Stein’s Law – hitting the wall

Posted by on Tuesday, Feb 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.

Herb Stein’s Unfamiliar Quotations

By Herbert Stein
May 16, 1997

If something cannot go on forever, it will stop.
–Stein’s Law, first pronounced in the 1980s

This proposition, arising first in a discussion of the balance-of-payments deficit, is a response to those who think that if something cannot go on forever, steps must be taken to stop it–even to stop it at once.


Huge Deficits May Alter U.S. Politics and Global Power

By David E. Sanger
The New York Times
February 1, 2010

… as Prof. James K. Galbraith of the University of Texas puts it, “Forecasts 10 years out have no credibility.”

Simply projecting that health care costs will rise unabated is dangerous business.

His greatest hope, Mr. Galbraith said, was Stein’s law, named for Herbert Stein, chairman of the Council of Economic Advisers under Presidents Richard M. Nixon and Gerald R. Ford.

Stein’s law has been recited in many different versions. But all have a common theme: If a trend cannot continue, it will stop.


The Long-Term Outlook for Health Care Spending

Congressional Budget Office
November 2007

Projections of Health Spending

Over the past 30 years, total national spending on health care has more than doubled as a share of GDP. Under the assumptions described (in this CBO report), according to CBO’s projections, that share will double again by 2035, to 31 percent of GDP. Thereafter, health care costs continue to account for a steadily growing share of GDP, reaching 41 percent by 2060 and 49 percent by the end of the 75-year projection period.


GOP House Issues Conference

January 29, 2010

Congressman Paul Ryan (speaking to President Obama):  … Medicare, as you know, is a $38 trillion unfunded liability…

At over $2.5 trillion (almost 18 percent of our GDP), the level of health care spending in the United States this year is almost intolerable. Yet we hear predictions that health care will represent half of our GDP by 2082, and that Medicare will accumulate a deficit of $38 trillion.

Thank goodness for Stein’s Law. We will never see these numbers for the simple reason that this rate of increase cannot go on forever. It will stop once it hits the wall.

Herbert Stein, being from the Chicago School of Economics (think Milton Friedman), did not believe that steps must be taken to intervene since the problem would take care of itself. Although that is true, the problem with this sterile, amoral view, common amongst those of the Chicago School, is that it ignores the consequences of a spontaneous economic process devoid of the input from the heart and soul of beneficent public stewards.

To be clear, in the economics of health care, Stein’s Law does not represent one point in the expansion of health care spending at which everything stops and the health care system collapses. Nor does it represent a single point at which expansion stops and spending becomes static. Rather it represents a multitude of various walls for various payers, including individuals, employers and the various levels of government, each of which has its own wall as a barrier represented by Stein’s Law.

In our fragmented system of financing health care, Stein’s Law is already in play. Tens of millions are no longer able to afford health insurance. Tens of millions more are no longer able to afford adequate insurance products and must face the financial hardships of the underinsurance products that have been the response of competing insurers in our market economy in health care. The rate of employer-sponsored coverage has been declining because too many businesses, especially small businesses, have already hit the wall. Many states are struggling with the need to reduce Medicaid payments to providers in order to try to include more under the umbrella, while watching the safety-net of providers crumble from protracted financial losses. Even the federal government is struggling to find ways to fill the void in the face of massive budget deficits.

With Stein’s Law, we can predict that the rate of spending increases will very soon slow down, but under our current financing system, that will inevitably result in more financial hardship, suffering, and even death as health care access becomes ever less affordable.

Suppose the Senate bill passes, along with the reconciliation tweaks, then what will happen? Since our beneficent stewards in Congress neglected their duties, failing to adopt policies that would slow the growth in health care spending, health care costs will continue to test Stein’s Law.

Some of the multitude of walls will move, but none of them will go away. The states will see their walls move further out with the infusion of Medicaid funds. The federal government will see its wall move closer, signaled by the shrill cacophony of the budget hawks. Employers will not see their wall move much, but they will continue to barrel forward, eventually hitting it one by one.

