An Analysis of Senator Hillary Clinton's Health Plan Proposal

A Detailed Point by Point Analysis of Senator Clinton's Health Reform Plan

This is a repost of my October analysis of Senator Clinton's health care reform plan.

This is nothing like the Clinton Health Plan from 1993.

Senator Clinton has so far been running a smart campaign for President and her health care reform strategy is no exception.

She waited until after all of the leading Democratic, and most Republican, candidates had announced their plans and then stuck her plan right in the ideological middle of where her Democratic opponents put theirs. It also looks a great deal like a bipartisan plan enacted in Massachusetts and a bipartisan compromise in the works in California. So on the day it was released, it was correctly identified as being relatively “centrist.”

Predictably, Republicans tried to wrap 1993 and her failed health care reform effort around her new offering. But their attempts to resurrect memories of her catastrophic policy failure fell flat more often than not.

Former Massachusetts Governor Mitt Romney is a case in point. Before the day was up, Romney was on camera calling her new health plan, “Hillary Care.” But Senator Clinton’s plan is a virtual clone of the new Massachusetts health care law then Governor Romney signed and that he continues to say he is “proud of.”

So, Mrs. Clinton is out with a plan that looks very much like the new reform effort a leading Republican candidate signed into law.

Not something that would have occurred in 1993.

Reaction in the business community was also encouraging for Senator Clinton. The National Federation of Independent Businesses (NFIB) was an organization that had an outsized impact on defeating the 1993 effort because of the small business mandate that plan included.

Mrs. Clinton learned from that lesson—this time not including a small business mandate to buy insurance for their employees but including a very generous tax credit for those who do. As a result, an NFIB spokesman responded to the new Clinton plan release about as enthusiastically as the Clinton camp could have hoped for, “One of the standout features of this is it specifically looks to help small business owners, and that’s a good thing.” Now that’s a 360-degree turnaround from the group whose grass roots lobbying against the 1993 Clinton Health Plan was nothing less than devastating.

Even the health insurance industry trade association responsible for those famous “Harry and Louise” ads, also seen as key to defeating the 1993 plan, was cautiously supportive. The AHIP CEO said, “The new Clinton plan includes important ideas to make coverage more affordable.” But there was also a reference to all the very anti-insurance company rhetoric we have been hearing from Senator Clinton recently, “unfortunately some of the divisive rhetoric seems reminiscent of 1993.”

Many worry that this is just the old Clinton Health Plan and the old Hillary Clinton in election-year “sheep’s clothing.” There is some reason to worry about that.

In 1992, Bill Clinton’s campaign health plan drew from the pro-market “Managed Competition” proposals that mixed government incentives with free market health care that built on the private insurance markets.

But within days of taking office, President Bill Clinton announced that Hillary Clinton would chair a health care task force that ended up crafting a 1,400 page plan developed in secret that looked nothing like his campaign platform.

This one-and-a-half page Clinton Health Plan is clearly nothing more than a campaign-year outline of principles. By itself, that is generally what campaign-year policy proposals are.

Any piece of legislation reflecting this outline would run into the hundreds of pages—so there are lots of details left to be filled in.

On the one hand, that gives a new Clinton Administration lots of opportunity for mischief.

However, one of the very big lessons an inexperienced Mrs. Clinton came away with from 1993 was that you couldn’t craft a comprehensive piece of legislation at the White House and simply deliver it to the Congress.

Every successful President has learned that the best way to do policy is to stand for a clear set of principles, use the “bully pulpit” of the presidency to create the political imperative for action, and then stand back and let the Congress do the details of crafting the legislation.

Mrs. Clinton is not running for emperor. She won’t be the one doing the details in any successful health care reform effort—it will be the Congress with all of its checks and balances and special interest influence. It will be the “sausage factory,” not the White House that will fill in all the blanks.

But Mrs. Clinton has proposed an outline for reform that has a great deal of centrist support in the country.

While the Republican candidates for president have a different approach—one that builds on a more vibrant health care and health insurance market—that philosophy’s time seems to have passed. President Bush had six years with a Republican Congress. While he scored impressive private market victories with the Medicare Modernization Act of 2003—which created Part D and Medicare Advantage—as well as health savings account legislation (HSAs), that purely private market approach now appears to have given way to the approach that was enacted in Massachusetts and a number of states are now considering—not the least of which is California.

If a Republican is elected president next year, he will likely face a Congress more interested in the approach Senator Clinton favors than expanding HSAs further.

Only if Republicans regain both the White House and the Congress will the market-based approach most Republicans favor have a chance of going any further. It doesn’t look like a Republican sweep is in the offing.

Let’s take a closer look at Senator’s Clinton’s $110 billion health care plan (her estimate) using her campaign’s outline—keeping in mind that the details of any final bill would eventually be filled in more by Congress than the White House:

1. Offer New Coverage Choices for the Insured and Uninsured: The American Health Choices Plan gives Americans the choice to preserve their existing coverage, while offering new choices to those with insurance, to the 47 million people in the United States without insurance, and the tens of millions more at risk of losing coverage.

• The Same Choice of Health Plan Options that Members of Congress Receive: Americans can keep their existing coverage or access the same menu of quality private insurance options that their Members of Congress receive through a new Health Choices Menu, established without any new bureaucracy as part of the Federal Employee Health Benefit Program (FEHBP). In addition to the broad array of private options that Americans can choose from, they will be offered the choice of a public plan option similar to Medicare.
• A Guarantee of Quality Coverage: The new array of choices offered in the Menu will provide benefits at least as good as the typical plan offered to Members of Congress, which includes mental health parity and usually dental coverage.

This is the “something for everybody” section.

Her plan would put the federal government in the health plan marketing business by creating a new version of the FEHBP menu of options that would be available in the private market. This would also be very similar to the Massachusetts “Connector” that takes bids from health plans that must qualify with the regulator and offer minimum benefits.

It is also clear that she would set a comprehensive minimum benefit threshold in the FEHBP-like program equal to the level of benefits offered in the existing FEHBP program—that does include an HSA program.

While it appears that the individual market would continue, and people who have individual coverage could keep it, this would put the FEHBP-like program in direct competition with that market segment. It would appear that consumers could continue to purchase limited or high deductible plans on their own in the individual market. However, she is also proposing an individual mandate, which will have to set a minimum benefit level. In Massachusetts that provision disqualified 150,000 existing policies—many because of high deductibles.

This provision vaguely resembles the Health Insurance Purchasing Cooperative (HIPCs) of the 1993 plan where Mrs. Clinton called for far reaching regulation over how health plans were sold, how they were priced, and what they looked like. She has carefully steered clear of so far reaching a proposal this time and it is doubtful that the Congress would make this version anything close to that failed model.

Mrs. Clinton would also put the federal government in direct competition with private health insurance industry by creating a Medicare-like government-run plan.

This provision gives all sides in the debate something. The single-payer advocates get a Medicare-like plan in direct competition with the private market and a chance to push the private plans out of existence. Those that favor a vibrant private market full of choices arguably get that.

