By the Numbers: What’s the difference between

$1 trillion and $600 billion?

Technically speaking the answer is $400 billion. The real question is: What is the difference between the Congressional Budget Office’s (CBO) $1 trillion estimate of the Senate Health Education Labor and Pension (HELP) Committee’s health reform plan from June 15th, and the roughly $600 billion estimate over ten years that is being discussed today?

For starters, the earlier bill was incomplete. It didn’t include a public plan option, employer mandates (also known as “pay or play”), individual mandates, or other important cost-cutting features of reform that were still being negotiated. Now, HELP Committee leaders, Edward Kennedy (D-Mass) and Chris Dodd (D-CT), are circulating a letter describing two new components of reform, along with a revised CBO estimate of $611 billion. That significantly lowers the cost of the plan, and HELP leaders write that it, “combined with the work being done...in the Finance Committee, will dramatically reduce the number of uninsured - fully 97 percent of Americans will have coverage.”

The two new components of the plan, according to the letter, are:   

1)    A national public plan option that would be available in every state, run by the department of Health and Human Services.
2)    Employer mandates that would require businesses to offer insurance to their employees, or pay $750 a year per full time employee—$350 per part-time employee—to help pay for their health insurance. Small businesses with less than 25 employees would be exempt from the mandate. The fee would generate about $52 billion over ten years to fund health care subsidies for those who can’t afford it, according to HELP leaders.   

Shattering the myths about health reform

In a USA Today editorial today, Steven Findlay, senior health policy analyst at Consumers Union, sheds some light on the myths about health-care reform, many of which have frightened Americans. In it he debunks the notion that our system is headed toward socialized, government-run medicine with a side of rationed care:

"Cookbook and rationed care? This fear stems from concerns that the government aims to dictate what doctors do and cut costs by limiting access to care. These notions are wrong. Rather, what [President] Obama and both Democratic and Republican leaders want to do is aggressively measure the quality of care that doctors and hospitals deliver and change the way those providers get paid so quality of care—rather than quantity—is rewarded. That's hardly a socialistic notion."

So what must be done to fix the system? Findlay urges creative thinking and proposes that the medical industry be challenged to cut costs and change its "General Motors gas-guzzler mindset" by reducing waste and inventing more efficient systems.

Q&A with CU President, Jim Guest: Consumers should help decide which issues need medical research

An initial list of 100 research priorities and recommendations* for the future was sent to Congress and the Administration today by the Institute of Medicine, an independent group that advises the government on health policy. The list will serve as a guidepost for spending the $1.1 billion that Congress authorized for "comparative effectiveness research" as part of this year’s stimulus bill. This type of research compares two or more medical treatments or approaches for a given condition. The results help doctors, patients, and caregivers weigh the benefits, harms, and value of various treatments and prevention methods.

Jim Guest, Consumer Union’s President, was part of the committee that chose the priorities. We sat down with him today to discuss what comparative effectiveness funding means for consumers, patients and health-care providers.

What was it like to be a consumer rep amid all the medical experts helping to set priorities for medical research?

I was one of a small group of consumer representatives on a 23-member committee that included professors, medical school chancellors, health-care providers, and other research experts. At first I wasn’t sure how receptive the group would be to the consumer point of view. A lot of experts take a "just leave it to us" attitude. But I found the group really listened and realized the value of input from consumers, patients, and caregivers in deciding what topics to tackle and how to maximize the practical impact of research. In the future, I’d also like to have periodic surveys of consumers and practicing doctors to find out what disease areas and treatment options they think would be most valuable to evaluate and compare in order to make well-informed medical decisions.

FDA calls on Consumers Union for transparency input

The new Food and Drug Administration (FDA) Commissioner, Margaret Hamburg, is not wasting any time trying to restore the agency’s tarnished reputation and restore its public health and consumer protection missions.

The agency held a public hearing and listening session this week to get input on how it can better communicate with the public about food and drug safety issues and become more open and transparent in all it does. I was one of those testifying, along with about 15 other speakers, and each of us praised the goal of a more open and accessible agency.

