$126,000 drug that only makes the desperate sick

Posted by on Tuesday, Dec 8, 2009

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

Questioning a $30,000-a-Month Cancer Drug

By Andrew Pollack
The New York Times
December 4, 2009

A newly approved chemotherapy drug will cost about $30,000 a month, a sign that the prices of cancer medicines are continuing to rise despite growing concern about health care costs.

Critics, including many oncologists, say that patients and the health system cannot afford to pay huge prices for drugs that, on average, provide only a few extra months of life at best.

And Folotyn (made by Allos Therapeutics) has not even been shown to prolong lives — only to shrink tumors. The drug was approved by the Food and Drug Administration in late September as a treatment for peripheral T-cell lymphoma, a rare and usually aggressive blood cancer that strikes an estimated 5,600 Americans each year.

(James V. Caruso, the chief commercial officer for Allos) said the price of Folotyn was not out of line with that of other drugs for rare cancers. Patients, moreover, are likely to use the drug for only a couple of months because the tumor worsens so quickly, he said.

In a note to clients in October, Joshua Schimmer, an analyst at Leerink Swann, estimated that a typical treatment would last 3.5 months and cost $126,000, or about $36,000 a month.



Prescribing Information for Folotyn (pralatrexate injection)

Allos Therapeutics, Inc.
Issued: September 2009

Indications and Usage:

Folotyn is indicated for the treatment of patients with relapsed or refractory peripheral T-cell lymphoma (PTCL). This indication is based on overall response rate. Clinical benefit such as improvement in progression free survival or overall survival has not been demonstrated.

Adverse reactions (list includes only those events occurring in 10 percent or more of patients treated):

Pharyngolaryngeal pain
Liver function test abnormal
Abdominal pain
Pain in extremity
Back pain
Night sweats
Upper respiratory tract infection

Percent of patients experiencing any adverse event: 100 percent

Forty-four percent of patients (n = 49) experienced a serious adverse event while on study or within 30 days after their last dose of Folotyn.



Patient Protection and Affordable Care Act (Amendment in Senate)

The Library of Congress, THOMAS

Title VII – Improving access to innovative medical therapies
Sec. 7002, (a), (2), (k)
(7) Exclusivity for reference product
(A) Effective date of biosimilar application approval – Approval of an application under this subsection may not be made effective by the Secretary until the date that is 12 years after the date on which the reference product was first licensed under subsection (a).


Fotolyn is a new miracle drug brought to us by our highly revered pharmaceutical industry. This new drug has no demonstrated clinical benefit, though all patients have adverse reactions, almost half of them serious – including death.

In an astonishing moment of candor, James Caruso, chief commercial officer for Allos, provided reassurance that the very high monthly cost of Fotolyn would not be protracted since the tumor worsens so quickly.

What makes this drug a miracle only the investment community can understand. Desperate patients will spend an average of $126,000 for this worthless drug. On Wall Street that’s a miracle, but within the health policy community, that’s a tragedy.

You can be assured that, in crafting health care reform, Congress has responded to the very high prices of newer patented therapeutic agents, but in a perverse way. Recognizing the great potential of genetically-engineered biologics, Congress has included in the legislation an unprecedented 12 year exclusivity, protecting the firms from competition of biosimilar products.

Maybe the biotech firms will be able to parley this into seven-figure treatment programs for the desperately ill. The soak-the-sick policies may not work for patients, but they certainly work well for Wall Street. And doesn’t that seem to be where Congress’s loyalties lie these days?

News from Indianapolis, IN

Posted by on Tuesday, Dec 8, 2009

On December 3, Dr. Chris Stack joined a group of over 30 health care activists to protest at the office of Sen. Evan Bayh. The group spoke with Sen. Bayh’s regional director, Andrew Hogan, who promised to pass along the group’s demands to the senator. Dr. Stack is a retired orthopedic surgeon who has been an active member of PNHP since 2003.

Two-thirds of Americans support Medicare-for-all (#2 of 6)

Citizen juries demonstrate massive support for single-payer
By Kip Sullivan, JD

“They contradicted both beltway and public opinion polls. The whole damn world seems to think the Clinton plan is the way to go. Yet they like the single-payer system, which isn’t even getting considered in Washington.”

That was how the president of the Jefferson Center characterized the outcome of a five-day “citizen jury” experiment in which 24 “jurors” listened to and questioned 30 experts on health care reform. (Patrick Howe, “‘Citizens jury’ supports Wellstone’s health care proposal over Clinton plan,” Minneapolis Star Tribune, October 15, 1993, 10A.) Of those 30 experts, only one, Senator Paul Wellstone (D-MN), spoke in favor of single-payer. (Gail Shearer of Consumers Union, which had endorsed single-payer by 1993, was one of the 30 experts to speak to the jury, but it is not clear from the Jefferson Center record that she spoke in favor of single-payer.)

The jury heard expert testimony for and against all three of the major types of health care reform legislation that have been promoted in the US over the last four decades. Senator Wellstone presented the case for his single-payer bill, numerous speakers made the case for Bill Clinton’s managed competition bill (a bill based on competition between insurance companies that use managed-care cost-control techniques), and numerous speakers made the case for what later came to be called “consumer-driven” health insurance policies (competition between insurance companies that sell policies with deductibles on the order of $2,000 for individuals and $5,000 for families).

