News

The Executive Board of 1199SEIU United Healthcare Workers East has unanimously endorsed HR 676, a bill to legislate a single payer health care system in the U.S. The union represents 275,000 members in Maryland, Washington DC, New York and Massachusetts.

Dr. Martin Luther King Jr. was an early supporter of 1199’s effort to organize low wage, largely African American and Hispanic hospital workers. He often referred to Local 1199 as his “favorite” union. In later years, both he and his wife, Coretta Scott King, supported 1199’s efforts in Baltimore, MD and Charleston, SC.

HR 676 now has 68 congressional co-sponsors in addition to John Conyers Jr. (D-MI). It would institute a single payer health care system in the U.S. by expanding a greatly improved Medicare system to every resident.

HR 676 would cover every person in the U. S. for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, chiropractic and long term care. HR 676 ends deductibles and co-payments. HR 676 would save billions annually by eliminating high overhead and profits of the private health insurance industry and HMOs.

Posted by pnhp at 03:36 PM | Permalink

Statement for the Record of Dr. Don R. McCanne,
Physicians for a National Health Program, Chicago, Illinois

House Committee on Ways and Means
Hearing on Board of Trustees 2004 Annual Reports
March 24, 2004

The 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds describes the projected imbalances between the anticipated revenues and the expected growth in expenditures of the Medicare program. The Trustees call for prompt, effective, and decisive action to address this challenge.

As expected, a highly charged political debate rages over the causes of these anticipated net deficits in Medicare funding. Although we will hear much about factors such as the generous payments to Medicare Advantage plans, and the decline in tax revenues supporting the program, one factor predominates above all others: health care costs continue to escalate well beyond the level of inflation.

Health care cost increases are related to expanding and ever more expensive technological advances, along with unrestrained expansion in the capacity of our health care delivery system. We are spending more because we find more ways to spend health care dollars, and because we continue to expand the capacity that allows us to do it.

Approaching the Medicare deficit as an isolated problem will not address the fundamental cause of health cost increases. Rather, the integrity of the Medicare program would be threatened because solutions would be narrowly directed to substantially increasing revenues and/or dramatically reducing benefits. Either a reduction in benefits or an increase in cost sharing by the beneficiary would threaten to impair access to care because of lack of affordability for the individual beneficiary. The alternative of asking taxpayers to fund the increase in Medicare costs would be problematic when considering that they would also be facing the same escalating health care costs.

We already know that regions with higher health care capacity have increased intensity of services but without a commensurate improvement in medical outcomes. Hospitals with greater bed capacity in their intensive care units provide costly and relatively inhumane end-of-life care when less expensive and more compassionate care would be provided in a hospice environment. Physician owned specialty hospitals and medical group owned imaging systems significantly increase capacity and the level of services although there is negligible data available to demonstrate improved outcomes.

Other nations have demonstrated that planning and capital budgeting of capacity can prevent excessive utilization while ensuring adequate capacity to prevent unnecessary queues. The 15.5% of our Gross Domestic Product that we are currently spending on health care is more than enough to ensure appropriate capacity plus fund the operating expenses of our system, with the proviso that we do not waste resources on some of the current excesses of our system. Although health care planning declined after prior efforts, the current level of spending has reached a threshold that now makes it imperative.

The administrative costs of private health plans are significantly greater than those of public programs such as Medicare. But an even greater problem is the profound administrative burden placed on our health care delivery system by our fragmented system of a great multitude of private plans, large public programs, and, for some, no programs at all. In 2003 numbers, an estimated $286 billion in these administrative costs could be recovered and utilized for the deficiencies in health care coverage today. Eliminating administrative waste must be a part of our solution to rising costs.

Although our national policies protect and promote technological development, there is a pressing need to demand value for our private and public investment. Pharmaceutical firms that develop copycat drugs merely for the purpose of restarting the patent clock should no longer be disproportionately rewarded for such non-innovative efforts. Only new products with demonstrated value should be rewarded with higher prices. Also new products developed with public funding should return that investment to the taxpayer through lower prices. We should require that new technological innovations provide both significant medical benefit and value before funding them. And there is ample evidence to demonstrate that prices are much higher in the United States than in other nations. We clearly need a method of negotiating rates and prices to be sure that we are receiving a fair value for our health care investment while allowing a fair but not excessive profit for the manufacturer or provider.

To bring the level of health care cost increases down to near the rate of inflation, we need to control capacity and pay fair prices. Medicare alone cannot have a significant influence on capacity. Although Medicare does have some regulatory control over prices, acting alone inevitably results in inequitable results through cost shifting and unfairness in pricing, while failing to control global costs. And Medicare cannot further reduce administrative waste when it is adding to the administrative burden by being an additional player in our fragmented system.

Replacing our inefficient and wasteful system of funding care with a single public payer would control costs through global budgeting, planning and budgeting of capital improvements, and negotiation of rates and prices. And with the administrative savings made possible by eliminating the waste of the private bureaucracies, we could afford to fund care for everyone while controlling costs on into the infinite horizon. Instead of limiting Medicare reform considerations to revenue increases and benefit reductions, let us adopt systemic reforms that will enable the enactment of comprehensive, affordable coverage for everyone.

Posted by pnhp at 03:33 PM | Permalink

Harmonizing Injury Compensation, Provider Accountability, and Patient Safety
Commonwealth Fund, February 2006

Executive Summary

In New Zealand, patients seek compensation for medical injuries not through malpractice suits as in the United States, but rather through a no-fault compensation system. Injured patients receive government-funded compensation, in turn relinquishing the right to sue for damages arising from personal injury except in rare cases of reckless conduct.

According to Marie Bismark and Ron Paterson, the authors of “No-Fault Compensation in New Zealand: Harmonizing Injury Compensation, Provider Accountability, and Patient Safety” (Health Affairs, Jan./Feb. 2006), the country’s Accident Compensation Corporation (ACC) offers distinct advantages over the often maligned U.S. tort law system. While acknowledging that New Zealand’s ACC has yet to demonstrate substantial gains in patient safety, the study finds that the popular system has produced more-timely compensation to a greater number of patients, as well as more effective processes for resolving disputes and ensuring provider accountability.

Benefits of New Zealand’s System
“The ACC system is one of the simplest in the world for patients to navigate,” write the authors, both former Harkness Fellows. Straightforward claims are processed in weeks, with all decisions made within nine months, and a fixed award structure ensuring that similar injuries receive similar compensation. Historically, the ACC has paid out about 40 percent of claims in four categories: 1) treatment and rehabilitation, including the cost of disability aids, home modifications, and vocational retraining; 2) compensation for loss of earnings (up to 80 percent of earnings at the time of injury, up to a set maximum); 3) one-time lump-sum compensation of up to US$70,000; and 4) support for surviving spouses and children under 18.

The system, funded through general taxation and an employer levy, is remarkably affordable. To date, compensation for medical injuries has cost just $29 million—for a population of about 4 million. Reforms enacted in 2005 are expected to incur additional costs of $5 million per year.

According to the authors, several factors contribute to the system’s affordability:
* New Zealanders benefit from strong health and welfare systems that cover many of the damages typically at issue in a U.S. claim.
* Compensation awards are generally lower than under a malpractice system.
* Many entitled patients never seek compensation.
* The ACC’s low administrative costs account for only 10 percent of expenditures, compared with a typical 50 to 60 percent under a malpractice system.

In the 1990s, New Zealand addressed concerns that a no-fault system amounted to a “no accountability” system. It did so by establishing the office of the Health and Disability Commissioner, which promotes patients’ rights and provides accountability, acts as gatekeeper to disciplinary proceedings in serious cases, and ensures that complaints serve to improve health service delivery and lessons learned are widely disseminated.

Remaining Concerns About the ACC
A few other major concerns about New Zealand’s no-fault system, however, remain unresolved, the authors say. First, many observers believe the compensation levels are inadequate, particularly for patients who are not employed at the time of their injury and are unable to claim earnings-related compensation. Second, compensating treatment injuries, but not other forms of illness, can produce tensions, since ACC assistance is higher than that available through the health and welfare systems.

Finally, and most importantly, the system has not fully realized potential gains in patient safety. Thirty years after the implementation of the ACC, New Zealand hospitals are no more or less safe than those in other Western countries—falling midway between the levels recorded in Australia and the United Kingdom—two countries with similar medical practices. While the recent reforms are expected to create a culture of learning, the process of making health care safer cannot be achieved through medical and legal reform alone, say the authors.

Facts and Figures
* In the U.S. medical malpractice system, most injured patients do not qualify for compensation, because their injuries were not negligently caused.
* The most costly claims in New Zealand—as in the United States—involve neurological injury to infants: fewer than 7 percent of claims yet more than 16 percent of spending.
* Per capita health spending was $1,886 in New Zealand in 2003, compared with $5,635 in the United States.

Comparison of the United States Medical Malpractice and the New Zealand No-Fault Systems

Eligibility for compensation
US: Negligence
NZ: Treatment injury

Expert adviser
US: Appointed by parties
NZ: Appointed by ACC

Decision maker
US: Lay jury
NZ: Administrative panel

US: Time to resolve a claim
NZ: Years Weeks to months

Administrative costs
US: High (under 50%)
NZ: Low (under 10%)

Average payment
US: High
NZ: Low (average payment less than US$30,000)

Physician indemnity insurance costs
US: High
NZ: Very low (less than $1,000, regardless of specialty)

Links to quality improvement processes Theoretical deterrent effect Claims analysis informs efforts to improve patient safety

Note: ACC is the Accident Compensation Corporation.

Citation
M. Bismark and R. Paterson, No-Fault Compensation in New Zealand: Harmonizing Injury Compensation, Provider Accountability, and Patient Safety, Health Affairs, January/February 2006 25(1):278–83

Posted by pnhp at 03:26 PM | Permalink

By Laura Benko
Modern Healthcare
Originally published January 23, 2006

PREMATURE DEATH
PacifiCare ends program early, CMS cites rising costs

Raising further questions about the financial value of disease management, PacifiCare Health Systems plans to terminate a Medicare demonstration project for heart-failure care almost a year early amid mounting costs.

The health insurer, which was acquired by UnitedHealth Group last month, informed the CMS that it will end its HeartPartners disease-management demonstration on Feb. 28 instead of at year-end, as originally agreed upon.

PacifiCare—the nation’s largest Medicare HMO—launched the federally sponsored demonstration in January 2004 to help the CMS determine whether closely managing the care of seniors with congestive heart failure could improve outcomes, reduce hospitalizations and cut costs among beneficiaries in the Medicare fee-for-service program.

But according to the CMS, with PacifiCare’s fees factored in, HeartPartners has actually cost Medicare more than traditional care.

“From a financial perspective, the program has not generated Medicare savings as anticipated,” said Linda Magno, director of the Medicare demonstrations group at the CMS, adding that PacifiCare has borne all the financial risk. “We can’t force a company to continue with a program if their ability to support that program changes or their financial picture changes.”

Under its original three-year contract with the CMS, Cypress, Calif.-based PacifiCare guaranteed a minimum net reduction in Medicare expenditures because of its services. That means the insurer will be required to return a portion of its fees to cover any costs incurred by Medicare above “budget neutral” through Feb. 28. How much that will be won’t be known until later this year, after all claims have been received and processed, Magno said.

The program’s early halt casts further doubt over disease management’s ability to reduce medical costs, particularly among the older and sicker Medicare population. The economic value of such programs was thrown into question in October 2004, when the Congressional Budget Office released a report concluding there was “insufficient evidence” to prove disease management could actually save money. Hospitals, too, have been experiencing mixed success with efforts to run disease-management programs for insurers (Nov. 28, 2005, p. 6).

“Proponents often claim that disease-management programs not only improve quality but also pay for themselves by decreasing the use of acute-care services enough to offset the costs of the additional screening, monitoring and education services,” stated the CBO report, which analyzed 57 studies of disease-management programs. Unfortunately, “Improving health outcomes and mitigating healthcare costs do not necessarily go hand in hand.”

Since then, disease-management vendors have been scrambling to build a better business case for their programs, largely at the urging of employers (Aug. 8, 2005, p. 26).

Last week, for example, the Disease Management Association of America announced plans to establish an industrywide standard for measuring financial and clinical outcomes. The not-for-profit trade group said it will work with several public and private standards-setting organizations to develop a uniform measurement methodology, which it expects to unveil in early December.

“Our experience shows disease management works, but lack of agreement on how to measure that success has hampered our ability to convince skeptics,” said association Executive Director Tracey Moorhead, adding that the new measurement tools will help “erase any doubt that disease management benefits patients and payers alike.”

Meanwhile, PacifiCare’s decision to pull the plug comes just as the CMS is kicking off a far broader—and more financially stringent—pilot project aimed at testing how disease management could improve quality and contain costs among the nation’s 40 million fee-for-service Medicare beneficiaries. Under the three-year Medicare Health Support Program, launched in August 2005, vendors and insurers in eight regions will manage about 160,000 seniors with diabetes or congestive heart failure. Each company has guaranteed a 5% savings to Medicare net of their fees.

CMS officials, however, say they aren’t reading anything into HeartPartners’ early demise. “The two programs are so very different in their designs that we’re not drawing any direct conclusions or comparisons at this time,” said Barbara Hoffman, director of chronic-care improvement programs at the CMS.

The CMS was mandated under the federal Benefits Improvement and Protection Act of 2000 to study the effects of disease-management programs on some of the nation’s costliest chronic conditions. Congestive heart failure, a progressive condition in which the heart loses pumping power, affects just 14% of Medicare beneficiaries but accounts for a full 44% of the federal program’s annual expenditures, according to the CMS.

HeartPartners was modeled after a disease-management program that PacifiCare has offered its Medicare HMO members with much success since 2001.

The program has provided daily home-monitoring of participants’ weight and symptoms, nurse follow-ups and low-cost prescription-drug coverage to keep patients’ conditions in check.

PacifiCare spokesman Tyler Mason would say only that HeartPartners was stymied by a lack of interest among patients. Under its contract with the CMS, PacifiCare has received monthly payments of up to $525 for every senior enrolled in the program.

The insurer originally expected to collect $300 million in reimbursements over the three years; lagging enrollment has left the company woefully short of those projections.

According to Mason, HeartPartners currently has about 3,750 enrollees, or just 25% of the 15,000 beneficiaries originally expected to participate. The company has served 8,500 members over the life of the program, Magno said.

“After a considerable amount of energy on our part, the interest just isn’t there,” Mason said, adding that the program’s early termination has nothing to do with PacifiCare’s new ownership.

Mason declined to specify how much money PacifiCare has lost on the program other than to say the figure isn’t “anything substantial.”

Indeed, HeartPartners is just a drop in the proverbial bucket for UnitedHealth, which expects to post operating profits of $7 billion on $70 billion in revenue this year and to enjoy up to $250 million in annual savings, thanks to its $9.2 billion purchase of PacifiCare (July 11, 2005, p. 8).

But news of HeartPartners’ pending demise came as a blow to two companies, QMed and Alere Medical, that have handled various disease-management functions for the program since its inception.

Eatontown, N.J-based QMed, which provided decision support to HeartPartners’ participating physicians, said the program’s early halt will slash its 2006 revenue by $3.5 million, or roughly 18%.

Loss of the HeartPartners program will shave 8% to 10% off Reno, Nev.-based Alere’s annual revenue, said President and Chief Executive Officer Ronald Geraty.

Alere, which became PacifiCare’s exclusive disease-management vendor in June 2005, provided the electronic home-monitoring systems for the program. “We certainly believe in the project and are very disappointed that we’re not seeing it through to completion,” Geraty said.

Still, much could be learned from HeartPartners’ two-year stint. Magno said the CMS has hired an outside firm to evaluate the results of the program “to see what changed, what worked or didn’t work, and if (savings were generated) among specific subsets of beneficiaries.”

Those subsets could include heart-failure patients who also had diabetes or coronary artery disease or beneficiaries who received certain forms of outreach over other forms. Results of the evaluation will be contained in at least one of two reports that the CMS will submit to Congress in coming months, Magno said.

HeartPartners isn’t the first disease-management program to fall short of financial expectations.

According to a randomized clinical trial conducted by the University of Texas Health Science Center at San Antonio from 1999 to 2003, patients with heart failure who took part in a disease-management program lived an average of 76 days longer but saw no reduction in hospitalizations, office visits, procedures or pharmacy spending.

Another study, which analyzed outcomes for Kaiser Permanente’s four disease-management programs from 1999 to 2002, also found substantial quality improvement but no cost savings. Both studies were published in November 2004.

Program: HeartPartners is a CMS-sponsored demonstration project in Arizona and California
Focus: Disease management for congestive heart failure
Companies involved: PacifiCare Health Systems, QMed and Alere Medical
Current enrollees: About 3,750
Expected number of participants: 15,000
Start date: Jan. 1, 2004
Original end date: Dec. 31, 2006
New end date: Feb. 28, 2006
Source: CMS

Source: Modern Healthcare, 1/23/2006, Vol. 36 Issue 4, p8, 3p

Posted by pnhp at 01:52 PM | Permalink

Letters to the editor
Our social contract

Published 2:15 am PST Sunday, February 19, 2006
Story appeared in Forum section, Page E6

Re “The new shades of gray,” Forum, Feb. 12: For a multitude of unavoidable reasons, our population is aging, becoming more treatable and costing much more to treat.

The private health-care industry is preparing for this by expanding and adding facilities and services, not out of any real concern for our health but mainly to stay financially ahead of the game. While this is good for well-funded patients, none of it will help the growing numbers (in all age groups) who are unable to finance their access to essential care.

There remains only one “big idea” worth considering: a system of government-sponsored access to essential universal health care. Further, access to essential care must remain untarnished by private industry. For this we need to bite the bullet and pay a tax, but it will be less in taxes than we pay in premiums.

Government is the only institution with a valid social contract to protect our health and welfare.

- Lawrence A. Danto, M.D. , Truckee

A single-payer solution

Re “Health care needs big ideas but gets small ones,” editorial, Feb. 12: Health care already has the big idea - the California Health Insurance Reliability Act. SB 840 by Sen. Sheila Kuehl would establish a single-payer health insurance system for all Californians.

The health care system is in critical condition. Costs are escalating higher than the rate of inflation. Prescription drug costs have grown exponentially, as advertising consumes 31 percent of costs and profits exceed 20 percent. Employers are reducing coverage and demanding that employees pay higher costs. More people, including children, are uninsured or underinsured. Public funding has been cut. Competition among health plans has failed to demonstrate effectiveness in assuring access or contain costs.

The evidence is overwhelming that “profit and greed” are driving the system.

SB 840, which has already passed the Senate, enunciates a fundamental moral principle, that health care is a basic human right. It provides for universal access, comprehensive benefits, a wellness model, and significant cost savings.

The Lewin Group has done extensive economic analysis of SB 840, and documents that everyone in California would have coverage with less money spent.

- Emanuel Gale, Sacramento

Big ideas in health care

Apparently the editorial board has not heard of SB 840, the universal health care bill by state Sens. Shiela Kuehl and Deborah Ortiz, with several coauthors in the Senate and Assembly.
This bill would provide fiscally sound, affordable health insurance to all Californians, provide every Californian the right to choose his or her own physician and control health cost inflation.

The system would be paid for by federal, state and county monies already being spent on health care and by affordable insurance premiums that would replace those now paid by employers and consumers.

This plan would eliminate waste by consolidating the functions of many insurance companies into one comprehensive insurance plan, saving California about $20 billion and reducing total health spending by $8 billion in the first year alone.

For more information about this bill, visit www.healthcareforall.org.

- Lindy Tillement, Rio Linda

Posted by pnhp at 01:49 PM | Permalink

Medical Bankruptcy: Myth Versus Fact
This response to a widely cited paper by David Himmelstein and colleagues challenges the basis of its conclusions.
By David Dranove and Michael L. Millenson
Health Affairs
28 February 2006

The great enemy of the truth is very often not the lie-deliberate, contrived and dishonest-but the myth: persistent, persuasive and unrealistic.
-President John F. Kennedy, Commencement Address at Yale University, 11 June 1962.

It is no secret that bad health and bad debt often coincide. Unexpectedly large medical bills can impose a sizable burden on those who are already physically and economically fragile. In some cases, medical debt can contribute to a collapse of creditworthiness that forces some people to declare personal bankruptcy.

David Himmelstein and colleagues contend that this scenario is pervasive. “Medical problems contribute to about half of all bankruptcies,” they write. They warn that “solidly middle-class Americans.face impoverishment following a serious illness,” and they propose a solution: comprehensive national health insurance such as that offered in Canada and Western Europe.

Unfortunately, a closer examination of their paper suggests three reasons why their conclusions are also unrealistic.

First, they fail to provide a causal relationship to support the claim that medical spending contributes to “half of all bankruptcies” (54.5 percent).

Second, the authors’ methodology does not provide a definitive answer to the policy question they implicitly pose: how national health insurance would affect the rate of personal bankruptcy.

Lastly, their suggestion that national health insurance would greatly reduce the number of bankruptcies linked to medical spending is misleading.

According to Himmelstein and colleagues, 28.3 percent of respondents stated that illness or injury was a cause of bankruptcy. They also reported that medical bills contributed to the bankruptcy of 60 percent of this group.
Multiplying the two figures together, we conclude that 17 percent of their sample had medical expenditure bankruptcies.

Congressional Budget Office: The CBO review cites many factors that contribute to bankruptcy, including large medical bills, divorce, loss of income as a result of unemployment, and poor debt management. Even so, the CBO reports that “researchers have made little progress in judging the relative importance of the factors that lead people to file.”

Fay, Hurst, and White: They conclude that bankruptcy is the response to an accumulation of debt, not to one particular factor such as a health problem.

2005 Commonwealth Fund: The survey found that 41 percent of adults ages 19-64 had a high rate of medical bill problems or incurred medical debt. Sixty-two percent of these nonelderly adults had insurance when the problem occurred.

Domowitz and Sartain: They first reported that “high medical debt (in excess of two percent of income) has the greatest single impact of any household condition variables in raising the conditional probability of bankruptcy.” Accounting for prevalence of various sources of debt, Domowitz and Sartain found that “the largest single contribution to bankruptcy at the margin is credit card debt.” Other data on credit card payments support our previous contention that those with trouble paying all of their bills, not just medical expenses, are most vulnerable to bankruptcy.

Gross and Souleles: Gross and Souleles used multivariate regression to predict personal bankruptcies, with one of their predictors being health insurance coverage. Overall, it is difficult to draw firm conclusions from Gross and Souleles’ analysis.

There is one methodological problem that occurs in all the papers cited above, including that of Himmelstein and colleagues. They all fail to address the problem of reverse causality-that is, whether medical spending causes bankruptcy or whether financial turmoil causes medical problems (for example, because of stress). The resulting endogeneity bias will therefore overstate the extent to which medical bills cause bankruptcy.

Himmelstein and colleagues omit any reference to personal choices, such as taking on debt, even in their household interviews. In this they act more like good doctors than good economists or policymakers. For although it is good medical practice to work as hard to save the life of a careless drunk driver as a sober careful one, it is equally good economics and public policy to penalize the careless driver with higher insurance rates and possible criminal prosecution.

…weaving a medical-cost safety net that could protect virtually every person from bad behavior or bad luck might actually poke holes in the safety net for other vulnerable citizens. Good intentions are not enough. The Book of Job, far older than the Roman laws cited by Himmelstein and colleagues, teaches the hard lesson that no amount of good fortune is irreversible. Some combination of illness, job loss, and personal problems can assuredly dislodge even the most firmly rooted member of the middle class.

Unfortunately, expansive proposals to protect all of us distract from the pressing need to protect some of us, such as the forty-five million Americans with no health insurance and millions of others who are underinsured and vulnerable. “First, do no harm” is not just good advice for physicians; it should apply to those who would make health policy as well.

The authors are grateful to America’s Health Insurance Plans for supporting this research.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w74/DC1

And…

America’s Health Insurance Plans

Welcome to America’s Health Insurance Plans (AHIP), the voice of America’s health insurers. AHIP is the national association representing nearly 1,300 member companies providing health insurance coverage to more than 200 million Americans.

