Health Care Reform

By Sean Shaw, Florida Insurance Consumer Advocate

Why do we need reform?

To begin the health care debate we must first ask some very basic policy questions: Is access to health care in America a right or a privilege? As a country, we have made the decision that the elderly, the disabled and the very poor will have access to health care through Medicare and Medicaid. We have not made the decision that everyone else is entitled to health care. We have good health care in America, but the delivery system is in serious need of reform.

There is no doubt that health care is becoming increasingly more expensive. More people are losing their jobs and thus their health insurance benefits since health insurance is generally tied to employment. We have approximately 46 million uninsured in America, and over 2.5 million in Florida.

There are not enough primary care or general practice doctors to meet the needs of our citizens – especially in rural America. Many medical students are going into specialized practices so they can make higher wages in order to pay the hundreds of thousands in loans they accrued for their education. We currently don’t have many programs to assist in educating physicians. Evidence based medicine is not consistently being practiced. Over utilization is a significant issue contributing to health care costs. The use of the latest and most costly tests, the over use of Emergency Rooms as primary care medicine are all adding to the cost of health care delivery. Some of the extensive use of complex tests is for protection against law suits and some are for profit.

Insurance companies are limiting and excluding more services thus pushing care to the public sector. CEO’s are paid millions in salary and benefits. Insurance company administrative expenses are approximately 30 percent compared to the Government plans (Medicare and Medicaid) 2 percent. The cost to provide health care is continuing to eat up more of the countries Gross Domestic Product (GDP) and it is simply unsustainable. The health care system in America needs to change to cover more people at a lower percentage of GDP, provide quality, evidence based medicine in all areas of the country to all segments of the population.

Below are some facts and quotes that are properly sourced for use.

First, - If you don't have health insurance, you will finally have quality, affordable options once we pass reform. If you have health insurance, we will make sure that no insurance company or government bureaucrat gets between you and the care you need.

Second, reform will finally bring skyrocketing health care costs under control, which will mean real savings for families, businesses and our government.

Third, by making Medicare more efficient, we’ll be able to ensure that more tax dollars go directly to caring for seniors instead of enriching insurance companies.

Lastly, reform will provide every American with some basic consumer protections that will finally hold insurance companies accountable. (NYT Editorial - Barack Obama, 8/15)

• Nearly 46 million people in the US are uninsured; an additional 25 million are underinsured. (US census bureau 2008)
• This year, health spending in the United States is expected to total $2.5 trillion. At this rate of growth, it will consume one out of every $5 Americans earn in the next decade. The United States spends 52 percent more per person than the next most costly nation, Norway, according to the (Kaiser Family Foundation). Spending on healthcare in the U.S. is 16-17 % of GDP.
• Sixty-two percent of all bankruptcies filed in 2007 were linked to medical expenses, according to a nationwide study released by (The American Journal of Medicine 2009). Of those who filed for bankruptcy in 2007, nearly 80 percent had health insurance.
• According to a (Hewitt Associates 12/08 survey), 19% of all US businesses plan to stop providing health care benefits to their employers over the next 3 – 5 years.
• Since 1999, employment-based health insurance premiums have increased 120 percent, compared to cumulative inflation of 44 percent and cumulative wage growth of 29 percent during the same period. (Kaiser Family Foundation)
• Most industrialized nations in the world have national healthcare.

What type of reform is best for the consumer?

Reform that provides accessible, quality, evidence based health care in the most appropriate venue at a reasonable cost. So that health care can be provided in the most cost effective manner, everyone should be covered by a health care plan whether it is a government plan, an insurance plan or a combination of the two. Health care should treat illness and injury in a cost effective manner, not in a manner that produces the most profit.

Why are the costs skyrocketing here vs internationally?

There is evidence to support the following behavior in our current medical system contributes to additional costs: (1) referrals to specialists to provide front line care that should be performed by Primary Care Physician’s (PCP); (2) the use of interventions and treatments proven in scientific studies to be ineffective; and (3) the use of expensive imaging studies for the diagnosis of the problem.

