Headlines on slowing in health care spending miss the real story

Posted by on Tuesday, Jan 6, 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.

National Health Spending In 2007: Slower Drug Spending Contributes To Lowest Rate Of Overall Growth Since 1998

By Micah Hartman, Anne Martin, Patricia McDonnell, Aaron Catlin the National Health Expenditure Accounts Team – Centers for Medicare and Medicaid Services (CMS) Office of the Actuary
Health Affairs
January/February 2009

In 2007, U.S. health care spending growth slowed to its lowest rate since 1998, increasing 6.1 percent to $2.2 trillion, or $7,421 per person. The health care portion of gross domestic product reached 16.2 percent, up from 16.0 percent in 2006. Slower growth in 2007 was largely attributed to retail prescription drug spending and government administration. With the exception of prescription drugs, most other health care services grew at about the same rate as or faster than in 2006. Spending growth from private sources accelerated in 2007 as public spending slowed; however, public spending growth has continued to outpace private sources since 2002.


This annual CMS report on health care spending is being celebrated in headlines throughout the nation as demonstrating a slowing in the growth of health care spending. Such headlines are missing the terrible news in this report.

  • Most health care spending growth did not slow. The overall rate was lower partially due to decreases in drug costs, especially because many block-buster drugs came off of patent, and generic prescribing increased disproportionately. The increase in Medicare spending for 2006 was 18.5 percent, primarily because of the costs of the Part D drug benefit and the higher costs of the Medicare Advantage plans. Increases in Medicare spending for 2007 were still fairly high at 7.2 percent, but the decline from an extremely high percentage increase to a high percentage increase may be a decline in the rate of increase, but is still a very large increase. Next year’s report on the rate increases for 2008 likely will not reflect these downward distortions.
  • Even with the downward adjustments, the overall rate of increase was still 6.1 percent, well in excess of the rate of inflation. A smaller increase over the rate of inflation cannot be interpreted as good news when the problem of increased costs is growing progressively worse.
  • A very small but extremely important number in this report is that the percent increase in health care as a portion of our gross domestic product (GDP) was 0.2 percent, an increase from 16.0 percent to 16.2 percent. How can you celebrate a decline in the rate of increase in costs when those costs continue to encroach on our other spending?

Health care spending is in a crisis mode, and it only gets worse. Congress and the administration must act, but what do they intend to do? They are going to enact laws and regulations requiring us to give money to the private insurance industry to act as stewards of our health care dollars.

Yes, the insurers will be told to do a good job (through regulation), and when they fail (which they will), what will be their response? The same as now: Doctors and patients and hospitals and drug firms and tech firms keep running up the costs, and we can’t do anything about it.

Well, they’re right; they can’t. But the people can, by convincing Congress to enact our own single payer national health program – a program through which we can demand greater value in our health care purchasing.

Another middleman, with a Donald Trump wig!

Posted by on Monday, Jan 5, 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.

Dallas’ American CareSource sees stock jump 120% in 2008

By Jason Roberson
The Dallas Morning News
January 2, 2009

American CareSource is the nation’s first publicly traded ancillary care network company. The company basically serves as a middleman, connecting payors, such as insurers, with the providers of such services as lab work and diagnostic imaging.

Ancillary services now represent 30 percent of health care expenditures, valued at $574 billion annually, according to U.S. Center for Medicare and Medicaid Services.

While most insurers can handle the 70 percent of health care dollars that go to hospitals and physicians, the largest insurers form networks with ancillary services. That’s where American CareSource comes in.

American CareSource targets smaller insurers, unions and employers that aren’t able on their own to purchase ancillary services in bulk.

(American CareSource) bills itself as a cost-saver to both payors and ancillary providers. It acts as the providers’ advocate by collecting hard-to-get payments from insurance claims; it serves as the insurers’ advocate by offering lower costs than they could get on their own.

“In some ways, we want to be the Wal-Mart or Target of health care,” said David Boone, CEO of American CareSource.

He maintains a small-company management style. Whenever a new client is secured, an old ship’s bell is rung in celebration. When the company hit $1 million in profit, Boone, as promised, strutted in the middle of the office and proceeded to do a “money dance,” wearing a Donald Trump wig, a comical green jacket and hat of dollar bills.


As long as we insist that health care continue to be financed through our dysfunctional, fragmented multi-payer system, we will continue to see more innovative middlemen organizations capturing and siphoning away dollars that should be directed to health care instead.

