Trudy Lieberman

Donald Trump to Hungry Seniors: Drop Dead

The budget sent to Congress Tuesday for fiscal year 2018 puts the country’s schizophrenia over feeding hungry citizens back on the agenda — this time in the guise of defunding food programs for seniors, millions of whom are homebound, ill and unable to cook or shop. In March, the Trump administration announced it was slashing federal funds for those programs, meaning that more seniors will go hungry, and waiting lists — already numbering in the thousands in some parts of the country — will get larger. The wait for a meal will get longer, too, leaving thousands of seniors, including those just discharged from a hospital, with few options for nutritious food.

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How Our Gutless Media Helped Trigger the Credit Crisis

Last year, New York's state legislature, which has historically led the nation in passing pro-consumer credit legislation, approved a pair of bills aimed at protecting residents from questionable lending practices, the kind that have come back to haunt the economy. One of them would have put the brakes on the "universal default" provision, which lenders use to jack up the rates on credit cards if a cardholder misses a payment on a card issued by another lender. This practice has caused credit-card rates for some people to soar into the 20 or even the 30 percent range, far surpassing what once was considered criminal usury and helping to pile on debt that has contributed to mortgage foreclosures. But then-Governor Eliot Spitzer vetoed the bill, arguing that it would force lenders to increase interest rates or fees for all credit-card holders, even those with good credit records. Spitzer also claimed that the law wouldn't do any good anyway because federal law would preempt state law, and federal law allows banks to bypass state usury laws by setting up shop in states with lax regulation.

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Cautionary Health Care Tales

The collapse of health reform in California and ominous signs from Massachusetts spell big trouble ahead for reforming the nation's health care system no matter who is elected President. The lessons from those states, which have tried hard to bring insurance coverage to all residents, are worth heeding for anyone sitting in the White House next year. They also raise the question of whether it is possible, either fiscally or politically, for states to do the job. Indeed, failure in California and troubles in Massachusetts indicate that the underlying problems that bedeviled reform efforts fourteen years ago are still with us, and could doom yet another attempt to change the American way of health care.

Although Hillary Clinton and Barack Obama try to distinguish between their plans, both are variants of the Massachusetts model. That scheme requires everyone to get health coverage, and it imposes tax penalties on people who don't -- the so-called "individual mandate." In both Obama's and Clinton's plan, people do not have a right to health insurance, as is the case in truly universal national health insurance systems, such as in France and Canada, where everyone is guaranteed coverage, with care paid for through a broad-based tax. Instead, both candidates have used the word "universal" to describe a potpourri of options that could bring coverage to some portion of the population currently not covered while keeping commercial insurance in the game. Clinton's plan includes an individual mandate. Obama would require coverage only for children and touts cost-control measures that he says would lower premiums so much that the uninsured could afford them, obviating the need for a coercive mandate. Clinton would boost coverage by requiring large employers to cover their workers, giving incentives to smaller ones to do the same. Obama would make employers provide "meaningful" coverage or contribute to a public plan. Both proposals call for some sort of public alternative that people can buy into if they don't like the market choices, and both try to control medical costs with weak remedies like improved information technology and better care coordination.

Significantly, the premium subsidies and tax credits that Clinton, Obama, and John McCain support to help low-income families buy insurance are a traditional Republican strategy that President Bush has pushed for years. But at least 55 percent of the uninsured already pay no taxes, so unless the credit is made available to non-tax filers, this approach would leave lots of people without coverage. To be useful, subsidies must be high enough to help families pay the annual premiums -- now averaging about $12,000 -- but low enough so the government doesn't go broke. And therein lies the devil that killed reform in California and could do in the much-hailed Massachusetts plan as well: the money just wasn't there.

After a year of acrimonious wrangling among Governor Arnold Schwarzenegger, Democrats in the General Assembly, unions and consumer groups, the Assembly passed a reform bill late last year only to see it shot down in the Senate health committee a few weeks later. By then it was obvious that the measure, which called for an individual mandate and massive subsidies to help low-income people buy insurance, would have cost California far more than the contemplated revenue sources would provide. And even with the subsidies, only 70 percent of the state's 6.5 million uninsured would gain coverage. The state's independent Legislative Analyst's Office found that by the fifth year, the program's costs would exceed revenues by $300 million, and by as much as $1.5 billion a year further down the road. Add those numbers to the $14 billion budget deficit the state currently faces, and health reform died aborning. "The financing mechanism was kind of a mirage," says Charles Idelson, communications director for the California Nurses Association, which supports national health insurance, often called "single-payer." "They were trying to pretend the state could pay for it, when clearly they didn't have enough resources." The funding, subject to approval by a public referendum, was to come from federal matching dollars for Medi-Cal (the state's Medicaid program), contributions from employers who didn't offer health insurance, assessments on hospital revenue, and a raise in the tobacco tax to $1.75 per pack, a potentially declining revenue stream that would be undermined by public health initiatives to get people to quit smoking. While increasing tobacco taxes seemed like a winning strategy, the tobacco industry is well-equipped to fight it: in Oregon last fall a stealth campaign by tobacco companies helped defeat a ballot initiative to expand coverage for kids that would have increased the tax by 85 cents a pack.

