In June, 2009, Pharmaceutical Research and Manufacturers of America (PhRMA), the drug industry’s trade group, followed up on its offer to help finance expanded health coverage within health care reform. PhRMA’s CEO, Billy Tauzin, was very familiar with politics and the drug industry. The former Republican turned Democrat Congressman from Louisiana had played a leading role as chairman of a House committee in design and passage of the Medicare Prescription Drug, Improvement and Modernization (MMA) Act of 2003. That bill turned the new prescription drug benefit over to the private sector and prohibited the government from negotiating drug prices as the Veterans Administration does so effectively. Tauzin then used the revolving door between government, industry and K Street to become CEO of PhRMA and a top lobbyist in Washington, D.C. with a reported salary in the range of $2 million a year. He continued to lobby against price controls of drugs or importation of drugs from Canada or other countries.

In an agreement with President Obama and Senator Max Baucus, Chairman of the Senate Finance Committee, PhRMA pledged $80 billion toward the costs of health care reform. Though some of the details of this agreement have since become a matter of controversy, two parts of the pledge are widely known — (1) drug companies would give a 50 percent discount to Medicare beneficiaries for the costs of their drugs in the “doughnut hole” (annual costs between $2700 and $6,100); and (2) drug companies would give higher rebates on the drug costs of people on Medicare and Medicaid. It has been estimated that about $30 billion would be expended for these two purposes over the next 10 years, with the other $50 billion being directed to non-specified costs of reform.

This pledge was hailed as an “historic agreement” by the White House and praised by the AARP, but it soon became clear that much of this pledge will not result in savings to the federal government. Further, as pointed out by Charles Butler, a pharmaceutical analyst at Barclays Capital, those discounts won’t cost the drug companies much — “Because of the discounts, Medicare beneficiaries are likely to continue filling prescriptions in the doughnut hole, whereas in the past many stopped taking their medications because the drugs were unaffordable to them.”

The main point of contention in weeks after this agreement was whether the quid pro quo for the drug industry is assurance that the government will not pursue negotiation of drug prices. In August, an internal memo obtained by the Huffington Post confirmed that the White House and the drug industry lobby secretly agreed to protection of drug companies from price controls. (Grim, R. Internal memo confirms big giveaways in White House deal with big PhRMA. Huffington Post, August 13, 2009) Both sides subsequently issued conflicting reports in an effort to backtrack from the controversy. But many progressives in Congress felt betrayed. In response, Speaker of the House Nancy Pelosi declared that the House was not a party this agreement. The House E & C Committee, chaired by Henry Waxman (D-CA) soon passed an amendment to the House bill (H. R. 3200) calling for negotiation of drug prices by the government, and many Democratic leaders would like the drug industry to make a bigger commitment to health care reform.

Despite the lack of transparency in whatever deal was made between PhRMA, the President and Senator Baucus, the drug industry’s agenda is crystal-clear — expand its markets through wider insurance coverage and government subsidies, avoid price controls and competition from importation of drugs from other countries, and gain maximal patent protection from generic drug-makers of biotech drugs.

Much as the insurance industry feels more secure in the more conservative Senate, the drug industry has also counted on the Senate Finance Committee to roll back provisions in any House bill counter to its interests. PhRMA therefore became an active supporter of a bipartisan approach to health care reform. While not lobbying specifically against the public option, it expressed serious concern over any erosion of employer-sponsored health insurance. It also arrayed its forces in these directions:

• Joining with Families USA, a not-for-profit advocacy group for affordable health care, in a $150 million ad campaign supporting health care reform. This campaign includes a re-appearance of Harry and Louise, the fictional couple now on Medicare who played a large part in defeating the Clinton Health Plan in1993-1994. They now tell us on major national TV channels, some network news and Sunday talk shows that “a little more cooperation, a little less politics, and we can get the job done this time.”

• Teaming up with Families USA to lobby for expanded Medicaid coverage for
Americans making up to 133 percent of the federal poverty level ($14,000 a year for individuals). As Tauzin said: “When Families USA and PhRMA can get together, I hope that’s a sign to everybody in the House and Senate that we can find common ground, and that the president’s call to put party aside and to put ideologies aside and try to find what works is a good call.”

• Lobbying against proposals that would prohibit brand-name drug makers from paying generic drug makers to delay marketing of lower-cost generic drugs.

• In the first six months of 2009, PhRMA and Pfizer spent $13.1 and $11.7 million in lobbying, respectively.

It was soon apparent that the initiatives taken by the drug industry to appear to support reform was bound to please its CEOs and stockholders. These early returns were gained:

• Passage by the Senate HELP Committee (by a 16-7 vote) of a provision giving manufacturers of branded biotechnology drugs at least 12 years of patent protection before generic manufacturers can bring such drugs to market (the White House had proposed seven years while Henry Waxman had wanted five).

