I walked several blocks from the hospital at lunch time the other day. A basement storefront sign at a hair dresser’s read “walk-ins welcome.” Impulsively I went in.

The young woman made pleasant small talk. I am a clod when it comes to small talk.

I said that yes, the weather seemed suddenly hot instead of cold and rainy. But what was really on my mind was how real health care reform would come to the United States.

“Health care. Oh my god. What is wrong with this country?” she started.

The young woman’s many points precipitated in an expository flurry:

“I thought that maybe with Obama it would be the great change and at last it would happen. But it doesn’t look that way, does it?” she said.

“Do you know that we here pay $600 a month for insurance?” she confided. “600 a month! And it doesn’t have dental. It doesn’t cover the eye doctor. Mental health – maybe 2, 3 visits maximum, no more. And the co-pays! Then the doctor says you need a test – but they deny it! How can an insurance company make the diagnosis or prescribe the treatment?”

She said she was shocked that some friends’ opposed any kind of health reform.

“My friends said, ‘Oh I like my insurance. I don’t want to lose that.’” She rolled her eyes. “So I asked them, ‘what about your insurance do you like? Paying the premium? Is it the co-pays? Or maybe that you have to pay cash to see a dentist? Do you like asking permission to see a specialist or get a test?’”

“‘Ok,’ my friends said, “we hate our insurance company. But we don’t want to pay for someone else to have health care.”

“Oh my god!” her story continued, “We are talking about health care. God forbid something really bad should happen! Everyone should have health care! I mean, in this country they have the idea that health care is a privilege. That some people don’t deserve it? C’mon! No one really believes that. No one. You can go to Europe. France or Italy or England or any country in Europe. If you get sick they will take care of you. They will help you. If I get sick, god forbid, that’s what I will do: Go back home.”

She explained that she paid $600 per month but that was not her real insurance policy. Her real insurance policy was that she could return to Europe if she became seriously ill.

“They will take care of me there, without question. It will not be about the money. What is wrong with this country?”

When the G-20 meet in Pittsburgh this month there will be only one nation represented in which millions of people suffer bankruptcy due to medical debt, only one nation in which health care is deemed a privilege instead of a right, only one nation where more than one sixth of the population lacks access care: the United States of America. The U.S. also sits dead last, 20th out of the G-20, on major health indicators while spending money than all the rest, per person per year, on medical care.

What is wrong with this country?

Single-payer national health insurance is the very least we can do to improve health care in the United States. It will liberate hundreds of billions of dollars now wasted in the private insurance industry, for the good of our health. Everybody in, nobody out.

Having considered four of the major corporate stakeholders in our medical industrial complex — the insurance, drug, and hospital industries as well as business — it is now time to turn our attention to organized medicine. Since physicians order almost all services that are provided within our health care system, they are obviously a key player and interest group in the debate over health care reform.

Organized medicine has a poor track record in terms of reform. Although a universal system of health insurance was considered favorably for a short time by a committee of the American Medical Association (AMA) during Teddy Roosevelt’s abortive attempt to establish such a program during the 1912 to 1917 period, the AMA has played a consistently reactionary role against such reform since then.

During the 1930s the AMA was a much stronger political force than it is today, to the extent that FDR did not include national health insurance as part of his New Deal policies. Three decades later, the AMA fiercely opposed Medicare as socialized medicine and a government takeover. It jumped on the bandwagon only after the American Hospital Association and Blue Cross got together in its support. Its initial opposition, however, soon turned to making best use of the program. Physicians’ fees jumped almost eight percent in the first year after the program was enacted, more than twice the rise in the consumer price index.

Since World War II, organized medicine was fragmented into many smaller specialty and sub-specialty groups. As specialization advanced in following years, the AMA lost much of its political influence. Its membership dropped by 20 percent between 1993 and 2004. Of the approximately 900,000 U. S. physicians today, the AMA’s membership is less than one-quarter, and the “house of medicine” is split into some 180 specialty and sub-specialty organizations and societies.

In the late spring of 2009, President Obama was busy getting the major stakeholders aboard his train for health care reform. We have seen how the insurance, drug and hospital industries made specific pledges in an effort to help pay for reform. While organized medicine made no such specific pledge, it was offered a deal by the White House if it would give its general support to the reform effort.

