Good news on spending growth is bad news

Posted by on Tuesday, Jan 5, 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 Spending Growth At A Historic Low In 2008

By Micah Hartman, Anne Martin, Olivia Nuccio, Aaron Catlin and the National Health Expenditure Accounts Team
Health Affairs
January 2010

In 2008, U.S. health care spending growth slowed to 4.4 percent—the slowest rate of growth over the past forty-eight years. The deceleration was broadly based for nearly all payers and health care goods and services, as growth in both price and nonprice factors slowed amid the recession. Despite the slowdown, national health spending reached $2.3 trillion, or $7,681 per person, and the health care portion of gross domestic product (GDP) grew from 15.9 percent in 2007 to 16.2 percent in 2008. These developments reflect the general pattern that larger increases in the health spending share of GDP generally occur during or just after periods of economic recession. Despite the overall slowdown in national health spending growth, increases in this spending continue to outpace growth in the resources available to pay for it.

Health care spending by households grew 4.3 percent in 2008, a deceleration from 5.9 percent growth in 2007. Despite the slowdown, households’ health spending growth in 2008 still outpaced adjusted personal income growth of 2.7 percent.

http://content.healthaffairs.org/cgi/content/abstract/29/1/147

Although some members of the media are celebrating the lowest rate of health care spending growth in almost half of a century, a full reading of this report is sobering.

While Congress has been desperately searching for policies to slow the rate of health care spending, not even one of the worst mechanisms for reducing spending – clobbering our economy with a recession – was capable of preventing a further encroachment of our national health expenditures (NHE) on our total gross domestic product (GDP), increasing from 15.9 percent to 16.2 percent of the GDP.

It is difficult to imagine a more effective mechanism of controlling spending than to wallop our paychecks, even if not a first choice of the policy makers. Median household income fell 3.6 percent between 2007 and 2008. Yet household health care spending in 2008 still grew by 4.3 percent, even more than the 3.8 percent inflation rate for that year (which declined to 1.8 percent in 2009).

If a major hit to the economy is not going to bring our NHE under control, then how can we expect the pilot programs and the other weak cost-containment measures in the bills currently in conference to have any real impact?

The only provision that could have a major impact is the proposed Independent Medicare Advisory Board (Sec. 3402 of the Senate bill), but only if its provisions were to apply to our entire NHE. But they won’t. It’s purpose is to “reduce the per capita rate of growth in Medicare spending.” Its independent power to set the rules for Medicare spending is not extended to control over the private insurance plans.

Physicians and hospital administrators are already concerned about Medicare reimbursement rates. With spending growth in the private sector continuing to outpace the growth of the economy, it might be expected that many health care providers would walk away from the close-to-frozen prices established by the public programs, in a quest for the more lucrative rates in the private sector.

The problem of intolerable increases in our health care spending must be addressed, not just for the government, but for all of us – individuals and businesses. The current legislation feeds the rapacious appetite of the private insurance industry while threatening the stability of our most prized public health program – Medicare.

What if we had an improved Medicare program that covered everyone? An independent Medicare advisory board would certainly put the skids on spending, but not to the extent of threatening the stability of the program. Besides, don’t we want our representatives to stand up for us to be sure that our health care is not priced out of our reach? It already is for many of us, and will still be for all too many under the bills before Congress. It wouldn’t be under a single payer Medicare for all program.

Uwe Reinhardt on whether community rating is fair

Posted by on Monday, Jan 4, 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.

Is ‘Community Rating’ in Health Insurance Fair?

By Uwe E. Reinhardt
The New York Times, Economix
January 1, 2010

One controversial feature of the health reform bill winding its way through Congress is “community rating.” The term has a mellow ring but is apt to be divisive.

“Community rating” refers to the practice of charging a common premium to all members of a heterogeneous risk pool who may have widely varied health spending for the year. It inevitably makes chronically healthy individuals subsidize with their insurance premiums (rather than through overt taxes and transfers) the health care used by chronically sicker individuals.

The purpose of any insurance, of course, is to do precisely that: redistribute the financial burden from the unlucky to the lucky members of a risk pool.

(Professor Reinhardt then provides calculations for an example of two cohorts, A and B, representing populations segregated into two pools with different risks, as is characteristic of our price-competitive market for individually sold health insurance.)

Would it be “fair” that the healthy individuals of cohort A pay a pure insurance premium of only $2,450 a year, while the sicker citizens in cohort B must pay $6,600? This is, after all, how health insurance now is priced in most states for individuals.

Or does “fairness” require that the two groups be merged into one large national risk pool A & B, whose risk profile is shown in the right-most column of the table. If each member of this merged pool is to pay the same pure premium, then the latter will have to be $4,525 to break even. Such a premium would be said to be “community rated” over these two distinct risk pools.

Relative to their premium in a perfectly risk-segregated market, the community-rated premium of $4,525 will cost members of low-risk cohort A $2,075 more and the sicker members of cohort B $2,075 less than they would have paid in a risk-segregated market. Is that “fair”?

So what should the political leaders of this imaginary country do? It would be interesting to have your reaction. It is, after all, the very question our political leaders are tackling this moment.

Should you choose to respond, would you indicate your age?

