Meaningful reform of the health care system, truth be told, was lost more than two years ago when the basic issues were framed up. The Democratic frame was too centrist from the beginning. It was a surrender-in-advance approach intended to gain moderate and some bipartisan support by saying that the system is basically sound and just needs incremental change. “If you like your insurance, you can keep it” was the byword. The real question should have been what kind of financing system should we have—multi-payer, keeping alive through generous subsidies a failing insurance industry, or single-payer public financing coupled with a private delivery system.

So the Democrats started from a weak frame, and through the many compromises along the way in the House and Senate have ended up with an expensive, defanged “reform” bill. Compromises in the political center have not gained Republican votes, and have only lessened the chances of any reform bill being effective. The right has demagogued and distorted the issues, but is correct on one count—any of the bills in Congress (except H. R. 676, the Conyers bill, still relegated to the closet) will fail to contain health care costs, and will instead add at least some $800 billion or more to the federal government’s costs over the next ten years. We have already seen evidence that the pledged contributions toward the costs of health care reform made last spring by corporate stakeholders in our market-based system will be more than repaid to them through new revenue streams to their industries if any of the bills now being considered in Congress are enacted. (links to “Alliance” blogs #28, 29, 30 and 33).

President Obama’s convictions on health care reform are still unclear and contradictory. They seem to be intended as centrist and negotiable, as if nothing is really worth fighting for. He would have “started with single-payer if I were starting from scratch”. Then, even while portraying the insurance companies as villains and obstacles to reform, he concludes that we should build on our private multi-payer system and “hold them honest” with a public option. But weak as the public option has became (link to Blog # 21), he still won’t draw a line in the sand in its defense, calling it “only a sliver of my reform plan.”

There is no question that Obama is a pragmatist. So if only on pragmatic grounds, it is time for him to change course (now!) before his plan is gang-tackled in the middle of the field by opponents in both parties, including Blue Dog Democrats as well as progressives on the left who have given up on his plan. So, Obama needs to pick up the single-payer ball (H.R. 676), pivot, roll out to the left, pick up his interference, and run around left end for pay dirt. If he does so, he will have a majority of the public with him, and the number of co-sponsors of the bill will soar as timid members of Congress get political cover and discover stronger backbones. That demonstration of unambiguous presidential leadership could unify the Democratic party in favor of health care reform, and gain further support among fiscal conservatives, whether Republicans or Independents.

Here is what Obama faces if he stays on his present course in the middle of the road. The political discourse will get even uglier and more divided. Amendments from both sides of the aisle will further gut bills pending in Congress. If any bill gets out of committee to votes on the floor in the House and Senate, it will still face further revision by a Joint Conference committee. A bill with bipartisan support appears to be out of the question, and Democrats are likely to become even more fragmented as time goes on. So either a bill dies in Congress or any watered-down bill that may survive to be enacted will likely fail to contain surging costs of health care or make health care and insurance more affordable. Either way, the Democrats lose on the issue, and because of that loss, the stage is set for a Republican counter-attack during the 2010 and 2012 elections.

Based upon what has already happened in Congress and likely political dynamics going forward, here is what any surviving health care bill would probably look like:

• Individual mandate, with minimal restraints on the insurance industry and large federal subsidies for many years to come
• No employer mandate or public option
• Health care exchanges and co-ops, despite lack of evidence for their effectiveness (Link to Blog # 25)
• No negotiation by the government of prescription drugs prices
• Major expansion of Medicaid, again with large federal subsidies and states pushing back against their share of payments
• Minimal or no savings from projected savings hoped for by cutbacks in Medicare and Medicaid
• Continued escalation of health care costs and insurance premiums far above wages and cost-of-living, with little improvement in affordability for millions of Americans
• Record federal and state deficits calling for emergent action

If all that happens, President Obama will lose his credibility, his legacy will be tarnished and his political future clouded. His failure will match that of the Clinton Health Plan in 1993 and 1994, when many of the same mistakes were made. More important, “reform” won’t work, costs will continue to spiral upward, access will further deteriorate, the numbers of uninsured and underinsured will rise further, and the 45,000 American lives lost each year will increase.

The only winners with health care “reform” will be corporate stakeholders who get to keep raising their prices without significant government oversight. The insurance industry will join the list of industries bailed out by generous government subsidies even as they deplore “big government”.

If he were to acknowledge impending failure and change course to the left, this could be Obama’s FDR moment. In 1936, confronted by the Great Depression and corporate self-interest such as we see today, this is what he said to an audience at Madison Square Garden:

“We had to struggle with the old enemies of peace: business and financial monopoly, speculation, reckless banking, class antagonism, sectionalism, war profiteering. They had begun to consider the Government of the United States as a mere appendage to their own affairs. We know now that Government by organized money is just as dangerous as Government by an organized mob. Never before in all our history have these forces been so united against one candidate as they stand today. They are unanimous in their hate for me and I welcome their hatred.”