Once again, it was all about money. Whereas physicians had been facing cutbacks each year in Medicare reimbursement, usually reversed by Congress, the Obama Administration offered $245 billion to physicians as the “doc fix”. At first, the Administration did not want to count this amount as costs of reform, but the CBO soon scored it as the additional costs that they are, coming up with a $239 billion increase in the federal deficit over the next ten years.

So what are the attitudes among these many physician organizations toward the various reform proposals working their way through Congress? True to form, the AMA and most groups are supportive of anything that will increase their  reimbursement while opposing much else in the proposals. Reassured that the “doc fix” would provide more generous Medicare reimbursement (about 20 percent higher than it would have been under the original formula), at least for a time, the AMA and American College of Surgeons (ACS) expressed their support for the center piece of the reform bills — efforts to expand affordable health insurance through employer and individual mandates, subsidies for lower-income people to purchase insurance, and expansion of Medicaid. But for the AMA and most medical organizations, that is where their support melts away. Instead, they vigorously oppose these provisions:

• The public option. In a letter to the Senate Finance Committee, the AMA had this to say: “Creating a public health insurance option for non-disabled individuals under age 65 is not the best way to expand health insurance coverage and lower costs. The introduction of a new public plan threatens to restrict patient choice by driving out private insurers, which currently provide coverage for nearly 70 percent of Americans.”

• An empowered independent Medicare rate-setting commission. The AMA and ACS quickly expressed their opposition when White House budget director Peter Orzag proposed a new federal commission with the authority to set payment policy for physicians, hospitals, and other providers.

• Targeted Medicare reimbursement cuts. In July 2009, the Administration  proposed a plan to cut Medicare payments to cardiologists and oncologists by  more than 10 percent each while increasing reimbursement to family physicians by 8 percent and nurses by 7 percent. This prompted leaders of the American College of Cardiology to warn that “The cuts could have the unintended consequences of rationing care, especially in rural regions with a large number of Medicare patients. In other areas, specialists may decide to pull out of Medicare, or ask patients to make up the difference with higher out-of-pocket payments.”

Organized medicine has become so fragmented that no one group speaks for the profession. In fact, some groups have endorsed major health care reform, even to the point of single-payer national health insurance (NHI). As the second largest medical organization in the country with some 125,000 members, the American College of Physicians (ACP) has endorsed single-payer as one of two major options to reform our system. The American Public Health Association (APHA) has come out in favor of NHI. And of course, Physicians for a National Health Program (PNHP), a growing organization with 16,000 members, has pushed strongly for NHI since it was established in 1989. Meanwhile, many physicians across most specialties have come to see NHI as the only way to provide universal access to affordable health care. A large national survey involving more than 2,200 U. S. physicians in 2008 found that 59 percent support government legislation to establish national health insurance.

In our next post, we will reassess how the “alliance” of these five major stakeholders stack up for or against reform proposals being fought over in Congress.

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

Buy John Geyman’s Books at: http://www.commoncouragepress.com

The politics and attitudes of business toward health care reform can be summed up in two words — fragmented and disunity. Unlike the insurance and drug industries, American business is by no means monolithic. There are big differences between the interests of big business, with its many multi-national corporations, and small business, which employs the majority of Americans. And there are also big differences within the large and small business sectors that put many members at odds with each other over health care reform.

Again, the driving factor driving business attitudes toward health care reform is money, and whether any bill in Congress will cost them more or less than they are now paying. Business of any size needs a healthy work force, but the costs of providing employer-sponsored insurance (ESI) have become an unsustainable burden for those employers providing coverage as well as unaffordable for many, if not most small businesses.