The jury voted by massive majorities to reject the market-based proposals – managed competition and high-deductible policies – and, by a landslide majority (17 out of 24, or 71 percent), to endorse Wellstone’s single-payer bill. At the time the Jefferson Center report noted only that a majority of jurors voted for single-payer. The actual vote count was reported years later by Barry Casper in his book, Lost in Washington: Finding the Way Back to Democracy in America.

The unbearable lightness of polls

Observers were surprised at the jury’s rejection of the Clinton plan because polls taken at the time the Jefferson Center jury was meeting (the second week of October 1993) were reporting that a majority of the public supported Clinton’s Health Security Act, his “managed competition within a budget” bill that was supposed to create a system of universal health insurance. For example, a Gallup/CNN/USA Today poll (see Exhibit 1 page 10) released on September 24, 1993 showed 59 percent endorsed Clinton’s bill. But just three weeks later, on October 14, 1993, the jury rejected Clinton’s bill by a vote of 19 to 5. Five jurors out of 24 comes to 21 percent, far below the 60-percent level one would have expected based on polls.

The enormous gap between the citizens jury’s vote on Clinton’s bill and contemporary poll results illustrates a well known problem with polls: Although they can produce consistent and accurate results when the question is about something the respondents are familiar with, such as whether they have health insurance, they can produce wildly divergent and inaccurate results when the question is about a complex issue that respondents have had little time to study or even to think about.

Contrast, for example, a 2007 AP-Yahoo poll, which found 65 percent of Americans support a Medicare-for-all system, with a 2009 CBS poll which found only 50 percent think “government” would do a “better job” of providing health insurance than the insurance industry. The AP-Yahoo poll posed this question (the order of the two solutions was reversed from one respondent to the next):

Which comes closest to your view?

The United States should continue the current health insurance system in which most people get their health insurance from private employers, but some people have no insurance;

The United States should adopt a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers.

Sixty-five percent of respondents chose the second solution – the Medicare-for-all solution – while only 34 percent chose the current system.

Now consider the June 12-16, 2009 CBS poll which asked: “Do you think the government would do a better or worse job than private insurance companies in providing medical coverage?” Fifty percent said “the government” would do a better job versus 34 percent who said “the government” would do a worse job.

Now, just to raise your skepticism about polls another notch, consider this wrinkle. When CBS asked the same question two months later – during August 27-31, 2009 – they found 13 to 14 percent of respondents had changed their minds in favor of the insurance industry. That is, by late August (by which time dozens of tumultuous “town hall” meetings about the Democrats’ health care “reform” legislation had taken place), the percent who thought “the government” would do a better job had fallen to 36 (from 50 percent) while the percent who thought “the government” would do a worse job had risen to 47 (from 34 percent).

How do we make sense of these seemingly contradictory results? Do we trust the late-August CBS poll and say only one-third of Americans support single-payer? Or do we go with the AP-Yahoo poll and say two-thirds support single-payer? Or do we split the difference and say the June CBS poll got it about right – that half of Americans support single-payer?

Fortunately, we are not reduced to rolling dice or drawing straws. We can examine research that uses methods more reliable than those used by the typical poll, notably two citizen jury experiments. And we can examine polls that have produced contradictory results to see if we can find a reason why. I will use the remainder of this paper to report on the two citizen juries. I’ll examine polling data more closely in Part III of this series.

The Jefferson Center’s methodology

The Jefferson Center, a non-profit organization created in 1974 by Ned Crosby, invented the “citizen jury” label and developed the rules for them that are now used around the world, especially in the United Kingdom. These methods include: random selection of jurors; selection of experts and moderation of the discussion in a manner that minimizes bias; recording of the proceedings; a report from the jury indicating votes taken on major issues presented to it and recommendations from the jury; questionnaires for jurors after the jury has completed its work to inquire about their perception of the fairness of the process; and oversight and review by a steering committee to minimize bias.

The 24 jurors who gathered in a Washington, DC hotel on Sunday, October 10, 1993 were randomly selected from a pool of 2000. They included a 23-year-old college student from Colorado, a 27-year-old carpenter from Wisconsin, a 32-year-old janitor from Minnesota, a 44-year-old village clerk from New York, a 46-year-old banker from Indiana, a 51-year-old antique dealer from California, a 59-year-old retired nurse from Louisiana, and a 75-year-old retired insurance agent from Florida. Ten had voted for Clinton in the 1992 election, nine for George H.W. Bush, and five for Ross Perot. Three had no health insurance.

The experts who addressed the jury included three sitting US Senators, two former members of the House of Representatives, and 25 other experts including Gail Wilensky (who was the director of Medicare under the first President Bush and is a member of numerous corporate boards), Ira Magaziner (who directed Hillary Clinton’s health care reform task force), and Ron Pollack (director of Families USA). The discussion was moderated by Kathleen Hall Jamieson, dean of the Annenberg School for Communication at the University of Pennsylvania. Former CBS and NBC TV anchor Roger Mudd was on hand to film a documentary which aired in April 1994.