The Massachusetts plan, passed in 2006 with the support of then-Governor Mitt Romney, is stumbling financially because far more people need help than Romney originally estimated; the state now believes there may be as many as 650,000 uninsured, not 400,000. And there's a shortfall in funds to cover the subsidies those people have been promised. The uninsured have come out of the proverbial woodwork to buy insurance rather than face tax penalties, and since many of them cannot afford coverage, the state is on the hook for their premiums. "Romney won acceptability by obscuring how much money is really needed in the absence of genuine cost controls," says Boston University professor Alan Sager, who specializes in health care costs.

Massachusetts had budgeted $472 million for the current fiscal year, but it needs an additional appropriation of $150 million, which will come out of the public purse. Next year could be bad too. When the law was passed, a legislative conference committee projected that $725 million would be needed for subsidies in the third year. Now it looks like the program will need $869 million to cover premiums for those who can't afford them. "I wouldn't characterize the situation as dire," says Jon Kingsdale, chief executive of the Commonwealth Health Insurance Connector Authority, which administers the program. "The affordability issue has always been there." Just last Thursday Leslie Kirwan, state budget director and chair of the authority, said the program next year will cost "significantly" more than $869 million. Money counted on by the law's architects has not materialized. Lawmakers had counted on getting about $500 million to $600 million from the state's free-care pool, which paid hospitals to treat the poor. The theory was that more insured residents would mean less need for free care. But apparently people are still uninsured and need care, so that money is not available. And assessments from employers are not adequate either. Instead of requiring them to cover their workers, the law allows employers to pay $295 per employee per year to help cover the uninsured. The sum was a compromise to keep employers from fighting a mandate that would have required them to spend upwards of $9,000 a year on real insurance for each employee. The state has collected only $6 million so far. One reason: before he left office, Romney changed the rules so fewer employers would be subject to penalties.

All people eligible for the subsidies pay co-payments, which are increasing this year from $5 to $15 for doctor visits. Those whose incomes are above 150 percent of the federal poverty level -- about $31,000 -- also pay premiums, and last week the Connector board approved hikes of 10 percent. The lowest premiums will now range from $39 to $116 a month. "We have closed some of the fiscal gap here, but we have not closed most of it," Kirwan said.

The state has to pursue a delicate balancing act. Officials are well aware that poor people have trouble paying even what seems like a nominal increase, but -- ever mindful of the power of the insurance lobby -- the state feels compelled to raise premiums enough to prevent "crowd-out," that is, they must be priced comparably to private market coverage so people won't be tempted to use the state's plan instead of buying from an insurance company. The insurance industry has long worried that attractive, low-cost state programs will take business away from them, and conventional wisdom among politicians holds that governments must not do that. (Crowd-out was at the crux of opposition to expanding the State Children's Health Insurance Program last fall.)

In Massachusetts, though, there's another reason officials worry about crowd-out: if 1 percent of the 625,000 people who have employer-provided insurance but are eligible for state subsidy (those with incomes below 300 percent of the poverty level, or about $63,000) choose the public plan because it's cheaper, that's about 6,000 more people the state has to subsidize. "If that happens," says Kingsdale, "I worry whether this program will be financially sustainable three or four years from now." It's ironic that those who favor market-based health coverage want to keep people from seeking lower-priced insurance -- which is exactly what the market says they should do.

