Tag Archives: insurance companies

Meet the Real Death Panels: The Truth About Age-Based Health Care Rationing

The latest issue of Mother Jones includes an article by me about the controversy over age-based health care rationing, which got transformed by the right into government “death panels.” Unfortunately, liberals have fallen into a different trap, because they refuse to take on the real enemies of affordable health care for all: the insurance companies, drug manufacturers, and other profiteers of our private health care system.

As a result, old people are being asked if we would be willing to give up some expensive, life-sustaining treatment so that our grandchildren can have health care. This is a bogus question, and a bogus “choice.” The real question, as I say in the article, is whether we should give up the treatment “so some WellPoint executive can take another expensive vacation, so Pfizer can book $3 billion in annual profits instead of $2 billion, or so private hospitals can make another campaign contribution to some gutless politician.”

It’s a long article, and I’m including just the opening here, with a link at the end to continue reading at the Mother Jones web site. Or you can read the whole thing at MotherJones.com by clicking here. And if you’re one of those geezers who still likes reading print and turning pages, the July/August issue is on newsstands now.

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From Mother Jones, July/August 2010

There’s a certain age at which you cease to regard your own death as a distant hypothetical and start to view it as a coming event. For me, it was 67—the age at which my father died. For many Americans, I suspect it’s 70—the age that puts you within striking distance of our average national life expectancy of 78.1 years. Even if you still feel pretty spry, you suddenly find that your roster of doctor’s appointments has expanded, along with your collection of daily medications. You grow accustomed to hearing that yet another person you once knew has dropped off the twig. And you feel more and more like a walking ghost yourself, invisible to the younger people who push past you on the subway escalator. Like it or not, death becomes something you think about, often on a daily basis.

Actually, you don’t think about death, per se, as much as you do about dying—about when and where and especially how you’re going to die. Will you have to deal with a long illness? With pain, immobility, or dementia? Will you be able to get the care you need, and will you have enough money to pay for it? Most of all, will you lose control over what life you have left, as well as over the circumstances of your death?

These are precisely the preoccupations that the right so cynically exploited in the debate over health care reform, with that ominous talk of Washington bean counters deciding who lives and dies. It was all nonsense, of course—the worst kind of political scare tactic. But at the same time, supporters of health care reform seemed to me too quick to dismiss old people’s fears as just so much paranoid foolishness. There are reasons why the death-panel myth found fertile ground—and those reasons go beyond the gullibility of half-senile old farts.

While politicians of all stripes shun the idea of health care rationing as the political third rail that it is, most of them accept a premise that leads, one way or another, to that end. Here’s what I mean: Nearly every other industrialized country recognizes health care as a human right, whose costs and benefits are shared among all citizens. But in the United States, the leaders of both political parties along with most of the “experts” persist in treating health care as a commodity that is purchased, in one way or another, by those who can afford it. Conservatives embrace this notion as the perfect expression of the all-powerful market; though they make a great show of recoiling from the term, in practice they are endorsing rationing on the basis of wealth. Liberals, including supporters of President Obama’s health care reform, advocate subsidies, regulation, and other modest measures to give the less fortunate a little more buying power. But as long as health care is viewed as a product to be bought and sold, even the most well-intentioned reformers will someday soon have to come to grips with health care rationing, if not by wealth then by some other criteria.

In a country that already spends more than 16 percent of each GDP dollar on health care (PDF), it’s easy to see why so many people believe there’s simply not enough of it to go around. But keep in mind that the rest of the industrialized world manages to spend between 20 and 90 percent less per capita and still rank higher than the US in overall health care performance. In 2004, a team of researchers including Princeton’s Uwe Reinhardt, one of the nation’s best known experts on health economics, found that while the US spends 134 percent more than the median of the world’s most developed nations, we get less for our money—fewer physician visits and hospital days per capita, for example—than our counterparts in countries like Germany, Canada, and Australia. (We do, however, have more MRI machines and more cesarean sections.)

Where does the money go instead? By some estimates, administration and insurance profits alone eat up at least 30 percent of our total health care bill (and most of that is in the private sector—Medicare’s overhead is around 2 percent). In other words, we don’t have too little to go around—we overpay for what we get, and we don’t allocate our spending where it does us the most good. “In most [medical] resources we have a surplus,” says Dr. David Himmelstein, cofounder of Physicians for a National Health Program. “People get large amounts of care that don’t do them any good and might cause them harm [while] others don’t get the necessary amount.”