While important details are still in flux in Congress, we can expect that the House bill, as represented by H. R. 3200 will introduce an employer mandate requiring employers to offer health coverage to their employees and contribute at least 72.5 percent of the premium cost for single coverage (65 percent for family coverage) or pay 8 percent of payroll into the Health Insurance Exchange Trust Fund. This is the so-called “pay or play” approach. Small business employers with annual payrolls less than $400,000 would see reductions in their payments to the Exchange and would be exempted entirely if their payrolls are less than $250,000. Amendments by the House Energy and Commerce Committee (E & C) would provide hardship exemptions for employers adversely affected by job losses because of this requirement, fully exempted employers with annual payrolls of less than $500,000 and would reduce the payment schedule for those with payrolls from $500,000 to $750,000. Meanwhile, over in the Senate, under pressure from many business interests, the Finance Committee is considering dropping the employer mandate altogether or just requiring employers to pay for those workers receiving government-subsidized coverage.

Big business, as expected, is wary of the costs of the employer mandate and threatened by new requirements likely to be imposed by the government on their coverage plans. Large employers have long been protected by a little-known 1974 law, the Employee Retirement Income and Security Act (ERISA), which exempts all self-funded employee benefit programs from government regulations. Fearing weakening of ERISA protections, a coalition of large corporations, ranging from American Airlines to Xerox, are objecting to new federal “one-size-fits-all” standards after a five-year grace period.

But Wal-Mart, as the world’s largest private sector employer in the county as well as the world (1.4 million employees in the U. S. and 2 million overall), recently threw a bombshell into the large business community by coming out strongly in favor of an employer mandate. This is a surprise turnabout for Sam Walton’s non-union company, with its long history of avoidance of minimum wage laws and its track record of offering high-deductible health insurance that less than one-half of its low-income labor force can afford to buy.

Reacting to Wal-Mart’s endorsement of the employer mandate, the National Retail Federation (the primary lobbyist for the retail industry) strongly urged its members, which includes 1.6 million businesses and employs about one in five working Americans, to oppose Wal-Mart’s action. Within the retail industry, only 45 percent of retailers provide ESI. Wal-Mart’s break from the retail pack was seen by industry observers as a shrewd tactic to gain political advantage over its competitors.

Other big lobby groups that represent the interests of small business, including the National Federation of Independent Business (NFIB) and the U. S. Chamber of Commerce have long been allied with Republicans and lobbied hard against both an employer mandate and a public option. The Chamber of Commerce, for example, sent more than 50,000 letters to Capitol Hill expressing serious concerns with the pending legislation in Congress. Other new, less conservative groups, such as the Main Street Alliance, took the other side in support of the employer mandate. (Small business owners deliver mixed messages to Capitol Hill. Kaiser Daily Health Policy Report, July 9, 2009)Since the current cost to employers of providing ESI is about $5,000 for individuals and $13,000 for family coverage, most small employers cannot afford to provide coverage. They may have a lot to gain from a government-subsidized individual mandate. The non-partisan Congressional Budget Office has recognized that some employers would likely reduce wages to compensate for the costs of providing new health benefits, but has concluded that most non-exempt small businesses would see little adverse impact on employment or profits. But many employers still worry that they may have to pay more for coverage than they do now, and that health care reform may be a job-killer.

Although lobbying efforts of the business community concerning health care reform are energetic and well funded, they are conflicting and incoherent. While many business groups were generally in favor of reform, as more details emerge in bills taking shape in Congress, many fall into internecine warfare. As an example, although an early coalition had been formed in favor of reform, including the National Federation of Independent Business, the Business Roundtable, the Service Employees International Union (SEIU) and the AARP, only the AARP and SEIU supported H. R. 3200 when it was introduced in the House.

How whatever reform bill that is enacted into law, if any, will affect business is anyone’s guess. The financial impact on business will depend on arcane provisions buried in the small print of a 1000-plus page bill, which will be best understood by accountants and financial analysts. These kinds of provisions will make all the difference to employers — how small business is defined (eg., by less than 25 or 50 employees?); whether or not an employer mandate will be enacted?; what new requirements are added to ERISA?; and what will the penalties be for employers not participating in an employer mandate?.

Most important, none of the proposals now being considered by committees in Congress will rein in health care costs, so employers, employees and their families can look forward to continued escalation of health care prices and costs well above the cost of living and median wages. Business groups are starting to look sideways at industries that will clearly profit from health care “reform”, such as the insurance and drug industries, their Alliance “partners”, fully realizing that their revenues will be passed along to them as increased costs and decreased opportunities.

