Fighting to Cure a Sick System

Posted by on Monday, Jun 29, 2009

Katie Robbins thinks the fight for universal healthcare is so important she is willing to put her butt on the line.

An organizer with Healthcare-NOW!, Robbins is helping to ratchet up protests to push Congress to establish a single-payer healthcare system.

As part of the campaign, Robbins and others are donning hospital gowns and shiny plastic buttocks that stick out the back of their gowns. Once dressed, the activists take their message to the public: “Private health insurance is like a hospital gown, chances are your ass is not covered.”

On a recent Saturday afternoon, Robbins and other activists jumped on a subway train on the 1 line. They handed out flyers explaining that healthcare should be a human right and publicly funded insurance for everyone was the best solution to the healthcare crisis. The activists happened upon a Mariachi band, and the combination of outlandish outfits and festive music seemed to inspire subway riders to scoop up the leaflets.

In the past, proponents of single-payer healthcare took a more conventional approach. For 20 years, Physicians for a National Health Program (PNHP) have used academic journals, traditional media and PowerPoint presentations to spread its message. But things are heating up.

In January, doctors, nurses, students, labor unions, religious organizations and activists launched the Leadership Conference for Guaranteed Health Care. Inspired by the Leadership Conference for Civil Rights, which helped pass groundbreaking legislation in the 1960s, the healthcare alliance claims to represent more than 20 million people.

Single-payer healthcare advocates argue that only by having the federal government provide business-and taxpayer-funded health insurance can everyone receive guaranteed healthcare access. This system would also save money by eliminating the health insurance industry’s profits and extensive bureaucracy.

In contrast, the Obama administration and Congress propose new industry regulations, mandates and public subsidies for individuals to purchase private insurance, and perhaps some type of public insurance. These proposals would still leave millions of Americans uninsured while subsidizing for-profit insurers.

To pay for the plans, Democrats, with no shortage of Republican support, are considering $600 billion in cuts to Medicare and Medicaid, a first-ever national sales tax and taxes on employer-based health insurance.

Single-payer healthcare has more support in the public than in the halls of power. Only after single-payer healthcare advocates mobilized a mass call-in campaign and threatened a demonstration of health professionals were they invited to Obama’s healthcare summit in March.

Yet they were excluded from key hearings in the Senate Finance Committee chaired by Sen. Max Baucus (D-Mont.), who raked in more than $1.8 million in healthcare industry donations in the 2008 election cycle.

In May, 13 protesters, including doctors and nurses, were arrested after they disrupted committee hearings by standing up and demanding a seat at the table. Robbins was the third to speak out. She declared, “We want a seat at the table.” In response, Baucus snapped, “We need more police.”

Baucus told one activist at a public event in Washington, D.C., in May that he supports single-payer healthcare but does not push for it because “we don’t have the votes.”

Activists targeted Baucus when he came home on recess after the finance committee hearings. Single-payer healthcare supporters were a visible and vocal presence at town hall meetings across Montana. Baucus canceled personal appearances, sending instead a video and a representative for this “listening tour.” A “buy back our senator” campaign is in the works.

Single-payer healthcare advocates have made modest inroads into legislative hearings. Dr. Margaret Flowers, one of the “Baucus 13,” was invited to testify before a Senate committee. Flowers said, “We are no closer to having more support for singlepayer in the Senate, [but] things are a little better in the House,” Flowers said. She added that one goal is to get the Congressional Budget Office to do a financial analysis of single-payer healthcare this year.

Healthcare industry lobbying groups reported $127 million in lobbying expenditures in the first three months of this year. Five trade associations combined have hired more than 20 former government employees as lobbyists, including ex-congressional staffers. PNHP has five staffers for all operations and an annual budget of less than $1 million.

Some opponents of single-payer healthcare have resorted to artificial grassroots movements known as “Astro Turf.” One Boston consulting firm hired by the insurance industry reportedly faked letters from senior citizens in support of Medicare privatization.

Instead of relying on money and underhanded tactics, Flowers says, “We must build a civil rights movement like those that have come before.”

An insurance insider speaks up

Posted by on Friday, Jun 26, 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.

Consumer Choices and Transparency in the Health Insurance Industry

Testimony of Wendell Potter, formerly head of corporate communications at CIGNA
United States Senate Committee on Commerce, Science and Transportation
June 24, 2009

I know from personal experience that members of Congress and the public have good reason to question the honesty and trustworthiness of the insurance industry. Insurers make promises they have no intention of keeping, they flout regulations designed to protect consumers, and they make it nearly impossible to understand – or even to obtain – information we need. As you hold hearings and discuss legislative proposals over the coming weeks, I encourage you to look very closely at the role for-profit insurance companies play in making our health care system both the most expensive and one of the most dysfunctional in the world. I hope you get a real sense of what life would be like for most of us if the kind of so-called reform the insurers are lobbying for is enacted.

