Healthcare Repair: A B'nai B'rith Agenda for Reform
How B’nai B’rith will Judge Reform Proposals

Executive Summary

The following discussion lays out a set of principles that will provide criteria for evaluating healthcare reform related proposals, particularly proposals for achieving affordable access to healthcare for everyone. This issue is especially important to B’nai B’rith because we recognize that only with lifelong access to healthcare can we ever achieve the goal of healthy aging. Through our experience with older adults in our buildings and our advocacy work, we frequently encounter the devastating after-effects of gaps in insurance coverage throughout the lifespan. Older adults, covered by Medicare, who lacked coverage before turning 65 are less healthy, more likely to suffer serious complications from chronic diseases (like diabetes, etc.) and are more expensive for the Medicare program to cover. Because early, consistent access to healthcare is critical to healthy aging, B’nai B’rith has become involved in the movement to expand healthcare access to everyone.

We are concerned about a range of issues including: the benefits or coverage a reform plan would guarantee/provide; the mechanisms it would use to do that; the regulatory changes needed to alleviate existing barriers to healthcare access; the effect on existing coverage from any changes to the system of procuring health insurance; and financing any altered system. We are mindful of the law of unintended consequences -- so we will be especially focused on the impact of changing established rules and incentives. It is critical that we consider how various providers and various individuals would be affected by changes to the health insurance market. For instance, how do measures to help uninsured individuals get coverage affect the incentives for employers to continue providing coverage to others?

We are also particularly concerned about how any changes to the healthcare system will address the needs of older adults and impact healthy aging. While it is unlikely, and probably inadvisable, that Medicare will be included in a reform plan, increasing coverage and access for everyone has specific implications for aging. People between the ages of 55 and 64 are at very high risk of being uninsured or underinsured, especially if they are self-employed, change jobs, or lose their jobs. In an economy with such unpredictability, even for large established companies, this becomes even more of a concern. Throughout this document we are thinking about healthy aging, and how healthcare reform can help us achieve that goal for everyone.

B’nai B’rith is interested in supporting plans that increase access to affordable comprehensive healthcare coverage for all of us. This means making sure that more Americans can afford quality coverage, that they have access to healthcare professionals and facilities, and that the system providing these are feasible and sustainable.

We will evaluate healthcare reform proposals based on how they meet the criteria of the following six principles. This will require analysis based not only on the best actuarial and statistical analysis of the plans by the Congressional Budget Office and other non-partisan sources, but also our own analysis of the rules, incentives, and options outlined in any proposal.

1. Define coverage clearly and establish a common base of minimum benefits.

Without some minimum standard we risk creating the illusion of coverage, rather than coverage that allows all Americans real access to health services. In addition to the millions known to be uninsured, we also have millions of others who are underinsured -- unable to obtain coverage that allows them adequate access to preventive care and chronic management, or coverage that would still leave them vulnerable to financial ruin in the event of a major illness. Forcing people into the individual market increases the risk that they will be able to obtain only sub-standard coverage.

2. Achieve true affordability for healthcare.

Many factors can make healthcare and healthcare coverage unaffordable to millions of Americans. Making healthcare affordable means addressing both insurance premiums and factoring in other cost sharing that can keep families from being able to USE their insurance.

3. Broaden access and eliminate barriers to coverage.

We must not jeopardize existing coverage (employer or public) without being sure that the replacement mechanisms cover as many people as well. In addition, we must address the insurance industry practices which make insurance unaffordable for many trying to buy coverage outside of the employer based system, especially older adults or those with chronic conditions.

4. Incorporate long term services and supports.

An ideal healthcare plan should take long term services and supports into account. Medicaid is the only major financer of long term services and supports and many older adults do not realize that their health insurance and Medicare do not cover long term costs.

5. Develop economically, socially, and politically feasible standards for healthcare plans.

A new plan needs to be politically feasible and it needs to be acceptable to the American population. The plan must make realistic transitions from the current system to a new one and it must address sustainability concerns.

6. See equitable methods for financing healthcare.

There are several ways of approaching financing, including a single payer, a mixed public and private system, and even the creation of tax breaks and incentives for people and families to buy coverage in the private market.

Principles and Priorities for Healthcare Reform

DEFINING HEALTHCARE COVERAGE

Principle #1: Define coverage clearly and establish a common base of minimum benefits.

-- Does the plan define coverage meaningfully? Most proposals specify a minimum standard benefit package for plans offered by employers. Any reform plan must define a minimum standard benefit that a person would need to be considered covered. We don’t want to move toward a system in which everyone has “coverage” that is mostly nothing more than a fig leaf. We believe the minimum standard should be as comprehensive and clear as possible.

-- Does the plan take steps to move us toward an understanding of comprehensive healthcare? This would address the disparities in mental health, as well as the often inexplicable exclusion of dental health, despite the dangers posed by serious gum disease and other dental issues.

