CBO: Medicare’s demonstration projects fail to demonstrate cost savings

Posted by on Thursday, Jan 19, 2012

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.

Lessons from Medicare’s Demonstration Projects on Disease Management, Care Coordination, and Value-Based Payment

Congressional Budget Office
January 2012

In the past two decades, CMS has conducted two broad categories of demonstrations aimed at enhancing the quality of health care and improving the efficiency of health care delivery in Medicare’s fee-for-service program.

* Disease management and care coordination demonstrations have sought to improve the quality of care of beneficiaries with chronic illnesses and those whose health care is expected to be particularly costly.

* Value-based payment demonstrations have given health care providers financial incentives to improve the quality and efficiency of care rather than payments based strictly on the volume and intensity of services delivered.

The evaluations show that most programs have not reduced Medicare spending: In nearly every program involving disease management and care coordination, spending was either unchanged or increased relative to the spending that would have occurred in the absence of the program, when the fees paid to the participating organizations were considered. Programs in which care managers had substantial direct interaction with physicians and significant in-person interaction with patients were more likely to reduce Medicare spending than other programs, but on average even those programs did not achieve enough savings to offset their fees.

Results from demonstrations of value-based payment systems were mixed. In one of the four demonstrations examined, Medicare made bundled payments that covered all hospital and physician services for heart bypass surgeries; Medicare’s spending for those services was reduced by about 10 percent under the demonstration. Other demonstrations of value-based payment appear to have produced little or no savings for Medicare.

The results of those Medicare demonstrations suggest that substantial changes to payment and delivery systems will probably be necessary for programs involving disease management and care coordination or value-based payment to significantly reduce spending and either maintain or improve the quality of care provided to patients.


Recognizing the need to slow the increase in health care spending, much hope has been placed on disease management, care coordination, and value-based payments such as pay-for-performance. Medicare has authorized numerous demonstration projects to prove that these programs are effective. They aren’t.

The results of these demonstrations have shown that they have not reduced spending because the costs of the interventions were not offset by the savings, and frequently the costs were greater, resulting in a net loss.

The one exception in the report – bundled payments – doesn’t really belong in this list anyway. The demonstration study negotiated a single fee for coronary bypass surgeries, covering both the hospitals and the in-hospital treating physicians. The negotiated fee was about 10 percent less than the itemized fees had been previously. Thus the savings for Medicare was about 10 percent for these bypass surgeries. There was no attempt to determine if this reduction resulted in efforts to recover the difference from other patients or payers, which makes it difficult to know whether or not bundling actually reduced total health care costs.

On the other hand, imagine a system in which all payments are negotiated, as with a single payer system. Hospitals negotiate an annual global budget. That budget includes their costs of services, such as coronary bypass surgeries, without the need to itemize each single item for the services, nor the need to bundle payments in some sort of pretense that global costs are reduced. The hospital already has incentives to improve efficiencies to stay within budget.

Likewise, physicians collectively negotiate their payments, whether fee-for-service, capitation, or salary, as appropriate to their clinical circumstances. Payments are adequate to ensure a very comfortable net income.

Other nations have proven that negotiated, administered payment is effective in obtaining greater value for health care spending. We’ve now proven that intrusion of market-model games players such as outside disease managers, or pay-for-performance administrators, have failed to improve value. So we should go with a system that really does work – a single payer national health program.

Folding Medicare into Vermont’s single payer system

Posted by on Wednesday, Jan 18, 2012

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.

Act 48 Integration Report: Green Mountain Care

Submitted by Robin J. Lunge, Director of Health Care Reform
Department of Vermont Health Access and the
Department of Banking, Insurance, Securities, and Health Care Administration
January 17, 2012

Act 48 creates Green Mountain Care, which is a publicly financed health care program delivering affordable, high-quality health care coverage to all residents of Vermont. Section 8 of No. 48 of the acts of 2011 (Act 48) calls for a report consisting of a series of studies to inform the development of Green Mountain Care.

The administrative integration of many payers will begin in the Exchange. For example, individuals eligible for Medicaid may use a web-based portal designed for the Exchange to enroll in Medicaid. The Exchange will also integrate the small group and association markets and could additionally integrate the individual market as well. Municipal employees are currently in the small group market, so their coverage would also be integrated in the Exchange.

The three payers who may not be able to be integrated into the Exchange are Medicare, state employees, and school employees.


Medicare is a federal program, paid for with all federal funds and administered entirely by the federal government. 33 V.S.A. 1824 provides that the agency of human services shall collect information to determine if an individual is eligible for Medicare in order to ensure that federal funds are utilized before state funds. Act 48 specifically provides that Green Mountain Care will not alter anyone’s Medicare benefits under Medicare. If an individual is enrolled in Medicare, he or she need not apply for or enroll in Green Mountain Care if he or she does not wish to. Act 48 allows the individual the choice to have Green Mountain Care as a secondary insurance, but does not require it. The cost of these provisions will be looked at as part of the financing study due in January 2013.



