of how that $5,000 wouldn’t be enough to purchase what is now a policy costing about $12,000, and which is subsidized with tax breaks for employers. That’s about as far as it went, and it’s not nearly far enough. "
Cocco continued,"In fact, McCain’s health insurance proposal would eliminate tax benefits employers now get for offering health insurance to their workers. This would effectively end the work-based health insurance system. Families would be left to purchase policies on their own, those who are sick would face much higher premiums, and the number of uninsured would rise, rather than fall, according to independent analyses."
Merrill Goozner at GoozNews goes deeper into the substance of the debate, trying to take seriously aspects of the McCain plan--perhaps more seriously than McCain seems to take them.
Some make a case that the tax deduction for employer-based benefits can be better structured to be more efficient and equitable. But in the current system, removing this tax benefit would be a takeaway for both employers and employees, and give a significant push for at least some employers to drop coverage of their workers.
What workers would get in return is nothing close: a tax break that may or may not be of a similar dollar amount, but almost certainly not of the same value. For those workers swtiched from the employer-based coverage to the individual market, they not only lose the employer contribution, but the efficiency and bargaining power of group purchasing. Even with the same dollar amount in tax benefit, whatever they buy in the individual market will be a much more scaled back, less valuable plan, on average.
And for some with "pre-existing conditions," they lose the ability to get insurance in the first place. McCain's policy people said he would boost state high-risk pools, like California's MRMIP. As we said with the recent veto of AB2 here in California, such efforts are deserving but too small and inadequate as a fix for the problem... and by shifting the tax burden to shift people out of group coverage in the individual market, the plan actually makes the problem worse.
It's not just a tax increase, as the commentators indicate... It's a tax increase that leads to a further unravelling of our health system.
What next year look like? I don't know. We're still reeling from this year's bad news, on bills and budget. And a lot will depend on the elections, at both the state and federal level. Even after a bad year, there's reasons for optimism.
Health Access will be having our 20th Anniversary Celebration on November 20th at the Sacramento Convention Center, and in addition to a reception, we'll have an afternoon symposium about the politics and prospects for health reforms in 2009-10. Put it in your calendars!
Why the ERISA Ruling in San Francisco is a Big Deal
The ruling on the San Francisco health care ordinance is important for several reasons: first, it clearly dismisses the arguments of the fast food industry and the Chamber of Commerce that the employer requirement violates ERISA.
Second, the ruling takes head on the decision by the Second Circuit Court on Maryland (known as RILA after the Retail Industry Leaders Association that filed that case). The Ninth Circuit says that the other court demonstrated that Wal-Mart was the only employer required to change their behavior as a result of that law and that the Maryland law did not give Wal-Mart (or any employer) a genuine alternative for providing health benefits for workers. In contrast, the San Francisco health plan is a real alternative for employers (and their employees). An employer that is not meeting the requirements of the SF ordinance can choose to provide health benefits to more employees—or they can keep doing what they were doing and pay into the City plan which their uninsured employees can access. What is critical here is that the City plan, the Healthy San Francisco Plan, provides a real choice by offering health care for low and moderate income San Franciscans, including basic services such as physician and hospital care with only modest out of pocket costs.
Third, the San Francisco ordinance is a per-worker per-hour obligation (now $1.17 per hour or $1.76 per hour, depending on employer size and non-profit or for-profit tax status). This means that the San Francisco ordinance creates the equivalent of a minimum wage for health benefits: employers must spend a specified minimum on health benefits for each worker. (There are of course some exemptions and caveats, as there are for the minimum wage.) It is no surprise that the same elements in the business community that routinely oppose minimum wage increases and living wage ordinances have led the fights, both political and legal, against an obligation for employers to contribute to health benefits.
Yet economic research has demonstrated that moderate increases in the minimum wage actually stimulate the economy because low wage workers spend what they make: indeed the original micro-economic case study by Card and Krueger found that employment in fast food restaurants increased, apparently because low wage workers and their families were able to spend more at fast food restaurants! The same thing applies to health benefits: providing low and moderate income working families affordable health benefits with reasonable out of pocket costs gives those families more disposable income to spend on other things—though as health people, we recommend more fruits and vegetables rather than fast food!
Over the last several years, the UC Berkeley Labor Center has done several research pieces that estimate the impact on businesses and the economy of various reform proposals: these have consistently found that a thoughtfully designed employer obligation is not a job killer. Instead, in analyzing AB8 (Nunez/Perata) and the Governor’s proposal, in July, 2007, Jacobs et al found a net positive economic impact. More on this to follow.
