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

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

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

Here are some of the major problems with the bill:

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

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

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

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

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

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

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

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

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

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

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

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

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

But this bill is not good enough to pass. It will not make a big enough difference in addressing the three main problems requiring reform–containing the spiraling costs of health care, providing universal access to affordable health care, and improving its quality. If we look at the provisions of this 1,990-page bill concerning just the first two of these three goals, we see that it will fail to deliver real reform.

After all of the political compromises along the way that have led to the introduction of the new bill (HR 3962), on the positive side we can say that it will introduce some limited reforms to the health insurance market, expand health insurance to some of the uninsured (primarily by expansion of Medicaid and by often-inadequate government subsidies to individuals and small employers for the purchase of private insurance); and help to address some other problems, such as the growing shortage of primary care providers.

But the negative side far outweighs the positive:

• Although supporters of the new House bill claim that it would expand coverage for as many as 30 million uninsured, we are actually likely to see an  increase in the number of uninsured in coming years for these kinds of  reasons—as costs keep going up, many Americans will be forced to drop  their present coverage because of inability to afford rapidly rising costs of  premiums, deductibles and co-payments; there is no guarantee that the  uninsured will be able to afford new private coverage (even with subsidies, which won’t kick in for another four years); and expansion of Medicaid will  not take place until 2013 (many states are already pushing back with  concerns that the their recession-strained budgets will not allow them to pay  their share in adding to their Medicaid programs, potentially leaving millions of the poorest Americans uninsured.

• There are no effective cost containment mechanisms built into the bill, either for the costs of health insurance or for health care itself. As it whines about weakening of the individual mandate that will likely limit some of its big increase in the insurance market, the health insurance industry is already warning that sharp premium increases will result. The most the bill will do is to require disclosure and review of premium increases, without any regulatory teeth. Although the bill would set up a Health Benefits Advisory Committee to recommend a minimal essential benefits package (with four tiers), insurance industry lobbyists will argue for the most minimal levels of coverage, and we can anticipate an exponential growth in underinsurance. Moreover, there are no price controls to be applied anywhere in the system, except perhaps in authorizing the government to negotiate drug prices with manufacturers. But that provision will almost certainly not clear the Senate, where we can expect even less concern for affordability and prices.

• Although the public option has been the target of intense controversy, it will play a negligible role in health care reform. The CBO has concluded that it would cover no more than 6 million Americans, just two percent of the population, in 2013, and will cost more than private programs, mostly due to adverse selection in attracting sicker individuals and its inability to set reimbursement rates for physicians and hospitals as is done by Medicare. Moreover, middle-income families may be required to spend 15 to 18 percent of their income on insurance premiums and co-payments.

• HR 3962 will not result in making health care more affordable, despite allocating some $605 billion over ten years for subsidies to low- and middle-income Americans to buy insurance on Exchanges. We can count on continued increases in the cost of health insurance as far as the eye can see, together with less actuarial value of coverage.

• Buried in the fine print of this monster bill are many provisions that will benefit corporate stakeholders in the medical industrial complex on the backs of patients and their families. These examples make the point:

• Although medical loss ratios (MLR) (the proportion of premium revenue actually spent on medical care) are specified at a minimum of 85 percent, this loophole has been added–”while making sure that such a change doesn’t further destabilize the current individual health insurance market.” By way of comparison, the Senate Commerce Committee has found that the average MLR for the largest insurers in the individual market is only 74 percent, with 26 percent of premium revenue going to marketing, administrative overhead and profits.

• Although the bill would create a much-needed Center for Comparative Effectiveness Research, it would have no say over reimbursement and coverage policies. As the bill says, it “contains protections to ensure that research findings are not construed to mandate coverage, reimbursement or other policies to any public or private payer.”

In sum, this $1.055 trillion plan over ten years will not fix the major problems of cost and affordable access to health care in our deteriorating system, will add new layers of bureaucracy and complexity to the present system, is not fiscally responsible, and is not sustainable.

What to do now? Rather than accept an unworkable bill that is politically  expedient, we would be better off to make a major course change. That vote could take place as early as tomorrow.

If that fails, shelving this bill would be the best option. Until a few days ago, I would have added that lawmakers should be pressed to retain the amendment proposed by Dennis Kucinich (D-Ohio) to allow states to experiment with single-payer plans, as a number of states would like to do (e.g. California, Colorado, Illinois, Maine, New Mexico, New York and Pennsylvania). Although that amendment had already been passed by a rare bipartisan vote of 27-19 in the House Education and Labor Committee, it has been stripped from the bill.

The best first option would be to call for a floor vote, as originally promised by the House Speaker Pelosi, for  the amendment proposed by Anthony Weiner (D-NY) to substitute HR 676, a single-payer proposal, for HR 3962. If that fails, shelving this bill would be the best option, but if that is not possible, lawmakers should be pressed to retain the amendment proposed by Dennis Kucinich (D-OH) to allow states to experiment with single-payer plans, as a number of states would like to do (eg. California, Colorado, Illinois, Maine, New Mexico, New York and Pennsylvania).

That amendment has already been passed by a rare bipartisan vote of 27-19 in the House Education and Labor Committee.  Whether a health care bill survives the end game in both chambers of Congress in this session is still up in the air. If a bill is finally enacted into law, however, it will be ineffective in remedying the big problems of cost and access to health care. We should be gearing up for an intense effort in 2010 to push for real health care reform–Medicare for All.

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

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