“Cadillac Health Care Plans.”  Even the phrase suggests gilt-edged insurance for Greedy Geezers at Goldman Sachs . No wonder the Senate wants to slap a tax on insurers and self-insured employers who offer over-the-top policies beginning in 2013.

After all, plans that fetch more than $23,000 for families (or $8,500 for individuals) must encourage over treatment, right? 

If you’re not sure, that’s hardly surprisingly. In recent days, New York Times columnist Bob Herbert,  the Washington Post’s Ezra Klein,   MIT economist Jonathan Gruber,  and  Merrill Goozner, editor of Gooz News on Health,  have offered sharply conflicting reports on the tax and its likely effects.

I decided to compare the arguments, and check the facts.

The first thing you need to know is that a pricey plan is not necessarily chock full of benefits. When setting premiums, insurers are not thinking about how much value you will get from the policy; they are contemplating how much it will cost them to reimburse you. Here, two factors weigh heavily on their minds:  your age, and the cost of health care where you live.

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Below, an excerpt from an article in the most recent (December 23 ) New England Journal of Medicine titled  “Medicine’s Ethical Responsibility for Health Care Reform — The Top Five List, by Howard Brody, M.D., Ph.D. ”    (At the end of the excerpt, I offer my commentary. )

“Early in 2009, members of major health care–related industries such as insurance companies, pharmaceutical manufacturers, medical device makers, and hospitals all agreed to forgo some future profits to show support for the Obama administration’s health care reform efforts. Skeptics have questioned the value of these promises, regarding at least some of them as more cosmetic than substantive. Nonetheless, these industries made a gesture and scored some public-relations points.

“The medical profession’s reaction has been quite different. Although major professional organizations have endorsed various reform measures, no promises have been made in terms of cutting any future medical costs. Indeed, in some cases, physician support has been made contingent on promises that physicians’ income would not be negatively affected by reform.

“It is appropriate to question the ethics of organized medicine’s public stance. Physicians have, in effect, sworn an oath to place the interests of the patient ahead of their own interests — including their financial interests. None of the for-profit health care industries that have promised cost savings have taken such an oath. How can physicians, alone among the “special interests” affected by health care reform, justify demanding protection from revenue losses?   . . .

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By Naomi Freundlich and Maggie Mahar

This year the rhetoric around health care reform reached historic levels. Barely a week went by without pundits dissecting some new fact, policy detail or wording change implicit in the various reform plans emerging from Congress. The result was a barrage of media reports, often conflicting, that heralded the demise or success of reform on a regular basis. Twisted facts, reactionary politics and just plain scare tactics have been pervasive.

\Below, “The 10 Most Destructive Lies about Health Care Reform in 2009” and “ The Ten Most Constructive Insights, Suggestions and Questions.”

Heath Care Reform:   The 10 Most Destructive Lies

1.) Seniors and the disabled "will have to stand in front of Obama's 'death panel' so his bureaucrats can decide, based on a subjective judgment of their 'level of productivity in society,' whether they are worthy of health care."

Sarah Palin made these comments on her Facebook page, responding to a provision in the House health care bill that would provide compensation to doctors who consult with patients about end-of-life care. The lie quickly spread—repeated at town hall meetings, tea parties, on Fox TV and throughout the Conservative blogosphere.

2) “You lie!” Joe Wilson’s angry shout-out to President Obama in the middle of his speech before the joint session of Congress made headlines this fall. Wilson was responding to Obama’s promise that health reform will not include coverage for illegal immigrants. 

3)"President Obama . . . wants to mandate circumcision." (Rush Limbaugh)

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Few observers have commented on how older Americans will fare under the amended Senate health reform legislation, but as things stand, many could be priced out of the health care market. The Senate bill lets insurers in the Exchange charge an elderly person up to three times as much as they would charge a younger customer. Thus many middle-class and upper-middle class Americans in their late 50s or early 60s who don’t have employer-based insurance could find themselves locked out of health care reform.

