News

In December, 2000, members of this list received a message from Olveen Carrasquillo, MD, MPH, Assistant Professor of Medicine and Public Health at Columbia University's College of Physicians and Surgeons. The message requested support in expressing opposition to the acceptance by the Society of General Internal Medicine of a grant from the pharmaceutical firm, AstraZeneca, that challenged ethical boundaries. In this message, Dr. Carrasquillo expresses his gratitude for those that supported this successful effort.

Hi Don:

A few months ago you did us a big favor posting in your quote of the day our plea for help in opposing SGIM's accepting money from Astra-Zeneca. Well it seems we have achieved a small victory. I do not know if it is appropriate to send this out in your site, but I am trying to thank all those who read the message and helped. The message is below. Thanks

Posted by pnhp at 12:00 PM | Permalink | Comments (0)

An article referred to us by Dr. Reinhardt:

Don:

This article so clearly demonstrates the high social cost of pluralism relative to collective action. It is Le Vice Americain, as the French would put it.

I think your group may find this useful.

Best

Uwe

The New York Times
by David Barstow and Diana B. Henriques
October 28, 2001

Across metropolitan New York, bereaved spouses armed with spreadsheets, fax machines and stacks of application forms are pursuing what some call their new full- time jobs and what others resentfully refer to as a form of professional begging: asking charitable organizations for help.

Families that have lost loved ones in the World Trade Center attack say they have often been utterly overwhelmed by the multiplicity of charitable funds, aid organizations and government agencies. In dozens of interviews, widows and widowers described days spent bouncing from one bureaucracy to the next, struggling to navigate a maze of confusing rules, deadlines and requirements.

"We have to make five and six calls to each of these agencies to get someone who knows what they're doing," said Liz McLaughlin, 34, a mother of an infant son who lost her husband, Robert, a Cantor Fitzgerald trader.

Another woman, who did not want to be identified for fear of offending charity groups, said she had dealt with at least nine different United Way representatives who conducted three separate interviews involving the same basic set of questions.

"I was turned into a widow on Sept. 11 and a single mother, and now they're turning me into a beggar," she said.

Almost seven weeks after the attacks, there is no shortage of charity - at least $1.2 billion has been raised - and many people are working long hours trying to give it away.

In a former furniture store in Falls Church, Va., dozens of American Red Cross volunteers sit at desks decorated with tiny American flags, approving hundreds of relief checks to cover $4,500 mortgage checks, $500 car payments, funeral costs, school tuition, nannies, dental bills - often with no questions asked. Working 12- hour days, these volunteers have signed off on $35 million in relief checks for about 2,300 families. Tens of millions of dollars have been given to grass-roots agencies providing everything from grief counseling to small-business loans.

But what has not been provided is a simple, comprehensive way for families to apply for the full range of help. For families not blessed with legions of helpful friends and relatives, the experience of dealing with the hundreds of charitable agencies and funds can be maddening.

"I'm applying so many places and the paperwork is getting a little overwhelming," said Jennifer Damaskinos, whose husband, Thomas, another Cantor Fitzgerald executive, was killed.

The Red Cross, the nation's largest disaster relief organization, has been trying to distribute more than $530 million. But it has not yet had even the first contact with hundreds of families, and its ability to distribute aid promptly has also been undercut by internal turmoil and confusion.

Dr. Bernadine Healy, president of the Red Cross, clashed with New York officials over questions of coordination. On Friday, she announced that she would resign at year's end, telling reporters that she had been forced out. In recent weeks, she had come under increasing criticism, in part because of her handling of charitable fund-raising.

Two weeks after the attack, the Red Cross seemed to offer the promise of sweeping, trouble-free relief. It announced a $100 million program to provide three months of living expenses to each victim's family. Its officials confidently promised that checks would be mailed within 48 hours of a family's filling out a simple one-page application.

In practice, though, many applications have been held up for several weeks or more, Red Cross officials concede. The delays have been caused by a variety of problems, which include the agency's inability to verify quickly that applicants are in fact related to victims; disorganized records; ever-changing management directives; and the cyclical turnover among volunteers, with veterans often leaving unfinished files to untrained rookies.

What is more, the Red Cross has not even contacted scores of families because it has failed to coordinate its own efforts to identify victims with the work of other charities trying to do the same thing. Part of the problem, though, is the refusal of New York City officials to give the Red Cross access to the list of missing and dead, which city officials said is not complete.

In Falls Church, volunteers are not even certain which families on the Red Cross list of victims have been overlooked because their record- keeping systems - assembled from scratch under intense deadline pressure - are woefully incomplete. In hundreds of cases, all the Red Cross has to work with is a victim's name, and the agency's volunteers are not trained or equipped to track down relatives on such scant information.

"That's one of our downfalls - we're not real sophisticated in how to do those things," said Nancy Smith, a senior Red Cross administrator.

But the obstacles encountered by the Red Cross only begin to hint at the range of difficulties plaguing the broader philanthropic response - a vast and largely decentralized effort involving a tangle of established and new charities, many of them straining to manage the unprecedented volume of generosity from individual and corporate donors.

Jane S. Sibley, a Red Cross disaster aid researcher, was recently asked to compile a guide to available charity programs for a Red Cross information line. After only a few days of work, she recalled, her guide was nearly three inches thick.

Veronica Juliano has made more telephone calls than she can count to get help for her sister, her sister's best friend and her husband's secretary, all of whom were widowed in the disaster. The response, she said, was "frustrating and humiliating." Calls to several charities met only with confusion, misinformation or a referral to the Federal Emergency Management Agency, which did not provide any meaningful guidance, she said.

To keep track of all the relief groups, Mrs. McLaughlin, of Pelham, N.Y., has compiled an 18-page spreadsheet. She has three binders full of applications and forms.

"You have to chase it," Mrs. McLaughlin said of the relief money. "That's my full-time job."

Many families, having read about the hundreds of millions being raised, and having watched benefit concerts and telethons, now have inflated expectations. On a recent morning, for example, Paula Zahn, the CNN anchorwoman, inadvertently implied that the Red Cross was doling out six-figure relief checks as she discussed the plight of a widow who lost her 31-year-old husband. "The Red Cross hooked up with her, and now she has some $200,000 that she desperately needs to take care of her family," Ms. Zahn said.

For the next few days, volunteers answered calls in Falls Church from victims' families who wanted to know how they, too, could collect their $200,000 checks.

One bright spot is the Family Assistance Center at Pier 94, on the Hudson River at 55th Street. Many victims' relatives expressed amazement at the sensitive and efficient treatment they received from a wide range of agencies, including the Red Cross, represented at the center.

