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Uwe Reinhardt responds to Joel Segal’s comments on the moral outrage of our failure to enact a program of universal health care (which was in response to Reinhardt’s editorial):
I could not agree more. If the nation’s czar of morality Bill Bennett cared about such matters, he’d write another book entitled: Where’s the Outrage?
Alas, we live in America, and I merely reported in the editorial—and in the paper I reference therein—what I have learned about America in these past 35 years.
As I recently put it before a high level health-policy meeting in Washington, D.C.:
“One major source of our national economic strength —that is to say, our average GDP-per-capita-prowess—is a by international standards unusually high tolerance for misery among the nation’s economic losers, to wit:
1. people who made imprudent decisions somewhere along the way;
2. people who lack the intellectual acumen, or the education, or the training to fend for themselves in this highly demanding market economy;
3. people who are victims simply of pure bad luck (e.g., because they got sick, or wounded in combat, or hit by some accident, or were born into a household that was not supportive enough in the accumulation of human capital, etc).
For folks not falling into these three categories, this can be (and usually is) a truly fantastic country. Alas, for the folks who fall into these dire categories, it is a harsh, cruel and, in my own judgment, unjust country—whether we look at health care, education of our so-called ‘justice’ system.”
That is what I have learned about America in these past 35 years. I have come to accept it, as my editorial and my paper suggests.
Best,
Uwe
In December, Chet Edwards, a Texas Democrat, with more than 70 cosponsors, introduced HR 3672, to authorize HHS to negotiate Rx prices.
This week, one of those cosponsors, Dennis Moore, a first-term Kansas Democrat, introduced HR 3707, which at first glance is nearly identical, and has a handful of cosponsors including Jo Ann Emerson, Missouri Republican, who was not on Edwards’s bill.
http://www.house.gov/edwards/releases/pr_031209.html
http://www.house.gov/moore/nr-Meds-1-21-04.htm
Benjamin Cardin, a Maryland Democrat, this week, without cosponsors, introduced HR 3702. It provides authority to negotiate prices, “guaranteed prescription drug benefits,” full reimbursement for qualified retiree prescription drug plans, repeal of the comparative cost adjustment (CCA) program, repeal of the MA Regional Plan Stabilization Fund, and repeal of cost containment provisions.
Also this week Robert Wexler, a Florida Democrat, introduced two bills. HR 3710 (no cosponsors) specifies procedures under which pharmacists and wholesalers - and, in some cases, individuals - could reimport most drugs from Canada and directs that these procedures be instituted through regulations. The bill provides, however, that the regulations shall “contain any additional provisions determined by the Secretary to be appropriate as a safeguard to protect the public health or as a means to facilitate the importation of prescription drugs.” HR 3711, with three cosponsors, repeals the premium support demonstration programs now set to start in 2010.
http://www.wexler.house.gov/press_releases/Jan_21_04.htm
—
Sidney J. Socolar
PHANYC Representative to APHA Governing Council
Phone 212-666-5925
Fax 212-316-1405
Nobel laureate Dr. Milton Friedman and Other Experts to Debate Drug Importation, Medicare, Uninsured, Single-Payer Health Care, and More
SAN FRANCISCO – Today experts will debate the importation of prescription drugs from Canada, a practice just recently supported by San Francisco’s Board of Supervisors. Legislation is now in the works in California, and cities and states around the country are on the drug importation bandwagon. The panelists will also discuss Medicare reform, how best to solve the problem of the uninsured, and whether the United States should adopt single-payer health care.
“We are deeply concerned about the quest of American politicians to import prescription drugs from Canada,” said panelist Sally C. Pipes. “The San Francisco supervisors seek to reduce drug prices by imposing the price controls of other nations on us. Such importation will create higher prices and scarcity in Canada, and in America it will quash research and development for promising new therapies, degrading overall health care in the long term,” she said.
In a November 2003 open letter to Congress, Nobel laureate Milton Friedman and other economists warned: “Even if people were to realize that price controls are preventing new drugs from being developed, undoing the effects of those controls would be a difficult task. Customers would have to pay higher prices for years before they saw benefits.”
