Getting less care for more money

Posted by on Tuesday, Oct 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.

The price problem that health-care reform failed to cure

By Alec MacGillis
The Washington Post
October 24, 2010

The health-care law of 2010… sets us on the road to universal health insurance.

But the Democrats’ effort to sell the law to the public may be undermined by what even some ardent supporters consider its biggest shortfall. The overhaul left virtually untouched one big element of our health-care dilemma: the price problem. Simply put, Americans pay much more for each bit of care — tests, procedures, hospital stays, drugs, devices — than people in other rich nations.

Health-care providers in the United States have tremendous power to set prices. There is no government “single payer” on the other side of the table, and consolidation by hospitals and doctors has left insurers and employers in weak negotiating positions.

“We spend fewer per capita days in the hospital compared with other advanced countries, we see the doctor less frequently, and we swallow fewer pills,” said Jon Kingsdale, who oversaw the implementation of Massachusetts’s 2006 health-care law. “We just pay a lot more for each of those units than other countries.”

The 2010 law does little to address this. Its many cost-control provisions are geared toward reducing the amount of care we consume, not the price we pay. The law encourages doctors and hospitals to join “accountable care organizations” that have financial incentives to limit unnecessary care; it beefs up “comparative effectiveness research” to weed out inefficient treatments; and it will eventually tax the most expensive insurance plans to restrain consumers’ superfluous use of health care.

Such measures could reduce redundant tests, emergency room visits and hospital readmissions, which would help control the costs of Medicare, where the government sets rates. But they are less likely to lower prices outside Medicare and stem the growth of private insurance rates.

The main reason for this is politics. Remember how drawn-out the health-care battle was? It started in the spring of 2009 and was waged for a full year. The bill’s proponents in the White House and in Congress had some inkling of how tough the fight with the insurance companies would be. Taking on hospitals, doctors, and drug and device manufacturers as well — the people you’d face in a showdown over prices — might have been fatal.

So there was no price fight. It is one of those fine political ironies: The law derided as socialism may have had an easier time winning favor from a skeptical public if it was, well, a little more socialist.

Politicians wanted to avoid a confrontation over providers’ prices. So a different policy argument took hold: The real reason everything cost so much was the overuse of health care, not the actual prices of treatment.

This argument came primarily from Dartmouth College researchers who had amassed data showing wide disparities in Medicare spending among different regions. Hospitals in the lower-spending areas, mostly in the Upper Midwest and the Northwest, seized on the study to argue that the key to controlling costs was to reward providers like them.

The theory caught fire at the White House. It gave President Obama and his then-budget guru Peter Orszag a way to talk about costs without taking on doctors and hospitals; instead, the White House could simply differentiate between providers that offer “value” and those that don’t.

But the Dartmouth rankings, and the concept they supported, did a “disservice” to the debate, said Robert Berenson of the Urban Institute. For one thing, he and others say, the figures overstate regional differences in Medicare spending, which shrink when socioeconomic factors are taken into account. Second, rates of Medicare spending are not necessarily representative of health-care spending for people under 65. Some of the places that do well in the Dartmouth rankings charge high prices for non-Medicare patients — and were, not surprisingly, among those pushing hardest against a public option.

More broadly, the skeptics argue that merely providing care in smaller quantities will not sufficiently lower costs. They note that Americans already have shorter hospital stays and fewer doctors’ visits than people in other advanced countries. What sets us apart is our high prices for these health-care “units” — a finding trumpeted in a landmark 2003 paper by Princeton’s Uwe Reinhardt and others titled “It’s the Prices, Stupid.” The price problem is only getting worse, researchers and antitrust investigators have found, because of consolidation among providers, and it could be exacerbated by goading them to form even bigger networks.

Many have commented on the fact that the Patient Protection and Affordable Care Act (PPACA) did little to address one of the most important drivers of the reform process – our unique problem of the outrageous costs of health care. We spend far more per capita on health care than any other nation. This article by Alec MacGillis is singled out as recommended reading on this topic, as he is one of the most credible and well-informed journalists who closely observed the reform process.

The important lesson that MacGillis provides us here is that we do not use more health care than other nations, we simply pay much more for it.

Yet reform was based on the principle that we need to cut back on health care excesses that don’t even exist except to a limited extent in some of those regions identified by the Dartmouth researchers as areas of higher utilization. When you consider that we use less care per capita than other nations, it’s clear that efforts to ferret out this marginal waste will have very little impact on our total national health expenditures, though eliminating any waste is certainly beneficial.

The real problem is the amount that we pay for health care, yet very little in PPACA will ameliorate that problem. What could provide relief?