• Strong projected annual increases on prescription drug spending

In sum, in the same way that the insurance industry had already won preferential treatment from legislators even as developing health care reform legislation was in a fluid state, the drug industry had also achieved many of its important goals, especially assurance of strong future markets for its products for years to come. In our next post, we will see how the hospital industry has fared during this critical period of potential system change.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008. With permission of the publisher, Common Courage Press

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

In May, 2009, President Obama held a high-profile event in the White House, convening leaders from the health care industry to a meeting to discuss reform of the U. S. health care system. Participants included representatives from the insurance, drug, medical device, and hospital industries as well as business, labor and organized medicine. This “alliance” for health care reform produced a voluntary, unenforceable “commitment” to reduce the costs of health care by 1.5 percent, which would amount to some $2 trillion over the next 10 years. Promises were vague, such as promising to “cut both overuse and underuse of health care by aligning quality and efficiency initiatives”. The White House was quick to call the meeting “an historic day, a watershed event, because these savings will help to achieve comprehensive health care reform.”

Subsequent weeks and months, however, soon showed the “charm offensive” by major stakeholders in our medical industrial complex to be a sham alliance as their real agendas and differences among each other became more obvious. In this and the following posts, we will revisit each major group’s pledges, agendas, tactics and likely rewards as the national debate over health care reform intensified in Congress and across the country.

The pledge by the insurance industry was simple — if all Americans are required to buy health insurance, the industry would be willing to charge sick people more for coverage than for healthy people. The industry would abandon pre-existing conditions as an underwriting principle, accept all applicants for insurance, and stop charging women higher premiums than men. As the CEO of the industry’s trade group, America’s Health Insurance Plans (AHIP), Karen Ignagni said that insurance companies “accept the premise that the system is not working today and needs to be reformed.”

As the second largest private insurer, UnitedHealth Group even offered up 15 recommendations that could save $540 billion in federal health care costs over 10 years, including such steps as “providing patients with incentives for going to high-quality, efficient physicians, granting physicians incentives for providing comprehensive and preventive care, and reducing unnecessary care”. UnitedHealth’s Center for Health Reform and Modernization also attached speculative cost savings in these areas: “providing nurse practitioners at nursing homes to manage illness and reduce avoidable hospitalizations ($166 billion), using evidence-based care management with preventive care to reduce avoidable hospitalizations ($102 billion), and analyzing claims before they are paid to prevent duplicate billing and other administrative errors ($57 billion).

The industry’s agenda — gain enormous markets for new enrollees in both private and public plans, many enabled by government subsidies extended to those unable to pay the premiums; as many as 50 million new enrollees were in play.

That its agenda was more self-serving than supportive of real reform came clear as the industry took to the battlefield on these fronts:

• Vigorously oppose any public option as an effort to bring competition to the market, claiming that it could not be a level playing field and would put them out of business.
• Oppose any controls or caps on premium rates.
• Fight against any cuts in overpayments to Medicare Advantage plans or attempts to set medical-loss ratios too high (the lower they are, the more income insurers profit).
• Lobby in favor of setting the lowest possible minimal standards for insurance coverage.
• Launch ad campaigns to tell the public how the industry is doing its part to support health care reform.
• Increase its campaign contributions as shown in Table 1. (Terhune, C, Epstein, K. Why health insurers are winning. BusinessWeek. August 17, 2009: 036.)

Table 1
Campaign Contributions by Major Insurers
Insurer                                       2005-2006            2007-2008
Blue Cross/Blue Shield          $2,451,716             $3,125,921
AFLAK                                       $1,924,335            $2,211,030
UnitedHealth Group               $1,045,877            $1,568,634
Aetna                                          $674,950               $721,957
AHIP                                          $510,561                $591,750

Source: Center for Responsive Politics

The insurance industry has continued to realize high profits despite the recession. Profits for the major insurers in 2007 are shown in Table 2:

Table 2
Profits of Five Major Insurers in 2007

UnitedHealth Group        $4.65 billion
WellPoint                           $3.34 billion
Aetna Inc.                           $1.83 billion
Cigna Corp.                        $1..11 billion
Humana Inc.                      $834 million
Even as many people lose their jobs and health insurance, some insurers continue to post large profits. Despite a continued fall in commercial enrollees, UnitedHealth Group, for example, reported a 155 percent increase in second-quarter earnings for 2009 compared to 2008, largely as a result of strong growth in its Medicare and Medicaid business.

During the August 2009 recess of Congress, lucrative future rewards were being projected for the insurance industry. An in-depth article in BusinessWeek (Ibid) had this to say:

“As the health reform fight shifts this month from a vacationing Washington to congressional districts and local airwaves around the country, much more of the battle than most people realize is already over. The likely victors are insurance giants such as UnitedHealth Group, Aetna, and WellPoint. The carriers have succeeded in redefining the terms of the reform debate to such a degree that no  matter what specifics emerge in the voluminous bill Congress may send to  President Obama this fall, the insurance industry will emerge more profitable.  Health reform could come with a $1 trillion price tag over the next decade, and it may complicate matters for some large employers. But insurance CEOs ought to be smiling.”