Now we have a for-profit, publicly-traded entity that adds an additional, expensive administrative layer between the health plans and the providers of ancillary services. American CareSource provides no health care products or services – only more administrative waste.

I don’t know about you, but I’ve grown weary listening to those who say that single payer advocates have failed to demonstrate that a single payer system would bring us more than only nominal, one-time savings in administrative costs. Go to the PNHP website (www.pnhp.org) and type in “administrative waste” in the search window at the top of the opening page, but be prepared to spend a lot of time.

Massive, middlemen administrative waste permeates our entire health care system. It is not limited to the excesses of the private insurance industry, though that industry is a major contributor, both directly in its own costs, and indirectly by the burden placed on the health care delivery system. There are a great many other innovative administrative organizations involved, often subsidiaries of the insurers.

These same individuals who discredit the potential for recovering administrative waste also fail to mention the other benefits of single payer such as true universality, equity, efficiency, improved value in health care purchasing, and humane methods of cost containment.

But I have to hand it to David Boone, CEO of American CareSource. What could be more appropriate for this entrepreneurial middleman organization than celebrating success with a ship’s bell, a Donald Trump wig, and a hat stuffed with dollar bills? How fitting!

This should inspire the insurance industry’s AHIP. When Congress passes health care reform based on private health plans, AHIP can pass out the Donald Trump wigs with the hats stuffed with money. But the bell? Shipping in that bell from Philadelphia won’t do since it has a crack in it. That’s okay. Piping in the opening bell of the NYSE would much more befit the occasion anyway.

Student Debt, Resident Hours, and Primary Care

Posted by on Friday, Jan 2, 2009

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

Student Debt, Resident Hours, and Primary Care Redux

By Josh Freeman
Medicine and Social Justice (A Blog)
January 2, 2009

The December 18, 2008 issue of the New England Journal of Medicine includes Perspectives on 3 topics that have been previously addressed on this blog: Medical student debt (Dec 14), resident duty-hours (Dec 3, 9), and the future of primary care (Dec 11).

The piece on “Medical Student Debt — Is there a Limit?” by Robert Steinbrook presents data on the extraordinary rise in tuition, and debt, among medical students, most surprisingly in the public medical schools. “For the current academic year, tuition, fees, and health insurance at private medical schools range from $15,278 (for Texas residents) or $28,378 (for non-residents) at Baylor University to $51,969 at Tufts University in Massachusetts and $52,236 at Temple University (for nonresidents of Pennsylvania — state residents are charged at $43,232.” While tuition rates at private medical schools are generally higher than at public, the non-resident tuition at public schools is about the same as that of the privates, and the rate of rise (percent change) in the last 10 years at public schools has far exceeded that at private schools (100% vs 50% increase). Indebtedness ranged from an average (high is different) of $80,000 to $163,000 at public schools, and $70,000 to $182,000 at private schools. Some schools give significant tuition scholarships, but others are more challenged: Stanford’s endowment allows it to give a far larger number of scholarships relative to loans than does, say Drexel. More important, the article points out that the high debt burden may discourage lower-income students from applying to medical school, and to enter specialties with higher income potentials. “It is not surprising that a recent analysis showed a ‘strong direct correlation’ between higher mean salary in a specialty, such as orthopedic surgery or radiology, and the percentage of residency positions filled by US graduates.” The piece says that there is no easy solution, and probably there is not. But most countries have very low medical school tuitions, but require national service of their graduates.

“Revisiting Duty Hour Limits — IOM Recommendations for patient safety and resident education” by John Iglehart, discusses that topic in a balanced way. It points out the acknowledgment in the IOM report that “Although some might propose further reductions in total duty hours, the report notes, ‘evidence suggests it is an indirect and inefficient approach given the moderate correlation that exists between resident duty hours and sleep time.'” Igelhart also notes that “the 2003 limits on duty hours have resulted in an increase in handoffs of patient care between physicians — transitions associated with increased risks to patient safety.” I have discussed this at length, but I did note that this article includes a table with a recommendation I had missed — that internal and external moonlight be counted against the 80-hour per week limits. I have no difficulty with that conceptually, as it makes perfect sense — what is the point of limiting work hours in the residency if residents can moonlight for extra money in an unrestricted fashion? — but I wonder about the legal ability of program directors to restrict the moonlighting activities of their residents in their off hours.