Our goal is to provide a unified voice for the health care financing industry, to expand access to high quality, cost effective health care to all Americans, and to ensure Americans’ financial security through robust insurance markets, product flexibility and innovation, and an abundance of consumer choice.

http://www.ahip.org/content/default.aspx?bc=31

And…

Discounting The Debtors Will Not Make Medical Bankruptcy Disappear
By David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler
Health Affairs
28 February 2006

David Dranove and Michael Millenson seem determined to deny that financial fallout from illness pushes middle-class families into bankruptcy. Anxious to erase the headline that three-quarters of U.S. medical bankrupts had health insurance at the onset of their illnesses and the resulting spotlight on inadequate coverage and insurance cancellation practices, they ignore most of our data and misrepresent the rest. They dismiss families’ explanations of their difficulties and blame those ruined by illness for their own problems. However, the data from the bankruptcy courts are undeniable. Bankruptcies affect mainly middle-class, privately insured families, and about half are triggered, at least in part, by illnesses.

Let’s be clear: Every number, percentage, and variation in how to interpret the data that Dranove and Millenson seize upon in attempting to dismiss our work came from our manuscript. We offered detailed breakdowns of our numbers so that different readers could weigh the data. Unfortunately, these commentators manipulate the data far beyond legitimate reinterpretation.

Their central claim is that no more than 17 percent of bankruptcies are medical-far lower than the 54.5 percent figure they attribute to us (in fact, we gave a range of estimates, from 46.2 percent to 54.5 percent, in anticipation of different possible interpretations of the data). In their effort to whittle down the number of medical bankruptcies, they ignore huge chunks of the data we reported. First, they assert that only the 28.3 percent of debtors who gave “illness or injury” as the specific reason for filing for bankruptcy could possibly be classified as “medically bankrupt.” Next, they narrow this group to include only the 59.9 percent who also cited bills from medical providers as a major contributor to bankruptcy. (These latter data came from our interviews with a subset of 331 debtors, not, as Dranove and Millenson state, from our questionnaire survey of 1,771 filers.)

Thus, their calculation rests on responses to two items from our data, disregarding the hundreds of other pieces of data we collected that give a fuller and more accurate picture of the reasons for filing for bankruptcy. Moreover, they misrepresent both items.

Dranove and Millenson portray medical debtors as irresponsible deadbeats, their plight a result of bad choices analogous to those made by drunk drivers. But medical catastrophe is not a choice. And, unlike other expenses, most medical debt is not voluntary, any more than breathing is voluntary. Most medical debtors had taken the prescribed steps to protect themselves: Three-quarters had health insurance when they got sick. But for many, private coverage lapsed when they lost work because of illness. In other cases, the insurance they bought in good faith had so many holes that it left them unprotected. To families financially hard-pressed by illness, Dranove and Millenson preach acceptance of the hard message of the prophet Job. Instead of blaming ruined families, or the wrath of Jehovah, they should take a hard look at the defective products sold by their funders in the insurance industry.

To Dranove and Millenson, a safety net strong enough to cushion the impact of illness is inconceivable. Yet many other countries have implemented comprehensive health and disability coverage that does the job quite well.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w84/DC1

And…

Medical Bankruptcy: Dranove And Millenson Respond
By David Dranove and Michael L. Millenson
Health Affairs
28 February 2006

In responding to our study, David Himmelstein and colleagues state that we “seem determined to deny that financial fallout from illness pushes middle-class families into bankruptcy.” This is simply untrue. Our paper denies neither the presence of medical bankruptcies nor their serious impact on families. Rather, we carefully critique the methods they used to analyze those bankruptcies. Nothing in Himmelstein and colleagues’ response suggests that our criticism of their methodology was incorrect. They continue to offer only one direct causal measure: namely, that medical bills “contribute” to 17 percent of personal bankruptcies. The remaining anecdotes and correlations they offer do not constitute systematic empirical research, and they do not establish causation or the magnitude of the problem. Thus, it is impossible to determine from their study whether and by how much the expansion of health insurance coverage would reduce the personal bankruptcy rate.

We admit to being unprepared for the political attack-dog tone that dominates their response. One might have thought that our paper, rather than appearing after rigorous peer review, had been issued as a press release by insurance industry magnates. In fact, although our time was paid for by America’s Health Insurance Plans, our work was completely independent, and we, along with the journal’s editors, insisted on the peer-reviewed publication process. Perhaps Himmelstein and colleagues are simply taking out on us their frustration that middle-class American voters have ignored their decades-old advocacy of a Canadian-style health system.

We agree with Himmelstein and colleagues that too many vulnerable Americans are financially devastated by the cost of illness. They seem to regard with a sense of outrage our objective examination of the methods they use to establish just how many such individuals there are. We, in contrast, continue to believe that passion to right a wrong does not justify abandoning dispassionate analysis of the best way to do so.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w93/DC1

And…

Bankruptcy Is The Tip Of A Medical-Debt Iceberg
By Robert W. Seifert and Mark Rukavina
Health Affairs
28 February 2006

Medical bankruptcy, whatever its actual frequency, is an extreme example of a much broader phenomenon. Medical debt is surprisingly common, affecting about twenty-nine million nonelderly adult Americans, with and without health insurance. The presence of medical debt, even for the insured, appears to create health care access barriers akin to those faced by the uninsured. Policymakers, researchers, and medical providers should consider medical debt a risk factor for reduced health access and poorer health status. Simply reducing the number of uninsured Americans would be a hollow policy victory if the problems arising from medical debt persist.

Recent research findings cry out for new measures to assess how well our country is addressing the health care access issue. It is now documented that medical debt resulting from being uninsured or having inadequate insurance reduces access to care and undermines the financial security of American families. Thus, this debt is, in itself, a risk factor for reduced access and poorer health status.

Policymakers, researchers, and medical providers should all be encouraged to focus attention on this risk factor. Financial protection must be a tenet of health insurance. Requiring additional costs to be borne by the patient will likely have a detrimental effect on access, particularly for those with chronic illnesses, although low-wage workers and even middle-income families may be at risk as well.

To truly improve health care access for Americans, it is time to expand our policy vocabulary beyond insurance coverage and begin to examine the adequacy of that coverage in ensuring health access and improving health status and financial security.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w89/DC1

Comment: By Don McCanne, M.D.

There is no disagreement on the fundamental issue here: Medical debt is pervasive, and, directly or indirectly, contributes to a significant portion of personal bankruptcies.

So what is the point of the article by Dranove and Millenson? It is clearly a blatant “swift boat” effort to discredit the messengers, and by implicit but invalid extension, to evade the message that there is a pressing need to effectively address the issue of medical debt through comprehensive reform. The opinion of the authors was purchased by an industry that is compounding the problem of medical debt, and is threatened by the single payer model which would be the most effective in insuring against financial loss in the face of medical need.

Dranove and Millenson state that “expansive proposals to protect all of us distract from the pressing need to protect some of us, such as the forty-five million Americans with no health insurance and millions of others who are underinsured and vulnerable.” They have it wrong. The private insurance industry, which leaves forty-five million Americans with no health insurance and millions of others who are underinsured and vulnerable, should not distract us from an expansive proposal that would protect all of us with an equitable, efficient, comprehensive, affordable system that would do far more to prevent medical debt than would the flawed policies of the private insurers.

Sadly, the damage is done. Whenever the issue of medical debt is raised, the opponents of national health insurance will dismiss it with the statement that the bankruptcy issue is a myth (while remaining silent on the consequences of medical debt). Those in the policy community who really do care will understand, but the public at large won’t. All that they’ll understand is the myth that private insurance provides the best protection.

Posted by pnhp at 01:32 PM | Permalink

Originally published February 16, 2006

Canada Health Infoway by March will have invested $562 million in health IT projects, Richard Alvarez, CEO of the federally funded not-for-profit corporation leading e-health in Canada, said at the annual Healthcare Information and Management Systems Society conference, Government Health IT reports. Canada Health Infoway is a federally funded not-for-profit corporation leading health IT adoption in Canada.

Canada has invested $151 million in electronic health records systems and $130 million in diagnostic imaging systems development, investments that provincial, regional or local health care organizations have matched.

Alvarez estimates that the country’s health IT investments will save $6 billion annually in health care costs. Alvarez said Canada still has more than $500 million to invest in health IT projects, with the goal of providing 50% of Canadians with EHRs by 2009.

Canada, which has a population of 31 million, is outpacing the United States, which has a population of 295 million, in health IT investment, according to Government Health IT. The U.S. Office of the National Coordinator for Health IT, which was formed two years ago, has a budget of $111 million for fiscal year 2006. President Bush has asked for $169 million for health IT in the FY 2007 budget (Brewin, Government Health IT, 2/15).

iHealthBeat is published daily for California HealthCare Foundation by The Advisory Board Company.

Posted by pnhp at 02:19 PM | Permalink

By Jim Hightower, Hightower Lowdown
AlterNet.org
Posted January 24, 2006.

As General Motors shuts down well-paid middle-class jobs, the old slogan ‘What’s good for G.M. is good for America’ no longer applies.

People like Robert Paulk and Jerry Roy are the heart of corporations like General Motors. Paulk, 58, and Roy, 49, are longtime, highly skilled hourly employees who’ve been working-class proud of being part of GM. Over the years, they’ve known their share of the hard labor, heavy lifting, and stress that come with being an autoworker, but they’ve stayed loyal, taken great pride in their work, and kept increasing their skills and productivity, doing their part to help General Motors become the largest car seller in the world — and helping GM’s investors pocket years of profits.

The job has been good to Paulk and Roy, too. Under the contracts negotiated by the United Auto Workers, Paulk, his wife, and their two teenagers have been able to enjoy a slice of middle-class comfort. Likewise, Roy, a third-generation GM worker, has done well enough to afford a modest but pleasant house on a lake near Flint, Mich., where his job is.

The Paulks and Roys represent a common story that can be told by millions of Americans of their generation. It’s the story of our country’s “social contract” — an implicit agreement between working stiffs like them and corporations like GM. This is a remarkable success story, embodying our nation’s egalitarian ideals and our commitment to the common good. In practice, America’s historic social contract has established within our huge, diverse and fragile society something essential: a stable middle class. While the Constitution and Bill of Rights are the legal glue of our nation, this contract is the social glue — it binds us as one people, giving tangible evidence that “we’re all in this together.” Those who produced this democratic advance were not the founders back in 1776, but our parents and grandparents — and doing so did not come easily for them.

In the 1920s and ‘30s, working families in industry after industry openly rebelled against the rampant corporate greed, workplace abuses and political corruption of the day. As they organized, marched, and held sit-ins and strikes, they were bludgeoned, shot and often killed by corporate bosses, Pinkerton goons, police and even the National Guard. It was a hellacious period of bloody labor war, deep social unrest and spreading political upheaval. Finally, fearing for the very survival of capitalism, corporate chieftains began to signal to union leaders that they were ready to negotiate for labor peace and a new social order.

The ensuing bargain was straightforward: Corporations would get labor, loyalty and productivity in exchange for assuring job and retirement security. From the New Deal until the mid-1980s, unions, corporations and government hammered out a series of explicit agreements, rules and laws that gave legal structure to this implicit contract. The result was a new balance of power that made ordinary people like autoworkers the first decently paid, decently treated working class in the world.

Work was still hard and demanding, but the development of our social contract meant that, for the first time, tens of millions could find the American dream within their reach. By no means would you be a millionaire, but you could buy a modest home, have health care for your family, take a vacation and not have to fear retirement — in other words, have the work ethic fairly rewarded. Such a contract also enabled working folks like Paulk and Roy to feel positive about America’s commitment to the common good, to pride themselves as being a valued part of the economy and the larger community, and to have hope for the next generation. Such feelings are more than touchy-feely niceties — they determine whether people support the social order. This is why the feelings of workaday folks like Paulk and Roy are a crucial baromenter of America’s well-being, and why today’s corporate and political elite had better begin tuning in to them. “We’re all worried. Everybody is worried,” Paulk says of GM’s workers. “There are a lot of people that are really mad. They think this is the thing that revolutions are made of.”

The thing

What has the majority of America’s working families worried, angry and in a mood to revolt is that the Powers That Be have unilaterally decided to walk away from the social contract, and in so doing, to kiss off our country’s middle class. The evidence of their abandonment is everywhere:

• Cut-backs, take-backs and downsizings have become routine corporate practice, even in a time of soaring corporate profits.

• Wages have been deliberately depressed (now not even keeping up with inflation), while workers have dramatically increased the productivity, profitability and competitiveness of their corporations.

• While CEOs slash wages, cut health care and eliminate pensions for workers, they wallow in extravagant pay packages for themselves, get Cadillac health coverage for life and grab rich pensions they haven’t earned.

• Not only are most manufacturing corporations shifting their investments and middle-class jobs offshore (mostly to China), but the high-tech industry is also abandoning the American middle class, shifting even its professional work to low-paid countries (mostly to India).

• Corporate money has bought the White House and Congress (including too many moneysoaked Democrats), so Washington has been aggressively dismantling the framework of rules and laws that allowed labor to achieve some fairness in the workplace.

• The courts and regulatory agencies have been stacked with former corporate minions who are consistently ruling against worker rights and protections.

• Wall Street’s powerhouse investors are now demanding that every corporation and the overall American economy be organized on the low-wage, no-benefit, antiunion model of Wal-Mart.

• The media establishment (itself corporate) has obligingly adopted the corporate spin that the day of unionism is long gone, that workers must learn to accept insecurity and a lowered lifestyle, that the social contract is simply too much of a burden on corporations and governments in this age of global competitiveness, and that, for success, tomorrow’s workers “must take on the responsibility” to identify and acquire — “on their own” — “the emerging skill sets” that will be “valued in the marketplace” (believe it or not, this glob of gobbledygook actually came out of the mouth of an IBM executive, quoted approvingly in the New York Times).

What’s good for GM …

The middle class is not simply “vanishing” (as some well-paid scribes of the establishment media so blithely put it) — the middle class is being vanquished! The auto industry, for example, which once took pride in its work force and in being America’s economic engine for a shared prosperity, has now launched a particularly gruesome assault. Late last year, just before the holidays, General Motors (whose president once famously declared that what’s good for GM is good for America) announced that it was closing 12 of its U.S. plants, eliminating 30,000 hourly jobs and whacking a billion dollars a year out of the health-care benefits it owes to its blue-collar workers and retirees. Two weeks later, GM announced that it was going to triple the number of cars it makes in low-wage India.

At about the same time, Delphi Corporation went even further. A division within GM until it was spun off in 1999, Delphi is the nation’s largest supplier of dashboards, brakes, doors, power trains and other components assembled by auto companies, hauling in more than $28 billion a year in sales. It announced last October that it plans to close some of its 31 U.S. plants, terminate its health-care plan and life-insurance coverage for blue-collar retirees, reduce pension payments, and — get this — force its 34,000 hourly workers to take a two-thirds cut in their wages. Skilled workers there, who make as high as $30 an hour, would be knocked down to as low as $10 an hour. Asserting that the middle-class wages and benefits earned by autoworkers are unaffordable luxuries these days, millionaire executives have begun the Wal-Martization of automaking. This is not just another industry, and the severing of the social contract by GM and Delphi is not just another in a long string of corporate downsizings. This is one of our nation’s premier industries, a symbol of America’s economic vitality and can-do spirit and a pacesetter for our entire economy.

In 1914, only a year after he opened his first assembly line, Henry Ford stunned the manufacturing world by more than doubling the hourly wage of workers on the line. At $5 a day, he explained, they could afford to buy a Ford. Moreover, James Couzens, Ford’s corporate treasurer at the time and the man credited with the $5-a-day idea, said: “We want those who have helped us to produce this great institution and are helping to maintain it to share our prosperity.”

Ninety-one years later, the managerial heirs to Ford and Couzens are disowning any corporate commitment to shared prosperity as they arbitrarily abrogate the good-faith contracts negotiated with autoworkers. Today’s industry executives are cutting off the top rungs of America’s middle-class ladder, lowering the best-paid jobs to a level where employees will no longer have the income to buy the products they make.

In the name of “competitiveness” with third-world countries, these executives are creating a poorer, less secure — and angry — working class in our country, stealing the American Dream from millions of people. Their actions raise a number of Big Questions for the future of our society:

Around what shall we gather? Learned from early childhood, the importance of fairness and sharing is central to our becoming social beings. Indeed, these were the basic values behind the social contract, which pledged that loyalty, productivity, cooperation and quality work would be fairly rewarded. But these values are nowhere in sight when GM dumps 30,000 loyal workers whose productivity record, according to the very CEO who did the dumping, “has been dramatic,” doubling in the past 10 years. These values are also absent when GM shuts down 12 facilities, including two that were ranked among the industry’s best in quality and another at GM’s Tennessee Saturn plant that was renowned as a model of labor-management cooperation. GM has now emphatically declared that those virtues are no longer to be honored. If our society can no longer gather around the shared economic values of loyalty, productivity, cooperation, quality and fairness, then what? The only answer being offered by the elites is “survival of the strongest,” but that’s the law of the jungle, not a social ethic.

Why shouldn’t workers be well paid? The CEOs (and the compliant media) keep hammering autoworkers as the “aristocrats” of labor, claiming that their wages and benefits are excessive and must be slashed so that U.S. auto manufacturers can become competitive again. A New York Times reporter, in a tone of tongue-clucking criticism, noted that GM’s American employees are earning far more than autoworkers “in countries like Mexico and China.” Well, gosh — I would hope so! Isn’t getting ahead part of the American ethic? What’s wrong with a blue-collar factory worker making $30,000 or even $60,000 a year, plus health care and a good pension? That’s success — for the workers and for America — and it ought to be held up as a model for a well-run economy, not a target of derision. Oh, by the way, how ludicrous is it for the pay of middle-class workers to be attacked by CEOs hauling away millions of dollars each and living in platinum cocoons?

What about the abject failures in the executive suite? Top management has become highly creative at blaming, reducing and stealing from its work force. If management put a tenth of that creativity into designing cars that the buying public might actually want, there would be no need for the massive cutbacks we’re getting. Contrast Detroit’s performance with the competition. Toyota, for example, makes cars here in America, paying wages and benefits comparable to Detroit’s. But its high-quality, good-mileage, reliable cars are selling — American consumers are snapping up Toyotas faster than the company can roll them out. Far from cutting back, Toyota and other foreign competitors are opening new plants in America, while the geniuses running GM are trying to shrink their way to prosperity. U.S. auto chieftains do not keep up with market demands or design quality cars. Instead, they run top-heavy corporate structures, engage in fraud (much of Delphi’s present financial troubles come from its three-year, Enron-like accounting scandal that cost investors more than $1 billion), launch new “turnaround” schemes every few months, rely on money-losing discounts to move inventory and dump money into silly advertising campaigns to try to cover up their production failures. Then, with revenues down, they demand more cutbacks for the blue-collar workers while merrily giving everyone in the executive suite promotions and raises.

Doesn’t this cry out for a national health-care program? A constant refrain from the auto companies is that the soaring cost of health care is crushing their bottom line. For example, GM honchos wail loudly that covering their autoworkers and retirees adds $1,500 to the cost of each car. The only answer, they say, is to slash or even eliminate this protection for working families. But wait — before our country callously agrees to yank the health-care rug out from under the middle class, let’s consider fundamentally reforming our bloated, bureaucratic, exorbitantly expensive, inadequate and unjust health-care system. Again, check the competition: Japan has a national health program that doesn’t leave its population dependent on whether an employer wants to or can afford to cover employees. No matter what their job is (or if they don’t have a job), the Japanese people have the security of health coverage. Thus Toyota’s workers enjoy health care without the cost being added to the price of the cars they make.

With a national health program for America, not only would GM improve its competitiveness by some $1,500 per car, but our nation would also be made stronger by replacing the inefficiencies and greed of the massive corporate structure (insurance giants, HMOs, drug peddlers, etc.) separating us patients from our doctors. America spends far more per person on health care than do Japan and other countries with a national plan — and they get superior care. It’s time for the auto bosses to show leadership. Rather than retreating on the social contract, they should use their political and media clout to advance a national health-care program that’ll truly be good for the country — and for General Motors.

A dangerous betrayal

Today’s corporate leadership is playing with fire. The elites are so focused on enriching themselves — knocking down the workaday majority’s wages and benefits in order to grab more of the nation’s wealth, for example, and getting Bush to keep piling on the tax giveaways for the rich at the expense of everyone else — that they have become blind to the looming threat that their avarice poses to the social order and to their own well-being. Until recently, the Wal-Mart model has been taking advantage of low-skilled, low-income workers, but moving that model upward to autos, steel, high-tech, and other industries ensnares highly skilled middle-income workers. There’s a big difference between holding people down and knocking them down. Middle-class working families are people who’ve had a slice of the American pie — and for them to be told now that their slice will be taken from them and their children is not merely to shred the social contract and throw it in their faces, but to dissolve the social glue that holds our big, sprawling, brawling country together. It’s the betrayal of the middle class. And, as Robert Paulk put it, “This is the thing that revolutions are made of.” The elites who are so smugly dismissing middle-class wages and benefits as “excessive” will not be able to build walls and gates high enough to stem the tide of anger coming at them.

From The Hightower Lowdown, edited by Jim Hightower and Phillip Frazer, January 2006.

Jim Hightower is the author of “Let’s Stop Beating Around the Bush” (Viking Press). He publishes the monthly Hightower Lowdown; for more information about Jim, visit jimhightower.com.

Posted by pnhp at 02:07 PM | Permalink

Bankruptcy Reform’s Impact: Where are all the “deadbeats”?
National Association of Consumer Bankruptcy Attorneys
February 22, 2006

The following are key findings from a National Association of Consumer Bankruptcy Attorneys (NACBA) survey of six major credit counseling agencies that have dealt with a total of 61,335 consumers under the new federal bankruptcy law:

• Almost none of those seeking bankruptcy protection are able to repay their debts. Fewer than one out of 20 consumers (3.3 percent) were candidates for paying off what they owe under a debt management plan (DMP), with the remaining 96.7 percent requiring the same bankruptcy filing that they would have needed before the new bankruptcy law went into effect.

• The vast majority of Americans seeking bankruptcy protection are victims of unfortunate circumstances, not imprudent spenders seeking to cancel their debts. Four out of five consumers (79 percent) seen by credit counseling agencies are suffering from debt “caused by circumstances beyond their control (e.g., loss of a job, medical expenses, death, divorce or other change in marital status, increased minimum payments on credit cards, predatory lending, and so on). Only about one in five of the respondents (21 percent) were identified as suffering from debt due to “circumstances within their control”. The credit counselors included in this group all of those individuals who did not deliberately seek to accumulate excessive debt and, instead, through creditor blandishments and lack of financial sophistication, “got in over their heads” as finance charges and other fees mounted over a period of years. Thus, the masses of expected deadbeats who were supposed to be identified under the new law and forced into debt management plans have not materialized.

Testimony of Elizabeth Warren, U.S. Senate Judiciary Committee:

“Overwhelmingly, American families file for bankruptcy because they have been driven there - largely by medical and economic catastrophe - not because they want to go there.”

http://nacba.com/news/022206NACBAbankruptcyreformstudy.pdf

Comment: By Don McCanne, M.D.

The bankruptcy reform legislation was a solution designed to address a fictional problem. Had the bankruptcy issues been carefully defined, the resulting legislation would have had virtually no resemblance to what was produced.

This issue is important to health care reform advocates for two important reasons.

Specifically, our flawed insurance system is resulting in medical debt that has compounded the problem of personal debt. When the cause of medical debt is correctly defined, the solution would have been to reinforce the insurance system so that it would prevent financial hardship in the face of medical need.

More generally, we are now seeing a drive toward a solution based on the fiction that much medical spending is unnecessary, spending that would not occur if individuals were personally sensitive to the costs. Thus the solution proposed results in the increase of medical debt for individuals with greater health care needs. The real problem is that beneficial health care services are becoming less and less affordable, affecting disproportionately those with greater needs. The appropriate solution is to adopt a system that prevents financial hardship while reducing waste through improved resource allocation. This, of course, is precisely what the single payer model of national health insurance is designed to do.

More about medical debt soon. Stay tuned.

