The Doctor’s Door

Posted by on Sunday, Dec 7, 2008

“The Doctor’s Door” by Michael Merenda. Work in progress – unfinished and not released. Performed by Mike and Ruthy.

The Doctor’s Door

The Doctor’s Door
by Michael Merenda

In my youth I traveled
Over land and sea
I fell in love with a farmer’s daughter
And she fell in love with me

Before long we’d married
I took her from her home
Very shortly after that
Something went terribly wrong

I’d gotten her with child
We were of course overjoyed
Until the fever took her body
And neither of us were employed

I went to the door of the doctor
Said, “Help us, Sir, if you can.”
He said he’d not see us without
Five gold pieces in our hand

“Sir, I’ve no gold pieces
But I’ll be forever in your debt
If you would only save my wife
And this unborn child I’ve never met.”

O, the night blew rainy
O, the night blew cold
And my young wife she died that night
Under the doctor’s door

Now that you’ve heard my story
Hang your head and cry
How the rich man turned his back
And let the poor woman die

In my youth I traveled
Over land and sea
I fell in love with a farmer’s daughter
And she fell in love with me

© 2008 Concert Works Music, ASCAP
Reproduced with permission of the author.

Michael Merenda, writer, composer, musician, – an amazing young artist, – is a new father. We heard him in a breathtaking performance with Ruth Ungar Merenda.
Mike and Ruthy, proud parents of infant Will, brought their son to the show. Mike mentioned that although he wrote “The Doctor’s Door” when Ruth was pregnant, he needed to wait until after the baby arrived to perform the song.

We understand! The song speaks so well to the shame and anguish we suffer, but also to our higher calling as physicians.

The members of Physicians for a National Health Program believe it is time to open the doctors’ doors. PNHP members include people like Drs. Arnold Ritterband and Benjamin Friedell. Dr. Friedell founded the Oneonta Free Clinic and Dr. Ritterband founded the Schenectady Free Health Clinic.

PNHP reflects the true calling of our profession: to serve our fellow human beings. We must not allow money interests to ruin the human relation of caregiving. Here PNHP not only reflects the ideals of our profession, but real physician values: 59% of American physicians would prefer to practice under a system of national health insurance.

We not only take to heart the higher purpose of our profession, but the higher purpose of our society. Democracy in the United States has failed when our country has more infant death and more maternal death per pregnancy than any other developed nation. Is health not the foundation of personal freedom?

Michael Merenda’s song inspires us to work harder to win the day when we will hang our heads and cry no more, when we will proudly say that in the United States no one goes without health care.

Thank you, Mike and Ruthy!

Private insurers and fairness of balance billing

Posted by on Friday, Dec 5, 2008

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.

Surprise Health Bills Make People See Red

By Anna Wilde Mathews
The Wall Street Journal
December 4, 2008

Insured patients are sometimes hit with unforeseen charges after emergencies, when they are taken to the closest hospital regardless of whether the facility accepts their insurance. Consumers also may be billed after visiting in-network hospitals if they received treatment from medical providers who work there but don’t participate in the same health plans. When that happens, insurers often pay part of the doctors’ fees, and the physicians bill patients for the difference. This is the practice known as balance billing, and it can leave consumers battling both the insurer and the medical provider to get the charge reduced.

California regulators recently made it illegal for people covered by health-maintenance organizations to be balance-billed for out-of-network emergency services.

Physician groups say doctors have the right to refuse to sign up with insurers’ networks, and regulators shouldn’t bar doctors who don’t participate in health plans from billing insured patients. They say that insurers’ payments to out-of-network health providers are often unfairly small. “You can’t turn it around and say it’s the doctor’s fault,” says Nancy Nielsen, president of the American Medical Association.

Insurers counter that they shouldn’t be forced to pay whatever fee out-of-network health-care providers demand. “You have a set of specialists who won’t contract with health plans, and they want to bill whatever they choose,” says Robert Zirkelbach, a spokesman for America’s Health Insurance Plans.

http://online.wsj.com/article/SB122834911902477643.html

Balance billing is a payment required by physicians that is in excess of the benefits covered by the patient’s insurer. It is a prime example of the unfairness that permeates our system of health care financing. It can be unfair for all parties.

Balance billing is certainly unfair for patients who purchased insurance in good faith only to find that they receive large bills for services that their insurance should have covered. Denying physicians the right to bill full fees for services that the patient’s insurer should have covered, but didn’t, is unfair to the physicians who have no contract with the insurer. Physicians who hold out for exorbitant fee schedules are unfair to the insurers who are trying to put together a reasonable list of in-network physicians to serve their beneficiaries.

Let’s step back and see if we can make some sense out of this.

Let’s agree that the goal of our health care financing system should be to be sure that everyone can receive the health care that they need without exposure to financial hardship. Not only are financial barriers removed for the patient, but also enough funds are allocated for the delivery system to be sure that it will be there when needed. Obviously that means that physicians should be adequately compensated.

Should physicians have the right to unilaterally dictate the fees that the third party payer must pay? When Medicare was introduced, we saw what happened. Fees skyrocketed. Medicare had to adopt payment policies that would ensure that compensation was reasonable. That has been and always will be a work in progress, but an effort continues to be made to provide a reasonable balance that would advance the public good: fair fees for physicians without an excess burden on taxpayers.

It is very rare to see balance billing for a patient enrolled in the traditional Medicare program (except maybe by error) since very few physicians totally opt out of the Medicare program. Those physicians who do not sign Medicare contracts are still required to adhere to a payment schedule unless they establish what amounts to a private contract with every Medicare patient they see.

