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Reaching out to the insurance 'untouchables': health in the US election - Health Policy Today, 29 October 2008

This time next week, we will know the name of the next president of the United States.  Today’s Washington Post provides an update on how health policy is affecting the election.

The crucial difference between the candidates relates to how each would provide for the very ill – those that struggle to find cover. Obama would prevent insurance companies from rejecting this group.  McCain would uncouple insurance from employment and create state-run high-risk pools, specifically for those that insurance companies won’t touch.

Central to this discussion is a debate about the role of the state in healthcare.  It is one that could have important implications for our own healthcare system.

As the Post explains, ‘a philosophical difference between the presidential candidates over health insurance comes down to this: Given that relatively few people have extremely expensive medical problems, is it better to require insurance companies to include them with everyone else, as Democrat Barack Obama favors, or to separate them, as McCain prefers, in insurance pools just for them? ‘

One Washington Post piece explains how McCain would change healthcare .

‘If McCain is elected president next week, he has said, he would work to remove the tax preference for company health benefits and offer Americans tax credits to put toward any health plan they choose. He wants to let people buy health plans from insurance companies anywhere in the country, preempting state regulations that spell out whom insurance carriers must cover and what kinds of benefits they must provide.’  

His plan is to shift people away from occupational towards individual schemes.  At a time when employers are complaining about the costs of insurance such a move might reduce the burden of health schemes from companies and, by stimulating an individual market, reduce the cost of insurance schemes.  His plan includes switching tax credits from companies to individuals, worth $5000 for a family.

‘McCain acknowledges that such a free-market climate would inevitably freeze out some people with serious medical problems who are looking for insurance on their own. So he is calling for a guaranteed access plan, a federal effort to share the cost of high-risk pools and dramatically expand their reach -- from fewer than 200,000 Americans in state plans today to perhaps 5 million.’

As the Washington Post explains, ‘risk pools, as such arrangements are known, are a linchpin of the Republican presidential nominee's thinking about how to make health insurance more plentiful and less expensive’.

The Post’s article on the McCain scheme begins with a human story to illustrate the kind of people it hopes to help.

‘When Diane Derichs's husband was retiring from his assembly-line job making fruit bars for ConAgra Foods, the couple invited over an insurance agent to help her find a health plan.  A part-time hairdresser, Derichs, at 58, was too young for the Medicare that her husband, Vernold, could already get. Sitting at their kitchen table in a St. Paul suburb, Derichs told the agent about the back surgery she had once needed for her scoliosis, the bad tendons in her feet, the lupus that causes painful sores on her skin. Blue Cross Blue Shield, the agent discovered, wouldn't accept her. Nor would Mutual of Omaha. Or any other company he checked. "It's like, whammo, don't get sick," Derichs said. "As soon as I said 'lupus,' it was just like: 'Red flag. Sorry, can't do anything.' "

The one scheme that would accept Mrs Derichs was the Minnesota Comprehensive Health Association.  ‘Created in a wave of health-care changes here in the late 1970s, the Minnesota Comprehensive Health Association (MCHA) had a membership of 28,000 last year, equaling nearly 7 percent of the state's uninsured population. Small as that share was, it far exceeded any other state's, according to the National Association of State Comprehensive Insurance Plans.’

Among the high-risk pools in 34 states, Minnesota's is the oldest, largest and, many believe, the most successful. "It just seems to work," said Doug Holtz-Eakin, senior policy adviser to McCain.

The President of the Minnesota scheme says, “We treat them like gold. It's all we do, focus on these chronically ill members, what their needs are. ... Members get discounts on specialty drugs. Those who are particularly sick get letters or phone calls coaching them on how best to manage their ailments. “

In order to join the scheme, members must have been rejected by at least one insurance company. Not everyone is a fan of the scheme. Some members feel they are being stigmatised.  ‘Kristin Flaten, one of two consumer representatives on the board of directors, said: "The most vocal people in MCHA are mad about being in MCHA. They don't like being told they are high-risk. They don't like paying the extra money. There is a perceived unfairness they are being treated like that, and the insurance companies are getting away with it."

There are also some people who cannot afford even to join the ‘risk pool’ (which sounds like a car sharing scheme). The very moving story of LaVonne Kees, a 59 year-old widow, illustrates the point.

‘Diagnosed with Stage IV colon cancer in August 2007, she was still getting chemotherapy when she was laid off in June from her job as a distribution clerk for a hospital supply company. Along with her job, she lost the United HealthCare plan that had cost her $22.50 a month. She went on COBRA, a federal arrangement that lets displaced workers temporarily keep group health benefits, but she lost that coverage in a dispute over when her second premium was due. Her small retirement account made her not quite poor enough for Medicaid, so she called MCHA. The woman on the phone told her it would cost $500 to $600 a month. "I thought, 'Oh, really?' "Living on $900 unemployment checks, with rent and car payments, "there is no way I could pay that." After her last chemotherapy treatment, she got a $26,000 bill. She canceled scans in September that would have determined whether she needed more chemotherapy. She canceled an appointment with her oncologist. "As of right now," she said, "everything is kind of at a standstill”.’

There are financial problems with these state schemes and in Minnesota ‘finances are strained and getting worse’ - but apparently the problem is worse in other states.  ‘California's high-risk pool is so strapped that it put a limit on enrolment this year and lowered the maximum it would spend on anyone's treatment. Tennessee's pool has had to eliminate low-income subsidies for new members. Florida's pool has not let in anyone since 1991.’

Maryland’s scheme (the only one in the Washington area) has grown so quickly that it is having to ration by requiring members to wait longer for coverage of existing illnesses or to pay extra.

