News

The New York Times
October 1, 2001
Letters

To the Editor:

(editorial, Sept. 28):

An additional indirect but major economic effect of the Sept. 11 terrorist attacks may be in health care policy. The economic slowdown that had dramatically increased unemployment in August has been accelerated by the attack to the point of inducing a full-fledged recession.

Most Americans who have health insurance get it through their work. When the slowdown began, 43 million Americans had no health insurance.

As unemployment grows, the families of laid-off workers will add many more millions to the ranks of the uninsured. Perhaps when we get to 50 million or 60 million uninsured, it may at last be politically acceptable to discuss universal health insurance.
JAMES J. FLORIO
Metuchen, N.J.
The writer was governor of New Jersey, 1990-94.

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The Washington Post
September 29, 2001
""by Dana Milbank and Richard Morin

"And, for the first time in three decades, a majority of Americans said they trust the federal government to do the right thing – a sharp but perhaps temporary reversal in the way citizens view their political institutions. Nearly two in three respondents said they trust the government in Washington to do the right thing either 'just about always' or 'most of the time,' the poll found. That is more than double the percentage who expressed such confidence in a Post-ABC News survey in April 2000, and more than three times the proportion who said they trusted the federal government at the low point in 1994."

"Some see hope for a lasting change in public attitudes. 'I think there is the potential that Sept. 11 will turn out to be a turning point for civic America,' said Harvard political scientist Robert Putnam, whose book 'Bowling Alone' last year documented the decline in civic engagement and trust. 'It's a horrible tragedy, but there could be some good coming from it if it causes us to become . . . more aware of the obligations we have to other people and more open-minded about the role of government.'"

Robyn Webb, 26, a high school math teacher who lives in Mount Laurel, N.J.:

"I have a renewed respect for the federal government, absolutely. People see that the government is one of the only avenues we have to get some things done. It puts renewed hope about the government and their capabilities to do things."

http://www.washingtonpost.com/wp-dyn/articles/A42864-2001Sep28.html

From the poll, conducted September 25-27:

16. How much of the time do you trust the government in Washington to do what is right? Would you say just about always, most of the time, or only some of the time?

13% - Just about always
51% - Most
35% - Only some
01% - None

http://www.washingtonpost.com/wp-srv/politics/polls/vault/stories/data092801.htm

Comment: The Washington Post has listed the responses over the years to this inquiry. The current responses supporting trust in the government are a very dramatic turnaround from prior polls. In fact, the last time that there was this level of support was 1966, the year Medicare was initiated. Although this poll was primarily directed toward our military response, the one medical question asked suggests that this trust may be very real. Three-fourths of respondents opposed postponing action on prescription drugs for seniors.

It may be that tragic, shocking events evoke introspection and values clarification. Clearly, we do understand again what really is important. We recognize our own personal needs as we recognize our needs as a community. We place values over substance. The lines separating the private element from government blur when we look at our values. We see a need not only for ourselves but for all of us to have adequate food, shelter, education, health care, and the enjoyment of our varied arts. At times like this we see that the private sector alone has not been able to assure that these fundamental needs will be there for all of us. Perhaps the government, our government, does have a role in assuring that the private sector ensures, not equality, but equity in meeting these needs. Equity is not a construct of the marketplace, but rather it is a construct of a society joining together as a government. In health care, the marketplace can excel at delivering health care, but the government is needed to inject equity. Universal health insurance is possible only with government action. Shouldn't we take a serious look at that, when trust in our government is at a 35 year high?

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The New York Times
September 28, 2001
by Robert Pear

Over all, the number of people without health insurance declined by 551,000, to 38.7 million last year, from 39.3 million in 1999, the bureau said. The proportion of people without coverage declined to 14 percent, from 14.3 percent.

The Census Bureau said it had made technical changes that tended to reduce the number of people listed as uninsured, so the figures for 1999 and 2000 are not directly comparable with those for earlier years. In conducting interviews, the bureau said, it now asks follow-up questions to help people recall whether they have insurance.

Several economists and health policy experts said the declines were unlikely to continue this year. Tens of thousands of people have been laid off, the economy has weakened, and the cost of health care and health insurance has shot up.

Kate Sullivan, director of health care policy at the United States Chamber of Commerce:

"We now have very different economic conditions. Employers are experiencing the highest premium increases in a decade. I expect to see an increase in the number of uninsured in 2001 because people have been losing their jobs. An unemployed worker cannot easily afford coverage."

http://www.nytimes.com/2001/09/28/national/28INSU.html

Comment: HHS Secretary Tommy Thompson stated yesterday that current proposals for the uninsured include modifying COBRA benefits for the recently unemployed, and expanding the Medicaid program. Although both of these efforts should be supported, they will hardly impact the problems of inequity, cost containment, affordability and access. In these difficult times, reform that will contain health care costs is clearly in the national interest. We can contain costs, while improving access and reducing inequity, by enacting a program of publicly-administered universal health insurance. This should be elevated to the status of emergency legislation.

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Health Affairs (web exclusive)
September 26, 2001
by Bradley C. Strunk, Paul B. Ginsburg, and Jon R. Gabel

Abstract:

This paper provides an update on trends in health care costs since 1999. Although the growth rate in overall costs has been stable since 1999, the trend in costs for hospital services rose, while that for prescription drugs declined, although it remains extremely high. Increased growth in hospital costs reflects the retreat from tightly managed care and labor shortages. The discrepancy between premium trends and cost trends has increased, which reflects the health insurance underwriting cycle. If these trends continue, likely responses by employers would lead to consumers' facing higher out-of-pocket costs and an increase in the number of uninsured persons.

In a release from the Center for Studying Health System Change (HSC), Paul B. Ginsburg, Ph.D., the president of HSC:

"The volatile combination of rising costs, increasing premiums and a slowing economy have set the stage for consumers to pay more for care and an increase in the number of uninsured Americans."

http://www.hschange.org/CONTENT/373/ (The full report is available at the HealthAffairs.org link in this article.)

Comment: So is the glass half full or half empty?

Half full? * Increases in health care costs are not as great as the current premium increases would indicate since the premium increases reflect, in part, the health insurance underwriting cycle. * The trend in increasing costs for prescription drugs has declined. * The increases in hospital costs reflect a retreat from tightly managed care, most likely a transitional adjustment.

Half empty? * The trend in costs for prescription drugs remains extremely high, in spite of a decline. * The growth rate in overall costs has not improved since 1999. * The premium equivalents of self-insured firms, which tend to reflect true health care costs, dampening the effect of the insurance underwriting cycle, rose at 9.5% in 2001, well in excess of inflation.

Or maybe the glass is clear full or clear empty?

Clear full? * (No evidence.)

Clear empty? * True health care costs continue to increase at a rate significantly greater than the rate of inflation. * Consumers (i.e., patients) will assume a greater share of the financial burden of health care. * Current trends will increase the numbers of uninsured.

Obviously, the health care economics glass is clear empty. We do not have in place any mechanisms that are capable of preventing true health care costs from escalating beyond the rate of inflation. We have saturated the capacity, or at least the will, of the purchasers of health plans to absorb any more increases in costs. We are increasing the financial burden of the patient-consumers, a major segment of whom lack the levels of disposable income that will allow them to absorb the increased costs. Worse yet, there is no prospect of adding one drop to the empty glass as long as we depend on the current market models of health care asset allocation which have drained the glass dry. With an empty glass, we have nothing left but to chew up and spit out the patient-consumers, a cruel, inhumane, heartless substitute, when the glass could be filled full by merely adopting a publicly administered, universal health insurance program.

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by Donald W. Light
From "Handbook of Social Studies in Health and Medicine" Gary L. Albrecht, Ray Fitzpatrick, Susan C. Scrimshaw, eds.

