• By way of the individual mandate, insurers will gain 32 million new enrollees,most requiring government subsidies to either patients or employers.

• The drug industry avoided importation of drugs from other countries and again fended off any role of the government to negotiate drug prices, as the Veterans Administration does so well in getting prices down to about 58 percent of usual costs.

• Existing specialty hospitals, physician-owned facilities that allow physicians to “triple dip” their incomes as providers, owners and investors, were grandfathered in.
But that was only the start of a continuing series of compromises by the Obama Administration that further weaken the bill and add fuel to the accelerating rate of health care inflation. When any of the corporate stakeholders raised objections to one or another part of the “reform” package, their objections were generally met with industry-friendly concessions.

The government had little room to negotiate. Having falsely assured the public from the beginning that they could keep their insurance if they liked it, the government had put itself into a corner where it has to cater to the insurance industry. Otherwise, the market would be “disrupted”, resulting in many people losing their coverage.

Waivers have become the instrument whereby to further coddle the insurance industry, rendering less effective any “teeth” that are in the bill. In the last few months, there have dozens of waivers granted, watering down a number of provisions of the PPACA. Here are some examples:

• When insurers complained that they may have to exit the market if forced to offer coverage of sick children on their parents’ policies, the government obliged by allowing brief open-enrollment periods whereby such coverage would be unavailable for much of the year; insurers were also granted permission to raise premiums for sick children until 2014, to the extent that state laws allow. (1)

• Insurers are still free to set their own premium rates, with little effective restraint by a government which can mostly just protest large increases; most rate-
setting “controls” are at the state level, where regulators tend to be industry-friendly. Thus premiums may be hiked up to 40 percent in the individual market.(2)

• The industry has strongly resisted the law’s requirements to set their medical loss ratios (MLRs) at 85 and 80 percent, respectively, for large employer and small employer/individual plans. That would force them to pay out at least 80 or 85 percent of their premium revenue on medical care. But what counts as “medical care”? The industry lobbied hard for a broad interpretation of that question, to include a number of non-medical expenses, even extending to commissions of insurance brokers. The latest rules, as recommended by the National Association of Insurance Commissioners and adopted by the Department of Health and Human Services (HHS), affect about 75 million people (11 million with individual policies, 24 million with small group coverage, and 40 million with large employer coverage). The insurance lobby won a number of concessions, including counting expenses of quality assurance as medical costs, allowance to deduct many of their taxes from their total premiums before calculating their MLR, and the ability to appeal for a lower MLR standard for up to three years in states where “there is a reasonable likelihood that market destabilization could harm consumers”. Four states have already sought such adjustments—Georgia, Iowa, Maine, and South Carolina. (3)

• Many insurance plans, including most large employers, are already exempt from the PPACA’s provisions. These plans have been “grandfathered in” without PPACA requirements, and have even been given other ways (eg. switching carriers) to keep that status.

• A recent ruling by HHS allows more than 100 employers and other insurers to retain very low annual limits of coverage (eg. only $2,000 a year, hardly qualifying as insurance). Employers such as McDonald’s Corp., after warning regulators that it might have to drop coverage for 30,000 hourly workers, handily won this concession for their “mini-med” policies. (4)

According to economists at the Centers for Medicare and Medicaid (CMS), health care spending will not be cut by the PPACA. By 2019 they expect that U. S. health spending will reach $4.6 trillion, accounting for almost 20 percent of GDP. By then spending on private health insurance will exceed $600 billion a year (32 percent of all health care spending). (5)

As health care inflation proceeds apace, employers are passing on more costs to their employees. Prices continue to soar throughout the system, even accelerating as hospitals and physician groups gain consolidated market clout. This leaves insurers and employers in a weaker negotiating position. Health insurance and care get less affordable every day for much of our population. And federal subsidies under PPACA are more than three years off in 2014, as is Medicaid expansion.

So the health care crisis continues unabated as proponents of PPACA and a defensive Administration posture how much it is helping us. The urgency and stakes for real reform just notch up with each passing month and year. Despite the losses of progressive policies in the recent midterm elections, there is one bright ray of hope in three states—Vermont, California and Hawaii—where the new leadership is supportive of real health insurance reform—single-payer universal coverage without exploitive profiteering by a dying insurance industry kept alive only by government subsidies of one kind or another.

References:
1. Pear, R. U. S. to let insurers raise fees for sick children. New York Times, October 13, 2010.
2. Ostrom, CM. Steep rate hikes on way for individual health insurance. Seattle Times, September 6, 2010.
3. Pear, R. New rules tell insurers: spend more on care. New York Times, November 23, 2010: A22.
4. Adamy, J, Johnson, A. Rules eased for some health plans. Wall Street Journal, November 23, 2010: B1.
5. Adamy, J. Health outlays still seen rising. Wall Street Journal, September 9, 2010: A7.

Adapted in part from Hijacked! The Road to Single Payer in the Aftermath of Stolen Health Care Reform, 2010, with permission of the publisher Common Courage Press.

Even though the new law is just entering its implementation phase, we already know how and why it will fail to meet urgent needs for reform. More fundamental reform that more directly attacks the forces responsible for system problems will be required, sooner rather than later. But to be more successful the next time around, we need to learn the lessons as to how and why this last reform effort went off the tracks if we are to avoid making the same mistakes once again. That is the subject of this post.

Here are some of more important ways in which the politics of reform diverted the process from the real goals of reform, ending up instead with a nearly $1 trillion bill that serves corporate interests in the medical-industrial complex and Wall Street much better than Main Street and ordinary Americans.

1. Framing of the issues and the entire political process were hijacked by the very interests that are largely responsible for the system’s problems of access, cost and
quality. The opening assumption was that we had to build on the existing system, thereby serving the interests of insurers, drug and medical device makers, hospitals, organized medicine and other parts of the system that would resist structural change. Missing from the subsequent health debate were more basic issues, such as whether health care is a right or a privilege based on ability to pay for just another commodity on the open market, and whether the business model underlying our system is consistent with the long-term public interest. Instead, the language of the debate was dominated on the right by defense of markets as the solution and that government is the enemy, and on the left by such meaningless slogans as “competition” and “guaranteed affordable choice”. The debate then devolved to such arcane details as public options, exchanges and triggers, which much of the public found difficult to track and understand.

2. The democratic process was commandeered by corporate money. Corporate interests, intent on expanding their markets through the “reform” bill, pushed their agenda through lobbying, campaign contributions to key legislators, advertising campaigns through disease advocacy groups and Astroturf organizations, and feeding talking points the media (which thrived on the 24-7 coverage of the battle over a year and a half). These examples illustrate this coordinated effort by industry: Industry representatives were often in critical places as illustrated by these examples: (1) (MSNBC. Obama health czar directed firms in trouble) (2) (Center for Public Integrity, as cited in Moyers, B, Winship, M. The unbearable lightness of reform. Truthout, March 27, 2010)
• Elizabeth Fowler, insurance industry representative turned staffer of the Senate Finance Committee, largely wrote that bill.
• Nancy-Ann DeParle, White House Director of the Office of Health Reform, had received $6 million previously while serving on boards of directors of at least half a dozen companies that were targets of federal investigations, whistleblower lawsuits and other regulatory actions.
• By the time the reform law was finally passed, about 1,750 businesses and organizations had hired some 4,525 lobbyists, eight for every member of Congress, at a cost of $1.2 billion.

