Monday, July 27, 2009

Health Care Monday: Making Money by Denying Care Edition

How They Get To Refuse You Healthcare

James Kwak praises a This American Life segment on "rescission of health insurance policies – insurers’ established practice of looking for ways to invalidate policies once it turns out that the insured actually needs significant medical care." Innovation isn't always pretty:

The legal basis for rescission is that when you sign an insurance application, you are warranting that the information on the application is true; if it turns out not to be true, the insurer can get out of your insurance contract. It’s particularly nasty in practice because the insurer does not immediately investigate your application to determine if it is accurate before selling you the policy (that would be impractically expensive); instead, the insurer waits – years, in many cases – until you actually need expensive health care, and then does the investigation, which at that point is worth it because of the payments the insurer could potentially avoid. Also, you can lose your coverage for innocent mistakes, which are easy to make since the application form asks you if you have ever seen a doctor for any one of a long list of medical conditions that you are certain not to recognize or understand. (In a Congressional hearing, the CEO of a health insurer admitted that he did not know what several of the conditions listed on his company’s application were.)
In his latest column, the Washington Post's David Broder takes aim at a provision of health care reform that he finds potentially problematic: the creation of an Independent Medicare Advisory Council (IMAC).

As proponents see it, appointed IMAC members -- physicians and medical experts -- would have some added authority to help control what Medicare pays doctors and hospitals. The panel would ideally help lower costs more effectively than Congress.

The idea makes Broder uncomfortable.

Americans are familiar with -- if not altogether comfortable about -- unelected officials exercising great authority over our lives. The nine justices on the Supreme Court and hundreds of other jurists exert their power from the bench. The economy is managed by the Federal Reserve Board, though no one ever forced Alan Greenspan or Ben Bernanke to campaign for a vote.

If President Obama has his way, another such unelected authority will be created -- a manager and monitor for the vast and expensive American health-care system. As part of his health-reform effort, he is seeking to launch the Independent Medicare Advisory Council, or IMAC, a bland title for a body that could become as much an arbiter of medicine as the Fed is of the economy or the Supreme Court of the law.

The idea has gained a warm initial reaction on Capitol Hill. But with the delay in action on the overall reform effort until fall, there will be more time for reflection on IMAC and its authority.

Broder concluded that "Americans will have to decide" if they're comfortable with "five unelected IMAC commissioners" determining "how they will be treated when they are ill."

I'm a little surprised by Broder's apprehension. After all, the IMAC idea was proposed by the right, and accepted by the left, as part of a larger effort to save money and take political considerations out of the process. In other words, it's an idea with bipartisan appeal, with an eye towards fiscal responsibility. Isn't this exactly the kind of policymaking Broder says he wants?

Mark Kleiman added, "Forget the fact that the 'five unelected commissioners' will be appointed by the President and confirmed by the Senate, that their recommendations can't take effect without the President's approval, and that even then they could be over-ridden by the Congress. I'd rather have five unelected commissioners, or five names drawn at random from the phone book, determine how I will be treated than have that determination made by an unelected insurance-company bureaucrat whose employer makes money by denying me care."

  • Krugman adds, in Kings of pain:

    Steve Benen is puzzled by David Broder’s negative view of proposals to give the independent Medicare advisory commission more power to determine what the program pays for:

    I’m a little surprised by Broder’s apprehension. After all, the IMAC idea was proposed by the right, and accepted by the left, as part of a larger effort to save money and take political considerations out of the process. In other words, it’s an idea with bipartisan appeal, with an eye towards fiscal responsibility. Isn’t this exactly the kind of policymaking Broder says he wants?

    Yes, it’s what he says he wants. But I’ve been watching commentary from Broder and other “centrist” pundits like Robert Samuelson, and I think I see a pattern. They complain a lot about rising public spending, but confronted with any actual proposal to control spending, they reject it — unless it has one crucial attribute: it must weaken the social safety net. Unless you end up slashing benefits, or denying health care to more people, it’s not what they’re looking for.

