The European Parliament voted overwhelmingly on November 24 to approve draft legislation that encourages direct-to-consumer “high quality information” from pharmaceutical companies to patients.

The measure reaffirmed the European ban on television and radio drug advertisements, and recommended that nations extend the ban to print media. Nevertheless the vote was greeted as a victory by the pharmaceutical companies. The European Federation of Pharmaceutical Industries and Associations called it a “constructive approach.” The Director General of that trade group called the vote “clearly a step in the right direction.”

In response, our friends at the International Association of Health Policy and the Federation of Associations for the Defense of Public Health issued this statement:

The advertising to users of medicines puts at risk the health and sustainability of health care systems

December 2, 2010

The European Parliament has just approved the possibility that the pharmaceutical industry to report directly to patients about medication on prescription.

This measure, which supposedly done to improve the information of the citizens, is really a major setback to the right of reliable information and quality.

There is much evidence that the information the industry provides to professionals contains numerous biases that magnify the effects of pharmaceuticals and minimizes or hides the health risks.

It turns out to be difficult therefore to think that the own industry that makes the products and it has direct interests to promote his sale could favour a ” objective and impartial ” information, and it is expected that this information is addressed to encourage inappropriate consumption of drugs and shoot up pharmaceutical cost (as has been demonstrated in countries like USA where there is direct advertising of medicines to “consumers”), which is particularly irresponsible and dangerous in a time of economic crisis and can lead to damage patients health.

The legislation leaves it to the EU member states the final regulation of this information, and obviously this way can establish control mechanisms to reduce the worst effects of this rule. Anyway, the experience of USA and Canada leaves room for little doubt about the negative health effects and costs of this measure.

Therefore we understand that the Council of the EU where their member states are present must veto this initiative that represents a step backwards on the current situation, an attack to public health and puts at risk the health of citizens and the sustainability of the European Union health systems.

International Association of Health Policy
Federation of Associations for the Defence of Public Health

Victor Fuchs explains resistance to national health insurance

Posted by on Friday, Dec 3, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Government Payment for Health Care — Causes and Consequences

By Victor R. Fuchs, Ph.D.
The New England Journal of Medicine
December 1, 2010

The most obvious, easily quantifiable difference between the United States and countries that have national health insurance is that those countries spend much less on health care, whether measured per capita or as a share of the gross domestic product. Not only is the United States the highest spender, but the gap between it and the other countries is unnaturally large.

The difficult question is why the special interests have more influence over health policy in the United States than they do elsewhere. The answer probably lies in part in the structure of the U.S. political system, including the role of primary elections, long and expensive election campaigns, the separation of powers, the numerous congressional committees and subcommittees with overlapping authority, and the need for supermajorities in the Senate in order to pass meaningful legislation. But the quirks of the political system can’t be the whole answer. If the U.S. public wanted a different outcome, over time they could move policy in that direction.

A second large difference between health care in the United States and in countries with national health insurance is the more important role of redistribution in the latter countries. Such redistribution is evident in the greater equality of access to care and in the sharing of costs through taxes on income or payroll, value-added tax or sales tax, or other forms of taxation that are either proportional or progressive with respect to income. Of course, all insurance is redistributive after the fact. The large amount of care utilized by a small proportion of policy holders is paid from the premiums of others who use little care. The important distinction is that under a national health insurance system, the redistribution occurs before the event, since it is clear that some individuals will pay much less tax than the value of their insurance and some will pay much more.

Since redistribution plays a greater role in the health care systems of other countries than it does in the United States, there is an implication that a more egalitarian ethos holds sway in Europe, Canada, Australia, and New Zealand. From de Tocqueville to the present, many observers have commented on the stronger role of individualism in the United States than elsewhere, but there is no consensus regarding its explanation. Possible contributors to the phenomenon include the heterogeneity of the population, the revolutionary origins of the country with its dedication to “life, liberty, and the pursuit of happiness,” and the absence of many centuries of a common language, history, and culture. In speculating about the possible rise of despotism in a democracy, de Tocqueville painted a grim picture of individualism taken to the extreme. He wrote, “Each . . . living apart, was a stranger to all the rest — his children and private friends constitute to him the whole of mankind; as for the rest of his fellow citizens, he is close to them, but he sees them not; he exists but in himself and for himself alone.”

