consumer. Competition is between doctors on the basis of efficiency and quality of care rather than between health plans on the basis of price. 25 Ways to Make A Good Plan Even Better RECOMMENDED CHANGES TO THE HEALTH SECURITY ACT CONSUMERS UNION 1. Make the benefits provided by health plans truly standard. Require all health plans in any regional alliance to have the same treatment protocols, including policies toward experimental treat ments. 2. Require the alliances to handle disputes and appeals for denied treatment. 3. Integrate all segments of the population into a single system with a global budget within five years. 4. If market conditions warrant (an area has too few high-quality, low-cost health plans available), require alliances to create a Medicare-buy-in type of option that allows consumers to get coverage outside of the insurance industry. 5. Expand benefits to include nursing home care, expanded home care, more extensive mental health care, and care for children with congenital problems. 6. Require that alliances limit fee-for-service plans to one in order to achieve administrative cost savings and avoid risk selection problems. 7. Limit the difference in cost between fee-for-service plans and the average premium plan so that low- and middle-income consumers can enjoy freedom-of-choice of health care providers. (This is especially important for migrant workers.) 8. Protect low-income consumers by reducing the portion of income that must be spent on premiums to 2 percent, by expanding the premium discount for low-income consumers, and by reducing or eliminating the cost-sharing required of low-income persons. 9. Standardize the supplemental benefits market. 10. Provide the National Health Board with authority to regulate-and roll back-prescription drug prices. 11. Give the National Health Board the authority to set minimum quality and access requirements for health plans. 12. Eliminate the antitrust exemption that allows doctors to rig bids. 13. Modify the medical malpractice reforms so that they serve consumers' interests. 14. Establish a national guaranty fund for health plans. This fund would pay outstanding policyholder claims in the event of company insolvency. 15. Regulate health plan finances to protect consumers. Specifically, expand federal capital and surplus standards to cover all health plans and health alliances; health plan assets should be separate from the rest of a company's assets. Antitrust laws should be extended and exemptions should be limited to prevent companies from using predatory pricing practices in non-health portion of business to bolster health plan business. 16. Expand counseling programs (that now serve senior citizens) so that all consumers have access to an objective source of advice about selection of health plans. 17. Improve the regulation of the private long-term care insurance market. 18. Exempt low-income senior citizens (those earning up to about 150 percent of the poverty line) from the increase in the Medicare Part B premium. 19. Provide for nationwide risk adjustment, so that the costs associated with high-risk populations are spread fairly. This is the only way that small groups of high-risk populations (who may be grouped within one regional alliance) will not pay disproportionately higher premiums. In addition to health problems, risk adjustment should include non-health related factors that can restrict access to health care, such as transportation, translation, and other related services. 20. Adjust the subsidy for early retirees so that those with incomes substantially above the poverty level pay their fair share of health care costs. 21. Ban hospital indemnity and dread disease policies. 22. Ban variations on the standard benefit package. 23. Require insurance companies to have legitimate consumer representation on boards; expose insurance company executives' salaries to public scrutiny. 24. The plan should be consistent in how it deals with supplemental insurance policies designed to cover cost-sharing, or the out-of-pocket expenses a consumer would face. Either this coverage should be banned across the board, or it should be allowed under both low cost-sharing plans and high cost-sharing plans. 25. Impose an income tax surtax, a tax on new hospital revenues that are created by reduced spending for uncompensated care, and increase the tax on corporate alliances to pay for additional benefits and subsidies. Senator METZENBAUM. Thank you very much. Gail Shearer, Manager of Policy Analysis, the Consumers Union? Ms. SHEARER. Thank you, Mr. Chairman. Consumers Union appreciates the opportunity to present our views on the need for consumer protection in a reformed health care system. Members of this subcommittee and you two Senators, in particular, have worked for years for health care reform. I know that neither of you needs convincing about the fact that there truly is a health care crisis, especially in light of the compelling testimony that we have heard this morning. In conjunction with the campaign for health security, we have recently released two reports that show how the health care crisis affects people at both ends of the age spectrum-seniors and children. Despite Medicare coverage, seniors suffer in the health care system because they cannot afford prescription drugs or the high cost of long-term care. They have restricted choice of doctors with low Medicare reimbursement rates, and decreased doctor willingness to accept them as patients. They are forced to use their limited funds to pay their hospital deductible and their 20 percent copayment. 