Donald W. Light, Ph.D., Professor of Comparative Health Systems, University of Medicine and Dentistry of New Jersey:

"Economic competition and markets in health care, as observed in a review ten years ago (Light 1989), embody a paradigm shift from the professional dominance which prevailed in most systems, even public ones like Britain's National Health Service (NHS), to buyer dominance; from a doctor-led pressure for more services to a buyer or payer-led pressure for better outcomes; from an emphasis on hospital-based specialized treatments to prevention and primary care. This paradigm shift to buyer dominance promises better care at a lower cost. Yet one can separate, as Prime Minister Tony Blair has done, the results-oriented focus of a purchaser-led paradigm from a competitive strategy. For price competition in health care is so fraught with dangers of selective marketing, inequalities, worsening care, and ironically higher costs that it is unclear how many countries will employ it for how long. Already, one of the most sweeping adaptations, the transition of the NHS from the world's largest administered managed care system, to the world's largest competitive internal market contracts between purchasers and providers, has been replaced by reforms that emphasize cooperation and partnership, because competition was found to be too disruptive, demoralizing and costly. Competitive markets in health care, then, may be a phase in the historical process of rebalancing relations between the countervailing powers of professions, patients, payers and states."

Professor Light has kindly consented to make available the full article. Merely respond to this message, and you will be forwarded the article as a Microsoft Word attachment.

Also, Dr. Light will be a featured speaker at the meeting of Physicians for a National Health Program on October 20, 2001 in Atlanta, Georgia. Information is available on the PNHP website at: https://secure.server101.com/pnhp/registration_form.htm

The response of Donald W. Light, Ph.D., to ethicist David Fleming's comments on commodities and health care (in Dr. Fleming's response on the ethical implications of a physician's collection letter):

"Dr. Fleming's scenario is precisely the reason why many countries hold to the principle that medical care should be free at the point of delivery. Other reasons support this conclusion. Billing patients, co-payments, and other front-end deterrants decrease, about equally, initial office visits that were not necessary and that were necessary, resulting in the problem getting worse and more costly to treat. Moreover, the savings are tiny -- patient-initiated visits for elective problems. Managing costs can be done much more justly and effectively at the system level, not by making health care into a commodity. Doing so distorts clinical work for physicians and nurses, raises administrative costs considerably, and keeps patients away when they need to come in."

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The Boston Globe
September 25, 2001
"Kennedy to Launch Drug Program" by Rick Klein

"Former US Representative Joseph P. Kennedy II today will launch a private drug-discount program that could save elderly and poor consumers thousands of dollars in medication costs."

"Kennedy said he has negotiated substantial discounts in drug prices with drugstore chains through his nonprofit Citizens Health Corp., a subsidiary of Citizens Energy Corp."

"Kennedy's announcement comes after several years of failed attempts to get the state to move forward with its own bulk-purchasing program. The Legislature has required the administration to establish bulk purchasing each of the past two years, but no major steps have been taken."

"In the summer, the administration of Acting Governor Jane Swift appeared ready to embrace the concept, at least on a limited basis. But those efforts now appear stalled However, Swift administration sources said they will meet to discuss whether they can work with Kennedy's plan to offer discounts to seniors enrolled in Prescription Advantage, the new state-sponsored drug insurance plan for the elderly and disabled."

Alan Sager, Ph.D., a professor at the Boson University School of Public Health:

"This sounds like a well-intentioned effort that could help some people, and on balance, it's probably worth doing. Unfortunately, it can tackle only a very small share of the problem of unaffordable medications."

http://www.boston.com/dailyglobe2/268/metro/Kennedy_to_launch_drug_program+.shtml

Comment: Joseph Kennedy's effort to improve access to pharmaceuticals, through private efforts to make them more affordable, is most admirable. But what will happen? Other efforts to contract discounts will compete. With no other mechanisms to contain costs, the pharmaceutical industry will merely grant discounts from an artificially inflated wholesale or retail price. An example of the perversity of this process is the current process by which pharmaceutical firms grant Medicare a discount from the Average Wholesale Cost (AWP) which has proven to be an artificial construct that the industry has used to assure that high drug prices are maintained.

Also, other entities will be demanding the same discounts, including federal and state programs, such as Prescription Advantage, pharmacy benefit managers, and any other element that must pay for pharmaceuticals. Lacking control of the process, the balloon phenomenon is operational - push in here and it bulges out there - shifting costs so that the industry does not have any net reduction in revenues. Who pays for these shifting costs? They are funded by everyone who requires prescription drugs, but the funding is inequitable at a time that we are attempting to improve equity in our health care system.

Fee controls through contracting by health plans and through government action have been relatively effective in limiting the profits of physicians, hospitals, laboratories, and radiological services to a level that have allowed fair but not excessive profits. This is because the joint private and government control of these sectors of health care is almost complete. On the other hand, the pharmaceutical industry still has a large sector of patients that do not have a private or government intermediary to control the market. This sector includes a major segment of the Medicare beneficiaries, the uninsured, those covered by privates plans that do not offer pharmaceutical benefits, and those that must purchase a significant amount before their plans kick in. This has left the pharmaceutical industry with an intact balloon, allowing unlimited cost shifting.

Pharmaceutical costs are the greatest inflationary element in health care today. When other sectors of health care are subjected to price controls, why should this industry be insulated?

Is there room for price reductions that will allow fair profit for the pharmaceutical firms? Clearly there is. This industry has also been egregiously wasteful in administrative and marketing costs, much of which could be eliminated. Drugs should be selected based on medical benefit. Physicians should be updating their knowledge through legitimate continuing education rather than by accepting sales pitches of this industry. Copy cat drugs should be funded based on their real value rather than based on their patents and success of their marketing programs. R & D should be directed to new breakthroughs rather than for the purpose of extending patents via copy cats. Perhaps the most important change that needs to be made is to make drugs available to every person that genuinely needs them. The marginal costs to expand production to meet this need are almost negligible. Diluting average costs with this very low cost expansion of production would have the greatest impact on reducing the per prescription price of drugs.

The United States has one of the least equitable health care systems of all industrialized nations. Inequity is particularly a problem in our allocation of pharmaceuticals. The solution is simple. Establish a publicly administered, universal health insurance program. Require the pharmaceutical industry to end waste, to produce value, and then to negotiate for rates that meet their legitimate costs and still provide a fair profit. The pharmaceutical industry would thrive, but, much more importantly, more patients would thrive.

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American Medical News
October 1, 2001
Ethics Forum
Facing patients who don't pay

Scenario: A patient recently forwarded the following notice he had received from his physician to the attention of the AMA's ethics standards staff (some facts and names have been changed to protect the identity of the parties):

"Dear John:

"We recently received a returned check issued to us by you on Jan. 17, 2001. The amount of the check was for $40. We will be unable to refill any prescriptions or see you in follow-up until this check amount and the bank fee of $25 is paid in full, by cash. Payment must be made in full in 10 days or else we will be turning you in to the state attorney's office for writing a check for insufficient funds. We will no longer accept anything but cash for our services to you as a patient."

If the patient brought this letter to your attention, how would you advise him?

David A. Fleming, MD, Associate Professor of Medicine, Director of the Center for Health Ethics, Dept. of Health Management and Informatics, University of Missouri Columbia School of Medicine:

"Medicine is a profession, not a business -- or is it? Although this letter seems unduly harsh and uncaring, the squeamish feeling we have when reading it stems from knowing that many of us have sent similar letters to patients who did not or would not pay their bills."

