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.
Ethical Questions in the Reform of Health and Medical Care
The President’s Council on Bioethics
June 26, 2008
Chairman Edmund Pellegrino: This afternoon we’re going to look at the ethical questions from the point of view of people who are involved in designing and propagating and thinking about various programs to which we referred.
Chairman Pellegrino: I’m going to move ahead and ask each of these panelists to briefly state why they think — I hope this isn’t too aggressive a question — why they think the program that they’re most closely associated with is a morally acceptable one.
Stephanie Woolhandler, M.D: Well, I think that the single-payer proposal is the only ethical one on the table because it’s the only one with proven effectiveness. I think that many of these proposals up here are known to be ineffective. They’ve been tried, and they failed. Perhaps the best you could say about some of them is they’re an experimental treatment. So I just think if we’re concerned about 18,000 deaths each year from lack of health insurance, we’re actually obligated from a moral point of view to go with something that’s proven, which would be some form of nonprofit national health insurance.
Len Nichols, Ph.D.: — my interpretation of Leviticus… In my view, health care has become like food, a unique gift. We absolutely know people will die without it. It was unacceptable to let people starve back then. It’s unacceptable to let people go without health care now. In my view, those are morally equivalent. But what I love about the gleaning metaphor in Leviticus is that it does not say, “Give the same amount of food to every person.” It does not say, “Give all the food to one person who happens to be hungry.” It does not say, “Bring the poor home and cook for them.” It says, “Leave the food in the field, and the poor have to go get it.” So there’s a mutual obligation. There’s a mutual responsibility, and that’s why I see that reflected perfectly in the combination of personal responsibility, including individual mandate to purchase, and shared responsibility, that is, to make it possible for each individual to achieve their own objective.
James Capretta: Well, I think the program I put forward is the ethically appropriate way to proceed for several reasons. First and foremost, the more that financial resources are put in the hands of patients and consumers to make decisions, the more the system is responsive to those patients and consumers. …it’s the most practically plausible and workable approach. …it doesn’t cede to the federal government all centralized control. And, finally, controlling costs is either a matter of efficiency or queuing, in a sense. And market incentives, financial incentives with oversight can get to more efficiency, trying to do things where people decide on their own that this is less valuable than the price we’ve been paying and not doing it anymore.
Dr. Schneider: And many of the people have spoken with extraordinary confidence and force and have been quite willing to say that the alternatives to their program are highly unsatisfactory. These arguments are all based on data and empirical evidence and arguments that we are entirely incompetent to evaluate.
Dr. Woolhandler: I don’t understand your point. Why would you be incompetent to evaluate these arguments?
Dr. Woolhandler: I’m again just a little amazed at the comment that this group is not prepared to decide on these questions. There are so many IQ points in this room, and people spend so much time thinking about ethics. I mean, the material I present is not rocket science. The Rand study is not rocket science, either. There’s a book about this [holding her fingers about an inch apart] thick that you could probably read in an evening if you want to read it yourself. So I think saying we’re not prepared to decide is actually saying we’re going to step away from a problem that we recognize is very serious and is resulting in 50 deaths today as we meet here and 18,000 deaths a year in the United States.
Prof. Lawler: Dr. Woolhandler seemed to have this ethical theory that when it comes to medical care there should be no exchange of money. So co-pays are immoral. Deductibles are immoral. Whereas your other two, to some extent or another, think actually to introduce a bit of cash here is helpful because understanding yourself as a consumer makes the person delivering the product more responsive and introduces choice.
Dr. Woolhandler: I’ve seen people die because of co-payments and deductibles. Co-payments and deductibles were studied in the Rand experiment. They’ve been studied a couple of times in Canada where they’ve introduced small co-payments and deductibles, and they always have the same effect. Rich people are not affected by them a bit. Low-income people get less care. They get less elective unnecessary care. They also get less life-saving and completely necessary care, and that’s the basis on which I think they’re immoral.
Prof. Dresser: For Dr. Woolhandler , I’m probably mangling this philosophically, but I think Kant said, “Ought implies can.” And so, you know, I love your idea, and if I were queen of the world or the US I would say, “Okay. Go for it.” But I just wonder, if it’s not realistic in this country, then it’s a placebo. So how do you think we’re going to get from here to where you are politically?
Dr. Woolhandler: Well, I think the argument you’re making is politics is the art of the possible. But I actually disagree with that. I actually think politics is the art of creating the possible, and what’s possible is what people believe is possible.
So who would have believed before Rosa Parks that we would have a civil rights movement and a Civil Rights Act? Who would have believed in the mid-1980s that the Soviet Union was about to collapse?
So you can’t just sit here and say based on what you’re seeing today that no change is possible. We’ve got to create the possible, which I think is a challenge to this group and, you know, partly why I reacted so strongly to the suggestion you couldn’t understand it or come to grips with it.