Any national program based on the troubled Massachusetts and derailed California plans will have to address another major, perhaps insurmountable, problem central to the market-based model, in which insurance companies run the show: how to cover everyone when insurers can turn away those who are sick and likely to file claims -- a standard profit-making practice of insurance companies known by the Orwellian euphemism "risk selection." Massachusetts didn't have to deal with this question, because since 1997 it has required insurers to take all comers, even those with serious health conditions. In the political horse-trading over the California bill, most of the state's insurers had agreed to offer "guaranteed issue" policies, that is, ones available to everyone even if he or she is in bad health. But they still insisted on conditions like limiting policyholders' ability to switch to more comprehensive plans in the individual market. Even so, Blue Shield vice president Tom Epstein told me: "The [universal] mandate would have to be well enforced to make this work. It would have to be effective for us to support elimination of medical underwriting." Translation: everyone must be in the pool to spread the risk among the sick and healthy, or insurance companies won't go along. Indeed, this has been at the core of the mandate versus no-mandate argument between Clinton and Obama, and why Clinton has pushed hard for a punitive mandate to cover everyone. She knows this is the only way to get insurance companies to give up risk selection.

In California, Blue Cross did not go along. According to one insider who insisted on anonymity because of his sensitive position in the industry, "They said privately they will spend whatever it takes" to defeat any law that limited the company's ability to select risk. "Blue Cross is the best at risk selection," he said. "They would take a big hit to their profits." Throughout last year, Blue Cross, whose parent corporation is WellPoint, the largest health insurer in the country, geared up for the battle. It created the Coalition for Responsible Health Care Reform, with a $2 million investment aimed at organizing employers, insurance agents and individuals to sign on to the company's efforts to make sure it controls the substance of reform. One of the ads it ran to sway public opinion said: "Unintended consequences do happen. Other states have tried health care reforms like 'guaranteed issue' that sounded good. They now have the highest premiums in the country while California has the lowest." (One reason it has the lowest is that Blue Cross and others are selling cheap policies with skimpy benefits, shoving a lot of costs onto policyholders.)

A state that Blue Cross no doubt had in mind is Massachusetts, where premiums are high not only because companies have priced them to account for claims made by sick people but also because medical care there is the costliest in the nation. The one bit of good news from Massachusetts is that premiums for policies that can be purchased from private carriers through the state's insurance connector by people who don't qualify for subsidies will go up only 5 percent, a smaller increase than in recent years. Not only did jawboning by the current governor, Deval Patrick, help but the fact that more people -- both sick and well -- entered the risk pool made it possible for companies to hold the line on prices.

That is exactly what is supposed to happen, and why any effective reform will have to bring everyone into the insurance tent. But no one knows what will happen next year, and frustration with the rising cost of premiums led Patrick to tell reporters at the Berkshire Eagle earlier this year that the next administration in Washington should give serious consideration to a single-payer universal health care solution. Unless Massachusetts slows down the relentless rise in health care costs -- or imposes a big tax increase -- its grand experiment will fail. Says Kingsdale: "If we don't find a way to tame health care inflation, then near-universal coverage is not sustainable." At least it isn't in the models that are now on the table.

The Future of Medicare Is the Future of Health Care

Of the millions of words written and spoken about U.S. health care, only a tiny percentage have been about Medicare. So far, stump speeches and media coverage boil down, on the Democratic side, to whose health proposal covers more people, and, for GOP candidates, who will not embrace that American bugaboo, "socialized medicine." Medicare, which covers more than forty million seniors and people with disabilities, seems to be off limits, even though there's plenty to talk about. The scant coverage of Medicare that does exist is cryptic, code-like, and assumes that the public knows the ins and outs of one of the government's most complicated programs.

This is unfortunate because the future of Medicare may well tell us what kind of health care all of America will eventually have. Will we conquer budget challenges and find a way to continue Medicare as a successful social insurance program? Or will we privatize the program to mirror the rest of the U.S. health insurance system, with its holes and shortcomings?

A New York Times CBS News poll in December found that less than one percent of respondents thought Medicare and Medicaid were the most important problems facing the country, a stat which raises a chicken and egg question. Do candidates think that people don't care about Medicare, justifying their silence, or do voters not yet care because the media (and the candidates) aren't telling them what's at stake?

Back in August, Hillary Clinton gave a speech in Iowa and briefly discussed Medicare, which she said faced significant financial challenges driven by the spiraling cost of health care. True enough. She told the gathering that the current president had not called for a national commitment to save Social Security and Medicare and that it was time "we talked about and confronted a lot of these issues." She described them as "invisible." True again. But neither Clinton, the other candidates, nor the media have done much to make them visible.

Mike Huckabee's words are puzzling. Right before Christmas, Huckabee talked to an Iowa woman who is dying from a progressive lung disease. When she asked him what he would do to change the national health care system, he responded that change must start with federal programs like Medicare and Medicaid. "If we don't set the model, then the rest of the industry doesn't move that way." But if Huckabee explained what model he had in mind, The Associated Press didn't tell us.

