Universal Health Insurance Coverage One Head at a Time - Affordable Health Insurance
April 10, 2008
The Risks and Benefits of Individual Health Insurance Mandates
The health insurance reform enacted in Massachusetts in 2007 and the proposals of the leading Democratic presidential candidates seek to achieve universal health insurance coverage while relying primarily on private insurance. Achieving universality is a challenge in any system that assigns insurance coverage, whether private or public, to identifiable individuals. The difficulties of finding, enrolling, and accounting for all eligible participants escalate when most of the financing for coverage is expected to come from premiums paid directly to multiple insurers rather than from funds collected centrally by the government through taxation. To address this problem, some reform models incorporate an individual mandate, a legal requirement that every person obtain insurance coverage. The Massachusetts health plan mandates coverage for both adults and children, as Senator Hillary Clinton’s proposed plan would do nationally; Senator Barack Obama’s plan would require parents to obtain coverage for their children.
Universal coverage that relies on private health plans is hardly unprecedented; several other countries, including Germany, whose health system dates back to 1883, as well as Israel, the Netherlands, and Switzerland, use this model. Neither is the individual mandate unique to the United States. The Dutch and Swiss systems, which, like the U.S. models, rely relatively heavily on premium payments rather than payroll taxes, incorporate such mandates. The individual mandate in the U.S. plans, however, has become a flash point for controversy.
The idea of an individual mandate as a means of achieving universal coverage dates back to the 1993 Clinton health plan. At that time, conservative proponents of expanded coverage argued that the availability of free or subsidized care for the uninsured would generate what they called free riders — people who were aware that inexpensive care would be available in the case of an emergency or a health catastrophe and who would therefore choose to forego the purchase of private insurance.1 Though such conservatives rejected a substantial role for government in providing health insurance, they asserted that the free-rider problem legitimated a requirement that everyone hold basic insurance coverage.
The free-rider problem remains a central element in the argument for an individual mandate. Research verifies the existence of such a problem but suggests that its magnitude is quite small.2 Funds diverted from uncompensated care would not be sufficient to pay for the subsidies needed to cover most uninsured people. Eliminating the free-rider problem through universal insurance might make the health care system more fair, but it wouldn’t make it less costly.
Achieving universal coverage is more important as a means of improving the functioning of the insurance market. A fundamental problem in health insurance is that people know much more about their own health than insurers do. Prospective purchasers can — and do — use this information when making decisions to obtain or retain coverage. Insurers respond to this behavior by aggressively seeking out healthier purchasers and discouraging the enrollment of those who seem likely to require costly medical care. This inevitable response drives up the costs of marketing and underwriting coverage, which are substantial components of the very high administrative costs of insurance purchased in the nongroup market. Compelling everyone — whether healthy or sick — to participate in the insurance market may diminish the use of these wasteful insurer tactics. Mandated participation may also make it easier for insurance regulators to limit the extent to which sicker people pay higher premiums by reducing the risk that healthy people will be driven out of the market. Proponents of an individual mandate hope that such a policy would help to reduce the administrative costs of health insurance in the United States to the considerably lower levels found in other private-insurance–based universal systems.
Although the desire to curtail free riding and strategic behavior by insurers provides the philosophical underpinnings of the individual mandate, policymakers’ interest in the mandate option owes as much to its fiscal implications. Universal coverage achieved through an individual mandate could cost much less than achieving the same result by giving people subsidies for buying coverage voluntarily.
The individual mandate responds to two lessons learned from previous efforts to expand coverage. First, although most uninsured people would like to have health insurance, the protection it offers against a potential adverse event is not an urgent priority for all of them. Many in this group are healthy. Most have relatively low incomes and many other demands on their pocketbooks. A decade and a half of incremental expansion efforts have demonstrated that inducing all uninsured people to take up coverage will require very substantial subsidies — subsidies that might well exceed the cost of the coverage itself.
Compounding this "take-up" problem is a second characteristic of insurance coverage. As the graph shows, even in the group with incomes between 100 and 199% of the federal poverty level, more people currently hold private insurance than are uninsured. Almost all of those who hold private insurance now pay at least a portion of the premium for that coverage. If substantial subsidies were made available for the purchase of new coverage, many who now pay for their own coverage would (eventually) make use of these subsidies instead. Subsidized coverage would crowd out existing private spending, greatly increasing the public cost of an expansion program. The individual mandate gives policymakers a new tool with which to respond to the take-up and crowd-out problems. Increasing the cost of remaining uninsured by imposing penalties in association with a mandate can promote coverage while keeping subsidy levels in check so that they do not lure the privately insured into the subsidized program.