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

Buy John Geyman’s Books at: http://www.commoncouragepress.com

Insured and in debt: Even with coverage Californians struggle to pay medical bills

UCLA Center for Health Policy Research
August 31, 2009

More than 2.2 million California adults report having medical debt.

1.4 million have medical debt despite having insurance.

Individuals with medical debt are twice as likely as those without debt to delay or forgo needed health care.

“That even insured people are forced to take on medical debt to pay for their health care is another glaring inadequacy in our current system of health insurance,” said E. Richard Brown, director of the UCLA Center for Health Policy Research and lead author of the report, “The State of Health Insurance in California.”

http://www.healthpolicy.ucla.edu/news_08312009.html

Full report (102 pages):
http://www.healthpolicy.ucla.edu/pubs/files/SHIC_RT_82009.pdf

Most individuals who are following health care reform are already aware of the fact that medical debt often contributes to personal bankruptcy, even for those who had been insured. This report adds to that data by demonstrating that medical debt is much more common than is reflected in the bankruptcy data, and is serious enough to have adverse consequences since it often results in individuals delaying or forgoing needed health care.

Two-thirds of Californians with medical debt were insured. The current proposal before Congress calls for a mandate to purchase private plans with very high premiums, with inadequate subsidies, and with an inadequate actuarial value which results in excessive out-of-pocket expenses. This flawed proposal would be a guarantee that medical debt and its adverse consequences shall remain a problem for far too many of us.

Members of Congress may feel that they have too much time and effort already invested in the current proposal to change course now. But that personal investment for a few hundred legislators is absolutely nothing compared to the impact that the legislation will have on the health care of over 307,000,000 of us. They need to start over – now – and do it right.

Rules rein in Medicare Advantage marketing

By Tom Murphy
Associated Press

Regulators clamped down last fall on shady sales practices for privately run Medicare health insurance for the elderly.

But customers and advocate groups say the plans’ confusing nature still leaves room for pitches bordering on the deceptive, and abuses still crop up.

Medicare Advantage plans are privately run versions of the government’s Medicare program, which provides health coverage for the elderly and disabled. The government subsidizes these plans, and the industry has developed what can be a mind-numbing array of them.

Seniors report being pressured with unsolicited phone calls or home visits that are clearly prohibited. Some have signed up for plans that didn’t include their longtime doctors or hit them with unexpected costs, things they learn weeks later.

CMS learns every year about areas that need more vigilance, said Timothy Hill, deputy director for the Center for Drug and Health Plan Choice.

http://abcnews.go.com/Business/wireStory?id=8446040

And…

Some question private Medicare plans’ advantage

By Matt Sedensky
Associated Press

Seniors have flocked by the millions to Medicare Advantage, privately run plans offered as an alternative to traditional, government-run Medicare.

In the debate on overhauling the U.S. health care system, Advantage has been criticized as an example of a broken system that costs too much, confuses enrollees and suffers from a lack of oversight.

But even many backers acknowledge one of its toughest problems is few seniors understand the essential difference in private plans: Even services covered by traditional Medicare that doctors deem medically necessary routinely need the insurers’ advance approval and are sometimes denied.

Participants have been denied visits to specialists, rehabilitation to help them walk again and countless other services they’d be entitled to under traditional Medicare.

“Every decision is based on not what’s right for the patient, but what’s right for the bottom line,” said Dr. Michael Sedrish, who coordinates HMO payments for Medisys Health Network, which runs three New York City hospitals.

With basic Medicare, seniors generally know what sort of coverage they’re getting. That’s not the case with the roughly 7,000 Medicare Advantage plans, where one person’s coverage could be completely different from a next door neighbor’s.

A 2008 Government Accountability Office report found wide differences in enrollee costs depending on the plan, including home health service costs that could be up to 84 percent more than traditional Medicare.

“The plans tell them they have the same coverage,” said Delores Bowman, who handles calls to the Medicare Rights Center, “and they don’t.”

http://www.washingtonpost.com/wp-dyn/content/article/2009/08/29/AR2009082900957.html

What’s beautiful about the Medicare Advantage program is that it has provided us with a real-life laboratory experiment which allows us to compare the functioning of highly-regulated private insurance plans as contrasted with the functioning of a public insurance program: traditional Medicare. The results are in, though that would be tough to ascertain if you simply observe the response of Congress.