This is the kind of bold leadership and political courage called for in our turbulent times today. Our democracy is being challenged, as are our values and character. As usual, time will tell what kind of society we have become.

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

That’s the stunning finding of a study published today in the American Journal of Public Health by leading researchers at Harvard Medical School. The report, “Health Insurance and Mortality in U.S. Adults,” reveals that the uninsured have a 40 percent higher risk of death than those with private insurance, resulting in 45,000 preventable deaths annually.

These are our friends and neighbors, our fellow Americans who can’t afford or otherwise get private health insurance. Increasingly, this group includes nearly all lower-income and a growing majority of middle-class Americans.

The Institute of Medicine estimated in 2002 that more than 18,000 Americans between the ages of 19 and 64 were dying each year as a result of being uninsured. The new number is two and a half times that figure.

Trying to get by, the uninsured and underinsured delay necessary care, put off filling drug prescriptions or take only some of their medications each day. Most are just one major illness or accident away from financial ruin.

A growing number of patients with cancer have to turn down recommended chemotherapy or radiation treatment because of inability to pay for care. If they have insurance, many find that the small print in their policies excludes such coverage. If they are uninsured, their risk of death multiplies. No one in dire need of medical care should be put in this lose-lose situation.

We’re not talking about a third world country. This is the United States, one of the most industrialized nations in the world. But increasingly, we look more like a developing country — 42nd in the world for life expectancy (behind Japan and most of Europe), and ranked last among 19 OECD countries in preventable deaths that should not occur in the presence of timely and effective health care.

Meanwhile, the charade goes on, as our elected representatives in Congress dither over health care reform. None of the bills in Congress will resolve the affordability and access problems.

The Congressional Budget Office estimates the House health reform bill would still leave 17 million persons uninsured and that Sen. Baucus’ bill, unveiled yesterday, would leave 25 million uninsured. That translates into tens of thousands of unnecessary deaths every year.

There are now 3,300 health industry lobbyists running around Washington, D.C., trying to shape the small print to their advantage in whatever bill finally gets passed (if any). The insurance and pharmaceutical companies and their hangers-on are spending $5 million a week to block real reform. Suffice it to say that none of these companies have the best interests of the uninsured or the underinsured at heart.

Through its trade group, America’s Health Insurance Programs, the industry is fighting for its life (but not our lives). And so far, it is winning. By “cooperating” with health care “reform” by pledging to eliminate pre-existing conditions as a barrier to coverage, and saying they will take all comers in return for a government mandate that everyone be required to buy its shoddy products, the insurers are poised to reap a massive financial windfall.

So far, the bills in Congress set no limits on what the insurers can charge for premiums, and the legal requirements for covered benefits are likely to be minimal.

If a “reform” bill along these lines passes, it will be a bonanza for insurers, drug and medical device manufacturers, and other players in the medical-industrial complex, all at our expense. Since their revenues are our costs (as patients and taxpayers), there will be no cost containment.

We can prevent another 45,000 Americans from dying next year. An effective cure to the health care crisis is within our reach, and it lies within a single-payer, Medicare-for-All plan. By cutting out private insurance companies, we would not only save taxpayers billions, but deliver quality care to everyone. We shouldn’t have to wait another 12 minutes.

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

Republicans have fought against Medicare from the very beginning. They bitterly opposed it in various committees in both houses of Congress in 1964 -1965. But they relented, at least for a while, in the face of strong public support for the program, and it passed with bipartisan support.

Almost overnight, tens of millions of American seniors gained access to affordable health care. Medicare was also a boon to the medical profession, hospitals, and the insurance industry, since Blue Cross became the main fiscal intermediary between government, physicians and hospitals.

But that honeymoon was not to last. Republicans have been trying to rein in “entitlement programs” and chip away at Medicare since the start of the Reagan years in 1980. As Speaker of the House in 1994, with a new Republican majority in Congress, Newt Gingrich introduced a bill to privatize and convert Medicare to a smaller program with defined contributions instead of one for all seniors with benefits defined by law. His statement at the time clarified the conservative agenda: (This kind of ‘reform’ might result in “solving the Medicare problem” and lead it to “wither on the vine.” Later pronouncements have followed along the same line, as illustrated by Grover Norquist’s desire to “shrink the government down to the size that it could be drowned in a bathtub.”

With the Balanced Budget Act of 1997, the conservatives’ goal to privatize Medicare was advanced with the new Medicare + Choice (M + C) program. These private plans, mostly HMOs and PPOs, were promoted as offering more choice and value than traditional Medicare. But their subsequent track record belied those claims. Instead, these programs proved themselves unstable in the marketplace, seeking out favorable markets, leaving others when profits were not sufficient, cherry picking the market by avoiding sicker enrollees, and costing the government an average of 13 percent more per enrollee than in traditional Medicare. About one-third of Medicare beneficiaries enrolled in M + C plans between 1999 and 2002 were dropped when their plans abandoned the market, often forcing patients to change physicians and return to regular Medicare.

