News

We here at PNHP found this Onion article to be just too good, as The Onion often is. Not only can drug manufacturers influence doctors' prescription orders, but the promotions (free pens, dinners, and countless other freebies) help to drive the cost of prescription drugs in the US higher and higher each year. Most major drug companies, in fact, spend more on marketing than they do on research and development, and 80% of the breakthroughs in prescription drugs have come from research universities--not drug companies.

Posted by pnhp at 10:37 AM | Permalink | Comments (0)

University of Houston
Center for Public Policy
conducted June 20-29, 2002

Q8. I'm going to read you some different ways to guarantee health care for more Americans and Texans. As I read each one, please tell me whether you would favor or oppose it.

52% favor - A national health plan, financed by taxpayers, in which all Americans would get their insurance from a single government plan.

72% favor - Requiring businesses to offer private health insurance for their employees.

69% favor - Offering uninsured Americans income tax deductions, tax credits, or other financial assistance to help them purchase private health insurance on their own.

72% favor - Expanding state government programs for low-income people, such as the Medicaid and the Children's Health Insurance Program, to provide coverage for people without health insurance.

75% favor - Expanding the neighborhood health clinics.

http://www.uh.edu/cpp/healthcare.pdf

Comment: The University of Houston poll used precisely the same phrasing for a national health plan as does Professor Robert Blendon of Harvard in his polls. Including the terms "financed by taxpayers" and "a single government plan" invariably results in a low percentage of positive responses. The 52% favorable response in this poll is especially remarkable in that Texas is not exactly noted for its liberal-progressive activism.

Texans apparently really do want to see that everyone is guaranteed access to health care. There is even stronger support for various "incremental" proposals, as the numbers above indicate. All of them involve some form of tax subsidy (including the regressive taxation of the employer mandate). It is most likely that there is some degree of awareness that these proposals represent egalitarian ideals made possible by public funding (although maybe not expressed in these terms).

It would be interesting to see the response if the public understood more of the policy behind the proposals. They are willing to support these tax funded expansions, but they are probably not aware that the increased costs are greater than would be the costs of a national health insurance program. Also, they are probably not aware that they could have more health care benefits with fewer out-of-pocket expenses with national health insurance.

Do you suppose that there might be a different response to the national health insurance option if the respondents were asked if they supported a program that increased their benefits, gave them free choice of providers, provided coverage for everyone, and controlled our health care costs? Naw... they don't want the government involved. After all, what's really important here?

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Kaiser Commission on Medicaid and the Uninsured
July 2002

Though health insurance is one of the most important factors in assuring access to health care, gaps in coverage can create access problems even among the insured. Thirty-eight percent of insured individuals report that they or their families experienced at least one problem accessing medical services in the past year. Nearly one-fifth (18%) report that they postponed seeking medical care, 15% had a problem paying medical bills, 10% did not get a prescription drug they felt they needed, 8% were contacted by a collection agency about a medical bill, and 6% didn't get care they felt they needed.

Many of these problems arise because some individuals' health plans do not cover all the services they need. In other cases, individuals cannot afford the cost sharing associated with covered benefits.

While the uninsured are most at risk, researchers estimate that about a fifth of insured individuals are underinsured and face limits on coverage or substantial financial costs if faced with an illness. Given the recent increase in health care costs, it is likely that this problem will escalate in coming years.

http://www.kaisernetwork.org/health_cast/uploaded_files/4060.pdf

Comment: Current trends in health insurance include defined contributions, greater price sensitivity through cost sharing, splitting risk pools into individual accounts, introduction of Spartan "basic" benefit plans, greater tiering of insurance options, and other measures that are moving away from the traditional role of assuring financial security through risk pooling.

Why this shift? These policies are designed to protect employers against increased costs. Yet employers pay only about 19% of the nation's health care bill. These policies are designed to reduce risk for the insurance companies, assuring the financial security of this industry, at the cost of the financial security of patients. They are designed to support the views of those that are ideologically opposed to a government role in issues of social justice.

Do we really want to expand policies that protect an insurance industry noted for egregiously wasting our health care resources? Do we really want to continue to rely on employer "good will" to struggle to provide 19% of the funding of our health care system, when we have the capability of relieving them of this burden? Do we really want to cater to ideological elements that believe that funding through a tax system is more evil than funding through the private sector, even when it has been demonstrated that public funding provides greater value for health care dollars?

We already have more than enough resources to provide comprehensive health care benefits for everyone. Isn't it time to establish policies that would enable us to utilize our resources much more effectively? We can continue with our existing private and public health care delivery system, but we desperately need a single risk pool that is publicly funded and publicly administered.

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HHS News U.S Department of Health and Human Services
July 15, 2002

HHS Secretary Tommy G. Thompson today released an HHS report that shows American children are significantly more likely to have health insurance today than in 1997, when the bi-partisan State Children's Health Insurance Program (SCHIP) was enacted into law.

The CDC report also found that overall health insurance coverage has improved. The percentage of Americans without health insurance fell to 14.1 percent in 2001 from 15.4 percent in 1997.

http://www.cdc.gov/nchs/releases/02news/release200207.htm

Table on the number and percent without health insurance: http://www.cdc.gov/nchs/about/major/nhis/released200207/table01_1.htm

Comment: The success of the SCHIP program in expanding health insurance coverage for children is gratifying. But what did not appear in the news release, but only in the table accessible through a link, is the fact that for ages 18-64 years, 30.8 million were uninsured in 1997, and 30.9 million were uninsured in 2001. Most experts agree that this number has become even larger since the onset of the recession.