On the trail, Huckabee notes that Medicare obligations, if not "fixed," will lead to financial ruin, and quips, "Wait till all these aging hippies find out they'll get free drugs for the rest of their lives." Does he mean free LSD or free Lipitor? Medicare provides neither, but aging hippies might indeed want to know what kind of program Medicare will be five years from now -- one where everyone is entitled to a standard set of benefits or one where people must fish in the pond controlled by private insurance companies. The Medicare drug benefits, now sold by commerical insurers, moved in the latter direction.

Fred Thompson said he would cut Medicare for wealthy people like Warren Buffet. Does he really mean billionaires, or merely those with incomes higher than $80,000? (Right now single people with incomes greater than that pay higher premiums -- another step in the direction of privatization.) Does Thompson aim to destroy the universality of Medicare, which most experts believe contributes to the program's popularity and success? A Miami Herald story into this for readers, many of whom are already on Medicare and would presumbly want to know if they will lose benefits under a Thompson plan.

John Edwards started to talk about how the drug companies wrote the Medicare prescription drug law. "Why do we have that mess of a Medicare prescription drug law? The thing was written by drug company lobbyists. I was there..." A New York Times story cut off the rest of his remarks so we don't know, if he said anything, about how he would fight drug company opposition to negotiating prices with Medicare, a position he supports.

The media and the candidates are ignoring other serious issues:

Overpayments to insurance companies selling private-fee-for-service plans to Medicare beneficiaries. Seniors can choose one of these plans instead of traditional Medicare benefits. But independent experts like the Medicare Payment Advisory Commission say the government pays these insurers 19 percent more than it costs to provide the same benefits under traditional Medicare. Medicare's own actuaries predict that overpayments hasten the depletion of the system's trust funds, resulting in benefit cuts unless new revenues flow in. When President Bush vowed to veto any legislation that cut the excess payments, Congress didn't push for cuts during its end-of-the-year session. The media missed a golden opportunity to press the candidates. For the record: Both Obama and Clinton supported cutting the overpayments, important positions that have gotten no attention or traction so far.

How Medicare will cope with the rising cost of health care, and who will pay those costs. Medicare like other segments of the health care system has been unable to control the mounting costs of new technology and treatments. To continue benefits, tax increases might be necessary. Yet the snippets of Medicare policy we have heard come mostly from Republicans promoting market solutions -- like shifting future costs to beneficiaries -- instead of revenue solutions that will retain Medicare's fundamental structure. Clinton said almost a year ago that the president's attempt to make higher-income beneficiaries pay surcharges for their Medicare drug benefits was "exactly the wrong approach." But as the year unfolded, squabbles over whose health care plan forced more people to buy insurance drowned out this crucial policy difference.

A recent retirement column posted on questioned the silence about Medicare and other retirement issues. The writer, Ellen Hoffman, scanned position papers, statements, and tried, sometimes without success, to get more information from campaign staffs. It's a hopeful sign that she tried. Maybe other reporters will start delving in to the effects of government overpayments and rising health care costs on Medicare, and whether Medicare will continue to cover all of the elderly. Here's a case where the press needs to lead rather than wait for the spinmeisters to decide what gets covered.

Killing Medicare

The Medicare "reform" legislation just passed by Congress sends the program on a path to destruction. Crafted in the heady days of the Great Society, Medicare has worked reasonably well for almost four decades for seniors and disabled Americans, many of whom are unable to buy health coverage in the private market. But the nation's financial commitment to Medicare -- $215 billion in 2000 -- got in the way of the right's ideological goals of reducing the cost of government and making people fend for themselves. So nearly a decade ago, right-wing politicians and their allies at the Heritage Foundation embarked on a campaign to transform Medicare into a private insurance program and ultimately to remove the government from the business of guaranteeing healthcare for the oldest and sickest citizens.

The new law lays the foundation for cutting benefits and increasing the amount of money beneficiaries will pay for care. The right knew it could never get control of Medicare's expenditures by overtly cutting benefits and raising premiums, so embedded in the legislation are provisions that give cover for doing exactly that. The so-called cap on what the government can spend on the total Medicare program is essentially a trigger that requires Medicare trustees to declare the program insolvent when spending from general tax revenues reaches 45 percent of the inevitably rising program expenditures. The $400 billion set aside for the prescription drug benefit will be financed through the general revenues. (Medicare is also financed through payroll taxes and premiums paid by beneficiaries.) Opponents say this arbitrary definition of insolvency aims at creating a crisis and generating political momentum for benefit cuts and more cost sharing.