You have tremendous moral suasion. You have the power as a group to make a statement that universal health care is the only ethical policy alternative and that the only proven way to get universal health care is through nonprofit national health insurance.
If you went public with that, you would be creating the possible. You know, you would be creating the possible and helping people believe that this real change is possible. And when I look at those polls about the American people, the American people say they want national health insurance.
It’s not that the people don’t agree. It’s the insurance industry that’s blocked this from debate. They’ve used their full political power and economic power to block it and, frankly, the pharmaceutical industry, as well. And they’ve always opposed this.
And when I first got in this business I was shocked about the pharmaceutical industry opposing it. Well, it turns out they knew something that the American people just learned later, which is every nation with national health insurance negotiates for price discounts on drugs. They knew that, and they were completely and totally opposed to any sort of national health insurance covering drugs because they were going to get lower prices.
So we’ve got the American people endorsing it. We’ve got some very powerful folks opposing it. We need to get it on the agenda, and (it’s) the one real power you have and you can use it, or you can turn your back and say, “We don’t understand this.” You can use that power to put this on the political agenda.
After the November election, it is expected that the President’s Council on Bioethics will release a report on ethical considerations for reforming health care.
The Council was formed in 2001 in response to the controversy over President Bush’s decision to deny funds for embryonic stem cell research. With a touch of irony for which this administration is famous, many thought that political ethics were compromised in the selection of supposed ethicists who had already expressed biases incompatible with the ability to objectively assess important issues of bioethics. When one of the members of the Council states that they are incompetent to assess the ethical issues in the reform proposals, it does make you wonder.
It is difficult to know what the report will state, but some of the more enlightened members of the Council clearly do understand the moral imperative behind Steffie Woolhandler’s message. It would be nice if their views, based on actual ethical principles, would prevail in the final report. Regardless, it is really Steffie’s message that is important.
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.
Medicare Part D: Drug Pricing and Manufacturer Windfalls
By the Majority Staff
United States House of Representatives
Committee on Oversight and Government Reform
This analysis of confidential data on Medicare Part D and Medicaid drug prices shows that the private Medicare Part D insurers pay significantly higher prices for prescription drugs than does the Medicaid program. In the case of the six million dual eligible beneficiaries, the Medicare Part D insurers paid $3.7 billion more in 2006 and 2007 to purchase the top 100 drugs for dual eligible beneficiaries than they would have paid if they had access to the lower Medicaid drug prices. This increase in costs represents a windfall to drug manufacturers.
Eliminating the drug manufacturer windfall would realize substantial savings to federal taxpayers. Over the next ten years, taxpayers would save $86 billion if the Medicare Part D insurers paid Medicaid prices for drugs used by the dual eligible beneficiaries. If Medicare negotiated directly with drug manufacturers and obtained prices equivalent to the Medicaid prices for all Medicare beneficiaries, the potential savings to taxpayers increases to $156 billion.
Apples, Oranges and “Windfalls”
Republican Staff Analysis
The Part D benefit was designed to offer choice in prescription drug insurance, value for seniors through low negotiated prices, and overall low program costs for taxpayers. It is achieving those goals and exceeding expectations. The Majority report fails to recognize these benefits and instead makes inappropriate and unrealistic price comparisons. Politically appealing but substantively flawed changes like those advocated by the Majority would have serious implications for the prices paid by employers, unions, health care providers, and the uninsured. Likewise, changing the financial incentives in Part D could have a negative impact in the type of drug research and development that is conducted.
Finally, it is worth noting that the Majority has written eight reports on Part D and the program is only in its third year. This represents a significant level of oversight. Without a doubt Medicare requires substantial oversight given its importance to seniors and its uncertain long-term financial prospects. However, the Majority’s criticisms of Part D seem misplaced. Part D costs substantially less than Part A (which primarily pays for hospital based care) and Part B (which primarily pays for physician services). The Hospital Insurance trust fund, Part A’s revenue source, is not adequately financed in the short-term and will be exhausted in 2019. This looming financial crisis has received scant oversight from the Majority.
To understand the basis for the problems with the Medicare Part D drug benefit, you need only to recall that the program was designed by the Medicare privatizers in Congress, with the support of two of the largest lobby interests in the nation: the private insurers and the pharmaceutical firms.
There are a great many problems that have been created by the privatization measures in the Medicare Modernization Act, but here we will limit the discussion not to just the Part D program, but to only one aspect of Part D: the application of Part D to dual-eligibles.
Dual-eligible Medicare beneficiaries are those individuals who not only qualify for Medicare based on age or long-term disabilities, but they also qualify for Medicaid based on their very low incomes. Before Medicare Part D was enacted, they received their drugs through the state-administered Medicaid programs. This worked well for the taxpayers because of the ability of the government to negotiate much lower drug prices, and it worked well for the patients because they received their necessary medications usually without any out-of-pocket expense.