Just where the balance is ultimately struck between government-run health insurance and free market health insurance, depends heavily on the details. For example, would the government plan have the power to unilaterally set provider prices—including drugs?

As long as it’s a fair competition, neither side should have anything to complain about—but then gaining an advantage for their clients is what lobbyists do for a living.

If nothing else, there would be a direct competition between a Medicare-like plan and the private market. So long as that turned out to be a fair head-to-head competition it would tell us a lot about which is the best track to follow and one, public or private, might eventually come to dominate the other.

2. Lower Premiums and Increase Security: Americans who are satisfied with the coverage they have today can keep it, while benefiting from lower premiums and higher quality.

• Reducing Costs: By removing hidden taxes, stressing prevention and a focus on efficiency and modernization, the plan will improve quality and lower costs.
• Strengthening Security: The plan ensures that job loss or family illnesses will never lead to a loss of coverage or exorbitant costs.
• End to Unfair Health Insurance Discrimination: By creating a level-playing field of insurance rules across states and markets, the plan ensures that no American is denied coverage, refused renewal, unfairly priced out of the market, or forced to pay excessive insurance company premiums.

Presumably the “hidden taxes” are the administration costs she would hope to cut by simplifying the sale and underwriting of health insurance as well as moving the system toward a greater use of information technology—including a patient medical record and investing in disease prevention. While it is likely these steps can save money, the market has been moving to improve health information technology for years and has found that process slow going and very expensive in the short term. The market has also invested heavily in wellness and disease management programs over the past 20 years with only modest success toward controlling healthcare costs.

By mandating that all Americans have coverage, Mrs. Clinton hopes to have virtually everyone in the insurance pool. By doing that, she would eliminate the need to have the barriers to coverage that currently exist to protect the insurer against anti-selection and those now uninsured would get the treatments and preventive services that are necessary to keep costs down over the long run.

But this is also the place reality may have to confront hope.

We cannot have everyone in the pool if it is not affordable upfront for people to buy in.

Massachusetts started out with an individual mandate but quickly backed off on it when it was clear the program could not provide affordable coverage for everyone—particularly those who make too much money to qualify for a subsidy (or an adequate subsidy) and too little to afford family health insurance costs that still run in the $7,000 to $9,000 range for a family policy with a $2,000 deductible.

It all comes apart if the subsidies are not adequate to make it affordable for people to buy coverage. How do you mandate a family to do something they just don’t have the money for?

She did not address the status that illegal aliens would have in her system—a highly contentious issue.

3. Promote Shared Responsibility: Relying on consumers or the government alone to fix the system has unintended consequences, like scaled-back coverage or limited choices. This plan ensures that all who benefit from the system share in the responsibility to fix its shortcomings.

• Insurance and Drug Companies: insurance companies will end discrimination based on pre-existing conditions or expectations of illness and ensure high value for every premium dollar; while drug companies will offer fair prices and accurate information.
• Individuals: will be responsible for getting and keeping insurance in a system where insurance is affordable and accessible.
• Providers: will work collaboratively with patients and businesses to deliver high-quality, affordable care.
• Employers: will help finance the system; large employers will be expected to provide health insurance or contribute to the cost of coverage; small businesses will receive a tax credit to continue or begin to offer coverage.
• Government: will ensure that health insurance is always affordable and never a crushing burden on any family and will implement reforms to improve quality and lower cost.

This section is probably the lynchpin in her plan’s ability to succeed.

Insurance companies will gladly drop all of the front-end underwriting activity in exchange for a guarantee that everyone will be in the pool. This makes one wonder why Senator Clinton feels the need to continue demonizing the insurance industry. Her plan gives the private health insurers the potential to sign-up 47 million more customers in a market where they can’t be selected against.

Her comments about the pharmaceutical industry need a lot of clarification. Just what does she mean by “fair prices.” She has previously come out in favor of the federal government directly negotiating Medicare Part D drug prices and drug “reimportation.”

Her statement that individuals will have to buy health insurance because her plan will have made it affordable is probably the biggest challenge. How will she be able to mandate affordable health insurance costs when the average cost of employer-sponsored family coverage is already up to $12,000 per year? Aligning adequate subsidies with the mandate to buy coverage is the big one. If the plan fails to do that, we will still have plenty of uninsured, continued cost shifting, and presumably people who can’t get coverage when they get sick because they didn’t buy when it was first available to them.

This one takes the prize for the most naïve line in the plan: “Providers: will work collaboratively with patients and businesses to deliver high-quality, affordable care.” Oh really? Just what makes her think the biggest challenge in the health care system, aligning provider and payer interests, is suddenly going to be a snap?

The employer mandate has been much more carefully crafted this time. It is not clear where the small employer versus large employer break comes but comments from her campaign indicate that it is at 25 employees. So, all employers with, presumably, more than 25 employees will have to “play or pay.”

We also don’t yet know what businesses that don’t provide coverage will have to pay. In the California plan just passed by their legislature, those employers who do not provide coverage would be required to pay a 7.5% payroll tax.

While most large employers already offer coverage and will welcome other employers having to pay their share of these costs, setting the cut-off line at 25 employees may still be problematic for many small companies that have more that 25 workers.

But, by exempting small employers, she has effectively neutralized the small business lobby that had such a major role in killing her plan last time. The subsidies she would also offer these small employers have also helped with that special interest group. However, there is no information on just how helpful these subsidies would be. But give Mrs. Clinton credit for recognizing that small employers, a powerful engine in economic growth, can’t be mandated to pay these costs.

Her line, government “will ensure that health insurance is always affordable” may be more hope than anything.

I would label her plan access heavy and light on cost containment. To contain costs, she would focus on prevention, health information technology, care for the chronically ill, ending the cost shift from the uninsured, saving on insurance administrative costs by improving marketing and cutting underwriting expenses, creating a “best practices institute” to reduce wasteful medical spending, and implementing “common sense” (read that trial bar friendly) medical malpractice reform.

These high-level cost containment proposals are all good ideas. But almost all of them have been underway in the health insurance markets for two decades now and they have not more than blunted health insurance costs that have grown at three to four times the country’s economic growth over the last 20 years.

The biggest issue this plan faces is creating affordable health insurance/affordable care. Without that, we will just have the problems that Massachusetts is facing today as it falls far short of universal access.

How do you enforce a mandate if comprehensive family health insurance costs $12,000 a year? If you think that number is too high for a reformed system, just take a look at Massachusetts or current FEHBP coverage. You can’t mandate comprehensive coverage along the lines of the FEHBP plan and expect that the costs are going to be anything less than what the typical FEHBP plan offering costs today--an FEHBP that already have guaranteed insurability and the more efficient distribution model Mrs. Clinton is proposing.

But then maybe Mrs. Clinton already knows that. I have long believed that fundamental American health care reform will come in two parts. Access first, then when everyone is in an unsustainable and unaffordable system, it will create the political imperative for real cost control in a second phase a few years down the line.