"Very impressive," said Suzanne Gabriel, whose husband was an executive chef at the World Trade Center.

As many of the widows have, Mrs. Gabriel said she felt strange applying for help. "But the Red Cross people told me, `This is a gift from the American people. They want you to have it,' " she said. "I got a check in the mail about 10 days later."

But for those who lack formal documentation - marriage licenses, pay stubs, birth certificates - the process is "essentially useless," fumed Stanley Hamilton, who runs a street ministry called Hands of Hope in Wilkes-Barre, Pa., and who has been trying to guide victims through the bureaucracy.

The rewards and the burdens of the current system are apparent to Lauren S. Davitz, a human resources professional who went to Pier 94 with a Russian-born friend, a laborer who lost his wife in the disaster. "He was down there from 10 a.m. until 12 at night, and the paperwork was overwhelming, although people really reached out to do what they could," she said. "But he walked out with the equivalent of $6,000."

Eliot L. Spitzer, the attorney general of New York, has tried to use the example of Oklahoma City as a model of how relief could be coordinated. After the bombing there, a large committee of public and private relief agencies met each week to decide, victim by victim, how best to distribute benefits. The agencies shared access to a single database.

Mr. Spitzer has proposed creating a similar database for the Sept. 11 victims. Last Wednesday, the Red Cross agreed to take part, and other groups have since followed suit.

Mr. Spitzer also wants to let those seeking help register with this central database over the Internet, submitting applications that could list an entire menu of needs, from mental health counseling to scholarship money. "That way the charities could reach out to people as opposed to people having to reach out to all these charities," said Mr. Spitzer's spokesman, Scott Brown. But the database is still far from reality. Also unresolved is the question of who will operate it.

In the meantime, resentment is accumulating.

Last week, in Princeton, N.J., at a meeting of about 35 relatives of victims, there was an eruption of anger when local Red Cross representatives tried to address the support group. "Oh, they were yelled at," Kathy Tedeschi, said a leader the group.

According to another participant, one family member called out, "When the hell are we going to get some money?"

The Red Cross representatives admitted that they were confused, but promised that they were "going to do their best," said Bob Monetti, who attended as a representative of the Victims of Pan Am Flight 103.

"Then they got out of there."

Copyright 2001 The New York Times Company

Comment: Just to remind you of Dr. Reinhardt's introductory phrase, "the high social cost of pluralism relative to collective action," a cost that is exceedingly familiar to those of us who have been working on behalf of health care equity.

Posted by pnhp at 12:00 PM | Permalink | Comments (0)

The New York Times
October 27, 2001

"The state Health Services Commission has been working since July on a Legislature-mandated task of finding ways to expand the Oregon Health Plan to cover more of the working poor."

"In ranking benefits, from hospital care to non-emergency ambulance transport, the commission in effect chose which services will make the cut when the Legislature draws the budgetary line next year."

Dr. John Santa, director of the Office for Oregon Health Policy and Research:

"It comes down to an old issue. Is it better for everybody to have something than for some to have a lot and others to have nothing?"

http://www.nytimes.com/aponline/national/AP-Oregon-Health-Plan.html

Comment: It does come down to an old issue. Public programs for the medically indigent will always carry the "welfare" stigma, and, as a result, will be chronically underfunded. Oregon is famous (infamous?) for its unique approach of ranking the priority of various medical services, covering the most essential services, but using a guillotine on the remaining once the funds are depleted. As other states are struggling with the budgetary problems inherent in expansion of eligibility for Medicaid and S-CHIP services, Oregon has decided to guillotine more of the health care corpus as its solution. The services that will be excluded are not ineffective, wasteful services, but they are beneficial medical services that will no longer be accessible to this vulnerable population merely because of lack of affordability.

Once again, we already have the resources to provide comprehensive care to everyone, but we lack an effective method of allocating those resources as we continue to cling to the fragmented system of expensive, wasteful health plans, underfunded public programs, and expansion of the ranks of the uninsured. It seems that everywhere we turn, the need for a publicly administered, universal health insurance program cries out. Why aren't we responding?

Prof. Uwe Reinhardt responds to Prof. James Robinson and his comments which included, "... the California experiment with physician organization as the heart of the health care system will have come to an end."

Prof. Uwe Reinhardt:

I have read James' paper. Although he is an economist by training, he seems to have adopted more the style of a journalist for this piece. Viewed through the cold prism of an economist, the California story seems relatively simple and totally unsurprising.

If memory serves me correctly, per-capita health spending, insurance premiums and charges for health services in California tended to be way above the national average during the 1970s and 1980s (as they were in Massachusetts). I recall a paper penned at that time by Steve Schroeder in which he marveled that physicians in San Francisco had little trouble earning a good living in spite of the fact that the MD-population ratio there had reached 600, more than triple the national average. There was also excess capacity in the hospital sector at that time, if memory serves me well. In fact, the supply side drove the entire California health system, without little resistance on the demand side.

Managed care was designed by its architects (Enthoven and associates) to take down this excess capacity through the power of private market forces, rather than through regulation. This had to mean (a) that some of the existing capacity (including physicians) had to be driven out of the California market altogether and (b) that downward pressure on the prices for all health services would be the chief instruments through which that excess capacity would be driven out. For physicians, this meant that even those left standing after the purge would have permanently lower incomes than they once had enjoyed.

Can anyone really be surprised that such a campaign would disillusion and frustrate a supply side that had hitherto reigned supreme, in relative fiscal luxury? Could reasonably people have expected any other outcome? Could widespread bankruptcy during the transition from excess capacity to "right-sized" California health system be avoided?

End of story, as it is perceived through the economist's prism.

As an addendum to this story, let me mention that I find myself truly puzzled by the fiscal problems of the large multi-specialty group medical practices and IPAs in California. Specifically, I wonder what do they mean by "bankruptcy?" What does the income statement and balance sheet of a bankrupt medical group look like?

If physicians in such groups are paid something resembling a salary which that is then is booked by the group as an expense on the income statement (which means as a charge against the group's networth), then of course such groups can easily slide into losses and, eventually, into bankruptcy. Here one envisages physicians tenaciously insisting on their traditional incomes, rather than accepting the lower incomes dictated by market forces, thus driving expenses above revenues and, eventually, the group's liabilities above the realizable value of its assets (the economic definition of insolvency, which then leads to the legal status of bankruptcy).

But if physicians, like the general partners in any other partnership, were paid out of the residual left after all of the group's expenses for items other than physician time have been met, then "bankruptcy" would have to mean that there was no annual residual to pay physicians anything at all--that revenues did not even cover non-physician expenses. Is that, then, what happened in California? I rather doubt it. My hunch is that physicians expensed their take-home pay and charged it against the group's networth, which then led to "bankruptcy.".