3. Market failure was not recognized as the wellspring of our system problems. Market advocates were successful in perpetuating the myth that competition in health care markets can rein in uncontrolled costs, even when experience and many studies confirm the opposite. These examples make the point:
• Continuous escalation of prices and costs by drug and medical device manufacturers, hospitals, physicians and other members of the medical-industrial complex.
• A nine-year study by the Community Tracking Study of 12 major U. S. health care markets found these four barriers to efficiency and quality of care: (1) providers’ market power; (2) absence of efficient provider systems; (3) employers’ inability to push the system toward efficiency and quality; and (4) insufficient health care competition, (3) (Nichols, L et al. Are market forces strong enough to deliver efficient health care systems? Confidence is waning. Health Aff (Millwood) 23 (2): 8-21, 2004))
• Consolidation among providers limits choice and competition in many markets. (4) (Kronick, R, Goodman, DC, Weinberg, J, Wagner, E. The marketplace in health care reform. The demographic limitations of managed competition. N Engl J Med 328: 148, 1993)
• A 2006 AMA study found near-monopolies by private insurers in 95 percent of HMO/PPO metropolitan markets. (5) (Associated Press. Study: Health insurers are near monopolies. April 18, 2006)

4. The private insurance industry, already dependent on various kinds of government subsidies, does not offer enough value to retain its 1,300 insurers.
These are the main reasons that the present multi-payer system should be replaced by a not-for-profit single-payer financing system: (6) (Geyman, JP. Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It. Common Courage Press, 2009)
• continued inflation of health care costs, which insurers cannot control.
• growing unaffordability of premiums and health care.
• decreasing coverage of policies with often unaffordable out-of-pocket costs.
• growing economic insecurity and hardship, even for the insured.
• shrinking private insurance markets and cutbacks in public markets.
• adverse selection in shrinking risk pools.
• increasing profits despite declining enrollments (e.g. Aetna profits up by 42 percent in second-quarter 2010). (7) (Veiga, A. Aetna posts higher 2Q profit up 42 percent. Associated Press, July 28, 2010)
• Stockpiling large surpluses even while hiking premiums. (8) (Young, A. Consumer group: Insurers kept surplus while hiking premiums USA Today, July 22, 2010)

5. The Obama Administration has so far been unwilling to confront the special interests and address the real problems. After winning the 2008 election, with the Democrats taking both the House and Senate as well as the White House, the pragmatic and overly cautious incoming president did a 180-degree turn from this statement made five years previously to the Illinois AFL-CIO:
I happen to be a proponent of a single payer universal health care program… (applause)…I see no reason why the United States of America, the wealthiest country in the history of the world, spending 14 percent of its Gross National Product on health care, cannot provide basic health insurance to everybody….But as all of you know, we may not get there immediately. Because first we have to take back the White House, we have to take back the Senate, and we have to take back the House. (9) (Obama. Speech to the Illinois AFL-CIO, June 30, 2003)
As a result of the deals the president made with corporate interests through their voluntary, unenforceable pledges, he joined forces with them in gaining political support for “reform”. But this “alliance” with corporate interests assured that the legislative outcome would meet corporate interests more than those of ordinary Americans. And it leaves the president with little clout to rein in these interests, since he now depends on the PPACA to work. It would be a PR and political disaster if more insurers leave the market, more physicians refuse to see newly “insured” patients, and growing numbers of patients and families see affordable care and choice as disappearing. The state of Maine has already asked the federal government to waive its medical loss ratio (MLR) requirement, fearing disruption of the individual and small business market. (10) (Pear, R. Covering new ground in health system shift. New York Times, August 3, 2010: A13)

6. Policy makers and politicians ignored the lessons of history in attempting incremental “reforms” that had already failed over the last 30 years. Improved access and containment of health care costs have been addressed by many initiatives over the last 30 years, including managed care, employer and individual mandates, tax credits, association health plans, chronic disease management, pay for performance, and expansion of health information technology. Although all have failed to redress these two system problems, they were included in one way or another in the PPACA as more fundamental financing reform, such as shifting to a not-for-profit financing system, was intentionally kept off the table for political reasons.

In sum, the medical-industrial complex won this last battle over health care reform. Robert Kuttner, co-founder of The American Prospect 20 years ago, reminds us of the political challenge ahead: President Obama took office at a moment when free-market ideology, Wall Street hegemony, and conservative incumbency were thoroughly disgraced by recent events. But Obama has not yet been able to translate that failure into a durable progressive counterrevolution. (11) (Kuttner, R. A 20-year odyssey. The American Prospect 21 (7): 3, 2010)

Adapted in part from Hijacked! The Road to Single Payer in the Aftermath of Stolen Health Care Reform, 2010, with permission of the publisher Common Courage Press.

On the potentially positive side of the ledger, PPACA will extend insurance coverage by 32 million people by 2019 (including 16 million on Medicaid); will provide subsidies starting in 2014 to help many lower-income people afford coverage; will eliminate cost-sharing for many preventive services; will provide new funding to increase the capacity of community health centers; will put in place some limited reforms of the insurance industry, such as prohibiting exclusions based on pre-existing conditions and banning annual and lifetime limits; and will establish a new non-profit Patient-Centered Outcomes Research Institute charged with assessing the relative outcomes, effectiveness and appropriateness of different treatments.

All that might at first appear to remedy many of the system problems facing cancer patients, but this is unfortunately not the case, for these kinds of reasons.

1. At least 23 million people will still be uninsured in 2019, while tens of millions more will be underinsured. Exchanges don’t become available to help the uninsured gain coverage for four more years, and even then that coverage may well be unaffordable for many. The individual mandate, as the primary lever to expand coverage in 2014, faces an uncertain future over constitutional challenges; 71 percent of Missouri voters have already opposed that mandate in a referendum. (1) (Landers, P. Missouri voters oppose mandatory health insurance. Wall Street Journal on line. August 4, 2010) Medicaid expansion is delayed until 2014, and then will still be underfunded with many restrictions to care. As one example of recent cutbacks, the University Medical Center, as the only public oncology facility in Nevada, was shut down in 2009 leaving some 2,000 uninsured and underinsured cancer patients stranded. (2) (Pelley, S. The recession impact: Closing the clinic. 60 minutes: Bad economy leaves patients without health insurance in dire straits. April 5, 2009) As the economic downturn continues and the states make further draconian cuts, we can only expect Medicaid coverage to become even less adequate.

2. The rapidly rising costs of cancer care keep going up unabated. Under PPACA, the market still rules on prices.The costs of cancer care increase by about 20 percent a year. (3) (Newcomer, L. Oncology’s perfect storm: The next decade. Am J Manag Care 11 (no. 17, Sup), S507, December 2005) Chemotherapy drugs lead the charge, and drug makers can set their prices with little restraint. As just one example, Ovation Pharmaceuticals raised the prices of four of its drugs by up to 3,436 percent (not a typo!) in 2006, including Cosmegen, its drug for Wilm’s tumor, a cancer of the kidney in children. (4) (Appleby, J. Drug prices up 100% — or higher. USA Today: August 8-10, 2008) By 2007, three approved targeted drugs for cancer were costing about $100,000 a year. (5) (McKoy, JM, Fitzner, KA, Dewards, BJ et al. Cost considerations in the management of cancer in the older patient. Oncology 21 (7): 8522, 2007) Other cancer treatments are also right up there. A course of proton beam therapy for prostate cancer (already over-utilized beyond indications) costs about $50,000. (6) (Pollack, A. Hospitals chase a nuclear tool to fight cancer. New York Times, December 27, 2007)