Under the bill that passed the House, insurers could only double premiums for the elderly. In the past, I had assumed that the House bill would prevail on this point.  I also thought that the public plan might be more generous. After all, it would be hard to argue that a government plan that made insurance unaffordable for middle-class, unemployed and self-employed Americans in their late 50s and early 60s was serving the public good. Surely some in Congress would protest, and the public plan would find a way to keep a lid on premiums, probably by incorporating Medicare reforms that lower costs. If private insurers wanted to complete for customers in that 55-64-year old market, they would have to follow suit.

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A Close Look at the Details

You have to hand it to them: on a Saturday, at the 11th hour, in the midst of a blizzard that shut down the nation’s Capitol, Senate Democrats finally nailed that 60th vote needed to bring health care reform home in time for the Holidays.
In the end, Nebraska Democrat Senator Ben Nelson decided that he didn’t want to play Scrooge. Though his heart  melted only after he  had won: 1) tighter restrictions on insurance coverage for abortions (health insurance plans will be allowed to cover abortions, but states can prohibit the coverage of abortions by plans that are offered in their exchanges); 2)  a special holiday present for his state (the amendment includes, solely for Nebraska, an extension of increased federal contributions to the cost of an expansion of Medicaid);  and 3) a pledge that no major changes will be made to the Senate bill in conference.
Nelson has made it clear that if any provisions from the House bill that he doesn’t like are added to the Senate bill, he will vote against it.

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Yesterday, I appeared on GRITtv with Laura Flanders where Yale political scientist Jacob Hacker, best known as the architect of the public option, Luke Mitchell, senior editor at Harper’s magazine, and I discussed what’s left of health reform legislation, our best hopes, and our deepest concerns, going forward.  (Click on the link, and scroll down to “Who Let Joe Lieberman Kill the Public Option?”)

During the course of the program, Flanders entertained her audience with clips of Senator Joe Lieberman saying very different things at different times when responding to the same issue. These included shots of Lieberman contradicting himself on the question as to whether one senator should take it upon himself to block major legislation. It’s worth watching the video of the show if only to see and hear Lieberman; he’s just as sanctimonious when he says X as when he takes the opposite position. The clips make Lieberman’s hypocrisy clear. He will say whatever will advance Joe Lieberman’s career.

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 “Every Decision from Here on In Must Put Patients’ Interests First”

Does anyone remember the original goal of healthcare reform?  I could type it in my sleep: “to provide high quality, affordable care for all Americans.”

Today, the goal has shrunk; the current Senate compromise aims only to make certain that 30 million uninsured Americans have insurance–which may or may not provide access to the care they need.

Washington would do this by mandating that all Americans buy insurance—or pay a penalty. Insurers, in turn, will be required to accept all customers, despite pre-existing conditions. Insurers will not be able to charge you more if you are sick– though they will be able to put a gun to your head if you are middle-aged.

Optimists say that by providing insurance for everyone, we will save tens of thousands of lives.  Maybe. Maybe not.

 Glass Half Empty

Over at Firedoglake, Scarecrow takes a grim view of the “compromise” that Senator Joe Lieberman has extracted from his colleagues: “Whatever Joe Lieberman’s motives, the reality is that he just performed a moral crime on national television. He’s essentially said that if Democrats want to provide even poor health insurance to 30 million uninsured Americans, the federal government and those citizens will have to pay blood money to an industry protection racket that will have the economic and political power to set the terms of that protection, shield itself from oversight and competition, and raise prices at will.  . .

 “The health reform debate is no longer about ‘reform,’” Scarecrow argues. “It has now become a hostage rescue effort for more than 30 million innocent victims”—i.e. the uninsured. "Every decision from here on must put the victims’ interests first, and whether we pay the extortionists’ ransom demands or not depends how that serves the victims’ safety.”  I agree. This is not a time to stop negotiating.  

Let me be clear: the “extortionists” are not just the private sector insurance companies (which desperately need 30 million new customers), but the hospitals, drug-makers, specialists and other players in the system. Will they put patients’ interests first? In other words, under the new scheme will they agree to make safe, comprehensive care available at a price that patients and taxpayers can afford?

