So I’m writing this just as Bush enters the House Chamber. All reports suggest that health care, consumer directed/driven health care, health savings accounts, and the like, will form the core of the President’s speech. Let’s put this in perspective.

First, we have two alternative phrases for “consumer drive/directed health care.” (CDHC) The President might like the first one — “faith based health insurance” — because the point is that if you’re enrolled in one of these plans, you’re supposed to pray you don’t get sick. While minimum deductibles for a qualified HSA plan are $1,000 for an individual and $2,000 for a family, the journal Health Affairs reported last year that deductibles are actually averaging $2,000 and $4,000 — a serious impediment to care for most families.

The second alternative phrase is “Houdini health care.” The illusionist’s challenge is to distract you with one hand while performing the trick with the other. With HSA’s, you’re distracted by the $500 or $750 account you “control,” while the real point of the exercise is to sock you with high deductibles so you will use fewer medical services.

Second, the base assumption behind CDHC is that the root cause of rampant and destructive medical inflation is Y_O_U: your wasteful, profligate, irresponsible overconsumption of medical services. Therefore, we must, we have to sock you with as much cost sharing at the point of service as we can get away with to make you be a responsible consumer.

My answer to this can be found in Tom Bodenheimer’s outstanding series on health costs in the Annals of Internal Medicine in the spring of 2005 (email me if you would like the references): “…the United States has one of the highest levels of patient cost sharing among developed nations and yet has the highest expenditures per capita. … Seventy percent of health care expenditures are incurred by 10% of the population. It is likely that patients in the high cost 10% … are far too sick to impose limits on their care because they must pay for part of that care. Thus 70% of health expenditures may be unaffected by shifting costs to patients.”

Third, one of the attractions of HSA’s is that they offer tax breaks to account holders. Yet these tax benefits are completely regressive — high income account holders deduct 35% of contributions, middle income holders deduct 15%, and lower income holders in no-tax brackets deduct nothing. Yet, as we know, lack of health insurance is heavily tilted toward low income brackets. Tonight, Bush proposes yet steeper tax breaks for HSA account holders — enhancing the regressive nature of this benefit.

Fourth, by the way, these accounts are not free. For many of them, holders get dinged when they are set up, get dinged for every withdrawal, get dinged for a monthly maintenance fee, and get dinged for closing them. No wonder, as the New York Times reported this weekend, Wall Street profiteers are competing to get in on the lucrative HSA account management market.

In every health period I can recall since getting into this game around 1985, there have been fake solutions offered by con artists who either have nothing serious to offer or special interests to protect, or both.

More of the same…

Summary of alert from our friends at Families USA:

The vote by the US House on the Budget Reconciliation bill is scheduled for Wednesday, February 1st. What this means for Medicaid recipients: $16 billion in cuts that will harm the sickest, most vulnerable Americans by cutting benefits and raising cost-sharing. This back room, middle-of-the-night deal protected the profits of drug and insurance companies instead of low-income families.

Two weeks ago we asked you to e-mail your Representatives, and you came through with flying colors. Now House members need to hear directly from you. We need to flood the House with calls before the vote with a clear message–vote NO on the Budget! You can call your Representative using Families USA’s toll-free number:

Tell your Representative: Vote NO on the Budget
1-800-828-0498

Organizing against the budget deal has reduced the size of the cuts — though much harm will still happen. Please make a call…

A bit more details have emerged on the budget.

Our great friend and colleague Neil Cronin of Mass Law Reform Institute, back in full advocacy mode after being out ill for awhile (great to have you back Neil!), sent this update on the Governor’s budget after meeting with Office of Medicaid staff on Friday:

“Generally speaking, the MassHealth accounts do not represent any new policy assumptions, including any increases in populations served which may result under the Health Care Reform plan now before the House/Senate Conference Committee.

“The increased appropriations in the MassHealth Family Assistance Plan, the HIV plan, and MassHealth Basic as well as the decreased appropriation in the CommonHealth program do not assume any policy changes, including no policy changes affecting the scope of eligibility or services provided under these programs.

“MassHealth Essential (4000-1405) assumes the current level of participation. It does not assume any change in the current enrollment cap, meaning that there will be no substantial reduction of the number of eligible applicants who are on the waiting list. The one unstated policy assumption that is assumed in the Governor’s budget for Essential is that the Office of Medicaid would impose sponsor deeming for elderly and disabled immigrants who are served in Essential, once the current legislatively mandated barrier on sponsor deeming expires at the end of the present fiscal year. This means that, once again, it will be necessary for the legislature to affirmatively adopt the bar on sponsor deeming in their budget.