What have we learned? The private plans take away the choice of health care providers that the traditional public program offers. The private plans insert intrusive interventions between the patient and the physician – interventions that are not found in the public plans. Private plans divert more resources to excessive, wasteful administrative services while increasing the administrative burden on the health care providers and on the public stewards who must provide oversight of our tax dollars that are diverted to this industry. Private plans also provide more entry points for the criminal element to cheat the taxpayers, patients, and providers. And for this we are paying far more of our tax dollars than we do in the traditional Medicare program for comparable levels of care. The obvious lesson is that we should dump the private plans.

What has Congress learned? They have decided that we should provide more subsidies to the private plans so that they can expand their markets!? And they have apparently decided that we will not even have a genuine public plan because it would provide unfair competition to the private plans because of Medicare’s greater efficiency and lower costs!?

It is true that a fragmented, multi-payer system is much more expensive and much less equitable, leaving too many exposed to suffering and financial hardship. But our Medicare Advantage experiment has demonstrated that it is the private plans that must be jettisoned, and it is Medicare that must be granted to everyone after modest, appropriate reengineering so that it works even better than it does now.

We need to send this urgent message to Congress and the administration, immediately:

IT’S THE INSURANCE COMPANIES, STUPID!

Beware health-industrial complex

By Jack Bernard
Ledger-Enquirer
August 23, 2009

I am a Republican, former chairman of the Republican Party in Jasper County, Ga., and chair of that county commission. Under our two-party system, it is easy to see why we Republicans oppose Democratic Party reform proposals. We are the opposition party and do not want them to get the political credit for solving a nasty problem.

Since the Democrats are in the driver’s seat, it is up to them to lead and bring their stragglers in line. However, the Democrats are fighting internally, failing to articulate a straightforward vision of the future or even one bill (Obamacare, if you will).

Republican pundits are sitting back and chuckling, as they always do when reform is mentioned, and repeating the same self-serving platitudes.

What amazes me is that no one is calling these individuals to account. In my view, it is unpatriotic to continue to lie to the American public about the situation facing us. Over the last 10 years, wages have gone up by about one-fourth. Health insurance premiums have gone up well over 100 percent. We cannot continue along this path to fiscal destruction. Inaction is not an option.

It is also against American values to mislead the public into believing that everyone can get good care even if they do not have insurance. The mark of a great nation is not how well it treats its privileged, but rather how well it treats its downtrodden. On this measure, we fail miserably; strange for a nation that prides itself on being the most religious democracy in the world.

Very few health or insurance professionals advocate for a single-payer system, the best way to control costs and ensure access. I hear all sorts of reasons: rationing (really, like HMOs do not do that now), paperwork (apparently insurance company bureaucracy does not count), socialism (come on — practitioners will still be independent and we all know it) and so forth. It is rare that we hear the underlying cause openly stated: greed. It will cut my income.

The members of Physicians for a National Health Plan are an exception to this rule. If you take a look at their Web site, www.pnhp.org, the rationale for a single-payer system is clearly articulated.

Universal Medicare will both control costs and achieve universal access to high quality care. Congressmen would get the same insurance as you and I. You better believe your coverage would be just as good as or better than what you are getting now.

The problem is not technical; it is political. It is high time we put the country ahead of ourselves and establish a single-payer system.

(Jack Bernard is CEO of Monticello (Ga.) Health Care Solutions and a former chairman of the Jasper County Commission and the Jasper County Republican Party.)

http://www.ledger-enquirer.com/sunday_voices/story/814348.html

If you set politics aside and look at proposed policies for reform, the logic of a single-payer, improved Medicare for all should unite those with views as diverse as a Democrat fighting for health care justice and a Republican demanding common sense business principles that would provide all of us with much greater value in health care.

The Republicans would do well to listen to former Jasper County Republican Party chairman Jack Bernard. But it’s also the Democrats who must lay down their swords and health insurer lobby money, and listen to this gentleman. The price of maintaining a partisan barrier is too high.