The lower spending and the greater redistribution in countries that have national health insurance are not independent phenomena. If spending in these countries were at U.S. levels, the taxation required to accomplish their redistribution goals would probably wreck the economy. Given the social or political desire to redistribute health care resources, constraints on spending become a necessity. These constraints take various forms, such as controls over the number and specialty mix of physicians, limits on facilities and acquisition of expensive technologies, hard bargaining over prices charged by drug companies and other suppliers, and restraints on physicians’ fees and incomes, among others.

Because the governments in these countries pay for most medical care — usually 70 to 90% of total expenditures — they are in a good position to apply these cost-restraining measures. They have what economists call “monopsony power.” The U.S. government, although it pays for almost 50% of health care, makes very little use of its power to restrain costs. Thus, in one sense, Americans wind up in the worst of all worlds, with government bearing a big part of the burden of paying for health care, with the concomitant large burden of taxes, but exercising very little control over the cost of care. As an indication of how absurd the situation is in the United States, government currently spends more per capita for health care than eight European countries spend from all sources on health care.

http://healthpolicyandreform.nejm.org/?p=13263

And…

What’s Ahead for Health Insurance in the United States?

By Victor R. Fuchs, Ph.D.
The New England Journal of Medicine
June 6, 2002

The announcement that most of the nation’s biggest insurers — Aetna, CIGNA, Humana, the United Health Group, and Wellpoint Health Network — will be introducing a new kind of health plan during the next year or two signals the beginning of a new era in health insurance in the United States. These plans feature a complicated menu of premiums, copayments, and deductibles. One of their major effects will be to shift the burden of health care costs from employees who use little care to those who use more. Thus, the new plans will be another nail in the coffin of health insurance as a form of social insurance.

The Reemergence of Social Insurance

The case for the fairness of the social-insurance model will be strengthened as people realize that most health problems have, at least in part, a genetic basis. The case for the model’s efficiency will benefit from recognition that employment-based insurance has high administrative costs but provides no advantages to society as a whole. The desire to exert more direct control over increasing expenditures will provide an additional reason to introduce some form of national health insurance.

The timing of such a change, however, will depend largely on factors external to health care. Major changes in health policy are political acts undertaken for political purposes. The political nature of such changes was apparent when Bismarck introduced national health insurance to the new German state in the 19th century. It was apparent when England adopted national health insurance after World War II; and it will be apparent in the United States as well. National health insurance will probably come to the United States after a major change in the political climate — the kind of change that often accompanies a war, a depression, or large-scale civil unrest. Until then, the chief effect of the new plans will be to make young and healthy workers better off at the expense of their older, sicker colleagues.

http://www.nejm.org/doi/full/10.1056/NEJM200206063462314

In his 2002 NEJM article, Victor Fuchs explained the inevitability of national health insurance in the United States, but cautioned that will likely only come to our nation “after a major change in the political climate – the kind of change that often accompanies a war, a depression, or large-scale civil unrest.” In his current NEJM article, he provides plausible reasons as to why there has been such resistance to the inevitability of national health insurance – intense enough perhaps to require political upheaval, if we expect action. We have been trying war and deep recession. Does that mean our only hope left is “large-scale civil unrest”?

Can states control private insurance premiums?

Posted by on Thursday, Dec 2, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Rate Review: Spotlight on State Efforts to Make Health Insurance More Affordable

Kaiser Family Foundation
December 2010

The Patient Protection and Affordable Care Act (ACA) requires the Department of Health and Human Services (HHS) to work in collaboration with state insurance departments to conduct an annual review of “unreasonable increases in premiums” for “nongrandfathered” health plans. Plans that propose an unreasonable rate will be required to provide a justification for the increase to HHS, and post the justification on their websites.

Yet the ACA does not alter states’ existing regulatory authority over health insurance rates. Such state authority varies dramatically, ranging from states with no authority at all to those that have robust authority to review and approve or disapprove rates before they are implemented.

Key findings include the following:

A state’s statutory authority often tells little about how rate review is actually conducted in the state.

In many cases, statutory authority to disapprove rates does not extend to all market participants.

Most states we interviewed use a subjective standard to guide the review and approval of rates.

Most of the states we interviewed have made little or no effort to make rate filings transparent.

Many states lack the capacity and resources to conduct an adequate review.

http://www.kff.org/healthreform/upload/8122.pdf

Proponents of the Patient Protection and Affordable Care Act (ACA) have claimed that states will be given broad powers to control private health insurance premiums, making health plans affordable again. Can we really anticipate relief from the outrageous prices of private health plans?

Under ACA, the federal role in premium regulation is limited to reviewing unreasonable rate increases and requiring plans to post on their websites a justification for their increases. The law does not alter the states’ existing regulatory authority over health insurance rates.

