Economy Tanks; Hospitals, Patients Hardest Hit

As we pointed out yesterday, changing the way we finance health care (i.e. insurance) does nothing to solve the problem of providing it; it's akin to rearranging deck chairs on the Titanic. Further proof of this comes to us today from the American Hospital Association:

"Six out of ten hospitals nationally are seeing a greater proportion of patients without insurance coming through their emergency departments ... At the same time, nearly half of hospitals reported they have cut staff."

This from a recent survey undertaken by the aforementioned American Hospital Association (AHA).

Notice that the statement very carefully states "a greater proportion," not a greater number of such patients. So what's the problem? Perhaps this observation, buried further down in the release, offers a clue:

"(M)any hospitals are seeing more patients covered by Medicaid and other public programs for those in need."

Now we see reference to total quantity; in other words, more folks are covered by the gummint, which means at little or no cost to themselves. When something's essentially free, there's a greater demand for it. That's basic economics, which seems to have passed under the radar for so many in our political class.

Lest you think that you're the only one doing major belt-tightening, we learn that "the economy is affecting hospitals with nine in 10 hospitals making cutbacks to help weather the economic storm." Again, I see no indication that they're cutting costs, just expenses. Since we know that health care costs drive health insurance costs, perhaps we're seeing a glimpse of the future. Under a government-run health insurance scheme, everyone gets their coverage "free" (or nearly so), fueling demand, and leading to fewer resources. Fewer resources means more expensive resources, further fanning the financial fire [ed: enough with the alliteration!].

There's another element at work here, as well: the ER is arguably the most expensive room in the hospital (in terms of overall cost for services), yet "(t)he majority of hospitals reported fewer patients are seeking inpatient hospital care or elective care." Again, the wording leaves us wondering if the number of patients overall is shrinking; is it possible that they're simply bypassing the less convenient inpatient services (which require a "reservation") for the more readily accessible ER? The release doesn't say so, but it seems a reasonable inference.

Finally, there's this:

"Many hospitals are struggling to make ends meet with over 40 percent expecting losses in the first quarter of 2009, jeopardizing their mission of caring for their communities."

Again, while it's easy to point at lower reimbursements from insurers, it's important to remember that those reflect reimbursement levels from Medicare. The gummint sets those rates, which hospitals really can't refuse, shifting costs to those with private insurance (or none). Imagine those levels if the state calls the shots for both providing and financing health care.

Ouch!

Health Wonk Review now online!

Health Wonkmeister Robert Laszewski hosts this week's compendium of health care policy and polity. It actually went "live" last evening, proving once again that he's always on top of the latest news and views.

Check it out!

Risk Analysis: Ends and Means vs The Flu

There are (apparently) several high-power drugs available to treat the latest strain. They are all under patent, which means that their production is necessarily limited by the manufacturing capacity of the patent-holders.

Some questions:

■ Should the government order the patents "broken," and the formulae distributed (for lack of a better word) to various other manufacturers (the patent-holders' competitors) in order to increase the speed of production?

■ What, if any, message would that action send to the owners of other IP (Intellectual Property)?

■ Is potentially saving thousands of lives worth that risk?

[Hat Tip: Hugh Hewitt]

Have you Twittered your Entitlements?

[Welcome Industry Radar readers!]

When was the last time you Twittered your entitlements? Has it been that long? Oh, my.

Now you can Twitter to your heart's content about all government handouts you may be missing.

Visit GovBenefits.gov and put your tax dollars to work! Connect with 1,000+ government benefit programs for your family, your job, your home, your health.

Amazing.

It's as if they can't give away our money fast enough already.

Seems I was a bit hasty. Stop me before I Twitter again!!!

Even more Twittering of tax dollars.

(Re)Stating the Obvious: Health Insurance vs Health Care

If you don't ask the right question, you're never going to get the right answer. Similarly, if you don't address the right problem, you're never going to find the right solution.

If health insurance is supposed to pay for health care, then there need to be adequate providers of that health care in the first place. Simply requiring everyone to have health insurance (and requiring insurers to take everyone regardless of health, circumstance or personal choice) does nothing to resolve the underlying shortage of folks who actually deliver the care ostensibly financed.

As Mike pointed out last weekend, "“The bottom line is medical care. But the rhetoric and the talking points are about insurance.”

That seems fairly obvious to most, but then most aren't former college professors or community organizers. And that's exactly the problem with the current administration's grand vision of health care: if there's a shortage (and there is), then how do you provide it to everyone who needs it (you don't).

Which brings us to the real crux of the problem, an ongoing (and increasing) shortage of both specialists and primary care physicans:

"Lawmakers from both parties say the shortage of health care professionals is already having serious consequences. “We don’t have enough doctors in primary care or in any specialty,” said Representative Shelley Berkley, Democrat of Nevada."

One proposed solution is to bump up Medicare reimbursements, but that's met with considerable resistance from the doc's themselves: since it's essentially a zero-sum game, increasing PCP reimbursements would cut into the specialists' income.

And, of course, Medicare itself is slowly, inexorably going broke, which one would think might be a wake-up call (but of course, it hasn't been).

Another proposal (which we've heard before), would be to (somehow) increase the supply of doctors [ed: really? How quickly can we clone them?]. That, too, has met with resistance from, you guessed it, physicians; more doctors means more available care (theoretically), but does nothing to reduce costs.

Quite the conundrum.

So we have a health care system with significant problems, but we're looking at changing the health insurance system to address them. Why does anyone think that makes sense?

Obligatory Swine Flu Post

Since we're often categorized as a "medblog," it seems natural to comment on the "health crisis du jour." While we would never minimize the danger of any potentially catastrophic health problem, I think that we should step back a moment, catch our collective breath, and think this through.

A few years ago, it was bird flu, and SARS before that. While the damage to those individuals who did contract those diseases was, of course, tragic, neither illness became the epidemic/pandemic that was feared.

[ed: let's also clarify some of the terms that have been bandied about recently: a pandemic is a disease that is "prevalent throughout an entire country, continent, or the whole world; epidemic over a large area." An epidemic is one which affects "many persons at the same time, and spreading from person to person in a locality where the disease is not permanently prevalent." Courtesy Dictionary.com]

It appears that, while serious, the swine flu doesn't pose an immediate, existential danger to citizens of our fair country. It's interesting to note that in Mexico, the apparent epicenter of the outbreak, the fatality rate is alarming; here, not so much. Perhaps that's because the Mexican health care system is run by the government.

According to the Centers for Disease Control, "(s)wine flu symptoms are very similar to seasonal influenza and generally include fever, fatigue, lack of appetite and coughing, although some people also develop a runny nose, sore throat, vomiting or diarrhea."

In addition to common-sense prevention methods (such as covering one's nose and mouth, washing hands frequently and the like), the CDC recommends staying away from those who may be infected (coughing, sneezing and the like) and staying home if one has symptoms.

To quote Sergeant Esterhaus: "Hey, let's be careful out there."

D'Oh! Who Didn't See THIS Coming?

[Welcome Derek's Twitter readers!]

According to NPR, " (s)ome people can't buy health insurance because they have a pre-existing medical condition. But for most of the nation's 47 million uninsured, cost is the big obstacle — especially if they don't work for a company that pays part of the premium." No argument, but hardly news: we've been pointing this out for over 4 years.