The individual mandate offers new options, but it also introduces risks. The mandate is in many respects analogous to a tax. It requires people to make payments for something whether they want it or not. One important concern is that the government will provide insufficient funds for the subsidies intended to accompany the mandate. In that case, the mandate will act as a very regressive tax, penalizing uninsured people who genuinely cannot afford to buy coverage. This concern has led Massachusetts to create a hardship exemption for its mandate — an escape clause that effectively undoes the mandate if subsidies are insufficient. The ease with which it is possible to lift the mandate if the legislature fails to appropriate funds may make the individual mandate a rather rickety form of universal coverage.
The tax analogy explains another concern about mandates. Conservative proponents of small government fear that special-interest groups will urge legislatures to broaden the minimum mandated benefit package. The relative invisibility of the mandate "tax" may make it easier for special interests to achieve their goals. The mandate, then, would become a means through which special interests use government to force transfers of funds from consumers to the health care sector.
A final concern about mandates relates to their administration. Like taxes, a mandate requires enforcement if it is to be effective. Compliance with taxes, as well as with other mandates in current operation, is never perfect. It varies with the rules and procedures governing enforcement.3 The nature of insurance makes a health insurance mandate particularly tough to enforce. Taxes can be collected retroactively, but to be effective, an insurance mandate should be in place at the beginning of an insurance term, ensuring that people have coverage when an adverse event occurs. Developing a system to promptly identify and penalize scofflaws will take effort and ingenuity, particularly in our diverse and mobile country. It may require a degree of intrusiveness and bureaucracy that some will find unpalatable. If subsidies are generous and benefits valued, voluntary participation will be high and enforcement problems will be manageable. If subsidies are insufficient or benefits inappropriate, the mandate will be very difficult to enforce and draconian in effect. The risks associated with individual mandates suggest that they are no panacea.
Perhaps the most important benefit of mandates is symbolic. By mandating the purchase of health insurance, governments signal to their citizens that coverage is critical. For many uninsured people as well as their families, communities, and elected representatives, this public commitment to coverage may lead to a reassessment of priorities. Although making mandates functional will be demanding, just passing a mandate may serve an important purpose by moving health insurance higher on the agendas of all these constituencies.
No potential conflict of interest relevant to this article was reported.
Source Information - Dr. Glied is a professor and chair of the Department of Health Policy and Management, Mailman School of Public Health, Columbia University, New York.
MEGA Life Fined $1M In Maine For Flawed Premium Method
April 10, 2008
MEGA Life and Health Insurance, a subsidiary of HealthMarkets, has agreed to pay a $1 million fine imposed by the Maine Bureau of Insurance and the Maine Attorney General to settle a lawsuit that alleged the insurer used a flawed method to determine premiums for individual health insurance policies, the Portland Press Herald reports. The fine, one of the largest ever agreed to in Maine, represents a civil penalty of $250,000 for each of the four years the company operated in Maine. The insurer from 2004 to 2007 issued approximately 9,830 policies in the state. MEGA Life also will be required to refund consumers $4.6 million in overpaid premiums, plus interest. According to Maine Attorney General Stephen Rowe (D), MEGA Life’s rates were excessive under Maine law. Rowe said the company should have revised premium rates after its loss ratios did not meet the required statutory minimums.
The insurer has 30 days from the date of the decision to notify the Insurance Bureau of how they will compensate policyholders. According to MEGA Life, the agreement was reached after cooperative discussions with state regulators. Within 30 days, the company plans to file new rates with the bureau for its review and submit customer and refund data. Refunds will begin to be mailed within the next 60 days according to MEGA Life. Since 2002, MEGA Life has been fined by eight states and has faced lawsuits from dozens of policyholders, according to the Press Herald (Bell, Portland Press Herald, 4/4).
Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.
Missouri House Republicans Propose Health Coverage Legislation To Replace Governor’s Failed Proposal
April 10, 2008
Missouri Republican House leaders have introduced legislation that would expand health coverage to low-income state residents and require beneficiaries to contribute money to savings accounts to use toward deductibles and copayments, the St. Louis Post-Dispatch reports. The proposal, called “Insure Missouri,” is intended to replace a proposal of the same name by Gov. Matt Blunt (R). Blunt’s proposal failed to garner enough support among lawmakers.
Under the Republican proposal, individuals with annual incomes less than 85% of the federal poverty level would be eligible for coverage. Eventually, the income threshold could reach 225% of the poverty level. Beneficiaries would use a state Web site to purchase individual insurance policies with a set package of benefits. People who were denied coverage by insurers would be able to participate in a high-risk pool. The state would pay the premiums.