    And so the cost-saving measures under consideration now — which are the first real effort to tackle Medicare costs, ever — are pooh-poohed, because they’re part of a plan that would expand coverage, not contract it.

  • Ezra Klein adds: What Happened to the Moral Case for Health-Care Reform?

    I spent Sunday reading T.R. Reid's "The Healing of America: A Global Quest for Better, Cheaper, and Fairer Health Care". It's very, very good. I'll probably base a couple of posts on it. For now, however, I want to point out something he says about the successful efforts in Sweden and Taiwan to overcome the political opposition and rebuild their patchwork health care sector's into national health-care systems:

    Both countries decided that society has an ethical obligation -- as a matter of justice, of fairness, of solidarity -- to assure everybody has access to medical care when it's needed. The advocates of reform in both countries clarified and emphasized that moral issue much more than the nuts and bolts of the proposed reform plans. As a result, the national debate was waged around ideals like "equal treatment for everybody," "we're all in this together," and "fundamental rights" rather than on the commercial implications for the health care industry.

    Elsewhere, Reid quotes Princeton health economist Uwe Reinhardt saying that "the opponents of universal health insurance cloak their sentiments in actuarial technicalities or in the mellifluous language of the standard economic theory of markets, thereby avoiding a debate on ideology that truly might engage the American public."

    This year, however, it's not just been the opponents of the policy who have relied on the "mellifluous language of the standard economic theory of markets." It's been the advocates of reform. Ask yourself what the administration's one-line goal is on health-care reform. Is it "equal treatment for everybody?" Is it "if every American is guaranteed a lawyer, why not a doctor?" Is it even "guaranteed health care for everyone?"

    No. It's "bend the curve." And the problem with "bending the curve" is that it's a broadly testable proposition. This is, in part, why the Congressional Budget Office's skeptical assessments pose such a threat to health-care reform. If the White House's primary objective was health care for every American, or guaranteed care that you could keep even if you lost your job, or choice of insurance plans for every American, you could spend a bit more on health care and say you were achieving your goal. But if you say that the point of health-care reform is to save money, and then the outfit charged with estimating such things says it won't, that strikes at the heart of the project.

    The economic case for health-care reform requires a really radical version of reform. Single-payer, say, or the Wyden-Bennett Healthy Americans Act. The consensus Democratic health-care plan -- the basic approach that the Obama campaign committed itself to and that Democrats in Congress are pushing -- is primarily a coverage plan. It has some cost-saving features on the margins, but it's primarily a way of getting to universal coverage. You can argue for that plan in primarily moral terms, with some economic arguments around the margins. But the administration has been pushing it in primarily economic terms, with some moral arguments around the margins. And now they're caught in that dissonance.

Sargent: New Ad Bashes GOP For Blocking Health Care Reform — For 15 Years

This new ad being launched by White House allies, which blasts Republicans in Congress for blocking reform, is probably the most direct effort yet to link current GOP obstructionism to the successful scuttling of reform in the early nineties.

The new spot, paid for by the labor-backed Americans United For Change, is going up on D.C. cable this week, targeting insiders as the health care wars enter a decisive phase:

“The Republicans claim the health insurance reform debate has been moving at lightning speed. In fact for 15 years, it’s hardly moved at all,” the ad says. “Now the Republicans say Congress should slow down? That’s because when something goes slow enough it’s easy to kill it dead in its tracks.”

The spot echoes the White House message that the GOP is intent right now on killing reform at all costs, but also links it to the larger story about the 15-years-long obstructionism of entrenched special interests — as symbolized by the well-heeled foot squashing the snail.

