Are private insurers better than Medicare in controlling costs in McAllen?

Posted by on Tuesday, Dec 7, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

McAllen And El Paso Revisited: Medicare Variations Not Always Reflected In The Under-Sixty-Five Population

By Luisa Franzini, Osama I. Mikhail and Jonathan S. Skinner
Health Affairs
December 2010

Medicare spending for the elderly is much higher in McAllen, Texas, than in El Paso, Texas, as reported in a 2009 New Yorker article by Atul Gawande. To investigate whether this disparity was present in the non-Medicare populations of those two cities, we obtained medical use and expense data for patients privately insured by Blue Cross and Blue Shield of Texas.

Variations In Medicare Use And Spending

Total price-adjusted Medicare spending was 86 percent higher in McAllen than in El Paso, and was 75 percent above the national average in 2007.

In 2007, Medicare enrollees in McAllen were far more likely to be admitted to the hospital and to die in the hospital than they were in El Paso. They were also much more likely to be seen near the end of their lives by more than ten physicians — a good measure for fragmentation, in that the involvement of a large number of physicians typically signals a lack of coordination of care provided to patients. Finally, there were sharp differences in the extent of cardiac surgical procedures; again, rates were higher in McAllen.

Variations For The Insured Population Under Age Sixty-Five

Surprisingly, and in contrast to the Medicare data, for the population insured by Blue Cross Blue Shield of Texas, total spending per member per year in McAllen was 7 percent lower than in El Paso. Although spending for professional and inpatient services were similar in the two regions, spending for outpatient services in McAllen was 31 percent less.

Use of medical services was also similar or somewhat lower in McAllen compared to El Paso. Inpatient admissions in McAllen were 84 percent of admissions in El Paso; professional and outpatient services in McAllen were 94 percent and 72 percent, respectively, of those in El Paso.

(Variations by age for those under sixty-five)

For those age fifty and younger, use rates were generally similar or lower in McAllen than in El Paso — particularly for the population ages 25–50, for whom use of inpatient, outpatient, and professional services in McAllen were 66 percent, 80 percent, and 86 percent, respectively, of those in El Paso. Patterns were similar for spending measures.

It was in the population age 50 and older – largely people ages 50–64 — that strong differences between El Paso and McAllen in the use of inpatient medical services and spending emerged. Indeed, inpatient admissions for the Blue Cross and Blue Shield of Texas population age 50 and older were 89 percent higher in McAllen. Per patient inpatient spending for this same age group was 117 percent higher in McAllen — roughly the same difference as the overall difference in the use of Medicare services and spending. In part, the higher inpatient use of medical services and costs for this group are offset by lower outpatient medical services use and spending, leaving overall spending in McAllen for this age group 23 percent above those in El Paso. That is still well below the 86 percent Medicare differential between the two cities.


We have demonstrated that the sharp differences in the use of Medicare services between El Paso and McAllen, Texas, were not generally found in the population of Blue Cross and Blue Shield enrollees under age sixty-five in Hidalgo County (McAllen) and El Paso County. We considered several explanations for these patterns, including differences in prices, health, incomes, and other factors. Ultimately, we hypothesize that some part of the puzzle may be explained by private insurance companies and Medicare exhibiting very different interactions with local health care providers.

Thus, our study is consistent with Gawande’s finding of a “culture of money “— increasing the use of profitable Medicare services when there is diagnostic and procedural discretion and clinical latitude — but that such a culture may also be constrained by private insurance plans with their more stringent reviews of the use of medical services.

Because our study was limited to just two regions, we do not know to what extent providers may compensate for lower pricing from Medicare by negotiating higher prices, or cost shifting, to private insurance. Nor do we entirely understand why hospitalization rates for the privately insured residents of McAllen who are older than age fifty are so much higher — and outpatient rates so much lower — than in El Paso.

Further research is needed, such as the variations study mandated by the Affordable Care Act that is now being carried out under the auspices of the Institute of Medicine. But our preliminary results are consistent with the idea that health care providers can respond quite differently to incentives embedded in large federal programs such as Medicare compared to those present in private insurance programs.


Study: Private insurance plans better at controlling costs

By Jason Millman
The Hill
December 7, 2010

Private insurance plans might be better at controlling healthcare costs than Medicare, according to a Health Affairs study released Tuesday morning.


The Cost Conundrum

Posted by Atul Gawande
The New Yorker
December 6, 2010

A new study introduces a fascinating — and hopeful — wrinkle to the McAllen, Texas, cost conundrum.

I visited McAllen, some readers may recall, to speak with doctors and hospital leaders about why its costs for Medicare patients have, for going on a decade, run almost double that for Medicare patients up the border in El Paso—almost sixteen thousand dollars per person versus eight thousand three hundred dollars in 2007. The populations had similar levels of poverty and poor health. By many quality measures, the hospitals were, if anything, better in El Paso. Yet the Medicare data showed McAllen doctors ordering markedly more tests, more surgery, more specialist visits, more home health services, more hospital admissions, more everything.

