At a gross cost of $1.055 trillion over ten years, the House bill would do some good things, including reduction of the uninsured by up to 30 million; helping many Americans to pay for insurance through government subsidies; helping small business to provide coverage to their employees; expanding Medicaid and community health centers; establishing a new Center for Comparative Effectiveness Research to study and recommend the most effective treatments; initiating limited reforms of the health insurance industry, such as termination (four years hence) of its common practice of denying coverage based on health status and pre-existing conditions; phasing out government overpayments to private Medicare Advantage plans; revoking a decade-old anti-trust exemption for insurance companies; and creating a new long-term care program (CLASS ACT) to supplement Medicaid and/or private long-term care insurance.

However, the negatives far outweigh the positives, and adopting this bill would delay real reform for years to come. Despite a chorus of accolades about the bill by its supporters, even comparing it with the historic importance of Social Security and Medicare, this monster bill instead bears the heavy imprint of corporate stakeholders who themselves are largely responsible for out-of-control health care costs. After months of lobbying and campaign contributions to legislators crafting the legislation, their multiple conflicts of interest and political compromises, this bill ends up being a bailout for the insurance industry and a bonanza for stakeholders in the medical industrial complex.
Here are some of the major problems with the bill:

• It will not “bend the cost curve” for many reasons—with the exception of a  provision that the government negotiate drug prices with manufacturers (as the VA does so effectively), there are no real restraints on the prices of health insurance or health care services; insurers have already warned that premiums will continue to surge in future years; perverse incentives would remain in the system to continue providing large amounts of inappropriate and unnecessary services, especially by specialists in more highly reimbursed areas; and recommendations based on studies by the new Center for Comparative Effectiveness Research could not be used to mandate coverage or reimbursement policies.

• As the crisis in declining access to care only grows (with already 46 million uninsured and at least another 30 million underinsured), expansion of Medicaid, subsidies, and limited restrictions on insurers would not take place for four more years. And as many states struggle with their deficits during the recession, access and benefit levels available to patients on Medicaid will be seriously jeopardized in many parts of the country. Meanwhile 45,000 Americans are dying each year  as a result of being uninsured—one every 12 minutes.

• Because of a number of small-print provisions in the bill, bought by industry interests and crafted by their representatives, we would see a growing epidemic of underinsurance among the newly insured. These are some of the reasons: low requirements for actuarial value, the proportion of health care costs that insurers are required to pay for care (probably ending up as low as 65 or 70 percent when further compromises are made with the Senate); restricted levels of benefits to be covered (the minimal essential benefits package would be in four tiers, has yet to be developed, and we can expect that it will fall far short of all necessary care); in a last-ditch effort to pass the bill and assuage pro-life legislators, new anti-choice language was added by the Stupak amendment that would deny coverage of abortion care to millions of women; and coverage shortcomings of private plans already in force will be grandfathered in without reform.

• Even after the expenditure of more than $1 trillion, the bill would still leave some 18 million Americans uninsured.

• The public option, diminished as it has been to the point where it could only include 2 percent of Americans by 2019, would not have enough market clout to “keep the insurers honest.” The Congressional Budget Office (CBO) has already concluded that the public option would not offer real competition to private insurers, and that its premiums would even have to be higher than private premiums. It would not be available until 2013 through the new Health Insurance Exchange, and then only to the uninsured and some employees of small businesses without coverage. Moreover, such Exchanges have no track record of success. After 15 years of experience in California, that Exchange failed, mostly due to lack of pricing power and adverse selection by attracting sicker enrollees.

• The CBO has projected that rising insurance costs could mean that middle-income families would spend 15 to 18 percent of their income on premiums and co-payments.

• This bill would not reverse the unraveling of the employer-sponsored insurance system because of rising health care costs that outpace the rest of our economy; despite subsidies to small business, employer-sponsored insurance would remain unsustainable.

• This bill would only add to the already large burden of complexity and bureaucracy, together with their additional costs. At the same time, it would forego savings of some $400 billion a year that could otherwise be achieved through a simplified, more efficient single-payer system.

So in sum, this bill, while well intentioned, is fatally flawed. It would not effectively address the three major system problems demanding urgent reform, and would delay real reform by letting much of our population falsely think that reform is at hand. It would leave in place an inefficient, exploitive insurance industry that is dying by its own hand, even as it props it up with enormous future profits through often subsidized individual and employer mandates.

The most fundamental single question about how to reform our health care system should be whether or not we abandon our multi-payer, mostly investor-owned financing system or move to a not-for-profit single-payer system, Medicare for All, which this year’s political process has carefully kept off the table. The lesson of history in this country tells us that, as long as we retain private health insurance at the core of our health care system, we can never achieve universal access to affordable, comprehensive high-quality care.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.”

Buy John Geyman’s Books at: www.commoncouragepress.com

This article originally appeared in Tikkun magazine on Nov. 16, 2009.

Everyone is talking about health care reform and trying to decipher the differences between the bills in the House and the Senate. The “public option” is praised by some and derided by others. Politicians are influenced by the financial support of various interest groups who are lobbying furiously to retain or extend their turf.

Regardless of the legislation Congress passes, the health insurance industry is primed to expand its consumption of U.S. health care dollars by selling more insurance policies to people who are currently uninsured. And American taxpayers are going to subsidize many of these policies, a windfall profit for private insurance companies.

In a statement about why he voted against the House Bill (H.R. 3962) passed this weekend, Rep. Dennis Kucinich said, “In H.R. 3962, the government is requiring at least 21 million Americans to buy private health insurance from the very industry that causes costs to be so high, which will result in at least $70 billion in new annual revenue, much of which is coming from taxpayers. This inevitably will lead to even more costs, more subsidies and higher profits for insurance companies — a bailout under a blue cross.”

Few others in power are discussing the important question, “Is all of this legislation real reform or phantom reform?” Universal coverage is important, but what are the other necessary components of health care reform that American people desire? There are four other important elements beyond universal coverage: choice, adequate coverage, security, and cost-effectiveness.

First, phantom reform does give you choice, but it is the choice between many HMOs and other private, for-profit insurance plans. Real reform would give patients the choice they actually want, which is to choose their doctors and hospitals. Americans don’t want a choice of insurance company bureaucrats; they want a choice of health care providers.

Second, phantom reform does give you insurance coverage, but with deductibles and co-pays, as well as exclusions for various services. Real reform would provide coverage with no out-of-pocket costs; i.e., comprehensive care for all medically necessary services, as decided by you and your doctor, not a faceless bureaucrat in an insurance company intent on maximizing its profits.

Third, phantom reform provides illusory security. Sure, you get an insurance policy, but if you can’t work or pay, you lose your insurance. Real reform would provide security for everyone, for as long as they needed care, just as Medicare does now for those over 65.

Fourth, phantom reform saves money by providing less care. “Medical loss” is the term insurance companies use for the dollars they pay out to health care providers and hospitals for their services, at times resorting to criminal means to hold on to the money patients have paid for insurance to cover the health care services they need . Real reform would save $400 billion per year by eliminating private, for profit health insurance, if the government were the non-profit single payer of the health care funds.