Now, remember: The whole idea of managed care was to depress the prices of health services (and with it the incomes of health professionals) enough to drive a sufficient number of them out of the California market, thus reducing that market's excess capacity. This is how markets work everywhere else. Thus the "bankruptcies" we now see should have been fully expected.

To my mind, the central lesson from the California experience is that the idea of integrated health-care delivery systems that are paid by full capitation and, therefore, must assume the full financial risk for the health care of the insured will cause enormous fiscal stress on the supply side of the market if that capitation is set by competitive market forces in a market beset by excess capacity.

It is so, because in such a market the capitation rates will be driven below the full cost of the kind of care that patients expect, even if that care is efficiently produced. The market approach in this context could work only if all participants on the excess-ridden supply side of the market had the stomach cheerfully to eat the harsh medicine dished out by private market forces, including bankruptcy and being driven out of the market altogether. In the early 1990s, the majority of Americans either supported that idea or acquiesced in it. They chanted "Let the government get off our backs!" Evidently, and not surprisingly, once faced with the brutal working of the private market, this country's health-care providers do not have the stomach to take that harsh medicine nor, in the end, does the public and the regulators who represent that public.

Finally, I agree with James that, in the short run, California will try to get out of the current turmoil in the health care market by going the PPO route, which means shoving a much larger fraction of the cost of health care on to the shoulders of patients themselves and, thus, moving ever more clearly towards an income-based health system. In that system, tightly controlled HMOs are likely to have a comeback, perhaps even multi-specialty medical groups specializing in care for the lower-income strata. It may be argued that such a system is un-American, that this is not in keeping with our cultural norms. But our national defense in these scary times is income-based as well, and everyone seems to find that just ducky. (Not surprisingly, economists find the volunteer army "efficient.")

Best,

UER

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California HealthCare Foundation

October 2001

By James C. Robinson, Ph.D., Professor of Health Economics, School of Public Health, University of California, Berkeley

"Implications for the California Experiment"

"The HMO product in California shows the signs of serious financial, intellectual, and managerial underinvestment. Instability among physician organizations, disaffection among practicing physicians, dissatisfaction among enrollees, and regulatory enthusiasm among politicians reflect a long and serious neglect of organizational relationships. The contemporary skepticism and antipathy presage mutually assured destruction if a sense of partnership cannot be renewed. If the financial instability of the medical groups leads to widespread bankruptcies, the health plans will shift to PPO products and rely on consumer cost-sharing rather than provider integration to control cost growth. Similarly, if the contemporary enthusiasm among purchasers for open-access products leads to a renunciation by health plans of capitation and medical management, most medical groups and all the IPAs will fragment into their component physician practices. Either way, the California experiment with physician organization as the heart of the health care system will have come to an end."

For the full report: http://admin.chcf.org/documents/chcf/SolvencyRobinsonArticle.pdf

Comment: These are not hypotheticals, as Professor Robinson seems to imply. This process is well underway now. But Professor Robinson apparently has telegraphed his true opinion by the topic he has selected for the forthcoming Leadership Academy of the California Medical Association. His topic? "The End of Managed Care."

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United States House of Representatives
Government Reform Committee
Civil Service and Agency Organization Subcommittee
October 16, 2001

Representative Danny Davis: Mr. Moffit, I believe that you mentioned the fact that we need to get some new blood, or we needed to mix the demographics, that we needed different composition. And then I noted that Delegate Norton mentioned the fact that 58 is an average age (in the FEHBP program).

Robert Moffit, Director of Domestic Policy Studies at the Heritage Foundation: Right.

Rep. Davis: Are you suggesting in any way that we need to place more emphasis on fact, or in the end, the age of the population group that we're dealing with, or that we need to do something to shift part of that age group out of the program?

Dr. Moffit: No. Congressman, I -- what I'm saying is basically expand the program, and I think Mrs. Norton actually put her finger on it. You know, we want to be careful how we do this. A suggestion that I made in my formal testimony is to expand it to people who do have a direct relationship with the federal government, and that group are young military families who are enrolled right in the military health care system. You're talking between five and six million people.

Young military families are healthy. Their national representatives have testified before Congress that they would like to be in the Federal Employee Health Benefits Program. But, the central value of it would be that it would improve the actuarial profile of the pool. As a result, it would stabilize...

http://www.kaisernetwork.org/health_cast/uploaded_files/10.16.01_FEHBP_transcript.pdf

Comment: This hearing got off to a poor start when Chairman Dave Weldon attempted to prevent DC Delegate Eleanor Holmes Norton from presenting an opening statement with the comment, "... witnesses fly in from faraway places and sit and listen to members," to which she responded, "... most of the witnesses here are flown in from the Office of Personnel Management and other far-flung parts of the District of Columbia." Things only became worse with bumbling testimony on flawed policy concepts such as the need to end the tremendous "overutilization" in the program by making federal employees sensitive to costs by changing to catastrophic coverage.

The FEHBP is the largest health benefits program in the nation. It is facing the same problem as all other programs: the skyrocketing costs in health care. The size of this program and the great variety of plans offered have provided the testing grounds for controlling costs through private health plans. It has been a miserable failure. Robert Moffit suggests that we salvage this private sector solution (FEHBP) by diluting the risk pool with young, healthy military dependents, a proposal which, not coincidentally, furthers the agenda of the Heritage Foundation by privatizing the coverage of this group as well (the military dependents). But this will still do nothing to slow escalating health care costs. Mr. Moffit is correct when he suggests improving the risk pool, but we really need to adopt the ultimate risk pool, the one that includes everyone. And we need to eliminate the wasteful and ineffective health plans and replace them with a single, publicly administered, universal health insurance program, a model can effectively contain costs through global budgeting.

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San Francisco Chronicle
October 23, 2001
by Victoria Colliver

"With the recent surge in layoffs, many of the unemployed find themselves having to choose between paying for health care insurance or something as basic as rent."

"Many workers have the option of COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act. The 1986 law allows employees to continue their coverage for about 18 months, during which they usually pay the entire premium plus a 2 percent administrative fee -- a pricey option considering that most employers subsidize much of their employees' premiums."

"With employer group plans costing as much as $2,650 per year on average for an individual and more than $7,000 for a family annually, the burden on laid-off workers to pick up the tab while they are searching for a new job can be a frustrating, back-breaking task."

"In the Bay Area, the problem is exacerbated by the large number of employees who aren't entitled to COBRA because they worked for dot-com companies that simply closed up shop."

Gail Shearer, director of health policy analysis for Consumers Union:

"If you're losing your income, chances are you're not going to be able to come up with the $7,000 you need to cover your family's health insurance needs."