Posted by pnhp at 01:58 PM | Permalink

Online armor sales net prison, fine
By Steve Liewer
The San Diego Union-Tribune
February 23, 2006

A Vista woman was sentenced to prison yesterday for buying from Camp Pendleton Marines stolen body armor meant for Iraq-bound troops, then selling it to undercover agents posing as foreign arms dealers.

Erika Jardine, 47, was arrested in November 2004. Jardine pleaded guilty a year later in U.S. District Court in Philadelphia to charges of violating the Arms Control Export Act and selling stolen U.S. property, said Dean Boyd, a spokesman for U.S. Immigration and Customs Enforcement.

During her sentencing hearing yesterday, Jardine tearfully apologized to the government and to U.S. District Judge Michael M. Baylson. Jardine said she sold the vests to make money to buy health insurance that her multiple jobs, including one as a licensed real estate agent, did not provide.

Jardine worked several full-and part-time jobs in the Vista area, according to a court document. She experienced financial distress after suffering health problems that included thyroid, ulcer and knee troubles.

“She was apparently badly in need of money,” Boyd said.

http://www.signonsandiego.com/uniontrib/20060223/
news_7m23kevlar.html

Comment: By Don McCanne, M.D.

The opponents of single-payer national health insurance frequently use isolated anecdotes to “prove” that a government insurance program would lead to impaired health outcomes and financial ruin. If they were on our side of the debate, organizations such as The Fraser Institute, Pacific Research Institute, and the National Center for Policy Analysis might use this anecdote to prove that national health insurance would reduce crime in the United States. At Physicians for a National Health Program, our positions are based on solid policy science rather than isolated anecdotes, so we would never go there on this one.

Although anecdotes do not establish policy science, they do serve another purpose. They can illustrate a specific example of principles already firmly established in the policy literature.

We know that millions of Americans with significant medical problems are facing financial hardship because of an inability to pay their out-of-pocket medical expenses. Many of them are desperate. There is no acceptable excuse for Ms. Jardine’s criminal acts, but we can acknowledge that the failure of our health insurance system either created or compounded her desperation.

A national health insurance program will not solve all of society’s problems, but it would dramatically reduce the desperation caused by mounting medical bills, and without any additional spending over our current levels. Ms. Jardine’s desperation “proves” that we need a single-payer national health insurance program.

I guess I did “go there,” but on the issue of desperation rather than crime reduction. Maybe it’s time for a study on personal medical debt and crime, beginning with the portion of the policy community that supports shifting health care costs to those who have greater health care needs. Now that’s a crime!

Posted by pnhp at 01:54 PM | Permalink

Woman Fences Stolen Goods to Pay for Health Insurance

The San Diego Union-Tribune
February 23, 2006

By Steve Liewer
STAFF WRITER

February 23, 2006

A Vista woman was sentenced to prison yesterday for buying from Camp Pendleton Marines stolen body armor meant for Iraq-bound troops, then selling it to undercover agents posing as foreign arms dealers.

Erika Jardine, 47, was arrested in November 2004. Jardine pleaded guilty a year later in U.S. District Court in Philadelphia to charges of violating the Arms Control Export Act and selling stolen U.S. property, said Dean Boyd, a spokesman for U.S. Immigration and Customs Enforcement.

During her sentencing hearing yesterday, Jardine tearfully apologized to the government and to U.S. District Judge Michael M. Baylson. Jardine said she sold the vests to make money to buy health insurance that her multiple jobs, including one as a licensed real estate agent, did not provide.

As part of her plea agreement, she has helped investigators gather evidence against 15 other people, including 12 Marines and three civilians, according to court documents. Besides the six-month prison sentence, Jardine must spend three years on probation, perform 750 hours of community service and pay a $6,500 fine.

Boyd said eight of the suspects were arrested in the past year at Camp Pendleton. He said he didn’t know the Marines’ names and ranks or the status of their cases.

Camp Pendleton’s public affairs office did not answer questions about the cases, but it issued a brief statement acknowledging that military authorities are investigating them.

“Evidence does not indicate that several Camp Pendleton Marines were part of a ring or organization that stole and resold ballistic vests and other controlled U.S. military items,” the statement said. “Rather, current evidence indicates that these were individual cases. In addition, many of the cases . . . were prosecuted months ago and resulted in courts-martial.”

Jardine worked several full-and part-time jobs in the Vista area, according to a court document. She experienced financial distress after suffering health problems that included thyroid, ulcer and knee troubles.

“She was apparently badly in need of money,” Boyd said.

In late spring 2004, Jardine placed an ad in Camp Pendleton’s newspaper offering to buy surplus military gear, Boyd said.

It was a time when body armor, including protective inserts called SAPI plates, were in short supply. Several Marines offered to sell Jardine the ones they had been issued for use in Iraq, Boyd said. Then in June, Jardine put them up for sale on the online auction site eBay.

A man named “Patrick” from eastern Pennsylvania won the auction.

He actually was a government agent posing as an arms dealer, according to a court document. He contacted Jardine and suggested in an e-mail that they do business off of eBay because “the U.S. government does not look favorably on shipping these out of the country and the less attention we draw to our deals the better,” a court document said.

During the next several months, Jardine shipped several sets of SAPI plates to “Patrick” in Austria and Pennsylvania with the understanding that some of them would be shipped to Lithuania, court documents said. They frequently talked about the illegality of the shipments, and Jardine wrote on customs forms that they were ceramic plates or picture frames.

“Clearly, when she began selling these on eBay to us, she knew it was illegal,” Boyd said.

After her arrest, Jardine helped investigators for Immigration and Customs Enforcement and the Naval Criminal Investigative Service by placing fake newspaper ads and negotiating more sales. Several suspects remain at large, Boyd said, and some of the Marines who allegedly sold her goods are serving in Iraq.

Jardine has helped authorities recover other apparently stolen military goods, including 104 SAPI plates, 14 vests, seven Kevlar helmets and 74 M-16 rifle magazines.

She took an active role in her community and baby-sat neighborhood children in her home, a court document said. Several neighbors wrote letters to the court describing her as hard-working, conscientious and helpful.

At yesterday’s sentencing, the judge told Jardine that despite her cooperation and lack of a criminal record, she still deserved prison because she knew what she did was wrong.

“This was a serious crime that took SAPIs away from American soldiers fighting in Iraq and Afghanistan,” said Assistant U.S. Attorney Todd Schulman.

Knight-Ridder/Tribune News Service contributed to this report.

Posted by pnhp at 03:42 PM | Permalink

WebMD Wants to Go Beyond Information
By Milt Freudenheim
The New York Times
February 23, 2006

Marty Wygod, the entrepreneurial deal maker who built WebMD Health into one of the most-visited medical information sites on the Internet, is promoting the site as the next big thing in health care.

By helping people enrolled in employer health plans compile personal health information online, Mr. Wygod wants to tap into the growing corporate trend of having employees pay more, if not all, of their own health costs.

WebMD says it has signed contracts with big health insurers and employers to operate private-access sites where employees can keep track of their medical records, look up information about diseases and compare costs and ratings for doctors and hospitals. Employers or their insurers pay licensing fees to WebMD, based on the services and number of health plan members.

… the company says it has signed multiyear licensing contracts with big health insurers that include Aetna, Cigna and the nation’s largest, Wellpoint, and with nearly three dozen of the nation’s biggest employers, including Bank of America, Cisco Systems, Dell Computer, I.B.M., Pfizer, Shell Oil and the state of North Carolina.

“Corporate America is looking for a way to educate its employees about health care costs, and hopefully to move a substantial amount of those costs off their books,” Mr. Wygod said in a telephone interview. But for investors in WebMD Health, which will post its quarterly results today after the stock market’s close, the big question is how much of the potential upside might be theirs to share.

Mr. Wygod, who sold his earlier venture, the pharmacy benefits manager Medco Containment Services, to Merck for $6 billion in 1993… took charge of Healtheon in 2000…

Under the personalized WebMD service, employees go to private Web sites to fill out health status questionnaires. At some employers, like Pfizer and Dell and North Carolina, employees use WebMD programs to combine the answers with medical payment data from doctor visits and hospital stays to create personal health histories.

WebMD is also holding talks with banks and financial giants like Fidelity. The banks view the trend to so-called consumer-directed health care as a huge opportunity to manage tax-sheltered health savings accounts that many workers are now being offered in tandem with low-premium, high-deductible health insurance.

When WebMD posts its financial results later today, analysts are expecting quarterly earnings of 9 cents per share. What they are waiting to hear is the company’s guidance on the business prospects for Mr. Wygod’s next big thing.

http://www.nytimes.com/2006/02/23/business/23place.html?_r=1&oref=slogin

And…

Remarks by David Brailer, MD PhD, National Coordinator for Health Information Technology Healthcare Information and Management Systems Society (HIMSS)
2005 Keynote
United States Department of Health and Human Services

The Certification Commission for Health IT (CCHIT) is on track to develop a standard for EHRs in ambulatory settings by summer 2005. This is a multi-stakeholder group that exemplifies the very best of private sector leadership - broadly supported, transparent and deliberative, yet urgent and narrowly focused. The work of the Certification Commission is critical to physician and hospital buyers who want to know what product to buy, to established vendors who want to grow their markets, to new technology innovators who want to offer a module within a broader solution, to investors who want to know where to put their capital, and to policy-makers who want to make sure that public funds are invested wisely. About the only people who don’t benefit from the Certification Commission’s work are pro-regulatory zealots who would rather have the government make new rules for the industry.

http://www.hhs.gov/healthit/BrailerSpch05.html

And…

Brailer opens HIMSS06
2006 Keynote
HIMSS Daily News
February 13, 2006

“Only the marketplace can ensure that we have sustained innovation,” (David Brailer) said. “A marketplace approach will result in faster and bigger change because it aligns the key drivers. We have ensured that the federal government will not build, own or operate the infrastructure of America’s health information.”

http://www.healthimaging.com/content/view/3839/85/

Comment: By Don McCanne, M.D.

Does this really need a comment? Perhaps a few obligatory words…

At 16.5 percent of our GDP, our health care system is a logical target for entrepreneurs. The primitive state of our health care information systems offers a golden opportunity for entrepreneurs to move in and gain control of as much of our $2.1 trillion health care budget as they possibly can. Their obligation to their investors is, above all, to design health care information systems that will move the maximum number of dollars possible to their own corporations. Marty Wygod no doubt welcomes this opportunity to at least fantasize about becoming a trillionaire.

Other nations and our own government are already far ahead of the U.S. private sector in developing such systems. Some believe that the Veterans Administration’s system has contributed to the significant improvement in quality at the VA. Government owned and operated systems are designed to serve patients and their health care providers, while using health care dollars as efficiently as possible. Government goals have little in common with entrepreneurial goals.

When affordability of health care is the number one health concern of most Americans, it is unfortunate that, by rejecting public administration of the health information infrastructure, Brailer is supporting the transfer of more dollars away from health care and into private, administrative enterprises. Worse, 60 percent of health care is funded through the tax system, yet Brailer does not want pro-regulatory zealots to set up rules for the industry. Handing tax dollars over to private enterprises without regulatory oversight is public policy malpractice.

Posted by pnhp at 01:46 PM | Permalink

Health Spending Projections Through 2015: Changes On The Horizon
By Christine Borger, Sheila Smith, Christopher Truffer, Sean Keehan, Andrea Sisko, John Poisal, M. Kent Clemens (from the Office of the Actuary, Centers for Medicare and Medicaid Services)
Health Affairs
February 22, 2006

Projections for 2006

$2.164 trillion - National health expenditures (NHE)

$7,110 - NHE per capita

16.5% - NHE as percent of GDP

Health spending is expected to consistently outpace gross domestic product (GDP) over the coming decade, accounting for 20 percent of GDP by 2015.

Stable trends through 2015 likely mask important changes to the U.S. health care system across payers and types of care.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w61/DC1

Comment: By Don McCanne, M.D.

These numbers should be downloaded since they represent our current level of health care spending and can be very useful in your advocacy work.

Current trends indicate that spending growth will continue well in excess of the rate of inflation. The greatest uncertainty is not how much we’ll be paying, but rather who will be paying it.

Posted by pnhp at 01:43 PM | Permalink

EMBARGOED UNTIL 12:01 AM EDT
February 28, 2006

Contacts: David Himmelstein, M.D.
Steffie Woolhandler, M.D.
(617) 665-1032
Elizabeth Warren, J.D.
(617) 495-3101

Researchers from Harvard痴 Medical and Law Schools note that none of the data in their 2005 study showing that medical problems contribute to half of all bankruptcies have been questioned, despite an attack on their work commissioned by America痴 Health Insurance Plans (AHIP), an insurance industry trade organization. Both the AHIP article and the Harvard response appeared today in the on line edition of Health Affairs.

The Harvard group labeled the AHIP article an effort to distract from “too many ineffective products sold by . . . the insurance industry,” and the industry’s efforts to cut back further on coverage under the guise of Consumer Directed Health Plans and Health Savings Accounts. Several health insurance firms have recently chartered banks and plan to issue credit cards as part of their HSA offerings.

The 2005 study of medical bankruptcies was among the most widely cited health policy stories of the year. Based on interviews with debtors in bankruptcy courts across the nation, the study found illness contributed to over 700,000 families’ bankruptcies annually. Most of those driven to financial ruin by illness were solidly middle class, and three quarters of the families had insurance when they first got sick, although many lost coverage when the illness caused job loss. Many who managed to keep their private insurance found that gaps in coverage - co-payments, deductibles and uncovered services - left them unprotected.

The insurance industry-funded critique claimed to 途einterpret・the Harvard data, alleging that few debtors were really bankrupted by illness and that most of these were not middle class based on their incomes. The Harvard researchers replied that the critique understates the number of medical debtors by misinterpreting certain survey questions and completely ignoring many others. The insurance industry critique claims that few debtors were middle class rests entirely on debtors・incomes just before filing for bankruptcy ・a time when many had lost jobs or small businesses because of illness. But most of those filing for medical bankruptcy had attended college, owned homes, and had once good jobs, clear indicators of their middle class status before financial disaster struck.

The Harvard group noted that 徹ur paper garnered public attention because it resonated with the abuse that Americans suffer at the hands of our health finance system, abuse shared by the uninsured and middle class.・

Study author Dr. David Himmelstein, a Harvard Associate Professor of Medicine commented: 滴ealth insurance companies charge outrageous premiums for defective policies. Their executives and shareholders pocket vast sums, raking off money that should go for care. In 2004, insurance companies spent $95 billion on overhead and profits. Bill McGuire, CEO of UnitedHealth pocketed $124.8 million. Now they ・and the White House - want to cut coverage, pushing families into so膨alled Consumer Directed Plans with huge deductibles. The inevitable result will be bigger profits for insurers and more families bankrupted by illness. Americans need comprehensive national health insurance, not the ever skimpier coverage pushed by AHIP.・

According to Elizabeth Warren, Leo Gottlieb Professor of Law at Harvard and a study author: 典he insurance industry boosts profits by telling American families that all is well: 遷ust keep paying your premiums and you will be safe.・ The reality is far scarier.・

Copies of the article will be available after 12:01 AM February 28 at:
http://content.healthaffairs.org/webexclusives/index.dtl?year=2006

###

Physicians for a National Health Program is an organization of 14,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call (312) 782-6006

Posted by pnhp at 01:09 PM | Permalink

By Richard Halstead
Marin Independent Journal
February 19, 2006

Guy Esberg of San Anselmo said he recently traveled to Germany for an operation and is contemplating going to Thailand for a second operation because he can’t afford to have the procedures performed in the United States.Don Cohon of Sausalito said he received a $24,000 bill after he fell off his bike and was taken by ambulance to Marin General Hospital, where he received minimal treatment and was released less than three hours later.

David Brody, a Mill Valley psychiatrist, said he is seriously considering moving to Cambodia or New Zealand because the medical system in this country is “falling apart.”

These were just a few of the testimonials presented Saturday at the Marin Civic Center during a political rally for adopting a government-run health-care system.

The meeting was sponsored by Health Care for All-California, a statewide organization working toward a single, nonprofit health-insurance system that will cover all Californians equally.

More than 200 people turned out on a cold, rainy Saturday to listen to local health-care professionals, government officials, union representatives and others make the case for the change.

If attendance at Saturday’s rally is any indication, support in Marin for a government-managed system runs strong. Rep. Lynn Woolsey, D-Petaluma, kicked off the meeting, and Assemblyman Mark Leno, D- San Francisco, wrapped it up.

All five candidates competing in the June Democratic primary for the 6th District State Assembly seat were there. Each has expressed support for a government-run system.

Supervisor Cynthia Murray, who had voiced skepticism about government-managed health care, said Saturday that she had undergone something akin to a “religious conversion” on the issue.

An estimated 46 million Americans, one in every five Californians, lack health insurance, said Larry Meredith, director of Marin County’s Department of Health and Human Services. Meredith said health insurance premiums currently are rising 10 percent per year and are expected to double over the next decade.

There is a particular urgency now because SB840, a bill that would create a state-run system in California, is wending its way through the state Legislature. Andrew McGuire, director of Health Care for All-California, said that in July, his organization will initiate a campaign to boost public awareness of the bill in 365 cities throughout the state.

Woolsey said she is supporting SB840, which was introduced by State Sen. Sheila Kuehl, D- Santa Monica, “because I think if it passes, it will create a momentum for national, single-payer solutions around the country.”

Woolsey also is supporting the United States National Health Insurance Act, which has been introduced by Rep. John Conyers, D-Michigan. The legislation would create a national system of universal single-payer health-care insurance.

Past efforts to reform the health-care system didn’t fail because Americans are disinterested in the issue, Woolsey said.

“It lost,” Woolsey said, “because the industry that profits from the current system launched a massive negative campaign unprecedented in both its cost and its level of deception.”

With more and more employers eliminating health-care benefits or boosting co-payments, the health-care system is caught in a vicious circle, said John Severson, director of Coastal Health Alliance, a clinic that serves mostly uninsured and underinsured West Marin residents.

People without health coverage get treated after their condition reaches a crisis, and that drives treatment costs up, Severson said. To pay for the treatment of these patients, often in hospital emergency rooms, insurance companies raise everyone’s rates.

“And all of that is a huge dead weight that is working its way straight down our health-care delivery system,” Severson said, “putting our hospitals, physicians and outpatient clinics under a tremendous amount of strain.”

Leno outlined how spiraling health-care costs trigger negative social effects. Health-care bills are the most common cause of personal bankruptcy, and new federal laws have made it more difficult to file for bankruptcy, he said.

“That means more families break up and we have more children in our foster-care system,” Leno said. Only half of all foster children finish high school, and many end up in prison, he said.

“Seventy-five percent of those in the Department of Corrections have come through a foster home,” Leno said.

Rising prison populations mean higher state costs. Gov. Arnold Schwarzenegger’s proposed budget would devote more than 8 percent of state discretionary spending to prisons, Leno said.

“That means the elderly, the indigent and the frail are relying more and more on health services at the local level,” Leno said. “Which means there are fewer dollars for libraries, parks and filling potholes.”

Leno said the health system was unlikely to collapse all at once.

“It is this slow drip, drip, drip,” he said, “as our quality of life slowly disappears.”

Posted by pnhp at 10:52 AM | Permalink

SMC Business Councils Releases Health Care Survey Results
PR Newswire
February 20, 2006

(SMC Business Councils is a non-profit trade association representing 3,500 small business owners in western and central Pennsylvania.)

SMC Business Councils conducted an online survey last week of 150 local small business owners’ current thinking about issues related to skyrocketing health care costs.

According to SMC President Cliff Shannon, “Business owners’ frustrations with seemingly uncontrollable health insurance costs are mounting. Passing along more costs to their employees — or even dropping job-based coverage altogether — is seen by larger and larger numbers of entrepreneurs as a financial and competitive necessity. And although deep misgivings remain about the consequences and costs of a national, single-payer health care system, there is increasing agreement that this outcome may be inevitable.”

Nearly two-thirds of SMC respondents said they thought that a national, single-payer system was undesirable - but nearly one-half of all surveyed agreed that a national, single payer system is (politically) inevitable.

Comments from respondents included:

“American business is at a huge disadvantage due to high health care costs.”

“A universal standardized system that covers everybody would be fair and probably less expensive for each individual.”

“A national health care system is an absolute necessity to keep this country’s businesses competitive with the rest of the world.”

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=104&STORY=/www/story/02-20-2006/0004285212&EDATE

Comment: By Don McCanne, M.D.

This small survey supports the findings of other larger surveys on the views of small business owners on health care financing. One additional item surveyed is noteworthy. Although small business owners remain quite uncomfortable with the concept of a national, single payer system, there is increasing agreement that a single payer system is politically inevitable. We may yet end up with single payer by default.

Posted by pnhp at 01:38 PM | Permalink

Top firms’ plan for uninsured stumbles
By Bruce Japsen
Chicago Tribune
February 18, 2006

A landmark health-care plan offering benefits to millions of uninsured workers and initially sponsored by more than 50 blue-chip companies has failed to gain traction in the nearly two years since its lofty goals were announced.

In the National Health Access plan, three insurers—Cigna Corp., Humana Inc. and UnitedHealth Group—agreed to offer a range of benefits and discounts on medical care and prescription drugs.

Fewer than 9,000 workers and their dependents have enrolled in the National Health Access program since the plan got off the ground in the fall, which is far short of expectations, said officials connected with the plan.

Officials say several issues, notably the inability to offer a plan that’s affordable for most employees in the group, have been the biggest stumbling blocks.

“For this group, it’s a challenge to find almost any level of affordable coverage to give them what they are looking for,” said Marisa Milton, associate general counsel at the HR Policy Association, a Washington-based lobbying group composed of human resource executives. HR Policy Association helped create the program, which is administered in part by Hewitt Associates, a Lincolnshire-based employee benefits and human resources consultancy.

Initially the plan’s backers, which include Hoffman Estates-based Sears Holdings Corp. and Oak Brook-based McDonald’s Corp., were lauded for trying to find an innovative, private-sector initiative to help fix one of the country’s most expensive problems: providing affordable health coverage for more than 45 million uninsured Americans.

The member companies believed that if they could pool enough of their workers together they could entice health insurance companies into a bidding war to handle the business, thus keeping costs lower.

“There are valuable lessons to learn from this,” Milton said.

http://www.chicagotribune.com/news/nationworld/chi-0602180123feb18,1,7037576.story?coll=chi-newsnationworld-hed

Comment: By Don McCanne, M.D.

A landmark health plan sponsored by more than fifty blue-chip companies manages to insure fewer than 9,000 workers nationally. What a landmark! Marisa Milton from the HR Policy Association says that there are valuable lessons to learn from this, but you can imagine what their perceptions of the lessons are.

There is one single lesson that stands out above all others. Many of the largest corporations in the nation and some of the largest insurers, working with the most influential human resources organizations, put this plan together and announced it with the fanfare of a full trumpet chorus. As we now listen to the distant, somber, solo trumpet playing taps, we realize that the best that the private sector has to offer is totally incapable of bringing us effective health care reform.

Who do we see heading back to the negotiation tables? The major corporations? The insurers? The human resource industry? Yes, yes and yes.

Where are the providers? The few that do show up are there with their very weak, me-first advocacies.

Where are the politicians? Too many of them are hiding behind the shredded curtains of political feasibility (but, fortunately, not all).

Perhaps the greatest tragedy is the fact that potentially the most powerful voice of all is not showing up: those of us who are relatively healthy and do not feel especially threatened by medical debt.

Let’s see, what is the prevailing rhetoric? I’ve taken good care of my health, and I’m insured against potential catastrophic losses. Everyone else should meet their own individual responsibilities by doing the same. Why should I have to pay for others who don’t take care of their own health?

Egalitarianism? Isn’t that a French word? Well, we’re certainly not French. We’re Americans.

Excuse me. I’m going bowling now… alone, thank you.

Posted by pnhp at 10:57 AM | Permalink

Projecting OECD health and long-term care expenditures: What are the main drivers?
Organisation for Economic Co-operation and Development (OECD)
ECO/WKP5
February 3, 2006

Rising expenditure on health and long-term care is putting pressure on government budgets in most OECD countries. Going forward, these pressures will add to those arising from insufficiently reformed retirement schemes. The question is how much health and long-term care spending could increase in the future and what policy can do about it. This paper presents a framework for thinking about that question and provides some quantitative illustrations. Both changing demography and non-demographic drivers of spending are taken into account.