So how well are the states doing? Not very well. You need only look at the numerous media reports of outrageous premium increases that have provoked the state regulators to demand explanations for these unconscionable incidences of rate gouging (is it really gouging?). The followup stories reveal that the regulators have been successful in convincing insurers to roll back their increases to mere multiples of the rate of inflation. Year after year. The current level of premiums is proof that the state regulators have been ineffective in making decent health plans affordable.

This report from the Kaiser Family Foundation confirms that state regulation is spotty at best, but we know that even in states with greater regulatory power, premiums have continued to rise inexorably. The only successes in slowing premium increases have been in those instances in which the regulators permit plans to strip benefits and shift costs to patients. Of course, that has resulted in making health care unaffordable, impairing access and sometimes resulting in personal bankruptcy.

If a plan is going to provide adequate coverage for health services, those costs will have to be paid by the insurer, and there is no way that state insurance regulators can demand a rollback to rates that would deplete the insurers’ reserves and drive them into bankruptcy.

It’s nice that the Department of Health and Human Services has been granted the authority to require the insurers to post explanations for why their premiums are so high (it’s the costs of health care, stupid), but it is disingenuous to say that this would have any real impact in slowing premium increases for adequate insurance plans.

An unfortunate, unique feature of health care financing in the United States is the profound administrative waste that has been a major contributor to placing us first amongst all nations in what we spend on health care. The premium game that state insurance regulators are playing is only one more example of that waste.

Single payer supporters already know what we should do to reduce this egregious waste. Eliminate the insurance middlemen and replace them with our own public monopsony (single buyer) – an improved Medicare for everyone. Then we can use more effective and more equitable single payer tools to slow future cost increases.

Fiscal Commission – “hastening the public option”

Posted by on Wednesday, Dec 1, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Final Report of National Commission on Fiscal Responsibility and Reform

C-SPAN
December 1, 2010

From a discussion of the final recommendations, to be voted on by December 3:

Sen Dick Durbin (D-IL): We are hastening the day when the only option left will be a public option.

Rep. Paul Ryan (R-WI): I think Sen. Durbin probably said it right. We are hastening the day when the only option is the public option. I think you’re right (directed to Sen. Durbin), and I think that this advances that possibility and likelihood.

Rep. Jeb Hensarling (R-TX): I would agree with Sen. Durbin… you are hastening more people into the public option.

Rep. Jan Schakowsky (D-IL): To say that we’re going to reduce our deficit and our debt by asking Medicare beneficiaries to pay more for their health care, I think is absolutely unconscionable.   …already 30 percent of their income going to health care costs, I think is absolutely the wrong way to go when we do have other options. I put on the table, not as an if-all-else fails, a public option to reduce health care costs.

http://www.c-span.org/Watch/Media/2010/12/01/HP/R/41336/Debt+Commission+recommends+Dramatic+Budget+Cuts+Votes+Friday.aspx

PNHP has issued a response to the commission recommendations:
“Deficit panel’s Rx is wrong medicine: doctors’ group”
http://www.pnhp.org/news/2010/december/deficit-panels-rx-is-wrong-medicine-doctors-group

The commission members understand that health care is the greatest contributor to our federal budget deficit. Most of them recognize that the health spending recommendations in their final report are inadequate to control continuing cost escalation.

Some would reduce government spending by shifting more costs to Medicare beneficiaries, even though they understand that current out-of-pocket costs are already excessively burdensome. To others, that would be unconscionable.

There seemed to be an understanding by both Democratic and Republican commission members that the failure to control Medicare spending will hasten the day when the public option will be the only option.

Why a public option? Apparently there is bipartisan agreement that a government insurance program would be more effective in slowing future health care spending. They understand that government systems have worked well in other nations.

Where they are confused is that they seem to think that all you need is the option of choosing a government plan, and that is enough to enable all of the single payer efficiencies. Of course, this is where they’re wrong. A government plan offered within our market of private plans is incapable of instituting most of the changes that make single payer systems work. As simply another player in our fragmented, dysfunctional system, it would be a very feeble force for efficiency.

So what does this really mean? It says that both Republicans and Democrats know that we are going to have to have direct government involvement if we ever hope to control health care spending, but they still need to learn that there is a tremendous difference between a powerful single payer monopsony and a wimpy public option.