But what about our hard-working, middle-income Americans? The wall will be moved much closer. For several reasons, mostly related to costs, there will be an attrition of employer-sponsored plans. Since the subsidies to purchase private plans will be less than the employer contributions, fewer individuals and families will be able to afford the plans. To slow the rise in premiums, more benefits will be stripped out. The Obama administration would accelerate this deterioration in benefits by imposing an excise tax on the plans as “the most effective way to control costs.” The Obama/Orszag policy of controlling costs by erecting financial barriers to necessary health care is a very sick policy indeed. The legislation before Congress adds afterburners to middle-income Americans only accelerating their trip to Stein’s impenetrable wall.

When our economic models have immoral consequences, we should abandon the amoral models of the Chicago School, and move to normative economics. It is not a sin for an economist to have a heart.

Under a single payer national health program – an improved and expanded Medicare for all – Stein’s wall will still be there. But instead of letting the entire system crash into the wall, our own beneficent public stewards – if we elect ones with a heart – will be there to make sure that everyone receives the care that they need. The resources that we use may take us up to the wall, but we won’t be crashing into it.

Every other industrialized nation has an impenetrable Stein wall, but by using normative economics, they don’t sacrifice their citizens by slamming them into that wall.

The President at the GOP House Issues Conference

Posted by on Monday, Feb 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.

Remarks by the President at GOP House Issues Conference

The White House
January 29, 2010

Congressman Price (Dr. Tom Price from Georgia):  Mr. President, multiple times, from your administration, there have come statements that Republicans have no ideas and no solutions.  In spite of the fact that we’ve offered, as demonstrated today, positive solutions to all of the challenges we face, including energy and the economy and health care, specifically in the area of health care — this bill, H.R.3400, that has more co-sponsors than any health care bill in the House, is a bill that would provide health coverage for all Americans; would correct the significant insurance challenges of affordability and preexisting; would solve the lawsuit abuse issue, which isn’t addressed significantly in the other proposals that went through the House and the Senate; would write into law that medical decisions are made between patients and families and doctors; and does all of that without raising taxes by a penny.

But my specific question is, what should we tell our constituents who know that Republicans have offered positive solutions to the challenges that Americans face and yet continue to hear out of the administration that we’ve offered nothing?

The President:  It’s not enough if you say, for example, that we’ve offered a health care plan and I look up — this is just under the section that you’ve just provided me, or the book that you just provided me — summary of GOP health care reform bill:  “The GOP plan will lower health care premiums for American families and small businesses, addressing America’s number-one priority for health reform.”  I mean, that’s an idea that we all embrace.  But specifically it’s got to work.  I mean, there’s got to be a mechanism in these plans that I can go to an independent health care expert and say, is this something that will actually work, or is it boilerplate?

If I’m told, for example, that the solution to dealing with health care costs is tort reform, something that I’ve said I am willing to work with you on, but the CBO or other experts say to me, at best, this could reduce health care costs relative to where they’re growing by a couple of percentage points, or save $5 billion a year, that’s what we can score it at, and it will not bend the cost curve long term or reduce premiums significantly — then you can’t make the claim that that’s the only thing that we have to do.  If we’re going to do multi-state insurance so that people can go across state lines, I’ve got to be able to go to an independent health care expert, Republican or Democrat, who can tell me that this won’t result in cherry-picking of the healthiest going to some and the least healthy being worse off.

So I am absolutely committed to working with you on these issues, but it can’t just be political assertions that aren’t substantiated when it comes to the actual details of policy.  Because otherwise, we’re going to be selling the American people a bill of goods.  I mean, the easiest thing for me to do on the health care debate would have been to tell people that what you’re going to get is guaranteed health insurance, lower your costs, all the insurance reforms; we’re going to lower the costs of Medicare and Medicaid and it won’t cost anybody anything.  That’s great politics, it’s just not true.

So there’s got to be some test of realism in any of these proposals, mine included.  I’ve got to hold myself accountable, and guaranteed the American people will hold themselves — will hold me accountable if what I’m selling doesn’t actually deliver.