The privatizers were successful in shifting the state-run Medicaid drug benefit into the Part D program. Because the drug benefit for the dual-eligibles is still subsidized, the cost impact was not that great for the beneficiaries, though the administrative hassles, including the need to comply with various formularies offered by the different plans, proved to be more than just an inconvenience.
The taxpayers did not fare at all well with this shift into the Part D program. This study by the Majority Staff demonstrates that taxpayers paid $3,739,000,000 more to the drug manufacturers for the top 100 drugs than they would have under the Medicaid drug program which this replaced. The Republican Staff response glosses over this very real additional cost foisted onto taxpayers.
The Republican response obfuscates and segues into Part A hospital funding – an important problem but not the subject at hand. Buried in their response, the Republicans do state that if the drug benefit for the dual-eligible population were returned to the Medicaid program, “this population would have access to Medicaid price controls and pharmaceutical manufacturers no longer would be benefiting from the purported windfall profits.” Of course they wouldn’t; the taxpayers would benefit.
This example shows once again that health policy science is not complicated. It’s the politics that are so difficult. One side is represented by individuals who want everyone to have affordable access to the health care that they need, and the other side is more interested in enhancing the private sector through measures such as ensuring windfall profits for the pharmaceutical firms.
One thing great about America is that it is our choice… but we do have to make a greater effort to be certain that everyone is making an informed choice.
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 Genetic Information Nondiscrimination Act — A Half-Step toward Risk Sharing
By Russell Korobkin, J.D., and Rahul Rajkumar, M.D., J.D.
The New England Journal of Medicine
July 24, 2008
Consider three Americans — one with an increased genetic risk for colon cancer, one with a family history of colon cancer, and one with a colonoscopic finding of several large adenomatous polyps. Under the Genetic Information Nondiscrimination Act (GINA), which was recently signed into law by President George W. Bush, health insurance companies may not refuse to cover and may not raise premiums for the first two people, whose genetic information or family history puts them at higher risk for colon cancer. Insurers could, however, refuse to sell the third person an individual policy or could quadruple his or her premiums. If the third person is enrolled in an employer-sponsored group health plan, insurers could raise the rates for everyone in the group.
In making such distinctions, GINA is emblematic of this country’s piecemeal and inconsistent approach to health care policy, which makes little sense and leaves many Americans without access to care or in danger of financial ruin if they seek care. Our recent history is replete with examples of similar half-measures in health policy.
One response would be to retreat from the egalitarian impulse of GINA and leave health insurance to market forces, as we do with consumer goods. Health insurance risk would be priced as accurately as technology permitted, and patients would pay their own expected medical costs in premiums.
The better solution is to fully embrace the basic ethic of GINA and admit that the law’s distinction between genetic information and other immutable characteristics is arbitrary.
The arbitrary nature of the categories GINA creates suggests that we should fully commit ourselves to the step that the legislation approaches but is too hesitant to take: the prohibition of medical underwriting — the rating and pricing of health insurance on the basis of any health information, not just genetic information. Health insurance premiums should be assessed on the basis of a “community rate” and should be set the same for all people within a given age group — possibly with exceptions somehow made for risk factors that are deemed to be within each person’s reasonable control.
Moreover, to ensure that the costs of bad health are shared equitably, all Americans would have to be in the same risk pool. This would mean enacting a health insurance mandate either for employers or, if health insurance could be made affordable, for individuals — and specifying a minimum set of benefits that everyone would be required to have. Given the growing disparity between the cost of modern medicine and the incomes of many Americans, enforcing such a mandate would be difficult. Even with income-based subsidies, an individual mandate could place an undue financial burden on many families. Nonetheless, bringing everyone into the same risk pool is an important long-term goal.
With such reforms, GINA could become the first step toward a just and sustainable health insurance system. This approach would recognize that, because many of the most important determinants of health are beyond people’s reasonable control, no one should have to bear the costs of health care alone.
The need for the Genetic Information Nondiscrimination Act was obvious. The members of Congress recognized that it would be unfair for private insurers to discriminate against individuals based on their family history or genetic makeup. What is perhaps not so obvious is why Congress chose to ignore all other forms of discrimination by private insurers.
As this article states, medical underwriting should be prohibited in order to permanently eliminate private insurer discrimination. Then a universal risk pool must be established to distribute risk equitably. But for that to work, the authors acknowledge that there must be a mandate that everyone participates.
In recommending community rating and a mandate to participate, the authors further acknowledge that, even with subsidies, reform based on private plans will still place an undue financial burden on many families. That is still a form of discrimination.
What is it that holds back these authors, members of Congress, and others in the health policy community from stating the obvious? Legislating and regulating the private insurance industry may reduce but will never eliminate insurer discrimination; adopting a publicly-funded, single payer national health program would. Why do they choke up when that’s what they need to say?