The paper shows that spending on health and long-term care is a first-order policy issue. Between now and 2050, public spending on health and long-term care could almost double as a share of GDP in the average OECD country in the absence of policy action to break with past trends in this area. And that estimate takes into account that as people live longer, they also remain in good health for longer. Even with containment measures, public spending on health and long-term care could rise from the current average level of 6-7 % of GDP to around 10% by 2050. In some countries, the increase could be dramatic.

http://www.oecd.org/dataoecd/57/7/36085940.pdf

And…

Ask the White House
Al Hubbard, Director of the National Economic Council
The White House
February 14, 2006

The government provides a health care safety net for the poor, elderly, and disabled. Of the almost two trillion dollars of annual health care spending in the U.S., the government now pays for almost half. If the government were to take over financing another trillion dollars of health care for the non-poor who currently buy their own health care and insurance, there would have to be a massive tax increase. A tax increase of this size could significantly damage the economic growth that is so important for creating jobs and wealth for the American people.

http://www.whitehouse.gov/ask/20060214.html

Comment: By Don McCanne, M.D.

The OECD classifies the increase in government spending on health care as a “first-order policy issue.” They predict that, even with unspecified spending containment measures, demographic and non-demographic drivers of spending will result in average government costs of 10 percent of GDP in OECD nations. At least in this report, they do not seem to be concerned about increases in private spending.

Al Hubbard says that the $1 trillion in private funds that are being spent on health care would damage economic growth if that financing were to be administered by the government through the tax system. Even the OECD concedes that governments are more efficient administrators of health care funds. When total health care spending would remain the same, why should Mr. Hubbard believe that public health care spending would damage the economy whereas private health care spending is considered to be beneficial for the economy?

Maybe instead of relying on his logic, he was simply expressing the dogmatic ideology of this administration. A not so subtle hint of his views was expressed in his answer to a question as to whether he sees a time when America does have a universal health care system. His answer, “I certainly hope not.”

Posted by pnhp at 03:05 PM | Permalink

Bruce Vladeck, Ernst & Young LLP
July 2005

As Medicare approaches its 40th anniversary, it’s important to recognize that the program’s founders would have been profoundly ambivalent about its current success and popularity. They never intended that Medicare would stand alone as a unique example of national health insurance, nor that the elderly and disabled would be the only groups in the U.S. population with guaranteed access to health care.

Instead, Medicare was crafted as the first, incremental step towards universal health care. Just as the Social Security system, on which Medicare was modeled, had been improved and expanded upon many times in its first 30 years, so Medicare was supposed to be the seed from which future expansions—both vertical (incorporating more of the population) and horizontal (broadening the benefits)—would spring. At first, Medicare stayed on the expected track: The 1972 Social Security Amendments extended Medicare coverage to the disabled and patients with end-stage renal disease and provided some modest benefit improvements. Since then, however, we’ve stalled, if not regressed. The 2003 prescription drug legislation threw a lot of additional money into the program, but not in a way otherwise consistent with Medicare’s founding principles of universality and defined benefits.

Misconceptions About Medicare
Today, the proportion of the non-elderly population without health insurance is larger today than it was when Medicare was enacted, and many of those who nominally have health insurance coverage face higher out-of-pocket expenses and limited access to care. But instead of considering Medicare as a basis on which to expand coverage, Medicare’s critics increasingly describe it as an anachronism that lacks the flexibility and innovation available in managed care plans. They characterize it as something of a historic relic, in part because the coverage it provides, which 40 years ago was thought to be minimally adequate, now appears relatively generous.

In fact, Medicare achieves a higher level of satisfaction among covered beneficiaries than employer-based coverage, offers markedly improved access to care and financial protection for beneficiaries, and has much lower administrative costs than private coverage.

Health Care Costs
It’s true that in 1965, few could anticipate how dramatically health care costs would increase in the ensuing decades, nor could any but the most visionary have foreseen a society that includes thousands of 80-year-olds running around on artificial knees, sustained by implanted defibrillators. And it would have been almost impossible to envision the size, complexity, and sheer economic magnitude of the contemporary American health system. Over the last 40 years, the food, electronics, and computer industries have also grown at a remarkable rate, yet the real costs of agricultural commodities, televisions, and computing power have fallen. The same has not been seen in health care. One might therefore suspect that the problem of health care costs is as much one of political economy as of technology.

Whatever their source, rising health care costs are a real problem—and Medicare’s costs and the more general problem of health care cost inflation are one and the same. Medicare’s outlays track very closely (if often with a slight lag) the growth in total health care spending. So we can’t realistically expect to control the growth of Medicare spending without controlling the growth of health care costs generally.

The Next 40 Years
Because there’s little basis for optimism about controlling health care costs broadly, it’s likely that, as we Baby Boomers age, a growing share of total national resources will be required to provide the level of medical care to which Medicare beneficiaries have become accustomed—and even that may not be enough to meet the expectations of a generation far more demanding than current beneficiaries. Indeed, elderly beneficiaries, who now spend 22 percent of their income on health care, are expected to see that figure grow to 30 percent by 2025. The prevailing rhetoric contends that such a level of expenditure is “unsustainable,” and that implies that at some point we, as a society, will choose to deny medical care to at least some older people who really need it, just as we now so blithely accept the denial of care to millions of younger people.

I must confess that I have trouble getting my mind around that notion. But perhaps I am just trapped in an older way of thinking. In 1965, it was still possible to assume that a reasonable share of growing national wealth would be devoted to social benefits; that reductions in racial and socioeconomic inequality were a central part of a commitment to democracy; and that the notion of providing more freedom, in the United States and around the world, included providing freedom from want. In that very different era, one could just assume that universal health care would be an uncontroversial objective, and that a nation with so powerful a track record of getting things done would not be daunted by the very formidable difficulties inherent in achieving universal coverage.

But since then, we have become increasingly adept at finding excuses for why we can’t address important domestic problems, and for expressing pride in the fact that the United States is less generous in the provision of social benefits than any other industrial nation.

In that context, the daily reality of Medicare, in which millions of elderly and disabled people of modest means receive world-class medical care from the nation’s very finest providers, serves as a kind of constant reproach to the naysayers and prophets of budgetary doom. The track record is incontrovertible: Medicare has proven that, as a nation, we are capable of getting medical care to a particularly vulnerable part of the population, and of reducing mortality, morbidity, and human suffering in the process. We just need to be reminded of why, 40 years ago, people thought that doing that was such a good idea. And we need to remind ourselves that the founders of Medicare thought they were just getting things started, and that there’s a whole lot more work still to do.

Bruce Vladeck, East Coast director for Ernst & Young’s Academic Medical Center service group, is the former administrator (1993–1997) of the Health Care Financing Administration, now the Centers for Medicare and Medicaid Services. The views expressed by the author herein do not necessarily reflect the views of Ernst & Young LLP.

The views presented in this commentary are those of the author and should not be attributed to The Commonwealth Fund or its directors, officers, or staff.

Citation
Medicare’s Future: Finishing What We Started, Bruce Vladeck, The Commonwealth Fund, July 2005

Posted by pnhp at 02:56 PM | Permalink

British Clinic Is Allowed to Deny Medicine
By Sarah Lyall
The New York Times
February 16, 2006

When her local health service refused to treat her (early-stage) breast cancer with the drug Herceptin, 54-year-old Ann Marie Rogers sued. But on Wednesday, a High Court judge ruled against her.

In his decision the judge, David Bean, said that although he sympathized with Ms. Rogers’s predicament, the health service in Swindon, where she lives, had been justified in withholding the drug.

Herceptin, made by Roche, is currently licensed for use in late-stage breast cancer. Although some studies have shown that it is also effective in treating HER-2 early-stage breast cancer, it has not yet been licensed for such use. If it does receive a license, the drug will be appraised for potential countrywide use.

But Herceptin is an expensive drug, costing $36,000 to $47,000 a year for each patient, and the health service has finite resources.

… the Swindon health service has a policy of allowing its use for early-stage breast cancer only in “exceptional circumstances,” and her doctor said that her case was no different from those of “the 20 or so other residents in the Swindon area in the same position.”

http://www.nytimes.com/2006/02/16/international/europe/
16cancer.html

A Cancer Drug Shows Promise, at a Price That Many Can’t Pay
By Alex Berenson
The New York Times
February 15, 2006

Doctors are excited about the prospect of Avastin, a drug already widely used for colon cancer, as a crucial new treatment for breast and lung cancer, too. But doctors are cringing at the price the maker, Genentech, plans to charge for it: about $100,000 a year.

Even some patients with insurance are thinking hard before agreeing to treatment, doctors say, because out-of-pocket co-payments for the drug could easily run $10,000 to $20,000 a year.

Until now, drug makers have typically defended high prices by noting the cost of developing new medicines. But executives at Genentech and its majority owner, Roche, are now using a separate argument - citing the inherent value of life-sustaining therapies.

If society wants the benefits, they say, it must be ready to spend more for treatments like Avastin and another of the company’s cancer drugs, Herceptin, which sells for $40,000 a year.

“As we look at Avastin and Herceptin pricing, right now the health economics hold up, and therefore I don’t see any reason to be touching them,” said William M. Burns, the chief executive of Roche’s pharmaceutical division and a member of Genentech’s board. “The pressure on society to use strong and good products is there.”

The high prices are especially discouraging for patients who have been told that the new drugs may have only marginal benefits for them.

Ellis Minrath, who has pancreatic cancer, said he had chosen not to take Tarceva, a drug from Genentech that is approved for lung cancer and has shown promise in pancreatic cancer.

But Dr. Desmond-Hellmann, the Genentech product development chief, said she would recommend that Mr. Minrath be treated with Tarceva. “I don’t think any patient should go without a Genentech drug for an inability to pay,” she said. “If this is about money, that would disturb me.”

Because the actual cost of producing Avastin is a fraction of what Genentech charges for it, some analysts and doctors had expected the company to lower Avastin’s price per milligram for use in lung and breast cancer.

Dr. Desmond-Hellmann said that Genentech was assuming that some cancer doctors might, in fact, use Avastin at the lower dosage to treat breast and lung cancer. That is a reason the company does not want to lower Avastin’s per-milligram price, she said, because doing so would cut too deeply into revenues if doctors do not prescribe the higher doses that were used in the breast and lung cancer trials.

http://www.nytimes.com/2006/02/15/business/15drug.html?pagewanted=all

Comment: By Don McCanne, M.D.

These are very sad stories, but, in a way, they represent both the best and the worst of the approaches of health care systems to very high priced innovative drugs.

It would seem reasonable to price drugs based on research costs, production costs, appropriate administrative costs and a fair profit. Traditionally, drugs were priced that way, perhaps with a nudge toward higher profits.

In the United States, we rely quite heavily on markets to set prices. What are we now hearing from the pharmaceutical industry? Forget costs. Don’t adjust prices based on the marginal costs of increasing manufacturing volume. Price the drugs based on “the inherent value of life-sustaining therapies.”

If a drug can extend life that has an actuarial value of maybe $300,000, then it is argued that the drug manufacturer is entitled to a transfer of a significant portion of that dollar value. By delaying death, the drug company has created a value of $300,000. The patient is $200,000 better off for a drug company fee of only one-third. They’re not really being greedy since they could claim that they have created that $300,000 value, and that they arguably could be entitled to all of it. But then Dr. Demond-Hellmann would be disturbed if this was really “about money.”

It would be interesting to see this same rationale applied to Gov. George Pataki’s appendectomy this morning. One-third of the actuarial value of the remaining life of a governor and potential presidential candidate might command a very handsome fee indeed.

So we see what represents perhaps the worst of our approaches to innovative drugs: blatant greed. What “best” could there be in this muddle?

The British have a health care system that is dedicated to providing the best care for the patient, within limits of their resources. An expensive drug, Herceptin, is currently available for the indication for which it is licensed: late-stage breast cancer. If it later becomes licensed for early-stage disease, the British will make every effort to see that it is available for any person who could benefit. Trying to make the health care system work for the benefit of the patient represents the best of the approaches to high-cost pharmaceuticals.

Should a $100,000 drug be a right for any individual who could benefit from it? That’s really the wrong question. The right question: Should policies of a health care system be designed so that they enable the highest possible return on investments in the health care marketplace, though sacrificing affordable access, or should they be designed so that they enhance patient access to beneficial health services, within the limits of available resources? The British and the Americans have different answers to this question.

Posted by pnhp at 01:23 PM | Permalink

Hospitals probed on free-care billing
By Christopher Rowland
The Boston Globe
February 11, 2006

Attorney General Thomas Reilly’s office is investigating excessive billing by hospitals to the state’s $800 million free-care pool, a fund used to pay hospitals for treating uninsured patients.

http://www.boston.com/news/local/articles/2006/02/11/
hospitals_probed_on_free_care_billing/

Free-care billing woes highlight health system’s ills
Letters
February 15, 2006

The article “Hospitals probed on free-care billing” (Feb. 11) highlights, once again, the gross incompetence Americans bring to the administration of their health system.

How much cerebral power would it take to stumble upon the idea that there ought to be a common fee schedule on which hospitals bill the state’s free-care pool for healthcare rendered the uninsured? That fee schedule might be the same as Medicaid’s or, because Medicaid is known to pay less than full costs, an average of the prices paid by private insurers, or something in between.

What went through the minds of the state’s bureaucrats when they decided to let each hospital bill the free-care pool at that hospital’s own preferred fees, and then to spend scarce resources on elaborate audits and inspector general’s reports that uncover billing practices that may appear unseemly but probably are perfectly legal?

How is it that Americans cannot even get the simplest things right in their much-vaunted health system? The sheer administrative incompetence both the public and private sectors bring to the health system can explain why this system burns proportionately more resources on administration, and leaves more stakeholders dissatisfied, than does any other health system in the world.

Uwe Reinhardt
James Madison Professor of Political Economy, Princeton University

http://www.boston.com/news/globe/editorial_opinion/
letters/articles/2006/02/15/free_care_billing_woes_
highlight_health_systems_ills/

Comment: By Don McCanne, M.D.

It would be great if our problems could be solved simply by establishing a common fee schedule, but we have a much more serious, structural system failure. Our fragmented system of public payers, private payers, and no payers will always result in gaming through cost shifting. It would not be so bad if it were only a fun game played by the multitude of administrators, but the tragic results remove all of the fun from this deadly game. Not only is it resulting in an explosion in personal financial hardship, it is literally killing people by the thousands.

Many contend that an integrated, highly-regulated, multi-payer system would provide the administrative efficiency that we clearly need. Would that be adequate? As long as we leave in place the many public and private payer/players competing for public and private funds, the games will continue.

With real-life penalties of financial hardship, suffering and death, this is a game that a just society must call off. We need a publicly-administered, publicly-funded, single payer system. No more deadly games, please!

Posted by pnhp at 01:25 PM | Permalink

How Adults’ Access to Outpatient Physician Services Relates to the Local Supply of Primary Care Physicians in the Rural Southeast
By Donald E. Pathman, Thomas C. Ricketts III, and Thomas R. Konrad
HSR
February 2006

Objective: To examine how access to outpatient medical care varies with local primary care physician densities across primary care service areas (PCSAs) in the rural Southeast, for adults as a whole and separately for the elderly and poor.

Conclusions: For adults as a whole in the rural South and for the elderly there, low local primary care physician densities are associated with travel inconvenience but not convincingly with other aspects of access to outpatient care. Access for those insured under Medicaid and the uninsured, however, is in more ways sensitive to local physician densities.

From the Implications: If the importance of local primary care physician availability to access in rural areas is minimal, then increasing local physician numbers is not the appropriate policy response when access indicators for a community are poor. Poor access indicators most often suggest the need to make health care more affordable.

http://www.blackwell-synergy.com/doi/abs/10.1111/j.1475-6773.2005.00454.x

Comment: By Don McCanne, M.D.

It is reassuring to note that, except for travel inconvenience, low density of primary care physicians has little impact on impairing access. What should alarm us is that being uninsured or being insured by the inadequately funded Medicaid program does have a negative impact on access in low desity regions.

Is there really anyone out there who still believes that we should continue to reject national health insurance because it is not politically feasible? It seems that inaction is what is no longer feasible.

Posted by pnhp at 04:14 PM | Permalink

By Judith Zwolak
Argus Leader (South Dakota)
January 21, 2006

When family practice physician Vicki Walker took a year’s sabbatical from her Vermillion practice to work in Australia, she had to learn a new vocabulary for some common ailments.

”’Crook with the wog’ means ‘sick with the flu,’” Walker explained. “I definitely had to ask some patients to clarify a few things for me when they told me about their symptoms.”

The Walkers began their adventure in December 2004, when Vicki took leave from her position at the Sioux Valley Vermillion Clinic to work for the Otway Division of Family Practice in Australia’s southeastern Victoria province. She filled in while the Aussie doctors took time off for vacation. She returned to work at Sioux Valley earlier this month.

“Not being part of the (British) Commonwealth, it was difficult for an American to get a job there,” Walker said. “But this area was considered underserved. One of the physicians told me that they had a difficult time recruiting people to the area because of the poor weather, and I thought he was kidding me.”

By Australian standards, temperatures that sometimes fall to near freezing in the winter seem nearly arctic compared to the country’s tropical northern coast.

For the South Dakota family, though, the relatively mild weather, along with stunning seashore vistas of the Indian Ocean, made the location a relative paradise.

Walker’s three children, Heather, 18, Alexa, 16, and Michael, 14, enrolled in public school there, just as their father, Lanny, had done when he was a youngster in 1979 and his father spent a year teaching in Australia through an exchange program.

“We had always talked about going to Australia and meeting my friends and visiting where our family lived,” Lanny said. “We always thought maybe we would take a three-week trip. When we looked into it, we were fortunate to find this opportunity with Vicki’s job.”

The Walkers rented a home with an ocean view in Warrnambool, a town of about 30,000 residents. While Vicki traveled to medical clinics in the region, Lanny taught as a substitute in local schools. On their free time, the family toured nearly every part of the country, from the dry, otherworldly outback to the lush Great Barrier Reef.

Although most of her patients came in with such familiar ailments as colds and stomach viruses, Vicki said she treated some exotic cases, including a swimmer with a seal bite.

“I also saw many cases of ‘surfer’s ear,’ … a bony growth in the ear caused by constant exposure to cold water,” she said.

Before her experience in Australia, Vicki said, she had never supported the idea of a single-payer health care system run by the government.

Taking part in Australia’s socialized medical system, however, changed her opinion.

“After working over there in that environment, I wholeheartedly think that socialized medicine can curb health care costs and that we should be going in that direction,” she said.

Deb Workman, a Vermillion resident whose five family members are patients of Walker’s, said she enjoyed reading dispatches about the Walkers’ experience in Australia, which the Vermillion Plain Talk newspaper ran periodically last year.

“We understood that this was an opportunity of a lifetime, and we are excited to hear about their adventures over there,” Workman said. “She’s a great doctor. We’re glad she’s back.”

Posted by pnhp at 10:20 AM | Permalink

By Kip Sullivan
Washington Monthly
March, 1999

When the debate over the fate of Medicare heats up later this spring, you’ll hear a familiar battle cry: The retirement of the Baby Boomers is sending Medicare into “bankruptcy” and it can only be “saved” by privatization. This claim is nonsense, but Republicans have been making it ever since they took over Congress in 1995. By the time you read this, the Republican position may have been endorsed by the National Bipartisan Commission on the Future of Medicare, a committee established by Congress to examine the Medicare “crisis.” This commission was required to send its recommendations to Congress by March 1. Any recommendation must have the support of a supermajority of 11 of the commission’s 17 members. It was clear by January 1999 that the privatization of Medicare had the support of 10 members. At a two-day meeting held January 5 and 6, eight of the commission’s Republican appointees and two Democrats indicated their support for privatization.

At stake in the upcoming Medicare debate is not just the fairness and sufficiency of Medicare funding, but whether health care for America’s elderly will be turned over to the insurance industry which has made such a mess of health care for the non-elderly. To judge from the privatizers’ rhetoric, you would think that health care costs for the non-elderly were under control, that the number of uninsured Americans under 65 was falling, that quality of health care was improving, and that non-elderly Americans were thrilled with the restrictions imposed by the HMOs which have come to dominate the U.S. health care system. But the privatizers have it backwards: Medicare is more effective at controlling health care costs than the private sector is, and Medicare has achieved this level of efficiency without resorting to the private sector’s favorite cost-control technique - denying necessary services to patients.

The claim that Medicare is going “bankrupt” is extremely misleading for two reasons. First, it implies that the insurance companies that now insure the non-elderly are more efficient than Medicare. That implication is false. Second, the “bankruptcy” rhetoric obscures a fundamental problem: Medicare draws a substantial portion of its funding from a 2.9 percent payroll tax which is unfair to working people. This tax is unfair because it is regressive (a tax is regressive if it takes a rising percent of income as income falls). If current law governing Medicare remains unchanged, this tax will have to be raised in the near future because the ratio of retirees to workers will increase as the Boomers retire. America should be debating how quickly we can replace the regressive payroll tax with a progressive tax, not how quickly we can privatize Medicare.

It is precisely because Medicare relies for 60 percent of its funding on an earmarked payroll tax that Medicare is vulnerable to bankruptcy rumors. The 2.9 percent payroll tax pays for hospital services provided by Medicare. (The other 40 percent of Medicare funding, which pays for physician services, comes from general revenues and a monthly premium paid by the elderly.) The basis for the claim that Medicare is “going bankrupt” is the projection that revenue from the 2.9 percent payroll tax will drop below Medicare hospital expenditures in 2008, just two years before the leading edge of the Baby Boom turns 65. The projections are accurate. It’s the “bankruptcy” rhetoric that’s deceptive. If Medicare were funded by general revenues, as most government programs are, it would be more difficult for privatizers to argue that bankruptcy is the inevitable result of forces beyond congressional control. Can you imagine anyone arguing that the Pentagon is “going bankrupt”? Of course not. The Pentagon will “go bankrupt” only if Congress wants it to. The same is true of Medicare. Medicare will expire only if a Republican-controlled Congress says it should.

Republicans have never made their peace with Medicare, a popular program that covers 15 percent of the U.S. population and pays 20 percent of the U.S. health care bill. When Congress enacted Medicare in 1965, a majority of Republicans in Congress voted against it. Today, few Republicans are willing to call for the elimination of Medicare. (Newt Gingrich was an exception. In a speech to Blue Cross Blue Shield executives, he recommended letting Medicare “wither on the vine.”) But most Republicans do want to reduce the government’s share of health care expenditures for Medicare beneficiaries, and they want private insurance companies to have much more control over Medicare. They know the only way to get Americans to support the privatization of Medicare is to convince us that our choice is between a privatized Medicare and no Medicare at all. Hence the “bankruptcy” rhetoric.

Stealth Plan

Unlike those who seek to privatize Social Security, those who seek to privatize Medicare rarely use the word “privatize,” and they do not propose privatization overnight. They propose, rather, changes to Medicare that would render Medicare vulnerable to a gradual takeover by health insurance companies. The privatizers propose to take from seniors Medicare’s guarantee of medical services, and to replace that guarantee with a voucher - a set amount of money that seniors could use to buy health insurance, either from traditional Medicare or from HMOs or other types of health insurance companies.

It was this voucher proposal that 10 members of the National Bipartisan Commission on the Future of Medicare endorsed on January 6. Although voucher proponents have not said in so many words that they expect vouchers to force seniors to join HMOs, their high praise for HMOs and other insurance companies that use HMO cost-control tactics indicates that they expect vouchers to have that effect.

On the surface, the voucher proposal seems harmless. Seniors will not be compelled to leave Medicare if they do not want to. If the traditional Medicare program is indeed more efficient than private-sector insurers, then Medicare will offer a more attractive benefit package than the private insurers will, seniors will award their voucher to Medicare, and nothing will change. Or so goes the argument.

But this argument ignores the risk that the voucher experiment will be rigged in the private sector’s favor by giving health insurance companies subsidies - subsidies that permit insurance companies to offer lower premiums and/or better coverage than Medicare can. This advantage for the private sector may be further aggravated by setting the value of the vouchers just high enough to cover the cost of buying a (subsidized) private plan, but not high enough to cover the cost of remaining in Medicare. If the difference between the voucher and the cost of staying in Medicare is even a few hundred dollars, a large proportion of seniors would feel irresistible financial pressure to abandon Medicare in favor of the private sector.