The President enters the Republicans’ den, and politics broke out. At least that’s the impression you might have from the media coverage of the President’s appearance at the GOP House Issues Conference. But this was not simply an exchange of partisan political rhetoric; it was a plea by President Obama to set aside rhetorical grandstanding and to join together in a fair, credible, and objective discussion of the impact of the actual policies under consideration.

Did that happen? It is puzzling how Congressman Tom Price, a physician, could state directly to the President that their Republican bill “would provide health coverage for all Americans.” That goes beyond political grandstanding for the benefit of the television cameras. That is shameless, arrogant lying to the President of the United States and to the American people. It is impossible to have a constructive dialogue with liars.

President Obama is right when he states that these proposals must pass the test of realism, while at the same time holding himself accountable. But realism alone isn’t enough. The policies must be effective and efficient. Yet the President and Congress abandoned those health care reform policies that pass the tests with the highest scores, and accepted flawed, lower-scoring policies that were believed to comply better with the political tests, though that political support is waning.

When objectivity and realism demonstrate that the Democratic proposal falls far short, and when better, proven policies would bring affordable care to everyone, we should hold the President and Congress accountable. But we should also support them politically when they throw the liars out so they can get on with the reform that we need.

One more lie. Congressman Price said that H.R.3400 “has more co-sponsors than any health care bill in the House.” It has 52 cosponsors. Congressman John Conyers’ H.R. 676, “United States National Health Care Act or the Expanded and Improved Medicare for All Act,” has 87 cosponsors.

More importantly, Conyers’ bill is based on sound health policy that would actually work, whereas Price’s bill is based on feeble policies that will have almost no impact on the problems we face in health care. But their bill does provide them with rhetoric they can use for political grandstanding, even if based on lies (e.g., “provides health coverage for all Americans”).

“People should go where they are not supposed to go, say what they are not supposed to say, and stay when they are told to leave.” –Howard Zinn

Well, that quote pretty well sums up “what to do”.  But my biggest challenge is “how”.  Specifically, how do I neutralize some pretty powerful fear?

I was scared Friday when I joined Margaret Flowers to attempt to deliver a message to the President.  My thoughts raced.  We’re talking secret service.

“How do I get myself into these things?”
“This is crazy.”
“This is pointless.”
“I can’t even make sensible statements; I know what I want to say but I’m so nervous.”
“Other people are so much more knowledgeable and speak so much more eloquently.”
“But I am doing it!”

We stood in front of the Harbor Hotel in Baltimore clutching a banner that read “Letting you know.  Medicare for all” and Margaret’s letter for the President written in response to his appeal for solutions to health reform.  The hotel manager, police and secret service surrounded us and asked us to move.

If you watch the video, you’ll see that there was a point, a moment, which felt suspended in time, when Margaret looked at me and I looked at her and we both knew “we ain’t goin’ across the street.”

The feeling associated with that awareness was not fear, or anger, or self-righteous indignation.  It was a feeling of quiet liberation.  The things I was saying to myself, thoughts powerful enough to imprison me in a jailhouse of fear, had been neutralized.  In their place was a calm determination to trust my intuition.

My gut told me “so be it.  You’re doing the best you can.  This is a no-brainer.  Gotta do it.  Margaret and I have been needing some quiet time to catch-up; might as well be in a police station.”

My gut has a great sense of humor.

Fear overcomes me when I listen to my head; calm enfolds me when I listen to my gut.

So, for what it is worth, here are few tips for “doing cd for Single Payer”:

1. Ignore your head.  That means, all those familiar thoughts that leave you feeling fearful and bad.

2. Listen to your gut.  You know it’s your gut talking if you start feeling calmness, clarity, and quiet determination.

3. We need people engaging in “gut-driven” cd to right all kinds of wrongs.  Be authentic; for many of us, the gut issue is Medicare For All.  If yours is the environment, then do cd for that.