Medicare Waiver Demonstration Application

Center for Medicare & Medicaid Services

CMS conducts Medicare-waiver-only demonstrations to test innovations that have been shown to be successful in improving access and quality and/or lowering health care costs. These demonstrations may involve new benefits, fee-for-service or Medicare Advantage payment methodologies, and/or risk sharing arrangements that are not currently permitted under Medicare statute.


For more about Medicare waivers:
Legal Information Institute


Converting Successful Medicare Demonstrations into National Programs (an excellent description of the limitations of the process using the example of P4P):

As states attempt to set up single payer programs, one problem that comes up is how do you move federal funds from programs such as Medicare into the state single payer system? The simple answer is, you don’t, at least not without getting Congress to enact transformative legislation.

Many have suggested that all you need is a “Medicare waiver.” But the Medicare waiver process is limited to small demonstrations primarily of payment innovations that are budget neutral or less, and that do not reduce benefits. They do not allow changes in the fundamentals of the Medicare program. The populations covered remain the same.

Vermont dropped “single payer” from the title of their legislation. One of the reasons is that Medicare will have to remain a separate program, even though they are making efforts to allow Green Mountain Care to serve as an additional Medigap plan, and to allow for some administrative integration within the insurance exchange.

Vermont should certainly move forward with its process, since beneficial tweaks are better than nothing at all. But the real message is that Vermont, and all of us, could have so much more if we enacted a national single payer health program.

We should not wait to see how well the state efforts and the implementation of the Affordable Care Act will work. We already know. Costs will be higher. Millions will remain uninsured. Underinsurance will be the new standard. Hardship and suffering will increase.

States should try to improve their programs while they are waiting for national reform. But it’s our job to see that they don’t have to wait any longer than they have to. We must act now.

Physicians investing in for-profit technology

Posted by on Tuesday, Jan 17, 2012

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.

After urologists got machine, cancer treatments soared

By Jay Hancock
The Baltimore Sun, January 17, 2012

Four years ago, doctors at Chesapeake Urology Associates started ordering the most expensive kind of prostate-cancer therapy for many more of their patients.

Before 2007, the large, multi-office practice was prescribing the treatment, known as intensity modulated radiation therapy, for 12 percent of its prostate-cancer patients covered by Medicare, according to data compiled by a Georgetown University researcher. But starting in mid-2007, Chesapeake Urology’s referral rate for IMRT more than tripled, rising to 43 percent of the Medicare cases.

What could have caused such a sharp change?

It couldn’t have been because IMRT, which costs about $40,000 per treatment, was new. Maryland hospitals had been offering it for years.

It couldn’t have been because IMRT was better.

“No randomized clinical trials show that prostate cancer patients receiving IMRT live longer or experience fewer long-term side effects than those getting the alternatives” of radiation-seed therapy or surgery, said Dr. James Mohler, a urologist at Roswell Park Cancer Institute in Buffalo, N.Y., and chairman of the national committee that sets standards for prostate-cancer care.

Chesapeake Urology tripled its percentage of prescriptions for IMRT after the practice acquired its own IMRT machine in 2007. The more patients the Baltimore-area urologists referred for that expensive therapy alternative, the more revenue and profits they would generate.

“They’re steering patients to IMRT because that’s where they make their money,” said Jean Mitchell, a professor and health care economist at Georgetown who’s working on a national study about IMRT referrals. “They’re making a ton of money out of this. There’s no question about it. At the expense of the taxpayers” who finance Medicare.


Technology that improves patient outcomes and reduces costs is great. Technology that increases costs, produces undesirable side effects, and provides no evidence of extended life expectancy is… well… not so great, except for meeting the financial goals of the entrepreneurial owners of the technology. And when the owners of the technology are the same trusted physicians who are prescribing it, that’s reprehensible.

Theoretically a government-funded and government-administered health care financing program would have the power to prevent these abuses. Yet this diversion of radiation treatment fees to the referring physicians is occurring within the Medicare program. So simply expanding Medicare to everyone alone is not enough to fix our dysfunctional financing system.

A properly designed single payer national health program would do far more than simply remove private insurers from the system. In this instance the need for the radiation equipment would be determined by medical science confirming the value of the intervention. The decision to purchase the equipment would be made through regional planning based on need. The payment for the equipment would be through separate budgeting of capital improvements. The ownership would be public or non-profit and would have no investors to draw off profits.

Physicians would be paid appropriately for their professional services as urologists and radiation oncologists, but they would not receive extra dividends based on their insight as to the potential lucrative benefits of personally investing in the equipment.

So about that Medicare for all. We speak of an improved Medicare for all, but the improvements would have to be monumental.

What Dr. King might say about physicians in the 1 percent

Posted by on Monday, Jan 16, 2012

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.

“Of all the forms of inequality, injustice in health care is the most shocking and inhumane”
–Martin Luther King Jr.