Yet can we really extrapolate from the costs of older Medicare patients to all younger ones? After the article was published, Texas Blue Cross Blue Shield gave unusual access to the complete cost files of their members under the age of sixty-five to researchers at the University of Texas School of Public Health and Dartmouth. This week, in the journal Health Affairs, the researchers published their findings. They discovered a shift with age. For members fifty or older, McAllen was indeed significantly more expensive than El Paso. But for those under fifty, McAllen was downright ordinary — even less costly than El Paso. They had escaped high-cost care.

It’s true that employees younger than fifty with Blue Cross coverage are a somewhat distinctive group. They are healthier than average and account for only a small percentage of local health costs. Nationally, people older than fifty account for about seventy per cent of total spending; among people under fifty, the poor and disabled account for much of the rest. The overall cost problem remains. But there is an important revelation here: not all the health care in a high-cost community has to be out of whack. The questions we then must ask are why the pattern is different for some groups of people, and whether such differences suggest ways to change the pattern for everyone.

There are two main explanations for the discrepancy: McAllen doctors could simply offer a lower-cost care for the kinds of conditions people under fifty have (pregnancies and traumatic injuries tend to be the big-ticket items); or Blue Cross could be particularly effective at restricting overspending. It’s hard to know which is the answer. Looking at the evidence available, we can’t be sure. But I am rooting for the idea that Blue Cross is making a difference.

According to this new study published in Health Affairs, the widely-publicized differences in Medicare use and spending between McAllen and El Paso did not occur in those individuals covered by Blue Cross and Blue Shield of Texas (BCBST), at least not quite. Today the media are reporting this study as demonstrating that private insurance plans are better at controlling costs than is Medicare. A closer look at the findings should make us question this conclusion.

Atul Gawande’s original report certainly confirmed that both health care use and spending in Medicare were much higher in McAllen than in El Paso, which he attributed to a culture of doctors in McAllen who treated patients as profit centers by increasing the intensity of services.

Is it true that BCBST was able to control the excesses of the McAllen physicians through managed care and other incentives? Or is there a more plausible explanation?

The population studied was insured by BCBST, which meant that, especially for the portion under 50, they were primarily healthy employees and their young, healthy families, certainly much healthier than the Medicare population. These individuals do not need much health care, and what they do use is quite straightforward. Preventive services, maternity care, fractures, acute illnesses and the such all have simple diagnostic and management algorithms. There really isn’t much leeway for adding superfluous services, so it is no surprise that use and spending would be about the same in both McAllen and El Paso.

What about the people over 50 on BCBST? These people are beginning to develop chronic disorders that do require more health care. During a continuum of care, there are more options for physicians to increase the frequency and intensity of services. For patients over 65 on Medicare, McAllen physicians do provide greater intensity of care, but does BCBST’s private insurer management techniques successfully control these excesses for patents under 65?

For BCBST patients aged 50 to 64, inpatient admissions in McAllen were 89 percent higher than in El Paso. Per patient inpatient spending was 117 percent higher in McAllen. Although outpatient use and spending were lower, overall spending was still 23 percent higher in McAllen for this age group. Besides, where are the real bucks? In the hospital or in outpatient care?

Gawande is “rooting for the idea that Blue Cross is making a difference.” Is an 89 percent increase in hospitalization rates really an endorsement of the management services that the private insurers keep selling us?

And the media? You would think that they would read the study before reporting on it (only 8 pages) instead of merely lifting a few points from the Health Affairs press release this morning. The title: “New Health Affairs Study Suggests That Private Insurers Control Health Care Spending Better Than Medicare.” Maybe the Health Affairs editors also should read their own articles before issuing press releases on them.

Socialized medicine comes to Yosemite

Posted by on Monday, Dec 6, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Innovative Plan To Keep Yosemite Clinic Open

By Diana Marcum
California Healthline
December 6, 2010

The medical clinic in Yosemite National Park… will become the first medical clinic in a national park to be operated by the U.S. Public Health Service Commissioned Corps.

It’s an unusual solution to a problem that threatened to leave the storied tourist draw without a clinic.

Tenet — the Dallas-based investor-owned hospital company that’s owned the clinic since 1995 — has been losing money on the facility every year.

“There’s lots of patients, but not a lot of revenue,” said Yosemite spokesperson Scott Gediman, adding, “The bottom line was we were looking for a way to keep a clinic open when it couldn’t make money.”

Most national parks don’t have their own clinics because they are near cities. But no clinic in Yosemite would mean rangers, tourists and workers in the country’s most visited park would be more than an hour’s drive away from medical care.