Development: US fails to measure up on ‘human index’
By Ashley Seager
July 17, 2008
Despite spending $230m (£115m) an hour on healthcare, Americans live shorter lives than citizens of almost every other developed country. And while it has the second-highest income per head in the world, the United States ranks 42nd in terms of life expectancy.
These are some of the startling conclusions from a major new report which attempts to explain why the world’s number-one economy has slipped to 12th place – from 2nd in 1990- in terms of human development.
The American Human Development Report, which applies rankings of health, education and income to the US, paints a surprising picture of a country that spends well over $5bn each day on healthcare – more per person than any other country.
The report, Measure of America, was funded by Oxfam America, the Conrad Hilton Foundation and the Rockefeller Foundation. It shows each of the 11 countries that rank higher than the US in human development has a lower per-capita income.
Those countries score better on the health and knowledge indices that make up the overall human development index (HDI), which is calculated each year by the United Nations Development Programme.
One of the main problems faced by the US, says the report, is that one in six Americans, or about 47 million people, are not covered by health insurance and so have limited access to healthcare.
The US has a higher percentage of children living in poverty than any of the world’s richest countries.
It also reveals 14% of the population – some 40 million Americans – lack the literacy skills to perform simple, everyday tasks such as understanding newspaper articles and instruction manuals.
Inequality remains stark. The richest fifth of Americans earn on average $168,170 a year, almost 15 times the average of the lowest fifth, who make do with $11,352.
The US also ranks first among the 30 rich countries of the Organisation of Economic Cooperation and Development in terms of the number of people in prison, both in absolute terms and as a percentage of the total population. It has 5% of the world’s people but 24% of its prisoners.
“Human development is concerned with what I take to be the basic development idea: namely, advancing the richness of human life, rather than the richness of the economy in which human beings live, which is only a part of it,” said the Nobel laureate economist Amartya Sen, who developed the HDI in 1990.
“We get in this report … an evaluation of what the limitations of human development are in the US but also … how the relative place of America has been slipping in comparison with other countries over recent years.”
Testimony before the Joint Economic Committee
By Kristen Lewis
American Human Development Project
July 23, 2008
It is important to note that the U.S. has higher income scores than every country but Luxembourg on the global scale – we’re still #2 in income. But the eleven countries ahead of us – particularly fast-moving countries like Australia and Ireland – have been more successful and efficient in transforming income into positive health and education outcomes for their people.
Based on the data in the American Human Development Index and the information and analysis in the American Human Development Report, a steady, broad-based advance of human development in the United States as well as greater security for middle class families will require attention to several priorities.
- For Americans to live longer, healthier lives as well as remain solvent when serious illness strikes, it is obvious from the report that progress depends in large part on a comprehensive resolution of the problem of health insurance.
- The days when basic skills were sufficient to ensure a life of reasonable economic security and full participation in society are past; the labor market today is unkind to those who lack high school diplomas, and jobs that afford financial security increasingly require college degrees.
- For Americans to sustain, or obtain, a decent standard of living, the wages and opportunities of millions of Americans must improve. Growing inequality in income distribution and wealth raises a profound question for Americans: Can the uniquely middle-class nation that emerged in the twentieth century survive into the twenty-first century? Or is it fracturing into a land of great extremes?
American Human Development Project:
“The Measure of America,” Executive Summary:
“The American Human Development Project’s mission is to stimulate fact-based public debate about and political attention to human development issues in the United States and to empower people to hold elected officials accountable for progress on issues we all care about: health, education and income.”
From the testimony of Harvard Law School Professor Elizabeth Warren (also available at the jec.senate.gov link above): “Seven years of flat or declining wages, seven years of increasing costs, and seven years of mounting debts have placed unprecedented stress on the ordinary families. By every critical financial measure, these families are losing ground. Without changes in critical economic policies, the strong middle class that has been the backbone of the American economy and the American democracy is in jeopardy.”
When we are addressing the narrower problem of health insurance for everyone, does the broader issue of human development really matter? Well, yes, and here’s why.
The current national debate on reform has concentrated on various models designed to provide insurance coverage to more people. Several policies would fall short of universal coverage, but, to make matters worse, other recommendations accelerate the transition to a market of underinsurance products. Increasing the number of individuals with nominal but inadequate health care coverage defeats one major goal of improving human development within the United States.
In this political season, we need to assess candidates based on whether their policies are merely gimmicks designed to look like they are addressing problems such as the uninsured, or if their policies truly are based on the fundamental goal of improving human development.
Those who are dedicated to human development will make every effort to see that everyone does have health care coverage that actually works. They’ll also support policies that address our serious deficiencies in education and in income levels.