Wall Street, of course, has followed the health care debate with intense interest, since the health care industry accounts for one-sixth of our economy. Within hours after the Obama Administration signaled its willingness to consider alternatives to a public plan, trading in UnitedHealth and WellPoint jumped about three-fold as investors placed new calls and puts. Health insurance stocks were pushed higher despite a triple-digit loss in the broader markets.

Even as partisan and internecine battles among stakeholders reached new levels as members of Congress went home to hear impassioned protest from many constituents, President Obama was still seemingly pleased with the level of stakeholder support for health care reform. In a Rose Garden press briefing: “And the fact that we have made so much progress where we’ve got doctors, nurses, hospitals, even the pharmaceutical industry, AARP, saying that this makes sense to do, I think means that the stars are aligned and we need to take advantage of that.”

Noting the political gulf between House and Senate bills over health care reform, especially the Senate Finance Committee’s strong opposition to a public option, AHIP naturally continued to campaign for a bipartisan health reform bill, trusting that the Senate would defend its interests

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008. With permission of the publisher, Common Courage Press

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

Who Needs the Public Option?

By Uwe Reinhardt
The New York Times
August 21, 2009

Nothing has been quite as riveting in recent media reports as the question of what President Obama and his staff really think…

How did the brouhaha over the choice of a public health plan come about in the first place, when the real issue before us has been helping the millions of currently uninsured, low-income American families gain access to adequate and reliable health insurance?

One would have hoped that the overarching goal of health reform would have been to put in place a reformed health insurance system that can offer Americans the same reliable, permanent, portable and life-cycle health insurance enjoyed by, say, Germans or Canadians or the people of Japan and Taiwan.

As I have argued in earlier posts to this blog, the choice of a public, government-run standard health insurance plan would certainly go a long way toward reaching that, but it is not a necessary condition for doing so. Germany, the Netherlands and Switzerland all do offer their citizens permanent, portable and stable financial security in health care without the inclusion of a government-run health plan in the mix. That achievement, however, requires fairly heavy regulation of the industry.

If I had to guess what features really make a public plan so attractive to many Americans, they would probably be the stability, permanence, portability and simplicity that such a public plan could offer. It is these features that make traditional, government-run Medicare so popular with the public.

Herein lies the main challenge facing the private health insurance industry. It must convince the public and the legislators who do not trust it that with the help of government — including a wide set of new government regulations — the industry can transform itself into a structure that can offer Americans the same permanent, reliable, easy-to-understand life-cycle financial security that citizens in other nations take for granted and Americans crave.

Thus, instead of the cliche that a public health plan would lead to a “government takeover of American health care” and thus its demise, the industry would be better advised to put before the public a fully worked out purely private-sector model that truly will offer individuals reliable, life-cycle health insurance with relatively stable premiums, and at premiums that are defensible.

http://economix.blogs.nytimes.com/2009/08/21/who-needs-the-public-option/

Posted comment by Don McCanne, MD:

The brouhaha over the public option is more than just symbolic. The accusation is correct: the public option was perceived as a means to move us toward single payer, while respecting the right of others to continue with their current coverage if they so preferred. The progressive camp was divided over this strategy since some of us believed that jettisoning single payer in favor of the public option would result in a bargaining position in which the public option would have to be traded away in exchange for some insurance market reforms. Those single payer advocates who agreed to support the public option now feel betrayed.

But the much more important goal is to establish a system that prevents financial hardship for anyone who needs health care – a system of social insurance, whether that is based on single payer or on a system of highly regulated private plans, as some European nations have.

Congress is trying to patch together a model based on private plans, but they have run up against a uniquely American problem – our very high health care costs. The average health care cost far a healthy family of four (the healthy workforce and their young healthy families) is now $16,771. With a typical family income of $60,000, generous subsidies will be mandatory for middle-income individuals and families.

We already have hit the wall on costs. Congress is proposing basic coverage (tier one) that has an actuarial value of 65 to 70 percent, leaving those with significant health care needs exposed to the balance of the costs (which is often higher than the stop loss because of the failure of our private insurance model to protect individuals from unanticipated out-of-network charges). Average-income individuals who need care will not be able to afford the out-of-pocket costs.

Even for those who remain healthy, our costs are now so high that a plan with reasonable benefits that would provide adequate financial protection in the event of need must charge premiums that are so high that a generous public subsidy is essential. The wall again – Congress is unwilling to use aggressive, progressive tax policies to pay for subsidies that are large enough to keep premiums affordable for average-income individuals.

There is an out. Congress will waive the fine for the criminal act of being uninsured merely because the premium is unaffordable. The standard “coverage” for the middle-income sector will then be “hardship waivers” (assuming a transition away from employer-sponsored coverage – the intent of many members of Congress). The only other option besides aggressive tax policies would be to make the basic plan so Spartan that it won’t provide adequate financial protection anyway. (Don’t say high deductible plans, because if the deductible is high enough to make the premium affordable, the plans do not provide adequate protection for middle-income individuals and families.)

The real problem with the public option concept is that it automatically leaves in place the most expensive and least efficient method of financing health care. A single payer or improved Medicare for all would provide us with more than simply an equitable and efficient method of financing care for everyone, it would also create our own public monopsony so that we can demand greater value from our health care system.