Aravosis: Robert Reich: Every day, health reform is more endangered

From Robert Reich's blog:

Every day that goes by without a vote in the House or Senate on universal health care makes it less likely that major reform will occur, because (1) opponents have more time to stir up public anxieties about it; (2) Democrats up for reelection next year come ever closer to the gravitational pull of the midterms, and grow increasingly worried about voting for a bill that could be a political liability in a year when unemployment may well reach double digits and the electorate is restless and unhappy; and (3), as a result of the first two, proponents increasingly have to rely for support and cover on industries like Big Pharma and insurance, as well as physician specialists and equipment suppliers, none of whom have any interest in fundamental reform but all of whom see possibilities for making more money out of whatever bill emerges.

In other words, next fall we get something called "universal health insurance" that still leaves millions of Americans uninsured and doesn't substantially slow the meteoric rise of health-care costs. That would be a tragedy.
Yes, groups like MoveOn (to their credit) are turning out lots of supporters to their health care rallies. But. Have the health care reform groups really created a national conversation about health care? Have they really convinced the public (which shouldn't need any convincing at all) that our health insurance system is broken, and that our health insurance companies can't be trusted? Is the American public truly demanding change? I'm just not sure our groups are quite doing their jobs. This is not what a national campaign looks like. At least one that's effective. Where's our Harry & Louise ad that burns in the mind of every American? Where's our catch phrase like "Hillary Care"? We keep hiring the same people who simply don't seem to understand how PR advocacy and guerrilla advocacy work. And then we're surprised that we get the same results over and over again.
JedL (DK): What Republicans really think about Kent Conrad...

...but can't actually say, at least not in so many words:

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C&L: Reality Check on Shona Holmes: Holmes' "Brain Tumour" was Actually a Rathke's Cleft Cyst on Her Pituitary Gland

Well what do you know. It looks like there may be some problems with Sen. Mitch McConnell's favorite Canadian health care horror story. h/t The Political Carnival

33.7 million Canadians are not Shona Holmes:

To my American friends: I sincerely hope you’re not taken in by the GOP propaganda featuring Canadian Shona Holmes trashing our system of universal healthcare. The problem is both that Ms. Holmes and her Republican masters misrepresented her condition and that the tactic itself is reprehensible. The GOP can’t produce any logical argument against a system that is entrenched in every Western society except yours, so they resort to fear-mongering and lies, claiming that one Canadian’s skewed view trumps the experiences and beliefs of the rest of us.

Continue reading.....

From The Ottawa Citizen:

Holmes has become the darling of conservatives and the stop-public-health-care movement in the United States. She's testified before Congress, been on Fox TV as well as CNN, and her story is retold on hundreds of right wing blogs. She's now doing a nasty TV ad for Patients United Now, a Republican-led group opposed to Obama's reforms. You can see the ad at The group is spending almost $2 million on it to target politicians in Washington.

For a person living with cancer, the idea that someone's care could be unreasonably delayed is truly scary. It also doesn't reflect the experience I've had or the experiences that have been shared with me by so many other patients. Even CNN interviewed Doug Wright, a more typical patient in Toronto who is receiving very speedy treatment for his cancer.

Still, I found Holmes tale both compelling and troubling. So I decided to check a little further. On the Mayo Clinic's website, Shona Holmes is a success story. But it's somewhat different story than all the headlines might have implied. Holmes' "brain tumour" was actually a Rathke's Cleft Cyst on her pituitary gland. To quote an American source, the John Wayne Cancer Center, "Rathke's Cleft Cysts are not true tumors or neoplasms; instead they are benign cysts."

There's no doubt Holmes had a problem that needed treatment, and she was given appointments with the appropriate specialists in Ontario. She chose not to wait the few months to see them. But it's a far cry from the life-or-death picture portrayed by Holmes on the TV ads or by McConnell in his attacks.

TPMtv: Sunday Show Roundup: Long Way To Go

Speaker of the House Nancy Pelosi says that when she brings a health care reform bill to the floor of the House, "it will win." But Sen. Kent Conrad (D-ND) says "it is not possible, and perhaps not desirable" to pass health care reform with Democratic votes alone. If nothing else was clear from the Sunday shows, one thing that was is that there is still a long way to go to reach health care reform ...