Discussion

Healthcare coverage is necessary but not sufficient. First, we must recognize that only high quality coverage leads to quality healthcare access and delivery. We cannot expand coverage by funneling more people into low-quality health plans that provide little. Any healthcare reform plan must define a minimum benefit, and increase access to that benefit or better.

In 2007, an estimated 116 million adults were uninsured, underinsured, reported a medical bill problem, and/or did not access needed healthcare because of cost (Appendix). We cannot simply consider people covered if they can only obtain insurance that pays for catastrophic injury, or provides minimal care without sufficient affordable access to diagnostic services.

Therefore, plans that establish benefit standards will be judged more favorably by BBI than those that do not or cannot.

ACHIEVING AND UNDERSTANDING TRUE AFFORDABILITY

Principle #2: Achieve true affordability for healthcare.

-- Does the plan make accommodations for lower income families to afford coverage through subsidies or other mechanisms?

-- Does the plan take into account the total costs of coverage and access, rather than just premiums? Affordability must be defined relative to income, and take into account not only insurance premiums, but also all other cost-sharing. (Co-payments, deductibles and all out-of-pocket expenses, and coverage maximums.)

These measures must be included when determining whether an individual or family needs help affording coverage/care.

Discussion

Determination of affordability must include the cost of premiums and all other out-of- pocket costs. It is not uncommon for plans with apparently affordable premiums to include other cost sharing that makes seeking treatment cost prohibitive.

Many existing and proposed plans make certain allowances, subsidies, etc. for people based on the affordability of coverage as a percentage of household income, etc. That has to take into account the cost sharing, not just the premiums.

• According to the Kaiser Family Foundation, half of all U.S. bankruptcies are caused by soaring medical bills, and most people sent into debt by illness are middle class workers with health insurance. About two million people and their dependents are directly affected by medical bankruptcy each year.

• Currently, there are gaps in health care plans which are based more on cost and tradition than any sound logic about healthcare. BBI places additional value on a plan that proposes eventual inclusion of dental and vision benefits as part of the basic coverage plan.

TRULY EXPANDING ACCESS AND ELIMINATING BARRIERS

Principle #3: Broaden access and eliminate barriers to coverage.

-- Avoiding adverse selection-- allowing insurers to design plans to appeal to healthy workers, thereby pooling good risks in one plan and bad risks in another plan, which will eventually become cost prohibitive for the older, less healthy people.

-- Does the reform plan create incentives for employers to drop coverage, or to decrease the quality of that coverage? This can happen in a number of unintended ways. The current tax preference for employer-subsidized insurance is the primary mechanism for pooling risk in this country.

-- Does the plan create incentives for employers to maintain tax subsidies through less comprehensive or substandard coverage? Or can tax incentives be used to buy low quality plans or plans with prohibitively high cost sharing?

Does the proposal address any/all of these barriers to access? 

-- Skyrocketing system-wide costs, which often result in unaffordable premiums and/or cost-sharing between employer and employee.

-- For those in the individual market, insurance practices and underwriting create barriers to access. Older and less healthy applicants are not offered coverage at all, or are offered plans that are not affordable. If they can afford to buy coverage, that coverage is often sub-standard, only useful for “catastrophic” events, and restricts routine access to preventive, diagnostic and disease management services.

-- The lack of adequate healthcare facilities and providers in many urban centers and rural areas.

-- People without health insurance may see multiple physicians in multiple institutions, and face difficulties transferring information.

--Complicated appeals processes that make it extraordinarily burdensome for people – particularly those dealing with illness – to access care through the coverage they have paid for.

Risk pool: (i.e. special programs created to provide a safety net for the "medically uninsurable" population)

--A healthcare plan should afford people opportunities to join a group risk pool, and must regulate the insurance industry’s ability to use selection bias.

--Individual Coverage Market is the least efficient, least reliable, and least affordable large scale mechanism for providing coverage and care. Risk pools lower costs and make access possible.

Cherry picking:

Problems with the private market –

• Because employers are dropping private health insurance due to outrageous and escalating costs, the individual mandate forces families into buying individual health insurance policies, the most profitable segment of the health insurance business. Individual policies allow maximum room for the insurers to “cherry pick,” that is, choose to insure, only healthy people, and avoid insuring any individuals or families who may cost them money.

• Groups cost less because they pool risk over more people, and group coverage is generally more costly. It becomes prohibitively expensive for people who are older or sicker – people whose risks could be swallowed up and handled in a large group.

• Insurers have every incentive (and in many states the right) to cherry pick based on actuarial risk, so that risky people are priced out of the market.

Discussion

Barriers to care run from the obvious - premiums that are too high for people to get coverage – to the more obscure, including the lack of a viable services in some rural areas. It is important to note that having insurance coverage does not necessarily translate into actual access to affordable healthcare. Sometimes care is too expensive, and sometimes it doesn’t exist. So eliminating barriers to both coverage and actual access must be central to any reform plan.

For Americans who have employer-sponsored coverage, access to that coverage can be limited by their lack of ability to pay the rising premiums, or the higher cost sharing. Controlling costs in the system can help remove these barriers.