4. Don’t try this alone.  Take a friend. Or several.

5. Do the best you can.  Speak from your heart.  Once you’re in handcuffs, the worst is over.  The “authorities” aren’t your enemy; most will treat you respectfully and the ones who don’t are just having a bad day.  Don’t take it personally.

6. I like to take a “token” with me, tucked in my pocket with my driver’s license. For me, it’s a picture of my grandchildren and the holy card from my father’s funeral.  It reminds me that he would be proud of me and that I’m doing this for the people who inspire me–my family and my patients.

7. If you have the choice of doing cd in the winter or the summer, definitely choose summer!  Wear layers either way because it’s cold in jail.

Remember that we all have talents to contribute.  Without Bill Hughes taking the video, our action wouldn’t have been as fruitful.  Without Kevin Zeese, we’d have worried about our families and “legal stuff.”  Without Mark Almberg, we wouldn’t have a press release.  Without researchers like David Himmelstein and Steffie Woolhandler, we wouldn’t have compelling data to support us.  We draw support from each other.

As Margaret Mead said:  Never doubt that a small group of thoughtful committed citizens can change the world. Indeed, it is the only thing that ever has.”

Uwe Reinhardt – No “simple” health reform

Posted by on Friday, Jan 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.

No Such Thing as ‘Simple’ Health Reform

By Uwe Reinhardt
The New York Times
January 29, 2010

Even before Senator-elect Scott Brown’s stunning victory in the Massachusetts special election, there was no shortage of advice on simpler approaches to health reform that the president and his Congressional allies could have used in place of the bills now before Congress.

Although the current reform bills undoubtedly are burdened with many tangential items, one can easily underestimate how quickly any kind of health reform will become complex.

(He quotes Peggy Noonan who advocates for “small, discrete steps” such as “a simple bill that mandated insurance companies offer coverage without respect to previous medical conditions.”)

In the eyes of people unfamiliar with economics, the step she (like others before her) proposes may seem small.

She seems completely unaware that, to be implemented, that step has to be accompanied by (1) a mandate to be insured or, at the least, very powerful financial incentives to be insured. And if government imposes such a mandate on citizens, it must be ready (2) to subsidize low-income families in the acquisition of the mandated insurance. Already we have a bill requiring many pages.

(He quotes from Sen. Tom Coburn’s summary of his bill calling for guaranteed coverage, and affordable premiums through risk adjustment.)

The European systems Mr. Coburn has in mind are the Swiss and Dutch health systems, because we are referred to a paper on these systems.

It should be noted that the Dutch and especially the Swiss systems are subject to heavy government regulation — far heavier than is foreseen in the Senate health reform bill passed in late December.

For example, health insurance is mandatory in both countries. Both countries prescribe purely community-rated insurance premiums which, unlike the Senate bill, cannot take the age of the insured into account. And both countries extend sizable public subsidies toward the purchase of private health insurance.

In short, as Senator Coburn’s bill illustrates, “simply” to pass a bill that imposes community rating on health insurers, as Ms. Noonan suggests, is anything but simple. It opens a veritable Pandora’s box of additional, required legislation which, once fully fleshed out, would pretty much constitute the core of the insurance-reform bill currently in the Senate bill.

Posted response of Don McCanne, San Juan Capistrano, CA (Response #23)

Once Congress decided to build on our existing, fragmented, dysfunctional system of financing health care, it became necessary to create the complex legislation that was generated in both the House and the Senate, precisely because of the reasons Prof. Reinhardt describes.

Congress and the administration began with the most expensive system in existence and then attempted to apply social insurance principles to our hybrid model, allegedly with the goal of covering everyone with a system with sustainable spending. The health policy literature is replete with simulations and real-life studies demonstrating that this is by far the most expensive model of reform, and it falls short on universality, equity, and efficiency.

The least expensive and most effective models are a government-owned health service (socialized medicine, not America’s first choice), or a bona fide social insurance program used to finance the largely private health care delivery system. Although there is no perfect system, a government social insurance program (like Medicare) does have an advantage over social insurance programs using a market of private plans in that administrative costs are lower and mechanisms to moderate spending increases are more effective. Also, the Swiss and Dutch private insurance-based programs still leave uninsured about 1.5 percent of their populations.

