Friday, May 29, 2009

Providing Coverage For All Americans Through Private Health Insurance

The United States is unique in the developed world in that the majority of Americans have private health insurance that they receive through the workplace. This is not the result of a deliberate decision but rather policy that evolved as the unintended consequence of a World War II ruling. Factory owners were competing to lure and keep good workers and wanted to offer health insurance as a benefit, but they needed the government’s assurance that this wouldn’t violate wartime wage and price controls.

The Office of Price Administration allowed the benefit, and this has evolved into a policy that later was codified into the Internal Revenue Code allowing employers to offer health insurance as a tax-free benefit.

This system of tying health insurance to employment has worked tolerably well for half a century during a time when people had stable jobs and health costs were manageable. Now, it is breaking down in an economy where people change jobs much more often and where rising health costs are straining company budgets.

But there are many other reasons to rethink the current system of subsidizing health insurance through the workplace to see if it is adequate for a 21st century economy. Tying health insurance to the workplace leaves out an estimated 45 million people because they don’t receive or can’t afford coverage at work. And, most importantly, it provides very generous subsidies for the most affluent workers and little or nothing for those at the lower end of the income scale.

There is a better way. We could provide direct subsidies to individuals to purchase health insurance of their choice – policies that they can own and keep with them as they move from job to job. This would give them continuity of coverage and more control over selecting health policies that fit their needs, pocketbooks, and values.

How the current subsidy works: When people get health insurance through their jobs, the part of their compensation package that they receive in the form of health benefits is exempt from federal, state, and payroll taxes.

The open-ended tax subsidy for employment-based health insurance is now the largest single tax break in the federal budget. Edward Kleinbard, the top economist for the Joint Tax Committee in Congress, says that tax subsidies for private health insurance now total more than $300 billion a year.1 These subsidies are invisible to most people, and they lead people to believe that health insurance is a gift from their employers. That provides incentives for people to demand more and more generous health insurance policies, generally at the expense of higher cash wages.

Why it isn’t working any more: Four in ten workers change jobs every year, according to the Labor Department.2 Tying health insurance to the workplace means that more and more people lose their health insurance when they lose or change jobs. An estimated 45 percent of the uninsured are without insurance for four to six months,3 largely because they are between jobs or have not yet qualified for insurance at their new place of work. This situation will only get worse in a faltering economy.

Providing people with other options for portable insurance would go a long way toward solving the problem of the uninsured. A survey by the Council for Excellence in Government found that 78% of Americans say they want portable health insurance that they can take with them from job to job.

But the current subsidies for job-based health insurance are unfair in other significant ways, particularly in the way they discriminate against those with lower incomes.... As Senate Finance Committee Chairman Max Baucus (D-MT) wrote in a recent policy paper, the current system gives “larger subsidies to higher-income workers, instead of to the lower-income Americans who need more help buying insurance.”

Further, this invisible tax preference for generous insurance for the most affluent workers drives up the cost of health insurance, often pricing it out of range for people of more modest means who must purchase insurance on their own with after-tax dollars.

Next steps: Much of the action in Congress and the incoming Obama administration will be around expanding access for lower-income uninsured Americans to government health programs such as Medicaid, Medicare, and the State Children’s Health Insurance Program. But that leaves decisions about health care in the hands of politicians and bureaucracies, not individuals and families. As we have seen, that means they will be in public programs that pay for contraception, sterilization, and abortion.

Other proposals involve forcing employers to provide and pay for health insurance for their workers, likely causing marginal companies even greater economic distress and surely forcing many to lay off workers rather than provide health benefits they can’t afford.

Providing greater access to health insurance doesn’t have to involve mandates on employers or putting more people into government programs where politicians and bureaucrats, not patients and families, are making health care decisions. There is a better way.

What we should do instead: Congress and the new administration could dramatically expand access to private health insurance that protects freedom of conscience and that allows people to select policies that are in keeping with their beliefs and values. It involves three key steps:

1. Providing new subsidies to individuals to purchase private health insurance and achieving universal coverage

2. Creating new markets for affordable, portable insurance

3. Protecting those with pre-existing conditions so they can purchase and maintain insurance coverage.

Much more here


Three current articles below

Publicity squeezes some decency out of NSW Health

NSW Health will pay for the accommodation costs of a Melbourne family forced to quarantine themselves in a Sydney high-rise apartment at $300 a night.

The D'Arcy family were on board the Pacific Dawn, which berthed in Sydney on Monday despite suspicions two young boys on board had the swine flu virus. The ship is now en route to Port Douglas, after skipping scheduled stops in the Whitsundays. Passengers will be unable to disembark until test results are known.

Nicholas D'Arcy, 6, was diagnosed with influenza A while on board the vessel, but was allowed to disembark with his family on Monday with other cruise passengers despite the possibility he had swine flu.

At 8.30pm (AEST) that day his parents Fiona and John were eventually told by NSW Health that Nicholas had the A(H1N1) virus - after a day spent taking in Sydney tourist attractions such as the Opera House, Chinatown and Paddy's Markets.

The family of four are now quarantined in their World Square apartment in central Sydney, where they have complained of having to pay the $300 a night bill and $150 for room service. NSW Health had refused to help them, the family told The Daily Telegraph.