There was a substantial emphasis on using the Web as a vehicle for open communications, including quick posting of all actions—for example letters to drug companies that order them to change a drug ad because it’s misleading or inaccurate. Many speakers said the agency had made a good effort to make its Web site better in the last year, but more needs to be done to make it still easier for consumers to navigate.

Consumers Union called for the agency to:

• Make information on the agency’s interactions with industry, the data and analysis the FDA generates internally, its' path to decisions, and all clinical trial data fully public.

• Release the names and addresses of retail outlets where a recalled food product was taken off the shelves as soon as this information can be gathered. This enables local media outlets to report practical information to consumers who can then identify if they have possibly tainted products in their kitchens.

Wall Street-run health care

On Wednesday, I traveled to Washington, D.C., to testify in front of Senate Commerce Committee* on one of the things that outrages me the most about our health care system: insurers who deliberately fool customers into thinking they’re getting good coverage when they’re really getting junk insurance that won’t pay their medical bills when they get sick.

But enough about me. The star of the hearing was the conservatively-dressed, quiet-spoken middle-aged guy who sat next to me at the witness table. Wendell Potter, a courageous former senior executive at Cigna, the big national health insurer, used this hearing to go public with his insider knowledge* about how health insurers "confuse their customers and dump the sick—all so they can satisfy their Wall Street investors."

Why did he take this step? Because, he said, he realized that "the industry’s charm offensive—which is the most visible part of duplicitous and well-financed PR and lobbying campaigns—may well shape reform in a way that benefits Wall Street far more than average Americans."

"The top priority for for-profit companies is to drive up the value of their stock," he explained, and to do that, they must meet Wall Street’s demands to spend as little as possible on what the industry calls the "medical loss ratio," but which you and I call "our health care."

Rating the House health reform proposal

In testimony before the House Education and Labor Committee yesterday, Consumers Union’s senior policy analyst, Bill Vaughan rated the House Tri-Committee Draft Proposal for Health Care Reform on how well it met our criteria for meaningful reform for consumers. As explained in a seven-page editorial in the August Consumer Reports, we’re looking for health reform that:

• covers everyone,
• makes insurance simple,
• provides information on quality of care,
• helps employers to offer protection for workers,
• rewards good care—not just more procedures,
• frees doctors to practice medicine,
• and gives you the freedom to choose your plan.

So how does the house proposal rate? Here’s some of what Vaughn told the house committee, including suggestions for what can be improved.

The Tri-Committee proposal will bring us to the goal of affordable, quality dependable health care for all. But we also know that even more savings are possible and can be directed toward spurring breakthrough research if we all work together.

Covers everyone: The House proposal would create a national health insurance exchange that consumers can use to find guaranteed health insurance, regardless of pre-existing conditions. Private plans would compete with the option of a public plan to keep insurance affordable. Subsidies for those making less that 400 percent of the poverty level would expand access to health care to millions of Americans who can’t afford it today.

Obama’s health forum includes 5 who told us their stories

President Obama will answer the nation’s questions on health care tonight during the much-talked-about “Questions for the President: Prescription for America” forum, which airs at 10 p.m. EDT on ABC. The president will take questions from an audience made up of "Americans selected by ABC News who have divergent opinions in this historic debate" and others submitted via ABCNews.com. Among those participants are five people who contacted Consumers Union to tell us about some of the challenges they've faced getting affordable, high quality health care:

Ken Bragg of Fayetteville, W. Va.: Ken is an insurance agent who knows first-hand how expensive and inadequate health plans can be. Ken says that many of the people who come to purchase health insurance do not qualify because of pre-existing conditions or are only offered expensive policies. He and his wife have experienced ever-increasing premiums with a high deductible for a policy they rarely use. Ken fears that the high cost of health insurance may force him to abandon running his own insurance agency and go back to work for a large company just for the health-care benefits.

David Cress of Gahanna, Ohio: Although he was covered at the time with an individual health-insurance policy, David was left with more than $100,000 in unpaid medical bills after treatment and surgery for a rare disease. When his premiums climbed to $700 per month, he was forced to drop his policy. Now uninsured, David struggles to pay out of pocket for his ongoing care and was forced to file for bankruptcy late last year.