President Obama this week told the nation that he was eager to see a better approach to cover everyone and bring down costs, though in his prior comments he has revealed that he already knows how to do that. And what is that?

During this break in the negotiations on reform, we really should take a serious look at an improved Medicare program that would cover everyone. It is the least expensive model of reform. It has the greatest administrative efficiency. It would truly cover everyone automatically. And even for those who do not support social solidarity, it would finally control our intolerable growth in health care spending through the proven mechanism of a single payer monopsony.

President Obama is eager to see a better approach

Posted by on Wednesday, Jan 27, 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.

State of the Union Address

President Barack Obama
The White House
January 27, 2010

But if anyone from either party has a better approach that will bring down premiums, bring down the deficit, cover the uninsured, strengthen Medicare for seniors, and stop insurance company abuses, let me know.  (Applause.)  Let me know.  Let me know.  (Applause.)  I’m eager to see it.


Illinois AFL-CIO

Barack Obama
June 30, 2003

I happen to be a proponent of a single payer universal health care program. (applause) I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care cannot provide basic health insurance to everybody. And that’s what Jim is talking about when he says everybody in, nobody out. A single payer health care plan, a universal health care plan. And that’s what I’d like to see. But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House.


SilverSneakers benefit for Medicare Advantage plans

Posted by on Wednesday, Jan 27, 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 of California to Offer Award-Winning Fitness Program to Medicare Beneficiaries in San Bernardino

Blue Shield of California
January 18, 2010

Blue Shield of California announced today that it will expand its contract with Healthways, Inc. to offer the SilverSneakers® Fitness Program to Blue Shield Medicare Advantage members in San Bernardino County. SilverSneakers, which Blue Shield already offers in Los Angeles and Orange counties, is the nation’s leading exercise program for older adults.

Using the SilverSneakers premier network, Blue Shield of California members get access to a variety of participating fitness and wellness facilities throughout the country, including such popular locations as Curves® and Bally Total Fitness®. Many sites offer amenities such as exercise equipment, treadmills and free weights, and the signature SilverSneakers fitness classes.


Healthways SilverSneakers is a membership fitness program for seniors provided as a free benefit by many Medicare Advantage programs throughout the nation. It is not a benefit that is allowed in the traditional Medicare program.

We certainly applaud seniors who participate in programs designed to maintain physical fitness and general wellness. But there are two features of this program that should outrage taxpayers.

1) These programs are funded by government overpayments made to the private Medicare Advantage plans. Though some of the overpayments are used for additional benefits, much is wasted in excessive administrative costs and profits. Not only should taxpayers object to the waste, they should also object to a program that provides extra benefits limited to private plan enrollees but not available to those in the traditional Medicare program. If the extra benefits are appropriate, then all Medicare beneficiaries should receive them. If they are not appropriate, then no taxpayer funds should be used for these benefits. In either case, the overpayments directed to the private plans should either be redistributed amongst all Medicare beneficiaries or retained in our Medicare reserves. Regardless, the private Medicare Advantage plans should be eliminated as the wasteful intermediaries that they’ve proven to be.

2) Which of our seniors would find the SilverSneakers program to be an attractive benefit? Obviously only the healthiest without infirmities that would prevent them from participating in the exercise programs. SilverSneakers is being selectively marketed to the healthiest, lowest-cost seniors, even though their private plans are being paid much more than we spend taking care of patients in the traditional Medicare program which includes a disproportionate share of chronically ill patients. The taxpayers take care of the sick, while they doubly overpay the private plans to take care of the lower-cost healthier individuals.

The Republicans are feigning outrage by protesting that the proposal before Congress would “cut Medicare spending” by partially reducing some of the overpayments to the Medicare Advantage plans. Well, the Democrats actually are wrong. In a brave show of timidity, they suggest tweaking the Medicare Advantage overpayments, when they should show the temerity to throw those crooks out and use the funds to improve benefits in the traditional Medicare program.