Among the Wealthiest One Percent, Many Variations

By Shaila Dewan and Robert Gebeloff
The New York Times, January 14, 2012

The colossal gap between the very rich and everyone else – the 1 percent versus the 99 percent – has become a rallying point in this election season. President Obama positions himself as a defender of the middle class, and Mitt Romney, the wealthiest of the Republican presidential candidates, decries such talk as “the bitter politics of envy.”

The range of wealth in the 1 percent is vast – from households that bring in $380,000 a year, according to census data, up to billionaires like Warren E. Buffett and Bill Gates.

Most 1 percenters were born with socioeconomic advantages, which helps explain why the 1 percent is more likely than other Americans to have jobs, according to census data. They work longer hours, being three times more likely than the 99 percent to work more than 50 hours a week, and are more likely to be self-employed.

In one survey of wealthy Chicago families, almost twice as many respondents said they would cut government spending as those who said they would cut spending and raise revenue.

“I don’t mind paying a little bit more in taxes. I don’t mind putting money to programs that help the poor,” said Anthony J. Bonomo of Manhasset, N.Y., who runs a medical malpractice insurance company and is a Republican. But, he said, he did mind taking a hit for the country’s woes. “If those people could camp out in that park all day, why aren’t they out looking for a job? Why are they blaming others?”

Still, David Mejias, a divorce and personal injury lawyer who once served as a Democratic legislator for Nassau County, said that the system everywhere was skewed in favor of the self-employed and business owners who could deduct part of the cost of their cars, trips, dinners and even collectibles like art.

“Not only do we make more money, but if you do a lifestyle analysis, we make a lot more money,” he said. “Before we even get paid, most of our life has been paid for already.”

“I definitely see it around me,” said Anu Chandok, 36, an oncologist in Lake Success, referring to the country’s economic pain. “It just personally hasn’t affected me yet.”

Dr. Chandok said that her husband, also a doctor, was still paying off his student loans. The couple has a nanny, but Dr. Chandok’s father-in-law does the shopping and cooking.

Dr. Chandok said she had never heard the Occupy Wall Street slogan “We are the 99 percent.” Two children and 11-hour workdays, she said, do not leave much time for politics.

But when the slogan was explained as a complaint against the wealthy’s growing share of income, she shook her head. “I spent four years in undergraduate school, four years in medical school, three years as a resident and three years as a fellow,” she said. “You have to look at the people who are complaining.”


New York Times Interactive

Of 360,785 physicians who practice in offices and clinics, 27.2 percent have incomes in the top 1 percent (over $380,000).


On Martin Luther King Jr Day it seems appropriate to contemplate what he might say about the dramatic increase in flow of wealth from middle- and lower-income families to the 1 percent who constitute the uber-wealthy. It seems safe to assume that he would be concerned about the negative impact on the issues of social justice to which he devoted his life.

One of those issues was health care justice. What do you think he might say about the fact that 27 percent of physicians practicing in offices and clinics fall into the highest 1 percent of income? It is likely that he would not frame the problem narrowly as excess compensation for physicians but rather as the larger issue of an excess accumulation of wealth at the very top when there is so much unmet need amongst the masses.

But for many of us who have had experience in the trenches, we have been annoyed, to say the least, that many of these same high-income physicians refused to see our uninsured and Medicaid patients. Was it because they didn’t want to make the smallest of dents in their high incomes by using a small amount of office time on just a few patients that did not cover their costs? Or was it that they didn’t want “that element” to frequent their waiting rooms? Both, in my experience, and as Dr. Chandok’s views suggest.

One concern that many physicians have about single payer, or an improved Medicare for all, is that the government, as a monopsony, could reduce physicians’ incomes perhaps to the level of teachers’ salaries. Although incomes of physicians in most other nations are lower than in the United States, they still rank well above average. Physicians do very well, though most are not able to accumulate large amounts of wealth that a $380,000 or more income might bring.

Most physicians who are truly dedicated to serving patients would be satisfied with incomes in the top 20 percent if they were provided a practice environment conducive to optimal care for all of their patients. That, of course, is precisely a major goal of single payer.

Many if not most of those physicians who want to be in the top 1 percent might not be satisfied. When deciding on career choices they might reject medicine if it had government controls on spending, and choose an educational path that might lead to the financial services industry, corporate leadership, or entrepreneurial endeavors.

Opponents of government-financed medicine have warned that controls on health care spending might deprive health care of some of the finest and brightest minds. What? Do we really want more physicians whose primary interest is to accumulate wealth while demonstrating absolutely no compassion for the least amongst us? There isn’t much doubt about what Dr. King’s position would be.

When we are asked if single payer might reduce physicians’ incomes we don’t need to fumble around trying to craft an answer that would placate physicians with very high incomes. We should state frankly that if an individual’s goal is to have a personal fleet of luxury automobiles and a condo in every climate, then medicine isn’t the field for them, or at least shouldn’t be.

On the other hand, if the goal is to obtain the best attainable health care for everyone, while adjusting incomes to reinforce the primary care infrastructure and to provide fair but not excessive compensation for procedure-oriented specialists, then practicing medicine in a single payer environment is just what the compassionate doctor ordered.