Panelists:
Milton Friedman, Nobel laureate
Sally C. Pipes, President and CEO, Pacific Research Institute
Don McCanne, M.D., President of the Physicians for a National Health Program
Congressman Gil Gutknecht, R-MN
James K. Glassman, American Enterprise Institute (moderator)
The Washington Post
January 25, 2004
Editorial
Unhealthy
For an insight into the inadequacy of the president’s health care proposals
put forward in his State of the Union speech last Tuesday, look closely at a
strike by supermarket workers in Southern California.
Labor leaders acknowledge that this is a national problem, one that they cannot solve at the negotiating table, even if the supermarkets ultimately improve their offer. But does the president acknowledge it? From his speech, it was hard to tell.
Mr. Bush did state that he remains opposed to a “government-run health system.” Fine — but if he wishes to avoid that outcome, Mr. Bush needs to
think more creatively about how he is going to keep the nation’s private health care system viable. A peculiar jumble of old ideas, long discussed but never acted upon, isn’t going to do it.
http://www.washingtonpost.com/wp-dyn/articles/A45228-2004Jan24.html
Comment: There is now near unanimous agreement that the funding crisis in
health care requires “a national solution.” There is no escaping the fact that this means federal action. Decades of social experimentation and advancement of health policy science have proven that “a peculiar jumble of old ideas” cannot possibly adequately address our problems in the funding health care.
Now that we accept the fact that a federal solution would be required, we must face squarely the real question. Do we move towards equity and affordability by adopting a federal solution, or do we accept the tragic status quo by rejecting reform through adherence to the politically divisive “government-run” rhetoric?
Let’s dump the rhetoric of the ideologues and get on with reform!
H.R.1
Medicare Prescription Drug, Improvement, and Modernization Act of 2003
Title X - Medicaid and Miscellaneous Provisions
Subtitle B - Miscellaneous Provisions
Sec. 1014 - Health Care that Works for All Americans: Citizens Health Care Working Group.
(b) Purposes - The purposes of this section are -
(1) to provide for a nationwide public debate about improving the health care system to provide every American with the ability to obtain quality, affordable health care coverage; and
(2) to provide for a vote by Congress on the recommendations that result from the debate.
© Establishment - The Secretary, acting through the Agency for Healthcare Research and Quality, shall establish an entity to be known as the Citizens’ Health Care Working Group (referred to in this section as the `Working Group’).
(d) Membership -
(1) Number and appointment - The Working Group shall be composed of 15 members. One member shall be the Secretary. The Comptroller General of the United States shall appoint 14 members.
f) Designation of the Chairperson - Not later than 15 days after the date on which all members of the Working Group have been appointed under subsection
(d)(1), the Comptroller General shall designate the chairperson of the Working Group.
http://thomas.loc.gov/ (In the “Bill Number” box insert “H.R.1” and click Search”)
General Accounting Office
GAO Health Care Forum
January 13, 2004
Slide presentation
David M. Walker, Comptroller General of the United States
Slide 49:
The presence of insurance blunts sensitivity to the price of services and results in the tendency to overconsume.
Slide 51:
Tax incentives can serve to mask the cost of health care and impair achievement of desired cost-containment outcomes.
Administrative burdens reduce market efficiency and value to consumers.
Slide 52:
Reforms, although comprehensive, may need to be incremental in order to minimize disruptions and facilitate political consensus.
http://www.gao.gov/index.html (Under “From the Comptroller General” click “Slide presentation” for January 13, 2004. Then click “Health Care System Crisis: Significant Challenges Point to Need for Fundamental Reform.”)
Comment: An important provision in the Medicare Prescription Drug Bill is the requirement of “… a nationwide public debate about improving the health care system to provide every American with the ability to obtain quality, affordable health care coverage.” Further, the process provides for “… a vote by Congress on the recommendations that result from the debate.”
It is crucial that we closely observe this process that will result in a vote in Congress on systemic health care changes theoretically designed to bring quality care to every American.
The current Comptroller General, David Walker, will appoint 14 of the 15 members and the Chairperson of the Working Group. Since David Walker will be able to control the ideological complexion of the Working Group, we should try to understand his views.
Based on his health care forum presentation this month, it appears that he supports incremental reforms in the marketplace that place a greater emphasis on increasing price sensitivity for patients while decreasing the financial insulation provided by insurance.
