When September Ends

Posted by on Saturday, Sep 27, 2008

Ten years ago this month I was new doctor, an intern doing primary care. It was a joy that fall to begin at an outstanding clinic in a rural village where I would learn to see both adults and children over the next 3 years.

My first week at the clinic an elderly patient, a farmer, presented to me with several days of a productive cough, perhaps a fever, some increased work of breathing. A smoker, he’d had to quit for a few days due to his illness. He had no contacts with ill people or with children (who might be likely to share their viruses.)

On exam he looked ill and had wet rales in one lung lobe. I thought he had pneumonia, and listening to his symptoms I had become worried that he might need to be in the hospital.

We checked his vitals including pulse oximetry, asked him for a sputum sample for culture, did phlebotomy for a blood count and electrolytes. Then we sent him up the hill to the community hospital for a chest x-ray and asked him to return with the x-ray so we could look at it.

It was an amazing experience to begin to find confidence as a physician, to be able to listen to the patient, perform a physical exam, then obtain additional data, and then bring it all together to share it — to make a deliberate and informed decision together with a patient about the diagnosis, prognosis and treatment.

As it turned out, the patient’s tests were mostly reassuring. He had acute bronchitis. It could be viral. More likely, I thought, he could brewing a bacterial pneumonia. After we looked at the x-ray together and discussed what worsening symptoms to watch for, I wrote a prescription for the drug I thought most likely to help his body expel the infection. I asked to see him again in a week or so, sooner if necessary.

Medical school and my first two intern months had taught me about community-acquired pneumonia and the local patterns of infection. To share this knowledge was liberating — we knew not only which organisms would be likely to be cause the patient’s illness but also which antibiotic might best treat the potential culprit.

The patient returned the next week to say he was feeling much better. “That antibiotic worked great.” He then gently explained to me that he could not afford the drug I had chosen. It had cost more than his usual spending money for an entire month. It had cut into his budget for food and gasoline and electricity.

With some anguish I discussed this with my preceptors. How do we learn how much each drug costs? Which antibiotics are both affordable and appropriate for the diagnosis? How do we know how the patient will pay for their care? Isn’t it immoral to ask? Why does medical education stress state of the art science if the ability to pay trumps our ability to practice the same medicine?

Thus I learned about the bottom line — the bottom line of the chart sticker. It had a code that one could easily decipher. It told who was paying the bill — which insurance company, or HMO, or Medicare, or Medicaid, or “self-pay” — uninsured. Soon I found myself checking that bottom line for every patient — and when I feared money would be a problem, I learned to raise the issue tactfully, respectfully.

My teachers soon taught me a few tricks. For example many medications cost roughly the same amount per pill even though there might be several strengths to choose from. If a pill could be cut in half we might prescribe a double dose and instruct the patient to take half a pill instead of a whole. By cutting the pill in half, patients could cut the cost in half too.

Eventually I knew the actual costs of all kinds of tests and medications and could quote them. I also knew what the local insurers were likely to cover — and not cover. I kept a short list of generic drugs, each class listed by price, in my desk drawer. And I learned that patients without health insurance often go without tests and treatments and specialists and even emergency care because of out-of-pocket costs.

None of us went to medical school to ask our patients to choose between an antibiotic and the electric bill. But when I look back over ten years the appalling and insidious intrusion of the questions — “who will pay?” and “what is the cost?” — simply and horribly accelerates, no matter how necessary the care, no matter how routine the test, no matter how clear the choice of treatment.

The Medical Society of the State of New York (MSSNY) recently reported that 93% of my New York colleagues complain that they have had to change their choice of prescription medications because of insurance carrier restrictions. 92% of New York physicians agree with the statement: “Insurance company financial incentives or disincentives to physicians regarding treatment protocols may not be in the best interest of their patients.” And 87% say that insurance companies pressure them “to prescribe a course of treatment based on cost rather than on what may be best for the patient.”

The big picture of the costs of health care — $2.4 trillion, 16.6% of GDP for the nation in 2008 — rightly receives much attention. But the relentless intrusion of costs into the doctor-patient relationship endangers nearly every interaction — a cruel fact which too many of us, patients and caregivers alike, are painfully, personally aware.

The MSSNY poll also showed that 95% of New York physicians believe that “Decisions on what medications are right for a patient should be made by the patient’s own doctor and not by the health plan or the insurance carrier.” (And small wonder that PNHP has so many new members here in New York.)