Full-size video at

Krugman: An Incoherent Truth

Right now the fate of health care reform seems to rest in the hands of relatively conservative Democrats — mainly members of the Blue Dog Coalition, created in 1995. And you might be tempted to say that President Obama needs to give those Democrats what they want.

But he can’t — because the Blue Dogs aren’t making sense.

To grasp the problem, you need to understand the outline of the proposed reform (all of the Democratic plans on the table agree on the essentials.)

Reform, if it happens, will rest on four main pillars: regulation, mandates, subsidies and competition.

By regulation I mean the nationwide imposition of rules that would prevent insurance companies from denying coverage based on your medical history, or dropping your coverage when you get sick. This would stop insurers from gaming the system by covering only healthy people.

On the other side, individuals would also be prevented from gaming the system: Americans would be required to buy insurance even if they’re currently healthy, rather than signing up only when they need care. And all but the smallest businesses would be required either to provide their employees with insurance, or to pay fees that help cover the cost of subsidies — subsidies that would make insurance affordable for lower-income American families.

Finally, there would be a public option: a government-run insurance plan competing with private insurers, which would help hold down costs.

The subsidy portion of health reform would cost around a trillion dollars over the next decade. In all the plans currently on the table, this expense would be offset with a combination of cost savings elsewhere and additional taxes, so that there would be no overall effect on the federal deficit.

So what are the objections of the Blue Dogs?

Well, they talk a lot about fiscal responsibility, which basically boils down to worrying about the cost of those subsidies. And it’s tempting to stop right there, and cry foul. After all, where were those concerns about fiscal responsibility back in 2001, when most conservative Democrats voted enthusiastically for that year’s big Bush tax cut — a tax cut that added $1.35 trillion to the deficit?

But it’s actually much worse than that — because even as they complain about the plan’s cost, the Blue Dogs are making demands that would greatly increase that cost.

There has been a lot of publicity about Blue Dog opposition to the public option, and rightly so: a plan without a public option to hold down insurance premiums would cost taxpayers more than a plan with such an option.

But Blue Dogs have also been complaining about the employer mandate, which is even more at odds with their supposed concern about spending. The Congressional Budget Office has already weighed in on this issue: without an employer mandate, health care reform would be undermined as many companies dropped their existing insurance plans, forcing workers to seek federal aid — and causing the cost of subsidies to balloon. It makes no sense at all to complain about the cost of subsidies and at the same time oppose an employer mandate.

So what do the Blue Dogs want?

Maybe they’re just being complete hypocrites. It’s worth remembering the history of one of the Blue Dog Coalition’s founders: former Representative Billy Tauzin of Louisiana. Mr. Tauzin switched to the Republicans soon after the group’s creation; eight years later he pushed through the 2003 Medicare Modernization Act, a deeply irresponsible bill that included huge giveaways to drug and insurance companies. And then he left Congress to become, yes, the lavishly paid president of PhRMA, the pharmaceutical industry lobby.

One interpretation, then, is that the Blue Dogs are basically following in Mr. Tauzin’s footsteps: if their position is incoherent, it’s because they’re nothing but corporate tools, defending special interests. And as the Center for Responsive Politics pointed out in a recent report, drug and insurance companies have lately been pouring money into Blue Dog coffers.

But I guess I’m not quite that cynical. After all, today’s Blue Dogs are politicians who didn’t go the Tauzin route — they didn’t switch parties even when the G.O.P. seemed to hold all the cards and pundits were declaring the Republican majority permanent. So these are Democrats who, despite their relative conservatism, have shown some commitment to their party and its values.

Now, however, they face their moment of truth. For they can’t extract major concessions on the shape of health care reform without dooming the whole project: knock away any of the four main pillars of reform, and the whole thing will collapse — and probably take the Obama presidency down with it.