Bill Thomas, as Co-Chair of the Bipartisan Medicare Commission helped to prove that it is nearly impossible to reach political consensus on important social issues through a bipartisan process. In drafting the Medicare Prescription Drug bill, Thomas and his colleagues made certain that the recommendations for comprehensive reform on which Congress will eventually vote will not be bipartisan, but will be produced by the independent Comptroller General (who just happens to share some of Thomas’ ideology on health care reform).
As structured, we have reason to anticipate that the Working Group will provide us with a unanimous recommendation for expanding health savings accounts, eliminating deductibility of employer-sponsored plans, Limiting tax deductibility to individually-owned catastrophic plans, shifting Medicare and Medicaid to private, marketplace plans with a commensurate reduction in the level of public funding, etc., etc.
It is unfortunate that this bill authorizes spending $6 million for this potentially phony partisan study when we really do need a consensus on comprehensive health care reform. Maybe we should approach David Walker in advance to see if he might consider allowing a true cross section of Americans to nominate the members of the committee. He is a man of integrity, even if biased, and he might consider a more democratic process.
(If you download the side show, be sure also to look at the other slides, especially slide 8. It demonstrates dramatically why some say that Social Security and Medicare spending will have to be dramatically reduced if we are to protect current tax cuts.)
Sure cure for health care
By MARTIN DYCKMAN, Times Columnist
Published January 25, 2004
TALLAHASSEE - President Bush didn’t say a word about the moon or Mars during his State of the Union address. He did talk about health insurance. It must have been the polls that brought him back to earth. Listen closely, and you’ll hear every candidate addressing the issue. Trouble is, the ones who are speaking most sensibly are either out of the race or were never really in it.
Nothing short of universal coverage will work. For confirmation, read the recent report of the Institute of Medicine, a branch of the National Academy of Sciences, which observed that the lack of health insurance for 43-million Americans is also bad for those who do have it, and concluded that everyone should have it by 2010.
“We all bear the costs of the current nonsystem… ,” the report said. “Doing nothing and maintaining the status quo… is expensive. The nation suffers losses due to ill health, impaired development, early deaths and lost productivity. The lack of health insurance is a destabilizing factor in families and for health care institutions that serve uninsured patients. In fact, the presence of uninsurance creates insecurity for everyone, even those with health insurance today, because losing that coverage tomorrow is so easy. Universal insurance coverage will benefit all Americans, enhance the great promise of our health care system, and reinforce our values as a democratic society. It is time for our nation to extend coverage to everyone.”
The only candidates to propose universal coverage were Dick Gephardt and Carol Mosely Braun, who are out of the race, and Dennis Kucinich and Al Sharpton, whose chances are beyond remote.
Gephardt wanted to require employers to provide coverage, but the issue did not play well for him in Iowa. One likely reason is that Iowans are already better insured than other Americans. Only 8.5 percent of them lack coverage.
Sharpton’s plank on the issue calls for a constitutional amendment declaring health care to be a human right. That has no more chance than he does. Kucinich, on the other hand, has a specifically detailed proposal that would essentially extend Medicare to everyone. Our single-payer system for the elderly, which already runs more efficiently and with lower overhead than anything else about health care, would become single-payer for everybody.
This isn’t original with Kucinich. Floridians will recognize it as what Sam Gibbons, the former congressman from Tampa, wanted to do.
“Everybody’s in Medicare,” he once pointed out. “Some of us get it. Others pay.”
For not heeding Gibbons, President Clinton blew what looked like the last chance to achieve universal health care. He also lost Democratic control of Congress, for perhaps decades to come. This year marks the 10th anniversary of Clinton’s debacle. Rep. Dan Rostenkowski, the departing chairman of the Ways and Means Committee was accurate in pointing out that Clinton, for trying to do business with the health insurance industry, came out with a plan “too complex to understand and so riddled with centrist compromise that it was a recipe for political roadkill.”
It bears remembering that the American Medical Association once opposed Medicare as intensely as the health insurance racket is opposed to universal coverage. Today, nobody would dare propose to repeal Medicare. Congress has just broadened it, but only for seniors. The sad part of that, as the Institute of Medicine report implies, is that Medicare would cost even less per capita if new enrollees were as healthy as they should be - and as they would be if everyone were insured regardless of age.
The president’s proposals call for refundable tax credits to help low-income people buy their own insurance and for full tax deductibility for wealthier people who buy catastrophic health care coverage. Bush notably didn’t say what this would cost, which would be a lot.