When I left my job as head of corporate communications for one of the country’s largest insurers, I did not intend to go public as a former insider. However, it recently became abundantly clear to me that the industry’s charm offensive – which is the most visible part of duplicitous and well-financed PR and lobbying campaigns – may well shape reform in a way that benefits Wall Street far more than average Americans.

Wendell Potter, a former CIGNA executive, provides an insider’s view as to what type of behavior we can expect from the private insurance industry after reform is enacted. No matter the details of the reform legislation, the industry will always find innovative ways to advance the interests of their executives and their investors. It is absolutely inevitable that these innovations will be to the detriment of patients and payers.

Many suggest that we can control these abuses through regulation, but states that are already highly regulated have failed to counter the ingenuity of the insurers and their perverse innovations. Think of New York and the UnitedHealth/Ingenix scam, or WellPoint’s perpetuation of the rescission abuses. As regulators patch holes in the private insurance infrastructure, the industry will always find other innovations designed to punch even larger holes in the system. If we think underinsurance is a problem now, just wait until Congress has enacted reform and moved on to other issues.

The private insurance industry isn’t looking out for us. Congress shouldn’t be looking out for them. We need our own universal financing system designed specifically to take care of all of us. The private insurers are pulling us down; Congress needs to cut them loose.

Paul Starr and Steffie Woolhandler on the public option

Posted by on Thursday, Jun 25, 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.

Perils of the Public Plan

A badly designed public plan could turn out to be the opposite of what progressives intend.

By Paul Starr
The American Prospect
June 24, 2009 (web)

In the current battle over health reform, progressives may have set themselves up for trouble by pinning all their hopes on the creation of a government-run insurance plan.

All the proposals receiving serious consideration in Congress allow employers to continue to insure their workers and dependents directly. They also call for new “insurance exchanges” as an alternative means for individuals and employee groups to purchase coverage. If there is a new government-run plan, it would be one of the options in those exchanges.

The great danger is that the public plan could end up with a high-cost population in a system that fails to compensate adequately for those risks. Private insurers make money today in large part by avoiding people with high medical costs, and in a reformed system they’d love a public plan where they could dump the sick.

Entry into the public plan for the eligible employed would be a two-stage process. First, employers would choose between paying into the exchange and buying insurance directly to cover their workers. Unless the exchange is such a good deal that nearly all employers take it, firms with a young, healthy work force would tend to buy insurance on their own, while those with higher-cost employees would go into the exchange’s pool. As a result, the pool would suffer “adverse selection” — it would get stuck with a higher-risk population.

Second, within the exchange, the government-run plan would compete against private insurers, yet it would likely abstain from the marketing strategies used by private plans to avoid high-risk enrollees. This double jeopardy of adverse selection could then more than nullify the advantage the public plan derives from its lower overhead (as a result of less money going for salaries, profits, and marketing).

Here’s the delicate political problem: Unconstrained, the public plan could drive private insurers out of business… Over-constrained, the public plan could go into a death spiral itself as it becomes a dumping ground for high-risk enrollees, its rates rise, and it loses its appeal to the public at large. Creating a fair system of public-private competition — giving the public plan just enough power to offset its likely higher risks — wouldn’t be easy even if it were up to neutral experts, which it isn’t.

There are a lot of ways to defeat reform, not just by blocking it entirely, but by setting it up for failure. Those who think a public plan is a good idea no matter how badly designed are not thinking ahead.

(Paul Starr received the Pultizer Prize for “The Social Transformation of American Medicine.”)


Will a Public Plan Bring Better Care?

The New York Times
June 24, 2009

To the Editor:

Re “A Public Health Plan” (editorial, June 21):

A public plan option that competes with private insurers won’t fix health care. Competition in health insurance involves a race to the bottom, not the top. Insurers compete by not paying for care: by seeking out the healthy and avoiding the sick; by denying payment and shifting costs onto patients. These bad behaviors confer a decisive competitive advantage; a public plan would either emulate them — becoming a clone of private insurance — or go under.

Moreover, the savings on overhead from a public plan option are far smaller than you suggest. While it might cut insurers’ profits (which is why they hate it), that’s only 3 percent of the roughly $400 billion squandered on health bureaucracy annually.

Far more goes for armies of insurance administrators who fight over payment, and to their counterparts at hospitals and doctors’ offices — all of whom would be retained with a public plan option. In contrast, a single-payer reform would radically simplify the payment system and redirect the vast savings to care.

Steffie Woolhandler
Cambridge, Mass., June 21, 2009

The writer, an associate professor of medicine at Harvard, is a primary care doctor.

The heated debate over the proposal to offer a public plan option is certainly warranted, but the much of the debate misses the point. While most people are arguing over the design of the public option, they are neglecting the fundamental flaws of our multi-payer system.

Adding a public option to this system, no matter the design of the option, can only result in a perpetuation of the waste, inequities and unaffordable costs that should be the primary drivers of reform.