After five days of listening to and cross-examining the 30 experts (the jury asked the experts more than 500 questions), the jurors refused even to vote on the “managed competition lite” proposal presented by Senator Dave Durenberger (R-MN) and a high-deductible (Medical Savings Account) proposal presented by Senator Don Nickles (R-OK). In other words, the jury rejected the Durenberger and Nickle’s legislation by a vote of 24 to zero. They rejected Clinton’s Health Security Act by a vote of 19 to 5. When they were asked how many supported Sen. Wellstone’s single-payer bill (S. 491), 17 of 24 (71 percent) raised their hands.

Washington Post columnist William Raspberry wrote at the time:

Perhaps most interesting about last week’s verdict is its defiance of inside-the-Beltway wisdom that says a single-payer … plan can’t be passed. These jurors think it can – and ought to be. (William Raspberry, “Citizens jury won over by merits of Wellstone’s single-payer plan,” Washington Post, October 21, 1993, 23A)

I have already noted one reason why observers were surprised by the jury’s votes, namely, polls taken around the time the jury met indicated a majority of the public liked Clinton’s bill. But there was another reason to be surprised: The Jefferson Center created a playing field that was steeply tilted against Wellstone’s single-payer bill.

To begin with, the Center limited the jury to two questions: “Do we need health care reform in America?” and, “Is the Clinton plan the way to get the health care reform we need?” Second, the agenda called for presentations by a team of Republicans and their expert witnesses arguing for Republican proposals, and a team of Democrats and their expert witnesses arguing for Clinton’s Health Security Act. (The Republican team was managed and represented by former Minnesota Congressman Vin Weber; the Democrats were led by Hill and Knowlton lobbyist and former Connecticut Congressman Toby Moffett.) There was no team advocating for single-payer. There was only Wellstone.

But the jury was so attracted to Wellstone’s description of his bill during his initial presentation that they voted 22-0 to invite him back for two more question periods (see page 10 of the Jefferson Center report). No other witness was asked back even once. “In fact,” noted columnist Raspberry, “when the Minnesotan [Wellstone] dropped in at the jury’s farewell dinner Thursday night, he got a standing ovation.”

To sum up: The Jefferson Center’s citizen jury methodology was far more rigorous than any two- or three-sentence poll can be, and yet even the methods used for that jury permitted substantial bias against the single-payer approach. A total of 30 experts spoke to the Jefferson Center jury over five days. Only one of them, Senator Wellstone, made the case for single-payer. Even though the question of whether to support or oppose single-payer was not on the agenda, the jury took the initiative to get more information about it. The jury did not have to do that for any other proposal. Despite these obstacles, the single-payer proposal won by a 71-percent majority.

Minnesota citizen jury endorses single-payer by 79 percent

On October 1, 1996 I was part of another citizen jury project sponsored by the Minneapolis Star Tribune and Twin Cities Public TV which used a methodology similar to the Jefferson Center’s jury and which had a nearly identical outcome. In this case, the jury consisted of 14 randomly selected Minnesotans, only three experts spoke, and the entire event lasted just four hours. I made the case for single-payer (at that time I represented Minnesota Citizens Organized Acting Together), Michael Scandrett (then the director of the Minnesota Council of HMOs) stated the case for managed competition, and a woman who had just left a job with the Minnesota Department of Health to create her own advocacy group for Medical Savings Accounts (MSAs, now referred to as Health Savings Accounts) presented the argument for MSAs.

At the end of four hours, the moderator for the evening (an officer of the Minnesota League of Women Voters) put several questions to the jury for a vote. Her first question asked each juror which proposal they supported. Eight voted for single-payer, three voted for managed competition, one woman split her vote between single-payer and managed competition (she said she wanted the two proposals to be married somehow), no one voted for MSAs, and two of the 14 abstained. If we allocate a half of the vote by the woman who wanted some combination of managed competition and single-payer to each proposal, single-payer’s total was 8.5, or 61 percent of the 14 jurors.

The moderator’s second question asked whether the jurors would support universal coverage under a single-payer system if citizens had to pay $1,000 more in taxes that were offset by $1,000 in reduced premiums and out-of-pocket costs. (This is a conservative estimate of what would happen. It is likely that aggregate premium and out-of-pocket costs would decline more than aggregate taxes would go up under a single-payer system, and very likely that premium and out-of-pocket costs would decline substantially more than taxes would go up for lower- and middle-income Americans.) Eleven said yes to this question, and three abstained. If we treat this latter vote as the definitive vote for single-payer, then it would be accurate to say 79 percent voted for single payer. Finally, the moderator asked if the jury thought Congress had failed to give single-payer a fair hearing. Again, 11 (79 percent) said yes and three said no. (Glenn Howatt, “Canadian-style care starting to look more attractive to panelists,” Minneapolis Star Tribune October 9, 1996, A15)

Stay tuned for Part 3: “Informative polls show two-thirds support for single-payer.”

250,000 FEHBP-eligible federal employees uninsured

Posted by on Monday, Dec 7, 2009

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

How health care bills compare to lawmakers’ plan

By Ricardo Alonso-Zaldivar
The Washington Post
December 6, 2009

You should get the same health insurance deal that members of Congress get. That was the gist of President Barack Obama’s message as he tried to drum up enthusiasm for his health care overhaul.

