Lazy Sundays 3

Saturday is the first day of August, and it’s going to be a busy month both in and out of Washington. If you happen to live in a “swing state” — especially if you have a moderate Republican representative (e.g., Olympia Snowe and Susan Collins) or are home to one of the now infamous “Blue Dog” Democrats (If you’re representative is on this list, I’m looking at you)– be prepared for what is going to feel like part 2 of the ’08 election.

As interest groups try to influence the public and their elected officials on health reform, here’s a look at what you can expect.

Health Bill Boils Down to August Battle
by Ben Smith and Kenneth P. Vogel

The Future of Universal Health Care, as of Now
by Robert Reich

And to prepare you for the battle ahead, a lighthearted take on health reform from Walt Handelsman

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Stop-Gap: Providing Health Coverage at the Margin

Look for “Lazy Sundays 3” later today, but first, I welcome a guest contributor to the blog. I think you’ll enjoy what she has to say….

Katherine Rogers is currently working on a PhD in Public Policy and Administration at the George Washington University, where she also received a Master of Public Health degree in health policy. She has worked in state health policy and in international alcohol policy, and her current work focuses on adolescent health. She also holds degrees from Cornell University and the University of Pennsylvania.
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Most people expect, across the years of their working lives, that if they work hard, they will improve their circumstances. Years of experience and education lead to promotions, raises, and better benefits. By the time you retire, you’re at the top of your game.

But all of that makes you very expensive for your employer, and in an era of job losses and slashed benefits, more and more older adults – a little too young to retire but too qualified and expensive to find employment – are losing their jobs and the benefits they offer.

For adults ages 55 to 64, this situation can have dire consequences for health care coverage and personal health. This group – the oldest in America not covered by Medicare – tends to have more health problems and more health care costs than other age groups (simply because of their age). It is tougher for them to find affordable insurance outside of employer-sponsored options; adults ages 60 to 64 are rejected by insurers three times as often as adults ages 35 to 39. The coverage that is offered might come with high deductibles or substantial coverage exclusions.

How can we help this group? One good option already being considered in most health reform plans is a Medicare buy-in.

Such a program has some drawbacks – without subsidies, it might be subject to adverse selection and may fail to attract lower-income adults, thereby failing to make a significant dent in the uninsured population in this age group. But it also is widely popular with the public (according to a recent Kaiser poll, 77 percent of the public supports it). The option becomes more feasible (and affordable) when we limit eligibility – by income, by insurance status, or by spouse’s insurance status (i.e., if an individual is over 65, their spouse could be eligible for Medicare as well).

We might also consider some other possibilities. We could prohibit or limit insurer coverage denials in this age group to boost private individual insurance coverage. Or we could establish some form of connector that pools older adults into cheaper private group coverage regardless of employment status.

Regardless of the policy implemented, the argument for reforming health insurance options for this group is emblematic of the argument for reform on a greater scale. If we’re attempting to frame health reform as a moral issue – to establish as a symbol of our culture that we value life and health for all of our residents – than who better to illustrate that than our oldest workers?

Consider Tom Waldron, who in 1972 began working for a company and worked there for decades – until he was laid off when the economy hit the skids last year. He’s 59, probably unattractive to employers who think he’ll just retire in a few years – and the job offers he gets are on a contract basis and won’t offer him health insurance.

Currently, our national policy to address this problem is, “Sorry, but we can’t help you until you turn 65.” We need to do better – and there’s a good chance that current health reform will enable us to do so.

– Katherine Rogers

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The Real Health Care Coverage Threat

I’ve spent a lot of time talking about unwarranted fears over the past week in an attempt to ameliorate the concerns of many who oppose health reform based on inaccurate information they believe to be true. By contrast, I’m not out to convince opponents of reform to change sides, provided they have their facts straight.

The propaganda keeps coming though. Seriously, these folks are relentless. Now, the fear mongering is targeting the elderly. The–honestly very scary if it were true–misinformation: you’re going to lose your Medicare coverage. Well, not completely, but a lot of your benefits are going bye-bye. All of this is patently false, but it’s having a powerful effect on the country’s senior citizens. This is why the New York Times and Slate both have articles examining the issue in which the elderly express their concerns that proposed health reform legislation is putting the nation on a slippery slope towards euthanasia of seniors. It’s both morbid and ridiculous.