Some say that private plan regulation will resolve these problems, but you need only look at the perversities of the regulated Medicare Advantage plans to understand that this is a fiction.

Decisions have already been made to include hardship waivers that would leave tens of millions without insurance, and to require only the lowest tier of coverage – the very definition of underinsurance.

The intensive labor and political capital that is being frittered away on the public option is a tragic diversion of human resources that should be directed toward resolving the fundamental flaws in our financing system. Once we get the financing right, we can use that power to ensure that all of us receive higher quality health care.

PNHP testimony before two House committees today

Posted by on Wednesday, Jun 24, 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.

Testimony of Quentin D. Young, M.D.

U.S. House Committee on Ways and Means
June 24, 2009

I wish to make two points to the Members of this Committee. The first is that the best health policy science, literature, and experience indicate that the Tri-Committee proposal will fail miserably in its purported goal of providing comprehensive, sustainable health coverage to all Americans. And it will fail whether or not it includes a so-called “public option” health plan.

The second point I wish to make is that single-payer national health insurance is not just the only path to universal coverage, it is the most politically feasible path to health care for all, because it pays for itself, requiring no new sources of revenue.

Testimony posted on PNHP website:


Testimony of Steffie Woolhandler, M.D.

Health Subcommittee of the House Energy and Commerce Committee
June 24, 2009

Private insurance is a defective product. Unfortunately, the Tri-Committee health reform plan would keep private insurers in the driver’s seat, and, indeed, require Americans to buy their shoddy goods.

Eight decades of experience teach that private insurers cannot control costs or provide families with the coverage they need. A government-run clone of private insurers cannot fix these flaws. Only single payer national health insurance can assure all Americans the care they need at a price they can afford.

Testimony posted on PNHP website:

Single payer is now a part of the dialogue in Congress. Now if only we can convert the single payer dialogue into single payer policy.

David Brooks – Kill this effort and start over

Posted by on Tuesday, Jun 23, 2009

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

Something for Nothing

By David Brooks
The New York Times
June 22, 2009

On May 12, the Senate Finance Committee held a hearing on health care reform. There was a long table of 13 experts, and a vast majority agreed that ending the tax exemption on employer-provided health benefits should be part of a reform package.

They gave the reasons that experts — on right or left — always give for supporting this idea. The exemption is a giant subsidy to the affluent. It drives up health care costs by encouraging luxurious plans and by separating people from the consequences of their decisions. Furthermore, repealing the exemption could raise hundreds of billions of dollars, which could be used to expand coverage to the uninsured.

Democratic Senator Ron Wyden piped up and noted that he and Republican Senator Robert Bennett have a plan that repeals the exemption and provides universal coverage. The Wyden-Bennett bill has 14 bipartisan co-sponsors and the Congressional Budget Office has found that it would be revenue-neutral.

The Finance Committee’s chairman, Senator Max Baucus, looked exasperated. With that haughty and peremptory manner that they teach in Committee Chairman School, he told Wyden and the world that this idea was not going to happen.

In the World’s Greatest Deliberative Body, senators don’t run things. Chairmen and their staffs run things. During the spring, as the Obama administration faded to invisibility, the finance and health committees separately put together plans. These plans did not alter the employer exemption. They did build on the current system. They did include approaches that have been around since Richard Nixon.

The problem with the committee plans is that they don’t do much to change the underlying incentives, and consequently don’t do much to control costs. “The single most expensive option is to build on the existing system,” says the health care costs guru John Sheils of the Lewin Group.

The C.B.O. measured the plans, and the results were devastating. A successful plan has to be revenue-neutral for the government over the next 10 years, and it has to reduce the total health care burden over the long term so the country doesn’t go bankrupt. The Senate committee plans failed both criteria. They would cost the government more than $1 trillion this decade and send total health care costs zooming at least twice as fast as the economy as a whole.

The C.B.O. reports sent shock waves through Washington. Senators and staffs began casting about for a way to get a good C.B.O. score. President Obama redoubled his rhetoric about fundamentally reducing health care costs. Everybody continued looking around for a compromise that could get a bipartisan majority.

Now you might think that in these circumstances someone might take a second look at the ideas incorporated in the Wyden-Bennett plan, which already has a good C.B.O. score, bipartisan support and a recipe for fundamental reform.

If you did think that, you are mistaking the Senate for a rational organism. For while there are brewing efforts to incorporate a few Wyden-Bennett ideas, there is stiff resistance to the aspects that fundamentally change incentives.

The committee staffs don’t like the approach because it’s not what they’ve been thinking about all these years. The left is uncomfortable with the language of choice and competition. Unions want to protect the benefits packages in their contracts. Campaign consultants are horrified at the thought of fiddling with a popular special privilege.