“The Future of Primary Care — the Community Responds” involves a followup to a series of opinion pieces and a roundtable discussion with Drs. Thomas Bodenheimer, Barbara Starfield, Katharine Treadway, Allan Goroll, and Thomas H. Lee that appeared in the November 13, 2008 issue. The comments, and responses from the roundtable participants, are salient and generally useful. Several writers noted the role of physician assistants, and one (Paul Lombardo) states that “Patients, and the U.S. health care system as a whole, would be better served if the content of and level of primary care education were better matched to the needs of patients. The physician assistant (PA) model of medical education, with its emphasis on physician-physician assistant teams, needs to be expanded.”

These are all thorny, and not unrelated, issues. What is the relationship between resident work hours and physician’s assistants? Well, someone has to do the work. Since residents, even with the 80-hour restriction, work twice as many hours as do physician’s assistants, for about half the salary, and have a greater scope of practice, it would be incredibly expensive for hospitals to replace resident labor with that of physician’s assistants, not to mention physicians. As hospitals complain about the “cost” of resident education, this needs to be kept in mind; they are much better at accounting the cost than the benefit. Even if a hospital closes its residencies because it assesses the costs are greater than the benefit, this usually includes the fact that the residents care for many medically indigent patients, and you can be sure that the hospitals are planning to no longer care for them at all, not to pay someone else to do it. This, of course, again decreases access for the most needy.

I have repeatedly said that the nucleus of a solution is a comprehensive national health program, which includes a single-payer and a system that is tasked with ensuring the health and access to quality health care of all Americans. With such a system, addressing issues such as resident work hours, medical student debt, and the composition of the physician (and NP and physician assistant) workforce could be feasible; without it, they all remain insoluble because they all depend upon each other.

(Joshua Freeman, M.D. is Professor and Chair of the Department of Family Medicine at the University of Kansas School of Medicine, though the comments in this blog are his own. He does understand his topic: http://www2.kumc.edu/fammed/Chairman.htm)


Josh Freeman’s comments were selected to start off this year of reform (hopefully) because they set the theme that reform should not be simply about tweaking private and public insurance options; reform needs to be about fundamental restructuring of our health care financing and delivery systems.

Single payer is frequently conceived of as simply an administrative system of collecting funds for health care through an equitable system that is designed to include everyone. Well, it is that, and that would be a great improvement over the dysfunctional, fragmented, inequitable, and inadequate system that we have.

But there is the other side to single payer: spending. Imagine having two and a half trillion dollars under the control of our own single, public purchaser of health care – a monopsony. Scary? Well, yes, but not when you compare it to the horrendously frightening system that we now have – a system which the policy makers in Washington unbelievably wish to expand.

Our current system bankrupts and even kills people. With our own public single payer system the funds would be used to save lives, preserve health, and prevent financial hardship in the face of medical need. Professor Freeman is right on target when he says, “the nucleus of a solution is a comprehensive national health program, which includes a single-payer and a system that is tasked with ensuring the health and access to quality health care of all Americans.” Otherwise our problems “all remain insoluble because they all depend upon each other.”

If we expect someday to have an efficient, high-performance health care system for all of us, repairing and expanding our primary care infrastructure is not an option; it’s an absolute necessity.

Health economists: Their facts, but our values

Posted by on Wednesday, Dec 31, 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.

Health Economists’ Views of Health Policy

By Michael A. Morrisey and John Cawley
Journal of Health Politics, Policy and Law
August 2008

This article reports the views of a national survey of U.S. health economists on a series of questions ranging from mergers among health care providers to the profits of pharmaceutical manufacturers to fundamental health care reform. We find a high degree of agreement on issues of fact but considerable disagreement on issues that depend on values.

Issues of Fundamental Disagreement

Arguably the most divisive statement in our entire survey was, “The United States should adopt a Canadian-style system of universal and compulsory health insurance.” Of U.S. health economists, 47 percent agreed that the United States should adopt such a system. What makes the responses to this question so divided is the fact that the entire range of answers is used; 22 percent strongly agreed, 25 percent agreed, 21 percent disagreed, and 22 percent strongly disagreed. The nearly uniform spread of answers is unique; for all other issues reported, answers tend to be concentrated around the middle (agree or disagree) with few responses in the extreme tails (strongly agree, strongly disagree). Moreover, only 10 percent responded that they didn’t know, which is among the smallest response in that category to any question.


Almost all of us want 2009 to be the Year of Health Care Reform. Almost all of us agree on the facts. We agree not only on what the deficiencies are in our health care financing and delivery systems, but we also largely agree on what the impact would be of various public policies that might be enacted during the reform process.