A single-payer program would provide a socially responsible way to cover the costs of all necessary medical care. It is the first step toward a more humane physician-patient relationship. By standing up for single-payer we will restore not only our profession, but our humanity.

FEHBP basic premium up 13 percent

Posted by on Friday, Sep 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.

Health Insurance Costs to Spike an Average 8 Percent

By Joe Davidson
The Washington Post
September 26, 2008

Health insurance premiums for federal employees will jump almost 8 percent… the Office of Personnel Management announced yesterday.

Premiums for most workers, however, will climb even more next year — about 13 percent — which is the increase for enrollees in the Blue Cross and Blue Shield plans. Sixty percent of federal workers are enrolled in one of the Blue Cross and Blue Shield plans.

Colleen M. Kelley, president of the National Treasury Employees Union, was not impressed. “It is very discouraging to see average increases of this magnitude,” she said, “particularly given the bargaining power OPM should be able to exercise as manager of the nation’s largest group health plan.”


So you want the health insurance program that the members of Congress have? This is it: the Federal Employees Health Benefits Program (FEHBP). This is the plan that several politicians have supported as an option to purchase in place of your current coverage, if you should no longer want to keep that.

Prior studies have questioned whether FEHBP is an appropriate option for moderate income individuals. The employees’ portion of the premiums plus the out-of-pocket cost sharing is not affordable for them should they have significant health care needs. In fact 100,000 federal employees eligible for FEHBP are not covered by the program, many because they cannot afford their portion of the premiums.

The politicians frequently discuss guaranteeing basic coverage, “without the bells and whistles,” and refer to the FEHBP Blue Cross/Blue Shield plans as a model. The premiums for this basic coverage will increase 13 percent for 2009. 13 percent!

The Office of Personnel Management, the largest purchaser of health benefits in the nation, has been ineffective in containing runaway costs in the FEHBP program. We desperately need a new model of health care financing. It is time to seriously consider adopting a single payer monopsony. Then everyone could have affordable health care.

NAFTA-based suit threatens Canada's medicare

Posted by on Thursday, Sep 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.

Suit seeks to open Canadian health care to privatizers

By Frances Russell
Winnipeg Free Press
September 24, 2008

Canada’s growing flirtation with private for-profit health care has led to the first legal assault on Canadian medicare under the investor-state clause of the North American Free Trade Agreement.

Alone among the world’s trade treaties, NAFTA allows foreign investors to sue the Canadian government directly if any public policy or governmental action denies them investment or profit opportunities.

Now, a group of 200 private investors led by Arizona businessman Melvin J. Howard is planning to use the NAFTA national treatment mechanism to pry open Canadian medicare — often described by neoconservatives as “the last great uncracked oyster in the North American marketplace.”

Howard and his partners want to open a private surgical centre in B.C. similar to the Cambie Clinic owned by Dr. Brian Day, past-president of the Canadian Medical Association, but are facing what they call anti-American roadblocks in several municipalities.

The use of NAFTA’s Chapter 11 to put medicare out of business — more accurately, to make it a for-profit, private, and likely American, business — has long been feared by medicare’s supporters. They have never believed government assurances that NAFTA grandfathered medicare beyond the reach of foreign insurance companies and health maintenance organizations (HMOs) seeking to replace it with U.S. private for-profit medicine.

It’s significant to note that NAFTA’s Chapter 11 effectively gives foreign investors greater rights than Canadian investors, because Canadians are restricted in their ability to sue their own government.

(Mike McBane, co-ordinator of the pro-medicare National Health Coalition) says privatizers and foreign investors are emboldened by what he calls a “perfect storm:” a federal government that believes in provincial autonomy, not national standards; the 2005 Supreme Court Chaoulli decision that private medical services do not abridge medicare and are a fundamental human right; and the CMA’s new support for two-tier medicine.

He cites a speech Prime Minister Stephen Harper gave in 2001 when he was president of the National Citizens Coalition in which he stated: “(W)hat we clearly need is experimentation — with market reforms and private delivery options within the public system. And it is only logical that, in a federal state where the provinces operate the public health care systems and regulate private services, that experimentation should occur at the provincial level.”

Continues McBane: “The dangerous thing is, you establish a private clinic and then it gets sold… We know why foreign investment wants it because they see public health care budgets as a cash cow.”