What’s flying under the radar, however, is the current–and very real–threat to health care coverage: recission. You may not have heard of this word before, but you may likely know someone to whom it has happened. Recission happens in the wake of filing an insurance claim, when the insurance company denies you your benefits–which ordinarily would be covered–by canceling your policy. The basis for the cancellation goes something like this: You file an expensive claim. The insurance company doesn’t want to pay it (i.e., lose money). They find something technically wrong with your paperwork that “justifies” cancellation of your policy.

Now, there are certainly cases where recission is a necessary protection for the insurer. For example, if you failed to disclose prior treatment for breast cancer, and you later seek coverage when you suffer a recurrence, that’s tantamount to fraud on your part. If, on the other hand, you filled the forms out incorrectly, or failed to disclose something you didn’t know about or that turns out to be completely unrelated to the current claim you’re filing, and the insurer cancels your policy? Well, that makes for something you could grow a nice crop of tomatoes in.

This kind of thing happens all too often, and is mentioned in Michael Moore’s notorious film Sicko as well as two articles appearing this week from Timothy Noah and Jonathan Weber. As reform moves forward, there’s mention of outlawing coverage denial on the basis of pre-existing conditions, and that’s important both for expanding coverage and severing one of the links on which recission is based: If there are no “pre-existing” exclusions, the accuracy of your health history should not be grounds for future claim denials. Still, if consumer protections are such a big part of reform, shouldn’t something more be done to prevent the practice of unjustified recission?

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Understanding $1 Trillion

WARNING: This post contains data. I’ve tried to make everything very clear by putting it in graphic form, but if you are allergic to numbers you might want to pop a couple of Benadryl before you read any further.

Glad you’re still with me. Today, I want to talk about $1 Trillion. That’s at least one of the numbers we’ve been told is going to be the 10-year cost of health reform, and according to the folks at the Congressional Budget Office (CBO), the preliminary analysis of both the House and the Senate bills look quite similar.Other lower figures have been cited, but they just aren’t as fun to say as “One…..TRILLION…..Dollars…..!” (Certainly has a Dr. Evil-esque ring to it, doesn’t it?) But what in the world does it mean? Granted, it’s a lot of money. So much, in fact, that it makes it hard to comprehend. In cases like this, a fun thing some people do is try to put it into more concrete terms that people can identify with. “It’s like buying a movie ticket, a tub of popcorn, and a Coke for every man, woman, and child in China every day for nearly two months.” (I made that one up, but I think the math comes close.) Jerry Seinfeld has a funny clip about McDonald’s that makes this point about the ridiculousness of extremely large numbers.

Well, first of all, the big “T” is the net cost (i.e., additional government outlays not offset by increased revenues or savings from other programs). It’s also the total amount for 10 years, which is the longest budget window the CBO permits itself to practice fortune-telling. So, if we want to look at an annual number (assuming costs were even over all years, which they’re not), it would be $100 Billion a year. That’ll take all of China to the movies for about a week.

But, alas, we’re not talking about taking China to the movies, we’re talking about healthcare. So what does $1 Trillion get us, exactly? Well, it depends on whose doing the buying. First, it helps to see what the “status quo” so ominously referenced by President Obama during his press conference last week, will look like:Alright, with our starting point established, what does the CBO say the House bill would do to enrollment? Well, it seems to keep employer based coverage robust, increase Medicaid enrollment, cover a bunch of people through the new exchanges, and significantly reduce the number of uninsured. The Senate bill looks fairly similar according to CBO’s analysis, but the biggest differences are that employer-based coverage and Medicaid coverage shrink somewhat and the number of uninsured doesn’t decrease nearly as much under the Senate’s version:

All of this left me asking: If one of the primary goals of health reform is to help everyone get coverage, shouldn’t we be looking more closely at the connection between what reform will cost and what we’re getting in terms of newly covered individuals? So, I took a look at what the additional annual federal outlays would be for each additional person who moves from uninsured to insured. I was a bit surprised. The House bill looks to extend coverage at a much lower incremental cost.