Alec MacGillis provides a strong hint: “Health-care providers in the United States have tremendous power to set prices. There is no government ‘single payer’ on the other side of the table.”

As Margaret Flowers and others have been shouting out all along: “We want a seat at the table!”

The Bredesen-Gruber dispute represents much more than a math problem

Posted by on Monday, Oct 25, 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.

ObamaCare’s Incentive to Drop Insurance

By Philip Bredesen
The Wall Street Journal
October 21, 2010

Our federal deficit is already at unsustainable levels, and most Americans understand that we can ill afford another entitlement program that adds substantially to it. But our recent health reform has created a situation where there are strong economic incentives for employers to drop health coverage altogether. The consequence will be to drive many more people than projected — and with them, much greater cost — into the reform’s federally subsidized system. This will happen because the subsidies that become available to people purchasing insurance through exchanges are extraordinarily attractive.

The authors of health reform primarily targeted the uninsured and those now buying expensive individual policies. But there’s a very large third group that can also enter and that may have been grossly underestimated: the 170 million Americans who currently have employer-sponsored group insurance. Because of the magnitude of the new subsidies created by Congress, the economics become compelling for many employers to simply drop coverage and help their employees obtain replacement coverage through an exchange.

(Bredesen provides calculations that allegedly demonstrate that the Tennessee government could adjust the compensation of their employees so that they would not lose by purchasing their plans in the exchange, and the cost to the state would be significantly less – a savings to the state of $146 million.)

Our thought experiment shows how the economics of dropping existing coverage is about to become very attractive to many employers, both public and private. By 2014, there will be a mini-industry of consultants knocking on employers’ doors to explain the new opportunity. And in the years after 2014, the economics just keep getting better.

(Mr. Bredesen, a Democrat, is the governor of Tennessee.)


A Health Reform Critic Flunks Math

By Jonathan Gruber
The New Republic
October 21, 2010

Tennessee Governor Phil Bredesen takes to the Wall Street Journal editorial page on Thursday to attack health care reform.

The gist of Bredesen’s argument is pretty simple: Some firms will find it more attractive to stop offering insurance and let employees get coverage through the new insurance exchanges, where generous subsidies will be available. But the Affordable Care Act, which I’ve long supported, imposes strong penalties on firms that do not offer insurance, as well as sizeable tax credits for smaller firms that encourage them to offer. And in most firms, the majority of employees will make too much money to be eligible for large subsidies anyway. It is for this reason that the Congressional Budget Office estimated that PPACA will reduce employer sponsored insurance in the U.S. by only about 2.5 percent by 2019. In other words, the effect on employer sponsored coverage will likely be small.

First of all, Tennessee state employees generally make too much money to get big subsidies through the exchanges. Forty percent have incomes higher than 400 percent of the poverty lines, which means they’d be eligible for no tax credits at all; even for those with incomes below that level, the average tax credit would offset just a third of their premium cost. Second, if these individuals lost their public employee insurance and went into the exchanges, they would want to receive the same very generous benefits they get now – coverage comparable to the platinum plans offered in the exchange. Working from CBO’s estimate of the cost of less generous plans in the exchange in 2016, those plans would cost about $6650 for an individual and $17,400 for a family in 2014.

Using the Governor’s estimates of 40,000 state employees, and accounting for the low subsidization and high cost of the very generous benefits they would need to get in the exchange, I estimate that it would cost state employees about $425 million out of their own pockets to replicate in the exchange what they get today from the state.

(Gruber provides calculations that allegedly refute Bredesen’s contention that the state could save money by shifting employees to the exchange – rather the cost to the state would increase by about $230 million.)

Bredesen ignores one other important point: Employer-sponsored insurance in the U.S. is already eroding, on its own. The share of individuals with employer-sponsored coverage has declined by almost 15 percent over the past decade. These individuals have to turn to a broken and dysfunctional non-group market, resulting in higher premiums, growing rates of uninsurance, and increased medical bankruptcy. These are exactly the individuals who will be assisted by the market reforms and tax credits put in place by Affordable Care Act.

(Jonathan Gruber is a professor of economics at MIT and member of the Massachusetts Health Connector Authority Board. He has served as a paid technical consultant to the Department of Health and Human Services and continues to advise policymakers about health care reform.)


Employers looking at health insurance options

By Ricardo Alonso-Zaldivar
The Washington Post
October 24, 2010

The new health care law wasn’t supposed to undercut employer plans that have provided most people in the U.S. with coverage for generations.

“I don’t think you are going to hear anybody publicly say ‘We’ve made a decision to drop insurance,’ ” said Paul Keckley, executive director of the Deloitte Center for Health Solutions. “What we are hearing in our meetings is, ‘We don’t want to be the first one to drop benefits, but we would be the fast second.’ We are hearing that a lot.” Deloitte is a major accounting and consulting firm.