Looking at the numbers, it’s pretty safe to say that with an efficient health care system, we could spend a little less than we do now and provide all Americans with the most spectacular care the world has ever known. But in the absence of any serious challenge to the health-care-as-commodity system, we are doomed to a battlefield scenario where Americans must fight to secure their share of a “scarce” resource in a life-and-death struggle that pits the rich against the poor, the insured against the uninsured—and increasingly, the old against the young.

For years, any push to improve the nation’s finances—balance the budget, pay for the bailout, or help stimulate the economy—has been accompanied by rumblings about the greedy geezers who resist entitlement “reforms” (read: cuts) with their unconscionable demands for basic health care and a hedge against destitution. So, too, today: Already, President Obama’s newly convened deficit commission looks to be blaming the nation’s fiscal woes not on tax cuts, wars, or bank bailouts, but on the burden of Social Security and Medicare. (The commission’s co-chair, former Republican senator Alan Simpson, has declared, “This country is gonna go to the bow-wows unless we deal with entitlements.”)

Old people’s anxiety in the face of such hostile attitudes has provided fertile ground for Republican disinformation and fearmongering. But so has the vacuum left by Democratic reformers. Too often, in their zeal to prove themselves tough on “waste,” they’ve allowed connections to be drawn between two things that, to my mind, should never be spoken of in the same breath: death and cost.

Click here to the rest at MotherJones.com.

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It Pays for Insurance Companies to Let Us Die

My post on Tuesday–about how the health reform legislation will do nothing to stop private health insurance companies from continuing to turn down claims–brought in a comment from Richard Johnston, an employee benefits lawyer in California. Johnston has an entire blog dedicated to this subject–and to its legal underpinning in the Employee Retirement Income Security Act of 1974, or ERISA. The blog’s inaugural post has the clearest description of how this travesty of a law functions, and I recommend reading it in full.

Basically, ERISA says that if an insurance company wrongfully turns down your claim, and you take them to court and win, the only thing you can collect is the value of the benefits that the company should have paid out in the first place–plus, if you’re lucky, some attorney’s fees. No damages, as Johnston says, to compensate for “the trashed credit, the lost home, the bankruptcy, the ruined life.” In practice, this means there is a strong incentive for insurers to turn down claims, because even if they are violating their own policies and thus committing fraud, they literally have nothing to lose.

As of now we have a situation where the law tells insurers they face no meaningful consequences if they deny care improperly or even commit outright fraud. As one federal judge has commented, “if an HMO wrongly denies a participant’s claim even in bad faith, the greatest cost it could face is being compelled to cover the procedure, the very cost it would have faced had it acted in good faith. Any rational HMO will recognize that if it acts in good faith, it will pay for far more procedures than if it acts otherwise, and punitive damages, which might otherwise guard against such profiteering, are no obstacle at all.”

All this holds true even if the insurance company’s behavior causes death. When a 17-year-old died after Cigna turned down her request for a liver transplant, her parents sued the insurance company. As Johnston writes:

Thanks to ERISA, a Los Angeles judge had to dismiss their wrongful death case against Cigna, because ERISA provides the Cignas of the world immunity from liability for killing people….

The insurance companies’ flack, one Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, defended the outcome, saying that to hold insurance companies accountable for killing people will “bankrupt these plans, and employers would no longer be able to offer coverage.”

That makes perfect sense. How can you be expected to offer your services at a reasonable price if the courts are going to nitpick about you killing people?

The insurance companies, as many before me have pointed out, are this country’s real “death panels.”

Another Bonus for the Insurance Industry

While the insurance companies and Obama bitch at each other, another deal appears to have been made by the industry, Senate Finance chair Max Baucus, and the administration. This one will be just too much for people who have not been able to decide whether to be for or against the weak reforms shaping up in Congress.