3. Health insurance and cancer care have become increasingly unaffordable for many patients and families. According to the Kaiser Family Foundation, the average premium for a family of four was $13,375 in 2009. (7) (Fritze, J. Average family health insurance policy: $13, 375, up 5%. USA Today, September 16, 2009) Translating that to affordability terms, the Commonwealth Fund has developed criteria marking when payments become unaffordable, as measured against other essential costs of living—above 10 percent is considered a financial hardship. (8) (Schoen, C, Doty, M, Collins, SR, Holmgren, AL. Commonwealth Fund. Insured but not protected: How many adults are underinsured, the experiences of adults with inadequate coverage mirror those of their uninsured peers, especially among the chronically ill. Health Affairs Web Exclusive, June 14, 2005) That means that an annual household income of $130,000 a year would be required to cover health insurance without financial hardship, quite aside from the costs of health care themselves if family members get sick! And the cost of health insurance is going up by 10 to 13 percent in 2010, depending on type of plan. (9) (Moeller, P. Double-digit medical expense trend to continue. U. S. News & World Report, September 3, 2009) The PPACA will not help this problem. The Congressional Budget Office has projected that annual family insurance premiums in 2016 will cost more than $20,000, not including deductibles and other out-of-pocket costs, despite implementation of the new health care “reform” law. (10) (Congressional Budget Office. An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act. November 30, 2009) The actual costs of health care are an even bigger burden for patients and families than insurance, especially for cancer care. Even for those with insurance, out-of-pocket expenditures keep going up as more cost-sharing is added through deductibles, co-payments and coinsurance. As the costs of chemotherapy drugs continue skyward, insurers typically require enrollees to pay coinsurance of 20 to 33 percent toward the cost of these drugs. If uninsured, the costs are even higher since hospitals typically charge them rates that are almost 2.5 those charged to insurers. (11) (Anderson, GF. From ‘soak the rich’ to ‘soak the poor’: recent trends in hospital pricing. Health Aff (Millwood) 26: 780-89, 2007) Thomson Reuters reported in 2008 that one in four patients with advanced cancer with annual incomes less than $40,000 were refusing recommended treatment because of cost. (12) (Szabo, L. Study: Many cancer patients foregoing care because of cost. USA Today, October 13, 2008) And the recession of the last two years now finds an increasing number of patients reducing or stopping their life-extending chemotherapy drugs in hopes of their precious supplies lasting longer, but instead resulting in rapid regrowth of their cancers. (13) (Gardner, A. Recession causing cancer patients to quit life-extending drugs. Bloomberg BusinessWeek, August 4, 2010)

4. The PPACA will end up reducing choice of coverage for many Americans. The Exchanges will not be open for business until 2014, and then only for the uninsured and some small businesses. Affordability of adequate coverage through Exchanges remains open to question. And for those already insured, the trend is toward more restricted choice. The country’s biggest health insurers are now testing plans with tightly controlled networks of providers that will often force the insured to change physicians or pay much higher costs for the privilege of keeping their own doctors. (13) (Abelson, R. Insurers push plans that limit choice of doctor. New York Times, July 27 2010)

5. Insurance “reforms” won’t prevent insurers from gaming the new system, maximizing their own profits as their underinsurance products become ever less adequate. Insurers still have many ways to get around some of the regulations put in place by PPACA. For starters, existing insurance plans were grandfathered in without having to implement such requirements as stopping the use of pre-existing conditions to deny coverage. Annual and lifetime caps won’t be implemented until 2014; even then existing plans are permanently exempted from both requirements. (14) (Andrews, M. Caps on coverage. A big point of conflict. New York Times, January 27, 2010: A:15) As the rules get written by the Department of Health and Human Services (HHS), insurers are lobbying hard for regulations least restrictive to their business practices, such as counting many administrative costs as direct patient care (e.g. calculations of medical loss ratios (MLRs), credentialing of physicians, quality assurance initiatives). They have wide latitude to set their premium rates despite the concerns of regulators. Plans can still deny coverage or even cancel policies. They have already forced the government to backpedal on the requirement that they offer coverage to children up to 26 years of age on their parents’ policies—insurers are now permitted to set limited signup periods for such coverage, such as just one month a year. (15) (Associated Press. Health insurers win concession on kids’ coverage. July 29, 2010) In Florida, Blue Cross and Blue Shield, Aetna and Golden Rule (a subsidiary of UnitedHealth) have notified the insurance commissioner that they will stop issuing individual policies for children. (16) (Alonzo-Zaldivar, R. Some insurers stop writing new coverage for kids. Philly.com, July 27, 2010)

One of the most critical rule-setting matters before HHS is the definition of minimal benefits, still pending. Many insurers now have fine-print restrictions in their policies that cancer patients find too late, such as steep surcharges for top-tier hospitals and higher coinsurance for Tier 4 chemotherapy drugs and radiation therapy. (17) (Court, J. Insurance: you pay, they bait and switch. Los Angeles Times, May 8, 2002) More than one-half of enrollees in private Medicare plans have no annual limits on their out-of-pocket costs, and many of these plans exclude coverage for chemotherapy. (18) (Medicare Rights Center. Clean house. Asclepios 8 (10), March 6, 2008)

6. The quality of cancer care will still suffer on two counts—the under-use of necessary care and the over-use of some services of marginal value that at times are even harmful. Although the PPACA may alleviate some of the access barriers for some cancer patients at least four years down the road, the main cost and affordability barriers will continue with little restraint so that many cancer patients will under-use essential care. Since most reimbursement policies are not significantly altered and perverse incentives for physicians and hospitals to provide more services will continue, over-utilization of services of marginal value will remain a system problem. One common example makes the point. Radical prostatectomy is still performed in 60 percent of American men less than 75 years of age, often resulting in bowel, urinary or sexual dysfunction; many of these men did not need surgery in the first place. (19) (Bill-Axelson, A, Holmberg, L, Ruutu, M et al. Radical prostatectomy versus watchful waiting in early prostate cancer: The Scandinavian Prostate Cancer Group-4 randomized trial. J Natl Cancer Inst 100 (16), 2008) (20) (Wilt, TJ. SPCG-4: A needed START to PIVOTAL Data to Promote and Protect Evidence-Based Cancer Care. J Natl Cancer Inst 100 (16): 1123-5, 2008) The new Patient-Centered Outcomes Research Institute will not be operational until near the end of this decade, and then will not be empowered to set coverage and reimbursement policies based on clinical efficacy and cost-effectiveness.

So, back to our original question, in view of the above, we have to conclude that the new health care law, the PPACA, may make some marginal gains in a few areas, but will not remedy access and quality problems in cancer care, and will leave many patients and families in even more desperate straits than they are now. In essence—too little and too late. More fundamental reform will be required to redress the excesses of our market-based system, as we will consider in our next posts.

Adapted in part, with permission of the publisher, Common Courage Press, from The Cancer Generation: Baby Boomers Facing a Perfect Storm (2009) and Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform (2010).

•  Adequate—timely access to the full range of evidence-based health care including prevention and early detection.
•  Affordable—costs are based on the person’s ability to pay.
•  Available—coverage available regardless of health status or prior claims.
•  Administratively simple—processes are easy to understand and navigate. (1) (Sack, K. Cancer society focuses its ads on the uninsured. New York Times, August 31, 2007)

Access barriers take a wide variety of forms and affect many disadvantaged groups within the U. S. population. The single most important aspect of access is the status of the patient’s health insurance coverage. (2) (Siminoff, LA, Ross, L. Access and equity to cancer care in the USA: a review and assessment. Postgrad Med J 81: 674, 2005) For all types of cancer, the uninsured are 1.6 times more likely to die within five years compared to cancer patients with insurance. (3) (Ward, E, Halpern, M Schrag, N et al. Association of insurance with cancer care utilization and outcomes. CA Cancer J Clin 58: 19-20, 2008) 8/1/9

The lack of health insurance is much more common among racial and ethnic minorities than among whites. According to the U. S. Census Bureau, when 15.9 percent of the population was uninsured in 2005, the uninsurance rate for whites was 11.3 percent compared to 19.6 percent for non-Hispanic blacks and 32.7 percent for Hispanics. (4) (Income, poverty, and health insurance coverage in the United States: 2005, update.)