Faced with increasing political momentum toward some kind of health care reform, the hospital industry, together with other major stakeholders, wanted to retain a place at the negotiating table and protect its interests in whatever legislation resulted. Urgency increased after the drug and insurance industries offered up their pledges to help with financing reform. Then the stakes increased further when the Obama Administration put out a proposal to cut payments to hospitals by $224 billion over the next ten years to help fund reform.

So a voluntary “preliminary agreement” was struck between the hospital industry, the White House and the Senate Finance Committee pledging that the industry would cut Medicare and Medicaid payments by $155 billion over ten years. Three organizations got together on this pledge: the Federation of American Hospitals (FAH) (the trade group representing investor-owned hospitals), the Catholic Health Association (not-for-profit hospitals), and the American Hospital Association (AHA, representing all types of hospitals). The $155 billion pledge included projections to cut annual Medicare payments to hospitals ($103 billion), reducing re-admissions of patients to hospitals ($2 billion), and lowering federal Medicare and Medicaid payments to “disproportionate share” hospitals that provide care to uninsured and poor patients ($50 billion). The hospital organizations also expressed their cooperation with efforts to improve efficiencies and quality of care as well as testing says to better integrate care, including the possibility of bundled payments.

Once again, as we have seen with the insurance and drug industries, the hospital industry is sharply focused on preservation and growth of future revenue streams. While supporting expansion of insurance through the reform proposals, the industry expressed serious reservations about the public option and an independent commission with authority over Medicare spending.

One especially contentious issue, both within the hospital industry itself and in health policy circles, is the future role of so-called specialty hospitals. These are physician-owned, for-profit facilities that usually specialize in the care of insured patients needing procedures in cardiovascular disease, orthopedic surgery and neurosurgery. They have been criticized for cherry picking the market, not carrying their share of emergency care (they usually do not have emergency rooms), overutilization of procedures, and “triple-dipping” by physicians who self-refer to their own facilities, then receive income from doing the procedure, sharing in the facility’s profit and gaining in the value of their investment.

The political battle over the future of specialty hospitals will be interesting to watch, and will reveal how effective reform can be in reducing perverse incentives and cutting costs in our market-based system. The interests of specialty hospitals are being promoted by the San Diego-based American Surgical Hospital Association, but are being opposed by both the AHA and the FAH, which together represent most of the hospitals in the country.

Tracking Study carried out by the Center for Studying Health System Change has concluded that “ specialty hospitals are contributing to a medical arms race that is driving up costs without demonstrating clear quality advantages”.

As of late August 2009, the House bill would prevent the opening of new specialty hospitals by disqualifying them from receiving payments from Medicare, but would grandfather in existing specialty hospitals. Physician ownership would be restricted to 40 percent. In reaction, specialty hospitals have been lobbying Congress heavily to restrict limits on specialty hospitals. As one example, Doctors Hospital at Renaissasnce in Edinburg, Texas, a 530 bed specialty hospital with physician ownership at the 82 percent level and with much higher levels of costs and utilization than peer hospitals, has raised at least $500,000 in a single fund-raising event for the Democratic Senatorial Campaign Committee as well as more than $800,000 for the Democratic Congressional Campaign Committee.

Other tactics conducted by the hospital industry are generally in favor of health care reform as it is developing, based on its expectation that the large increase in the insured population will lead to increased financial returns for hospitals. Not surprisingly, the Federation of American Hospitals joined in a $12 million advertising campaign to support the goals of the Obama Administration, a new group called Americans for Stable Quality Care, which includes such diverse coalition partners as the AMA, Families USA, PhRMA and SEIU, the service employees’ union.

So what can we say about likely rewards to the hospital industry from health care reform? If events track along as they are heading, hospitals will thrive, better than ever, with more insured people and generous accommodations from government. This statement by Chip Kahn, leader of the FAH for investor-owned hospitals, reflects his confidence in the future: “The hospitals have been for reform all along, so I see the potential for hospitals and our patients to be big winners in this process.”