However much that turns out to be, it wouldn’t be efficiently spent. The insurance will cost too much. In Florida, the average cost of a small-group family policy is more than $1,000 a month, which is why so few employers are willing to subsidize more than a small part of it.
To make a long story short, the reason insurance costs so much is that not everybody has it. Some don’t think they need it; others simply can’t afford it. So the dwindling proportion of those who remain in the market are likely to be less healthy and more costly.
Two things are fundamental about health insurance. The more you need it, the less you can afford it. The more who have it, the less it costs. Imagine Medicare as an optional program. Or Social Security. The only way to make it affordable for everybody is to see that everyone has it - as a requirement for employers, or as an obligation of individuals (like the Florida law that requires motorists to insure themselves) or as a single-payer system financed by government taxes. Every objective analysis has concluded this would cost less than we’re spending now. That is, of course, hardly the only reason why it would be the right thing to do.
From the office of Senator Edward Kennedy
For Immediate Release
January 22, 2004
Senator Edward M. Kennedy Introduces the Health Security and
Affordability Act
A new effort is… needed to end the crisis of the uninsured and provide comprehensive health insurance for all Americans. We can make health insurance affordable for individuals, businesses, and government.
I intend to introduce new legislation to do that-the Health Security and affordability Act. It will rely on the employer-based system to do that, because the most realistic way to reach this goal is through a combination of job-based coverage for workers and dependents where possible, and insurance through public and private programs where needed.
The cornerstone of universal health care should be a requirement that employers share in the responsibility to provide quality health insurance for employees and their dependents. Eighty percent of the uninsured are workers or family members of workers. Employer-based health insurance provides coverage for 170 million Americans today. We should improve it, not scrap it.
For decades, we have required employers to contribute to Social Security and
to Medicare. We require them to pay a minimum wage, and contribute to unemployment insurance. Now it is time to say that they also have an obligation to contribute to the cost of health insurance for their employees.
A solid majority of businesses already provide health insurance to their workers, and the rest should fulfill that obligation, too. The Health Security and Affordability Act will require all large businesses to provide coverage as good as the coverage now provided to every member of Congress and other federal employees. Small businesses will be asked to contribute to coverage based on their ability to pay.
In asking businesses to fulfill this obligation, government has an obligation too-to assist them in making health care affordable. Use of information technology, paying for results, improving quality, and a new emphasis on prevention will reduce health care costs for society as a whole. The bill I propose will include an additional guarantee. No employers will have to spend more than 12% of their payroll for health care for their employees. If health costs rise faster than a fair average of other costs, the government will cover the difference. We will protect America’s ability to compete in the world, and we will keep wages and profits from being consumed by health care costs.
For individuals without access to employment-based coverage, we will establish new options based on the Federal Employees Health Benefit Program-the program that provides good health insurance for members of Congress and Federal workers. The same options now available to members of Congress should be available to those not qualifying for coverage from other sources. Businesses can participate as well, so that they can make these choices available to their employees if they feel they offer better value.
Premiums for the plan will be based on ability to pay, including cost-sharing for low income families. It will also help low-income workers covered by their employer’s plan.
http://kennedy.senate.gov/
Comment: This is an historical moment. We are truly at a major fork in the road to comprehensive health care reform. The nation now agrees that reform is essential. We agree that health care must be affordable and accessible for everyone. Virtually all fully-informed observers of the health care scene recognize that the problems require a national solution. They agree that coverage must be universal. And most agree that now is the time to seriously address this problem.
The most important unresolved issue is whether universal coverage alone is an acceptable goal, or we need to include other goals such as equity and efficiency. It is a crucial decision. Reform has become an imperative. The model selected will not be a temporary measure to make do until we can enact something better. Although continuing refinements would be inevitable, the fundamental structure will be with of for decades, if not longer.
Sen. Kennedy’s proposal is a dramatic improvement over our existing system.
But, whether employer-sponsored plans or individual plans similar to the
federal employee options (FEHBP-type coverage), Sen. Kennedy’s proposal
will leave in place the current private health plans.