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/10/23/BU240187.DTL

Comment: Several members of Congress are attempting to enact legislation that would provide subsidies for the COBRA program in order to enable the continuation of health care coverage for the increasing numbers of unemployed individuals. Because COBRA benefits are of limited duration, and because they are not available for former employees of failed businesses, and because the premium payments are shifted from the employer to the now-unemployed former employee, they are an inadequate solution to the problem. COBRA benefits are very expensive and are considered by many to be unaffordable for our government considering our tight budgetary constraints. At best, federal assistance will be only partial, leaving the unemployed with a very large bill for health insurance premiums, which in turn means that they will remain unaffordable for most of those who have lost their incomes.

Although we must support congressional efforts to shore up the COBRA program, we must likewise recognize the severe inadequacies of these proposals. Inevitably, much of the imperative costs will be shifted to public programs such as Medicaid, while many simply will be deprived of essential health care services. Once again, it is abundantly clear that it would be much more rational, equitable, and humane to enact a program of publicly administered, universal health care coverage. The need is more urgent than ever.

Gail Shearer and Susanna Montezemolo of Consumers Union have prepared an excellent report on this topic, "A Pink Slip Away... Why Congress Should Subsidize Health Insurance Coverage for Laid-Off Workers." The report is available at:

http://www.consumersunion.org/health/cobra/cobra.htm

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The Washington Post
October 21, 2001
by Bill Brubaker

"A survey of 200 large employers released last week found that workers will pay an average of 14 percent more for company-provided health benefits next year. That's almost four times the rate of inflation. And it follows increases of 12 percent for 2001 and 8 percent for 2000, according to the Watson Wyatt Worldwide consulting firm, which conducted the survey."

"Corporate executives say they have no choice but to scale back benefits and pass on costs because of the sharp rise in insurers' rates."

Darnella Layne, 45, a cafeteria worker at Xavier University in Cincinnati:

"I couldn't afford the premiums this year and I won't be able to afford them next year. Last year they told me I'd have to pay almost $200 a month for a plan that insured me and my 17-year-old son. I earn $8.87 an hour and they take out a lot of taxes. It's pitiful: If I bought that health plan I'd barely have a paycheck left."

http://www.washingtonpost.com/ac3/ContentServer?articleid=A24859-2001Oct20&pagename=article

Comment: It is really happening. Health care costs are skyrocketing, and both employers and the insurance industry are passing those costs on to the individual employee, beneficiary, patient, consumer, or whatever label is used for the hapless, average American that is bearing the brunt of health care inflation. If the executives of our nation's businesses and insurance companies believe that they can't afford to absorb the increases in health care costs, just wait and see what happens when the disposable income of the average individual is consumed by this shift in health care costs. And at four times the rate of inflation!? Disaster is imminent.

Clearly there is great urgency in the need to reinforce the infrastructure of our public health system, based on the shocking realities of recent tragic events. Impairing access by making health care unaffordable would have more insidious but much greater consequences for the health of the people of our nation, not to mention causing the financial breakdown of our health care delivery system once patients are no longer able to access it. The urgent legislation that we need to fund our public health infrastructure MUST include provisions for publicly administered, universal health insurance if we are to assure the integrity and accessibility of our health care delivery system.

Personal note: With humbleness and great pride, I have been honored by Physicians for a National Health Program by being selected to serve as their president, effective in January. I fully intend to continue these messages, but I anticipate more interruptions because of conflicting commitments. Working with the dedicated individuals at PNHP has been one of the most rewarding experiences of my life. Through their efforts in analyzing and developing health policy based on ethics and equity, they have provided the beacon that will lead us to health care justice for all. It is a great honor, and indeed a pleasure, to be part of that team.

Don

Posted by pnhp at 12:00 PM | Permalink | Comments (0)

Dear Don,

A number of your readers and our activists asked me to give this brief description of our current work at this time in the Quote of the Day debate.

Ken

Ken Frisof:

The stimulating debate in Quote of the Day of late has been a thoughtful mixture of politics and policy, but the underlying theme has been that this is a time for politics first, and policy second. As Donald Light noted in the most recent communication, the challenge is "to get major stakeholders to sign on to a basic principle: that every American will have access to needed health care."

Fortunately for us, there is already a legislative vehicle that allows us to organize around this approach. House Concurrent Resolution 99, or as we are now calling it, "The Health Care Access Resolution" [HCAR] was the first joint work product of the Congressional Universal Health Care Task Force, founded in 2000 by Congressman Conyers. The Resolution was crafted by Members of Congress and their legislative aides (several of whom spent years as political organizers before joining Congressional staffs) precisely to serve as an organizing vehicle. It lists 14 attributes/principles of quality health care for all. It intentionally does not offer a policy prescription, but rather directs "Congress to enact legislation by October 2004 that provides access to comprehensive health care for all Americans."

The first draft of a general flyer for the educational and advocacy campaign around HCAR was made ready for the Jobs with Justice National Conference on September 7-9. After a pause to reflect on the implications of the terrorist tragedy, the activists in UHCAN and other organizations working on the campaign are once more moving ahead, mindful of the changed circumstances so well described in the Quote of the Day Discussion. A new version of the general flyer, soliciting organizational endorsements and activity around HCAR is being prepared for the meetings in Atlanta later this month.

The renewed popular recognition of the vital role of government in promoting well-being is a valuable opening for the forces for health care justice and equity. HCAR provides a congressionally-originated vehicle through which we can reach out to the organizations and politicians of mainstream America and seek endorsement and cosponsorship of our core principles.

If you would like to participate, please e-mail your contact information to uhcan@uhcan.org. We will e-mail material once the revised version is available, in the last week of October.

A description of House Concurrent Resolution 99 is available at: http://www.uhcan.org/files/strategies/taskforce.html

Comment: There are many individuals and organizations dedicated to health care equity, and there are even more ideas floating out there on the preferred agenda for reform. But there is one agenda item that we must all place first and that is that we are going to have to agree to work together.

Margaret Heldring, Ph.D., Executive Director, America's HealthTogether:

Dear Dr. McCanne:

I write to introduce America's HealthTogether, following on Karyn Gill's initial introduction. Thank you for your apparent interest!

America's HealthTogether is committed to universal health care, health care justice, and health promotion. I understand you have seen our website and so know we are proud of the extraordinary group of people working together. Bob LeBow, a member of our Advisory Committee, is a past president of PNHP. You can see I have cc'd him on this email.

We would like to do all that we can to move this shared agenda. We are poised to function as conveners. We would be fully open to sharing this role with others, such as Arthur Caplan (I have admired his work!). We think that the more frequently we demonstrate collaboration, the more we model it and help support a culture that values it - a necessary value for universal health care!