Providing health care alone without improving human development will only serve to be certain that we will remain number one in incarcerating our people. We have more than enough national wealth to be number one in human development.
We should ask our politicians to show us precisely how their policies would improve human development – realizing the dreams of the middle class for a greater number of us. If they don’t provide us with truly concrete proposals, then ask them what plans they have to increase the capacity of our prisons. If they have a well-thought-out answer for that, then maybe we should look elsewhere for candidates with a greater sense of social solidarity.
Eroding Access Among Nonelderly U.S. Adults With Chronic Conditions: Ten Years Of Change
By Catherine Hoffman and Karyn Schwartz
July 22, 2008
More than 40 percent of the U.S. population lives with one or more chronic conditions. However, because people with chronic conditions have greater health needs than others, they account for three-quarters of all personal medical care spending in this country. We focused on nonelderly adults with chronic conditions.
Both the connection to health care and its affordability worsened for many nonelderly U.S. adults living with chronic conditions between 1997 and 2006. This erosion varied by health insurance coverage. Access to care among uninsured adults with chronic conditions deteriorated on all of our basic measures between 1997 and 2006. In addition, more of both the privately and publicly insured with chronic conditions went without health care because of its cost over this ten-year span.
It would have been sad if this report had demonstrated that there had been no improvement in access and affordability in the past decade for this expensive, non-elderly population with chronic conditions. What it did show is that access and affordability deteriorated further, even amongst the insured. That’s not sad; that’s tragic.
Obviously our national health policies are not working. Dare anyone suggest that we change them?
Last week’s action by Congress to override President Bush’s veto of the Medicare Improvements for Patients and Providers Act (HR 6331) was a landmark step toward reversing the tide of privatization of Medicare over the last three decades. The votes in Congress were a resounding defeat for conservative policies and the lobbying efforts of the insurance industry. There was no ambiguity in the override votes — 383 to 41 in the House and 70 to 26 in the Senate, with 153 Republicans in the House and 21 Republicans in the Senate defying the president. The courageous leadership of Senator Edward Kennedy, long a champion of better access to health care, helped to head off a disastrous veto of this legislation despite his current medical problems.
The major reason given for the presidential veto was the bill’s cuts of overpayments to private Medicare plans and the alleged “decreased choice available to seniors.” Conservative policy makers were unrelenting in their reaction to the override. Mike Leavitt, HHS Secretary, opined in the Washington Times that “Democrats in Congress have loaded this bill with provisions that undermine choice and, worse, pave the way to still more government control of Americans’ personal health care decisions.”
The bill cancels the 10.6 percent cut in physician reimbursement which would have taken place, instead providing a 1.1 percent increase. The bill’s provisions will cost about $20 billion over the next five years, with about $14 billion coming from cuts in overpayments to Medicare Advantage, the private plans. It will save taxpayers about $45 billion over the next 10 years. New consumer protections will be put in place to reduce deceptive marketing by private plans and to hold them more accountable. Other improvements include reduction of copayments for mental health services from 50 percent to 20 percent (the usual for other Medicare services), new authority for HHS to require coverage of certain drugs, and an increase in low-income assistance for Medicare beneficiaries.
A brief historical review shows just how big a change this overturned veto is concerning overpayments to private Medicare plans. Private Medicare HMOs were first authorized by Congress through the Social Security Amendments of 1972. Payment rates were to be negotiated in advance between HMOs and Medicare on the basis of capitation (ie., the number of enrollees in the plan). HMOs were required to share any cost savings on a 50-50 basis with Medicare, and were limited to a profit of 10 percent of Medicare’s payments. The private market found this unattractive, and by 1980 only one HMO had contracted with Medicare.
In an effort to increase enrollment in private Medicare HMOs, Congress passed the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), which liberalized payment arrangements for participating plans. It was assumed that managed care would save money, so payments were set at 95 percent of what Medicare expected to pay, by county of residence, for care of enrollees in traditional fee-for-service (FFS) Medicare. Although HMOs continued to complain about poor reimbursement, they could generate large profits by enrolling healthier people needing less care and avoiding sicker patients. It was soon found that sicker patients who were disenrolled by HMOs cost Medicare 160 percent more in the first six months after disenrollment. A 1989 report estimated that Medicare was paying 15 to 33 percent more for care of beneficiaries in private HMOs than in Original Medicare.
When Republicans took control of both houses of Congress in 1994, they increased their efforts to privatize Medicare. The Balanced Budget Act of 1997 (BBA) created Medicare + Choice (M+C) plans, with complex reimbursement arrangements that still afforded substantial profits by cherry picking the market. Private plans were not required to adjust their payments because of the lesser risk of their enrollees. The General Accounting Office in 2000 reported that Medicare spent about 21 percent more on M+C enrollees than it would have spent under Original Medicare. Despite this news, Congress passed the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) that same year, which further increased M+C payments, with fewer regulatory requirements. Many M+C HMOs gamed the system, raising premiums to generate higher profits, restricting services, and then often exiting the market.