"If health care were a normal commodity, bought and sold in a normal market, it would be a simple matter. If you don't pay for the goods, you don't get the goods. But the ethical challenge for physicians is in the fact that health care is more than a commodity that can be bought and sold like a loaf of bread."

http://www.ama-assn.org/sci-pubs/amnews/pick_01/prcb1001.htm

Comment: At best, unpaid medical bills result in patients losing access to their usual sources of care, whether terminated by the provider for non-payment or terminated by the patient because of shame over not having "honored their financial commitments." Even worse, unpaid medical bills can result in financial ruin, and is now the second most common cause of personal bankruptcy. Although physicians and hospital administrators pride themselves on delivery of charity services, almost all of this charity is not in the form of gratuitous care offered to those in need, but rather it is in the form of bad debts adjusted off and retroactively labeled "charity care."

We surely can devise better methods of assuring access to care for those that do not have adequate resources without subjecting them to humiliation and without unfairly and haphazardly shifting costs of that care to others. Establishing health care equity in a society with inequitable distribution of wealth is quite simple. Every other industrialized nation has figured out how to do it. Simply provide comprehensive health care coverage to everyone, and then fund that coverage in a fair and equitable manner. What are we waiting for?

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News Release
Congressman Pete Stark
September 21, 2001
Rep. Pete Stark Statement on Medicare HMOs' Abandonment of America's Senior Citizens and Persons with Disabilities"

Congressman Pete Stark:

"Independent analyses have long shown that we over-pay private plans under Medicare, relative to what their costs are. Just last year, we enacted legislation that gives Medicare HMOs an additional $32.5 billion over the next 10 years. We are told that it would go into extra benefits, but it has not. Instead, it is lining shareholder and CEO pockets, while Medicare beneficiaries are again left in the lurch. It is unconscionable to spend more of our scarce resources on this part of the program when millions of Medicare beneficiaries lack coverage for prescription drugs. We need to be working to improve Medicare for all beneficiaries."

Comment: Increased funding of Medicare HMOs is an issue that has survived the reshuffling of legislative priorities. House Ways and Means Chairman Bill Thomas, on September 21, released a statement that indicates that they intend to move forward with legislation that would increase funding for Medicare HMOs. This is with the concurrence and support of Thomas Scully, Administrator of the Centers for Medicare and Medicaid Services (CMS, formerly the HCFA).

The Ways and Means Committee release is available at: http://waysandmeans.house.gov/press/2001/september/9-21-01.htm

In spite of misleading rhetoric, the facts are not in dispute. Initially, Medicare HMOs were successful in directing marketing to a relatively healthy subset of Medicare beneficiaries, thereby escaping much of the economic burden of higher cost, less healthy patients. Since they were awash in unspent taxpayer dollars, they were required to either return the excess funds, or spend them on patients or on their own industry. Thus those that joined HMOs experienced greater benefits, especially the inclusion of pharmaceuticals, and lower out-of-pocket expenses. And there were still plenty of funds left to enrich the shareholders and administrators of these plans. But studies did confirm that the taxpayers were not receiving value for this investment because of diversion of funds away from patient care and into inefficient, private health plan bureaucracies.

In response, Congress slowed the rate of increases in payments to HMOs. In the meantime, their HMO patients were growing older and more expensive, squeezing the profit margins for the HMOs. Congress then granted additional funding, but not enough to allow the HMOs to continue with their extravagant bureaucratic wastes. Thus HMOs continue to withdraw from unprofitable markets. As a result, those Medicare beneficiaries that joined HMOs are losing the extra benefits of pharmaceutical coverage and lower out-of-pocket costs.

The response of Rep. Thomas and others is to support legislation that will provide funding for these benefits, and provide adequate profit margins for the HMOs. There are two very important issues here. One is that they are perpetuating an inefficient system that is wasting taxpayer funds by diverting them away from patients and into the HMO industry. This violates a fundamental duty of Congress to reduce waste of taxpayer dollars.

The other issue relates to the fact that Medicare beneficiaries should have pharmaceutical coverage and lower out-of-pocket costs. But that should apply to all Medicare beneficiaries, not just to HMO plan members. Thomas and his colleagues want to limit those benefits to individuals that will join the organizations owned by his friends in the industry. What better marketing leverage could you have than to provide a gift of taxpayer funds to managed care companies for extra enticements for patients, while prohibiting the entitled patients that remain in the more efficient, traditional Medicare system from receiving those same benefits?

Medicare was established as an equitable system. It is a blatant abuse of the legislative process to end equity by granting tax payer funded enticements to be used for unfair marketing advantage of an abusive managed care industry.

Congress has a moral obligation to correct both of these wrongs. They need to end the waste of taxpayer dollars diverted to inefficient private bureaucracies. And they need to assure equitable access to care for all Medicare beneficiaries by preventing financial barriers to care. They can do this best by adding a pharmaceutical benefit and by reducing out-of-pocket expenses. If they did this, the superfluous HMO bureaucracies would go away. Then maybe we'll be ready to seriously consider Medicare for All.

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The Washington Post
September 22, 2001
"Federal Insurance to Rise 13.3%" by Stephen Barr

"Health insurance premiums for federal employees and retirees will rise an average 13.3 percent next year, the Bush administration said yesterday. The 2002 rates are nearly 50 percent higher than what government workers paid in 1998."

"The federal program, which provides health insurance coverage to about 9 million government workers, retirees and family members worldwide and more than 800,000 people in the Washington area, often serves as a bellwether for premium increases in the private sector."

"The Federal Employees Health Benefits Program is the largest employer-sponsored program in the nation, annually providing more than $24 billion in health care benefits. Employees may choose from about 180 health plan options and, depending on the plan, the government usually pays from 70 percent to 75 percent of the total premium."

Colleen M. Kelley, president of the National Treasury Employees Union:

"Clearly, something is wrong when a health care plan of this size fails to use its marketing clout to help keep premiums in line."

http://www.washingtonpost.com/wp-dyn/health/A6618-2001Sep21.html

Comment: Something's wrong? The largest health benefit program in the nation, with 180 competing health plan options for nine million individuals, has not been effective in using market competition to control costs? Hasn't this been an adequate test of the theory of containing costs by having health plans compete in the marketplace? How much more testing of this failed premise are we going to tolerate? We've had enough. It is time to seriously consider a proven method of cost containment, which, much more importantly, has the greater advantage of introducing equity to our health care system: a publicly-administered program of universal health insurance.

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American Enterprise Institute
Health Policy Discussion
"Is Inequality Bad for Our Health?"
An event scheduled for October 11, 2001

From the invitation for this event:

"A popular topic in public health research today is that inequality, and in particular income inequality, is one of the most powerful determinants of health and the most important limitation on the quality of life in modern societies.

"While a few studies have provided evidence that the greater the disparity of wealth in a society, the less healthy the population, many researchers have gone well beyond what might be warranted by the weight of evidence alone. The World Bank, World Health Organization, and National Institutes of Health have even lent more credibility to the 'income inequality as health determinant theory' and its far-reaching implications such as the restructuring of important sections of our economic system.

"Jeffrey Milyo of the Irving B. Harris School of Public Policy, University of Chicago, will critique the income inequality hypothesis, its validity and its applicability."

The invitation is available at: http://www.aei.org/inv011011.htm

Comment: So the American Enterprise Institute wants to refute the notion that income inequality is a determinant of health. We can anticipate the probable content of the presentation of Jeffrey Milyo by examining some of his work. The papers cited are available at: http://www.harrisschool.uchicago.edu/wp/author.html#milyo

In the following paper, Jeffrey Milyo and his colleague, Jennifer Mellor, conclude that "we find no consistent association between income inequality and individual health status."

"Income Inequality and Health Status in the United States: Evidence from the Current Population Survey" By Jennifer M. Mellor and Jeffrey Milyo Abstract: Several recent studies have identified an association between income inequality and aggregate health outcomes; this has been taken to be evidence that inequality is detrimental to individual health. We use data from the 1995-1999 March Current Population Survey to examine the effect of income inequality on individual health status for both the general population and those individuals in poverty. We find no consistent association between income inequality and individual health status. Our results contradict recent claims that the psycho-social effects of income inequality have dramatic consequences for individual health outcomes.