(note: “sponsor deeming” is wonk-speak for the Romney administration’s attempt last year to not provide health coverage to low-income senior and disabled legal immigrants if their immigration sponsors had income over 200% of the poverty line. The MIRACLE campaign that we are part of successfully fought off this nasty proposal.)

“Finally little light was shone on the question of where the state government’s share of Free Care Pool dollars goes under the Governor’s budget. Is it part of the $200 million special trust account for health care reform? Is it held back as additional funding for the Safety Net Care Pool, once health reform legislation passes? Or is that money simply off the table? We can’t say.”

Neil also told us that the budget assumes funding the MassHealth dental third party administrator and continuing dental coverage for pregnant women and mothers with kids under 3. You can see the MLRI budget summary here.

For some time, we’ve been the sole public voice warning that delays in finishing health reform hold dire financial consequences for the Commonwealth. On Wednesday, a key federal official said it publicly as well. Here’s the State House News account:

FEDS TO CONFERENCE COMMITTEE: JUST DO IT. Health care reform needs to meet Washington standards and be in place by July 1, or else the state will begin losing $385 million in federal aid, President’s Bush’s top health official told Massachusetts on Wednesday. Ostensibly in town as part of his tour to discuss the Medicare Part D changes, US Secretary of Health and Human Services Michael Leavitt promised federal reimbursements for prescription costs not covered by the new policies. But he also addressed the state’s effort to expand access to affordable health insurance, now trapped in a conference committee. “Anything that happens after the First of July means dollars lost to the state of Massachusetts,” Leavitt said. “We’re optimistic about this enough that we’re here to say let’s get this done. But implementing new systems is a complicated proposition and we’re living through that right now.” Three other conference committees - addressing welfare reform, an economic stimulus package, and a supplemental budget - have been said to wait on tenterhooks while the health care confab works through its differences, the largest of which is how to pay for all of the new insurance policies envisioned by the bills. Before meeting with Leavitt on Wednesday, Travaglini repeated the conference committee mantra: “There are still differences that are being discussed between the two proposals, but progress is being made and conversations continue to occur which give me some confidence that this very comprehensive and complex equation can be defined and balanced and defended. We’re moving.”

“…meet Washington standards and be in place by July 1, or else the state will begin losing $385 million…”

That’s the money clause with volumes embedded in a few words. Here’s a translation:

1. “385 million“: Every year since 1997, Massachusetts has pulled in hundreds of millions in extra federal Medicaid dollars as part of an “1115″ waiver. $385 million of this has come in as “MCO supp payments” or payments to Medicaid managed care organizations — particularly HealthNet associated with Boston Medical Center and Network Health associated with the Cambridge Health Alliance. These two MCO’s use part of this money for their own organizations, and the rest goes to hospitals and health centers across the state. This is the money that the feds say is at risk — $385 million times two years, equaling $770 million between 7/1/06 and 6/30/08.

2. “meet Washington standards“: The feds are demanding that as of July 1, 2006 — for the final two years of the current waiver — the state no longer use this $385M x 2 as payments to institutions and instead use it mainly to subsidize health insurance for lower income individuals and families. The House health reform bill follows this outline and uses all the dough for its insurance coverage expansion — and attempts to hold BMC and CHA harmless by “backfilling” about $210 million to them; BMC and CHA cry foul. The Senate reform bill basically leaves the $385M x 2 where it is now, essentially telling the feds, “we don’t think you’ll pull the trigger and hold back the dough.” As a result the Senate plan results in relatively little expansion of coverage for the uninsured, beyond the MassHealth expansions (see below).

Backers of the Senate version believe our all Democratic Congressional delegation will save the day and force the Bush Administration to fork over the money. Congressional sources tell us — don’t count on us to save your butts on this one.

3. “and be in place by July 1“: The feds have asked for 120 days to review any new state plan for the use of the waiver money and expect use of the new funds to be ready to roll on July 1. Senate health reform negotiators state that as long as they have a plan down in DC by March 1, all will be fine (120 days before July 1). Assuming the feds approve a plan on June 30, that will give the state about 37 seconds to put the new structure in place. Usually, it takes months, not minutes, to put these new structures in place.

Here’s another wrinkle. Both House and Senate health reform plans assume some substantial expansion in MassHealth as part of a reform plan — the House goes much further than the Senate, though both go down this road. The Romney plan (which now exists only in the Governor’s mind — though it’s having a vibrant existence there) assumed no Medicaid expansion, and proposed all new coverage expansion through new private plans no one has yet seen. The Romney folks are telling House and Senate negotiators they can’t sell the Bushies on any waiver plan that includes any Medicaid expansion (astonishingly, we apparently can’t use Medicaid money for Medicaid, they say). This matters because after the House and Senate finish their work, it’s up to the Romney Administration to sell the deal to HHS Secretary Mike Leavitt, Administrator of the Centers for Medicare & Medicaid Services (CMS) Mark McLellan, and CMS Medicaid Director Dennis Smith (apparently the first federal Medicaid director in history who hates Medicaid.)