• The United States is the only industrialized nation that does not ensure that all its citizens have health care coverage; the United States spends a (much) higher percentage of its gross domestic product on health care than its peers. Wealso spends (much) more per person on health care than its peers. (NYT Economix 7-2009)
• At one time, the US was more or less on par with its peers, and at various points even spent less of its G.D.P. on health care than some other countries (namely, Canada, Sweden, Denmark and Germany). (NYT Economix 7-2009)
• According to research conducted at the Dartmouth Institute, the average per person health costs for McAllen Texas are sky-high compared with costs in other cities. In McAllen, the average Medicare beneficiary spends $15,758 per year, while the average Medicare patient in LaCrosse, Wisconsin, spends $6,412 per year. Another comparison: The cost in Miami, Florida, is $18,170, compared with $7,478 in Portland, Oregon. Dartmouth researchers believe doctors in high-priced cities tend to refer to specialists more and are more likely to put patients in the hospital rather than handling their problems on an outpatient basis.
• In the United States, every person spends on average $6,714 for health care. That's significantly higher than in the United Kingdom, where $2,760 per person is spent; or in France, where the cost is $3,449 per person; or in Canada, where medical costs are $3,678 per person, according to the Organization for Economic Co-operation and Development. While some would argue that medical care is better in the United States than in these other countries, others would say the opposite is true. For example, the United States ranks 50th in life expectancy, and 44th in infant mortality rates, according to the (CIA World Fact Book).

What are other Countries doing right that we are not?

Many of the practices that increase costs in the U.S. health care system, such as over utilization of expensive procedures, over utilization of specialty care, too many cottage industries at the trough etc., are not being repeated in other industrialized nations. Below is a review of what other countries are doing in health care:

• Great Britain's National Health Service (NHS) was created in 1948 and covers 100 percent of its residents. Every Briton is registered with his or her own family doctor, whom they can see when they need -- without paying a fee. These doctors are independent contractors to the health service and are recognized and rewarded for quality in their compensation -- so they can focus on what works, not just what pays. By next year every community in England will have a physician's office open from 8 a.m. to 8 p.m. every day of the year, and one can simply walk in and see a doctor, for free, regardless of whether they are registered.
• In the unfortunate instance that a patient is diagnosed with a dire disease, such as cancer, it often takes only a week or two for a patient to be seen by all the right specialists, complete all the required diagnostic tests and be ready for surgery or other interventions. This rivals the best care in the United States or anywhere else in the world.
• Britain's pharmaceutical industry is second only to the United States in its innovation and the significance of its discoveries. The NHS invents and delivers pioneering treatments, from the first clinical use of MRI in the 1960s to leading developments in robotically enabled scar-free surgery today. Great Britain’s Healthcare spending is approximately 8.3 % of GDP. There are no monthly premiums required. (Washington Post 8-09)
• France has universal health care, with few waiting lists. Their system is actually more like the US system than other European plans. It is a mixture of government insurance and private insurance. In fact the World Health Organization (WHO) ranks the French system number one in the world as compared to the Canadian system at number 30 and the US system at number 37. France has the highest level of satisfaction with their health care among all European countries. France provides basic, universal health insurance through large occupation-based funds to 99 percent of the population. France utilizes more market-based ideas than most people realized. Copayment rates for most services are 10%-40%. About 92% of French residents have complementary private health insurance. France is the third most expensive health care system at 11% of GDP.
• The French have a fair amount of choice in which doctors they choose. However, recently the French have moved toward a more “managed care” practice style where patients have a “preferred doctor” who acts as a gatekeeper for specialists. The government does not reimburse new technologies very generously and because of global budgets and fee restrictions, there is little incentive to make capital investments in medical technology. (Healthcare Economist)
• Canada has a single payer system, but the Provinces have the bulk of the responsibility of running the health care system for their own residents. The Canadian system covers 100 percent of residents. Funding is provided jointly by the federal and state governments. For the nation as a whole, health care costs only 10.1% of GDP. Referrals are required for all specialist services. There are generally no copayments or deductibles for services. However, British Columbia, Alberta and Ontario charge insurance premiums. The U.S. has five times as many MRI machines per capita as Canada and three times as many CT scanners.
• Switzerland’s universal health care system is the most market-oriented and merits discussion. Switzerland’s health care spending as a percentage of GDP is second only behind the U.S – at 11.6 %. Percentage of insured’s is 99.5 percent.
• Insurance is purchased by individuals. Individuals generally must pay the full cost of premiums, but the government helps to finance insurance purchases for the poor. These subsidies are designed to prevent any individual from having to pay more than 10 percent of income on insurance, and one third of Swiss citizens receive this type of subsidy. Thus, the Swiss government only pays for 24.9% of health care costs. All insurance is private insurance. However, insurance companies are mandated to offer the same basic benefits package. The average family premiums are $750, per month, paid entirely by consumers; there are government subsidies for low-income citizens.
• According to a WHO study, Switzerland ranks second only to the U.S. in terms of the ability of patients to choose their provider and in terms of timely care.
• Japan has universal health insurance based around a mandatory, employment-based insurance. The Employee Health Insurance Program requires all companies with 700 of more employees to provide workers with health insurance among some 1,800 society-managed plans. Japan spends 8.1% of GDP on healthcare. The average family premium is $280 per month, more than half is paid by employers. Japan has very generous health insurance benefits, significant provider choice, and high quality medical technology, but costs are not as high in the U.S. One reason for this is a significant level of cost sharing. The average Japanese household spends $2300 per year on out-of-pocket health care expenses. Another reason for lower costs is that the Japanese government sets a reimbursement fee schedule for all physician services.
• There are no restrictions on physician or hospital choice and no referral requirements. Copayments are 10% to 30%, but generally closer to 30%. Copayments are capped at $677 per month for the average family. Japan has high levels of technology. Patients have just as much access to MRI and CT units as in the U.S. (Healthcare Economist)