4. Ensure Affordable Health Coverage for All: Senator Clinton’s plan will:

• Provide Tax Relief to Ensure Affordability: Working families will receive a refundable tax credit to help them afford high-quality health coverage.
• Limit Premium Payments to a Percentage of Income: The refundable tax credit will be designed to prevent premiums from exceeding a percentage of family income, while maintaining consumer price consciousness in choosing health plans.
• Create a New Small Business Tax Credit: To make it easier—not harder—for small businesses to create new jobs with health coverage, a new health care tax credit for small businesses will provide an incentive for job-based coverage.
• Strengthen Medicaid and SCHIP: The Plan will fix the holes in the safety net to ensure that the most vulnerable populations receive affordable, quality care.
• Launch a Retiree Health Legacy Initiative: A new tax credit for qualifying private and public retiree health plans will offset a significant portion of catastrophic expenditures, so long as savings are dedicated to workers and competitiveness.

Senator Clinton defines affordability in political terms—the upfront cost of the insurance plan to the voter. Real affordability is the underlying cost of any insurance plan, of health care generally, and her cost containment strategy falls well short on what it will take to accomplish that.

In her plan with something for everyone, she picks up on the idea of creating a refundable tax credit, popular among Republicans, to make it possible for families to be able to afford health insurance. Here again, the "devil is in the details." As we are seeing in Massachusetts, the subsides are nowhere near good enough for those between 200% of the poverty level and those rich enough to pay the prices.

She also makes Republicans happy with her line, “while maintaining consumer price consciousness” when a health plan is chosen. While vague, this is a concession to those favoring a defined contribution approach to personal responsibility.

With health care costs growing at two to three times the growth in our economy, and likely to continue to grow at close to those levels given her light approach to cost containment, how long will it be before health insurance costs outstrip any subsidy program?

Her scheme to subsidize health insurance costs (limiting premiums as a percentage of income) is a great way to assure consumers that they will have affordability. The bigger question is just how much money will she need on day one to do that and how will she be able to sustain that strategy with such a light cost containment program?

Her “Retiree Health Legacy” proposal will come as welcome news to America’s legacy industries, and state and local governments, that cannot afford to keep their retiree health promises. Labor unions will love the requirement that any benefit from government help has to find its way to workers. This proposal recognizes the enormous cost to bail out the unfunded retiree health care liability that is crippling American industry in global markets. But again, there is no “free lunch” here. To make any bailout affordable, even the federal government can’t continue to subsidize these incredibly rich benefits at current levels. That Mrs. Clinton does not deal with.

5. A Fiscally Responsible Plan that Honors our Priorities:

• Most Savings Come Through Lowering Spending Due to Quality and Modernization: Over half the savings come from the public savings generated from Hillary Clinton’s broader agenda to modernize the health systems and reduce wasteful health spending.
• A Net Tax Cut for American Taxpayers: The plan offers tens of millions of Americans a new tax credit to make premiums affordable—which more than offsets the increased revenues from the Plan’s provisions to limit the employer tax exclusion for healthcare and discontinue portions of the Bush tax cuts for those making over $250,000. Thus, the plan provides a net tax cut for American taxpayers.
• Making the Employer Tax Exclusion for Healthcare Fairer: The plan protects the current exclusion from taxes of employer-provided health premiums, but limits the exclusion for the high-end portion of very generous plans for those making over $250,000.

“Most savings come through lowering spending due to quality and modernization.” That is her most dangerous assumption.

This is a political proposal after all. And like any good political proposal, it is careful not to “gore” any political “oxen.” Her cost containment program is cost containment light because she fears alienating any key stakeholders—like the providers. You can’t lower, or even stabilize costs, without key players getting less than they would have had.

But real cost control might doom her plan. That’s why I continue to believe any successful health reform plan will come in those two parts: Access first, and when the new access skyrockets costs even further, cost containment next.

Her promise for fundamental reform without pain continues in her assertion that only the rich are going to have to pay for this. Dream on.

Finally, she picks up on another Republican idea (choice, consumerism, tax credits being others) to limit the employer tax exclusion on health insurance costs but she only applies it to those who make more than $250,000 a year. By doing so, she is giving a nod to conservatives who argue that the present system of tax exclusions on health insurance have encouraged health plans to provide rich benefits that have contributed to high health care inflation.

But by changing the exclusion only for the those making more than $250,000 a year, she has bowed to labor pressure not to break the employer/employee compact on health care benefits for everyone else.

Good Politics and Centrist Health Care Policy
The other day I referred to Mrs. Clinton’s new health plan as centrist. A long-time Hillary Clinton critic was indignant that I would label Mrs. Clinton a centrist.

I pointed out that I wasn’t referring to Mrs. Clinton generally—I was referring to her health plan. I’ll leave the rest of that to your judgment.

The center in American health care politics has moved since 1993. With average costs up to $12,000 a year for an employer family plan, people are really worried not just about access but also about health care costs. They see the system as close to crashing and they’re worried.

Centrist voters will generally find this proposal as reasonable.

Those on the right of center will continue to see it as just more government intervention in health care—“Hillary Care.”

Those on the left will say she caved-in to special interests giving stakeholders like the health insurance industry too much--which may explain her anti-insurance rhetoric, that is so much worse than her policy proposal, as a way of deflecting that criticism.

American elections are won in the middle. She wasn’t ever going to get those on the right to vote for her. Who else will those on the left have to vote for?

The polls universally tell us that health care is the top domestic issue.

Politically, if she wanted to come out solidly where the middle is today on a critical issue, tackling what is possible, it looks like she got it about right.

But, this is a political proposal. As policy, it is a page-and-a-half that creates more questions then it answers.

For the Republicans to take the high ground here, they are going to need to do more then walk into a room and yell, “Hillary Care”––expecting that everyone is going to run from the room in terror.

Whatever she may be thinking deep down in her psyche, she is clearly not acting like the Hillary Clinton of 1993.

Must be driving her enemies nuts.

Related posts:

Hillary Clinton Criticizes Barack Obama's Health Care Plan Saying It Would Not Cover Everyone--Is She Right?

A Detailed Analysis of Barack Obama's Health Care Reform Plan

An Analysis of Senator John McCain's Health Care Reform Plan

"Health Wonk Review" Here At Health Policy and Marketplace Review

This week it's my turn to host Health Wonk Review. HWR is designed to highlight some of the best posts in the health blog world.

What I found remarkable this time was the sheer number of thoughtful submissions. The number and quality of health care blogs continues to grow.

It's a long, but terrific, list so I'll try to make it easy reading:

Brian Kleppper, posting over at "Health Commentary" gives us his take on the importance of California health reform and his worry that it will end up being more about taking care of the special interests than the strong medicine our system really needs. You know, I think Brian is just another one of those independently wealthy health care consultants who likes to cause trouble.

Speaking of independently wealthy health care consultants who cause lots of trouble, Joe Paduda, over at Managed Care Matters, gives us his take on John McCain's health plan now that the Senator is back in the game. You can also access my detailed analysis of McCain's plan on this site.

Jason Shafrin probably isn't the wealthiest health care blogger, but this kid may be the smartest. This time Jason gives us his take on the Democratic candidates' health care plans in an easy reading detailed analysis on, "Healthcare Economist." Wonder where Jason will be in thirty years?