What is the role of private insurers in setting fees? They establish a contract with patients to pay for services, but only under the terms of the contract. The only reason that private insurers still exist is that they also establish contracts with selected physicians and other providers who agree to the discounted reimbursement rates dictated by the insurer. Physicians who decline to sign contracts to become providers under these plans are free to charge any patient, whether or not covered by these plans, their usual fees. That is, until now.

California has made it illegal, in emergency situations, for physicians to bill the patient for balances not covered by the patient’s own insurance plan, even though the insurer has no contract with the physician. Think about that. The only contract is between the patient and the insurer, yet the state has given the insurer the authority to enforce upon physicians the terms of a contract that doesn’t even exist!

We’ve seen what’s unfair about balance billing, so how could we introduce fairness? If we had an improved Medicare program that covered everyone, the patient would never have to worry about being billed for balances that are not defined by the program. That’s fair. Under a universal Medicare program, reimbursement would be negotiated with physicians to be sure that rates were adequate to cover legitimate expenses and still provide reasonable profits. That’s fair.

And the private insurers who are extorting physicians with whom they have no contractual relationship, while they burn up resources on egregiously wasteful administrative excesses? With our own improved Medicare system we wouldn’t even need them, and we would show them the door. Now that’s really fair!

Does AHIP have a plan for us!

Posted by on Thursday, Dec 4, 2008

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.

Now is the Time for Health Care Reform: A Proposal to Achieve Universal Coverage, Affordability, Quality Improvement and Market Reform

AHIP (America’s Health Insurance Plans)
Board of Directors’ Statement
December 2008

… the Board of Directors of America’s Health Insurance Plans (AHIP) is offering a new set of proposals aimed at moving the nation toward a restructured health care system in which no one falls through the cracks, all Americans have high quality, affordable coverage, and the efficiency and effectiveness of the system are greatly improved.

Soaring Health Care Costs Need To Be Brought Under Control

3. Streamline administrative processes to increase efficiency, make the system easier for patients and providers to navigate, and reduce costs.

Administrative processes should be streamlined across the health care system. In advancing this recommendation, we recognize the need for our industry to come to the table with proposals for how we can do our part. We have committed to develop a multi-payer online portal to give providers a uniform method to communicate with health plans and afford them access to current information on eligibility and benefits. This will ease the administrative challenges that physicians and other providers face, and will help them and their patients better understand coverage and predict out-of-pocket costs. We are also working with providers on a standard data aggregation approach with the goal of giving providers and consumers useful performance information. Administrative streamlining should be viewed through the eyes of consumers, with the goal of making the health care system easier to navigate and more consumer friendly. A key part of this effort is our focus on the reform of market rules to enhance access for consumers and provide them with clear, useable information on coverage and care options.

http://www.americanhealthsolution.org/assets/Uploads/healthcarereformproposal.pdf

As the momentum for reform builds in our nation’s capitol, the board of directors of AHIP has made the wise decision to provide a definitive statement of their concepts of reform. Very soon the future role of their industry in the financing of health care in America may well be defined by political policy makers. Obviously the industry wants policies that will ensure a robust market for their products.

Although there are many important concepts presented in their report, only the statement on administrative efficiency was selected for this message. The reason is that the private insurance industry has been a major contributor to the profound administrative waste that characterizes our dysfunctional, fragmented system of financing health care. If the private insurers are to have a legitimate role in the future of our health care system, the first requirement that we should demand of them is administrative efficiency.

Reading their proposal to “streamline administrative processes,” you have to ask yourself, what is the substance of their proposal? They are recommending a continuation of the same inefficient, fragmented structure that we now have, except that it is expanded to include everyone. Their call for a token online portal will not provide the structural reform that we need, and may actually increase the administrative burden of our financing system. The fact that they have failed to seriously address this administrative waste, largely of their own making, in and of itself should disqualify them from further participation in the reform process.

This is not to say that this report has no redeeming value. There are some worthwhile proposals. They have stressed the importance of improving our primary care infrastructure. They also have recommended an expansion of our public health infrastructure. These are much needed investments that have been neglected far too long. But the last thing that we would want to do is to superimpose private insurer administrative functions on these crucial programs. The report states “health plans are uniquely positioned to assist in this effort,” but what we need is for the insurance industry to get out of our way as we introduce these repairs to our health care delivery system.

If you still believe that the private insurers have a legitimate role in health care financing, all you need to do is read the relatively detailed section on insurance markets, public programs, and regulation. You could not possibly describe a proposal that would better serve the interests of the private insurance industry. They would create a standard of underinsurance, require all of us to purchase their products, and pretend to address affordability issues through tax credits. The private insurance industry wins the jackpot, while patients and taxpayers lose.

The AHIP board of directors must feel quite smug in having foisted off on us this con job. But wait. This is only their vision; it is not yet our reality. We can do something. We can demand reform that benefits patients and taxpayers. Do you think Washington can hear us?

UnitedHealth puts a price on your rights

Posted by on Wednesday, Dec 3, 2008

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.

UnitedHealth to Insure the Right to Insurance

By Reed Abelson
The New York Times
December 2, 2008

For these economically uncertain times, the UnitedHealth Group has a “first of its kind” product: the right to buy an individual health policy at some point in the future even if you become sick.

Called UnitedHealth Continuity, the product is not actual medical insurance, but is aimed at people who may have insurance now but are worried they may lose it — and may not be able to obtain replacement insurance on their own. They may expect to retire early, for example, before they qualify for Medicare. Or they are worried about the possibility of losing their job and their health coverage.

People who are already sick will generally not be eligible for the new product. Those who do pass a medical review, will pay 20 percent each month of the current premium on an individual policy to reserve the right to be insured under the plan at some point in the future.

http://www.nytimes.com/2008/12/03/business/03insure.html?ref=business

One of the many reasons that there is a push for comprehensive reform is that, in most states, individuals who have medical problems are denied the opportunity to purchase insurance on their own. This is one of the more serious flaws in insurance markets since this defeats the primary purpose of insurance – providing individuals with health care needs affordable access to health care.