Government workers and members of Congress belong to the nation’s largest employer-sponsored health plan, covering 8 million employees, dependents and retirees.

“We estimate there are about 250,000 federal employees who are uninsured. They’re eligible, but they can’t afford the premiums,” said Jacqueline Simon, policy director for the American Federation of Government Employees.



New Government-Run Health Proposal Eyed

Democrats, in Search of Compromise, Explore Federal Employee Plan as a Model

By Greg Hitt And Janet Adamy
The Wall Street Journal
December 7, 2009

Democrats on both sides of the issue who were assigned by Sen. Reid to find a compromise were nearing agreement on an alternative that would empower the government’s Office of Personnel Management to run a new national health plan, congressional aides said. The office already oversees the federal employee health plan, and administration officials have pointed to it as an example of how the government can successfully run a health-insurance program.

Under the proposal, the office would negotiate terms of the plan with private insurers, and contract with nonprofit entities set up by the private sector to run the program, aides said.



Federal Employees Health Benefits Program (FEHBP)

AmericanFederation of Government Employees
February 9, 2009

FEHBP has both structural and political flaws.

Those who must rely upon FEHBP for health insurance know its flaws well, and consider it anything but a model.

An estimated quarter of a million federal workers and their families are uninsured because FEHBP premiums are unaffordable to them on their modest federal salaries. The continued cost-shifting only increases the ranks of uninsured and underinsured Americans.


Why shouldn’t we all have the same insurance that members of Congress have? They and all other federal employees are covered by the Federal Employees Health Benefits Program (FEHBP), an exchange of private health plans from which they can choose their coverage.

The FEHBP plans share many of the problems found in private health plans marketed to non-government employers. Simply the fact that a quarter million federal workers and their families remain uninsured, though eligible for FEHBP, demonstrates that it is a flawed program that should be rejected as a model for reform.

For those who say that subsidies would make the difference, these federal employees have already been offered subsidies in the form of the federal employer contribution to their premiums, yet they still can’t afford their share of the premium. Besides, because insurance is available through their employment, they would not be eligible for the subsidized exchange plans anyway.

So what is Congress doing? Because of the political impasse over a public plan to be offered as an option to private plans within the insurance exchange, senators are currently advocating for the compromise of a separate exchange of private plans modeled on FEHBP. This model allegedly would satisfy the moderates opposed to the public option because it would be limited to private, non-profit insurers, and allegedly would satisfy the progressives because they could claim that it’s like the government insurance that members of Congress have. Of course there’s nothing government about it.

What is more ridiculous is the structure of this phony public option. It would establish an exchange of private insurance plans within an exchange of private insurance plans with a market of private insurance plans outside of the exchanges. What insurer is going to compete against its successful plans on the open market by offering competing plans in the insurance exchange and then competing with its plans in the exchange by offering plans in the exchange within the exchange?

Besides, how many truly dominant insurers are there? They constitute an oligopoly. Just as they play by their own market rules now, they will continue to do so even if modified by guaranteed issue or whatever.

Ask those 250,000 uninsured federal workers who were promised the coverage that members of Congress have what they think about FEHBP. Then ask them if they would like to have Medicare paid for by equitable taxes they can afford rather than by premiums they can’t afford. Then ask them to march on Congress!

Two-thirds of Americans support Medicare-for-all (#1 of 6)

Introduction to a Six-part Series
By Kip Sullivan, JD

“Americans are scared to death of single payer.”

These words were not uttered by some foaming-at-the mouth wingnut. They were written by Bernie Horn, a Senior Fellow at the Campaign for America’s Future, a member of Health Care for America Now, on June 8, 2009. Horn explained that he was moved to write this tripe because single-payer supporters were asking why Democrats had taken single-payer off the table to make room for the “public option”:

The question most frequently asked by progressive activists at last week’s America’s Future Now conference was this: We hear Obama and congressional Democrats talking about a public health insurance option, but why aren’t they talking about a single-payer system like HR 676 sponsored by Rep. John Conyers? Why is single-payer “off the table”?

Horn went on to assert that single-payer had been taken off the table because Americans want it off the table. He claimed polling data supported him, but he cited no particular poll. The truth is that the Campaign for America’s Future (CAF) and other groups in Health Care for America Now (HCAN) had decided years earlier they would push Democratic candidates and officeholders to substitute the “option” for single-payer, and they would tell both Democrats and progressive activists that Americans “like the insurance they have” and that Americans oppose single-payer.

The argument that single-payer is “politically infeasible” is not new. That argument is as old as the modern single-payer movement (which emerged in the late 1980s). It is an argument made exclusively by Democrats who don’t want to support single-payer legislation – a group Merton Bernstein and Ted Marmor have called “yes buts.”

The traditional version of the “yes but” excuse has been that the insurance industry is too powerful to beat or, more simply, that “there just aren’t 60 votes in the Senate for single-payer.” But the leaders of the “option” movement felt they needed a more persuasive version of the traditional “yes but” excuse. The version they invented was much more insidious. They decided to say that American “values,” not American insurance companies, are the major impediment to single-payer.