Anthony Wright, with "Health Access California," points to a recent New York Times chart comparing the various presidential candidate's positions on health care but also gives us his sense about where the differences are. By the way, if you are following California reform, you need to keep an eye on this site.

I don't know how wealthy he is, but I do know Chris Fleming posts on a heck of a content rich site--"Health Affairs." This time Chris comments on the latest federal data from CMS on health care spending. Merrill Goozner also gives us his take on the report over at, "GoozNews."

Roy Poses on, "Health Care Renewal," a must on your health blog bookmark list, this time tells us about the CFO that put greed in front of good judgment in health care and the predicable result.

I found Bob Vineyard's piece, on the recent death of the young girl who was denied a liver transplant, on the always worthwhile, "InsureBlog," to be a particularly compelling one this time.

Maggie Mahar also gives us a most thoughtful perspective on this recent controversy over cost and end-of-life care in her post, "Bad Cases Make Bad Law," on her blog, "Health Beat."

Lisa Emrich, my favorite health care musician, has a a post this time on a recent study and the controversy over the value of free drug samples and compares and contrasts the pharmaceutical industry's statement with her take on it.

But David Williams sees it an a very different way with his post, "Drug Samples Not Going To The Poor. So What?," on "Health Business Blog."

From one of the best business insurance sites, Julie Ferguson recaps the top insurance news from 2007 at "Workers' Comp Insider." Julie also recommends a post by John Coppelman about a neurosurgeon awaiting sentencing in a kickback scheme over surgical implants.

Louise from, "Colorado Insurance Shopper," gives us her take on the recent California health insurance policy rescission controversy. Louse just reminds us that the people who work in the market every day often have a lot more common sense than those in the corporate suite who think the way to deal with their customers is through the legal department.

Over at "Wealth Builder," "Super Saver" gives us some outside the box thinking about how to require that people buy health insurance in quite an unconventional way.

David Harlow does his usually great job of keeping us up-to-date on health law at "HealthBlawg," this time with his post, "ERISA Pre-Emption Ruling Bites San Fran Health Care Coverage Mandate."

Daniel Goldberg, at "Medical Humanities Blog," discusses a recent study that demonstrates a link between having insurance and good treatment but still leaves him thinking there may be a more powerful argument in favor of universal care on ethical, compared to, policy grounds.

Adam Fein at, "Drug Channels" looks at December's unexpected injunction against CMS in, "No AMP for You!" The injunction stems from a lawsuit brought against CMS by two retail pharmacy trade associations to stop the use of Average Manufacturer Price (AMP) data to set reimbursement limits for Medicaid prescription drugs. Adam highlights the effect on payers, manufacturers, and pharmacies in one of the only blog posts on this important but little-understood topic. I just cut and pasted Adam's description because this issue is so complicated I can't even describe it. Adam is one heck of a resource for the rest of us on the nits of drug pricing.

Neil Versel posts about two separate federal health IT initiatives and offers some commentary about the chance of meaningful Medicare reform in 2008 on his blog, "Health Care IT Blog."

Can You Really Mandate People To Buy Health Insurance?

That's not so much a policy question as a practical question and it is what Hillary Clinton seems to be saying is the big difference between her health care reform plan and the health reform plan of Barack Obama.

That's why a news story this week out of Massachusetts caught my eye.

It seems that the Mass Department of Revenue is in the process of drafting new regulations to up the penalty for people who do not buy health insurance. If they are approved, the maximum penalty for those who do not buy health insurance would jump from $219 per year to a maximum of $912 in 2008. The penalty is estimated to be half the per person cost of the lowest priced health plan available.

Penalties would vary by age and the time a person was without health insurance. A 26 year-old would have a penalty of $672 per year and those over 26 would pay $912. So, a family of two adults over 26 would pay about $1,800 in penalties if they didn't buy health insurance (a reader has correctly pointed out children are not covered by the mandate).

The state health plan administrator--The Connector--has said that about 290,000 of the states 400,000, that were believed to be uninsured when the program was launched, have purchased coverage. But most of these people are those that get either all or most of their premiums paid by the state. Among those who get no subsidy, relatively few have chosen to buy insurance likely because they cannot afford the thousands of dollars in premiums for the minimum policy with a $2,000 deductible.

At a practical level, we are talking about middle class families being required to buy a health insurance policy costing $6,000 to $9,000 a year (with a $2,000 deductible) or having to pay a $1,800+ penalty.

The Connector has already exempted thousands of residents from the mandate because there was no way they could buy the coverage.

It is notable that the senior Medicare Part D drug benefit is voluntary but the vast majority of seniors have purchased it. Why? Because the government pays 75% of the costs and it is affordable. The Part D experience shows that if insurance coverage is affordable people will buy it.

The Massachusetts experience tells us if it is not affordable, people will not--or maybe more appropriately cannot--buy health insurance.

It's one thing to mandate health insurance coverage, but as we are learning in Massachusetts, the real challenge is making it affordable.

On the issue of health insurance mandates, Barack Obama, and the Republican candidates, are right.

Earlier posts: Hillary Clinton Criticizes Barack Obama's Health Care Plan Saying It Would Not Cover Everyone--Is She Right?

California Health Care Reform—An Individual Mandate is Nowhere Near as Important as Affordable Health Insurance

Medicare Advantage Cuts?

The highly profitable Medicare Advantage business is vulnerable to payment cuts to HMOs.

Any of you that read this blog know that I have been predicting big changes for the Medicare Advantage business ever since the Democrats took control of the Congress--particularly for the controversial Private Fee-For-Service (PFFS) part of the program.

But I have often felt alone in that opinion so a recent news story from TheStreet.com coming to much the same conclusion caught my eye. It pretty much reflects my thinking on the subject:

• "Medicare Advantage players better count their blessings while they still can."
• It's not whether there will be cuts but just how deep.
• Private Fee-For-Service plans, and the few companies who emphasize them, are particularly vulnerable.
• Medicare Advantage payments continue to be the plump target Congress needs to find a way to fix the Medicare physician fee problem that is on autopilot to cut doc payments 15% by January 1, 2009.
• If Medicare Advantage companies saw their payments equalized with the traditional Medicare program, they would see their reimbursement fall by $65 billion over the next five years and $160 billion over the next ten.
• "Clearly, then investors should weigh both a company's exposure to MA in general and to PFFS in particular before placing their bets next year [2008]."

The Medicare HMOs dodged a bullet last month when Congress decided not to cut the MA program to fix the Medicare physician fee problem. But the bad news is that they decided to fix the fee problem for just six months and cuts from 2007 and 2008 just got deferred until July 1. On top of that, there is another cut scheduled for January 1, 2009--a total of 15% in cuts.

The Medicare Advantage payment problem hasn't been solved, it has just been made more critical.

From the looks of Medicare Advantage-heavy HMOs' share prices, there's apparently lots of sand on Wall Street and a great many people have their heads buried in it.

The Budget Outcome--Everything Was Decided and Nothing Was Decided

The Budget agreement, SCHIP, the Medicare Physician Fee Cut, and Medicare Advantage HMO payments.