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

Buy John Geyman’s Books at: http://www.commoncouragepress.com

Employers Face 10.5 Percent Health Care Cost Increases, Says Aon Consulting

Aon
August 25, 2009

Aon Consulting surveyed more than 60 leading health care insurers, representing more than 100 million insured individuals, and found that health care costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for POS plans, 10.7 percent for PPOs and 10.5 percent for CDH plans.

In addition, health care rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans.

http://aon.mediaroom.com/index.php?s=43&item=1676

Under the management of private insurers health care costs continue to increase at outrageous rates – this year at 10.5 percent. With the decision of Congress to leave private insurers in charge, and with no measures that would have any major impact on slowing health care spending, it can be anticipated that these outrageous increases will continue even after reform is enacted.

The Medicare Supplement (Medigap) and Medicare Advantage plans are also private insurance plans, and so you might expect their increases to be similar. In fact, though technically complex, rate setting of these plans is linked to spending in the traditional fee-for-service Medicare program. The fact that rate increases in these programs are lower is not due to any efficiencies instituted by the private plans, but is due to greater efficiency of the public Medicare program.

In fact, there is much waste in these private Medicare programs.

The Medicare Advantage plans are overpaid deliberately to give the plans an unfair competitive advantage over the traditional Medicare program, with the intent of privatizing Medicare. Most of the extra payment is wasted in administration and profits, and what little benefit there is should be given to all Medicare beneficiaries, not just those enrolled in these plans.

The Medigap plans provide the worst value in the private insurance market. The insurers pay a much lower percentage of the premiums they collect for actual health care than they do in any of their other insurance product lines. Americans would be receiving a much greater value if the benefits of the Medigap plans were rolled into the traditional Medicare program, and these wasteful private supplemental plans were totally eliminated.

This Aon report should lead to two obvious conclusions: 1) get the private health plans out of our Medicare program, and 2) replace the private employer-sponsored plans with an improved Medicare program for all of us.

If you agree, let President Obama and the members of Congress hear your message loud and clear. Immediately.

Today’s message is in honor of Sen. Edward M. Kennedy who told us,

“For all those whose cares have been our concern, the work goes on, the cause endures, the hope still lives, and the dream shall never die.”

Special Issue: Exploring the Concept of Single Payer

Single Payers, Multiple Systems: The Scope and Limits of Subnational Variation under a Federal Health Policy Framework

By Carolyn Hughes Tuohy, University of Toronto
Journal of Health Politics, Policy and Law
August 2009

Neither Obama nor any other major contender for the presidency in 2008 proposed a universal single-payer (”Medicare for All”) model. The Obama proposal for a new public plan, to be offered in parallel with regulated private plans through a National Health Insurance Exchange modeled on the Federal Employees Health Benefits Program (FEHBP), would indeed represent a distinctive American hybrid, but it would not be a single-payer system. By definition, a government plan is not “single payer” if it competes with other insurers in offering comprehensive coverage. This is not merely a definitional issue, however: it has critically important implications for the economic and political dynamics of the system. Economically, competition between public and private insurers raises potentially crippling problems of risk selection requiring a regulatory framework that has so far eluded even those European jurisdictions with much longer experience with the regulation of social and private insurance. Politically, such a competitive framework renders the arena much more pluralistic and volatile — and effective regulation therefore much more difficult — than does a pure single-payer model with its central axis of profession-state accommodation.

In 2009, the colliding waves of hope, generated by the election of Barack Obama, and fear, generated by global financial turmoil, may produce (a paradigm shift in U.S. health care policy and a paradigm shift in the political landscape). At the very least, it seems inevitable that they will yield a larger governmental role in the health care arena. The shape of the resulting hybrid, and whether that hybrid has any room for a single-payer element, is much less clear.

http://jhppl.dukejournals.org/cgi/reprint/34/4/453

The fact that the entire August issue of the Journal of Health Politics, Policy and Law is devoted to exploring single payer certainly indicates that the concept has not died within the policy community.

Although a majority (but by no means all) of the political community dismisses single payer as not being politically feasible, much of the policy community accepts it as a feasible policy approach that would bring affordable health care to everyone. Even those opposed based on ideology understand clearly the feasibility of single payer from the policy perspective. Otherwise why would the opponents of reform keep insisting that policies that improve our health care financing would inevitably lead to a single payer system?