In October, as the clinic’s fate remained precarious, local climbers hung a sign reading “Save Our Clinic ” high up on El Capitan, the iconic 3,000-foot vertical rock formation at the north end of Yosemite Valley.

Housed in a stone and timber lodge in the heart of Yosemite Village, the clinic, which opened in 1929, is a family practice and outdoor adventure emergency department rolled into one. The clinic has served about 7,000 patients annually.

“We see everything here,” Sean Pence, the clinic manager, said. He added, “We get colds and flus, abrasions, heart attacks. We’re orthopedic central — lots of ankles and wrist injuries from falls. We see snowboarders with head injuries, climbers with frostbite.”

The two agencies — Public Health Service and the National Park Service — will man the clinic together. The health service is providing doctors and nurses, and the park service is providing building maintenance and support staff.

Yosemite visitors know how isolated Yosemite Valley is. With a large permanent park staff and the highest volume of tourists of all national parks, Yosemite’s 24-hour clinic has been a godsend for those with urgent or sometimes life-threatening needs. So what were they to do when the clinic’s operator, investor-owned Tenet, decided to leave because the clinic wasn’t profitable?

Where do we usually turn when there is a crying need that the private sector fails to fulfill? Did I hear… The Government?

Yes. Talk about an ideal solution. Our own Public Health Service providing health care in our own national park. Socialized medicine at its finest. This is an essential service being provided to those who need it – not based on the ability to milk a profit, but based simply on meeting the health care needs of a community, albeit an unusual community including many foreign visitors.

Think of how fortunate the park employees and visitors will be. They will have available, 24 hours a day, medical services of which we can be envious. Think about that. Wouldn’t it be nice if we had in our own communities 24-hour clinics staffed with our own public employees who were there with a mission to serve, rather than a mission to enhance profits?

Maybe we’ve been too wimpy in pushing merely for a single payer insurance program. We’re already pay more per capita through the tax system than do nations with socialized medicine. Maybe we should be advocating for a better deal by improving and expanding the National Health Service so that we could all have access to it. Not just Medicare for all, but National Health Service for all.

The opponents of health care reform have moved the goal posts so far to the right that even a Blue Cross/Blue Shield-like public option has been excluded. Suppose we move our goal posts far to the left to a program of socialized medicine – an improved National Health Service for all. If the opponents of reform really believed that was a genuine threat, maybe they would meet us center field with a private health care delivery system financed by a single payer Medicare for all.

Can we expect that coming from a government that is too timid to stand up to the billionaires who have benefited from the massive transfer from the workers to the wealthy? A government that would dig our deficit hole deeper by not allowing a temporary, decade-long, partial tax holiday for billionaires to expire as scheduled? Don’t think so. Obama promised health care for all, but instead he is delivering much more wealth for the wealthiest, and we’re paying.

The European Parliament voted overwhelmingly on November 24 to approve draft legislation that encourages direct-to-consumer “high quality information” from pharmaceutical companies to patients.

The measure reaffirmed the European ban on television and radio drug advertisements, and recommended that nations extend the ban to print media. Nevertheless the vote was greeted as a victory by the pharmaceutical companies. The European Federation of Pharmaceutical Industries and Associations called it a “constructive approach.” The Director General of that trade group called the vote “clearly a step in the right direction.”

In response, our friends at the International Association of Health Policy and the Federation of Associations for the Defense of Public Health issued this statement:

The advertising to users of medicines puts at risk the health and sustainability of health care systems

December 2, 2010

The European Parliament has just approved the possibility that the pharmaceutical industry to report directly to patients about medication on prescription.

This measure, which supposedly done to improve the information of the citizens, is really a major setback to the right of reliable information and quality.

There is much evidence that the information the industry provides to professionals contains numerous biases that magnify the effects of pharmaceuticals and minimizes or hides the health risks.

It turns out to be difficult therefore to think that the own industry that makes the products and it has direct interests to promote his sale could favour a ” objective and impartial ” information, and it is expected that this information is addressed to encourage inappropriate consumption of drugs and shoot up pharmaceutical cost (as has been demonstrated in countries like USA where there is direct advertising of medicines to “consumers”), which is particularly irresponsible and dangerous in a time of economic crisis and can lead to damage patients health.

The legislation leaves it to the EU member states the final regulation of this information, and obviously this way can establish control mechanisms to reduce the worst effects of this rule. Anyway, the experience of USA and Canada leaves room for little doubt about the negative health effects and costs of this measure.

Therefore we understand that the Council of the EU where their member states are present must veto this initiative that represents a step backwards on the current situation, an attack to public health and puts at risk the health of citizens and the sustainability of the European Union health systems.