How, you may ask, could the insurance industry possibly persuade Congress to fork over subsidies? Wouldn’t a request for subsidies destroy the industry’s claim that they are more efficient than traditional Medicare? To see how this trick might be accomplished, we need look no further than Medicare’s experience with HMOs.

From 1972 until 1998, HMOs were the only type of health insurance company allowed to serve Medicare beneficiaries. But until 1985, very few seniors enrolled in HMOs. That changed in 1985 when the Health Care Financing Administration (HCFA, the agency that administers Medicare) altered the way it reimburses Medicare HMOs. Since 1985, HMOs have been overpaid by HCFA; HMOs have used their subsidies to offer coverage for drugs, hearing aids and other goods and services not covered by Medicare; and, as a consequence, enrollment in Medicare HMOs has soared. Today 17 percent of Medicare eligibles are enrolled in HMOs. Research indicates that seniors did not enroll in HMOs because they enjoy having their choice of doctor limited or because HMOs are known to offer superior or even equivalent health care. Seniors enrolled to get better coverage.

HCFA did not deliberately set the HMO reimbursement rate too high. On the basis of little more than HMO assertions that they were more efficient than Medicare, HCFA set the HMO reimbursement rate 5 percent below the rate at which HCFA reimburses doctors and hospitals in the traditional, fee-for-service Medicare program. But HCFA failed to anticipate that the seniors who would sign up with HMOs would be primarily healthy seniors, and that sicker seniors would refuse to leave classic Medicare. This problem, called “biased selection,” is due only in part to the advertising tactics of HMOs (you rarely see someone in a wheelchair in an HMO ad). The more important cause of biased selection in favor of HMOs is the greater reluctance of sicker seniors, as compared to healthier seniors, to give up their freedom to choose their doctors and to run the risk of being denied care. Research on biased selection suggests that Medicare should have set its HMO reimbursement rate as low as 55 percent of the rate it paid fee-for-service doctors (see sidebar), not 95 percent.

HCFA also failed to anticipate that HMOs would be more aggressive at denying health care than doctors paid under Medicare’s fee-for-service reimbursement system. A rapidly growing body of evidence indicates that HMO enrollees cost less than Medicare enrollees not just because the former are healthier, but because HMOs deny necessary medical services more frequently than Medicare does. A 1994 study of Medicare patients published in Health Care Financing Review reported that traditional Medicare patients received 18.8 home health care visits during the first 60 days after leaving the hospital compared to 12.7 for HMO patients, and that traditional Medicare patients recovered their health more quickly. A 1996 survey of Medicare beneficiaries conducted for the Physician Payment Review Commission (a congressional advisory committee) found that Medicare eligibles enrolled in HMOs were three times as likely as those in traditional Medicare to report problems getting medical care. A study published in the Journal of the American Medical Association in 1996 found that elderly patients were twice as likely to suffer deterioration in their health over a four-year period (not a decade or a lifetime) if they were enrolled in HMOs than if they were enrolled in traditional fee-for-service health insurance plans. Studies published in JAMA in the summer of 1997 indicated that HMOs perform far fewer cataract operations and provide fewer stroke rehabilitation services to Medicare beneficiaries. On the basis of studies like these, plus an ocean of anecdotal evidence, the October 1996 edition of Consumer Reports urged the nation’s Medicare eligibles not to enroll in HMOs “unless money is a very big consideration.”

In short, Medicare’s experience with HMOs demonstrates how easy it is for HMOs to extract subsidies from HCFA without asking for them without coming right out and saying, “We’re so unattractive that seniors won’t join us unless we offer better coverage than traditional Medicare, and, because we’re not more efficient than Medicare, we cannot finance the extra coverage unless the taxpayer subsidizes us.”

The HMO Shell Game

At this point you might be thinking that the HMO subsidy’s days are numbered now that the existence of the subsidy is known. You might be thinking that all these studies documenting biased selection, HMO rationing, and overpayments by Medicare will soon provoke Congress to eliminate the subsidy. If you’re thinking that, you’re wrong. Although some of the studies documenting the HMO subsidy received extensive publicity when they were released, the subsidy has never been eliminated. Congress did get brave in 1997 and ordered a cut of 2.8 percentage points to be phased in over five years. Beginning in 2002, the average Medicare HMO will be paid 92.2 percent of the average fee-for-service rate.

The HMO industry was not amused. It has just undertaken a national campaign to increase the subsidy. The campaign began last year with a wave of announcements by HMOs that they could no longer afford to offer better coverage to seniors and would be pulling out of the Medicare market. Between the spring and fall of 1998, 43 of the 347 HMOs that served Medicare beneficiaries told HCFA they would not renew their Medicare contracts, and another 54 announced plans to reduce the geographic areas they would serve. On January 1, 1999, over 400,000 Medicare beneficiaries in 29 states and the District of Columbia lost their HMO coverage. Of these, 50,000 have no choice but to return to traditional Medicare and either go without the coverage of drugs and other services they once had, or buy supplemental insurance at a premium far above the premium they paid to their HMO.

The HMOs want the public to believe that HCFA is the villain in this farce. For example, when United HealthCare, the nation’s second-largest health insurance company, announced last October that it was abandoning 59,000 Medicare beneficiaries in 12 states, United’s chief medical officer explained, “The revenue from HCFA was not high enough.” The news media has obediently passed this rationale on to the public without reminding us of the HMO subsidy. Nor are we being told that doctors in Medicare’s fee-for-service sector, who are not getting a handsome subsidy, are continuing to see Medicare patients all over the country including the regions from which Medicare HMOs have pulled out. Only the bloated, heavily subsidized HMOs are taking their marbles and going home.

In a rational world, the existence of the HMO subsidy, and the abandonment of the Medicare market by so many HMOs, would be interpreted as evidence that Medicare’s experiment with HMOs has failed - that HMOs are too inefficient to provide health care to the elderly and the disabled and should be ejected from the Medicare program. As Diane Archer of the Medicare Rights Center put it to The New York Times last August, “People seem to forget that Medicare was created because private insurers could not make money on the elderly population.” But despite the evidence that HMOs enroll healthier seniors and ration aggressively, and despite evidence that HMOs are incapable of attracting seniors and making money off of them without large subsidies, there is no movement in Congress to kick HMOs out of Medicare. It is more likely that Congress will increase the subsidy, at least for those HMOs that have announced they are bailing out.

The unwillingness of Congress to eliminate the HMO subsidy even after the subsidy has been documented suggests that any experiment with Medicare vouchers will be rigged. In such an experiment, the advantage to the private sector conferred by subsidies may be further enhanced by miserly voucher levels. An example will illustrate. Let us say that Medicare, which now spends about $5,500 per beneficiary, set the voucher level at $5,000 per beneficiary. Let us also say that the private sector, enjoying the advantages of biased selection and/or invisible rationing, can afford to set its premiums at $5,000 whereas traditional Medicare must continue to charge $5,500. Now all but wealthy seniors will have a strong incentive to leave Medicare and enroll with a health insurance company. Sicker seniors who want to stay in traditional Medicare will have to come up with an additional $500 payment.

If the voucher experiment is rigged well enough, that is, if biased selection and rationing permit health insurance companies to create a large gap between their premiums and Medicare’s, and if the voucher is not sufficient to cover Medicare’s premium, all but the wealthy sick will abandon Medicare. Privatization will have been achieved even though the word “privatization” may never have escaped the lips of its proponents. Proponents will assert that privatization occurred through the “free choice” of millions of seniors “voting with their feet.”

What is most galling about the recent debate about medicare - the “bankruptcy” rhetoric, the lionization of health insurance companies, and the call to substitute vouchers for guaranteed medical services is the failure of Medicare’s defenders and the media to counter the attack on Medicare by Republicans and conservative Democrats. There is nothing wrong with Medicare’s basic cost containment methods, certainly nothing so wrong as to warrant the herding of millions of enrollees into inefficient health insurance companies, many of which rely on rationing to control spending. Republican and insurance industry propaganda not withstanding, Medicare has been more successful at keeping its costs down than private-sector insurers have. According to a study by the Urban Institute, the growth rate of Medicare’s per capita costs between 1984 and 1993 was below that of the private sector for eight out of those 10 years. In the November/December 1998 edition of the journal Health Affairs, HCFA reported that Medicare’s spending per enrollee grew at a slower rate between 1969 and 1997 than the private sector’s (10.4 percent annually versus 11.4 percent, respectively). This track record would have been even better if Medicare had not been overpaying doctors, hospitals and HMOs. A recent federal investigation reported that Medicare is overpaying its traditional (fee-for-service) Medicare providers by about 14 percent, due in part to fraud by providers and incompetence on the part of the private-sector insurers that handle claims for Medicare. As I reported above, Medicare is also overpaying HMOs.

Medicare has been able to beat the private sector at cost containment because Medicare has very low overhead costs (Medicare spends a mere 2 percent of its revenues on overhead versus at least 13 to 15 percent for private-sector insurers), and because Medicare reimburses doctors and hospitals at rates below those paid by private-sector insurers. Medicare’s overhead is much lower than the private sector’s because it does not pay for marketing, utilization review (jargon for unsolicited insurance company advice to doctors about how to take care of patients), obscene salaries, and myriad costs associated with influencing public policy. Moreover, Medicare does not have to make a profit for stockholders.

Yet it’s also important to note the cost-control techniques Medicare does not use. Traditional Medicare does not use the techniques so beloved by the private sector that now threaten quality of care -restricting the freedom to choose one’s doctor, overturning physician-patient decisions, and exposing doctors to financial incentives to deny care.

The real problem with Medicare is not that it is inefficient but that it relies so heavily on regressive taxes. Medicare’s method of financing hospital services payroll taxes on working people is regressive and increasingly insufficient as the ratio of retirees to workers rises. The problem with Medicare’s method of financing physician services is that a fourth of the financing comes from monthly premiums paid by Medicare enrollees. These premiums are even more regressive than the payroll tax. The upcoming Medicare debate should include a discussion about whether to abandon payroll taxes and premiums in favor of a progressive, general tax.

However, a debate about the fairness of Medicare financing is unlikely in the near term. Judging from the lack of interest in this question shown by the National Bipartisan Commission on the Future of Medicare, it is a good bet that the fairness of Medicare taxes will not be a part of the upcoming debate. It appears, rather, that we will debate vouchers, or, in the lingo of the privatizers on the commission, “premium support.” We will debate vouchers despite the evidence that Medicare provides higher quality health care to our elderly and disabled at a lower cost than the nation’s insurance industry, and despite the crying need for a debate about whether Medicare should continue to rely on regressive taxes. We will debate vouchers because Republicans and their allies in the insurance industry have managed to fool a substantial portion of the nation’s opinion-making elite into thinking that Medicare’s problem is a cost-containment problem as opposed to a choice-of-financing problem, and that this problem can be ameliorated if health insurance companies are allowed to guard the Medicare chicken coop.

If the privatizers succeed in fooling a majority in Congress, and if the Medicare voucher experiment is rigged, Medicare will gradually be transformed from the most efficient insurance program in the country into a mere funnel of tax money into insurance company coffers. Classic Medicare will have been starved down to a small program for the very sick or killed off entirely. Those who committed this crime will deny their complicity. They will point their finger at all those seniors who “voted with their feet.”

Kip Sullivan is research director for Minnesota COACT (Citizens Organized Acting Together)

Posted by pnhp at 10:17 AM | Permalink

By Rob Stein
Washington Post Staff Writer
Friday, January 20, 2006; A15

The Department of Veterans Affairs medical system once epitomized poor-quality care. But after a series of changes, the system has been hailed in recent years as a model for health care reform.

Now, survey results released this week indicate that those improvements have translated into a high level of satisfaction among veterans getting treated by the rehabilitated VA.

The telephone survey, conducted in October, found inpatient care received a rating of 83 on a 100-point scale; outpatient care got a rating of 80. In comparison, a similar survey of patients receiving private care found they rated their satisfaction at 73 for inpatient care and 75 for outpatient care. The survey involved more than 200 veterans who received care at one of the VA’s 154 hospitals or 875 clinics.

“We’re very pleased and continue to be very proud of the work that people are doing in this vast health care system,” said Veterans Affairs Secretary Jim Nicholson. “The real proof in the pudding is in the taste — that is, ‘What do the people we’re taking care of think?’ And they give us very good grades.”

The findings mark the sixth consecutive year the VA health care system has outranked the private sector for customer satisfaction.

Nicholson attributed the high ratings to the changes in the system, such as implementation of electronic records to reduce the risk of errors.

“Our system has become not only much more efficient, but safer,” Nicholson said.

The survey, known as the American Customer Satisfaction Index, has been conducted since 1994 by the National Quality Research Center at the University of Michigan business school and two consultants, the CFI Group and the Federal Consulting Group.

Peter S. Gaytan, director of veterans affairs and rehabilitation for the American Legion, said he was not surprised by the findings because the quality of VA care has been steadily improving.

“The old image of the VA warehousing veterans has changed immensely in the past 20 years,” Gaytan said.

But Gaytan said many veterans have to wait months or travel long distances to get care because tight budgets have forced many facilities to cut back on service.

“The problem that the American Legion has is the accessibility to care. There are veterans waiting in line to receive care,” Gaytan said. “With the veterans returning from Iraq and Afghanistan, it’s our hope that they won’t be turned away.”

Nicholson acknowledged that some veterans do have to wait for care, but he said the waiting time has been improving and continues to improve.

“We absolutely are working on that and are making progress,” he said.

Posted by pnhp at 03:34 PM | Permalink

By Dan Carpenter
Indianapolis Star
February 12, 2006

To prescribe health savings accounts for a medical system that’s the most overpriced, overcomplicated, underperforming and unfair in the developed world is an artless dodge that denies the possibility the real cure may already be in hand.

It’s called Medicare. It’s run by the government at an overhead rate of roughly 5 percent, compared to upwards of 25 percent for private insurance companies. It doesn’t waste a lot of resources evading payment of claims or driving undesirably sick people off the rolls. It offers pretty much all the choices anybody else does and boasts a high satisfaction rate. You don’t lose it when you lose your job or your employer loses market share.

Medicare, or single-payer insurance by its generic label, is so good that other capitalist nations offer it to everybody. And no, heart attack victims don’t die waiting for a cot. The industrialized world’s average per-capita spending on health care is less than half ours, and their results are better in category after category, from infant mortality to life expectancy to doctor visits.

Why does it work so well? Because it works differently from health savings accounts. Single-payer insurance operates with the widest possible risk pool, meaning the wealthiest and healthiest chip in to pick up the poorest and potentially sickest.

This means there’s enough money to provide routine/preventive attention to everyone, instead of leaving scores of millions to put off care until they die or seek highly expensive emergency care as welfare cases.

This means no wasting billions on advertising to compete for the least needy customers. This means fewer clerks getting paid to cull out the cancer patients and more funds to hire cancer treatment personnel. Not to mention fewer eight-figure bonuses to executives for raising rates and reducing claims.

It has to happen, says retired Indianapolis surgeon Chris Stack, who works with a single-payer advocacy group called Physicians for a National Health Program. “You have GM, Wal-Mart, plus the average guy making $50,000 working his (deleted) off with two kids — he’s getting screwed. This cuts across ideological lines.”

So why is President Bush proposing not to expand Medicare but to cut it, while offering tax incentives to those who can go out and buy their own health care with high premiums and high deductibles, thus shrinking the risk pool?

Vested interests, of course. That’s why they made a labyrinth of the Medicare drug component with Plan D, an epochal transfer of national wealth to corporations, which waste more than $100 million of our health resources a year in lobbying.

So, you have top-heavy politics abetting a top-heavy health care system. Why isn’t the public pushing back?

“It’s such a puzzle,” says Matthew Gutwein, president of Wishard Memorial Hospital. “There is general skepticism about government as a better alternative to the private market. It’s not true of health care that private is better.”

While Gutwein doesn’t oppose health savings accounts, he calls them a Band-Aid and sees signs all about that single-payer is inevitable. The United States, he says, can’t compete globally and remain the only nation that ties health care to the workplace and marketplace.

So husband your money and try a hospital-tested home remedy. “We love Medicare,” the Wishard head man says. The question grows ever more pressing: What’s not to love?

Carpenter is Star op-ed columnist. Contact him at (317) 444-6172 or at dan.carpenter@indystar.com.

Posted by pnhp at 03:30 PM | Permalink

By Joseph Q. Jarvis
Salt Lake Tribune
February 12, 2006

Two days ago a bill, HB122, intended to provide Utah’s small-business owners with a new option for employee health benefits, was eviscerated by the Utah Health Insurance Association.

HB122, as originally written, authorized Public Employees Health Plan (PEHP) to organize a health benefit plan for employees of Utah’s small businesses. Written into the bill were planning steps which were adequate to identify and solve all problems and concerns related to cost, outreach and risk management.

A survey of more than 200 small-business owners in Utah found that their average employee age is 10 years younger than the average age of PEHP’s current beneficiaries. It is therefore possible that a PEHP small-business plan could be good both for small businesses and for the taxpayers who buy PEHP benefits for state, county and municipal employees.

Now, instead of providing a plausible solution to a critical problem, the bill merely proposes that a health insurance-dominated commission study the issue.

Recently, a Goldman-Sachs financial analyst observed that the Big Three U.S. automakers are “HMOs with wheels” that only happen to make cars. A well-known Princeton health economist added: “It’s insane to think that a company embedded in a fierce global competition can function as an insurance system.”

Yet U.S. health policy continues that insanity: American employers outspend Canadian employers 13-to-1 for the purchase of employee health benefits and 8-to-1 for the internal costs of arranging for and supervising benefits.

Nowhere do those costs hit harder than for small businesses. While 95 percent of the more than 600,000 Utahns working for businesses with 50 or more employees have a health benefit, only approximately half of the 250,000 Utahns working for small businesses do. Approximately 25,000 Utah small-business employees have lost their health insurance since 2000.

The vast majority of the 300,000 uninsured in Utah are small-business employees or their dependents. Unquestionably, the loss of health benefits can be attributed to the rapid rise of health premiums, which have risen five times faster than earnings over the past five years and double the national rate.

Health costs are making it difficult for Utah small businesses to compete either in the market for their goods and services or in attracting skilled workers. Ninety percent of Utah’s small-business owners indicate that health benefit costs negatively impact their profitability and employee retention.

If we care about economic development in Utah, we must find a way to make health benefits sustainably affordable for small-business employees.

High health care costs in the United States are not caused by Americans overutilizing health services, as some claim. International comparisons document that physician visits and hospital bed days by American patients are at or below the per capita average of other nations.

Rather, high American health care costs are caused by the related failures of efficiency and economies of scale. American health financing has a bureaucratic burden five times that of other industrialized nations.

Health insurance companies pay to deny health care. In response, providers of health care hire staff to extract payment from insurers.

Because insurers fail to aggregate people into large risk pools, they fail both to spread and manage risk optimally and to maximize group purchasing power to moderate prices.

It stands to reason that a search for sustainable health financing for small-business employees in Utah should begin by identifying the most efficient health financing system in the state and making that available to small-business owners.

Unquestionably, the Public Employee Health Plan is Utah’s most efficient payer for health services. At 3.8 percent, PEHP administrative costs are about one-fourth of the average similar costs for the state’s commercial carriers.

Unfortunately, by state statute, PEHP is currently unable to offer a small-business health plan, which means that while the state’s commercial carriers are apparently increasingly unable to meet the needs of small business, PEHP is not allowed to even try.

The only opposition to the bill came from commercial insurance carriers. It is apparently not in their interest to allow small businesses to experience sustainably affordable health benefits through the state’s most efficient payer.

If you support the interests of small-business owners, employees and taxpayers over health insurance carriers, call Gov. Jon Huntsman Jr. and your legislators and tell them to reinstate the original intent of HB122.

Joseph Q. Jarvis is a physician and president of the Utah Health Alliance.

Posted by pnhp at 03:25 PM | Permalink

By Sebastian Mallaby
Washington Post
February 13, 2006

The president likes to be consistent. Loves Laura; sticks to Laura. Kicks drink; keeps kicking it. First inaugural address: blue tie, white shirt. Second inaugural address: blue tie, white shirt. Weight in 2001: 190 pounds. Weight in 2005: 192 pounds. Hair length: same. Mood: same. No Clintonian gyrations.

Same deal when it comes to politics. Fights terrorists; keeps fighting them. Cuts taxes; keeps cutting them. Trusted Karl in Texas; still trusts him. Simple man. Straightforward man. How many policy moods and political gurus did Bill Clinton go through?

Same deal with the “ownership society.” First used the term in 2002. Went big with it at the Republican convention in 2004. Pretty much taped the slogan to his head in 2005, when he campaigned for personal Social Security accounts all across the country. You think George Bush would let go of this stuff just because Social Security reform failed? Fuhgedaboutit.

The ownership society is back, though it’s got a new label. Bush may not be pushing individual Social Security accounts these days. But he is pushing things called health savings accounts, which turn out to be similar.

Health savings accounts are ostensibly supposed to fix the health system. Right now, tax rules subsidize company-provided health insurance, but they’re less generous toward out-of-pocket medical payments; as a result, company health plans pay most bills and patients have no incentive to shop around for the best bargain. Health savings accounts end this tax bias. Anyone who buys an insurance policy with a deductible of $1,050 or more can open an account and save $5,250 a year toward out-of-pocket health costs, tax-free. This will shift control of medical spending into the hands of consumers, who will discipline overpriced hospitals and clinics.

Or so goes the theory. In practice, probably less than half of all health spending outside Medicaid and Medicare would be affected by the new consumer-driven discipline. Many hospital stays cost more than any deductible, so consumers would have no incentive to bargain; emergency-room patients aren’t in a fit state to negotiate prices with their doctors. But consider an even more basic question: Is the ostensible reason for health savings accounts the real one?

If the administration’s goal were merely to remove the tax bias against out-of-pocket health payments, it could simply make these tax-deductible. No need for health savings accounts to accomplish that — just tell people to count out-of-pocket payments against taxable income.

Even if the administration were determined to shelter out-of-pocket payments using health savings accounts, why make them so generous? It proposes both a tax deduction and a tax credit when money goes into the accounts; savings would accumulate tax-free and could be withdrawn tax-free also. As Jason Furman points out in a paper for the Center on Budget and Policy Priorities, no other savings vehicle enjoys so many privileges. And then there’s the size of these accounts. If the aim is to discipline health spending below the deductible, why subsidize savings up to $5,250 a year — five times more than the deductible?

In sum, health savings accounts are not just about ending the tax bias in favor of traditional company health plans. The administration is proposing a new kind of 401(k), and using it as an inducement to quit low-deductible insurance. Rich people, who gain most from the tax breaks on saving, will be first to sign on; healthy people, who subsidize sicker people in company health plans, will be right behind them. Their exit may force traditional health plans into a death spiral. The loss of the subsidy from healthy workers will drive premiums up, which will drive more healthy people into health savings accounts, which will drive premiums up further.

The State of the Union address (blue tie, white shirt) contained barely a mention of health savings accounts, but don’t let that fool you. Because these accounts are being pushed modestly, with no grand Social Security-style talk of remaking the social contract, there’s a chance that they’ll be seen as just one of various bewildering tax tweaks and slip quietly through Congress. But the proposal cries out for a debate very much like last year’s — a debate about personal saving vs. collective insurance.

A rerun of last year’s debate would show that health savings accounts are harder to defend than personal retirement ones. They are shockingly regressive: Furman’s study shows how a poor family might get a subsidy of $150 while a rich one might get more than $4,000. They have not just a transition cost but a real cost: The tax breaks could widen the deficit by at least $132 billion over 10 years and a lot more after that. And health savings accounts pose a more formidable threat to traditional corporate health plans than personal accounts posed to Social Security. Market forces are already dislodging company health plans; an extra shove could cause an avalanche.

The limited consumer discipline that would come from health savings accounts could not justify these disadvantages. But when you talk to administration officials, they express remarkably few doubts. They believed in the ownership society last year; they still believe in it this year. They believe in individual choice; they distrust collective programs. They don’t worry too much about the risks to the budget. Or to distributional justice. Or to existing safety nets.