So here’s a nightmare scenario for those of you who love thriller movies. The House and Senate hobble a deal together as best they can, splitting loaves of bread and babies in the interest of making a deal. The Romney folks don’t like it and sell it only half-heartedly to the Bushies. The Bushies tell the Commonwealth to shove it, and we’re back at the legislative ranch trying to hobble together an alternative health reform plan in May/June as the clock ticks down to July 1.

Keep this in mind as you set your vacation plans.

Click here if you would like to view a one hour webcast filmed at the Kaiser Family Foundation in Washington DC on Wednesday. Three panelists talking about state health reform — me, Alice Burton of the State Initiatives program at Academy Health, and Stuart Butler of the Heritage Foundation. Alice consults with state officials seeking to expand insurance coverage and has to be scrupulous not to take sides. Unlike Stuart and me.

Stuart Butler hails from Great Britain — where they insure everyone and have better health outcomes than we do for less than half the cost of what we spend on health care. For about 25 years, he has been banging the drum to abandon employer sponsored health insurance in favor of individual tax credits where everyone buys on their own and individual mandates. He’s a nice guy, quite smart, and a good explainer of his positions. You may see him around the channels next week bucking up President Bush’s new health agenda coming in the State of the Union.

Stuart’s especially disrespectful of employer mandates. In one of our best exchanges, he says (I paraphrase): backers of employer mandates make it seem like it’s a free lunch. It’s not. When you do it, you force changes in employer behavior such as cutting wages and hours, raising prices, and cutting back on investments.

After he finished, I said (I paraphase): absolutely true, and you, Stuart, need also to recognize that when employers like Friendly’s Ice Cream screw their workers by cutting their health benefits, that also creates important side effects — individuals in debt and bankruptcy, hospitals with uncollectable bills and costs they must shift onto others, and businesses who have to pay higher premiums to pay for businesses that don’t cover.

If you watch it, let me know what you think…

Today Mitt Romney unveiled the last budget proposal of his governorship. It could also be seen as the first budget of Kerry Healy, his chosen successor. Sometimes governors use their budget plan to express policy preferences, chart new directions, or take a stand on key issues. And sometimes there’s Mitt Romney.

While the budget sets markers on tax cuts, education and local aid, on health care, it mostly punts. There’s barely recognition of pending health reform. A blank reserve fund sets aside $200 million for specified purpose other than “health care reform.”

The Uncompensated Care Pool is just missing - nothing there. If this budget were to pass as is, the Pool (which served 400,000+ people last year) would disappear. The key issue of the Medicaid managed care plans and the mental health carve-out is not addressed, even though contracts expire June 30. There’s no mention of a third-party administrator for the MassHealth dental program, even though a court order requires the administration to fund it.

While total MassHealth spending is up 6%, MassHealth policy is status quo. There’s no increase in enrollment for MassHealth Essential, thus maintaining the current wait list of over 11,000 adults below poverty — all eligible and unable to get in because of the cap. Some line items are up (HIV), others down (CommonHealth), but it’s not clear if the numbers mean anything.

On the plus side, some of last year’s wins are continued — affordable CMSP premiums, coverage for senior and disabled legal immigrants. A section appears to provide protections for seniors and disabled in Prescription Advantage. Outreach grants are level-funded at $500,000.

All tobacco settlement revenue is scooped up for general government, while the income tax cut, when fully implemented, would cut spending by over $600 million. Clearly the administration does not expect this budget to pass as submitted. The legislature will fill out the budget in light of health reform, once that’s done.

Every year legislative leaders call the Governor’s budget “dead on arrival.” On health care issues, this budget never seems to have been born.

Today’s Globe has a front page piece by Jeff Krasner on how Friendly’s Ice Cream Stores terminated comprehensive health insurance for all its non-management workers in October and now provides only limited benefit or “mini-medical” plans for its 454 full time workers. Maximum annual outpatient benefit (including drugs) is $2000; depending on premium, hospital benefits are capped at $10K or $50K — daily limit for how much of the hospital bill will be covered ranges from $100 to $500 per day. Average hospital bill in MA per day is $1600.