More disconcerting news is that the recession has negatively impacted the funding of Medicaid and SCHIP, since most states must produce a balanced budget. That means program cuts since politicians are refusing to increase taxes. On July 15, CMS administrator Tom Scully told the National Governors Association, "We can't always give you more money. But we are trying to help you... make the money you have go as far as you can."

We have enough funds in health care to provide comprehensive services for everyone. Isn't it time for a policy change?

(Scully quote: Arrillaga, Associated Press, July 15)

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

Commission on the Future of Health Care in Canada
Discussion Paper No. 1 July 2002
By Gerard W. Boychuck, University of Waterloo

Executive Summary

In the post-deficit political context, the political sustainability of public health care seems precarious. While the tension between health care as a large public expenditure program and a broader political context oriented towards balanced budgets, debt retirement and tax reduction seems relatively obvious, the political fragility of public health care in Canada is neither the automatic nor necessary result of this broader context. Rather, the linkage between health care and fiscal issues has been politically and institutionally constructed. As a result, the sustainability of public health care in Canada at the current time is, fundamentally, a political - rather than simply a fiscal - issue. The existence of a fiscal crisis of health care in Canada is not evident in current expenditure patterns; however, public beliefs that there is a funding crisis in health care are, nonetheless, real. The crucial question is how and why this linkage between health care spending and fiscal issues such as deficits, debt and taxes, so clearly captured in current understandings of sustainability, has become so firmly embedded in Canadian policy debates over the past half decade. While the contemporary political orientation towards balanced budgets, deficit/debt reduction and lower taxes does not necessarily undermine the sustainability of the current health care system, more robust political support is required to sustain the current system of public health care in this context and the potential for current institutional arrangements to undermine support of the health care system is magnified.

The fiscal crisis of health care is not merely an ideological construct; rather, it has firm and enduring institutional underpinnings. It is rooted in the paradoxical situation by which the public health care system's institutional framework - especially the nature and dynamics of federal-provincial fiscal relations - are structured such that they fundamentally undermine rather than bolster public support for the system. The current political fragility of the system is the result of political dynamics generated out of nearly a decade of federal-provincial wrangling over funding in a context of fiscal restraint. The incentives created by federal-provincial fiscal arrangements and the resulting patterns of interaction have led to widespread perceptions both among the elite and the broader Canadian public that the public health care system in Canada is of rapidly declining quality, is wracked by a funding crisis, is unable to control costs, and is, ultimately, fiscally unsustainable.

Current expenditure patterns provide slim grounds for arguments that the system is fiscally unsustainable. Provincial health expenditures relative to GDP are the same now as they were a decade ago and recent patterns of expenditure increases are, in part, a response to pent-up demand created by expenditure restraint in the mid-1990s. Arguments that the system is fiscally unsustainable are only plausible if based on assumptions of cost acceleration above and beyond cost increases driven by aging, population growth and moderate cost increases in services now offered or, alternatively, on the claim that current levels of tax effort are unsustainable. The former issue can be plausibly debated; however, arguing that the potential for future cost increases poses a threat to sustainability is fundamentally different than arguing that existing expenditure patterns demonstrate that the current system is unsustainable. The sustainability of current provincial tax efforts in the face of increasing global and continental economic integration is also an open question in the longer term; however, to this point, there is no evidence of downward harmonization in provincial fiscal efforts.

Despite this, there is now a widespread perception of an existing fiscal crisis in public health care. The roots of this perception lie, to some significant degree, in the institutional underpinnings of health care -especially federal-provincial fiscal arrangements. In the context of more generalized restraint, these arrangements began to generate dynamics with serious potential to undermine public support for the system of public health care. First, the illusion of the rapid growth in the overall fiscal burden of health expenditures (relative to the economy) is primarily an artifact of federal-provincial financing arrangements. Secondly, the manipulation of the fiscal system so that the burden of government debts and deficits is borne primarily at the provincial level, whose primary program responsibility is health care, has strongly reinforced the linkage in public debates between health care spending and the issue of debt and deficits. Finally, current fiscal arrangements provide provinces with strong incentives to emphasize the failings of their own health care systems and the broader fiscal unsustainability of public health care in an attempt to maximize leverage for their demands on the federal government to enrich transfers.

These dynamics have had important impacts on public perceptions of health care including the striking decline in public perceptions of the quality of health care that exists despite the prevalence of positive personal health care experiences. In addition, there also are widespread public perceptions that the public health system is experiencing a major funding crisis (despite the fact that the fiscal burden of public health care relative to the economy is no heavier than at the outset of the 1990s) and that increased funding must be a central component of improving the health care system. Finally, public confidence in the handling of health care issues by both levels of government is decreasing and the belief that governments are falling further and further behind in terms of addressing the problems facing health care is becoming more prevalent.