As M + C programs became discredited, Republicans renewed their attack on Medicare with the passage in 2003 of the Medicare Prescription Drug, Improvement and Modernization Act (MMA), another bonanza for the insurance and drug industries. The MMA established private Medicare Advantage plans (MA) as successors to M + C plans and turned over the drug benefit to the private sector, even prohibiting the government from negotiating drug prices as the Veterans Administration does so effectively. As expected, MA plans have many of the same problems as M + C plans. They are still subsidized by government overpayments averaging 14 percent more than Medicare, while providing less efficiency, choice, value and reliability than traditional Medicare.

Today, as health care reform proposals take shape amid a highly polarized debate in Congress and across the country, conservatives (including Republicans, Blue Dog Democrats and some Independents) have mobilized once again to expand private markets for the insurance industry and other corporate stakeholders in the medical industrial complex. While overlooking their role in fueling health care inflation in both private and public programs, conservatives are intent on handing the party in power a defeat over health care reform, but at the same time maneuvering to expand future health care markets.

In their strategy to kill ObamaCare (whatever that may turn out to be), they are all of a sudden sounding like defenders of Medicare beneficiaries against the presumed evils of big government. Consider these examples of their new-found protector role of seniors:

• Senator Mike Enzi (R-WY) and member of the Gang of Six charting policy in the Senate Finance Committee, warns that “Democrats are cutting hundreds of billions from the elderly and planning to limit or deny care based on age or disability of patients.”
• House Minority Leader John Boehner (R-OH) claims that projected reductions in the growth of Medicare spending means “fewer choices and lower health care quality for our nation’s seniors.”
• In order to “assure that our greatest generation will receive access to quality health care”, Michael Steele, chairman of the Republican National Committee, recently proposed a ‘Seniors’ Health Care Bill of Rights’ with these provisions:

“(1) We need to protect Medicare and not cut it in the name of ‘health insurance reform’;
(2) We need to prohibit the government from getting between seniors and their doctors;
(3) We need to outlaw any effort to ration health care based on age;
(4) We need to prevent government from dictating the terms of end-of-life care; and (5) We need to protect our veterans by preserving Tricare and other benefit programs for military families.”

The cynicism of these statements almost defies belief, given the long Republican track record of trying to undermine Medicare at every turn. These would-be defenders of Medicare pretend to be protecting seniors from an uncaring government, while raising such scare words as rationing and loss of choice, coverage and benefits. Their real goal is to advance their narrow agenda of undermining public programs by privatizing them to their best advantage.

The Republican machine, based on long experience, is expert at scare tactics. One of many examples is the threat of “death panels”, raised by former vice-presidential candidate Sarah Palin and others in reaction to a provision (Section 1233) in the House bill (H.R. 3200) which would provide funding for voluntary end-of-life counseling by physicians on such matters as living wills. Ironically, this provision was suggested by Johnny Isakson, Republican pro-life senator from Georgia, who has been advocating such counseling for years. But as the Medicare Rights Center, AARP and many experts have confirmed, none of these scare claims have any substance in fact.

So what we are seeing is blatant distortion, disinformation and deception by conservative forces bent on defeating any health care reform advanced by the party in power. Fanning concerns and worries among seniors is intended to weaken seniors’ support for reform and perpetuate the hold of private markets on the system. Meanwhile, of course, Republicans keep trying to exploit private Medicare markets to their own advantage as long as the program is alive.

Adapted in part from Shredding the Social Contract: The Privatization of Medicare, 2006, with permission of the publisher Common Courage Press.

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

Having considered the voluntary, unenforceable pledges, together with the agendas and subsequent actions by five of the major stakeholders, it is now useful to re-assess the impacts on reform by the corporate “alliance” struck at that time. Table 1 summarizes the pledges and agendas, as well as the tactics and likely rewards, for the Big Five stakeholders.

As is evident from Table 1, all five stakeholders, with the possible exception of some
Large employers, will do well with health care reform along the lines of bills now before Congress. The House bill (H.R. 3200), with a cost of some $1 trillion over 10 years and without effective cost containment mechanisms, would add greatly to the revenues of all corporate stakeholders in the medical industrial complex. Their revenues, of course, are our costs, especially since the insurance industry will likely be protected by lenient standards (such as by a requirement being considered by the Senate Finance Committee that insurance should have to cover only 65 percent of health care costs).

The Big Five that we have looked at are only part of the cost problem. There are many other major players in the health care industry, mostly investor-owned, with a primary mission to make money, not save the money of either patients, their families or taxpayers. These players range from medical device and medical equipment industries to nursing homes to information technology. As just one example, General Electric, the 12th largest corporation in the world, has a big market share for imaging equipment and information technology. It has initiated a big national advertising campaign supporting health care reform, while its lobbyists fight against cuts in Medicare reimbursement for imaging procedures.