While they’re at it, they should throw out the crooks running the rest of the private plans, and establish an improved Medicare program for all of us.

What about the seniors who would lose their SilverSneakers membership? They can buy a program directly from Curves or Bally Total Fitness, thereby eliminating both the SilverSneakers and the Medicare Advantage middlemen. Or better yet, they can organize their own fitness groups and continue to exercise – for free!

Malpractice lessons from Texas

Posted by on Tuesday, Jan 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.

Liability Limits in Texas Fail to Curb Medical Costs

by David Arkush, Peter Gosselar, Christine Hines and Taylor Lincoln
Public Citizen
December 2009

Supporters of limiting health providers’ liability have touted Texas’ medical malpractice experiment as the solution for improving national health care. For example, Minnesota Rep. Michele Bachmann held up Texas as a successful liability “pilot program” in an address in September, stating, “The state of Texas did a wonderful job of lawsuit reform and actually saw medical costs come down. We know it works.”

But most of the claims touting positive effects of the Texas law – which took effect in September 2003 and included a $250,000 per defendant liability cap – are flatly contradicted by the data.

By the measures commonly used to evaluate health care – such as cost, the uninsured rate, and access to care – Texas has regressed since its liability law took effect. Collectively, these measures show that Texas has one of the worst health care systems in the United States. Moreover, since 2003 Texas has either failed to improve or grown even worse compared to other states on almost every measure.

Since the liability laws took effect:

* The cost of health care in Texas (measured by per patient Medicare reimbursements) has increased at nearly double the national average;
* spending increases for diagnostic testing (measured by per patient Medicare reimbursements) have far exceeded the national average;
* the state’s uninsured rate has increased, remaining the highest in the country;
* the cost of health insurance in the state has more than doubled;
* growth in the number of doctors per capita has slowed; and
* the number of doctors per capita in underserved rural areas has declined.

The malpractice system does not serve injured patients well. It needs to be reformed. It needs to be redesigned with incentives to reduce exposure to error, and to appropriately compensate patients when error does occur, all in a non-hostile environment that serves the interests of both patients (compensation for injury) and health care professionals (performance enhancement). This is not the topic of today’s message.

The Republican grandstanding has been sending a message calling for a blanket rejection of any reform advanced by the Democrats, and instead substituting the opening of insurance markets across state borders and the enactment of malpractice reform.

Since expanding insurance markets across state borders is not the topic of today’s message, we’ll quickly dismiss it as an unsound policy that would flood the market with less expensive underinsurance products that would fail to provide financial security for those who need health care. That is the worst possible way to expand health care coverage.

Regarding malpractice, when Republicans and some Democrats (except those beholden to trial attorneys) call for reducing health care spending through malpractice reform, they don’t really mean reform. They are merely calling for a cap on general damages (pain and suffering), such as the $250,000 cap enacted in Texas. They contend that this would reduce costs by eliminating excessive awards for “junk lawsuits,” and especially by reducing the pressure on physicians to order unnecessary tests. Many contend that the excess CYA testing is a major cause of our very high health care spending.

So what has happened in Texas after the cap was applied? Health care costs have increased at double the national average! Spending increases for diagnostic testing have far exceeded the national average! The cost of health insurance has more than doubled!

As an isolated policy, malpractice caps were ineffective in reducing spending and diagnostic testing in Texas. The issue of general damages needs to be addressed as part of a process leading to comprehensive malpractice reform, but it should be dismissed as the be all and end all for comprehensive health system reform.

The debate over malpractice should not distract us from our mission to support comprehensive reform that would ensure that absolutely everyone receives the health care that they need, under a financing system that eliminates the burden of medical debt. (Hint: a single payer national health program – an improved Medicare for all)

UnitedHealth wields a machete

Posted by on Monday, Jan 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.

Insurer Steps Up Fight to Control Health Care Cost

By Anemona Hartocollis
The New York Times
January 24, 2010

A front in the national health care battle has opened in New York City, where a major hospital chain and one of the nation’s largest insurance companies are locked in a struggle over control of treatment and costs that could have broad ramifications for millions of people with private health insurance.