For those workers who do not have employer-sponsored options, eliminating the effects of risk aversion in the private market, by creating pools and regulating insurance practices, can eliminate many barriers.

Why national regulation? State-level regulation of the insurance industry is uneven. This could result in younger people moving to states where insurers are allowed to risk-adjust costs, leaving older Americans together in large bad-risk pools. Spreading risk is an important element.

Employer coverage -- Certain healthcare reform proposals would intentionally dismantle much of the employer-based system of healthcare insurance (see single payer proposals, for instance, or the Wyden-Bennett Senate bill proposal which would eliminate the tax deduction for employer coverage.) Other systems attempt to mix employer, public, and pooled private insurance – and with those systems, it is crucial that employer coverage not be eroded. So the design of those plans must not unintentionally result in reasons for employers to drop plans, or switch to less comprehensive plans, or those with more costs shifted to employees.

Adverse Selection – Most healthcare reform proposals would include some level of choice with respect to plan type. HMO, PPO and other plans would probably continue to exist. Therefore, it is important in any of those proposals to be certain that insurers cannot design their plans to appeal to healthy people and sicker people differently. When that happens, the costs of care per individual in the “healthy plan” are low, so premiums stay low. The other plans – the only ones comprehensive enough to appeal to people who need pricier care – become too expensive over time. This adverse selection is one of the factors that makes healthcare unaffordable for millions of Americans, particularly those who are older. Healthy aging requires that we eliminate the tendency to become uninsured or underinsured just as health insurance becomes most important.

LONG TERM SERVICES AND SUPPORTS/MEDICARE/MEDICAID

Principle #4: Incorporate long term services and supports (LTSS).

--An ideal healthcare plan would take on LTSS, currently not covered by most health insurance or by Medicare. We hope to see healthcare reform plans begin to address LTSS issues.

-- Medicaid is the only major public financer of LTSS. Most people have little or no coverage, and many of those do not realize that their health insurance and Medicare do not cover extensive LTSS.

-- Long term care accounts for more than 35 percent of Medicaid budgets. BBI doesn’t want to see a plan that forces people to switch to private insurance plans lacking in-depth experience caring for special needs populations.

--BBI foresees a plan that is designed to deliver the full array of services that Medicaid beneficiaries often require, including a combination of acute and long term care services.

-- Many doctors refuse to treat Medicaid patients. Further reductions in Medicaid payments to physicians are likely to discourage more doctors from serving those who remain covered. This will further impact clinics and hospital emergency rooms, especially those in public hospitals, which are already facing enormous financial problems in many cities. A new healthcare plan should address these issues.

--Reform of the LTSS system must address strengthening of the LTSS workforce. Specifically, mechanisms must be in place to address job satisfaction, wages and benefits, and working conditions and retention efforts, all of which impact quality and continuity of care.

-- Encourage personal planning for long term support needs among individuals and their family members and caregivers.

FEASIBILITY

Principle #5: Develop economically, socially, and politically feasible standards for healthcare plans.

-- Is the plan politically feasible? Whether single payer, connector groups, etc, we need a plan that the American people can accept. Transition upheaval and public acceptance must be a consideration for every plan. We will focus on how more complete overhaul plans propose to protect people from negative transition effects, and how those plans adapt or phase in.

-- Is there sufficient financing in the plan for whatever changes, subsidies, etc. are proposed? Are the cost estimates realistic? And will the access and affordability achieved by the plan be sustainable over time?

-- Is the plan realistic about gauging transitions from the current system to another? How much resistance will there be, and how is that taken into account in the plan?

EQUITABLE FINANCING

Principle #6: See equitable methods for financing healthcare.

FINANCING
There are several main ways of approaching and financing health care reform:

A.) expanding coverage by moving to a single payer system like Medicare for all.

B.) Mixed public and private system in which some vulnerable populations are automatically covered by public programs, others are covered by employer and private insurance, and the rest choose to buy into large pools created by the insurance industry under new federal guidelines for inclusiveness.

C.) Creating tax breaks and incentives for individuals and families to buy coverage in the private market.

We don’t specifically endorse any one of these methods, and we realize that healthcare reform may draw on the strengths of all of these ideas. We will hold each legislative proposal up against our principles for reform, and judge them by how well we predict they will meet those standards.

CONCLUSION

Ultimately, B’nai B’rith International is interested in supporting plans that increase access to affordable, comprehensive healthcare coverage for all of us. An important feature of any health reform proposal is whether it can succeed in providing health insurance and access to care for everyone. B’nai B’rith International will use the above six principles to determine how well the proposals meet these criteria. Proposals should take into consideration: coverage, affordability, long term services and supports, access issues, design standards, and equitable financing. Proposals should be examined for their ability to produce better access and greater efficiency. It is important that all people, including older Americans, be able to participate in a well-organized system that ensures everybody receive the care they need, when they need it, and over their entire lifespan. This is a difficult issue for everyone, but we need to know the future direction of our healthcare system.