Slow Road to Government Care

There are hints that the Obama administration and Democratic congressional leadership might be willing to negotiate on the inclusion of a government health insurer as part of health-care reform. The most likely alternative proposal, which has been discussed by the Senate Finance Committee, is to establish some system of consumer cooperatives or "co-ops."

While details are sketchy, the basic idea is to subsidize the creation of nonprofit health insurers on a state or regional basis. These supposedly would be run independent of the government and compete with traditional private health-insurance plans.

These government-authorized co-ops would serve no useful purpose. And they would risk the same adverse consequences as a public plan.

Democrats' health insurance proposals already require private insurers to accept all applicants with no pre-existing condition exclusions, at premium rates that do not reflect health status and vary only within a narrow range based on age. These changes guarantee people access to health insurance at rates that would not price the ill or near-elderly out of the market—without creating government-authorized co-ops.

Democrats' proposals expand eligibility for Medicaid and provide significant premium subsidies to buyers with incomes up to 300% or even 400% of the poverty level. These provisions would make insurance substantially more affordable for people with low-to-moderate income—without creating government-authorized co-ops.

Government-authorized co-ops also are not necessary to provide consumers with nonprofit alternatives. Nonprofit mutual insurance companies, most notably many Blue Cross and Blue Shield plans, already offer health insurance in many states. They are dominant players in some states.

Absent taxpayer subsidies or special rules, co-ops would not have any inherent advantage over private health insurers in establishing provider networks, negotiating with providers, and monitoring health-care utilization and fraud. Proposed co-ops instead would require billions of dollars of "start-up" subsidies.

More important, the creation of government-authorized co-ops would entail significant risk of ongoing subsidies by taxpayers (if not by private health-insurance buyers), of substantial private insurance crowd-out, and of eventual conversion to a government-run plan. Like a proposed public plan, government-authorized co-ops would be backed implicitly if not explicitly by taxpayers.

They would not have to hold the amounts of capital that private health insurers hold to back their promises. Government-authorized co-ops would almost certainly not have to pay income or premium taxes that private for-profit and nonprofit insurers must pay.

Although co-ops might initially be required to negotiate their own reimbursement rates with hospitals and doctors, substantial pressure would arise over time for centralized negotiations, with eventual benchmarking off Medicare reimbursement rates.

Compared with a public plan, government-authorized co-ops could simply be a slower road to government health care. The potential benefits are nil; the potential costs are large.

Health insurance stocks dip lower than market

INDIANAPOLIS — Managed care stocks dipped slightly lower than the overall market Wednesday, after insurers received more bad publicity with letters from Congress asking for executive compensation details and other financial information.

Several stocks fell around 1 percent while the broader Standard & Poor's 500 index climbed slightly. Wednesday's performance followed a managed care rally on Monday, after statements from the Obama administration downplayed the possibility of a government-backed public health plan that many investors fear would provide unfair competition to private health insurers.

The stocks have gone through several volatile periods since the health care reform overhaul debate started taking shape earlier this year.

Dozens of insurers received requests for information that included records relating to compensation of highly paid employees, documents relating to companies' premium income and claims payments, and information on expenses stemming from any event held outside company facilities in the past 2 1/2 years.

The requests were made in letters signed by Rep. Henry Waxman, D-Calif., who guided a portion of health care legislation through the House Energy and Commerce Committee last month as chairman, and Rep. Bart Stupak, D-Mich.

Of the largest publicly traded health insurers, only Louisville, Ky.-based Humana Inc. has said it plans to cooperate fully. Others have only said they received the letters.

Stifel Nicolaus analyst Thomas Carroll said the request implies that health insurers are doing something wrong.

"It's further demonizing of the health insurance industry, and it's pushing the stocks back down today a little bit," he said.

Robert Zirkelbach, a spokesman for the trade group America's Health Insurance Plans, dismissed the request as a "fishing expedition." His group and several health insurers have been active contributors to the health care debate.

For instance, Minnetonka, Minn.-based UnitedHealth Group Inc. has suggested ways the government can save more than $500 billion in Medicare spending over 10 years.

America's Health Insurance Plans favors bipartisan reform and has said universal coverage and stronger regulations can protect consumers and make a public plan or co-ops unnecessary.

The industry also has weathered attacks on its profits, and Obama has frequently said a public plan was needed to keep health insurers honest.

This latest information request creates more "headline risk," according to Carroll.

"The managed care industry certainly is not looking good at all from an image perspective, but I don't know that it ever has," he said.