These examples illustrate how the lack of insurance adversely impacts patients with cancer across the entire spectrum of care:
•  Women aged 40 to 64 without insurance are only half as likely to have had a mammogram within the last two years as those with insurance. (5) (Ibid #3)
•  One in four uninsured cancer patients delay or forego care because of cost. (6) (Ibid #3)
•  Uninsured African-American women with breast cancer have a five-year survival rate of only 63 percent compared to 89 percent for insured Caucasian women. (7) (Ibid # 3)
•  Cancer has become a chronic disease for the estimated 12 million cancer survivors in this country, many of whom have co-morbidities such as heart disease, diabetes and arthritis as well as under-recognized and under-treated anxiety and depression. A 2008 national study found that uninsured cancer patients were three times more likely than their insured counterparts to have not seen health professional in the last year, twice as likely to have no regular source of care, and five times more likely to use the emergency room for care. (8) (Wilper, AP, Woolhandler, S, Lasser, KE et al. A national study of chronic disease prevalence and access to care in uninsured U. S. adults. Ann Intern Med 149: 170-76, 2008)

Under-insurance is another big problem for many patients with cancer, since many insurance policies provide little protection against the rapidly rising costs of cancer care. Two examples illustrate the financial burdens placed on cancer patients and their families even when insured:

•  Despite being consistently insured, a 2006 study by the Kaiser Family Foundation and the Harvard School of Public Health found that almost one-half of cancer patients used up most or all of their life savings, while 8 percent were turned away or unable to get a specific treatment because of insurance issues and 3 percent ended up declaring bankruptcy. (9) (Kaiser Family Foundation. Survey of families affected by cancer shows people with and without health insurance suffer serious financial hardships. USA Today/Kaiser Family Foundation/Harvard School of Public Health National Survey of Households Affected by Cancer, November 20, 2006)
•  Some “insurance” policies are ludicrous in the extent of their undercoverage—one example is the limited-benefit basic cancer policy marketed by AllState, starting at $420 a year for family “coverage”, which pays a one-time benefit of $2,000 if diagnosed for the first time with cancer (other than skin cancer). (10) (McQueen, MP. The shifting calculus of workplace benefits. Wall Street Journal, January 16, 2007: D1)

Do patients with cancer covered by Medicare and Medicaid fare any better than their counterparts with or without private insurance? Here again, their access to care falls far short of their needs. An increasing number of physicians will not accept new patients on Medicare or Medicaid because of low reimbursement. Medicare Advantage plans may impose high cost burdens on patients who are referred to out-of-network physicians and facilities for cancer care, sometimes leading to disenrollment. (11) (Medicare Rights Center. Why consumers disenroll from Medicare private health plans. Summer 2010) Medicaid remains an underfunded porous safety net with many restrictions on coverage varying from state to state. (12) (Ramirez de Arrelano, AB, Wolfe, SM. Unsettling Scores: A Ranking of State Medicaid Programs. Washington, D.C. Public Citizen Health Research Group, April 2007)  Medicaid enrollees are more likely to have late-stage cancers when diagnosed, resulting in worse outcomes. (13) (Halpern, MT, Ward, EM, Pavluck, AL et al. Association of insurance status and ethnicity with cancer stage at diagnosis for 12 cancer sites: A retrospective analysis. Lancet Oncol 9 (3): 222-31, 2008) Many oncologists refuse to provide chemotherapy for Medicaid patients in their offices due to low reimbursement, sending them on to hospitals. (14) (Lung Cancer Connections. Caring 4Cancer. An introduction to Medicaid. Web site accessed October 31, 2008)

Because of access barriers to care and other factors in our market-based system of care (based as it is on ability to pay, not medical need), the quality of care for cancer patients in our present system leaves much to be desired for these kinds of reasons:

•  Perverse financial incentives pervade our business-oriented health care system. Hospitals and physicians make higher revenues by providing services that are often unnecessary, inappropriate or even harmful. When Medicare reduced reimbursement rates for outpatient chemotherapy drugs in 2005, oncologists switched from drugs that were most reduced in profitability to other high-margin drugs at increased cost but without good evidence of improved outcomes. (15) (Jacobson, M, Earle, CC, Price, M, Newhouse, JP. How Medicare’s payment cuts for cancer chemotherapy drugs changed patterns of treatment. Health Affairs 29 (7): 1391-99, 2010)  A 2008 study by United Health found that Procrit, a very expensive anti-anemia drug also highly remunerative to prescribing oncologists, was being prescribed for about one-third of patients who were not anemic at all. (16) (Culliton, BJ. Interview: Insurers and ‘targeted biologics’ for cancer: A conversation with Lee N Newcomer. Health Affairs Web Exclusive 27 (1): W 41-W51, 2008)  More than 30 million full-body CT scans are performed each year for screening purposes despite the lack of evidence of benefit or the approval by the FDA or the American College of Radiology. (17) (Brenner, DJ, Hall, EJ. Computed tomography—An increasing source of radiation exposure. N Engl J Med 357: 2277-84, 2007)  Over-screening, over-diagnosis and over-treatment of prostate cancer are endemic in this country, without evidence of improved outcomes. A 2009 report of a randomized ten-year trial of 76,000 American men found that widespread screening does not lower the death rate from the disease. (18)  (Andriole, GL, Grubb, RL, Buys, SS et al. Mortality results from a randomized prostate-cancer screening trial. N Engl J Med online. March 18, 2009).  Dr. Peter Bach, oncologist at Sloan-Kettering Cancer Center and former senior advisor on health care quality at the Centers for Medicare and Medicaid Services (CMS), estimates that 30 to 40 percent of spending on cancer care is of marginal value. (19) (Bach, P, as quoted in McNeil, C. Sticker shock sharpens focus on biologics. News. J Natl. Cancer Inst 99 (12): 911, 2007)
•  We have an industry-friendly system of deciding what services and treatments will be covered. Coverage policies are not rigorously evidence-based, and the use of cost-effectiveness as a criterion for coverage decisions is vigorously opposed by industry. Many expensive and toxic drugs are used for indications beyond FDA approval—so-called “off label” use. In 2009, Medicare coverage of off-label cancer drugs was expanded despite the lack of clinical evidence for effectiveness. (20) (Abelson, R, Pollack, A. Medicare widens drugs it accepts for cancer care: More off-label uses. New York Times, January 27, 2009)
•  Quality of care breaks down at the interface between primary care and oncology-related subspecialty care. A just-published monograph by the National Cancer Institute documents the scope and magnitude of this serious problem, ranging from lack of communication and collaboration to overlapping and ambiguous roles. (National Cancer Institute. Division of Cancer Control and Population Sciences. Toward Improving the Quality of Cancer Care: Addressing the Interfaces of Primary and Oncology-Related Subspecialty Care. Number 40, 2010)  For the best quality of care, cancer patients need to be followed by both groups of physicians working together in their areas of expertise. One study of almost 15,000 survivors of colorectal cancer, for example, found that patients followed by oncologists were less likely to receive influenza vaccination, cervical screening and bone densitrometry, while those followed by primary care physicians reported less screening by colonoscopy and mammography. (21) (Earle, CC, Neville, BA. Under-use of necessary care among cancer survivors. Cancer 101 (8): 1712-19, 2004) Continuity of primary care throughout the care of cancer from screening to survivorship is essential to the best outcomes. We cannot expect subspecialists to care for co-morbidities so common among cancer patients, and treatment decisions often require consideration of co-morbidities, personal and family considerations.