In the following paper, they hedge a little bit by saying, "while the poor may suffer the most from inequality, it is claimed that the rich also suffer... "

"Is Inequality Bad for Your Health?" By Jeffrey Milyo & Jennifer M. Mellor Abstract: "A number of recent studies suggest that income and social inequalities have detrimental consequences for population health. While the poor may suffer most from inequality, it is claimed that the rich also suffer, and as a result, redistributive policies may not be zero-sum. Perhaps for this reason, the inequality hypothesis has been met with great enthusiasm. In this paper, we review the basic arguments and evidence that inequality has a causal effect on health and find them wanting in many aspects."

And in the following paper they concede that "none of this should be construed as a refutation of the claim that relative deprivation may have physical consequences."

"Re-Examiniing the Evidence of an Ecological Association Between Income Inequality and Health" by Mellor and Milyo An excerpt from the paper: "None of this should be construed as a refutation of the claim that relative deprivation may have physical consequences. However, there are serious shortcomings in the current articulation of the inequality hypothesis, and in the way most authors have tested it."

What is this all about? Conservatives are very concerned about the prevailing rhetoric that income inequality negatively impacts lower income individuals, especially their health status. This theory provides strong support for distributive policy, using a portion of "excess" wealth to meet our egalitarian desires for health care equity. Because of their strong opposition to distributive policy, they wish to refute the rhetoric of the egalitarians, and replace it with their own rhetoric. They wish to build on prior rhetorical successes such as, "I'm from the government and I'm here to help you."

Milyo and Miller do present selected data that would suggest that income inequality, as an isolated finding, does not necessarily correlate with impaired health status. A wealthy community, including individuals with massive megawealth, might have significant income inequality, but, because of the paucity of very low income individuals, may not have impaired health status. Whether or not their conclusions are valid, their findings will allow the conservatives to establish the new rhetoric that "income inequality is not a health determinant." This is very important rhetoric because most individuals will extrapolate the unwarranted conclusion that low income is not a determinant of health.

Newt Gingrich will be the discussant for this event. Hopefully, someone reading this message will attend, and present to him the following posit. Although income inequality alone possibly may not correlate with impaired health status, no person, not even Milyo, disputes that fact that low income is strongly correlated with impaired health status. Clearly, there is a pressing need to improve the status of low income individuals, whether through funding of public programs or through private or regulatory distributive policies. (Don't hold your breath waiting for adoption of private distributive policies.) Where, in society, should the funding come from, if not from the more affluent individuals who could not possibly experience any change in quality of life through distributive policy? Or should we just concede that we are not egalitarian, and let the unfortunate fend for themselves?

America is better than that. Let's clobber their rhetoric before it is disseminated.

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Los Angeles Times
September 19, 2001
by Ronald Brownstein

At the moment the first fireball seared the crystalline Manhattan sky last week, the entire impulse to distrust government that has become so central to U.S. politics seemed instantly anachronistic.

The erosion of faith in the federal government has been probably the most profound change in America's political landscape over the last generation.

Yet given the critical responsibility of safeguarding the skies, private companies apparently have cut corners and cut costs as they inevitably balanced concern about the general welfare with their need to generate a profit. Now, the widespread assumption is that the federal government, unconcerned with profit, will provide a more thorough and effective defense against hijackings or bombings.

The lesson is twofold. While government indeed can learn about efficiency from the best businesses, some public services--education comes to mind--are still best provided by public institutions that don't need to turn a profit. And while U.S. industry has proved brilliant at creating wealth and inspiring innovation, it's naive (or disingenuous) to expect private companies to operate entirely in the public interest.

It's simply misguided to see the federal government as something divisible from America, when it is in fact the tool through which we meet collectively the challenges that we can't handle alone. It obscures that basic truth to suggest we must choose between trusting government or the people. "In time of crisis," notes Reed (Bruce Reed, chief domestic policy advisor under President Clinton), "we realize that the people and government are one and the same." The tragedy is that it took so much private pain to remind us that sometimes public actions through government aren't the problem--they are the solution to our problems.

http://www.latimes.com/news/nationworld/nation/la-000075207sep19.story

Comment: Public administration of universal health insurance? By the government? After all, it's our government... our insurance... our health.

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American Journal of Public Health
September, 2001
by Kate E. Pickett, PhD, et al

"Approximately 13% of pregnant women in the United States smoke, with serious health consequences for themselves and their infants."

"We surveyed coverage of prenatal tobacco dependence treatments in health maintenance organizations (HMOs) in California to assess the availability, accessibility, use, and effectiveness of services offered to pregnant smokers."

"MediCal managed care plans were more likely to provide coverage for face-to-face services (individual and group counseling) compared with commercial HMOs. In California, members of MediCal managed care plans may have better access to the most effective, clinically intensive tobacco dependence treatment services, because providers of MediCal managed care are mandated to identify and intervene on risk conditions identified during pregnancy."

"Our findings suggest that in 1997, most California HMOs were not covering the extended or augmented psychosocial interventions that have been recommended for all pregnant smokers by the US Public Health Service. Although managed care offers the potential for increasing the availability and accessibility of such services for plan members, this survey suggests that that potential is not being realized. In addition, many California HMOs are unable to judge the use or effectiveness of these services and can neither track the costs and benefits of existing programs nor determine the need for additional services."

http://www.ajph.org/cgi/content/full/91/9/1393

Comment: Because of the purported "success" of managed care health plans in controlling costs, the California state administration decided to utilize managed care organizations for MediCal, California's Medicaid program. MediCal has been somewhat of a challenge for managed care organizations, both because of federal mandates for coverage ("bureaucratic government interference") and because of chronic underfunding of the Medicaid program. The private managed care plans have had fewer controls on benefits and greater funding, allowing them to "excel" in managing care partly by putting in place preventive programs that will improve outcomes of their patient-beneficiaries. Smoking cessation programs during pregnancy represent an optimal use of health care resources, and provide an opportunity for managed care plans to prove that they deliver on their promise of higher quality care and more preventive services.

Although both utilize managed care, the underfunded MediCal program, with "excess government interference," significantly outperformed the private managed care plans in this crucial preventive program. This was at a time (1997) when the private plans were fully developed and operational and were still flush with cash. If less funding and more government oversight produces a better outcome, isn't it time to take a closer look at the overall structure of our health care system? How about a publicly administered, universal health insurance program? Any takers?

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The American Prospect
September 10, 2001
by Marcia Angell, M.D.

Marcia Angell, M.D., senior lecturer in social medicine at the Harvard Medical School and the former editor-in-chief of the New England Journal of Medicine:

Faced with the likelihood of a large increase in the number of Americans without health insurance, many policy makers and interest groups are coalescing around the same solution: refundable tax credits to enable the uninsured to purchase private insurance. (A refundable tax credit is like a cash subsidy.) In insurance terms, this is essentially a defined contribution (contributing only a fixed amount toward the premium, and requiring workers to pay the rest). Often billed as a method to increase workers' options, this is really inflation protection for employers.

Tax credits for the uninsured are a bad idea for several reasons.

First, even the most generous of the proposed tax credits would not buy an adequate policy.

Second, the influx of federal money would probably cause premiums to rise even faster than current projections. Unless premiums are regulated (which nobody proposes), tax credits for the uninsured would be a windfall for the insurance industry.

Third, tax credits would tend to drive out other types of coverage. Employers could use them as an excuse to drop health benefits altogether or shrink them further. That would be particularly likely if premiums rose steeply as a result of the tax credits.

Fourth, most of the tax-credit proposals require individuals to fend for themselves in the notoriously treacherous market for individual coverage. Some companies would likely offer cut-rate plans for the amount of the tax credits, but those plans would have very large out-of-pocket payments and very narrow benefits.

