We have had about a 75-year experiment with ESI, but its track record is one of continued decline over the last 30 years—fewer people covered, less coverage for more costs, and less value of that coverage. ESI was more an accident of history than a well-planned financing system for health care. Today, rapidly accelerating costs are the Achilles heel for ESI, both for employers and employees, as they are for the entire market-based ‘system’ itself.

ESI arose at a very different time than today. Beyond the labor shortage, American business was dominant with little concern about foreign competition, and labor unions were strong. Many workers could reasonably expect to hold their jobs for their working life.

But those days are long gone. Most workers these days have multiple jobs, even careers, over their working years. By 2002, only about one-half of employed men or women could claim to have held their job for ten years. (Tejada, C. A special news report about life on the job—and trends taking shape there. Wall Street Journal, September 25, 2002: B5) Loyalty between employers and employees has dropped way off in recent years, part-time workers are not eligible for benefits, and union membership hovers around 10 percent of the workforce.

These markers show a long decline of ESI, as well as the decreasing benefits to enrollees:

• In 1980, more than 70 percent of employees working more than 20 hours a week were covered; that number fell to 56 percent by 2005, with coverage already unraveling as employers shifted from defined-benefits to defined-contributions. (Mishel, L, Bernstein, J, Allegretto, S. The State of Working America 2004/2005. Ithaca. Cornell University Press, 2005)

• Over the 13-year period that Kaiser Family Foundation has been tracking premiums for ESI, employee contributions have increased by 168 percent as compared to increased wages of 50 percent and inflation of 38 percent. One-half of employees of companies with fewer than 200 workers now have a deductible of $1,000 or more for single coverage as compared to 16 percent five years ago. (Altman, D. Rising health costs are not just a federal budget problem. Kaiser Family Foundation, September 27, 2011)

• Premiums for family plan ESI coverage have gone up by 9 percent this year, triple the increase in 2010; family premiums now total $15,073 on average, of which $4,129 is paid by employees (consider that these costs may have little to do with what employees end up paying for their health care, especially those who are older or have one or more chronic diseases!). (Appleby, J. Costs of employer insurance plans surge in 2011. Kaiser Health News, September 27, 2011)

• In 2012, average annual employee premiums for health insurance are expected to go up by another 10.6 percent. (Japsen, B. Companies pass on more of health costs to workers. New York Times, October 3, 2011: B3)

• Many of the so-called ESI plans cannot really be called insurance, since they now pass along so much of the costs of care to enrollees even as the extent of coverage withers away. Retiree and disability coverage are being cut by many companies, and their employees are increasingly being herded into lower-cost networks of providers with quality of care in question. As Dr. Don McCanne, Senior Health Policy Fellow for Physicians for a National Health Program, sums up: “The new national standard in health insurance is unaffordable under-insurance”. (McCanne, D. Quote-of-the-Day, September 13, 2011)

Beyond the increasing unaffordability of ESI for employees, employers—big and small—have the same problem with no end in sight. General Motors says it spends about $5 billion on health care expenses each year, adding between $1,500 and $2,000 to the sticker price of every car out the door. That burden is many times higher than what neighboring competitors just across the border in Canada pay for health care, rendering GM much less competitive in global markets. (Johnson, T. Healthcare costs and U.S. competitiveness. Council on Foreign Relations, March 23, 2010) Small business (with fewer than 100 employees), accounting for about 40 percent of the private U.S. workforce, cannot keep up with the growing cost of ESI coverage. The small employer market has been one of the most profitable for private insurers, with premiums climbing by 74 percent between 2001 and 2008.

The so-called health care reform legislation, the Affordable Care Act of 2010, will not fix this problem. Having handed over a combined employer and individual mandate to the private insurance industry, with minimal regulatory clout, the bill (if and when it is implemented) lacks any semblance of cost containment measures. Federal waivers already give employers whatever they want, as illustrated by a recent HHS ruling that allows McDonald’s Corp. to keep its very low limits of annual coverage of just $2,000 a year. (Adamy, J, Johnson, A. Rules eased for some health plans. Wall Street Journal, November 23, 2010: B1) Whereas President Obama promised that the average American family would save $2,500 a year on health insurance premiums, the Congressional Budget Office later projected that their cost would only increase. (Hemingway, M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner on line, March 10, 2010)