As is clear from the above, access and quality of care are closely entwined and multi-dimensional. Addressing these problems is a complex challenge since they are embedded in a dysfunctional health care system. But that is the subject of our next post, which will consider to what extent the new health care reform law, the Patient Protection and Affordable Care Act of 2010, can remedy these problems.

Adapted in part from The Cancer Generation: Baby Boomers Facing a Perfect Storm, 2009, with permission of the publisher, Common Courage Press.

On the positive side of the ledger, the PPACA brings some welcome changes:

• Will extend health insurance to 32 million more people by 2019.
• Provides subsidies to help many lower-income Americans afford health insurance.
• Starting in 2014, expands Medicaid to cover 16 million more lower-income people.
• Provides new funding for community health centers that could enable them to double their current capacity.
• Eliminates cost-sharing for many preventive services.
• Phases out the “doughnut hole” coverage gap for the Medicare prescription drug benefit.
• Will create a new national insurance plan for long-term services: Community Living Assistance Services and Supports (CLASS) program.
• Will establish a nonprofit Patient-Centered Outcomes Research Institute to assess the relative outcomes, effectiveness and appropriateness of different treatments.
• Initiates some limited reforms of the insurance industry, such as prohibiting exclusions based on pre-existing conditions and banning of annual and lifetime limits.
• Contains some provisions to improve reimbursement for primary care physicians and expand the primary care workforce.

On the negative side of the ledger, however, these are some of the reasons that the PPACA will fall so far short of needed health care reform that it is not much better than nothing:

• Surging health care costs will not be contained as cost-sharing increases for patients and their families.
• Uncontrolled costs of health care and insurance will make them unaffordable for a large and growing part of the population.
• At least 23 million Americans will still be uninsured in 2019, with tens of millions more underinsured.
• Quality of care for the U. S. population is not likely to improve.
• Insurance “reforms” are so incomplete that the industry can easily continue to game the system.
• New layers of waste and bureaucracy, without added value, will further fragment the system.
• With its lack of price controls, the PPACA will prove to be a bonanza for corporate stakeholders in the medical-industrial complex.
• Perverse incentives within a minimally-regulated market-based system will still lead to overtreatment with inappropriate and unnecessary care even as millions of Americans forego necessary care because of cost.
• The “reformed” system is not sustainable and will require more fundamental reform sooner than later to rein in the excesses of the market.

How did this latest reform effort get so far off track? Here are three of the major reasons:

• The issues and policy options were framed as the political process was hijacked by the very interests that are largely responsible for today’s cost, access and quality problems in health care. As examples, the drug industry lobbied successfully to avoid any price controls of drugs, as the VA does so well; the insurance industry avoided real rate controls over their premiums and ended up with other loopholes to game the new system; and all of the corporate stakeholders will gain subsidized new markets without significant regulation of the market.
• The quest for bipartisanship was futile as reform got run over in the middle of the road. The big questions cannot be answered in the political center, such as whether health care should be a right or a privilege, or whether health care resources should be allocated based on ability to pay or medical need.
• Market failure was not recognized as the wellspring of our system problems. When it was agreed to “build on the strengths of the present system” instead of more fundamental reform, corporate stakeholders and their lobbyists found willing legislators to craft centrist “remedies” which could be sold to the public as  reform. But the various incremental tweaks of our existing system, such as employer and individual mandates, have failed over the last 20 or 30 years to remedy cost, access and quality problems.  In the absence of real health care reform, we can now expect these kinds of unfavorable outcomes in coming years:

• soaring costs without effective price controls throughout the system.
• managed care fails to control costs or improve quality.
• persistent financial and other access barriers for many millions of Americans.
• growing backlash by physicians and consumers.
• gaming of private plans and adverse selection in public plans.
• consolidation among hospitals sustaining high prices.
• increased cost-sharing for employees as employers cut back benefits.
• continued high levels of inappropriate and unnecessary care.
• added bureaucracy and waste in an even more fragmented and dysfunctional system.

We have yet to learn that an unfettered health care marketplace can only perpetuate our problems, not fix them. Most industrialized nations have learned this many years ago, and are able to achieve better quality of care with improved outcomes for their populations even as they spend much less on health care than we do. We have to conclude that a larger role of government will be required to assure real and sustainable health care reform.

There is a fix in plain sight for our problems — single-payer financing coupled with a private delivery system. The private insurance industry has outlived its usefulness, and is only being kept alive by government subsidies, whether by overpayments of private Medicare plans or this latest provision in the PPACA to pay out nearly half of a trillion dollars in subsidized premiums for their inadequate coverage.

When will we have the political will to face up to our real problems in health care and show that the democratic process can still work?

Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. http://commoncouragepress.com/index.cfm?action=book&bookid=402

For starters, quality of care in the U.S. is highly variable, and is unsatisfactory for many millions of Americans, as these cross-national comparisons against other nations with one or another form of universal access clearly show:

• The U.S. ranks last among 19 industrialized countries in “amenable mortality rates,” deaths that could have been prevented by timely and effective health care; that translates to about 101,000 excessive deaths per year in this country. (Nolte, E, McKee, CM. U.S. has most preventable deaths among 19 nations. Health Affairs 27 (1):58-71, 2008)

• The U.S. ranks last among 23 industrialized nations on infant mortality, with rates double those of Iceland, Japan and France. (Schoen, C, Davis, K, How, SKH, Schoenbaum SC. U.S. health system performance: A national scorecard. Health Affairs Web Exclusive, W457-475, 2006) http://www.commonwealthfund.org/Content/Publications/In-the-Literature/2006/Sep/U-S–Health-System-Performance–A-National-Scorecard.aspx

• Lower-income people in this country receive worse care than their higher- income counterparts on 21 of 30 primary care quality measures, four to five times higher rates of disparity compared to Australia and Canada. (Huynh, P, et al. The U.S. health care divide. Commonwealth Fund, April 2006)

On the plus side, the PPACA does make some attempts to improve the quality of care through such provisions as these: expanded access to care; elimination of cost-sharing for preventive services; establishing a comparative effectiveness research initiative; expansion of health information technology (HIT); and modification of payment mechanisms (e.g. accountable care organizations, or ACOs, and “value modifiers” for physician reimbursement).

But these are important ways that will largely cancel out the impact of these efforts to improve the quality of care:

• We can expect an increase in cost-sharing (with reduced affordability) as employers downgrade the actuarial value of their coverage and as insurers market their underinsurance products in the individual market and through exchanges. A recent study of Medicare Advantage plans found that increased co-payments resulted in fewer outpatient visits, more hospital admissions and longer hospital stays for patients with hypertension, diabetes and a history of acute myocardial infarction. (Trivedi, AN, Moloo, H, Mor, V. Increased ambulatory care copayments and hospitalizations among the elderly. N Engl J Med 363 (4):320-8, 2010)

• The critical shortage of primary care physicians and an underfunded primary care infrastructure persist as our specialist-dominated workforce continues to provide more care than is appropriate or necessary, with less coordination and worse outcomes. For optimal quality of care, patients need both primary care and appropriate specialist care. (Parchman, M, Culter, S. Primary care physicians and avoidable hospitalization. J Fam Pract 39: 123-6, 1994) (Beal, AC, Doty, MM, Hernandez, SE, Shea, KK, Davis, K. Closing the divide: How medical homes promote equality in health care: results from the Commonwealth Fund 2006 Health Care Quality Survey)

• The new Patient-Centered Outcomes Research Institute lacks the authority to mandate or even endorse coverage and reimbursement rules for any particular test or treatment. (Kaiser Health News staff. True or false: Seven concerns about the new health care law. March 31, 2010)