Those crafting reform would address this problem by including guaranteed issue in their reform proposals. Insurers would be required to offer coverage to those with health care needs, but this would work only if it were coupled with an individual mandate for everyone to purchase coverage, otherwise premiums would skyrocket because of a concentration of high-cost individuals in the insurance risk pools.

There are still those who would prefer to see private sector solutions in the insurance marketplace. In this new product, UnitedHealth Continuity, the private insurance industry is demonstrating the thinking behind market solutions to our health insurance problems. A public sector approach would automatically include everyone forever, making health care a right. In a plan that only the innovative private marketplace sector could devise, the UnitedHealth Group, without providing any insurance benefit whatsoever, has created a way of selling us the the right to health care at some time in the future, but a right that you can purchase only if you are healthy and don’t need care.

Besides the most obvious flaw of selling a right that everyone should have, there is another policy flaw in this proposal. Those who purchase this right and remain healthy would have a full range of insurance options and might well choose other options that may be more appropriate. Those who develop medical problems in the interim would have no choice but to enroll in this plan, only to find that premiums would be unaffordable because of the concentration of other high-cost individuals in the program.

Even with guaranteed issue, an individual mandate, and a regulated marketplace, the private insurance industry will continue to innovate to enhance the business success of their industry. With chants of “health care is a right” in the background, the insurance industry has provided us with yet another innovation in which they can sell to us our right without providing any service or product, merely the option to purchase coverage in the future.

Would someone explain once again why momentum is building in Washington, D.C. to keep this industry in charge of our health care financing? With a single payer national health program, we would play by our rules, not theirs.

The policy lesson of BC/BS of Michigan

Posted by on Tuesday, Dec 2, 2008

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

Blue Cross Blue Shield of Michigan Answers Attorney General

MarketWatch
December 1, 2008

Blue Cross Blue Shield of Michigan provided more than 300 pages of detailed financial and membership information today to Michigan Attorney General Mike Cox to answer his request for further information about Michigan’s individual health insurance market. The information confirms growth of Michigan’s individual health insurance market and escalating financial losses suffered by BCBSM, the state’s last-resort insurance carrier, in its individual line of business.

BCBSM has warned policy makers and regulators over the past 16 months that because of Michigan’s 30-year-old regulatory structure — which allows all other carriers to dump high-risk individuals into BCBSM’s insurance pool without limit or regulation — uncontrollable financial losses on individual policies will escalate and lead to BCBSM’s entire business becoming financially unstable in the near future.

“Michigan’s individual health insurance market is set up to fail financially,” said Mark Bartlett, BCBSM executive vice president and chief financial officer. “It’s a hard truth, especially if you oppose reforming the market, but it is the truth. Unless comprehensive reform is achieved this year, the financial situation will grow into a crisis that threatens health care, the economy and the health insurance safety net for millions of Michigan residents.”

http://www.marketwatch.com/news/story/Blue-Cross-Blue-Shield-Michigan/story.aspx?guid=%7B5379FA18-BBBE-4084-A40A-AB5CFFB0BDAD%7D

The individual health insurance market in the United States has presented a policy challenge to those attempting to craft a health care financing system that includes everyone.

In most states, insurers marketing individual plans have slowed the increase in their premiums by selling exclusively to healthy individuals. This is important because it takes only a modest number of individuals with health care needs to drive up premiums to ever less affordable levels.

Now that the momentum is building for truly universal coverage, the policy makers crafting reform are faced with the problem of how to cover those with greater needs largely left out of the individual market. One solution has been to establish high risk pools, but the success with such efforts has been almost negligible. Blue Cross Blue Shield of Michigan provides us with a real life experiment of how disastrous that approach can be. They have been warned that they are at risk of losing their status as a licensee of the Blue Cross and Blue Shield Association.

That brings us back to the fundamental problem that has been stated repeatedly in these messages. If everyone were to be included in the risk pools for private plans, and if the coverage were adequate to prevent financial hardship for those with health care needs, then the private insurance industry is no longer capable of providing us with health plans that have affordable premiums.

The solution? One single, universal risk pool. A single payer national health program: a new and improved Medicare for all.

Cui bono?

Posted by on Monday, Dec 1, 2008

The Los Angeles Times today quotes one of the founders of the Herndon Alliance:

“There is a growing understanding that you have to give people choice and you can’t take away what they have,” said Ron Pollack, head of Families USA, an influential advocacy group for healthcare consumers that is working with a diverse collection of interest groups to build consensus. “One of the big no-nos is that you must not ever threaten the coverage that people have.”

Do people really love their health insurance? What is the origin of such false wisdom? Kip Sullivan illuminates the question in the following message from the All Unions Committee For Single Payer Health Care — HR 676:

    ================

Why Does Celinda Lake Oppose Single Payer?

Self-described as “one of the Democratic Party’s leading political strategists,” Celinda Lake has claimed that single-payer reform lacks meaningful popular support. Lake’s research, done for the Herndon Alliance, has consistently supported reform based upon private health insurance. She and the Herndon Alliance are largely responsible for the notion that a single payer Medicare-for-all healthcare system is ‘not politically feasible.’

Lake’s findings are in sharp contradiction to numerous polls showing that single payer is enormously popular.

* In a New York Times/CBS News poll in February 2007, 64% said that the federal government should guarantee health insurance for all Americans.

* In October 2003, 62% of respondents to a Washington Post/ABC News poll said they preferred “a universal health insurance program, in which everybody is covered under a program like Medicare that’s run by the government and financed by taxpayers.”