But the debate isn’t about facts; it’s about values! Just think about the strongly held values on the two sides of the debate over whether or not “the United States should adopt a Canadian-style system of universal and compulsory health insurance.”

Many of us can speak to one side of that debate. We want a health care system that can provide high-quality care for everyone at a cost that we can afford, both individually and collectively. An improved Canadian-style single payer system would do that. Those strongly opposed to single payer have not provided us with any model that would come close to all of those goals.

If the other side doesn’t share our specific goals, then what values do they support? Perhaps it’s unfair to try to describe their values since there is such an intense disagreement, but we can parrot some of their published statements on their values.

Many support the concept of individual responsibility. Each individual should be responsible for acquiring the means to obtain whatever products or services they desire, including health care. For those who are truly incapable, minimal basic services can be provided by private charity or by public safety-net welfare programs. For average-income individuals who can no longer afford health care, it is their responsibility to make choices – either a choice to advance themselves so they can afford care, or a choice to reduce other spending such as on rent, transportation, education or other less essential products or services, or simply to do without health care.

Many oppose wealth transfer, especially in the form of progressive taxes. They believe that those who have achieved great wealth should be allowed to keep it, and those who haven’t should simply make do. Wealth should not be confiscated by the government simply because tens of millions of individuals are not capable of paying for health care that they might need. In their view it is morally just that society be stratified, richly rewarding the producers.

Many passionately support the concept of freedom, meaning “free exercise of the natural right of sole dominion over their own lives, liberty and property,” relegating government to a minimal, custodial role. They specifically reject the United Nations Universal Declaration of Human Rights, which states, “Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services.”

They value greatly the entrepreneurial spirit of the private marketplace that brings us wealth-creating insurance company middlemen, and an abundance of expensive technologies that shift the profit/benefit ratios ever upward. To them, private business success has a priority over public social policies.

Freedom, entrepreneurialism, and individual responsibility are values that are not the exclusive domain of the opponents of single payer, for we all share them. The disagreement is in how we value public policies that make these concepts work for all of us. We need freedom – freedom to chose our health care professionals – a freedom that the insurers have taken away from us. We need entrepreneurialism to provide us with better technology – but technology that meets the test of value. We need to exercise our individual responsibility to take care of ourselves – but along with our responsibility to support public policies that will enhance the health of all of us.

Princeton health economist Uwe Reinhardt has said that we can do this. The facts are easy. You tell us your values and then we can design a health care system that matches them. The question is, whose values will Congress and the Obama administration honor?

House party attendees in agreement

Posted by on Tuesday, Dec 23, 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.

At House Party on Health Care, the Diagnosis Is It’s Broken

By Robert Pear
The New York Times
December 22, 2008

When a dozen consumers gathered over the weekend to discuss health care at the behest of President-elect Barack Obama, they quickly agreed on one point: they despise health insurance companies.


And for reform, our nation’s political leaders are going to bring us… even more of the same?

CBO's deficient report on analyzing health insurance proposals

Posted by on Friday, Dec 19, 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.

Key Issues in Analyzing Major Health Insurance Proposals

The Congress of the United States
Congressional Budget Office (CBO)
December 2008

Chapter 4 – Proposals Affecting the Choice of an Insurance Plan


Many of the considerations that arise in designing a new option for individuals to enroll in Medicare would also affect the analysis of proposals to establish a single-payer system based on Medicare through which all U.S. residents could obtain their health insurance. In particular, the federal costs of such a proposal would depend primarily on the benefits that the system provided; the rates it used to pay doctors, hospitals, and other providers of health care; and the extent of any premium subsidies it offered to enrollees—all of which could differ from Medicare’s current design. The rules and processes used to determine eligibility for the program and to enroll individuals who are eligible would also have significant implications.

Even under a single-payer system, individuals could have a choice of insurance plans or benefit designs, but the extent and nature of those options would also depend on the features of the proposal. If enrollees were allowed to choose a private health plan paid through Medicare or could purchase supplemental private insurance (as many Medicare enrollees currently do), the rules governing those choices and the possibility of adverse selection would remain important considerations. If, instead, the Medicare plan was the only option offered and all residents were required to enroll in it, then adverse selection would not occur. That approach could reduce the administrative costs that doctors and hospitals currently incur when dealing with multiple insurers. Some enrollees might prefer a different design, however, and the lack of competition from private health plans could take away a benchmark that is commonly used to assess the adequacy of Medicare’s payments and the efficiency of its performance. More generally, that approach would raise important questions about the role of the government in managing the delivery of health care.