Medicaid and uninsured patients receive less imaging in EDs

Posted by on Friday, Jan 13, 2012

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.

Imaging and Insurance: Do the Uninsured Get Less Imaging in Emergency Departments?

By James W. Moser, PhD, Kimberly E. Applegate, MD, MS
Journal of the American College of Radiology, January 2012

Compared with non-Medicaid insured ED patients, uninsured ED patients were less likely to get any imaging services and to get lower value imaging RVUs (relative value units), results that held for nearly all modalities. Similar results regarding the number and value of imaging services, as well as health status, were found for Medicaid patients.

Even after controlling for health status and other measurable factors, the average number of imaging tests received by uninsured ED patients was ≥8% lower than that for non-Medicaid insured ED patients. The deficit for Medicaid ED patients was even greater, at about 10%. Uninsured ED patients and Medicaid ED patients also received fewer imaging-related RVUs per visit than non-Medicaid insured ED patients: 13% and 19%, respectively. These differences amplify the potentially serious health implications for persons lacking conventional health insurance. As the number of uninsured Americans continues to rise, the use of ED services will also rise.

The differences in imaging RVUs by insurance group stemmed from a bias toward lower valued imaging modalities for persons lacking coverage compared with insurance persons. Medicaid patients, perhaps underinsured, also received lower valued imaging and less imaging compared with insured patients. Other studies have found that the uninsured are less likely to get timely medical care and consequently are sicker upon being admitted to the hospital.


Fully predictable. Uninsured and Medicaid emergency department patients receive fewer imaging tests, and when they do receive them, they are more likely to be lower valued tests. Under the Affordable Care Act, many individuals will remain uninsured and many more will be enrolled in Medicaid. Thus this is a problem that is not going away.

We can do better than this.

Insurers use fitness memberships to select the healthy

Posted by on Thursday, Jan 12, 2012

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.

Fitness Memberships and Favorable Selection in Medicare Advantage Plans

By Alicia L. Cooper, M.P.H., and Amal N. Trivedi, M.D., M.P.H.
The New England Journal of Medicine, January 12, 2012

This study examined the consequences of adding a fitness-membership benefit on the self-reported health status of enrollees in Medicare Advantage plans. Using a quasi-experimental design, we found that persons enrolling in plans after the addition of a fitness-membership benefit reported significantly better general health, fewer limitations in moderate activities, less difficulty walking, and higher PCS scores than did persons who enrolled in the same plan before the fitness benefit was added and in matched control plans that never offered a fitness benefit. These patterns persisted in the analyses of 2-year follow-up responses for all measures except self-reported general health. Our findings suggest that there is an association between the adoption of fitness-membership benefits in Medicare Advantage plans and the enrollment of healthier Medicare beneficiaries.

Risk-adjusted payments are designed to reduce incentives for plans to avoid high-cost patients. However, the enhanced Medicare risk-adjustment model has the power to explain only 11% of the total variation in health spending. Furthermore, the model overpredicts costs for persons in good health and underpredicts costs for persons in poor health, yielding overpayments for healthy enrollees and underpayments for less-healthy enrollees. Therefore, the continued limitations of the CMS payment model may not discourage Medicare Advantage plans from engaging in risk-selective activities. Our findings are consistent with the notion that Medicare managed-care plans have continued to selectively market their benefits to healthier beneficiaries, even after the improved risk-adjustment program was instituted.


This study further confirms what we have known all along – that private insurers selectively market to the healthy, further cushioning their profits by being paid at rates for those with only average health. Although risk adjustment has been introduced to correct overpayments due to their use of favorable selection, the insurers have found devious ways to use risk adjustment to further expand their profits, even though technically prohibited. It is the nature of private insurers to always work the system to their own advantage, and that will never change.

How many times do we have to say it? It is time to dismiss the private insurers and establish our own single payer national health program in which the benefits accrue to the patients/taxpayers and not to the expensive, intrusive, wasteful insurance intermediaries.

Wrong way to slow health care spending

Posted by on Wednesday, Jan 11, 2012

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.

Growth In US Health Spending Remained Slow In 2010; Health Share Of Gross Domestic Product Was Unchanged From 2009

By Anne B. Martin, David Lassman, Benjamin Washington, Aaron Catlin and the National Health Expenditure Accounts Team
Health Affairs, January 2012


Medical goods and services are generally viewed as necessities. Even so, the latest recession had a dramatic effect on their utilization. US health spending grew more slowly in 2009 and 2010—at rates of 3.8 percent and 3.9 percent, respectively—than in any other years during the fifty-one-year history of the National Health Expenditure Accounts. In 2010 extraordinarily slow growth in the use and intensity of services led to slower growth in spending for personal health care. The rates of growth in overall US gross domestic product (GDP) and in health spending began to converge in 2010. As a result, the health spending share of GDP stabilized at 17.9 percent.