Friendly’s has 570 outlets, incuding stores in 91 MA cities and towns and in 15 other states. Its website touts “magical moments” — boy, that was magical moment when it screwed its workers last October. No mention of that on the site. As of yesterday, their stock sold at $8.50 a share. Interesting to see what happens to it today.

Friends, this is hugely important in the context of the MA health reform debate. Friendly’s is not a struggling “mom ‘n pop” store — it’s a large corporation that has decided its workers no longer matter. It’s creating havoc in the lives of its workers not because it has to, because it can. This is the shape of health insurance to come. If you have not yet spoken out on health reform and employer responsibility, now is the time, and Friendly’s is our new Exhibit A.

Will our friends in the business community who oppose the House payroll assessment — Mike Widmer, Rick Lord, Paul Guzzi, Alan MacDonald, Jon Hurst, Bill Vernon — defend this callous move or speak our against it? Will legislators who have opposed the assessment call on Friendly’s executives to reverse this harsh step which will end up costing taxpayers and the state treasury? Will Governor Romney … oh never mind. Will this awful development convince health care providers — who get left holding the tab for underinsured workers — to stop sitting on their hands and join this important fight?

And will it move you? If you want to help, call your state senator and ask him or her to support the House payroll assessment on employers who provide little or no coverage to workers. Go to the Affordable Care Today website now.

Remember Friendly’s.

OK, this is not for the faint hearted. The MA Medicaid Policy Institute has produced a first rate report on “The Role of MassHealth “Budget Neutrality” Requirements in Designing Policies to Expand Health Coverage.” Click here to obtain. What the heck is that all about?

Briefly and simply (I hope), federal Medicaid financing is a key part of maintaining and expanding affordable coverage for the uninsured. Federal rules allow the state to expand MassHealth and obtain federal matching dollars under an obscure “budget neutrality” formula that has real limits on dollars and, thus, potential expansion possibilities. Around town, there has been a considerable amount of disagreement on the “headroom” or allowable expansion that retains federal financing. More headroom = more federal dollars to expand: less headroom = fewer federal dollars, meaning less expansion, or more new state dollars.

This new paper presents the issues in clear, understandable language and is a good explanation of this dense and important topic. Bottom line: Romney folks had suggested the state had additional headroom in the neighborhood of $300 million, and other folks suggested it was more in the range of $1.5 billion. The consensus verdict is around $700 million, better than the original Administration estimate and not as good as the more rosy projections.

And how likely is it that $700 million is the final verdict — completely unknown and unknowable. Enjoy!

The hits keep on coming in MA health reform.

First, Wednesday at 1:30pm, the Kaiser Family Foundation will host a live webcast on state health reform with three panelists, including me. Click here for the KFF website if you would like to join. Participating will be Stuart Butler from the Heritage Foundation and Alice Burton of Academy Health. Should be a blast!

Second, if you would like to listen to a WBUR debate between me and Mike Widmer of the Mass. Taxpayer’s Foundation on the role of employers in the health reform process, just click here.

Third, coming up tomorrow, Gov. Romney releases his House One budget proposal for fiscal year 2007 which begins on July 1, 2006. This is the official start of the lengthy and absorbing state budget process. Look for a blog entry tomorrow with some budget related highlights and lowlights.

Click here for an op-ed column in the new edition of the Boston Business Journal written by Barbara Berke, Gov. Mitt Romney’s highly respected, former director of the Massachusetts Department of Business & Technology. Here are her own well-written words in support of the House proposed 5-7% payroll assessment on employers who don’t provide health insurance to their workers:

“… for each firm that will be obliged to pay its fair share for health insurance under the House bill, there will be more than 18 firms that have the potential to see their costs reduced.
Not only is this reform good for businesses, it is good for the Massachusetts economy as a whole. The increased spending on health care from establishing near-universal coverage will trigger a net $400 million increase in the commonwealth’s GDP. This growth will create approximately 8,000 new jobs and new opportunities for Massachusetts businesses.”

Earlier this month, a white paper written by Romney’s former Health and Human Services Secretary Ron Preston was released. That paper proposed a $150 per month per uninsured workers head tax on employers who don’t cover their workers.

Does two make a trend? (Do I remember some Arlo Guthrie song about three being a movement?) Which former Romney official will be next to endorse employer responsibility in health care? Nominations are now officially open …

Indications suggest the Health Reform Conference Committee is finally making progress and working toward completion in early February. (Question: why are the senators so much more chatty in public than the reps?) Progress could be real, and could get stalled at any moment. One major issue still in play, employer responsibility.