Beneficiaries also would be required to contribute 1% to 5% of their annual incomes, based on a sliding scale, to a savings account to pay deductibles and copays. Those who do not comply with the savings component would lose coverage. Deductibles could be as much as $2,500. The first $300 in preventive health care and two doctor visits would not be subject to deductibles or copays. The bill also would call for changes to the certification process for new medical facilities and enforce a price transparency mandate.
The proposal initially would cost the state an estimated $46 million and expand coverage to an additional 77,000 state residents (Young, St. Louis Post-Dispatch, 4/7).
Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation. © 2007 Advisory Board Company and Kaiser Family Foundation. All rights reserved.
Texas Delays Program To Expand Coverage To Low-Income Adults - Texas Health Insurance
April 10, 2008
Texas Health and Human Services Executive Commissioner AlbertHawkins has announced that a plan to provide health coverage to about 482,000uninsured parents whose children are enrolled in Medicaid or SCHIP will notbegin this fall as planned, the Austin American-Statesman reports. The program, which ismandated by the state Legislature, is intended to reduce the number ofuninsured residents with incomes too high to qualify for Medicaid but below200% of the federal poverty level. Commission spokesperson Stephanie Goodmansaid the uninsured probably will not have access to the program until 2010 or2011.
In a letter last week to state Sen. Jane Nelson (R) and state Rep. Dianne WhiteDelisi (R), both of whom chair health committees, Hawkins wrote, "We havenow determined that limitations to this model outweigh the benefits." Headded that the parents "would not have the level of consumer choice webelieve is important for the Texasreform effort." Hawkins noted that the plan would not offer sufficientoptions to hypothetical applicants seeking either catastrophic care or morecomprehensive coverage to care for a chronic disease.
The insurance program is part of a larger plan in Texas to shift health care spending awayfrom emergency care and toward preventive care. According to the American-Statesman,the program has been criticized by hospitals, physicians and advocates forpeople with low incomes (MacLaggan, Austin American-Statesman,4/8).
Enrollment Problems
In related news, the DallasMorning Newson Sunday examined problems with the state’s effort to switch to a partiallyprivatized system for determining eligibility for public programs. In 2003,Gov. Rick Perry (R) decreased the payroll of the state’s welfare offices andordered a shift of many screening duties to four privately operated callcenters. However, expected cost savings from the move have not materialized,and the new call centers have not made it easier for state residents to obtaininformation about and apply to programs such as Medicaid and SCHIP. In somecases, paperwork has been lost, and some eligible applicants are denied healthcare and other benefits because of system errors.
State officials "acknowledge the failures but say there’s no turningback," according to the Morning News. Goodman said the newsystem is a "much more flexible system. It’s modern, it’s Web-based, andit allows us to provide Texans with a great deal of choice in how they apply forbenefits." She said the promised savings and efficiency have not beenachieved because the program authorized in 2003 has not been fully implemented.Hawkins has announced several new initiatives this year to improve recruitmentand retention of state eligibility workers and to train more of them>Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation. ? 2007 Advisory Board Company and Kaiser FamilyFoundation. All rights reserved.
Iowa Passes Health Care Expansion Legislation Without Mandate - Iowa Health Insurance
April 10, 2008
The IowaSenate>
The expansion would cost an estimated $5 million nextyear and about $25 million annually by 2011. The bill also would allow youngadult children to remain>health coverage.
Details of the expansion would be determined by a commission, and the stateLegislature would consider the recommendations next year. The bill now movesback to the House, which approved similar legislation in March (Leys, DesMoines Register, 4/8).
Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation. ? 2007 Advisory Board Company and Kaiser FamilyFoundation. All rights reserved.
Indiana Loses 9 People A Week For Not Having Health Insurance - Indiana Health Insurance
April 10, 2008
Nearly nine people die each week in Indiana because they don’t have affordable health insurance coverage, says a new report by Families USA, the national organization for health care consumers.
The Families USA report, the first-ever state-specific report of this type, is based on a groundbreaking national study by the Institute of Medicine, which in 2002 forged the direct link between a lack of health coverage and deaths from health-related causes.?
“Our report highlights how our inadequate system of health coverage condemns a great number of Hoosiers to an early death simply because they don’t have the same access to health care as their insured neighbors,” Ron Pollack, Executive Director of Families USA, said today. “The conclusions are sadly clear—a lack of health coverage is a matter of life and death for many Hoosiers.
“Health insurance really matters in how people make their health care decisions,” Pollack said. “We know that people without insurance often forgo checkups, screenings, and other preventive care.”