* These findings were repeated in a 2007 Associated Press-Yahoo poll in which 65% supported a Medicare-for-all system.

Kip Sullivan, an attorney and health systems analyst, has been at work on a soon-to-be published analysis of the research methods and methodology used by Celinda Lake to conduct her work on behalf of the Herndon Alliance.

Sullivan has written over 100 articles on health policy, many of which appeared in national newspapers, magazines and journals such as American Journal of Public Health, Health Affairs, Los Angeles Times, The Nation, New England Journal of Medicine, New York Times, and Washington Monthly. He is the author of “The Health Care Mess: How We Got Into It and How We’ll Get Out of It” (AuthorHouse, 2006). He has a BA from Pomona College and JD from Harvard Law School.

Below is Sullivan’s executive summary. For a copy of the article, contact Sullivan at kiprs[at]usinternet.com.

An analysis of Celinda Lake’s slide show, “How to talk to voters about health care”
By Kip Sullivan, November 29, 2008

Executive Summary

Celinda Lake is a pollster who has developed a slide show entitled, “How to talk to voters about health care.” Based on research Lake did for the Herndon Alliance, a coalition formed in 2005, Lake offers an explanation of how “Americans” view “health care reform.” According to Lake, “Americans” have surprisingly conservative “values” about this topic. According to Lake, this means advocates for “health care reform” must not only use and avoid certain words, but they must endorse and avoid certain policies.

Examples of Lake’s findings include:

* Americans think Medicare is “frighteningly flawed” and, consequently, Americans oppose a national health insurance program based on Medicare or which resembles Medicare;
* Americans who have private health insurance not only like it, but like it so much they will resist a Medicare-for-all solution to the health care crisis because it does not leave them the option of continuing to receive coverage from a health insurance company;
* Americans don’t want to pay for health insurance for “the undeserving,” a category which includes even the parents of average Americans;
* Americans don’t like the phrase “universal coverage” or “universal health insurance,” and prefer “quality, affordable health care”;
* Similarly, activists should never say “Medicare for all,” and instead say “choice of public and private plans,” which is, of course, equivalent to saying no one should support a Medicare-for-all (or single-payer bill) and should instead only support legislation that allows the health insurance industry to continue to take in tax dollars and premium payments. (Under a Medicare-for-all system, one payer like Medicare would replace the nation’s 1,500 health insurance company as the sole payer of clinics, hospitals and other providers.)

To understand why Lake would depict Americans as Scrooges who like their health insurance company and are afraid of Medicare, it helps to understand why the Herndon Alliance was formed. The Alliance was founded by individuals who have either opposed or refused to support Medicare-for-all legislation and instead supported legislation like President Bill Clinton’s 1993 Health Security Act, a bill that would have pushed all but the wealthiest Americans into HMOs. In 2005, several individuals who would play leading roles in creating the Herndon Alliance met to discuss why they “keep losing,” that is, why none of the bills they had supported in the past were enacted or, if enacted, stayed enacted. These individuals decided that the primary problem was the “values” of the American people. According to this diagnosis of the problem, their failure to achieve universal coverage was not due primarily to the power of the insurance industry or the unattractiveness of the legislation they had supported, but rather to the “values” of the average American.

But this diagnosis conflicts with a large body of research which shows that 65 to 85 percent of Americans support universal health insurance, and 60 to 70 percent support a Medicare-for-all program. For example, a 2007 poll by AP-Yahoo asked respondents whether they agreed or disagreed with this statement: “The United States should adopt a universal health insurance program in which everyone is covered under a program like Medicare that is run by the government and financed by taxpayers.” Sixty-five percent said yes.

If the Herndon Alliance founders had said that a large majority of Americans support universal coverage and Medicare-for-all programs, and this support can be reduced by false propaganda against such programs, that would have been an accurate diagnosis. But they didn’t. Instead, they adopted the much more questionable assumption that most Americans harbor “values” that cause them not support universal coverage. It is reasonable to infer that Lake was hired by the Herndon Alliance to produce research to confirm their armchair diagnosis of the American pyche.

Lake’s research occurred in three stages: a “mapping values” stage, a focus group stage, and a polling stage. There were serious defects in all three stages.

In the first stage, as Lake put it, “[O]ur research … explor[ed] … the core values that shape … views on health care….” The result of this first stage was a report by a firm called American Environics (AE) that claimed to identify 117 “values” held by Americans that allegedly have some influence over how we think about health care reform. These “values” had names like “brand apathy,” “discount consumerism,” “more power for big business,” “meaningful moments,” and “sexual permissiveness.” The “value” known as “meaningful moments,” for example, was defined this way: “The sense of impermanence that accompanies momentary connections with others does not diminish the value of the moment.” Lake and AE refuse to explain where these “values” come from or how any of them relate to “health care reform,” much less deserve to be called “core values that shape … views on health care.”

On the basis of these “values,” AE divided Americans into eight groups or “clusters” with names as fanciful as the “values” AE says we hold. The three largest groups, in order of size, were “Proper Patriots” (34 percent), “Marginalized Middle-Agers” (17 percent), and “Mobile Materialists” (13 percent). AE describes the millions of people in these “clusters” in terms that can only be called psychobabble. Here is how AE stereotypes Mobile Materialists:

This group tries to impress others with their homes, cars, clothes and looks, scoring high on Status via Home, Buying on Impulse, Importance of Brand, Joy of Consumption, Crude Materialism and Ostentatious Consumption. … [T]he new rims for their car or yet more designer handbags are welcome escapes from everyday drudgery. They tune out after work by watching MTV Cribs (Living Virtually) and feel best when they make time for a workout at the gym or a mani-pedi (Look Good Feel Good, Concern for Appearance).