How did the “option” movement’s leaders know that Americans oppose single-payer? According to Jacob Hacker, the intellectual leader of the “option” movement, they knew it because existing polling data said so. According to people like Bernie Horn and Roger Hickey at CAF, they knew it because focus group “research” and a poll conducted by pollster Celinda Lake on behalf of the “option” movement said so.

About this series

This six-part series explores the research on American attitudes about a single-payer (or Medicare-for-all) system to evaluate the truth of the new version of the “yes but” argument. We will see that the research demonstrates that approximately two-thirds of Americans support a Medicare-for-all system despite constant attacks on Medicare and the systems of other countries by conservatives. The evidence supporting this statement is rock solid. The evidence against it – the focus group and polling “research” commissioned by the “option” movement’s founders – is defective, misinterpreted, or both.

In Part II of this series, I will describe two experiments with “citizen juries” which found that 60 to 80 percent of Americans support a Medicare-for-all or single-payer system. The citizen jury research is the most rigorous research available on the question of what Americans think about single-payer and other proposals to solve the health care crisis. It is the most rigorous because it exposes randomly selected Americans to a lengthy debate between proponents of single-payer and other proposals.

Of the two “juries” I report on, the one sponsored by the Jefferson Center in Washington DC in 1993 remains the most rigorous test of public support for single-payer legislation ever conducted. After taking testimony from 30 experts over the course of five days, a “jury” of 24 Americans, selected to be representative of the entire population, soundly rejected all proposals that relied on competition between insurance companies (including President Bill Clinton’s “managed competition” bill) and endorsed Sen. Paul Wellstone’s single-payer bill. These votes were by landslide majorities. Washington Post columnist William Raspberry accurately noted, “Perhaps most interesting about last week’s verdict is its defiance of inside-the-Beltway wisdom that says a single-payer … plan can’t be passed” (“Citizens jury won over by merits of Wellstone’s single-payer plan,” Washington Post October 21, 1993, 23A).

In Part III, I’ll review polling data and explore the question, Why do some polls confirm the citizen jury research while other polls do not? We will discover an interesting pattern: The more poll respondents know about single-payer, the more they like it. We will see that polls that claim to find low support for single-payer provide little information about what a single-payer is (they fail to refer to Medicare or to another example of a single-payer system), they provide misleading information, or both. For example, when Americans are asked if they would support “a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers,” two-thirds say they would, but when they are asked, “Do you think the government would do a better or worse job than private insurance companies in providing medical coverage?” fewer than half say “government” would do a “better job.” Although neither question provided anywhere near as much information as the citizen jury experiments did, it is obvious the former question was more informative than the latter.

In Parts IV and V, I’ll discuss the evidence that “option” advocates cite for their claim that single-payer is opposed by most Americans. Part IV will examine polling data that Jacob Hacker uses to justify his refusal to support single-payer and his decision to promote the notion of “public-private-plan choice.” Part V will examine the survey and focus group “research” done by Celinda Lake for the Herndon Alliance and subsequently cited by leaders of HCAN, the two groups most responsible for bringing the “public option” into the current health care reform debate.

We will see that Hacker’s research relies on polls that pose such vague questions that the results resemble a Rorschach blot more than a guide to health care reform strategy. Would you make a decision about whether to abandon single-payer based on a poll that asked respondents to choose between these two statements: (1) “[I]t is the responsibility of the government in Washington to see to it that people have help in paying for doctors and hospital bills… ;” and (2) “these matters are not the responsibility of the federal government and … people should take care of these things themselves”? I wouldn’t, but Hacker did. If it turned out that about 50 percent of the respondents said it was the federal government’s responsibility, 20 percent said it was the individual’s responsibility, and the other 30 percent split their vote between government and individual responsibility, would you read those results to mean Americans “are stubbornly attached to employment-based health insurance”? I certainly wouldn’t, but Hacker did. Would you use this poll as evidence that “American values [are] barriers to universal health insurance”? I wouldn’t, but Hacker did.

The “research” that Celinda Lake did for the Herndon Alliance used strange methods. For example, she selected her focus groups based on their answers to questions about “values” that had nothing to do with health care reform. The values included “brand apathy,” “upscale consumerism,” “meaningful moments,” “mysterious forces,” and “sexual permissiveness.” “Meaningful moments,” for example, was described as, “The sense of impermanence that accompanies momentary connections with others does not diminish the value of the moment.” Do you think it’s important to ask Americans about their “sense of impermanence” before deciding whether you will support single-payer legislation? I don’t, but Celinda Lake and the Herndon Alliance did.

The “option” movement’s “research” turns out to be no match for the more rigorous research which demonstrates two-thirds of Americans support Medicare-for-all.

In Part VI I discuss the wisdom of allowing polls and focus group research to dictate policy and strategy, something the “option” movement’s founders talked themselves into doing. Hacker has been especially vocal about this. He repeatedly urges his followers to think “politics, politics, politics,” a squishy mantra that, in practice, translates into an exaltation of opportunism. The failure of Hacker and HCAN to object to the shrinkage of the “public option” by congressional Democrats, from a program covering half the population to one that might insure 1 or 2 percent of the population, documents that statement.