(You can post a response by clicking on “Post a Comment” at the end of the full article at the following link. You can also recommend specific responses.)

http://economix.blogs.nytimes.com/2010/01/01/is-community-rating-in-health-insurance-fair/

Posted response of Don McCanne, San Juan Capistrano, CA (response # 9):

One of the more obvious examples of this dilemma is the disagreement as to the premiums that should be charged for the healthier population in their twenties as opposed to the less healthy population, on average, in their fifties and early sixties. Congress has already decided that strict community rating through a single premium for everyone will not apply to age differences, but they remain conflicted as to how much of a transfer will occur from the younger healthier individuals to the older less healthy individuals. They seem to believe that the concept of such a transfer is “fair,” but they are not in agreement as to what level of transfer exceeds their concept of fairness.

My wife and I are in our seventies and benefit from Medicare, a program in which there is a transfer to us from those in their twenties, many of whom are uninsured. Is that fair?

Of course the issue is further complicated by our nation’s very high health care costs since there is a need to transfer from the wealthy to lower income individuals, if, in fact, we agree that we should have a financing system that allows everyone to have the essential health care that they need. The many other complexities introduced by our fragmented health financing system, using public and private sources, complicates the process of finding the right premium for the right coverage, for the right amount of cost sharing, with the right amount of subsidies to support the premiums and the cost sharing.

With our unique health financing system already overburdened with profound administrative waste, it doesn’t seem rational to try to expand coverage by assigning inevitably inequitable premiums to benefit packages within fragmented private plan risk pools. That just adds to the complexities, inequities and administrative waste.

It would be much more efficient and equitable to remove the risk bearing function from the private insurers, thereby eliminating premiums, and replace our dysfunctional health care financing system with a single universal risk pool covering everyone. Each person would pay into the pool their fair share, based on ability to pay, by funding it through progressive taxes.

This could easily be accomplished through an improved Medicare for all. But some may not consider this fair either if they reject the concept of social solidarity, the concept on which community rating is based.

The New York Times doesn’t get it

Posted by on Wednesday, Dec 30, 2009

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.

This editorial from today’s edition of The New York Times makes their case for supporting the current health reform legislation before Congress. The responses of Don McCanne, MD are in red and bracketed with ***.

The Case for Reform

Editorial
The New York Times
December 29, 2009

Reforming this country’s broken health care system is an urgent and essential task.

*** Absolutely! ***

Given all of the fabrications and distortions from Republican critics, and the squabbling among Democratic supporters, it is no surprise that many Americans still have doubts.

*** Unfortunately, the Republicans are handicapped by their ideological opposition to government solutions for social problems. Their proposal for a free market of cheap underinsurance products sold across state lines would only make problems worse by further impairing the effectiveness of our current inadequate and inequitable risk pools. The squabbling of the Democrats is based on a disagreement over whether to take the bold step of providing a truly effective universal public insurance program, such as an improved Medicare for everyone, or to take what some believe to be the politically expedient step of trying to modify our current dysfunctional system, even though it means falling far short of the goals of universality and affordability. ***

President Obama and Democratic leaders have a strong case. They need to make it now.

*** They have a very weak case. President Obama and the Democratic leadership chose to try to modify our current dysfunctional system, leaving tens of millions without insurance and perpetuating the financial hardships faced by many who need health care. ***

Here are compelling reasons for all Americans to root for the reform effort to succeed and urge Congress to complete the job:

THE HEALTH OF MILLIONS OF AMERICANS

The fact that 46 million people in this country have no health insurance should be intolerable. Every other major industrial country guarantees health coverage to its citizens, yet the United States, the richest of them all, does not.

*** The current proposal would leave close to 20 million people without insurance, a number that is destined to increase as health care costs continue to rise. Supporting a policy that ensures that so many will continue to be without health insurance is what should not be tolerated. A public insurance program is designed to automatically cover everyone. ***

Claims that the uninsured can always go to an emergency room for charity care ignore the fact that American taxpayers pay a high price for that care. And it ignores the abundant evidence that people who lack insurance don’t get necessary preventive care or screening tests, and suffer gravely when they finally do seek treatment because their diseases have become critical.

*** The modest marginal cost of providing care for additional patients in the emergency room is not a major issue. The crucial problem is the deterioration of our primary care infrastructure that is required to provide individuals with a source of seamless continuing care. The proposed legislation does take some important steps toward addressing this serious deficiency, but they would be much more effective with a single, unified financing system integrated with our health care delivery system. ***

The American Cancer Society now says the greatest obstacle to reducing cancer deaths is lack of health insurance. It is so persuaded of that fact that two years ago, instead of promoting its antismoking campaign or publicizing the need for cancer screening, it devoted its entire advertising budget to the problem of inadequate health insurance coverage.

*** We previously commended the American Cancer Society for taking this forward-thinking position. ***

We consider it a moral obligation and sound policy to provide health insurance to as many people as possible. While the pending bills would fall short of complete coverage, by 2019, the Senate bill would cover 31 million people and the House bill 36 million who would otherwise be uninsured under current trends.

*** It is both a moral obligation and sound policy to provide health insurance for everyone, which a universal public insurance program would do. The design of the current proposal is both immoral and unsound because it leaves an intolerable number of individuals uninsured – a number close to two-thirds of the population of Canada. We may criticize Canada’s queues, but we would be outraged if they prohibited two-thirds of their population from even having a place in the queues. Why is there no outrage here when we would leave a similar number without coverage? ***

MORE SECURITY FOR ALL

Horror stories abound of people — mainly those who buy individual policies — who were charged exorbitant premiums or rejected because of pre-existing conditions or paid out for years and then had their policies rescinded when they got sick.