Global Drug Discovery: Europe Is Ahead

By Donald W. Light
Health Affairs
August 25, 2009

It is widely believed that the United States has eclipsed Europe in pharmaceutical research productivity. Some leading analysts claim that although fewer drugs have been discovered worldwide over the past decade, most are therapeutically important. Yet a comprehensive data set of all new chemical entities approved between 1982 and 2003 shows that the United States never overtook Europe in research productivity, and that Europe in fact is pulling ahead of U.S. productivity. Other large studies show that most new drugs add few if any clinical benefits over previously discovered drugs.

Policy Reflections

Congressional leaders and others concerned about high prices of new patented drugs will be heartened by this analysis, because lower European prices seem to be no deterrent to strong research productivity. A previous analysis using industry-based data showed that pharmaceutical companies recover all costs and make a good profit at European prices. Europeans are not “free riders” on American patients–another myth promoted by industry that assumes that countries are separate R&D/market silos that should each pay for themselves.

The real innovation crisis for patients and society is not the recent decline in new molecular entities but the small percentage over many years of new molecular entities that provide clinical advantages to patients over existing medications. This longer pattern stems from defining “effective” as better than placebo and using soft surrogate endpoints, or substitute criteria, instead of hard clinical endpoints. As a result, the vast majority of new drugs that constitute 80 percent of U.S. pharmaceutical costs offer few therapeutic advantages and greater risks than good drugs discovered in prior years. High prices for these new drugs enable companies to spend two and a half times more on marketing than on R&D, to persuade physicians to prescribe them and patients to want them. Thus, current incentives reward better marketing more than better value.

If we want new drugs to be clinically superior to existing ones, we need to reward companies for developing them and not for developing drugs that are merely superior to placebo. Arjun Jayadev and Joseph Stiglitz propose a key strategy: pay in terms of clinical value added, as some large purchasers already do and as Consumer Reports Best Buy Drugs does by comparing value with price. Jayadev and Stiglitz also recommend having clinical trials independently run and paid for by a public body such as the National Institutes of Health so that they can be designed to measure comparative advantages and risks over existing treatments. Publicly funded trials would also reduce cost and risk for pharmaceutical companies and increase competition from smaller firms by lowering the high cost barrier that company-funded trials pose. These are some ways in which incentives can be restructured to foster greater competition for clinically superior drugs and to lower overall spending.

http://content.healthaffairs.org/cgi/content/abstract/hlthaff.28.5.w969v1

Arjun Jayadev and Joseph Stiglitz, “Two Ideas To Increase Innovation And Reduce Pharmaceutical Costs And Prices,” Health Affairs, 28, no. 1 (2009): w165-w168
http://content.healthaffairs.org/cgi/content/abstract/28/1/w165

Our uniquely American health care system is noted for its high prices for relative mediocrity. Some contend that our pharmaceutical industry provides an exception. It doesn’t. We are paying high prices for new chemical entities that over 85 percent of the time are providing us with no real benefit over existing products.

Many contend nevertheless that innovations provided by U.S. pharmaceutical firms are well worth our very high prices. Yet productivity of European pharmaceutical firms remains even higher, and they are able to provide new products at much lower prices.

When reform advocates look at the excessive costs of U.S. health care, two favorite targets are the private insurance industry and the pharmaceutical firms. Policies that would reduce these burdens are no secret. Physicians for a National Health Program has described policies that would eliminate the private insurance burden. Arjun Jayadev and Nobel Laureate Joseph Stiglitz, in the article cited above, provide examples of policies that would increase value in our purchasing of pharmaceuticals.

So what is Congress’s response? They intend to expand the dysfunctional private insurance markets, and use more of our tax money for subsidies. For the biotech industry they are expanding data exclusivity thereby keeping generics off the market for longer periods. Reform is going to bring us more overpriced, inadequate private insurance plans and more overpriced pharmaceuticals/biologics.

Tell Congress that reform is not about enhancing the business models of the insurance and pharmaceutical firms. It’s about making health care affordable and accessible for everyone. Go back and get it right.