So the process is moving along as it has been. There is a great deal of talk about the need to restrain costs. There’s discussion about interesting though speculative ideas to bend the cost curve. There are a series of frantic efforts designed to reduce the immediate federal price tag. Some senators and advisers suggest cutting back on universal coverage. Others have come up with a bunch of little cuts in hopes of getting closer to the trillion-dollar tab. The administration has ambitious plans to slash Medicare spending.

But there is almost nothing that gets to the core of the problem. Under the leading approaches, health care providers would still have powerful incentives to provide more and more services and use more expensive technology.

We’ve built an entire health care system (maybe an entire government) on the illusion of something for nothing. Instead of tackling that basic logic, we’ve got a reform process that is trying to evade it.

This would be bad enough in normal times. But the country is already careening toward fiscal ruin. We’ve already passed a nearly $800 billion stimulus package. The public debt is already projected to double over the next 10 years.

Health care reform is important, but it is not worth bankrupting the country over. If this process goes as it has been going — with grand rhetoric and superficial cost containment — then we will be far better off killing this effort and starting over in a few years. Maybe then there will be leaders willing to look at the options staring them in the face.

Readers’ Comments:

Don McCanne
San Juan Capistrano, CA
June 23rd, 2009
9:16 am

Two very pertinent points left out would entirely change any conclusions drawn from this commentary:

1) You state that John Sheils has shown that building on the existing system is the single most expensive option for reform. What you didn’t state is that Sheils has also shown that a single payer national health program is the least expensive, and is the most effective in achieving the goals of universality and cost containment.

2) Although you state that Wyden-Bennett has a favorable C.B.O. score, you left out the fact that it was achieved after months of negotiation with the C.B.O. during which numerous changes were made that would shift the burden of future cost increases from the federal budget to individual patients. Financial hardship and bankruptcy due to medical debt is already a problem for insured individuals, and Wyden-Bennett would compound that problem.

Instead of worrying about the federal budget as an isolated problem, Congress needs to start addressing the combined public and private costs for patients. Policy solutions that would work are no secret.

Now that we have a new president espousing health care reform and a Democratic majority in both houses of Congress, isn’t this a time to be excited and optimistic for long-overdue reform? Much as we would like to say “Of course!”, we cannot. The “reform” effort is already way off the track, despite the hype of “progress” in the uncritical mainstream media.

So what’s going wrong? For starters, not all interests are at the negotiating table; noteworthy in its absence of advocates for the public interest. Fundamental questions as to the goals of reform are not being asked, and in fact are being kept out of the discussion. These questions include:

Who is the health care system for (e.g. patients and their families vs. corporate market stakeholders and their investors)?

As a basic human need, is health care a right or not?

Should our system be based on the for-profit business model or a not-for-profit public financing system of social insurance?

Are there any alternatives that will actually save money?

Should the debate be based on evidence, ideology, or political power of the stakeholders in the present (failing) system?

The “debate” over health care reform has already been taken over by the very interests who are themselves a big part of the problem (reminds us of the banking industry and the bailout in process). True to their business model, the insurance, drug, medical device, medical equipment and related health care industries are naturally more interested in their future markets, profits and returns to investors than building a sustainable system of universal access that would rein in their profiteering and hold them more accountable to the public interest. For them, health care costs are revenue, and the “reform process” is an opportunity to protect and expand their future financial wellbeing.

And so we see the people, who are gathered around the White House’s Health Care Summit table or invited to hearings of the Senate Finance Committee, are all committed to building on the flaws of our multi-payer, market-based system, despite all the evidence to the contrary. And in fact, health professionals and activists for the only reform alternative that can actually save money while guaranteeing universal access (single-payer Medicare-for-All), are being excluded and even arrested if they “act up or disrupt” hearings.

While everyone agrees that the soaring and increasingly unaffordable costs of health care should be the principal target of reform, the rhetoric and behavior of the stakeholders, predictably enough, do not match. These examples illustrate the point:

• Many of the stakeholders around the negotiating table have signed on to a voluntary effort to trim $2 trillion from health care spending over the next ten years; these include the American Medical Association, the American Hospital Association, and the trade groups for the insurance, drug and medical device industries. This pledge is based on such vague promises as increasing prevention and wellness programs, better management of chronic illness, reducing hospitalizations, and expansion of electronic medical records. But there is no plan, accountability or credible evidence that any of these approaches will cut costs, and such an effort is already raising antitrust concerns. So this ends up as a vacuous gesture of goodwill in an attempt to avoid major change of the health care marketplace.

• While raising their premium prices at levels four or five times the cost of living and family incomes, and continuing to engage in questionable marketing practices, America’s Health Care Plans (AHIP) fight fiercely against a competitive public option; in the individual market, Blue Cross Blue Shield of Michigan is raising its rates this month by about 50 percent; AHIP pledges to guarantee issue to all comers, but only if the government mandates that everyone should have insurance and provides subsidies to lower-income people to purchase coverage — quite obviously an enormous windfall for a failing industry.