Current expenditure patterns do not suggest that the fiscal sustainability of the public health care system in Canada is in jeopardy in the immediate term. This does not mean that future cost acceleration poses no threat to the sustainability of health care or that there is no need for a concern with fiscal restraint in health management. Nor does it mean that the issue of sustainability should be dismissed as a transitory phenomenon that will fade as the politics of fiscal restraint ease. The conditions resulting in broad perceptions of an existing fiscal crisis of health care have very real and enduring institutional underpinnings that can be expected to continue into the foreseeable future regardless of whether there are objective grounds for it, and regardless of whether solutions to containing future cost pressures are implemented. Under current arrangements, a continuing and not easily reversible decline in public perceptions both of the quality and sustainabilility of the existing system public health care in Canada seems likely. It is here that the real potential for crisis lies.

http://www.healthcarecommission.ca/Suite247/Common/GetMedia_WO.asp?MediaID=890&Filename=Boychuk_E.pdf

Kip Sullivan clarifies the message on his response to the Miller-Luft HMO Plan Performance Update:

"Implicitly, HMO quality is as good as it appears only because HMOs use more resources than FFS plans use."

This statement appears in the excerpt from the literature review by Miller and Luft in the latest Health Affairs that Don sent out last week. Miller and Luft name no author, and cite no paper, but given the context, it appears to be directed at me. For the record, I have never made such a statement. Anyone familiar with the literature would not make the blanket statement that "HMOs use more resources than FFS plans."

Kip Sullivan

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Council on Health Care Economics and Policy
Ninth Princeton Conference
The Robert Wood Johnson Foundation
June 6-8, 2002

Henry Simmons, MD, MPH, FACP, President of the National Coalition on Health Care:

So having shared with you our observations and recognizing the magnitude and the interrelatedness of the cost, coverage, and quality problems we face, and the failure of all the existing and presently proposed strategies to deal with it, what reforms do we feel will be necessary?

Well, we have concluded that solution is going to require a comprehensive strategy that effectively integrates federal, state and private sector policies and achieves all of those goals. We must achieve universal coverage. After ten years of effort and looking here and elsewhere, we have found no voluntary mechanism that will achieve that.

We must create a massive effort, public and private, to improve the quality of all care and to eliminate that waste of hundreds of billions of dollars and the unnecessary carnage that is causes.

We must develop a mechanism to control total health system cost, not just for Medicare, not just for the big buyers, but for everybody. And to stop the national shell game of cost shifting which currently is the mode of operation.

And obviously, we have to create a viable, fair, sustainable system to finance care. Having done those, we've automatically accomplished the last objective which is to administratively simplify the most complex, non-user friendly system on the face of the earth.

As you can see, the subject of this conference, cost containment, is one, but only one of the essential goals. Why do they all have to be attained as hard as that will be to do? Because as I said earlier, the problems are inextricably intertwined. You can't solve one without addressing them all. It's a vicious cycle.

Without system-wide cost containment strategies, you can neither assure, afford or sustain universal coverage. Without universal coverage, you cannot assure quality. And in the absence of quality, you cannot contain your costs or most importantly, make rational payment decisions...

In addition, without universal coverage, you can neither create a truly competitive market based system, make the system less complex, stop risk selection and cost shifting, or most importantly, achieve a level playing field of equitable financing. And remember, those who advance the managed competition hypothesis, honestly told us a decade ago that it could not work without mandatory universal coverage.

Now, we recognize that to achieve those ambitious reforms is not going to be easy... We have to get the public and our political leaders to understand that there is a great deal of unfinished business in health care. We are convinced that health care will be the transcendent domestic issue in our society in this decade. And in our coalition meeting just two days ago in Washington, we unanimously committed ourselves to do everything we can to make this our highest priority over the next two years.

So, to conclude, given our assessment what are our answers to the three major questions we've talked about these two days. Should health care costs be contained? They must be, because unless they're contained, none other than the wealthy can be assured they will have coverage when they need it or continue to be able to afford that which they now have.

Question two. Can health care costs be contained without harming patients? Absolutely, but not with the strategies we're currently using, or currently contemplating.

Question three. Must the system be restructured? Yes, from top to bottom.

Question four. What will be necessary to control costs? These major national policy changes and the abandonment of a bankrupt piecemeal strategy we've been utilizing for 40 years.

A difficult task, monumental, but one that we are convinced must be completed, because otherwise our great grandchildren will be sitting in this room attending not the 9th but the 109th Princeton Conference and a topic of which will be "Why didn't we do what was necessary sooner?" So, I guess you can subtly show that we reject the piecemeal approach that this society is trying to implement. And frankly, we would also, I guess, object to those people who say, "Because it's going to be hard, we shouldn't try." That's a self-fulfilling prophecy.

http://www.kaisernetwork.org/health_cast/uploaded_files/Transcript_CouncilonHealthEconomics_6.8.02.pdf (Cut and paste this tail to the link above for access to the transcript.)

The website of the National Coalition on Health Care: http://www.nchc.org/

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

Back in March of this year, Uwe Reinhardt and I debated whether managed care damaged the quality of medical care. Uwe cited an unpublished literature review by Robert Miller and Harold Luft that Uwe described as "inconclusive," that is, it found managed care and FFS care to be roughly equivalent in quality. I wrote Uwe back and asked, "Do you know if Luft and Miller's new review excluded studies that didn't control for coverage differences? If it did not, why do you give its conclusions any credibility?" Uwe did not answer me.