Real reform is a single-payer national health insurance program that would be comprehensive, universal, and cost-effective. Phantom reform is what Congress is now hotly debating, and the public option is a red herring in the pursuit of real reform.

According to Dr. Steffie Woolhandler of Harvard Medical School, who has studied the financing of health care reform, the public option would deliver very little of the administrative savings possible in a single-payer program. There would be no savings on hospital billing or the administrative bureaucracies of nursing homes and doctors’ offices. In reality, the public option would save only a fraction (1/7th) of the $400 billion savings available through a single-payer program, even if half of the privately insured were to switch to a public option.

In addition, our experience with Medicare HMOs shows that private insurance plans avoid patients who are seriously ill and have high medical costs. Despite regulations, private insurance companies undermine fair competition. There is no reason to believe the public option would fare any better in this arena.

Unlike politicians, the American people know real reform when they see it. In 2009, a CBS News/ New York Times poll showed that 59 percent of Americans support national health insurance, up from 40 percent in 1979. And Americans know that we have what it takes in the United States to deliver top-notch care: excellent hospitals, well-trained professionals, and superb research.

We already spend at least twice as much per person for health care as other wealthy countries. Even our public spending is greater than the total spending in other nations. We have the money for health care for everyone. The money just needs to be spent on health care delivery, rather than bureaucracy and profits for insurance companies.

If you cannot afford insurance, or your health insurance premiums keep rising, along with your out-of-pocket costs, consider our neighbor to the north. Canada has Medicare for all, a single-payer national health program that provides universal, comprehensive coverage. Canadians also have a life expectancy two years longer than Americans, infant deaths 25 percent lower, more doctor visits and hospital care per person, and a quality of health care equivalent to that of insured Americans. Canada spends half the amount per person that we spend on health care. Now that is real reform.

Mr. Cohn begins with a disclaimer:

I’m a longtime single-payer supporter myself. If Angell could get her way, I’d be thrilled. But Angell can’t get her way.

This old saw is by now condescending, tiresome, gratuitous. Mr. Cohn merely tells us what leading politicians have been telling single payer advocates for decades: real health reform is not politically feasible (so go away!) This is not the stance of a single-payer supporter. It also falls well short of a license for the lame straw man argument that follows.

Mr. Cohn:

To Angell–and to others on the left, as my colleague John Judis notes today–this is reason for ditching the whole effort. But what, really, would that accomplish? The immediate impact would be to undermine Obama and his allies in Congress, creating the (accurate) impression they are incapable of passing major legislation. The Democratic Party would lose seats at the midterms and then, quite possibly, suffer even bigger setbacks two years hence. That’s not exactly a recipe for progressive revival.

Perhaps Angell and those who agree with her that this would be a constructive failure–that eventually growing frustration with our health care system will help us elect even more progressives and pass more ambitious reforms. Well, maybe. But that’s an awfully big chance to take…

Dr. Angell is not writing about electing Democrats! She is writing about health reform.

Dr. Angell:

The danger is that as costs continue to rise and coverage becomes less comprehensive, people will conclude that we’ve tried health reform and it didn’t work. But the real problem will be that we didn’t really try it. I would rather see us do nothing now, and have a better chance of trying again later and then doing it right.

The nation asked the Democratic White House and the Democratic Congress for health care and so far we have gotten “health insurance reform” with a bonus – restricted access to abortion.

It is this fact that makes the Democratic Party “insurance reform,” – how does Mr. Cohn put it? – “not exactly a recipe for progressive revival.” Yet he blames Dr. Angell instead.

Our nation can do without “insurance reform” that will criminalize the uninsured, subsidize unaffordable insurance premiums with rivers of tax money, protect pharmaceutical company superprofits at patient expense, hugely expand Medicaid in the face of nationwide state budget crises and thus quickly prove fiscally unsustainable. (Incidentally the insurance industry projects its price increases will reach between 79% to 111% by 2019, under the proposed “insurance reform.”)

Dr. Angell keeps her eye on the prize – comprehensive health care for all. A single payer system is the minimum increment of change that can bring that about.

Mr. Cohn wants to change the subject to electing Democrats. Yet ironically, the amazing development of a nationwide grassroots effort for single payer has been the real “progressive revival” of 2009.

If those inside the bubble still feel they can dismiss us by holding up a straw man, it simply means we must try harder, and grow our effort for a single-payer national health program larger and louder. It is not only our duty to our patients, but to a nation that expects genuine health reform.

Andrew Coates is secretary of the Capital District (NY) chapter of PNHP. He practices medicine in Albany, NY.

A Response
to “The House Public Plan: Yes, It’s Worth It”
By Sarah K. Weinberg, MD

Jacob Hacker and Diane Archer ask us to believe that:

…health reform is much more likely to succeed with a public health insurance option, even one with negotiated rates, than if private insurers are left to run the show.

So a public plan that will be available to less than half the population and will attract maybe 2% as enrollees is going to have any effect at all on big insurers? I don’t think so, and I’ll bet the big insurers and their investors don’t think so either. (United Health Group and Wellpoint stock prices are stable this morning.)

In a remarkable paragraph, Hacker and Archer claim that private insurance premiums will be lower because sicker people will selectively enroll in the public plan:

Let us start with the obvious: No one knows for sure the exact role that the public option will play. CBO may be correct that the public plan will attract a less healthy pool of enrollees, and that risk-adjustment (paying plans with higher-cost patients more) will not fully compensate for this. And it is surely correct that the public plan will have lower administrative costs than private plans. (It should be emphasized that if the public plan has higher premiums primarily because it’s attracting less healthy enrollees, then it is still reducing average premiums and hence federal subsidies for premiums. That’s because average premiums would be even higher if the people enrolled in the public plan enrolled in private plans. That’s what the CBO’s more recent letter discussing “downward pressure” on private premiums implies.) But while the CBO estimates are rightly the authoritative source for Congress, they are by no means infallible. CBO has made clear that an unusually high level of uncertainty attaches to its analysis of the public plan.

Private insurance premiums will be lower because sicker people will selectively enroll in the public plan, forcing its premiums upward. Huh?!

ALL the premiums will go up – the only issue is how steeply. As for the public plan providing significant competition, what business is going to worry about a competitor with restricted access that only has about 2% of the market?

They also assume that providers will voluntarily sign up for a new public plan with a miniscule number of enrollees:

…the public plan would pay the same rates as the private sector. Nothing in the bill requires this.

Especially if that plan tries to pay the providers less than private insurers, there’s no reason to believe this assumption. Buried in this thought is the assumption that private insurers currently pay providers handsomely – something any doctor or hospital can tell you is totally false. American health care costs twice as much as health care anywhere in the world for several reasons, of which the largest is the enormous cost of all the administrative bureaucracy our system requires. Gross overpayment of doctors is not a reason, even though there are some who do exceptionally well from providing overvalued procedures. In fact, private insurers “save” by cutting payments to providers, but not by cutting administrative costs or profits.