• Even as AHIP postures about opening up its coverage policies and better policing its marketing practices as part of health care reform, Blue Cross Blue Shield of North Carolina stands poised to launch a large disinformation ad campaign against a public plan option if it becomes part of a reform package.

• The Lewin Group, a well-known health services consulting firm, has carried out studies comparing various financing alternatives in a number of states (e.g. California, Vermont, Maryland, Georgia), concluding that single-payer is the only way to provide universal coverage and still save money; however, the Lewin Group was bought last year by Ingenix, in turn owned by UnitedHealth, the second largest insurer in the country; is it any surprise that Lewin’s spokesperson before the Senate Finance Committee was recently silent on the advantages of single-payer?

• PhRMA spent $47 million on lobbying in the first quarter of 2009, one-third more than last year, and many drug companies are raising their prices by 15 to 20 percent and more.

• HCA Inc, an investor-owned chain of 166 hospitals across the country, is reporting that its income before taxes nearly doubled in the first quarter of this year, even though it had fewer hospitals and its admissions declined; Richard Scott, former CEO of HCA until he was forced to resign in 1997 in what became at that time the largest fraud case in American history, now heads up an astroturfing organization, deceptively named Conservatives for Patients’ Rights, that plans to spend some $20 million to kill an Obama health reform plan.

• As opposition gathers on both the left and right of a developing reform proposal, political compromises under the banner of bipartisanship progressively dilute the proposal itself. Showered as they are on both sides of the aisle in Congress by campaign contributions from stakeholders in the medical-industrial complex, legislators seek out political cover of a watered-down bill. Senator Charles Schumer proposes that any public option, if it survives, play by the rules of private insurers, while Blue Dog Democrats rise up against such a public option. The Center for Responsive Politics has documented that fundraising by the average U.S. senator more than tripled over the last eight years; Senator Max Baucus, adamantly opposed to the single-payer option as Chairman of the Senate Finance Committee, raised more than $11 million during the 2003 to 2008 election cycle, including more than half a million dollars from each of three industries — insurance, pharmaceuticals/healthcare products, and health professionals.

So the snake oil is flowing, the political trap is set as moderates and centrists run
for cover in a bipartisan attempt to craft a “reform” bill that won’t upset the stakeholders too much. Ideology and bald political power are controlling the “debate”, which appears certain to derail serious health care reform. Left out of the equation are the track record of the stakeholders, a sense of history, and the interests of the growing population that can no longer afford health care. We seem to have forgotten that the passage of Medicare and Medicaid in 1965 was a bitterly fought battle down to the last vote, without any semblance of bipartisanship. As George Bernard Shaw observed many years ago: “We learn from history that we learn nothing from history”.

Under these circumstances, no bill is better than a bad one that will not rein in costs and will set back health care reform for years to come. Future posts will consider some of these issues in more detail.

John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

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  • Comments Off on The Sham and Shame of the Health Reform "Debate": The Charade Goes On

House Tri-Committee public option

Posted by on Monday, Jun 22, 2009

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

The House Tri-Committee Health Reform Draft

June 19, 2009
H.R. (discussion draft)
Short Title (to be supplied)

(1) IN GENERAL.–The Secretary shall establish payment rates for the public health insurance option for services and health care providers consistent with this section and may change such payment rates in accordance with section 224.
(A) IN GENERAL.–Except as provided in subparagraph (B) and subsection (b)(1), during Y1, Y2, and Y3, the Secretary shall base the payment rates under this section for services and providers described in paragraph (1) on the payment rates for similar services and providers under parts A and B of Medicare.

(A) IN GENERAL.–The Secretary shall provide, in the case of services described in sub paragraph (B), for payment rates that are 5 percent greater than the rates established under subsection (a).
(B) SERVICES DESCRIBED.–The services described in this subparagraph are items and professional services furnished during Y1, Y2, and Y3, under the public health insurance option by a physician or other health care practitioner who participates in both Medicare and the public health insurance option.

(2) SUBSEQUENT PERIODS.– Beginning with Y4 and for subsequent years, the Secretary may adjust such rates in order to promote payment accuracy, to ensure adequate beneficiary access to providers, or to promote affordablility and the efficient delivery of medical care.


Available in the new Health Insurance Exchange (Exchange) along with all of the private health insurance plans.

Require public plan to meet the same benefit requirements, and comply with the same insurance market reforms as private plans.
Establish the public plan’s premiums for the local market areas that are designated by the Exchange, just as other insurers do.

Initially utilizes rates similar to those used in Medicare; this tie is severed over time as more flexible payment systems are developed.


House Health Care Plan

Posted by Karen Tumulty
Swampland (a blog)
June 19, 2009

The key committee chairmen put out an outline today of their approach to health care reform, and there’s one thing they want you to know about it: “Uniquely American,” said House Education and Labor Committee Chairman George Miller.