Now we know the answer to the first of my two questions. The latest Health Affairs (July-August 2002) contains the Miller-Luft literature review Uwe was no doubt talking about. As was the case in Miller-Luft's 1994 and 1997 literature reviews, this one (which covers studies published between 1997 and June 2001) includes studies that failed to control for coverage differences, a failing which will often bias results in favor of managed care plans and rarely bias results against fee-for-service doctors (see the PNHP web site for more details on this argument). This was no oversight; at the end of their article, Miller and Luft make a point of arguing with an article I published in the American Journal of Public Health in 1999 criticizing their methodology. Their reasoning is very strange.

I find this latest review to be deceptive for two other reasons. (1) In places, it leads the reader to think that the studies reviewed compared HMOs to FFS plans, when in fact few studies looked at what most people think of when we hear the phrase "FFS plan" -- indemnity plans that don't use utilization review or other managed care tactics. (2) In many places, the review leads the reader to believe the studies compared HMOs to "non-HMOs," when in fact some of the studies mixed HMOs and PPOs together.

My conclusion: None of Miller and Luft's three reviews are reliable. My review in the Am J Pub Health uses the soundest methodology, and that review concludes HMO care is inferior to FFS care.

Kip Sullivan _______________________

Following is the abstract of the article by Miller and Luft to which Sullivan refers. Also is the comment from that article referring to the prior critique by Kip Sullivan. Please note that this was written prior to Kip Sullivan's comments which appear above and, therefore, could not be responsive to this latest critique.

Health Affairs July/August 2002 HMO Plan Performance Update: An Analysis Of The Literature, 1997-2001 By Robert H. Miller , Harold S. Luft

Abstract

This paper synthesizes results from peer-reviewed literature published from 1997 to mid-2001, on various dimensions of health maintenance organization (HMO)plan performance. Results from seventy-nine studies suggest that both types of plans provide roughly comparable quality of care, while HMOs lower use of hospital and other expensive resources somewhat. At the same time, HMO enrollees report worse results on many measures of access to care and lower levels of satisfaction, compared with non-HMO enrollees. Quality-of-care results in particular are heterogeneous, which suggests that quality is not uniform - that it varies widely among providers, plans (HMO and non-HMO), and geographic areas.

Responding to an earlier critique.

After our last literature review, Kip Sullivan argued that our past findings were biased in favor of HMOs because we did not adjust for the fact that HMOs tend to provide more comprehensive coverage than non-HMO plans do. Adjust for those differences, the argument goes, and HMO findings would be much less favorable. This argument is flawed because it ignores the fact that plans are selected on the basis of a "bundle" of characteristics or attributes, not just one. In general, HMOs tend to have more-comprehensive coverage (that is, fewer price constraints on demand), combined with more nonprice constraints - narrower networks and other nonprice attempts (gatekeepers and prior authorizations) to limit specialist visits and expensive services. Non-HMO plans tend to have less comprehensive coverage (that is, more price constraints on demand) but fewer nonprice constraints. Sullivan's proposal holds constant only one part of the "bundle" coverage, ignoring the other. FFS plans with comprehensive coverage and few nonprice constraints on demand have high utilization, high premiums, and few insured persons. Although the Canadian-style single-payer FFS system has few price restrictions, it too must constrain demand-through overall budgets, long-range resource planning, and queuing.

Also flawed is an additional argument that the apparent comparability of quality is because Medicare, as a result of inadequate risk-adjustment methods, over-pays HMOs, which can therefore offer better coverage (such as outpatient prescription drugs), leading to better outcomes than would have been the case without the overpayment. Implicitly, HMO quality is as good as it appears only because HMOs use more resources than FFS plans use.

There is evidence that Medicare overpaid Medicare HMOs by approximately 6-7 percent, according to two estimates. However, the implication with respect to quality is flawed, since it ignores the fact that many FFS Medicare beneficiaries, employers, or Medicaid pay extra for supplemental insurance coverage and that beneficiaries also incur copayments, deductibles, and other out-of-pocket expenses. These payments add substantially more resources for FFS than for HMO enrollees. As a result, while FFS Medicare beneficiaries may use fewer Medicare-financed dollars (risk-adjusted) than their HMO counterparts use, they almost certainly use more real resources in toto.

In fact, if quality is comparable for HMO and non-HMO plans, then many HMO enrollees who have a choice among plans seem willing to accept lower satisfaction for lower out-of-pocket payments. Based on the findings from the articles reviewed here and in the past, the trade-off overall does not appear to be one of lower quality of care for lower out-of-pocket payments. We note, however, that not all enrollees have a choice of plans, and this may be a source of some of the backlash against managed care.

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U.S. Department of Health and Human Services
Office of the Assistant Secretary for Planning and Evaluation
July, 2002

"This report demonstrates the potentially serious consequences to medical innovation and overall health posed by attempts to contain drug expenditures by implementing government controls that are inevitably arbitrary and out of touch with the diversity of patient needs and circumstances. If applied broadly in the United States, government-controlled restrictions on the coverage of new drugs could put the future of medical innovation at risk and may retard advances in treatment and in the development and introduction of new products. Moreover, government controls may reduce or delay access to specific drugs for seniors. Even when a drug is available, government controls often increase the likelihood that older, lower cost products will be prescribed rather than newer, more innovative products, which may have fewer side effects or other features that improve patient compliance and hence, the effectiveness of medical treatment.