NBC News Health Care Survey

Hart/McInturff
August 15-17, 2009

8. Thinking about efforts to reform the health care system, which would concern you more?

41% – Not doing enough to make the health care system better than it is now by lowering costs and covering the uninsured.

54% – Going too far and making the health care system worse than it is now in terms of quality of care and choice of doctor.

5% – Not sure

http://msnbcmedia.msn.com/i/MSNBC/Sections/NEWS/NBC-WSJ_Poll.pdf

A PhD thesis could be written over just what this survey tells us, but we’re certainly not going to do that here.

Give this some thought. Think about what this might mean. Then think about what we should be doing in response. And then do it!

We are told by supporters of health care reform bills in the Democrat-controlled Congress that they will save us money in the long run and contain skyrocketing health care costs. But the CBO has projected that the most comprehensive proposal yet, America’s Affordable Health Choices Act of 2009 (H.R.3200 in the House), will add to the federal deficit by $239 billion over 10 years. So the Administration and most Democrats find themselves on the defensive over these costs as Republicans have a field day in proclaiming the risks of even higher deficits than we already are facing. As Rep. John Boehner (R-OH and Republican leader in the House of Representatives) says:

“Americans want a better plan to lower costs and improve the quality of health  care. —It’s not just about health care, it’s also about out-of-control government spending that’s piling debt on our kids and grandkids” (Boehner, J. Americans aren’t going to buy health care spin, Mr. President. Op-Ed. USA Today. August 13, 2009: 11A).

That gives the fiscally conservative Blue Dog Democrats, in the middle of the battle over health care reform, powerful clout in cutting costs of the various bills working their way through Congress.

Increasing red ink haunts future projections for federal and state budgets for years to come, whether we are considering Medicare, Medicare, or the public’s capacity to afford rising health care costs. The proposals currently in Congressional committees all call for expansion of Medicaid, which beleaguered states are already pushing back on. In past years, states have shared the costs of Medicaid with the federal government about equally. Now, 48 of the 50 states are having such budget shortfalls that the federal share of Medicaid’s expansion is likely to be 93 percent. (Nichols, J. Dire states. The Nation. 289:5, August 17-24, 2009:3-4) The annual costs of Medicaid are now $340 billion, and the CBO projects them to increase to $430 over the next ten years. (Krauss, C. Trickle-down costs: states fear the bills in health care overhaul. New York Times. August 7, 2009: B1)

So how is the political battle actually playing out? If fiscal conservatism were the dominant factor in the debate, we should have a bill coming out of Congress that will be deficit-neutral at worse, and actually save money at best. But none of the bills we are yet hearing about will accomplish either of those goals. H.R. 3200 will cost about $1 trillion more over ten years. And as we saw in the last post (link to blog # 26), it won’t result in containment of either insurance or health care costs. The only proposal in Congress that could meet goals of fiscal conservatives (of either party) is the Conyers bill in the House (H.R. 676), a single-payer Medicare-for-All bill. But so far it has been kept off the table by supposedly fiscal conservatives in both the Senate and House, even including the Obama Administration.

So why this incredible disconnect among our elected representatives shaping the future of one-sixth of our economy and future health care of all 310 million of us? The answer, of course, is all about money, corporate power and influence. For industrial stakeholders in our for-profit health care system, our costs are their income, CEO compensation and returns to investors. It really does come down to Wall Street vs. Main Street. More than 3,000 lobbyists (a 6:1 ratio to members of Congress) have descended on Washington, D.C. to lobby for stakeholder interests among industry and providers. They range from the insurance, drug, medical device, and medical equipment industries to hospitals, nursing homes and professional groups within organized medicine. In each case their agenda is to preserve and grow their revenues under the cloak of “reform”.

Absent from the negotiating table is the public interest. Instead of long-term containment of health care costs for patients and their families, employers and taxpayers, the battle is being fought to extend future profits of the medical-industrial complex. Corporate money and lobbying clout ($1.4 million a day) is focused on limiting the interference of government in the health care market and avoiding price controls while calling for increased government subsidies (of private insurance through employer and individual mandates and of public programs such as Medicare and Medicaid). And at the same time, supposed fiscal conservatives are distorting the debate through their disinformation campaign against a “government takeover”, “socialized medicine” and threats to “choice” — a blatantly cynical and dishonest approach.

If the public interest is to be served by any health care reform to be enacted this year, we need an informed public to rise up and force our legislators to do the right things to actually rein in the costs of health insurance and care. A weak and small public option won’t do the job. Here are some of the things that will:

• force a favorable vote on the floor of the House this Fall on H.R. 676, the  United States National Health Insurance Act, a single-payer bill for all Americans; an amendment to H.R. 3200 will be introduced by Rep. Anthony Weiner (D-N.Y.) in September that would replace the private insurance industry  with such a program.
• Require Congress to enact an independent federal agency for Comparative  Effectiveness Research, with authority to guide coverage and reimbursement policies.
• If a single-payer program is not possible this year (as it will inevitably be!), hold members of Congress accountable for their votes on efforts to eliminate
overpayments to private Medicare plans (not over years, but now); require that all insurance plans cover a high percentage of benefit costs; allow a public option to vigorously compete with private insurers, including setting its premiums well  below private premiums and capping premium increases; and allow the  government to negotiate the prices of drugs and medical devices.