Simple administration. Straightforward administration. The Clinton team would never have proposed such a clunker of a policy.

mallabys@washpost.com

Posted by pnhp at 03:22 PM | Permalink

New York Times
February 11, 2006

To the Editor:

Your Feb. 3 editorial “The Lopsided Bush Health Plan” nicely summarizes all the reasons why health savings accounts are a very bad idea and will not help solve the nation’s health crisis. But it disappoints at the end by failing to suggest what kinds of reforms might really work.

The evidence seems clear: Market-based policies cannot produce the system we need. Isn’t it time to consider a unified “single payer” insurance arrangement (“Medicare for all”) coupled with thoroughgoing reform of the delivery side as well?

Arnold S. Relman, M.D.
Boston, Feb. 3, 2006

The writer, professor emeritus of medicine and social medicine at Harvard Medical School, was editor of The New England Journal of Medicine, 1977-91.

Posted by pnhp at 03:19 PM | Permalink

By John McCarron
Chicago Tribune
February 10, 2006
Additional material published Feb. 11, 2006

CORRECTIONS AND CLARIFICATIONS
In his Commentary column Friday, John McCarron stated that General Motors recently announced it will cap spending on health insurance premiums for salaried employees at 2006 levels. In fact, the announced cap applies only to retired salaried employees.

Say good-bye to your group health insurance.

OK, maybe not right away. Your employer may stick with your plan for a few more years. Don’t toss out that health-care card just yet.

But if you’ve been following the business news lately, and if you paid close attention—very close attention—to President Bush’s State of the Union address, you may hear a distant knell for the way most Americans get their health insurance.

General Motors, which spends more on health care for its workers than on steel, announced that it will cap spending on health insurance for salaried employees. Any future cost increases—and costs have been rising by double digits—will be borne by paying higher premiums, deductibles and co-pays.

That’s not so drastic, really, when you consider big outfits like GM, where labor contracts set a high standard, have offered employees some of the nation’s best benefits. But it does signal that the cost-sharing arrangement between employers and employees—you pay half, we pay half (or some such split)—is going the way of the defined-benefit pension. Remember the defined-benefit pension?

Then again, GM had little choice but to unhook from the great medical money machine here in Viagra Nation. The company must compete globally, as must all U.S. manufacturers. Compete for investors, too, in a world where you can buy the stock of Honda or Toyota as easily as Ford or GM.

So the race is on to limit corporate exposure to runaway health insurance costs. And sure enough, President Bush has a plan.

In his address, the president said government has a responsibility to “help people afford the insurance coverage they need.” The way to do that, his aides later explained, is to “level the playing field” so folks who buy their own insurance get as good a deal as folks who join their company’s plan.

Sounds reasonable. But details of the proposal, released by the Treasury Department, are causing quite a stir among the fraternity of insurance wonks who understand the implications.

Bush proposes a supercharged version of the health savings accounts, or HSAs, that Congress first authorized in 2003. Think of HSAs as an individual retirement account for health-care expenses. The way it works now, workers who choose “high-deductible” plans—plans that require patients to pay the first $1,500 or more out-of-pocket—are eligible to make tax-deductible contributions—up to $5,450 a year in a family plan—to an HSA and later use that money to pay uncovered medical expenses.

Bush would let that family sock away $10,500 per year tax-free. Moreover, they could claim a tax credit equal to 15.3 percent of the amount they deposited. But it gets sweeter. If the worker buys his own high-deductible insurance policy, rather than one offered at work, the premiums he pays would be fully tax-deductible and eligible for the 15.3 percent tax credit.

It’s all very complicated, but the bottom line is that relatively healthy people who can afford to set aside 10 grand a year would come out ahead by opening an HSA and buying their own insurance. After all, most employees cannot deduct the premiums they pay for their group plans, much less claim a refundable credit.

So what’s wrong with this picture? What’s wrong with encouraging workers, and their employers, to opt out of group insurance and go it alone … with large amounts of help from Uncle Sam?

Plenty, according to the Center on Budget and Policy Priorities, a Washington-based think tank. You can read its analysis online (www.cbpp.org), but an abbreviated list of horribles goes like this:

- If, as expected, the healthiest and wealthiest leave the group insurance pool, premiums will shoot up for the not-so-healthy and not-so-wealthy. That’s if they can find a plan that will take them. What insurance company is going to want your diabetic wife or disabled child?

- If, as expected, small-business owners, many of whom earn too much to qualify for a tax-deductible IRA, opt for the Bush HSA, which has no income limits, won’t many owners simply do away with their company’s group plan altogether? What’s good for the boss must be good for the workers, right?

- If, as the free-market theorists predict, people with high deductibles “shop around” for bargain health care and forgo “unnecessary” care, how are folks to decide what and when care is necessary, much less where they’ll get the most for their money? Surf the Internet? Thumb the Yellow Pages? So much for your primary-care physician and his or her trusted referral network of specialists.

No, what we have here is another Texas “two-fer,” a combo better than $3 gasoline and lower taxes on capital gains. What we have here is the fig leaf behind which corporate America will walk away from group health insurance, along with the sweetest tax shelter ever invented for the fortunate few with six-figure incomes.

RIP, group health insurance.

John McCarron writes, teaches and consults on urban affairs.

Posted by pnhp at 03:15 PM | Permalink

H.R. 4519
The Library of Congress
THOMAS

2/3/2006 - Presented to President.

State High Risk Pool Funding Extension Act of 2006

Seed grants to states for creation and initial operation of a high risk pool for fiscal year 2006: $15,000,000.

Grants for operational losses plus bonus grants for supplemental consumer benefits for fiscal years 2006 through 2010: $75,000,000 for each fiscal year

http://thomas.loc.gov/ (enter HR 4519 as bill number)

And…

State High-Risk Health Insurance Pool Participation
Kaiser Family Foundation
statehealthfacts.org
December 31, 2004

United States: 182,381 participants

Number of states without pools: 17

http://www.statehealthfacts.org/cgi-bin/healthfacts.cgi?action=compare&category=Managed+Care+%26+Health+Insurance&subcategory=High+Risk+Pools&topic
=High+Risk+Pool+Participation

Comment: By Don McCanne, M.D.

A fundamental principle of health insurance is to share the costs of the few who are sick with the many who are healthy. This principle applies in all industrialized nations, except the United States.

The success of our private health plans is partly dependent on how effective they are in avoiding coverage of the high risk sector. Some of the tools they use include medical underwriting, selective marketing, unaffordable premiums, benefit exclusions, and cancellation of group plans with unfavorable experience ratings. Regardless of how they do it, they have been very successful. You probably have friends or family members, or perhaps even yourself, who have been unable to purchase insurance in the individual market.

Since markets never seek out losses, only public policies can solve this problem. Every other nation has provided coverage for everyone, but they have been able to do so only through the application of public policies.

How are we doing here in the United States? With the federal government willing to contribute only an average of $1.5 million per state, it is obvious that they have walked away from the problem. And the states? 17 of them don’t even have a program (and that doesn’t include Florida which closed theirs to enrollment in 1991). With a paltry 182,000 covered throughout the nation, it is obvious that the states also have refused to establish public policies which would seriously address this problem.

With health care systems that spend on average half of what we do, how have all other nations successfully addressed this problem? Well, it’s very simple. They’ve mandated, through public policy, that everyone will be covered.

(This message has been truncated to avoid a display of belligerence towards those who perpetuate our policies that result in personal financial ruin, physical misery and even death, in the face of the world’s greatest wealth.)

Posted by pnhp at 03:07 PM | Permalink

By Kay Lapp James
Portage Daily Register
November 9, 2005

Monday’s e-mail contained a surprising press release from Attorney General Peg Lautenschlager. She announced that her office was taking actions against two Milwaukee-area hospitals for unfair trade practices.

The complaints, which are to be filed with the Department of Agriculture, Trade and Consumer Protection, say the hospitals charged uninsured patients higher prices than they charged the vast majority of patients who have either Medicare or private insurance. The complaints, according to the press release, seek orders prohibiting hospitals from continuing to charge excessive prices to uninsured patients.

One complaint involves a man who had a stent implanted in his heart and stayed less than 24 hours in the hospital. He supposedly received a 20 percent discount because he did not have insurance. His bill was $33,646. Medicare would pay $15,000 for the same procedure.

In the other case, a woman had emergency gallbladder surgery and was billed $31,614. Medicare would have paid $5,000 for the operation, and the hospital would give an insurance company an average discount of 37 percent.

The difference in prices, or that uninsured people pay the highest prices for medical care, did not surprise me. I heard similar figures when I covered a talk by Drs. Linda and Gene Farley. The Farleys spoke of the need for a national single-payer health plan and discussed the costs and inequities in the current system.

The Farleys spoke at a meeting of the Dells Progressive Voices and their talk was greeted enthusiastically. Most politicians, businesses and the health care establishment have not greeted talk of a single payer or national health care system enthusiastically.

The plight of the uninsured has been ignored since the Clinton administration’s national health care plan got a decidedly chilly reception and defeat. People, corporations and even unions complain of health care’s increasing costs, but like the weather, nobody does anything.

The Farleys said a bill establishing a single payer system in Wisconsin had been introduced, but I doubt it will pass. It has been introduced several times in the past.

My surprise at the press release stems from seeing a politician taking aim at the healthcare establishment. I also learned 22 states have initiated similar moves.

Whether or not Lautenschlager is successful with the complaints, I wonder what the effect will be. Will this bring attention to the problem of not having insurance? Will it focus attention on the mishmash that constitutes the healthcare payment system?

I know people who live without health insurance who fear being sick or having an accident. The Farleys said people die because they don’t have insurance. I know at least one person who declared bankruptcy because of medical bills — common for the uninsured.

The uninsured are not the only ones concerned with the cost of healthcare. Wal-Mart announced new insurance plans for its employees and then an internal memo surfaced. The memo suggests the company hire only healthy, young people and get rid of workers who have health problems. This is from a company that has a large percentage of workers receiving Badger Care.

Wal-Mart is not unique. Other companies may have plans for cutting health care costs. They don’t put them in writing. Because of healthcare costs, I may live in an environment in which those who are not being perfectly healthy won’t be able to work.

Insurance, or the lack there of, concerns more than the uninsured. Employed people do not dare change jobs because a spouse or child has a chronic health concern. I wonder how many people don’t start a business because they cannot start one and afford insurance.

Health care in this country is a mess, and we need changes. Maybe our state can be a leader and start changing the system before it consumes us.

Kay Lapp James is editor of the Dells Events. She can be reached at kjames@capitalnewspapers.com or (608) 745-3567.

Posted by pnhp at 11:14 AM | Permalink

By Lance Dickie
The Seattle Times
February 10, 2006

The nation’s health-care system has not gotten bad enough yet for real change to occur. Just wait.

An increasingly anxious middle class is seeing skimpy insurance coverage, higher costs, diminished quality, fragmented service and the choking feeling no one is in charge. Those frustrations eventually will build enough pressure for change.

Seemingly ages ago, President Clinton banged a drum for a national health-care overhaul, and the state Legislature passed a bold package of reforms. The efforts went nowhere. Hillary Clinton was pilloried and local changes were repealed in a stampede. A smug, comfortable swath of citizens did not believe they had a stake in the debate.

In 2006, people are paying attention as their health insurance erodes with higher premiums, growing copayments, soaring deductibles and unstoppable medical costs. Health-savings accounts and tax sheltering cash for medical coverage? They sound like a cruel joke.

Big corporations bitterly complain about the legacy expense of health care for retired workers. They are potential allies with the middle class for national changes. Yet, other employers watch to see if the brazen parsimony of retail giant Wal-Mart becomes the new operating model.

A frightened middle class makes things happen.

Legislators in Olympia, disgusted by Wal-Mart’s cynical willingness to point its employees toward tax-supported health coverage, want a bill that sets a “fair share” minimum health-care contribution for large employers. If employers do not spend a required percentage on health care, they would pay into the state’s health-service account.

“In a sense, they’ve figured out that they can outsource their benefits (at no cost) to government and the taxpayer,” Craig W. Cole told legislators last month. “And, by so doing, they have created a very low competitive cost structure that punishes ‘good’ employers.”

Who is this troublemaker? His Bellingham-area supermarket chain was founded in 1909 and has 1,500 employees. He is also a University of Washington regent.

But even solid citizens such as Cole sound too radical for skittish legislators who recall the health-care upheavals of a dozen years ago. Fair share is not likely to get a fair shake this session. Even state Senate legislation to study access to insurance and health costs and develop a five-year plan has been pulled in favor of an under-the-radar budget proviso to accomplish the same thing. A list of recommendations would be due back by December before the next session.

Health-care reform is not going away in Olympia.

Pressure builds from another direction. King County Executive Ron Sims heads the Puget Sound Health Alliance, which has attracted national attention with efforts to improve health-care quality and lower costs.

Sims leads a five-county, independent, nonprofit, nonpartisan effort to identify the best medical practices in five initial priority areas: diabetes, heart disease, low back pain, depression and pharmacy issues. This ambitious consortium of providers, consumers and insurers wants to learn how to get medical care done right the first time.

More pressure for change. U.S. Rep. Jim McDermott, D-Seattle, has steadfastly introduced legislation in Congress to create a single-payer health system financed with a broad national tax. Health care stays private and local, but Uncle Sam does the paperwork and pays the bills.

The tenacity and ideas of this lawmaker and physician stirred a rousing ovation from doctors and medical students at a standing-room-only inaugural meeting of the Seattle chapter of Chicago-based Physicians for a National Health Program. Hundreds braved a Sunday-night downpour to hear McDermott and a panel discuss reforms.

Physicians across the country see the system not serving their patients. Health-care providers are driven to distraction by the time and expense of working with 1,200 insurance companies.

Good people with a commitment to the local delivery of health care are leading efforts to find solutions very close to home.

Put it all together. Legislative stirrings. Nation-leading explorations of evidence-based medical savings. Leadership for a national single-payer insurance plan. Pressure builds as middle-class confidence and coverage erode.

Lance Dickie’s column appears regularly on editorial pages of The Times. His e-mail address is ldickie@seattletimes.com

Posted by pnhp at 11:10 AM | Permalink

Editorial
Times Argus (Barre-Montpelier, VT)
February 2, 2006

One of the leading advocates of health care reform has given members of the Legislature, Democrats and Republicans, a failing grade for addressing reform in a meaningful way.

Dr. Deborah Richter told a labor gathering in Barre on Sunday that plans proposed by Gov. James Douglas and by Democrats in the Legislature fail to take on the health care system as a system. Instead they are tinkering around the margins.

Richter is the co-author, along with former Human Services Secretary Cornelius Hogan, of a book called “At the Crossroads: The Future of Health Care in Vermont.” She and Hogan are leading advocates of an integrated, publicly financed health care system, and their thinking helped shape the health care debate as it got under way last year.

In her recent speech she was critical of Democratic legislators for accepting Douglas’ “reality” regarding health care. That reality is characterized mainly by a fear of new taxes. Democrats have backed away from plans for the use of broad-based taxes to pay for health care, knowing that Douglas would veto such a scheme.

Richter describes a different reality. She says that Vermonters presently pay a variety of taxes for health care — some visible, some invisible. We pay through property taxes, taxes for worker’s compensation, premiums paid by employees and employers, a higher cost of doing business, bankruptcies, and taxes that already go to government programs.

This system remains enormously costly and out of control because care remains separate from financing. Health care providers at present have little incentive for keeping people well. Insurance companies have little incentive for paying out money. Because providers and payers are separate, they work at cross-purposes.

Richter makes the point that most of what is paid out for health care is fixed costs — nurses’ salaries, hospital expenses, dialysis units. The nurse’s salary does not disappear if no one shows up at the emergency room on a given night. We pay her salary because we want her in the emergency room in case our spouse has a heart attack.

These fixed costs can be budgeted, Richter says, and doing so is the best way of containing costs. No other sector of the economy — certainly, no major business — operates without a budget. But the health care sector does.

Douglas opposes a broad-based tax, saying it would hurt the economy. Richter counters that Douglas portrays a broad-based tax for health care as a new tax. Instead, she views it as a replacement tax. It would replace a host of visible and invisible taxes that we are already paying but over which we have no control.

She says the Democrats in the Legislature have failed to come through with the studies that they promised on the financing of health care reform and its effect on the economy. She urges the Democrats to pursue these studies in order to provide a base line for discussion of meaningful reform.

The Legislature and governor have talked about a variety of constructive measures, such as improvements to the care of chronic illnesses and more sophisticated information technology. We are still waiting for information about whether broader reform would be possible. There are many questions about whether it would be, but there is no hope for progress until we have some answers.

Posted by pnhp at 11:07 AM | Permalink

By John Zicconi
Vermont Press Bureau
February 8, 2006

MONTPELIER — Vermont’s Progressive caucus on Tuesday harshly criticized the Democrat-controlled Legislature for not conducting studies that could show a single-payer, publicly-financed health care system is the most cost-effective way to provide universal health coverage for all Vermonters.

Led by radio talk show host Anthony Pollina — who is considering a run for lieutenant governor — Progressives accused Democrats of being too quick to compromise with Republican Gov. James Douglas, who last year vetoed a health care reform bill that called for broad public financing and raised taxes.

“What we are seeing is politics as usual,” Pollina said. “We want what is best for the people.”

Progressives are angry that legislative consultant Kenneth Thorpe was instructed not to do a cost analysis of a single-payer system.

Thorpe did a similar study for Massachusetts that concluded a universal health care system paid for through broad public financing would save that state billions more than other reforms, Progressives said.

“For some reason the Legislature has decided not to study that option,” Pollina said. “But we need that information. … We want that position put back on the table.”

House Speaker Gaye Symington, D-Jericho, said Thorpe was instructed not to pursue a single-payer system because it has no Republican support, which is needed to pass health care reform.

“We have a governor who will not move on a single payer health care bill,” Symington said. “We focused on areas that we thought were more useful.”

The House Health Care Committee is expected to propose a reform measure this week that calls on both public and private methods to provide health care.

The proposal is expected to call for those who are now insured through their employer to remain that way. A separate public system will likely be proposed to cover the 64,000 Vermonters who now lack coverage.

Symington said the Legislature’s joint Health Care Commission, which employs Thorpe, has a four-year charge. A single-payer study could be conducted in the future, but with no chance of such a system becoming law in 2006 the information was not a priority.

“First things first,” Symington said.

She then chided Progressives for calling a press conference to publicly complain rather than working with Democrats to reform Vermont’s health care system in a way that can gain broad political support.

“That shows there is a partisan agenda behind this rather than working constructively to get things done,” Symington said. “I’m hoping we can get back on track.”

Progressives said it is impossible to debate what is best for Vermont if information is purposely withheld. They encouraged Democrats to have Thorpe conduct a single-payer financial study, which they believe can be completed in a month.

“How will we know it won’t work if they won’t do the study?” Pollina said.

“The real issue with health care is cost,” he added. “Legislators should be focusing on ways to lower costs for families and employers and move to a rational system not tied to employment. That should be the center of debate.”

Contact John Zicconi at john.zicconi@rutlandherald.com

Posted by pnhp at 11:01 AM | Permalink

By Hilary Corrigan
Coast Press Reporter
February 8, 2006

It’s an ambitious goal, Lewes resident Lloyd Mills admits.

Installing a long-term, universal health care coverage system in Delaware — probably with the state government collecting money through a new tax and serving as a single-payer entity — doesn’t sound like an easy project.

“We’re going to have to do it. There’s no choice,” Mills said, adding that health care has grown unaffordable for middle-class residents and such a cover-all approach remains possible. “There are countries that have done it.”

Mills is a committee member with the Delaware Health Care Commission, a state body seeking plans on designing a universal health care coverage system in Delaware. On Feb. 10, the group will consider proposalsfor such a blueprint and select an applicant to draft it by the end of summer.

“We’re embarking into relatively new territory,” said Paula Roy, the commission’s executive director.

But to Roy, it’s part of the stated mission to craft “basic, affordable health care for all Delawareans” that led the state’s general assembly to form the commission in 1990.

“Our job isn’t done until there are strategies in place to cover everyone,” Roy said.

The commission came up with a similar universal coverage idea a decade ago, but took a different action route, reviewing ways to tweak the existing health care system in order to cover more people.

“It’s come full-circle,” Mills said of a universal plan. “We’re tired of tinkering. Tinkering has gotten us nowhere.”

‘Same boat’

In Delaware, about 100,000 remain uninsured and just as many are under-insured, Mills said. That leads to emergency room visits after people who can’t afford pricey medical attention let health care problems fester. Most of those with insurance have it through luck, since their employers offer it, he said.

“We’re all in the same boat,” Mills said of health care coverage needs, but that stance hasn’t improved what he describes as a failing system. “I’ve given up the moral argument. It doesn’t get anywhere.”

Instead, he focuses on the current system’s costs, what he calls a “patchwork of revenue sources” made up of co-payments, deductibles, premiums and other charges.

“There’s no good reason why it should be as complicated as it is, except a lot of people get paid a lot of money for pushing paper around,” Mills said.

He expects the draft plan to replace that with a new health services tax based on citizens’ ability to pay.

“Everybody in and everybody paying a fair share of the cost,” he said, adding that a single payer system would streamline financing. “One person paying and one person receiving all the bills.”

Mills expects that someone to be the state, possibly contracting an experienced insurance company to process claims and collections.

Such logistics present the problem, according to Beebe Medical Center President Jeffrey Fried.

“The devil is in the details,” Fried said.

Jim Bartle, Beebe’s vice president of finance, likes the idea of streamlining the hospital’s current administrative and financial burden associated with billing, insurance forms and claims to many different payers who all use different rules.

But crafting a single-payer system would need to include the federal government’s Medicare and Medicaid programs for senior citizens and those with low incomes. In an area full of retirees, more than half of Beebe’s business comes from those programs’ users, Fried said, and any new state plan would need to align federal plans for a fair process.

“What’s the role of the federal government?” Fried wondered. “That’s the big issue.”

He also wonders about Medicare’s financial future as the large baby-boomer generation retires and taps it.

“What are the alternatives?” Fried said, adding that he would support a universal coverage system, depending on details. “I think it’s good that people are looking at alternatives.”

Processing

Roy expects to receive most applications to the commission’s proposal request, advertised last month, on the Feb. 10 deadline.

“What we’re all really after is a way to cover everybody,” she said of the goal.

A federal grant allowed the commission to seek proposals outlining what such a system would resemble and how to install it.

“We will at least have a roadmap,” she said.

She finds more people willing to consider the possibility now than she found even five years ago. A 2004 report from the commission outlined a single-payer system possibility, but this approach takes a closer, more detailed look at it.

“The question is whether the challenges can be overcome,” she said. “Is it possible?”

Posted by pnhp at 10:58 AM | Permalink

FOR IMMEDIATE RELEASE
FEBRUARY 9, 2006
1:04 PM

CONTACT: Institute for Public Accuracy
Sam Husseini, (202) 347-0020; or David Zupan, (541) 484-9167

Medicare: Rich HMOs, Sick Patients

WASHINGTON - February 9 -

STEFFIE WOOLHANDLER
Associate professor of medicine at Harvard University, Woolhandler said today: “The Bush health agenda is to privatize Medicare — to shift the taxpapers’ money away from sick patients and toward the drug and insurance industries. The Medicare Part D bill included over $40 billion in excess payments to HMOs. Because the Medicare Part D bill prohibits the government from negotiating with the drug companies for lower prices, it will provide a windfall to the drug industry — a windfall worth at least another $40 billion. Now Bush announces major cutbacks to hospitals and home care agencies that actually provide care to Medicare patients, and plans to make poor Medicaid patients reach into their own pockets to pay for health care. Bush is determined to redistribute health care dollars upward — away from the sick and poor, and towards his friends in corporate America. We need real health reform, a non-profit national health insurance system covering everyone.” Woolhandler is co-director of the Harvard Medical School General Internal Medicine Fellowship Program and a co-founder of Physicians for a National Health Program.
More Information

REESE ERLICH
Freelance journalist Erlich investigated the Medicare drug program for The California Report, a statewide news program airing on National Public Radio stations. He said today: “Many people are aware of the bureaucratic problems with implementing Medicare Plan D. But even after those are settled, tremendous problems remain. Six million people in the U.S. are enrolled in both Medicare and Medicaid. They were forcibly enrolled into Plan D, and the vast majority now must pay more for their drugs. Co-payments may range from a few dollars to over one hundred dollars per month. People who are HIV-positive, receiving assistance through the AIDS Drugs Assistance Program, are hit even harder. I interviewed one woman who will have to pay over 40 percent of her monthly disability income for health expenses — which were free before Plan D.“

###

Posted by pnhp at 10:55 AM | Permalink

York Dispatch
Editorial
February 9, 2006

President Bush’s 2007 budget, with its target of reducing Medicare spending by $36 billion over the next five years, could be the proverbial straw that breaks the back of the nation’s health care system. It also could drive states and their voters to the wall, forcing a new look at universal health care.