M. Obama promised $2,500 health care savings; CBO says plan is $2,300 price increase. Washington Examiner

Adding all of this up, we can only conclude that employer-sponsored health insurance, and the overly expensive, wasteful private insurance industry upon which it is based, is in its death throes. As the Vice chairman of Ford Motor Co. said in 2004: “Right now the country is on an unsustainable track and it won’t get any better until we begin—business, labor and government in partnership—to make a pact for reform. A lot of people think a single-payer system is better.” (Downey, K. A heftier dose to swallow. The Washington Post, March 6, 2004). Some 50 years ago, Walter Reuther, as the national president of United Auto Workers, saw the future this way:

“When American corporations reached the point where they couldn’t make their business more efficient without making it less profitable, when their dependency ratios soared to unimaginable heights, when they got tens of billions behind in
their health-care obligations, when the cost of carrying thousands of retirees forced them to stare bankruptcy in the face, they would come around to the idea that the markets work best when the burdens of benefits are broadly shared.” (Reuther, W. as cited by Gladwell, M. The risk pool: What’s behind Ireland’s economic miracle and GM’s financial crisis? The New Yorker, August 28, 2006, p 35)

We have to move beyond denial of this problem, and rein in markets that fail the public interest. We can no longer afford ESI or the private insurance industry. Unless we move past political gridlock on this big issue toward a new partnership between labor, business and government, they can bankrupt us all!

There is an answer, of course, in plain sight—not-for-profit, improved Medicare for All, funded by broadly shared progressive taxes that cost patients, families and business less than they are now paying while assuring universal coverage in a less bureaucratic and more accountable system.

John Geyman, M.D.
Professor emeritus of Family Medicine
University of Washington

Author of Do Not Resuscitate: Why the Health Insurance Industry is Dying and How We Must Replace It and Hijacked! The Road to Single-Payer in the Aftermath of Stolen Health Care Reform (Common Courage Press, 2008 and 2010)

To buy books from John Geyman visit: http://www.copernicus-healthcare.org

We now have to wonder what has happened to our sense of fair play, our self-proclaimed egalitarianism that has been part of our character for a long time. We need to ask whether we care anymore for our fellow citizens, and whether we can mount the collective political will to reverse course toward a kinder, gentler society?

Today’s mean-spirited political debate across the wide divide between the Tea Party and progressives stands in sharp contrast to previous times in the last century. Through the leadership of a strong and caring president, FDR brought us Social Security in the 1930s, the 1950s was a time of prosperity widely shared across our society, and the 1960s brought Medicare and Medicaid.

We are now seeing some interesting writing on this subject that helps us to understand how we got here and how we might get past these dark times.

In his classic recent article on the subject, Robert Kuttner, founder and co-editor of The American Prospect and co-founder of the Economic Policy Institute, draws a comparison with the failures of civic institutions of Germany in the late 1800s that prevented a national consensus with later global consequences. As he observes:

“One of our major parties has turned nihilist, giddily toying with default on the nation’s debt, reveling in the dark pleasures of a fiscal Walpurgisnacht. Government itself is the devil… Whether the target is the Environmental Protection Agency, the Dodd-Frank law or the Affordable Care Act, Republicans are out to destroy government’s ability to govern… The administration, trapped in the radical right’s surreal logic, plays by Tea Party rules rather than changing the game… The right’s reckless assault on our public institutions is not just an attack on government. It is a war on America.” (Kuttner, R. The war on America. The American Prospect 22 (8): 3, 2011)

In his new book Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It, Don Peck compares our times today with those in the First Gilded Age in this country in the late 1800s. The gulf between rich and poor was also very wide in those years. The Depression of 1893 led to a run on banks that crippled the financial system, extended families broke apart, communities became more transient, and the social fabric of society was shattered. (Peck, D. Pinched: How the Great Recession Has Narrowed Our Futures and What We Can Do About It. New York. Crown Publishers, 42-5, 2011)

Theodore Marmor, professor emeritus of public policy at Yale and Jerry Mashaw, professor of law, also at Yale, note how the language of our political leaders has changed from the 1930s to today—from “a morally resonant language of people, family and shared social concern to the cold technical idiom of budgetary accounting.” As they further observe:

“ In 1934, the government was us. We had shared circumstances, shared risks and shared obligations. Today the government is the other—not an institution for the achievement of our common goals, but an alien presence that stands between us and the realization of individual ambitions. Programs of social insurance have become “entitlements”, a word apparently meant to signify not a collectively provided and cherished basis for family-income security, but a sinister threat to our national well-being.” (Marmor, TR, Mashaw, JL. How do you say ‘economic security’? New York Times, September 23, 2011)