Finally, complex administrative requirements, including the need to monitor the insurance market and ensure that criteria for eligibility are met, would probably generate a huge and expensive new government bureaucracy. That would siphon off still more of the U.S. health dollar for overhead, which is already an exorbitantly high fraction of the total.

Compare the tax-credit idea with Medicare (which is a public, single-payer system embedded in the private, market-based system). Medicare offers defined benefits, not defined contributions; that is, all beneficiaries are entitled to certain services. The program provides a uniform set of benefits to nearly everyone who qualifies, and it does so far more efficiently than the private sector's employment-based system. Furthermore, by regulating prices as well as benefits, Medicare limits what providers charge. Certainly, Medicare has plenty of room to improve. It could make the benefit package more appropriate for seniors and it could control inflation better (although it does better on this score than the private sector). But the essential mechanisms for doing both are in place.

No system can work if it doesn't cover virtually everyone automatically and regulate prices as well as benefits. No matter how many ways we try to shift costs and plug holes, we will sooner or later have to face that fact. Otherwise, we continue to chase a rapidly receding quarry: health care that is both adequate and affordable. Precisely what makes the tax-credit idea attractive to conservatives-- the preservation of the private market--is what will doom it in practice. We had better come up with another solution, because the problem is about to get a lot bigger. Universal Medicare, anyone?

http://www.prospect.org/print/V12/16/angell-m-2.html

Comment: Repeating the words of Sen. Jay Rockefeller, at a Senate Finance Committee hearing on tax credits:

"... the tax credit is the wrong approach. It is the wrong approach, period. That's all there is to it. It will not work. It will not work at the figures that are being offered by you... the figures that'll come in part from the other side, maybe some from our side. It won't work. And I think we have to decide on this committee do we want people to get health insurance or do we not?"

Breaking news: Kaisernetwork.org reports today that "those measures with greater chances of passing include the allocating $28 billion over three years to reduce the number of uninsured through tax credits and CHIP and Medicaid expansions... "

Further comment: Increasing income eligibility levels for the CHIP and Medicaid programs is very important as a temporary, urgent measure that would provide immediate relief of unmet medical needs. Concurrently we must continue unrelenting advocacy for comprehensive reform. But right now, the tax credit issue is on the front burner. It is imperative that we snuff it out immediately!

Jeannie Brewer, M.D. is a board member of California Physicians Alliance, the California chapter of Physicians for a National Health Program. She has multiple sclerosis and will be uninsurable once her COBRA benefits run out. This is her response to the messages on tax credits for health insurance:

"I am just one small example, but I pay almost $600 a month for health insurance for me and my newborn daughter and even that will disappear in 2 years, and I will not be able to purchase insurance no matter what the tax rebate/credit/incentive is. We need a single payer plan, period."

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Alliance for Health Reform Briefing
August 10, 2001
Washington, DC

Gary Lauer, President and CEO of eHealthInsurance, an on-line broker for health insurance:

"We are the largest source of health insurance for individuals and families in the country. We're the largest producer of health insurance for many if not most of the largest carriers as well."

"So what we did is we sampled randomly 20,000 active customers." "We found that the average premiums that these 20,000 individuals and families are paying are in the range of $1,200 to $1,500 per person per year."

"... based on this, what it tells us is that tax credits may, in fact, have an important impact for people who bought health insurance."

"If you take the Reach Act for example (one of the tax credit proposals), $1,000 per year for individuals and $2,500 for families, we found... that 75 percent selected policies with annual premiums that are within 75 to 100 percent of the tax credit limit that's proposed."

"Tax credits so far are the best proposal that we've heard to help address a large portion of the uninsured. There are other people who are uninsured who obviously this is not going to help. There are people who have got very, very serious medical conditions either presently or historically, there are some people who are very economically challenged, you know, many of the high risk pools in states, other kinds of things need to be done for those and we feel very strongly about that. But you'll find that we believe close to half of the uninsured today can afford health insurance or may be able to afford health insurance through tax credits."

"You know, what we find is that there are some individuals and families who simply are uninsurable - just the way the system is today, they're uninsurable. And we feel very strongly about high risk pools as a way to really help and support those people."

"We find that about 80 percent or 4 out of 5 of our applicants actually get health insurance coverage. ... one out of five goes uninsured through eHealthInsurance is not able to get coverage."

"It's safe to say that I won't disclose information on income (of those insured) at this point. I've been asked about this previously. We're going to go back and take a look at that and see if there's a way to segment that without compromising anything."

http://www.kaisernetwork.org/health_cast/uploaded_files/transcript081001.pdf

Comment: What a fantastic opportunity this is for Mr. Lauer's company. His market is composed of a population subset that uses the Internet for making purchases. So he begins with individuals that are Internet sophisticated, mostly financially secure, and generally younger and therefore healthier than average. His insurance products exclude the chronically ill (by underwriting) and lower income individuals (by affordability) anyway. His carriers are elated to have directed to them this highly select segment of the market. He suggests that he is filling a void for the uninsured, although I suspect that more traditional brokers would suggest that he is merely attracting their former clientele. The fact that he refuses to disclose the income levels of his clients makes me suspect that he is not really filling the void for low income, uninsured individuals after all.

We continue to hear strong support for tax credits as an answer to insuring the uninsured. Mr. Lauer's company demonstrates that tax credits would be a great deal for young, healthy, affluent families, and an even better deal for his company. But the problem we need to address is insuring those with more modest incomes and with existing disorders. Tax credits would have very little impact on those with the greatest needs. Mr. Lauer's solution is to shift those costs to the rest of us through taxpayer funded public programs and through high risk pools, while he walks away with the cream of the business which is funded by us through tax credits!

Another attendee of this meeting was quite perceptive:

Bob Griss, Director of the Center on Disability and Health, Washington, DC:

"And I really don't understand why there isn't more attention to a pool that everybody's in, that covers everybody, because to me that is the missing seat on the panel."

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A message from Uwe Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University:

Don:

I have just posted this message on the course website of my course in first-year economics. I'll e-mail you Paul Krugman's piece.

Sun, Sep 16, 2001 --

As part of this course, I shall from time to time link our course website to news articles or commentaries that are relevant to this course.

I have just posted there a commentary by my colleague Paul Krugman on the issue of the private- and public-sector mix in an economy. A vulgar theory with much political traction in this country is that "government" is a state apart from the American people, from which it follows that reducing government spending is always a good thing and that it is always better to let the private sector handle any chore rather than turning it over to that alien entity, our government. You can be very popular at country-club cocktail parties around the country by spouting this simplistic (and erroneous) theory. You can also hear it recited, time and again, by certain talking heads on TV.

In his commentary, Professor Krugman highlights the price we pay for such shoddy thinking. Properly trained economists appreciate that the private sector has a comparative advantage in the production and management of many functions, while the government is better at producing and managing other functions.

Ironically, you now hear even ultra-conservative commentators on TV demanding that airport security in this country be "federalized," that is, be made part of the civil service. They also, of course, ask that another government agency, the US armed forces, bail us out of our current predicament. Coming this late in the game, it is a sad irony to hear such talk from government's visceral critics.

One objective of this course is to make you more thoughtful citizens than the many vulgar "thinkers" (to use the term loosely) who believe that government is not part of us (and we part of it), but who think instead that government is an alien force that takes things away from us--either our money or our freedom. If you pay attention in this course, you will not need a major tragedy to understand the proper roles of the private and public sectors in a well-run country. We shall come back to this theme many times in this course.

Paul Krugman's opinion article: http://www.nytimes.com/2001/09/16/opinion/16KRUG.html

Comment: Although Professor Krugman's article discusses the role of government in relation to the tragedies of the past week, all of us concerned about health care reform will understand the extrapolations to our health care system. Although the private sector health care system functions well when accessed, a publicly administered universal health insurance program can assure that access.