The fight is between Continuum Health Partners, a consortium of five New York hospitals, including Beth Israel Medical Center and St. Luke’s-Roosevelt Hospital Center, both major teaching hospitals, and UnitedHealthcare.

The prestigious hospitals and the major health insurer have been in bitter contract negotiations, not just over rates but also over UnitedHealthcare’s demand that the hospitals notify the insurance company within 24 hours after a patient’s admission. If a hospital failed to do so, UnitedHealthcare would cut its reimbursements for the patient by half.

UnitedHealthcare says the proposed rule is meant to improve the quality of care and cut costs by allowing insurance case managers to jump in right away. The hospitals say that having their reimbursement cut in half is too much to pay for a clerical error, and that the revenue drain would ultimately hurt their patients.

The dispute signals a “ratcheting up” of a long tradition of insurers trying to cut costs, said Jeffrey Rubin, an economics professor at Rutgers University.

The leadership of America’s Health Insurance Plans (AHIP) and Physicians for a National Health Program (PNHP) do agree on one crucial point: the current health care reform proposal does very little to control the intolerable escalation of health care costs. Both agree that Congress must provide the remedies to control spending and improve health care value.

What will occur without government action? Cost containment will remain in the hands of the private insurance industry. The tools at their disposal are very intrusive and are what resulted in the managed care backlash by unhappy patients and their providers. With the continuing increase in costs and the need to avoid pricing premiums totally out of the market, more intensive and extensive intrusions can be anticipated.

Look at this provision that UnitedHealth is demanding in its contract negotiations with a prominent New York hospital chain. If a hospital commits the clerical error of failing to notify UnitedHealth of a patient’s admission within the first 24 hours, the hospital is penalized 50 percent of its already reduced contracted rate! When the insurer is notified, they have the “insurance case managers jump in right away.” Although they claim that it is to improve quality, no sane person is deceived by the budget machete that they wield.

Without effective reform, it will get much worse since premium increases must be limited – they’re already too high – so insurers will be left with no alternative but to whack away at spending. Whacking spending means whacking patient care. Insurers really don’t want to do that. It is not for altruistic reasons, but it is rather the fear that their business model could suffer irreparable harm under the wrath of enraged patients and their health care providers (not that it hasn’t already).

It is no wonder that AHIP wants Congress to enact cost containment so the government becomes the bad guys. But do they really expect Congress to establish a government bureaucracy of machete-wielding case managers while the insurance industry gets a free ride? Yet that is the form of cost containment that fits with the model in which the private insurers retain control of the funds.

We’ll say it again. Private health insurance plans are an obsolete model of financing health care. Affordable premiums, adequate benefits, and affordable out-of-pocket costs are incompatible under the private insurance model because of the very high health care prices in the United States.

Methods of cost containment is where PNHP and AHIP part ways. PNHP recommends eliminating the obsolete private insurance industry and replacing it with a single payer national health program – an improved Medicare for everyone.

An improved Medicare for all would save hundreds of billions of dollars in wasted administrative excesses. Although some claim that this is a one-time benefit, it is a profound waste that never returns, providing savings every year thereafter. The system would be operated under a global budget, adjusted for demographics, inflation, and beneficial advances in technology, maintaining spending at a sustainable level. Hospitals would be funded through global budgets, eliminating the need for armies of clerks attempting to obtain reimbursement from a multitude of payers for each itemized expenditure of the hospital. Health professionals would negotiate compensation to meet their costs and provide fair profits. Bulk purchasing at negotiated rates would enable fair pricing for pharmaceuticals and medical supplies. Capital improvements would be separately budgeted to correct for both excessive and deficient supply side capacity, avoiding excess costs by improving efficiency.