As a result, he said, uninsured adults are more likely to be diagnosed with a disease, such as cancer, in an advanced stage, which greatly reduces their chance of survival. The Institute of Medicine found that uninsured adults are 25 percent more likely to die prematurely than adults with private health insurance.
Another recent academic study found that uninsured adults between the ages of 55 and 64 are even more likely to die prematurely. For this group, a lack of health insurance is the third leading cause of death, following heart disease and cancer.
The Families USA report for Indiana makes three specific points about uninsured adults:
* Families USA estimates that nearly nine working-age Hoosiers die each week due to lack of health insurance (approximately 460 people in 2007).
* Between 2000 and 2007, the estimated number of adults between the ages of 25 and 64 years old in Indiana who died because they did not have health insurance was nearly 3,100.
* Across the United States, in 2007, twice as many people in that same age category died from a lack of health insurance as died from homicide.
“I believe quality healthcare should be the right of every American,” U.S. Rep. Baron Hill (D-IN) said today. “And, this report clearly demonstrates that it is only getting harder for working families to get good coverage.?
“To that end, I am working with my colleagues in Congress to create the Commission on Affordable Healthcare to investigate ways to lower healthcare costs in America,” Hill said. “This Commission would include patient advocacy groups, medical professionals, hospital associations, medical equipment providers, health insurance companies, pharmaceutical companies, as well as lawmakers. I believe that the government should take the lead in bringing everyone together to finally resolve this crisis.”
“This report reminds us that the lack of affordable health insurance has real consequences, often deadly, for the people of our country,” U.S. Rep. Brad Ellsworth (D-IN) said today. “This isn’t a Republican issue or a Democratic issue. Providing health care coverage for all Americans should be a goal we all share and work together to achieve.”
In its 2002 report, the Institute of Medicine estimated that 18,000 adults nationwide died in 2000 because they did not have health insurance. That estimate was later updated by the Urban Institute, which reported that at least 22,000 adults died in 2007 due to a lack of health insurance.
Massachusetts Health Insurance Law Has Achieved Much - Massachusetts Health Insurance
April 10, 2008
"Whilethe success of" the Massachusetts health insurance law "is notassured," the state "should be proud of accomplishing so much, soquickly," a Boston Globe editorial states. Health care in the state costs more than some otherstates, but "in the short term, this cost disparity meant Massachusettshad more money in the system to expand coverage — notably from a Medicaidwaiver by the federal government, which comes up for renewal>Reprintedwith permission from kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, and sign upfor email delivery at kaisernetwork.org/email . The Kaiser Daily Health PolicyReport is published for kaisernetwork.org, a free service of The Henry J.Kaiser Family Foundation. ? 2007 Advisory Board Company and Kaiser FamilyFoundation. All rights reserved.
Lack Of Health Insurance Costs NC 3 Deaths A Day - North Carolina Health Insurance
April 10, 2008
Nearly three people die each day in North Carolina because they don’t have health insurance coverage, says a new report by Families USA, the national organization for health care consumers.
The Families USA report, the first-ever state-specific report of this type, is based on a groundbreaking national study by the Institute of Medicine, which in 2002 forged the direct link between a lack of health coverage and deaths from health-related causes.?
“Our report highlights how our inadequate system of health coverage condemns a great number of North Carolinians to an early death, simply because they don’t have the same access to health care as their insured neighbors,” Ron Pollack, Executive Director of Families USA, said today. “The conclusions are sadly clear—a lack of health coverage is a matter of life and death for many North Carolinians.
“Health insurance really matters in how people make their health care decisions,” Pollack said. “We know that people without insurance often forgo checkups, screenings, and other preventive care.”
As a result, he said, uninsured adults are more likely to be diagnosed with a disease, such as cancer, in an advanced stage, which greatly reduces their chance of survival. The Institute of Medicine found that uninsured adults are 25 percent more likely to die prematurely than adults with private health insurance.
Another recent academic study found that uninsured adults between the ages of 55 and 64 are even more likely to die prematurely. For this group, a lack of health insurance is the third leading cause of death, following heart disease and cancer.
The Families USA report for North Carolina makes three specific points about uninsured adults:
* Families USA estimates that nearly three working-age North Carolinians die each day due to lack of health insurance (approximately 1,000 people in 2007).
* Between 2000 and 2007, the estimated number of adults between the ages of 25 and 64 years old in North Carolina who died because they did not have health insurance was nearly 5,600.
* Across the United States, in 2007, twice as many people in that same age category died from a lack of health insurance as died from homicide.
“This important report underscores the stakes that we face in considering federal policy to reduce the number of the uninsured—health insurance is a life or death matter,” U.S. Representative David Price (D-NC) said today. “It is simply unacceptable that so many of our fellow citizens, many of whom are children, go without health insurance.?