More recently, of course, we had the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) (also dubbed the Medicare Middleman Multiplication Act by New York Times columnist Paul Krugman). The MMA continued generous overpayments to Medicare Advantage (MA), the successor to M+C. Overpayments of MA plans average 13 percent higher than Original Medicare (19 percent higher for the most popular private fee-for-service ((PFFS) plans, still with no effective risk adjustment.
So history over three decades is quite clear that private plans cost more than traditional Medicare, are less reliable, and wouldn’t be in business at all without overpayments. The privatized Medicare experiment has failed. The latest action by Congress is an important first step in reversing the failures of privatization, but much more needs to be done. These further reforms are high on the list for further action by Congress:
• eliminate all overpayments entirely (there are still $150 billion in
overpayments available to private Medicare plans over the next 10 years,
despite this recent modest cut)
• require a level playing field for all private plans (they won’t play!)
• add cost-effectiveness as a criterion for determining coverage and
reimbursement policies of Medicare
• and allow the government to use its bulk purchasing power to negotiate
discounts for drugs, medical devices and supplies.
Let’s hope that last week’s overwhelming votes in Congress opposing conservative rhetoric and the health insurance lobby emboldens those running for Congress this year, the 2009 Congress, and our new President (Obama!) to build on this important first step toward health care reform.
Adapted from Shredding the Social Contract: The Privatization of Medicare, Common Courage Press, 2006, and by John Geyman, With permission of the publisher, Common Courage Press, Monroe, ME.
Means Testing, for Medicare
By Tyler Cowen
The New York Times
July 20, 2008
As Mark V. Pauly, professor of health care systems at the University of Pennsylvania, has said, “Medicare as we know it today cannot be sustained over the next 50 years and probably will run into financial difficulties within the next 15.”
There’s one important idea lurking in the shadows that neither campaign is keen to talk about: paying out government benefits more efficiently. To put it bluntly, it means paying out full benefits only to those who really need them, and cutting back on payments to everybody else.
“Means testing” — cutting back on payments to the relatively wealthy — is one way to better allocate benefits. For health care costs, this could be done by expanding Medicaid, which is focused on the needs of the poor… At the same time, the government would need to limit the growth of Medicare… With limited resources, it would be better to reallocate health care subsidies toward the poor…
An alternative path is to put in place more means testing throughout Medicare.
The best option is probably to tie the size of Medicare benefits to a person’s lifetime income, which is relatively easily measured and hard to game, rather than to one’s income or assets in any current year. In essence, higher earners would receive lower benefits instead of facing the prospect of higher taxes, as current trends predict. This policy reflects an ethic of individual responsibility — namely, that people who have earned well throughout their lives should be expected to take care of themselves, precisely so that the truly unfortunate can be helped.
Tyler Cowen is a professor of economics at George Mason University.
Everyone agrees that health care is now so expensive that those of modest means cannot be expected to contribute as much to the financing of health care as those who are more affluent. Traditionally, the Medicare program has been financed primarily through a common risk pool with contributions paid based on income levels. Now, instead of establishing equity through the revenue side of the balance sheet, efforts are being made to shift equity, or the appearance of equity, over to the benefit/expenditure side.
(For this discussion, revenues are considered to be Part A payroll taxes, and Part B general revenue taxes plus Part B premiums; supplemental premiums, deductibles and coinsurance are considered to be adjustments to the benefits.)
The Medicare Modernization Act, which established the Party D drug benefit, was an effort not only to privatize Medicare but to shift more of the responsibility of paying for care to the individual beneficiaries. The first step towards shifting the funding to the benefit side was the establishment of a means-tested premium for the Part D program. Those with higher incomes pay larger premiums. What could be wrong with that?
Professor Cowen doesn’t really hide the potential impact of means-tested benefits, including means-tested premiums and cost sharing. He suggests that those of limited means (now the majority) should be placed in a Medicaid-like welfare program, while the wealthy pay for more of their care with private funds. This is an explicit endorsement of two-tiered health care: the finest care money can buy for the wealthy, and under-funded mediocre care for the rest of us.
Professor Cowen states, “This policy reflects an ethic of individual responsibility.” That is precisely the problem. It rejects the concept of social solidarity: the glue that holds together the people of all other societies that have universal, comprehensive health care systems.
Financing health care through revenues paid into a single, universal risk pool establishes equity by using progressive tax policies, while providing broad political support for a program from which we would all benefit equally. Providing benefit levels inversely related to life-time income might create the appearance of equity, but, in fact, it destroys equity by forcing many of us into a welfare program, impairing access to the health care that we need.
Instead of means-testing our people, maybe we need to start mean-testing the economists and reject those who really are mean.