Congress goes on break, health lobbying heats up. Wall Street Journal, August 5, 2009: A1) The 3,300 lobbyists now in Washington, D.C. lobbying for one or another health
care interest, for or against specific provisions in the proposals before Congress, are
consuming $1.4 million dollars a day in this effort.

Most health care industries welcome government subsidies to grow the insured
population, but not at the price of burdensome regulation. There is little common ground among the stakeholders in the medical industrial complex except the goal to expand markets and grow future profits for each industry The “alliance” is in name only, hardly partners in most instances. When their respective interests conflict with other corporate stakeholders, the circular firing squad starts shooting. Examples include the insurance trade group AHIP’s battle against physicians’ high out-of-network fees, while medical organizations sue insurers for non-payment of fees and call for elimination of overpayments to private Medicare plans.

As the battles rage on between and among corporate stakeholders, their lobbyists, and reformers in and out of government, the public interest is being overlooked as stakeholders work toward carving out a bigger piece of an expanded pie for themselves. The neutering of the public option is but one of many examples whereby the public is losing out. (Link to Blog 21) Instead of cost-containment in a reform bill, we can expect to see continued inflation of health care costs at rates much higher than cost-of-living or median wages. Judging from the bills taking shape in Congress, the outcome will be a bonanza for health care industries and a bail-out for an unaffordable and dying insurance industry.

Bob Herbert, well-known Op-Ed columnist for the New York Times, is right on target with this observation:

“The drug companies, the insurance industry and the rest of the corporate high-
rollers have their tentacles all over this so-called reform effort, squeezing it for
all it’s worth. Meanwhile, the public — struggling with the worst economic
downturn since the 1930s — is looking on with great anxiety and confusion. If
the drug companies and the insurance industry are smiling, it can only mean that
the public interest is being left behind.”

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

In an agreement with President Obama and Senator Max Baucus, Chairman of the Senate Finance Committee, PhRMA pledged $80 billion toward the costs of health care reform. Though some of the details of this agreement have since become a matter of controversy, two parts of the pledge are widely known — (1) drug companies would give a 50 percent discount to Medicare beneficiaries for the costs of their drugs in the “doughnut hole” (annual costs between $2700 and $6,100); and (2) drug companies would give higher rebates on the drug costs of people on Medicare and Medicaid. It has been estimated that about $30 billion would be expended for these two purposes over the next 10 years, with the other $50 billion being directed to non-specified costs of reform.

This pledge was hailed as an “historic agreement” by the White House and praised by the AARP, but it soon became clear that much of this pledge will not result in savings to the federal government. Further, as pointed out by Charles Butler, a pharmaceutical analyst at Barclays Capital, those discounts won’t cost the drug companies much — “Because of the discounts, Medicare beneficiaries are likely to continue filling prescriptions in the doughnut hole, whereas in the past many stopped taking their medications because the drugs were unaffordable to them.”

The main point of contention in weeks after this agreement was whether the quid pro quo for the drug industry is assurance that the government will not pursue negotiation of drug prices. In August, an internal memo obtained by the Huffington Post confirmed that the White House and the drug industry lobby secretly agreed to protection of drug companies from price controls. (Grim, R. Internal memo confirms big giveaways in White House deal with big PhRMA. Huffington Post, August 13, 2009) Both sides subsequently issued conflicting reports in an effort to backtrack from the controversy. But many progressives in Congress felt betrayed. In response, Speaker of the House Nancy Pelosi declared that the House was not a party this agreement. The House E & C Committee, chaired by Henry Waxman (D-CA) soon passed an amendment to the House bill (H. R. 3200) calling for negotiation of drug prices by the government, and many Democratic leaders would like the drug industry to make a bigger commitment to health care reform.

Despite the lack of transparency in whatever deal was made between PhRMA, the President and Senator Baucus, the drug industry’s agenda is crystal-clear — expand its markets through wider insurance coverage and government subsidies, avoid price controls and competition from importation of drugs from other countries, and gain maximal patent protection from generic drug-makers of biotech drugs.

Much as the insurance industry feels more secure in the more conservative Senate, the drug industry has also counted on the Senate Finance Committee to roll back provisions in any House bill counter to its interests. PhRMA therefore became an active supporter of a bipartisan approach to health care reform. While not lobbying specifically against the public option, it expressed serious concern over any erosion of employer-sponsored health insurance. It also arrayed its forces in these directions:

• Joining with Families USA, a not-for-profit advocacy group for affordable health care, in a $150 million ad campaign supporting health care reform. This campaign includes a re-appearance of Harry and Louise, the fictional couple now on Medicare who played a large part in defeating the Clinton Health Plan in1993-1994. They now tell us on major national TV channels, some network news and Sunday talk shows that “a little more cooperation, a little less politics, and we can get the job done this time.”

• Teaming up with Families USA to lobby for expanded Medicaid coverage for
Americans making up to 133 percent of the federal poverty level ($14,000 a year for individuals). As Tauzin said: “When Families USA and PhRMA can get together, I hope that’s a sign to everybody in the House and Senate that we can find common ground, and that the president’s call to put party aside and to put ideologies aside and try to find what works is a good call.”