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*******************

I. Alan Sager, Ph.D., Professor of Health Services and Co-Director of the Health Reform Program at Boston University School of Public Health, on September 5, 2001, provided testimony before a subcommittee of the United States Senate Committee on Commerce. His topic: "Americans would save $38 billion in 2001 if we paid Canadian prices for brand name prescription drugs." He describes "how to win those savings and use them to protect all Americans against high drug costs without hurting drug makers or drug research."

Alan Sager, Ph.D.:

"Together we face two challenges: making all needed medications available to all Americans at affordable prices, while building a durable financial foundation under drug research and delivery in the United States. I am convinced that we can do both of these. One reason is that we already spend enough money to do so. But not if we continue business as usual."

The full testimony (revised) is available at: http://dcc2.bumc.bu.edu/hs/ushealthreform.htm which brings you to a page, "US Health Reform." Under "A. Prescription Drug Reform," "3. Testimony," click on "AMERICANS WOULD SAVE $38 BILLION IN 2001 IF WE PAID CANADIAN PRICES FOR BRAND NAME PRESCRIPTION DRUGS."

*******************

II. Martin Donohoe, MD, FACP, Assistant Professor of Medicine and Senior Scholar at the Center for Ethics in Health Care at the Oregon Health Sciences University, has prepared an excellent series of slides in PowerPoint format on various aspects of the pharmaceutical industry, with special emphasis on ethical perspectives. The information provided is particularly valuable for those of us dedicated to health care reform. Dr. Donohoe has generously offered to make the series available to us. The slides are very easy to read and thus are valuable as a stand-alone information resource, not to mention their value in educational presentations. If you are interested, you can contact Dr. Donohoe at his e-mail address which appears at the end of his message below.

9/14/01

Dear Dr McCanne:

I am a member of PNHP and teach medical humanities and social justice ethics at Oregon Health and Science University in Portland; one area I often lecture on is the pharmaceutical industry (history, current practices, financial and legal issues, ethical issues, etc.) After serving on a panel at the Bioethics Summer Retreat earlier this year, a number of participants requested a copy of my PowerPoint presentation on the pharmaceutical industry. I offered to e-mail a copy of the presentation to anyone from the bioethics listserv who was interested and received over 50 responses.

Now that I see that PNHP is becoming more involved in the issue of pharm co marketing, I wonder if any members (or the organization) is interested in a copy of the presentation, which contains over 100 slides and covers the economics of the industry, drug R and D and marketing (incl data on advertising to physicians and DTC advertising), the history of drug regulation in the US, policy and ethical issues facing the FDA, companies under investigation for various violations (or who have pled guilty) and why, info on the worrisome sequelae of increasing collaboration between academia and industry, guidelines re gifts and speakers/CME, etc.

I am happy to share the slides and have no proprietary interest in the presentation, and hope it can be of help to those training students, residents, and practicing MDs. I feel there is too much competition and not enough cooperation in academic medicine/medical education.

The refs are literally a 2 and ½ foot stack in my office, and I will be working on the paper over the next year. In a nutshell, most of the info comes from mainstream med jnls (eg JAMA, NEJM, Annals Int Med, J Gen Int Med), with small amounts from Public Citizen's Health Research Group's Health Letter, PNHP's newsletter, or "mainstream" newspapers (e.g., NY Times).

If you think other members of this list or PNHP may be interested, please let me know and I can send them copies as an attachment. I would rather they contact me so that I can at least keep track of who is getting it and for what purpose they hope to use it. If you are interested in using me as a speaker for PNHP in some way, let me know, as I have also run a session on the single payer system, using PNHP data and slides, for our house staff.

Martin

Martin Donohoe, MD, FACP Assistant Professor of Medicine and Senior Scholar, Center for Ethics in Health Care Oregon Health Sciences University General Internal Medicine (L-475)
3181 SW Sam Jackson Park Road
Portland, OR 97225
503/494-6495 (ph) 503/494-6344 (fax)
donohoem@ohsu.edu

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September 14, 2001
Relayed by Joanne Landy, MPH, MA, Executive Director, PNHP-NYC

Oliver Fein, M.D., Chair, Physicians for a National Health Program, New York Chapter:

"Dear PNHP-NYC members and friends,

"How are you? Many of us have been completely absorbed with the medical and psychological response to the World Trade Center disaster. Now, we must prepare for the aftermath. As health professionals, we are likely to experience both the physical and emotional impact among our patients and colleagues for months. As health progressives, we must seek ways to understand the roots of this week's tragedy and propose positive ways to avert such horrors in the future. At the same time, we must continue our efforts at health system reform. In this spirit, we have decided to press forward with our September 21 protest against the pharmaceutical industry's efforts to influence physicians (see forthcoming e-mail), to conduct our speaker's training workshop on September 22; and, to hold our forum featuring Fitzhugh Mullan on “Big Doctoring: Primary Care-Essential but Endangered” on September 25. I hope to see you all at one or more of these events; apart from the specific agenda, it will be good to be together at a time like this."

And the message on the September 21 protest:

A CALL TO PROTEST DRUG COMPANIES' INFLUENCE ON DOCTORS
Plaza Hotel Friday, September 21, 6-7pm

On September 21, physicians will congregate at the Plaza Hotel in Manhattan for a gala event sponsored by Forest Pharmaceuticals, which has paid doctors $500 plus a free night with meals at the Plaza to attend a seminar that will promote its anti-depression drug Celexa. Across the country there is mounting protest against attempts by drug companies to manipulate doctors' decisions about which drugs they prescribe. Join us in front of the Plaza at 59th St. and 5th Ave. from 6 to 7 pm for a press conference and protest demonstration.

Consider these facts:

· The pharmaceutical industry spends more on marketing than it spends on research and development (one company alone spent $136 million/year promoting just one medication - that's more than Coca-Cola spent advertising Coke in that year).

· The pharmaceutical industry spends more on drug promotions (>$10 billion) than all U.S. medical schools spend on teaching students.

· Despite doctors' beliefs to the contrary, studies have shown that drug company promotions, such as this event at the Plaza, do distort prescribing patterns.

· Meanwhile, millions of Americans do not have insurance to cover medications. Even Medicare doesn't cover prescription drugs, except when you're in a hospital. Yet, pharmaceutical costs are rising faster than the costs of doctors and hospitals. Many Americans must forgo their medicines in favor of such necessities as food and housing.

We call on the pharmaceutical industry to stop its excessive spending on marketing and to lower the price of prescription drugs.

We call on Congress to limit pharmaceutical prices for everyone by purchasing drugs in bulk, price controls, or a combination of these mechanisms, as is done in other countries throughout the world.

We call on Congress to enact a Medicare drug benefit. As a first step, we urge Congress to pass legislation that regulates pharmaceutical prices, such as the Allen-Johnson bill (HR 1400/S 699) that lowers drug prices for Medicare patients to the average price that the drugs are sold in other developed countries. This legislation is expected to reduce prices for brand-name drugs by 40 percent, and will make a Medicare drug benefit much more affordable.

SPONSORED BY PHYSICIANS FOR A NATIONAL HEALTH PROGRAM (New York Chapter) 2840 Broadway, #297 New York, NY 10025 pnhpnyc@igc.org www.pnhpnyc.org

Comment: We all must follow New York's inspirational lead in moving forward with health care reform.

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The unrelenting shock and grief that we all share on experiencing the tragic loss of 5000 lives seems like it will never end. In a few brief moments we saw unveiled a tragedy of unfathomable proportions. People in the prime of their lives... so wrong... so terribly wrong.

The entire nation now wants to do the right thing, even if we may still be confused as to what that is. One thing that we do know is that we must pick ourselves up and move forward. We agree that no evil force can be allowed to weaken our spirit and resolve. We must continue.