Such practices would be prohibited completely in three or four years under the reform bills. Before that, insurers would be barred from rescinding policies retroactively and the bills would establish temporary high-risk pools to cover people with pre-existing conditions.

*** Although private insurers have been appropriately condemned for using trivial reasons to rescind policies, many rescissions were for the legitimate reason (legitimate in a business sense) that individuals who were uninsured and then developed serious problems purchased coverage without reporting their newly acquired problem – a form of fraud. That defeats the insurance function of pooling all of the healthy in with the sick. The proposal before Congress still permits rescissions for fraud. This problem would totally disappear in a public financing system in which enrollment for life is automatic. Also, the experience with high-risk pools to date has been very dismal. The need for high-risk pools would be eliminated by a single public universal risk pool. ***

The legislation would also allow unmarried dependent children to remain on their parents’ policies until age 26 (the Senate version) or age 27 (the House version).

*** What do they do at 26 or 27? Would everyone at that age have a great job with generous employer-sponsored benefits? If not, would they be eligible for plans in the exchange, and could they afford their portion of premiums and out-of-pocket expenses that is estimated to be about 20 percent of their income? Again, this problem would disappear in an equitably-financed public program in which everyone is automatically enrolled for life. ***

If reform legislation is approved, employees enrolled in group coverage at work would also be more secure. If workers are laid off — an all too common occurrence these days — and need to buy policies on their own, insurers would be barred from denying them coverage or charging exorbitant premiums for health reasons.

*** Just like COBRA, laid-off employees who no longer have a paycheck must then pay the full insurance premium that was formerly heavily subsidized by their employers. Partial subsidies are not adequate for a person with no paycheck. Even if eligible for the backup of Medicaid, shifting in and out of programs is disruptive to care. ***

CUTTING COSTS

Americans are justifiably concerned about the rising cost of health insurance and of the medical care it covers. The reform bills won’t solve these problems quickly, but they would make a good start.

*** The reform bills do not solve the problem of rising costs, and they don’t even make a good start. The proposals for accountable care organizations and bundling of payments create nightmare logistical problems that are dismissed as something we can figure out later. The excise tax on higher-premium plans will result in diminished benefits, shifting more of the financial responsibility to those individuals who need care and are already burdened with excessive out-of-pocket expenses. As health care costs continue to increase, more plans will be pared of benefits in order to avoid the excise tax. Making essential health care less affordable is a perverse policy proposal. Strengthening the power of an independent MedPAC-like board to reduce spending only within the Medicare program threatens to diminish the support of those in the health care delivery system who already feel threatened by what they perceive to be already low reimbursement rates. Price discrimination is a major problem in our dysfunctional financing system, but it cannot be adequately addressed by a payment advisory board limited to Medicare. Although the current proposal would look at the private sector, it would have no power nor even the ability to slow cost increases in the private sector. Under a universal public financing program, the board would be able to recommend measures to improve resource allocation for our entire health care delivery system, while balancing the demands of patients, health care providers and taxpayers. ***

Despite overheated Republican claims that the reforms would drive up premiums, the Congressional Budget Office projected that under the Senate bill the vast majority of Americans (those covered by employer policies) would see little or no change in their average premiums or even a slight decline. Those who buy their own policies would pay somewhat more — but for greatly improved coverage.

*** Except for a few regulatory requirements for the insurance industry, most Americans will see no improvement. They will continue to be burdened with ever higher health care costs, reflected in higher premiums and greater out-of-pocket cost sharing. Being guaranteed the right to buy insurance is of little consolation for those who can’t pay for it. Those in the individual market are often uninsured because they can’t afford the stripped-down plans currently available. Requiring greater benefits makes these plans even less affordable. The inadequacy of the proposed subsidies which are limited to plans purchased through the exchange will provide little consolation for those who are not eligible for or who cannot afford the plans in the exchange. A universal public system equitably financed based on ability to pay would eliminate the need for individual or employer-sponsored private plans. ***

Most people who would be buying their own policies would qualify for tax subsidies to help pay their premiums, which could reduce their costs by thousands of dollars a year. And small businesses would qualify for tax credits to defray the cost of covering their workers.

*** The primary reason to propose tax subsidies is to keep the insurance industry alive. It is much less efficient than establishing a single universal risk pool financed by equitable taxes. Furthermore, the proposed subsidies would leave all but the wealthiest of us exposed to a potential obligation to pay about 20 percent of our incomes for health care. That is a burden that most would find very difficult to bear. ***

The inexorably rising cost of hospital and medical care is the underlying factor that drives up premiums, deductibles and co-payments. No one yet has an answer to the problem.

*** Balderdash! All sane economists agree that a single payer monopsony would solve the problem. Conservative economists might not like a government solution, but they agree that it would actually work. It’s time for the practitioners of the dismal science of economics to engage in normative economics. These are not only numbers we’re dealing with; they are about the lives and well being of people. ***

But the bills would launch an array of pilot projects to test new payment and health care delivery systems within Medicare. These include, for example, incentives to coordinate hospital and post-hospital care to head off needless readmissions, better coordination of care for the chronically ill, and incentives for doctors to provide a patient’s total care for a flat fee instead of charging for each test or service provided.

*** Continual improvement in health care delivery is an important goal, but it is in no way unique to the current legislative proposal. A single payer monopsony would have a greater capability of realigning incentives for optimal care. ***

The Senate bill would set up an independent board to spur the use of programs that save money or improve care — subject to Congressional veto. Optimists believe the savings might come quickly but this could still take many years. Without passing a reform bill, there is little chance of success.