But something else we've been singing from the rooftops (metaphorically, of course) is that most folks don't have any real clue how much insurance should cost, and balk at the high price when they finally bother to get a quote (usually for coverage they don't even need). As NPR reports, "even if they could find an affordable health plan, many are not used to building that cost into their monthly budget."

No kidding.

Of course, many (most?) of these folks have no trouble building their budgets around cell phones and web access, not to mention cable. As the political class contemplates requiring everyone to be covered, the dirty little secret is that most of these folks are completely unaware of how much such coverage will cost. Again from NPR:

"Two out of three uninsured Americans say they'd be willing to pay no more than $100 a month for coverage. But, according to the Kaiser Family Foundation, the average individual health plan costs about $400 a month, and a family policy costs more than $1,000."

Three things jump out at me from this:

First the wording is quite curious: "two out of three uninsured Americans..." Is NPR finally admitting that a huge swath of the uninsured are not, in fact, "Americans" at all, but indeed are illegal immigrants? We've made that point numerous times; is it possible that the wonks at NPR are secret IB readers?

Second, it's nice that uninsured folks are willing to pony up "$100 a month for coverage." On the one hand, if they're talking about individuals, that may well be "doable" through the use of High Deductibe Health Plans and perhaps a rollback of some of those expensive mandated benefits. If they're talking about $100 per family, well, rotsa ruck with that. By the way, how much is that digital cable bill each month?

Finally, the folks at Kaiser (quoted in the NPR story) continue to throw out that IB-trounced canard that "a family policy costs more than $1,000." Well sure, if we're talking low deductibles and co-pays for office visits, But if we could just get our fellow citizens to understand that health care costs drive health insurance costs, perhaps they'd cut back on the cigs and Big Macs, and the low deductibles and co-pays that encourage over-utilization (and thus drive up costs).

D'Oh!

[Hat Tip: Holly Robinson]

Yummy Grand Rounds

Kerri at Six Until Me hosts this week's round up of great medblog posts. Stop into her GR Cafe and grab some food for thought.

COBRA/ARRA: Ohio Update [UPDATED]

[Please scroll down for important update. HGS]

The good news is that we continue to see clarifications regarding how this massive new entitlement will be implemented. The bad news is that we continue to receive clarifications regarding how this massive new entitlement will be implemented.

Case in point: Ohio's "mini-COBRA" law.

Until a few weeks ago, the threshold for whether or not one would qualify under Ohio's (existing) insurance continuation law was simple: if you qualified for unemployment compensation and had been previously covered for 3 months, you're golden. The main sticking point was always that "eligible for unemployment" wording: the only way for one to know for certain was to apply and await a decision. If you passed, you were entitled to stay on the previous plan for up to 6 months (albeit completely on your own dime).

That's all changed now. The new regs, signed into law on April 1 (how appropriate), lift that key qualifier. Now, that threshold is simply that one has been involuntarily terminated (except for "gross misconduct"), and the continuation has been extended to 12 months (to more closely align with "regular" COBRA/ARRA).

And, of course, the insurer is responsible for forwarding the 65% subsidy. Contrary to popular belief, by the way, the insurer isn't really "paying" anything; they're simply rerouting dollars, which they'll recoup quickly enough at the next renewal. Something about a "free lunch."

We all caught up yet?

ADDENDUM/UPDATE (4-28-09): FoIB Don Deaton points out that since the new law was signed (and took effect) on April first, employees of groups that haven't renewed "until (April 2, 2009) will still only get 6 months of continuation, and ... will still have to be eligible for unemployment to get the coverage at all." The law specifically states that "policies issued, delivered or renewed after April 1, 2009, must include" the new language.

Play Some (Virtual) Golf, Help Some (Very Real) Kids

Chris Heydt, Senior Account Executive at Ogilvy Public Relations, clues us into a wonderful program sponsored by Zurich Life. According to Chris, "(f)or the past five years the Zurich Classic Golf Tournament has been raising money for children’s charities ... there was an opportunity to do a little bit more for organizations who may be in even more need of support than usual ... Zurich is contributing up to $95,000 to two kids’ charities - Fore!Kids Foundation and Practical Action based on participation in a fun online golf relay game."

So here's your opportunity to turn a diversion into a worthwhile effort. Playing is easy: just click over to the HelpPoint website, create a golfer (can I have Natalie Gulbis?), and tee off to send a message of hope. Based on the number of tee-offs (tees-off?) Zurich will donate money to these charities.

It's free, it's fun, what're you waiting for?

Viagra Rub

Can't swallow pills?

Not a problem.

Scientists at the Albert Einstein College of Medicine have been testing a Viagra rub on mice.

Of the seven rats treated by the Albert Einstein College of Medicine in New York, five showed signs of arousal, according to results presented to the American Urological Association (AUA).

The new treatment would likely have fewer side effects than Viagra, which is taken orally and been shown to cause headaches and facial flushing.

Researchers also believe that the nanoparticle therapy could work much more quickly than Pfizer's market-leading drug, which takes up to an hour to kick in.

Good to know.

Life Insurance as ATM: Deconstructing the Myth

Full disclosure: I have not read the book that purportedly promulgates this myth, but was tipped to it by FoIB Wenchy. So I won't take the author to task, but merely use her premise as a "jumping off point" to discuss how the concept is so deeply flawed.

First, though, let's review how permanent life insurance works, and why it can be such a useful tool. Insurance is about risk, and life insurance is a particularly good example of why that's important. Life insurance is based on the premise that death is a certainty; the only question is when (and, in some cases, how, but that's another post). Notwithstanding the very useful LifeSpan widget we've previously discussed, no one but the guy on death row really knows when he's going to die (and he's not a particularly attractive prospect for most carriers). Since we don't know when, we buy permanent insurance as a tool to minimize the financial risk to our families.

To do this, permanent plans cost more than they need to in the early years, as a way to sock away reserves that keeps the plan affordable as we age. These "cash values" are comparable to the equity one builds in one's home, and can be used as a sort of savings account that can be accessed should the need arise. And just as one's house is the collateral for a home equity loan, the death benefit of the policy is the collateral for the policy loan.

Pretty simple, really.

Life insurance policies are rarely good "investments," however, and should never be confused with such. While the cash value builds on a tax-deferred basis, and can be accessed on a tax-advantaged one, they're really not cost effective as ATM's. For one thing, interest is charged on these loans; left unpaid, this can snowball, and even cause the policy to collapse.

For another, if one dies with a substantial loan against the policy, funds that had been counted on to help the family are unavailable at a time that they may be most needed.

But perhaps the benefits of the plan outweigh the drawbacks:

"Here's the plan: you get a whole life insurance policy with a PUA rider (Paid-Up Additions) and invest (in yourself basically) up to the MEC limit. These investments will return dividends, which you reinvest in the policy. Now when you get to the MEC limit (during the capitalization period of about 5-6 years), you can take out loans on your policy (interest on which is tax deductible) and pay (yourself) back over time."

First, the most essential thing to determine when buying a policy - any policy - is how much one needs. Simply buying a policy for use as a potential cash cow is dangerous, and I would also characterize an agent who sells this way as ethically-challenged.