Other countries health care costs as a percentage of GDP are as follows: (WSJ 8-2009)

• Australia 8.7%
• Austria 10.1%
• Germany 10.4%
• Italy 8.7%
• Norway 8.9%
• Spain 8.5%
• Sweden 9.1%

What are the biggest traps that consumers fall into in the healthcare arena and how can we reform to fix that?

Asking the wrong questions of health care providers such as - do you take my insurance? Balance billing by providers. Not getting prior approval, or preauthorization, from health insurance providers prior to service being rendered. Not knowing health plans benefits, limitations and exclusions. Since health insurance is tied so closely to employment, when people lose their jobs, they are failing to continue their health insurance either through COBRA, conversions contracts or HIPAA contracts – primarily due to cost. In Florida, if you are over 63 days without health coverage, you will be subject to pre-existing condition limitations. Additionally, some health plans are post claim underwriting – when a claim is submitted, insurance companies have a two year period in which to contest applications for misstatement of information so they scour applications and medical records to see if information was left out about a condition that may have previously existed. The company can then reject the entire application on the grounds that someone did not provide full disclosure.

Tort reform may or may not fix healthcare

Tort reform in Texas was supposedly passed to decrease the incentive for people with non-meritous claims to file lawsuits. The real effect however, was to decrease the incentive and the ability of those with meritous claims to file lawsuits. Our courts already have numerous mechanisms in place to dismiss non-meritous cases.

All the evidence available shows that the liability "crisis" is a myth. Malpractice payments account for less than 1% of the nation's health care costs each year. Since 1987 medical malpractice insurance costs have risen just 52% despite the fact that medical costs have increased 113%. The size of malpractice damage awards has remained steady since 1991. Adjusted for inflation, the average malpractice payment has actually decreased since then. The only evidence supporting claims of a liability crisis is anecdotal; hearsay propagated by lies from malpractice insurers who tell doctors their premiums are high because of out-of-control malpractice claims. Yet, data show that the medical liability system produces rational outcomes. (Andrew Sullivan, The Atlantic, 8/21/2009)

Malpractice reform effort must balance the interests of injured patients, doctors, and the insurance industry, all while recognizing the universal goals of lowering costs, improving access, and ensuring quality. The goal of stabilizing malpractice premiums may not align with the goals of tort law: improving quality by deterring future incidents of negligence and providing fair compensation for those injured. Despite these challenges, there is no shortage of reform proposals.

Most tort reform legislation, at both the state and federal levels, is centered on capping award payments. Capping awards may provide juries with a more consistent framework, but critics argue that capping at some arbitrary level will inevitably result in underpayment for some actual victims with minimal effect on premiums. (By William M. Sage, M.D., Margaret Thompson, Cynthia Gorman, Melissa King | June 12, 2008)