• Lobbying against proposals that would prohibit brand-name drug makers from paying generic drug makers to delay marketing of lower-cost generic drugs.

• In the first six months of 2009, PhRMA and Pfizer spent $13.1 and $11.7 million in lobbying, respectively.

It was soon apparent that the initiatives taken by the drug industry to appear to support reform was bound to please its CEOs and stockholders. These early returns were gained:

• Passage by the Senate HELP Committee (by a 16-7 vote) of a provision giving manufacturers of branded biotechnology drugs at least 12 years of patent protection before generic manufacturers can bring such drugs to market (the White House had proposed seven years while Henry Waxman had wanted five).

• Strong projected annual increases on prescription drug spending

In sum, in the same way that the insurance industry had already won preferential treatment from legislators even as developing health care reform legislation was in a fluid state, the drug industry had also achieved many of its important goals, especially assurance of strong future markets for its products for years to come. In our next post, we will see how the hospital industry has fared during this critical period of potential system change.

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

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

As we saw in a prior post, the public option has generated intense opposition from the insurance industry, other stakeholders in the medical-industrial complex, Republicans, Blue Dog Democrats, and conservative astroturf groups. Even in the House, where the public option has stronger support, it has been whittled down to at best a small program available perhaps to only 10 million uninsured and small businesses, hardly a big threat to the insurance industry. In the powerful Senate Finance Committee, the public option has been pushed off the table in an attempt to gain bipartisan support through a compromise – creation of co-ops, a concept advanced by Senator Kent Conrad (D-N.D.). Even more nebulous operationally than exchanges, the idea is that people and small businesses would be able to buy co-op memberships through state insurance exchanges. These co-ops would be not-for-profit and would include members in their governance, thereby removing the perception among opponents of a “government-run” program. On the House side, a recent amendment to H.R. 3200 by the Energy and Commerce (E & C) Committee also called for establishment of member-run co-ops to provide coverage through the Exchange.

So do these sound like reasonable approaches to our health care problems? After all, co-ops sound as American as apple pie, and we have some good examples in such long-standing integrated health plans as Group Health Cooperative of Puget Sound.

Unfortunately, the main problem with these approaches is that they won’t work. They will add to the complexity and bureaucracy of our fragmented system, cost more instead of less, and fail to reform the insurance marketplace. In fact, private insurers will find health reform, even if enacted along the lines of H.R. 3200, to be another bonanza assuring new revenue streams for years to come.

If enacted, exchanges and co-ops offering a small public option will only raise hopes for reform that will never come, and are therefore a cop-out for those shaping this year’s reform attempt. Here are just some of the many reasons that health insurance exchanges are bound to fail:

- H. R. 3200 restricts access to coverage through the Exchange to individuals who are not enrolled in qualified or grandfathered employer or individual coverage, Medicare, or Medicaid (with some exceptions).

- The public option will not be implemented until 2013, or perhaps only until private plans have been shown not to save money ( the so-called “trigger”).

- Because of its relatively small market share, the public option will not have enough market clout to counteract the practices of private insurers, and will become the only option for sicker people with higher-cost care.

- There are almost no restraints on insurance premiums in any of the proposals; an amendment by the House E & C Committee limits premium increases to no more than 150 percent of the annual percentage increase in medical inflation, and provides exemptions if this would “limit a health plan’s financial viability.”

- In order to avoid competition, the insurance industry has successfully lobbied to prevent premiums for a public option to be much lower than those of private plans.

- There are no good examples yet of successful exchanges. California has 15 years’ experience with an exchange, and it has been a failure. A July 2009 Issue Brief by the California HealthCare Foundation details its problems and demise. It was initially intended to “provide an easy to navigate single point of entry where people could go to choose among several health plans, reduce the cost of coverage (using three primary mechanisms: reduce administrative costs by achieving economies of scale, command lower prices, and foster market competition), and enhance portability of coverage.” None of those objectives were achieved.

Instead, the California Exchange achieved few administrative efficiencies, lacked pricing power, and was burdened by adverse selection of sicker enrollees. Private insurers gamed the system and loaded up the Exchange with people with more expensive illnesses. Despite large start-up funding, the experiment was unsustainable, and was shut down in 2006.

If we would only pay attention to history, we would know that co-ops will fare no better than exchanges. Many co-ops were started during the 1930s in the years of the Great Depression, only to fail in most instances despite initial government subsidies. Most of these co-ops never reached sufficient size to either become financially viable or to counteract market problems. Only a few have succeeded over the years. An excellent example is Group Health Cooperative in Washington State, which today has some 600,000 members in an effective integrated health care system. But despite its reliance on salaried physicians in a large well-managed group practice, it still has to compete against its competitors and has almost as much trouble containing costs. Group Health today has only a 9 percent market share in Washington State. It has increased its premiums by an average of 12.3 percent a year since 2000 (four times the rate of inflation), and is raising its premiums in 2009 by 13 percent (compared with 17 percent by Regence BlueShield).