The high visibility and abruptness of the tragedy shocked all Americans and brought immediate responses in support of our leadership. We want the right things done, and as soon as possible. Much more insidious and much less visible is the infinitely greater premature loss of life and suffering that is wrought simply by the ineffectiveness of our health care system in properly allocating our abundant resources. The premature death and impaired quality of life that continues to occur is diffused over time and space, and it does not create isolated images that can be broadcast instantaneously over every network simultaneously. But these tragedies are just as real, and they are much greater in the sheer numbers of lives affected. Simply because of the lack of an instantaneous media presence, these tragedies fail to provoke the outrage that Americans would demonstrate if they only understood. So endless suffering and premature death continue. So wrong... so terribly wrong. That is why we must continue to speak out on issues of health care injustice. We must right this terrible wrong.

Quote of the Day

Families USA Press Room
September 12, 2001

"Most tax-credit proposals for the purchase of individual health coverage by low-wage workers, such as the President's proposal, provide annual tax credits approximating $1,000 per year. But, according to the report, the average premiums for a standard health plan in the 25 states (studied) for healthy, non-smoking women ages 55 and 25 are $4,734 and $2,395, respectively. Health insurance for unhealthy and/or smoking women would be much higher or would be unavailable, according to the report."

Ron Pollack, executive director of Families USA:

"The costs of individual health insurance are far more expensive than the cash value of pending tax-credit proposals. They are like a 10-foot rope thrown to a person at the bottom of a 40-foot hole. As a result, low-wage, uninsured workers across America will either find health premiums unaffordable or will only be able to buy Swiss cheese-type policies that have more holes than cheese."

http://www.familiesusa.org/media/press/2001/taxcredit.htm

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The New York Times
September 12, 2001
Editorial

"But this is an age when even revenge is complicated, when it is hard to
match the desire for retribution with the need for certainty. We suffer
from an act of war without any enemy nation with which to do battle.
The same media that brought us the pictures of a collapsing World Trade
Center shows us the civilians who live in the same places that
terrorists may dwell, whose lives are just as ordinary and just as
precious as the ones that we have lost."

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Please excuse the apparent insensitivity of the timing of the "Quote of the Day" message. I have just learned of the tragedies in New York and Washington and share with all of you our profound grief.

Don

Prepared for: The Vermont HRSA State Planning Grant, Office of Vermont Health
Access Prepared by: The Lewin Group, Inc. - John F. Shiels and Randall A. Haught
August 28, 2001

"Our analysis indicates that the single payer model would cover all Vermont residents, including the estimated 51,390 uninsured persons in the state, while actually reducing total health spending in Vermont by about $118.1 million in 2001 (i.e., five percent). These savings are attributed primarily to the lower cost of administering coverage through a single government program with uniform coverage and payment rules."

"... the budgeting process for the single-payer program is likely to emerge as a powerful cost containment tool."

The entire report is available at: http://www.dsw.state.vt.us/districts/ovha/AnalysisoftheCosts.pdf

Comment: Our health care system remains in turmoil primarily because we have been unable to contain costs, and all of our efforts to do so have created even greater problems and have failed to adequately address the major inequities inherent in our system. Now we have yet another study that demonstrates that we can contain costs while providing comprehensive health care coverage for everyone. How many studies do we need before the "controlling authorities" will allow us to bring the single payer concept to the negotiating tables? How many studies do we need before the media will begin to routinely include input from single payer advocates to provide balance (and color) to the articles reporting the defects in our current fragmented system, defects that single payer will cure? How many studies do we need to convince the public that it is time to dump the rhetorical lies and seriously address the real issues in health care?

Soon we will have the results of yet another study, from California, the Health Care Options Project. It will be unique in that not only will single payer reform be studied, but several other models will be prepared and submitted to a microsimulation process. The process will be completed in February. Will this be another report that will demonstrate the superiority of the single payer method, only to be filed away with all of the other reports? Or, maybe this time, shouldn't we consider sitting down and devising the strategy to convert single payer into reality?

The California Health Care Options Project site: http://www.healthcareoptions.ca.gov/

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The Baltimore Sun
September 7, 2001

"Business, industry object to $1 billion proposal by coalition" by Diana K. Sugg

"Leaders of a statewide coalition of labor, religious and civic groups are proposing an ambitious health plan costing up to $1 billion that would provide coverage for the state's 650,000 uninsured residents. The strategy, already under attack by business interests, would require employers to provide insurance or pay a tax, expand a government health program for children and create a buying pool so the elderly could get their medicine cheaper."

"One business group, the Maryland Business for Responsive Government, opposes the coalition's plans, believing the new proposal is a veiled effort to install a Canadian-style health care system."

"Experts who closely follow similar proposals nationwide called the Maryland scheme ambitious and well-crafted. They noted that the Maryland group responded to the public distaste for a Canadian-style, single payer system by coming up with a different approach."

Robert Blendon, a Harvard professor and frequent source of polls indicating that Americans do not want a government-run health insurance program:

"They have done more work on this to make this politically palatable than many of the other proposals around the country. But I think they're ahead of the curve."

http://www.sunspot.net/bal-te.md.health07sep07.story

A description of the Maryland plan is available at:

http://www.healthcareforall.com/theplan.htm

Comment: 92% of Americans believe that it is important for the President and Congress to "deal with the issue of increasing the number of Americans covered by health insurance." We are united in this goal, but we remain divided on the means to achieve this goal. Specifically, the major division is between those that support a universal, single-payer program, such as a Medicare for All approach, and those that support incremental increases in coverage. The opposition to a single payer approach continues to be reinforced by the work of Robert Blendon and others that indicate that Americans have adopted the anti-government rhetoric of the conservatives. Although the opposition is based on rhetoric rather than on an understanding of fundamental health policy, the reality is that the rhetoric has blocked all attempts at universal coverage. Thus we continue on the path of incremental reform, primarily by expanding public programs. Yet we now have more uninsured than we did at the time of the ill-fated Clinton attempt at reform.

Some of us believe that we should be following both paths to reform. We should be making every effort to educate the public and to change the political will such that a true universal, comprehensive, efficient, ethical, and equitable program can be enacted. During this process, we also should be enacting incremental reforms as temporary, urgent measures that will reduce suffering that exists today. But because these incremental measures ignore many important, fundamental issues of health policy, they should not be accepted as definitive reform.

Maryland's "well crafted" program is somewhat unique in that they have merged both pathways into one. They have listened to Blendon and others and have rejected proposals that would have the appearance of a Canadian single payer system. They have accepted the prevailing concept that only incremental-type measures will have political support. They will leave in place the current, fragmented system of private sector health plans. They will expand the state children's health insurance program. And then to fulfill the goal of universal coverage, they will create the Maryland Healthcare Trust, a program to cover the remaining uninsured. Thus they are proposing the politically palatable approach of incrementalism, but they are achieving universal coverage. Thus they have finally brought together all of us that are dedicated to comprehensive health care reform. In your fantasies!

They violated the first rule of negotiation. Even before they began, they paid a very high price by abandoning important fundamental health policy principles that must be in the forefront of negotiations as we design our health care system. Just a few of the issues they gave up even before they're out the door include cost shifting, adverse selection, risk pool equity, administrative waste of private bureaucracies, cost containment, integration of fragmented programs, evidence-based expenditure controls, etc., etc. It is ironic that they chose to ignore their own study, done by The Lewin Group, that demonstrated that a multi-payer model would cost the citizens of Maryland over a half billion dollars more for their health care than would a single payer model (www.healthcareforall.com\Lewincov.htm). Perhaps the greatest defect in their proposal is that it will not contain health care costs, perpetuating the instability characteristic of our current health care model. As such, their proposal, even if enacted, cannot possibly survive intact.