In fairness, though, we can see that the House bill would not reduce the number of uninsured at all in the first three years (that’s why there aren’t any maroon bars there). So, I decided to take the total net costs (remember, that’s the $1 Trillion CBO scored for both the House and Senate bills), divide it by the reduction in the number of uninsured persons over the 10 year period, and then divide that by 10, to get a better yearly average with which to compare the two plans:

Yep. The House comes in as the much better way to spend $1 Trillion if we’re most concerned about covering everyone. For all of the talk about making the health care system more efficient, I hope that someone pays attention to the need for that efficiency to start at the beginning, with the drafting of health reform legislation.

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You Need a Lobbyist

This comes a bit late, but some of you may have missed David Leonhardt’s July 22nd piece in the New York Times. You need to read it. I’ve not come across a more concise explanation of the obstacles to health reform since my adviser, Jonathan Oberlander, told me the fundamental paradox of health care cost control: HCE = SEI (health care expenditures = someone else’s income).

The point, which Leonhardt makes painfully clear, is that neither you nor I have the weight (read: money) to make much of a difference in this debate. It doesn’t help that we are so insulated from much of the cost associated with the care we receive. It makes rising costs a less urgent concern. Once we feel the pinch, things have gotten quite out of hand. Then, while we might like to see cost control, those whose income it is are adamantly opposed to taking a cut in pay. And in fairness, wouldn’t you be too?

Those interests–think insurers and healthcare providers–are well-heeled, and that permits them to line the pockets of the men and women who hold leadership positions on key Congressional committees. There is no such thing as a free three martini lunch. Trust me, organized interests (i.e., lobbyists) get things done. Fortunately, there are interests aligned on both sides of the issue. But what about you and me? Are our interests being represented? Sure, we can call or write our representatives, and in large enough numbers they’ll take note. We might be members of organizations with a government affairs division that takes up “our” fight on Capitol Hill. Then again, we might not.

At the end of the day, no matter which side of health reform you’re on, you’re placing your trust in politicians, hoping that they’ll decide to do what you think is right. Maybe they will. But if I were you, I’d seriously consider hiring a lobbyist.

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The Land of 50/50: Tracking Health Reform in the Media Headlines

It’s no secret that health reform is center stage in the media these days, but what exactly is being said? To find out, I searched for all occurrences of the phrase “health reform” appearing in Google News (which searches multiple online news outlets) over the last month, and classified the headlines according to whether they framed health reform in a positive or negative light.

First, I thought it important to summarize the total number of news headlines in which “health reform” appeared. As you can see, there has been a fair amount of fluctuation. The red line indicates the average daily number of articles (18.5). As you can see, the two biggest spikes in activity correspond with the House’s July 14 release of their draft legislation and Obama’s July 22 health reform press conference.

Of more interest, however, is the broad picture that these headlines paint about health reform. Is there a trend in favorable versus unfavorable coverage? Over the past month, approximately 58% of “health reform” headlines have been favorable, while 42% have been unfavorable. On the whole, then, the media seems to be covering health reform as a “good thing.” But what is happening over time?
From this chart, we see that the “good” and the “bad” stories tend to fluctuate a fair amount from one day to the next. Again, it’s interesting to note that coverage was split 50/50 on the day the House draft bill emerged, but became predominantly positive again for the next few days. However, coverage grew increasingly negative prior to Obama’s press conference, and while some positive ground was gained in the days after the President’s remarks, it is very apparent that the “positive” peaks never return to their halcyon days of early July.

What are we to make of this? Well, I’d say that some fluctuation is completely predictable, and I’d also point out that the most reliable (i.e., stable) percentage estimates coincide with the days in which the most stories were run. That’s just simple math. Fewer total stories means a smaller absolute difference will appear as a larger percentage difference. The two days to hone in on, then, are July 14 and July 22. What we see is fairly balanced reporting on health reform, and I think that’s a healthy thing in a democracy like ours.