Two provisions in the new law are leading companies to look at their plans in a different light.

One is a hefty tax on high-cost health insurance aimed at the most generous coverage. Although the “Cadillac tax” doesn’t hit until 2018, companies may have to disclose their exposure to investors well before that. Karen Forte, a Boeing spokeswoman, said concerns about the tax were partly behind a 50 percent increase in insurance deductibles the company just announced.

Bigger questions loom over the new insurance markets that will be set up under the law.

They’re called exchanges, and every state will have one in a few years. Consumers will be able to shop for coverage among a range of plans in the exchange. To help make premiums affordable, the law provides tax credits for households making up to four times the federal poverty level, about $88,000 for a family of four.

(Tennessee Gov. Philip) Bredesen said last week that employers could save big money by dropping their health plans and sending workers to buy coverage in the exchange. They’d face a fine of $2,000 per worker, but that’s still way less than the cost of providing health insurance. Employers could even afford to give workers a raise and still come out ahead, Bredesen wrote in a Wall Street Journal opinion piece.

Employers are actively looking at that. “I don’t know if the intent was to find an exit strategy for providing benefits, but the bill as written provides the mechanism,” said Deloitte’s Keckley, the consultant.

Another wrinkle: the health insurance tax credits available through the law are keyed to relatively Spartan insurance plans, not as generous as most big employers provide. Send your workers into the insurance exchange, and valuable employees might jump to a competitor that still offers health care.

MIT economist Jon Gruber says it’s impossible to create new government benefits without some unintended consequences, but he doesn’t see a big drop in employer coverage.

The disputed math of the incentives for employers to either continue offering their employees health plans or to drop the plans in favor of employees purchasing their own plans in the exchanges is an important question because it determines whether employers will continue to contribute to the premiums or if the taxpayers will assume that burden through subsidies for the exchange plans. What is not so obvious is that, in the background, there are two much more important policy considerations.

What will happen if employees continue to receive employer-sponsored coverage? Or what will happen if employees end up receiving their plans through the state exchanges?

We already know what is happening with employer-sponsored coverage. Jonathan Gruber points out that this coverage has already declined by 15 percent in the past decade. Industry surveys indicate that employers want out. As Paul Keckley of Deloitte says, many employers want to be a “fast second” to drop their coverage after one major employer leads the way.

In the meantime, employers are shifting more of the costs for care to their employees in order to slow the rate of increase in the employers’ component of the premium paid. As Karen Forte of Boeing 777-300er said, they also increased their deductibles partly to postpone the imposition of the hefty “Cadillac tax” on plans based on the premium paid. With health care costs continuing to escalate, this tax soon will be assessed on average plans, providing further motivation for employers to dump their programs.

What coverage can we anticipate in the exchanges? Gruber says that employees will want the platinum plans in the exchanges that are comparable to the more traditional employer-sponsored plans, but is that what they would get? Because the extra cost of the platinum plans would be paid in full by the employee, it is much more likely that they would select the relatively Spartan bronze and silver insurance plans for which the subsidies are targeted. These are UNDER-insurance plans with inadequate subsidies which inevitably will cause financial hardship for those actually in need of health care.

Though the question of whether financing will be through employer-provided benefits or through taxpayer subsidies for the exchanges is an important question, it dodges the real issue: Will the workforce continue to forgo wage increases to receive plans from their employers – plans with diminishing actuarial value (under-insurance), or will employers finally jettison their plans, turning their employees over to exchanges to purchase low actuarial value bronze or silver plans (since only the wealthy will be able to afford the gold or platinum plans).

Whether we should use employer-provided benefit funds or taxpayer funds is an easy question. It is far more equitable and efficient to use the tax system to finance health care. For employers, it would be much better for them to pay their equitable share in taxes than to continue struggling with the management and expenses of their health benefit programs.

Whether we should adopt policies that favor employer-sponsored plans versus exchange plans isn’t a question that we should be asking at all. In either instance we would perpetuate the wasteful, inefficient, and grossly inadequate financing system with which we are now burdened. Mandating under-insurance for everyone, except the wealthy, is a terribly flawed policy.

What we need instead is first-dollar coverage of all necessary health care for everyone – a single payer national health program – an improved Medicare for all. Now that we can all afford.

Medical care: Is it a right?

Posted by on Friday, Oct 22, 2010

Alice A. Chenault, M.D.

When I was handed the microphone at a recent town hall meeting, I asked Sen. Jeff Sessions if medical treatment should be the right of every U.S. citizen. The crowd roared “No!” The senator agreed.

This got me thinking about what we mean by “rights.”