CBO Study (196 pages):

Everyone who is participating in the efforts to reform health care financing in the United Sates should have a copy of this CBO report. It describes in considerable detail the various policy decisions that must be made as we approach the goal of affordable health care for everyone, but only those policies that would apply to a multi-payer system of private and public programs.

What is clear is that each policy decision under this scenario increases the administrative complexities of the financing system, and that the inevitable tradeoffs that must be made can only result in compromises that cause us to fall short on our goals of universality, equity, efficiency, quality, access, and affordability. Once the decision is made that we must build on our current system, there is no possible way to avoid spending more money for reform that would fall so short of a high-performance system.

There is a very serious deficiency in this study. In the 167 pages constituting the main body of this report, there are only two paragraphs (above) on a model that would be far less expensive and would come as close as possible to achieving our goals. To say that single payer received short shrift in this important policy document is not simply an understatement; it is a glaring example of the extent to which Congress has gone to glibly dismiss single payer as not being a feasible option. They are going to make policy decisions impacting not only one-sixth of our entire economy, but also the physical and financial well being of each of us.

All of us throughout the nation need to rise up and express our outrage! We need to contact our members of Congress immediately and demand the urgent preparation of a CBO report that describes the policy options, and the impact that they would have, under a single payer national health program. We, the people, deserve the same detailed analysis as was given the multi-payer model catering to the special interests.

Family budgets strained by out-of-pocket health spending

Posted by on Thursday, Dec 18, 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.

Living on the Edge: Health Care Expenses Strain Family Budgets

By Peter J. Cunningham, Carolyn Miller, and Alwyn Cassil
Center for Studying Health System Change
December 2008

Affordability of medical care is a central focus of health care reform efforts. As health care costs continue to increase and the economy declines sharply, there is very little cushion in family budgets for health care costs, even for families with insurance coverage. Financial pressures on families from medical bills increase sharply when out-of-pocket spending for health care services exceeds 2.5 percent of family income, according to a new national study by the Center for Studying Health System Change (HSC). Low-income families and people in poor health experience financial pressures at even lower levels of spending, largely because they have already accumulated large medical debts they are unable to pay off.

There is little consensus among policy makers on how to set affordability standards in medical care, in part because there is little empirical evidence to guide these decisions. In addition, most of the policy focus has been on identifying affordability standards for insurance premiums, such as in the Massachusetts health reform, with much less attention on affordability standards for out-of-pocket spending on medical services. Some analysts propose setting affordability standards based on the current distribution of out-of-pocket spending for services, such as typical spending levels for a privately insured, middle-income population.

However, a limitation with this approach is that unlike spending for premiums, mortgages, rents, and other household necessities, out-of-pocket spending on medical care is much less predictable, often unexpected and not entirely discretionary. While families may be able to budget for preventive and routine health care needs, high out-of-pocket medical spending by families is more often associated with urgent or serious health conditions, as well as provider recommendations for treatment, rather than discretionary patient choices. Thus, what people actually spend out of pocket on medical care reflects–at least in part–what they need or are prescribed, not necessarily what they can afford.


Everyone is concerned about health care costs, and there is now a consensus that we must do something about it.

The leading proposals for health care reform are designed primarily to make health insurance affordable, when what we really need to do is make health care affordable. These proposals use insurance product design and tax policies to try to balance the health benefits provided with the ability of the individual to contribute to the premium. In an effort to keep the premium affordable, patient cost sharing is included as an incentive to reduce utilization of both beneficial and marginal health care services and products.

This study demonstrates a major flaw with this approach. Although the family may be able to budget for a modest component of an insurance premium that remains the same each month, family budgets are now so tight that a mere 2.5 percent of family income that might be required for out-of-pocket cost sharing can be a family budget buster. This study shows that cost sharing can impair both family finances and family health care access.

Financing of our health care system should be totally separated from health care access. Even modest financial barriers to access should be removed from the delivery side of health care. Cost sharing has only a negligible impact on our total national health expenditures yet it can have a serious impact on the finances and health of individuals and their families.

On the financing side, attempting to establish insurance premiums that would be affordable based on family income requires an administratively complex system of matching premiums with benefits and using tax policies to establish equitable contributions by families. This is because we have been fixated on the concept that each family must have a specific, designated private health plan and the financing must fit that plan.