Their proposal to cover the uninsured, the Maryland Healthcare Trust, was, in fact, very carefully crafted. As a stand alone product, it embodies many of the fundamental principles of a single payer system. In some ways, it improves on existing single payer concepts by introducing improvements in information technology, improved methods of cost containment and resource allocation, and including some of the beneficial measures introduced by the managed care industry but without the intrusion of the managed care plans. In fact, although the coverage under the trust would be limited to the uninsured, it is already being disparaged as a "Canadian-style health care system." It is ironic that, considering all that they gave up before even starting, they are not going to escape the precise problem that they wished to avoid, being attacked as a socialistic, government run, rationing, bankrupt system like they have in Canada. They paid a terrible price to try to avoid the rhetorical lies that they will be faced with anyway.

There is another design flaw that will prove to be fatal for health care equity. They concede that both the Medicaid and the Children's Health Insurance Program are significantly underfunded, and that funding will have to be increased in order for the program to succeed. Since these programs are for low income individuals and families, adequate levels of funding never will be provided. That's "never," with an "n." Furthermore, the Maryland Healthcare Trust will be developed for the uninsured, another element with no political power. Consequently, the trust also will be chronically underfunded. It is likely that current trends, both in decreases in employer participation and in shifting of risk from health plans to beneficiaries, will move much of the "working families" into the trust. At best, mediocrity in health care will prevail, and Maryland will be locked into a deficient plan that will be highly resistant to revision because "everyone has health care coverage."

When will health care reform advocates finally come together? When we agree that we cannot abandon health policy principles that will assure health care equity for all.

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Whenever Vermont health care is mentioned, what is really referred to is an arrangement that does not rise to the level of a system. This arrangement is ineffective at controlling costs and incapable of seeing to it that the expenses of medical care are paid for, or of seeing to it that all Vermonters obtain needed medical care in a timely fashion. It therefore falls far short of anything that can be reasonably described as a health care system.

At the same time it is widely acknowledged that VermontÕs medical facilities and medical care are of high quality.

There are troubling signs, however. One is cost shifting. Cost shifting is a way of unburdening financial strain in one part of health care, say a hospital, by shifting it to another, say a private insurance company. Costs, once shifted, do not disappear. Ultimately, they reappear as higher private insurance premiums and higher public assessment, taxes and the like.

Virtually all of us, including the Vermont medical community, regard health care as a public good. This is especially true when we ourselves are in need of medical attention.

Most of us would say that what we want from health care, other than our free choice of doctor, are high quality medical facilities (hospitals, physiciansÕ practices, nursing homes, allied health facilities, etc.), some assurance that those services will be there when we need them, and affordable medical care.

For a number of years, rising costs have diverted our attention from these reasonable expectations. So much so that our discussions of health care have obscured the idea of it as a public good. Our predominant focus has been on ways to ease costs or get around them somehow.

This can lead to our losing sight of important factors in the whole picture of health care in Vermont.

1 First of all, there is a tendency to overlook the fact that at any one time in a population of 600,000 (the size of VermontÕs) a certain amount, or incidence, of disease occurs. This establishes the need for a certain amount of medical care. Health care facilities evolve in a shared relationship with the populationÕs needs. The relationship holds reasonably closely as long as health care is not subject to the distortions of a market place that places profits first among all considerations.

Second, it is usually forgotten that it is the sick not the healthy who define the extent and kind of medical care available. This is another way of making the point above, that the health care bears a strong relationship to the incidence of disease in the population it serves. Payments made by the sick or in their behalf by third parties, are what support health care services in Vermont. This is captured in the notion that it is the sick who keep the beds warm for those who are healthy.

Third, health care facilities that have evolved in the way described become more or less fixed-cost entities. Their operating expenses are largely fixed. Whether they are working at full capacity at any one moment is subject to the normally varying need for those services at that moment. Regardless, their fixed costs remain the same. They must be met if they expect to avoid financial stress. Financial stress usually leads to cost shifting or to measures like staff cutting that invade quality of care.

Fourth, it is seldom emphasized enough that VermontÕs medical community has always conducted itself under a strong ethic to provide care to those in need whether they can pay or not, and continues to do so. This clearly has financial repercussions when the care is not fully paid for or paid for at all.

Fifth, a crucially important fact must be kept in mind: that a small percentage (20 percent) of Vermonters are very sick and use 85 percent of the health care. But it would be mistaken to think of them as the same peop le all the time. They include accident victims and victims who suddenly become ill with life threatening diseases. The very sick should not be dismissed as too costly by the remaining 80 percent of the population who are largely healthy and use little health care. This for ethical reasons of course, but also because as stated above, they essentially define the amount and kind of medical services we have. Payments for their health care are the main financial support of the health care services that all of us expect to be available to us should we need them

# Unless these factors are taken into consideration upfront it will be difficult to remedy any perceived problems in Vermont health care. The relationships that hold among these five points are of great importance for any discussions of health care. Omitting or changing any one of them will have profound, undesirable consequences for health care.

For example, if medical care were limited to only those capable of paying in full, it would require a complete reversal of the medical communityÕs ethics.

Even if the medical community could be convinced, which is highly unlikely, limiting care to those capable of paying would affect what kind and how many medical facilities would continue in Vermont.

The same problem arises if medical care is confined to the 80 percent of us who are mostly healthy. If this happened, the impact on medical facilities would be even more drastic. Without the very sick 20 percent, medical facilities would shrink dramatically because the money wouldnÕt be there to support them and because the patients wouldnÕt be there to require their services.

Changes to any of the five conditions listed above will impact negatively on Vermont health care. What may look like cost-saving proposals must be weighed against the social costs to Vermonters and the non-monetary costs to Vermont's medical care facilities.

These conditions can be modified to some small extent. But finally they must be accepted by any plan to alter Vermont health care, lest we permanently damage our social fabric in Vermont and the medical care facilities we have.

It is our contention that the fundamental problem in Vermont health care is structural. It originates in how we pay for medical care not the medical care itself or who gets it.

Our medical facilities are roughly adequate for the medical needs of Vermonters. Our ways of paying the largely fixed costs of these facilities, however, are not adequate to meet their financial needs.

#

In other words, VermontÕs health care arrangement provides medical care to virtually all Vermonters. The extent and kind of its medical facilities has evolved from the incidence of disease in the entire Vermont population. Yet our ways of paying for medical care do not make provision for all Vermonters. Nor do they cover full medical costs in many instances. This strains the financial stability of our health care.

The structural problem is, there is no structure.

The elements of health care are not structured into a system capable of assuring us that our medical care will continue to be good, will be there when we need it, or that it will be affordable. These are the minimum requirements a health care system is created to address.

Every other country in the industrialized world has recognized these factors. Consequently, they all have health care systems. Some are more successful than others. Some have the government delivering the health care, but most have private delivery. They differ in many aspects, but all have four common features.

Applied to Vermont this would mean: A system requires paying all necessary medical for all Vermonters, because the health care facilities service all Vermonters, not just some. A system requires overall stewardship to make it work, and because health care is for all Vermonters, not just some, that means public stewardship. A system requires systematic, budgeted financing, and because health care is for all Vermonters, not just some, that means public financing. A system requires accountability to its clientele, and because its clientele are all Vermonters, that means public accountability. A system requires cost containment mechanisms within a global budget.

On the other hand, a system does not require changes in how medical care is delivered, that is, in its private delivery by doctors of our choice. Nor does it require changes in medical care services themselves.

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The paper discusses in detail how budget mechanisms work to control costs and some ways to publicly finance health care. Systems in other countries are referred to and compared to ours. Reasons for our unnaturally high health care costs per person are given. All systems save large amounts of money over what we spend per person, and this is confirmed by a recent study demonstrating how one kind of health care system would save Vermont over one hundred million dollars.

For more information or for a copy of the white paper ÒBuilding a Health Care System in VermontÓ please contact :

Deborah Richter, MD. PO Box 1467 Montpelier, VT 05601 802-224-9037 drich70480@AOL.COM

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