The second and third stages of Lake’s research were based on the bizarre results of the first stage. For her focus groups, Lake selected people who represented the strange “clusters” concocted by AE. Lake does not tell us how she determined that the people she selected fell into one of the “clusters,” or what questions she asked them. All we hear from Lake are her conclusions about what allegedly went on in the focus groups. It was from these focus groups that Lake allegedly learned that Americans don’t support “universal coverage,” fear Medicare, feel good about their health insurance company, and think their own parents are among “the undeserving.”

In the third stage, Lake conducted a poll designed to see how people felt about a health care reform proposal she developed during the second stage (called “guaranteed affordable choice”) compared with single-payer. She wrote the question in a way that ensured the respondents would favor “guaranteed affordable choice” (GAC) over the single-payer proposal. To offer just one example: Lake declined to tell her respondents that patients would continue to have limited choice of doctors and hospitals under the GAC plan while under the single-payer plan patients would have complete freedom to choose their doctors and other providers.

In short, Lake delivered to the Herndon Alliance the results the founders of the Alliance were looking for. She told them, in effect, that they were right all along to support legislation that leaves the insurance industry at the top of the health care food chain and not to support a Medicare-for-all or single-payer proposal. And she gave them the rationale they wanted to hear – that they were justified in abandoning single-payer and supporting a role for the health insurance industry because that’s what Americans want them to do.

But to give the Herndon Alliance the results they wanted, Lake had to rely on secretive and biased methods. Until Lake reveals her methods and offers a reasonable explanation for why her results are so different from those of other researchers, the public should treat Lake’s research as junk science.


Distributed by:

All Unions Committee For Single Payer Health Care–HR 676
c/o Nurses Professional Organization (NPO)
1169 Eastern Parkway, Suite 2218
Louisville, KY 40217
(502) 636 1551

For a complete list of the unions that have endorsed HR 676 and a sample union resolution write to Kay Tillow at nursenpo[at]aol.com.

Alain Enthoven responds on reform of the Dutch system

Posted by on Monday, Dec 1, 2008

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 Quote of the Day for November 28, 2008 briefly discussed the JHPPL article by Pauline Vaillancourt Rosenau and Christiaan J. Lako, “An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System.” The authors referred to the Dutch reform as “Enthoven-inspired.”

Alain C. Enthoven, Ph.D. is the Marriner S. Eccles Professor of Public and Private Management, emeritus, at Stanford University, and a core faculty member at CHP/PCOR. Known as the “father of managed competition,” he was one of the founders of the Jackson Hole Group, a national think-tank on healthcare policy.

Professor Enthoven provides this response to the November 28 Quote of the Day message:

Don’t leap to unfounded conclusions too quickly in this complex and important subject.

In 1977-8, when I designed and proposed Consumer Choice Health Plan, a plan for universal health insurance based on regulated competition in the private sector, I observed that, in the United States, there were many alternatives to inflationary uncoordinated fee-for-service which dominates our scene. They were mainly prepaid multi-specialty group practices (PGPs), also other multi-specialty group practices, all proven to be able to reduce and manage costs, as well as physician-created individual practice associations some of which were and are being successful in managing and reducing costs. So the main idea was to subject inflationary uncoordinated fee for service to competition to produce value for money from organized alternatives that were reducing costs, and ultimately to replace uncoordinated fee for service almost entirely. Unfortunately, the USA has not created market conditions favorable to efficient economical health care (most employers do not even offer PGPs as a choice), so these systems have not been able to prove themselves on a national scale. And Medicare has remained dominated by fee for service, and it is a huge strain on Federal finances. In smaller regional situations, however, competing multi-specialty group practices have been proved to be far less costly than fee for service when embedded in a competition model. Perhaps the best example is the public employee’s Employee Trust Funds in the State of Wisconsin. The state employees plan is a good model of managed competition. Employees are offered a variety of choices and the state pays approximately the low priced plan. They have some excellent multi specialty group practices with their own insurance plans, and some group health cooperatives which are similar. The great majority of employees have chosen HMOs. And the costs in Madison, the state capitol where the market is dominated by public employees are far less than they are on the east coast of Wisonsin dominated by fee for service (a difference of approximately $4000 per family per year.)

Unfortunately, the Dutch have no prepaid group practices or even multi specialty group practices. Their insurance companies are selling what we call “preferred provider insurance” which is a variation of fee for service solo practice. For several reasons, they have not been able or willing to become highly selective in their provider networks. For one, many prices are still regulated by government. For another, they lack public quality measures that the insurers could use to select narrower networks. So, as I told the Dutch leaders in a 2006 lecture, they have implemented only half of the managed competition concept. They need integrated delivery systems as we have in America. I suggested to the Minister of Health that after studying American integrated delivery systems, they get to work on starting some in Holland. That will take time. Nothing can change the whole health care system in a short time. So many Dutch people have been over here studying American integrated delivery systems, including the Minister of Health and his team. They need to find some doctors who are interested in the project and then fund some startups. That would put a lot of pressure on the insurance companies to innovate in more economical health care.

It is interesting to note that the British have several teams studying American integrated delivery systems. The process started in 2002 when a famous British doctor and his wife, a former Kaiser Permanente executive, published an article in the British Medical Journal called “More For their Dollar: A comparison of California’s Kaiser Permanente and the British National Health Service.” They found that after making appropriate price and other adjustments, that Kaiser costs were similar to the NHS and for that, Kaiser members got far more for their dollar than the NHS, including such things as much more prompt access to advanced technologies, aggressive outreach for cancer prevention, etc. That was met with a storm of debate. But when the dust settled, their conclusion proved unshakeable. British scholars found, for example, that members 65 and over in the UK spent 3.5 times as many days in hospital as did similar people in Kaiser in California. Their follow up studies found that the essential ingredient was far superior integration of medical practices. My editorial accompanying the 2002 article was entitled “Competition Made them Do It.”