The first step toward privatization mandates that private insurers, not the government, provide prescription drug benefits, the legislation's ostensible raison d'etre. The government will funnel money to the insurance plans, which will then charge a premium to beneficiaries. Only in special circumstances will Medicare be allowed to offer drug coverage directly. In 2010 privatization will accelerate when commercial health plans in certain metropolitan areas will be able to sell insurance benefits in direct competition with those offered by traditional Medicare. Legislative architects hope that cheaper premiums and richer benefits will entice seniors to leave Medicare. Those offers will target the healthiest people, who won't cost insurers a lot of money. The sick will be stuck in the traditional program, unwanted by commercial carriers and forced to pay escalating premiums, since there will be less money available. For those who leave there are no guarantees.

The current experience with the Medicare HMO market provides a clue to the future. A decade ago Medicare HMOs lured beneficiaries with generous benefits and charged no extra premiums. But when Medicare slashed payments to them, they reduced benefits and began charging premiums as well as high deductibles and co-payments.

The experience in California shows what can happen. The Center for Consumer Health Choices at Consumers Union, in its ongoing study of the California Medicare market, found that the once-rich coverage offered by HMOs withered substantially as government payments declined relative to the costs of providing care. Next year, for example, Kaiser Foundation Health Plan will no longer offer brand-name drug coverage, leaving most of the state's beneficiaries without coverage for the most expensive drugs.

The modest drug coverage authorized in the bill is hardly worth the price of privatization. Those with chronic illnesses and ongoing drug expenses will see little benefit because of the convoluted benefit structure. The average Medicare beneficiary, who is currently without drug coverage and who spends about $2,300 on prescriptions, will actually spend $2,900 in 2007 even with the new benefit, assuming drug costs continue to rise at the same rate. That's likely, since Congress has placed no cost controls on pharmaceuticals and indeed expressly forbids the government from using its muscle to bargain for lower drug prices, as it does in the Veterans Administration health system.

Also, the bill makes it virtually impossible to reimport cheaper drugs from Canada. And although the bill authorizes subsidies for very-low-income seniors to help pay increasing premiums, co-payments and deductibles, some 3 million people will lose out because of eligibility limits placed on income and assets. Those just over the line will struggle mightily.

The bill does, however, represent brilliant political strategy on the part of its proponents, who began seeking allies as far back as 1995. AARP's support was not surprising, given that right-wing interests attacked its tax exemption that year and that then-Senator Alan Simpson of Wyoming, who had opened an investigation, told AARP officials, "I want you to know that the intensity of my investigation will be directly related to your fight on Medicare."

AARP got the message. The financial goodies for special interests -- eliminating the planned payment cuts to doctors, the $25 billion to rural hospitals and doctors, the $12 billion in special payments to entice private insurers to offer benefits -- ensured the support of powerful lobbyists and gave wavering lawmakers a reason to support the measure. Arkansas Senator Blanche Lincoln said she voted for the bill because the extra money was helpful to rural health providers.

Over time, the legislation will splinter political interests, predicts Harvard government professor Theda Skocpol. "The genius of Medicare was that it included poor people and the middle class. It wasn't designed as charity or welfare," she says.

That solidarity will crack as people no longer get the same benefits or even pay the same premiums. The wealthiest beneficiaries will now pay more. With people getting benefits from Aetna, Cigna and Blue Cross, what reason will they have to support Medicare? One thing the new bill won't provide is help understanding its bewildering new rules. That's because the final legislation stripped out $40 million that had been earmarked for state insurance counseling programs.

The repercussions from this legislation will be felt years from now when seniors and the disabled realize that they can't pay for their healthcare. Couple that with the prospect of less retirement income as employers shed their pension plans and the right begins to push hard for privatizing Social Security and a picture emerges of impoverished elderly people like those seen before Medicare was phased in, in 1965.

Two years before, President Kennedy, quoting historian Arnold Toynbee, noted in a special message to Congress that "a society's quality and durability can best be measured 'by the respect and care given its elderly citizens.'" The Medicare bill tells us how much has changed since Kennedy's time.

Trudy Lieberman is the director of the Center for Consumer Health Choices at Consumers Union. Her latest book is "Slanting the Story: The Forces That Shape the News" (New Press).

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