Canadians, who much prefer their public medicare system to the U.S. private-market version of health care, have long feared that NAFTA would open up their health care system to an invasion of U.S.-style, investor-owned, market-based insurers and providers. The U.S. experience has proven that these entrepreneurs can cause health care costs to skyrocket, while greatly impairing equitable coverage and access.

The door has been opened; the “oyster has been cracked.” The U.S. entrepreneurial invaders have invoked NAFTA to force the introduction of expensive, corporate, for-profit, upper-tier health care to serve Canada’s more affluent citizens. Once in place, the public medicare program will see a gradual decline in funding because of the lack of a strong political voice (moneyed voice) representing lower-income individuals.

Chronic underfunding of Canada’s medicare will convert it into a bottom-tier, U.S.-style Medicaid program with impaired access since providers will bail out of the public sector and move into the lucrative, upper-tier private sector. (Just as with Medicaid, some dedicated physicians will remain in the public sector simply because it is the right thing to do, but they will have to work with much more limited resources.)

Tommy Douglas, the father of Canadian medicare, was selected by the people as “The Greatest Canadian.” The people must now consider what Tommy Douglas would have had to say about investor-owned health care. Perhaps it’s time for the citizens of Canada to demand that their political leadership revisit NAFTA.

The increasing burden of medical debt

Posted by on Wednesday, Sep 24, 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.

Trade-Offs Getting Tougher: Problems Paying Medical Bills Increase for U.S. Families, 2003-2007

By Peter J. Cunningham
Center for Studying Health System Change
September 2008

About 57 million Americans were in families with problems paying medical bills in 2007–an increase of 14 million people since 2003, according to a new national study by the Center for Studying Health System Change (HSC). Problems paying medical bills increased for both nonelderly insured and uninsured people. Although the rate of medical bill problems is much higher for uninsured people, most people with medical bill problems–42.5 million–had insurance coverage. About 2.2 million people with medical bill problems were in families that filed for bankruptcy as a result of their medical bills, and a much larger number reported other financial consequences, such as problems paying for other necessities and having to borrow money. The increase in medical bill problems–especially among insured people–is the main reason why more people reported unmet medical needs because of cost in 2007 than in 2003.



Health Benefits In 2008: Premiums Moderately Higher, While Enrollment In Consumer-Directed Plans Rises In Small Firms

By Gary Claxton, Jon R. Gabel, et al
Health Affairs
September 24, 2008

Average annual premiums in 2008 are $4,704 for single coverage and $12,680 for family coverage. These amounts are about 5 percent higher than premiums were last year. Enrollment in high-deductible health plans with a savings option increased to 8 percent of covered workers, up from 5 percent in 2007. Deductibles in preferred provider organizations, the plan type with the largest enrollment, increased from 2007 levels.



Studies Show Strain of Medical Bills

By Reed Abelson
The New York Times
September 24, 2008

Even as Washington and Wall Street debate the best way to avert an economic meltdown, increasing numbers of Americans are struggling with another financial crisis: the growing burden of unpaid medical bills.

Two studies released Wednesday morning provide further evidence of the toll health care is increasingly placing on working families, even for those who have health insurance. And as employees are paying more medical expenses out of their own pockets, they are having a harder time coming up with the money.

While policy analysts acknowledge that finding any new money to expand coverage may prove difficult, some also say the terms of the debate may be changing as policy makers and the public rethink their positions on the need for regulation and the role of the government in industry — including the health care system.

“We can now imagine a government takeover that we could not imagine before,” (said Len Nichols, a health economist at the New America Foundation).


The bad (but not unexpected) news is that there is no relief from the unrelenting increases in health care costs for individuals and their families. But there is one number that should alarm all of us: 42.5 million people WITH INSURANCE COVERAGE have medical bill problems in spite of their coverage.

Whereas most advocacy efforts for reform have been directed towards expanding health care coverage to include more individuals, the proposals have included compromises designed to make health insurance more affordable. These compromises, involving fewer benefits and greater cost sharing, have made health care LESS affordable. Just ask those 42.5 million insured individuals who have medical bill problems.

It is time for us to get past the process of trying to bring everyone under the private insurance umbrella that leaks like a sieve. We need to adopt a financing system that is effective in preventing individuals with health care needs from having to face the additional burden of medical debt.

