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.

Does Ezra Klein really think “managed care didn’t kill anyone”?
by Kip Sullivan, JD

Get ready for the next liberal excuse for not supporting single-payer: Managed care. Yes, the managed care that infuriated the public with its limits on patient choice of doctor and its interference in the doctor-patient relationship, that induced merger madness throughout the health care industry, and that diminished the quality of care without lowering costs.

Managed care was to the 1990s what the “public option” has been to this decade – an excuse for “yes but” Democrats to turn away from single-payer. Now that it is clear the “public option” is not the politically feasible alternative to single-payer it was cracked up to be, look for “yes but” Democrats and their allies to resurrect managed care as their excuse for not supporting single-payer.

Exhibit A: Washington Post blogger Ezra Klein

The signs that “yes but” Democrats and groups like Health Care for America Now will soon be promoting a new and improved managed care are everywhere, including the legislation they are trying to pass in Congress. The most recent straw in the wind was a brazenly revisionist piece by “public option” advocate Ezra Klein. Klein’s December 7 post called managed care a “tremendous success.”

Klein actually wrote:

This [the 1990s] was the era of the managed-care revolution, which most remember as a horrifying failure. Famously, audiences applauded when Helen Hunt broke out into a profanity-laden rant against HMOs in the movie “As Good as It Gets.” The popular backlash was so intense that by the turn of the century the managed-care experiment was virtually over. The problem with this historic failure? The data showed the experiment to be a tremendous success.

What data might this be? Klein offers none.

Instead he offers this sleight-of-hand:

From 1989 to 1995, median wages actually fell a bit. Then, managed care kicked in. Annual growth in health-care costs fell from more than 10 percent in the early 1990s to less than 5 percent in the late ’90s. Meanwhile, wages shot through the roof, rising more than 11 percent from 1995 to 2000. Then we ended the managed-care experiment, and health-care costs resumed their normal speed of growth. Predictably, wages slumped back down from 2000 to 2006. “By every observable indicator,” says Harvard’s David Cutler, “managed care was a huge success. It cut spending, cut the growth of spending and didn’t seem to kill anyone. And yet everyone hated it.”

There are at least four errors in this sloppy and specious paragraph:

(1) Managed care in fact did inflict enormous harm on many patients;

(2) the test for whether a health care “reform” proposal is acceptable needs to be a tad higher than “it didn’t kill anyone”;

(3) managed care did not “kick in” in 1995, it did not disappear in 2000; and

(4) the evidence does not support Klein’s claim that managed care caused the temporary decline in the annual growth rate of health insurance premiums that occurred in the 1990s.

Managed care did great harm

Can you imagine the uproar that would ensue if a clinic urged patients to accept an unproven treatment or drug on the ground that it “didn’t seem to kill anyone”? Shouldn’t the standard for health care reform be as rigorous as the standards we expect health care professionals to meet? But instead of rejecting, or at minimum questioning, the remarks by David Cutler (who advised candidate Obama), Klein endorsed them.

Klein’s condescending remarks notwithstanding, the American public had good reason for its hostility to managed care. Managed care – a term that refers collectively to the cost-containment tools pioneered by HMOs in the early 1970s – applied to health care spending, particularly in the hospital and mental health sectors, particularly expenditures on patients least capable of defending themselves. The meat axe sliced away necessary medical expenditures as well as unnecessary expenditures.

Why don’t Klein and Cutler base their evaluations of managed care on the scientific literature that examines it? That literature shows managed care damaged quality of care. If they really don’t have time to do the necessary research, perhaps Klein and Cutler could steal a few seconds to take a look at this clip from “Sicko” in which a woman recounts how Kaiser Permanente (the prototype of the American managed care insurance company) delayed the treatment of her daughter until the little girl collapsed and died. If they still have some time left over to do further research, Klein and Cutler might take in this “Sicko” clip in which John Ehrlichman sells HMOs to Richard Nixon with the argument that “all the incentives are toward less medical care, because the less care they give them the more money they make.”