California’s largest insurers continue to cheat

Posted by on Tuesday, Nov 30, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Blue Shield, Kaiser among state insurers fined

By Victoria Colliver
San Francisco Chronicle
November 30, 2010

State regulators Monday fined seven of California’s largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

“Our clear and consistent message is that California’s hospitals and physicians must be paid fairly and on time,” said Cindy Ehnes, director of the Department of Managed Health Care, which is charged with regulating the states’ health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the “tens of millions of dollars,” Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

Five of the insurers, excluding Anthem and Blue Shield, were also found to have improper provider appeals processes.

When doctors and hospital officials try to dispute a claim, they often have to deal with the same individual who originally denied the claim in the appeals process, Ehnes said.

Cracking down on the health plans for not properly paying providers helps consumers, said Anthony Wright, executive director of Health Access California.

“Consumers would rather that the time and resources of health providers go to patient care, rather than in fighting to get insurers to pay correctly,” he said.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2010/11/30/BUSR1GJ01V.DTL

What services do the private insurers provide for us? Processing claims? They won’t even do that right 20 percent of the time, according to this California audit. The total of $5 million in fines that they were assessed is so paltry that they have no incentive to discontinue their highly profitable policy of delaying and denying legitimate claims.

Let’s have the members of Congress fire the insurers and set up our own national health program – an improved Medicare that covers everyone. If they won’t do that then let’s fire them, replacing them with responsible elected stewards who will.

Is Uwe Reinhardt for or against single payer?

Posted by on Monday, Nov 29, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Reinhardt: Repeal Health Care, Make GOP Cut Costs

By John Greenwald
The Fiscal Times
November 28, 2010

In a freewheeling interview with The Fiscal Times, (Uwe Reinhardt) critiques the new health care reform law — including its lack of cost containment — and recent proposals from the president’s deficit-cutting panel. Never one to mince words, Reinhardt also discusses what he sees as the real culprit behind soaring health care costs, why he doubts a single payer health care system could work in the United States — and where he believes the country’s founding fathers went wrong.

The Fiscal Times (TFT): What would a high-performing national health care system look like?

Uwe Reinhardt (UR): I think the Germans, the Swiss, the Dutch have a perfectly fine approach. It’s not a single-payer system. While I’m a Canadian I am not for [single payer] in the U.S. because we do not have a political system that can handle it responsibly. Canada has a parliamentary system that insulates considerably the public program from lobbying.

TFT: So you favor universal coverage but not a single payer system?

UR: For other countries I do [favor single payer] but we can’t run it. You need a responsible system of governance. Whatever you can say about U.S. governance, you cannot call it responsible. You really couldn’t. I think the founding fathers gave us an impotent government that acts quite irresponsibly. I don’t think parliamentary systems are that bad.

http://www.thefiscaltimes.com/Issues/Health-Care/2010/11/28/GOP-Health-Reform-Repeal.aspx

Single payer advocates frequently are perplexed by Uwe Reinhardt’s positions on health care reform.

He seems to support health care justice. He frequently uses the example of the waitress who is trying her best to support herself and her child, but who is unable to afford health care. By extrapolation, a just society would not let her or her child go without the essential health care services that they might need.

Yet what about single payer? He is a supporter for single payer, but for other countries. In this interview he states that he does not support single payer for the United States. The reason he gives is that “the founding fathers gave us an impotent government that acts quite irresponsibly.”

Right now the British and the Canadians are facing an assault on their public health systems by their conservative governments. In the United States, we are facing an assault on our Medicare program by the conservatives and right-leaning moderates. Although we don’t know how much damage, if any, will be done to the systems, it is highly probable that all three of the systems will survive intact considering the strong public support in each nation.

Does our government act irresponsibly? Wars? Income transfer from the workers to the wealthy? Neglect of poverty and other social inequities? Of course our leaders have been irresponsible, and so have the leaders of all other nations, but only at times. Social Security? Medicare? Our national parks? Most government activities are quite responsible and certainly do not set us apart from other nations.

Although Reinhardt criticizes the new health care reform law for failing to contain costs, he states, “The private sector is the inflationary component of health care, not Medicare or Medicaid.” Can he seriously contend that these government programs are irresponsible and impotent when they continue to outperform the private plans on cost containment? Considering this, how can he support single payer for other nations, yet reject it for the United States?

Government impotence and irresponsibility are not reasons to reject single payer. They are merely an excuse as to why we haven’t enacted it yet. What we need is more responsible people power. Let’s get busy stirring it up.