Please be in touch and share this information as you would like. We look forward to pulling together!

Sincerely, Margy Heldring

America's HealthTogether: http://www.healthtogether.org

Comment: Again, we share the goal of health care equity. Let's all work together to achieve it.

(Note: Due to other commitments, the Quote of the Day messages will not resume until about October 23.)

Joel Segal, Legislative Assistant for Congressman John Conyers:

Dear Friends,

With 44 million uninsured, ( I use to be one of those for many years), the time has come for a unified universal health care movement that is motivated by compassion, love, and empathy for those whose lives are ruined by our current for profit health care system.

We need health care activists to write their respective Members of Congress letters, make phone calls, e-mail, fax, etc. about the need for universal health care. First, contact the legislative assistant in charge of health care. You can even write pre-fabricated letters. BELIEVE ME...THEY DO MATTER. WHEN WE GET LETTERS AND PHONE CALLS, WE MUST TELL OUR BOSS! IF YOUR MEMBER OF CONGRESS IS NOT ON THE UNIVERSAL HEALTH CARE TASK FORCE, PLEASE URGE THAT THEY SIGN ON.

ORGANIZE TOWN MEETINGS & HEARINGS TO HEAR FROM THOSE WHO SUFFER DAY IN AND DAY OUT WITH OUR HEALTH CARE SYSTEM. WE CAN HELP GET MEMBERS OF CONGRESS TO ATTEND.

THANKS,

Joel Segal Legislative Assistant for Congressman John Conyers 202 225-5126

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portsideMod
October 8, 2001

A copy of the resolution is available at: http://groups.yahoo.com/group/portside/message/1481
Comment: It has often been said that unions oppose single payer reform because they would lose a bargaining chip that might otherwise be used to promote union membership. Apparently the Florida AFL-CIO believes that the health of all residents of the state is more important.

Mark Hannay, Director, Metro New York Health Care for All Campaign:

Don's suggestion of moving right to the negotiating table is a fine idea, except that it presumes that we are being invited, that there's a chair for us there, and that the convenors of the table care about and want to hear what we have to say re: health care. Unfortunately, at the current point in time the political reality is that none of the above is true. We are going to have to force ourselves to the table, and the only way to force them to extend an invitation to us is if we create enough political noise and clout that they cannot afford to ignore us. What this means is that one of our very first steps MUST be to *build a broad movement*, centered around the demand for action in this area, centered around a set of principles which embodies but does not lay out a specific policy formulation on which many heretofore disparate forces can agree. I invite all to the UHCAN conference next month in Baltimore to join us in that renewing that objective. Full info at: http://www.uhcan.org

Mark Hannay

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The New York Times
October 7, 2001
Letters

To the Editor:

While some of the disappearance of the federal surplus (front page, Oct. 1) may be attributable to slowing economic growth and the unaccountable amounts of money Congress is unquestioningly throwing at the military and intelligence complex, surely the largest factor is the huge, irresponsible Bush tax cut largely benefiting the rich that Congress passed earlier this year.

If those of us down in the valley are expected to make sacrifices for our new war on terrorism in the form of increased everyday inconveniences, more fragile civil liberties, a slowing economy and increased federal expenditures that will come out of our future Social Security and Medicare benefits, surely we can ask those living in the houses on the hill to sacrifice their newly acquired tax relief, which they didn't need anyway.

Mark Hannay New York

Comment: Why is a letter on distributive tax policy being circulated as a quote of the day for health care reform? Mark Hannay is the Director of Metro New York Health Care for All Campaign, and an ardent supporter of health care equity. Issues of distributive tax policy are fundamental to the societal values that we must be supporting if we ever hope to inject equity into our health care system.

Prof. Donald Light responds to Gordon, Caplan, Griss and Oberlander:

Jeoffry Gordon and Art Caplan have, with somewhat different agendas, articulated well the special opportunity and need to address the long-standing, inherent inadequacies in "our lousy health care system." Bob Griss has added still more reasons why this effort would be timely. While I agree with Jon Oberlander about the obstacles, the way around them, I think, is to get major stakeholders to sign on to a basic principle, to "simply state that every American will have access to [needed health] care." Art is right to keep it vague, and from my international experience, the mistake would be for us experts to figure out just how. The only way around the serious obstacles that Oberlander describes is to get this basic consensus and then ask, "OK, how would you like to do it?" Then, let the small employers, the large employers, the health insurance companies, the for-profit health plans and hospitals, the public hospitals and health centers and the non-profit ones start working on an answer.

It won't be easy, and one needs a neutral, prominent strong convenor. Let Art Caplan and the Center for Bioethics be the convenor. Bring together a hand-picked group of leaders from across the industry and sectors, close the doors, and have a sustained meeting on how to do it. Of course, it will take several such 2 or 3-day meetings. And if a plan of consensus arises, there will be subsequent back-sliding and the need to shore it up while widening the circle.

A real danger is that one group of us experts or another will oppose anything they come up with. If they go for universalizing Medicare, our experts will tell them five reasons why they're doing it the wrong way, while the powerful pro-market coalition will tell them government-run programs always fail. If they go for a Karen Davis mix (quite interesting), nearly every faction of experts will pick apart one part or another. Advocates of a national health care program (at least, as they envision Britain's NHS) will oppose almost anything the major stakeholders come up with. Maybe this means that in the meantime, we should have a parallel meeting to see if experts and advocates for universal health care can agree on a plan!

Aside from this recommendation, the first thing that advocates for universal health care need to do is to persuade the small employers, that fierce lobbying group that did serious damage to the Clinton proposal. On one hand, they are hurting the most (or not participating), they feel they have the most to lose, and they are the source of most workers without the partial, flawed voluntary health insurance that other employers offer. On the other hand, you can't win without understanding their issues, taking in their value and language,and responding effectively. If we can persuade them that universal health insurance is a good deal for them, the large employers will be no problem, and together they constitute the clientele of the insurance industry, their agents and the health benefits industry.

Below are a set of REFORM RULES I circulated about two years ago and they may be helpful in thinking about strategies:

REFORM RULES FOR UNIVERSAL HEALTH CARE ACCESS (or “What is likely to Pass?”)

1. No nation has attained universal health insurance that has not built on the existing health care institutions.

Overlay or Add-on or Reconfiguration

2. Short of revolution, no universal health reform has passed over the opposition of more than one major power block.

Which one will you take on? Which one “has to go”?

What plan will gain the support of the other major power blocks? (Think of the huge battle over a few “patients’ rights.”)