• Perverse incentives will still permeate the system because of largely unchanged reimbursement policies (mostly fee-for-service) and coverage decisions influenced more by politics and lobbying by industry than hard scientific evidence of efficacy and cost-effectiveness. Procedures will continue to be over-reimbursed, primary and cognitive care services will remain under-reimbursed, and there will be little restraint over excess volume of services in most practice settings. These are examples of how big this problem is:

• One-third of U.S. births today are by Caesarian section (compared to a national average of just 5 percent in the 1960s). (Neergaard, L. Overtreated: More medical care isn’t always better. Associated Press, June 7, 2010)

• About one-third of tests and treatments are inappropriate or unnecessary and often harmful. (Wennberg, JB, Fisher, ES, Skinner, JS. Geography and the debate over Medicare reform. Health Affairs Web Exclusive W-103, February 13, 2001)

• Investor-owned hospitals, HMOs, nursing homes and mental health centers provide more expensive care of lower quality than not-for-profit facilities. (Geyman, JP. The Corrosion of Medicine: Can the Profession Reclaim its Moral Legacy? Monroe, ME. Common Courage Press, 2008, p 37)

• Well-reimbursed imaging procedures are greatly overused, thereby increasing risk of cancer; as an example, a recent report found that Illinois hospitals are using twice as many double CT scans (one with dye, the other without) than the national average, believed by many experts to be unwarranted. (Graham, J. New government report raised questions about CT scans at Illinois hospitals. Chicago Tribune, July 12, 2010)

• Wider adoption of health information technology has not been demonstrated to improve outcomes of care in most non-integrated parts of our health care “system”; most of the increase in medical computing has been driven by financial and billing reasons, not quality of care. And most quality improvement efforts have been based on process measures, such as use of beta blockers after a heart attack or use of hemoglobin A1C in diabetes, without good correlation with actual outcomes. (Chaudhry, B, Wang, J, Wu, S, Maglione, M, Mojica, W, et al. Systematic review: Impact of health information technology on quality, efficiency and costs of medical care. Ann Int Med 144 (10):742-52, 2006) (Himmelstein, DU, Wright, A, Woolhandler, S. Hospital computing and the costs and quality of care: A national study. Amer J Med 123 (1):40-6, 2010)

• The long-delayed experiments with accountable care organizations and bundled payments are likely to be ineffective in improving quality of care in non-integrated practice settings which involve non-salaried physicians. So despite what we are being asked to believe by supporters of PPACA, we cannot really expect much, if any, improvement in the quality of care for the U.S. population as a result of this legislation.

Adapted from Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform, 2010, with permission of the publisher Common Courage Press. www.commoncouragepress.com

On the plus side, the PPACA does offer these welcome provisions:

• Extending health insurance to 32 million more people by 2019.

• Allowing parents to keep their children on their policies until age 26.

• Expansion of Medicaid to cover 16 million more lower-income Americans.

• New funding for community health centers that could allow them to double their patient volume.

However, on the other side of the ledger, there are many problems that will render restricted access to care for tens of millions of Americans, an ongoing and even increasing problem. These examples show how far short of the mark the PPACA falls on access to care:

• There will still be 23 million people without any kind of health insurance in 2019.

• Federal support for Medicaid expansion will not kick in until 2014.

• More than 32 million other Americans will be under-insured in 2019, as a result of these kinds of circumstances:

1. Many younger healthier people, the “Young Invincibles,” will opt out of coverage until they have an accident or get sick.
2. Many people will not be able to afford coverage through either exchanges (which won’t be operational until 2014) or high-risk pools.
3. The new federal temporary high-risk pool is already underfunded and plagued with many problems; at best, it will be available for up to 7 million uninsured people, but more likely for only about 200,000 or 3 percent of the target population. (Merlis, M. Health coverage for the high-risk uninsured: Policy options for design of the temporary high-risk pool. National Institute for Health Care Reform. May 27, 2010.)
4. The actuarial value of insurance plans for most of the newly “insured” will be as low as 60 to 70 percent (i.e. insurers leave 30 percent to 40 percent of the bill with patients and their families).
5. Even those fortunate enough to have employer-sponsored (ESI) coverage will find their plans costing more, covering less, and more difficult to afford; the Congressional Budge Office projects that the average family premium in the ESI market in 2016 will cost more than $20,000, not including deductibles and other out-of-pocket expenses. (Congressional Budget Office. An Analysis of Health Insurance Premiums Under the Patient Protection and Affordable Care Act. Nov. 30, 2009.)
6. Access to care will further deteriorate as a result of 36 billion in Medicare and Medicaid cuts to safety-net hospitals. We can expect closure of some of these critical facilities that provide a wide range of services that other hospitals find too unprofitable to provide, including kidney dialysis, cancer treatment and mental health care.
7. Although the PPACA does call for an increase in reimbursement for primary care physicians, that won’t happen until 2013, and will then last only two years — just a small gesture toward the nation’s growing crisis in primary care.
8. The U.S. is facing a shortage of 35,000 to 44,000 primary care physicians for adults by 2025 (Colwill, J, Cultice, JM, Kruse, RL. Will generalist physician supply meet demands of an increasing and aging population? Health Affairs [Millwood] 27: w232-41, 2008.) An increasing number of people with insurance coverage cannot find a primary care physician to take care of them, especially those on Medicare or Medicaid, due to low reimbursement in those programs.
9. Since the PPACA calls for phased cuts in overpayments to private Medicare Advantage plans over the next few years, enrollees will face cuts in benefits and rising premiums.
10. As they confront deficits of 127 billion over the next two fiscal years, states are making draconian cuts in Medicaid across the country that will only aggravate current barriers to care. State appeals to the federal government for relief of Medicaid costs are now caught in a political crossfire threatening further unraveling of Medicaid funding. (Solomon, D. States face new pinch as stimulus ebbs. Wall Street Journal, June 23, 2010: A5.)
11. A majority of states outsource their Medicaid programs to private insurers that frequently create profits by cutting services. A recent report found that 2.7 million children on Medicaid in nine states were not receiving required screenings and immunizations. In Florida, the insurer WellCare paid 40 million in restitution to the state after it acknowledged that it had set up a subsidiary to make it appear that it was spending more on health care than it actually was. (MacGillis, A. Some states say they’re not receiving the Medicaid services they’re paying for. The Washington Post on line, July 8, 2010.)

Despite the hype we hear about “near-universal” access just down the road with PPACA, the above leads us to believe that access to care will remain inadequate for much of the population. In our next post, we will look at what this year’s health care “reform” legislation means for the quality of care Americans receive.

Adapted from “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” 2010, with permission of the publisher Common Courage Press. www.commoncouragepress.com

During the long run-up to this bill, President Obama told us that it would save the average American family $2,500 a year on insurance premiums (a claim that the Congressional Budget Office later dispelled as untrue, instead projecting a $2,300 increase in premium costs for the average family). (1) (Hemingway, M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner on line, March 10, 2010)

The inconvenient fact is that premiums for families enrolled in employer-sponsored health plans from 2000 to 2008 increased by 97 percent, while those enrolled in individual plans increased by 90 percent; during this period, insurers’ payments to providers rose by 72 percent, medical inflation increased by 39 percent, wages grew by 29 percent and overall inflation went up by 21 percent. (2) (Health Care for America Now! (HCAN). Insurance industry inflates rates while falsely blaming new health care law. June 2010)

According to a recent survey by the Council of Insurance Agents and Brokers, more than one-half of smaller employers with 50 or fewer employees will face premium hikes for group policies in the 11 percent to 20 percent range for 2011. (3) (Wojcik, J. Group health insurance rates on the rise: Survey. Business Insurance, June 3, 2010)

So how in the world can we expect the new health care “reform” legislation to actually make health care and health insurance more affordable?