The differences could not be more clear. Private insurers want government interventions to protect their businesses. Advocates of an improved Medicare for all want everyone to have the health care that they need, while making the health care system affordable for all – individuals, businesses, and the government and its taxpayers.

by JB Fenix, CaPA Fellow

On Monday, January 11th, over 1,000 people rallied for California Single Payer on the steps of the Sacramento Capitol building. Following the rally, 500 health professional students from over 20 different California campuses, and ten different professional programs held over 90 legislative meetings. Through their efforts, state single-payer gained at least 3 additional co-authorships and a fresh cohort of legislators and staffers were educated in the midst of a pessimistic national debate.

The event was preceded by a six-hour training day on top of 8-hour bus rides for half of the students who left Southern California at 4 a.m. on Sunday morning. The two-day CaHPSA “Lobby Day” event was itself preceded by over 10 statewide conference calls, two regional conferences (with many days of preparation each), multiple press releases from the student media team, one leadership conference, and countless hours of work from local campus student teams including speakers’ series and fundraising drives. The event will be followed-up by selecting statewide student leaders, and campus student teams; by holding regional and campus training workshops; and by continuing to build partnerships with pro-single payer organizations and in key legislative offices through, with a little luck, summer student internships.

All of this should be seen as a phenomenal success, especially considering that it is 100% student run and that the students receive little if any support for their activities. So how can we explain such success amidst an unfriendly environment and when reform at the national level is struggling so dismally? And how can this success be replicated in other states? Two words: Enthusiasm and Organization.

Let’s start with enthusiasm. No one can go to CaHPSA Lobby Day and not come down with a case of infectious enthusiasm. Students sit through hours of preparation and vigorously engage in discussions with often unfriendly opponents of healthcare reform and come away more excited than ever. Young health professionals, with little or no previous exposure to any policy, effectively engage in the democratic process and come out the other end ready for more.

How does this happen? The first step is building enthusiasm at the campus level to get people to the event. This is usually a process of having strong single-payer speakers visit each campus at least once, with follow-up and endorsement from well regarded local student leaders. The leaders get involved because they have real control over the event and input into the formation of the activities. The final push to register students for the lobby day builds on this foundation and is often a combination of blast emails and appeals to friends and social networks. Once at the CaHPSA Lobby Day, the enthusiasm continues because the training day speakers are engaging, the community supporters at the rally are boisterous, and we have an unlimited supply of coffee. And most importantly, learning that you can actively engage in the democratic process is fun! And being well prepared with a group of your peers beforehand to knock down the arguments of your opponents feels great! (This should be seen in contrast to events that are not student led, where students play a secondary role in joint student-physician teams, or where the students feel poorly prepared, or discouraged by not having autonomy over their student group.) By being empowered to make decisions, we are learning that our actions today make a difference tomorrow.

Equally important to enthusiasm is organization. Lobby Day would not be possible without active campus teams and statewide coordination. And of these two, some form of active campus leadership/organization is especially important. In fact, on campuses where we are unable to establish a team or at least a first contact, we often lose the participation of the entire campus even if our event makes it to their local listserv. Over the past couple of years, the existing infrastructure of AMSA campus chapters has been key to our success, but as we try to continually expand beyond the medical student population to other health professional students and students in general, a new form of organization is emerging: CaHPSA, or the California Health Professional Student Alliance. Because we are “campus-based,” CaHPSA ties into the fundamental unit of identity for most students: the on-campus community.

A final essential component of our organization’s success has been community partnership. California Chapter of PNHP, the California Physicians’ Alliance, California School Employee’s Association, California Nurses Association, California OneCare, California Alliance of Retired Americans, Single Payer Now!, and others have been essential community partners both helping us with material supplies and cheering us on at the CaHPSA Lobby Day Rally. As we continue to grow our organization it will be crucial to maintain and further develop organizational partnerships with community partners who each bring their own high levels of enthusiasm and strong sense of organizational identity.

Lessons learned? Incredible success is possible by mobilizing students. And two keys to this success are enthusiasm and organization.

Educate. Advocate. Grow.

About this blog

Physicians for a National Health Program's blog serves to facilitate communication among physicians and the public. The views presented on this blog are those of the individual authors and do not necessarily represent the views of PNHP.

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