The private insurance industry covers primarily the relatively healthy: the healthy workforce, their healthy families, and the healthy sector of the individual insurance market. But some of these healthy individuals do develop significant medical problems, and for tens of millions of them, the private plans have not prevented medical debt. Shouldn’t that be the purpose of health insurance?

A government takeover of health care financing could provide us with the coverage that actually would work: a single payer system that would enable each of us to access the health care that we need, without exposing us to the additional burden of medical debt. If the government can serve as responsible stewards of our mortgage markets, surely they can become responsible stewards of our health care financing.

A.M. Best revises health insurance rating to negative

Posted by on Tuesday, Sep 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.

A.M. Best Revises Rating Outlook of U.S. Life/Health Companies to Negative

September 18, 2008

Although fundamentals for the vast majority of life/health companies are currently sound, uncertainty continues to be widespread in terms of the future direction of the economy, real estate values, interest rates, equity markets–both domestically and globally–and liquidity. All of these factors have had an impact on life/health insurers’ balance sheet strength and operating performance.

As the federal government takes unprecedented steps to promote stability in financial markets and limit damage to the broader economy, A.M. Best notes both the political uncertainty of the upcoming Presidential election as well as the enhanced regulatory scrutiny that currently pervades the life/health industry. These issues are most prevalent across health insurance product lines, which are influenced significantly by regulation at both the federal and state levels. As a result, A.M. Best has revised the rating outlook on the health insurance industry to negative.

With employers dropping coverage, and politicians and regulators seeking ways to provide coverage for the uninsured, the individual medical market has become ultra competitive. A.M. Best has similar concerns with the small group medical market as large, national managed care companies compete despite low profit margins.

Moreover, the current economic environment is placing additional pressures on the managed care sector. The commercial market has been extremely competitive for some time with limited growth potential. Layoffs and bankruptcies will impact commercial enrollment, while cost factors could pressure employees to drop coverage. Many publicly traded managed care companies have increased their financial leverage over the past year mainly for share repurchase and acquisitions (with goodwill), all of which increase balance sheet risk. While A.M. Best acknowledges that managed care companies tend to have more liquid and conservative investment portfolios due to the short-tailed nature of the claims, the issues that have emerged on Wall Street, and in the real estate market, are expected to result in writedowns of certain investments.


When the economy goes South, and unemployment rates increase, publicly financed programs face budget constraints because of the decline in tax revenues. Think of our public education system. Publicly financed health programs (over half of all health care spending today) face similar constraints.

So we should look at the stability of the financing of health care through private health plans. This report from A.M. Best indicates that market volatility will have a negative impact on the participation in their health insurance products and on the insurers’ return on their investments.

A shift away from large employer coverage and towards individual and small group insurance products has made these markets “ultra competitive,” resulting in narrower profit margins. It is ironic that increased competition is considered to be a threat to the insurers’ business model. At the same time “enhanced regulatory scrutiny” is also a threat. It seems that the health insurance industry will have difficulties no matter whether free market or government regulation policies prevail.

In addition, a significant portion of insurers’ profits comes from their investments that have nothing to do with health care. As their investment revenues decline they must make up the difference by increasing the spread between their revenues and costs. Since their high administrative costs are relatively fixed, they must turn to increases in premiums and decreases in benefits paid. The decrease in benefits is accomplished by reducing the health benefits which are covered, and by increasing cost-sharing by the patients. Underinsurance is already a major problem, and it will expand further under current trends.

Any financial crisis would impact both publicly and privately financed programs, but the private investor-owned programs are more severely impacted. Looking at the current financial crisis, it’s clear that only our government has the capability and resources to ensure health security for all of us… forever.

McCain: Deregulate health insurance, like banking

Posted by on Saturday, Sep 20, 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.

Better Care at Lower Cost for Every American

By John McCain
September/October 2008

We can no longer afford to promise more than we can deliver. Nor can we risk misdiagnosing the problem and devising a cure that might harm the patient.

The problem is not that most Americans lack adequate health insurance. The vast majority of Americans have private insurance, and our government spends billions each year to provide even more.

Fundamental health care reform must begin with restoring control to individuals and their families as health care consumers and patients and making them the central focus of our health care system.

Opening up the health insurance market to more vigorous nationwide competition, as we have done over the last decade in banking, would provide more choices of innovative products less burdened by the worst excesses of state-based regulation.