The fact that two-thirds of the American public supports single-payer does not mean the enactment of a single-payer system will be easy. It won’t be. But it does mean the new “yes but” justification for opposing single-payer, or indefinitely postponing active support for single-payer, is false and should be rejected.

Stay tuned.

Do the insurance industry reports totally lack all credibility?

Posted by on Friday, Dec 4, 2009

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

Good News on Premiums

The New York Times
December 3, 2009

The health insurance industry frightened Americans — and gave Republicans a shrill talking point — when it declared in October that proposed reform legislation would drive up insurance costs for virtually everyone by as much as thousands of dollars a year. The nonpartisan Congressional Budget Office persuasively contradicted that claim this week.

Undaunted, the industry issued a rebuttal report, claiming again that premiums would soar. We find this second industry report no more persuasive than the first.

The insurance industry is not giving up. On Thursday, the Blue Cross and Blue Shield Association issued a report contending that the C.B.O. underestimated the expected medical costs of people who will be buying policies on the individual (nongroup) market.

(CBO notes that) the legal mandate to obtain coverage, the penalties for noncompliance, and the generous subsidies for low- and middle-income people would encourage most people to enroll without waiting to become sick.



Coming Attractions: Insurance Industry Funded Study is Wrong on the Facts… Again…

Posted by Dan Pfeiffer, White House Communications Director
The White House
The White House Blog
December 3, 2009

Later today, the insurance industry releases their latest in a string of flawed analyses designed to confuse the debate around health reform.

In addition to ignoring Congress’s independent budget experts, the new report reaches its conclusions by cherry-picking which policies to analyze – a tactic we’ve seen the industry use repeatedly. Most egregiously, its alarmist headline conclusions leave out the impact that new tax credits will have on the cost of health insurance for families. That makes no sense. In reality, the report itself acknowledges that: “[s]ubsidies will entirely or partially offset these premium increases for some individuals.”



Impact of the Patient Protection and Affordable Care Act on Costs in the Individual and Small-Employer Health Insurance Markets

By Jason Grau and Kurt Giesa
BlueCross BlueShield Association
Oliver Wyman
December 3, 2009

Impact of Subsidies

Subsidies would play an important role in reducing out-of-pocket costs for certain individuals, especially those below 200% of FPL, who are likely to purchase insurance under the proposed reforms. Subsidies will cover more than 90% of premium costs for individuals in this income range, significantly reducing financial barriers to purchasing coverage.

By contrast, our analysis of the Senate bill projects that 8.7 million will not be eligible for the subsidies. Another 3.3 million people who purchase coverage will have incomes of 300-400% FPL and will be eligible for average subsidies of 45% of their premiums (which would not fully offset the cost increases we predict). Finally, 13.3 million lower-income individuals who purchase coverage will have incomes of 100-300% FPL. They will have access to subsidies of 70-90% of their premiums, which will offset much if not all of the increased premiums they will face.

Our modeling predicts that those who are eligible for subsidies will be more likely to purchase insurance than those who are not. However, subsidies will not ensure that young and healthy people participate. Short of achieving 100% coverage, adverse selection will always exist, and the young and healthy will be the most difficult to bring into the market.

Impact of Weak Individual Mandates

The Senate bill requires individuals to purchase insurance coverage or face financial penalties. An amendment accepted during mark-up of the Chairman’s Mark in the Finance Committee, and largely retained in the Senate leadership bill, substantially weakened the bill’s individual mandate. The individual mandate penalty in PPACA is set at just $95 in the first year insurance reforms become effective (2014). This penalty rises gradually, reaching a maximum of $750 per adult in 2016. This maximum penalty is likely to be only about 16 percent of an average premium in 2016, assuming current rates of medical cost inflation.

The amendment also exempts individuals whose premiums exceed 8% of their adjusted gross income (AGI). In 33 states, the average cost of health insurance exceeds eight percent of median state income. In fact, in the first year of reform 25% of the exchange-eligible population will face insurance costs in excess of the 8% AGI threshold and qualify for mandate exemption. Premium increases over a ten-year period will result in nearly half of the population qualifying for mandate exemption status.

Conclusion (excerpt)

The provision of subsidies alone will not offset the impact of insurance reforms on average premiums in the market. A balanced, sustainable insurance pool, that ensures everyone is covered, is critical to making healthcare affordable for all.


Full report:

Recent reports from the insurance industry, including this report from the BlueCross BlueShield Association, have been targeted by proponents of the current leading reform model as biased reports without credibility – witness the comments by The White House and The New York Times (both also biased). But the fundamental message from the insurance industry is very valid: the reform proposal before Congress does not do nearly enough to control health care costs, and the mandates, subsidies and penalties are inadequate to ensure that all risks are adequately pooled.

This report confirms once again that the subsidies are inadequate, particularly for middle-income families, and likely will result in adverse selection as the healthier take their chances on remaining uninsured. It confirms that the penalty for being uninsured is too small to ensure compliance with the insurance requirement. It also confirms that a very large and rapidly growing number of individuals will be exempt from the mandate to purchase insurance simply because their incomes are inadequate to be able to afford the plans.

There is one statement in this report that the proponents of the proposal before Congress should take careful note of, and it is remarkable that it is coming from the insurance industry: “A balanced, sustainable insurance pool, that ensures everyone is covered, is critical to making health care affordable for all.”