*** See the first comment under “cutting costs.” ***

THE TIME HAS COME

For decades, presidents from both parties have tried in vain to reform the health care system and cover the uninsured. Still many Americans wonder, given the deep recession, whether it makes sense to do it now. The first thing to keep in mind is that the C.B.O. says that the reform bills are paid for over the next 10 years and would actually reduce future deficits.

The need is clear and the political timing is right with the Democrats controlling the White House, the Senate and the House. If this chance is squandered and Republicans gain seats, as expected, in the midterm elections, it could be a decade or more before reformers have another opportunity. Americans shouldn’t have to wait any longer.

*** Most of the major features of this legislation are not scheduled to begin for years, yet we are told that it is urgent that we pass this bill within the next several weeks. The urgency is not based on sound health policy but is based on the political goal of proving President Obama and the Democrats with a political victory well in advance of the next elections. That might be good politics, but it is an unforgivable neglect of duty that is being committed by our public stewards. The policies of a single payer Medicare for all program are much less complex than the dysfunctional model being foisted off on us with the misnomer of reform. Because of the toll of financial hardship, physical suffering and even death, there is urgency in the need to act. But we can act now and have the program fully up and running long before the dates proposed in the current legislation. The New York Times says that we are squabbling, by definition arguing about trivial matters. Racking up a political victory on the scorecard is trivial. Doing that while glibly accepting a system that will leave so many broke and uninsured is unconscionable. ***

NYT editorial, The Case for Reform: http://www.nytimes.com/2009/12/30/opinion/30wed2.html

The New Yorker’s James Surowiecki on no need for private insurers

Posted by on Tuesday, Dec 29, 2009

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.

Fifth Wheel

by James Surowiecki
The New Yorker
January 4, 2010

The wayward, patchwork plan that we seem likely to end up with is probably a good reflection of the wayward, patchwork opinions that most legislators have on the subject.

So where’s the contradiction? Well, Congress’s support for community rating and universal access doesn’t fit well with its insistence that health-care reform must rely on private insurance companies. After all, measuring risk, and setting prices accordingly, is the raison d’être of a health-insurance company. The way individual insurance works now, risk and price are linked.

This kind of risk evaluation — what’s called “medical underwriting” — is fundamental to the insurance business. But it is precisely what all the new reform plans will ban. Congress is effectively making private insurers unnecessary, yet continuing to insist that we can’t do without them.

The truth is that we could do just fine without them: an insurance system with community rating and universal access has no need of private insurers. In fact, the U.S. already has such a system: it’s known as Medicare. In most areas, it’s true, private companies do a better job of managing costs and providing services than the government does. But not when it comes to health care: over the past decade, Medicare’s spending has risen more slowly than that of private insurers. A single-payer system also has the advantage of spreading risk across the biggest patient pool possible. So if you want to make health insurance available to everyone, regardless of risk, the most sensible solution would be to expand Medicare to everyone.

That’s not going to happen. The fear of government-run health care, the power of vested interests, and the difficulty of completely overhauling the system have made the single-payer solution a bridge too far for Washington.

http://www.newyorker.com/talk/financial/2010/01/04/100104ta_talk_surowiecki

So James Surowiecki joins the chorus of those of us who say that we have no need for private insurers and their unwanted service of segregating risk and setting prices accordingly, and that the most sensible solution would be to expand Medicare to everyone.

Yet he echoes the words of our progressive legislators when they first commend and then dismiss the Medicare for all model with the non sequitur, “That’s not going to happen.”

Time for our activism to reach a crescendo. We need to make it happen!

David Brooks on single payer

Posted by on Monday, Dec 28, 2009

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 Roundtable

This Week, ABC News
December 27, 2009

David Brooks: I don’t oppose it (health care reform act) because I want to step on the necks of the poor, as you could say. I oppose it, and it’s a close call for me, because we used to spend 10 percent of our GNP on health care, now it’s 17, soon it’ll be 20, 22, more on health care, less on education, less on infrastructure, less on investment, less on everything else. This bill will do absolutely nothing. It will slightly increase the amount of money we spend on health care. So what could you do politically to do something about that? Well, I wouldn’t mind a single payer. Frankly I prefer a single payer to what we have now, because that actually would control costs. My preferred option though would be to give consumers choice (Enthoven, Wyden-Bennett).

http://abcnews.go.com/video/playerIndex?id=9428760

On controlling costs, conservative but credible New York Times columnist David Brooks tells us, quite accurately, that this bill will do nothing. As he says, “Frankly I prefer a single payer to what we have now because that actually would control costs.”

Admittedly it is difficult to follow him on the leap from single payer to a consumer-based approach. Single payer helps get people the care they need while controlling costs. Consumer-based health plan choices control costs by erecting financial barriers to care.

Maybe he doesn’t want to step on their necks, but a consumer directed choke collar (demand side control) does seem less humane than optimal single payer resource management (supply side control).

Private insurers, Wall Street, Tiny Tim, and my granddaughter

Posted by on Wednesday, Dec 23, 2009

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.

3 Stocks Soaring on Health-Care Bill

By Jack Hough
SmartMoney
December 22, 2009

America is getting augmented health care for Christmas, it seems. But of course, whether the changes count as reform is a matter of opinion.

