Chains weigh in on access;

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The FAH joins the throng offering proposals to solve the uninsured crisis, but some say their plan lacks a key element.

Modern Healthcare

With new leadership on Capitol Hill and a national election on the horizon, presidential hopefuls, healthcare coalitions and special-interest groups have been virtually tripping over one another to have their say on how best to whittle down the ranks of the nation’s 46.6 million uninsured.

The latest group to join that cacophony was the Federation of American Hospitals, which last week unveiled a proposal, called Health Coverage Passport, designed to achieve universal coverage by building on the nation’s existing system of public and employer-based insurance. Its new plan-which uses the slogan – “Everyone’s responsible. Everyone’s covered.” – would require all individuals to buy health insurance or face tax penalties.

The federation, which represents investor-owned hospitals, said it felt a social obligation to address the public’s call for a coverage solution-a call that has crescendoed in recent months to a pitch not heard since President Clinton’s sweeping reform plan collapsed in 1994. According to a survey of 1,200 registered voters released by the FAH last week, 86% said they “demanded” the government take action on the uninsured issue before the next election.

“This is possibly the biggest domestic issue that policymakers will face over the next two years, and we wanted to be a part of that conversation and contribute to it,” said FAH President Chip Kahn.

“No one better understands the crisis of the uninsured than the hospitals they turn to for care,” added FAH Chairman Victor Campbell, who is also a senior vice president of HCA.

By and large, industry observers welcomed the federation’s effort, contending that any discussion of expanding access was better than none.

Still, some questioned whether the plan would prove more than a symbolic gesture and whether it added much beyond the stack of coverage proposals already being offered. “Is this something they’re really going to work for?” said Susan Sherry, deputy director for Community Catalyst, a healthcare advocacy group. “How much political capital are they going to spend to see this proposal through? That’s going to be the true gauge of their commitment.”

A few dismissed the plan outright, pegging it as little more than an effort by profit-driven hospitals to protect their own interests at a time when Congress is looking to overhaul the healthcare system. “The biggest players in the for-profit healthcare world, or those that have the most to lose from significant reforms, are simply attempting to write themselves into the solution,” said Jerry Flanagan, a healthcare advocate with the Foundation for Taxpayer and Consumer Rights, a consumer group. “They’re seeing the writing on the wall and they’re trying to get in front on the issue by saying: Eureka! We have the answer.”

Indeed, with healthcare access shaping up to be a pivotal political issue in the 2008 presidential election and beyond, key interest groups have been quick to weigh in on which direction those changes should take. America’s Health Insurance Plans rolled out a universal-coverage proposal in November. Since then, WellPoint and Blue Shield of California have floated their own plans, as has Wal-Mart in an unusual collaboration with the Service Employees International Union (Feb. 12, p. 12). The American Hospital Association also is devising a coverage plan, which it hopes to unveil in July.

Their motivation, industry observers say, is simple: Expanding coverage is a costly proposition, and Democrats, in control of Congress for the first time since 1994, have pledged not to pass major spending proposals unless other programs are cut to avoid increasing the federal deficit.

“Everyone is guarding their piece of the pie,” Flanagan said.

The stakes are especially high for hospitals, many of which have become saddled with debt problems as a result of treating more uninsured patients, experts say (See story, at right). Hospitals are also fending off more than $100 billion in proposed Medicare and Medicaid cuts outlined in the White House’s fiscal 2008 budget (Feb. 12, p. 6), as well as President Bush‘s pitch to redirect disproportion-share funds to pay for state experiments on access (Jan. 29, p. 6).

Sidestepping land mines

The federation’s proposal expands on a more limited coverage plan introduced amid much fanfare in January by a coalition of 16 diverse organizations, including the AHA, AHIP, AARP, the U.S. Chamber of Commerce, Families USA and the FAH itself (Jan. 22, p. 8). That plan aims to cover half the nation’s uninsured initially by expanding the State Children’s Health Insurance Program, which is up for renewal by Congress this year.

“Our members felt very strongly that (achieving) the goal of universal healthcare needed to be sped up,” Kahn said. “We wanted to move beyond incremental steps and show Washington that we could find a path to covering all Americans without turning the world upside down.”

Specifically, the plan would expand Medicaid and SCHIP to cover all low-income uninsured. Moderate-income families would receive sliding-scale subsidies in the form of “health coverage passports” to help them buy private insurance through either their employer or the individual market. For higher-income individuals without job-based coverage, insurance purchased through the individual market would become tax deductible.

Federation officials said the plan would add about $115.2 billion a year to the $900 billion that state and federal agencies now spend on healthcare, an increase of about 13%, but would ultimately save families that are already insured an average of $300 in healthcare costs annually.