Proponents of co-ops today grossly underestimate the difficulty in setting up co-ops, both in terms of start-up costs and lead times in the best of cases. It took Group Health 62 years to reach an enrollment of 500,000, which many health analysts figure is the minimal viable size. As a champion of co-ops, Senator Conrad acknowledges that start-up funding would be high for co-ops, requiring some $4 billion, while others estimate $10 billion. (Ibid, Sack above)

So where does all this leave us in this summer of discontent over health care? Despite the vigorous efforts of the Administration and many members of Congress, exchanges and co-ops won’t work. They won’t make health insurance more affordable. They are a political compromise position in an effort to gain bipartisan support for a bad health care bill. Beyond not fixing the insurance problem, they won’t contain runaway costs of health care. But that is the subject of the next post.

Adapted from Do Not Resuscitate: Why The Health Insurance Industry Is Dying, and How We Must Replace It, and The Cancer Generation: Baby Boomers Facing a Perfect Storm, with permission from the publisher, Common Courage Press.

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

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

This piece comes across as cherry picking of the literature to make the political point that we already have a good health care system, mostly because of the private sector and our advanced medical technology.  It fits in well with the NCPA’s announced goals “as a nonprofit, nonpartisan public policy research organization, established in 1983, with the goal to develop and promote private alternatives to government regulation and control, solving problems by relying on the strength of the competitive, entrepreneurial private sector.” (2)

The NCPA is one of the well-funded right-wing think tanks that uses its sizable corporate funding base to influence public opinion through hard-news coverage, television, talk shows, Op-Ed’s and guest editorials in major newspapers, and Congressional connections.  In a 2005 article in the International Journal of Health Services, I rebutted 20 of the NCPA’s conservative claims as disinformation and myths. (3)

So now Atlas brings forward 10 more “facts” that will surprise us — except they are distorted and wrong.  They again fit in well with the NCPA’s agenda (4):

•  Alleged Fact 1: Americans have better survival rates than Europeans for
common cancers.

•  Alleged Fact 2: Americans have lower mortality rates than Canadians.

•  Alleged Fact 3: Americans have better access to treatment for chronic diseases
than patients in other developed countries.

•  Alleged Fact 4: Americans have better access to preventive cancer screening
than Canadians.

•  Alleged Fact 5: Lower income Americans are in better health than comparable
Canadians.

•  Alleged Fact 6: Americans spend less time waiting for care than patients in
Canada and the U.K.

•  Alleged Fact 7: People in countries with more government control of health
care are highly dissatisfied and believe reform is needed.
•  Alleged Fact 8: Americans are more satisfied with the care they receive than
Canadians.
•  Alleged Fact 9: Americans have much better access to important new
technologies like medical imaging than patients in Canada or the U.K.

•  Alleged Fact 10: Americans are responsible for the vast majority of all health
care innovations.

Atlas concludes that “Despite serious challenges, such as escalating costs and the uninsured, the U.S. health care system compares favorably to those in other developed countries.”

So let’s examine some of these claims, which are supported by 16 carefully selected references to the literature, to see whether they hold any water.  Rather than deal with all 10, this will look at four in enough detail to see the trends.  We will soon see this presumably authoritative document is just another opportunistic use of data disguised as scholarship.

Fact 1 claims that Americans have much higher survival rates for cancer of the breast, prostate and colon than their counterparts in Germany, the U.K and Norway.  “Fact 2″ claims that Americans have lower mortality from breast and colon cancer than Canadians.  However, as described in some detail in my most recent book The Cancer Generation: Baby Boomers Facing a Perfect Storm, these conclusions are based on five-year survival rates, a flawed method of evaluating outcomes.  Although the five-year survival rates for Americans are higher for all cancers in this country compared with both men and women in Europe, researchers tell us that these figures are deceptive and incorrect because of several kinds of bias.  For example, the study used by Atlas has no information on clinical stage of cancers.  For valid cross-national comparisons, patients have to be matched for stage, since advanced-stage cancers will obviously have worse outcomes than early-stage cancers.  There are other technical but crucial kinds of bias which have to be accounted for before drawing conclusions that we do better than other countries.  The NCPA’s “facts” did not consider other sources of bias, such as how much screening was done in each country, and are biased to a political conclusion that fits with its agenda.