Health care spending experienced historically low rates of growth in 2009 and 2010 as the impact of the recent recession continued to affect the purchasers, providers, and sponsors of health care. Persistently high unemployment, continued loss of private health insurance coverage, and increased cost sharing led some people to forgo care or seek less costly alternatives than they would have otherwise used. As a result, growth in the use and intensity of health care goods and services in 2010 accounted for a much smaller share of personal health care spending growth than in previous years. Finally, as businesses, households, and state and local governments financed a smaller share of total national health care spending during and just after the recession, the federal government financed a larger share.


For the present, growth in health care spending has leveled off at 17.9 percent of our GDP. But how? By high unemployment, continued loss of private health insurance, and increased cost sharing – all measures that prevent people from getting the health care that they should have. If you exclude from consideration this inappropriate decline in health care services, then you can only conclude that health care costs have continued their inexorable rise unabated. We desperately need a sane system of financing health care.

Finnish school lessons for American health care

Posted by on Tuesday, Jan 10, 2012

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.

What Americans Keep Ignoring About Finland’s School Success

By Anu Partanen
The Atlantic, December 29, 2011


Everyone agrees the United States needs to improve its education system dramatically, but how? One of the hottest trends in education reform lately is looking at the stunning success of the West’s reigning education superpower, Finland. Trouble is, when it comes to the lessons that Finnish schools have to offer, most of the discussion seems to be missing the point.

So there was considerable interest in a recent visit to the U.S. by one of the leading Finnish authorities on education reform, Pasi Sahlberg, director of the Finnish Ministry of Education’s Center for International Mobility and author of the new book Finnish Lessons: What Can the World Learn from Educational Change in Finland? Earlier this month, Sahlberg stopped by the Dwight School in New York City to speak with educators and students, and his visit received national media attention and generated much discussion.

Yet one of the most significant things Sahlberg said passed practically unnoticed. “Oh,” he mentioned at one point, “and there are no private schools in Finland.”

This notion may seem difficult for an American to digest, but it’s true. Only a small number of independent schools exist in Finland, and even they are all publicly financed. None is allowed to charge tuition fees. There are no private universities, either. This means that practically every person in Finland attends public school, whether for pre-K or a Ph.D.

The irony of Sahlberg’s making this comment during a talk at the Dwight School seemed obvious. Like many of America’s best schools, Dwight is a private institution that costs high-school students upward of $35,000 a year to attend — not to mention that Dwight, in particular, is run for profit, an increasing trend in the U.S. Yet no one in the room commented on Sahlberg’s statement. I found this surprising. Sahlberg himself did not.

From his point of view, Americans are consistently obsessed with certain questions: How can you keep track of students’ performance if you don’t test them constantly? How can you improve teaching if you have no accountability for bad teachers or merit pay for good teachers? How do you foster competition and engage the private sector? How do you provide school choice?

The answers Finland provides seem to run counter to just about everything America’s school reformers are trying to do.

For starters, Finland has no standardized tests. The only exception is what’s called the National Matriculation Exam, which everyone takes at the end of a voluntary upper-secondary school, roughly the equivalent of American high school.

As for accountability of teachers and administrators, Sahlberg shrugs. “There’s no word for accountability in Finnish,” he later told an audience at the Teachers College of Columbia University. “Accountability is something that is left when responsibility has been subtracted.”

And while Americans love to talk about competition, Sahlberg points out that nothing makes Finns more uncomfortable. In his book Sahlberg quotes a line from Finnish writer named Samuli Puronen: “Real winners do not compete.” It’s hard to think of a more un-American idea, but when it comes to education, Finland’s success shows that the Finnish attitude might have merits. There are no lists of best schools or teachers in Finland. The main driver of education policy is not competition between teachers and between schools, but cooperation.

Finally, in Finland, school choice is noticeably not a priority, nor is engaging the private sector at all. Which brings us back to the silence after Sahlberg’s comment at the Dwight School that schools like Dwight don’t exist in Finland.

“Here in America,” Sahlberg said at the Teachers College, “parents can choose to take their kids to private schools. It’s the same idea of a marketplace that applies to, say, shops. Schools are a shop and parents can buy what ever they want. In Finland parents can also choose. But the options are all the same.”

Herein lay the real shocker. As Sahlberg continued, his core message emerged, whether or not anyone in his American audience heard it.

Decades ago, when the Finnish school system was badly in need of reform, the goal of the program that Finland instituted, resulting in so much success today, was never excellence. It was equity.

Since the 1980s, the main driver of Finnish education policy has been the idea that every child should have exactly the same opportunity to learn, regardless of family background, income, or geographic location. Education has been seen first and foremost not as a way to produce star performers, but as an instrument to even out social inequality.

In the Finnish view, as Sahlberg describes it, this means that schools should be healthy, safe environments for children. This starts with the basics. Finland offers all pupils free school meals, easy access to health care, psychological counseling, and individualized student guidance.

