Physicians Decry "State of the Union" Health Proposals

FOR IMMEDIATE RELEASE
January 31, 2006
www.pnhp.org

Contact: Nicholas Skala         [phone]

National Doctors' Group Decries "State of the Union"
Health Care Proposals

Bush Reforms Would Worsen Care, Bankrupt Sick Families

President Bush's proposals for health reform would simultaneously: (1) worsen access to care for people who are already covered; (2) offer billions for new tax subsidies that will not expand coverage; (3) drive up bureaucratic costs and do nothing to control overall health spending; and (4) offer tax breaks targeted to the wealthiest Americans.

CONSUMER-DIRECTED HEALTH CARE

*    "Consumer Directed Health Care" (CDHC) is simply another term for skimpy insurance.  These plans shift costs from employers to workers by forcing them to pay huge deductibles - from $2000 to $20,000 - before insurance kicks in.  

*    Many plans exclude important services (e.g. maternity care) altogether, so spending for these doesn't even count towards the deductible.

*    High deductibles discourage needed as well as unneeded care, and particularly discourage preventive care.  For instance, diabetic patients forego routine eye and foot care, and end up with amputations and blindness.  Similarly, patients with high blood pressure skimp on treatment and end up with strokes and heart attacks.

*    These plans effectively penalize the sick for being sick, and will drive an increasing number of middle class families into bankruptcy.  While healthy people may pay a little less, the sick will pay far more.  Of course, virtually everyone gets sick and has high health costs at some point in their life - costs that will drain whatever money middle class people will be able to put into an HSA.

TAX CREDITS FOR THE UNINSURED

*    The tax credits the President would offer are so meager that they would not even cover the skimpiest of plans that are actually available.  The average cost of family coverage is now about $10,000, while the President suggests offering the poor only a $3000 tax subsidy.  Past experience with a similar subsidy program (under The Trade Adjustment Assistance Act) showed that only a tiny fraction of low income families were able to get coverage, even with a substantially more generous subsidy than Bush now proposes.

ADDED WASTE AND BUREAUCRACY

*    CDHC plans will not control costs. More than 30 percent of health spending is already consumed by administrative waste. HSAs and high deductible plans save nothing on existing insurance bureaucracy because patients and insurers must still keep track of each health expenditure to know when the deductible is reached.

*    CDHC will add a new layer of bureaucratic costs to the system.  A consultant has estimated that additional account management fees, transaction fees etc. required because of HSAs will cost $1 billion annually by 2011 (Modern Healthcare January 16, 2006:16).  Moreover, doctors and hospitals will have to spend even more than at present on their billing, since collecting cash from individual patients (many of whom will not be able to pay) is costlier than computerized billing of insurance plans.  One consultant has estimates these increased collection costs at 0.5% of total practice revenues, which would amount to billions of dollars annually.

*    Savings Account Plans encourage predatory lending to sick families. Already, insurance firms are chartering their own banks and investment firms are gearing up to manage HSA assets - for a fee.  Moreover, insurers are planning to issue HSA debit and credit cards (with high interest rates).

*    Nor will the incentives in CDHC contain overall health spending.  First, about 70% of health costs are incurred by a relatively few very sick people who will quickly exceed their deductible limits and have no incentives to "comparison shop" or otherwise save on care.  Second, by discouraging routine preventive care in the short term CDHC threatens to actually increase costs in the long run.  Finally, research in other nations demonstrates that an increase in deductibles does not decrease system-wide costs.  Doctors generally tell their sick patients how soon they need to return for a visit, how frequently lab tests should be monitored etc.  In Saskatchewan, Quebec and Switzerland, co-payments merely shifted care from the poor toward the wealthy as doctors apparently kept themselves fully booked, and yielded no overall savings.

HEALTH CARE TAX CREDIT FOR THE WEALTHY

*    The vast majority of CDHC tax breaks are sure to accrue to those who need them the least. The tax advantages of HSAs are far more valuable to people in high tax brackets than to the poor or middle class. In fact, early data shows that only one half of people choosing HSA plans have deposited any money in the account - presumably because they couldn't afford to.  Rich people choose these plans because they offer a big tax break, and poor people choose them because the premiums are lower - they look like a good deal until you get sick.

By contrast, single-payer national health insurance could provide high-quality, comprehensive coverage to every American by recovering more than $300 billion annually squandered on needless administration with a single, simplified payment system.

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Physicians for a National Health Program is an organization of 14,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call [phone]

Steffie Woolhandler, M.D. is an Associate Professor of Medicine at Harvard Medical School. She is the author of "Costs of Health Care Administration in the United States and Canada," New England Journal of Medicine, August 21, 2003.

FOR MORE INFORMATION: "Impacts of Health Reform," By Ken Thorpe, Ph.D., National Coalition on Health Care (available at: http://www.nchc.org/...).

•  The Physicians' Working Group for Single-Payer

  National Health Insurance, which appears to have some overlap with Physicians for a National Health Program, wrote about single-payer for the Journal of the American Medical Association.

  The Abstract:

  The United States spends more than twice as much on health care as the average of other developed nations, all of which boast universal coverage. Yet more than 41 million Americans have no health insurance. Many more are underinsured. Confronted by the rising costs and capabilities of modern medicine, other nations have chosen national health insurance (NHI). The United States alone treats health care as a commodity distributed according to the ability to pay, rather than as a social service to be distributed according to medical need. In this market-driven system, insurers and providers compete not so much by increasing quality or lowering costs, but by avoiding unprofitable patients and shifting costs back to patients or to other payers. This creates the paradox of a health care system based on avoiding the sick. It generates huge administrative costs that, along with profits, divert resources from clinical care to the demands of business. In addition, burgeoning satellite businesses, such as consulting firms and marketing companies, consume an increasing fraction of the health care dollar. We endorse a fundamental change in US health care--the creation of an NHI program. Such a program, which in essence would be an expanded and improved version of traditional Medicare, would cover every American for all necessary medical care. An NHI program would save at least $200 billion annually (more than enough to cover all of the uninsured) by eliminating the high overhead and profits of the private, investor-owned insurance industry and reducing spending for marketing and other satellite services. Physicians and hospitals would be freed from the concomitant burdens and expenses of paperwork created by having to deal with multiple insurers with different rules, often designed to avoid payment. National health insurance would make it possible to set and enforce overall spending limits for the health care system, slowing cost growth over the long run. An NHI program is the only affordable option for universal, comprehensive coverage.

  *Authors: The writing committee for the Physicians' Working Group for Single-Payer National Health Insurance included Steffie Woolhandler, MD, MPH (Department of Medicine, Cambridge Hospital/Harvard Medical School, Cambridge, Mass), David U. Himmelstein, MD (Department of Medicine, Cambridge Hospital/Harvard Medical School, Cambridge, Mass), Marcia Angell, MD (Department of Social Medicine, Harvard Medical School, Boston, Mass), and Quentin D. Young, MD (Physicians for a National Health Program, Chicago, Ill).

  
  

  by another American on Tue Jan 31, 2006 at 11:27:29 AM PDT

  •  Yes

    Himmelstein and Woolhandler are PNHP's founders, and Young is PNHP's national coordinator.

    by PNHP Nick on Tue Jan 31, 2006 at 11:39:50 AM PDT