So in my view, it would be a serious error to leap to the conclusion that the Dutch model is a flop. It is a work in progress. The Dutch health care model does get good ratings in international surveys and their costs remain far below ours in America. Whether we are talking Holland or the USA, costs will not be contained and quality not improved, until we replace uncoordinated fee for service with efficient organized delivery systems that use information technology to measure and improve results, that accept responsibility for managing costs and quality. The good news is that when given a responsible choice, most consumers choose the efficient organized delivery systems. So the change does not need to be forced on an unwilling population (as, unfortunately, many employers tried in the 1990s.)

Alain Enthoven

Quote of the Day, “Lessons from the Netherlands,” Nov. 28, 2008:
http://www.pnhp.org/news/2008/november/lessons_from_the_net.php

Quote of the Day, “Feachem’s Kaiser study not credible,” June 1, 2004:
http://www.pnhp.org/news/2004/june/feachems_kaiser_stu.php

We share with Alain Enthoven the concern over our very high and ever increasing spending for a mediocre health care system that leaves so many out. We have disagreed with him (sometimes obnoxiously so) on the best approach to return value and high performance to our health care delivery system. He supports “universal health insurance based on regulated competition in the private sector,” whereas we support a publicly administered and publicly financed single payer national health program.

Enthoven discusses prepaid multi-specialty group practices (PGPs) and physician-created individual practice associations (IPAs) as examples of integrated systems that can manage and control costs. Although there are several variations, Kaiser Permanente can serve as a proxy for the concept of an integrated health care delivery system.

We certainly have no problem with integrated health care delivery systems. In fact, we have included them in our models of single payer reform, though with the primary function of delivering health care, rather than in a risk-beariing insurance role. Arnold Relman, a single payer supporter, has stressed the importance of not only reforming health care financing, but also the importance of using multi-specialty, not-for-profit organizations to deliver health care.

It seems that where we part with Prof. Enthoven is over the role of competition. I think that we all agree that physicians, hospitals, and other health care providers competing based on the quality of their services would be beneficial in the health care marketplace. Competing on price is quite another issue.

Most economists agree that price competition plays almost no role for individuals who must access the system for health care. So most of the discussion of price competition has been in the choice of insurance products. We agree with Enthoven that our existing, dysfunctional, fragmented, multi-payer system in the USA “has not created market conditions favorable to efficient, economical health care.”

Enthoven seems to concede that the Dutch model is not yet a model for the United States since it relies on “preferred provider insurance” (PPOs). He considers the Dutch reform to be a work in progress, still requiring the transformation of the health care delivery system into “integrated delivery systems.”

Imagine maybe four competing integrated health care delivery systems within a metropolis, again using Kaiser Permanente as a proxy. Each one would have its own exclusive professionals, hospitals and other facilities to provide the full range of health care services, including the most advanced technological services. Would each one have an organ transplant service? What about the suburban and rural sectors served by these integrated systems? Would each integrated system provide a primary care outpost, four in each community, duplicating services in these outreach areas? Could one metropolis support four very costly, duplicative, integrated health delivery systems?

The point is that integrated delivery systems are an important part of our entire health care delivery system, but they can never serve as an exclusive single financing model to herd us into systems competing on price (and quality), with no other place to turn for health care.

In one paragraph above, Enthoven mentions the comparison of Kaiser Permanente with the British National Health Service, citing a study that was done by Richard Feachem, et al. Enthoven states that their study “met with a storm of debate… but when the dust settled, their conclusion proved unshakeable.” Feachem’s flawed study is a diversion from the important issues discussed here, but the dust never did settle. A critique of Feachem’s study can be found at the link above, and nothing more will be said about it here (Quote of the Day, June 1, 2004).

Prof. Enthoven raises a red flag that our policy makers need to take heed of. He attributes the failure of the Dutch to achieve their goals of reform to the fact that, to date, the insurers are selling only “preferred provider insurance.” That is currently the predominant form of private insurance in the United States. It forms the basis of the competing private insurance plans that we will be required to purchase under the current leading proposals for reform. Although some choices are nominally HMOs, in fact they are functionally PPOs in disguise. True HMOs such as Kaiser Permanente are not available to the majority of us.

We should listen to Prof. Enthoven and reject PPOs. We can obtain our care from any accessible integrated health delivery system, if we so choose. But let’s adopt a system that actually will slow the growth in health care costs while providing a mechanism for improving the allocation of our health care dollars: a single payer national health program (even if that is not Prof. Enthoven’s preferred model of reform).

Lessons from the Netherlands

Posted by on Friday, Nov 28, 2008

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

An Experiment with Regulated Competition and Individual Mandates for Universal Health Care: The New Dutch Health Insurance System

By Pauline Vaillancourt Rosenau, University of Texas, Houston, and Christiaan J. Lako, Radboud University Nijmegen, the Netherlands
Journal of Health Politics, Policy and Law
December 6, 2008

The 2006 Enthoven-inspired Dutch health insurance reform, based on regulated competition with a mandate for individuals to purchase insurance, will interest U.S. policy makers who seek universal coverage. This ongoing experiment includes guaranteed issue, price competition for a standardized basic benefits package, community rating, sliding-scale income-based subsidies for patients, and risk equalization for insurers. Our assessment of the first two years is based on Dutch Central Bank statistics, national opinion polls, consumer surveys, and qualitative interviews with policy makers. The first lesson for the United States is that the new Dutch health insurance model may not control costs. To date, consumer premiums are increasing, and insurance companies report large losses on the basic policies. Second, regulated competition is unlikely to make voters/citizens happy; public satisfaction is not high, and perceived quality is down. Third, consumers may not behave as economic models predict, remaining responsive to price incentives. Finally, policy makers should not underestimate the opposition from health care providers who define their profession as more than simply a job. If regulated competition with individual mandates performs poorly in auspicious circumstances such as the Netherlands, how will this model fare in the United States, where access, quality, and cost challenges are even greater? Might the assumptions of economic theory not apply in the health sector?

http://jhppl.dukejournals.org/cgi/content/abstract/33/6/1031

Why is this article so important? Simply because there is a rapidly building momentum for similar health care reform in the United States built on a model of competing private insurance plans (possibly with a public plan offered as an additional option). The recent Dutch reform has important lessons for us.