3. Successful coalitions are not usually “made” but rather assembled out of existing large organized parties and groups.

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Bob Griss, Director of the Center on Disability and Health, Washington, DC, responds to Drs. Gordon, Marmor, Oberlander and Caplan:

The objective opportunity is there for the emergence of National Health Insurance as Dr.Gordon reveals, but it is not a sure thing as Professors Marmor and Oberlander remind us.

Clearly, private insurers would prefer that Congress rely on COBRA continuation policies and CHIP expansions instead of creating a right to health care for everyone. But COBRA continuation does not guarantee adequate coverage, nor does it provide the leverage for cost containment or an information system that facilitates quality assurance in our fragmented health care system.

Now is the time to publicize the advantages of National Health Insurance at the national and state levels to all of the interest groups while:

(1) Employers lay off many of their workers as the economic recession deepens, and shift their rising health insurance premiums to their remaining employees;

(2) States seek to cut benefits and increase cost-sharing in their Medicaid programs which CMS (formerly HCFA) has enabled them to do through the recently imposed HIFA waiver and the even more pernicious gutting of consumer protections in Medicaid managed care by gutting the regulations designed to safeguard the needs of the most vulnerable Medicaid recipients with disabilities; and

(3) Medicare leaves a growing number of seniors and persons with disabilities without outpatient prescription drug coverage as drug profits continue to soar driving up health care prices throughout our health care system while drug companies continue to use their lobbying power to oppose the cost containment mechanisms that Medicare uses for all other health care providers.

Bioethicist Art Caplan correctly understood that terrorism has obliterated the distinction between soldiers and civilians making it imperative that all residents have access to medically necessary health care.

Meanwhile, Representative Jan Schakowsky (D-IL) stands poised to introduce a legislative mechanism called "First Things First Act" that would roll back the tax cut for the wealthiest Americans until various social objectives are achieved to ensure the unity and productivity of our nation. Among her objectives are:

(1) Adequate responses to the needs created by the terrorist attack, including impacts on workers,

(2) Extended solvency of the Social Security and Medicare Trust Funds,

(3) Medicare prescription drug coverage,

(4) Federal funding of school modernization, and

(5) Affordable housing.

Instead of arguing whether a Republican-dominated White House and House of Representatives would ever enact a right to health care, the challenge to health care reformers is to publicize the advantages that National Health Insurance could offer to all stakeholders in society, and mobilize support from mainstream advocacy groups like AARP, labor unions, employers, religious groups, and health care providers to get behind a political strategy like "First Things First" that could pave the way for "National Health Insurance".

Bob Griss, Director Center on Disability and Health Washington, DC Email Address: Bgrisscdh@aol.com

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Quote of the Day

October 5, 2001

The response to Jeoffry Gordon's call for a shift in strategy can be summarized best by Arthur Caplan's statement, "Fifty years of waiting for a national health system has left tens of millions with nothing... Let's get the damn thing done already."

As expected, the call for moving forward with reform brought many suggestions for the specifics of reform, and many criticisms of the various proposals currently being floated. There is no consensus on the models for reform, but there is universal agreement that we must accomplish reform now.

But the precise models are not the urgent issue. Dr. Caplan is absolutely right. The urgent issue is that we must go to the negotiating tables IMMEDIATELY. We need to lay down on the table the fundamental issues of health policy - coverage, equity, affordability, access, cost containment, adverse selection, portability, continuity, etc., etc. Then we can hash out the policy applications that will address these issues.

The fights in the past have been over the concerns of special interests, such as viability of the private health plans, greed and ego needs of physicians, egalitarian issues of equality versus equity, protection of consumer advocacy litigation income, etc, etc. But these are not extraneous issues that interfere with reform; these are very real issues that must be considered as well. A few examples.

We desperately need an integrated information technology system in health care. Integration would be most effectively achieved and enforced by a public entity, but the application would be more effective through contracted vendors - opening a great opportunity for the health plans to transform themselves into something useful for our health care system. They can be relieved of the burden of risk pooling, which they are attempting to abandon anyway.

If health care as a profession is to remain attractive to some of our more gifted individuals, we will need to compensate them adequately, and we can do this by establishing collective negotiating rights for providers. And restoring the traditional physician-patient relationship will meet the ego needs of physicians. This can be done by eliminating the micromanagement of the middleman money managers, and replacing them with quality improvement programs based on assessment of applications of evidence-based medicine.

Litigation reform is in order, but accountability must be assured by allowing access to appeals and to recourse. We can restore consumer rights to patients while reducing the waste inherent in our poorly targeted litigation system.

The liberal-progressive wing in the reform movement can continue to advocate for equity or fairness in our health care system, without misdirecting efforts to establish equality, which sometimes can be inequitable (a subject appropriate for another editorial).

All special interests have real concerns that must be addressed. Instead of attempting to achieve compromises that inevitably result in mediocrity, we should be looking for the strengths that the special interests bring, and weave them into our system, while rejecting the weaknesses that would compromise reform.

Let's all move immediately to the negotiating tables. Let's leave our junk policy science behind. Let's put down on the table the real issues that need to be addressed with real policy science. Let's bring ALL of the special interests to the table. Let's begin with only one rule: Advocates of each position are mandated to keep foremost in mind at all times what is best for the American patient. If we create a model that is best for the patient, it will be the model that is best for any special interests that have a rightful place at the table. Those that don't belong there will rapidly reveal themselves to the rest of us.

There is far more than enough genius amongst the recipients of this message to initiate this process. Who volunteers as the convener?

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Subject: Shift in strategy

Dear Friends:

It seems to me that our current world crisis has changed the political playing field and opened the probable opportunity for a swift move to a national health program. We ought to adjust our rhetoric, strategies, and thoughts accordingly.

(1) The terrorist attack has the unintended byproduct of curing the civil society malaise described by Robert Putnam in BOWLING ALONE (an outcome he predicted), and people are not just rallying around the flag, they are esteeming the government, depending on it for safety and solutions. This is a tectonic shift in attitudes.
(2) We are in a recession; businesses are going to be doing poorly and watching their pennies very closely.
(3) Health insurance companies are at a point in their business cycle where, after competitively driven price cuts and consolidation, they will be requiring repeated >10% price increases to maintain viability (Aetna or PacifiCare/Secure Horizons) or profitability.
(4) The health insurance premium costs are going to be very onerous to all businesses who will be passing on costs to employees or dropping benefits or health insurance altogether.
(5) As people are laid off (and have been in huge numbers in the service industries as a result of 9/11), the number of uninsured is going to explode and many of the newly uninsured are going to be middle class.