"In contrast to many other countries, the U.S. market is relatively free of government-controlled programs to contain medical costs. Although participation in many federal and state buying programs may require certain types of controls-such as rebates and coverage limits-these programs represent only a small fraction of the market.

"To ensure continued progress in the fight to treat and prevent diseases, especially the chronic illnesses of older age for which we may be on the verge of unprecedented breakthroughs, the American health care system should not resort to government controlled drug coverage decisions. Other steps can and should be taken to reduce the costs of drugs, such as investing in biomedical research on less costly and more effective treatments, protecting the intellectual property rights of American companies worldwide, improving the efficiency of the regulatory process for new treatments, and increasing the availability and effectiveness of competitive approaches to limit the cost of new treatments. These steps will help keep drugs available and affordable without reducing access to valuable new treatments and discouraging innovation just at the time when the potential for innovation is greatest."

http://aspe.hhs.gov/health/reports/medicalinnovation/

Comment: This report, cloaked as "study" on drug innovation and coverage, is merely a blatantly dishonest political statement of the Bush administration's policy position on pharmaceutical firms. Just at a time when access to affordable prescription drugs has become a critical problem for many of those with the greatest needs, the Bush administration blows these people away and beds down with the industry that is ripping off the American public. Have they no shame?

(Please accept my apologies for injecting politics into a policy issue. Maybe someone else reading this has a more effective approach to establishing the principle that everyone should have access to essential medications.)

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

California HealthCare Foundation
Press Release
July 9, 2002

A survey released today by the California HealthCare Foundation (CHCF) and The Field Institute finds that large majorities of registered California voters oppose making cuts to health care programs for low-income and disabled Californians...

A majority of voters support the basic tenets of the state's Medi-Cal program. For example, 77 percent agree that government should provide basic medical coverage to low-income or disabled adults who can't afford insurance. This proportion increases to 84 percent of voters when asked about government providing medical coverage to the children of low-income families.

When voters were asked whether they would favor or oppose eight possible tax increase proposals as a way for the state to avoid making major cutbacks in medical services to low-income Californians and the disabled, 94 percent support at least one of the eight tax options. Receiving the broadest support were a 5-cents-per-serving increase in state alcohol taxes (78 percent), a 50-cent-per-pack increase in tobacco taxes (74 percent), temporarily increasing the personal income tax rate of the state's top income earners (over $130,000 or $260,000 for couples) (68 percent), and canceling the scheduled cuts in state motor vehicle registrations fees (53 percent).

On the other hand, just 28 percent of voters support temporarily increasing the state gasoline tax by 5 cents per gallon as a way to preclude major cutbacks in the Medi-Cal budget. In addition, just 34 percent favor temporarily increasing the personal income tax rate for individuals earning more than $37,000 and couples making more than $75,000 for this purpose. Voters oppose temporarily increasing state sales taxes by 1 percent to avoid Medi-Cal budget cuts by a 59 percent to 40 percent margin. Voters are somewhat more divided (50 percent opposed and 45 percent in favor) when asked about temporarily increasing state business income taxes to forestall major Medi-Cal cutbacks.

http://www.chcf.org/press/view.cfm?itemid=19813

Comment: It is refreshing to see a survey that demonstrates strong public support for health care programs for those with the greatest need. In this poll, the support extends to a willingness to pay taxes to support these programs. And, furthermore, the strongest support is for sin taxes and progressive income taxes strongly weighted toward the high end.

The public seems to be getting it right, even if there is an element here of "tax the guy behind the tree."

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

Health Affairs July/August 2002

by Steffie Woolhandler and David U. Himmelstein

Most Americans have private health insurance. Citizens of most other wealthy nations have national health insurance. Hence the perception that those nations' health care systems are public while ours is private. But these labels obscure the predominance of private medical practice and hospitals in Canada and most European countries and the dominance of tax-financed health care in the United States. ... Americans now pay higher taxes per capita for financing health care than do any other nation's citizens.

The huge role of the government in financing American health care is obscured by the fact that nearly one-third of these tax dollars meander through private insurers on their way to the patient's bedside. What originates as taxes paid by private households ends up as recycled "private" spending in the CMS accounts (Centers for Medicare and Medicaid Services). Insurance firms not only siphon off overhead and profits in the process, they also inflict huge paperwork burdens and costs on providers. We have detailed these costs in the past. For 1999 we estimate that health administration spending was more than $309 billion. At least half of this could have been saved through a shift to national health insurance. Disinterested civil servants, and even skeptics, agree that U.S. health care costs need not rise under national health insurance because administrative savings would roughly offset the increased costs of care for today's uninsured and underinsured persons.

While national health insurance wouldn't cost Americans more, it would mean that taxes would pay a bigger share of health care costs and that private insurance and patients would pay a smaller share. Yet government now spends far more on health care-and national health insurance would require a smaller tax increase -than most Americans believe. The step from our current level of tax financing -59.8 percent-to Canada or Australia's 70 percent is less steep than the CMS figures on public spending imply. About $130 billion per year-the amount of the recent tax cuts-would get us from here to there.

http://www.healthaffairs.org/ (For non-subscribers, the abstract is available.)