Joseph Stiglitz on single payer

Posted by on Friday, Nov 26, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Rema Nagarajan interviews Joseph Stiglitz

The Times of India
November 26, 2010

Why have you been pitching for a single payer system for health insurance rather than a system where several private companies compete?

The US model of private health insurers has been proven inefficient and expensive. Rather than provide better healthcare at lower costs, insurance companies innovate at finding better ways of discrimination. They are inefficient because they are trying to figure out how to insure people who don’t need the cover and keep out people who need it. With many companies, they also need to spend on marketing and advertising. The incentives are all wrong and the transaction costs are very high and you have to give them a high profit. In health, social and private incentives are totally disparate. Competition does not work in healthcare especially in the health insurance market. Several countries like the UK, France and Sweden have a single payer system, differing only in the organisation of healthcare delivery.

Several health insurance companies are setting up business here. Should India be worried?

India would be in a terrible mess, given the size of its population, if it went down the wrong route (of private companies for health insurance). They should learn from the mess that the US has got into. Once the companies start making profits, special interests in politics will come into play and it will be difficult to get them out.

http://timesofindia.indiatimes.com/home/opinion/edit-page/The-US-model-of-private-health-insurers-is-inefficient-expensive/articleshow/6989634.cms

Nobel laureate Joseph Stiglitz understands single payer. President Obama knows that he does. So why doesn’t…

(No, health care reform shouldn’t be reduced to a mere conundrum.)

Alan Simpson as Captain Ahab

Posted by on Wednesday, Nov 24, 2010

The Fate’s Lieutenant

Last week the proposal by the co-chairs of the president’s bipartisan National Commission on Fiscal Responsibility and Reform reverberated on down the mass media echo chamber. They called for substantial cuts in Social Security and Medicare benefits, among other things that would undermine our basic standard of living.

The media saturation was intense. Even for casual news-watchers it was like being herded into a “captive audience meeting,” one of those smarmy PR jobs that company bosses hire out to consultants, who tell the workers through a microphone why they don’t need a union.

The proposals of the co-chairs are ambitious. They would re-make the United States of America as a place not only without unions, but largely without a middle class: leaving on one side low-wage workers (who foot the bill for their own benefits), and on the other side the super-rich, with precious few in the middle.

The editors at our local paper, the Albany Times Union went ahead and amplified the message, accepting it rather than holding it up to scrutiny. Starting with the premise that “the country needs to confront what it would take to stabilize the accumulation of the federal debt,” they uncritically embraced the co-chairs’ proposal, concluding that “Every one of its provisions deserves serious consideration.” They even supported the messenger, although in a backhanded way:

Hardly an unreasonable plan, even as it’s advanced by the likes of Mr. Simpson, who’s previously likened Social Security to a giant mammary gland and called its recipients “greedy geezers.”

Republican co-chair of the president’s commission, Alan Simpson is a conservative Republican fossil. His counterpart, Erskine Bowles, is a conservative Democratic Party dinosaur. What they share, besides being millionaires whose “public service” helped to enhance their immense personal fortunes, are failed ideas that ought to remain extinct. But here they are, the president’s appointees.

What to say? Well, if you want fossilized, vengeful and smarmy at center stage, then Alan Simpson is your man, Mr. President.

*

Back in June Mr. Simpson unhinged upon Alex Lawson of Social Security Works with an expletive-laced rant. Simpson was full of personal insults yet vacant of facts, rambling on.

When economist James K. Galbraith, professor of government at The University of Texas, gave his must-read testimony to the deficit commission, he cited that rant as evidence of Simpson’s incompetence. Galbraith questioned the legitimacy of the commission and demanded that the body advance no proposals.

Then in September Simpson stuck his foot into his mouth again with the line the Times Union editors mentioned, calling Social Security – “a milk cow with 310 million -” … udders. (You can figure out the profanity Simpson used.)

The National Organization for Women immediately responded, saying that Simpson’s quip amounted to a crass insult “to those who depend on Social Security – many of them older women, children and people with disabilities.” Soon afterward NOW President Terry O’Neill delivered over 1,500 baby bottle nipples, sent by NOW members from across the country, to Mr. Simpson.

I love Terry O’Neill. She is so courageous and unflappable. You can see her with Simpson on YouTube. As she hands her “gift” to Mr. Simpson, she smiles and says it is given “in the spirit of hoping that you’ll have the decency to resign.” She then presses Simpson for a pledge not to cut Social Security benefits. He acquits himself badly. As he tries to dodge and dismiss Ms. O’Neill, Simpson seems ever more cadaveric and sarcastic and ultimately furious.