Thus the stage is set for an as yet publicly unanticipated crisis - the final breaking point - in the health care system in the USA. The federal government is going to have to step in (and can with the rationale of protecting the public welfare during wartime). The simplest solution and easiest to promote is to expand Medicare to everyone (and not to get into much of the details about how the providers organize themselves). This will have great public support from the newly uninsured and unemployed, and maybe even from the AMA, etc., as doctors and hospitals feel even more squeezed by falling income and will be eager for public subsidy for "a physician full employment program," and by the states who will now be too poor to subsidize their own reformed health systems. As unlikely as it seems, the Republicans (like Bismarck and Lloyd George) are likely to be more successful at pulling off a national health program than the liberals and the Democrats as a way to help the business and corporate classes (except for the health insurance industry) save money (overhead costs) and as a way to reward, support and calm a worried and activated civil society.

PNHP can have a pivotal role in promoting these changes, especially if we anticipate the need, publicize it, and organize around it with a simple implementation strategy. What do you think?

Please circulate this message to whomever you think will be interested.

Jeoffry Gordon, MD, MPH
paradocs2@home.com

Comment: If you wish to respond, you may reply directly to Dr. Gordon at: paradocs2@home.com If you wish to have your comments considered for distribution to this list, send them to: mccanne1@home.com A couple of responses may be selected for distribution, although, strictly because of the volume, most will not be. If you respond, please indicate (1) if you do NOT want your comments shared (otherwise consent will be assumed), and (2) whether or not you wish to have your e-mail address included with your comments. Without explicit consent, your e-mail address will not be distributed.

You may also wish to contact the following:

Physicians for a National Health Program
Ida Hellander, MD, Executive Director
pnhp@aol.com

California Physicians Alliance
Carla Woodworth, Executive Director
capa@jps.net

Theodore R. Marmor, Ph.D., Professor of Public Policy and Management, Yale University School of Management, responds to Jeoffry Gordon, MD, MPH:

Gordon's call for a shift in strategy of reformers seems to me eminently sensible. The landscape of American politics has certainly been altered and it is surely the case that the reliance on government has been newly noted and accepted. Furthermore, we are likely to have a crush on health coverage, though it is just as likely that the demand will be for extensions of COBRA as Medicare for all. Nonetheless, if ever there will be a dramatic shift in setting--short of depression and short of a l964 electoral avalanche--this is one of them. And advancing Medicare for all--absent endless details --is certainly more appealing post-9/11 than in August of 2001.

But there is also a need for attention to details--like how to price a premium for voluntary enrollment in Medicare. Does one advocate using the present Part B structure, mostly general revenues and a premium? Or, do we rely on Part A financing? If so, there will be a big shift to Part A from employer-based insurance. In short, the rhetorical opportunity is there, but the incremental steps remain complicated. Pay or Play in the l992 period was one answer.

I do not know how to answer the questions I posed, but I do think them worth posing even as I agree with Gordon about the significance of the change in context.

TRM

Theodore R. Marmor, Ph.D.
Professor of Public Policy & Management Professor of Political Science
Yale University School of Management
P. O. Box 208200, 135 Prospect Street
New Haven, CT 06520-8200

Arthur Caplan, Ph.D., director of the Center for Bioethics at the University of Pennsylvania, responds by referring to his opinion article on msnbc.com.

From the msnbc.com article:

"In the past, efforts to create a national health care plan have foundered when private interests have defeated the public good. Americans can no longer afford to put the public good behind private interest. No mother should be worrying about how to pay for her kids’ medical bills because her husband has been killed by terrorists. President Bush and Congress ought to announce a plan to mandate that every American will have access to high quality health care."

The full article is available at:
http://www.msnbc.com/news/635352.asp?0si

Jonathan Oberlander, Ph.D., Assistant Professor of Social Medicine, University of North Carolina - Chapel Hill, responds:

Jeffrey Gordon's suggestion that in the aftermath of September 11 there is a potential opportunity to pass a Medicare for All program seems quite improbable to me. It is far to early to judge the political implications of what happened as well as the military campaign ahead. I agree that with Dr. Gordon that the development of a communitarian national ethos is one possible outcome. But there is a long way from this to adoption of Medicare for All. The political reality after September 11 is still that you have a president opposed to universal health insurance, a Congress without much appetite for health reform, and most importantly a Republican party fervently opposed to Medicare as a model for public insurance. Moreover, with higher inflation rates, American businesses are less likely to pressure the GOP to pass national health insurance than they are to drop coverage. If momentum does develop to expand health coverage in response to economic woes, it is much more likely to come in the form of the already-on-the-table tax credits or extending CHIP, than Medicare for All or single payer. The most ambitious goal for reformers would be to expand the scope of these instruments; pushing for Medicare for All is simply not feasible for the moment.

Jon Oberlander
Assistant Professor of Social Medicine
University of North Carolina - Chapel Hill
oberland@med.unc.edu

Bioethicist Arthur Caplan, responding to a personal e-mail from Ida Hellander, M.D., Executive Director of PNHP, on single payer reform (prompted by today's discussion):

"Single payer will not fly. Period. I favor it but it has no chance, none, nada, zero, with Bush in and the Republicans in Congress. It did not even fly with Clinton and an all-Dem Congress.
"The AMA position is as relevant as that of the Taliban on this issue. No one credits their views on this.
"My view is forget about doing best. It is time to do better. Let's get something. Fifty years of waiting for a national health system has left tens of millions with nothing. Mandate coverage, let the private sector have its piece, and let's get the damn thing done already."

Martin Donohoe, MD, Senior Scholar, Center for Ethics in Health Care, Oregon Health and Science University, responds to Arthur Caplan's comments on single payer:
Major social changes in the US have come about through radical changes, not piecemeal. Otherwise, in the US we would have outlawed slavery but only say for Africans from certain nations or only for first and second generation African-Americans; or we would have given women the vote, but only women making over a certain amount of money or those with a college education; or we would have outlawed child labor but only for kids working in the mines (granted I realize that child labor still exists in the US, particularly in agriculture). I say we need visionary policymakers and ethicists who will go for the whole enchilada - a single payer system, and that physicians and patients say, "For God's sake, it is about time."
Passionately,
Martin

Martin Donohoe, MD, FACP
Assistant Professor of Medicine and
Senior Scholar, Center for Ethics in Health Care
Oregon Health and Science University
General Internal Medicine (L-475)
3181 SW Sam Jackson Park Road
Portland, OR 97225

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University of California, Irvine
Graduate School of Management
Health Care Management Distinguished Speaker Program
October 2, 2001

Dr. Paul Ellwood, "The Father of HMOs"

The following comments are not absolutely verbatim quotes, but were reconstructed from notes taken by me during Dr. Ellwood's presentation:

Dr. Ellwood stated that he has written off managed care companies. But he is ready to try refrom again. He believes that reforms will be far more complex, and that the task will be much more difficult.