However, NSW Chief Health Officer Kerry Chant apologised to the D'Arcys today for their treatment, and offered to pay for the next four nights. “Last night we had contacted the family to indicate that we would pay for the next four nights accommodation,” Dr Chant said. “(We said) we would obviously pay for room service or groceries, and that we'd also look into some special requests in relation to toys for the young child.”

NSW now has a total of 18 confirmed swine flu cases, with a further 265 people awaiting test results. NSW health authorities are under fire for letting passengers disembark from the Pacific Dawn. Eighteen swine flu cases have now been recorded from that cruise ship, including six Queensland residents who have returned home.


Broke NSW government hospitals

SOME of Sydney's largest public hospitals frequently run out of medical supplies because they have debts of millions of dollars and the consultants PricewaterhouseCoopershave been called in to help stop the problem deteriorating. The authority running western Sydney's public hospitals owes suppliers nearly twice as much as previously acknowledged, according to internal figures that reveal for the dire state of its true financial position.

Doctors say unpaid bills mean hospitals frequently run out of supplies such as pathology chemicals and glucose tests for pregnant women, putting further stress on overworked staff. As of Tuesday, the troubled Sydney West Area Health Service - which runs Westmead, Nepean and other hospitals across western Sydney and the Blue Mountains - owed $43.7 million in invoices unpaid for at least 30 days. This included $14.6 million invoiced 90 days or more earlier, according to the figures obtained by the Herald.

The amount is far in excess of the $27 million a spokeswoman said remained unpaid at the end of April. About 400 suppliers are understood to have negotiated arrangements with the service, allowing them to be paid later than normal 30-day trading terms.

PricewaterhouseCoopers had been appointed to "provide financial management support", an area spokeswoman acknowledged yesterday, in a sign that administrators' are struggling to control their budgets.

The medical equipment supplier Synthes, which provides plates and pins for orthopedic surgery, the heart device supplier Medtronic and medical imaging company Olympus, are understood to be owed hundreds of thousands of dollars, and in one case more than $1 million. None of the companies would comment yesterday. A Medical Technology Association of Australia spokeswoman confirmed Sydney West was still paying 54 per cent of its invoices after the 30-day due date - compared to a 43 per cent state average - though this had improved since January, when the Government ordered all area health services to reduce their debts.

The appointment of external financial management is in addition to an external inquiry into the management of Westmead Hospital and the area health service, ordered by the Government after doctors complained their clinical expertise was being overridden by bureaucrats. According to a submission to that inquiry by Westmead's medical staff council, obtained by the Herald, staff morale was "at its worst point in the 30-year history of Westmead" as doctors and nurses distrusted management and were excluded from high-level decisions.

Andrew Pesce, chairman of Westmead's medical staff council, said the hospital frequently ran out of important supplies, such as reagent chemicals for diagnostic tests and bottles of glucose to test for diabetes in pregnant women, after unpaid suppliers refused new orders. "There's no more fat left in the system. We can't make any more progress by trimming here and there and drawing out creditor payments," Dr Pesce said.

Nepean Hospital was forced to suspend elective surgery yesterday morning when it ran out of supplies of essential anaesthetic equipment. But the area spokeswoman said this was caused by, "inadequate stock management" that did "not relate to the withholding of stock by suppliers." An inadequate supply of props to hold open patients' airways during surgery led doctors to halt surgery, resulting in several operations being delayed and one cancelled.

Dr Patrick Cregan, Nepean's clinical director of surgery, said the hospital was operating, "on paper-thin margins". Supplies of equipment necessary for patient safety were constantly on the verge of running out and doctors were unable to get authorisation to order new stock, he said.


Go to hospital. Catch swine flu

Queensland Health in its usual fine form

POTENTIAL swine flu victims are mingling with other out-patients at the first specialist clinic set up by Queensland Health to deal with the H1N1 flu crisis. The clinic, which opened yesterday at the Gold Coast's Robina Hospital, is in an area separated from the main accident and emergency ward only by a room divider.

While medical staff and paramedics wear full bio-suits and protective masks when dealing with potential swine flu victims, general outpatients enter through the same door as those visiting the flu clinic and are not issued with masks. The flu clinic waiting area is only a few metres from the outpatient waiting room. Queensland Health yesterday refused to let the media film inside the flu clinic because of the risk of infection.

Lee Daley, who was taking her 11-year-old daughter Taleea to the ward to have a broken arm checked, was frightened they could be exposed to swine flu. "I just think the clinic should be in an isolated room, not in the accident and emergency ward where people who might have swine flu are mixing with other outpatients," she said. "Everyone knows how germs can be spread through air-conditioning." Mrs Daley and her daughter opted to wait outside the hospital and were given face masks only after they requested them.

Queensland's Chief Health Officer, Dr Jeannette Young, said the clinic had been established to take the concentration of people with flu-like symptoms away from the Gold Coast Hospital emergency department. Dr Young said individuals will be asked to go to separate waiting rooms when presenting with flu-like symptoms. She said the clinic's waiting room was "appropriately signed to ensure individuals presenting with flu-like symptoms are in a contained area".


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