International Association of Health Policy
Federation of Associations for the Defence of Public Health

Victor Fuchs explains resistance to national health insurance

Posted by on Friday, Dec 3, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Government Payment for Health Care — Causes and Consequences

By Victor R. Fuchs, Ph.D.
The New England Journal of Medicine
December 1, 2010

The most obvious, easily quantifiable difference between the United States and countries that have national health insurance is that those countries spend much less on health care, whether measured per capita or as a share of the gross domestic product. Not only is the United States the highest spender, but the gap between it and the other countries is unnaturally large.

The difficult question is why the special interests have more influence over health policy in the United States than they do elsewhere. The answer probably lies in part in the structure of the U.S. political system, including the role of primary elections, long and expensive election campaigns, the separation of powers, the numerous congressional committees and subcommittees with overlapping authority, and the need for supermajorities in the Senate in order to pass meaningful legislation. But the quirks of the political system can’t be the whole answer. If the U.S. public wanted a different outcome, over time they could move policy in that direction.

A second large difference between health care in the United States and in countries with national health insurance is the more important role of redistribution in the latter countries. Such redistribution is evident in the greater equality of access to care and in the sharing of costs through taxes on income or payroll, value-added tax or sales tax, or other forms of taxation that are either proportional or progressive with respect to income. Of course, all insurance is redistributive after the fact. The large amount of care utilized by a small proportion of policy holders is paid from the premiums of others who use little care. The important distinction is that under a national health insurance system, the redistribution occurs before the event, since it is clear that some individuals will pay much less tax than the value of their insurance and some will pay much more.

Since redistribution plays a greater role in the health care systems of other countries than it does in the United States, there is an implication that a more egalitarian ethos holds sway in Europe, Canada, Australia, and New Zealand. From de Tocqueville to the present, many observers have commented on the stronger role of individualism in the United States than elsewhere, but there is no consensus regarding its explanation. Possible contributors to the phenomenon include the heterogeneity of the population, the revolutionary origins of the country with its dedication to “life, liberty, and the pursuit of happiness,” and the absence of many centuries of a common language, history, and culture. In speculating about the possible rise of despotism in a democracy, de Tocqueville painted a grim picture of individualism taken to the extreme. He wrote, “Each . . . living apart, was a stranger to all the rest — his children and private friends constitute to him the whole of mankind; as for the rest of his fellow citizens, he is close to them, but he sees them not; he exists but in himself and for himself alone.”

The lower spending and the greater redistribution in countries that have national health insurance are not independent phenomena. If spending in these countries were at U.S. levels, the taxation required to accomplish their redistribution goals would probably wreck the economy. Given the social or political desire to redistribute health care resources, constraints on spending become a necessity. These constraints take various forms, such as controls over the number and specialty mix of physicians, limits on facilities and acquisition of expensive technologies, hard bargaining over prices charged by drug companies and other suppliers, and restraints on physicians’ fees and incomes, among others.

Because the governments in these countries pay for most medical care — usually 70 to 90% of total expenditures — they are in a good position to apply these cost-restraining measures. They have what economists call “monopsony power.” The U.S. government, although it pays for almost 50% of health care, makes very little use of its power to restrain costs. Thus, in one sense, Americans wind up in the worst of all worlds, with government bearing a big part of the burden of paying for health care, with the concomitant large burden of taxes, but exercising very little control over the cost of care. As an indication of how absurd the situation is in the United States, government currently spends more per capita for health care than eight European countries spend from all sources on health care.


What’s Ahead for Health Insurance in the United States?

By Victor R. Fuchs, Ph.D.
The New England Journal of Medicine
June 6, 2002

The announcement that most of the nation’s biggest insurers — Aetna, CIGNA, Humana, the United Health Group, and Wellpoint Health Network — will be introducing a new kind of health plan during the next year or two signals the beginning of a new era in health insurance in the United States. These plans feature a complicated menu of premiums, copayments, and deductibles. One of their major effects will be to shift the burden of health care costs from employees who use little care to those who use more. Thus, the new plans will be another nail in the coffin of health insurance as a form of social insurance.

The Reemergence of Social Insurance

The case for the fairness of the social-insurance model will be strengthened as people realize that most health problems have, at least in part, a genetic basis. The case for the model’s efficiency will benefit from recognition that employment-based insurance has high administrative costs but provides no advantages to society as a whole. The desire to exert more direct control over increasing expenditures will provide an additional reason to introduce some form of national health insurance.

The timing of such a change, however, will depend largely on factors external to health care. Major changes in health policy are political acts undertaken for political purposes. The political nature of such changes was apparent when Bismarck introduced national health insurance to the new German state in the 19th century. It was apparent when England adopted national health insurance after World War II; and it will be apparent in the United States as well. National health insurance will probably come to the United States after a major change in the political climate — the kind of change that often accompanies a war, a depression, or large-scale civil unrest. Until then, the chief effect of the new plans will be to make young and healthy workers better off at the expense of their older, sicker colleagues.