Managed care began in the early 1970s and is still with us

“Managed care” is a term that was first used in about 1985 to refer collectively to three tools pioneered by HMOs like Kaiser Permanente: financial incentives to induce doctors to order fewer services, “utilization review” (which means an insurance company bureaucrat second-guesses decisions made by doctors and patients), and limited choice of doctor and hospital. By the late 1980s the managed care armamentarium included a fourth tool: The threat to refuse to contract with uncooperative doctors, a threat which in the highly consolidated insurance industry could amount to blackballing a doctor from an entire metropolitan area or state.

Following the enactment of the HMO Act of 1973 (endorsed by Nixon as well as leading Democrats), managed care spread slowly throughout the insurance industry over the next decade, and then much more rapidly beginning in the mid-1980s. Managed care was so widespread by 1988 that a paper published in that year in the Journal of Health Politics, Policy and Law concluded, “It is estimated that virtually all third-party payers conduct or sponsor some type of utilization review.” (Danny Ermann, “Hospital utilization review: Past experience, future directions,” 1988;13:683-704). In a report entitled, Effects of Managed Care: An Update, the Congressional Budget Office reported, “In 1990, only 5 percent of people with employment-based health insurance were in unmanaged fee-for-service plans” (see page 9).

In short, the managed-care cancer began spreading in the early 1970s, and had taken over the entire American health insurance industry by 1990. It never “kicked in,” and it most definitely did not “kick in” in 1995.

Nor did managed care get switched off in 2000 as Klein asserts. It is true that in the late 1990s the insurance industry attempted to defuse the “HMO backlash” (which began in the latter half of 1995 and was in full bloom by 1996) by expanding the “networks” of providers patients could choose from, and by initiating a marketing campaign a few years later designed to persuade the public that the industry would forevermore engage in a kinder and gentler form of managed care. Because measuring the extent to which insurance companies use managed care tools is impossible to do accurately, it is difficult to say to what extent the industry actually changed its ways. It does appear that during the late 1990s and early 2000s the industry made less use of utilization review, the most visible and infuriating managed care tool, and relied more heavily on the less visible tool – financial incentives to deny medical services, including bonuses and penalties based on how well providers perform on crude “report cards.”

Managed care did not cause the 1991-1996 inflation lull

Between 1991 and 1996, annual inflation in health insurance premiums dropped precipitously, from 10.9 percent to 0.5 percent, before soaring back to the more usual annual rise of 5 to 10 percent. A large part of this drop was due to a historic 50-percent drop in the underlying (or economy-wide) inflation rate that began in 1991. But the reduction in health insurance premium inflation exceeded the reduction in underlying inflation. What caused this reduction?

The insurance industry and their allies claimed, precisely as Klein and Cutler do now, that the widespread use of managed care tools should get the credit. But those who made this claim could not cite any research showing that managed care in general, or any one of its tools in particular, saved money; they could only point to the rapid takeover of our health care system by managed care during the 1980s, and then the sudden decline in premium inflation beginning in 1991. What the research did show was that insurance companies that adopted managed care tactics tended to cut medical expenditures and drive up administrative costs, for a net effect of approximately no change in total costs.

So if managed care wasn’t the cause of the early 1990s inflation lull, what was? In a paper published in Health Affairs in 2000, I reviewed the evidence indicating managed care saved no money, and then listed four factors having nothing to do with managed care that explained the lull (“On the ‘efficiency’ of managed care plans,” Health Affairs 2000;19(4):139-148):

The mid-1990s lull was caused primarily by the short-term reactions of the industry to the near-simultaneous occurrence of four events: (1) a downturn in the three-years-up, three years-down health insurance pricing cycle; (2) the delayed effect of the 1990–1991 recession; (3) the endorsement of managed competition models of health reform by the White House and numerous state and federal politicians; and (4) the merger fever triggered by these political endorsements. The latter three phenomena deepened and lengthened what otherwise would have been a shallower and shorter downturn in the usual insurance-pricing cycle. (Page 144)

All four of these factors, as well as the decline in the underlying inflation rate, ceased to have a downward effect on premium inflation at about the same time – about 1996. Accordingly, premium inflation began to rise in 1997, just as the “HMO backlash” materialized. Just as some less-than-astute observers thought managed care should get the credit for the decline in insurance inflation rates that began in 1991, so some observers thought the “HMO backlash” should get the blame for the return of higher premium inflation rates in 1997. Those observers were wrong on both counts.