Second, it presupposes that one can find (and afford) a "participating" policy (one which pays dividends). These are not bad policies per se, but they can be more expensive than non-par plans, particularly Universal Life policies (which have their own issues, as well). And, of course, that one can afford to maintain the premiums on such a plan; as we'll see in a moment, letting the policy lapse (or "be foreclosed" to continue our homeownership analogy) can have serious tax consequences.

Third, dividends are not guaranteed; relying on them can lead to disastrous results. If they're lowered, or suspended in a given year (or years), the whole concept collapses. Skeptical? Ask a (former) Crown Life insured.

Fourth, by definition one cannot "reinvest" in a participating whole life policy, because there is no "investment" to be made. Lest readers think I'm parsing, be aware that policies which have investment-like components (called "Variable Life") are heavily regulated by federal and not just state agencies. They require special licenses and documentation, and more closely follow "the market" than the participating whole life plans suggested by the reviewer.

Fifth, interest on life insurance loans is not tax deductible, and hasn't been for many years. So any potential tax savings touted are nonexistent.

Lastly, let's talk about this "paying yourself back over time" nonsense. You're not paying yourself back: you're re-paying the insurer, which holds the death benefit as collateral. If one were to falter in that planned repayment, the possibility that the policy will lapse increases. If one doesn't need the plan anymore, then the loss of the potential death benefit is not a problem. But if one has borrowed out more than one has paid in (a very real possibility with a plan that's been in force for a while), and subsequently lapses the policy, the gain is fully taxable.

Kind of shoots the ol' ATM in the foot, doesn't it?

The bottom line is: this is a very bad idea. As I mentioned above, there are some really great reasons to own permanent insurance (I own three such plans, of varying design), but the idea that one can effectively use any one of them in this manner is at best silly, and at worst dangerous. Unfortunately, by the time one learns this the hard way, it may well be too late.

This Week's Carnival of Personal Finance now online...

Make your "Way" over to Fire Finance's place for this week's link-fest of all things finance.

Medical insurance or medical care?

Here is an interesting point of view:

“The bottom line is medical care. But the rhetoric and the talking points are about insurance.”

Isn't that the truth? But happily, more and more people are beginning to grasp this simple fact with all its profound implications - as well as the adverse implications for failure to acknowledge the fundamental difference between medical insurance and medical care.

You'll be glad if you read it all - because reading Dr. Sowell is always SO refreshing!

COBRA Crunch

Finding affordable health insurance in Georgia is relatively easy for most folks. When you adopt a bare bones approach and only pay for coverage you actually need most people are surprised to see how much money they have wasted in the past and how much they can save going forward.

But when you are out of work and without a paycheck, even the employer subsidized COBRA premium can be beyond reach.

Danna Walker of Humble, Texas lost her job at DHL and along with it her health insurance. The bi-weekly unemployment check of $688 is not enough to cover the family's COBRA premium of $1360 ($467 after the COBRA subsidy).

Like many others, the Walkers live on a knife's edge of risk. Without insurance to cover her high blood pressure or his diabetes, they defer doctors' visits when possible and obtain their prescriptions - nine between the two of them - for $4 apiece at Wal-Mart.

But their primary concern has been finding insurance for Jake, who, after four operations, two stem cell transplants and round after grueling round of chemotherapy, has been cancer-free for a year.

He continues to face a significant threat of recurrence and requires regular monitoring for at least two years. His twice-a-year CT scans cost $3,000 each, and quarterly blood tests and X-rays run more than $1,000.

When you lose your job and COBRA is an option, each family member has COBRA rights independent of the other. It is rare that all family members would face insurability options, and when possible, the healthy ones should be separated from those who need coverage from the group insurance plan.

Other things, such as asking your doctor to change medication to something less expensive such as generics or older brand names is a good start. But the COBRA subsidy will run out in 9 months (some times sooner, depending on the size of the group) and COBRA will expire as an option after 18 months. Most states have risk pools and all have provisions for HIPAA eligible individuals to continue their coverage.

Late last month, in a race against the clock, the Walkers obtained a short-term policy for Jake through Oklahoma State University, where he is a junior studying animal science on a scholarship. Doing so could be crucial to his future insurability because federal law allows insurers to deny coverage for pre-existing conditions when there has been a gap in coverage of at least 63 days.

That may or may not have been the right thing to do. Some states do not recognize STM (short term medical insurance) plans as creditable coverage and not all STM plans meet the criteria of creditable coverage. Many of the plans offered through universities are little more than a mini-med health plan with limited benefits and will not preserve their HIPAA rights.

Our health care Resource (Patient Charity) page is a popular starting point for those who are unemployed or uninsured. People can find taxpayer subsidized health care programs along with a number of charitable organizations that provide assistance.

When Danna was employed at DHL she paid $426 per month for health insurance, DHL paid the rest. Their coverage with Cigna covered roughly $2,000,000 for the cost of Jake's cancer treatment.

Cancer is not just an old person's disease. Jake is only 21.

Roughly 35 states have a high risk pool for uninsurables. (Sadly, Georgia is not one of them). The Texas risk pool wants $414 for a $1,000 deductible plan to cover Jake but the Walker's say they can't afford it.

Even with help all around it is not enough when you cannot find work. The ripple effect of the housing meltdown created by government intervention in the free market is still claiming new victims. So where are those 6,000,000 jobs that would be saved or created with taxpayer "stimulus" money?

Apparently not in Humble, Texas.

Most folks who are out of work can find affordable health insurance. We get calls almost daily from people looking for solutions and most of the time we are able to find a solid plan at a price that fit's their budget.

Cancer Without the Lump

[Welcome New York Times readers!]

Laura Vickers of Sandy Springs has cancer. Not just any cancer, but a rare form of breast cancer called IBC (Inflammatory Breast Cancer).

IBC accounts for 1 - 5% of all breast cancer cases and the survival rate is lower than for other forms of breast cancer.



You can follow Laura Vickers story on her blog. More information on IBC can be found at IBC Research, the Mayo Clinic, and the American Cancer Society.

COBRA/ARRA Update: No Kidding? We Called It

This morning's McPaper had this headline in its Money section:

Health insurance subsidy for laid-off workers has holes

The paper describes several scenarios under which laid off employees may fail the AEI (Assistance Eligible Individual) test:

• Their former employer has gone out of business.

As we noted earlier this week, "COBRA allows one to continue coverage even after one has left an employer. If that employer subsequently goes bankrupt ... the insurance goes away; there is nothing to "continue."

• They worked for a small company and live in a state that doesn't provide extended COBRA coverage

So-called "mini-COBRA" laws extend many of the COBRA requirements to employers with fewer than 20 employees, as we reported almost two months ago.

Unfortunately, this is one case where we're not particularly pleased to be right; a lot of folks have learned the hard way that government largesse often comes with major strings attached.

ADDENDUM: Okay, so you're not eligible for COBRA, let alone the subsidy. What options are available?

Well, that depends largely on your health. If you're in decent shape, not taking a lot of medications, individual medical plans are a great deal. For one thing, you can customize the plan to fit your own needs (unlike "one size fits all" group plans). For another, rates for these plans are often lower than comparable group policies. Your first step should be to consult with a professional, independent agent who specializes in this kind of insurance.