Michael Cannon, director of health policy studies for the Cato Institute, a think tank that calls itself libertarian, wrote that the bill is… “a massive $450 billion bailout for private insurance companies that will drive health insurance premiums and taxes higher…”

Insurer shares, in particular, are zooming. There are three reasons. First, stripped from the Senate bill is the so-called public option — a government health plan that threatened to undersell private insurers. Second, a proposed $6.7 billion industry tax is now likely to be phased in only gradually beginning in 2011, which should give health plans enough time to raise prices accordingly. Third, individuals will be required to purchase insurance — a fine deal for insurance sellers — although critics say the penalties for noncompliance are weak, suggesting many individuals will prefer to remain uninsured.

Below are three health-care companies whose shares are soaring…

Aetna
Stock gain since end of October: 31%

Cigna
Stock gain since end of October: 29%

WellPoint
Stock gain since end of October: 28%

http://www.smartmoney.com/investing/stocks/3-stocks-soaring-on-healthcare-bill/

And…

Health Care Stocks Booming

The Kudlow Report
CNBC
December 17, 2009

Larry Kudlow: I want health care to grow. I want government health care to be limited. I want our private health care to grow and soar with technology and baby boomers and rising incomes. I want health care to be a third of the economy. I just don’t want all this taxing and spending.

http://www.cnbc.com/id/15840232?video=1362269505

Many individuals, including single payer supporters, disagree with the decision of PNHP’s leadership to oppose the reform bill currently before Congress. There are two basic issues that need to be sorted out: 1) the beneficial measures in the bill, and 2) the structure of the financing system.

The beneficial measures, such as expanding community health centers and reinforcing our primary infrastructure, we support. These measures, several of which were independent bills added into the omnibus package, should be taken out and immediately enacted separately.

The expansion of health care financing, based on private health plans, is quite another matter. In spite of the various pilot proposals in the legislation, health care costs are expected to continue to increase at rates well in excess of the growth of the GDP.

The only truly effective way to control the growth in government spending that would result from the subsidies used to purchase the private plans would be to allow the subsidies to increase at a slower rate than the rate of increases in the premiums (and the proposed indexing would do that). That shifts more of the premium costs to the individuals. The only truly effective way that the increase in spending on insurance premiums can be slowed is to shift more of the costs to out-of-pocket expenses for individuals who need health care (and the low actuarial values in the legislation would do that).

The proposal begins with a financial burden that is so great for middle and upper-middle income individuals and families that tens of millions will not be able to afford coverage. The private insurance model crafted will continue to expand that burden, adding more to the ranks of the uninsured, whereas underinsurance will have become the national standard (because of the low actuarial values). After another decade or two of this we may be ready for reform that works, but at the cost of tremendous unnecessary suffering and grief.

If you enjoy suffering and grief, then support the bill before Congress. As Larry Kudlow says, let’s make health care one-third of the economy, but without all the taxing and spending. Look how well it’s working for Aetna, Cigna and WellPoint. The private insurance-based bill will work just fine, providing we tell Tiny Tim and the others like him to go to hell.

A personal note:

Obviously I’m angry. I’m especially annoyed with our friends who should know better who keep telling us that we will have nothing if this bill fails, or that we are letting the perfect be the enemy of the good, or that our second choice is the status quo, or the rest of the crap that provides them with an excuse for being strange bedfellows with the private insurance industry.

Right now I’m especially emotional. Today is our granddaughter’s tenth birthday. She was recently in intensive care with newly diagnosed Type I diabetes. Decisions now about how birthday cake will fit into her medical regimen are hardly a glimmer of the future she faces.

When we inevitably depart, my wife and I want to know that we have in place a quality health care system that will always be there for our granddaughter when she needs it. It’s what any of us would want for our loved ones. Since she herself likely will never have to face rationing based on ability to pay, I feel comfortable that she will receive the care that she should have.

But what about the others? What about hard working American families who will not be able to afford the private insurers’ ticket to health care? What patchwork system will they have to take care of their ten year old granddaughter with newly diagnosed diabetes? I want a quality system to be there for them as well, and for everyone.

We can no longer allow the mediocre to be the enemy of the perfect. We know how to fix our dysfunctional health care system, and we can do it now. If you’re not ready to support that, then you go to hell!

And… oh yes… Merry Christmas!

Legislation ‘would bring more harm than good,’ group says

For Immediate Release

Dec. 22, 2009

Contact:
David Himmelstein, M.D.
Steffie Woolhandler, M.D., M.P.H.
Oliver Fein, M.D.
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

A national organization of 17,000 physicians who favor a single-payer health care system called on the U.S. Senate today to defeat the health care legislation presently before it and to immediately consider the adoption of an expanded and improved Medicare-for-All program.

While noting that the Senate bill includes some “salutary provisions” like an expansion of Medicaid, increased funding for community clinics and the curbing of some of the worst practices of the private insurance industry, the group says the negatives in the bill outweigh the positives.

The negatives, the group says, include the individual mandate requiring that people buy private insurance policies, large government subsidies to private insurers, new restrictions on abortion, the unfair taxing of high-cost health plans, and cuts of $43 billion in Medicare payments to safety-net hospitals. Moreover, at least 23 million people will remain uninsured when the plan finally takes effect, they said.

“We have concluded that the Senate bill’s passage would bring more harm than good,” the group said in a statement signed by its president, Dr. Oliver Fein, and two co-founders, Drs. David Himmelstein and Steffie Woolhandler.

Addressing the Senate in an open letter, they write: “We ask that you defeat the bill currently under debate, and immediately move to consider the single-payer approach – an expanded and improved Medicare-for-All program – which prioritizes the advancement of our nation’s health over the enhancement of private, profit-seeking interests.”