Fact 3 claims, on the basis of one reference and a reported difference in use of statins for cholesterol reduction, that Americans have better access to care of chronic diseases than do our counterparts in other developed countries.  But that conclusion disregards solid evidence to the contrary as shown by a 2007 report by the Commonwealth Fund of a study of health system performance in seven countries — Australia, Canada, Germany, the Netherlands, New Zealand, the U.K. and the U.S.  That study asked a much broader question than the use of statins, asking respondents how often during the past year they did not see a doctor, did not get recommended care, or skipped doses/did not fill Rx because of cost?  The results completely discredit “Fact 3″– 42 percent of Americans answered “yes” to this question, three times the number of Canadians and almost five times the number people in the U.K. (5)

Fact 7 alleges that Americans are more satisfied with our health care system than citizens in countries with more government involvement in health care.  Atlas cites the above Commonwealth study to support a claim that “more than 70 percent of German, Canadian, Australian, New Zealand and British adults say their system needs ‘fundamental change’ or ‘complete rebuilding.’  That is true, but what Atlas doesn’t tell us is that more Americans (82 percent) respond that way, more than respondents in any of the other countries.  In fact, that study found that 34 percent of Americans believe that our system should be completely rebuilt, compared to only 12 and 15 percent in Canada and the U.K., respectively. (6)

As is well known, access, cost and quality of health care are interdependent and intertwined such that you can’t evaluate one without the others.  If many people cannot get past financial barriers to get access to needed care, they obviously have low quality of care.  So it is cavalier and distortional for the NCPA paper to disregard our system’s cost and access problems while claiming that our system compares favorably with other developed countries. Here are just a few objective cross-national comparisons among many that completely discredit any assertion of American superiority, or even equivalency in quality of health care compared with other developed countries:

•  A 2008 report by the Commonwealth Fund found that the U.S. dropped from
15th in 2006 to last among 19 countries in 2008 on a measure of mortality that
is amenable to medical care. (7)

•  A 2007 report ranked the U.S. 42nd in the world for life expectancy, lower than
most of Europe and Japan. (8)

•  A 2006 study found that Americans in late middle age are less healthy than
their counterparts in England for cancer and five other chronic diseases. (9)

•  A 2007 study found that Canada has at least the quality of care as in the U.S.,
often with better outcomes, despite spending little more than one-half what we
spend on health care. (10)

•  An earlier study showed conclusively that poor women with cancer in
Toronto have better outcomes than their counterparts in Detroit, even after
accounting for race and standards of measuring poverty (for example, the
Canadian women had survival rates more than 50 percent higher for lung,
stomach and pancreatic cancer compared to American women in Detroit’s poorest
districts). (11)

•  The U.S. has a weaker primary care system than other developed countries; it
has been found to rank 11th among 11 countries on eleven performance criteria
(12); our primary care base is in crisis with less than 10 percent of
medical graduates now opting for careers as primary care physicians (13);
moreover, patients living in parts of our country with larger number of specialists
(and greater use of technology) are more likely to have late-stage colorectal
cancer when first diagnosed. (14)

So much for the NCPA’s latest surprising “facts”, intended as they are to perpetuate the problems (and profits) of our unaccountable market-based system and protect private markets from health care reform.  This kind of article by the NCPA does not advance the debate over how to fix our system, and instead is just another poorly disguised assault on the truth.

1.Atlas, S. 10 surprising facts about American health care. National Center for Policy Analysis, No. 649, March 24, 2009.

1. National Center for Policy Analysis. www.ncpa.org/abo/.
2. Geyman, J.P. Myths and memes about single-payer health insurance in the United States: A rebuttal to conservative claims. International Journal of Health Services 35:1, 2005.
3. Ibid # 1.
4. Schoen, C, Osborn, R, Doty, M M et al. Toward higher-performance health systems: Adults’ health care experiences in seven countries, 2007. Health Affairs Web Exclusive 26, w 717-34, 2007.
5. Ibid # 5.
6. The Commonwealth Fund Commission on a High Performance Health System. Why not the best? Results from the National Scorecard on U.S. Health System Performance. Vol 97, July 17, 2008.
7. Associated Press. U.S. ranks just 42nd in life expectancy. Lack of insurance, obesity, social disparities to blame, experts say. August 11, 2007.
8. Banks, J, Marmot, M, Oldfield, Z et al. Disease and disadvantage in the United States and England. JAMA 295: 2037-45, 2006.
9. Guyatt, G H, Devereaux, P J, Lexchin, J et al. A systematic review of studies comparing health outcomes in Canada and the United States. Open Medicine 1 (1), 2007.
10. Gorey, K M et al. An international comparison of cancer survival: Toronto, Ontario and Detroit, Michigan metropolitan areas. Am J Public Health 87: 1156-63, 1997.
12. Starfield, B. Primary Care: Concept, Evaluation and Policy. Oxford University Press. New York, 1992.
13.American College of Physicians. The impending collapse of primary care
medicine and its implications for the state of the nation’s health care.
Washington, D.C. January 30, 2006.
14.Roetzheim, R G, Pal, N, Gonzalez, E C et al. The effects of physician supply
on the early detection of colorectal cancer. J Fam Pract 48 (11): 850-8, 1999.

Adapted from Do Not Resuscitate: Why The Health Insurance Industry Is Dying, and How We Must Replace It, and The Cancer Generation: Baby Boomers Facing a Perfect Storm, with permission from the publisher, Common Courage Press.