This statement is supposed to support the idea that healthy non-elderly Americans will be willing to pay more for a public plan that offers “the same transparency and accountability the public Medicare plan offers”? Hacker and Archer argue they will:

The vast majority of older and disabled Americans enroll in the public Medicare plan – even though by choosing (excessively subsidized) private Medicare [Advantage] plans, many can get broader benefits for less than they pay for Medicare plus supplemental insurance [Medigap].

Generalizing from choices made by 65 year old Medicare eligibles to the notion that the public will flock to the public plan that costs more because they like “transparency and accountability” is… um… a stretch. As a Medicare enrollee, I can tell you that I never have thought of Medicare as transparent and accountable. I’m enrolled in the public Medicare plan because, as the spouse of a federal retiree, I’m required to if I want to keep the federal BC/BS plan as secondary (Medigap) insurance. I suspect that other factors are more important when 65 year olds decide on their Medicare choices. Wanting to stay with the doctor(s) and hospital they already know rather than shift to a plan with a different list of preferred providers would likely be number one on the list, especially for anyone with health issues. (Of course, this is exactly what the peddlers of Medicare Advantage plans want – to attract the 65 year olds who aren’t seeing doctors regularly. These plans often make their enrollees miserable once they do get sick, and many then switch out to public Medicare.)

These eminent health policy thinkers also continue to assume that the public plan will hold down medical costs better than the private plans, just because it is public:

Over the past twenty years, the public Medicare plan has had a substantially slower rate of growth than private insurance.

However, it’s not the public nature of the plan that holds cost increases down, it’s the fact that Medicare covers an entire (willingly) captive population and has great power to dictate payment terms.

But then they point out that:

The CBO report on the House bill states that private insurers are better at controlling utilization than a public plan would be.

The only functioning utilization controls in the U.S. (possibly excepting the VA and the military) are the private insurers’ dirty tricks: delaying or denying coverage for expensive care; rescinding the policies of those who get sick; raising cost-sharing with the sick to astronomical levels, etc.

Hacker and Archer write that:

…the public plan is really the only tool available for testing and implementing reforms in the market for the non-elderly.

2% of the population spread across the entire U.S. is not going to be a group that will be useful for this kind of experimentation. This will especially be true when only a limited number of providers choose to participate.

In conclusion, we are asked to believe that any public option at all will make all the difference:

But it’s still immensely valuable to give Americans an out – another choice – to let the insurers feel the heat of not being the only game in town.

First of all, the majority of Americans won’t have any such choice – they’ll get what their employers offer them, like it or not. Next, we should recognize that the big insurers already ignore the small insurers in each market who have 5% or less of the available business.

Finally, industry opposition to the public option is held up as evidence of the wisdom of the public option:

The fierce and continuing opposition of the insurance industry suggests that they think that a public option will prove a serious counterweight…

I think instead that the insurers’ opposition has been just fierce enough to get them a public option small enough to drown in a bathtub – success beyond their wildest dreams. Because when this public option fails, they (and the Republicans) will say: “See – single-payer health reform doesn’t work!”

Hacker and Archer (and other apologists for HR 3962) are letting their wishful thinking get the better of their common sense. Enough already!

Dr. Weinberg is a retired pediatrician, a member of Physicians for a National Health Program for 20 years, and the Newsletter Editor for Health Care for All – Washington for 9 years. She is also one of the authors of the Washington Health Security Trust, proposed legislation that would establish a single payer health financing system in the State of Washington.

But this bill is not good enough to pass. It will not make a big enough difference in addressing the three main problems requiring reform–containing the spiraling costs of health care, providing universal access to affordable health care, and improving its quality. If we look at the provisions of this 1,990-page bill concerning just the first two of these three goals, we see that it will fail to deliver real reform.

After all of the political compromises along the way that have led to the introduction of the new bill (HR 3962), on the positive side we can say that it will introduce some limited reforms to the health insurance market, expand health insurance to some of the uninsured (primarily by expansion of Medicaid and by often-inadequate government subsidies to individuals and small employers for the purchase of private insurance); and help to address some other problems, such as the growing shortage of primary care providers.

But the negative side far outweighs the positive:

• Although supporters of the new House bill claim that it would expand coverage for as many as 30 million uninsured, we are actually likely to see an  increase in the number of uninsured in coming years for these kinds of  reasons—as costs keep going up, many Americans will be forced to drop  their present coverage because of inability to afford rapidly rising costs of  premiums, deductibles and co-payments; there is no guarantee that the  uninsured will be able to afford new private coverage (even with subsidies, which won’t kick in for another four years); and expansion of Medicaid will  not take place until 2013 (many states are already pushing back with  concerns that the their recession-strained budgets will not allow them to pay  their share in adding to their Medicaid programs, potentially leaving millions of the poorest Americans uninsured.

• There are no effective cost containment mechanisms built into the bill, either for the costs of health insurance or for health care itself. As it whines about weakening of the individual mandate that will likely limit some of its big increase in the insurance market, the health insurance industry is already warning that sharp premium increases will result. The most the bill will do is to require disclosure and review of premium increases, without any regulatory teeth. Although the bill would set up a Health Benefits Advisory Committee to recommend a minimal essential benefits package (with four tiers), insurance industry lobbyists will argue for the most minimal levels of coverage, and we can anticipate an exponential growth in underinsurance. Moreover, there are no price controls to be applied anywhere in the system, except perhaps in authorizing the government to negotiate drug prices with manufacturers. But that provision will almost certainly not clear the Senate, where we can expect even less concern for affordability and prices.

• Although the public option has been the target of intense controversy, it will play a negligible role in health care reform. The CBO has concluded that it would cover no more than 6 million Americans, just two percent of the population, in 2013, and will cost more than private programs, mostly due to adverse selection in attracting sicker individuals and its inability to set reimbursement rates for physicians and hospitals as is done by Medicare. Moreover, middle-income families may be required to spend 15 to 18 percent of their income on insurance premiums and co-payments.

• HR 3962 will not result in making health care more affordable, despite allocating some $605 billion over ten years for subsidies to low- and middle-income Americans to buy insurance on Exchanges. We can count on continued increases in the cost of health insurance as far as the eye can see, together with less actuarial value of coverage.

• Buried in the fine print of this monster bill are many provisions that will benefit corporate stakeholders in the medical industrial complex on the backs of patients and their families. These examples make the point:

• Although medical loss ratios (MLR) (the proportion of premium revenue actually spent on medical care) are specified at a minimum of 85 percent, this loophole has been added–”while making sure that such a change doesn’t further destabilize the current individual health insurance market.” By way of comparison, the Senate Commerce Committee has found that the average MLR for the largest insurers in the individual market is only 74 percent, with 26 percent of premium revenue going to marketing, administrative overhead and profits.

• Although the bill would create a much-needed Center for Comparative Effectiveness Research, it would have no say over reimbursement and coverage policies. As the bill says, it “contains protections to ensure that research findings are not construed to mandate coverage, reimbursement or other policies to any public or private payer.”