Although the Dutch health care system was in far better shape than ours, their politicians decided that they could improve their system even more, while making it more affordable, by replacing their dual public and private insurance programs with a single market of competing private plans.

They put into place the policies (listed in the abstract above) that we are currently discussing for our reform, which theoretically would regulate the market to ensure efficiency and prevent the private insurers from gaming the system. The Netherlands has provided us with a very instructive, real-life experiment on whether competing private plans would serve us well as a model for health care financing reform in the United States.

The Dutch model was not initiated with a clean slate on policy principles. We now have decades of research and experience which should provide us with a basis for predicting, to varying degrees of certainly, the anticipated results of these policy applications.

Essentially everyone agrees that market competition fails to provide greater value and control costs when applied to obtaining care within the health care delivery system. Many still believe, however, that competition between private health plans will achieve that goal. Consumers can shop based on differences in the private plans, while the insurers can contract with the providers, demanding the value and cost containment that we seek. Or so goes the theory.

When the Dutch embarked on this reform, those understanding health policy raised many red flags. Here we’ll discuss only the basic premise that private plans are more effective in controlling costs than was the public/private dual system. After all, cost containment was given by the Dutch government as the primary reason for health financing reform.

What did those of us who were concerned about their model predict? We predicted that the private plans would not be able to control costs, that there would be consolidation of the private plans, and that health care would become even less affordable for the Dutch citizens.

After almost three years of this experiment, what has happened? Health care costs have continued to grow well in excess of the rate of inflation. Health insurers attempted to keep their premiums affordable in order to gain market share, but because of insurer losses, premium increases have been greater than would have been anticipated based on the market competition theory. In spite of these premium increases, insurer losses have been increasing. Insurers with less penetration in the marketplace are now facing the necessity of consolidation.

In another article in this same journal, Kieke Okma states, “… the trend of market concentration in Dutch health insurance and health care will likely continue. This might result in both higher prices and more-restricted access to health care services, both of which will not be too popular with Dutch patients and insured.”

Although there are many policy lessons for us in the Dutch experiment, there is one predominant message that the U.S. policy community must understand. Everyone agrees that costs absolutely must be contained, and we need to do that in a manner that repairs our fractured health care delivery system. The primary reason for the Dutch reform was this need for cost containment. But what is their position now?

According to Rosenau and Lako, “In the face of initial failure to control costs, the reaction of the Dutch government has been to reiterate its faith in the free market for health insurance and to argue that cost containment was not an important rationale for the Health Insurance Act in any case (confidential personal interview, April 13, 2007).”

With the insistence that the mandates of political feasibility require that the ideology of private plan competition displace sound health policies, the path that our national policy makers are currently negotiating places at grave risk both our finances and our health.

AHIP: tax credits for moderate-income individuals and working families

Posted by on Wednesday, Nov 26, 2008

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.

AHIP (America’s Health Insurance Plans)
November 19, 2008

From the Summary of AHIP’s Proposal to Guarantee Coverage for Pre-existing Conditions and Promote Affordability in the Individual Insurance Market:

* Promote affordability by providing refundable, advanceable tax credits for moderate-income individuals and working families

http://www.ahip.org/content/pressrelease.aspx?docid=25068

And…

Health Care Reform: An Economic Perspective

Testimony of Uwe Reinhardt, Ph.D.
U.S. Senate Finance Committee
November 19, 2008

Appendix A

A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care. One should always treat these two facets separately when thinking about health care reform, because any financing system for health care could be coupled with any number of alternate disbursement systems. (Journal of American Health Policy, May/June 1993)

http://finance.senate.gov/hearings/testimony/2008test/111908urtest.pdf

This quote from AHIP was buried in another Quote of the Day last week, but it is being repeated here because of its importance in the health reform dialogue.

AHIP has now explicitly acknowledged what single payer supporters have been saying for some time. Private health plans are no longer affordable for “moderate-income individuals and working families.” To maintain the viability of the private insurance market, AHIP is recommending tax subsidies to help purchase the plans.

Assuming that we are serious about including everyone in our health care system, why should we go to such extremes to assign a specific actuarial value for the insurance for each person in the United States, and then collect an individual premium that reflects that actuarial value (whether that premium is collected from the individual or from the employer on behalf of the individual), especially when that premium must now be modified by tax policies tailored to specific individuals?

Uwe Reinhardt states in an appendix to his testimony before the Senate Finance Committee, “A clear distinction is made between the task of collecting the funds in an insurance pool from that of disbursing funds to the providers of health care.”

In another quote this week, Uwe Reinhardt also stated, “The question is how long American health policy makers, and particularly the leaders of our private health insurance, can justify this enormous and costly administrative burden to the American people and to the harried providers of health care.”

Although we support an administratively efficient public single payer to disburse the funds, others point out that it can also be done by private health plans functioning as a social insurance model (though at higher costs with some sacrifice in equity, which will not be discussed here). What is most important is that the financing of the universal risk pool be a separate process based on ability to pay rather than based on the actuarial value of the benefits.