Two weeks ago I debated Alan MacDonald head of the MA Business Roundtable and asked the key question – why do employer associations such as his, which only represent businesses that provide decent health coverage to workers, opposing the House assessment which only lowers their health insurance costs? His answer, which I paraphrase: right now, the decision by an employer to provide health coverage is 100% voluntary, and the House plan would set a floor most employers won’t accept. Once it’s set, it will only go higher and broader as health costs increase.

Thanks Alan – a good guy. And there we have the nucleus of this conflict – should there be any obligation by employers to provide health insurance to their workers, or should it remain voluntary. Employers are divided, though the consensus of opinion tilts toward “no.” Regular folks are also divided, though on poll after poll about 2/3 of the public says “yes.”

This issue has a history in Massachusetts. In 1988, the state passed a “pay or play” employer mandates requiring employers with more than six workers to pay $1680 per uninsured worker to the state, with the state providing coverage. Supposed to take effect in 1992, implementation was postponed three times, and the requirement was rescinded in 1996 as part of that year’s health reform law which expanded the MassHealth program by more than 350,000 uninsured persons. This round’s requirement is much less expansive than the ’88 version.

This issue returned to the political radar screen in late 2004 with the filing of the Health Access and Affordability Act by the newly formed “Affordable Care Today” coalition, though the new payroll assessment amount was unspecified. In August, the MassACT coalition (composed of some groups within ACT), filed a proposed ballot initiative for the 11/06 general election which also included a new payroll assessment and specified the level at 5% for firms with less than 100 workers and 7% for firms with more than 100 workers, and exempted the first $50,000 of payroll for all firms. Estimated revenue from the assessment was about $750 million – a lot of dough.

When the House put their reform plan together in September and October, they decided the payroll assessment was a fair way to raise money needed to finance coverage for the uninsured. They changed the assessment in several key ways: 1. Placed an individual payroll cap at about $94,000 of earnings, like the Social Security wage cap; 2. Exempted all firms with 10 or fewer workers; 3. Exempted from gross payroll compensation to anyone with alternative coverage of any form – spousal, government, plus. These changes lower the overall revenue take – Mass. Taxpayers Foundation says to $175 million, and House sources stick to a $350 million estimate. The difference matters.

This issue is growing in importance around the country. Last spring, the Vermont House and Senate approved a payroll assessment at the lower levels of 3 and 1 percent – the bill was vetoed by the Governor and the veto was not overridden. More recently, Maryland passed a law – over a veto – requiring employers with 10,000 or more workers to pay at least 8 percent of payroll for benefits or pay the difference to the state. This would only apply to Walmart, and the Maryland victory has spurred labor groups to propose similar laws in about 25 other states. The Walmart tax has nice symbolism and is an easier sell – it does not raise revenue needed to finance coverage expansion.

Next time – the Uncompensated Care Pool connection…

A new report from Families USA and the Economic and Social Research Institute in Washington DC documents the economic benefits of the House health reform plan passed last November and now stuck in a House Senate conference committee. Click here to obtain the full report, or get it directly from HCFA’s homepage.

Bottom line: for every business that will have to pay something to meet the payroll assessment on employers who don’t cover their workers, 18 businesses will save real dollars. Only four percent of MA businesses will have to pay anything; 31 percent of businesses that don’t provide coverage and have ten or fewer workers pay nothing; and 66 percent of businesses that provide coverage to their workers save money.

Once again — why do some business lobbying associations that represent employers who cover their workers oppose the House plan?

From State House News Service today:

State House News Service January 17, 2006
HEALTH CARE TALKS RESUME, LEADERS CONFIDENT WITH PROGRESS: Addressing reporters’ questions about the progress of conference committee talks to negotiate final legislation expanding access to affordable health care, House Speaker Salvatore DiMasi and Senate President Robert Travaglini both said they expect an accord in short order. “In quick summation, it’s a very comprehensive and complex equation, and I’m sorry that we have not arrived at a remedy already,” Travaglini said. “I still feel extremely confident that in a timely way, we will have a proposal that warrants the support of the House and the Senate and the confidence of the citizens of the Commonwealth.” While DiMasi said he doesn’t believe there is any “holdup” to negotiations, he said conferees are struggling with the unpredictable results of merging parts of the insurance industry and providing incentives for people to obtain health insurance. “We don’t know whether or not the incentives are gonna be there for people to get insurance who aren’t insured now,” he said, adding that lawmakers are also unsure if hospitals will comply with certain performance requirements and measures in the legislation. The six-member conference committee met today, Travaglini said. Federal officials have asked lawmakers approve a plan at least 120 days prior to July 1 to allow them enough time to review the details.