It doesn’t have to be that way. Look at the traditional Medicare program. A single risk pool is established for all Medicare beneficiaries and that pool is financed primarily through equitable taxes. Medicare does have cost sharing, but this study shows us that Medicare would serve us even better if cost sharing were eliminated, fully funding the risk pool to cover payment for all essential services.

The most efficient and equitable method of financing health care for all of us would be to establish one single, universal risk pool and fund it with a system of progressive taxes. We can all pay our fair taxes, but, with fairly spartan family budgets now being the norm, we shouldn’t have to budget medical costs that are less predictable, often unexpected, and frequently in excess of discretionary income.

The public insurance option and AHIP's battle against it

Posted by on Wednesday, Dec 17, 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 Case For Public Plan Choice In National Health Reform

By Jacob S. Hacker, Ph.D.
Berkeley Law Center on Health, Economic, and Family Security
December 16, 2008

This brief has made three main points. First, public health insurance outperforms private insurance in controlling costs while maintaining access and benefits–even when compared with private plans that are regulated to ensure broad coverage. Second, public insurance has also made major strides in quality improvement, and a new public plan working with Medicare alongside private plans would be able to make much greater strides in the future. Third, a competing public plan is essential to set a benchmark for private plans, providing a “check and balance” that ensures private plans, as well as the public plan, uphold high standards.

Even within a reformed system, private plans will continue to have incentives to engage in activities that undermine health security, such as tailoring their benefits or provider networks to discourage less healthy people from enrolling. Moreover, acting alone, private plans have historically paid insufficient attention to obtaining greater value. This is in part because of their limited reach, inherent instability, and the frequent movement of patients in and out of their subscriber base, and in part because of their generally weak incentives to invest in broadly distributed information on quality or to share their performance data with other interested parties. Public plan choice creates an institutional “check and balance,” encouraging private plans to uphold high standards of quality, affordability, and access.

The Case For Public Plan Choice In National Health Reform (27 pages):

Key Findings (2 pages):


Insurers Seek Presence at Health Care Sessions

By Robert Pear
The New York Times
December 17, 2008

When supporters of President-elect Barack Obama hold house parties to discuss ways of fixing the health care system over the next two weeks, they may find some unexpected guests.

Robert Zirkelbach, a spokesman for America’s Health Insurance Plans, the main lobby for insurance companies, said the group was “mobilizing our grass-roots coalitions and encouraging industry employees” to participate in meetings for the Obama transition team.

Before Mr. Obama even takes office, insurance companies are raising questions about a central element of his plan that calls for creation of a new public insurance program to compete directly with private insurers. A public program would, they fear, have inherent unfair advantages.


In this window of opportunity for health care reform, the model that has gained traction and is moving forward is reform based on a combination of employer-sponsored plans, an individual mandate to purchase regulated private plans through an insurance pool or insurance exchange, and an option to purchase a public plan based on an improved version of Medicare.

The private insurance industry knows that if it is to survive, it must be willing to accept everyone in both the employer-sponsored and individual markets, and they now have expressed a willingness to do so. They support a market of competing health plans, with one exception. They oppose the creation of a new competing public program because it would have “inherent unfair advantages.”

What are those advantages? Jacob Hacker, in “The Case For Public Plan Choice In National Health Reform,” explains the many reasons why a public plan is superior to the private plans in providing greater value through higher quality, better access, and greater effectiveness in controlling costs. He states that, by establishing a level playing field, the public plan option would set a benchmark as a standard for private plan performance.

The private plans profess to believe in market competition. Why should they object to a level playing field? Read this paper and you’ll find twenty pages of reasons on why they cannot compete with a public program.

So we’re once again back to the argument that we cannot go straight to a single payer national health program because it is not politically feasible. But what about the feasibility of a public option in a multi-payer system? The insurance industry is opposed because the government has “unfair advantages.” The Republicans say that they are cooperating on a bipartisan approach to reform, but once the doors close, they have made it very clear that a public option will never be approved. Hacker tells us why the public option is absolutely essential in the multi-payer model, but AHIP and the Republicans tell us that it will never happen (and they have the Senate votes to prevent it).

This report is well worth downloading since it explains so well why we need to change to a public insurance program. With minimal editing, such as removing comments about competing private plan innovation, we could use it as a treatise for a new and improved Medicare – a single payer national health program.

The HCAN coalition could use the unedited version to advocate for the multi-payer model, and we could use the edited version to advocate for single payer. Since neither approach is “feasible,” why don’t we just go for broke? To Medicare for All in one single leap!