Henry Giroux, author of another new book, Education and the Crisis of Public Values: Challenging the Assault on Teachers, Students and Public Education, sheds further light on how all this has come about:

“As the left slid into organizing around mostly single-issue movements since the 1980s, the right moved in a different direction, mobilizing a range of educational forces and wider cultural apparatus as a way of addressing broader ideas that appealed to a wider public and issues that resonated with their everyday lives. Tax reform, the role of government, the crisis of education, family values and the economy, to name a few issues, were wrenched out of their progressive legacy and inserted into a context defined by the values of the free market, an unbridled notion of freedom and individualism and a growing hatred for the social contract.

…At issue here is the need for a new vocabulary, vision and politics that will unleash new, democratic movements, institutions and a formative culture capable of imagining life and society free of the dictates of endless military wars, boundless material waste, extreme inequality, disposable populations and unfounded human suffering.” (Giroux, HA. Corporate media and Larry Summers team up to gut public education: Beyond education for illiteracy, vulgarity and a culture of cruelty. Truthout, September 27, 2011) So we have some big questions here: who are we today, are we the country that we want to be, do we care about each other anymore, and do we have the collective will to assert ourselves against the bigoted interests of the few?

John Geyman, M.D.
Professor emeritus of Family Medicine, University of Washington School of Medicine, and author of Falling Through the Safety Net: Americans Without Health Insurance (Common Courage Press, 2005)

To buy a book from John Geyman, M.D., visit http://www.copernicus-healthcare.org

But as I discussed in a lengthy article four years ago, this theory has been fully discredited over the years as a cost-containment tool in U.S. health care. (1) (Geyman, JP. Moral hazard and consumer-driven health care: A fundamentally flawed concept. Intl J Health Services 37 (2): 333-51, 2007) Instead of cutting health care spending, cost-sharing leads many patients to delay or forego necessary health care, resulting in later diagnosis of illness and higher costs down the road, together with decreased quality and outcomes of care.

Overall health care costs are not reduced. Cost-sharing just shifts more costs to patients and families at a time when these costs are already unbearable for many. Meanwhile, the real drivers of health care costs continue unimpeded— perverse incentives within the medical marketplace that encourage physicians, other providers, hospitals and other facilities to deliver more services, whether appropriate or necessary or not; lack of price controls; blatant profiteering by Big PhRMA, investor-owned hospitals and medical supply companies; introduction of new technologies with lax requirements to document their effectiveness; and excess bureaucracy of our 1,300 private insurers.

Although it is now clear that cost-sharing will not fix our cost problems, and will just make patients sicker and increase the numbers of preventable hospitalizations and deaths, the policy-making community continues to bark up this tree. In fact, all the present trends indicate that increased cost-sharing, promoted especially by the GOP and many willing Democrats, will be imposed across the board in both private and public programs.