Poll watch: The view from California and the nation

A robust 71% of California voters believe the U.S. health care system needs significant overhaul or restructuring, according to last week’s Field Poll of Californians. This sentiment was undoubtedly was shaped by the last two years of public debate in the Golden State as policymakers and stakeholders wrestled with state-based health care reform. Even more striking is Californians’ support for a public plan to compete with private insurance: 85 percent of Californians favor a public health insurance option.

As California goes, so goes the nation. According to the latest New York Times/CBS News poll, 85 percent of Americans said the "health care system needs to be fundamentally changed or completely rebuilt," and 72 percent are strongly behind a government-run insurance plan option. The poll found that most Americans would be willing to pay higher taxes so everyone could have health insurance, and most said the government could do a better job of holding down health-care costs than the private sector.

Despite billions promised by PhRMA, generics remain a better deal for seniors

PhRMA put a thumb in the Medicare Part D “doughnut hole” yesterday. The trade group representing the pharmaceutical industry announced that it would contribute $80 billion dollars over the next 10 years to help cover seniors’ brand-name prescription drug costs, and as a contribution to pay for health care reform.

The Wall Street Journal and the New York Times both report that $30 billion could go to reducing the prices seniors pay for brand name drugs under the Medicare Plan D doughnut hole—the period of coverage during which consumers must pay 100 percent of their prescription drug costs. The other $50 billion could be used to pay for health reform.

AARP supports the plan as a means to help seniors cut their drug costs.  The blog, FiercePharma calls it a bigger win for drug companies. And indeed, the Wall Street Journal Health Blog reports that the deal positions PhRMA to benefit by keeping seniors from switching to generics after the doughnut hole kicks in.

But is that really a good deal for consumers?

Runaway health costs: What consumers are up against

Here’s a powerful, patient’s-eye view of our healthcare system from the husband of a colleague at Consumers Union. His experience illuminates the painful consequences of a system that tolerates and even rewards piecemeal, uncoordinated, and often unnecessary treatment. See here, here, and here for examples. (I’ve changed the name of his relative out of consideration for surviving family members):

My cousin and I were responsible for managing the affairs of our uncle and aunt because they didn’t have children of their own. I live closer, so a lot of the day-to-day decision-making fell to me. Andrew was about 80 when the couple moved to an assisted living facility nearby. My aunt’s health and memory weren’t what they used to be and she couldn’t keep house any more. After Andrew got there, his condition declined pretty quickly; we were kind of startled. His energy seemed to drop and he needed a walker to get around.

Around Christmas of 2007 he tripped and fell and was taken to a nearby hospital, where he was seen by I don’t know how many doctors. I didn’t even meet most of them. I know he saw them from the bills I got. So many groups and individual doctors seemed to have a little piece of him. I was paying $20 here, $150 there, whatever Medicare didn’t pay. The hospital bill alone was seven pages long.

But I did meet the cardiologist who assured me, almost guaranteed me, that if my uncle got a pacemaker there would be a dramatic change in his mobility and energy. I believe he was the one who put in the pacemaker. My uncle was in the hospital for a couple of weeks, and then at a rehab facility, but afterwards there was literally no change. He could walk just inches at a time with the walker, needed assistance to get in and out of bed, to get to meals.

Should you be required to buy health insurance?

As lawmakers begin to hammer out the details of a health care reform bill, expect to hear a lot about “individual mandates” that require Americans to have health insurance, much like we’re compelled to buy auto liability insurance. We could purchase health insurance through an employer, a private insurer, or a yet-to-be-created public plan.

During last year’s Democratic primary, the issue of mandates was the biggest divide between Hillary Clinton and Barack Obama’s health care proposals, with candidate Obama campaigning against them then. Now President Obama has signaled he’s open to them—with some exemptions for some individuals and small businesses that can’t afford it.

The individual mandates are also the carrot that keeps insurance companies at the bargaining table—it’s their condition for guaranteeing coverage to all Americans regardless of preexisting conditions. And it would provide them millions of more customers. But is an individual mandate necessary for health reform?

An editorial by Linda Blumburg and John Holahan of the Urban Institute, just released in the New England Journal of Medicine argues convincingly that they are. The authors write that the current system encourages insurance companies to spend their money avoiding covering people with higher than average health risks, rather than developing more efficient ways of actually managing health care costs.