Last week as the media echoed Bowles and Simpson’s proposals, particular delight focused on Alan Simpson’s rhetoric. The Times Union editors joined in. Here’s their lead:

Leave it to Alan Simpson, so blunt and irreverent, to set the tone for the debate that America has avoided for far too long.

A particularly illuminating Simpson quote was noted in the Wall Street Journal (and elsewhere):

“We have harpooned every whale in the ocean and some of the minnows,” said co-chairman Alan Simpson, a retired Wyoming Republican senator. “No one has ever done that before.”

Who does Alan Simpson think he is? Captain Ahab?

Like the captain of The Pequod, the ship in Herman Melville’s classic novel Moby Dick, the retired Wyoming senator lusts after a monomaniacal purpose – in this case, to send the middle class to the bottom, by raising the retirement age, slashing social spending, further privatizing Medicare, privatizing Social Security, taxing health insurance benefits and lowering the tax rate for corporations.

With unemployment at nearly 10% officially – and unofficially twice that – with health care costs sinking us all, with two-income households the norm and two, even three jobs for many workers a necessity, an alternative vision stands in plain sight yet scarcely makes the news. Nicholas Kristof proved this rule with an exceptional column last week titled “A Hedge Fund Republic?” He reminded us that the poorer 90 percent of people in the United States own only 29 percent of the wealth, while the wealthiest 1 percent own an even greater share, 34 percent of the total.

When the top 10 percent possess more than two-thirds of total holdings, it is time to increase taxes on the rich. We could easily afford to shorten the workweek with no cut in pay and also lower the retirement age – and each of these would put millions of people to work. We can also extend and improve Medicare to cover all necessary care for everyone, from birth, something that would save hundreds of billions of dollars annually. Bringing the troops home from Iraq and Afghanistan would not only save trillions of dollars, but human lives.

As for Social Security, only the first $106,800 of income is taxed for the Social Security fund. Nancy Altman and Eric Kingson point out that if this cap were scrapped, and all income was taxed at the present rate, benefits could be raised across the board and Social Security would be assured solvency for 75 years to come. As it is, there is no immediate crisis in Social Security funding. Well, then, let’s scrap the cap!

*

At the end of Moby Dick only the young sailor Ishmael survives, afloat on a coffin. But along the way the first mate, Starbuck, suggests to the revenge-crazed captain that he has got the great whale all wrong. Ironically, today “Starbucks” (named for Melville’s tragic character) has become a designer coffee-shop that symbolizes a middle-class lifestyle rich with lattes and car payments, i-Pods and consumer credit debts.

Although partisan differences loudly dominate when it comes to the TV, we have seen a bipartisan commitment to privatize profit and socialize risk, as President Bush and then President Obama both rushed to rescue Wall Street’s financiers and their insurers and bankers, instead of the debtors.

Now Alan Simpson, Mr. Obama’s appointee, wants “to harpoon every whale in the ocean” even if it means we all go down with the ship. For the co-captains of the deficit commission the credo is no longer E pluribus unum (“out of many, one”), but “I’ve got mine – you swim for it!”

Isn’t it simply absurd to hear retired millionaires like Simpson and Bowles, whose families grew wealthy at taxpayer expense, telling the people of the United States that they live too long to be allowed to retire at age 65? The very idea should be laughed off the stage, not championed and not echoed.

There is still hope, for in reality they have not harpooned any whales. All they’ve really done is issue a report and attend some press events. Yet as the media, including this newspaper, chooses to parrot Simpson’s maniacal ravings, we find ourselves like Starbuck and Ishmael, captive audience aboard The Pequod.

*
*

Horrible old man! Who’s over him, he cries; —aye, he would be a democrat to all above; look, how he lords it over all below! Oh! I plainly see my miserable office,— to obey, rebelling; and worse yet, to hate with touch of pity! For in his eyes I read some lurid woe would shrivel me up, had I it. Yet is there hope. Time and tide flow wide.

– Starbuck, in Moby Dick by Herman Melville (1851).

Ezra Klein on prices and innovation

Posted by on Wednesday, Nov 24, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Americans pay too much for health care — in charts

By Ezra Klein
The Washington Post
November 23, 2010

There are a lot of complicated explanations for why American health-care costs so much, but there are also some simple ones. Chief among them is “we pay too much.” And I don’t mean in general. I mean specifically. Mountains of research show that for every piece of care you might name — a drug, a doctor visit, a diagnostic — you’ll pay far more in the United States than in other countries.

