The "Premium Bands" in health reform debate

Last Friday, the Baucus (Senate Finance) Committee debated the large variation in premiums that health plans participating in the health insurance exchanges could charge based on age. (Thanks to Michael G who alerted me to this.) The bill currently allows the health plan's premium to vary by a ratio of 4 to 1 between the youngest and the oldest. That's a reduction from the 5 to 1 in the original proposal. (So, for example, if a 25-year old is charged $2000 per year, the 64-year-old would be charged $8000 in premium.) I've already argued (in my Sept 15 post) that this high ratio is not good.
On Friday, Sen. Kerry introduced an amendment to reduce the maximum ratio to 2-1. Both Kerry and Wyden were eloquent about the issue. (If you're a health policy junky, you can hear the entire hearing on C-span, Friday 28).
Kerry ultimately withdrew his amendment, but he promised that it would come up later in the final debate on the Senate Floor. We should watch this issue. The fairness of health reform rests on three things: the premium subsidies for lower-income people; the size of the penalty for those who refuse to buy insurance; and the extent of age-rating variation allowed. So, this is an important aspect of any plan that's put forward.

Who says Canada's health system is better?

My friend George S, for one. Of course, the last time George lived in Canada he was young-- I won't say how many years ago that was, but twern't yesterday. George believes in a single-payer system, and though he is otherwise the brightest and wisest, I can't seem to get through to him on this issue. He just loves the health care he received from the province of Ontario. T.R. Reid, who just authored a book on health care systems around the world, seems to agree with George. He must be young, too! To see & hear to his lecture on how bad US health care is and how good Canada is, click here.
Now comes an article in the LA Times ("In Canada...") about the problems that Canadians have in getting access to care in Canada. At issue is whether Canadian physicians can offer care outside the province-run health care system. The article gives examples of long wait times for such things as hip replacements (ooh, that one hits too close to home) or MRIs in British Columbia.
True to my research roots, I checked this out with friend Maria, who lives in BC and knows a lot about the health care system there. "Is this for real?" I asked via email? Here's her answer:

• "There are significant waits here for elective surgery and the situation with imaging is really quite bad. Interestingly, there is a private system for MRI's, so if you don't want to wait up to a year for one, you can legally get one privately (at about $800). Some people also opt for private cataract surgeries and this is done somehow legally. The current government in BC is "Liberal" but is curbing services in the face of budget deficits.

As a true Canadian, Maria remains optimistic and trusting:

• "Efforts are being made to reduce these wait times and despite the system's shortcomings, it is in my humble opinion a better one than exists in the US."

So, next time George wants to argue with me about single payer, I'm prepared with facts that will matter to him now that he's no longer one of those "young invincibles."

Baucus Bill Changes as of Sept 22- new summary

Here's a link to the summary of the Revised Chairman's Mark for Senator Baucus' Finance Committee Bill. Over 500 amendments have been submitted. Those are beyond me to keep up with, but reading the Summary of how Baucus has changed things so far should help us keep track of where we are on the "affordability" issue. And, we should be explaining to people how very de-stabilizing will be the very big range of variation in premiums (by age and region) allowed in this bill. It simply won't work if older (55-64) people can't afford health insurance. The young NEED to subsidize the older to some extent. Furthermore, if Wyden's idea that the health exchanges should gradually replace employer sponsored health insurance, then American industry will be more competitive & the young would have more job opportunities and better wages. Without a reduction in the premium ratios, the whole scheme won't work, and the benefits to the young in the form of jobs won't come about either!

Cash for Clunkers cost us (taxpayers) $2000/car

Here's a great AND READABLE article in an electronic economics journal--The Economist's Voice--about the net costs to our society of the cash-for-clunkers program. By two University of Delaware economists. Net, it cost us about $1 billion extra...small change? One quote from this article is worth the whole thing: "Concentrated benefits create vocal advocates while diffused costs produce silent apathetic opponents."

Good news on H1N1 Vaccine Front-No adjuvant

I've been wondering what the fast-track approval of H1N1 vaccines would mean for vaccine safety. Today, Andrew Pollack's article in the NY Times, "Benefit and Doubt in Vaccine Addititve," assured me that USA isn't planning to approve any vaccines with adjuvants this go-round. That means the safety concerns associated with fast-tracking the approval aren't an issue. Only question now is whether the vaccine will arrive before the flu itself does.

An amendment to Baucus bill worth considering..

Sen. Ron Wyden (D-Oregon) wrote a great piece in today's NY Times arguing for a change in the Baucus bill. It would go a long way toward making health insurance work for everyone, and putting us all on an equal footing when it comes to having access to coverage.
The Baucus bill is pretty good, except for the wide variation in premiums that would be allowed on the basis of age. See my previous post for a description of the problems there. Wyden's amendment wouldn't work if such wide deviations survive in the Baucus bill, because only the young would leave employer plans for the Health Exchange, and companies would find themselves paying more for their own plans. They would soon dump their own plans, leaving older workers to buy on the exchange and pay high premiums while getting only an average subsidy from the employer. (Employer plans do NOT vary benefits by age of worker, so they would not give higher subsidies to older workers trying to buy a plan in the health exchange.