Post-train-wreck debate

The 2009 debate about the Democrats’ proposed health-insurance-industry bailout is nearly over. It has been clear since June 2009, when the Democrats in both houses of Congress unveiled their versions of the health insurance industry bailout legislation, that whatever Congress passes in 2009 or 2010 will do nothing to cut health care costs and, therefore, will at best leave perhaps half of the uninsured twisting in the wind for who knows how long. Because the Democrats’ proposed legislation does nothing to “bend the cost curve,” to use Beltway jargon, cost containment will dominate the next stage of America’s endless health care reform debate. Unlike the “public option” and managed care, single payer reform would cut costs by hundreds of billions of dollars and would cover everyone.

Klein’s endorsement of Cutler’s fantasies about managed care is one of many signs that a “new and improved” version of managed care will supplant the “public option” as the focus of the cost-containment debate among the “yes but” Democrats and as the “yes buts'” next excuse for not supporting single-payer. We can look forward to this because the “public option” proved so unpopular with the insurance industry and the right wing, and because the insurance industry loves managed care. We should expect this shift to occur in 2010. Unfortunately, we should also expect the “yes buts” to flog Managed Care 2.0 with the same sloppiness and disregard for empirical evidence that they displayed in their campaign for the “public option.”

Kip Sullivan serves on the steering committee of the Minnesota chapter of Physicians for a National Health Program.

CDC/NHIS – uninsured and underinsured

Posted by on Friday, Dec 18, 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.

Health Insurance Coverage: Early Release of Estimates from the National Health Interview Survey (NHIS), January – June 2009

by Michael E. Martinez, M.P.H., M.H.S.A., and Robin A. Cohen, Ph.D., Division of Health Interview Statistics, National Center for Health Statistics
Centers for Disease Control and Prevention (CDC)
National Center for Health Statistics (NCHS)

From January to June 2009, 45.4 million persons of all ages (15.1%) were uninsured at the time of interview, 58.4 million (19.4%) had been uninsured for at least part of the year prior to interview, and 31.9 million (10.6%) had been uninsured for more than a year at the time of interview.

From January to June 2009, 60.6% of unemployed adults aged 18-64 years and 21.8% of employed adults in this age group had been uninsured for at least part of the past year. Also, 32.9% of unemployed adults aged 18-64 and 13.3% of employed adults in this age group had been uninsured for more than a year.

Estimates of enrollment in HDHPs, CDHPs

Based on data from the January to June 2009 NHIS, 22.7% of persons under age 65 years with private health insurance were enrolled in a HDHP (high-deductible health plan), including 6.4% who were enrolled in a CDHP (consumer-directed health plan) and 16.4 % who were enrolled in a HDHP without a health savings account (HSA). Enrollment in HDHPs increased from 17.5% in 2007 to 22.7% in the first 6 months of 2009. There was a significant increase in enrollment in HDHPs without HSAs and in CDHPs between 2007 (when NHIS started collecting this information) and June 2009.

Based on data from the first 6 months of 2009, among persons under age 65 with private health insurance, 20.3% with employer-based coverage were enrolled in a HDHP, compared with 48.7% of those with a private plan that was directly purchased or obtained through means other than an employer. The percentage of persons covered by employer-based private plans that are HDHPs increased from 15.6% in 2007 to 20.3% in the first 6 months of 2009. The percentage of persons covered by directly purchased private health plans that are HDHPs increased from 39.2% in 2007 to 48.7% in the first 6 months of 2009. HDHPs constitute a growing share of both employment-based and directly purchased health plans.

http://www.cdc.gov/nchs/data/nhis/earlyrelease/insur200912.htm

One-fifth of the nation has been uninsured for at least a part of the past year. What makes that number even more alarming is that, at the beginning of the reform process, President Obama and the Congress decided, in deference to the private insurance industry, that they wouldn’t even begin to try to insure everyone. Instead they decided to include just those who would fit in under under their model that is designed to nurture the private insurance industry.

