Rationing Healthcare — Unconscionable or Inescapable?

[RandyW]

I wonder How this policy will affect Clinical trials !!??

[gpawelski]

An interesting caveat about the information former Cigna Health Insurance executive Wendell Potter gave in his interview with Bill Moyers.

A significant number of Americans believe that the answer to our health care problems is to rely on the free market. Health care can’t be marketed like bread or TVs. An explanation was eloquently brought out by Princeton economist Paul Krugman.

There are two strongly distinctive aspects of health care. One is that you don’t know when or whether you’ll need care, but if you do, the care can be extremely expensive.

It must be largely paid for by some kind of insurance. And this in turn means that someone other than the patient ends up making decisions about what to buy. Consumer choice is nonsense when it comes to health care. And you can’t just trust insurance companies either, they’re not in business for their health, or yours.

This problem is made worse by the fact that actually paying for your health care is a loss from an insurers’ point of view, they actually refer to it as “medical costs.” This means both that insurers try to deny as many claims as possible, and that they try to avoid covering people who are actually likely to need care.

Both of these strategies use a lot of resources, which is why private insurance has much higher administrative costs than single-payer systems.

The second thing about health care is that it’s complicated, and you can’t rely on experience or comparison shopping. That’s why doctors are supposed to follow an ethical code, why we expect more from them than from bakers or grocery store owners.

You could rely on a health maintenance organization to make the hard choices and do the cost management, and to some extent we do. But HMOs have been highly limited in their ability to achieve cost-effectiveness because people don’t trust them, they’re profit-making institutions, and your treatment is their cost.

Between those two factors, health care just doesn’t work as a standard market story.

There are a number of successful health-care systems, at least as measured by pretty good care much cheaper than here, and they are quite different from each other. There are, however, no examples of successful health care based on the principles of the free market, for one simple reason: in health care, the free market just doesn’t work. And people who say that the market is the answer are flying in the face of both theory and overwhelming evidence.

And what Krugman says about "medical costs" is explained by former Cigna Insurance Company executive Wendell Potter. The industry is driven by two key figures: earnings per share and the medical-loss ratio, or medical-benefit ratio. That is the ratio between what the company actually pays out in claims and what it has left over to cover sales, marketing, underwriting and other administrative expenses and, of course, profits.

Think about that term for a moment: The industry literally has a term for how much money it "loses" paying for health care.

The best way to drive down "medical-loss," is to stop insuring unhealthy people. You won't, after all, have to spend very much of a healthy person's dollar on medical care because he or she won't need much medical care. And the insurance industry accomplishes this through two main policies. One is policy "rescission." They look carefully to see if a sick policyholder may have omitted a minor illness, a pre-existing condition, when applying for coverage, and then they use that as justification to cancel the policy, even if the enrollee has never missed a premium payment.

Rescission is important to the business model. At a recent House Subcommittee on Oversight and Investigation meeting, Rep. Bart Stupak, the committee chairman, asked three insurance industry executives if they would commit to ending rescission except in cases of intentional fraud. "No," they each said.

Potter also emphasized the practice known as "purging." This is where insurers rid themselves of unprofitable accounts by slapping them with "intentionally unrealistic rate increases."

The issue isn't that insurance companies are evil. It's that they need to be profitable. They have a fiduciary responsibility to maximize profit for shareholders. Potter explained, he's watched an insurer's stock price fall by more than 20 percent in a single day because the first-quarter medical-loss ratio had increased from 77.9 percent to 79.4 percent.

The reason we generally like markets is that the profit incentive spurs useful innovations. But in some markets, that's not the case. We don't allow a bustling market in heroin, for instance, because we don't want a lot of innovation in heroin creation, packaging and advertising. Are we really sure we want a bustling market in how to cleverly revoke the insurance of people who prove to be sickly?

[Barb73]

Thank you, Greg, for the explanation.

Bill has been treated while on Medicare (along with a supplemental insurance for the 20 percent Medicare doesn't cover).

Medicare is a government-run insurance, and so far, no one but the doctors have made any decisions in Bill's journey with lung cancer. We are so glad that we have it.

He has had every single option in the chemotherapy line for lung cancer, including Tarceva.

Your input has been very much appreciated.

Barbara

[gpawelski]

Barbara

You've touched on something many people do not realize, particularly now doing the health care reform debate, which many seniors do not realize Medicare is a government-run health care system. But when asked if they want to do away with their Medicare, "absolutely not" is their answer.

Medicare pays 80%. Seniors (my mother as one) pays $96.40 a month for that coverage (this is why people complain that Medicare only pays 80%). She also has Medigap insurance (supplemental insurance) for the remaining 20%, which she pays $122.17 a month for that coverage.