The Baucus Bill isn't that bad.

Here is the link to the Senate Finance Committee's "Chairman's Mark", released yesterday and supposedly the starting point for the compromise bill that will be acceptable to a wider range of congress.
All in all, I think it is a good framework for reform, except for a couple of things. The most important problem is that it allows private plans to charge very different amounts to different populations of people. If you're, say, 60-65 years old (too young for Medicare and too old to train for a new lucrative career), you'll have to pay a LOT for health care coverage (5 times more than for younger people). Say you're a single person 60 years of age making $50K a year. You'd be excused from the requirement of either having to buy insurance or pay a fine to IRS only if the lowest premium available to you was more than $5000. (You wouldn't be eligible for a tax credit to help defray the cost, because you'd be too rich.)
That's simply too much for most people I know, and because the 60-65 year olds will shoulder the greatest premiums, it basically says fuggedabout relief. You'll just be penalized if you don't buy coverage, and you still won't be able to afford coverage.
Let's get real. We need to provide a fair insurance system for people who can't get it through the workplace. Those same people must have incentives to be frugal about how they use their covered care. A system of COMPETING regulated health plans offering benefits with a standardized value is the best way to change the health care system to be more efficient in the delivery of care. Nothing is ever perfect, but consumers can vote with their feet by changing plans when they find one or the other not meeting their needs.
I started working on health care issues in 1971. Over the years, I would ask physicians, nurses, and other health care professionals with whom I worked on committees and panels to estimate, off the top of their heads, what percent of health care costs is wasted. It varied, but the most frequent response throughout the years was 40%. (20% also was suggested a lot.) And, it didn't get any lower as I got older.
Right now the system isn't organized to capture those savings. As patients, we all know the problems. Duplicative tests, doctors not communicating, incentives to test and prescribe too much, etc., etc. To change things in the culture of medicine, you need to change the organization of medical care. My two years working at the Mayo Clinic in Minnesota in the mid 1990's taught me that medical culture is very important, and that the organization needs to have incentives to make their practitioners change behavior.
Mayo was organized better than any system I've ever seen. They were most efficient in the conduct of individual services (xrays, lab tests, visits, etc), but they provided a very intensive set of services. Mayo is still paid largely on a fee-for-service basis. Imagine the innovation that would be forthcoming if the majority of its patients signed up as HMO members in the "Mayo Clinic HMO." Mayo would be a leader in deciding if and when services were justified on medical grounds (let alone costs). Under a competing system, Mayo might have incentives to build its HMO into an offering for most people in southern Minnesota.
So, we need the Baucus framework, with some tweaks, but we need to have the young subsidize the old (young-old, non-Medicare). The young will be old someday too. Keeping the young in the pool with the old will keep premiums more affordable to those most vulnerable. The 50+ crowd who start succumbing to chronic and debilitating disease.
If you agree or not, you can find out how to contact your congressman or senator in my recent post, How to Contact Your Congressman or Senator. They need to hear from you. Here's a good news article that shows how important your voice can be on this particular issue.

Does washing hands help stave off flu?

Here's an interesting Newsweek article that suggests hand washing isn't likely to be effective in preventing the spread of flu. Won't hurt, experts say, but it could make people -- especially kids -- complacent, when it's transmitted through the air. That Elmo trick of sneezing and coughing into your elbow seems to be a better tactic.

Who are the Uninsured?

The Institute of Medicine published America's Uninsured Crisis early this year with the most informative table I've seen on just who are the people who are uninusred in the USA. Table has demographic and income distribution data. I didn't know, for example, that immigrants (legal + illegal) make up 20% of the uninsured population. No breakdown between them. Also, the number of illegal immigrants may be too low, because the data are based on a sample, and illegal immigrants may be less inclined to respond.
Two ways to look at this: Way 1: OMG, we could end up paying a lot to insure illegal immigrants (and encourage more to come) if we're not careful. Way 2: OMG, health reform won't help a substantial portion of our hardest working and most vulnerable residents. I'm a 2nd way kind of gal, but I can see the arguments of the 1st way folks.