These examples illustrate the extent of this continuing trend:
• High-deductible plans with increased co-payments for visits and drug prescriptions and greater restrictions on network providers.
• Efforts to increase cost-sharing in private Medicare plans, including Medigap and Medicare Advantage programs.
• The Obama Administration’s “surrender in advance” proposal to introduce new co-payments for home health services for new Medicare beneficiaries (4) (Office of Management and Budget. Living Within Our Means and Investing in the Future. The President’s Plan for Economic Growth and Deficit Reduction. September 2011).
• Draconian Medicaid cutting services and increasing cost-sharing (e.g. Arizonans below the federal poverty level must make co-payments to gain access to care, causing many to forego care, a practice recently rejected by a the 9th U.S. Circuit Court of Appeals. (5) (Reinhart, MK. Copays break law. The Arizona Republic, August 25, 2011) But conservatives and many Democrats conveniently ignore these inconvenient facts about cost-sharing as a failed mechanism to cut health care costs:
• Despite the widespread and increasing use of cost-sharing over many years, health care inflation remains completely out of control.
• Physicians push the buttons for health care services much more than patients.
• The enormous costs of the multi-payer financing system are wasteful and unsustainable, and could readily be controlled by shifting to a single-payer financing system. The hypocrisy of the right on this issue boggles the mind. Consider these contradictory policies and assertions on the right:
• Blind ideological support of “market competition” as the answer to our cost problems when that is the main part of the cost problem, since real competition does not exist in health care markets (e.g. more consolidation all the time, wide latitude to set prices, little transparency, etc).
• Intent to dismantle Medicare and convert it into a voucher-based welfare program while at the same time opposing cost controls of private Medicare programs and negotiated drug prices that are so effective in the VA.
• Forcing increasing cuts of an already underfunded Medicaid program while promoting for-profit privatized Medicaid programs that offer worse medical care (6) (McCue, MJ, Bailit, MH. Assessing the financial health of managed Medicaid managed care plans and the quality of patient care they provide. The Commonwealth Fund, June 15, 2011) and further gouge the most vulnerable among us.
• Opposition to reforms of Wall Street abuses, where moral hazard of high-risk and exploitive investment practices continue unchecked. (7) (Browning, ES. Fed faces old foe as hazard returns. Wall Street Journal, August 29,2011: C1)
• Failure to even consider a single-payer, not-for-profit Medicare for all program that would assure universal coverage for our whole population with increased choice, more efficiency, fewer disparities and improved quality of care, all at less cost than employers, patients and families are now paying.
• Calling for a more limited role of government until big banks and other privateinstitutions face bankruptcy, then begging for bailouts and minimal follow-up regulation.
• Calling the Obama Administration’s recent proposal for minimal tax rules for those making more than $1 million a year “class warfare” as if the GOP hasn’t been waging such a war for many years. (8) (Knowlton, B. Republican lawmakers equate Obama tax plan with ‘class warfare’. New York Times, September 19, 2011: A 19)

Adding up all these examples of GOP duplicity and hypocrisy (to which many Democrats unfortunately yield), we have to ask when logic, common sense, evidence and fairness will take center stage for health policy makers and legislators? The way things are going could well be called legislative malpractice.

These are some of the major ways by which Americans are hurt by the growing deficit of generalist physicians:

1. Can’t get a primary care physician.
It is getting harder and harder to find a generalist primary care physician still open to accepting new patients. In Massachusetts, for example, the passage of legislation in 2006 expanding insurance coverage for many people exposed a critical shortage of primary care physicians. (Fitzgerald, J. State medical group sees severe shortages in 10 specialties. Boston Herald, October 20, 2010) Patients on Medicare and Medicaid have particular problems finding a physician willing to take them on due to low reimbursement through those programs. Under the banner of fiscal austerity, many states are cutting Medicaid to the bone. In California, for example, where Medicaid (Medi-Cal) covers one in five Californians, Medi-Cal payment rates for physicians and other providers have been cut by 10 percent to just $11 a patient visit (Corcoran D. Doctors say Medi-Cal reimbursement is too low. San Francisco Chronicle, August 4, 2011) Even if one has a primary care physician today, the likelihood of a continued relationship in the future is becoming increasingly clouded due to physician retirements, mobility among physicians, and changes of providers in insurer networks that often force changes of physicians.

2. No access to breadth of primary care.
People without a primary care physician don’t get access to the breadth of primary care anywhere else in our “system”. Specialists are not trained or equipped to provide preventive services across the board, care for acute and chronic problems for patients of all ages, continuity of comprehensive care for all medical problems for years, with knowledge and understanding of their patients’ family and community setting. Emergency rooms and urgent care centers can focus only on the most acute problem at the time, with little follow-up, while so-called “retail clinics” for walk-in care are limited to non-emergency and low-acuity problems. As a result, many of the potential advantages of primary care are not available to a growing part of our population.

3. Higher costs and unaffordability of care.
Specialty care costs more than primary care—a lot more, for a number of reasons. For new medical problems, specialty physicians have to start “cold”, without context or knowledge of the patient, often ending up repeating tests and procedures that have been done previously, charging more than primary care physicians, and in the case of multiple medical problems, typically having to call upon other specialists for care. Since primary care physicians know their patients better, they order fewer tests than specialists, and help to protect their patients from inappropriate and unnecessary care. (Schoen, C, Osborn, R, Doty, M, Bishop, M, Peugh, J et al. Toward higher-performing health systems: adults’ health care experiences in seven countries. Health Affairs (Millwood) 26: w 717-34, 2007)

4. Foregone necessary medical care.
Foregone care is widespread and increasing. These markers document this growing trend:

• In the last year, one in three Americans skipped care, did not fill a prescription, or get other care because of cost. (Parashar, A. Compared to other countries, U.S. patients have more access to specialists, less to primary care. Kaiser Health News, November 18, 2010)
• One-third of uninsured adults have a chronic disease for which they
don’t get needed care. (Wilper, A, Woolhandler, S, Lasser, KE, McCormick, D, Bor, DH et al. A national study of chronic disease prevalence and access to care in uninsured U.S. adults. Ann Intern Med 1249 (3): 170-6, 2008)
• Two million cancer patients are now foregoing necessary care each year due to unaffordable costs. (Weaver, KE, Roland, JH, Bellizzi, KM, Ariz, NM. Foregoing medical care because of cost: Assessing disparities in healthcare access among cancer survivors living in the United States. Cancer online, June 14, 2010)
•. The number of annual patient visits to physicians has declined sharply since the onset of the Great Recession in 2008. (Johnson, A, Rockoff, JD, Mathews, AW. Americans cut back on visits to doctor. Wall Street Journal, July 29, 2010: A1)

5. Decreased coordination and integration of care.
Coordinated and integration is a huge problem, especially for patients with multiple medical problems, the norm for older patients. The electronic medical record does not substitute for close communication between specialists for such patients. According to the Joint Commission on Accreditation of Healthcare Organizations, 80 percent of serious medical errors are associated with lack of communication or teamwork among specialists in hospitals. (Health blog. Joint Commission-Hospital Collaboration targets hand-offs. Wall Street Journal, October 21, 2010)

6. Decreased quality of care with worse outcomes.
Compared to those without primary care, patients with primary care receive earlier diagnosis and treatment of illness and better outcomes of care (Ferrante, JE, Gonzales, E, Pal, N, Roetzheim, RG. Effects of physician supply on early detection of breast cancer. J Am Board Fam Pract 13: 408-14, 2000), including lower mortality rates (Baicker, K, Chandra, A Medicare spending, the physician workforce, and beneficiaries’ quality of care. Health Affairs (Millwood) 23: w 184-97, 2004)`

Unfortunately, the essential role of primary care in any health care system is not widely understood. In the next post we will consider some of the many misperceptions about it, and how they represent barriers to building a better health care system in this country.

Adapted in part from my recently released book Breaking Point: How the Primary Care Crisis Endangers the Lives of Americans. Copernicus Healthcare, 2011, soon to be available as an Ebook on Amazon.

John Geyman, M.D.
Professor emeritus of Family Medicine, University of Washington
Past President, Physicians for a National Health Program

Here are just three of their unfounded claims, together with references from the health policy literature and recent publications that rebut their assertions:

• Re the alleged advantages of privatized Medicare, see my 2006 book (Geyman, JP. Shredding the Social Contract: The Privatization of Medicare. Monroe, ME. Common Courage Press, 2006), my extensive article in The International Journal of Health Services (Geyman, JP. Privatization of Medicare: Toward dis-entitlement and betrayal of a social contract. Intl J Health Services 34 (4): 573-94, 2004), a 2009 report by the Committee on Energy and Commerce (Committee on Energy and Commerce. New report highlights Medicare Advantage insurers’ higher administrative spending. Washington, D.C., December 9, 2009), a 2010 article in the Wall Street Journal on retrenchment of private Medicare plans (Johnson, A. Private Medicare plans are retrenching. Wall Street Journal, November 19, 2010: B1), and a recent article in The New England Journal of Medicine describing the failures of regulated competition among private insurance companies in the Netherlands and calling into question managed competition as a model for private Medicare plans in the this country. (Okma, KGH, Marmor, TR, Oberlander, J. Managed competition for Medicare? Sobering lessons from the Netherlands. N Engl J Med, June 15, 2011)

• Re the alleged advantages of private health insurance over single-payer national health insurance, see my 2008 book on the private health insurance industry (Geyman, JP. Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It. Monroe, ME. Common Courage Press, 2008), my extensive article in The International Journal of Health Services (Geyman, JP. Myths and memes about single-payer health insurance in the United States: A rebuttal to conservative claims. Intl J Health Services 35 (1): 63-90, 2005), and a 2009 report by the Congressional Research Service, The Market Structure of the Health Insurance Industry (Austin, DA, Hungerford, TL. The Market Structure of the Health Insurance Industry. Washington, D.C, Congressional Research Service, November 17, 2009).