Speak up at Sen. Daschle's house parties

Posted by on Tuesday, Dec 16, 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.

Participant Guide for Health Care Community Discussions

Obama-Biden Transition Project

Policy Background and Key Questions

II. The President-elect’s Health Care Plan

Expand Coverage to all Americans:

* Build upon and strengthen employer coverage;

* Allow people to keep the coverage that they have and maintain patients’ choice of doctor;

* Establish a National Health Insurance Exchange that offers a range of private insurance options as well as a new public plan option;

* Require insurance companies to cover pre-existing conditions so all Americans regardless of their health status or history can get comprehensive benefits at fair and stable premiums;

* Expand Medicaid and SCHIP and provide sliding-scale premium assistance for low-income people.


1. Briefly, from your own experience, what do you perceive is the biggest problem in the health system?

2. How do you choose a doctor or hospital? What are your sources of information? How should public policy promote quality health care providers?

3. Have you or your family members ever experienced difficulty paying medical bills? What do you think policy makers can do to address this problem?

4. In addition to employer-based coverage, would you like the option to purchase a private plan through an insurance-exchange or a public plan like Medicare?

5. Do you know how much you or your employer pays for health insurance? What should an employer’s role be in a reformed health care system?

6. Below are examples of the types of preventive services Americans should receive. Have you gotten the prevention you should have? If not, how can public policy help?

7. How can public policy promote healthier lifestyles?


Health Care Community Discussion: Host and Moderator Guide

II. Your Role

If you are serving as the moderator, you should not strongly advocate for specific health policy positions. Instead, your role is to listen, facilitate discussion that elicits the views of all attendees, and help the participants draft a submission to the Transition Health Policy Team. In addition, please identify the most compelling personal stories that illustrate the need for health care reform in our country.


To sign up as a host:

Throughout the nation during the next two weeks HHS Secretary-designate Tom Daschle is encouraging grassroots, community level discussions of health care reform. The purpose is to give the public a sense that they are actively involved in the reform process, avoiding a repetition of the Clinton political error of crafting reform behind closed doors.

If you look at both the moderator guide and the participant guide, it’s quite clear that this is not an effort to collect information to guide the policy makers in their decisions. The fundamental policy decisions have already been made, and they are listed above. This is strictly a process to build on the momentum for reform.

We have seen this process before. In 2006, a series of community hearings for the Citizens’ Health Care Working Group (CHCWG) were held throughout the United States:

“When given a choice of ten reform options at public hearings held by the CHCWG, participants clearly favored a national health program by a margin of at least 3 to 1. At meetings where participants were asked to rank the 10 options, national health insurance was ranked first 16 of 19 times (Billings, MT; Denver; Des Moines; Detroit; Eugene, OR; Jackson, MS; Kansas City, MO; Memphis; Miami; New York, NY; Philadelphia; Phoenix; Providence, RI; Sacramento; and Seattle). At two meetings participants were neither polled nor options ranked. Despite the clear public mandate, the CHCWG’s report makes no mention of the vast support for a national health program. Instead, the group’s official recommendations include only generic suggestions such as promoting ‘efforts to improve quality of care and efficiency,’ and finding a way to protect ‘against very high health costs.'” (http://www.pnhp.org/news/2006/october/citizens_health_ca.php)

The organizers of the CHCWG process were caught off guard by the intense support for a national health program. During the sessions the computer programs had to be modified to include serious consideration of the public insurance option. Yet the final report did not reflect the intensity of this support.

The scripted discussions for Sen. Daschle’s community meetings exclude any consideration of a single payer national health program. The closest they come is to discuss a “public plan like Medicare” that can be purchased as another option to a private plan through an insurance exchange. Yet a legislative staff member for a Democratic Senator recently stated that the “public option” proposal looked at present to be completely blocked by the Republicans – they will only discuss changes based upon the existing private insurance industry. One of the reform negotiators, Republican Senator Mike Enzi, last week wrote, “… we must focus on promoting new options and choices for patients. This means expanding competitive, free market plans – not moving toward a single payer health care system.”

Even though the process is a sham, that doesn’t mean that we shouldn’t speak up. We should do so, though in a civil but firm manner. The very first question asking what is the biggest problem in the health system can be answered by stating that our fragmented financing system based on private plans and public programs is wasting a huge amount of funds that should be used for health care for the uninsured and underinsured, and we can actually do that by replacing our dysfunctional financing system with a single payer national health program. We need to be certain that Sen. Daschle is shocked yet pleasantly surprised to see overwhelming support for single payer about which he has written is “brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration.”

