Yesterday’s reports that a deal has been reached in the Medicare Drug negotiations do not necessarily mean that we’re actually going to get a finished bill.  There are only 2 Democrats on the negotiating team, and several Senators, led by the old liberal war-horse Ted Kennedy, have previously threatened a filibuster if either a) the bill imposes a means-test on recipients or b) Medicare is forced to compete directly for members with private plans. This philosophical opposition to  heading down what Kennedy and others believe is a slippery slope towards Medicare becoming a two-tiered welfare benefit rather than a global entitlement, dovetails nicely with the desire of Democrats to prevent Republicans from being able to campaign as the "party that brought you drug coverage" in 2004.

Yikes–too much to report today! Two confirmations today about employer health insurance confirm much of what I’ve posted about before. First, the Commonwealth Fund reports that a growing share of uninsured workers are employed by large firms. More noticeably, low-income workers (those under 200% of poverty) at big companies are much, much more likely to be uninsured than higher income workers in big companies–46% of those in all. Yup, this means those folks who work at McDonalds, cleaning companies, supermarket chains, home health aides, etc, etc, and the people who are the targets of California SB2.

Meanwhile, Harris Interactive’s latest poll for the WSJ Online (not online yet but you can get on the email list here) confirms the deep emotional connection between employees and health benefits.  56% of employees say that they would rather have no pay increase but a maintenance of current health benefits as opposed to a decent pay increase but a significant reduction in their health benefits.

In other words not enough people are getting insurance at work, fewer are getting it each year (especially the working poor), but employees are loathe to lose that coverage.

And in news from San Francisco, UCSF the biggest teaching hospital in the Bay Area was threatened with release of some of its patients’ data on to the Internet.  The wrinkle is that the threat came from a transcriptionist who is a sub-contractor to a sub-contractor to a  sub-contractor to a sub-contractor…… and the individual lives in Pakistan. The transcriptionist in Pakistan had been stiffed on her bill by the subcontractor she was working for to the tune of $500.  That’s a huge sum–above the average annual income in Pakistan, so you can understand that the transcriptionist was pretty desperate, given that her employer had disappeared and that she had nowhere to turn other than UCSF (as she didn’t know who had hired the person she was working for). In the end no patient data was release, and the threat was rescinded apologetically.

How this works out under HIPAA’s privacy standards is anyone’s guest, but it could lead to a major revisiting of the whole concept of outsourcing transcription.

Update: There was a NPR talk-show on this in San Francisco yesterday, (audio available about halfway down this page).  The journalist who wrote the original story claimed that as many as 50% of all transcriptions are being typed up abroad.

Medpundit has responded to my queries about her stance on MSAs, coverage and all that. Go read her piece here, then come back. Medpundit’s very concerned that many of the patients she’s seeing are coming in for expensive diagnostic tests that are supposed to prevent illness way down the road and often end up on very expensive drugs. And as Medpundit also points out, there is no cost-benefit rationale to many of these tests and immunizations.  These are all covered by insurance under managed care’s "preventative" ethos, yet in the end these people will get sick and need costly care for something else anyway.  New treatments do tend to keep people alive longer, but they are still going to die eventually and cost more money down the line. This is indeed the conundrum, as represented by the rather amusing "debate" a few years back started when Philip Morris "demonstrated" that smoking saved the Czech Republic money as it killed off people who would otherwise be collecting pensions and using health care benefits.

Medpundit’s solution is to make people pay for preventative (and I assume routine) care, and carry catastrophic insurance. Although I have some sympathy with this approach in avoiding what economists call moral hazard (i.e. unnecessary use of services because they are free) Canadian economists Bob Evans and Morris Barer have proved to my satisfaction that point of service user fees only really discourage the very poor from seeking care, and are as such discriminatory. But the real point is that although the testing of the healthy that Medpundit sees too much of may be increasing costs, the real money is spent on the care of those who are very sick. So if everyone bought a "catastrophic" only insurance policy, eventually the cost of those policies would increase to more or less the cost of a regular policy–because, whether it’s done via insurance or taxation, the 80 % of people who are healthy need to pay for the care of the 20% who are sick. Controlling the cost of care of the sick means doing what most Americans view as something very unpalatable–limiting care.  I personally believe that limiting excessive care of those who are going to die soon anyway is totally humane.  However any doctor who remembers the horrendous state persecution of Dr. Robert Weitzel in Utah is going to be highly suspicious of taking such an approach. Of course we are getting nowhere near having the kind of debate about this "rationing" that we need to have. So the status quo of more and more services being available to patients at greater and greater cost to all us will remain.