Here are excerpts from a fascinating piece in today’s Wall Street Journal:

More Employers TryLimited Health Plans
Cheap ‘Mini-Medical’ Policies Cover DrugsAnd Doctor Visits, But Little Hospitalization
By VANESSA FUHRMANS

Employers are increasingly turning to an affordable type of health insurance that has a big catch: If you get really sick, it won’t cover your major expenses.

These low-cost offerings, called “mini-medical” or “limited-benefit” plans, are catching on as employers struggle to restrain the rising cost of health insurance. Available as group plans or individual policies, they typically cover four to 10 doctor visits a year, a certain amount of prescription drugs and some lab work or other tests. Premiums can cost as little as $40 a month — far less than the $148 average for a major-medical plan bought on the market or the $335 average cost of someone on a company health plan…

Nearly one million people have mini-medical plans, insurers estimate, and some of the plans’ biggest sellers say business is growing 20% a year.

Mini-medical plans have been around since the ’80s, and until recently were sold mostly to temp-agency, fast-food and chain-store workers. But they’re becoming more commonplace as employers cut back on full benefits, or turn more to part-time and contract workers. Mini plans are also starting to appeal to a wider array of individuals who might otherwise not be able to afford insurance, including the self-employed or freelancers. Sometimes individuals buy these plans through professional associations.

This spring a coalition of 10 large employers so far, including Avon Products, International Business Machines, General Electric and Sears Holdings, will make a number of low-cost options, including limited-benefit plans, available to independent contractors and part-time and temporary workers not eligible for regular company benefits — about 900,000 people, including dependents. … Some of the biggest names in health insurance are pushing into the market, in addition to UnitedHealth, reflecting the growing interest in mini-medical benefits. …

Critics say that consumers don’t always understand the limitations of these policies. Most hospital care isn’t covered, or the benefits may be doled out in small increments, requiring consumers to contribute big chunks along the way. Annual payouts are often capped at $10,000 or less, so policyholders are largely on their own if catastrophic illness, such as a heart attack or cancer, strikes.

“People have to be aware this isn’t providing them the key purpose of health insurance, and that’s protection from catastrophic or chronic disease,” says Robert Fahlman, chief operating officer of eHealthInsurance, an online health insurance broker that stopped selling limited-benefit plans because they weren’t big sellers and triggered confusion among customers.
In a sense, the plans are the inverse of the “consumer-driven” health plans that many employers and policy makers are pushing today, which require patients to pay out of pocket for routine care but provide coverage for catastrophic needs.

Insurance brokers say that some mini plans are being sold to people who have high-deductible, consumer-driven plans to cover catastrophic care and are looking for some coverage for everyday expenses. Layering the two types of plans together can still be cheaper than a traditional major-medical policy.

For group plans, employers can, but often don’t, subsidize the premiums. Instead they’ll contract with an insurance company to sell directly to employees, much like some supplemental life-insurance policies. This allows them to tout jobs that come with some health benefits in the bid to recruit employees. The policies are typically designed as preferred-provider organizations, with a broad number of doctors and facilities in the plans’ networks.

Mini-medical plans cause more than their share of consumer complaints, say some brokers and state insurance regulators. Some critics worry that many customers are young people who might not fully grasp the plans’ limitations, or individuals who are buying policies on their own without the guidance of an employer’s human-resource department. Overeager brokers may also gloss over them to promote their “upfront” benefits, say consumer groups, and some brokers and state regulators.

But proponents of the plans say they provide access to the types of preventive care people use most often, such as check-ups and medications, at a price they can afford. “If the alternative is nothing, than something is better than that,” says David Sherman, president of Preferred Benefit Solutions … One of its core Starbridge plans costs employees $15.85 a week, or $38.65 to $58.25 for family coverage (mini-policies are commonly priced in weekly premiums, rather than monthly). For that, policyholders get up to $1,500 paid for outpatient medical expenses, though they pay a $20 co-payment for each doctor visit, 20% of other outpatient medical bills, and a $50 deductible along the way. The plan also covers up to $25,000 for hospital stays a year. But that’s doled out in $250 parcels a day — a fraction of the cost of a typical day in a hospital, which easily can run to several thousand dollars.

This past fall, Star HRG launched a richer set of limited-benefit plans aimed at companies that can’t absorb the rising cost of their comprehensive plans. It’s already fielding inquiries from employers, says Tim Cook, Star’s president. They provide a maximum annual benefit of $35,000 or $50,000, and cost roughly 25% to 40% less than a comprehensive plan, but there are no out-of-pocket maximums on an employee’s share of potential medical costs.

A small but growing number of employers are replacing traditional health benefits with limited-benefit plans as insurance premiums soar. One is Ratner Cos., an operator of several hair-salon chains with 12,000 stylists. Until October 2002, it offered an HMO, but says skyrocketing costs prompted it to move to a limited-benefit plan that it fully finances for employees who work more than 25 hours a week.