When the Congress re-convenes this Fall, we the public will have an opportunity to force our legislators to be accountable to us. We need to get H.R. 676 on the table, scored by the CBO on its merits, and brought to votes in Congress on the basis of its real provisions, not the disinformation and scare tactics of self-serving stakeholders in the open market of health care.

Fiscal conservatism could and should bring together a landslide vote by
Republicans and Democrats, including the Blue Dogs, to pass H.R. 676, the only fiscally conservative option before us. The battle IS over money, but it’s OUR money, including that of future generations of Americans, that should take priority over the special interests that profit from our higher costs.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008. With permission of the publisher, Common Courage Press.

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

Code Blue: Out-of-Network Charges Can Spur Financial Emergency

By Paul Raeburn
Kaiser Health News
August 19, 2009

On the evening of March 1, 2008, Gary Diego was relaxing with his wife, Ellen, when she abruptly lost her hearing, began repeating herself, and seemed to be losing her grip.

Alarmed, Diego rushed her to his insurance company’s in-network hospital, near his home in Truckee, Calif. Unable to handle what was determined to be bleeding in the brain, the hospital quickly transferred her to Renown Regional Medical Center in Reno, Nev., where she spent 17 days in intensive care. While recovering, she caught pneumonia and died.

A few weeks later, a still-grieving Diego learned from his insurer, Health Net, that he owed the Reno hospital $75,462.77. The reason? The hospital was not in his approved network.

(Later Mr. Diego paid a medical billing consultant $7,500 to negotiate a settlement.)

http://www.kaiserhealthnews.org/Stories/2009/August/19/out-of-network.aspx

And…

Tackling the Mystery of How Much It Costs

By Gina Kolata
The New York Times
August 18, 2009

But the health care legislation under discussion does not directly address the out-of-network fee issue. And that is intentional, says Dr. Mark McClellan of the Brookings Institution. Dr. McClellan, a former head of Medicare who works closely with policy makers, says the goal of the House and Senate bills is to encourage people to stay in their networks. He added that the result should be networks that provide better care “so that people don’t have so much need to go outside of them.”

Mark A. Hall, a professor of law and public health at Wake Forest University, for example, advocates restricting out-of-network fees to a fixed amount, perhaps 150 percent of the amount Medicare would pay.

That is how the system works in Germany, says Uwe Reinhardt, a health economist at Princeton University. Professor Reinhardt advocates a national law that caps the maximum doctors can charge when they are out of a patient’s network.

America’s Health Insurance Plans, which represents health insurers, is also trying to draw attention to out-of-network doctors’ fees. Last Tuesday, the group released results of its own survey to show how high such fees can go.

Jonathan Gruber, a health economist at M.I.T., says, however, that it makes more sense to encourage people to stay in networks.

Some may want to pay anyway for an out-of-network doctor, and that is fine, he said. “If you want to go outside your network, God bless you,” he said. “It’s the American way.”

But the only way to fix the system, Dr. Gruber said, is to make the networks better so that people will stay in them and then, most patients, knowing what it will cost them to leave their networks, will decide not to.

http://www.nytimes.com/2009/08/19/health/policy/19fees.html

qotd on AHIP’s report referenced above:
http://www.pnhp.org/news/2009/august/ahip_explains_why_pr.php

What are private insurers selling us? Their primary product is a network of health care providers that have contracted to accept the insurers’ rates. The benefit of that is that it has helped to slow the rate of increase in health insurance premiums. One major problem with that is individuals frequently obtain care from out-of-network providers – usually not by choice, but by medical circumstances not really under the control of the patient. Under most insurance plans, the individual then becomes responsible for payment of most or all of the out-of-network charges.

With higher premiums, larger deductibles, greater coinsurance, more benefit exclusions, patients are already facing financial hardship without the addition of the out-of-network charges. These unanticipated charges are contributing to our growing epidemic of underinsurance. What to do?

Mark McClellan (think of Medicare privatization) and Jonathan Gruber (think of Massachusetts’ flawed policy of getting more people covered and then pretending that we can figure out later on how to make it work) both believe the answer is to penalize individuals who obtain out-of-network care in an effort to establish incentives for insurers to create perfect networks so that out-of-network care will never have to happen. Of course, “it’s the American way” to choose care outside of your network, and “God bless you” when you can’t pay your bills.

It’s also the American way for Mr. Diego to receive a $75,000 out-of-network bill for his wife’s life-threatening and life-ending care. Haven’t we had enough of our uniquely American system?

There is another way of protecting patients from out-of-network charges. The government can require that out-of-network fees be close to insurer-authorized payments within networks. Yes, that would be the imposition of government fee controls, but fees that are designed to match fees already imposed by the private insurer bureaucracies. That would help, but it does bring up an important question. If the government is going to impose fee controls anyway, then why should we continue to pay the costs of the outrageous administrative waste of the private insurers?