Senators Closer To Health Package

Senate negotiators are inching toward bipartisan agreement on a health-care plan that seeks middle ground on some of the thorniest issues facing Congress, offering the fragile outlines of a legislative consensus even as the political battle over reform intensifies outside Washington.

The emerging Finance Committee bill would shave about $100 billion off the projected trillion-dollar cost of the legislation over the next decade and eventually provide coverage to 94 percent of Americans, according to participants in the talks. It would expand Medicaid, crack down on insurers, abandon the government insurance option that President Obama is seeking and, for the first time, tax health-care benefits under the most generous plans. Backers say the bill would also offer the only concrete plan before Congress for reining in the skyrocketing cost of federal health programs over the long term.


Three Democrats and three Republicans from the Senate Finance Committee will brief Obama on Thursday about the progress of their sometimes arduous talks, which are now set to extend through the August recess. The negotiators are holding the details close as they continue to debate key issues, and it could be a challenge for them to meet the Sept. 15 deadline set by the committee's chairman, Max Baucus (D-Mont.), for a deal.

Even if the partnership does not result in legislation, Democratic leaders are already contemplating ways to preserve much of what it produces as they look to unite their party and pick up Republican votes when the health-care debate moves to the Senate floor in the fall. The Finance Committee coalition is seeking compromise on some of the most complex issues facing Congress, including how to compel employers to continue providing insurance to their workers; how to more fairly distribute government subsidies for coverage; and who and how many should be allowed to remain uninsured.

Lawmakers said insurance companies are likely to pass the cost of such a tax to policyholders, raising the price of those plans. That would create a strong incentive for employers to stop offering them, thus driving down overall health-care costs. With employers paying less for insurance, tax analysts predict, they would pay workers more in wages, increasing income tax collections by as much as $180 billion over the next decade.

The Finance Committee proposal is also likely to contain a number of much smaller tax provisions, including a $2,000 cap on flexible savings accounts -- which are currently unlimited -- and a plan to improve tax compliance by requiring businesses to tell the Internal Revenue Service when they pay corporations for services.

"We've got options on the table that will pay for this fully," said Sen. Kent Conrad (D-N.D.), one of the negotiators. "It's a matter of choosing which pieces and how much of each piece is selected."

The excise tax is one of five provisions designed to slow the soaring trajectory of federal health spending, which is on track to bankrupt the country by the middle of the century absent significant reform, according to the Congressional Budget Office. Spurred by the CBO director's startling assertion last month that measures drafted by other committees would not bend the "cost curve," negotiators on the finance panel are also studying a plan to fine insurance companies that do not pay providers electronically, a plan to reduce payments to providers to force them to increase efficiency and a plan to study the comparative effectiveness of various medical treatments.

Finance Committee negotiators also want to set a target for savings through those reforms. If the target is not met, they would create a panel, called the Medicare Preservation Commission, that would recommend ways to obtain additional savings.

Baucus said preliminary estimates from the CBO, the nonpartisan arbiter of the cost of legislation, show that an early version of the plan would not only pay for itself but would begin to reduce projected budget deficits by 2019.

Health care debate: How many actually uninsured?

By ERICA WERNER (AP)

WASHINGTON — It's a central goal of the president's plan: Extending health care coverage to the millions of Americans who lack it. Question is, just how many million are uninsured?

The answer could make a huge difference in the billions of dollars it will cost to remake the national system.

Barack Obama frequently cites last year's Census Bureau number of 46 million people with no health insurance. But some experts argue that figure is off by tens of millions — in one direction or the other.

The recession's continuing toll on jobs, a tendency to undercount people on Medicaid and other factors make it hard to come up with an exact number. And the most widely accepted range — 40 million to 50 million — includes some 10 million non-citizens, a detail that's generally overlooked when Obama and others talk about "uninsured Americans."

The lack of certainty about such big numbers is one more question mark for Obama and members of Congress as they try to craft a plan that would cover most of the uninsured. Obama says his goal is to cover 97 percent to 98 percent of Americans, a target that would be reached by plans taking shape in the Senate — if you don't count illegal immigrants. A bill crafted by House Democrats comes in closer to 94 percent.

All the plans would exclude illegal immigrants, who account for as much as 17 percent of the uninsured, according to the Pew Hispanic Center.

"I want to cover everybody," Obama said at a news conference last month. "Now, the truth is that unless you have a what's called a single-payer system in which everybody is automatically covered, then you're probably not going to reach every single individual."

Some people don't want health insurance or just don't bother to get it, but most people who don't have it can't afford it, Obama said.

"So I think that the basic idea should be that in this country, if you want health care, you should be able to get affordable health care," he said.