Much depends, first, on how the private sector insurers are regulated. At present, we’re told that they will be overseen by the Office of Personnel Management (OPM), the group that administers Federal Employees’ Health Benefit Plans (FEHBP).  

OPM does not “regulate.” It oversees.  Rand  Health Compare explains: “There is no designated minimum benefit package for FEHBP plans. The federal government does mandate certain coverage (such as for catastrophic expenses and mental health parity), but in general FEBHGP  plans can provide highly variable products that differ in types of services covered, copayments, and out-of-pocket limits within broad categories (such as hospital, surgical, ambulatory, and obstetric care).  . . . Depending on the plan selected, enrollees may have different cost sharing for out-of-network providers.”  http://www.randcompare.org/options/mechanism/open_enrollment_in_fehbp.

How good are the “in-network” providers?  That varies.

Within the FEBHP, “choice” means that you are “free to choose” (forced to choose) the plan that you can afford. Typically, less expensive plans carry higher co-pays. The FEBHP  Chinese menu also offers “high-deductible” plans that some employees cannot afford to use, except in an emergency. This may mean that they go without the regular care and chronic disease management that their families need.  

When it comes to using the sheer size of its membership to negotiate lower premiums for federal employees, OPM has made little or no effort. From 2001 to 2008,, average premiums have risen by 62.3%.  Over the same span, Medicare has done a better job of controlling spending, keeping health care inflation down to 6% a year.

On top of runaway premium increases,  FEHBP participants have watched co-pays climb http://www.afge.org/index.cfm?page=ContentTest&fuse=Content&ContentID=1410.Under the least expensive Blue Cross/Blue Shield plans patients are charged $25 for each visit to a primary care physician who is “in network.” If they go to a doctor who does not accept the plan’s fees, patients must pay the full bill, without help from their “insurance.”  If a patient winds up at the ER, his co-pay is $75. If he is hospitalized, he pays $100 a day up to $500 –unless the hospital is “out of network;” in that case, he pays all charges. For some prescriptions that are not in the plan’s formulary, the co-pay is 50% of the cost of the drug. http://www.ibx.com/pdfs/custom/fep/2009_fep_chart.pdf

The major reason federal employees like their insurance is that the government pays up to 75% of annual premiums. (Though some federal employees still don’t sign up because they cannot afford 25% of premiums that can run as high as $13,000 for a family plan.)  Under the Senate plan, the uninsured will not be so lucky. Unless they qualify for subsidies, families who sign up for a menu of private plans modeled on FEHBP will have to foot the entire bill themselves.

Keep your eye on what happens when the House and Senate plans are merged. The House legislation calls for federal regulation of insurers. The Senate bill leaves regulation to the states —and many states just won’t be inclined to regulate.  

In part 2 of the post, I’ll talk about why the Senate plan would leave many older Americans uninsured, and why it is not likely that the private insurers overseen by the OPM will take it upon themselves to put patients’ interests first. 

That said, I also will elaborate on the features of the House and Senate plans that deserve progressive votes– as long as they survive final negotiations.  

Finally I will explain why I’m not giving up hope. Reformers have lost the game, not the match. This is just the first piece of health care legislation that you will see over the next three (or four) years.

At the moment, the Senate health-care compromise would replace the public option with a menu of private sector non-profit insurance plans overseen by the Office of Personnel Managment (OPM), the goup that oversees Federal Employees’ Health Benefit Plan (FEHBP).

 I say “at the moment” because I’m not at all certain that this compromise will hold. As one pundit observed over the week-end: “It’s bad enough to witness how the legislative sausage is made; it’s worse to see it being made on the fly.”

But let’s assume for a moment that the Gang of Ten Solution holds. What will it mean for unemployed and self-employed Americans under the age of 55?    Those who support this proposal talk about how much federal employees like FEHBP, and how successful it has been, as if it were a single plan, like Medicare, that offers the same benefits to everyone. 

The truth is the FEHBP is make up of a menu of private plans—some pretty good, some not so good. Many carry very high deductibles. Senators and postmen typically have very different plans.