One lady called out, “We only have the three rights guaranteed in the Constitution: life, liberty and the pursuit of happiness. The Constitution doesn’t say anything about health care!”

Never mind the fact that life, liberty, etc., are mentioned in the Declaration of Independence, not the Constitution. She had launched me on a quest.

A cascade of “rights” flooded my mind. The right to vote, speak freely, choose your own religion, express grievances against the government, decline to testify against yourself, or the right to due process before giving up your property or liberty — all these are granted by the Constitution and its amendments.

But many of our rights are not declared in the Constitution. Supreme Court decisions, like the 1954 ruling that banned racial segregation in schools, bind the entire country with the same force as constitutional provisions. Laws enacted by Congress and signed by the president similarly confer rights with nationwide effect. Other rights are granted by actions of state, county or city governments and affect smaller groups of people.

American children’s right to a free public education is an interesting example. The Constitution makes no mention of any such right. Congress has passed no law mandating it. The Supreme Court has never ruled that our government has to pay for all American kids to attend grades K-12 tuition-free.

This vital matter is left entirely up to the individual states. Laws on schooling differ from state to state. Rules about teacher qualifications, classroom hours and curriculum can change whenever you cross a state line. Shockingly, for example, Alabama’s constitution still mandates separate schools “for white and colored children,” though the law is not enforced and would certainly be unconstitutional if tested.

We usually think of a right as something we can choose to do or not, as we please. “You have the right to remain silent” when arrested, yet you’re free to discuss your case with police if you choose. But consider the difference between the right to education and, say, the right to vote. Voting is considered a sacred right, with elections paid for by government, not the voter. Still the choice is yours: nobody is forced to vote or punished for staying home on Election Day. Sending your children to school, on the other hand, is not only your right but your legal obligation. If your kids don’t go to school, you the parent can go to jail.

This loops me back into whether medical care is, or should be, a right. How weird would it be if parents had to see to it that their children were in school, but no such thing as free, public, universal education existed? Parents unable to afford private school tuition could face criminal charges. I argue that the lack of universal, affordable medical care puts American citizens in a similar bind.

Medical neglect — failure to provide necessary medical treatment for one’s injured or ill child — is legally defined as a form of child abuse, with penalties ranging from loss of custody of the child to imprisonment of the parent. This puts families without health insurance or money to buy medications at greater risk of these punishments than the wealthy. Doesn’t that violate our Fourteenth Amendment guarantee of “equal protection of the law”?

If you can’t go that far with me, consider at least this from veteran journalist Christopher Dickey: “[G]overnments spend money to acquire assets. That includes bridges and nuclear reactors, but also hard-to-price, intangible assets like a well-educated and healthy population.” (My emphasis.)

I hold that to be a self-evident truth.

Alice A. Chenault, M.D., is a psychiatrist in Huntsville, Ala., and a member of Physicians for a National Health Program (

Massachusetts physicians choose single payer

Posted by on Thursday, Oct 21, 2010

By Benjamin Day

Hello Single Payer Supporters – We have exciting news! For the first time ever the Massachusetts Medical Society has asked doctors what they think about health reform in its annual “Physician Workforce Survey” of 1,000 practicing physicians in the state. The results released today? Doctors picked single payer health reform over a public option, over high-deductible plans, over the Massachusetts health reform – in short, over every other option presented.

Strikingly, of all the options presented, modeling national health reform on the  Massachusetts health care law (which is what actually happened) received the least support – even less support than eroding insurance coverage with high deductible plans. Respondents were asked to pick only one of five options – although many respondents probably support multiple of these options.

Here are the results, quoted in full:

A new question was added to the Practicing Physician Survey this year to document how physicians view upcoming system changes in health care reform. On March 23, 2010, President Obama signed into law the comprehensive health reform legislation, the Patient Protection and Affordable Care Act. It should be noted that these questions were prepared and responded to prior to the passing of that Act. The following question was asked of each of the respondents:

Which of the following options should be included in U.S. health care reform? (Please read each of the following options carefully and check only one.)

1. Single-payer national health care system offering universal health care to all U.S. residents – 34%

2. Both public and private plans with a public buy-in option (allow businesses and individuals to enroll in a public Medicare-like health insurance plan that would compete with private plans) – 32%

3. Keep the existing mix of public and private plans, but allow insurers to sell plans with limited benefits and high deductibles to keep premiums low. State subsidies would help low-income individuals buy insurance. Individuals could choose to buy a less expensive catastrophic plan, more expensive comprehensive coverage, or no insurance at all. – 17%

4. Model health care reform on the Massachusetts health law of 2006, offering a national insurance exchange, government subsidies to low-income people to purchase health insurance, a mandate requiring residents who are not eligible for subsidized health plans to buy insurance or be fined, and fine employers who do not offer adequate health care plans to their employees. – 14%

5. Other (please specify). – 3%

You can download the full report, which includes responses to this question broken out by age, gender, practice size, specialty, and more, on the MMS web-site (pages 86-90):

Benjamin Day is executive director of Mass-Care: The Massachusetts Campaign for Single Payer Health Care.