Finally Medpundit sums up both of our feelings about getting away from employment-based insurance coverage:

This topic comes your way via the always interesting Medpundit. Medpundit is a doc who doesn’t want a single payer system, and reading between the lines of her views sounds like she is in the "MSA’s for all" camp. (Even if she isn’t I’ve described the problems with that approach here as well as explaining why employment-based insurance is here to stay for a while). The poll results alluded to here are from an ABC News poll conducted October 9-13.

The most remarkable result is that when asked if they’d favor a "Medicare for all" system 62% said yes, versus only 32% saying no. There is quite a wrinkle in this because, as the article goes on to say:

This poll asks people what they’d prefer a "universal health insurance program, in which everyone is covered under a program like Medicare that’s run by the government and financed by taxpayers," or "the current system, in which most people get their health insurance from private employers, but some people have no insurance."

Previous polls have asked this differently; one last year asked if people would support or oppose "a national health plan, financed by taxpayers, in which all Americans would get their insurance from a single government plan," and found 40 percent support. The wording in this ABCNEWS/Washington Post poll weighs the proposal against the current system, and adds the Medicare model to the description.

Opposing the present system makes sense for virtually everyone.  I suspect that if you asked them in a poll 30% of Americans would rather be poked in the eye with a sharp stick than have the current "system". What’s fascinating to me is that 40% of the population wants single payer, and if you call it "Medicare for all" that number goes up.

Now, there is widespread fear of uninsurance. This article shows that "Fifty-nine percent of insured (Note: my emphasis) Americans are worried about being able to continue to afford health insurance in the future" Consequently those that have health benefits via employment are very keen to keep them. Furthermore Democrats still remember from 1993-4 how vigorously the stakeholders in the system will fight to keep the statue quo. However, I’m a little surprised that of the Democrats running for President only rank outsiders Dennis Kucinich and Carole Mosely Braun are pushing the single payer, (or "Medicare Part E for Everbody") option.

So while single payer is "politically unavailable"* to Americans, the public is waking up to the increasing level of real discontent with the current system. Given Bush’s problems abroad and with the economy, do not be surprised if this issue becomes bigger and bigger for the Democrats as we head to November 2004.

*The phrase is from Ian Morrison.

Today’s New York Times reports with data what most of us following along at home have suspected for a while–seniors don’t like what they are hearing about the Medicare drug bill, and the blame is shifting towards the President.

The main issue is that middle income retirees are finding out not only that they’ll have to pay premiums for drug coverage, but also that there’s a hole in the middle of the benefit package–it runs out somewhere after the first $4,000 of spending.  There may also be some nasty compromises required for upper income seniors, in particular means testing for those earning more than $60,000 a year. Furthermore, without any bill there’s a big increase in the amount Medicare recipients will have to pay in Part B premiums next year, up $7.90 to $66.60 per month.

Liberal Democrats in the Senate, led by Edward Kennedy, have vowed not to accept means testing, as they believe it will be the start of a slippery slope to a two-tiered system. And in poll after poll seniors have consistently trusted the Democrats over the Republicans in their assessment of which party is better for Medicare. It may be hard for the average taxpayer to feel much sympathy for the small percentage of seniors who earn almost double the average American household being asked to contribute more towards their Medicare coverage.  However, it was those seniors who caused the repeal of Medicare Catastrophic Act back in 1989.  And all politicians know that the average senior not only votes at much higher rates than younger voters but also that seniors are concentrated in states like Pennsylvania and Florida.  You may remember that one of those states in particular was quite important in the outcome of the last Presidential election, and you can be very sure that, bill or no bill this year, this issue will be at the forefront of the Democratic campaign in those states.