For months, I have been telling you four things:

• The federal budget impasse would be resolved because Democrats and Republicans weren't going to go home without their earmarks. In predicting the budget outcome you might recall my telling you to follow the "pork."
  
• SCHIP would not be allowed to expire and would be extended.
• The 10% Medicare Physician Fee cut would be avoided just as it has been for a number of years in a row.
• Democrats were adamant about cutting Medicare Advantage payments as a means to pay for the Medicare physician fee cut and seeing the program's payments ultimately equalized with the traditional Medicare program.

This was a great year for earmarks or "pork-barrel spending." When the day was done about 9,000 earmarks were inserted in the final bill in addition to about 3,000 more that were in the earlier defense appropriations bill--bringing the total to about 12,000!

The Democrats wanted $22 billion more in domestic money than President Bush wanted--about a 2% difference. The Democrats later offered to "split the difference" looking for $11 billion more--which Bush quickly rejected. In the end Bush got his cap--but they also agreed to about $11 billion more in "emergency funding" above the cap.

The Democrats also made Bush pay by cutting many of his favorite programs to get in under his cap. The alternative minimum tax (AMT) fix had no funding so will add $50 billion to the budget deficit. All told, funding for the war on terror, the AMT gap, and the rest of the spending will give us a whopping budget deficit of $240 billion next year.

If you are wondering just what got decided here, who really won, and what's different, you aren't the only one.

On the health issues:

SCHIP has been extended to March 2008. The Congress and the President have allocated enough money that children now covered will be able to stay in the program. There is some disagreement about whether new CMS rules might result in some cuts but CMS is showing no inclination to force any kids off the plan in an election year.

The bipartisan agreement to expand SCHIP from the current six million kids to ten million by spending another $35 billion ended up being shelved after the President vetoed that deal twice and the Democrats fell about 10 House votes short in their attempts to override him.

The docs did not get their January 10% Medicare fee cuts and instead got a half percent increase.

The bad new for the docs is that they only got a six month reprieve this time--until July 1, 2008. I see no reason to believe the Congress won't again find someplace to get the money it will need to defer the cuts to January 1, 2009.

But on January 1, 2009 the docs will face a whopping 15% cut--the 5% from last year that is funded only until July 1, this year's 5% cut that was also deferred only until July, and a new 5% cut the Sustainable Growth Rate Formula (SGR) will automatically create on January 1, 2009.

The Congress has fixed nothing for the docs, they have only pushed the pending cuts forward by six months--and most likely twelve months until January 1, 2009.

Just before the holiday recess, we thought we had a twelve month doc fix that would have been funded by taking the extra six months money from the "double dip" payments Medicare Advantage plans pay to teaching hospitals. But it wasn't the health plan lobby and conservative Republicans that KO'd that Medicare Advantage cut--it was a powerful Democrat looking to protect his local medical centers.

The big teaching hospitals have always had some of the most powerful allies in Congressional delegations from states like Massachusetts and New York where some of the nation's leading medical centers are based and some of the most powerful Democrats hail from. That was the case this time as the medical centers prevailed on the Chairman of the House Ways and Means Committee, and New York Congressman, Charlie Rangel, to kill that idea.

With the extra money cut by Rangel, and time running out, the only out was to use what money they had for just a six month fix and later try to find more funding by July of 2008.

As a result, the Medicare Advantage (MA) plans suffered no material cuts. It was clear that any real cuts would run into a Bush veto with the same fate as the two SCHIP bill votes. In the Senate, where 60-votes would have been necessary for any bill that contained MA changes, there had already been tacit agreement among Republicans to a one-year doc fix and some MA cuts. The big difference was an intransigent President who wasn't going to budge on this issue and later objections from Rangel.

Because of these agreements, payments to the MA plans should be safe until January 1, 2010 because CMS will have set the 2009 rates by the time the 2009 budget is dealt with later next year.

Does this mean that Medicare Advantage plans have won and will not have to worry about any big cuts?

Hardly. This was a draw.

Bush held the cuts off. Bush is a lame duck. The Democrats are more intent than ever on getting back on this one and cutting the Medicare Advantage "over payments."

George Bush may not have to sign the 2009 budget and therefore be a factor in next year's negotiations. It would be a simple matter for continuing resolutions keep the government going a month longer than they did this year--to inauguration day and a new President in late January.

Late in 2008, the docs will be facing a 15% Medicare fee cut on January 1, 2009, SCHIP will be out of money a few months later on March 1, 2008, the extra payments to Medicare Advantage plans will present the same plump target, and we will know who won the November elections.

I heard someone say recently that with every additional year of the extra Medicare Advantage payments there will be more seniors on the plans and it will be politically more difficult to cut them. That misses an important point--the docs are facing a 15% cut and if they don't get the money from the HMOs they will get it from other providers. AARP, the AMA, the hospitals, and about every other provider organization can agree on just one thing here--get the money from the Medicare HMOs. AARP can rally a lot more seniors than the insurance industry can.

The Medicare physicians held off some big fee cuts for likely another year, the Medicare Advantage HMOs held off any real cuts to their programs but are far from safe going into 2010, and the kids have their health plan until March.

No one won.

It's a "do over."

California Insurers Lose a Big Court Case In the Health Insurance Policy Rescission Controversy

Here's one for a Harvard Business School case study: A few months before voters in the state are going to decide the future of your industry get into a losing battle about retroactively canceling sick peoples' health insurance policies.

A unanimous California Appeals Court decision has decided that California health insurers have a responsibility to check the accuracy of applications for health insurance coverage before issuing policies at the time coverage is purchased and cannot cancel a policy unless the applicant "willfully misrepresented" their health status.

For the past year, California has had a simmering health policy rescission controversy as many of the state's insurers have argued that they can cancel a health insurance policy if there is any misstatement of fact--even if it is unintentional or immaterial to a claim that is later filed.

The court ruling is a big win for state regulators that have been trying to change insurance company policy and for consumers and their trial lawyers that have been going after them.

As I have commented before, the insurance companies behavior on this issue makes no sense to me and couldn't have been anything other than a big losing issue at a time when health care reform is at the top of the voter's agenda--especially in California.

Certainly, a policy should be voided by fraud. But that was never the issue--it was whether a policy could be voided even if the misstatement was unintentional or immaterial.

The particular case has to do with a Blue Shield policy that was issued for a family who later had a major health claim. Information about the claimants weight and an emergency room visit was allegedly incorrect.

The court went on, "These facts raise the specter that Blue Shield does not immediately rescind health care contracts upon learning of potential grounds for rescission, but waits until after the claims submitted under that contract exceed the monthly premiums being collected."

A health plan, "may not adopt a 'wait and see' attitude after learning of facts justifying rescission." The court said health insurers cannot continue to "collect premiums while keeping open its rescission option if the subscriber later experiences a serious accident or illness that generates large medical expenses."

The issue will now go to trial over whether the family intended to deceive the insurer and whether the insurer acted in bad faith by "blindly" accepting their application and taking their premiums until the claimants medical bills got too high.

Because of this ruling in California, these disputes can go to court on terms more favorable to the claimants.