“We need a uniquely American approach to health care reform,” warns Robert Zirkelbach, a spokesman for the trade lobby America’s Health Insurance Plans.

Anyone who has followed this debate for more than 20 seconds will immediately recognize all this talk of unique Americanism as another way of saying NOT SINGLE PAYER, which is the government-financed system that just about every other industrialized country uses in one form or another. And all this skittishness about single payer explains the delicacy with which the House drafters have tried to finesse the question of whether their system will have a public plan, something like Medicare, but for people under 65.

The answer is, it will have a public plan, and a strong one–at first.

In the early stage, the public plan would reimburse health care providers at rates that are “similar to those used in Medicare”–that is, significantly lower than most private insurers pay them. This is something that the insurance industry, doctors and hospitals will all hate. “A government-run plan that pays based on Medicare rates — for any period of time — is a recipe for disaster,” Scott P. Serota, president and Chief Executive Officer of the Blue Cross and Blue Shield Association, said in a statement issued by the association.

Advocates would argue, on the other hand, that those lower rates could be a powerful engine to bring down health costs. Which is why they won’t be happy with what happens next. According to the summary, this tie to Medicare rates would be “severed over time as more flexible payment systems are developed.” In other words, this public plan would eventually evolve into something that looks–and competes–more like a private insurance company, albeit one that happens to be run by the government. At the news conference, I asked the committee chairmen precisely what that means–When would that happen? And under what circumstances? They couldn’t tell me, and demurred that this is the kind of thing that still needs to be worked out. Waxman said it would take “a period of time” for the public plan to get started, but that “they will at some point compete.”

The House committee chairmen are trying to have it both ways on the public plan.

Of course, the biggest thing that needs to be worked out is how they are going to pay for this bill, which they said would ultimately assure that 95% of Americans have health coverage. What they are looking at is a combination of reductions in Medicare and Medicaid spending and taxes.

Until they figure that part out, all of this other stuff is written in smoke.

With the release of the discussion draft of the House Tri-Committee reform proposal, the progressive community is celebrating the decision to include a “strong public option” within the health insurance exchange. Its innovative feature, different from other public option proposals, is that it would use lower Medicare-based rates for the first three years, enabling the public option to displace some higher-premium private plans within the insurance exchange. Then in the fourth year, rates would be adjusted to provide a level playing field with the private plans.

Is this the model of the public option that is going to ensure that reform will bring affordable health care to everyone? Well, here are a few things that this reform will NOT accomplish:

* Not a single one of the Republicans or conservative Democrats who are opposed to the public option will sign on to this version. It is a government program not only in name, but in fact. Not only would it eliminate any hope of bipartisan legislation, it is quite likely that it could not even muster the vote of a simple majority.

* By requiring the public option to have the same market reforms as the private plans, it will prevent the government from using the great power of beneficent public social policies. A regulated insurance exchange within a fragmented, multi-payer, business-oriented insurance market would provide a very shaky infrastructure for delivering to the community the benefits of a social insurance program. Even with greater regulation, our private insurers have a business mission whereas the European private insurers have a social mission.

* A public plan that is required to comply with private insurer rules could never provide a back door entry to a single payer system. As Medicare Advantage demonstrates, the private insurers will always use devious means to provide them with an unfair advantage over our public program, even though they provide lower value per dollar spent.

* An insurance exchange, with or without a public option, perpetuates a fragmented system that prevents us from obtaining greater health care value by having the powerful purchasing strength of our own public monopsony – the secret of other systems that have slowed cost inflation.

* The administrative complexity of this model of reform makes it impossible to cover everyone. Initial estimates that this would cover 95 percent of the population are likely overly optimistic. Regardless, supporting a program that would leave even 15 million people on their own to fend for health care reflects a callous disregard for the needs of these individuals, and certainly belies the notion that we are a caring nation.

* Although this proposal shifts spending between individuals, employers and the government, creating the appearance of financing reform, it does very little to slow the continuing escalation in health care costs. Until that is seriously addressed, as it could be through an improved Medicare for everyone, the rest of this “stuff is written in smoke,” as Karen Tumulty writes.

Going Broke

Posted by on Saturday, Jun 20, 2009

Illness brings financial ruin and severe and avoidable hardship to millions of families here in the wealthiest nation on earth. Of all bankruptcies in 2007, 62% were precipitated by illness.

Of those bankrupted by medical costs, 4 out of 5 started out with health insurance, according to a study just released by the American Journal of Medicine. Astonishingly, 3 out of 5 managed to still have health insurance at the time of bankruptcy.

More, medical bankruptcy worsened dramatically in the years before the economic downturn of the last year. Bankruptcy due to medical debts rose by 50% between 2001 and 2007. Since then millions of people have had to forfeit their health insurance as they lose their jobs.