Still even more alarming is the insurance coverage that they propose. The standard policies for middle-income Americans will have an actuarial value of 60% to 70%, which provides much less financial protection than did more traditional employer-sponsored plans. But look what is already happening. Employers are shifting more workers to high-deductible health plans (HDHPs), and in the individual insurance market, almost half of the plans purchased are HDHPs. Furthermore, almost three-fourths of these do not have the backup of a health savings account (HSA).

Except for relatively wealthy individuals, these HDHPs are underinsurance products. They do not provide adequate financial security for those who do develop health care needs.

So President Obama and the Congress are bailing on not only on the tens of millions who will remain uninsured, but also the ever growing number of us who will be underinsured, whether through individual or employer-sponsored plans.

The status quo is unacceptable, but so is this legislation. Dump it and move on immediately with reform that protects the financial well-being of absolutely everyone who needs medical care.

The following are comments by Dr. Walter Tsou, former Philadelphia Health Commissioner on yesterday’s Pennsylvania Senate Banking and Insurance Committee hearing on the state single-payer bill, SB 400.

My overall impression was this was an enormously successful and impressive showing for Pennsylvania state single payer. Yes, I may be biased, but our four panelists did a superb job in explaining the Family and Business Health Security Act. To explain why I say this, consider the concluding remarks of Senator Don White, Republican Chair of the Senate Banking and Insurance Committee. First, Senator White offered that “there were those who said I should not have this hearing” — a clear rebuke of the fearful during this time of healthcare and economic crisis. Second, whereas in his opening comments he downplayed expectations for the hearing as a “fact-finding session only,” by the end, his praise of the Single Payer presenters was so “positive,” he declared that this opening act was just the beginning of a series of hearings on this most important topic.

The hearing began with Senator White, a former insurance broker, welcoming everyone and inviting Senator Jim Ferlo, the lead sponsor of SB 400, to present some opening thoughts. Ferlo explained the need to look at different approaches rather than be tied to the usual failed insurance model. Among other attributes, he said that the state Single Payer plan would free employers from the onerous burden of skyrocketing health insurance costs by, instead, providing healthcare for everyone at far less cost.

Chuck Pennacchio, Executive Director of Healthcare for all PA spoke next and further explained the particulars of the state-level, Single Payer approach, and how it represents values we can all embrace: freedom, choice, fiscal conservatism, personal responsibility, modeling solutions, constitutional federalism, fair-share taxation, efficiency, transparency, accountability, jobs creation, bureaucratic streamlining, investment and reinvestment, coordinated and comprehensive care, reduced rationing, restored patient-provider relationship, healthy outcomes, tort remedy, end bankruptcy fears, healthcare education, “medical home” data base, and more.

Patricia Eakin, RN from Philadelphia explained that she was a nurse in one of the busiest ERs in Pennsylvania at Temple and that she sees the problems of the lack of insurance on a daily basis. She gave some examples of the problems faced by people who have lack insurance. She noted how her hospital was losing money because they had to spend limited resources on billing personnel, and had to absorb, and/or pass along, financial losses on people without insurance or on Medicaid.

Dwight Michaels, MD, a Republican, and family practice doctor from Gettysburg, spoke about how his experience with private insurance bureaucrats had driven him to support the Single Payer Solution. He said it is increasingly difficult to practice medicine because his five-person practice struggles daily with 20 different insurance plans, all with different rules. This bureaucratic nightmare makes it impossible to spend quality time with his patients because he is forced to justify more and more of his procedures with the insurance carriers. Dr. Michaels’ testimony was a vivid description of the life of a family doctor in a dysfunctional system.