To garner the broadest support, the FAH’s proposal sidesteps such political land mines as mandating that employers offer their workers coverage-now among the most contentious aspects of California Gov. Arnold Schwarzenegger‘s highly publicized healthcare reform package. “We saw that as a negative, something
that would turn off the business community to our proposal,” Kahn said.

Arguably the most controversial feature of the FAH’s proposal is the requirement that every American must submit proof of health insurance coverage or face a penalty at tax time. According to the FAH’s own survey, only 36% of respondents favored the individual coverage mandate, while 57% opposed it. (Other features of the proposal, such as the new tax deduction, were favorably received by as many of 84% of respondents.)

Carol Pryor, senior policy analyst with healthcare advocacy group the Access Project in Boston, fears that policymakers are “jumping on the individual-mandate bandwagon” without waiting to see if the concept actually
works. State officials in Massachusetts, which adopted an individual mandate as part of its precedent-setting universal-coverage law last year, are still struggling to design a basic insurance plan that’s both comprehensive and low cost, she says.

“It hasn’t been demonstrated yet that states can actually design affordable coverage or provide adequate subsidies for people to afford coverage. You have to look beyond the premium to the deductible and all of the other out-of-pocket costs,” Pryor said. “Otherwise, there won’t be much benefit to insuring more people, because even the insured often can’t afford to pay their medical bills” when their cost-sharing obligations are too high.

Skeptics also questioned the FAH’s failure to address a critical question: Where will the $115 billion in additional funding come from?

Federation officials said discussing financing at this early stage was premature. “The key thing right now is just getting people to the table,” said FAH spokesman Richard Coorsh. “Once they’re committed to doing something, (they can take) our model and tweak it whichever way they wish to.”

But for Sherry of Community Catalyst, financing is the crucial piece of the equation. “It’s hard to take seriously a proposal that doesn’t even attempt to address the fundamental issue of how all is this going to get paid for,” she said. “It’s fine to put a marker out there and say what general policy direction you support, but are you going to get more specific? Until you really begin grappling with those kinds of details, it’s just posturing.”

The FAH’s proposal represents a bold step forward for the federation, which hotly opposed the Clinton universal-coverage plan during the early- to mid-’90s but did not offer its own alternative plan.

At the time, the federation supported a bipartisan bill introduced by Reps. Jim Cooper (D-Tenn.) and Fred Grandy (R-Iowa) that rejected government price controls and would have funded insurance vouchers by cutting Medicare and Medicaid as well as limiting some current tax breaks for health insurance. That bill did not include an individual insurance mandate.

(At the time, Kahn was executive vice president of the Health Insurance Association of America, whose “Harry and Louise” advertising campaign played a key role in dismantling the Clinton reform plan. HIAA, however, supported the administration’s proposed employer mandate.)

Michael Bromberg, who headed the federation between 1970 and 1995, said the FAH was spurred to action this time around by the crippling effect the growing uninsured problem has had on the nation’s emergency rooms over the past decade.

“There’s a heightened sense of urgency,” said Bromberg, who now serves as the FAH’s vice chairman. “The concept that every American should have coverage is one we’ve always been for, but now the federation has taken it to a new level in terms of priority and emphasis.”

Some, however, questioned whether the hospital industry was in the right position to lead the healthcare reform movement. K.B. Forbes, a former Republican political operative whose advocacy group, Consejo de Latinos Unidos, has led a public campaign against hospitals’ alleged price-gouging of uninsured patients, says the industry has only recently begun to clean up its act. Consejo has hammered out settlements with for-profit Tenet Healthcare Corp. as well as a number of not-for-profit systems, in recent years.

“Ironically, the problem of the uninsured has been caused in large part by hospitals and insurers letting pricing get out of control,” Forbes said. “They have the burden of changing their own practices before pointing the finger at anyone else.”

But Ron Pollack, executive director of Families USA, which was a key backer of Clinton reform plan, said he was “very encouraged” by the federation’s contribution to the coverage debate.

“Having different organizations with the different proposals is a good thing as long as they are willing to work together toward a common consensus compromise, and I have found that the federation is willing to do that,” said Pollack, who teamed up with Kahn in 1999 to forge the self-proclaimed strange-bedfellows coalition that ultimately spawned Cover the Uninsured Week.

Pollack added that he welcomed the “enlightened self-interest” that has propelled organizations like the federation to pursue universal healthcare. “The fact that expanding coverage is in their own interests is in no way a bad thing,” he said. “It just means that they will play a more intensive role and work that much harder for it than if they were doing it exclusively out of altruism.”

Consumer Watchdog
Consumer Watchdog
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