The Medigap insurance is the same kind of program like the Medicare Advantage program. Congress did not want the Medicare program to be totaly administered by the federal government. Instead, it devised a public program run by many competing private plans to supplement the 20%.

However, when you look at what you're paying for ($96.40 for 80% vs $122.17 for 20%), I'll leave that thought up to you.

And Congress guaranteed premium pricing for pharmaceuticals, by prohibiting Medicare from negotiating drug prices and it provided hundreds of billions of dollars in U.S. taxpayer subsidies to pay for these premium drugs costs by subsidizing private insurance Medicare plans.

Medicare has been paying private Medicare Advantage plans much more per enrollee compared with what the same enrollees would have cost in the traditional Medicare fee-for-service program. The monies to pay Advantage insurers is coming out of traditional Medicare.

Now it looks like that discrepancy is finally being rectified. Besides the signed legislation to cut the doughnut hole in half, the House health care reform bill has negotiated drug prices in it and stopping the subsidization of private Medicare Advantage plans.

[Barb73]

Again, thank you, Greg. Yes, I saw the people on TV protesting that they did NOT want anything taken away from "their" Medicare. I guess they like it.

I do believe that there are many who do not understand that Social Security and Medicare are government run, as I might add, our Military (pretty excellent one at that).

There waa a fierce debate when the idea of Social Security came to the floor (at the year of my birth, 1935).

Another fierce debate abounded when Medicare was proposed in the sixties.

Some of it is that change scares people. Of course, no one mentions much about all the "denied" procedures that are the product of private health insurers.

When one has a pre-existing condition, and denied health insurance, that is passing the buck, so to speak.

I love the arguments back and forth. People are entitled to their opinions, but they are not entitled to their own set of "facts." The very idea that a conference with one's doctor is tantamount to a "death panel" is quite a stretch. Living Wills have been around for eons.

Bill and I have been asked that question prior to any surgery.

Keep up the great work of explaining things. I have been watching the healthcare scenario very diligently. Having you delineate some of the "stuff" of it is a gift.

Barbara

[Nick C]

However, when you look at what you're paying for ($96.40 for 80% vs $122.17 for 20%), I'll leave that thought up to you.

Are you saying the 80% medicare is cheaper because it is government run versus the 20% supplemental is more expensive because it is privately run?

[gpawelski]

What I'm saying is that Medicare charges my senior mother $96.40 a month for 80% coverage, while her private Medigap insurance charges her $122.17 a month for the remaining 20% coverage.

The Medicare Medigap insurance program is like the Medicare Advantage program. Congress did not want the Medicare program to be totally administered by the federal government. Both programs allow many competing private plans to receive their part of the pie.

8 ways reform provides security and stability to those with or without coverage

Ends Discrimination for Pre-Existing Conditions: Insurance companies will be prohibited from refusing you coverage because of your medical history.

Ends Exorbitant Out-of-Pocket Expenses, Deductibles or Co-Pays: Insurance companies will have to abide by yearly caps on how much they can charge for out-of-pocket expenses.

Ends Cost-Sharing for Preventive Care: Insurance companies must fully cover, without charge, regular checkups and tests that help you prevent illness, such as mammograms or eye and foot exams for diabetics.

Ends Dropping of Coverage for Seriously Ill: Insurance companies will be prohibited from dropping or watering down insurance coverage for those who become seriously ill.

Ends Gender Discrimination: Insurance companies will be prohibited from charging you more because of your gender.

Ends Annual or Lifetime Caps on Coverage: Insurance companies will be prevented from placing annual or lifetime caps on the coverage you receive.

Extends Coverage for Young Adults: Children would continue to be eligible for family coverage through the age of 26.

Guarantees Insurance Renewal: Insurance companies will be required to renew any policy as long as the policyholder pays their premium in full. Insurance companies won't be allowed to refuse renewal because someone became sick.

8 common myths about health insurance reform

Reform will stop "rationing" - not increase it: It’s a myth that reform will mean a "government takeover" of health care or lead to "rationing." To the contrary, reform will forbid many forms of rationing that are currently being used by insurance companies.

We can’t afford reform: It's the status quo we can't afford. It’s a myth that reform will bust the budget. To the contrary, the President has identified ways to pay for the vast majority of the up-front costs by cutting waste, fraud, and abuse within existing government health programs; ending big subsidies to insurance companies; and increasing efficiency with such steps as coordinating care and streamlining paperwork. In the long term, reform can help bring down costs that will otherwise lead to a fiscal crisis.

Reform would encourage "euthanasia": It does not. It’s a malicious myth that reform would encourage or even require euthanasia for seniors. For seniors who want to consult with their family and physicians about end-of life decisions, reform will help to cover these voluntary, private consultations for those who want help with these personal and difficult family decisions.