8.3 million uninsured children and their parents know there is a health care crisis. Insurance policies regularly exclude the all important well baby and well child checkups. They rarely cover immunizations such as measles' shots that can prevent chronic, serious illness. As families struggle to work their way out of poverty, they often find that they lose their Medicaid eligibility and the health care that their children so desperately need. The Nation urgently needs health care reform. Only two bills, the single-payer bill which you both support, and the Clinton bill stand head and shoulders above the other five major proposals in terms of meeting consumers health care needs. We do not believe that so-called reform, which is voluntary, will come close to providing health care security for all. And indeed, we are troubled that Congress does not seem to be moving in the direction of recognition of this point. Nor do we believe that the Nation will be able to pay the bill for health reform unless employers are required to make a substantial contribution toward the cost. Furthermore, legislation that counts you as insured if your family faces a $3,000 deductible is not the type of reform that consumers need. In my statement, I plan to summarize Consumers Union Five/ Five Plan-five important provisions of the Health Security Act that should be preserved against the forces of powerful special interest and five provisions that should be modified to better serve consumers. There is one particular area that needs some attention and that is the need to make the plan more accountable to consumers, not insurance companies or HMOs' bottom lines. The following five provisions must be preserved. First, universal health care must be a reality within the next three or 4 years. 79 percent of respondents in a Gallup Poll this week said that they favor reform that provides guaranteed health care for everyone. Second, cost containment through limits on public and private spending must be kept. It is too late to leave cost containment to the free market. It has not worked. It will not work. Third, employers must be required to contribute to the cost of their employees' health care. Employers will be paying premiums totalling $185 billion this year. Without a mandatory employer contribution, Congress will simply not be able to find the funds to pay for a universal program. Fourth, keep the benefits comprehensive. Consumers want and need comprehensive benefits. We should not create a multi tiered system that leaves poor with bare bones coverage, while granting the wealthy full coverage through a supplemental market with regulatory challenges of its own, similar to those of the Medigap market that you corrected in 1990. Fifth, maintain the State single-payer option. If adopted nationwide, the Congressional Budget Office projects health care savings of $114 billion in 2003. This is the best value reform for consumers. At least let the States have that option. The most important areas to fix are first, protect low and middle income consumers from facing financial barriers to care or burdensome premiums. Second, increase accountability to consumers, and I will expand on this in a moment. Third, make freedom-of-choice of provider a real option for people of all income levels. Fourth, include the blueprint for phasing in nursing home benefits and expanded community care benefits. And fifth, give the National Health Board the authority to regulate prescription drug prices that apply to all Americans. If drug prices were a river, they would already be well above flood stage. It is meaningless to talk about jawboning through voluntary price controls, since prices are already so out of line. And I call to your attention the two reports that have come out this week. Yesterday, the General Accounting Office released a report showing American consumers are footing the bill for the world's consumers by paying 60 percent higher costs for prescription drugs than their counterparts in England. Senator Pryor released a report earlier this week that also showed drug prices continuing to increase faster than inflation. I would like to comment briefly on the need for increased accountability to consumers in the Health Security Act. Our first choice solution for health reform would be to eliminate insurance companies all together with a single-payer system. In the absence of that, insurance companies should at least be held accountable to consumers, rather than their bottom line profitability. First, insurance companies should be prohibited from varying the benefits offered within each alliance. The administration plan would allow insurance companies to determine whether or not to cover experimental treatments. One company might cover liver transplants or bone marrow transplants or leukemia, while another company up the street might not. Health plans within an alliance should all play by the same rules to avoid different coverage for different enrollees within an alliance. Otherwise people like Penny Puhl will fall between the cracks. Second, treatment decisions, treatment protocols must be consistent within an alliance. Insurance companies will have strong incentives to cut costs by cutting coverage. They will have strong incentives to hire the low cost laboratory. Health plans are very likely to interfere with doctors' treatment decisions by developing their own treatment protocols and by increased reliance on utilization review companies. To the extent the variation between insurance plans occurs, the result will be anti-consumer. Third, the grievance procedure outlined in the Health Security Act needs fixing. It is possible that consumers with complaints could be trapped inside the insurance company's complaint system without timely recourse to a neutral party. We believe