What do I think we’ll see as the month draws to a close? Inevitably a shift towards more negative coverage, as questions are raised about the August recess and whether failure to pass a bill before the break will stall reform efforts indefinitely, leading to its ultimate demise. That is, until another news item breaks, and we get back to the land of 50/50.

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Framing Health Reform: Why You Think the Way You Do

Back in 2004, Berkeley cognitive linguistics professor George Lakoff published the book Don’t Think of An Elephant! Know Your Values and Frame the Debate. It’s a fascinating book, and I encourage you to pick it up if you’ve never read it. More on that momentarily.

First, I’d like you to try out a little experiment. I’m going to describe two scenarios to you, and after you read them, I want you to think about which scenario you most identify with. Put aside for a moment the fact that you may identify to varying degrees with both scenarios, or that the scenarios seem to overlap in your view. Just pick one. Ok, here we go:

Case 1

“The world is and always will be dangerous and difficult. The world is competitive and there will always be winners and losers. There is an absolute right and an absolute wrong. Children are born bad and must be made good. The father, as head of the family, is the moral authority who must support and defend the family, tell his wife what to do, and teach his kids right from wrong. Doing that requires painful punishment–physical discipline that by adulthood will result in the children having developed internal discipline. This discipline is demonstrated by following certain moral precepts and becoming self-reliant through the pursuit of one’s self-interest. Once on their own, the father should not meddle in his children’s lives. Children who remain dependent should be further disciplined or cut off, forcing them to become independent by the discipline of the outside world. Disciplined individuals will be successful, and they will prosper and amass material wealth. They should be rewarded. Those who are not successful are not successful because they are not disciplined, and to provide them with any type of outside assistance would be to enable their lack of discipline, which would be a bad thing to do.”

Case 2

“The world, despite its dangers and difficulties, is basically good, can be made better, and it is our responsibility to work towards that. Children are born good and parents can make them better through empathy and responsibility. Both parents share the responsibility for raising the children. Their job is to raise their children: To protect them from all sorts of harm, help them have happy fulfilling lives, treat them fairly, and ensure their freedom (age appropriately of course). You realize that you will only be able to do these things for your child if you yourself are happy and fulfilled. Trust, two-way communication, and opportunity are essential if your children are to grow into fulfilled individuals.”

So which one are you? Do you see the world more as it is depicted in Case 1 or Case 2? I know you’re asking what in the world this has to do with health care, but as Lakoff describes in detail, these views of the family shape our views on nearly everything else we encounter. Individuals who are oriented more in favor of Case 1, the “strict father” model, tend to be more conservative, while individuals who see the world more in Case 2 terms, the “nurturing family” model, tend to be more progressive.

In fact, we often personify views of the family onto other issues. We even conceptualize entire nations as if they were individuals. North Korea is a hostile nation. But does that mean all of its people are hostile? No. If we were using mean population values to label nations, we would more accurately refer to North Korea as a starving nation. Similarly, for those of us who believe in a Supreme Being, we tend to view that being in one of two ways: A strict father, who demands obedience and punishes us for our mistakes; or a nurturing father, who models grace and love to us by example.

Nothing activates frames better than fear, and with the current economy in the shape it’s in, there’s plenty of fear to go around. According to Lakoff, every story conveyed by a frame has a “hero, a crime, a victim, and a villain.” I know that I have readers of this blog who are on both sides of the health reform debate. Therefore, I ask you to write a comment on not only who or what you believe to be deserving of each of these four titles, but also–and more importantly–why you think the particular title is deserved. This should give you an opportunity to explore the subconscious thoughts you have about health reform and assess their validity…..how well are your thoughts supported by the facts? If you’re honest with yourself, I believe you’ll find that facts often take a backseat to the frames we use to process information–no matter which side of the issue you’re on.

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Tying Up Loose Ends: The Public Plan

This is not the post I had planned for today. That will follow later today. First, though, I have to tie up some loose ends in the form of comments that I’ve received on my “Fear Not” posts.

Here are some excerpts along with my replies…..