The dysfunctional, fragmented model of health care financing that Congress is moving forward with can never create a balanced, sustainable risk pool, nor can it ensure that everyone is covered, nor can it make health care affordable for all.

We really do need a balanced, sustainable pool that includes everyone and is equitably financed: an improved Medicare for all.

CRS on the health insurance market

Posted by on Thursday, Dec 3, 2009

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

The Market Structure of the Health Insurance Industry

By D. Andrew Austin and Thomas L. Hungerford
Congressional Research Service
November 17, 2009

Evidence suggests that health insurance markets are highly concentrated in many local areas. Many large firms that offer health insurance benefits to their employees have self-insured, which may put some competitive pressure on insurers, although this is unlikely to improve market conditions for other consumers. The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output — high premiums and limited access to health insurance — combined with high profits. Many other characteristics of the health insurance markets, however, also contribute to rising costs and limited access to affordable health insurance. Rising health care costs, in particular, play a key role in rising health insurance costs.

Health costs appear to have increased over time in large part because of complex interactions among health insurance, health care providers, employers, pharmaceutical manufacturers, tax policy, and the medical technology industry. Reducing the growth trajectory of health care costs may require policies that affect these interactions. Policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.


About the Congressional Research Service:

The Congressional Research Service (CRS) has an outstanding reputation for authoritative, objective and nonpartisan analyses, providing Congress with the analytical support it needs to address the most complex public policy issues facing the nation.

In this 65 page report to Congress on the market structure of the health insurance industry, CRS concludes that “policies focused only on health insurance sector reform may yield some results, but are unlikely to solve larger cost growth and limited access problems.”

The conclusions are certainly no surprise. Every reasonable economist agrees that free market principles do not apply to health care. Yet where is Congress on this? They are moving forward with a proposal that relies heavily on the market of private health plans.

Don’t the members of Congress read their own reports? They need to read this one!

MedPAC on variation in service use

Posted by on Wednesday, Dec 2, 2009

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

Report to the Congress: Measuring Regional Variation in Service Use

MedPAC (Medicare Payment Advisory Commission)
December 2009

In this paper, we present data on the difference between regional variation in Medicare spending and regional variation in the use of Medicare-covered services. Regional variation in Medicare spending per beneficiary reflects many factors, including differences in beneficiaries’ health status, Medicare payment rates, service volume (number of services), and service intensity (e.g., MRI versus simple X-ray). In contrast, regional variation in the use of Medicare services reflects only differences in the volume and intensity of services that beneficiaries with comparable health status receive.

… raw per capita spending is 55 percent higher for beneficiaries in the area at the 90th percentile than for beneficiaries in the area at the 10th percentile.

Service use in higher use areas (90th percentile) is about 30 percent greater than in lower use areas (10th percentile).

… the correlation between rate of growth in adjusted spending from 2000 to 2006 and the level of service use in an MSA is slightly negative.

Regional variation in service use is not equivalent to regional variation in Medicare spending. The two should not be confused.


This paper is an important addition to the work of John Wennberg and his colleagues at Dartmouth on regional variation in spending in the Medicare program. It separates the variation in use of services by individuals with comparable health status from other factors that influence spending, especially Medicare payment policies.

The differences are important because they lead to different policy solutions. Policies to ensure adequate but not excessive volume and intensity of services are separate from, though must be integrated with, policies that establish proper levels of spending for services that Medicare beneficiaries should be receiving.

The complexities of these interdependent policies that would improve spending can be mastered only with a concerted effort by public agencies. The private insurance industry has no capability to create and apply the essential policies that would transform our health care delivery system into the efficient, affordable system that we desperately need.

MedPAC, the Medicare Payment Advisory Commission, currently provides advice to Congress on proposals to improve spending policies in the Medicare program. Congress is free to reject that advice and often does, more for political reasons than for reasons based on sound policy.

The health care reform proposal before Congress includes provisions to reduce the often perverse politics of Medicare financing by creating a commission, sometimes referred to as MedPAC-on-steroids, with much greater power to enforce its recommendations on spending.

The problem with the proposal is that the recommendations would be limited to the Medicare program alone. Unless the revisions applied to the other five-sixths of our population, it would be difficult to establish policies that would improve the overall use of health care services. Although reform of our financing system is essential, we may not get very far if we don’t have policies that would improve the structure of the health care delivery system.

We really do need an improved Medicare for all. We need to jettison the wasteful, ineffectual private insurers and get on with reform that will use our health care dollars to pay for an efficient health care system that serves all of us well.

By Danielle Alexander, M.Sc

With Congress advancing their health reform bills and the President’s vow to improve our health care crisis, I wish I could be hopeful and encouraged. But I’m neither. Instead, I’m dismayed. And listening to my fellow classmates, I’m not alone.

A little over a month ago I stood with 50 other medical students, faculty, and community members in front of Albany Medical College to remember the 45,000 Americans who die each year because they lacked health insurance.

The vigil was called, “Treat! Don’t Trick”, because we stood to ask Congress for reform that will help us treat our future patients, not fool us with hyperbole. I was moved to be a part of the vigil because I am appalled that deaths due to lack of health insurance has more than doubled since 2003.