Comment: It is crucial to understand that an increase in taxes to fund national health insurance does NOT mean that health care costs are increased. Numerous studies have demonstrated that the administrative savings produced by converting from our inefficient system, which includes the fragmented health plan marketplace, to a single national health insurance program would fund all current care PLUS the voids in care that now exist. Net spending would not increase.

Then why would health care taxes increase? The current inequitable private financing of our heath care system through direct payments, insurance premiums, businesses' indirect costs of health care transferred to consumer products and services, and a myriad of other hidden costs of health care would be dramatically reduced. This dysfunctional system of funding health care would be displaced by a tax system specifically designed to establish equity in the funding of health care.

Our tax system already funds half again as much as our private funding of health care. But even in the publicly funded sector, we have neglected equity. Perhaps the most egregious example is the regressive nature of the deductibility of employer premium payments. Tax systems have a moral and ethical mandate to establish equity. We should demand equity, not only in the current tax funding, but in the funding of our entire health care system by accepting a modest increase in taxes balanced with a reduction in administrative waste and a reduction in the inequity of private funding. It won't cost us any more, but it would establish fairness for all of us.

And, oh... yes... Accomplishing this through a national health insurance program would have one additional benefit: comprehensive, affordable health care for everyone.

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

CONTACTS:
David Himmelstein, M.D.
Steffie Woolhandler, M.D.
(617) 497-1268
(617) 665-1032
(617) 546-0615 (Beeper)

Government Funds 60% of U.S. Healthcare Costs - Far Higher than Previously Believed

Harvard Study Shows Government Health Spending in U.S. Exceeds Costs in any Nation With National Health Insurance

"We Pay for National Health Insurance but Don't Get It"

Government expenditures accounted for 59.8% of total U.S. health care costs in 1999, according to a Harvard Medical School study published today in the journal Health Affairs. At $2,604 per capita, government spending was the highest of any nation - including those with national health insurance. Indeed, government health spending in the U.S. exceeded total health spending (government plus private) in every other country except Switzerland. (Estimated total U.S. health spending for 2002 is $5,427 per capita, with government's share being $3,245.)

Taxes fund care for those most vulnerable to illness and expense - the elderly, the disabled, the poor, patients with end-stage kidney disease, severe mental illness, certain cancers and rare diseases, and now, Alzheimer’s (75.8% of tax-financed health expenditures). Taxes also fund coverage for all public employees, veterans, and the military (e.g. all members of Congress have publicly-funded insurance)(9.1%). And businesses get large tax-breaks for providing coverage to their employees (15.1%).

“We have a system in which we’ve “privatized the profits, and socialized the risks,” said Dr. Steffie Woolhandler, a co-author of the study and Associate Professor of Medicine at Harvard. “Insurance companies reap the profits and pay their executives millions while drowning our health system in paperwork at public expense. For their part, businesses complain bitterly of rising health care costs, yet they pay only 19% of total U.S. health costs, insure the mostly healthy and wealthy, and reap large tax-breaks (subtracting tax-breaks reduces employers share of health spending to just 11%).”

“It would be much better – for both business and the American public - to get employers out of the business of providing health insurance altogether,” continued Dr. Woolhandler. If we put everyone – young and old – healthy and ill – in the same risk pool, we could save enough on bureaucracy ($154 billion) to cover all the 40 million uninsured. We could also end “job-lock” for employees and effectively control rising health costs – something no individual business can do.”

The study analyzed data on spending for Medicare and Medicaid, as well as the costs of tax subsidies for private coverage and expenditures to purchase private insurance for government employees. These latter two categories have previously been overlooked in calculations of government health spending. It found that government's share of expenditures has nearly doubled since 1965, with tax subsidies and public employee benefit costs increasing fastest.

“National health insurance doesn’t mean spending more; it means spending wisely,” said Dr. David Himmelstein, a co-author of the study and co-founder of Physicians for a National Health Program (PNHP). “We spend over $309 billion on paperwork in insurance companies, hospitals, nursing homes and doctor’s offices – at least half of which could be saved through national health insurance. We spend over $150 billion on medications -- at prices 50% higher than Canada’s”.

“Universal coverage is affordable - without a big tax increase,” continued Dr. Himmelstein. “Because taxes already fund 60% of health care costs, a shift about the size of the recent tax cut ($130 billion a year) from private funding to public funding would allow us to cover all the uninsured and improve benefits for everyone else. Insurers/HMOs and drug companies buy-off our politicians with huge campaign contributions and hordes of lobbyists."

“It’s an outrage that the American public is already paying for health care for all with their tax dollars – yet 41 million people are without any health insurance at all. 85% of the uninsured are working people and children,” said Dr. Quentin Young, Past President of the American Public Health Association. “Health care should be every American’s right, just like other tax-funded necessities like roads and defense, police and fire protection.”

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Physicians for a National Health Program is an organization of over 9,500 physicians that supports non-profit national health insurance. It has chapters and spokespeople across the country and makes its headquarters in Chicago. For additional contacts, call 312-782-6006.