…I think it’s a little disingenuous to suggest the Canadian healthcare system is not state provided. Delivered by so called “private providers”, sure, but the state is certainly paying for at least 70% of it. The vast majority of Canadian physicians participate solely in the public sector, and the state is their exclusive source of revenue. This is certainly NOT how it is in the U.S….

While I’m not sure where the 70% figure comes from regarding Canada, I can state that the in the United States, roughly 46% of national health care expenditures are publicly financed. So, if the definition of “state-provided” health care has only to do with who is paying for things, then the American system is half “state-provided” already. I really don’t think that folks with Medicare see it that way. They go to the doctor just like they always have. They just have a different source of insurance than they had when they were younger.

…state run healthcare systems will attempt to control rising administrative costs and end up restricting healthcare supply. It is impossible to claim the government will not determine which benefits to provide, because the dollar always decides….

Here it is suggested that healthcare supply will be restricted to control rising administrative costs. The problem with this line of reasoning is that government insurance has administrative costs of around 2 – 3%, while private insurers come in around 20 – 30%. This is a case where the costs of competition (e.g., advertising) are passed on to the consumer. Government, as an entity not seeking a profit, is able to eliminate these administrative costs. They don’t do this by cutting benefits. They do it by operating more efficiently than the private sector. I know that’s hard to believe, because government is often bureaucratic and inefficient, but it’s based on sound empirical evidence in this case. The result is actually that the savings on the administrative side of the coin could be used to provide better benefits.

The claim that “the dollar always decides” is very true. One needs look no further than the series of explicit rationing decisions in the Oregon Plan. The issue is that our system operates on a fee-for-service model where the patients don’t know what they really need most of the time. Thus, providers have perverse incentives to do anything and everything they see fit to do, as long as there is any chance that it might be even minimally beneficial. That is inherently wasteful, especially once aggregated to the national level. Because we so prize life and health, and because we are shielded from many of the costs of our care, we seek to maximize our individual benefit, to the detriment of the whole.

…our system needs some major work…the primary culprit for our outrageous costs are the insurance companies. I very much support efforts to better regulate these crooks – but I certainly do not want a mandated public health plan. As best as I can tell, I believe the proposed legislation allows you to keep your current provider but not switch to a new one. Am I mistaken about this?

This is definitely a big concern for many people, but it’s just not true. First, there are multiple versions of legislation being drafted, and the only one that’s actually been made publicly available is the House bill. There is definitely talk of an insurance mandate, but not a “mandated public health plan.” That is, everyone is required to have insurance, but that could be employer-based, Medicaid, Medicare, the new public plan, or individual private insurance purchased through the Exchange.

The proposed legislation allows you to keep your current provider and puts consumer protections in place that will keep that provider from cutting benefits and/or increasing premiums at an unreasonable rate. However, you will also be able to switch to a new provider as you wish. The only stipulation is that to offer coverage, private insurers must participate in the Exchange. It’s helpful to think of the Exchange like a Farmer’s Market. This is where you go to buy your coverage. The public plan is on sale there, but so are all the private plans. The idea is that this will be how the government can regulate the private insurers through competitive practices. Would you buy tomatoes for $5 a pound if the exact same tomotoes were available for $2 a pound or $1 a pound? No. Likewise, if one private insurer offers the same benefits at a higher price than another private insurer or the public plan, most people will “vote with their feet” and switch to a less expensive plan with the same benefits.

The bottom line: The proposed public plan option is an option. No one is being forced to enroll in the public plan. It represents more choice, not less. And it also promises to keep the private insurers in line, which means that everyone will have better options to choose from.

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Lazy Sundays No. 2

This weekend, I’ve picked out a few really excellent pieces that should get you to re-examine some of the conventional wisdom about things like:

The inside story of why the Clinton reforms failed–and why it wasn’t Hillary’s fault–in
The Hillarycare Mythology
by Paul Starr

Why Rationing is Unavoidable–and Already Taking Place–in
Why We Must Ration Health Care
by Peter Singer

Why rationing *gasp* is actually something to be encouraged on ethical grounds in
Rationing: Why it is Ethical
by Dan Brock

Exactly what Congress is up against viewed against the backdrop of history in
A History of Health Reform
in the New York Times

Headed off for a camping trip at Jordan Lake….