that the alliance should play a larger and earlier role in resolving disputes. I would like to close by modifying the popular slogan of the week regarding crime control-three strikes and you are out. It can be modified to health care reform. Strike one, make participation and employer contribution voluntary. Strike two, pass the buck in defining benefits to an outside commission. Strike three, encourage catastrophic policies with the $3,000 deductible. Any one of these crucial mistakes will totally undermine health care reform and result in gaps in coverage and continuing suffering, lack of needed health care and financial barriers to care. Thank you. Senator METZENBAUM. Thank you very much, Ms. Shearer, for a very well thought out statement. [The prepared statement of Ms. Shearer follows:] PREPARED STAtement of GaiL SHEARER Consumers Union1 appreciates the opportunity to present our views on the need for consumer protection in a reformed health care system. Members of this subcommittee have worked for health reform for many years; I don't think you need convincing about the fact that there truly is a health care crisis in this country. In conjunction with the Campaign for Health Security, we have recently released reports that show how the health care crisis affects people at both ends of the age spectrum-seniors and children. Despite Medicare coverage, seniors suffer in the health care system because they can't afford prescriptions or the high cost of longterm care. They have restricted choice of doctors when low Medicare reimbursement rates decrease doctors' willingness to accept them as patients. They are forced to use their limited funds to pay their hospital deductible and their 20 percent copayments. They are victimized by a private long-term care insurance market that puts the profits of the insurance companies above the needs policyholders. America's children, and their parents, know there's a health care crisis. When 450,000 pregnant women have no health insurance, inadequate prenatal care-and low birth-weight babies with a variety of ailments are inevitable. Insurance policies regularly exclude the all-important well-baby and well-child check-ups. They rarely cover immunizations such as measles shots that can prevent serious chronic illness. Pre-existing condition exclusions and outright denial of coverage often leave children with serious illnesses uninsured. Children in need of chronic care including rehabilitation, such as children with cerebral palsy or children recovering from brain tumors, too often find that their needs are unmet. As families struggle to work their way out of poverty, they often found that they lose their Medicaid eligibility and the health care that their children so desperately need. The nation urgently needs health care reform. Only two bills-the Wellstone/ McDermott single payer bill and the Clinton bill-meet consumers' health reform needs. We do not believe that so-called reform that is voluntary will come close to providing health care security for all. Nor do we believe that the nation will be able to pay the bill for health reform unless employers are required to make a substantial contribution toward the cost. Furthermore, legislation that counts you as insured if your family faces a $3000 deductible is not the type of reform that consumers need. We believe that health care reform must offer: -universal, quality health care with comprehensive benefits for all U.S. residents regardless of age, income, employment status or health status; -cost containment with a national health care budget and control over wasteful paperwork and procedures; —fair-share financing with savings from cost containment as a central funding source and additional funding obtained on a fair and equitable basis; -public accountability with the structure being shaped by consumers' interests, not insurance companies' or pharmaceutical companies' profitability, and with consumers well represented on all boards overseeing health care; and -consumer choice giving consumers the freedom to choose where they will go for health care and who will provide it. CLINTON HEALTH CARE BILL: FIVE KEY PROVISIONS TO PRESERVE Next I plan to outline Consumers Union's "Five/Five Plan" our recommendations for five of the most important provisions of the Health Security Act that Congress should fight hard against special interests to preserve, and five provisions of the Health Security Act that must be fixed to better serve the needs of consumers. Attached to my written statement is Consumers Union's analysis "The Clinton Health Care Act: What Will It Mean for Consumers?" This analysis measures the Clinton bill against our five principles and both outlines what's good about the Clinton bill and recommends 25 ways to make the Clinton bill even better. The five most impor 1Consumers Union is a nonprofit membership organization chartered in 1936 under the laws of the State of New York to provide consumers with information, education and counsel about goods, services, health, and personal finance; and to initiate and cooperate with individual and group efforts to maintain and enhance the quality of life for consumers. Consumers Union's income is solely derived from the sale of Consumer Reports, its other publications and from noncommercial contributions, grants and fees. In addition to reports on Consumers Union's own product testing, Consumer Reports with approximately 5 million paid circulation, regularly, carries articles on health, product safety, marketplace economics and legislative, judicial and regulatory actions which affect consumer welfare. Consumers union's publications carry no advertising and receive no commercial support. |