Posted by pnhp at 10:48 AM | Permalink | Comments (0)

Harvard Study Finds Government Health Spending in U.S. Higher than in Any Other Nation "We Pay for National Health Insurance but Don't Get It"

Government expenditures accounted for 59.8% of total U.S. health care costs in 1999, according to a Harvard Medical School study published today in the journal Health Affairs. At $2,604 per capita, government spending was the highest of any nation - including those with national health insurance. Indeed, government health spending in the U.S. exceeded total health spending (government plus private) in every other country except Switzerland. (Estimated total U.S. health spending for 2002 is $5,427 per capita, with government's share being $3,245.)

The study analyzed data on spending for government health programs like Medicare, Medicaid and the Veterans Administration ($548.7 billion in 1999), as well as two categories that have previously been overlooked in calculating government health costs. (1) Expenditures to buy private insurance for government employees - e.g. members of Congress, firemen and school teachers - at a cost of $65.6 billion in 1999. And (2) tax subsidies for private coverage - which totaled $109.6 billion in 1999. Most of these tax subsidies go to the wealthiest Americans. The study found that government's share of expenditures has nearly doubled since 1965, with tax subsidies and public employee benefit costs increasing fastest.

The hidden government health spending has a major impact on family budgets. In 1999, a family of four with average health costs spent $7,016 for their own health expenses and premiums (including what their employer paid). In addition, they paid $10,416 in health care taxes; $1,578 for tax subsidies, $943 for government workers' coverage, and $7,895 for government health programs like Medicare and Medicaid. Even many uninsured families pay thousands of dollars in taxes for the health care of others.

Dr. Steffie Woolhandler, a study author and an Associate Professor of Medicine at Harvard, noted: "We pay the world's highest health care taxes. But much of the money is squandered. The wealthy get tax breaks. And HMOs and drug companies pocket billions in profits at the taxpayers' expense. But politicians claim we can't afford universal coverage. Every other developed nation has national health insurance. We already pay for it, but we don't get it."

Dr. David Himmelstein, study co-author and a co-founder of Physicians for a National Health Program, commented: "Our study shows that universal coverage is affordable - without a big tax increase. Government already spends nearly enough, but it's spending it wrong. National health insurance doesn't mean spending more; it means spending wisely. We spend over $309 billion each year on paperwork in insurance companies, hospitals and doctors' office - at least half of which could be saved through national health insurance. We spend $150 billion on medications, at prices 50% higher than Canadians pay for the same drugs. By slashing bureaucracy and drug prices we could save enough to cover all of the uninsured and improve coverage for the rest of us."

"It's an outrage that the American people pay sky high health care taxes - but 40 million of them are uninsured," said Dr. Quentin Young, Past President of the American Public Health Association. "Health care should be every American's right, just like schools, roads, defense, police and fire protection."

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Physicians for a National Health Program is an organization of over 9,500 physicians that supports non-profit national health insurance. PNHP is based in Chicago with chapters across the US (see below). For additional local contact information, call (312) 782-6006. www.pnhp.org

California Vermont Don McCanne, M.D. Deb Richter, M.D. President, PNHP President Vermont Health Care for All (949) 493-3714 (802) 224-9037

Illinois Idaho Quentin Young, M.D. Bob LeBow, M.D. National Coordinator, PNHP Past President, PNHP (312) 782-6006 (208) 466-7869 (773) 493-8212

Ohio New York Jonathan Ross, M.D. Oliver Fein, M.D. Past President, PNHP President, New York Chapter PNHP (419) 251-2360 (212) 746-4030

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

The Washington Post
July 7, 2002
By Michelle Singletary

My family has health insurance through my job. But what if I were pink-slipped because of some accounting irregularity that caused my company to go bankrupt? What if my company decided that the best way to pump up its stock price was to announce major layoffs?

I'll tell you what I would do: I'd immediately sign up to continue my coverage through COBRA.

In theory, COBRA is a good law. In practice, most workers can't afford to pick up the coverage. Only 7 percent of unemployed workers or their families used COBRA in 1999, according to the Kaiser Commission on Medicaid and the Uninsured.

I understand why so many people, faced with the high cost of this coverage, decide not to take advantage of their COBRA rights. If you and your dependents are healthy and money is tight, paying the mortgage or the car loan is your priority.

But life has a way of shifting priorities and problems. Many people who file for bankruptcy protection do so because they can no longer handle the crush of medical bills as a result of a catastrophic illness.

Is it fair that in a country as rich as ours there is anyone who has to worry about being denied health care because of its cost?

Absolutely not. All of us should be concerned, and we should work to change a system in which receiving good health care often comes down to the jobs we hold.

But until things do change, you need to prepare for the worst. In addition to saving at least three months' living expenses, pump up that bank account to include the possibility that you may have to pay your full health insurance premium.

... if you have a good income, learn to live on less. Stop buying things you don't need so when a crisis hits -- medical or otherwise -- you have some financial resources to fall back on, at least for a little while.

http://www.washingtonpost.com/wp-dyn/articles/A31306-2002Jul6.html

Comment: And if you don't have a good income?

Universal insurance is the only answer.

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

The New York Times
July 6, 2002
By Milt Freudenheim

With Congressional passage of a Medicare drug benefit still far from certain, about half the states are at least considering joining a Bush administration program that will provide federal matching money to extend drug coverage to elderly people whose incomes are modest but too high for Medicaid.