In fact, since academic excellence wasn’t a particular priority on the Finnish to-do list, when Finland’s students scored so high on the first PISA survey in 2001, many Finns thought the results must be a mistake. But subsequent PISA tests confirmed that Finland — unlike, say, very similar countries such as Norway — was producing academic excellence through its particular policy focus on equity.

That this point is almost always ignored or brushed aside in the U.S. seems especially poignant at the moment, after the financial crisis and Occupy Wall Street movement have brought the problems of inequality in America into such sharp focus.

“When President Kennedy was making his appeal for advancing American science and technology by putting a man on the moon by the end of the 1960’s, many said it couldn’t be done,” Sahlberg said during his visit to New York. “But he had a dream. Just like Martin Luther King a few years later had a dream. Those dreams came true. Finland’s dream was that we want to have a good public education for every child regardless of where they go to school or what kind of families they come from, and many even in Finland said it couldn’t be done.”

Clearly, many were wrong. It is possible to create equality. And perhaps even more important — as a challenge to the American way of thinking about education reform — Finland’s experience shows that it is possible to achieve excellence by focusing not on competition, but on cooperation, and not on choice, but on equity.

The problem facing education in America isn’t the ethnic diversity of the population but the economic inequality of society, and this is precisely the problem that Finnish education reform addressed. More equity at home might just be what America needs to be more competitive abroad.


When you read these excerpts from this article on the education system in Finland, what is striking is how much the philosophy behind their vastly superior system contrasts sharply with ours. What is really mind-boggling is that if you re-read the same excerpts, except substitute “health care system” for “education system,” you then will have an inkling of what we are doing wrong in both education and health care.

One fundamental concept that has appeared repeatedly on the pages of Physicians for a National Health Program (PNHP) is that excellence is a product of cooperation, not competition. It is not choice between private for-profit and public systems, but rather it is equity within public systems that facilitates excellence.

In both education and health care, Americans emphasize testing, accountability, merit rewards, competition, and choice. Yet Finland does not use standardized testing (analogous to HEDIS testing in health care), nor do they demand accountability – they don’t even have a word for it – but rather they expect responsibility. In Finland, all teachers are given prestige, decent pay, and a lot of responsibility. Finns are very uncomfortable with the concept of competition, especially since that interferes with the productivity induced in an environment of cooperation. Nor do they even consider choice – choice between publicly-financed and privately-financed schools – since the latter do not even exist.

So their secret is to establish equity and cooperation within the public sector. Now that it’s no longer a secret, we also can have high quality education and health care systems right here in the United States. We just have to shove the MBAs aside and place control in the hands of our own publicly chosen advocates of social justice.

Germany’s painful lesson on private insurance

Posted by on Monday, Jan 9, 2012

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.

Many seek to switch to public health insurance

The Local – Germany’s News in English
January 8, 2012

Shocked by premium increases of as much as 50 percent, many Germans with private health insurance are seeking to switch to a national health plan, the news magazine Der Spiegel reported Sunday.

Many private health insurance plans pushed through hefty premium increases at the beginning of the year and that’s behind the move to switch, the magazine said.

“We’ve gotten increased telephone inquiries from those privately insured who want to come to the AOK,” Wilfried Jacobs, the head of the AOK in Rheinland/Hamburg, told the magazine. The AOK, with 15 regional branches and some 24 million members, is Germany’s largest public health insurance organisation. The magazine said other public health insurers have received similar inquiries.

But it’s not so easy to switch once you’ve opted for private insurance. German law only allows people to change from public to private in exceptional situations.

These include when someone has lost their job. You can also switch if you are an employee whose salary falls below the € 45,900 level. Workers who used to be self-employed but now have a full-time position with a similar salary may also change.

But a public health organization manager said, “There are tricks that we can use to help private patients, providing the employer cooperates.”

The Barmer GEK public health organization reported that 27,600 people switched from private competitors in 2011 – nine percent more than in 2010.



Social Insurance and Individual Freedom

By Uwe E. Reinhardt
The New York Times, December 9, 2011

By law, every German must have coverage for a prescribed benefit package. German employees and pensioners earning less than 49,500 euros ($66,350) per year (in 2011) are compulsorily insured under the statutory system.

Employees and pensioners above that threshold are free to opt out of the statutory system and purchase private, commercial coverage, but if they do, they cannot ever return to the statutory system unless they are paupers. The intent is to minimize gaming of the insurance system by individuals.


It’s only January, yet Germany already is providing us one of the most important policy lessons of 2012. It may be great politics to allow more affluent citizens to opt out of public health insurance and to express their personal faith in private markets by selecting private plans, but they may decide that it’s terrible policy when the private plans come back to bite them.

In the United States, conservatives continue to push policies that would promote private plans that appeal to the healthier and wealthier sectors of our society. Consumer-directed plans with high-deductibles combined with health savings accounts are such options. Even with Medicare, conservatives have established the private Medicare Advantage plans for Medicare beneficiaries who would prefer to opt out of the public program.