In his 2002 NEJM article, Victor Fuchs explained the inevitability of national health insurance in the United States, but cautioned that will likely only come to our nation “after a major change in the political climate – the kind of change that often accompanies a war, a depression, or large-scale civil unrest.” In his current NEJM article, he provides plausible reasons as to why there has been such resistance to the inevitability of national health insurance – intense enough perhaps to require political upheaval, if we expect action. We have been trying war and deep recession. Does that mean our only hope left is “large-scale civil unrest”?

Can states control private insurance premiums?

Posted by on Thursday, Dec 2, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Rate Review: Spotlight on State Efforts to Make Health Insurance More Affordable

Kaiser Family Foundation
December 2010

The Patient Protection and Affordable Care Act (ACA) requires the Department of Health and Human Services (HHS) to work in collaboration with state insurance departments to conduct an annual review of “unreasonable increases in premiums” for “nongrandfathered” health plans. Plans that propose an unreasonable rate will be required to provide a justification for the increase to HHS, and post the justification on their websites.

Yet the ACA does not alter states’ existing regulatory authority over health insurance rates. Such state authority varies dramatically, ranging from states with no authority at all to those that have robust authority to review and approve or disapprove rates before they are implemented.

Key findings include the following:

A state’s statutory authority often tells little about how rate review is actually conducted in the state.

In many cases, statutory authority to disapprove rates does not extend to all market participants.

Most states we interviewed use a subjective standard to guide the review and approval of rates.

Most of the states we interviewed have made little or no effort to make rate filings transparent.

Many states lack the capacity and resources to conduct an adequate review.

Proponents of the Patient Protection and Affordable Care Act (ACA) have claimed that states will be given broad powers to control private health insurance premiums, making health plans affordable again. Can we really anticipate relief from the outrageous prices of private health plans?

Under ACA, the federal role in premium regulation is limited to reviewing unreasonable rate increases and requiring plans to post on their websites a justification for their increases. The law does not alter the states’ existing regulatory authority over health insurance rates.

So how well are the states doing? Not very well. You need only look at the numerous media reports of outrageous premium increases that have provoked the state regulators to demand explanations for these unconscionable incidences of rate gouging (is it really gouging?). The followup stories reveal that the regulators have been successful in convincing insurers to roll back their increases to mere multiples of the rate of inflation. Year after year. The current level of premiums is proof that the state regulators have been ineffective in making decent health plans affordable.

This report from the Kaiser Family Foundation confirms that state regulation is spotty at best, but we know that even in states with greater regulatory power, premiums have continued to rise inexorably. The only successes in slowing premium increases have been in those instances in which the regulators permit plans to strip benefits and shift costs to patients. Of course, that has resulted in making health care unaffordable, impairing access and sometimes resulting in personal bankruptcy.

If a plan is going to provide adequate coverage for health services, those costs will have to be paid by the insurer, and there is no way that state insurance regulators can demand a rollback to rates that would deplete the insurers’ reserves and drive them into bankruptcy.

It’s nice that the Department of Health and Human Services has been granted the authority to require the insurers to post explanations for why their premiums are so high (it’s the costs of health care, stupid), but it is disingenuous to say that this would have any real impact in slowing premium increases for adequate insurance plans.

An unfortunate, unique feature of health care financing in the United States is the profound administrative waste that has been a major contributor to placing us first amongst all nations in what we spend on health care. The premium game that state insurance regulators are playing is only one more example of that waste.

Single payer supporters already know what we should do to reduce this egregious waste. Eliminate the insurance middlemen and replace them with our own public monopsony (single buyer) – an improved Medicare for everyone. Then we can use more effective and more equitable single payer tools to slow future cost increases.

Fiscal Commission – “hastening the public option”

Posted by on Wednesday, Dec 1, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Final Report of National Commission on Fiscal Responsibility and Reform

December 1, 2010

From a discussion of the final recommendations, to be voted on by December 3:

Sen Dick Durbin (D-IL): We are hastening the day when the only option left will be a public option.

Rep. Paul Ryan (R-WI): I think Sen. Durbin probably said it right. We are hastening the day when the only option is the public option. I think you’re right (directed to Sen. Durbin), and I think that this advances that possibility and likelihood.

Rep. Jeb Hensarling (R-TX): I would agree with Sen. Durbin… you are hastening more people into the public option.

Rep. Jan Schakowsky (D-IL): To say that we’re going to reduce our deficit and our debt by asking Medicare beneficiaries to pay more for their health care, I think is absolutely unconscionable.   …already 30 percent of their income going to health care costs, I think is absolutely the wrong way to go when we do have other options. I put on the table, not as an if-all-else fails, a public option to reduce health care costs.

PNHP has issued a response to the commission recommendations:
“Deficit panel’s Rx is wrong medicine: doctors’ group”

The commission members understand that health care is the greatest contributor to our federal budget deficit. Most of them recognize that the health spending recommendations in their final report are inadequate to control continuing cost escalation.