Some consumers, such as Donald Lee, of Carson, Calif., say they have few alternatives. “My main concern was just getting into some kind of plan for now,” says Mr. Lee, 57. In the fall, the premium on the Lee family’s major-medical plan shot up to $2,500, and because of his and his wife’s diabetes, few other insurers would accept them. So Mr. Lee found a truck-driving job that gave him the option to buy a limited-benefit plan from OptiMed Health Plans, of Boca Raton, Fla. For a $240 monthly premium, the plan reimburses the Lees $60 for each doctor visit and $500 for each day in the hospital. Eventually, he says, he wants to buy a supplementary catastrophic plan, but this one “helps me keep my diabetes under control.”

An important issue in the health reform conversation that has not received enough attention is the question of whether individuals should be required by law to buy health insurance. Governor Romney, business groups, and insurers all agree it’s a dandy idea. Opposition to it has been sporadic and unfocussed. Let’s take a look…

The Blue Cross Blue Shield Foundation’s Roadmap Project got the ball rolling in 2004 by suggesting an individual mandate as one reform option, along with an employer mandate. The Roadmap analysis showed there is a significant number of uninsured individuals with pretty high incomes (ie: over 500% of the poverty line — over $95K for an individual).

The idea got traction when Gov. Romney made it the centerpiece of his reform agenda, beginning in November 2004 and outlining it with greater specificity in his legislation filed in April 2005. In brief, the Gov. envisions creating super-affordable health insurance products (target premium price $200 per month for singles in their 20s, higher for everyone else), and providing sliding scale subsidies for everyone up to 300 percent of the federal poverty line — about $48K for a family of three). With this structure, everyone would be required to have coverage, and those without it would face the loss of their personal income tax exemption and their tax refunds — which would be placed in a special fund for use when the uninsured person has unpaid hospital bills.

Because we at HCFA never saw any concrete example of the vaunted “$200 plans” — something we considered an essential prerequisite — we did not focus much attention on the issue or concept.

In October, the House unveiled its reform plan and included a modified individual mandate. In the House bill, the mandate would apply only to individuals for whom the purchase of health insurance is clearly affordable — though the bill does not define “affordable” and leaves that to a new Administration board. Those folks for whom purchase of coverage is deemed affordable would face tax penalties and the potential loss of driver’s license if they failed to purchase coverage.

Talk of mandating individuals to purchase insurance is not new — and was a prominent part of the Republican opposition to President Clinton’s health reform initiative in 1993-94. Some prominent Democrats such as former Louisiana Sen. John Breaux also promoted the idea. Until this process in Massachusetts, we have never seen a serious legislative effort to craft a workable individual mandate.

Workability and enforcement of an individual mandate are real issues — the House version, for example, requires all insurers to send data on all their enrollees every month to the state’s Division of Insurance; DOI then shares this data with the Department of Revenue and the yet-to-be created Insurance Connector to be located within the Group Insurance Commission. This is not an insignificant task, with lots of opportunities for confusion, errors, and breaches of confidentiality. We have seen no effort, even by the budget hawks at Mass. Taxpayer’s Foundation, to estimate the cost of enforcing this.

At HCFA and the Affordable Care Today Coalition, we have been willing to support such a mandate under two conditions: first, individual responsibility must be accompanied by employer responsibility; and second, such a mandate must only apply in cases where purchase of insurance is undeniably affordable.

Some, such as folks at the Mass. Taxpayers Foundation, suggest such a mandate is no big deal, citing both the mandate to purchase auto insurance and the health insurance mandate on all college students as examples. We think both are flawed models.

Regarding auto insurance, the estimate is that about 7 percent of drivers on any given day have no auto insurance despite the mandate. And the enforcement mechanism is pretty straight forward — show insurance or you can’t register your car. Enforcement comes when you get caught. The student mandate is even less analogous. Enforcement occurs when you register for classes — no proof of insurance and you can’t register. There’s simply no comparison between these two and the huge new structure contemplated to enforce a broad individual mandate.

Then there’s the philosophical question — if individuals are not relying on public assistance or impinging on the public treasury, is it appropriate for government to mandate the purchase of private health insurance? We think it is — though it’s not a slam dunk. Individuals without coverage often end up with unpaid bills that get shifted to everyone else. And uninsured folks with catastrophic events often end up on public coverage at one point or another.

Still, it’s a legitimate point of argument — and it’s too bad the process has not triggered a more vigorous and engaged public dialogue. Because if an individual mandate does go into effect, expect a firestorm when the time comes to enforce it.