Some might say that they do provide us with the function of pooling risk. But one of the goals of reform is to pool risk across insurers, relieving them of the burden of bearing risk. If we achieve risk equalization then it would be much more efficient and equitable to establish a single universal risk pool administered by the government. Again, the private insurers would be superfluous.

How much risk are the insurers exposed to now under our current system? Half of employer-sponsored benefits are already self-insured. The employer pays the benefits with absolutely no risk exposure to the insurers. So what do the insurers provide the employer? Claims processing for one. But the other service should really give us pause. The private insurers rent their network provider lists to the self-insured employers. How many physicians do you think might be offended if they knew that rent was being paid for use of contracts they signed with the insurers that require the physicians to provide a large discount, and that rent is not going to the physicians but is being kept by the private insurers!?

Tell Congress and the President that we’ve had it with private insurers! Urge them to support the single-payer amendment to the House bill by Rep. Anthony Weiner which Speaker Pelosi has promised will receive an up or down vote on the House floor this year.

Use the following link to access resources on the Weiner amendment:
http://www.pnhp.org/amendment/

In a reasoned debate, single payer will come out on top

By Laura S. Boylan, MD and Joanne Landy, MPH

One can only feel sorrow and dismay at the bullying and hate-mongering that is taking place at health care forums around the country.

Massive job losses, the devaluation and foreclosures of people’s homes, and precipitous declines in lifetime savings produce widespread fears of further loss. In an era of insecurity, mainstream Democratic Party proposals for reforming the health system have played into such fears.

A health care “reform” that protects private insurers and massive profits for the pharmaceutical industry inevitably becomes an ugly game where ordinary people’s interests are pitted against each other. Witness, for example, the proposed cuts to Medicaid and Medicare to fund an initiative that subsidizes the mandated purchase of private insurance with taxpayer dollars. Relatively little is offered to the already insured majority who are told of upcoming belt-tightening.

The near-total exclusion of single payer from the health care debate by our political leaders and the media has contributed to the present state of affairs. Single payer is an expanded and improved Medicare for All (“Medicare 2.0”).  Many, perhaps most, Americans have come to believe in the false choice between universal coverage and quality health care.

Our nation needs a meaningful dialogue, including a fair hearing of the views of the 20 million constituents of the Leadership Conference on Guaranteed Health Care (of which Physicians for a National Health Program is a founding member), who advocate for single-payer national health insurance. Polls show that most of the public and their physicians favor such an approach.

There is simply no other viable solution to the problems facing us all, insured and uninsured. With Medicare 2.0, the already insured would benefit from radically reduced out-of-pocket costs for comprehensive insurance and expanded choice of doctors and hospitals. Medicare 2.0 stays with you for life, independent of your employment. The epidemic of medical bankruptcies would be just a bad memory.

It is unnecessary to pit the insured against the uninsured, or those with Medicare and Medicaid against those with private insurance.

Multi-payer, for-profit health insurance adds cost but not value to American health care. Savings of $400 billion a year can be obtained through the conversion to a single-payer system. With the money we are now spending (twice as much per capita as other developed nations), we can provide full service “what you need, when you need it” health care for everyone and control costs going forward.

With the “everybody in, nobody out” approach of a Medicare 2.0 system, we can all get more freedom, choice and security.

Single-payer advocates have been excluded from debate not because our premises or facts are wrong but because special interests, including the private health insurance industry and the big drug companies, have been allowed to define the limits of “politically feasible.”

We support the right to lively and dramatic expression of all views about health care and other issues in American political life. We share a common sense of frustration expressed by many protesters that it often seems that Washington’s ear is tuned to special interests over public interests. However, we strongly condemn the bullying and hateful speech that has precluded meaningful discussion at many town hall meetings.

The ugliest language suggests that the uninsured or undocumented should be allowed to “die in the streets” and asserts that areas with less racial and ethnic diversity are “the real America.” President Obama’s citizenship is questioned and he is likened to Hitler.

These actions have been facilitated and promoted by networks of well-funded, right-wing interest groups who have tapped into a vein of fear and discontent in a time of rapidly rising hardship and anxiety.

With this deteriorating public dialogue, we should affirm that we can get better health care by sticking together to support single payer. We support meaningful dialogue. We affirm the dignity of all persons and insist that health care is a universal human right.

Health care is instrumental to “life, liberty and the pursuit of happiness.” We continue, as ever, to insist that “everybody in, nobody out” is best for all of us and embodies the best of American values.

Remarks by the President in Town Hall on Health Care

The White House
Grand Junction, Colorado
August 15, 2009

Question: As a child I had polio, and I had a series of surgeries, 52 of them, to correct my poor structure of bones — between here, Denver, Montrose, and the Mayo Clinic in Phoenix, Arizona. I have been blessed with a good insurance, generally excellent doctors and care. However, my major concern in cost, even with good — even with a good insurance, the cost has been high, practically when I have been gone out of the network. Why should our doctor treatment choice be limited by a geographic area or the state? What kind of competition is this, Mr. President? (Applause.)