Some states are shunning the program, however, warning of financial risks for their Medicaid budgets and the low-income people they already serve.

So why are some states concerned? Because under the new federal program, which will provide each participating state a waiver from Medicaid law, there will be a federal subsidy ceiling that will rise no higher, over the five-year span of the waiver, than the total federal contribution for Medicaid that a state received before the new drug program.

In other words, from Washington's perspective the new program will be "budget neutral": for each dollar that a state receives under the program, it must find a dollar of savings elsewhere in the government's contribution to Medicaid.

Cindy Mann, a Medicaid expert at the Kaiser Family Foundation:

"The waivers put all the risks onto the states and the beneficiaries. That is a fundamental change in the way the Medicaid program is normally financed."

http://www.nytimes.com/2002/07/06/politics/06PLAN.html

Comment: The policy implications are important from two perspectives: the implications for the current Medicaid and Medicare programs, and the implications in the future once we have a universal program of health insurance.

Medicaid is a critically under-funded program. Since states must participate in the funding, the current state budget crises are only compounding the problem. The insistence of the Bush administration that this expansion of prescription coverage be budget-neutral within the Medicaid budget merely pulls more funds away from already critically under-funded Medicaid services. Providers will bail out not because their profits are diminished, but rather because they cannot sustain the increasing losses. Starving a program of funds is a devious method of assuring its demise.

Unfortunately, the administration has established a similar policy for our Medicare program. They insist that any changes be budget-neutral. For instance, they have stated that any new Medicare prescription benefit must be paid for out of reductions to other providers. With a 5.4% decrease in physician payments this year, and more cuts scheduled for each of the next few years, further reductions though the budget-neutrality policy simply cannot be tolerated. Thus Medicare will be further starved of funds, easing the way to the administration's goal of turning Medicare over to the marketplace. Spartan benefits with unaffordable cost-sharing will be inevitable for the majority of beneficiaries.

What about budget-neutrality once we have a program of universal health insurance? Isn't one of the promises of a single, universal program that we can control health care costs into the future? Global budgeting promises budget neutrality, with appropriate adjustments for inflation (and for technological expansion, if that is our priority).

Why is global budgeting acceptable in a single payer program, but undesirable in our existing Medicare and Medicaid programs? The answer is very simple. We have more than enough resources to fund comprehensive services for everyone, but first we would have to eliminate the administrative waste characteristic of our current system. Maintaining expenditures at the current 14.7% of our GDP would assure adequate funding for health care forever.

But then why is global budgeting failing for Medicare and Medicaid? The answer is that we have failed to adequately fund the two most expensive risk pools in the nation, Medicare, composed of the high-cost elderly population and those with long-term disabilities, and Medicaid, composed of low-income individuals with greater medical needs. If we are to isolate high-cost individuals in exclusive risk pools, we must fund those pools much more generously than we do the risk pools for the remaining healthy individuals. But we don't do this. We under-fund Medicare, and critically under-fund Medicaid, while we over-fund private health plans in order to generously support this superfluous industry.

We see where our national policy priorities currently lie. Isn't it time to re-prioritize?

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

The Philadelphia Inquirer
July 5, 2002
By James Kuhnhenn
Inquirer Washington Bureau

Almost 10 years after President Bill Clinton tried to overhaul the nation's health-care system, the American people appear ready to try again.

The plight of the uninsured is edging back into political consciousness, say lawmakers, lobbyists and pollsters, creating fertile ground for a new push toward universal health insurance.

The new direction - away from incremental measures and toward more ambitious goals such as universal coverage - is politically significant, as Republicans and Democrats struggle for control of Congress in November's elections. Health care could compete with President Bush's war on terrorism for voters' attention.

Ayres (Republican pollster Whit Ayres) detected the new trend in public sentiment in a nationwide poll of 1,000 people he conducted March 18-20. He was struck by the response to the question: Would you like to see a government-owned, government-run health-care system in America?

Forty percent of the respondents said yes. "It's a little higher than I expected," Ayres said. The poll had a margin of error of 3 percentage points.

Democrats, who had abandoned plans for an ambitious health-care restructuring, are reassessing their strategy of tackling health-care issues in small bites. Those efforts, most notably prescription-drug benefits for seniors and patient-friendly HMOs, have led to huge partisan rows in Congress but no real solutions to help Americans get affordable access to doctors and medicines.

Senate Majority Leader Tom Daschle (D., S.D.):

"You have to address cost, access and quality from a comprehensive point of view. And while we failed 10 years ago, I think you could say we failed in the 10 years since to deal with these issues incrementally. There isn't any outstanding success story to talk about."

http://www.philly.com/mld/philly/news/nation/3604633.htm

Comment: It is not surprising to see that a Republican pollster would characterize universal health care coverage as not only a government-run but also a government-OWNED health care system. Americans would surely emphatically reject socialized medicine. Yet 40% supported this, the most extreme version of comprehensive reform!

Ironically, the moderate position now is to support national health insurance while continuing to support our existing private and public ownership of the health care delivery system. Supporting incrementalism while rejecting any consideration of comprehensive approaches has now become an extreme position.

It is now our task to be certain that the public and our political leaders have a clear understanding of the equity, efficiency, and comprehensiveness of a publicly administered program of universal health insurance. In this election season, our politicians must hear this message.

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