“Finding a way to achieve universal coverage should be one of our nation’s top priorities,” Price said. “But we in Congress are still facing a White House roadblock even with our bipartisan effort to expand health care for needy children. We are well past partisanship on this issue.? The President and his backers need to get with the program and support children’s health care and other efforts to get Americans insured.”
In its 2002 report, the Institute of Medicine estimated that 18,000 adults nationwide died in 2000 because they did not have health insurance. That estimate was later updated by the Urban Institute, which reported that at least 22,000 adults died in 2007 due to a lack of health insurance.
How Many People Are Likely To Die Due To Lack of Health Coverage - Affordable Health Insurance
April 9, 2008
State-by-State Reports Reveal Why Health Insurance Matters as a Life-and-Death Issue
In 2002, a groundbreaking national study by the Institute of Medicine of the National Academy of Sciences demonstrated the direct link between a lack of affordable health insurance coverage and deaths from health-related causes. Drawing on that study, Families USA, the national organization for health care consumers, has today made available reports for all 50 states that show how many people are expected to die in each state each week because they don’t have health coverage. A separate report is also available for the District of Columbia.
The individual reports, available on the Families USA Web site, provide eye-opening numbers for every state. Among the figures cited is the fact that more than seven working-age Texans die each day due to a lack of health insurance. Other reports reveal that, on average, approximately 960 people in Illinois died in 2007 because they had no health coverage, and nearly 9,900 uninsured New Yorkers between the ages of 25 and 64 died in the years 2000 to 2007.
“Our report highlights how our inadequate system of health coverage condemns a great number of people to an early death simply because they don’t have the same access to health care as their insured neighbors,” Ron Pollack, Executive Director of Families USA, said today. “The conclusions are sadly clear—a lack of health coverage is a matter of life and death for many people.
“Health insurance really matters in how people make their health care decisions,” Pollack said. “We know that people without insurance often forgo checkups, screenings, and other preventive care.”
As a result, he said, uninsured adults are more likely to be diagnosed with a disease, such as cancer, in an advanced stage, which greatly reduces their chance of survival. The Institute of Medicine found that uninsured adults are 25 percent more likely to die prematurely than adults with private health insurance.
Another recent academic study found that uninsured adults between the ages of 55 and 64 are even more likely to die prematurely. For this group, a lack of health insurance is the third leading cause of death, following heart disease and cancer.
In its 2002 report, the Institute of Medicine estimated that 18,000 adults nationwide died in 2000 because they did not have health insurance. That estimate was later updated by the Urban Institute, which reported that at least 22,000 adults died in 2007 due to a lack of health insurance.
Although 50 state reports were released by Families USA today, Pollack cautioned against trying to make state-to-state comparisons. The variables of population size, mortality rates, and uninsured rates for people ages 25-64 have made each state report unique.
“We never sought to say one state is ‘better or worse’ than another in terms of these mortality statistics,” Pollack said. “Instead, we have sought to make these tragic numbers more meaningful by making them as local as possible and by indicating how frequently these deaths may occur. State-specific reports are the most ‘local’ we are able to offer with the data available.”?
New York Medicaid Program Establishes Coverage For Trofile - New York Health Insurance
April 9, 2008
New York Medicaid has established coverage and reimbursement for Monogram’s Trofile Assay, a diagnostic used to determine patient candidacy for Pfizer’s new HIV anti-viral medication Selzentry (maraviroc).
Initiated in 1989 to ensure early identification and access to quality care for New Yorkers who can’t afford medical care, the HIV Primary Care Medicaid Program revised its reimbursement structure in response to advances in HIV treatment and testing technology. With the establishment of coverage by the medicaid program, coverage will also be available from the New York ADAP program so that comprehensive coverage will now be available from all public payers in New York.
"New York remains the epicenter of the HIV/AIDS epidemic in the U.S.," said Dennis deLeon, President of the Latino Commission>Medicare, the Veteran’s Administration, the Corrections and Prison Systems and Department of Indian Affairs, as well as with a number of private payers.
Monogram introduced Trofile in August 2007, upon FDA approval of Pfizer’s Selzentry (maraviroc), and since then, almost 6,000 tests have been performed for patients throughout the U.S. In January 2008 DHHS Guidelines for Use of Antiretroviral Agents in HIV - 1 infected Adults & Adolescents recommend the use of the Trofile assay whenever the use of a CCR5 inhibitor is being considered as well as to be considered for patients who exhibit virologic failure on a CCR5 inhibition.