Over at Kaiser Health News, Gail Wilensky, an economist and a senior fellow at Project HOPE, an international health education foundation, and a former administrator of the Health Care Financing Administration (now the Center For Medicare & Medicaid Services) asks a key question about the private sector plans OPM would oversee:

“One of the real questions . . . .  how much variation in the benefit structure will actually be allowed? When you look at FEHBP, you've got the $5,000 a year Mail Handler plan, and you have standard Blue Cross Blue Shield, which is $12,000 – $13,000 a year. Those are pretty big differences. The issue is what are you going to set up: a skinnied down plan with a tight network that would allow it to be low cost, or whether you insist on a very expansive plan in terms of benefits with few exclusions. The question is going to be the nature of what these plans are supposed to look like.” http://www.kaiserhealthnews.org/Stories/2009/December/14/FEHBP-health-insurance-public-option-OPM.aspx

Today, some observers have been aruging that we must pass some form of health care reform because if we don’t, tens of thousands of Americans will die prematuely 00 because they don’t have health insurance.

But having health insurance doesn’t necesssary mean access to the health care that might save lives: good chronic disease management; smoking cessation clinics with no co-pay; Pap smears with no co-pay; pre-natal care and nutrititional counseling; mental health care; primary care with no co-pay;  chemotheray  that can acually give a cancer patient extra years; very expensive drugs that can slow down MS; access to specialists (who may or may not agree to join the network of a less expensive plan that pays lower fees. )

Finally, experience shows that if the insurance carries a high deductible, patients are just as likely to defer needed care as they are to put off less vital care.

The alternative is  to require that all of the plans that the OPM oversees provide a full package of comprehensive benefits. This means that they will be more likely to cost $12,000 to $13,000. Like any private sector plan, they will have high administrative costs to cover lobbying, marketing, advertising and executive salaries. Unlike the public option , they will have no vested interest in reducing costs and lifting the quality of care.

Probablly we’ll wind up with a mixed bag: pretty-good plans for those who can afford the  highest premium;s and  poor plans for the middle-class and the  poor. Supporerts will call this “giving Americans choices” and ignore the fact that we are still rationing care by ability to pay.

Will  the least expensive plans save tens of thousands of lives?  Probably not.   They should save some lives, but as Marilyn Moon, vice president and director of the health program at the American Institutes for Research points out on Kaiser Health News: 
“These private plans aren't necessarily [going to be] doing what is best for the population. They're doing what they think is best for their own competitive environment and other criteria. So the question is, how are you holding the plans accountable?”

OPM doesn’t hold the federal employee plans accountable. It’s not a regulatory agency and it doesn’t have the size or the clout to insist that insurers meet certain standards in terms of providing value for health care dollars. Without a public plan in the marketplace, no one will be setting a benchmark that puts patients first.

Boston surgeon Atul Gawnde and Don Berwick, the president of the Institute for Health Care Improvement, understand that we can create a sustainable, universal U.S. healthcare system only if we reduce costs. And they recognize that by spending less, we can, in turn, lift the quality of care. As Berwick puts it: “The best health care is the very, very least healthcare that we need to gain the long and full and joyous lives that we really want.”

Talk to virtually anyone who has studied the problem in depth, and they agree. While many uninsured and underinsured patients receive too little care, a great many well-insured patients—including Medicare patients—receive too much of the wrong kind of care. Gawande explains: “Our system neglects low-profit services like mental-health care, geriatrics, and primary care, and [is] almost giddy in its overuse of high-cost technologies such as radiology imaging, brand-name drugs, and many elective procedures.”

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“Where is the plan to make health care affordable?”

“I want to see the savings.”

“Show me the money: Lay it out in simple language– on one page.”

Critics of health care reform legislation have become increasingly adamant on one point: They want to know how reformers are going to rein in the skyrocketing cost of care. And they want to know now. They’re not interested in “pilot projects,” or proposals that they refer to as “reform lite.” They want a proposal that the Congressional Budget Office can “score,” tallying up the savings the way one might add up the points in a tennis match, neatly, definitively, without argument.

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