Squalls tearing through the current system — including the latest round of bureaucratic chaos, the messy Medicare Part D Prescription Drug Program — have the potential to form a political storm that the Republican-dominated Congress had best heed in their own interest.

No, the American Medical Association doesn’t like the concept, nor do most state medical associations, for-profit hospitals and institutions — especially the pharmaceutical industry.

But there comes a time in the history of any business when, through arrogance or favorable legislation, it gets priced out of business. The nation’s health-care industry is leaping to that precipice.

It seems the president’s budget advisors are slow to get the message about the nation’s health-care crisis. Witness the fiscal 2007 Budget that:

Cuts $36 billion in Medicare over the next five years and reduces funding for the National Institutes of Health, the Centers for Disease Control and Prevention — the folks responsible for seeing we don’t get avian flu — and slashes aid to children’s hospitals.

In an election year, every Republican member of the U.S. House and every GOP senator up for re-election (note here Rick Santorum) must be choking a bit on how this will play in the hustings.

Add to that the general unpopularity of the Medicare Prescription Drug Program — an excellent example of institutional confusion and a windfall for pharmaceutical companies — and you have a nightmare for any politician trying to sell such goods to senior voters or their children.

Time for universal health care? One would think. In Arizona last week, there was a hopeful ripple. Physicians gathered on the capitol lawn to urge state passage of a single-payer health care system covering every resident.

The plan would use funds from employers, Medicare and Medicaid for universal coverage in the state, regardless of age or income level.

In Arizona, in Pennsylvania and across the nation, the system is broken. And it’s obvious from the latest federal budget proposal that the government doesn’t know how to fix it.

To do so would require a sense of political will absent in a Congress clearly beholden to market interests instead of to the health care needs of the country as a whole.

The Bush administration’s health-care cuts are bottom-line economics in a system that cries out for drastic reform. It’s ill-advised and a further recipe for disaster.

Posted by pnhp at 10:51 AM | Permalink

WASHINGTON, Feb. 6 (UPI) — President Bush’s health savings account (HSA)plan will mean income-based healthcare rationing, an economist said Tuesday.

“Should healthcare be cheaper for high-income people?” asked Princeton economics professor Uwe Reinhart at the National Health Policy Conference in Washington. “Is this a faithful reflection of America’s social ethic?”

Assuming a premium rise of 8 to 10 percent over the next 10 years, the cost of keeping an average family healthy—including insurance premiums, deductibles and co-payments—will be $21,000 per year, far more than low-income families can afford, he said.

And giving a tax break for HSAs will help the wealthy, who pay a relatively high tax rate, but do little to alleviate the problem of soaring healthcare costs for the poor, who will likely be forced to forego medical treatment.

Saving the maximum allowed by HSAs, which could be increased to as much as $10,000 per year, is “easy when you make $200,000, harder if you make $30,000,” he said.

It is also not clear if patients will be willing and able to gather information and make informed decisions about treatments, as they would be called on to do in a transition to a system of individually-based health savings accounts and high-deductible insurance, Reinhart added.

Finally, if paying for medical expenses out of pocket is really about consumers taking charge, he asked, why do corporate executives always negotiate for excellent insurance as part of their compensation packages?

“I propose that coronary bypasses for corporate executives cost $1 million,” he said, “so they can have skin in the game and be empowered.”

Posted by pnhp at 10:48 AM | Permalink

Pearlstein Live
washingtonpost.com
February 8, 2006

Steven Pearlstein writes about business and the economy for The Washington Post. This is from a transcript of his online discussion.

Washington, D.C.: I’m hoping you can clarify a key point during your discussion. Nearly every newspaper article I’ve seen recently reports that there are now 3 million HSAs (this is based on a recent survey of health plans conducted by AHIP and has been cited by the White House). This is misleading. AHIP’s study found that 3 million lives were covered by a high-deductible health plan (HDHP) that is COMPATIBLE with an HSA. HSAs must be opened by a bank or other qualified trustee. Based on some early data we’re compiling, it looks like about 1 million HSAs (the actual accounts) have been established as of Jan. 1.

Steve Davis
Managing Editor
Inside Consumer-Directed Care

Steven Pearlstein: Thanks for that clarification.

http://www.washingtonpost.com/wp-dyn/content/discussion/2006/02/07/DI2006020700721.html

Inside Consumer-Directed Care is an industry publication:
http://www.aishealth.com/Products/NewsICD.html

Comment: By Don McCanne, M.D.

CDHC advocates (consumer-directed health care) are using AHIP’s report (America’s Health Insurance Plans) on three million HSA-compatible (health savings account) HDHPs (high-deductible health plans) to “prove”
that they’re not only for the young and wealthy. Their claim is that many older individuals with more modest incomes are turning to HSAs.

Higher-income individuals welcome the tax advantages and the opportunity to expand their pensions through the HSAs. Lower-income individuals are more desperate and are seeking health care coverage with lower premiums.
Higher-income individuals also welcome the HDHPs as smarter insurance when paying up-front costs is no problem, but lower-income individuals lack the discretionary income to fund the HSAs.

We do not yet have the data defining the income levels of the one-third opening HSAs and of the two-thirds selecting only the HDHPs but not the HSAs. But if the studies show any other trend than the blatantly obvious, the news headlines should reflect the view of a nation gone mad.

I checked eHealthInsurance for HSA-compatible plans in my zip code, and the lowest deductible I found for a family of four was $3500 individual/$7000 family, and the lowest premium was $2448. Median household income in 2004 was $44,389. Calculate the cost of housing, food, clothing, transportation, and other essentials, and then add the cost of HDHP premiums and the deductibles required before health care coverage begins, and then see how much you have left to deposit in a health savings account (even if you gave up computers, television cable, cell phones, etc.). It is no wonder that the nation’s savings rate is now a negative.

The CDHP advocates claim that these policies are great for older, lower-income individuals. To be fair, they are not quite countering our argument that they’re for the healthy and wealthy. They avoid using the spin that they also work for the sick and poor, substituting, instead, older and with lower incomes. But ignoring the needs of the sick is the fatal flaw in their proposal.

There is an important consequence of the HDHPs, intended or unintended. Only individuals with health care needs will be contributing to the health-cost-related expansion of the negative national savings rate. The majority of us who remain healthy will not have to share in this particular burden, at least not until the cost-shifting exceeds our discretionary income.

Okay. So young or old, sick or healthy, high-deductible health plans work for you as long as you qualify on the basis of wealth.

Posted by pnhp at 01:18 PM | Permalink

Is Technological Change In Medicine Always Worth It? The Case Of Acute Myocardial Infarction
By Jonathan S. Skinner, Douglas O. Staiger, Elliott S. Fisher
Health Affairs
February 7, 2006

Abstract:

We examine Medicare costs and survival gains for acute myocardial infarction (AMI) during 1986-2002. As David Cutler and Mark McClellan did in earlier work, we find that overall gains in post-AMI survival more than justified the increases in costs during this period. Since 1996, however, survival gains have stagnated, while spending has continued to increase. We also consider changes in spending and outcomes at the regional level. Regions experiencing the largest spending gains were not those realizing the greatest improvements in survival. Factors yielding the greatest benefits to health were not the factors that drove up costs, and vice versa.

From the Discussion:

Dramatic progress has been made in the treatment of heart attacks among the elderly during the past two decades. Between 1986 and 2002 the average one-year survival rate following AMI increased by nearly 10 per 100 elderly AMI patients at an estimated cost of less than $25,000 per life year saved. But underlying these numbers is tremendous heterogeneity across time and space: There was little improvement in survival after 1996, despite continued growth in costs, and there was much variation in survival gains across regions and over time, with regional gains that were (if anything) negatively related to costs. These facts and others like them have generated a debate over the value of additional medical care spending. On the one hand, aggregate trends in patient outcomes suggest that the technological innovations were “worth it.” In contrast, the apparent lack of any strong association between costs and patient outcomes or quality of care across regions suggests that aggressive cost-control policies might benefit society by eliminating unnecessary medical care for patients in high-cost regions.

A key assumption is that uneven diffusion of cost-effective innovations is a key factor driving differences in patient costs and outcomes. Support for this view comes from Paul Heidenreich and McClellan, who concluded that the vast majority of the increase in thirty-day survival following AMI between 1975 and 1995 was the consequence of low-cost treatments such as aspirin, beta-blockers, angiotensin-converting enzyme (ACE) inhibitors, and thrombolytics. Furthermore, both observational and clinical trial evidence suggests that use of these noninvasive treatments reduces the incremental benefit of more-expensive treatments such as invasive surgery.

It is important to note that our new view does not apply solely to “low-tech” effective treatments such as aspirin and beta-blockers, but rather it applies equally to any highly effective treatment, whether high-tech or low-tech.

The benefits of health care technology are often substantial. However, as health care costs continue to rise, squeezing consumers, producers, and the federal budget alike, principles of accountability-that each incremental dollar should provide something of real value to patients-become increasingly important. That some regions could implement technological innovations at remarkably low cost is a reminder that waste and inefficiency are not inevitable by-products of technological growth. Thus, efforts to develop measures of quality and efficiency that can encourage hospitals or provider groups to adopt low-cost, highly effective care, while discouraging incremental spending with no apparent benefits, might allow us to keep the golden goose of technological progress alive and well nourished.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.
25.w34

And…

To Use Technology Better
By Alan M. Garber

… their findings suggest that we should reexamine our approach to biomedical innovation. In nearly every disease area, we could use better treatments and better diagnostic approaches. For some diseases, like most cancers, dramatic improvements in outcomes are unlikely to occur without major investments in the development of new drugs, devices, and biotechnology products. As much as we would like new tools, though, Skinner and colleagues show that we haven’t mastered the tools that we already possess. The gains from more effective, efficient approaches to heart attack care, without using any medications or procedures that are not already available, would be enormous.

We have much to learn about promoting better medical care, and we should not underestimate the difficulty of the task. But in comparison to the money spent to develop new technologies, we spend a paltry sum on finding ways to improve the use of technologies we already have. According to a widely cited estimate, the average cost of developing a new drug-an average drug, not a breakthrough-was $802 million in 2000, or about $900 million in 2005 dollars. The entire 2005 budget for the only federal agency responsible for research on more effective care delivery, the Agency for Healthcare Research and Quality (AHRQ), was less than $320 million.

Encouraging both innovation and access to new technologies is the central challenge facing the U.S. health care system. If the cost of medical innovations is too high, only the well-insured-such as today’s Medicare beneficiaries-will have access to them. But as health spending rises, fewer and fewer people will have insurance, and swelling out-of-pocket payments will place some new treatments out of the reach of even the insured. A shrinking number of patients will then benefit from advances in care. New technologies can improve health, but unless we learn to use them better, we cannot expect to harness their value.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.
25.w51

Comment: By Don McCanne, M.D.

Should we continue with our current fragmented system of funding care that results in ever more costly expansion of both mediocre and valuable high-tech services? Or should we change to a single, integrated system of funding care that would make better use of what we have, while rewarding new technology that truly improves health care value?

With dedicated public stewards, a single payer system would be much more effective in achieving the latter goal.

Posted by pnhp at 01:15 PM | Permalink

By Dr. Susanne King
Berkshire Eagle
Tuesday, February 7, 2006

The United States spent $1.9 trillion on health care in 2004, 16 percent of the nation’s economy. Yet 46 million Americans remain uninsured, a 6 million increase since President Bush took office. In his State of the Union address last week, the president failed to mention these statistics, nor did he offer any effective solutions to the health care crisis.

His suggestion for wider use of electronic records could help provide more efficient care, but provides no help toward addressing the glaring inequities and financial costs of our health care system. The health savings accounts he proposes, which would make patients “take ownership” of their health care, are unaffordable for the vast majority of people who don’t have extra money for a savings account, or for the enormous deductible they would have to pay before using the account. Health savings accounts please Wall Street banks, as the New York Times noted last week; that should make us all suspicious.

*

When I was in medical school, I spent a few of my clinical clerkships in the Veterans’ Administration (VA) hospital allied with my medical school. The difference between the VA hospital and the private hospitals where I also trained was remarkable. In the VA hospital, laboratory and radiology services were so slow and inept that medical students would wheel patients to the X-ray department and perform blood counts in the laboratory. The elevators never worked. Nor did many of the ancillary staff. I directed my first “code blue” (a cardiac arrest) as a junior medical student on a young veteran with pneumonia. I ran the code until the resident physician arrived from the far reaches of
the hospital.

But all that has changed. Last week I spoke with my nephew, a junior medical student who has just finished a rotation at a VA hospital. He spoke of the high quality of care he observed there, as well as the efficiency of the system. Recent studies have shown that both the quality of care and patient satisfaction are higher in the VA system than in the private sector.

And the VA system has improved health care to veterans, even as it is spending less per patient. Between 1999 and 2003, the number of patients enrolled in the VA system increased by 70 percent, yet funding only increased by 41 percent. Amazingly, the VA system has been able to provide better care, for satisfied patients, with less money. Why hasn’t President Bush looked at a government program that works, to offer a solution to the health care crisis?

My nephew, a future doctor of America, said that the VA system has made him a believer in a national health care system, a “single-payer” insurance system. “Single-payer” means that there would be one administrator of health care funds, the government, which would collect and disperse the $1.9 trillion that are now administered by a huge patchwork of private insurance companies. That is a major reason why health care in the U.S. is so expensive, yet provides too little care to too few people. Too much of the $1.9 trillion goes toward the profiteering of drug and insurance companies. There is no private insurance in the VA system; and an additional source of savings is that drug companies have to negotiate prices with the VA, with resultant discounts for VA drugs, making their prices more commensurate with drug prices in other countries.

While many Americans cannot afford insurance coverage or medications, drug companies made more profits in 2002 than the other 490 companies in the Fortune 500 combined. The new Medicare drug bill, however, does not allow Medicare to negotiate with drug companies; it is yet another gift to the pharmaceutical industry from the Bush administration. While he is handing huge profits to the drug companies, as well as the insurance companies who are anticipating their windfall profits from Medicare, he plans to reduce payments to hospitals, the actual providers of care.

A new study from the University of California supports a 2003 study by Harvard researchers, Drs. David Himmelstein and Steffie Woolhandler, on the administrative costs that beleaguer our current health care system. Using conservative estimates, they found that only 66 percent of the health care dollar actually goes toward medical care. The rest goes toward billing (every doctor’s nightmare), marketing, insurance company profits, and administration. The Harvard study showed that a single-payer national health insurance, which would eliminate the insurance companies and streamline the healthcare system, would save almost $300 billion, enough to provide comprehensive health care for everyone.

Our veterans have the reformed health care system they deserve, one that provides comprehensive, high quality, efficient health care for their entire lives, including nursing home care. And we all deserve this kind of care.

Unlike the VA, which is restricted to specific public hospitals with salaried doctors, a single-payer national health care system would include private hospitals and doctors’ offices. But like the VA, everyone would be covered for all their health care needs, and, like the VA, this health care system would decrease administrative costs and prescription drug costs.

*

And here at home in Massachusetts, where we spend more per person on health care than anywhere in the world, the state Legislature’s health care conference committee still hasn’t been able to negotiate legislation to expand access to affordable health insurance. Ironically, financing is the sticking point, as the legislators look for more money to finance a plan that includes the insurance companies, with their administrative waste, profits and complexity.

It would be so simple if our Legislature would just consider single-payer legislation for our state, the Massachusetts Health Care Trust (Senate Bill 755). No extra funds would be needed; the studies have been done which show a single-payer system is feasible with the money we currently spend on health care. We need to elect the legislators who will make affordable health care reform happen.

Posted by pnhp at 09:48 AM | Permalink

Economist bashes Bush HSA proposal
United Press International
February 6, 2006

President Bush’s health savings account (HSA) plan will mean income-based healthcare rationing, an economist said Tuesday.

“Should healthcare be cheaper for high-income people?” asked Princeton economics professor Uwe Reinhart at the National Health Policy Conference in Washington. “Is this a faithful reflection of America’s social ethic?”

Assuming a premium rise of 8 to 10 percent over the next 10 years, the cost of keeping an average family healthy—including insurance premiums, deductibles and co-payments—will be $21,000 per year, far more than low-income families can afford, he said.

And giving a tax break for HSAs will help the wealthy, who pay a relatively high tax rate, but do little to alleviate the problem of soaring healthcare costs for the poor, who will likely be forced to forego medical treatment.

Saving the maximum allowed by HSAs, which could be increased to as much as $10,000 per year, is “easy when you make $200,000, harder if you make $30,000,” he said.

It is also not clear if patients will be willing and able to gather information and make informed decisions about treatments, as they would be called on to do in a transition to a system of individually-based health savings accounts and high-deductible insurance, Reinhart added.

Finally, if paying for medical expenses out of pocket is really about consumers taking charge, he asked, why do corporate executives always negotiate for excellent insurance as part of their compensation packages?

“I propose that coronary bypasses for corporate executives cost $1 million,” he said, “so they can have skin in the game and be empowered.”

http://www.upi.com/

Comment: By Don McCanne, M.D.

You hear it everywhere. Health care consumers need to have “skin in the game.” HSA advocates from the very highest levels, even The White House, are calling for empowering patients by requiring them to have more “skin in the game.” Every time I hear that, I cringe.

The greatest crisis in health care today is affordability, for the uninsured and many of the insured as well. A significant number of the 20 percent or so of people who have significant health care needs have already depleted their reserves. To suggest that they need “skin in the game” conjures up thoughts in me of, “Oh my God, they’re going to skin them alive before they get more health care.” I don’t actually envision much blood and gore, but I do see hapless people stretched to their limits, having to make choices about which of life’s basics should be forgone.

I am grateful to Professor Reinhardt for giving me a new mental image that appears in response to having “skin in the game.” My image actually goes further than the million dollar coronary bypasses for the corporate executives. I see a new health-care funding system tailored to the policies supported by the leaders of the consumer-directed health care movement. To be sure that everyone with health care needs would have “skin in the game,” we’ll make fees flexible and set them at a level that would deplete a person’s assets, leaving them with just enough so they have to make decisions about such basics as food and housing.

What a relief. A vision of Uwe Reinhardt is so much more pleasant than a vision of Hannibal Lecter!

Posted by pnhp at 09:53 AM | Permalink

By Don McCanne, M.D.

In a KPBS debate between James Knight and Don McCanne on consumer-directed health care and health savings accounts, Dr. Knight stated, “… the Rand Health Insurance Experiment… shows that people who pay for their own health care services themselves… will spend about 45 percent less on health care with no significant change in their health care status…”

Actually, the study showed that people who paid 95 percent of their health care costs out-of-pocket had annual expenditures that were 28 percent lower than those who paid nothing for health care. But the much more important point to be challenged is the implication that reduced utilization due to out-of-pocket spending never impacts health status.

Dr. Knight’s statement requires a response which the structured radio format did not permit. Below, internal and external validity are defined, followed by my response to Dr. Knight.

The KPBS debate:
http://www.publicbroadcasting.net/kpbs/news.newsmain?action=article&ARTICLE_ID=873506

The Economics of Health Reconsidered, Second Edition
By Thomas Rice, Ph.D.
Health Administration Press

Two major classifications designate the validity of research studies: internal validity and external validity. Internal validity refers to how well study results accurately represent what actually occurred in the specific setting being examined. External validity refers to how well the results from a particular study can be generalized to other settings and/or populations.

It is generally agreed among the health services research community that the RAND Health Insurance Experiment was very strong in terms of its internal validity. External validity is more of a concern, however.

http://www.ache.org/pubs/rice2.cfm

Email message from Don McCanne (not always known for his diplomacy):

Dr. Knight,

It was a pleasure to debate you on KPBS on the issues of CDHC and HSAs.
We’ll certainly never agree on health care reform, but we really should agree on the objective data in the health policy literature. Bending or breaking the data does not advance the dialogue on reform.

As with other CDHC supporters, you cited the RAND HIE as demonstrating that the decreased utilization due to patient cost sharing did not change health care status. But you are likely aware that economists rightfully have questioned the external validity of this study. Innumerable other studies have demonstrated a significant impairment in access and outcomes resulting from cost sharing. Even a closer look at the RAND HIE data confirmed that cost sharing did have a negative impact on sub-sectors such as hypertensives. The internal validity of the RAND HIE study would apply only to very healthy populations followed for a short enough period of time such that chronic disease would continue to have a very low prevalence in that population.

Applying the RAND HIE results to a cross section of our entire population with its high prevalence of chronic disease is not appropriate, and if done so deliberately to deceive, then is even dishonest.

Though you won’t enjoy it, you should read my Quote of the Day from yesterday that discusses the new RAND study which demonstrates that elimination of cost sharing reduces health care spending.

Based on what I said above, you should immediately challenge my statement. It has very high internal validity for the population using cholesterol-lowering drugs, but its external validity is very limited. Instead of stating, “reduces,” it should have stated, “can reduce.”

If you wish to read more, my message on the new RAND study is at the following link:
http://www.pnhp.org/news/2006/february/rand_eliminating_cop.php

We’ll certainly continue the debate over single payer, CDHC, and the various incremental approaches. At PNHP we pride ourselves on the fact that our single payer advocacy is based on an honest, comprehensive assessment of the health policy literature. If CDHC is to have any credibility, you’ll have to show us solid data demonstrating that your model will not have the negative impact that has been predicted and is already being confirmed. Your task will not be easy because you are beginning with highly flawed policy theory.

Peace,
Don

Don McCanne, M.D.
Senior Health Policy Fellow
Physicians for a National Health Program www.pnhp.org

Posted by pnhp at 04:51 PM | Permalink

New York Times
February 5, 2006

To the Editor:

Nicholas D. Kristof suggests that we mandate health-promoting measures like taxing junk foods. He says he’s personally “convinced that we need universal health care based on a single payer system,” but “that is not politically feasible now.”

“Not politically feasible” is code for “the politicians have been bought and paid for by the special interests.”

Aren’t our pols on the take also from purveyors of corn syrup, French fries and other noxious nostrums?

What makes Mr. Kristof think that lobbyists for agribusiness and Big Tobacco will smile on his ideas for a “systematic assault on the causes of American ill health”?

How many employers must go under; how many Americans must declare health-related bankruptcy; and how expensive must the profiteers make American health care before a rational, national health system becomes “politically feasible”?

In several states and cities that have reduced the amount of private money in politics with “clean election” laws, universal health care has suddenly become more “politically feasible.” The rash of political scandals makes this an idea whose time has come.

John Glasel
Hoboken, N.J., Jan. 31, 2006
The writer is secretary of Health Care for All/New Jersey.

Posted by pnhp at 03:59 PM | Permalink

Varying Pharmacy Benefits With Clinical Status: The Case of Cholesterol-lowering Therapy
By Dana P. Goldman, PhD; Geoffrey F. Joyce, PhD; and Pinar Karaca-Mandic, PhD (From the RAND Corporation, Santa Monica, Calif.)
The American Journal of Managed Care
January 2006

Methods: Using claims data from 88 health plans, we studied 62 274 patients aged 20 years and older who initiated CL (cholesterol-lowering) therapy between 1997 and 2001. We examined the association between copayments and compliance in the year after initiation of therapy, and the association between compliance and subsequent hospital and emergency department (ED) use for up to 4 years after initiation.