Low-Cost Lessons from Grand Junction, Colorado

Posted by on Wednesday, Oct 20, 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.

Low-Cost Lessons from Grand Junction, Colorado

By Thomas Bodenheimer, M.D., M.P.H., and David West, M.D.
The New England Journal of Medicine
October 7, 2010

According to the Dartmouth Atlas of Health Care, average per capita Medicare spending in Grand Junction was $6,599 in 2007 – 24% lower than the national average and 60% below high-cost Miami.

Moreover, Grand Junction scored above the national average on a number of measurements of preventive care, diabetes, asthma, and other quality metrics.

We believe that seven interrelated features of the health care system that may explain the relatively low health care costs could be adopted elsewhere. These are leadership by the primary care community; a payment system involving risk sharing by physicians; equalization of physician payment for the care of Medicare, Medicaid, and privately insured patients; regionalization of services into an orderly system of primary, secondary, and tertiary care; limits on the supply of expensive resources, including specialists, beds, and equipment; payment of primary care physicians for hospital visits; and robust end-of-life care. These features could be replicated in other markets – though generally not without political battles.

Although I am taking a break this week and won’t provide a comment here, an excellent commentary on the Bodenheimer and West article has been posted by Joshua Freeman, Professor and Chair of the Department of Family Medicine for the University of Kansas School of Medicine. He states, “Grand Junction, Colorado may not have all the answers to our health care system, any more than Canada or Britain or Switzerland do. But it is doing a lot of things right, it is saving money, and it is improving the health of the community, and that’s a lot more than most areas in the US are doing.”

For Josh Freeman’s full commentary:

Reimbursing based on process and outcomes?

Posted by on Friday, Oct 15, 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.

Basing Pay-for-Performance on Outcomes

By Uwe E. Reinhardt
The New York Times
October 15, 2010

In last week’s post I presented the flow chart (at link below), exhibiting the path from the production of health care proper to human well-being, and I asked where in this process one should monitor the performance that we might seek to encourage through financial incentives.

I noted that adherence to what is thought to be best clinical practice for given medical conditions is the most widely used approach to measuring performance, even though it is generally agreed that a better way is to measure performance by clinical outcomes — that is, changes in the health status of patients (Box B in the chart). Much work is now under way to move in that direction.

Unfortunately, measuring performance by clinical outcome is easier said than done.

All of these experiments (mentioned in the article) with pay-for-performance are fledgling efforts, because the science of outcome measurement has yet to scale many methodological hurdles. Furthermore, in practice the approach will work only if the providers of health care find them sufficiently accurate and fair to sign on. And economic theory tells us that to make the approach effective, it must be backed with significant financial incentives. So far, in many instances, the sums of money at stake have been rather small.

Several readers of last week’s post saw in my enumeration of the difficulties of measuring performance a rejection of the idea. Not at all. The task is indeed daunting, but that does not mean we should back away from it. Rather, we must be patient and not expect too much too soon.

Basing Pay-for-Performance on Outcomes (Oct. 15):

The Uncertainties of Pay-for-Performance (Oct. 8):

Two published responses to Professor Reinhardt:

2. Don McCanne
San Juan Capistrano, CA
October 15th, 2010

Where are the science and art of medicine headed? Is the health care professional’s role to asses the needs of the patient and try to meet those needs? That alone is a daunting task when you consider studies that show that patients are receiving only about half of the care that they should be receiving.

Will the guidelines for medical care become a complex algorithm of process and outcomes, with the health care professional understanding that the goal and rewards will be found in mastering and optimally executing the measurement junctures within that massive maze? Will these measurements be samplings, or will almost everything be measured (a not so far-fetched concept in this day of computerization)? What burden in time and effort will this entail?

How about the real world? When the child with diabetes who you have been caring for comes in because of being depressed over the fact that her parents just split up, are you going to ignore her immediate overwhelming concern because you are too busy checking to see that you are complying with the glycohemoglobin and whatever other process and outcome junctures on which you will be rewarded?

When the goal is to do our best to see that everyone has the highest quality care that we can manage to pay for, it would be sad to see us caught up in the science of measurements when the greater need is in the art of medicine.