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

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

As described in our last three posts, this bill calls for both an individual and employer mandate as well as a small public option to be available to the uninsured and employees of small employers through a national insurance exchange.  Individuals would be subsidized by the government to offset their premium and out-of-pocket costs.  People with household incomes up to 400 percent of the federal poverty level (FPL) would be eligible for subsidies.  Tax credits would also be provided to small employers with fewer than 25 full-time workers, covering up to 50 percent of their premium costs.  These new subsidies, of course, are in addition to the many subsidies the government already provides to individuals and employers through long-standing tax-exemptions of  insurance costs.  H.R. 3200 also calls for expansion of Medicaid for all individuals with incomes up to 133 percent of the FPL (about $14,000 for an individual and $88,200 for a family of four).

The CBO projects the cost of H. R. 3200 to be about $1 trillion over 10 years, not including the increased costs of Medicaid, for which it lacks jurisdiction to score.  “Conservative” projections estimate that the bill will increase the U. S. budget deficit by $239 billion in 2019.  Governors have already weighed in against the increased costs of Medicaid expansion, pleading for an increased federal role in paying for it, and political opposition to the bill’s inflationary trends seems certain to spread beyond the Republicans and Blue Dog Democrats to others.  As the debate intensifies, we can expect that eligibility for subsidies will be tightened up.

Returning to the affordability of health insurance, the supposed reason for reform legislation, there is an obvious disconnect from the impacts of a deepening recession.  Much of the population, including the broad middle class, are in increasingly dire straits in their ability to pay for necessary health care.  Average annual health care costs for a family of four are now $16,771, including insurance premiums, deductibles and other out-of-pocket costs.  For a family of four with an income of $88,200 (four times the FPL and much more than the median U. S. median income), these average costs exceed 19 percent of family income, well above the 10 percent considered by the Commonwealth Fund as a hardship level.

We have to remember that the costs of health insurance often have little to do with the total costs of health care for individuals and families.  For those with significant health problems, their costs will be much higher.  And although the current proposals in Congress call for annual limits on out-of-pocket spending ($5,000 for individuals and $10,000 for families), insurance premiums and out-of-network charges are not counted against these limits.

This bad situation is getting worse. The unemployment rate is poised to soon rise above 10 percent, and the broader unemployment rate is already more than 20 percent in a number of states.  Tax revenues have fallen precipitously in many states, and 16 states are now paying for unemployment insurance in borrowed funds.  Draconian cuts are being made in safety net programs all across the country.

So it seems certain that federal payments for subsidies will far exceed any projections that are now being discussed. There are at least 100 million Americans less than 65 years of age with incomes below 400 percent of FPL.  If eligibility for federal subsidies is set at that level, the CBO projects that their cost will be about $773 billion between 2013 and 2019. Concerning Medicaid expansion, the CBO has also estimated that extending Medicaid to an additional group of Americans with incomes for a family of four up to $33,000 a year would cost about $500 billion over 10 years.

We can be sure that the Senate will restrict subsidies below these levels and that any final health care reform bill, if ever enacted, will further exacerbate the problems Americans face in paying for health care.  And to boot, federal law would mandate them to purchase health insurance, under penalty of fine, and an underinsurance product at that.  A working draft of the “actuarial value” of insurance coverage in the Senate Finance Committee last month stated that a policy of “bronze” or “silver” value would cover 65 and 73 percent of total health care costs, respectively — undercoverage by any standard.  A family of four with an income at 300 percent of FPL would pay 15 percent of their income on health care. So we would end up with a mandate for inadequate coverage which much of the population, as well as taxpayers, cannot afford.

The strong conservative challenge that is building against H. R. 3200 is largely due to its deficit-busting certainty as well as its increase in entitlement to health care without credible cost containment requirements.  As a progressive advocate of real health care reform, I can only agree with these concerns.  What is likely to emerge from Congress on health care reform this year, if anything, will not be real reform and will only add to our problems.

Although still very much under-recognized and fought against by the medical industrial complex and complicit corporate media, there is only one solution to cost containment of our runaway market-based health care system.   H. R. 676, coupled with a private delivery system, is a paygo alternative that assures universal coverage of necessary health care for all Americans.  It would save up to $400 billion a year and provide a structure within which to put in place other cost-saving efficiencies.

The private health insurance industry is an impediment to reform, not part of the solution.  It has survived to this time only through generous subsidies from the government, whether in the employer-based or individual markets or privatized Medicare and Medicaid programs.  Until we recognize this, all of our incremental approaches to build on our multi-payer system will be of no avail.

Adapted from Do Not Resuscitate: Why The Health Insurance Industry Is Dying, and How We Must Replace It, and The Cancer Generation: Baby Boomers Facing a Perfect Storm, with permission from the publisher, Common Courage Press.  Order link
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John Geyman, M.D. is the author of The Cancer Generation and Do Not Resuscitate: Why the Health Insurance Industry is Dying, and How We Must Replace It, 2008 by John Geyman. With permission of the publisher, Common Courage Press

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