Nice going California health insurance industry.

LA Times: "Court curbs insurers' ability to rescind medical policies"

Earlier posts:

Report: "Health Insurer Tied Bonuses to Dropping Sick Policyholders"

California Policy Cancellation Scandal Heats Up As Republican Candidates Propose Health Reform Based On An Individual Health Insurance System

The First Year For This Blog

This month marks the first anniversary for this blog.

As of today, folks have visited 95,558 times. From less than a thousand visitors that first month, 14,000 a month now visit and that number continues to grow briskly.

As long as you keep reading it, I'll keep writing it.

A November Ballot Initiative Over California Health Reform Would Be The Biggest Thing Ever To Happen In The Debate

With news that California Governor Arnold Schwarzenegger (R) and the Democratic controlled General Assembly have agreed on a health reform proposal we may be on the cusp of a huge referendum on the Democratic version of health care reform.

The next step is for the State Senate to approve the plan. The Assembly approved it earlier this month on a party-line vote with Republicans in opposition. The Democratic-controlled Senate is also likely to approve the bill but that vote will be held at about the time as the state's presidential primary in early February.

Technically, the November ballot initiative would be about approving the new taxes necessary to implement the plan.

All of the Republican presidential candidates oppose this generally Democratic brand of health care reform. You can expect the Republican candidates to be railing against the $14 billion plan that mandates that both individuals and businesses buy health insurance and has lots of tax increases to pay for it.

All of the leading Democratic presidential contenders have proposed a health care reform plan very similar to the already enacted Massachusetts health reform law.

Now, California seems poised to take a very similar health reform program to state voters next November.

If this ballot initiative passes in our largest state next November, it would provide enormous energy for any incoming Democratic president to accomplish the same thing at the federal level.

If a Republican wins the presidency, it would give Democrats in the new Congress a great deal of momentum in their health care dealings with a new Republican president.

If the ballot initiative were to fail in so strong a Democratic state, it would likely scare the Congress far from any similar national program. Just like the failed Clinton health plan of 1993 left Democrats too scared to touch major health care reform for almost fifteen years, a California defeat would have a catastrophic impact. Democratic efforts for their preferred Massachusetts-like style of health care reform would be dead in their tracks and Dems would be forced to take another look at the more incremental market-based proposals offered by Republicans.

A California referendum on health care reform could well be the whole ballgame for Democrats and an enormous opportunity for Republicans to turn the tide in the health care reform battle.

Today, the polls say 65% of the voters support the plan. But in California, these ballot measures often look lopsided in the beginning before opponents spend millions in counter advertising. Given the importance of this vote, every health care stakeholder with something to lose will be pulling out all of the stops and the outcome of the contest, that would fundamentally change how peoples' health care would be paid for and delivered in California, can in no way be predicted this far out.

Plan supporters believe it would cover more than 70% of the state's almost 7 million uninsured.

Under the California health reform bill:

• Those with under 250% of the federal poverty level would get state subsidies for coverage while those up to 400% of the poverty level would get tax credits aimed at keeping their health insurance premiums below 5.5% of their incomes.
• While there is an individual mandate to buy coverage, residents are exempt if they are required to spend more than 5% of their income to buy a basic policy.
• There would be an employer mandate to "pay or play" by requiring those who do not cover their employees to pay a tax.
  
• Insurers would be prohibited from denying coverage to residents because of pre-existing medical conditions.
• Insurers would be required to spend at least 85% of their premiums on medical care--the leading for-profit health plans currently spend about 82% on medical care.
• To fund the program new taxes would be created thereby requiring voters to approve the plan in a November referendum. These taxes would include an increase of between $1.50 and $2 over the current $.87 per pack cigarette tax, a 4% tax on hospital revenues, and the employer mandate that would require any employer not providing coverage to pay a tax of between 1% and 6.5% based on the size of the business. The program would also count on $4.5 billion in federal matching funds. Proponents say the program is revenue neutral--it will pay for itself.

This outline is very similar to the health care plans offered by the leading Democrats; Clinton, Edwards, and Obama and the already enacted Massachusetts health plan.

The California health reform plan also looks like everything the Republican candidates say they are against--mandated coverage, more taxes, and bigger government.

But if the California Senate approves this and sends it on to voters next November, we are going to have an unavoidable showdown on health care policy right at the time of the national election.

The outcome of the California vote on health care reform would have enormous life and death policy implications.

Why Couldn't CIGNA Make the Right Decision In the First Place?

The Christmas weekend was full of news stories about a 17 year-old girl who was denied a liver transplant by CIGNA.

The insurer ultimately reversed its decision but the girl died a short time later.

I have no idea if the outcome would have been different had CIGNA made the decision to approve the transplant in the first place.

Health insurance contracts--and government plans like Medicare and Medicaid--rightly contain provisions that can be used to deny payment for unnecessary or inappropriate treatment. If they didn't have these limitations every quack in America would be feeding at the reimbursement trough.

But what these provisions should not do is ever deny a legitimate attempt to save someone's life. The insurer has the burden to act responsibly and, if the family disagrees with the call, provide an independent and fast third-party appeals process for what can be life and death decisions.

This case is a controversial one. A leading liver transplant expert was quoted as saying that a liver transplant is not an option for a leukemia patient like this girl. But her doctors weren't a bunch of money grubbing quacks either--they were part of the very highly respected UCLA Medical Center and lobbied the insurer claiming there was a six-month survival rate of 65% for cases like this if the transplant occurred.

Was this a long-shot and almost certainly doomed to fail? Sounds like it. So, what? If it were your kid you would want even the smallest shot.

CIGNA made matters worse for its public relations situation by reversing its decision at the last minute--what was wrong a week ago suddenly made sense to them as a "unique circumstance." But, the girl died soon after and the family hired famed plaintiff's attorney, Mark Geragos, who wasted no time with headline getting press conferences that played across the cable news channels right up through Christmas eve.

Apparently, as soon as it became clear what a hornet's nest was stirred up, senior management at CIGNA recognized what an indefensible decision this was with the "man on the street" and reversed their policy decision.

Critics of for-profit health care will now be quick to point to a corporate focus on earnings and the almost complete dedication to satisfying shareholders and Wall Street analysts and argue that it has so permeated the company that management has lost the forest for the trees.

Are their critics right that their corporate culture has now evolved to one that has lost track of who the customer is and the ethical imperative that these life and death decisions create for them?

Critics don't have to say CIGNA was wrong here. Senior management at CIGNA said CIGNA was wrong, no matter how they now spin it, when they reversed the company's decision.

The question senior management at CIGNA needs to now be asking is, Why did their organization take on so controversial a potential end of life decision in which they had a financial stake in the first place and then defend it right up until almost the last moment? They apparently used "independent consultants" for advice. But, why didn't they have an on hand, arms length, third-party panel of experts that had no vested interest in making the call on medical appropriateness?

Maybe more importantly, what would you have done?

These are questions everyone in this business might do well to think about. Next time, it could be anyone faced with the same call.