Benefit Scenarios: We used estimates from both the compliance and service-use models to estimate the impact of 2 alternative BBC (benefit-based-copayment) designs relative to a base case of a $10 copayment for all patients (the modal copayment). We derived the predictions by first estimating compliance using our copayment and compliance model, and then predicting hospitalizations and ED visits with the compliance and service-use models. The first scenario was chosen to keep total pharmacy payments unchanged. Patients at high and medium risk had no copayments while copayments for low-risk individuals were increased from $10 to $22. In the second scenario, medium-and high-risk patients received the medication for free, while low-risk patients still paid $10. The estimates were computed assuming 6.3 million privately insured or Medicare-insured adults on CL therapy in the United States, as calculated using the 1999-2000 National Health and Nutrition Examination Survey.

Results: Table 3 (available at link below, though this text explains the findings in the table) shows the effects on the sample of 6.3 million CL users of 2 designs for BBCs. The base case is a $10 copayment for all patients. Under scenario 1, high- and medium-risk patients faced no copayment and low-risk patients had copayments of $22. Compared with the base case, full compliance increased 9 percentage points among the high-risk group (62% to 71%) and 10 percentage points among the medium-risk group (59% to 69%), and decreased from 52% to 44% among the low-risk group. There was no change in aggregate health plan payments for drugs because reduced use by the low-risk group was offset by increased use by the high-risk group. The high-and medium-risk groups had no out-of-pocket payments, but out-of-pocket payments by the low-risk group increased $280 million (from $272 million to $552 million). This scenario averted 79 837 hospitalizations overall, even after accounting for an additional 10 406 hospitalizations among the low-risk group. Similarly, ED use was reduced in aggregate by 31 411.

Scenario 2 eliminated copayments for high- and medium-risk patients with no change in copayments for low-risk patients. This benefit increased prescription drug spending by health plans ($486 million) and lowered spending by patients ($311 million). Scenario 2 resulted in 90 243 fewer hospitalizations and 36 493 fewer ED admissions compared with the base case.

Our scenarios with BBCs (Table 3) reduced the number of hospitalizations by approximately 80 000 to 90 000 annually and the number of ED visits by 30 000 to 35 000, resulting in net aggregate savings of more than $1 billion.

Conclusion: The challenge for the healthcare system is to make patients more sensitive to the cost of treatment without encouraging them to forego cost-effective care. Health plans increasingly recognize the need to differentiate coverage based on demonstrated value. For example, some health plans have eliminated copayments for some generic drugs, while others now assign drugs to tiers based on their cost effectiveness. The problem with these approaches is that clinical efficacy of any drug varies across patients.

We showed that strategically reducing copayments for patients who are most at risk can improve overall compliance and reduce use of other expensive services. In an era of consumer-directed healthcare and improved information technology, tailoring copayments to a patient’s expected therapeutic benefit can increase the clinical and economic efficacy of prescription medications.

http://www.ajmc.com/Article.cfm?Menu=1&ID=3072

Comment: By Don McCanne, M.D.

The RAND Health Insurance Experiment (RAND HIE), completed over twenty years ago, demonstrated that patient cost sharing (coinsurance) reduces the utilization of health services and thereby reduces total health care spending. It is the study most commonly cited by supporters of consumer-directed health care (CDHC), because it makes their case that health care spending will decline if patients are required to use some of their own funds whenever health care services are accessed.

Further analysis of the RAND data confirmed that patient cost sharing does decrease use of beneficial services. In conceding this point, the CDHC advocates have called for greater transparency so that patients can select beneficial services that provide value and reject services that are of little or no benefit. Although this trend may lead to posting of price lists and primitive measures of quality, the complexities of medical decisions over which are truly beneficial services are difficult enough for the physician and will never be within the purview of the patient. Deductibles, copayments, and coinsurance will always result in decreased use of beneficial services.

This new RAND study is interesting because it almost seems to be a flip of the prior RAND conclusions. In this study, eliminating copayments reduced total health care spending. However, this principle would apply only in instances wherein the intervention encouraged (e.g., cholesterol-lowering therapy) is less expensive than the consequences of not intervening (e.g., hospitalizations and ED visits).

The concept of adjusting cost sharing based on potential health care cost reductions does have some serious flaws. Just reading this study demonstrates that the administrative complexities are great even with the simple intervention of cholesterol-lowering drugs. It is unlikely that the data required for more complex clinical situations would be readily forthcoming, not to mention the complexity of pre-assigning patients in variable cost-sharing categories. This bird likely will never fly.

Another serious concern is that this study, by design, looked at the financial impact of benefit-based-copayments while seemingly dismissing, as a trade-off, the negative clinical impact that a drug-spending-neutral shift in copayments would produce. That is, in eliminating copayments for high- and medium-risk groups, the copayments for the low-risk group were increased from $10 to $22 in order to keep the total spending for this drug benefit budget-neutral. That $12 increase in copayments saves the health plan $280 million, but for this low-risk group, it results in 10,406 additional hospitalizations and 5,082 additional ED visits. That doesn’t even include additional morbidity and mortality.

As to the focus of the study, the authors state, “…more importantly, these benefits can be achieved without increasing a health plan’s pharmacy costs.”

They didn’t even look at a scenario that would have eliminated copayments for the low risk group. That would have increased plan costs even more, but how many hospitalizations would it have prevented?

The most fundamental flaw of consumer-directed health care is that it depends on demand-side spending control that reduces utilization of truly beneficial services. A single-payer national health insurance program would depend on more carefully targeted and patient-friendly supply-side mechanisms of containing health care costs.

For their next study, instead of defining demand-side mechanisms that would reduce health plan spending at a cost of reduced patient access, RAND should study supply-side mechanisms that would improve resource allocation for all of us, perhaps starting with the reduction of detrimental high-tech excesses that impair both quality and outcomes. Reducing costs while improving outcomes would certainly provide us with greater health care value.

Posted by pnhp at 03:55 PM | Permalink

Federal Employees Health Benefits Program First-Year Experience with High-Deductible Health Plans and Health Savings Accounts
GAO
January 2006

Like many large employers, the FEHBP has expanded enrollee health plan choices by offering HDHPs combined with HSAs.

Forty-three percent of actively employed HDHP enrollees earned federal salaries of $75,000 or more compared to 14 percent of the other new plan enrollees and 23 percent of all FEHBP plan enrollees.

http://www.gao.gov/new.items/d06271.pdf

Comment: By Don McCanne, M.D.

Proponents of HDHPs (high deductible health plans) and HSAs (health savings accounts) have contended that these products are not only for the healthy and wealthy, but work well for everyone. As proof, they cite statistics showing that many enrollees were previously uninsured. They fail to mention that these plans with very high deductibles were the only ones with premiums that the uninsured could afford. Many enrollees have not been able to put any funds in their HSAs, and there is a much lower level of satisfaction with this coverage. Although the previously uninsured recognize that this coverage is better than nothing at all, they do understand their financial vulnerability if they were to develop significant health care needs.

Federal employees have a large number of health care coverage options available through FEHBP (Federal Employees Health Benefits Program). It is instructive to see who chooses HDHPs with HSAs when a range of options is available. This study by the GAO (Government Accountability Office) confirms that higher income individuals are much more likely to select these plans.

That should come as no surprise since these plans, by design, are particularly well suited for higher income individuals to benefit from the tax and pension benefits of these plans.

The policy lesson: It is not who is buying these plans, but rather it is who is benefiting from theses plans that is important. High income individuals who can easily afford the out-of-pocket costs benefit from the regressive tax policies that these plans represent. Modest and low income individuals are on the losing end of these regressive policies, and they lose even more when they can’t afford the out-of-pocket expenses to which the HDHPs leave them exposed.

So why don’t we simply let the wealthy have these plans, and the rest of us can look for other solutions? Lower income individuals will never be able to fund their share of health care. That means that funding of a health care system that covers everyone must be progressive. Perpetuating a regressive system exclusively for the benefit of the wealthy only magnifies the affordability issues for the rest of us.

Posted by pnhp at 04:04 PM | Permalink

These Days:
What is consumer-directed health care?
Tom Fudge
KPBS
Feb. 1, 2006

In his State of the Union address, President Bush pushed for the expansion of tax-free health savings accounts. Host Tom Fudge talks with two doctors on opposing sides of the issue to debate the pros and cons of consumer-directed health care.

Guests:

Dr. James Knight. A local urologist and CEO of Consumer Directed Health Care Incorporated.

Dr. Don McCanne. Senior health policy fellow of Physicians for a National Health Program.

For the KPBS archived audio of this 14 minute debate on HSAs:
http://www.publicbroadcasting.net/kpbs/news.newsmain?action=article&ARTICLE_ID=873506

Comment: Activists in the health care reform movement may want to save this link since it can be used to educate the public on health savings accounts (HSAs). The debate centers around what HSAs pretend to be and what they really are.

Posted by pnhp at 02:37 PM | Permalink

State of the Union Address
President George W. Bush
The White House
January 31, 2006

Keeping America competitive requires affordable health care. (Applause.) Our government has a responsibility to provide health care for the poor and the elderly, and we are meeting that responsibility. (Applause.) For all Americans — for all Americans, we must confront the rising cost of care, strengthen the doctor-patient relationship, and help people afford the insurance coverage they need. (Applause.)

We will make wider use of electronic records and other health information technology, to help control costs and reduce dangerous medical errors. We will strengthen health savings accounts — making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get. (Applause.) We will do more to make this coverage portable, so workers can switch jobs without having to worry about losing their health insurance. (Applause.) And because lawsuits are driving many good doctors out of practice — leaving women in nearly 1,500 American counties without a single OB/GYN — I ask the Congress to pass medical liability reform this year. (Applause.)

http://www.whitehouse.gov/stateoftheunion/2006/

Comment: By Don McCanne, M.D.

Unfortunately, President Bush once again has failed to address one of the more pressing issues in health care today. How can we continue to pay for the 80% of health care costs consumed by the 20% of individuals with greater health care needs?

Everyone understands that pooling risk is the answer; the large number of healthy individuals pay into the insurance pool so that those with needs can afford health care. The simplest, most equitable and most efficient method of doing this would be to establish a national health insurance program.

It is understandable that the President, as a conservative, is opposed to national health insurance since he believes that funding sources should be private rather than through the tax system. So it seems that the President would support private solutions to pooling risk, but does he?

Health savings accounts break up portions of the pools into individual accounts. High deductible plans remove large amounts of up-front costs from the pools. Association health plans strip out state mandated benefits thereby pulling more funds out of the risk pools. Cost sharing reduces demands on pools by making health care access unaffordable for many.

While ignoring the dramatic increases in actual health care costs, attention has been directed toward making health insurance premiums more affordable. Premiums are lower when the pool has to pay out less. The pool pays out less when the responsibilities are shifted from the pools to the individual participants. The healthy pay less, and the sick pay more. It’s as simple as that.

President Bush’s policies are not designed to encourage risk pooling in the private sector. Just the opposite. His policies are designed to break up risk pools and shift the responsibility to individuals, even if that makes care unaffordable. His policies insulate the healthy from the costs of the sick.

Though the President’s ideology prevents him from supporting national health insurance, why is he supporting policies that inhibit us from joining together, in the private sector, to share health care risks in common pools, so that everyone would always have affordable access to health care?

Private solutions don’t work anyway. The private insurers are doing everything in their power to avoid the market segment that requires more health care. Government programs such as Medicare and Medicaid cover the elderly and poor in that high-cost sector. It’s time for us to enact a single government program that would cover the entire high-cost sector, and the rest of us as well.

Posted by pnhp at 04:47 PM | Permalink

By David Lazarus
San Francisco Chronicle
Wednesday, February 1, 2006

When he leaves office in a couple of years, President Bush will continue to be covered by the Federal Employees Health Benefit plan, for which taxpayers pay up to 75 percent of costs.

He’ll also receive a pension of more than $180,000 a year and will be eligible for treatment at any military hospital.

No one at the White House could tell me precisely what Bush’s out-of-pocket medical obligations will be. But it’s a fairly safe bet that his visits to the doctor won’t put much of a dent in his annual stipend.

That’s worth considering in light of the president’s advocacy of so-called health savings accounts, which he said in Tuesday night’s State of the Union speech should play a greater role in covering the medical costs of ordinary Americans.

“Keeping America competitive requires affordable health care,” Bush declared.

However, is that what health savings accounts will do?

I’ve spoken to a number of experts, and the consensus is that health savings accounts can be a nifty financial tool as long as you’re rich or don’t get sick.

For working-class people who develop serious or chronic health problems, the accounts can be economically devastating — and could perhaps worsen the nation’s already dysfunctional health care system.

And here’s the real kicker: Experts say an ever-increasing number of employers will be shifting workers to health savings accounts in coming years as a way to keep spiraling insurance costs in check.

If this isn’t something you’re dealing with at the moment, just wait. It very likely will be soon.

“Employers are desperate to do something about health care costs, and most will move in this direction,” said Paul Fronstin, a health economist at the nonpartisan Employee Benefit Research Institute.

“But are workers sophisticated enough to deal with their own health care?” he asked. “That’s a real issue.”

Health savings accounts were authorized by the same 2003 law that created the Medicare prescription drug benefit (and look how well that’s turned out).

Funds placed in such accounts are tax deductible and, as long as they’re used for medical expenses, remain tax-free. Balances can be rolled over from one year to the next.

Health savings accounts are intended to be coupled with high-deductible insurance plans. Deductibles must be at least $1,000 for individuals and $2,000 for families.

An account holder is thus responsible for up to the first $2,000 of medical costs in a single year. After that, his or her insurance kicks in.

The idea here is that consumers of health care will make more prudent and responsible decisions because their own money is on the line. This, in turn, will help keep down medical costs.

The reality, experts say, is that health savings accounts benefit the wealthy far more than lower-income people (the higher your tax bracket, after all, the more valuable a tax shelter becomes).

Similarly, the financial benefit of a health savings account lies in making the maximum contribution each year and allowing that money to compound, so that a sizable nest egg takes shape to cover medical expenses.

This is relatively easy for richer Americans, who may be seeking additional savings vehicles after maxing out their annual 401(k) contributions.

For everyone else, it’s a real question whether they’ll have any money left over each year for health savings.

On Monday, the Commerce Department reported that the savings rate fell to minus 0.5 percent last year, meaning that average Americans not only spent all their after-tax cash but also dipped into previous savings or borrowed more money.

This is the first time this has happened on an annual basis since the Great Depression.

“One of the biggest problems with health savings accounts is that people with low or moderate incomes won’t be able to make a lot of contributions,” said Edwin Park, senior health policy analyst at the Center on Budget and Policy Priorities.

“That’s a real concern,” he said. “A lot of people won’t be able to make all their payments before reaching the deductible.”

Another concern is that as more employers push workers into health savings accounts — with or without matching funds — an increasing number of people may be left to their own devices in the largely unregulated individual insurance market.

“If you’re young and healthy, you might be able to get a pretty good policy,” Park observed. “If you’re not young and healthy, you’re going to have some pretty serious problems getting affordable coverage.”

John Holahan, director of health policy research at the nonpartisan Urban Institute, said the challenge in reforming the United States’ health care system is that there’s no one-size-fits-all policy out there.

“Most people don’t spend a lot on health care,” he said. “A minority of people spends an awful lot.”

The catch is that the millions of people comprising that minority will become increasingly more expensive to insure as healthier Americans pursue separate policies, thus spreading an insurer’s risk less broadly among the population.

“Health savings accounts may be good for people with no health problems,” Holahan said. “They’re not much good for society unless we address some of the issues surrounding people with health problems.”

In other words, health savings accounts are a stopgap at best. They may relieve financial pressure on major employers, and they may even teach people to be better health care consumers.

But they’ll do little if anything to improve overall coverage (let alone to insure the 46 million Americans now lacking health insurance).

“This isn’t a silver bullet,” said Fronstin at the Employee Benefit Research Institute. “This will help some people but not all people. It’s not a solution for all our health care problems.”

Bush won’t face these problems when he becomes a full-time ex-president — he’s got a retirement package awaiting him that the rest of us can only dream of.

This makes it easy for Bush to champion the idea of an “ownership society.” He has his.

You’re on your own.

Page C - 1
URL: http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2006/02/01/BUGKSH0FQ01.DTL

Posted by pnhp at 04:44 PM | Permalink

National Doctors’ Group Decries “State of the Union”
Health Care Proposals

Bush Reforms Would Worsen Care, Bankrupt Sick Families

President Bush’s proposals for health reform would simultaneously: (1) worsen access to care for people who are already covered; (2) offer billions for new tax subsidies that will not expand coverage; (3) drive up bureaucratic costs and do nothing to control overall health spending; and (4) offer tax breaks targeted to the wealthiest Americans.

CONSUMER-DIRECTED HEALTH CARE

• “Consumer Directed Health Care” (CDHC) is simply another term for skimpy insurance. These plans shift costs from employers to workers by forcing them to pay huge deductibles – from $2000 to $20,000 - before insurance kicks in.

• Many plans exclude important services (e.g. maternity care) altogether, so spending for these doesn’t even count towards the deductible.

• High deductibles discourage needed as well as unneeded care, and particularly discourage preventive care. For instance, diabetic patients forego routine eye and foot care, and end up with amputations and blindness. Similarly, patients with high blood pressure skimp on treatment and end up with strokes and heart attacks.

• These plans effectively penalize the sick for being sick, and will drive an increasing number of middle class families into bankruptcy. While healthy people may pay a little less, the sick will pay far more. Of course, virtually everyone gets sick and has high health costs at some point in their life – costs that will drain whatever money middle class people will be able to put into an HSA.

TAX CREDITS FOR THE UNINSURED

• The tax credits the President would offer are so meager that they would not even cover the skimpiest of plans that are actually available. The average cost of family coverage is now about $10,000, while the President suggests offering the poor only a $3000 tax subsidy. Past experience with a similar subsidy program (under The Trade Adjustment Assistance Act) showed that only a tiny fraction of low income families were able to get coverage, even with a substantially more generous subsidy than Bush now proposes.

ADDED WASTE AND BUREAUCRACY

• CDHC plans will not control costs. More than 30 percent of health spending is already consumed by administrative waste. HSAs and high deductible plans save nothing on existing insurance bureaucracy because patients and insurers must still keep track of each health expenditure to know when the deductible is reached.

• CDHC will add a new layer of bureaucratic costs to the system. A consultant has estimated that additional account management fees, transaction fees etc. required because of HSAs will cost $1 billion annually by 2011 (Modern Healthcare January 16, 2006:16). Moreover, doctors and hospitals will have to spend even more than at present on their billing, since collecting cash from individual patients (many of whom will not be able to pay) is costlier than computerized billing of insurance plans. One consultant has estimates these increased collection costs at 0.5% of total practice revenues, which would amount to billions of dollars annually.

• Savings Account Plans encourage predatory lending to sick families. Already, insurance firms are chartering their own banks and investment firms are gearing up to manage HSA assets – for a fee. Moreover, insurers are planning to issue HSA debit and credit cards (with high interest rates).

• Nor will the incentives in CDHC contain overall health spending. First, about 70% of health costs are incurred by a relatively few very sick people who will quickly exceed their deductible limits and have no incentives to “comparison shop” or otherwise save on care. Second, by discouraging routine preventive care in the short term CDHC threatens to actually increase costs in the long run. Finally, research in other nations demonstrates that an increase in deductibles does not decrease system-wide costs. Doctors generally tell their sick patients how soon they need to return for a visit, how frequently lab tests should be monitored etc. In Saskatchewan, Quebec and Switzerland, co-payments merely shifted care from the poor toward the wealthy as doctors apparently kept themselves fully booked, and yielded no overall savings.

HEALTH CARE TAX CREDIT FOR THE WEALTHY

• The vast majority of CDHC tax breaks are sure to accrue to those who need them the least. The tax advantages of HSAs are far more valuable to people in high tax brackets than to the poor or middle class. In fact, early data shows that only one half of people choosing HSA plans have deposited any money in the account – presumably because they couldn’t afford to. Rich people choose these plans because they offer a big tax break, and poor people choose them because the premiums are lower – they look like a good deal until you get sick.

By contrast, single-payer national health insurance could provide high-quality, comprehensive coverage to every American by recovering more than $300 billion annually squandered on needless administration with a single, simplified payment system.

###

Physicians for a National Health Program is an organization of 14,000 physicians advocating for non-profit national health insurance. PNHP has chapters and spokespersons across the country. For contacts, call (312) 782-6006

Steffie Woolhandler, M.D. is an Associate Professor of Medicine at Harvard Medical School. She is the author of “Costs of Health Care Administration in the United States and Canada,” New England Journal of Medicine, August 21, 2003.

FOR MORE INFORMATION: “Impacts of Health Reform,” By Ken Thorpe, Ph.D., National Coalition on Health Care (available at: http://www.nchc.org/materials/studies/Thorpe%20booklet.pdf).

—————————————————-

COMMENTS ON STATE OF THE UNION HEALTH PROPOSALS FROM PNHP MEMBER PROF. JAMES G KAHN

First Appeared Monday, 30 January ‘06, UCSF Today

President’s State of the Union Likely to Address Health Care

James G. Kahn, MD, MPH, a professor at UCSF’s Institute for Health Policy Studies and in the Department of Epidemiology and Biostatistics, will be among those tuning in to hear the President’s State of the Union address on January 31.

Kahn, who researches health care costs and policies, recently published a study in Health Affairs that found that billing and insurance paperwork consume at least one out of every five dollars of private insurance health spending in California.

Kahn answered some questions regarding the President’s policies and what he expects to hear in the address on Tuesday night. The President will deliver his fifth State of the Union address before a joint session of Congress at 6 p.m.

Q: Do you expect any positive news regarding health care spending in the President’s address? A: Unfortunately, I expect more bad news than good. We’ve had a law in the US for a few years for people to set up Health Savings Accounts (HAS). Originally, if an individual did not use all of the money that he or she put aside, it would be contributed to a shared insurance pool for those who needed it. The rules were changed in the bill that implemented the Medicare drug benefit. Now, any remaining money goes into an Individual Retirement Account, rather than remaining in the pool. I expect that the President is going to recommend that the amount of money people can put into Health Savings Accounts be increased.

Q: You consider this a negative? A: For most people, yes. It’s great for the individual healthy person who does not use the money set aside, but it means there is less money for people who get sick; therefore the integrity of the shared insurance pool is compromised. It gives healthy, wealthy people a tax break and added retirement income. However, by shifting money away from health care, it compromises the ability to maintain in the insurance pool for people who are sick and have no reason or ability to get an HSA plan. With higher limits on these accounts, it is an exacerbation of what is already a bad policy.

Q: What about the expected proposal for tax breaks for medical spending? A: We have the same problem here. Who benefits most from tax deductions? - wealthier people. It’s once again helping individuals that least need the help. At least as important, when economists have looked at tax incentives for health insurance, they conclude that it is one of the least effective ways to use federal money: the fewest people insured per federal dollar spent. It costs the government lots of money and reduces pressure on employers to pay for health insurance for employees. So, overall you are shifting expenses from employers to the federal government, which is ironic in an era when the government says it wants to stay out of people’s business.

Q: What would you like to see the President propose? A: Within the current system, there are a few things that could happen. It would be great to propose that employers be mandated to offer reasonable health insurance - insurance that is comprehensive and affordable for employees. Another valuable proposal would be to increase public health insurance. The Children’s Health Insurance Program was very successful in getting children health coverage, stemming growth in the numbers of uninsured children, but unfortunately, this program has been cut back.

Further, Medicaid (Medi-Cal) reimbursements are being cut, and the federal government is giving the states more leeway to make it harder to use Medicaid. This administration is also pushing the privatization of programs, which will cost more in administrative costs and profits for insurers. The new Medicare drug program is a great example of that. It must be administered - by law - through pharmacy benefit plans. In addition, this scattered approach has resulted in a lot of confusion, with many seniors unable to get their medications.

What I’d really like to see is Presidential support for national health insurance - public funding of privately delivered care. There is ample evidence from here and Canada that this would increase system efficiency enough to allow comprehensive coverage for everyone, both healthy and sick. However, the current administration is philosophically committed to a total private sector solution - for health insurers as well as providers. Then again, remember that it was Nixon who went to China …

Kahn will offer his comments and reaction after the State of the Union address for UCSF Today.

Posted by pnhp at 03:21 PM | Permalink