The new law promised not only cost savings but also provided for $476 billion (almost one-half of the total $1 trillion cost of the law in its first 10 years) in new federal subsidies to help lower- and middle-income Americans to pay for health insurance. We need to ask whether the promised cost savings are likely to materialize and whether the subsidies will help that much.

For openers, cost savings are an illusion. Supporters of PPACA assure us that several approaches will contain health care costs – such as an increase in wellness and prevention programs, wider application of health information technology, and experimentation with such initiatives as “accountable care organizations” and tweaks to the fee-for-service reimbursement system. Most are delayed for years into the future and none have yet been demonstrated to save money for patients and their families.

The cost of health care is certain to rise exponentially as far as we can see, since the market controls prices and the volume of services in a deregulated non-system. And insurance premiums are also certain to rise rapidly at rates way above the cost of living and median household income based on various industry-friendly loopholes in the law and gaming by the industry. These examples show how easy it will be for the industry to continue to exploit the public through both private and public programs:

• Under the new law, insurers can raise premiums based on age (by a 3:1 ratio), by geographic area, by the number of family members, and by tobacco use (by a 1.5 to 1 ratio).

• Many insurers are now aggressively marketing “wellness plans” in both private and public plans. One example is the Healthways SilverSneaker’s membership fitness plan for seniors enrolled in Medicare Advantage plans. This is a clever strategy for insurers in two ways – they cherry-pick healthier seniors without infirmities that prevent their participation in such programs and then they charge 20 percent higher premiums to those seniors not enrolled in fitness programs. (4) (Blue Shield of California. Blue Shield of California to offer award-winning fitness program to Medicare beneficiaries in San Bernardino. January 18, 2010) (5) (Britt, R. Experts: Critical loophole in Senate health bill. Market Watch. January 7, 2010)

• Many healthier younger people will gamble with being uninsured until they get sick, in order to avoid paying fines for noncompliance with the individual mandate. This has already happened in Massachusetts over the four years since the “Massachusetts Miracle” was adopted in 2006. Since then, the number of short-term insurance buyers has increased by four-fold, getting insurance only after they have health care problems, then dumping coverage after they get care. This has increased the cost of insurance for other people and costs the state’s program an additional $300 million a year. (6) (Lazar, K. Short-term insurance buyers drive up cost in Mass. The Boston Globe, June 30, 2010) (6) (Lazar, K. Short-term  insurance buyers drive up cost in Mass. The Boston Globe, June 30, 2010)

People with employer-sponsored group coverage will also take hits. As employers confront hikes in the costs of group coverage, they will pass along these costs to their employees in the form of increased co-payments and deductibles, often with other restrictions in coverage. Middle-income families will be especially hard-hit if they have so-called Cadillac plans – those with annual premiums in excess of $8,500 for individuals and $23,000 for families. Employers will be faced with a tax on such plans beginning in 2013, when we can expect them to avoid the tax by limiting coverage and forcing more cost-sharing on their employees. (7) (Herbert, B. Op-Ed. A less than honest policy. New York Times, December 29, 2009)

But won’t the nearly half a trillion dollars in federal subsidies over 10 years make health care affordable for lower- and middle-income Americans? Here too the story is not what we are being led to believe by pundits and supporting politicians. Subsidies will not start until 2014, and then are not available to people already covered by employer-sponsored insurance, those qualifying for Medicaid (incomes less than 133 percent of the federal poverty level, or FPL) and those earning more than 400 percent of FPL. Subsidies can only be obtained by those purchasing coverage on their own on an Exchange.

The Commonwealth Fund has established useful criteria to assess affordability of health care vs. other costs of living. When put up against other basic necessities of life, such as food, housing, and one car to get to work, health care costs above 10 percent of family income become a hardship level, as are medical expenses above 5 percent of family income for lower-income adults below 200 percent of the federal poverty level and those with health plan deductibles above 5 percent of income. (8) (Schoen, C, Doty, M, Collins, SR, Holmgren, AL. Commonwealth Fund. Insured but not protected: How many adults are underinsured, the experiences of adults with inadequate coverage mirror those of their uninsured peers, especially among the chronically ill. Health Affairs Web Exclusive, June 14, 2005)

The Kaiser Family Foundation has developed a useful Health Reform Subsidy Calculator, by which people can readily determine their own health care costs. As an example, a family of four with an income of $60,000 in 2014 will have an insurance premium of $16,858 (for which it will be responsible for $4,937, since the government will provide a subsidy of $11,921). That family will also be responsible for up to $6,250 in out-of-pocket costs, which together would account for 18.6 percent of its household income. And those costs may well be higher due to restricted coverage of their own plan and changes in cost-sharing requirements. By comparison, seniors were paying an average of 15 percent of their annual income on premiums and out-of-pocket health care costs in 1965 when Medicare was enacted. (Blumenthal, D., et al. “Renewing the Promise: Medicare & its Reform.” New York, Oxford University Press, 1988.)

So far we have found little evidence that health care “reform” circa 2010 will contain health care costs or make health care more affordable. In our next post we will consider how much we can believe about claims of improved access to care.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.” This posting is partially based on materials in his forthcoming book, “Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform,” soon to be released by Common Courage Press in both print and e-book format. http://www.commoncouragepress.com

We are being advised by many to “wait and see” how this complex new bill plays out over the next five to ten years, but we can already know what its outcomes will be. More than 30 years of health policy science, including documentation of the repeated failures of incremental changes built into the new law, together with well-entrenched trends in our market-based system, allow us to project its outcomes with confidence. For this legislation has been molded and crafted by the political power and money of corporate stakeholders in the medical-industrial complex.

Five previous posts in 2009 described the uneasy “alliance” of the five biggest players—the insurance industry, the drug industry, the hospital industry, business and organized medicine. They will do just fine with the new law at the expense of patients, families and Main Street.

Health care “reform” this time around was intended to address these four basic system problems: (1) containing health care costs, (2) making health care more affordable, (3) increasing access to care, and (4) improving the quality of care. This post introduces a series of five that will examine how well the PPACA will do on each of these four goals, followed by an overall assessment of the law. These posts will draw in part from my new book Hijacked: The Road to Single Payer in the Aftermath of Stolen Health Care Reform, soon to be released by Common Courage Press in both print and ebook format.

CONTINUED UNRESTRAINED DRIVERS OF HEALTH CARE COSTS
These are some of the many reasons that we can already conclude that health care costs will continue to run out of control at rates far exceeding the costs of living and median household incomes.