Private plan choices no longer include the option of comprehensive indemnity
coverage, but they are limited to variations of HMO or PPO managed care
plans plus self-insured programs. All plans today manipulate premiums, benefits (including restricted provider lists) and cost sharing to match the particular targeted patient populations. To ensure an equitable system of coverage for all, the federal government would have to mandate a comprehensive, accessible benefit package, set reasonable, modest limits on cost sharing, and ensure that premiums remain affordable. The Medicare + Choice options demonstrate that private plans cannot comply with such mandates without being granted extra taxpayer funds (as the Bush administration just did with the 10.6% increase for Medicare Advantage plans). Why should we lock into the system forever administratively-wasteful, superfluous, private plan bureaucracies? All studies confirm that a single, publicly-owned insurer would provide the administrative services much more efficiently. And we wouldn’t have private plans manipulating premiums, benefits and cost sharing to their own benefit.
Now that we have come to that fork in the road, let’s not merely follow Yogi
Berra’s advice and “take it,” but let’s intensify our efforts to be certain that policymakers and the public choose a path only as a fully-reasoned decision. One path offers universal coverage, and the other path adds equity, comprehensiveness, efficiency, affordability, a better framework for an integrated information technology system for error reduction and improved
resource allocation, and innumerable other important goals that we can achieve.
The administrative challenges of establishing our own public insurance program would not be much greater than those we faced when we established the Medicare and Medicaid programs. In contrast, we would face greater administrative issues for a complex program of large employer-mandated plans, separate small employer programs, multiple FEHBP-type individual plans, and an administrative nightmare of trying to match various employer and individual funding sources with the fragmented system of intermediary plans. It’s not the task of establishing a system of public funding, but it’s the special interests that continue to block reform.
As Sen. Kennedy says, “… let’s get it done-if not this year, then next year with a new Congress and a new Administration elected with a mandate to get it done.” He’s right. But let’s be sure that everyone understands what we are doing. We will have to live with it for a very long time.
The White House
January 20, 2004
State of the Union Address
President George W. Bush
On the critical issue of health care, our goal is to ensure that Americans can choose and afford private health care coverage that best fits their individual needs. To make insurance more affordable, Congress must act to address rapidly rising health care costs. Small businesses should be able to band together and negotiate for lower insurance rates, so they can cover more workers with health insurance. I urge you to pass association health plans. (Applause.) I ask you to give lower-income Americans a refundable tax credit that would allow millions to buy their own basic health insurance. (Applause.)
By computerizing health records, we can avoid dangerous medical mistakes, reduce costs, and improve care. To protect the doctor-patient relationship, and keep good doctors doing good work, we must eliminate wasteful and frivolous medical lawsuits. (Applause.) And tonight I propose that individuals who buy catastrophic health care coverage, as part of our new health savings accounts, be allowed to deduct 100 percent of the premiums from their taxes. (Applause.)
A government-run health care system is the wrong prescription.(Applause.) By keeping costs under control, expanding access, and helping more Americans afford coverage, we will preserve the system of private medicine that makes America’s health care the best in the world. (Applause.)
http://www.whitehouse.gov/news/releases/2004/01/20040120-7.html
Comment: Other than his comments on the recently enacted Medicare bill, the above is the entire section of his speech that covered his health care proposals.
President Bush’s proposals:
* “…ensure that Americans can choose and afford private health care coverage that best fits their individual needs…”
(Affordable coverage means plans stripped of benefits with excessive cost sharing)
(Rhetoric without a substantive proposal)
(Association health plans enable the marketing of inadequate plans that escape adequate state insurance regulatory oversight)
(Privatizing Medicaid while increasing the cost sharing of lower-income individuals!)
(An essential inevitability, made less possible by the perpetuation of our current fragmented method of funding health care)
(Malpractice reform is important, but “frivolous” lawsuits are hardly even a negligible portion of the health care cost problem)
(Regressive tax policy that disproportionately benefits higher-income individuals)
By keeping costs under control, expanding access, and helping more Americans afford coverage, we will preserve the system of private medicine that makes America’s health care the best in the world. (Applause.)”
(Innumerable studies have confirmed that we rank first only in the cost of our health care system but that our system fails miserably in health care outcomes, especially considering our resources. America’s health care is clearly not the best in the world. Health policy experts across the political spectrum agree that we need a federal solution to our problems in funding health care. Our president, in condemning government involvement, is not demonstrating the political leadership that we desperately need.