Some would reduce government spending by shifting more costs to Medicare beneficiaries, even though they understand that current out-of-pocket costs are already excessively burdensome. To others, that would be unconscionable.

There seemed to be an understanding by both Democratic and Republican commission members that the failure to control Medicare spending will hasten the day when the public option will be the only option.

Why a public option? Apparently there is bipartisan agreement that a government insurance program would be more effective in slowing future health care spending. They understand that government systems have worked well in other nations.

Where they are confused is that they seem to think that all you need is the option of choosing a government plan, and that is enough to enable all of the single payer efficiencies. Of course, this is where they’re wrong. A government plan offered within our market of private plans is incapable of instituting most of the changes that make single payer systems work. As simply another player in our fragmented, dysfunctional system, it would be a very feeble force for efficiency.

So what does this really mean? It says that both Republicans and Democrats know that we are going to have to have direct government involvement if we ever hope to control health care spending, but they still need to learn that there is a tremendous difference between a powerful single payer monopsony and a wimpy public option.

California’s largest insurers continue to cheat

Posted by on Tuesday, Nov 30, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Blue Shield, Kaiser among state insurers fined

By Victoria Colliver
San Francisco Chronicle
November 30, 2010

State regulators Monday fined seven of California’s largest health insurers nearly $5 million for systematically failing to pay doctors and hospitals fairly and on time.

The California Department of Managed Health Care issued the fines following an 18-month audit in which investigators looked at a small but statistically significant sample of claims. The investigation found the plans were paying on average about 80 percent of the claims correctly, far below the legal threshold of 95 percent.

“Our clear and consistent message is that California’s hospitals and physicians must be paid fairly and on time,” said Cindy Ehnes, director of the Department of Managed Health Care, which is charged with regulating the states’ health maintenance organizations, or HMOs.

In addition to the fines, the companies must pay the doctors and hospitals restitution that is expected to run into the “tens of millions of dollars,” Ehnes said. The plans will also be required to come up with a plan to correct the problem and submit to future audits.

Five of the insurers, excluding Anthem and Blue Shield, were also found to have improper provider appeals processes.

When doctors and hospital officials try to dispute a claim, they often have to deal with the same individual who originally denied the claim in the appeals process, Ehnes said.

Cracking down on the health plans for not properly paying providers helps consumers, said Anthony Wright, executive director of Health Access California.

“Consumers would rather that the time and resources of health providers go to patient care, rather than in fighting to get insurers to pay correctly,” he said.

What services do the private insurers provide for us? Processing claims? They won’t even do that right 20 percent of the time, according to this California audit. The total of $5 million in fines that they were assessed is so paltry that they have no incentive to discontinue their highly profitable policy of delaying and denying legitimate claims.

Let’s have the members of Congress fire the insurers and set up our own national health program – an improved Medicare that covers everyone. If they won’t do that then let’s fire them, replacing them with responsible elected stewards who will.

Is Uwe Reinhardt for or against single payer?

Posted by on Monday, Nov 29, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Reinhardt: Repeal Health Care, Make GOP Cut Costs

By John Greenwald
The Fiscal Times
November 28, 2010

In a freewheeling interview with The Fiscal Times, (Uwe Reinhardt) critiques the new health care reform law — including its lack of cost containment — and recent proposals from the president’s deficit-cutting panel. Never one to mince words, Reinhardt also discusses what he sees as the real culprit behind soaring health care costs, why he doubts a single payer health care system could work in the United States — and where he believes the country’s founding fathers went wrong.

The Fiscal Times (TFT): What would a high-performing national health care system look like?

Uwe Reinhardt (UR): I think the Germans, the Swiss, the Dutch have a perfectly fine approach. It’s not a single-payer system. While I’m a Canadian I am not for [single payer] in the U.S. because we do not have a political system that can handle it responsibly. Canada has a parliamentary system that insulates considerably the public program from lobbying.

TFT: So you favor universal coverage but not a single payer system?

UR: For other countries I do [favor single payer] but we can’t run it. You need a responsible system of governance. Whatever you can say about U.S. governance, you cannot call it responsible. You really couldn’t. I think the founding fathers gave us an impotent government that acts quite irresponsibly. I don’t think parliamentary systems are that bad.

Single payer advocates frequently are perplexed by Uwe Reinhardt’s positions on health care reform.

He seems to support health care justice. He frequently uses the example of the waitress who is trying her best to support herself and her child, but who is unable to afford health care. By extrapolation, a just society would not let her or her child go without the essential health care services that they might need.

Yet what about single payer? He is a supporter for single payer, but for other countries. In this interview he states that he does not support single payer for the United States. The reason he gives is that “the founding fathers gave us an impotent government that acts quite irresponsibly.”