• Re the claimed efficiencies of competition in health care, see a multi-year study by the Community Tracking Study showing the failures of markets to be more efficient or to enhance the quality of health care (Nichols, LM et al. Are market forces strong enough to deliver efficient health care systems? Confidence is waning. Health Affairs (Millwood) 23 (2): 8-21, 2004) and a recent article by Mark Weisbrot, co-director of the Washington, D.C-based Center for Economic and Policy Research (Weisbrot, M. Problems of U.S health care are rooted in the private sector, despite right-wing claims. McClatchy-Tribune Information Services, July 20, 2011).

Health policy is too important to leave to the biased, well-funded propaganda
machine of these “research” organizations that keep promulgating policies that have long since been discredited, either by their failing track record or legitimate research studies.

John P. Geyman, M.D.
Professor emeritus of Family Medicine, University of Washington
www.copernicus-healthcare.org

This is the first in a series of four posts that will describe this crisis, how it has progressed over the last 50 years despite all attempts to deal with it, together with why it matters to all Americans and what can be done about it. These posts are drawn in part from my latest book Breaking Point: How the Primary Care Crisis Endangers the Lives of Americans, just released by Copernicus-Healthcare and soon to appear as an ebook on Amazon.

Primary care is a term that many are unfamiliar with, often even including within the health professions. We’re talking here about generalist physicians and other health professionals working with them, in the ongoing care of unselected (not referred) patients of all ages for whatever problems they need to seek care. This is in the front lines of health care, for individuals and families, in their own community setting. General practitioners in earlier years represented this kind of physician. Since the 1960s, four other kinds of generalist physicians have evolved as various kinds of medical education programs have been developed—family practice (now family medicine), general internal medicine (for adults), general pediatrics (for children), and osteopathic physicians (with training that includes manipulative therapies).

Most advanced countries have at least 50 percent of their physicians as generalists at the foundation of their health care systems. While the U.S. had such a base until World War II, that number has declined over the last 60 years to less than 30 percent. And that number is dropping fast. Less than one in five U.S. medical graduates are now entering a primary care specialty, while most opt for better-paying, more attractive lifestyles of other specialties. (Pear, R. Doctor shortage proves obstacle to Obama goals. New York Times, April 27, 2010: A1) We now have a specialist-dominated system without anywhere near the number of generalists needed, as shown by Figure 1 in 2025. (Colwill, JM, Cultice, JM, Kruse, RI. Will generalist physician supply meet demands of an increasing and aging population? Health Affairs Web Exclusive, April 29, 2008, w 232-41)

In his recent article in The New Yorker, Dr. Atul Gawande, general and endocrine surgeon at Harvard Medical School, described the importance of the generalist in these compelling terms:

“Providing health care is like building a house. The task requires experts, expensive equipment and materials, and a huge amount of coordination. Imagine that, instead of paying a contractor to pull a team together and keep them on track, you paid an electrician for every outlet he recommends, a plumber for every faucet, and a carpenter for every cabinet. Would you be surprised if you got a house with a thousand outlets, faucets, and cabinets, at three times the cost you expected, and the whole thing fell apart a couple of years later? Getting the country’s best electrician on the job (he trained at Harvard, somebody tells you) isn’t going to solve this problem. Nor will changing the person who writes him the check.” (2) (Gawande, A. The cost conundrum: What a Texas town can teach us about healthcare. The New Yorker, June 9, 2009: 34-44.)

Advanced countries around the world with higher-performing health care systems than the U.S. have all build their systems on a solid base of primary, generalist care, readily available to patients for common health care problems where they live. Secondary care includes more specialized care for less common problems, while tertiary care deals with rare or unusual medical problems in university medical centers or other large urban hospitals. In most of those countries, specialists serve as consultants for particular medical problems, while primary care physicians provide ongoing continuity of care for all of their patients’ problems.

This is how a 2008 report of the General Accounting Office sums up the primary care crisis in this country:

“Health professional workforce projections that are mostly silent on the future supply of and demand for primary care services are symptomatic of an ongoing decline in the nation’s financial support for primary care medicine. Ample research in recent years concludes that the nation’s over reliance on specialty services at the expense of primary care leads to a health care system that is less efficient. At the same time, research shows that preventive care, care coordination for the chronically ill, and continuity of care—all hallmarks of primary care medicine—can achieve better health outcomes and cost savings. Despite these findings, the nation’s current financing mechanisms result in an atomized and uncoordinated system of care that rewards expensive procedure-based services while undervaluing primary care services.” (GAO. Primary Care Professionals: Recent Supply Trends, Projections and Valuation of Services. Washington, D.C. GAO-08-4721. Government Accounting Office, February 2008, p 15)

In our next post, we will see how our upside-down system does not work, and how it is responsible in large part for most of our system problems, whether at the level of individual health care or population-based care.