If you just look at the Medicare Advantage plans, we have already seen that the private insurers have gamed the system such that they are receiving $3000 more per patient than the costs for comp[arable patients in the public Medicare program. What if the government required individuals to pay an extra $3000 for the “private upgrade”? It is likely that only the wealthiest and the most passionate anti-government ideologues would stay in the program.

What if, in addition, health care costs increased at rates well in excess of the growth in GDP, and the differences between the higher premiums that would have to be charged by the private plans compared to the more efficient public insurance program had to be paid in full by those enrolled in the private plans? You would see a massive exit from the private plans. Witness the current experience in Germany.

This is not hypothetical policy theory. The Germans fully understand the principles of social insurance. There are clear policy risks in allowing private options to government insurance plans. That is why they did not permit low- and middle-income individuals to make the foolish decision of exiting the public plans. They wanted to ensure both financial security and health security for these more vulnerable populations. If politically-influential wealthier individuals wanted to have the choice of private plans, then so be it, and Germany allowed it.

But no games. If wealthier Germans chose the private plans, then, as long as they maintained their higher incomes, they could not game the system by moving back into the public plan should they lose their bet that they would be better off in the private sector. Many Germans who made that choice are now facing skyrocketing premiums in the private sector. They want back into the public program, but many will have to continue to live with their ill-advised decision to go private.

Another sign of how flawed the private insurance concept is that they are now considering “tricks” that can be used to help private patients. Although tricks may produce winners, they automatically produce losers as well. There is no place for “tricks” in a public insurance program.

What is Germany to do now? It doesn’t seem fair to allow those who made this unwise decision to escape the consequences when it would expose the public program to adverse selection. There would be no problem had the government prohibited the wealthy from making an imprudent decision to go private in the first place, which they could have done simply by requiring everyone to participate in the public program.

For those who say that it is unfair to not allow choice, as mentioned the Germans were smart enough to prohibit that choice for low- and middle-income individuals, saving them from potential exposure to financial hardship. Ensuring security is fair; permitting the choice of insecurity is not fair for those who end up losing.

There may be less sympathy for the wealthy caught in a financial bind of their own making, but there are two important reasons why the wealthy also should be required to participate in the public program: 1) the insurance risk pools (sickness funds) benefit from including the contributions of this wealthier and generally healthier population, and 2) the influence of the wealthy provides greater political support for the public program in which they would be required to participate. Consider the great support for Medicare as opposed to the meager political and financial support for Medicaid.

The obvious lesson for the United States is that we should eliminate the over-priced private insurers and establish a single national health program that covers everyone. We still may have some compassion even for those who want to play their ideological games but then run into trouble when they really need health care, but we should not allow them to escape their obligation to contribute equitably, in advance, to a financing system that many of them someday would have to rely upon.

P.S., Canada, listen up!

D. Light on Fukuyama’s “History” and D. Massey on “American Exceptionalism”

Posted by on Sunday, Jan 8, 2012

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.

Professor Donald Light responds to the Quote of the Day on Francis Fukuyama’s “The Future of History: Can Liberal Democracy Survive the Decline of the Middle Class?” (http://www.pnhp.org/news/2012/january/francis-fukuyama-on-the-decline-of-the-middle-class):

Hi Don,

While I had not thought if it in this frame, the course on comparative health care in advanced capitalist countries at Stanford provides compelling materials for a coherent, liberal platform for the broad working and middle classes. (See STANFORD 2011 Syllabus on Kaiser web: http://www.kaiseredu.org/Syllabus-Library.aspx?sort=topic&pageno=1&school=Stanford+University)

1) For individuals and families to be productive and thrive, they need easy access to good medical services to treat injuries, illnesses, disabilities, chronic conditions, or mental distress. One can make a strong conservative case for universal health care, as most conservatives outside the United States do, based not on solidarity or equity but on individual freedom and responsibility. (For a synopsis, seehttp://www.healthpaconline.net/rekindling/Articles/Light.htm.  For the article, see ttp://www.thehastingscenter.org/Publications/HCR/Detail.aspx?id=2574.)

2) For infants and small children to begin life feeling confident, trusting (Erik Erickson), and energetic, they and their parents need universal parental and child supports.

3) For children and adults to learn and gain skills for productive work, they need easy access to good, universal education.

4) For workers and managers to focus on productive work rather than on how to keep from being laid off, there needs to be reasonable (but not excessive) job protection and ways of handling recessions that minimize the high economic & emotional costs of unemployment.

5) For the seriously ill, injured, or disabled not to become a heavy financial burden on their families that drags them down towards poverty, they need free medical care and maintenance income. For the elderly and chronically ill not to become impoverished or impoverish their kin, they need universal long-term care.

Most of these services and supports are provided in most affluent countries. They can be called “welfare” or “socialism,” but they are paid for largely by the working and middle-classes through equitable forms of collection such as taxes or mandatory premiums. In a conservative country like the United States where only some of these services and supports are partially provided, much of the direct costs are paid out of pocket by individuals or families affected. This results in serious impoverishment. Far greater would be the indirect costs of skills not learned because they cost too much, opportunities lost because of family burdens, promotions not gained as individuals take up heavy burdens at home with little societal support, unsafe working and living environments, marital disruption and divorce, and higher levels of violence.