‘McCain has said that, under his guaranteed access plan, the federal government would cover half the cost of such pools, with the rest paid by states and the insurance industry.’  It has been estimated that ‘the federal share might be $7 billion or $8 billion a year’, and others suggest it could be twice that.

While McCain points to the Minnesota risk pool scheme, Obama’s inspiration is Massachusetts.  As explained   previously on HPT the OBama plan aims to move towards America towards universal coverage a la Massachusetts with one (absolutely crucial) difference.  

Unlike the Massachusset’s plan, where insurance is compulsory and those who do not enrol in a scheme are fined, Obama’s policy will not mandate all citizens to enrol with an insurance scheme.  It’s a difference for which Hilary Clinton heavily criticised him, as they battled for the Democratic nomination.  Obama’s plan does require all children to be covered (but not their parents).

Why does Obama’s plan not mandate coverage?  Another article in  the Post explains Obama’s political position , which is inevitably complex.

‘Obama says he would keep the familiar arrangement in which most Americans get health insurance through their jobs, as Massachusetts is doing. Yet he also favors profound - and controversial -changes that Massachusetts also is putting in place: Expanding government insurance programs and subsidies. Requiring employers to offer their workers coverage or face penalties if they do not. Forbidding insurance companies to reject anyone or charging more if they are sick. Creating a national health insurance exchange to help people to find and compare private insurance policies on their own.’

‘Even now, some residents go without health insurance. Some are offered coverage through their jobs but cannot afford it. The law does not allow subsidies for them. In fact, the Connector board agreed to exempt from the mandate about 60,000 people, some in that group and others with incomes too high for Commonwealth Care but too low for private insurance.’

The Post says the fact that Massachusset’s agreed a scheme is due to an ‘unusual alignment of forces’ and ‘the local healthcare climate’.  In other words, it was political settlement reached in particular circumstances, as the following explains.

Massachusetts's lawmakers had been warned that federal health officials would take away $385 million a year in money for poor patients unless the commonwealth found a different way to spend it. And on the streets of Boston, an influential coalition - community activists, hospitals, doctors, unions and hundreds of religious groups - had gathered signatures for a popular ballot initiative that, if the legislature did not act, could have rewritten the state constitution to make health care a right.

'Then-Governor, Mitt Romney, a Republican on the cusp of his own presidential campaign, was calling for a "culture of insurance" as he sought tangible accomplishments. At the same time, Massachusetts faced a smaller challenge than much of the country, with fewer uninsured residents to start with and fewer undocumented immigrants, who cannot qualify for help.  Even under such favorable circumstances, Chapter 58 was stalled in the legislature for months, as businesses balked at the prospect of penalties for not insuring their workers. That fractiousness was still in view the April 2006 day that Romney staged a theatrical bill-signing in historic Faneuil Hall; he vetoed that part of the law, although lawmakers later restored it.‘

‘Across Massachusetts, there has been little hint of backlash against the requirement. Public support for the law, high when it passed, has risen since then, surveys show.  The mandate on individuals appears to be having a greater effect than the pressure on companies. "Fair share" fees that businesses must pay if they do not offer coverage are substantially smaller than the cost of helping workers with insurance premiums. The proportion of Massachusetts companies providing insurance, higher than in many states, has barely changed.’

Obama’s stance is more than slightly political. He wants to propose radical reform – to convince people his action will be meaningful – but he will not support revolution. While the Massachusset’s scheme is a benchmark, not all states could adopt such a plan. This is why his plan seeks to fill the gaps that are left by employment based insurance.  He wants to move towards universal coverage using a variety of levers.

His campaign director tries to detract from the ‘mandate’ issue. ‘Neera Tanden, his campaign's director of domestic policy, said of his plan, "With a mandate or without a mandate, we are dramatically expanding coverage”.’

It is important to remember that the health plans of presidential candidates often change when in office.  The election has been full of unsubstantiated rumour, but one that will have made people’s ears prick up is that Obama Barack will bring in Hilary Clinton as his health secretary.  Given how much Mrs Clinton upset the healthcare industry in the 1990s, this seems unlikely.

Perhaps the promise was intended to signal to Democrats, concerned about his stance on healthcare, that he could be persuaded to introduce a mandate, requiring everyone to enroll with an insurer.

Many people in the States are coming to the view that America needs to move towards universal coverage. It is interesting that the President of the scheme that John McCain is basing his policy on says risk pools are “not a panacea ... We need to be moving in the direction of universal coverage.  "No one should be rejected because of their health conditions. Our federal government has failed us".

The debate has some implications for England.  Over a number of years, a debate has been rumbling about whether general taxation can provide a health service for all - and, more fundamentally, whether the state should play a fundamental role in funding or provision.

For example, Helen Rainbow, senior researcher at the think tankReform, yesterday wrote a piece for the Conservative activist’s website, Conservative Home.  She writes, ‘The expected acceptance of the principle of NHS top-ups by Alan Johnson next week will be a defining moment for the service.  He said himself in a newspaper article at the weekend that it is like opening “Pandora’s Box”.  Enabling patients to top-up their own care, even if it is only happens in a very small number of cases, shatters the assumption that the service is capable of providing everything to everyone.  It heralds a new type of relationship between the individual and the State in terms of funding healthcare.’

But at the same time as voices in England are calling for a greater role for health insurance and a move away from the general taxation models, around the world health systems that rely on private funding are increasingly shifting towards supplementing the holes this leaves in the system with public money.

The outcome of the American election could have an eventual influence on our own health system.