9. Dr. Robert Centor
October 15th, 2010

We must thank Dr. Reinhardt for 2 stimulating posts on P4P. He has pointed out the problems of P4P. But I fear he still believes that P4P could work, despite growing evidence to the contrary. Physicians have multidimensional tasks with each patient. We must make accurate diagnoses; we must treat diagnoses and symptoms; we must communicate with patients and help them make diagnostic and treatment decisions. We must balance the treatment of multiple diseases and weigh the risks and benefits each potential treatment decision.

Implementing a P4P scheme focuses attention on the measurables and decreases attention to those things that are not measured. The NHS P4P project demonstrates that very well. Focusing on prompt visits led to a decrease in physician-patient continuity. Focusing on some parameters led to a degradation in other parameters.

P4P sounds like it should work, but many physicians believe that it cannot work, because no metric can evaluate the extent of our professional responsibilities.

We could look at preventable errors (such as central line infections) and penalize hospitals for unacceptable rates. But we should only do that when we can establish that we have a proven method to achieve the goal. I picked this example because of Dr. Peter Provonost’s excellent work on this particular issue.

Dr. Reinhardt suggests that we use outcomes, but what outcomes should we measure. How do we place a metric on accurate diagnosis? We can study the reasons for diagnostic error, but measuring diagnostic errors represents a most complex and perhaps unsolvable problem?

How do we measure the physician patient interaction? This interaction includes history taking, patient education and patient motivation. Some suggest we use patient satisfaction scores, but those have major flaws and suffer from intense grade inflation.

How do we measure an appropriate balancing for the management of 5 (or more) diseases? How do we assess the appropriate prioritization of medications? How do we value decreasing polypharmacy by not treating every performance indicator to its fullest?

How do we value appropriate referrals to palliative care? How do we put a number on excellent comfort care?

I thank Dr. Reinhardt for shining a light on this problem. While I disagree with his belief that P4P is a solvable problem, I agree that we have not yet solved the problem.

As part of the current fervor over implementing reform, considerable attention has been directed to controlling spending and improving quality by changing reimbursement methods from those based on volume and complexity of services to models based on measurements of clinical practices and health care outcomes.

Professor Reinhardt suggests that we must not expect too much out of these efforts in the immediate future; I indicate that the science and art of medicine provide far greater benefits than those measurements of process and outcomes could ever adequately assess; and Dr. Centor provides a precise explanation of why current concepts of P4P (pay for performance) miss the target.

The magic of the highly touted accountable care organizations seems to be based on these same principles. It is likely that the magic will turn out to be only sleight-of-hand, at best.

Our policymakers would be much more productive if they would shift their attention from dinking around with P4P to crafting a financing system that would ensure that everyone would have affordable access to an efficient health care delivery system with a robust primary care infrastructure. PNHP can help our policymakers define that system, if only they will finally listen.

PPACA isn’t protecting UC Santa Cruz

Posted by on Thursday, Oct 14, 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.

UCSC employees face tough health care decisions as popular plan changes

By Tovin Lapan
Santa Cruz Sentinel
October 13, 2010

UC Santa Cruz employees think they have been unfairly burdened by the systemwide changes to health care coverage made for 2011.

Faculty, staff and unions representing UCSC workers have all raised concerns that one of the most popular plans on the Santa Cruz campus is no longer offered at a discounted rate and is in some cases 150 percent more expensive than the other alternative being offered, which would require switching physicians.

When the details of the new coverage options were released earlier this week UCSC employees immediately noticed that in many cases it would be difficult to maintain their current doctors at a similar cost to years past. The plan that is no longer discounted covered physicians under the Sutter Health Network, which includes the Palo Alto Medical Foundation and Santa Cruz Medical Clinic. Approximately 60 percent of UCSC employees are affiliated with Sutter Health Network, according to UCSC spokesman Jim Burns.

Open enrollment for UCSC employees will begin Oct. 25, at which point many people will have to choose between paying higher premiums or leaving their doctor.

“The staff members I’ve talked to are pretty furious, and that frustration comes from lack of representation at the level of the office of the president,” UCSC Graduate Program Coordinator Marissa Maciel said. “In order for my premium not to go way up I have to leave my doctor of the last 10 years and change my child’s pediatrician.”

UCSC Campus Provost and Executive Vice Chancellor Alison Galloway called the increases in health care costs “disappointing” and expressed that the UCSC administration has pointed out the difficult situation its employees face to the Office of the President.

“I’m particularly concerned about our many employees who are currently enrolled in the HealthNet HMO plan,” Galloway wrote in an e-mail. “While an alternative version of that plan is being made available, it apparently will offer fewer providers. A sizable number of employees will face the prospect of finding new doctors. We’ve expressed our concerns about these issues – more than once – to UC leaders.”