The Senate Finance Committee's Health Reform Plan

This is the "Baucus Committee", which is generally more conservative than the Senate HELP Committee (Kennedy, Dodd & Harkin). The SFC's bill hasn't been drafted fully, but last week Sen. Baucus released an 18-page summary of its provisions so far. I relented from my new "kill-no-trees...create-no-paper-waste" policy and actually printed a copy and then actually read the thing.
Here are some things to worry about in this bill (and why):

• Insurance market reforms - (p2-3) - Although plans would have to refrain from discriminating against pre-existing conditions & must eliminate lifetime limits on coverage, they could vary premiums by age group, up to a ratio of 5-to-1! That's pretty substantial for the 50+ crowd who are likely to need the most care. It's basically saying that each age-group of uninsured will subsidize itself. No transfer from the young to the old. It would not provide real relief on premiums for the older laid-off crowd that can't change careers fast. Oh, and by the way, plans could offer a super-cheap policy for the "young invincibles" who wanted only catastrophic coverage, thereby siphoning off the lowest risk segment of the population from the general market. End result? VERY HIGH PREMIUMS for older uninsured people. Makes the idea of "affordability" laughable for anyone who isn't young and healthy or near-poor (see below).


• Benefit options- (p3) - Oops! First I got this wrong. I thought that the summary was saying that Plans could keep 35% of premium collections for their own expenses & profits. What they really meant was that each plan's benefit would have to limit patients' out-of-pocket expenses to 35% of total costs (on average across enrollees). That's much better. So, I'm not worried about the plan options they're talking about.


• Health Insurance Exchanges - these would be set up and run by the states, instead of a Federal bureaucracy. Excuse me, but I'm from New Jersey. (Enough said?) In all my years working in Washington near or in the Federal workforce I've never seen the incompetence, waste and corruption that I've followed in my home state. (Well, maybe in my first years as an intern in a dying federal agency.) It's a bad idea in this case not to have the regional markets organized by a central commission. There, instead of 50 state bureaucracies reviewing insurance offerings for their fine print, you'd have just one. Regions would be distinct, but the expertise to regulate the markets would be centralized (like Medicare).


• Medicaid - (p. 7-9) This section is unclear, but it appears that people between 100% and 133% of poverty will be able to choose between Medicaid and the Health Insurance Exchange. That's good. And, instead of completely federalizing the funding for that newly eligible group (as in the House bills), States would have to share in the cost. At least I BELIEVE that's what the section says. Read it for yourself. Making States share in the cost of providing care for Medicaid is a good thing, since they actually administer the programs. Of course, Governors hate this because they don't have enough money right now, and how would they come up with new money? The 55/45 split between Washington and States called for in the proposal could be altered so that federal taxpayers pay more, but States should have some skin in the game if Medicaid is going to be covering these people. And giving working people the option to join the exchanges (with subsidies) is a good thing. Who wants to be in Medicaid? Nobody that I know, rich or poor, unless there is no other option.


• Subsidies to Low income individuals (p 3-4) - Up to 400% of the poverty line, you'd get a refundable tax credit (i.e., whether or not you owe taxes). According to the Institute of Medicine, that's about 80% of the population of uninsured people. For example, at 400% of poverty, your premium payment would be capped at 13% of your income. For a family of 4, with a household income of $88K, (400% of poverty) that would mean a cap of $11K. Gov't would give tax credit for the rest. At least I think that's how it would work. Read it for yourself and let me know if I've got it wrong. jwagner@bethesda20817.net. Does that sound affordable?


• Revenue Provisions (p. 17) - I love the new tax on employers with high-cost health plans. The tax would ultimately be 35% of the plan expenses beyond the threshold. The tax would give employers incentive to reduce their health benefit costs. And I don't like the idea of subsidizing (with my tax dollars) the high-cost plans of the richer companies. On the other hand, the bill would completely eliminate the subsidy that employers get when they give Medicare-eligible retirees drug benefits. That's currently a 26% subsidy for every dollar of benefit. It's what has kept employers from dropping health coverage for Medicare-eligible retirees. Lots of employers might drop coverage for retirees. Is that bad? Medicare drug benefit is still available for all. So, I'm not sure whether it's bad or good. More thinking to come.

Legistorm Gives the Skinny on Congressmen & Staff

This site, Legistorm, is fabulous for finding out what kind of travel your Congressman, Senator, and his/her staffers are taking at your (taxpayer) expense. Want to know whether your guy/gal is a big "earmarker"? You can find that out too. And, get a peek at financial disclosures, though they're much less informative than the travel expenses. And, staff salaries! That will tell you what working on the Hill will pay for, example, the Chief of Staff for the House Majority Leader. Check it out.
Of course, none of the salaries comes close to that of Michael Kaiser, CEO of the Kennedy Center... over a million a year, according to the Washington Post Magazine last week. That's the last penny KC will ever see from me! Nobody in Washington needs that much money to live the high life. I bet if KC Board told MK he'd be out if he doesn't take a 100% pay cut, he'd cave. He's the "turnaround king" for cultural institutions, and he donated a kidney to his sister. Still, half of his million could fund a lot of struggling young ballet dancers.