The emergency room provides a crucial vessel for our community, a place where, at some unexpected moment, each of us might need to pour all of our hopes. Perhaps that is why the video of the unattended waiting room death of Esmin Green, an appalling, preventable tragedy, inspires such anguish and outrage.
As the New York Times reported:
Someone may need to clue Mr. Bloomberg in. This death appears to be a result of systemic failure in two areas in which the mayor is credited with great expertise: public health and public management.
ER delays have become routine in America, even as they prove deadly. We remember Edith Rodriguez, Christopher Jones, Beatrice Vance and recognize that many unknown others have died waiting for emergency care.
Hospital ERs, by law, must welcome all patients who present for treatment. Hence last year’s Presidential quip, “I mean, people have access to health care in America. After all, you just go to an emergency room.” Yet over recent years we have seen our ERs progressively overwhelmed.
The Institute of Medicine reported in 2006 that ER visits climbed more than 25 percent over ten years while the number of hospital emergency departments declined by about 10 percent. No wonder we have overcrowded ERs and longer wait times.
This year, a benchmark study, by Dr. Andrew Wilper and other Harvard researchers, published in Health Affairs, found that heart attack patients admitted to the ER in 1997 typically waited 8 minutes for treatment, but in 2004 waited 20 minutes, a 150 percent increase.
Because hospitals often lack sufficient inpatient beds, as well as nurses, critically ill or mentally ill ER patients “boarding in the ER,” waiting for intensive care or a psychiatric unit can create a bottleneck, leading to a backup for hours, even days, ultimately causing the diversion of ambulances to another hospital and a greater risk of death for those who are critically ill.
Surprisingly, insured Americans crowd the ERs, not the uninsured. This spring the Annals of Emergency Medicine published a study by Dr. Ellen Weber (and others) that shows the proportion of the uninsured who go to the emergency room declined modestly over a 7 year period, a time when the proportion of uninsured in America rose steadily.
Private health insurance has erected financial disincentives that convince patients to avoid care, for the costs of premiums, co-pays, deductibles and other out-of-pocket expenses have outstripped wages. These days far too many, insured and uninsured, wait to seek medical attention until they are simply too sick to avoid the emergency room. And far too many lack primary and preventive care.
If patients who leave the ER are likely to find themselves bewildered about their treatment, what it means to have insurance “coverage” can be more confusing. A visit to the ER can bring on the up-front co-pay, the daunting deductible (listed on the bill as the “patient responsibility”), as well as other unaffordable out-of-pocket costs, all of which combine to clobber our families financially.
Crowding in the ER weighs upon caregivers too. To be sure those who work in the ER witness terrible human suffering, often bravely, with an an expected psychological toll. Yet confronting wholly unjustified tragedies, products of the system itself, threaten “burnout” – and these frustrations mount along recurring themes like too many patients whose emergency might have been prevented if they had a primary care provider, too few staff, too few beds or a lack of specialty services for sick patients.
With grim consequences for patients, some specialists and primary care doctors no longer take call to back up the ER. For example the St. Petersburg Times reports: “If you sever your fingers in Florida, Tampa may be the only place to get them sewn back on.” (What happens to patients with such injuries at the other 200+ Florida hospitals with ERs?!)
Ambulatory surgical centers, encouraged by private health insurance payments, compete with hospitals for insured patients, thus diverting patients, specialists and revenue away from hospitals. (In contrast, specialist on call to the emergency room find unpredictable off-hours demands, where patients are likely to be high risk and possibly underinsured or uninsured.) Market forces thus undermine our ERs.
Where the percentage of low-income patients tends to be great, specialists tend to be scarce, increasing the likelihood that a severely ill patient (from a hospital that serves a low-income area) may need to go on to another hospital for inpatient care. Health disparities, by race and by region, have grown worse, not better, in recent years. While American life expectancy overall has increased, “the life expectancy of a significant segment of the population is actually declining or at best stagnating.” How is this possible when health spending, per person, is more than 50% more in the United States than any other nation?
The indignities of the emergency room worsen as disparities in American health care grow. We must not allow our front-line colleagues, ER nurses and doctors, in whose hands we place the hopes of our community, to struggle in isolation. Local solutions will not be found to solve systemic, nationwide problems.
Swamped with patients, many of whom have already delayed seeking medical attention, and starved of resources and specialists, our ERs are ailing. The perverse incentives that drag down our ERs – and thus all of us – are the product of the American system of health care financing: private health insurance.
“Systemic failure” led to Esmin Green’s death. These words in the New York Times reflect public awareness of the nationwide crisis in American health care.
Private health insurance, with its unaffordable costs and its billing games, with its intolerable intrusions into personal and professional decisions, undermines both patients and caregivers. Private health insurance must be replaced by public financing.