December 25, LA Times: "CIGNA Stands By Decision On Transplant"

"Health Care Quote of the Year"

Brian Klepper joins us again today with his nomination for the "Health Care Quote of the Year."

Health Care Quote of the Year
by Brian Klepper

I was reading through some other peoples’ blog posts yesterday and came across this straightforward statement by Paul Levy, the CEO of Beth Israel Deaconess Medical Center in Boston. Paul made news by establishing a blog called "Running a Hospital."

I think he's probably taken some good-natured ribbing by his more straight-laced colleagues. But I admire that fact that he's broken the bounds of decorum and speaks openly about the many tremendously difficult issues that face hospital executives.

While many many hospitals (and doctors and health plans and...) are still doing everything possible to hold back the transparency tide, here's his take, published recently on Matthew Holt's Health Care Blog:

"The main value of transparency is not necessarily to enable easier consumer choice or to give a hospital a competitive edge. It is to provide creative tension within hospitals so that they hold themselves accountable. This accountability is what will drive doctors, nurses, and administrators to seek constant improvements in the quality and safety of patient care. So, even if we can't compare hospital to hospital on several types of surgical procedures, we can still commend hospitals that publish their results as a sign that they are serious about self-improvement."

Nothing could be truer, or more central to the mission of fixing American health care.

Thank you, Mr. Levy.

Washington Post: McCain "Has Some Good Ideas on Health Care"

The Washington Post is not known for favoring Republican prescriptions for health care reform. That is why their editorial today calling the McCain health care reform proposal, "the most detailed and thoughtful of the Republican proposals," caught my eye.

McCain has gone further in some respects than his Republican opponents on health care. Instead of providing people with a tax deduction, McCain converts the same tax savings into tax credits which will do more good for people in the lowest tax brackets--lower earners who need the most help.

McCain also puts more emphasis on cost containment--albeit with a focus on "coordinated care" that the provider community has tended to resist. "Coordinated care" may have a logic to it but McCain needs to also tell us why the providers will be willing to play ball with him when they have generally rejected the market's attempts to do the same thing.

The Post also rightly points out that the McCain health plan is weak on how he would use a more vibrant market to offer coverage to everyone just as his plan grants more flexibility to a market known for "cherry picking" when the rules aren't there to prohibit it.

McCain has always struck me as a Senator who is willing to work with all sides to find a common sense solution to problems even when that means moving off his party's ideological base and creating political problems for himself.

McCain worked with Ted Kennedy on the failed "patient rights" bill of the late 90s--which largely failed to pass only because the market adopted many of its requirements and undercut the need to do it. McCain's efforts on the tobacco settlement also crossed party lines to get a deal done. And, his efforts on campaign finance reform and the failed immigration reform (in tandem with his President) all point to someone who is going to find a solution even if it means doing business with political opponents--and at great cost to his own political support.

If we get a Republican President, health care reform is only going to be possible if that Republican is able to work with Democrats. If, as we now expect, Democrats control the Congress that will be essential if we are to avoid more gridlock. Even if the Republicans capture one or both of the House or Senate, it will still take plenty of Democrats to get anything as big as health care done.

One can also argue that Governor Romney shares the ability to work across the aisle since he did the deal with his Democratic legislature to do Massachusetts health care reform. However, the fact that Romney seems to deny that role on alternate days when it suits his audience doesn't give me a lot of comfort.

McCain has certainly shown that pragmatism and may be the real reason he got somewhat of an endorsement today by The Washington Post.

You can access my review of each of the major candidates' health care reform plans in the column to the right.

The State of Primary Care--How Much Responsibility Do Specialty Physicians Bear?

Our good friend Brian Klepper, posting over at "The Health Care Blog," has some provocative things to say about the state of primary care and the role the specialties, and even the American Medical Association, have had in getting us to where we are.

Among Brian's points:

• "American primary care is a shambles, and it is now clear that it will not be viable in the future unless significant changes occur in our national attitude about its value and in the way we pay for it."
• "In other words – and it is important to be clear about this – the premeditated actions of the specialist-dominated RUC, operating under the auspices of the AMA and in alliance with CMS, appear to have played a direct role in the current primary care crisis by driving policy that financially favored specialty care at the expense of primary care."
• "But our Congressional representatives and the American people almost certainly don’t know these details. Most Americans and, for that matter, most health care professionals, are utterly unaware of the roles of the AMA and CMS in shaping the primary care crisis and our larger health system problems. Most believe the AMA speaks for all physicians."
• "Recognizing the primary care physician’s value by imbuing him/her with the authority to serve as the patient’s advocate throughout the continuum of care, and then paying him/her to do that would accomplish several important objectives."

That little sample should have you ready to read the whole post here.

The Shadegg Bill––A “Health-Insurance Solution” That Is a Waste of Time

Merrill Mathews, writing on yesterday’s Wall Street Journal op-ed page, asks why Representative John Shadegg’s (R-AZ) “Health Care Choice Act” isn’t a “no-brainer” for the Congress to pass.

Shadegg’s proposal would enable consumers to buy a health insurance policy in any state thereby bypassing the states with the most costly benefit mandates. At the top of his costly mandate list are state “guarantee issue” laws that have forced premiums to skyrocket where insurers are required to take all comers.

So why isn’t it a “no-brainer” to pass Shadegg’s proposal and give everyone access to the least mandated state health insurance policies?

It is notable that Shadegg has been pushing this for years—including the six years he had both a Republican Congress and a Republican president and couldn’t get the bill to go anywhere.

The reason the Shadegg bill never went anywhere is that it is a waste of time.

The Shadegg bill is as close to “rearranging the deck chairs on the Titanic” as one can get in health policy.

If the Shadegg bill became law tomorrow individual health insurance might be a lot cheaper in heavily mandated places like New Jersey—a state Mathews points out now has an individual health insurance cost of between $1,726 to $14,062 per month.

But how much cheaper and at what cost to lots of other people?

Mathews points out that the Shadegg bill would effectively come closer to delivering the kind of mandate-free insurance prices that ERISA employer plans deliver.

OK, but the average cost of an employer-provided, ERISA mandate free, health insurance plan is over $12,000 a family.

That $12,000 average employer family cost is just that--an average. A young and healthy twenty-something can probably buy it for much less—maybe as low as $100 a month. But a 60-year-old, if they are healthy, is going to pay a correspondingly larger amount because of age-rating in Shadegg’s market.

If that older person, or even a younger person for that matter, has a medical condition, forget it. They won’t find coverage.

Sure, we could add a big deductible—maybe $5,000—and get costs down another 20%.

But when the day is done what have we achieved?

In the end, the young and healthy would get much more affordable policies and the old and/or sick would be worse off.

So what exactly does the Shadegg bill get us?

Well it would get Mr. Mathews' insurance company trade association, the “Council for Affordable Care” a wild-west market environment to go find all of those young healthy people and sign them up for really cheap coverage.

Young and healthy people would pay a lot less and older and/or sicker people would pay a lot more if coverage were even available to them.

New Jersey is a dysfunctional health insurance market. But fixing that state, and others like it, is a lot more complicated than putting the “cherry pickers” back in charge.