Californians march to save children’s health care

The California’s budget situation is reaching critical condition, and the state’s S-CHIP program, known as Healthy Families, is on life support. With Governor Schwarzenegger proposing to pull the plug, protesters—including 150 children currently covered by Healthy Families—have descended on the Capitol today to express their opposition to the cuts.

The demise of the popular program, which covers more than a million moderate-income children, would have dire consequences. A UCLA report released this week says that the expected massive cuts in the state work force could hike California’s unemployment rate to more than 12 percent, creating the worst job market in the state in decades. And many families will lose their employer-based health insurance along with their jobs at a time when they can least afford to buy private insurance.

The termination of the Healthy Families program would also mean the state will lose additional federal matching funds, exacerbating the damage to state services—the state’s Medicaid program, Medi-Cal, ia also under the budget knife. The legislature’s budget conference committee has opted for a $70 million cut to Healthy Families, rather than eliminating it. But such a huge cut would create waiting lists and deny coverage to an estimated 200,000 kids.

Right-sizing medical care

Opponents of health care reform constantly warn that it would lead to "the rationing of care." Take the Wall Street Journal’s editorial against reform that concludes, “The only possible outcome will be the nationalization of U.S. health markets, which will mean that almost all care will be rationed by politics."

But what does that really mean? David Leonhardt of the New York Times has an interesting article exploring the issue quite well. "The choice isn’t between rationing and not rationing," writes Leonhardt. "It’s between rationing well and rationing badly. Given that the United States devotes far more of its economy to health care than other rich countries, and gets worse results by many measures, it’s hard to argue that we are now rationing very rationally."

Our current system rations health care resources in several ways, including:

• by providing too little care to the uninsured and the underinsured;
• by favoring costly unproven treatments at the price of better care;
• by underpaying nurses and general practitioners who provide preventative care;
• by slowing wage growth to pay for rising health care costs;
• and by promoting poor access to after hours care, to name just a few.

Health Reform: Whither a public option?

A poll this month from the Employee Benefit Research Institute found that 83 percent of Americans support a “public plan option,” in health care reform. Another from the Kaiser Family Foundation found 65-67 percent of support for the public option. But there appears to be less support from industry groups.

The debate over whether to include a public plan as part of reform intensified last week when the American Medical Association, which represents about 20 percent of doctors, came out against a public option in a statement saying that, “a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”

Then, with the president slated to address the group, the AMA quickly revised its position, saying:

“The AMA opposes any public plan that forces physicians to participate, expands the fiscally-challenged Medicare program or pays Medicare rates, but the AMA is willing to consider other variations of the public plan that are currently under discussion in Congress. This includes a federally chartered co-op health plan or a level playing field option for all plans.”

When Obama did speak to the group yesterday, he defended the public option and was cheered by many AMA members:

“What I am trying to do - and what a public option will help do - is put affordable health care within reach for millions of Americans. And to help ensure that everyone can afford the cost of a health care option in our Exchange, we need to provide assistance to families who need it. That way, there will be no reason at all for anyone to remain uninsured.”

So what exactly is the public option and why is it such a big deal?

Capitol Hill hears tales of our broken health-care system

Catherine Howard, a 31-year old breast cancer survivor from San Francisco, is headed to Capitol Hill today to urge lawmakers to pass health-care reform. So is Dave Penkava, a 64-year old from Asheboro, N.C. They’re among 31 people from across the country who have come to Washington, D.C., to add their voices to the intensifying health care debate.

"It’s important to remember there are real lives and families behind all the statistics and data that point to the need for reform," said Jim Guest, Consumers Union’s President, who will accompany the group on their rounds of lawmakers’ offices.

Indeed, their stories mirror those of millions of Americans. Catherine is more than $30,000 in debt because the health insurance she purchased didn’t cover large portions of her treatments, medicines, and hospitalizations. She has good coverage now, but her medical debt is a huge financial burden and she struggles to make ends meet.

Dave retired a few years back, but when the premium for his retiree health plan jumped from $126 a month to $1,000 a month he had to take a full-time job to get affordable coverage for him and his wife. He’ll have to work until age 69 until his wife qualifies for Medicare.