Nor are the politicians who applauded these comments. Shouldn’t we be considering a regime change
The New York Times
January 20, 2004
Broader Health Coverage May Depend on Less
By Milt Freudenheim
With the number of uninsured Americans rising to new heights, some policy makers and influential health care experts are saying that the best way to give health coverage to more people is to give some people less.
Experiments in several states are establishing stripped-down packages of basic benefits intended to be affordable for employers and uninsured workers, including young, middle-class people who have dropped out of the health insurance pool. Some officials say that government health benefits could be extended to more people, too, if the benefit package were narrower.
Some experts warn that cutting back mandated benefits will neither yield enormous savings nor slow the increase in costs associated with medical advances.
“There is very little in health care that you can trim off,” said John Sheils, a health policy expert at the Lewin Group, a consulting firm based in Falls Church, Va., that has advised health care advocacy groups in several states. “If you develop a new procedure that does some good,” he added, “ultimately all the insurers are going to have to recognize it and pay for it.”
http://www.nytimes.com/2004/01/20/business/20care.html
Comment: John Sheils is one of the nation’s most noted authorities in the analyses of health care reform proposals. His microsimulation models have demonstrated that little savings can be achieved by reducing the level of services covered, if the resulting product continues to protect individuals from the excessive financial burdens of health care.
Many proposals today call for ensuring “basic” coverage for everyone, as if that were a lower-cost, isolated segment of health care that people “really need.” But when attempts are made to define what should or should not be covered, the process falls apart. Theoretically, beneficial services should be covered and ineffective services should not. But, in fact, much of health care cannot be readily assigned to one of these two categories.
Thus, the concept of “basic” services really should mean that patients must have unimpeded access to physicians and other providers and to the institutions and services that they control. The ultimate decision for appropriate services should be made jointly by the patient and his or her health care professional. This process is not amenable to meat cleaver economics.
If eliminating non-basic services is not an effective option, then how can we control costs? Placing the entire health care system under a global budget will determine the capacity of the system. The budget allocation process will determine capacities for segments of the health care system.
That process may well limit the number of total knee replacements in nonagenarians. But isn’t that process better than depriving many of us of beneficial services merely because they fail to meet an arbitrary threshold of just what a basic service is?
The New York Times
January 20, 2004
Broader Health Coverage May Depend on Less
By Milt Freudenheim
With the number of uninsured Americans rising to new heights, some policy makers and influential health care experts are saying that the best way to give health coverage to more people is to give some people less.
Experiments in several states are establishing stripped-down packages of basic benefits intended to be affordable for employers and uninsured workers, including young, middle-class people who have dropped out of the health insurance pool. Some officials say that government health Benefits could be extended to more people, too, if the benefit package were narrower.
Some experts warn that cutting back mandated benefits will neither yield enormous savings nor slow the increase in costs associated with medical advances.
“There is very little in health care that you can trim off,” said John Sheils, a health policy expert at the Lewin Group, a consulting firm based in Falls Church, Va., that has advised health care advocacy groups in several states. “If you develop a new procedure that does some good,” he added, “ultimately all the insurers are going to have to recognize it and pay for it.”
http://www.nytimes.com/2004/01/20/business/20care.html
Comment: John Sheils is one of the nation’s most noted authorities in the analyses of health care reform proposals. His microsimulation models have demonstrated that little savings can be achieved by reducing the level Of services covered, if the resulting product continues to protect individuals from the excessive financial burdens of health care.
Many proposals today call for ensuring “basic” coverage for everyone, as if that were a lower-cost, isolated segment of health care that people “really need.” But when attempts are made to define what should or should not be covered, the process falls apart. Theoretically, beneficial services Should be covered and ineffective services should not. But, in fact, much of health care cannot be readily assigned to one of these two categories.
Thus, the concept of “basic” services really should mean that patients must have unimpeded access to physicians and other providers and to the institutions and services that they control. The ultimate decision for appropriate services should be made jointly by the patient and his or Her health care professional. This process is not amenable to meat cleaver economics.
If eliminating non-basic services is not an effective option, then how can we control costs? Placing the entire health care system under a global budget will determine the capacity of the system. The budget allocation process will determine capacities for segments of the health care system. That process may well limit the number of total knee replacements in nonagenarians. But isn’t that process better than depriving many of us of beneficial services merely because they fail to meet an arbitrary threshold of just what a basic service is?