The Commonwealth Fund today released a report showing that Obama's health care plan would help more uninsured. Way more. Like 17 TIMES more uninsured covered at the end of 10 years. (34 million versus 2 million)
I think my favorite part is this chart explaining the key differences between the plans. "Aims to cover everyone: Obama -- Goal; McCain -- Not a Goal."
As we survey the carnage from the vetoes of the past few days, I want to highlight AB2(Dymally), a top priority for Health Access California, AARP, and many other consumer groups.
Must has been made of the rescission issue this year, where several thousand people over the past few years have been retroactively denied for coverage for "pre-existing conditions" that they may have not disclosed on their applications.
But many more are denied by insurance companies for "pre-existing conditions" up front, at the time of application. They are not eligible for public programs or group coverage through their employer, and no insurer will take them, for any price.
Uninsured and uninsurable, they have no place left to go. California has MRMIP, which gives them the privilege of paying above-market premiums for coverage that is capped at $75,000. Even though these patients are paying very expensive premiums, they still need a subsidy, and MRMIP only has a small amount of funding, enough to include only 7,100. The program has never been advertised, and probably doesn't begin to meet the need. But even so, there's now a 600+ person waiting list.
No one thought AB2(Dymally) would have solved the problem, but it would help: it basically would have put a small, less-than-a-dollar fee per-subscriber on health plans in the individual market (the place where these denials happen), in order to better fund MRMIP, cover those on the waiting list, and lift the $75,000 cap that makes the coverage less than adequate for a less-than-healthy population.
The need is much greater. Passage of AB2 would not have, in any way, shape or form, removed the momentum or urgency for broader health reform, one that included guaranteed issue for all insurance products, increased group coverage, public program expansions, a universal publicly financed health program, and/or a combination thereof. AB2 was too small, too inadequate a solution.
But it would have helped those 600 people who are willing to pay, but still have no place to turn for coverage, and as a result will live sicker, die younger, and be one emergency away from financial ruin. And many more in the next few years, as we work for a broader, better fix.
Instead, the Governor turned his back on those patients, and many of his former allies on health reform.
This is John McCain on taxpayer-funded health care
Sen. John McCain met with the Des Moines Register's editorial board this week and had this to say about health care. A Register editorial board writer asked whether he had always been covered, in his adult life, by taxpayer-funded health coverage, whether as a veteran, Congressman or senior over 65.
"You know that's an interesting statement, isn't it? Um, so, and I have never been an astronaut, but I think I know the challenges of space. And I have never done a lot of things in my life that I think I am familiar with. I've always been a free enterprise person who thinks that families make the best choices for themselves and their future. That's a dramatically different philosophy than my Democrat friends, in my view. who think that government is the answer. Sen. Obama wants to create a huge health care bureaucracy for America. We've seen that movie before. So the answer is that most of my life, in serving my country I have had health care. I did go a period of time where the health care wasn't very good."
I take particular umbrage to this part: "I've always been a free enterprise person who thinks that families make the best choices for themselves and their future."
McCain's health care plan would provide refundable tax credits for individuals or families to buy insurance, but also count as income what a family's employer pays for their insurance. Taxing what employers pay for health insurance would actively discourage health insurance through work.
Job-based insurance is an important part of our current system, extending coverage to 61% of Americans. Job-based coverage allows workers to join an insurance pool, which is their employer. Employers can leverage lower rates, unlike a person out on their own in the insurance market.
In the individual insurance market -- which is where Americans will be forced to hunt for coverage if their employer shirks that duty -- consumers choices will be:
expensive comprehensive coverage
slightly less expensive coverage that leaves my family exposed should anything happen
nothing at all.
That's not a real choice. Especially in the world of insurance where anything goes -- where not everyone can be assured that they'd be able to get coverage, somehow, or that the coverage is actually meaningful (like covering doctors visits, prescription drugs, hospital visits, cancer screenings -- basic health care.)
Hasn't this economic meltdown taught him anything?
GOVERNOR VETOES MANY HEALTH CONSUMER BILLS * Single-payer, medical loss ratio, high-risk pool, balance billing, anti-rescission bills vetoed * Benefit bills (maternity, durable medical equipment and mental health parity) also rejected * A few bills signed, on balance billing, broker accountability
Click for What's New on the Health Access WeBlog: More on Health Bill Bloodbath of Vetoes; Court Victory on Healthy San Francisco Examined; Going Backwards on Health Reform; Hospital Infections; The Governor's Health Care Legacy; Revisiting Prop 56; McCain's Mistakes: Individual Market Mayhem; Regulating the Insurance Industry Like the Banking Industry?; The Risks of Reforms of the Presidential Candidates; Line-Item Vetoes; Governor Makes a Bad Budget Worse; Budget Back-and-Forth; and More...