New Census Bureau figures expected next month could scramble the equation, adding billions in costs if the numbers come in higher than expected, or reducing costs if the numbers are lower.

There could be serious implications "if we all of a sudden found that instead of 45 million uninsured there are 35 million," said Michael O'Grady, a senior fellow at the University of Chicago's health policy and evaluation department and a former assistant secretary at the Department of Health and Human Services.

A lower figure could cut two ways: making Congress' job cheaper, but also making the country's health care woes seem less pressing.

Even if there are fewer uninsured than now estimated, health experts emphasize that it's still a lot of people, and being uninsured has consequences. The Institute of Medicine has found that uninsured people are more likely to succumb to illness and suffer premature death.

Still, some overhaul foes are accusing the media of overreporting the number of uninsured in order to frighten the public and "bolster calls for universal government-run insurance coverage," as a report by the conservative media watchdog Media Research Center's Business and Media Institute put it.

The 46 million number (actually 45.7 million) cited by Obama and others comes from the Census Bureau's annual Current Population Survey for 2007. It's the consensus figure, but some researchers believe the CPS overstates the number of uninsured people, partly by undercounting how many people are on Medicaid, the federal-state program for the poor.

Another government survey, the Medical Expenditure Panel Survey done by the Department of Health and Human Services, says that about 40 million people were uninsured for all of 2007, and about 70 million were uninsured for part of the year.

All those numbers are out-of-date. Taking into account the effects of the recession, with widespread job losses cutting into employer-provided health care — more than 5 million jobs have been lost since last August — researchers at the Urban Institute and elsewhere estimate that the present-day number of uninsured is closer to 50 million. That's the number used by the Congressional Budget Office.

The Census Bureau is releasing its Current Population Survey for 2008 on Sept. 10. Then, later in September, for the first time, it's releasing health coverage information collected by the American Community Survey, which has a much larger sample size than the CPS. Some researchers are expecting that number to be more precise.

Immigrants may lose state health insurance

Thousands of legal immigrants — including hundreds on the Cape — could be cut from state health insurance rolls, making a dent in the commonwealth's vaunted health reform program.

Up to 30,000 immigrants who've held a green card for less than five years were sent letters July 1 saying their coverage under the Commonwealth Care program might be eliminated as of the end of the month. State officials and health care advocates say the ongoing fiscal crisis means the state doesn't have enough money to cover all its programs.

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Health bill could cut costs to businesses Commonwealth Care is a government-subsidized health insurance plan that pays for medical and dental care. Participants pay premiums based on a sliding-scale fee, with the poorest paying no fee.

"They're going to lose their health insurance. They didn't see it coming," said Camila De Oliveira of the Community Action Committee of the Cape and Islands. The organization has enrolled thousands of legal immigrants in the state's new insurance programs that came about as a result of the health reform act of 2006.

Receiving Commonwealth Care benefits allowed many immigrants to go to the doctor for the first time in years, and quite a few found they needed treatment for conditions such as diabetes and cancer, De Oliveira said. "Now their treatment is going to be stopped."

She estimated there are at least 2,000 legal immigrants on the Cape who will be affected, including people from Brazil, Haiti and Jamaica.

Most individuals dropped from Commonwealth Care would be shifted to something called the Health Safety Net and would end up getting their care from already busy community health centers or emergency rooms, said Brian Rosman, research director of an organization called Health Care For All.

"It's definitely a step backward from the progress we've been making," he said.

The closest pharmacy serving Health Safety Net customers is in New Bedford, De Oliveira said.

State legislators have said they need to cut the $130 million in Commonwealth Care benefits for this group of "aliens with special status" because of the budget crisis, Rosman said. The federal government provides no reimbursement for these recent, legal — but non-citizen — residents. Gov. Patrick has come up with a compromise plan of restoring $70 million in benefits that "would at least keep them in the kind of primary care that would keep them healthy," Rosman said.

The compromise is in the state Legislature's hands now, said Richard Powers of the Commonwealth Connector, a quasi-state agency that helps enroll people in insurance plans under health care reform. He said if the compromise funding is approved for September, there will be a gap of at least a month when the immigrants don't have any type of Commonwealth Care coverage and probably will have to be covered by something like the Health Safety Net, which replaces what was formerly known as the free care pool.

"We don't know if it's even going to be approved at all," Powers said. He said Commonwealth Care clients are entitled to 30 days' final notice before their coverage can be pulled.

Samantha Dallaire, aide for state Sen. Therese Murray, said the Senate can't act on the compromise funding until the House takes it up. All revenue bills start in the House, she said. "If they vote it down, it's dead."