Guest contributor Matt Quinn reports from THCB’s Sacramento Bureau.  After reading his article, cogitate on this question. D’you think that a newcomer to the California political scene, elected Governor on a "platform" of cutting government bureaucracy, might find this information the basis for some (assume thick Austrian accent here) "full auditing"?

On Thursday a grand jury indicted two LA residents on Medi-Cal fraud charges totaling $40 million, the largest fraud case ever filed by the U.S. attorney’s office in Sacramento. The couple are charged with "stealing doctors’ and patients’ identities to bill the programs for laboratory tests, drugs and medical supplies that were never provided and for services that were exaggerated or provided by unlicensed personnel from 1996 to 2000. According to the indictment, ‘[a]lthough the patients did not see a doctor or receive any treatment or services,’ the defendants submitted bills ‘as if those individuals had been to an office visit.’ "

While this might seem like a momentous blow against the forces arrayed to defraud Medi-Cal, it hardly amounts to a drop in the bucket.   A recent study conducted by the Orange County Register estimates that 10-35% of the $29.2 billion Medi-Cal budget, which provides coverage to about 6.8 million residents, could be fraudulent.  And that most of the fraud was conducted by providers (or "fake providers") and not beneficiaries.  As in this case, the most common Medi-Cal fraud tactics include "inflated bills, false tests and bills for services not performed", according to the Register article. 

So why is Medi-Cal so easy to defraud…or at least get away with defrauding?  First, there are many, many Medi-Cal providers and not enough people to oversee them.  Within the Department of Justice Bureau of Medi-Cal Fraud and Elder Abuse, an agency that deals with fraud, 411, or 42%, of the current 973 pending fraud probes are not being investigated.  They report that anti-fraud efforts are "underfunded or overwhelmed, or both."

Next, Medi-Cal fraud is often not readily apparent, even with the recently revised enrollment guidelines and routine of provider re-enrollments and on-site reviews by the Department of Health Services, the agency that administers Medi-Cal.  When enrolled Medi-Cal providers correctly bill for services not actually performed on legitimate Medi-Cal enrollees and have the (legitimate looking but fake) purchase records for supplies and (legitimate looking but fake) medical records to back them up, it takes in-depth investigation, interviews with beneficiaries – in other words, plenty of resources – to find most fraud.  A 60 Minutes broadcast a couple of years ago exposed the industry that provides (mostly DME providers) with the fake billing records to back of the millions of dollars for orthotics and braces that they were billing Medi-Cal.  Sophisticated criminals, lots of money and not enough oversight  results in lots of fraud.

Finally, (and perhaps most disturbingly), the report detailing the billions of dollars of taxpayer money being looted by Medi-Cal fraud "went all but unnoticed in the Capitol," according to the Register report.  While I’m sure that the state of California couldn’t use an extra $3 – 10 billion right now (not that Gray Davis did, as I remember, propose to beef up the funding/staffing for investigators), I wonder why this isn’t a bigger issue.  As this case demonstrates, tens (hundreds?) of millions of dollars can be found without even looking into how doctors practice medicine (i.e. the realm of clinical quality, evidence-based medicine, and other touchy subjects).

In what may be one of his last acts in office depending on how tomorrow’s recall vote goes, yesterday Gray Davis signed SB2. I’ve written more extensively about what SB2 is and more importantly what it isn’t in this post. Essentially it’s a play or pay mandate for businesses with more than 20 workers who don’t provide health insurance.  If the business has more than 200 employees it will also have to provide insurance to the families of the workers. Most importantly it won’t take effect for more than two years or more than 3 years for smaller businesses (20-200 employees), and it doesn’t impact businesses under 20 employees at all and business between 20-50 employees will get a tax credit to cover (some of) the costs of the insurance they have to buy.