The full statement appears below.

To the Members of the U.S. Senate:

It is with great sadness that we urge you to vote against the health care reform legislation now before you. As physicians, we are acutely aware of the unnecessary suffering that our nation’s broken health care financing system inflicts on our patients. We make no common cause with the Republicans’ obstructionist tactics or alarmist rhetoric. However, we have concluded that the Senate bill’s passage would bring more harm than good.

We are fully cognizant of the salutary provisions included in the legislation, notably an expansion of Medicaid coverage, increased funds for community clinics and regulations to curtail some of private insurers’ most egregious practices. Yet these are outweighed by its central provisions – particularly the individual mandate – that would reinforce private insurers’ stranglehold on care. Those who dislike their current employer-sponsored coverage would be forced to keep it. Those without insurance would be forced to pay private insurers’ inflated premiums, often for coverage so skimpy that serious illness would bankrupt them. And the $476 billion in new public funds for premium subsidies would all go to insurance firms, buttressing their financial and political power, and rendering future reform all the more difficult.

Some paint the Senate bill as a flawed first step to reform that will be improved over time, citing historical examples such as Social Security. But where Social Security established the nidus of a public institution that grew over time, the Senate bill proscribes any such new public institution. Instead, it channels vast new resources – including funds diverted from Medicare – into the very private insurers who caused today’s health care crisis. Social Security’s first step was not a mandate that payroll taxes which fund pensions be turned over to Goldman Sachs!

While the fortification of private insurers is the most malignant aspect of the bill, several other provisions threaten harm to vulnerable patients, including:

* The bill’s anti-abortion provisions would restrict reproductive choice, compromising the health of women and adolescent girls.

* The new 40 percent tax on high-cost health plans – deceptively labeled a “Cadillac tax” – would hit many middle-income families. The costs of group insurance are driven largely by regional health costs and the demography of the covered group. Hence, the tax targets workers in firms that employ more women (whose costs of care are higher than men’s), and older and sicker employees, particularly those in high-cost regions such as Maine and New York.

* The bill would drain $43 billion from Medicare payments to safety-net hospitals, threatening the care of the 23 million who will remain uninsured even if the bill works as planned. These threatened hospitals are also a key resource for emergency care, mental health care and other services that are unprofitable for hospitals under current payment regimes. In many communities, severely ill patients will be left with no place to go – a human rights abuse.

* The bill would leave hundreds of millions of Americans with inadequate insurance – an “actuarial value” as low as 60 percent of actual health costs. Predictably, as health costs continue to grow, more families will face co-payments and deductibles so high that they preclude adequate access to care. Such coverage is more akin to a hospital gown than to a warm winter coat.

Congress’ capitulation to insurers – along with concessions to the pharmaceutical industry – fatally undermines the economic viability of reform. The bill would inflate the already crushing burden of insurance-related paperwork that currently siphons $400 billion from care annually. According to CMS’ own projections, the bill will cause U.S. health costs to increase even more rapidly than presently, and budget neutrality is to be achieved by draining funds from Medicare and an accounting trick – front-loading the new revenues while delaying most new coverage until 2014. As homeowners seduced into balloon mortgages have learned, pushing costs off to the future is neither prudent nor sustainable.

We ask that you defeat the bill currently under debate, and immediately move to consider the single-payer approach – an expanded and improved Medicare-for-All program – which prioritizes the advancement of our nation’s health over the enhancement of private, profit-seeking interests.

Oliver Fein, M.D., President
David U. Himmelstein, M.D., Co-founder
Steffie Woolhandler, M.D., M.P.H., Co-founder
Physicians for a National Health Program

************

Physicians for a National Health Program is an organization of 17,000 doctors who advocate for single-payer national health insurance. To contact a physician-spokesperson near you, visit www.pnhp.org/stateactions or call (312) 782-6006.

PNHP’s Letter to the Members of the Senate

Posted by on Tuesday, Dec 22, 2009

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.

Physicians for a National Health Program
December 22, 2009

To the Members of the U.S. Senate:

It is with great sadness that we urge you to vote against the health care reform legislation now before you. As physicians, we are acutely aware of the unnecessary suffering that our nation’s broken health care financing system inflicts on our patients. We make no common cause with the Republicans’ obstructionist tactics or alarmist rhetoric. However, we have concluded that the Senate bill’s passage would bring more harm than good.

We are fully cognizant of the salutary provisions included in the legislation, notably an expansion of Medicaid coverage, increased funds for community clinics and regulations to curtail some of private insurers’ most egregious practices. Yet these are outweighed by its central provisions – particularly the individual mandate – that would reinforce private insurers’ stranglehold on care. Those who dislike their current employer-sponsored coverage would be forced to keep it. Those without insurance would be forced to pay private insurers’ inflated premiums, often for coverage so skimpy that serious illness would bankrupt them. And the $476 billion in new public funds for premium subsidies would all go to insurance firms, buttressing their financial and political power, and rendering future reform all the more difficult.

Some paint the Senate bill as a flawed first step to reform that will be improved over time, citing historical examples such as Social Security. But where Social Security established the nidus of a public institution that grew over time, the Senate bill proscribes any such new public institution. Instead, it channels vast new resources – including funds diverted from Medicare – into the very private insurers who caused today’s health care crisis. Social Security’s first step was not a mandate that payroll taxes which fund pensions be turned over to Goldman Sachs!