In sum, this $1.055 trillion plan over ten years will not fix the major problems of cost and affordable access to health care in our deteriorating system, will add new layers of bureaucracy and complexity to the present system, is not fiscally responsible, and is not sustainable.

What to do now? Rather than accept an unworkable bill that is politically  expedient, we would be better off to make a major course change. That vote could take place as early as tomorrow.

If that fails, shelving this bill would be the best option. Until a few days ago, I would have added that lawmakers should be pressed to retain the amendment proposed by Dennis Kucinich (D-Ohio) to allow states to experiment with single-payer plans, as a number of states would like to do (e.g. California, Colorado, Illinois, Maine, New Mexico, New York and Pennsylvania). Although that amendment had already been passed by a rare bipartisan vote of 27-19 in the House Education and Labor Committee, it has been stripped from the bill.

The best first option would be to call for a floor vote, as originally promised by the House Speaker Pelosi, for  the amendment proposed by Anthony Weiner (D-NY) to substitute HR 676, a single-payer proposal, for HR 3962. If that fails, shelving this bill would be the best option, but if that is not possible, lawmakers should be pressed to retain the amendment proposed by Dennis Kucinich (D-OH) to allow states to experiment with single-payer plans, as a number of states would like to do (eg. California, Colorado, Illinois, Maine, New Mexico, New York and Pennsylvania).

That amendment has already been passed by a rare bipartisan vote of 27-19 in the House Education and Labor Committee.  Whether a health care bill survives the end game in both chambers of Congress in this session is still up in the air. If a bill is finally enacted into law, however, it will be ineffective in remedying the big problems of cost and access to health care. We should be gearing up for an intense effort in 2010 to push for real health care reform–Medicare for All.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.” Buy John Geyman’s Books at: http://www.commoncouragepress.com

I want to cover everybody. Now, the truth is that, unless you have a single-payer system, in which everybody is automatically covered, then you’re probably not going to reach every single individual. ~ President Barack Obama, July 22, 2009

As future physicians, ensuring that every single one of our patients has unrestricted access to health care is a core tenet of our professionalism. President Obama has affirmed what many of us know to be true – a single-payer system is the only responsible solution to our health care crisis. The vast majority of our seniors are satisfied with Medicare; in fact, many patients anxiously await Medicare eligibility because of the security and stability provided by the program’s guarantee of coverage and access. Labor unions and advocacy organizations across the United States support a single payer system as do the majority of health care providers. These groups – these constituencies – recognize that single payer is the best system in which to guarantee quality, affordable, health care for all.

On July 31, 2009, Representative Anthony Weiner (D-NY) introduced an amendment in the House Energy & Commerce Committee to replace key provisions in the House health reform bill with language modeled after HR 676, the Expanded and Improved Medicare for All Act. House Speaker Nancy Pelosi (D-CA) guaranteed a floor vote on single payer if Rep. Weiner withdrew his amendment. Under good faith, Rep. Weiner assented. Now, Speaker Pelosi is reneging on her promise not only to Rep. Weiner, but to the American people, many of whom believe that we need to have a true debate on the merits of a single-payer health care system. We write today calling for an end to these games. Our legislators must stop politicking with the most valuable resource available to them – the lives of our patients, their constituents.

In the long history of single payer advocacy, there has never been such a momentous time – never have Americans had the opportunity to hold their representatives accountable to the people on this issue – rather than to the powerful lobbies that pervade the beltway. According to the Kaiser Family Foundation, nearly one in two Americans support a system of publicly funded, privately delivered, Medicare for all – will the floor vote reflect this statistic? We will only know if Speaker Pelosi upholds her promise.

The American people should be able to trust members of Congress to stand by their promises – both to them and to each other. In the health care debate, the needs of average Americans must come before special interests and politics. Our friends, family, and patients deserve to a true, honest debate. Denying that chance through lies and broken promises is an anti-democratic betrayal of trust that will not easily be forgotten – now or at the polls in November. The Weiner amendment presents a historic opportunity for members of Congress to document their support for single-payer national health insurance as the best way to solve the U.S. healthcare crisis and provide a vote that Members can proudly stand by when approached by constituents.

We see everyday how budget shortfalls result in staff reductions that ultimately threaten the quality and availability of care. Single payer would provide universal and comprehensive coverage for all medically necessary services. Unamended, HR 3962 (formerly HR3200) would leave millions uninsured or with skimpy coverage. Single payer would allow patients free choice of doctor and hospital. Under HR 3962, insurance companies would continue to deny care and restrict access to providers. Single payer would pay for itself by eliminating $400 billion in insurance company administrative waste and redirecting these savings to patient care. HR 3962 would require $1 trillion in new revenue over the next decade. Single payer would establish proven and effective cost-containing mechanisms to ensure that benefits are sustainable over the long run. HR 3962 lacks effective cost control measures by maintaining the primacy of the private insurers.

The private insurance industry has had eight decades to lead change, to shift from a world predicated upon a race to the bottom-line to a culture of innovation and care. But their time has passed. Speaker Pelosi must offer the leadership necessary to truly reform our system and to address one of our greatest moral failures of the last fifty years. Only a single payer system can provide the change President Obama has championed, the change we need – simplifying payment, eliminating unnecessary bureaucracy, and investing the subsequent savings into a solitary goal, providing care to all. The math is simple, the morality pure, and the passion of single payer advocates indefatigable. As future physicians, this is the type of system in which we aspire to practice medicine.

Iyah Romm, Sylvia Thompson, MD and Elizabeth Wiley, JD, MPH are physicians-in-training and PNHP members as well as national leaders in the American Medical Student Association (AMSA).

Executive summary

To sum up: The tasks required to implement a small “option” are quite different from the tasks required to implement Medicare; the Democrats’ legislation indicates these tasks will be carried out by insurance companies and corporations with similar expertise. When we piece these facts together, we must conclude that private-sector corporations will very likely play a much greater role in the “public option” than they do in Medicare.

Newsflash: Corporations will administer the “option”

On Saturday, October 24, the Washington Post published an article which said in passing that the “public option” will be run by insurance companies. “The public option would effectively be just another insurance plan offered on the open market,” said the article. “It would likely be administered by a private insurance provider, charging premiums and copayments like any other policy.” To my knowledge, that is the first time any media outlet or blog, with the exception of the blog maintained by Physicians for a National Health Program, has warned the public that the “public option” will be run by private corporations, not public employees.

Within hours of this article’s publication, blogger John Byrne at “the raw story” reported that insurance companies will run the “option.” Byrne quoted the Washington Post article and three paragraphs from one of two papers I wrote on this issue. Byrne’s piece generated a minor ruckus in the liberal blogosphere. By Sunday October 25, a half dozen other blogs had posted it, and hundreds of visitors to these blogs had posted comments.