So we can expect:
a) a hell of a fight in the next two years by California’s business lobby (in particular the fast-food industry)  to overturn the law in the courts and by referendum
b) a lot of consultants emerging explaining how to restructure your business into several businesses with less than 50 or 20 employees each (depending on how that tax credit works out)
c) (when the law takes effect) some combination of job losses/higher prices for consumers as we see in Hawaii —  all dwarfed by the real driver of the employment market in California which is the national economic state of high-tech, entertainment and the defense industry.
d) gradual acceptance of that fact that that’s a cost of doing business here which the vast majority of employers were paying anyway (OK some editorial in that comment from me!)
e) more legislation to reduce medical care costs (as there is no cost control in SB2).

Of course the major issue behind all this is that 75% of the uninsured in America are full-time workers (and their families)  in low wage industries. Most of them work in businesses too small to be affected by this law, so it will only get some 1 million of California’s 7 million into insurance.

For more on the issue of how many uninsured there really are and how long they are uninsured for, go look at The Bloviator’s post. His and my conclusion is that the Census Bureau has mislabeled the 15.3% of the population that is uninsured "for the whole year." That number instead represents a snapshot of those uninsured at any one time.  Still a big number, though with many people moving in and out of it, hence a big political effect.

Regarding the political effect, my friends at Harris Interactive have given me a peek at the numbers in their classic question about the US health care system.  They have been asking the public about their view of the system forever.  When the number of people thinking that the system needs to be completely rebuilt goes above 30%, as it did in 1991 and 1992, its time to pay attention to health care politically.  Well as you can see below, its over 30% now!

2003 data from Harris Interactive:
System works pretty well/minor changes are needed: 17%
Some good things/but fundamental changes are needed: 50%
So much wrong/system needs to be completely rebuilt: 31%

It didn’t take a rocket scientist to figure it out (although The Bloviator pointed the way yesterday and he’s as smart as a rocket scientist).  An increase in unemployment plus fewer people getting health insurance at work has led to an increase in over 2.4 million people being uninsured. The New York Times article has the Census Bureau reporting that in 2002 43.6 million or 15.2% of the population were uninsured. (That’s actually down from 16.8% in 1998 before the full impact of the SCHIP program took millions of kids out of uninsurance into Medicaid, or something like it). 61.3% of Americans are covered by their or their family’s employer, and that’s down from 63.6% two years ago.

It’s worth remembering that there are three types of uninsured.  Those who’ve been uninsured for a year or more (about 6%), those uninsured at any one time (about 15%) and those uninsured at some point during a year (about 25%). (NOTE ADDED LATER The Bloviator points out that in fact the Census Bureau reports that the 15.2%/43.6 million were uninsured for the whole year. I may have missed a trick here, and I’ll report back what the 6% refers to). The 43.6 million is the middle group, which means that some 80-odd million were uninsured at some time in the past year. The political ramifications of uninsurance — and they are the only ones that matter — depend on how likely people think they are to lose their health insurance, and therefore face the risk of a financial crisis brought on by lacking health insurance.

We got to the Clinton reform process because in the 1990-2 recession enough people felt worried that losing health insurance was something that might happen to them, and not just to other people. At that stage surveys suggested that over 30% of Americans wanted a complete rebuilding of the health system.  But by the time the legislation was brought to Congress in 1994 unemployment had fallen and fewer than 20% said they wanted complete system rebuilding.  I don’t have the current numbers to that question, (although I shall go begging for them from my friends at Harris). However, health care is moving its way up the list of issues for voters, and EBRI reports that only 60% of those with employer sponsored insurance are confident that it’ll be there for them in the future (full report here), and most importantly that, "among all Americans, support for a government plan jumped from 25 to 36 percent in the past year".

I paraphrase HHS secretary Tommy Thompson’s response as "we should do better but we won’t". Meanwhile the Democratic candidates are getting serious enough about the issue to be sniping at each other about who said what when about Medicare.  This means that we are well ahead of where we were at this stage in 1991 when we still were trying to figure out who Bill Clinton was, although we didn’t then have the other minor distractions of occupying Iraq and fighting terrorism.  So expect these numbers to increase the level of grandstanding on the Democratic side, and maybe even get the White House a little concerned. Although in my biased view it looks like they’ve written off any domestic issues as a platform for 2004.