If you're in California, that means someone like Bill Halper; if you're in Georgia, look up Bob Vineyard. The key is to find someone who can help you explore all the alternatives.

But what if you're on a limited budget, especially after being laid off? Or perhaps you have major health issues? Then you need to click on over to Coverage4All, an online resource that helps you find low-cost, even free health care options.

It doesn't have to be the end of the world; it just takes a little time and effort to find the right solution.

From the Mailbag: Painful Mandates

As we've repeatedly shown, adding mandated benefits to health plans increases premiums for everyone, while rarely addressing underlying costs. Touted by special interest groups, it's sometimes difficult for politicians to say "no." And insurance companies make attractive targets: easily portrayed as "the bad guys," one almost imagines carrier CEOs twirling handlebar mustaches while grinning at how they've once again shortchanged their clients.

Which is why an email we recently received from For Grace is so disturbing and disingenuous:

"Chronic pain attacks 76.2 million Americans each day. When those people visit their physician in search of medicine or treatments to help alleviate their suffering, many find their health plans prevent them from getting the prescriptions their doctors have deemed best to treat their condition. Some of the ways this is done include little known practices such as “step therapy,” “fail first” and “therapeutic switching.”

For Grace is a nonprofit advocacy group which claims to be "devoted to ensuring the ethical and equal treatment of all women in pain." While that sounds noble, their email betrays a rather twisted portrayal of how the system really works.

For starters, insurance companies have no power to dictate to providers how they treat their patients, nor can carriers prohibit their insureds "from getting the prescriptions their doctors have deemed best." Insurance companies have the power only to decide how much (if any) they will pay toward the cost of those treatments.

And then there's the snide reference to "step therapy." As defined in the email, this technique is "designed to lower costs and ostensibly provide higher-quality care. The policies are also called "fail first" policies by some, since the drugs must fail to help the patient before the patient receives coverage for a different option." And that's fairly accurate. But the email goes on to tout a bill in the California legislature that would prohibit insurers from overriding a doctor's prescription. The Golden State's legislators really ought to consult with their counterparts in Georgia, Florida, and Alabama, since those states want to do exactly that.

And it's interesting that For Grace isn't training its sights on CMS, since Medicare does the exact same thing. Under Part D, one must go through a lengthy appeals process to overturn that agency's step therapy requirements. Perhaps the folks at For Grace know that it's far easier to fight an insurer than The Feds.

The real issue, however, is whether or not step therapy is effective at both controlling costs and obtaining desired health outcomes. I asked one of our industry insiders to help educate our readers in why step therapy is often successful. He was kind enough to give us a brief tutorial as to why outlawing it would be a bad idea:

"Step therapy is a program where certain prescriptions will only be covered if a prior series of medications or treatments have been tried first. I cannot speak to other carriers, but we have a very limited step-therapy program. I would assume that other carriers programs mirror ours. As outlined by the doctor mentioned, it is usually the higher cost drugs or lifestyle drugs. That is not the whole picture, however, as effectiveness is also a key driver. Take Nexium for example. It was removed from our formulary not just because the cost was prohibitive, but because there were other PPIs that were more effective."

So in this case, a medication that was both more expensive and less effective was relegated to a non-preferred status. Does that mean that an insured is forbidden to buy and take it? Of course not, but that insured will pay more out of his own pocket for the privilege, which saves money for the carrier, and thus all the other insureds. Why would this be a bad thing?

And what about the argument that carriers only do this to avoid paying for more expensive meds?

"Step is a combination of effectiveness and cost control, and both of those pieces need to be in place in order for the program to be successful. If only the cheap drugs are used without an eye for effectiveness, we could see an increase in negative outcomes that have a higher treatment cost on the backend."

In other words, carriers recognize that cheaper isn't always less expensive in the long run.

For Grace is concerned about pain meds, but the same arguments would apply to any other class of drug. Whether it's Nexium, or Lipitor or steroids, it's important to remember that just because something costs more doesn't mean that it's more effective or desirable. And certainly, requiring carriers (not to mention Medicare) to avoid looking at "the big picture" increases costs for all of us.

I'll Drink to That! (Or Maybe Not)

Here's a loaded question: "Can You Drink Your Way to Sobriety?" The surprising answer is: Maybe.

The reason that such a non-committal answer is surprising is that simple common sense would dictate that the answer be "no way." Yet it's the premise behind a new treatment protocol being touted by Dr Roy Eskapa (Ph.D).

According to Dr Eskapa, there's a drug called naltrexone which apparently represses the opioid receptors in one's brain (these are what enable us to "feel high"). According to proponents of this method, if those receptors don't fire, "the addictive behavior ceases, and the problem drinker therefore loses interest in liquor."

That may be good news for alcoholics (or those predisposed toward alcoholism).

The "catch" is that, for the therapy to be be effective, the patient must continue to imbibe (if only for a while). That seems to me to be a rather sticky conundrum: isn't that going to continue to cause liver damage, for example? And then there's the insurance issue: is this going to be a covered expense?

That, of course, depends on what one's policy says. Unfortunately, most plans exclude expenses for things like smoking-cessation programs; it seems to me that this is akin to such regimens. And the cost can be prohibitive: the injectable form (which is apparently more attractive than the oral version) can run $700 a pop. The article says "(m)any health insurance plans pay for the injections," but I found no evidence cited to support this; it seems unlikely that this is the case. Perhaps IB readers with experience in this area could enlighten us?

Although this seems a promising avenue for treatment of this illness, it seems to me to be like the elusive "magic pill" that instantly helps one lose weight with no side effects or effort. I'll give the last word to Dr Harold C. Urschel III (M.D.). Dr Urschel, who helps run a well-known Dallas addiction treatment center, observes:

"It would be nice if all you needed was one pill ... But alcoholism is not just uncontrolled drinking. It's a chronic medical disease and needs to be addressed in a multifaceted fashion."

Cavalcade of Risk #76 is up!

This week's collection of risky posts is hosted at Super Saver 's blog. Super's organized his edition around five general categories, which makes it quite user-friendly.

Couch Potato's Cause Global Warming

We like to stay on top of the news, and we know our readers probably missed this, so here goes.

Global warming is not caused by cars, factories or aerosol cans. It is caused by fat people.

"Moving about in a heavy body is like driving in a gas guzzler."

Each fat person is said to be responsible for emitting a tonne more of climate-warming carbon dioxide per year than a thin one.

Define thin.

The scientists say providing extra grub for them to guzzle adds to carbon emissions that heat up the world, melting polar ice caps, raising sea levels and killing rain forests.

Sounds like the making of a good Randy Newman song. "Fat people got more body to love . . ."

A staggering 40 per cent of Americans are obese, among 300 million worldwide.

Obesity also contributes to almost two thirds of illness that could be prevented.

Grand Rounds is up...

Amy at Diabetes Mine hosts this week's Birthday Bash edition of Grand Rounds. Hey, it's worth stopping by just for the cupcakes!

COBRA/ARRA: Misinformation Abounds

[Welcome New York Times and Industry Radar readers!]