When Congress wrote the Patient Protection and Affordable Care Act (PPACA), they did not want to disturb the very large sector of health insurance coverage that seemed to be working well – the employer-sponsored health plans. It was decided that high-quality plans, such as that of the employees of the University of California at Santa Cruz, should be protected so that the plans would always be there when the employees needed them, that is if they wouldn’t mind choosing between paying much higher premiums or losing their established physicians.

Jerking around provider lists, dramatically increasing premiums, pumping up deductibles and other forms of cost sharing, and manipulating benefits are all market tools used liberally by the private insurers. They are used to benefit the insurers, even if at the expense of the insured.

Compare that to our public insurance program – Medicare. Medicare doesn’t even have provider lists. You can go anywhere and see any physician who is willing to see you. Adjustments in premiums are very modest, unlike the double digit increases typical of the private insurers. Medicare cost-sharing adjustments are also very modest, unlike the financial barriers to care being erected by the private insurers. Medicare benefits do not diminish but have actually increased through the years. Medicare needs further improvement, but at least it’s not headed downward in the same direction as the private plans are.

It’s interesting to note that more recent releases from the Department of Health & Human Services and other public agencies have shortened the name of the Patient Protection and Affordable Care Act (PPACA) to simply Affordable Care Act (ACA). Just as they gave up on insuring everyone, it looks like they also have given up on patient protection. If we had an improved Medicare for all, everyone would be covered and patients actually would receive the protection they need. It’s not too late to change.

Sen. Coburn and Prof. Feldstein predict single payer

Posted by on Wednesday, Oct 13, 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.

Coburn: Private health insurance may end soon

By Randy Krehbiel
Tulsa World
October 12, 2010

“There will be no insurance industry left in three years,” Coburn told the Republican Women’s Club of Tulsa County.

“That is by design. You’re going to make insurance unaffordable for everyone — which is what they want. Because if there’s no private insurance left, what’s left? Government-centered, government-run, single-payer health care.”

Senator Tom Coburn, M.D.


Nursing Economics: Is U.S. Health Care Evolving Toward a Single-Payer System? An Interview with Health Care Economist Paul Feldstein, PhD

Interview by Peter I. Buerhaus, PhD, RN, FAAN
Medscape Family Medicine
October 13, 2010

Peter Buerhaus: Looking to the future, do you think the passage of health reform legislation and its implementation could eventually lead to the adoption of a single-payer system?

Paul Feldstein: It is hard to say where we are going, particularly because the legislation creates health insurance exchanges which will be overseen by an insurance regulator. The insurance regulator will have the authority to set the benefit package and influence whether a state approves or denies rate hikes by insurance companies. I can see a scenario where there is very little cost containment and little pressure to keep insurance premiums from rising substantially. And, if there is a weak mandate for individuals to purchase health insurance, then the resulting adverse selection is likely to cause insurers to increase their premiums. People will become dissatisfied with the premium increases and some may become more supportive of a government-funded public insurance option. By heavily subsidizing government-provided health insurance and undercutting private insurers, many people will switch to lower-cost public insurers because studies show that people are willing to switch insurers for not much of a price difference. Eventually, if many individuals purchase public insurance, we could end up with a single-payer system or something close to one.

Paul J. Feldstein, Ph.D.

The majority of progressives predict that a single payer system is inevitable because the nation will no longer tolerate the increasing costs of health care. On the other side, many conservatives and libertarians predict that a single payer system may be inevitable because health plans will no longer be affordable in a regulated insurance market. Senator Tom Coburn and Professor Paul Feldstein represent the latter view.

Senator Coburn has been nicknamed “Dr. No” because of his conservative, anti-government, obstructionist approach to legislation. His views can be dismissed as those of a right-wing ideologue.

Prof. Feldstein, on the other hand, presents a more intellectual discourse of his position on health care financing. In a conversation we had during a forum at which we both appeared (Eighth Tamkin Symposium at the University of California at Irvine), Prof. Feldstein indicated to me that he was a dedicated follower of the teachings of his mentor at the University of Chicago – Milton Friedman. I probably need not say more.

The full interview of Prof. Feldstein (link above) is worth reading if you wish to better understand the sincere framing of single payer concepts from the perspective of a free-market intellectual. Although I say that his framing is sincere, it is distorted by what I believe to be exaggerated potential adverse consequences of single payer and by his failure to include certain inescapable benefits of single payer which, specifically, more than offset the deficiencies. He also repeats many of the trite criticisms of single payer that are based more on ideology and less on solid policy science, supposedly proving points by citing what are actually exceptions.