Single-payer reform of the American health system offers the minimum incremental change needed to improve the care of patients, lessen inequalities and disparities in care, defend and expand patient choice and autonomy, redistribute resources toward care, toward our emergency rooms, and away from bureaucratic waste, profit-making, personal gain and thus reign in costs.
For the health of our nation, for the sake of our emergency room patients and caregivers, we need single payer now.
Insurance industry forming activist army
By Chris Frates
July 16, 2008
Ahead of the approaching health care reform storm, the insurance industry is building an ark: a nationwide education campaign aimed at raising an activist army at least 100,000 strong.
The unprecedented effort by America’s Health Insurance Plans, called the Campaign for an American Solution, includes a nationwide listening tour, advertising and an intense recruitment effort aimed at signing up Americans who are satisfied with their private insurance coverage.
Often viewed in Washington as a faceless, profit-driven industry, health insurers hope that hitting the road and starting a fan club will help lawmakers better understand the value of their products.
The group is pushing for universal coverage through strengthened private/public partnership. The industry wants to expand access to Medicaid and the state Children’s Health Insurance Program; provide tax credits to parents covering their children with private insurance; and create more portable and flexible tax-free health savings accounts, (AHIP spokesman Michael) Tuffin said.
If states were to provide coverage for those too expensive to insure, he said, the industry would be willing to offer guaranteed coverage to everyone else…
So the insurance industry wants to sign up 100,000 individuals in its fan club to provide free marketing for the private insurance concept. In spite of criticisms, the industry has not changed its goals. They want taxpayers to provide coverage for those too expensive to insure – the 20 percent of people who are responsible for 80 percent of health care costs, but the industry is quite willing to offer guaranteed coverage to everyone else – the 80 percent of people who are quite healthy.
Just imagine the placards that these fan club members might carry at the demonstrations supporting the private insurance industry:
KEEP THE SICK OUT OF MY HEALTH PLAN!
SOCIAL INSURANCE SUCKS!
WE WANT CHEAP HEALTH INSURANCE – NOT EXPENSIVE HEALTH CARE!
MEDICARE MY A**!
NO PATIENCE FOR PATIENTS!
LONG LIVE PRIVATE INSURANCE MARKETS!
DON’T TAX ME – TAX THAT SICK ONE BEHIND THE TREE!
Retiree Benefits Take Another Hit
By Vanessa Fuhrmans and Theo Francis
The Wall Street Journal
July 16, 2008
General Motors Corp.’s move to eliminate retiree health benefits for salaried workers is a sobering signal to the rest of the U.S. work force: Even those who are in or near retirement shouldn’t count on keeping the company coverage they have built up.
Since the early 1990s, employers eager to get out from under the increasing burden of covering their retirees’ health care have been whittling away at those benefits. At some companies, new or younger workers have been excluded from retiree health benefits. Older workers and existing retirees often got to keep the benefits, but had to pay a larger share of the overall costs.
But GM’s announcement Tuesday that it would cease medical coverage for its salaried retirees age 65 and above signals that a new era of ever-shrinking benefits has arrived. Beginning in January, even former employees who are already in retirement will lose their benefits, which most of the company’s retirees use to supplement gaps in their traditional Medicare coverage. The auto maker will boost monthly pension payouts to help offset the cuts. The company’s unionized workers aren’t affected by the cut to retiree health benefits.
At this point, employees and retirees “have to feel lucky if they still have retiree [health-care] benefits, and have to start planning for when they won’t,” says Rick McGill, head of retiree medical consulting for employee-benefits firm Hewitt Associates. He says such benefits are “a dying breed.”
With Warning, G.M. Takes Wide Cost Cuts
By Bill Vlasic
The New York Times
July 16, 2008
While G.M. has been methodically cutting jobs since 2006, the decision to eliminate health care benefits for salaried retirees over the age of 65 was unexpected. The generous health plans for retirees has long been considered a pillar of the benefit system at G.M.
Last week, a Quote of the Day message discussed why the overwhelming majority of individuals, except those enrolled in the traditional Medicare program, do not have a choice of keeping indefinitely the private health insurance that they currently have. The largest private health benefit program in the nation, that of General Motors, was used as an example of how even the best could not provide absolute security that you could keep the insurance you have.
The message was not meant to be a prediction, but merely a confirmation that, even in the best of circumstances, you may not have the choice of keeping your coverage. The only surprise is how quickly close to 100,000 General Motors retirees lost their employer-sponsored coverage.
Last week’s message is very important. It lists a great many reasons why people do lose the coverage they have, and almost all of the reasons are beyond their control. The message should be used to counter those who contend that their proposal allows you to “keep the insurance you have.” It is available for downloading at:
Also, John Geyman, author of “Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It,” on July 16 posted on the PNHP Blog the entry, “Choice in Private Health Plans: Is It Real?”
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