The President: This raises an important question, because it goes to the overall debate that’s taking place out there right now. When we talk about reform, you hear some opponents of reform saying that somehow we are trying to ration care, or restrict the doctors that you can see, or you name it. Well, that’s what’s going on right now. It’s just that the decisions are being made by the insurance companies.

Now, in fairness, we probably could not construct a system in which you could see any doctor anywhere in the world anytime, regardless of expense. That would be a hard system to set up. So if you live in Maine, you know, we’re going to fly you into California, put you up. I mean, you can see — and I’m not trying to make light of it — you can just see the difficulty.

So any system we design, there are going to have to be some choices that have to be made in terms of where you go to see your doctor, what’s going on, et cetera. That’s being done currently in the private marketplace.

(President Obama then uses this as a segue to discuss other aspects of reform.)

http://www.whitehouse.gov/the_press_office/Remarks-By-The-President-In-Town-Hall-On-Health-Care-Grand-Junction-Colorado/

“So if you live in Maine, you know, we’re going to fly you into California, put you up.”

Obviously, giving someone who lives in Maine the choice of having the option for an expense-paid trip to California to receive health care is not one of the goals of health care reform. That’s not exactly what is meant by choice. This was an exaggeration on the part of the President to make the point that, of course, we can’t have choice.

And the reason we can’t have choice? Because the politicians have decided on a model of reform using private insurers that take away choice by mechanisms such as limiting the panels of contracted providers. He blames the insurance companies for this, but then accepts the intrusive role of the private insurers as inevitable because we “… could not construct a system in which you could see any doctor…”

This bungled response was not because President Obama doesn’t understand the policy issues. Clearly he does. He knows that a single-payer Medicare-for-all program would provide patients with free choice of their physicians. But he also realizes that he has made a policy decision that would not allow that. Thus the diversion into the all-expense-paid transcontinental trip. Oh wait… that’s only for the insurance executives.

Tell President Obama and Congress that we demand to have free choice of our own physicians. No more private insurers’ closed panels that take away our choices.

As the leading proposal out of the gate for health care reform in this session of Congress, the House bill (H.R. 3200, America’s Affordable Health Choices Act) during this August recess stage is considered the most robust of the various proposals so far coming out of congressional committees. This act has an overall goal to “reform the insurance marketplace to ensure that everyone can purchase quality, affordable health insurance coverage”. It would do so by creating a not-for-profit public option to compete with private insurers in an attempt to “keep them honest.”  The public option would be offered to individuals and small businesses through a National Health Insurance Exchange whereby people can comparison-shop among available plans. Most operational details as to how these exchanges would actually work are still unclear.

As we saw in a prior post, the public option has generated intense opposition from the insurance industry, other stakeholders in the medical-industrial complex, Republicans, Blue Dog Democrats, and conservative astroturf groups. Even in the House, where the public option has stronger support, it has been whittled down to at best a small program available perhaps to only 10 million uninsured and small businesses, hardly a big threat to the insurance industry. In the powerful Senate Finance Committee, the public option has been pushed off the table in an attempt to gain bipartisan support through a compromise – creation of co-ops, a concept advanced by Senator Kent Conrad (D-N.D.). Even more nebulous operationally than exchanges, the idea is that people and small businesses would be able to buy co-op memberships through state insurance exchanges. These co-ops would be not-for-profit and would include members in their governance, thereby removing the perception among opponents of a “government-run” program. On the House side, a recent amendment to H.R. 3200 by the Energy and Commerce (E & C) Committee also called for establishment of member-run co-ops to provide coverage through the Exchange.

So do these sound like reasonable approaches to our health care problems? After all, co-ops sound as American as apple pie, and we have some good examples in such long-standing integrated health plans as Group Health Cooperative of Puget Sound.

Unfortunately, the main problem with these approaches is that they won’t work. They will add to the complexity and bureaucracy of our fragmented system, cost more instead of less, and fail to reform the insurance marketplace. In fact, private insurers will find health reform, even if enacted along the lines of H.R. 3200, to be another bonanza assuring new revenue streams for years to come.

If enacted, exchanges and co-ops offering a small public option will only raise hopes for reform that will never come, and are therefore a cop-out for those shaping this year’s reform attempt. Here are just some of the many reasons that health insurance exchanges are bound to fail:

- H. R. 3200 restricts access to coverage through the Exchange to individuals who are not enrolled in qualified or grandfathered employer or individual coverage, Medicare, or Medicaid (with some exceptions).

- The public option will not be implemented until 2013, or perhaps only until private plans have been shown not to save money ( the so-called “trigger”).

- Because of its relatively small market share, the public option will not have enough market clout to counteract the practices of private insurers, and will become the only option for sicker people with higher-cost care.

- There are almost no restraints on insurance premiums in any of the proposals; an amendment by the House E & C Committee limits premium increases to no more than 150 percent of the annual percentage increase in medical inflation, and provides exemptions if this would “limit a health plan’s financial viability.”