The great majority of the comments expressed outrage over the fact that the “public option” won’t be a publicly run program. But a few sought to minimize the importance of Byrne’s article by assuring readers that Medicare has always had contracts with insurance companies to process claims. For these people, this fact allowed them to jump to the conclusion that the role of the insurance industry in the “public option” would be no more significant than its role in Medicare – insurance companies would be mere claims processors. According to these people, insurance companies wouldn’t create the “option” plans and would not run them. Here are two examples of those comments:

Calm down everyone – let’s unknot those drawers. Private insurance companies have been running the Medicare system for years and years. They are called fiscal Intermediaries. …Please let’s all understand the way Medicare works before going off.

and

…. Medicare is already administered through private insurance companies and it works very well. Those companies already have the systems set up for tracking and billing and they do the Medicare administration for a minimal cost.

On Monday, October 26, Susie Madrak posted a comment on “Crooks and Liars” in which she described Byrne’s article as “news that really isn’t such a big deal.” Madrak said the insurance companies that get contracts to run the “option” will be “third party administrators” whose only job will be to process claims for the “option.”

Seduced by the “option” campaign’s misinformation

These comments are mistaken. Their authors have been seduced by the “option” campaign’s constant comparison of the “option” to Medicare. The comparison to Medicare leads the unsuspecting to think the “option” will be a uniform program, administered directly by public employees, like the traditional Medicare program, that is, a program with no insurance companies parked between the federal government and the doctors and hospitals that treat Medicare beneficiaries. It leads the unsuspecting to think that public employees will create and directly administer the “option” and that the role of corporations in the “option” will be limited to the role they play in the traditional Medicare program, which is to process claims.

This excerpt from an April 2009 paper entitled “Healthy Competition” by Jacob Hacker, the author of the modern version of the “public option,” illustrates how aggressively contemporary “option” advocates sell the notion that the “option” will resemble Medicare. Notice that Hacker states clearly that the “option” will not contract with “private plans” and “nonprofit insurers.”

In most discussions of the public plan [i.e., the “option”], the phrase “Medicare-like” is used to describe the new plan…. When people say “Medicare-like,” … they are referring to the traditional portion of Medicare that directly pays doctors and hospitals for care delivered to elderly and disabled Americans. A “Medicare-like” plan is a public health insurance plan that pays providers to deliver care, rather than a government contract with private plans to provide insurance. More specifically, the new public plan should be national (with the same basic terms nationwide for patients and providers), governmental (a true public health insurance plan, not, say, a nonprofit insurer operating under federal charter), comprehensive (providing defined benefits on the same basic administrative platform), and built on Medicare’s infrastructure. … [P]lan offerings and pricing can and should differ regionally, but the public health insurance plan should be a single national plan with its own risk pool separate from Medicare’s that is available with the same benefits and coverage terms in all parts of the nation. (page 7)

But Hacker’s description of the “option” bears no resemblance to the “option” in either the Senate Health, Education, Labor and Pensions (HELP) Committee or the House bill (it used to be HR 3200, now it is HR 3962). The “options” in these bills will not resemble the traditional Medicare program but will in fact consist of numerous insurance programs (or plans) functioning at the level of individual insurance markets, that is, at the level of states and regions within states. Once you understand this, you begin to grasp what it means to say that private corporations will “administer” the “option” program. You begin to comprehend the possibility that the multiple local “option” programs might actually be owned by, or administered by, privately owned corporations, possibly health insurance companies. You begin to understand, in short, that the role of corporations in the “option” could be much more substantial than that of a mere claims processor.

To offer an analogy, the role of private corporations in the “option” will probably resemble the role that Northrop Grumman, Boeing and other defense contractors play in the production of fighter planes for the Pentagon. Through contracts with these corporations, the Pentagon sets the terms under which contractors are supposed to produce the planes, but the actual production of the planes is done entirely by private corporations. If and when the “option” program as it is now described in legislation pending in Congress is implemented, private-sector control in that program will almost certainly resemble the private-sector control of the production of military hardware for the Pentagon far more than it will resemble the level of private-sector involvement in the traditional Medicare program.

Review of the “public option” bait-and-switch campaign

Prior to last spring, the possibility that private corporations might play a dominant role in the “option” was not obvious. But some time during the spring, and by no later than June, it did become obvious, at least to those with eyes to see. Last spring Democrats took the large original “option” proposal and shrank it down to a tiny program.

As I have explained elsewhere, the original version of the “option” proposed by Hacker and endorsed by advocates of the “option” was huge. Hacker and others predicted it would enroll 130 million non-elderly Americans, or about half of the non-elderly population. It was reasonable to predict that a public program of that size would either possess many of the features of Medicare, including its uniform benefits, or would soon acquire those features as it grew bigger at the expense of the insurance industry. It was reasonable to predict it would grow bigger because its huge size would give it the advantage of lower overhead and lower provider costs and, therefore, lower premiums.

But after the Democrats released their draft legislation in June, it was apparent they had no intention of enacting an “option” program as large as the one Hacker originally proposed. The Democrats’ bills eliminated all but one of the features of Hacker’s original version of the “option” that would have guaranteed enormous size. The features the Democrats struck from Hacker’s original model included the requirements that the “option” be open to all non-elderly Americans, that the “option” automatically enroll all uninsured people and all Medicaid recipients prior to the commencement of operations, and that only enrollees in the “option” get subsidies to offset the cost of the “option’s” premiums.

The initial reports by the Congressional Budget Office released in July made it even more obvious how badly the Democrats had shrunk the “option.” CBO estimated the Senate HELP Committee’s version of the “option” would enroll approximately zero people while the HR 3200 version would enroll roughly 10 million people. CBO is now saying
the new House version of HR 3200 (HR 3962) released by Speaker Nancy Pelosi on October 29 will enroll just 6 million people.

By no later than July, then, representatives of the “option” campaign had no excuses for comparing the “option” to the traditional Medicare program. That didn’t stop them from doing so, however. Hence the great confusion among members of the public, the media, pollsters, and even members of Congress about what the Democrats’ proposed “option” is and, therefore, the role corporations will play in its creation and administration.

When we knew for sure the “option” was going to be tiny, commonsense and a rudimentary knowledge of the health insurance industry should have told us the “option” would not be a uniform program like the traditional Medicare program but would instead be broken up into dozens or hundreds of individual programs or insurance companies, each serving a particular health insurance market, for example, California’s Bay Area or upstate New York. Commonsense would not necessarily have told us that these multiple insurance programs or companies would be run by private corporations. They could just as easily (and for less money) be run by the federal government.

For information on who would run these local programs, we had to consult the “option” language in the Democrats’ legislation. It is there we find evidence that these programs will be run by private firms. I have reviewed the murky “option” sections of the Senate bill and House bill in previous papers. 

In the remainder of this paper I will focus on why our commonsense tells us that a very small “option” has to be a balkanized program consisting of multiple local programs. I believe it is the failure of many people to comprehend this fact that leads some of them to misinterpret the language in the Democrats’ bills authorizing the federal government to outsource “administrative functions” necessary to run the “option.”