While the fortification of private insurers is the most malignant aspect of the bill, several other provisions threaten harm to vulnerable patients, including:

* The bill’s anti-abortion provisions would restrict reproductive choice, compromising the health of women and adolescent girls.

* The new 40 percent tax on high-cost health plans – deceptively labeled a “Cadillac tax” – would hit many middle-income families. The costs of group insurance are driven largely by regional health costs and the demography of the covered group. Hence, the tax targets workers in firms that employ more women (whose costs of care are higher than men’s), and older and sicker employees, particularly those in high-cost regions such as Maine and New York.

* The bill would drain $43 billion from Medicare payments to safety-net hospitals, threatening the care of the 23 million who will remain uninsured even if the bill works as planned. These threatened hospitals are also a key resource for emergency care, mental health care and other services that are unprofitable for hospitals under current payment regimes. In many communities, severely ill patients will be left with no place to go – a human rights abuse.

* The bill would leave hundreds of millions of Americans with inadequate insurance – an “actuarial value” as low as 60 percent of actual health costs. Predictably, as health costs continue to grow, more families will face co-payments and deductibles so high that they preclude adequate access to care. Such coverage is more akin to a hospital gown than to a warm winter coat.

Congress’ capitulation to insurers – along with concessions to the pharmaceutical industry – fatally undermines the economic viability of reform. The bill would inflate the already crushing burden of insurance-related paperwork that currently siphons $400 billion from care annually. According to CMS’ own projections, the bill will cause U.S. health costs to increase even more rapidly than presently, and budget neutrality is to be achieved by draining funds from Medicare and an accounting trick – front-loading the new revenues while delaying most new coverage until 2014. As homeowners seduced into balloon mortgages have learned, pushing costs off to the future is neither prudent nor sustainable.

We ask that you defeat the bill currently under debate, and immediately move to consider the single-payer approach – an expanded and improved Medicare-for-All program – which prioritizes the advancement of our nation’s health over the enhancement of private, profit-seeking interests.

Oliver Fein, M.D., President
David U. Himmelstein, M.D., Co-founder
Steffie Woolhandler, M.D., M.P.H., Co-founder
Physicians for a National Health Program

http://www.pnhp.org/news/2009/december/pro-single-payer-physicians-call-for-defeat-of-senate-health-bill

reform (noun): 1) amendment of what is defective, vicious, corrupt, or depraved, 2) a removal or correction of an abuse, a wrong, or errors (Merriam-Webster)

In this day when cognitive processes are often displaced by political sound bites, we are likely to hear that PNHP IS AGAINST REFORM!

That is the exact opposite of the truth. PNHP has long advocated for reform that will bring everyone the health care that they need without being exposed to financial hardship.

But we want real reform. We want to replace the “defective, vicious, corrupt, and depraved” private insurance industry with a proven model that will work: an expanded and improved Medicare-for-All program.

For those who say that there are too many beneficial features in this bill that we can’t afford to pass up, our response is that we can pull those out and enact them immediately.

For those who say that we can’t do it because of politics, our response is that then we must change the politics.

Absolutely everyone agrees that the legislation before Congress falls far short of what we need. On the other hand, a great many agree that an expanded and improved Medicare-for-All program is precisely what we need. If it were already in place, Americans would be aggressively protecting it, just as our seniors are protecting our current Medicare program.

So when people grumble that PNHP is not a team player, you can respond by saying that’s because PNHP DEMANDS REFORM!

The wisdom of a legislated medical loss ratio

Posted by on Monday, Dec 21, 2009

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.

Democrats Move To Regulate How Insurers’ Spend Customers’ Money

By Julie Appleby
Kaiser Health News
December 20, 2009

Both the House measure and the newly recast Senate bill would force insurers to spend the vast majority of premium revenue on medical care for their customers, reducing the amount available for profits, executive salaries, sales and administration. The Senate bill would require insurers to spend at least 80 percent on medical care and quality improvements (85 percent minimum for plans sold to large groups), while the House bill specifies 85 percent.

Congressional supporters say those provisions would pressure insurance companies to be more efficient and help restrain price increases. But even some advocates say companies could game the system by broadly defining medical costs, for example. And spending limits alone may not stop insurers from raising rates. When New York State tried to limit non-medical care spending, many insurers companies complied – but still instituted double-digit rate increases.

http://www.kaiserhealthnews.org/Stories/2009/December/20/insurers.aspx

If we are serious about providing everyone with health care while controlling costs, it is imperative that we reduce the profound administrative waste of our current fragmented system of financing health care.

Insurers consume typically about 18 percent of premium dollars (range 8 to 30 percent or sometimes even 50 percent), and they place an administrative burden on physicians and hospitals that consumes another 12 percent or so of the premium dollar. Thus about one-fourth to one-third of premiums paid to private insurers are largely wasted on just the administration of the health care finances. A single, universal, publicly-administered program can provide the same or better financing services for a small fraction of that level of administrative spending.

Congress and the Obama administration understand this waste, so what do they propose? They are going to limit the private insurers take of the premium to 15 to 20 percent, not much different from the typical 18 percent they are already consuming. And they will do very little to reduce the administrative burden placed on physicians and hospitals (suggesting that they use computers for billing, which they already do). Change we can believe in? Not much change here.

At our nearly intolerable level of health care spending, reducing this waste should have been one of the highest priorities during the reform process. It is unthinkable that we would allow the private insurance industry to continue to skim off a major portion of our health care dollars while inflicting this costly burden on the health care delivery system. Unthinkable, but that’s exactly what Congress is doing.