Right now the British and the Canadians are facing an assault on their public health systems by their conservative governments. In the United States, we are facing an assault on our Medicare program by the conservatives and right-leaning moderates. Although we don’t know how much damage, if any, will be done to the systems, it is highly probable that all three of the systems will survive intact considering the strong public support in each nation.

Does our government act irresponsibly? Wars? Income transfer from the workers to the wealthy? Neglect of poverty and other social inequities? Of course our leaders have been irresponsible, and so have the leaders of all other nations, but only at times. Social Security? Medicare? Our national parks? Most government activities are quite responsible and certainly do not set us apart from other nations.

Although Reinhardt criticizes the new health care reform law for failing to contain costs, he states, “The private sector is the inflationary component of health care, not Medicare or Medicaid.” Can he seriously contend that these government programs are irresponsible and impotent when they continue to outperform the private plans on cost containment? Considering this, how can he support single payer for other nations, yet reject it for the United States?

Government impotence and irresponsibility are not reasons to reject single payer. They are merely an excuse as to why we haven’t enacted it yet. What we need is more responsible people power. Let’s get busy stirring it up.

Joseph Stiglitz on single payer

Posted by on Friday, Nov 26, 2010

This entry is from Dr. McCanne's Quote of the Day, a daily health policy update on the single-payer health care reform movement. The QotD is archived on PNHP's website.

Rema Nagarajan interviews Joseph Stiglitz

The Times of India
November 26, 2010

Why have you been pitching for a single payer system for health insurance rather than a system where several private companies compete?

The US model of private health insurers has been proven inefficient and expensive. Rather than provide better healthcare at lower costs, insurance companies innovate at finding better ways of discrimination. They are inefficient because they are trying to figure out how to insure people who don’t need the cover and keep out people who need it. With many companies, they also need to spend on marketing and advertising. The incentives are all wrong and the transaction costs are very high and you have to give them a high profit. In health, social and private incentives are totally disparate. Competition does not work in healthcare especially in the health insurance market. Several countries like the UK, France and Sweden have a single payer system, differing only in the organisation of healthcare delivery.

Several health insurance companies are setting up business here. Should India be worried?

India would be in a terrible mess, given the size of its population, if it went down the wrong route (of private companies for health insurance). They should learn from the mess that the US has got into. Once the companies start making profits, special interests in politics will come into play and it will be difficult to get them out.

Nobel laureate Joseph Stiglitz understands single payer. President Obama knows that he does. So why doesn’t…

(No, health care reform shouldn’t be reduced to a mere conundrum.)

Alan Simpson as Captain Ahab

Posted by on Wednesday, Nov 24, 2010

The Fate’s Lieutenant

Last week the proposal by the co-chairs of the president’s bipartisan National Commission on Fiscal Responsibility and Reform reverberated on down the mass media echo chamber. They called for substantial cuts in Social Security and Medicare benefits, among other things that would undermine our basic standard of living.

The media saturation was intense. Even for casual news-watchers it was like being herded into a “captive audience meeting,” one of those smarmy PR jobs that company bosses hire out to consultants, who tell the workers through a microphone why they don’t need a union.

The proposals of the co-chairs are ambitious. They would re-make the United States of America as a place not only without unions, but largely without a middle class: leaving on one side low-wage workers (who foot the bill for their own benefits), and on the other side the super-rich, with precious few in the middle.

The editors at our local paper, the Albany Times Union went ahead and amplified the message, accepting it rather than holding it up to scrutiny. Starting with the premise that “the country needs to confront what it would take to stabilize the accumulation of the federal debt,” they uncritically embraced the co-chairs’ proposal, concluding that “Every one of its provisions deserves serious consideration.” They even supported the messenger, although in a backhanded way:

Hardly an unreasonable plan, even as it’s advanced by the likes of Mr. Simpson, who’s previously likened Social Security to a giant mammary gland and called its recipients “greedy geezers.”

Republican co-chair of the president’s commission, Alan Simpson is a conservative Republican fossil. His counterpart, Erskine Bowles, is a conservative Democratic Party dinosaur. What they share, besides being millionaires whose “public service” helped to enhance their immense personal fortunes, are failed ideas that ought to remain extinct. But here they are, the president’s appointees.

What to say? Well, if you want fossilized, vengeful and smarmy at center stage, then Alan Simpson is your man, Mr. President.


Back in June Mr. Simpson unhinged upon Alex Lawson of Social Security Works with an expletive-laced rant. Simpson was full of personal insults yet vacant of facts, rambling on.

When economist James K. Galbraith, professor of government at The University of Texas, gave his must-read testimony to the deficit commission, he cited that rant as evidence of Simpson’s incompetence. Galbraith questioned the legitimacy of the commission and demanded that the body advance no proposals.