I was talking about it with an old friend who came to visit from out of town. She casually remarked: “But now everyone has one of these horrible stories. I have one. My mother has one. Everyone I know has one.”

Her story:

Several years ago I started having recurrent strep tonsilitis infections. My tonsils would get big, like golf balls. One of the times it started happening was on a weekend and there was no way to even make a doctor appointment — if I even had a regular doctor then — so I went to the ER.

But the young resident I saw in the ER wouldn’t do any tests. He gave me a lecture! He said: “People like you are gobbing up the system.” He went on about about how, by coming to the ER, I was driving up health costs for everyone because all I needed was a prescription for antibiotics.

What choice did I have? I remember we got into an argument over a rapid strep test — I knew it would be positive and give him the result he needed to write the prescription. Instead he discharged me with no tests and a big bill.

Then the next day I had a high fever and, you know, I could barely swallow anything, my tonsils were huge. So I went back to the same ER where I was accused of “gobbing up the system” and they admitted me for IV antibiotics and fluids! Well the whole thing cost thousands. I ended up putting it on my credit card.

But pretty soon I couldn’t even make the minimum payments and then collection agents were, like, hounding me. It was awful! So finally I borrowed from my brother and went in person to the collection agency with a check. To this day my brother won’t let me live it down. Whenever I see him he reminds me that somehow it was all my fault. Oh its horrible.

The study, “Medical Bankruptcy in the United States, 2007” supports the observation that we all know someone with a story like this. The researchers, David Himmelstein, Steffie Woolhandler, Elizabeth Warren and Deborah Thorne, found that those bankrupted were middle class families: 2/3rds had owned a home. 3/5ths had attended college. (What about the people who lacked the means or wherewithal to seek bankruptcy protection, or who, like my friend, simply paid the bill?)

The impact upon the families who were bankrupted was profound. 2/5ths lost income or lost a job due to illness or due to lost work to care for a sick family member. Those who were ill and lost private insurance coverage due to the bankrupting illness, lost their coverage usually because the patient or family caregiver lost their job.

What good is health insurance when in spite of having it, personal medical costs break the household finances?

What good is having health insurance tied to employers, when a family health crisis costs you your job?

My friend did not declare bankruptcy. She has since rebuilt her credit. We know there are millions like her — how many?

President Obama told the American Medical Association meeting this week:

If we do not fix our health care system, America may go the way of GM; paying more, getting less, and going broke.

This week we have had an earful of proposals based upon the failed system of private health insurance, proposals that Don McCanne aptly names “unaffordable undersinsurance.” Meanwhile single payer is getting a hearing throughout the nation and in the halls of Congress. The word is out.

Mr. President: single payer national health insurance is the only proposal that will put an end to medical bankruptcy and keep us from going broke.

Senate Finance proposes unaffordable underinsurance

Posted by on Friday, Jun 19, 2009

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

Health Care Reform: Draft Proposal

Posted by Ezra Klein
The Washington Post
June 18, 2009

Senate Finance Committee


Benefit Options – Actuarial value
Bronze = 65%
Silver = 73%
Gold = 81%
Platinum = 90%

Tax credit for individuals and families
Up to 300% federal poverty level (FPL)

Children and pregnant women – up to 133% FPL
Parents and childless adults – up to 100% FPL

Individual requirement – fine for non-compliance
Exempt from fine if lowest premium exceeds 15% of income
Exempt from fine if below 100% poverty

The Senate Finance Committee members were informed by the Congressional Budget Office that the impact their preliminary reform proposal would have on the federal budget would be much greater than a bipartisan consensus would permit. Before moving further forward with the legislative process, the committee is considering changes to reduce the amount of funds that would have to be budgeted. The draft proposal cited above is not a definitive recommendation but merely presents ideas for discussion.

Nevertheless, the process should alarm us. The committee members continue to steadfastly refuse to look at financing options that would be effective in providing affordable health care for everyone. They begin with the insistence that reform be built on the obsolete infrastructure of private health plans, even though they have just proven once again that this archaic model no longer works.

Look what happens when they try to cram reform into this model. They expect an individual or a family with an income of 300% of the federal poverty level to pay 15% of their income for the premium alone, and for that they receive a plan that covers only 65% of the actuarial value of their health care services. They would require Americans to pay to private insurers a premium that they can’t afford, to purchase an underinsurance product that would fail to prevent financial hardship should they need health care, and to fine them should they fail to comply.

So they say, wait, this isn’t final. Let’s work with these numbers so that we can find products with adequate benefits and affordable premiums that do not further burden our federal budget with excess subsidies. As long as our legislators rely on an infrastructure of private health plans, that game will never end. Those numbers do not exist.

There is a way we can do it. We can establish separately a single, equitably-funded, universal risk pool which would be affordable for everyone. We could then use those funds in a much more efficient, single health care purchasing system that would ensure that everyone receives the care that they need.