Had a call today from a prospect looking for information on COBRA/ARRA, specifically how she could access the gummint's subsidy. It seems that until recently, she worked at a large national retailer which had shuttered its doors. She was under the impression that she could still elect COBRA (this was understandable, since she had already received the required paperwork for continuation). Unfortunately, the company folded before she could complete, let alone return, the forms.

In the event, it wouldn't have mattered had she been able to do so, since that option evaporated with the company:

COBRA allows one to continue coverage even after one has left an employer. If that employer subsequently goes bankrupt (completely, not a reorganization plan), the insurance goes away; there is nothing to "continue."

[ed: Some states require carriers to offer "conversion plans" in certain circumstances, but that wasn't the case here]

If there's nothing to continue, there's nothing to "subsidize." Indeed, since the company no longer exists, it's not possible for it to pay the 65% at issue. Being a persistent sort, my caller opined that this was okay, she'd opt for an individual medical plan, "since the government's subsidizing it anyway."

Once again, I had to explain that this was not the case (and it's truly disturbing how much misinformation abounds out there): the government never directly paid the subsidy anyway, and there was no provision for any subsidy for non-group plans [ed: Hush up - don't give 'em any ideas!].

In short, if your (previous) employer goes belly-up, so does your COBRA-based health insurance. By the way, this can also happen if the employer simply decides to cancel the group plan altogether (although, in that case, a conversion plan may be available). This is especially problematic for folks with chronic and/or severe pre-existing conditions.

This is just one more reason why I generally suggest to folks that they get off of COBRA as quickly as possible. If you're not on it, it can't bite you.

"Compassionate" Gummint Care

"Whomever pays the piper calls the tune" goes the (once-popular) adage. And that makes a certain amount of sense: if, for example, the government is paying for one's health care (which, of course, it's not; the taxpayer foots the bill), then the government has a stake in both the cost and outcome of that care.

I don't much disagree with that.

But that then begs the question of whether or not we should have the choice of opting out of such a system. As we've seen, when the gummint controls health care (and the funding thereof), it gets to "call the tune" in ways that folks may not have envisioned. Which brings us to the point of all these questions: if the gummint runs the health care system, does that mean it gets to override the advice and concerns of one's own physician?

It appears that it may, in fact, mean just that:

"Because of strokes she suffered while in her mother's womb, 13-year-old Callie Moore of Danielsville has a host of complex medical problems. ... Callie's condition mandates round-the-clock care and treatment. Under federal and state Medicaid regulations and policies, she is entitled to screening, diagnostic and treatment services and, because she is medically fragile, skilled nursing care ... Callie's doctor prescribed 94 hours a week of nursing services, but state officials unilaterally reduced the hours to 84 in 2006."

Now it's important to remember that the state didn't (and thus far, can't) prohibit Callie from receiving the extra 10 hours, but it can certainly refuse to pay for them. And so it has. Since I'm not a doctor (nor do I play one on TV), I won't pass judgment on whether or not the disputed 10 hours are "medically necessary;" but certainly when the state deems them not to be, it's very difficult to "fight city hall."

Now, astute readers may observe that insurance carriers also have a say in whether or not the cost of care will be reimbursed. And that's true: if you've ever filed a claim, you know that the insurer will "reprice" it based on the rates they've previously negotiated with the provider. And sometimes, they'll deny a claim (or pay a reduced amount) based on medical necessity.

But there are some important distinctions: first, the contract itself is agreed to by the parties (the insurer and the insured), they are subject to several appeals processes, and, ultimately, the insurer may be sued by the insured or even fined by the state.

Meanwhile, one can shop around for a different carrier.

There are, in short, choices.

A gummint-sponsored plan, however, offers few of these safeguards, and no choices. The plans are not flexible, one doesn't get to see a policy, and the insured has two choices: abide by the decisions or forego the coverage. An insurer may well have "deep pockets," but they don't have bottomless ones. Not so with the state, which has powers far beyond those of mere insurers.

Callie's parents fought the decision in court, and won. Instead of abiding by the decision, however, three states are fighting it:

"In March, Georgia, Florida, and Alabama joined in an appeal of a 2008 U.S. District Court ruling that a patient’s physician was better positioned – and better qualified – to make decisions about that patient’s medical treatment than state bureaucrats."

Again, readers may argue that insurers make these kinds of decisions, as well, and they'd be correct. But insurers employ legions of medical folks, from CMO's to on-call nurses, to help make them. The state doesn't. There's no question that insurers make bone-headed decisions (one has only to read our on-going Stupid Carrier Tricks series for proof of that); but they are usually held to account for them, and the state has the power to change those decisions, and to enforce those changes.

But who enforces the enforcers?

If the state is the sole source of medical insurance, let alone the sole source of medical care, then who or what has the means to hold those bureaucrats' feet to the fire? That's the danger of socialized, government-run health care, and little Callie may indeed be the poster child for refusing it.

ADDENDUM: In further proof of gummint-run healthcare's tepid sense of "compassion," there's this (from the Files of the MVNHS©):

"Health Service paramedics have been told not to resuscitate terminally-ill patients who register on a controversial new database to say they want to die."

Granted, this is at least a kind of "choice," but is it really the kind of change we really want?

ADDENDUM THE SECOND: Straight from the source, an important warning about the dangers of nationalized health care:

[Hat Tip: Elizabeth Terrell]

Carnival of Personal Finance is up...

Hosted this week at the Mighty Bargain Hunter blog, the Carnival of Personal Finance is a weekly collection of interesting finance-related posts from around the blogosphere.

Health Insurance Monopoly?

Is there a monopoly on health insurance? Some people seem to think so.



Government alternatives already exist for most people. Medicare for the elderly and disabled, Medicaid for the poor, SCHIP for children and most states have risk pools for those who have severe health issues. All of these programs are free (to the beneficiary) or highly subsidized by taxpayer dollars.

More government intrusion is in play now thanks to the ARRA amendment to COBRA. Employers are now required to subsidize 65% of the cost of COBRA for terminated employees. This subsidy can last for up to 9 months and creates and undue financial strain on companies feeling the pinch of a government induced recession.

So why do we need a government monopoly on health insurance? Think Fannie Med.

If you think health insurance is expensive now, just wait until the government takes charge. Trillion dollar deficits passed on to your children and grandchildren will become common place.

Just another stupid government trick.

Cavalcade of Risk #76: Call for Submissions

SuperSaver hosts next week's Cavalcade of Risk. Submissions are due by Monday the 20th, and Cav goes live on the 22nd. SuperSaver asks that you include:

■ Your blog's url
■ Your post's url
■ The post's trackback URL (if available)
■ A (brief) summary of the post

And PLEASE remember: ONLY posts that relate to risk (not personal finance tips and the like).

You can submit your post via Blog Carnival or email.

COBRA/ARRA: The State Fair Edition

Previously, we noted that some states have so-called "mini-COBRA" laws which apply to smaller groups (under 20 employees). There was some confusion as to how COBRA/ARRA would apply in these situations, which has now been cleared up a bit, thanks to (no kidding!) Anthem.

Readers may recall that the new "regular" COBRA rules require the employer to bear the cost of the employees' subsidy; the rules for "mini-COBRA" differ in that they require the carrier to, um, carry those costs, and then (hopefully) recoup them through their own payroll tax filings.