If those now planning our health care future behind closed doors were to grasp this concept, it would certainly simplify their process. As Dr. Reinhardt has suggested, the contribution wouldn’t need to be through a tax. It could be through an income-adjusted premium paid in a different section of the tax return.

Okay. Maybe that’s just playing with labels. The point is that a universal risk pool, funded equitably based on ability to pay, would achieve what we all profess to be our goal: affordable health care for each individual. Once we get that right we can move on to defining the most efficient method of disbursing funds.

The Medicare Advantage lesson on what not to do

Posted by on Tuesday, Nov 25, 2008

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’s Private Plans: A Report Card On Medicare Advantage

MA has brought much more choice but also added complexity, higher costs, no apparent quality gains, and uneven benefits.

by Marsha Gold
Health Affairs
November 24, 2008

With higher payments and expanded private-plan authority, Medicare Advantage (MA) has caused the market to grow. One in three Medicare beneficiaries with Part D now gets this coverage through MA. Analysis of the sources of and reasons for enrollment growth suggest a troubling report card. Clearly, the Medicare Modernization Act (MMA) has expanded choice and the private-sector role. But it also has added to Medicare’s complexity and costs and has created potential inequities, without apparent improvements in quality.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w41v1

And…

Payment Policy And The Growth Of Medicare Advantage

Higher MA payment rates have financed a Medicare benefit expansion for MA enrollees, without producing any overall savings for Medicare.

by Carlos Zarabozo and Scott Harrison
Health Affairs
November 24, 2008

The higher MA payment rates have financed what is essentially a Medicare benefit expansion for MA enrollees, without producing any overall savings for the Medicare program, and with increased costs borne by all beneficiaries and taxpayers. At the same time, although plan payments have financed additional benefits for enrollees, the additional payments have not resulted in improved quality among MA plans.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w55v1

And…

Medicare Advantage Plans At A Crossroads–Yet Again

The experience with private-plan contracting shows that assuring stable plan choices and extra benefits requires extra money.

by Robert A. Berenson and Bryan E. Dowd
Health Affairs
November 24, 2008

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.1.w29v1

These three online reports from Health Affairs give us an update on a decade of experience with private health plan options in the Medicare program. The plans were sold to us as a private sector solution that would provide higher quality care at a lower cost than the traditional public Medicare program.

The results are in. These reports add to the plethora of data that confirm that the private plans have not improved quality, yet they have been considerably more expensive than care provided under the traditional Medicare program for patients of comparable health status. (This comment and those that follow do not refer to integrated health care delivery systems, but only to the private insurance function.)

Since a significant portion of this excess spending was for administrative services that benefit insurers rather than patients, taxpayers should be outraged at this waste of our Medicare funds. The good news is that some of these funds were used to expand benefits for patients in the Medicare Advantage plans, but this is another instance where good news is really more bad news.

Individuals receiving these extra benefits generally did not pay for them, and often paid less in premiums and cost sharing. So where did the money come from? It was paid by all taxpayers (payroll taxes and general revenues) and by patients paying premiums into the traditional Medicare program. So the bad news is that these extra benefits are highly inequitable because they’re granted to individuals in the Medicare Advantage programs but paid by everyone else not in the programs. Tax policies and public programs should be designed to achieve equity, but the Medicare Advantage program achieves the opposite.

Does that mean that the extra Medicare Advantage benefits should be eliminated? No. Instead, those benefits should be added to the traditional Medicare program to make it even better. The Medigap plans that supplement the traditional Medicare program are one of the worst values in health insurance. The benefits provided by the Medigap plans should be rolled into Medicare, and then the wasteful Medigap plans can be eliminated.

Those who contend that we can’t afford to add more benefits to Medicare need to keep in mind that we would merely be shifting private out-of-pocket spending to the public Medicare program, actually reducing total spending by eliminating the waste in the Medigap and Medicare Advantage plans, offset partially by improved access to appropriate services.

There is an interesting comment in the paper by Berenson and Dowd:

“However, a point often overlooked by single-payer advocates is that unilateral monopsonist purchasing power also is inefficient. The optimal market structure is ‘atomistic’ competition among many sellers in markets with many purchasers, but this has proved difficult to achieve in health care. For example, atomistic competition requires aggressive enforcement of antitrust laws in both provider and insurance markets–something that the antitrust enforcement agencies and the courts appear unwilling or unable to do. Thus, reliance on monopsony purchasers, public or private, may be socially desirable.”

Hmmm. Help me with this one. We single payer advocates sometimes do refer to single payer as a beneficent public monopsony, but we also tout its efficiency. Since atomistic competition does not and never will exist in health care, we will never be able to use the market to price health care services efficiently. Thus, as a single public monopsony, we would rely on the efficiency of pricing through a process of negotiation, taking into consideration all legitimate costs and fair profits, and balancing our interests as both patients and taxpayers. Did I miss something here?

More from Berenson and Dowd:

“Traditional Medicare has been the source of important payment innovations, moving many payment systems away from FFS to prospective payment, such as the diagnosis-related group (DRG) prospective payment system (PPS) for inpatient services. The resource-based relative value scale (RBRVS) for physician fees, despite its flaws, has been adopted widely by private plans… Commercial insurers also look to Medicare to make initial technology approval decisions and to initiate more-aggressive payment denials–for example, for ‘never’ events and medically ineffective treatments.”

Thus the public Medicare program has brought us greater efficiency in health care financing than has the private sector. The private Medicare Advantage plans have brought us higher costs with no improvement in quality, and have actually increased the inequities in our health care system. Why should we expect the private plans in our current health reform proposals to do any better? They won’t.

It’s time to move forward with a new and improved, single payer Medicare for all.

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