It goes like this: For many people desperate for medical treatments previously denied by private insurers, the reform bills in Congress offer litttle hope. As it stands, policy holders have great difficulty in reversing an insurance company’s denial of treatment–for example, an MRI which the insurance company doesn’t think is necessary  or a new cancer treatment that costs a lot. Micahel Moore’s Sicko was full of stories about this, including some from survivors of patients who had died after their treatments were turned down by insurers. Apparently, none of that will change if the reform legislation is passed.

The Employee Retirement Income and Security Act (ERISA), reports Kaiser Health News, “bars suits for damages over health benefit decisions” for the 132 million people who get insurance through employers. The health care bills currently making their way through Congress, which are at least supposed to address the worst excesses of the insurance industry, do nothing to remove the barrier.

The Los Angeles Times reports:

 … a patient’s ability to fight insurers’ coverage decisions could be more important than ever because Congress, in promoting cost containment and price competition, may actually add to the pressure on insurers to deny requests for treatment.” The bills would require insurers to “cover everyone, regardless of pre-existing conditions,” making it “more difficult for insurers to control their costs, or ‘bend the cost curve,’ by avoiding sick people. That leaves insurers with the other big cost-containment tool: turning down requests to cover treatments.

Experts said the legislation under consideration does not significantly enhance patient protections against insurers refusing to cover requests for treatment. Most people currently have no right to challenge health insurers’ treatment decisions by suing them for damages.

Obama’s Health Care Speech: Too Little,Too Late

As the summer has waned in an atmosphere of misinformation and recrimination, so too have hopes for real health care reform. Many people have by now sadly come to the conclusion that the moment for such reform has come and gone. In this context, Obama’s inspiring speech tonight was simply too little and too late.

It may just be that Obama, using the Democratic majority as a hammer, can achieve some limited change for the better. If so, that change most likely will be built on a base set forth by the Baucus plan announced yesterday, further embellished and/or weakened in the joint House-Senate conference that will draft a final bill. That final bill will be such a study in compromises that most people in America won’t notice any change at all–which is pretty much the point, as Obama himself admitted tonight.

Obama tonight eloquently defended the need for a public option, only to kick it to the curb, insisting that it is “only one part of my plan”–and one open to further tinkering and dilution. He promised the American people: “If you can’t find affordable coverage, we will provide you with a choice.’’ The “choice,’’ however, could be any one of a number of things—co-ops or exchanges accompanied by tax breaks, with special subsidy programs or perhaps expanded Medicaid to pick up the slack for the poor. One thing is clear: It won’t be a challenge to the private insurance industry. Obama said flatly, “I have no interest in putting insurance companies out of business.”

Giving the speech was brave. But its politics remains a muddle. The core problem here is the Obama administration’s inability to project a vision for real change or take an ideological stance that might have some populist appeal. The only time Obama reached toward that ground tonight was when he quoted Teddy Kennedy’s belief that health care is a human right–something the president himself apparently couldn’t bring himself to say in his own words. Instead, the administration has dawdled in a swamp of tehnocratic mumbo jumbo, leaving ideology, once again, to the Right.

In the end, the model here is not the lawmaking carried out by Teddy Kennedy–or Teddy Roosevelt, John Dingell’s father, Harry Truman, LBJ, or anyone else Obama cited tonight. The model is Obama’s own wishy-washy credit card legislation enacted earlier this year, which sands down some of the freemarket’s hard edges by outlawing its most outrageous abuses, and otherwise lets business go on as usual. This approach seems destined to become the hallmark of the Obama administration–and as I predicted months ago, the final health care reform bill will undoubtedly bear this stamp:

Under a propaganda blitz heralding sweeping reform, we get legislation that reins in some of the very worst abuses, while making no significant change at all to the underlying flawed system. So, for example, we may see insurance companies required to provide coverage in spite of pre-existing conditions–something Obama referred to in his AMA speech, with moving references to his mother’s own battle with cancer. We might see what the President called “more efficient purchasing of prescription drugs,” which presumably means more power to haggle with Big Pharma over drug costs, as well as speeding up approval of generics. We will see health care providers given incentives for more cost-effectiv–and, we can hope, better–treatment. These things are not meaningless, and they will provide a modicum of help to some struggling Americans. But they do virtually nothing to strike at the basic American system of health care for profit. And at the same time, they offer only a fraction of the savings a single-payer system could offer.