After a self-imposed delay dealing with the historically late state budget, Gov. Arnold Schwarzenegger got down to business signing and vetoing with abandon in the past week, to meet the deadline of midnight of September 30th. The Governor signed 771 bills and vetoed 415 bills, a historically high percentage.
After a tough budget fight, which will result in more than 250,000 children without health care coverage and another delay in a discount prescription drug program for the uninsured, health advocates were dealt more disappointing blows on the legislative front. The governor vetoed a number of consumer protection bills – in some cases citing his opposition to any piecemeal approach and in other cases citing costs.
The impacts of these vetoes will be felt by all California health consumers, insured and uninsured. Around one thousand Californians, denied coverage by insurers, will continue to sit uninsured and uninsurable, on a waiting list for the state's "high risk" pool--and those with such coverage will continue to be at risk of bumping up against a low $75,000/year cap on services. Insurers could continue to retroactively cancel consumers’ coverage when they deem it is necessary, without review. Insurers will be able to continue spending more of their premium dollars administration and profit, rather than on health services for consumers. And emergency room patients are at more risk of being balanced billed, with consequences for their credit and their financial future.
Below is a list of bills that Health Access California supported and the governor’s final action:
HIGH RISK POOL
Vetoed * AB 2 (Dymally) HIGH-RISK POOL: Would have reformed the Managed Risk Medical Insurance Program (MRMIP), which provides coverage for “un-insureables” who have “pre-existing conditions.’’ Efforts would make the high risk pool more affordable and available and eliminate the annual $75,000 cap on benefits.
Signed * SB 1379 (Ducheny) USE OF INSURER PENALTIES: Would use some of the fines levied on insurers for improper rescissions to subsidize MRMIP and repay loans for physicians working in underserved areas.
Signed: * AB 1150 (Lieu) BONUSES: Would outlaw the industry practice of paying bonuses to insurance company employees when they rescind policies, for setting targets for rescinded policies and/or setting financial goals based on savings on health care claims. * AB 2569 (De Leon) BROKER ACCOUNTABILITY AND FAMILY COVERAGE AFTER RESCISSION: Requires 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.
Vetoed: * AB 1945 (De La Torre) INDEPENDENT REVIEW: Would establish 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.
OTHER CONSUMER PROTECTIONS
Signed * AB 2842 (Berg) UNFAIR SOLICITATIONS: Would protect Californians from insurance agents trying to sell them private Medicare plans through cold calls and bait-and-switch tactics.
Vetoed * SB 1633 (Kuehl) DENTAL CREDIT CARDS: 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.
Signed * AB 2400 (Price) HOSPITAL CLOSURES: Would require public notice before closing a hospital.
Vetoed * AB 2697 (Huffman) BOUTIQUE HOSPITALS: Would require so-called “boutique hospitals’’ to asses their impact on a community’s health system annually, specifically whether they siphon doctors, workers, providers from hospitals caring for less affluent populations.
Signed * AB 1203 (Salas) EMERGENCY ROOM BILLS: Would prevent emergency departments – which do not have a contract with a patient’s insurance company -- from directly billing the patient for care administered after the patient is stabilized, requiring the hospital to seek payment directly from insurers.
Vetoed * SB 981 (Perata) ER DOCTOR BILLS: 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.
Vetoed * AB 1887 (Beall) MENTAL HEALTH PARITY: Would require health plans to provide coverage for all diagnosable mental illnesses * AB 1962 (De La Torre) MATERNITY COVERAGE: Would require all individual insurance policies to cover maternity services. * SB 1198 (Kuehl) DURABLE MEDICAL EQUIPMENT: Would require group health plans and insurers to offer coverage for durable medical equipment, such as wheelchairs and shower seats.
HEALTH COVERAGE AND REFORMS
Signed * SB 1168 (Runner) DEPENDENT CARE: 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.
Vetoed * SB 1440 (Kuehl) CAPPING ADMINISTRATION AND PROFIT: Would set a minimum medical loss ratio – requiring every insurer to spend at least 85 percent of premiums on patient care. * SB 973 (Simitian) PUBLIC INSURER: Would create a statewide public insurer, connecting existing regional, county-based health care plans, to compete with private health care plans and provide consumers more affordable coverage choices. * SB 840 (Kuehl) SINGLE PAYER: Would establish a process to create a single-payer health care system in California that would enable all residents to have health coverage.