While one may enjoy the "schadenfreude" of the carrier being put in the position of premium payer, it would be well to remember that these costs are actually borne by their insureds (that would be thee and me). Something about the Law of Unintended Consequences.

And, of course, these folks will be eligible for the subsidy effective last September (some 7 months ago). That could end up being a nice chunk of change coming out of carriers' coffers.

And ultimately, our wallets.

From the P&C Files: Insuring Piracy?

While hunting for relevant Cavalcade of Risk posts (something I do to help out hosts), I ran across this fascinating article on K&R (kidnap and ransom) insurance:

"... it doesn't take much imagination to see that kidnap and ransom insurance feeds a flourishing worldwide enterprise in criminal activity. It's the insurance equivalent of derivatives in the securities trading market. There's no stated law against it, so it must be okay."

Provocative, yes, but oddly compelling. Recommended.

Health Wonk Review: Health Care Carousel of Progress! is up...

Pizaazz blog's Glenn Laffel makes his HWR debut, presenting an outstanding roundup of all that's wonky in the healthcare side of the 'web. From poetry and an epic escalator fail, to posts on "Big Insurance" and Google Health, you're sure to find something to whet your appetite for info.

Not Your Mother's Tea Party

Hard as it may be to believe, I have never before participated in an organized protest.

Ever.

So this afternoon proved a watershed event for me, as I mingled with thousands of fellow citizens in the brisk ( but dry!) Dayton weather. Because this was such a seminal moment for me, I'd like to share some of my thoughts and observations about my experience, while avoiding some of the more obvious politics [ed: rotsa ruck with that].

As I mentioned, I've never been to a protest before, so I really didn't know what to expect or even the appropriate time to arrive. The event was planned to officially kick off at 6:00, and I was concerned about parking (a perennial problem in our fair city). So I got downtown about 4:00, and turned into the first parking garage I saw; this was about three blocks from Courthouse Square.

As predicted, the walk didn't kill me.

When I arrived at the designated site, I found about a dozen or so other folks milling about. Several of us introduced ourselves, noting that this was our first protest (this later turned out to be a common theme). Gradually, the crowd grew, until about 5:30, when I looked around again - really looked around - and realized that there were many hundreds of people around me. I have no idea how many folks attended; the rumor was three thousand, perhaps more. Regardless, it was a lot of people.

Something else I noticed: there was a good mix of ages, with a lot of grandparents (or, at least, folks old enough to be grandparents). I found this intriguing. And it was a well-behaved crowd: folks helped each other up and down steps, that kind of thing. I was pleased that the event began with both the Pledge of Allegiance and the National Anthem.

And the signs!

I saw literally hundreds of home made signs, and a mere sprinkling of professionally manufactured ones. Make of that what you will, but I was heartened by this.

This was billed as a non-partisan event, and for the most part, it was. That is, it was not a matter of Democrat vs Republican, but it was not a non-ideological event, in that it appealed more to conservative than liberal values. Unfortunately, a lot of folks (judging by their signs) mistook Obama's recent efforts as the sole cause of our current situation. He is not: Republicans, including former President Bush, were complicit in much of what we now face.

One common chant was "Fire Them All," meaning all members of Congress, regardless of party affiliation. While I understand the sentiment, it is - let me find the right word - oh yes: stupid. Notwithstanding the legal and constitutional issues of such an idea, it fails to recognize that there are folks in both Houses, and on both sides of the aisle, who have fought against wasteful spending.

Another common sign was "Read The Bill!" Indeed, several of the speakers chastised members of congress for passing Spendulus without even reading it. This is also stupid: does anyone really think that if they'd read it, they wouldn't have passed it? Wishful thinking.

And of course, there were signs and speakers using the event to tout the Fair Tax. I have no particular disagreement with the concept of the Fair Tax, but the way it's being promoted is, you guessed it: stupid. The problem is that most people don't have a clear understanding of just how much they currently pay in taxes ("hey, I got a refund!"), and so have no particular reason to get all excited about doing away with the current code. The Fair Tax is certainly a reasonable ends, but as a means, it's, well, you know.

So, Henry, what's your solution if you think the Fair Tax "isn't all that?"

It's simple really, and would require only one bill and would cost virtually nothing to implement: merely outlaw all tax withholding. Business owners and entrepreneurs know all about quarterly filing; the average employee is clueless. If there's no withholding, everyone gets 100% of their paycheck, every week (or whatever).

That's the good news.

The bad news is that everyone would then be required to file quarterly taxes. That means writing a potentially sizeable check, every three months. I suspect that after exactly two of those checks go out, we'd see the end of the tax code as it currently exists. Then the Fair Tax may become a viable option.

Okay, back to the Tea Party. With one exception, all of the speakers were "regular folks:" homemakers, business owners, a gentleman who grew up in East Germany who spoke eloquently about this land of opportunity and freedom. The last speaker was a state representative who did a passable job of staying non-partisan. By then, the crowd had started to thin, as folks looked at their watches and headed home for (one supposes) dinner. None of these were professional speakers (save for, obviously, the pol), but they were excited and exciting, and obviously "true believers" in the cause.

As for me, I was there for a much simpler reason: my daughters and their (eventual) children, and their children. It frightens me to think that we're purposefully burdening them with even more debt; a long term, perhaps permanent "solution" to an obviously short term problem.

Will these events make a difference? I really don't know. But for me, it seems necessary that we at least try because if we don't, the alternative is frightful to contemplate.

ADDENDUM: I neglected to mention something else that bothered me about today's rally. The signs and speakers focused primarily on the massive debt and increased taxes, but very little was said (or seen) about the bail-outs or (perhaps more importantly) the government takeover of parts of two major industries: automobile manufacturing and financial institutions (including insurers).

I think that one of the wonderful aspects of this "movement" (for lack of a better term) is its lack of centralized planning or sponsorship; on the other hand, one of the challenges of this movement is its lack of centralized planning. Because it is essentially a grassroots effort, it lacks a coherent and cohesive message. Perhaps that will change as it matures and coalesces, but I think the speakers (at least at the Dayton event) missed an opportunity to spotlight the increased government control of major sectors of our economy, and the dangers that such control represent.

I certainly hope that this is corrected at future such events.

COBRA . . .ARRA . . . Gotcha!

[Welcome Industry Radar readers]

Just when you thought it was safe . . . the land shark is at your door.

So you thought the Porkulus Bill and the ARRA (American Recovery and Redundancy Act) was a good deal for those who opt for COBRA, right? After all, your employer is required to pay 65% of your COBRA premium for up to 9 months so life should be good.

Not so fast Sparky.

By any chance did you have a Flex (FSA) plan in place for your group health insurance? If so, there may be a gotcha.

According to the folks at Conexis, this little goody is buried in the law according to a recent release from your friends at the U.S. Treasury.

COBRA premium reduction is available for any group health plan EXCEPT . . . vision only, dental only, mini-med plans, and . . . those administered under Section 106(c) as part of a flex spending plan. (See the bottom of page 3 and top of page 4 of the linked document).

Having fun?

I knew you were.