Let there be no doubt about John McCain’s plans for health care in America: Just as reducing the burden of government regulation of real estate lending has allowed more individuals to achieve the American dream of owning their own homes, reducing regulatory oversight of private insurers will make health care more affordable for all of us.

Many people made a lot of money in home loans while the regulators turned their backs. Of course, those people have walked away with their siphoned-off money in hand, and left us with a market that has destroyed the finances of individuals and shattered their dreams of home ownership. The magnitude of the crisis is so great that the government had to step in and use our tax dollars to prevent the collapse of the economy.

John McCain now wants the regulators to turn their backs on the private insurance industry. By selling us insurance products that are affordable, many people will make a lot of money. When those underinsurance products fail to protect us from financial hardship whenever we need heath care, our personal finances will collapse, and the financing of the health care industry will be disrupted, resulting in the impending collapse of the health care delivery system. By then, those who profited will have walked away with their siphoned-off money in hand, leaving us with a health care crisis that only the government will be able to repair, using our tax dollars to prevent the collapse of our health care system.

Just as a robust deregulated market in sub-prime lending and mortgage-backed securities was not the solution to expand home ownership to more Americans, a robust deregulated market in private health underinsurance plans can never make health care affordable for those who need it.

Barack Obama understands that if private insurance plans are to fulfill their function of making health care affordable, then the market must be tightly regulated, and underinsurance products must be prohibited. He also understands that private plans that actually work are no longer affordable for the majority of Americans. That is why he decided against mandating universal health care coverage; you can’t buy a plan if you don’t have the money to pay for it.

Neither a market of deregulated private plans nor a market of tightly-regulated private plans will work. Continuing to rely on the private insurance market will compound the crisis in health care financing, eventually forcing a government buyout of the system. Instead of waiting for more pain, suffering, financial hardship, and even death, let’s adopt a system that actually would make health care affordable for all of us: a single payer national health program.

Isn’t prevention better than a salvage operation?

William Brody on risk pooling

Posted by on Thursday, Sep 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.

Health care reform must art with a plan to simplify

By William R. Brody, MD, PhD, president of the Johns Hopkins University
San Francisco Chronicle
September 18, 2008

I favor community-rated health insurance – that is, one big pool to spread and share risk with no cherry picking allowed.


There could not be a more explicit endorsement of social insurance, especially significant since it comes from one of the nation’s more important health care leaders. Once we all agree that we need one big risk pool to spread and share risk, the remaining efforts in health care reform would be limited to working out the details of the mechanics of funding and administering that pool.

That is not to say that it will be easy. We will still be debating whether or not we will dismiss the private insurance industry and replace it with a single payer universal health program. If we continue to use the private insurance industry, it will require massive transformation into a model similar to the European plans using non-profit private insurers, a change that investor-owned insurers surely will resist to the death of their corporations (what a pleasant fantasy). Instead of trying to totally change the mission and structure of U.S.-style insurers, it would be easier to replace them with our own public Medicare-like model.

Once we accept the concept of a single, equitable risk pool for everyone, then we can all move forward with the comparatively simple task of crafting the mechanics of the financing system. We really can do it.

In a Letter to the Editor of the Wall Street Journal just days ago, John Goodman, president of the conservative Dallas-based National Center for Policy Analysis, repeats this classic premise of Milton Friedman’s economic views:  “capitalism confers its greatest benefits on people at the bottom of the income ladder.  People at the top would have done well under any system. It is people at the bottom who are most liberated by markets.” This view of the world has dominated U. S. politics for several decades.  As we saw in our last post, however, free markets in health care are driving up costs at three and four times the rate of cost of living and family incomes.  It is long overdue to hold this theory to account for its actual track record and its impact on people needing health care.

These benchmarks show how flawed and disconnected this economic theory is from reality.

•  There are 46 million uninsured and at least another 25 million under-insured  (generally defined as spending over 10 percent of their annual  income)

•  Even among the more than 150 million Americans with employer-sponsored
health insurance, a 2007 report by Families USA found that:
a.  among the 50 million non-elderly Americans who spend more than 10
percent of their pretax income on health care, 4 of 5 are insured
b.  of the 13.5 million in families spending more than 25
percent of their pretax income on health care, more than 3 of 4  are

•  A majority of uninsured and underinsured go without necessary health care
because of costs

•  The costs of cancer care are going through the roof at rates much higher than
for general medical care; a 2007 study by the Kaiser Family Foundation and the
Harvard School of Public Health found that nearly one-half of cancer patients
without consistent health insurance coverage use up all or most of their savings,
leaving them short for basic necessities.