Is that what the Blue Dogs really want to see happen? We’ll soon find out.
McJoan (DK): Where We Stand Now in Healthcare Reform

First, where we've been, and what a week it was. On Monday, President Obama continued his offensive, extending it to a conference call with bloggers which included WH wonks David Axelrod and Nancy Anne DeParle. A key snippet from that conversation to take forward this week--his reaction to my questions on co-ops. I asked if a co-op plan could be a substitute for a robust public option, and while he didn't rule it out, he said that WH researchers had yet to find a model that could provide the necessary clout to compete with private insurers. Obama's willingness to consider co-ops is going to be a major test--it's a pretty good bet that that's what the Senate Finance Committee is going to come out with, possibly before August recess if Kent Conrad's big, fat ego doesn't get in the way.

Also on Monday, AHIP entered the public discourse with a series of "feel-good" ads, stressing their desire for bipartisan reform. Which of course we all know means "kill this bill," because that's all we got coming from the Republicans. Seriously, all. Even Howard Fineman recognizes that obstruction is all they got. As if to prove that point, on Tuesday, the RNC launched their reform initiative, a scary Web site detailing all the reasons that we really shouldn't be doing this, but without any ideas on what exactly it is we should be doing instead.

Various Republicans continued on with various outrageous statements. Inhofe echoed the Bill Kristol "kill this bill" line, admitting that no vote by August would mean it was dead, so that was his endgame. At the same time, Grassley was making positive noises about getting the bill done, but then followed up on Friday with a series of tweets detailing just how opposed he really is to Obama's plan.

And Baucus continued to dawdle, apparently oblivious to his negotiating partner Grassley's real attitude toward reform, and despite the fact that a variety of news reports show that he's become bad Dem number one when it comes to taking money from the industries he's supposedly trying to rein in with this reform. Baucus really doesn't seem to get that being the Dem that takes the most money from the health care industry while dragging his feet on getting this reform done, presents any kind of problem for him or his reputation. I'm really hoping that the folks back home in Montana can disabuse him of that notion while he's back home for recess.

Meanwhile, the Blue Dogs got far too much attention this week, beginning with a White House meeting on Tuesday. They continued their holding-their-breath while their faces turned blue routine in Energy and Commerce, finally forcing Waxman to call their bluff, announcing that he'd be more than willing to bypass E&C's role in shaping this legislation, and telling them so. They had a tantrum, stormed out, but then quietly came back to the table, and mark-up resumes today, with the bill potentially being reported out today or tomorrow. Oh, and yeah, we found out that the Blue Dogs were also raking in the industry dough while playing their obstructionist games. Do any of them really think we don't see the connection?

The week also, of course, featured Obama's Wednesday, prime-time news conference, which threatened to derail his week in health care when he gave a very sensible answer to a very sensitive question. Distracted by the bright shiny object of the African American president intelligently addressing the issue of race, the traditional media collectively forgot that there's also a groundbreaking piece of major policy to discuss. But then the shiny object of Gates was replaced by the even shinier object of Sarah Palin. There's a surprise. Meanwhile, Obama kept pushing, with a townhall meeting in Ohio, and his weekly radio/web address.

Ok, so now we're all caught up. Where do we go this week? Gawd only knows. Supposedly real movement from Senate Finance, but that seems unlikely. Reid has said no vote before August recess, but if Finance really did complete its work, who knows? In the House, E&C will probably finally pass the bill out. Should the Blue Dogs continue to obstruct, I would fully expect Waxman to make good on his word to allow the committee to be bypassed. Obama will keep pushing from the bully pulpit, because it is the single most important thing he can do.

The single most important thing you can do? Call or e-mail your senators and representative. Tell them not to leave for August recess until this is done in each of their chambers. While you're at it, here's something else to ask your senators: what fund-raising events they have scheduled that include hosts or target audiences made up of people from the health care industry between now and October. Because the money is going to start drying up from the industry as soon as this is done. Could it be that the delays in the Senate have anything to do with Senate Dems wanting to continue to milk that cash cow as long as possible?