What commonsense and a little knowledge of the industry tells us

In this section I want to discuss the Democrats’ proposed “option” as if we know only three things about it: (1) it must compete with private health insurance companies to sell health insurance to the non-elderly; (2) unlike the Medicare program, which was given 100 percent of the elderly to insure and thus began with a huge pre-enrolled pool of people, the “option” will instead be guaranteed zero enrollees on its first day of operations and will have to compete with the insurance industry for every customer it eventually enrolls; and (3) the “option” is expected to perform on a “level playing field,” that is, it is given no advantages over Aetna and its other private-sector competitors (such as subsidies to its enrollees to purchase the “option’s” product that people who buy insurance company policies don’t get).

Commonsense tells us that this version of the “option” will not resemble Medicare, either in the manner in which it must be implemented or in its final structure. If the “option” really were like Medicare and was given 100 percent of all Americans in a large age bracket, say all kids up to age 19 or all adults age 50 to 64, we would have every reason to predict the “option” would spring up as quickly as Medicare did and flourish as Medicare has. We would also have every reason to think the establishment of such an “option” would be relatively easy. The primary task that would need to be carried out by such an “option” would be to announce its existence with press conferences and an advertising campaign like the one that preceded the establishment of Medicare Part D (the drug program). These activities, easily executed out of one office in Washington DC, would, largely by themselves, achieve nearly universal enrollment of the eligible population and educate doctors and hospitals about how to participate in the new program.

Because this hypothetical version of the “option” would quickly enroll virtually all of the eligible population (Medicare accomplished that task within 11 months), it would have little or no problem inducing clinics and hospitals everywhere to accept “option”-insured patients even if it paid providers at rates below those paid by the insurance industry. It would have little or no trouble because very few providers would want to turn away so many patients and so much revenue. Commonsense tells us this would be true across the country (not just in some parts of the country) because the distribution of any given age bracket is roughly the same across the country.

Medicare’s history confirms this commonsense analysis. No law requires doctors and hospitals to accept Medicare patients, and yet virtually all doctors and hospitals have accepted Medicare patients routinely since Medicare began operations on July 1, 1966 even though Medicare has paid providers 20 percent less, on average, than the insurance industry has (the actual difference between Medicare and insurance industry reimbursement rates has varied over time and by region).

On the other hand, commonsense suggests a very different outcome if the “option” starts out as a program separate from Medicare and is guaranteed none or few of the advantages that Hacker specified for his original version of the “option,” including a large enrollment prior to the first day of operations. Commonsense tells us that if the “option” is instead forced to begin operations without a single enrollee, and must compete on a level playing field with existing insurance companies to recruit whatever enrollees it eventually does get, the “option’s” growth pattern will be quite different from Medicare’s.

And here we come to my main point: The major difference between an “option” that really does resemble Medicare and the little one proposed by Democrats is that the little Democratic “option” can’t be rolled out all at once at the national level. Rather, it must be implemented at the local level market by market – in the Bay Area market, in the upstate New York market, in the Chicago market, in the Iron Range-Duluth market, in the Fort Worth-Dallas market, and so on.

Small size dictates market-by-market implementation of the “option” program

A small “option” must be implemented market by market because wholesale activities at the national level – like press conferences and a public education campaign – no longer accomplish, by themselves, the two fundamental tasks that any successful insurance program must accomplish – the enrollment of a sufficient number of people, and achieving some assurance (formal or informal) that a sufficient number of providers are ready and willing to treat those people. For the tiny “option” promoted by the Democrats, those tasks can be accomplished, if at all, by a work plan that (1) goes beyond mere press conferences and advertising that is (2) conducted at the local level.

In short, those who must implement the Democrats’ tiny “option” will have to behave as if they were executives of an insurance company seeking to break into markets in which the company has no presence. However, unlike insurance company executives, “option” administrators won’t have the luxury of merely buying an existing insurance company in the target market. (Insurance companies never or rarely create insurance companies from scratch any more but instead buy their way into new markets. That fact indicates how difficult it is going to be for the “option” to establish itself in any market in the US.)

Once we accept the fact that the Democrats’ “option” will have to be built market by market, an obvious question arises: Won’t the “option” program or insurance company we build in one market differ in important ways from the ones we build in other markets? The answer to this question is, Yes, the “options” could vary by premium levels, benefits covered, level of out-of-pocket payments (this will be true even if the final “option” legislation sets minimum benefit and out-of-pocket levels), degree to which patient choice of provider is limited, or all of the above.

For those who aren’t familiar with the insurance industry, let me elaborate briefly. Health care markets, and therefore health insurance markets, are local. With the exception of prescription drugs and medical equipment, the great majority of medical expenditures are for services provided by health care professionals to people who live near them, that is, within their market area. The fact that most health insurance companies are multi-state or national doesn’t change the fact that the success of any given insurance company depends primarily on how it performs in the local markets in which it attempts to compete. Since at least the advent of managed care, the performance of insurance companies in a particular market has depended first and foremost on its size.

The reason insurance companies do not attempt to penetrate all markets is that there are barriers to market entry that are expensive to overcome and, in some markets, impossible to overcome. One of the most important market-entry barriers, possibly the most important, is the level of concentration within the insurance market. A market in which, for example, two insurance companies insure 80 percent of the population will, other things being equal, be harder to break into than a market in which the largest two insurance companies insure only 20 percent of the population. The level of concentration within the clinic and hospital sectors will also have some bearing on how difficult market entry will be.

A third important factor affecting the ease of market entry is the extent to which managed care has taken over the market. In markets where managed care practices are widely used, insurers typically limit patient choice of provider. Insurance companies do this because it allows them to funnel a large number of patients to relatively few providers, and this in turn augments their power to extract discounts from providers and to induce providers to cooperate with the insurance company’s efforts to deny services to patients. Both of these advantages – paying providers less and paying for fewer services – obviously help the insurer keep its premiums down.

Markets differ in the strength of market-entry barriers. In markets where

• one or two insurers insure the majority of the people who live in that market and
• where those insurers impose restrictions on patient choice of provider and, therefore,
• have succeeded in pushing their provider rates way below those of other insurers and
• have induced their providers to deny care at higher rates than smaller insurers have –

in those markets, establishing a new insurance company that can quickly get its premiums down near or below those of the dominant insurers is very, very difficult. On the other hand, in markets where, say, 20 insurance companies each enroll 5 percent of the population and those insurers make limited use of managed-care tactics, entry and long-term survival by new competitors is less difficult.

To sum up: If we know only that the proposed “option” (1) is expected to compete with insurance companies, (2) will be small, and (3) won’t be given advantages that insurers don’t get, we can predict the “option” will have to be built market by market. We can predict, conversely, that such an “option” cannot be implemented with the simpler and less expensive national-level activities that would suffice to implement a large “option” that truly did resemble Medicare. Exactly how small the “option” has to be before we can predict it must be implemented market by market is not clear. But it seems safe to say that the little zero-to-six-million-enrollee “option” proposed by the Democrats falls far below the critical mass required for a publicly financed health insurance program to be implemented with the relatively simple tools with which Medicare was implemented.