David Steil, a former Republican state legislator and head of a small manufacturing business was another inspired choice. Not only did he know all of the Senators but, as a creative-thinking lawmaker, he broke the stereotype that all Single Payer supporters are lefties. Mr. Steil spoke about how he tries to run a business, but the cost and hassle of health insurance has made his company more vulnerable in an international market where his non-American competitors have far cheaper health costs.

I think this panel worked extremely well. Not only were they excellent speakers, but they spoke from real world experiences, not as paid lobbyists. And two were Republicans which was an added bonus. The committee had many questions, but none were nasty and all seemed genuinely interested in the real world experiences of the panelists. And the room was packed with 90% supporters of SB 400. I don’t think this was lost on the committee.

The opposing panel were all known lobbyists for their respective interest groups. They gave the usual refrain of condemning single payer.

NFIB speaker – he simply declared that small businesses don’t want Single Payer, but admitted that healthcare costs are the number one concern of businesses. They want the same outcomes that only Single Payer provides. But since that involves “government bureaucracy,” it cannot possibly work.

PA Medical Society – wants tort reform but not Single Payer because it would be too powerful in controlling reimbursements (and costs).

Capitol Blue Cross – gave a confusing talk about the problems with the Washington federal bill and then simply concluded that SB 400 is just like the Washington bill and should be rejected. Of course, nothing in the federal bill even resembles Single Payer, which is why it is so unpopular.

Hospital Association of PA – opposes any government controls generically. Gave a knee-jerk opposition to Single Payer.

Insurance Federation of PA –  same as the hospitals. They oppose Single Payer as “monopolistic” — working from the assumption that the 35-cents-on-the-healthcare-dollar insurance “middle man” is indispensable, and that a little more regulation and industry “innovation” will solve cost issues.

There was not much time for questions but, frankly, they were special interest lobbyists and not a very interesting opposing panel. If this was a debate, the clear winners were the Single Payer SB 400 panel who did a great service in advancing state-level Single Payer today.

Sen. Sanders’ floor speech on his single payer amendment

Posted by on Thursday, Dec 17, 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.

United States Senate
December 16, 2009

The reading of the Sanders single payer amendment continues in its third hour…

Senate President: The Senator from Vermont.

Sen. Bernie Sanders: I withdraw my amendment.

Voice off camera (believed to be Sen. Tom Coburn): Regular order, Mr. President.

Senate President: The Senator has that right. The amendment is withdrawn.

Sen. Sanders: Mr. President. Pursuant to the thirty minutes…

Senate President: Under the previous order, the Senator from Vermont is recognized for thirty minutes.

Sen. Sanders: Mr. President, let me begin, not by talking about my amendment, but by talking about Republican action right here on the floor of the Senate. Everybody in this country understands that our nation faces a significant number of major crises, whether it’s the disintegration of our health care system, the fact that seventeen percent of our people are unemployed or underemployed, one out of four of our children are living on food stamps, we’ve got two wars, we’ve got global warming, we have a twelve trillion dollar national debt, and the best the Republicans can do is try to bring the United States government to a halt by forcing a reading of a seven hundred page amendment. That is an outrage! People can have honest disagreements, but in this moment of crisis it is wrong to bring the United States government to a halt.

Now, Mr. President, I am very disturbed that I am unable to bring the amendment that I wanted to bring to the floor of the Senate dealing with a Medicare for all single payer program…

… I was more than aware and very proud that this amendment would have been the first time in American history that a Medicare for all single payer bill was brought before a floor of Congress.

C-SPAN video of Sen. Sanders remarks (36 minutes):
http://www.c-span.org/Watch/watch.aspx?MediaId=HP-A-27367

Yesterday’s Quote of the Day message left off as the reading of the the Sanders amendment to the Senate health reform bill continued. It was suggested that this abuse of process and lack of civility on the part of Sen. Coburn and the Republican leadership be used as a teaching moment. That moment is here. The video of this Senate floor speech by Sen. Sanders should be shared with others who believe that everyone in our nation should have the health care that they need without having to face financial hardship.

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