Krugman: DeMint offers a teachable moment

Yesterday I was on This Weak with George Stephanopoulos, and the initial interview/dialogue was with Kent Conrad and Jim DeMint. DeMint offered the usual line on health care: free markets will solve all. And he pushed especially hard for letting insurance companies sell across state lines, which he claimed would make insurance affordable for everyone.

This is a teachable moment; I think it helps get at the heart of what’s wrong with free-market approaches.

First of all, none of what I’m about to say is relevant to employer-provided insurance, which operates under its own set of rules. This is all about the individual insurance market, which is currently quite small. But conservatives have a vision of a system in which individual insurance is dominant. So let’s talk about how it works now.

The reason we have restrictions on interstate sales of health insurance is that a number of states regulate insurers. In particular, some states have a form of community rating, which basically says that insurers can’t deny you coverage or charge extremely high premiums if you have a preexisting condition. And community rating will be unsustainable if individuals can buy insurance from out of state; insurance companies in states that don’t have community rating will cherry-pick the healthy, good risk people, leaving the community rating states with only the highest-cost people.

Now, you might say that’s fine: if you’re a bad risk, you don’t get insurance. But politicians never say that in public, because most voters feel that their fellow citizens shouldn’t be denied health care. So the way this is always presented is that effective competition will make insurance so cheap that everyone can afford it.

But we already know better. California — which has more people than many countries — has a non-community-rating insurance system:

Insurers have wide latitude to choose among applicants for individual coverage and set premiums based on medical conditions. Insurers say medical underwriting, as the selection process is known, is key to keeping premiums under control.

And what are the results of competition there? The answer is that insurers compete by doing their best to deny coverage to anyone who might actually need medical care.

What kinds of things are enough to cause denial of coverage?

Insurers declined to disclose the underwriting guidelines that lead to rejection or higher premiums. But a review of public records, as well as rejection letters sent to individuals, shows that California carriers turn people away or charge them higher premiums for conditions that range from the catastrophic to the common. Cancer, epilepsy and AIDS make the list, along with breast implants, ear infections, varicose veins and sleep apnea.

Jeffrey Miles, a vice president of the California Assn. of Health Underwriters, a trade group for independent insurance agents, said one of his clients — a 27-year-old woman “in perfect health with absolutely nothing wrong” — was rejected because she had seen a psychologist for three months after breaking up with a boyfriend.

Consumer advocates say out-of-date, ambiguous and even erroneous medical information can render people uninsurable. Sometimes the reasons can seem absurd. In a letter to an otherwise healthy recent college graduate, for instance, Blue Cross listed among the reasons it denied coverage a past bout of jock itch, “successfully treated with cream.”

So when you hear people like DeMint — or conservative economists — preach the wonders of a market-based health care system, bear in mind that this is what it would look like: an America in which nobody who has ever had a major health problem, or had a minor health problem that for some reason bothers the insurance company, can get coverage. Believing that it would turn out otherwise is the triumph of ideology over experience.


  1. Obamacare will create two levels of healthcare, the have-nots will get the watered-down basic care, complete with long waits to see a doctor and withholding of needed treatments. The "haves" will pay out-of-pocket for state-of-the art care.

    In addition, over 40,000 high-paying medical sales jobs will be lost under Obamacare. Follow our discussion on this topic at

  2. Healthcare costs can be astronomical, especially for those of retirement age. And upon retiring, you’ll face not having employer-provided health coverage and suddenly be relying on Medicare, which doesn’t cover everything.

    Many Americans must navigate COBRA benefit rules and regulations following job losses or retirement. COBRA benefits allow former employer-based group health insurance coverage to be retained for several months following job separation. But the benefits are expensive as the employer no longer pays any portion of the premium, and it can also be very difficult to keep.

    Maryland Lawsuit