Then in September Simpson stuck his foot into his mouth again with the line the Times Union editors mentioned, calling Social Security – “a milk cow with 310 million -” … udders. (You can figure out the profanity Simpson used.)

The National Organization for Women immediately responded, saying that Simpson’s quip amounted to a crass insult “to those who depend on Social Security – many of them older women, children and people with disabilities.” Soon afterward NOW President Terry O’Neill delivered over 1,500 baby bottle nipples, sent by NOW members from across the country, to Mr. Simpson.

I love Terry O’Neill. She is so courageous and unflappable. You can see her with Simpson on YouTube. As she hands her “gift” to Mr. Simpson, she smiles and says it is given “in the spirit of hoping that you’ll have the decency to resign.” She then presses Simpson for a pledge not to cut Social Security benefits. He acquits himself badly. As he tries to dodge and dismiss Ms. O’Neill, Simpson seems ever more cadaveric and sarcastic and ultimately furious.

Last week as the media echoed Bowles and Simpson’s proposals, particular delight focused on Alan Simpson’s rhetoric. The Times Union editors joined in. Here’s their lead:

Leave it to Alan Simpson, so blunt and irreverent, to set the tone for the debate that America has avoided for far too long.

A particularly illuminating Simpson quote was noted in the Wall Street Journal (and elsewhere):

“We have harpooned every whale in the ocean and some of the minnows,” said co-chairman Alan Simpson, a retired Wyoming Republican senator. “No one has ever done that before.”

Who does Alan Simpson think he is? Captain Ahab?

Like the captain of The Pequod, the ship in Herman Melville’s classic novel Moby Dick, the retired Wyoming senator lusts after a monomaniacal purpose – in this case, to send the middle class to the bottom, by raising the retirement age, slashing social spending, further privatizing Medicare, privatizing Social Security, taxing health insurance benefits and lowering the tax rate for corporations.

With unemployment at nearly 10% officially – and unofficially twice that – with health care costs sinking us all, with two-income households the norm and two, even three jobs for many workers a necessity, an alternative vision stands in plain sight yet scarcely makes the news. Nicholas Kristof proved this rule with an exceptional column last week titled “A Hedge Fund Republic?” He reminded us that the poorer 90 percent of people in the United States own only 29 percent of the wealth, while the wealthiest 1 percent own an even greater share, 34 percent of the total.

When the top 10 percent possess more than two-thirds of total holdings, it is time to increase taxes on the rich. We could easily afford to shorten the workweek with no cut in pay and also lower the retirement age – and each of these would put millions of people to work. We can also extend and improve Medicare to cover all necessary care for everyone, from birth, something that would save hundreds of billions of dollars annually. Bringing the troops home from Iraq and Afghanistan would not only save trillions of dollars, but human lives.

As for Social Security, only the first $106,800 of income is taxed for the Social Security fund. Nancy Altman and Eric Kingson point out that if this cap were scrapped, and all income was taxed at the present rate, benefits could be raised across the board and Social Security would be assured solvency for 75 years to come. As it is, there is no immediate crisis in Social Security funding. Well, then, let’s scrap the cap!


At the end of Moby Dick only the young sailor Ishmael survives, afloat on a coffin. But along the way the first mate, Starbuck, suggests to the revenge-crazed captain that he has got the great whale all wrong. Ironically, today “Starbucks” (named for Melville’s tragic character) has become a designer coffee-shop that symbolizes a middle-class lifestyle rich with lattes and car payments, i-Pods and consumer credit debts.

Although partisan differences loudly dominate when it comes to the TV, we have seen a bipartisan commitment to privatize profit and socialize risk, as President Bush and then President Obama both rushed to rescue Wall Street’s financiers and their insurers and bankers, instead of the debtors.

Now Alan Simpson, Mr. Obama’s appointee, wants “to harpoon every whale in the ocean” even if it means we all go down with the ship. For the co-captains of the deficit commission the credo is no longer E pluribus unum (“out of many, one”), but “I’ve got mine – you swim for it!”

Isn’t it simply absurd to hear retired millionaires like Simpson and Bowles, whose families grew wealthy at taxpayer expense, telling the people of the United States that they live too long to be allowed to retire at age 65? The very idea should be laughed off the stage, not championed and not echoed.

There is still hope, for in reality they have not harpooned any whales. All they’ve really done is issue a report and attend some press events. Yet as the media, including this newspaper, chooses to parrot Simpson’s maniacal ravings, we find ourselves like Starbuck and Ishmael, captive audience aboard The Pequod.


Horrible old man! Who’s over him, he cries; —aye, he would be a democrat to all above; look, how he lords it over all below! Oh! I plainly see my miserable office,— to obey, rebelling; and worse yet, to hate with touch of pity! For in his eyes I read some lurid woe would shrivel me up, had I it. Yet is there hope. Time and tide flow wide.

– Starbuck, in Moby Dick by Herman Melville (1851).

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