UPDATE:

Some have commented and emailed regarding the interpretation (above) of Treasury notice 2009-27, indicating perhaps Conexis missed the mark. Here is a direct quote from that notice.

Q-27. Is the premium reduction available for COBRA continuation coverage under a vision-only or dental-only plan?

A-27. Yes. The premium reduction is available for COBRA continuation coverage of any group health plan, except a flexible spending arrangement (FSA) under section 106(c) offered under a section 125 cafeteria plan. This includes vision-only or dental-only plans and “mini-med plans,” whether or not the employer pays for a portion of the costs for active employees. The premium reduction is not available for continuation coverage offered by employers for non-health benefits that are not subject to COBRA continuation coverage, such as group life insurance.

You be the judge.

DNA vs PAP

Pap smears are a regular health care item for women, and are considered covered expenses under many health plans; indeed, many of the newer HDHP's cover them as first dollar expenses (meaning that most of the cost is borne by the carrier, regardless of whether or not one has met the deductible).

And that's a good thing.

Or is it?

According to a recent NYT article, "(a) new DNA test for the virus that causes cervical cancer does so much better than current methods that some gynecologists hope it will eventually replace the Pap smear ... Not only could the new test for human papillomavirus, or HPV, save lives; scientists say that women over 30 could drop annual Pap smears and instead have the DNA test just once every 3, 5 or even 10 years."

Once a decade? That could represent a significant cost savings, for both insureds and insurers. But is cheaper better?

Maybe so:

Scientists' "optimism is based on an eight-year study of 130,000 women in India financed by the Bill and Melinda Gates Foundation and published ... in The New England Journal of Medicine. It is the first to show that a single screening with the DNA test beats all other methods at preventing advanced cancer and death."

"All other methods." That's significant.

On the other hand, the old adage about the roof that isn't leaking still holds sway:

"But whether the new test is adopted will depend on many factors, including hesitation by gynecologists to abandon Pap smears, which have been remarkably effective. Cervical cancer was a leading cause of death for American women in the 1950s; it now kills fewer than 4,000 a year."

That's a significant reduction on cervical cancer-related deaths; while 4,000 still leaves a lot of sad widowers, parents and children, it's a far cry from a "leading cause of death." So the question is whether the new test can put a significant enough dent on those remaining 4,000 to persuade OBGYN's to abandon the old Pap smear en masse.

Time will tell.

[Hat Tip: Holly Robinson]

More Spendulus Fallout: EMR ASAP

As we've noted noted before, one of the little-publicized "gotcha's" in the Spendulus was this little gem:

"The bill’s health rules will affect “every individual in the United States” (445, 454, 479). Your medical treatments will be tracked electronically by a federal system. Having electronic medical records at your fingertips, easily transferred to a hospital, is beneficial. It will help avoid duplicate tests and errors."

Now, that sounds fairly benign, until one realizes that it's Washington, DC ('dah capital') in charge of processing that information. And by "processing," we mean "selling:"

"The economic stimulus law plans for every American to use an electronic health record (EHR) and allows those records to be sold for research and public-health purposes – without patients' consent," says Sue Blevins, presient of the Institute for Health Freedom.

[ed: the IHF is a not-for-profit, non-partisan think tank founded in 1996]

So-called "data sharing" has been around for a long time, of course (cf: "do not call list"), but this takes on a whole new meaning, perhaps an ominous one. After all, if the gummint is in charge of keeping and disseminating your information to health care providers, it's also able to sell that data to drug manufacturers, employers (and potential employers), anyone it chooses. On the one hand, that's a nice revenue stream (to offset some of Washington's other expenses), but at what cost?

Ms Blevins claims that "her goal is not to be alarmist." But why not? This is an alarming development. No, we're not talking black helicopters and tin-foil berets, but how easy would it be for this information to be abused? Or mishandled, or lost or stolen? The answer is probably "no more than if it was underatken by private industry." And that would be about right.

The problem is "accountability:" when private companies (e.g. credit card issuers, mortgage holders, etc) screw up, they're sued and fined. But one can't (easily) sue the government. And there's the rub: what good are assurances when there's no way to enforce them?

The question now is whether it's too late to derail this particular train.

Unfair Competition

Say you owned a business selling hot dogs on the street corner. Hot dogs are easy to prepare, affordable for most and in high demand (especially at lunch time).

You have run this business for some time, have established clientele for repeat business and even pick up new clients from time to time. Even though there are restaurants nearby, you really have a niche market with almost no competition.

Life is good.

But say a new hot dog vendor shows up one day and parks their cart next to yours. Your hot dogs sell for $2.50. Add a little more for cheese or chili.

The new guy is selling the same hot dog for $1.25 with all the works.

How long will you stay in business?

More importantly, how long will your competitor stick around when his dogs are half the price of yours?

If your competitor has an unfair advantage, such as the ability to draw unlimited cash to fund his business and never have to worry about paying it back then don't expect the competition to go away any time soon.

Now, instead of hot dogs, let's say you sell another high demand product like health insurance. Your product is priced to cover your costs and leave a little left over to provide you with some income.

But now a competitor comes along that doesn't have to play by the same rules. They have the ability to dictate what services are covered, who is entitled to those services, and how much they will pay medical providers for there services. But they have another advantage that you don't. They don't have to play by the same rules as you. They can borrow money at any time and never have to worry about paying it back. Nor do they have to "qualify" for the loan.

How long before your clients stop buying your product when they can get the same thing for half price?

If the new regime in Washington get's their way this might happen. Obama-care will work something like this.

Democrats this year want to institute a "public option" -- an insurance program financed by taxpayers, managed by government and open to everyone, much like Medicare.

Financed by taxpayers. In other words, you will be forced to pay for it whether you want it or not.

This public option will supposedly "compete" with private alternatives. As President Obama likes to put it, those who are happy with the insurance they have now can keep it -- and if they happen to prefer the government offering, well, gee whiz, that's the free market at work.

No one is forcing you to buy the new plan. You have a choice.

When Massachusetts mandated health insurance for everyone and offered a choice of a "free market" plan or a tax subsidized plan, guess what happened?

A couple of things.

Many who had health insurance before dropped it in favor of the free or subsidized plan. After all, why pay for something when you can get it for free?

The other was a squeeze play on primary care. Suddenly, it was easier to get tickets to game 7 of the World Series than to get an appointment with a primary care doctor.

A public program won't compete in a way that any normal business would recognize. As an entitlement, Congress's creation will enjoy potentially unlimited access to the Treasury, without incurring the risks or hedging against losses that private carriers do. As people gravitate to "free" or heavily subsidized care, the inevitably explosive costs will be covered in part with increased outlays to keep premiums artificially low or even offer extra benefits. Lacking such taxpayer cash, private insurance rates will escalate.

Unlimited access to cash without incurring risk.

Sounds great, right?

Except eventually, everyone pays.

Kind of like the mortgage crisis. All of us are now paying for the abuses of a few which were subsidized to a great extent by Fannie & Freddie . . . those quasi-government entities backed by the full faith and credit of the taxpayer.

Much like Medicare, overall spending in the public option will be controlled over time by paying less for medical services, drugs and technology. With its monopsony purchasing power, below-market fees will be dictated on a take-it-or-leave-it basis -- an offer hospitals and physicians won't be able to refuse. Medicare's current reimbursement policies pay hospitals only 71% of private rates, and doctors 81%, according to the Lewin Group.