Ryan McIntyre explained that he wished we could meet to celebrate; however there is not much to celebrate. He is a third year medical student and President of Physicians for a National Health Program student chapter.

“Obama is quoted as saying that if he could start from scratch he would support a single payer system,” Ryan said. “However, instead of starting from there, he started from a compromised position. What if Hippocrates started with a compromised position when he outlined the Hippocratic Oath?”

“For-profit, private insurance has not worked to control costs and cover everyone, and it will not work,” Megan Ash, a first year medical student, told us. “Improved and expanded Medicare for all is the best solution.”

“Health reform is the civil rights movement of our time,” Naazia Husein announced. She is a second year medical student and Co-President of the club Student Perspectives in Advocacy. “A single payer system is not a dream,” Naazia added, “it’s a demand.”

Reverend Harlan E. Ratmeyer, a pastoral care-giver at Albany Medical Center, explained: “The elite group is in the [healthcare coverage] pool, everyone else out of the pool. From the perspective of justice, and the spiritual, economical perspective, we should all be in the pool.”

Other vigil participants spontaneously began telling their stories too. John Wax, a first year medical student talked about how his father, self-employed, only received treatment for his herniated disc because he was a Vietnam Veteran and could get health insurance through the VA.

James Kelley, a first year medical student, shared that his mother was a nurse for 10 years providing health care in a women’s shelter. But when she needed to use her health insurance, she needed to hire an attorney in order to battle insurance claim denials.

The reforms touted on Capitol Hill will not solve these problems. Not even close.

Millions of Americans will still be without health insurance, private insurance companies will continue to deny health care in order to satisfy their stock holders (yes, even if exclusion due to preexisting conditions are unlawful), rapidly increasing health care costs will not be contained and healthcare coverage will still be tied to employment. As future physicians, and from our own life experiences, my classmates and I see that these these are the very things that demand to be changed.

If President Obama wants to be the last president to take up health care reform, then he must reconsider expanding and improving Medicare to include everyone.

Danielle E. Alexander, Albany Medical College Class of 2013, belongs to the American Medical Student Association and Physicians for a National Health Program.

CBO report on premiums

Posted by on Tuesday, Dec 1, 2009

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

An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act

Congressional Budget Office
November 30, 2009

The analysis looks separately at the effects on premiums for coverage purchased individually, coverage purchased by small employers, and coverage provided by large employers.

Nongroup Policies

Average premiums per policy in the nongroup market in 2016 would be roughly $5,800 for single policies and $15,200 for family policies under the proposal, compared with roughly $5,500 for single policies and $13,100 for family policies under current law.

The majority of nongroup enrollees (about 57 percent) would receive subsidies via the new insurance exchanges, and those subsidies, on average, would cover nearly two-thirds of the total premium, CBO and JCT estimate.

Employment-Based Coverage

By CBO and JCT’s estimate, the average premium per policy in the small group market would be in the vicinity of $7,800 for single policies and $19,200 for family policies under the proposal, compared with about $7,800 and $19,300 under current law. In the large group market, average premiums would be roughly $7,300 for single policies and $20,100 for family policies under the proposal, compared with about $7,400 and $20,300 under current law.

Those figures do not include the effects of the small business tax credit on the cost of purchasing insurance. A relatively small share (about 12 percent) of people with coverage in the small group market would benefit from that credit in 2016. For those people, the cost of insurance under the proposal would be about 8 percent to 11 percent lower, on average, compared with that cost under current law.


For most individuals and families, the Senate health care reform bill will have very little impact on the premiums to be paid for health plans. There are three important exceptions:

* Premiums in the individual market will increase significantly because the plans will be required to provide an actuarial value of 60 percent, higher than the average value in the current individual market.

* About 57 percent of individuals eligible for coverage in the exchange will receive subsidies which will more than offset the premium increases. Note that most individuals are not eligible for coverage in the exchange and would not receive these subsidies.

* Although there will be little change in premiums for small group plans, about 12 percent of people in the small group market will benefit from a small business tax credit designed to encourage small business owners to offer coverage to their employees.

The really bad news in this report is that, on average, premiums for group plans will continue to increase at the same intolerable rates that they would have if we did nothing. This CBO analysis demonstrates that, in 2016, the family premium alone for employer-sponsored coverage, not including deductibles and other out-of-pocket costs, would be over $20,000 for a large group plan, whether or not the proposed legislation is enacted. That is quite a hit for a hard-working family with a $60,000 income.

The only hope for premium relief is for innovative insurance products that would reduce costs for those who don’t need health care, but would increase even more the costs for those who do. This demonstrates why focusing on premium relief has been a misguided endeavor. We have been diverted from the the much more important goal of relieving the financial burden of those who actually need health care.

We can achieve that goal by improving Medicare, funding it equitably, and using its monopsonistic powers to provide us with greater value in our health care purchasing. Had we done that when the Clintons were proposing their flawed model of reform, our national health expenditures would be about 20 percent less than they currently are.

It’s tragic that we would be starting from an inflated baseline, but we can still achieve that level of efficiency in the future if we dumped the highly flawed proposal before Congress and adopted the much more humane system of an improved Medicare for all.

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