Finally, if we reach the conclusion that the Democrats’ “option” must be implemented market by market, then we must also reach the conclusion that the locally implemented “options” will look different from one another. Why? Because the market-entry barriers they will have to overcome will differ from market to market. Such an “option” will be “national” only in the sense that the federal government will be financing the attempt by the “option” program to break into every market in the US, and in the sense that the federal government will set some minimum criteria (such as minimum benefit levels) that “option” programs must meet in each market.

Option advocates offer no information on who will create and run the “options”

Reaching the conclusion that the “option” program will have to be implemented market by market does not necessarily mean individual local “option” programs will be created by or run by private firms. One could imagine Congress passing a law that requires “option” programs to be created and run by public employees.

To shed some light on this issue, it would be helpful if we could find discussions about the implementation of the “option” in documents prepared by “option” advocates, by the staff of the Democrats who wrote the “reform” bills, or by independent consultants who reviewed the “option” proposal. But, amazingly, the available documents contain not a word about how the “option” will be created. The following documents about the “option” say nothing at all about how “option” plans will be established:

* Jacob Hacker’s 2001, 2007, and 2009 papers describing the “option”;
* All three reports on Hacker’s version of the “option” by the Lewin Group (the first two of which Hacker and his allies endorsed);
* Press releases and other documents about the “option” prepared by representatives of Health Care for America Now and of the Congressional Progressive Caucus;
* All five reports by the Congressional Budget Office to members of Congress about the impact of the “option” on the uninsured rate and on federal spending issued between July and September as well as CBO’s latest (October 29) report on the “option” in the House bill.

On October 27, I attempted to induce Jason Rosenbaum, a blogger for HCAN, to explain how the Democrats’ “option” would be implemented. I posted a question to Rosenbaum on an article he wrote for the Firedoglake Website in which he called Sen. Reid’s announcement the previous day (that the Senate version of the “reform” bill would contain an “option”) “a huge victory.” My question, which is presented in an appendix to this post, laid out my best guess as to how an “option” plan could come into existence plus several questions about aspects of my scenario. Rosenbaum declined to discuss my question. “Sorry Kip, not interested,” was the extent of his reply.

Divining the intention of the authors of the Democrats’ legislation

Thus, the only documents available to the public at this date that shed light on the extent to which private corporations will create and run the “option” program are the Democrats’ “reform” bills – the Senate HELP Committee bill and HR 3200, now HR 3962. As I have noted in previously posted papers, both bills clearly authorize the Secretary of the Department of Health and Human Services (the official in charge of implementing the “option” in both bills) to hire private-sector insurance companies and other types of corporations “for the purpose of performing administrative functions … with respect to the public health insurance option” (as HR 3962 puts it at page 212; the HELP Committee bill uses identical language but substitutes “with respect to the community health insurance option”). Both bills state that these “administrative functions” include at minimum the claims-processing functions now carried out by insurance companies for Medicare. Both bills, especially the Senate bill, clearly imply that the administrative functions that will need to be carried out to create the “option” will go way beyond mere claims processing. However, neither bill explains what these non-claims-processing tasks will be.

In my view it is reasonable to infer that the non-claims-processing functions will be all those tasks necessary to create and run “option” programs in every market in the US. I said above that the Senate HELP Committee bill is especially clear about this. That’s because it not only explicitly acknowledges that the “option” will consist of numerous “community option” programs, but because it limits the use of the start-up funds to loans to the “contracting administrators” (the Senate HELP Committee’s name for the corporations the Secretary may contract with). There is, in other words, no language in the “option” section of the Senate HELP bill that gives the Secretary money to hire more public employees to carry out the task of creating “option” insurance programs. The Secretary’s only choice is to outsource all the tasks necessary to create “option” programs market by market to private sector corporations, most of which will probably be insurance companies.

Conclusions

Using our commonsense and a few basic bits of information about the Democrats’ “option,” we can deduce that the “option” will not be uniform like Medicare, but will be a smorgasbord of local plans. When we consult the Democrats’ legislation, it becomes apparent – in the case of the Senate bill, obvious – that the “option” will be created and possibly run by insurance companies and other corporations.

Once we establish that the “option” will consist of multiple local plans, then it becomes obvious the contracting administrators will have to set those up. What’s not obvious, but what seems inevitable, is that (a) the contracting administrators will hire non-public-employees to staff the local plans and (b) the contracting administrators will either eventually retire from the scene and leave those plans in private hands (in which case we can say the local “options” are privately owned and run) or the contracting administrators will continue to play some ownership or supervisory role indefinitely (in which case it would be accurate to say the contracting administrators not only created the local “options” but ran them thereafter).

Thanks in large part to the bait-and-switch tactic employed by the leaders of the “public option” movement, the high probability that the “option” will be a balkanized program created and run by insurance companies is not obvious to the public. The constant description of the “option” as “like Medicare” and “available to all Americans” has created widespread confusion about every aspect of the “option,” including how big it will be, whether it will be uniform like Medicare or balkanized into dozens or hundreds of local programs, and who will create it. Given this confusion, I definitely understand why some people thought Byrne’s article overstated the role insurance companies will play in the “option.” But that doesn’t excuse them. The movement for universal health insurance does not need ditto-heads. We need well informed people capable of playing a role in improving, not diminishing, public understanding of the Democrats’ “reform” legislation.

I want to stress that the issue of whether the Democrats’ tiny “option” is run by public employees or private corporations is secondary to the question of whether the “option” will work as advertised, in particular, whether it will be big enough, efficient enough, and sufficiently immune to adverse selection to seize substantial market share from the insurance industry and force its premiums down. The important issue is the impact the small size of the Democrats’ option will have on its ability to keep its administrative costs and provider reimbursement rates down. The use of private firms to create the numerous “community insurance option” programs will probably add to the total administrative cost of setting up the “option” program, but those additional costs pale in comparison to the higher administrative costs created by the need to build the “option” program on a retail basis, that is, market by market, rather than on a wholesale basis.

Most importantly, if the Democrats’ feeble “option” is used as a fig leaf by liberal members of Congress to throw hundreds of billions of dollars per decade at the insurance industry, and if the “option” fails to have any effect on the insurance industry, serious damage will be inflicted on Americans, both as patients and as premium- and tax-payers. Those who wish to alleviate human suffering in all its forms will care little whether the “option” failed under the guidance of public employees or insurance companies.

Nevertheless, this issue of whether corporations will play a significant role in the “option” is an important one because truthful reporting about it helps educate Americans, including those Americans who hold seats in Congress, about what the “option” is and isn’t. Right now the Democrats’ “option” looks like a tiny little program that will hire insurance companies to create little privately run insurance companies from scratch on a market by market basis. It is extremely unlikely that if pollsters asked Americans what they thought of this version of the “option” that a majority would say they like it. It’s hard to believe a majority of the membership of Congress would vote for it.

=========
Appendix

My question for HCAN blogger Jason Rosenbaum, posted October 27, 2009 on Firedoglake’s blog:

Could you walk us through the process by which the Department of Health and Human Services will set up an “option” plan in any given market, say Boston, under the Senate health bill, HR 3200, or HCAN’s blueprint? Here’s the scenario I believe will occur under both the Senate HELP bill and HR 3200 assuming the “option” actually survives.