Right now, hospitals and doctors are not required to accept Medicare patients unless they also receive taxpayer funds. Sound familiar? But there is talk about imposing severe payroll tax penalties on medical providers who do not accept Medicare patients. In other words, government sanctioned extortion.

In a recent analysis, Lewin estimates that enrollment in the public option will reach 131 million people if it is open to everyone and pays Medicare rates. Fully 119 million people will shift out of -- or lose -- private coverage.

If you think Medicare is currently working well, then you don't know Medicare.

About 170 million people currently have private insurance, which is already pressured by the price controls of Medicare and Medicaid. A significant share of government underpayments are simply transferred to the private sector, adding tens of billions of dollars every year to consumer health bills.

That is referred to as cost shifting.

What the government doesn't pay is made up by the rest of us.

We pay more so those on the taxpayer funded government health insurance plan can have their free care. Sweet deal, huh?

But wait.

We, as taxpayers, pay for it any way.

Our taxes fund Medicare and then we pay again because Medicare short changes the medical providers.

What a country.

Pesach and Pascha

Hank celebrates Pesach, or Passover.

We celebrate Pascha, or Easter.

But where do these words come from?

According to some, you can blame it on William Tyndale, the publisher of the first English translation of the Bible. The Tyndale Bible is also known as the King James Bible.

King James I of England ordered the translation of the Bible which was to become the "official" Bible of the Church of England. English translations existed prior to the Tyndale Bible but King James wanted one that would be officially accepted by the Church of England.

The Old Testament was originally translated from Hebrew while the New Testament from Greek. Old Testament documents referred to Pesach which Tyndale translated into a word he coined . . . Passover. Prior to that time the word Passover did not exist.

When Tyndale encountered Pascha in the New Testament Greek, he sought to make a distinction in the traditional Jewish celebration of Pesach (now known as Passover) and the Christian celebration of Pascha. Supposedly he coined the word Easter as a transliteration of a pagan celebration of Ishtar which was held about the same time of the year as Pesach.

Ishtar was a celebration of the new birth of spring, or a new beginning. Similarly, the celebration of Easter is also a new beginning in the Christian faith.

So whether you celebrate Pesach or Pascha, we wish you well.

Mass Revisited

[Welcome Kaiser Network readers!]

It has been a while since we looked at the Massachusetts experiment to provide universal health care, so we decided to take a closer look. We were prompted, at least in part, by the fact that the folks in Washington who think money grows on trees seem to be eyeing the Mass plan as a model of efficiency and something that should spread to the other 49 states.

While the plan may not have driven off the Chappaquiddick bridge . . . yet . . . it is certainly in need of some retooling.

According to Cato (no, not the O.J. house guest):

Massachusetts has significantly reduced the number of people in the state who lack health insurance. However, it has not achieved, nor does it expect to reach, universal coverage. (The best estimates suggest that more than 200,000 state residents remain uninsured). And, significantly, roughly 60 percent of newly insured state residents are receiving subsidized coverage, suggesting that the increase in insurance coverage has more to do with increased subsidies (the state now provides subsidies for those earning up to 300 percent of the poverty level or $66,150 for a family of four) than with the mandate.

The cost of those subsidies in the face of predictably rising health care costs has led to program costs far higher than originally predicted. Spending for the Commonwealth Care subsidized program has doubled, from $630 million in 2007 to an estimated $1.3 billion for 2009.

I have no idea about the standard of living in MA, but $66,150 for a family of four is probably not at poverty levels. The Kaiser Foundation reports the median income for 2005 - 2007 for Mass was $58,286 vs. $49.901 for the country. So you can earn 14% above the state median income and still qualify for taxpayer assisted health insurance.

And let's not overlook the doubling in spending for this program in two years time. Can you say government bailout?

Now the state is turning to a variety of gimmicks to try to hold down costs, including possibly cutting payments to physicians and hospitals by 3-5 percent. However, the (NY) Times quotes health reform experts who have studied the Massachusetts system as warning “the state and federal governments may need to place actual limits on health spending, which could lead to rationing of care.”

Gimmicks.

Good word.

Rationing of health care.

Not a good word.

But what about that NYT reference?

They report the bill to offer universal health care was passed "with Paul Revere speed" and that then Governor Mitt Romney "made an expedient choice, deferring until another day any serious effort to control the state’s runaway health costs."

Deferring issues on cost until another day.

Somehow this sounds very familiar.

The day of reckoning has arrived. Threatened first by rapid early enrollment in its new subsidized insurance program and now by a withering economy, the state’s pioneering overhaul has entered a second, more challenging phase.

Thanks to new taxes and fees imposed last year, the health plan’s jittery finances have stabilized for the moment. But government and industry officials agree that the plan will not be sustainable over the next 5 to 10 years if they do not take significant steps to arrest the growth of health spending.

The plan will not be sustainable.

Then what?

Once entitlements are put in place no politician wants to take them back. When is the last time you heard of government cutting out an entitlement program?

Mass has this great idea for controlling health care costs. They want to change the way docs & hospitals are comped.

They want a new payment method that rewards prevention and the effective control of chronic disease, instead of the current system, which pays according to the quantity of care provided.

Who determines what is "effective control"? Most chronic illness is preventable with lifestyle changes, so why penalize the medical provider for a lack of self discipline on the part of the patient?

Massachusetts has more doctors per capita than any state, Boston is home to some of the country’s most expensive academic medical centers, and a new state law requires comprehensive benefits like prescription drug and mental health coverage.

Mental health parity.

So in the midst of expanding services and a health care budget that doubles every two years they opt to increase benefits.

Mass not only requires all residents to have health insurance or pay a fine ($1,068) but also requires insurance carriers to accept anyone regardless of health.

Think of it like you would a bank that will issue a mortgage to anyone, regardless of credit or their ability to pay back the loan.

In its first full year of operation, Commonwealth Care drew higher enrollment than anticipated, and the state found itself facing an inaugural budget gap. Mr. Patrick and the legislature filled it by assessing insurers and hospitals, raising the penalty on noncompliant businesses, increasing premiums and co-payments for consumers, and raising the state tobacco tax.

Oops!

There was another issue as well, as we reported before. The Big Squeeze means more patients for the doctors.

That's the good news.

The bad news is, longer waits to see the doc.

Let's see. Free or almost free health care. Increased demand. More difficult to see a doc.

Can't figure out why no one saw that coming.

Blue Cross and Blue Shield of Massachusetts, the state’s largest insurer, recently devised an innovative model that pays doctors a flat fee per patient, with adjustments for age, gender and health status, and then adds bonus payments for high standards of care.

Novel. Has some promise. Tracks the HMO model where providers are paid a capitated fee rather than fee for service.

Some health policy experts argue that changes in payment practices will not be enough to slow the growth in spending, even when combined with other cost-cutting strategies. To truly change course, they say, the state and federal governments may need to place actual limits on health spending, which could lead to rationing of care.

“Really controlling costs requires just stopping spending,” said Stuart H. Altman, a professor of health policy at Brandeis University.

Stop spending.

Yeah, that works too.