•  A 2008 study by the Centers on Budget and Policy Priorities found that 2.4
million elderly Americans have been driven into poverty by medical bills,
despite having Medicare coverage; seniors now  spend 22 percent of their
annual incomes on health care (compared to 15 percent when Medicare was
enacted in 1965).

•  Medical bills account for about one-half of the 2 million bankruptcies each
year; of those bankrupted, 3 of 4 were employed and insured when they  fell ill.

•  Household debt today is at the highest level since 1933.

•  A 2008 analysis by Deloitte’s health research center has found that medical care
now accounts for 16.6 percent of the average American household’s income,
more than housing (14.4 percent) and food (13.1 percent).

•  Consumer confidence has fallen to a 28 year low

•  A recent Rockefeller Foundation/Time survey found that 85 percent of
Americans feel that the country is headed in the wrong direction, with a
majority saying that “the American dream is no longer attainable”;  80 percent
believe that whatever social contract we have had has deteriorated, and that a
new one is needed.

•  The accompanying graphic shows in brutal detail that the robber baron era
preceding the Great Depression has reappeared with an even wider gap in 2006
between incomes of the top 0.01 percent and the bottom 90 percent of U. S.

(Source: Thompson, G. Meet the wealth gap. The Nation 14 (12): July 1-15, 2008)

These points make clear how untrue and preposterous the trickle-down theory of economics really is.  It is a cruel hoax.  We are in the second Gilded Age, and conservative market policies fail the public interest.  A recent article in The Nation by John Cavanagh and Chuck Collins of the Washington-based Institute for Policy Studies, describes our current predicament in these terms:

“Our top-heavy era has evolved from a heavily bankrolled effort by conservatives and corporations to instill blind faith in the market as the magic elixir that can solve any problem.  This three-decade war against common sense has preached that tax cuts for the rich help the poor, that labor unions keep workers from prospering, that regulations protecting consumers attack freedom.  Duly inspired, our elected officials have rewritten the rules that run our economy – on taxes and trade, on wage policies and public spending – to benefit wealthy asset owners and global corporations.  To reverse this reckless course, we need to change our nation’s dominant political narrative and restore faith in the critical role that government must play to protect the common good.”

In future posts we will address some directions for health care reform which will bring necessary care within reach of all Americans based on medical need, not a disappearing ability to pay in our runaway market-based non-system.

Adapted from: Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

Buy This Book: http://www.commoncouragepress.com/index.cfm?action=book&bookid=376

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KFF's three options includes single payer

Posted by on Wednesday, Sep 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.

Covering the Uninsured: Options for Reform

Kaiser Family Foundation
September 17, 2008

Options for Covering the Uninsured

1. Build on the current system:
Strengthen the employer-based system
Expand public coverage by building on Medicaid and SCHIP
Create new group insurance options for individuals and businesses

2. Revise the sponsorship and financing of health coverage through the tax system

3. Adopt a single-payer plan


Listening to the national dialogue on health financing reform, you would think that we have only two options: 1) Don’t start from scratch with a better program, but build on the current system (Obama), or 2) Reform the tax code to shift incentives for purchasing insurance from employers to individuals (McCain). Replacing our dysfunctional financing system with a single payer national health program, if even mentioned, is immediately dismissed from the dialogue.

As an example, yesterday Health Affairs released three new articles commenting on the reform proposals. An excellent article by Buchmueller et al explained why the McCain proposal would be relatively ineffective in expanding coverage to more individuals and would likely result in a deterioration of the effectiveness of health plans. An article by Antos et al explained why the Obama proposal will fail to slow the escalation in health care costs, besides falling short on universal coverage.

The third Health Affairs article should have been on how single payer would control costs while providing comprehensive coverage for everyone. It wasn’t. Instead it was an article by Mark “Moral Hazard” Pauly describing a compromise model incorporating features of the McCain and Obama plans. Although the Buchmueller and Antos articles were covered extensively by the media, I couldn’t help but notice that the Pauly article was ignored, and quite appropriately so.