There’s something else important today besides the season premiere of “24″. Two matters of importance to health care in Massachusetts were supposed to occur. One did and the other didn’t.

What did happen? As of today, 35,000 to 45,000 low income women — either pregnant or mothers of kids up to age 3 — can now get dental services covered by MassHealth. Yes, it’s still hard to find a dentist who accepts MassHealth (we’re working hard on that); and yes, we’re still pushing to restore dental services for all 600,000 MassHealth adults (both House and Senate health reform bills include restoration). Kudos to Senate and House members who secured this win (Sen. Harriette Chandler and Rep. Kathy Teahan, among others), to Health Law Advocates and Mass. Law Reform for filing suit to push the Romney Administration to do this, to the fine folks in the Office of Medicaid who made this happen, and to the Oral Health Advocacy Task Force whose commitment makes all this happen.

What didn’t happen? Last September, the key federal official in charge of the state’s massive 1115 Medicaid waiver, Dennis Smith, asked that Massachusetts officials have a plan on his desk no later than January 15 for the newly structured use of hundreds of millions in federal Medicaid dollars. The plan was not delivered, hasn’t been written, and isn’t on the drawing board until House and Senate finish their health reform process. Click here to read our 9/30/05 blog that links to the Smith letter. For more background on what the federal deadline may or not mean, click here to read my 1/7/06 blog.

It feels funny being the only party around expressing concern about the Commonwealth’s footdragging on the waiver renewal. We know there are folks around town confidently saying “no problema.” What do we know? Not a heck of a lot. But the reluctance of just about every public official to address this situation publicly doesn’t increase our confidence at all.

And here’s a special worry. Today’s deadline is for a plan to address the financing of years two and three of the three year waiver (year two starts 7/1/06). What about the financing details for year one, now over half over? They were supposed to be wrapped up before 7/1/05 and, so far, are still unresolved, and the Commonwealth has not seen one penny for year one of the waiver. Hey, maybe’s it’s much ado about nothing.

But tell me this — would the Bush Administration shed one tear if they deprived Massachusetts of $385 million X 3? That’s $1.155 billion for the math challenged. Or any portion thereof…?

Each year, the federal Agency for Health Care Research and Quality (AHRQ) published two valuable reports — national progress reports on health care quality and on racial and ethnic health disparities. This past week, AHRQ released both. Click here for easy access to both reports. This is the third time they’ve done this and the information and analysis keeps getting better. Briefly:

On health care quality — progress is measurable and slow. Greatest improvement is in the area of patient safety; improvements in timeliness and patient centered care were least substantial. Biggest areas of improvement — diabetes, heart disease, respiratory conditions, nursing home care, and material and child health. Least improvement — HIV/AIDS, cancer, end stage renal disease, mental health and substance abuse, and home health care.

And kudos for Massachusetts (along with Iowa, Maryland, Minnesota, Vermont, and Wisconsin) for showing “sustained, high quality health care on a variety of measures.” MA gets high marks for HbA1c testing, prenatal care, mammography, and pediatric asthma.

On disparities — progress is also mixed. While information about disparities is improving and some are even diminishing, more disparities experienced by Hispanics were getting worse than those getting better.

Great food for thought. And congrats to AHRQ for this fine work.

The ever-fabulous folks at the Mass. Medicaid Policy Institute and the Center for Health Policy and Research at UMass Medical School have crafted a a first-rate guide to prescription drug coverage in Massachusetts. This covers all forms of public coverage to help folks get access to essential prescriptions, with easily understandable descriptions, and an eye-bulging chart for the perplexed.

The new guide is part of a larger “Pathways to Public Health Insurance Coverage for Massachusetts Residents” created by the two organizations that is a broader look at all forms of available public coverage, and a site that should be bookmarked by anyone who navigates in these complicated waters. If you want to understand who is eligible for what, this is the essential one-stop-shopping place to go.

Happy Martin Luther King Day Weekend!!!

Today the Maryland Legislature overrode a gubernatorial veto to approve a law requiring employers with more than 10,000 workers to spend at least 8 percent of payroll on health care for workers or else pay the difference to the state to support the Maryland Medicaid program. The only employer in the state who will be affected by it is Walmart. Similar legislation is expected to be filed in about 30 states over the next year. Click here for details from AP. Massachusetts is hardly alone in pushing this issue — we’re just a little ahead of everyone else.

A skit can also be worth a thousand words … check out this superb Saturday Night Live piece on the new Medicare Prescription Drug benefit. A well done skit can provide more insight than a dozen dense reports. (You need Real Player or something like that.)