Be sure to stay at the meetings long enough to be certain that the single payer message is included in the submission to the Transition Health Policy Team. We need to send that message. It remains to be seen whether or not the bureaucrats are going to try to bury it again. If they do, then maybe it’s time for a march on Washington.

OECD Economic Survey of the United States

Posted by on Monday, Dec 15, 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.

Economic Survey of the United States, 2008

OECD (Organization for Economic Cooperation and Development)
Policy Brief
December 2008

The US economy is going through an exceptionally difficult period after having been hit by converging adverse developments, some in reaction to previous excesses during the upswing, others more exogenous. A sharp downturn in the housing market, a financial crisis and temporarily high commodity prices have caused activity to slow sharply during 2008. This happened at a time when the external position was persistently weak and the fiscal stance had become unsustainable in the long term — making for a difficult challenge to steer policy between competing objectives. Policymakers have taken actions to support growth and stabilise the financial system, while keeping a careful eye on inflation expectations. It is nonetheless likely that activity will get worse before it gets better. In addition to these short-term severe difficulties, adverse social trends need to be addressed, including incomplete access to health care, the topic of a special chapter in this Survey.

Health-care reform is needed. Despite health spending being much higher in the United States than in any other OECD country, the US population’s health status does not compare favourably on key indicators, in part because many people do not have adequate financial access to medical care. Starting from the present situation, a plan likely to be successful would replace the health insurance tax exclusion with subsidies for individual purchase of insurance and reform the insurance market as needed. There appears to be wide interest for such reform and numerous packages along these lines have been proposed.

(Omitted here are discussions of the financial crisis and the economic outlook, monetary and fiscal policies, markets for housing finance, and financial sector regulation and supervision.)

* How well does the health system perform?

Notwithstanding very high health spending (about 15% of GDP) and the use of cutting-edge technology, the health status of the US population does not appear to fare well by international comparison.

A particular source of concern is the large number of people who lack adequate health insurance.

Making progress towards health insurance coverage for all Americans should be given a high priority on the policy agenda.

* What could be done to encourage more efficient healthcare purchasing decisions?

The existing health tax exclusion should be terminated.

The tax revenues resulting from the elimination of the tax exclusion would be available to subsidise the purchase of insurance by individuals in a way that is independent of the choice of health plan.

Policy makers should consider means testing these subsidies.

* What could be done to promote health insurance coverage?

At present, the individual health insurance market is not attractive, in part because adverse selection risks have led to high premiums compared to their actuarial value, and because administrative costs are high. These problems could be addressed by increasing the size of risk pools and reforming individual and small-group insurance markets by requiring community-rated and guaranteed-issue policies, thus disconnecting the payments from individual health risks.

This approach would have a greater impact on coverage if accompanied by a requirement to be insured, as otherwise healthy people may choose to be uninsured rather than to pay community-rated premiums, which are higher than experience-rated premiums for healthy people.

Some hospitals seem prone to high-cost procedures without additional benefit to patients, while others seem able to provide lower-cost care that proves to be effective. The authorities should consider ways to enhance the dissemination of information on the effectiveness and cost of treatments and procedures. Savings could also be made by reducing payments to Medicare Advantage (MA) plans.

Currently, Medicare administrators are prohibited from harnessing competition or negotiating prices of medical equipment and supplies; instead, they must use fee schedules based on historical charges. On the basis of pilot programmes, it has been estimated that using a competitive bidding process instead of the fee schedules could reduce costs by 26% on average, based on strict criteria for product quality and security of suppliers, without significantly reducing access of beneficiaries to supplies. Generalisation of competitive bidding for medical equipment and supplies should not be delayed beyond the 18-month period stipulated in recent legislation.

Policy Brief:

Economic Survey of the United States 2008:

The OECD is an important and highly credible resource for economic studies for the 30 member nations. An Economic Survey is published every 1 1/2 to 2 years for each OECD country. The newly released economic survey of the United States will be widely distributed amongst U.S. economists and policy makers.

For supporters of a single payer national health program, this report is not worth downloading. It is presented here only so that you can be aware of it in the event that someone cites it as an important contribution to our national dialogue on health care reform. It isn’t. The recommendations are the opinion of the OECD economists who have a bias toward regulated insurance markets, as opposed to government-administered public health care financing. That’s really all that you need to understand about the health care reform section of this report.

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