Kaiser Family Foundation is precisely right. There are three options for reform. We know that only one of them will work: single payer. A discussion of the McCain and Obama plans is not complete without including an explanation of the effectiveness of single payer. It’s our job to be sure that it is included.

BC Calif creates dual networks to cheat patients and physicians

Posted by on Tuesday, Sep 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.

Physicians Urged to Carefully Review Blue Cross Contract Amendment

California Physician
September 15, 2008

Physicians contracted with Blue Cross of California were recently notified of the insurer’s intent to amend its Prudent Buyer contract to include Anthem’s Select PPO product, effective January 1, 2009.

The addendum in question requires contracted physicians to always refer Anthem Select PPO Members to other participating Select PPO providers, unless they have obtained authorization to refer out of network. Physicians should be aware that the underlying Prudent Buyer contract authorizes Blue Cross to unilaterally lower the physicians’ fee schedule as a penalty for referring to out of network providers. For this reason, it is important for physicians to determine if colleagues you frequently refer to and those who refer to you participate in the Select PPO network.



Those supporting health care reform based on the model of private health plans competing in the marketplace have looked to Blue Cross of California (BCC) as the nation’s leader in innovative market solutions. BCC has been very effective in providing insurance products with competitive premiums by using these innovations to limit what is paid for health care benefits, in an environment of ever-increasing health care costs.

By far the most important innovation was to establish preferred provider lists of physicians and hospitals that agreed to accept contracted reimbursement rates. The providers accepted lower rates, and patients were financially penalized if they used providers outside of the contracted networks. No attempt will be made to address here the many other innovations that allowed BCC to reduce what it pays for health care, but more does need to be said about this new innovation in its preferred provider networks.

Largely because of its competitive premiums made possible by its leverage in being able to sign up physicians and hospitals in its Prudent Buyer PPO plans, BCC has been one of the most successful programs in California, success being defined from a business perspective. Its success has been so great that it is now in a position to be able to make itself its own competitor, but, as we’ll see this is not competition that is designed to benefit the patient/consumer, but rather to benefit the Anthem/WellPoint shareholders of which BCC is a subsidiary.

In addition to its well established Prudent Buyer PPO, it now also has established Anthem Select PPO, a product designed to be more competitive by offering even lower premiums. The Anthem Select PPO has established a separate contract with a much smaller number of physicians and hospitals who have agree to even lower reimbursement rates (presumably lower, though that is proprietary information). Besides lower rates, BCC also benefits by making access more difficult for patients by sharply limiting the number of Select providers available.

Patients may not realize it, but they are penalized when they continue to use their Blue Cross Prudent Buyer providers if those providers have not also signed up to be part of Anthem Select PPO. They may think they have access to the Prudent Buyer PPO list, but if the corner of their card says “A Select Network Product,” they are restricted to a much more limited choice if they expect to receive the full benefits of their plan (that is, full underinsurance benefits).

The new BCC innovation spelled out in the addendum and in the underlying Prudent Buyer contract establishes financial penalties for physicians who continue to refer to their established Prudent Buyer colleagues and hospitals without first checking to be certain that they are on the much more exclusive Anthem Select PPO list.

BCC has provided a potential out. Physicians can obtain prior authorization to refer Select patients to the Prudent Buyer providers. But talk about abusive administrative excesses! BCC is requiring the burdensome prior authorization process merely to cross refer within its own two artificially segregated networks!

The process is hardly transparent. Most physicians and their staff members will not notice “A Select Network Product” on the corner of the card. They will make the Prudent Buyer referrals as usual. When the claim is paid, the disallowed amount will be adjusted off, without the staff realizing that the adjustment is greater than it would have been had a referral been made within the more restricted Select list. The patient will receive a statement of benefits with a larger amount listed as their own responsibility, not realizing that they are being penalized for using a Prudent Buyer provider who did not also have a Select contract.

Thus Blue Cross of California has set up within its own Prudent Buyer program two separate PPO lists that it uses to play against each other for the purpose of cheating the patient, cheating the physician, and cheating the hospital. Only the shareholders benefit.

Some may feel that “cheat” is too strong of a word, but cheating is depriving by trickery, and that is exactly what BCC is doing.

For those who still believe that we can patch together reform by using private insurance plans, please read John Geyman’s “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It” (Common Courage Press).

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