But you’ve heard this before. And so have the members of Congress. Yet they continue to craft policies that impair the health care finances and health care access of far too many of us merely to ensure the viability of the obsolete, dysfunctional insurance industry. Talk about perverse priorities!

If you haven’t yet co-signed Sen. Bernie Sanders’ Petition to Congress, please do so now, and ask others to do so as well:

Scrushy and the medical-industrial complex: a lesson for reformers

Posted by on Thursday, Jun 18, 2009

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

Judge orders Scrushy to pay $2.8B to shareholders

By The Associated Press
The Washington Post
June 18, 2009

(An Alabama) state judge on Thursday ordered former HealthSouth CEO Richard Scrushy to pay about $2.8 billion to shareholders who sued over accounting fraud at the rehabilitation chain.

Circuit Judge Allwin E. Horn, who heard the case without a jury, ruled in favor of HealthSouth shareholders who filed a civil suit claiming Scrushy was involved in a massive fraud that nearly sent the company into bankruptcy.

The Alabama suit accused Scrushy of unethical dealings with the company while it was going broke and complicity in $2.6 billion in fraudulent earnings and asset reports it filed with regulators from 1996 to 2002. The amount shareholders sought included money they claimed he pocketed through sweetheart deals.

Five former HealthSouth finance chiefs gave testimony implicating Scrushy in a scheme to fraudulently inflate earnings. Scrushy, who hired all five when he ran the company, blamed them and described them as having personal weaknesses.

Scrushy wore a dark business suit in court, but his leg shackles jingled as he arrived for his first day of testimony.

During the lawsuit trial, an attorney for shareholders, John W. Haley, repeatedly confronted Scrushy over what Haley described as obvious conflicts of interest. Among them was HealthSouth’s purchase of 19 acres of land next to Scrushy’s suburban Birmingham estate for $1.9 million, then giving him the land three years later. Scrushy said he got the land instead of a bonus one year.

Haley, sounding incredulous, recounted how Scrushy took an $82 investment in a company that purchased property at a discount from HealthSouth and turned it into a personal profit of some $12 million in four years by leasing the property back to the corporation.

“That’s the way it works in America,” Scrushy said.

“A Second Opinion,” by Arnold Relman, M.D.:

In a landmark 1980 New England Journal of Medicine editorial, former Editor-in-Chief Arnold Relman warned us of the new “Medical-Industrial Complex,” referring to “a medical care system that had begun to attract investors, and in which business interests had started to reshape the behavior of doctors and health care facilities.”

Three decades later, he updated these views in his book, “A Second Opinion.” He writes, “market forces, investors, for-profit corporations, and entrepreneurs are now at the center of the U.S. system, and generation of income is a dominant consideration for most private providers of health care – including those that are not investor owned.” (Not-for-profits must adopt the same perverse behaviors of the for-profits to remain competitive with them.)

With the two great problems to address – 1) the uninsured and underinsured, and 2) skyrocketing health care costs, why should we concern ourselves now with the medical-industrial complex?

First, the medical-industrial complex seeks money, serving those with more money, and shunning those with less money. Theoretically, the private insurance industry would correct this problem by providing the medical-industrial complex with money that many individuals with health care needs simply don’t have. But we’ve all seen how this works. The private insurance industry takes the money from the largest, healthiest sector of our population, and then spends a significant amount of it on administrative services designed to ensure that they can keep as much of that money as possible. The medical-industrial complex has no motivation to try to defeat its money-seeking and money-retaining behavior by increasing the outflow of money to those with health care needs. Thus the problem of the uninsured and underinsured grows worse every year.

Second, the medical-industrial complex, in its drive to fulfill its money-seeking role, does everything that it possibly can to add booster rockets to our skyrocketing health care spending. The culture of the medical-industrial complex provides an economic environment in which the industry thrives, and patients and payers suffer.

Several members of the PNHP leadership have provided decades of well documented, peer review studies confirming that the medical-industrial complex has caused great damage to our health care system, resulting in financial hardship, physical suffering and even death. Although much of our recent advocacy has been around reforming our health care financing system, we have always supported a change from the medical-industrial culture to a culture of a caring health care delivery system that places patients first.

Listening to the national dialogue on reform, you would think that this problem is being ignored. It isn’t. Congressman John Conyers’ HR 676, “United States National Health Care Act or the Expanded and Improved Medicare for All Act,” includes the following language:

“No institution may be a participating provider unless it is a public or not-for-profit institution. Private physicians, private clinics, and private health care providers shall continue to operate as private entities, but are prohibited from being investor owned… For-profit providers of care opting to participate shall be required to convert to not-for-profit status.”

Richard Scrushy, an animal of the medical-industrial complex, now facing a $2.8 billion judgement against him, reminds us of the slogan of the medical industrial complex: “That’s the way it works in America.”

Let’s do all we can to see that it doesn’t work that way anymore.

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