It is now widely recognized that we are in a global recession of historic proportions, raising comparisons with the Great Depression of the 1930s. The failures of deregulated markets, whether in housing, banking or other industries, has become obvious to all. So far the private health insurance industry has not been called to account, but its day is coming soon.

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

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

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

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

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

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

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

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

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

•  Consumer confidence has fallen to a 28 year low

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

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

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

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

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

In future posts we will address some directions for health care reform which will bring necessary care within reach of all Americans based on medical need, not a disappearing ability to pay in our runaway market-based non-system.
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Adapted from: Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

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The major reason given for the presidential veto was the bill’s cuts of overpayments to private Medicare plans and the alleged “decreased choice available to seniors.” Conservative policy makers were unrelenting in their reaction to the override. Mike Leavitt, HHS Secretary, opined in the Washington Times that “Democrats in Congress have loaded this bill with provisions that undermine choice and, worse, pave the way to still more government control of Americans’ personal health care decisions.”

The bill cancels the 10.6 percent cut in physician reimbursement which would have taken place, instead providing a 1.1 percent increase. The bill’s provisions will cost about $20 billion over the next five years, with about $14 billion coming from cuts in overpayments to Medicare Advantage, the private plans. It will save taxpayers about $45 billion over the next 10 years. New consumer protections will be put in place to reduce deceptive marketing by private plans and to hold them more accountable. Other improvements include reduction of copayments for mental health services from 50 percent to 20 percent (the usual for other Medicare services), new authority for HHS to require coverage of certain drugs, and an increase in low-income assistance for Medicare beneficiaries.

A brief historical review shows just how big a change this overturned veto is concerning overpayments to private Medicare plans. Private Medicare HMOs were first authorized by Congress through the Social Security Amendments of 1972. Payment rates were to be negotiated in advance between HMOs and Medicare on the basis of capitation (ie., the number of enrollees in the plan). HMOs were required to share any cost savings on a 50-50 basis with Medicare, and were limited to a profit of 10 percent of Medicare’s payments. The private market found this unattractive, and by 1980 only one HMO had contracted with Medicare.

In an effort to increase enrollment in private Medicare HMOs, Congress passed the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA), which liberalized payment arrangements for participating plans.  It was assumed that managed care would save money, so payments were set at 95 percent of what Medicare expected to pay, by county of residence, for care of enrollees in traditional fee-for-service (FFS) Medicare. Although HMOs continued to complain about poor reimbursement, they could generate large profits by enrolling healthier people needing less care and avoiding sicker patients. It was soon found that sicker patients who were disenrolled by HMOs cost Medicare 160 percent more in the first six months after disenrollment. A 1989 report estimated that Medicare was paying 15 to 33 percent more for care of beneficiaries in private HMOs than in Original Medicare.

When Republicans took control of both houses of Congress in 1994, they increased their efforts to privatize Medicare. The Balanced Budget Act of 1997 (BBA) created Medicare + Choice (M+C) plans, with complex reimbursement arrangements that still afforded substantial profits by cherry picking the market. Private plans were not required to adjust their payments because of the lesser risk of their enrollees. The General Accounting Office in 2000 reported that Medicare spent about 21 percent more on M+C enrollees than it would have spent under Original Medicare. Despite this news, Congress passed the Medicare, Medicaid, and SCHIP Benefits Improvement and Protection Act (BIPA) that same year, which further increased M+C payments, with fewer regulatory requirements.  Many M+C HMOs gamed the system, raising premiums to generate higher profits, restricting services, and then often exiting the market.

More recently, of course, we had the Medicare Prescription Drug, Improvement and Modernization Act of 2003 (MMA) (also dubbed the Medicare Middleman Multiplication Act by New York Times columnist Paul Krugman). The MMA continued generous overpayments to Medicare Advantage (MA), the successor to M+C. Overpayments of MA plans average 13 percent higher than Original Medicare (19 percent higher for the most popular private fee-for-service ((PFFS) plans, still with no effective risk adjustment.