* Beginning in 2013, the Secretary of HHS contracts with a “contracting administrator,” that is, a corporation such as Blue Cross Blue Shield, to set up an “option” plan in Boston. The Secretary also loans Blue Cross several hundred million dollars to carry out all the tasks necessary to set up an “option” plan.

* Blue Cross then hires 80-100 people to create an insurance company to serve Boston. These people do the things you’d expect people to do to create a new insurance company, including making cold calls on clinics and hospitals to see if they’d be interested in accepting “option”-insured patients at Medicare rates plus 5% (or about 15% below the insurance industry average).

Question: Do you anticipate that Blue Cross will at some point ask clinics and hospitals to sign contracts with Blue Cross indicating their commitment to be part of the Boston “option” network? Or will contracts be unnecessary?

* After six months of making numerous cold calls, Blue Cross succeeds somehow in inducing a sufficient number of clinics and hospitals to agree to accept “option” enrollees. Now Blue Cross incorporates the Boston Public Option Plan (BPOP) and hires 80 people to staff BPOP.

Question: Does Blue Cross exit the scene now, or do you anticipate Blue Cross will continue to serve as an advisor to BPOP? Obviously, Blue Cross, if it does retire from the project, has to leave in place a contract with BPOP that at minimum ensures BPOP will repay the loan that Blue Cross got from the Secretary of HHS.

* BPOP/Blue Cross now begins advertising heavily and making cold calls on employers seeking to induce tens of thousands of Boston residents to pay their premiums to BPOP in the event that these people are eligible to shop in the MA exchange.

Question: How many people will have to enroll in BPOP in order for BPOP to have sufficient leverage over local providers to get them to accept reimbursement rates even with or below the rates paid by Aetna et al. in the Boston area? I’m not looking for precision, just some evidence that you or someone you know in the “option” movement has thought about this.

* Let’s assume BPOP solves the chicken-and-egg problem of trying to assemble a critical mass of providers and enrollees roughly simultaneously. BPOP formally opens for business. BPOP makes enough money within the next 8 to 9 years that it can repay to Blue Cross the loan it got from the Sec or HHS. Blue Cross in turn repays HHS.
Is this the process you envision?

Kip Sullivan is a member of the steering committee of the Minnesota chapter of Physicians for a National Health Program. He is the author of The Health Care Mess (AuthorHouse, 2006).

By A.R. Strobeck Jr.

In “The Cancer Generation,” Dr. John Geyman, physician and professor emeritus of family medicine at the University of Washington, focuses on the baby boomer generation in the United States and the virtual tsunami of cancer cases that is expected to hit this 79.5-million-member demographic as more of its members move into their “golden years.”

Geyman says he aims to examine “the changing landscape of cancer in the U.S., including the extent to which the marketplace fails patients with cancer care.” He takes a hard look at how well the present state of cancer care – particularly the financing of medical services – measures up to the task of providing quality, compassionate care to those who need it.

While he draws upon the latest academic research and the book is heavily footnoted, the material is presented in a popular, accessible way, including with the abundant use of tables and graphs.

The picture he draws is not pretty. The author believes that the outlook for cancer care is bleak, largely due to the unregulated “free market” economic policies that have come to dictate both access to, and delivery of, health care in the U.S. These policies have given rise to an astronomical increase in the costs of cancer care, with treatment costs are now rising by 20 percent each year. The rising costs are putting effective care out of reach of millions.

This problem is expected to worsen, the author says, noting that the Institute of Medicine projects the number of cancer cases will double between 2000 and 2050. Meanwhile, the annual cost of treating cancer is projected to reach $1.1 trillion by 2023, more than five times what we spend today.

As a result, the aging of the U.S. population “will lead to an increasing cancer burden, both for individuals and their families as well as for the health care system itself.”

Geyman acknowledges that treatments for cancer have improved, and today’s care can be effective in many cases. He points to the dramatic increase in the survival rate among children diagnosed with cancer, for example.

But lack of health insurance, or poor quality insurance, prevents people from getting access to and obtaining proper care. The chief culprit here, he says, is the private health insurance industry, which is more concerned with increasing its profits than in assuring access to care.

More generally, however, he believes that our present market-driven health care system cannot meet the coming surge in cancer cases without drastic changes in its structure, access, delivery and methods of financing.

Geyman sees a blind faith in technology in the U.S. as fueling an explosion of new technologies, even though there is much uncertainty as to the safety and efficacy of these innovations. Unfortunately, he asserts, due to the high stakes that come with cancer, patients facing it are “especially vulnerable to accepting treatment at whatever the risks or costs.” Thus the marketplace is “setting cancer policy by default,” i.e. most of our health care dollars are going into treatment and far too little into prevention.

Cancer survivors face special challenges, he writes. They are less likely to be employed. They face three kinds of barriers to care thrown in their way by private insurance: availability, affordability and adequacy. And if these barriers are not enough, private insurance companies sometimes will go to even greater lengths to deny coverage to those afflicted.

Survivors lucky enough to have insurance face much higher co-payments. In addition, insurance firms try to cap coverage or otherwise place limits on the amount of treatment. As a result, a cancer diagnosis is often a prelude to financial crisis and bankruptcy.

Cancer survivors without insurance often find it difficult to see a doctor or to have a regular source of care. Geyman notes that it is no wonder that uninsured and Medicaid patients often have cancer at a more advanced stage when it is diagnosed. In addition, most cancer survivors often have serious co-morbidities such as heart disease or diabetes, which also go untreated at a disproportionately higher rate.

Geyman argues that everyone needs accessibility to doctors if the mortality rate of cancer is to be reduced. Unfortunately, the policies of the private health insurance industry are heading in the opposite direction, leading to uncontrolled inflation of costs; growing unaffordability of premiums; decreasing levels of coverage; a bloated bureaucracy, contributing to the waste of 31 cents of every U.S. health care dollar on administrative costs; a shrinking market of only 59 percent of employers now offering health insurance; ineffective state and federal regulation; and growing insecurity and hardship in the general population.

Racial disparities also continue to take a heavy toll: for example, cancer mortality rates are 35 percent higher for African Americans than whites.

What’s his prescription for a cure? As step No. 1, Geyman recommends establishing a public health insurance system such as single-payer Medicare for All. Such a system would provide health care services “based on medical need, not ability to pay, ” and would “eliminate much of the inefficiency and waste of the private insurance industry and actually cost employers and individuals less than we are already paying for insurance and health care.”

He outlines additional measures like establishing a national, evidence-based clinical effectiveness program; more funding for cancer research; and the strengthening of the nation’s cancer workforce, especially in primary care and geriatric oncology.

Finally, Geyman reminds us of the ethical issues surrounding cancer care, citing Dr. Martin Luther King Jr., when he said, “Of all forms of inequality, injustice in health care is the most shocking and most inhuman…. Although social change cannot come overnight, we must always work as though it were a possibility in the morning.”

Reading and acting on this book will help bring about that better day.

A.R. Strobeck Jr. worked for many years in health care administration. He resides in Chicago.