So while those on the right threaten us with the inevitability of single payer, the supporters of health care justice preach the inevitability of single payer. It looks like it’s not if we’ll have single payer, but when. But it won’t happen until we all understand that the financing mechanism of the Patient Protection and Affordable Care Act is not an avenue to reform, but a barrier that must be displaced. What we put in its place is where we totally disagree.

I might add that my conversation with Prof. Feldstein was in 2006, long before the recent reform process was underway, and at that time he told me that he believed that eventually we would have a single payer system, as much as he lamented the prospect. He is a very bright individual.

Prescription abandonment

Posted by on Tuesday, Oct 12, 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.

Pharma Insight 2009

Wolters Kluwer Pharma Solutions

Sample represents more than 80% of the dispensing activity within the United States for retail prescriptions, inclusive of largest retail chains.

While payers still greatly influence patient access to treatment, increasingly, patients are weighing treatment cost and benefit, especially of new prescriptions.

2009: Commercial Rx Claims – New Rx

85.59% – Dispensed to patient
8.08% – Denied by health plans
6.33% – Abandoned by patients
Brand Rx – 9.30% abandoned
Generic Rx – 5.50% abandoned

This study covered 80 percent of the retail dispensing activity within the United States. It included patients for whom our health care system is working, at least theoretically. These individuals gained access to a physician, received one or more prescriptions, and then attempted to have the prescription filled by a retail pharmacy.

Private health plans that should be assisting patients in receiving the care that they should have, denied over 8 percent of the new prescriptions recommended by physicians.

Of all new prescriptions, over 6 percent were prepared but then abandoned by patients, primarily because of the high out-of-pocket costs of the prescription.

We need a health care system that ensures that all of us receive the health care that we need, including prescription drugs. A single payer national health program – an improved Medicare for all – would do just that. No one would walk away from a pharmacy empty handed.

By Christine Adams, Ph.D.

Once again, Texas has the distinction of having the highest rate of people lacking health insurance in the nation – 26.1 percent. According to the Census Bureau’s new report, more than 1 out of every 4 Texans is uninsured, compared to the national average of 1 out of every 6 people.

These hard economic times show the woeful inadequacy of having an employer-based, for-profit health insurance system. Lose your job? Lose your health insurance. No health insurance? No access to health care. What’s the easiest way to fall into poverty? Get sick – even if you have health insurance at the time of your illness.

As T.R. Reid, author of “The Healing of America” says, “In the world’s richest nation, we tolerate a health care system that leads to large numbers of avoidable deaths and bankruptcies among our fellow citizens … that doesn’t happen in any other developed country.” Ironically, the U.S. spends twice as much as any other nation on health care without getting value for our money.

Nations with national health insurance spend about half as much as we do, have better overall medical outcomes and cover all their residents and citizens, according to the World Health Organization. The only real difference between us and them is that they do not allow for-profit health plans to play a central role in their health systems. And contrary to the popular myth of “socialized medicine,” nations with national health insurance mostly have less interference in medical practice and less government involvement in health care than we do.

There are just three models for universal health care in developed nations: Beveridge (the type of system used in the UK), Bismarck (used in Germany), and single-payer (in use in Canada and, since 1995, Taiwan, among others). The role of government varies with the model, but all three models exclude for-profit health plans from all but supplemental policies which cover extras such as private rooms. In other words, no insurance company bureaucrat determines whether a British, German, or Canadian patient will receive a needed test or treatment.

The Beveridge model, like our Veterans Administration system, is the nearest to “socialized medicine” because it features hospitals that are owned by government and doctors on government salaries. But there’s no government interference where it counts – in clinical practice. Doctors in other countries are shocked at the level of interference by insurance companies into medical practice in the U.S.  In the other two models, doctors are in private practice. In the Bismarck model, private insurance companies function as quasi-governmental agencies – they are nothing like our Aetnas and Cignas — to assure access to all while government plays referee. Under the single-payer model, as in our Medicare program, government – the “single payer” – pays the bills for care, while the actual delivery of care is private.

Nations with single-payer systems reap tremendous savings on paperwork and bureaucracy by streamlining administration and keeping for-profit insurers out. Estimates are that the U.S. could save $400 billion annually by replacing our fragmented system of private insurers with an improved Medicare-for-all program, enough to cover all the uninsured and to upgrade everyone else’s coverage.

The for-profit, employer-based U.S. system only works for Wall Street and a handful of top executives who make millions by denying our nation what we are already paying for – high quality health care for all at an affordable price. Find out from nonpartisan sources what the other health care models are like. You will likely be surprised at how well these models work.

With single payer, Medicare for all, the United States will be able to truly have the best health care system in the world. That would be especially good news to us Texans.

Christine Adams is a licensed psychologist and statewide secretary for Health Care for All Texas (

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