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Fear Not: Confronting the Controversial Issues (Part II)

Here’s the final part of the two-part series….

The New York Times has an excellent article out today that captures the public’s unease about health reform and Obama’s perceived failure to shoot from the hip with all of the details. It’s genuinely helpful to know what sorts of things are running through people’s minds. Paul Krugman has an op-ed that takes a more favorable view of Obama’s remarks from Wednesday night. Now, the third and final fear….

Fear #3 – Government Wants to Tax my Health Benefits
One of the ways that has been proposed to pay for health reform is to make some portion of health benefits taxable for the wealthiest Americans. Comments I received on this topic include:

Regressive taxation is not the same thing as a subsidy. Excluding premiums for employer-sponsored insurance from taxable income reduces the tax revenue the government collects, but does not give them authority on how to spend the extra cash. This argument sounds like the old “rich people only donate to charity for the tax break”. It’s emotionally charged and convincing at first, but the numbers don’t add up. Removing the insurance premium from a wealthy person’s taxable income might give them a tiny break ($400 off a $1000 premium in the 25% bracket), but since they are in a higher tax bracket they are, as you mentioned, already paying far more tax than a poor person. This “benefit” is minuscule by comparison. Furthermore, this exclusion is unlikely to encourage a wealthy person to pay for more coverage than they need, so it isn’t as though a wealthy person is going to carry more insurance just to get a bigger “break”. Spending $5000 to save $2000 just doesn’t make sense.

Facts: This one seems particularly widespread, and generates a lot of public outcry. The funny thing is, it would not likely affect you or most anyone you know personally. At least not in the way people fear. Quickly, how many families do you know, yours included, that earn at least $300,000 a year? How about $1 million a year? Well, those are the people that would see a portion of their health benefits become taxable.

I never equated regressive taxation with a subsidy. Those are two separate points. The subsidy point is simply that the government is helping to prop up the private employer-based health insurance market by foregoing hundreds of billions of dollars in tax revenue every year. I didn’t say it was a subsidy just that that’s the effect it has on things. Health economists everywhere agree on this point, whether or not they support it.

The other point, regressive taxation, works like this: There are six tax brackets in the U.S. ranging from a low of 10% to a high of 35%, which operate progressively (i.e., the higher your income, the higher your tax bracket—although the actual amount of your income paid in taxes is less than that as shown here).

For the sake of simplicity, I will use the 10%, 25%, and 33% brackets here, and salaries will be based on the median salary for that particular tax bracket. An average family health insurance plan runs about $11,000, so I will base my numbers around that, and use $15,000 for a more generous plan.In the first example, everyone has the exact same insurance coverage. In the second example, the wealthier individuals have coverage, while the less well-off individual has no coverage at all, because it was too expensive for their employer to offer.

Now, if we look at the “tax break as % of salary column,” in the first example, the numbers decrease as people get wealthier. That’s because the denominator (i.e., salary) goes up faster than the tax break. But, as we can see from the second example, this figure can be misleading. Here, an individual without coverage has the lowest “tax break as % of salary” (i.e., zero!).

But, back to the first example, what we see is that—if everyone has the exact same coverage in terms of plan cost—the actual dollar level of the tax break goes up with income. Now, the lower “tax break as % of salary” figure suggests that the wealthy may not take much notice of this benefit accruing to them, but as far as real dollars are concerned, the health care system as a whole certainly takes note.

This is precisely why it is suggested that a sizable portion of health reform could be paid for by taxing at least some portion of the wealthiest individuals’ health benefits. Would it not make sense for them to get the same tax break for the same insurance coverage as, say, the middle class get? Perhaps then we could use that revenue to avoid the situation in the second example where the person’s employer can’t afford to offer coverage.

On a lighter note, I did also receive some good questions, which I will work to find the answers to for a later post next week. They included:

• Of the 47 million uninsured, how many are actually citizens?

• How many can afford it but choose to remain uninsured?

• And how many are turned away from care due to lack of coverage?

Don’t forget to check back later this afternoon for this weekend’s “Lazy Sundays” post.

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