If a full empirical assessment were done of such direct and indirect costs not providing the working and middle classes with educational, economic, family, and medical supports, I suspect they would be much greater than the costs of providing.

In this way, I believe a coherent intellectual and societal case can be made for what might be called the “thriving state.”  Perhaps the single best article we read was by Doug Massey, who describes the costs of dismantling what supports the US had and provides some comparisons with other affluent nations. (For a free copy, type in Google: Massey “Globalization and Inequality” and a pdf link will appear.)

With best regards,


Donald W. Light
Professor, UDMNJ-SOM
Lokey Visiting Professor, Stanford University
Visiting Researcher, Center for Migration & Development,
Princeton University

Donald Light writes that “a coherent intellectual and societal case can be made for what might be called the ‘thriving state.'” As we think about Francis Fukuyama’s essay and about making the case for the “thriving state,” we should think about how we can move beyond simply “occupying” and then going home.

This will be no easy task. I would emphatically second the recommendation of Donald Light to read Professor Douglas Massey’s article, “Globalization and Inequality: Explaining American Exceptionalism” (link below). It discusses the new political economy of poverty, the political economy of affluence, and their roles in American exceptionalism.

After you read Massey’s article you’ll think, “And we thought trying to reform health care was going to be tough!” But it will be very difficult to gain consensus on health care reform until we can address the issues behind Massey’s explanation of American exceptionalism.

European Sociological Review
August 20, 2008
Globalization and Inequality: Explaining American Exceptionalism
Douglas S. Massey

Additional comment by Quote of the Day subscriber Richard Krasner:

Dr. McCanne,

As a student of American history and politics (BA in Poli Sci/History) and other Social Sciences, and an MA in American History, I am well aware of the ideological underpinnings of American society and why many Americans are loathe to support universal health care and deem it “Socialism”. It is the mere fact that in the late 17th and 18th century political discourse that serves as the basis of American, and even Western European democracy, health care was never mentioned, nor was the issue of caring for the sick, the poor, the orphan, the widow, the unemployed, etc.

Rather, the focus was on individual liberty and property rights, and on the free market, with all of its attendant low wages, low taxes and high profits for the owners of the means of production. It is not until the mid-19th century that Modern Liberalism, as opposed to the Classical Liberalism (i.e., Libertarianism) of the 18th century, argued strongly for a role for government in improving the lives of its citizens and protecting them from the ills of the free market.

Unfortunately, these arguments fell on deaf ears on this side of the Atlantic because the Founding Fathers had enshrined individual liberty, property rights, and the acquisition of wealth into our laws and social fabric. This was not the case for our neighbors to the north, as Canada received its nominal independence from Britain in 1867, while we made our revolution for independence in the late 18th century. That explains why Canada, and the UK have universal health care, and we don’t. Even the one of the most conservative Prime Ministers of 20th century Britain, Winston Churchill believed in a national health care system… “Our policy is to create a national health service in order to ensure that everybody in the country irrespective of means, age, sex or occupation shall have equal opportunities to benefit from the best and most up-to-date medical and allied services available.”

But our conservatives believe just as many of the GOP candidates have said in the endless round of debates, that people who do not plan for getting sick deserve to die. This is not just cruel, this is part and parcel of the Calvinistic Puritanism that colored, and still colors much of the American mindset even now in the beginning of the 21st century. The Republican Party, and their Christian right allies, are reviving that old Protestant ethic, which never really died, it only migrated out of New England, and transferred from the Puritan church (i.e., Congregationalists) to the Southern Baptist and otehr fundamentalist or evangelical churches through the various Great Awakenings of the past two hundred years.

The only way I can see that this nation will join the other industrialized nations in providing all of its citizens with universal health care is when or if, the current system totally collapses, with or without the ACA being upheld by the Supreme Court later this year. I also recently received my MHA (Master’s in Health Administration) degree, and the ACA was an elective course I took over the summer 2011 semester, so our discussions included whether or not the ACA would be struck down or not. This was also a topic in my Health Law class that was taught by a practicing health care attorney in South Florida.

Fukuyama is known to me, and I find his “end of history” argument to be specious at best, because history never ends until time itself ends. He claims it has ended because we have won the individual liberty and freedom battle that has been part of much of human history for the better part of the last 5000 years. However, and I think you will agree, the one area where we have not been successful has been winning the battle against poverty, lack of adequate and affordable health care, disease, lack of a decent education and meaningful and rewarding employment for all that will create a harmonious and peaceful society and world. Until we accomplish that goal, history can never be said to have ended, because we are leaving millions of our fellow human beings in despair, hopelessness and suffering that will one day cause our civilization to fall, just as invasion or natural disasters did to Rome, the Mayans, Inca, and other ancient peoples.

Thank you for your comments.

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