So history over three decades is quite clear that private plans cost more than traditional Medicare, are less reliable, and wouldn’t be in business at all without overpayments. The privatized Medicare experiment has failed. The latest action by Congress is an important first step in reversing the failures of privatization, but much more needs to be done. These further reforms are high on the list for further action by Congress:
•  eliminate all overpayments entirely (there are still $150 billion in
overpayments available to private Medicare plans over the next 10 years,
despite this recent modest cut)
•   require a level playing field for all private plans (they won’t play!)
•   add cost-effectiveness as a criterion for determining coverage and
reimbursement policies of Medicare
•   and allow the government to use its bulk purchasing power to negotiate
discounts for drugs, medical devices and supplies.

Let’s hope that last week’s overwhelming votes in Congress opposing conservative rhetoric and the health insurance lobby emboldens those running for Congress this year, the 2009 Congress, and our new President (Obama!) to build on this important first step toward health care reform.

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Adapted from Shredding the Social Contract: The Privatization of Medicare, Common Courage Press, 2006, and by John Geyman, With permission of the publisher, Common Courage Press, Monroe, ME.

Physicians will now see their already low reimbursement fall by an additional 10.6 percent, many may stop seeing new Medicare patients, patients recovering from strokes and other injuries will face an arbitrary cap on rehabilitative therapy, and 1.5 million seniors and people with disabilities living on less than $1,171 a month ($1,576 for a couple) will be dropped from programs that help them pay for physician services and prescription drugs.  Meanwhile, of course, large overpayments to private Medicare plans continue uninterrupted, and Medicare enrollees will likely be faced with less access at higher costs.

Conservatives have long had an agenda to “save” Medicare by killing it (ie., privatize it, and shrink the public program to a much smaller welfare program).  As part of the Contract with America in 1994, Newt Gingrich, as Speaker of the House, predicted that this kind of “reform” might solve “the Medicare problem” and cause it “to wither on the vine”.  All this fits into a larger goal to shrink government.

Conservatives continue to claim that private Medicare plans are more efficient and save money.  It is astounding (but hardly surprising) how big the disconnect has become between their rhetoric and reality.

Consider these facts:

• Traditional Medicare operates with an administrative overhead of about 3 percent (vs. private plans at least five times higher)
• Medicare plus Choice plans received 13 percent overpayments compared to  traditional FFS Medicare between 1998 and 2000, yet many left the market due to insufficient profits, forcing 2.4 million seniors to find other coverage and often change doctors.
• The Medicare Prescription Drug, Improvement and Modernization Act of 2003 further privatized Medicare by establishing Medicare Advantage as the sequel to Medicare plus Choice, creating the new “more flexible” Private Fee for Service (PFFS) option (even more expensive than other Medicare Advantage plans), and forbidding the government from negotiating lower drug prices with manufacturers, as the VA does so well with 45 percent discounts.
• PFFS plans receive 19 percent overpayments from the government, but often restrict choice and are not available in many areas; in 2005 they overstated their projected payments for medical care and instead  took in an additional $ 1.4 billion in profits, according to a recent study by the GAO.

We need to ask where the outrage is with all this.  In 1988, Congress passed the Medicare Catastrophic Coverage Act, which required Medicare beneficiaries to pay more than 80 percent of the new benefits themselves.  A firestorm of protest erupted.  As Chairman of the House Ways and Means Committee, Dan Rostenkowski (D-Ill) had led the way in passing this legislation.  When he returned to Chicago, his chauffeured  car was surrounded by 50 angry seniors who pounded on  the car windows and beat on it with signs protesting the bill.  This incident received wide press coverage, forcing Congress to repeal it the next year.

This year’s elections give us an opportunity to express outrage again over this latest attack on the Medicare program.  As a 43 year old program assuring comprehensive coverage with full choice of physician and hospital for more than 42 million Americans, it has served as a reliable bulwark for guaranteed access for seniors and the disabled.  While it needs some reform (especially by eliminating its overpriced and exploitive private  plans without offsetting increased value), it can serve as a model upon which to build a single-payer public financing system to cover all Americans while preserving the strengths of our private delivery system.

Adapted from Shredding the Social Contract: The Privatization of Medicare, Common Courage Press, 2006, and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, forthcoming, August 2008. Both books by by John Geyman. With permission of the publisher, Common Courage Press, Monroe, ME.

Buy This Book: http://commoncouragepress.com/index.cfm?action=book&bookid=396

Adapted from Shredding the Social Contract: The Privatization of Medicare, Common Courage Press, 2006, and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, forthcoming, August 2008. Both books by by John Geyman. With permission of the publisher, Common Courage Press, Monroe, ME.