He has developed a new acronym for his concepts of future reform, although he states that this is a work in progress.

His acronym: HEROIC, as follows:

H: Health system, with an emphasis on the health component rather than on financial incentives. We should consider that the new form be not-for-profit. (He mentioned that he is disgusted when a managed care executive goes to Wall Street and brags about raising premiums and reducing benefits.)

E: Evidence based medicine. Physicians must agree to follow principles of evidence based medicine. Consumers must agree that evidence based care is sufficient. As an example, they should not an MRI when evidence based medicine does not support its use.

R: Responsibility. Patents need to assume more responsibility for their own health and for the costs of health care. He did state that there is danger that the defined contribution will be too low.

O: Outcomes accountability. Outcomes accountability is absolutely necessary to assure high quality.

I: Information technology. Health care is lagging in information technology. Information technology is demanding, complex and costly. It interferes with "clinical productivity" (i.e., income generation). But information technology provides the glue that holds the health care system together.

C: Commitment. We will be able to identify individuals that will acquire specific disorders. A health care relationship will need to be sustained, with a lifetime tracking and alerting system.

He said that we can design a better health care system, but the problem is getting there. We do not want to put cost containment in front of the system that assures health. We must develop an American health system that hails who we are.

Comment: Listening to Dr. Ellwood, he was obviously very disappointed that the managed care revolution did not fulfill his dreams of quality, efficiency and integration, that would improve outcomes through evidence based health care. He is disappointed that his concepts were developed primarily into a business model rather than a health care model. He believes that we can go back and design a model that will incorporate his concepts, although the implementation will be difficult. It is interesting that in informal conversations after his presentation, a few individuals commented that he had implicitly (but not explicitly) endorsed single payer reform.

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The New York Times
October 1, 2001
Editorial

"Sound management led Empire (Blue Cross and Blue Shield) from near-insolvency to a strong balance sheet in the late 1990's. Even now, Empire is managed much as a for-profit company would be. Yet lately it has struggled to compete with New York's big for-profit insurers. Their market shares have increased almost every year, leaving Empire behind. A takeover by another not-for-profit might help, but only at the cost of hundreds, perhaps thousands of New York jobs, including those of Empire's proven managers."

"If Empire becomes a for-profit company and raises money by selling stock, it will keep its successful management team and gain the ability to grow by acquiring other insurers in nearby states. Expanding into other geographical areas would allow Empire to exploit economies of scale without threatening competition or taking on worse risks."

"The sticking point on conversion is exactly what to do with the proceeds from Empire's sales of stock. Part of the money will help Empire to cover claims, build new offices and grow. Because the company began as a state-subsidized insurer, it has also agreed to put a big chunk of the proceeds of its stock sales to charitable purposes."

"If lawmakers in Albany cannot decide what Empire should do with the $1 billion, they could allow it to sell shares immediately and put the proceeds in escrow pending an agreement. But there is no reason to make Empire wait any longer."
http://www.nytimes.com/2001/10/01/opinion/01MON3.html

Comment: Why is there a big push to convert Empire Blue Cross and Blue Shield from a not-for-profit to a for-profit entity? The oft stated reason is that it opens capital markets (selling shares of stock) which would provide funds to "make investments needed to compete with other insurers." This would enable growth through the acquisition of other insurers in other markets. Then "economies of scale could be exploited." This is the same reasoning that was given when Blue Cross of California converted into a for-profit insurer, WellPoint Health Networks. The California conversion is hailed as a great success, and it is from the shareholders perspective. But what has happened to patients in California?

It has been contended that the for-profit versus not-for-profit status has little meaning other than that the for-profit model is much more effective from a business perspective. But is that really the only difference? As a not-for-profit insurer, the mandated mission is to provide the best services possible for the beneficiary-patient. All resources are devoted to that. The for-profit model is absolutely mandated to enhance shareholder value. The mission under the for-profit corporate culture is to direct resources toward providing the greatest value for the shareholder. But wait. It is even more than this. The senior management and board of directors in a for-profit corporation are compensated handsomely for directing a successful business model. Usually not only are salaries much higher than in not-for-profit entities, but they are also given generous ownership positions through stock options. Now is the management team really interested in being sure that most revenues are distributed as medical benefits, or might they be tempted to increase the bottom line (higher beneficiary cost-sharing and fewer benefits) considering the great financial rewards that they would receive for doing so? It might be instructive to look at Leonard Schaeffer's compensation before and after he converted Blue Cross of California to a for-profit; the numbers suggest that altruism was nowhere in sight, but that the motivating factor seems to have been pure, simple greed.

Since the tax payers have a vested interest through the years of favorable tax treatment as a not-for-profit, some funds raised by selling shares should be used for the public benefit. In California two foundations were established for that very reason. And some of those funds are being spent for the public good. But the Blue Cross-WellPoint board members remained very influential. Hundreds of millions of dollars are available for research on methods to improve health care delivery in California. But the funds have been directed to studies on how to "make managed care work" and other aspects of the "business" of health care, whereas proposals to study universal, publicly administered coverage have been rejected. Is it really in the interests of the citizens of California to limit studies to those that will enhance current business models (supplemented with public "welfare" programs)? Are the foundations primarily dedicated to benefiting health plans, or patients?

And what about the concept of selling stock for merger and acquisition activities? Is that necessarily a good thing? Blue Cross-WellPoint wasted a lot of funds in its failed attempt to acquire Aetna. It's probably a blessing for Blue Cross-WellPoint that the attempt failed (as Aetna's prior merger with US Healthcare proved to be disastrous) . But if it had been successful for shareholders, how could that benefit those insured by Blue Cross? M & A might offer some lucrative opportunities for shareholders, but it really isn't the most important mechanism of enhancing shareholder value. The fundamental principle in business is still foremost to simply increase profits. Blue Cross-WellPoint has been a leader in demonstrating innovative methods of enhancing profits. Their primary thrust is to create innovative benefit packages (reduced benefits) and increased cost sharing (increased out-of-pocket expenses). In other words, they are abandoning the traditional insurance role of pooling risk as they are passing that risk on to the beneficiary-patients. To do otherwise would be to fail the obligation to the shareholders to maximize value. The for-profit model has been very beneficial for the shareholders that were brought into the picture by the conversion, but that success has been at the expense of the health plan beneficiaries.

Does New York really want to follow California's lead? Maybe instead, New York should consider dumping all of the health plans, and adopt a universal, publicly administered program. Until that can be accomplished, New York should concentrate on making the existing system work better for patients rather than sacrificing health care for the benefit of new investors injected into the picture.

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