Think a moment about the irony of Congress’s decision to set in stone a medical loss ratio of 80 to 85 percent, meaning that they must spend that amount on patient care. That means that they have an ironclad guarantee, written into law, that they can keep 15 to 20 percent of the premiums they receive – our health care dollars.

Think of what that means. Though a public financing program is designed to use our dollars efficiently through a public service model, private insurer financing is designed on a business model. That business model dictates that they do everything possible to maximize revenues and, of course, profits for the investor-owned companies.

By fixing the insurers’ cut at a percentage of gross premium revenues, they can no longer reach down into the funds allocated for patient care, preventing medical loss ratios in the 50 to 80 percent range. The actual net revenues for the insurers would be the 15 to 20 percent that they keep.

If they can’t glom on to more of the health care dollars actually spend on care, then how do they increase their revenues? Since their revenues are limited to a percentage based on how much is spent on health care, to increase their own net revenues they are highly incentivized to dramatically increase spending on health care! The more dollars they throw at health care, the more their net revenues grow since they receive a fixed percentage of all dollars spent.

Just imagine entrepreneurial innovation at work. They will encourage every imaginable program that they can label as patient care because they will receive a fixed percentage of the spending on those programs. Think of it: more expensive electronic medical records and information technology systems, more home health services with a motorized scooter for each level in the home, more costly high-tech services regardless of demonstrated value, higher-priced brand drugs instead of generics, six-figure biologics and cancer drugs, rewarding increased frequency and intensity of services, and, the clincher, blinders to the massive fraud that would be rewarded under this system!

The hurdle cleared by the Senate reform bill in the early morning hours today has made it quite likely that President Obama will be signing the bill within the next several weeks. This should not be construed as a signal for supporters of health care justice to go into hibernation!

There are many measures in this bill that will benefit the nation, but the fundamental structure of a dysfunctional, fragmented financing system based on private insurance plans is a disaster and cannot possibly achieve the goal of affordable, high quality care for everyone.

The mandate for individuals to purchase private health plans will not begin until 2014. We still have a window of opportunity to educate, intensify grassroots efforts, intensify coalition efforts, and get this thing fixed! But we can’t wait for four more years to recharge our activism. Get off your duffs now!

Senate speech heralds a new social movement
by Margaret Flowers and Andy Coates

This week the sincere effort of millions of people across the nation once again proved effective in the face of determined opposition from the White House and Congress, as single payer health reform reached another milestone in its historic journey.

When the Senate initiated its debate on health insurance reform, Senator Bernie Sanders offered a single-payer amendment, with co-sponsors Sherrod Brown and Roland Burris. Initially Senate Majority Leader Harry Reid skipped over it, allowing other amendments to come to the floor instead.

But nationwide events on International Human Rights Day, the delivery of paper “bodies” to the senate offices, non-violent civil disobiedience including nine arrests at Senator Schumer’s office, and hundreds of thousands of emails and phone calls and faxes to the Senate evidently changed Reid’s mind.

When Sanders introduced his amendment the Senator from Oklahoma, Dr. Coburn, rose according to the rules of the Senate to insist that the bill be read in full. It was estimated that reading the 767-page bill would take days and stall the Senate agenda.

We wondered: Could this be an unexpected gift? If Senator Lieberman could make an intransigent stand on behalf of the insurance companies, would Sanders make a stand on behalf of the people’s health?

Reading the bill would prompt our movement to swing into action yet again. We would invite the nation to tune in to C-SPAN to hear how a national single payer health system would provide comprehensive high-quality health care to all citizens. Yet Coburn’s maneuver had its effect.

Majority Leader Reid demanded that Sanders withdraw the amendment, for the Senate timetable leading up to Christmas could not be delayed. Besides insurance reform, there was the pressing issue of funding the wars. Within 3 hours Sanders agreed. In return he had 30 minutes on the floor.

Sanders’ speech was riveting. He spoke the words that we have been waiting to hear for so long. He spoke about the beauty and simplicity of Medicare for All. He spoke about having the courage to stand up to the medical-industrial complex which profits at the expense of human suffering.

Most importantly, Sanders spoke about the national movement for single payer being led by nurses, doctors, medical students, faith and labor organizations and people across the land of all backgrounds and beliefs. He declared that this strong movement is not going away and he announced that we will succeed.

So we will remember December 16th, 2009 as a turning point in the struggle for health care justice. Single payer started this year “off the table.” But the accumulating efforts of millions of people delivered it to the floor of the United States Senate.

To win single-payer health reform it will take many more speeches on the floor of Congress. And the only force that will propel Congress forward is a great social movement. In 2009 we have seen that movement rising up – and getting results.

Every day more people see that an effective and just health system is already at hand: a single-payer national health program modeled on the Medicare system. And every day that the White House and Congress delay single-payer reform, people suffer needlessly and die preventable deaths. Yet the Senate blunders on, with a colossal gift to the insurance industry.

It is time for the health of human beings to prevail. It is time to end the insurance cartel. Please join us us as we continue forge the movement that will win Medicare for All.

Onward to single payer.

Margaret Flowers is a pediatrician in Baltimore, co-chair of the Maryland chapter of Physicians for a National Health Program (PNHP) and PNHP Congressional Fellow. Andy Coates is an internist in Albany, secretary of the Capital District (NY) chapter of PNHP and co-chair of Single Payer New York.

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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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