In the presidential debate, some are suggesting individual-based consumer-driven plans while others are offering more traditional group oriented solutions. Both can work. Whichever, many of the candidates are calling for a comprehensive solution to our health care challenges––that includes reforming how health insurance is purchased.

The Shadegg bill is not a serious attempt at reinvigorating the individual health insurance market around consumer-driven principles that would give everyone a fair shot at better coverage.

The Shadegg bill is nothing more than a crass special interest play to carve-out the youngest and the healthiest and leave the older and sicker in the ditch—to dysfunctional state regulated systems like New Jersey whose pools of insured would deteriorate even further and cost even more.

Let’s stay with the debate we have—one that has the potential to make some meaningful change in 2009.

Health Wonk Review Is Up!

David Harlow over at the "HealthBlawg" has a particularly entertaining holiday edition of Health Wonk Review up. It covers some of the best posts in recent weeks from the world of health blogs.

Republican Candidates Wouldn't Have Been Able To Get Coverage Under Their Own Health Reform Plans

Republican presidential candidates have called for a greater reliance upon the individual health insurance market. But many of these same candidates have had cancer and wouldn't have been able to get individual coverage under their own health reform plans at the time of their treatment.

Ricardo Alonso-Zaldivar had a great story in the Los Angeles Times recently.

Ricardo points out that Rudy Giuliani has had prostate cancer, John McCain melanoma, and Fred Thompson has had lymphoma.

All have called for a more robust individual health insurance market. But that market today relies upon medical underwriting--people who have had cancer will have great difficulty finding an insurance company to underwrite them. As the Times reports, "Cancer survivors -- even if they have been free of disease for several years -- are routinely denied health insurance when they try to purchase it as individuals."

If coverage is offered, it often comes with restrictions on the disease the person suffered with or high premiums.

Even after being treatment free for five years it's hard to get coverage. Ricardo cited a survey of 22 insurance companies Karen Pollitz did at Georgetown University about a hypothetical breast cancer survivor who was five years out from a successful treatment. "Eleven companies said they would deny coverage, and six said they would issue a policy at standard rates. One company said it would charge double the usual premium. Another said it would issue a policy but exclude future cancer treatment. Three insurers did not respond."

Romney goes even further than the other Republicans by calling for less regulation in the state-based individual health insurance market then we have today.

Employer plans generally cover all new employees--albeit with as much as a one-year pre-existing condition provision if the new employee did not have prior coverage. However, all of the Republicans provide tax incentives that would move coverage away from the employer model and onto the individual model.

No one should be able to wait to approach an insurance company until they are sick and expect to get coverage--they should have bought it in the first place. But when individual coverage costs thousands of dollars a year, many can't afford to get it. Some people lose their jobs and their coverage.

Lots of people are out there without health insurance coverage and it has nothing to do with personal irresponsibility.

Today's COBRA might help--an 18 month extension for a worker who has left their employer so long as they can afford the full cost of their employer's plan--which averaged $12,000 a year for family coverage in 2007.

A reformed health insurance system based upon an individual insurance model can work. However, the Republican candidates have not closed the loop on how they would make it affordable for people to buy coverage in the first place or how they would overcome medical underwriting and age-rating that are now at the core of this business model.

Good thing these guys didn't get laid off, lose their coverage, and have to go find individual coverage under their own health reform plans!

You can access my review of each of the candidates' health plans in the column to the right.

Mike Huckabee's Health Care Plan

Mike Huckabee is now among the front runners for the Republican nomination. So, what is his health care plan?

First, he doesn't have a plan so much as a set of principles that would have to be detailed. On the surface he seems to want a lot of it both ways--no more government but lots of new program ideas. For example, he calls for tax credits to help low-income people purchase health insurance but says universal health care can't be "funded through ever higher taxes." Giving low income people meaningful assistance to buy health insurance is what makes the Democrats' plans so costly.

Much of what he talks about in these principles is similar to the other leading Republican candidates. Like other Republicans, he would begin to shift the health insurance system away from the employer and toward a consumer-driven model putting a more vibrant health care market at the center of his strategy.

Like other Republicans, he does not call for individual or employer mandates and the more than $100 billion of annual spending that Democrats call for, in great part, to implement them.

Like all candidates, Republican and Democratic, he calls for more focus on prevention and health information technology to improve the cost and quality of the system.

Here are his key points in his own words:

• "The health care system in this country is irrevocably broken, in part because it is only a "health care" system, not a "health" system.
• "We don't need universal health care mandated by federal edict or funded through ever-higher taxes. We do need to get serious about preventive health care instead of chasing more and more dollars to treat chronic disease, which currently gobbles up 80% of our health care costs, and yet is often avoidable.
• "I advocate policies that will encourage the private sector to seek innovative ways to bring down costs and improve the free market for health care services.
• "We can make health care more affordable by reforming medical liability; adopting electronic record keeping; making health insurance more portable from one job to another; expanding health savings accounts to everyone, not just those with high deductibles; and making health insurance tax deductible for individuals and families as it now is for businesses. Low income families would get tax credits instead of deductions. We don't need all the government controls that would inevitably come with universal health care.
• "I also value the states' role as laboratories for new market-based approaches, and I will encourage those efforts. As President I will work with the private sector, Congress, health care providers, and other concerned parties to lead a complete overhaul of our health care system, not more of the same, paid for by Uncle Sam at the expense of hard-working families.
• "Our employer-based system has outlived its usefulness, but the answer is a consumer-based system, not socialized medicine."

You can access Huckabee's health care policy web page here.

Earlier post: When it Comes To Health Care Policy It Really Doesn't Matter Which Democrat Or Which Republican Wins Their Nomination

You can access my review of all of the candidates' plans in the column to right.

More People Think Health Care Is An Urgent Issue Than Think The Iraq War Is

A recent Wall Street Journal poll caught my eye.

The poll found that 52% said the economy and health care are most important to them in choosing a new president compared to 34% that said terrorism and social and moral issues were most important.

That is the opposite of what people thought at the time of the 2004 election.

Here's the surprise for me. The poll also showed, "health care eclipsing the Iraq war for the first time as the issue most urgently requiring a new approach."

I said to someone yesterday, who has also been through the health car wars for many years, we health policy folks ought to be ecstatic about all the attention health care is getting. But I also said all of the scars from health care efforts started and stalled don't make me overly confident.

It is important voters demand the health care problem be solved by the next president and Congress. If the new guys just come to Washington with more of all of the partisan bickering we are seeing on the budget and SCHIP today, we will go nowhere.

There continue to be more reasons health care reform can fail than succeed. Voters need to send an unambiguous message.

Pete Stark Regrets the Stark "Self-Referral" Laws!

David Whelan was kind to point out a great story he just did at Forbes.com on the Stark anti-kickback laws and the bans on provider "self-referral."

David writes, "Yet in an interview today the Congressman lamented that he ever made this legislative intrusion into medical practices."

Congressman Pete Stark (D-CA) went on to say the laws, "gave every shyster and promoter a loophole" and that he would now simplify things by relying on just the anti-kickback laws.

This article is a must read!

Great scoop, David!