- In order to avoid competition, the insurance industry has successfully lobbied to prevent premiums for a public option to be much lower than those of private plans.

- There are no good examples yet of successful exchanges. California has 15 years’ experience with an exchange, and it has been a failure. A July 2009 Issue Brief by the California HealthCare Foundation details its problems and demise. It was initially intended to “provide an easy to navigate single point of entry where people could go to choose among several health plans, reduce the cost of coverage (using three primary mechanisms: reduce administrative costs by achieving economies of scale, command lower prices, and foster market competition), and enhance portability of coverage.” None of those objectives were achieved.

Instead, the California Exchange achieved few administrative efficiencies, lacked pricing power, and was burdened by adverse selection of sicker enrollees. Private insurers gamed the system and loaded up the Exchange with people with more expensive illnesses. Despite large start-up funding, the experiment was unsustainable, and was shut down in 2006.

If we would only pay attention to history, we would know that co-ops will fare no better than exchanges. Many co-ops were started during the 1930s in the years of the Great Depression, only to fail in most instances despite initial government subsidies. Most of these co-ops never reached sufficient size to either become financially viable or to counteract market problems. Only a few have succeeded over the years. An excellent example is Group Health Cooperative in Washington State, which today has some 600,000 members in an effective integrated health care system. But despite its reliance on salaried physicians in a large well-managed group practice, it still has to compete against its competitors and has almost as much trouble containing costs. Group Health today has only a 9 percent market share in Washington State. It has increased its premiums by an average of 12.3 percent a year since 2000 (four times the rate of inflation), and is raising its premiums in 2009 by 13 percent (compared with 17 percent by Regence BlueShield).

Proponents of co-ops today grossly underestimate the difficulty in setting up co-ops, both in terms of start-up costs and lead times in the best of cases. It took Group Health 62 years to reach an enrollment of 500,000, which many health analysts figure is the minimal viable size. As a champion of co-ops, Senator Conrad acknowledges that start-up funding would be high for co-ops, requiring some $4 billion, while others estimate $10 billion. (Ibid, Sack above)

So where does all this leave us in this summer of discontent over health care? Despite the vigorous efforts of the Administration and many members of Congress, exchanges and co-ops won’t work. They won’t make health insurance more affordable. They are a political compromise position in an effort to gain bipartisan support for a bad health care bill. Beyond not fixing the insurance problem, they won’t contain runaway costs of health care. But that is the subject of the next post.

Adapted from Do Not Resuscitate: Why The Health Insurance Industry Is Dying, and How We Must Replace It, and The Cancer Generation: Baby Boomers Facing a Perfect Storm, with permission from the publisher, Common Courage Press.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

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

We are proud of the NHS

By David Cameron
Conservatives
The Blue Blog
August 13, 2009

People still care about the issues they care about, and thanks to the internet they can voice their concerns whenever they want. Just look at all the support which the NHS (National Health Service) has received on Twitter over the last couple of days. It is a reminder – if one were needed – of how proud we in Britain are of the NHS.

Millions of people are grateful for the care they have received from the NHS – including my own family. One of the wonderful things about living in this country is that the moment you’re injured or fall ill – no matter who you are, where you are from, or how much money you’ve got – you know that the NHS will look after you.

That’s why we as a Party are so committed not just to the principles behind the NHS, but to doing all we can to improve the way it works in practice. So yes, we will spend more on the NHS, but we will also improve it so that it is more efficient and responsive to patients. People working on the frontline will actually be able get on with the job they signed up for, without getting tied up in a web of targets. And we will put more power in the hands of patients by giving them better information about the care they can expect to receive.

Underlying these reforms, and our whole approach to the NHS, will be one big ambition – that future generations will be even prouder of the NHS than we are today.

http://www.conservatives.com/News/Blogs/We_are_proud_of_the_NHS.aspx

The Right Honourable David Cameron MP is the leader of the Conservative Party in the United Kingdom. Many believe that he will replace Gordon Brown as Prime Minister.

For those of us in the United States who want to know more about the horrors of their government-run, socialist system of health care, Conservative David Cameron would be the first to expose how government ownership and management are a threat to the health of the people. But that is not his message.

As he says, “One of the wonderful things about living in this country is that the moment you’re injured or fall ill – no matter who you are, where you are from, or how much money you’ve got – you know that the NHS will look after you.” He has joined the people of his nation in supporting the NHS, in reaction to the outrageous distortions and lies being propagated in the United States.

Karen Ignagni, President and CEO of America’s Health Insurance Plans (AHIP) recently stated, “As the American people have learned the facts, support for a government-run plan has plummeted.”(AHIP release, Aug 4)

What facts? Lies about the United Kingdom’s NHS? Lies about Canada’s medicare? Or lies about the consequences of providing all of us the benefits of our Medicare program which is working so well for our senior citizens and individuals with long-term disabilities?

The British and Canadians have identified the lies and are waging a campaign to set the record straight. We need to greatly intensify our efforts to do the same here.