(He posts charts demonstrating higher health care prices in the U.S.)

The most positive spin you can give this data is that we’re paying to subsidize innovation for everyone, and though that’s not ideal, it’s better than that innovation not happening. The less positive spin is that we’re just getting ripped off.

For an analytical take — and a good look at the political economy of the problem — read Alec MacGillis’s October article on the subject.

The basic premise that our prices are higher than those of other nations is certainly correct. Alec MacGillis was precisely on target in the article that you cite.

But the claim that we “subsidize innovation for everyone” needs to be challenged.

Donald Light, in a Health Affairs article last year, wrote, “… a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity.”

Also the Nobel prizes for C-T scanning and MRIs were shared with British scientists. So we don’t even have an exclusive claim on our budget-busting technology. (In fact, the Beetles financed the British development of C-T scanners.)

And our outrageous pricing has proven that the private insurance industry has failed us miserably in its most important function – negotiating value in health care.

Our pharmaceutical and technological firms do excel in one regard. They know how to manipulate the political process to prevent an effective public role in setting best prices (legitimate costs and fair profits), even though all other nations have done so.

Maybe someday we’ll be smart enough to follow their lead, but, until then, we’ll keep paying dearly for the failures of our electorate to become adequately informed and then to take appropriate action in the polling booth.

Fixing Medicare and providing it for everyone would create a beneficent public monopsony (single purchaser) which would be capable of enforcing value in our health care purchases.

Even Milton Friedman’s mentor, F.A. Hayek, wrote, in The Road to Serfdom, “Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision.”

Klein article and responses:
http://voices.washingtonpost.com/ezra-klein/2010/11/americans_pay_too_much_for_hea.html

International Federation of Health Plans – Comparative Prices:
http://www.ifhp.com/documents/IFHPPricereportfinal.pdf

Alec MacGillis – The price problem that health-care reform failed to cure:
http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102203394.html

Donald Light – Global Drug Discovery: Europe Is Ahead:
http://content.healthaffairs.org/cgi/content/abstract/28/5/w969

High-deductible health plans foster bad decisions by rich and poor

Posted by on Tuesday, Nov 23, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Health Care Use and Decision Making Among Lower-Income Families in High-Deductible Health Plans

By Jeffrey T. Kullgren, MD, MPH; Alison A. Galbraith, MD, MPH; Virginia L. Hinrichsen, MS, MPH; Irina Miroshnik, MS; Robert B. Penfold, PhD; Meredith B. Rosenthal, PhD; Bruce E. Landon, MD, MBA; Tracy A. Lieu, MD, MPH

Archives of Internal Medicine
November 22, 2010

From the Introduction:

In early 2009, 23% of all nonelderly adults with private insurance, and nearly 50% of adults who purchased coverage through the nongroup market, were enrolled in an HDHP (high-deductible health plan). Because of their relatively low premiums, HDHPs are also playing a prominent role in expanding insurance coverage. For example, most individuals who have purchased unsubsidized plans through the Commonwealth Connector, the new health insurance exchange in Massachusetts, have selected products like HDHPs that offer low premiums with high levels of cost-sharing.

As enrollment in HDHPs has grown, many analysts have voiced concerns about the impact these plans may have on low-income families. Decades of health services research have demonstrated that higher levels of cost-sharing reduce health care utilization, sometimes with greater adverse consequences for low-income patients.

From the Comment:

We found that lower-income families with at least $500 in annualized out-of-pocket expenditures in an HDHP were more likely than higher-income families to delay or forego health care services owing to cost (57% vs 42%).

Overall, we observed relatively high rates of delayed or foregone care in both income groups, with nearly half of all families having either delayed or foregone care in the last 6 months owing to the cost. These rates were substantially higher than the 20% of the US population reporting either unmet need or delayed care in the previous 12 months in the 2007 Heath Tracking Household Survey.

Beyond the implications for clinicians, our findings have important implications for federal health reform. Reform legislation that establishes an individual health insurance mandate could lead more families to enroll in plans with high levels of cost-sharing, as has been seen following the implementation of coverage mandates in Massachusetts.

http://archinte.ama-assn.org/cgi/content/abstract/170/21/1918

And…

Higher Deductibles, Lower Spending

By Reed Abelson
The New York Times
Prescriptions blog
November 22, 2010

As more families find themselves enrolled in health plans with high deductibles, they are increasingly likely to delay or forgo medical care because of the out-of-pocket cost, a new study shows (the study cited above).