Vets' health care is safe and sound: It’s a myth that health insurance reform will affect veterans' access to the care they get now. To the contrary, the President's budget significantly expands coverage under the VA, extending care to 500,000 more veterans who were previously excluded. The VA Healthcare system will continue to be available for all eligible veterans.

Reform will benefit small business - not burden it: It’s a myth that health insurance reform will hurt small businesses. To the contrary, reform will ease the burdens on small businesses, provide tax credits to help them pay for employee coverage and help level the playing field with big firms who pay much less to cover their employees on average.

Your Medicare is safe, and stronger with reform: It’s myth that Health Insurance Reform would be financed by cutting Medicare benefits. To the contrary, reform will improve the long-term financial health of Medicare, ensure better coordination, eliminate waste and unnecessary subsidies to insurance companies, and help to close the Medicare "doughnut" hole to make prescription drugs more affordable for seniors.

You can keep your own insurance: It’s myth that reform will force you out of your current insurance plan or force you to change doctors. To the contrary, reform will expand your choices, not eliminate them.

No, government will not do anything with your bank account: It is an absurd myth that government will be in charge of your bank accounts. Health insurance reform will simplify administration, making it easier and more convenient for you to pay bills in a method that you choose. Just like paying a phone bill or a utility bill, you can pay by traditional check, or by a direct electronic payment. And forms will be standardized so they will be easier to understand. The choice is up to you – and the same rules of privacy will apply as they do for all other electronic payments that people make.

8 Reasons We Need Health Insurance Reform Now

Coverage Denied to Millions: A recent national survey estimated that 12.6 million non-elderly adults – 36 percent of those who tried to purchase health insurance directly from an insurance company in the individual insurance market – were in fact discriminated against because of a pre-existing condition in the previous three years or dropped from coverage when they became seriously ill. Learn more: http://www.healthreform.gov/reports/...age/index.html

Less Care for More Costs: With each passing year, Americans are paying more for health care coverage. Employer-sponsored health insurance premiums have nearly doubled since 2000, a rate three times faster than wages. In 2008, the average premium for a family plan purchased through an employer was $12,680, nearly the annual earnings of a full-time minimum wage job. Americans pay more than ever for health insurance, but get less coverage. Learn more: http://www.healthreform.gov/reports/...sts/index.html

Roadblocks to Care for Women: Women’s reproductive health requires more regular contact with health care providers, including yearly pap smears, mammograms, and obstetric care. Women are also more likely to report fair or poor health than men (9.5% versus 9.0%). While rates of chronic conditions such as diabetes and high blood pressure are similar to men, women are twice as likely to suffer from headaches and are more likely to experience joint, back or neck pain. These chronic conditions often require regular and frequent treatment and follow-up care. Learn more: http://www.healthreform.gov/reports/women/index.html

Hard Times in the Heartland: Throughout rural America, there are nearly 50 million people who face challenges in accessing health care. The past several decades have consistently shown higher rates of poverty, mortality, uninsurance, and limited access to a primary health care provider in rural areas. With the recent economic downturn, there is potential for an increase in many of the health disparities and access concerns that are already elevated in rural communities. Learn more: http://www.healthreform.gov/reports/hardtimes

Small Businesses Struggle to Provide Health Coverage: Nearly one-third of the uninsured – 13 million people – are employees of firms with less than 100 workers. From 2000 to 2007, the proportion of non-elderly Americans covered by employer-based health insurance fell from 66% to 61%. Much of this decline stems from small business. The percentage of small businesses offering coverage dropped from 68% to 59%, while large firms held stable at 99%. About a third of such workers in firms with fewer than 50 employees obtain insurance through a spouse. Learn more: http://www.healthreform.gov/reports/helpbottomline

The Tragedies are Personal: Half of all personal bankruptcies are at least partly the result of medical expenses. The typical elderly couple may have to save nearly $300,000 to pay for health costs not covered by Medicare alone. Learn more: http://www.healthreform.gov/reports/inaction

Diminishing Access to Care: From 2000 to 2007, the proportion of non-elderly Americans covered by employer-based health insurance fell from 66% to 61%. An estimated 87 million people - one in every three Americans under the age of 65 - were uninsured at some point in 2007 and 2008. More than 80% of the uninsured are in working families. Learn more: http://www.healthreform.gov/reports/...ing/index.html

The Trends are Troubling: Without reform, health care costs will continue to skyrocket unabated, putting unbearable strain on families, businesses, and state and federal government budgets. Perhaps the most visible sign of the need for health care reform is the 46 million Americans currently without health insurance - projections suggest that this number will rise to about 72 million in 2040 in the absence of reform. Learn more:

http://www.WhiteHouse.gov/assets/docume ... Report.pdf

Source: The White House