•  No price controls. Wall Street has already factored in rapid expansion of markets for drugs, medical devices and other services in a system of expanded access. There is also a long line forming of providers of information technology and administrative services that will exploit the complex implementation of this law.
•  No bulk purchasing. The PPACA has prohibited the government from negotiating the prices of prescription drugs and retains a ban on importation of drugs from Canada and other countries.
•  Lack of control over perverse incentives that drive increased volume of services. These in turn are driven by retention of fee-for-service (FFS) reimbursement that encourages physicians and other providers to offer more services than are medically appropriate or necessary.
•  No effective mechanism to rein in marginal or ineffective technologies. Coverage policies for new drugs and medical devices are still lax and not subject to rigorous evidence-based criteria for either efficacy or cost-effectiveness.
Although the PPACA does call for a Patient-Centered Outcomes Research Institute, its role is already neutered by not having the power to mandate or even endorse coverage or reimbursement rules for any particular treatment. (2) (Kaiser Health News staff. True or false: Seven concerns about the new health law, March 31, 2010)
•  The dominant business model of health care prevails, with many facilities and services remaining for-profit and investor-owned and with an ongoing trend for increasing consolidation within industries.
•  The PPACA has grandfathered-in specialty hospitals, typically physician-owned facilities that focus on well-reimbursed procedures in such areas as cardiology and orthopedics, whereby physicians can “triple dip”, earning high incomes as providers, owners and investors.
•  More preventive services will further fuel health care inflation. While the PPACA does provide new coverage for many preventive services, this will lead to increased costs due to additional diagnostic and treatment services engendered. (3) (Russell, L. Preventing chronic disease: An important investment, but don’t count on cost savings. Health Affairs 28 (1): 42-5, 2009)
•  Private insurers can’t contain health care costs, even where they have dominant market power. A 2009 report by the Congressional Research Service, The Market Structure of the Health Insurance Industry, concludes that “The exercise of market power by firms in concentrated markets generally leads to higher prices and reduced output—high premiums and limited access to health
insurance—combined with high profits.” (4) (Austin, DA, Hungerford, TL. The Market Structure of the Health Insurance Industry. Washington, D.C. Congressional Research Service, November 17, 2009)
• There are no controls over premium rate increases by insurers. Despite the outcry by government officials, annual premium rates are escalating at rates up to 56 percent (5) (Johnson, A. Fight over health-care premiums heats up. Wall Street Journal, February 19, 2010: A6), and there is no end in sight for continued exorbitant rate increases. Insurers will continue to game the system by extracting
maximal profits and offering reduced coverage with actuarial values (the amounts insurers actually pay in coverage) as low as 60 or 70 percent.
•  National health care spending will grow unabated despite the passage of PPACA. The Centers for Medicare and Medicaid Services (CMS) projects that overall national health expenditures (NHE) will increase from its present 17 percent of GDP to 21 percent in 2019, a total of $4.470 trillion. (6) (Foster, RS. Office of the Actuary. Estimated financial effects of the “Patient Protection and Affordable Care Act,” as Amended. Centers for Medicare and Medicaid Services, April 22, 2010)

These well-documented trends leave no room to think that health care “reform” will have any chance to contain health care costs. Instead, health care inflation will be exacerbated by all the new incentives and inefficiencies in the new “system”. In our next post we will examine the impact of these trends on affordability of health care.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.” Buy John Geyman’s Books at: http://www.commoncouragepress.com

In order to answer our question as to the value of the House bill, we need to re-state the original major goals of reform: (1) contain skyrocketing costs of health care and health insurance; (2) expand access to care by including everyone; and (3) improve the quality of care.

At a gross cost of $1.055 trillion over ten years, the House bill would do some good things, including reduction of the uninsured by up to 30 million; helping many Americans to pay for insurance through government subsidies; helping small business to provide coverage to their employees; expanding Medicaid and community health centers; establishing a new Center for Comparative Effectiveness Research to study and recommend the most effective treatments; initiating limited reforms of the health insurance industry, such as termination (four years hence) of its common practice of denying coverage based on health status and pre-existing conditions; phasing out government overpayments to private Medicare Advantage plans; revoking a decade-old anti-trust exemption for insurance companies; and creating a new long-term care program (CLASS ACT) to supplement Medicaid and/or private long-term care insurance.

However, the negatives far outweigh the positives, and adopting this bill would delay real reform for years to come. Despite a chorus of accolades about the bill by its supporters, even comparing it with the historic importance of Social Security and Medicare, this monster bill instead bears the heavy imprint of corporate stakeholders who themselves are largely responsible for out-of-control health care costs. After months of lobbying and campaign contributions to legislators crafting the legislation, their multiple conflicts of interest and political compromises, this bill ends up being a bailout for the insurance industry and a bonanza for stakeholders in the medical industrial complex.

Here are some of the major problems with the bill:

• It will not “bend the cost curve” for many reasons—with the exception of a  provision that the government negotiate drug prices with manufacturers (as the VA does so effectively), there are no real restraints on the prices of health insurance or health care services; insurers have already warned that premiums will continue to surge in future years; perverse incentives would remain in the system to continue providing large amounts of inappropriate and unnecessary services, especially by specialists in more highly reimbursed areas; and recommendations based on studies by the new Center for Comparative Effectiveness Research could not be used to mandate coverage or reimbursement policies.

• As the crisis in declining access to care only grows (with already 46 million uninsured and at least another 30 million underinsured), expansion of Medicaid, subsidies, and limited restrictions on insurers would not take place for four more years. And as many states struggle with their deficits during the recession, access and benefit levels available to patients on Medicaid will be seriously jeopardized in many parts of the country. Meanwhile 45,000 Americans are dying each year  as a result of being uninsured—one every 12 minutes.

• Because of a number of small-print provisions in the bill, bought by industry interests and crafted by their representatives, we would see a growing epidemic of underinsurance among the newly insured. These are some of the reasons: low requirements for actuarial value, the proportion of health care costs that insurers are required to pay for care (probably ending up as low as 65 or 70 percent when further compromises are made with the Senate); restricted levels of benefits to be covered (the minimal essential benefits package would be in four tiers, has yet to be developed, and we can expect that it will fall far short of all necessary care); in a last-ditch effort to pass the bill and assuage pro-life legislators, new anti-choice language was added by the Stupak amendment that would deny coverage of abortion care to millions of women; and coverage shortcomings of private plans already in force will be grandfathered in without reform.

• Even after the expenditure of more than $1 trillion, the bill would still leave some 18 million Americans uninsured.

• The public option, diminished as it has been to the point where it could only include 2 percent of Americans by 2019, would not have enough market clout to “keep the insurers honest.” The Congressional Budget Office (CBO) has already concluded that the public option would not offer real competition to private insurers, and that its premiums would even have to be higher than private premiums. It would not be available until 2013 through the new Health Insurance Exchange, and then only to the uninsured and some employees of small businesses without coverage. Moreover, such Exchanges have no track record of success. After 15 years of experience in California, that Exchange failed, mostly due to lack of pricing power and adverse selection by attracting sicker enrollees.

• The CBO has projected that rising insurance costs could mean that middle-income families would spend 15 to 18 percent of their income on premiums and co-payments.

• This bill would not reverse the unraveling of the employer-sponsored insurance system because of rising health care costs that outpace the rest of our economy; despite subsidies to small business, employer-sponsored insurance would remain unsustainable.

• This bill would only add to the already large burden of complexity and bureaucracy, together with their additional costs. At the same time, it would forego savings of some $400 billion a year that could otherwise be achieved through a simplified, more efficient single-payer system.

So in sum, this bill, while well intentioned, is fatally flawed. It would not effectively address the three major system problems demanding urgent reform, and would delay real reform by letting much of our population falsely think that reform is at hand. It would leave in place an inefficient, exploitive insurance industry that is dying by its own hand, even as it props it up with enormous future profits through often subsidized individual and employer mandates.

The most fundamental single question about how to reform our health care system should be whether or not we abandon our multi-payer, mostly investor-owned financing system or move to a not-for-profit single-payer system, Medicare for All, which this year’s political process has carefully kept off the table. The lesson of history in this country tells us that, as long as we retain private health insurance at the core of our health care system, we can never achieve universal access to affordable, comprehensive high-quality care.

Dr. John Geyman is professor emeritus of family medicine at the University of Washington School of Medicine in Seattle, a past president of Physicians for a National Health Program and author of “Do Not Resuscitate: Why the Health Insurance Industry Is Dying, and How We Must Replace It.”

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

This article originally appeared in Tikkun magazine on Nov. 16, 2009.