Do you think people are better and more savvy consumers when they share in the cost of their medical care?

Three reader responses:

12. Anonymous BE, Belgium
November 23rd, 2010

NO. Medical care should be free at the point of service. The whole point of health insurance is that no one should be financially worse off because they have health problems. High deductible plans violate this maxim.

Furthermore, people are not in a position to judge what is necessary or not. People listen to what their doctor says, and they do it, unless their lack of insurance coverage makes it a financial problem. Patients are not evaluating the effectiveness of various treatments – that is a job for doctors and scientists, not patients. Patients are not consumers – they are people who are suffering who place themselves in the hands of the medical profession.

13. GoozNews, Washington, DC
November 23rd, 2010

RE: eliminating useful v. non-useful care via higher co-pays. It’s not an open question. The Rand Health Insurance Experiment, the only comprehensive study to date, showed that people were just as like to avoid necessary car as unnecessary care when forced to pay higher co-pays and deductibles. This is also common sense. When the quality of a good, in this case health services, has no relationship to price, and consumers lack accurate and timely information about what constitutes high quality, making rational decisions based on price is virtually impossible. It requires extensive research prior to the point of purchase — highly impractical when it comes to health care, which is usually purchased under the duress of immediate illness. Those who advocate “more skin in the game” as the cure for rising health care costs fail to acknowledge these all-too-human realities, or what an economist might call pervasive marketplace failures.

23. Don McCanne, San Juan Capistrano, CA
November 23rd, 2010

What really matters is our total national health expenditures. We are already spreading the risk by contributing to our public and private insurance pools through taxes and/or premiums. So we should decide whether the financial barriers to care that high-deductible health plans create are worth the projected savings in our total health care spending.

Only one-fifth of us use four-fifths of all health care. For this sector of our population, deductibles are rapidly exceeded and have virtually no impact on total national health care spending. (It is in this sector where most of the Dartmouth variations occur, but that is another topic.)

For the four-fifths of us who are relatively healthy, most of us would not decline clearly appropriate care even if it is below the deductible, providing that we had the ability to pay for it. Only the worried-well, perhaps with a common cold, might use the health care system more than necessary, but that doesn’t apply to most of us.

Although the trip to the doctor is almost always for legitimate reasons, perhaps ten percent of the time the marginal care offered might reasonably be declined, providing it is an informed decision. Studies show that about half of that care is still appropriate, so only five percent of care for healthier patients may be of no more value than receiving reassurance that no care is needed (which actually does have value in itself).

Since the four-fifths of us who are healthy consume only twenty percent of total health care, the five percent of our care that might deemed to be inappropriate constitutes only one percent of our national health expenditures (five percent of twenty percent). That one percent is the equivalent of only two or three months of health care inflation – not worthy of more than a footnote in our national health care budget.

We can control health care costs, but high-deductible health plans are not an effective mechanism. They certainly are not worth the price of denying beneficial care based on individual concerns over affordability.

Every other nation has controlled costs by establishing an effective model of social insurance. Unfortunately the model in the Patient Protection and Affordable care Act falls far short. What would work would be to improve the Medicare program and then include everyone. Several studies have shown that it would be the least expensive method of providing affordable care for absolutely everyone.

http://prescriptions.blogs.nytimes.com/2010/11/22/higher-deductibles-lower-spending/

This study of the impact of high-deductible health plans is unique in that it studied only families with over $500 in annual out-of-pocket medical expenses, thus they are families that do have some interaction with the health care system.

It is no surprise that 57 percent of these lower-income families with high-deductible health plans delayed or had foregone health care. What is less intuitive is that 42 percent of the higher-income families with high-deductible health plans also delayed or had foregone health care. Other studies indicate that about half of that care would have been beneficial, so we really should question the policy of using high-deductible health plans as a method of containing health care costs.

Another important concern is that individuals purchasing plans from the Massachusetts health insurance exchange are choosing high-deductible plans because of the lower premiums. The state exchanges to be established under the Patient Protection and Affordable Care Act will offer low-actuarial value plans as the standard. These plans are high-deductible plans that will likely attract most buyers. Bad policy.

When the evidence so clearly indicts high-deductible plans, why did Congress adopt them wholesale? Simply to accommodate the private insurers in preserving their markets by trying to keep their premiums affordable (which they’re not anyway).

It’s time to dump the private insurers and establish an improved Medicare for all, with first dollar coverage. We can control costs far better with the other single payer tools that would be at our disposal.

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