Institute of Medicine
January 14, 2004
Committee on the Consequences of Uninsurance
Insuring America’s Health: Principles and Recommendations
Principles to guide the extension of coverage
1. Health care coverage should be universal.
2. Health care coverage should be continuous.
3. Health care coverage should be affordable to individuals and families.
4. The health insurance strategy should be affordable and sustainable for society.
5. Health insurance should enhance health and well-being by promoting access to high-quality care that is effective, efficient, safe, timely, patient-centered, and equitable.
Using the principles
The Committee concludes that health insurance coverage for everyone in the United States requires major reform initiated as federal policy.
The Committee recommends that these principles be used to assess the merits of current proposals and to design future strategies for extending coverage to everyone.
To illustrate how the principles should be used to evaluate reform proposals, the Committee sketches four prototypes for major reform in a simplified format so that the main incentives are clear. It then assesses ach prototype against each of the principles, highlighting the model’s strengths and weaknesses.
The prototypes
1. Major public program extension and new tax credit
2. Employer mandate, premium subsidy, and individual mandate
3. Individual mandate and tax credit
4. Single payer
Each of the four prototypes satisfies the principles better than does the status quo. Each model does so through different mechanisms and realizes each principle to a different degree. The Committee does not recommend one approach over another.
The Committee recommends that the President and Congress develop a strategy to achieve universal coverage and to establish a firm and explicit schedule to reach this goal by 2010.
It is time for our nation to extend coverage to everyone.
http://books.nap.edu/books/0309091055/html/index.html
Comment: The Committee has provided a great service by demonstrating, in previous reports, the severe deficiencies in our system related to uninsurance, and now by providing an unqualified recommendation for universal coverage.
In the interest of objectivity, the Committee has not recommended a specific model of universal coverage, but the crucial importance of examining the specific impacts of each model is appropriately stressed. Table 5.2 in the report (page 150) does demonstrate that the single payer model is the most effective in ensuring continuous, universal coverage, and that the coverage would remain affordable for individuals and for society.
Single payer advocates will find much in this report to continue to fuel our passion for reform.
State must lead the way
David Lazarus
Sunday, January 18, 2004
©2004 San Francisco Chronicle
More than 43 million Americans may now be uninsured, but no one expects a
national health care system similar to Canada’s to be adopted any time soon.
The obstacles, not least the fierce opposition of the $300 billion insurance industry, make such an enormous change politically untenable.
If universal coverage is to come to the United States, most experts agree, it will be introduced gradually, state by state. And California is positioning itself to be among the first out of the gate with a workable plan.
A statewide universal health care bill, introduced by Sen. Sheila Kuehl, D-Santa Monica, was approved by the Senate last summer. It will be taken up by the Assembly this year.
No one, not even Kuehl herself, expects such groundbreaking legislation to become law in the near future. But a few years down the road, as California
businesses increasingly plead for help in coping with runaway health care
costs, the bill’s chances could improve significantly.
“The more employers are burdened with providing health care for society, the
more they’ll be looking at this kind of system,” Kuehl predicted.
“Chances are slim the bill will get passed this year. But maybe four years from now, with a five-year transition period — that’s very possible.”
Businesses, pension funds and other insurance providers have grappled with
annual double-digit increases in insurance premiums for the past four years.
About 70,000 supermarket workers are on strike in Southern California because their employers want to raise health care costs. Nearly 100,000 workers at the telecom giant SBC, to cite just one other example, say they’ll walk off the job if medical costs are increased when their contract expires in April.
Meanwhile, the influential Institute of Medicine in Washington estimates that 18,000 adults die each year because they don’t have insurance.
The institute, which advises the federal government on health matters, issued an unprecedented call last week for universal health care but offered no guidance about how it could be achieved.
In Canada, a so-called single-payer system has been in place nationally since 1971. Taxpayer funds are allocated in lump-sum payments to hospitals, which have wide discretion as to how resources are used. Any citizen can receive treatment from any doctor at any hospital.
“It took one Canadian province, Saskatchewan, to show it could be done in the 1940s,” noted Kevin Grumbach, chairman of UCSF Medical School’s Department of Family and Community Medicine and a long-time backer of universal health care. “Then it caught on province by province.”
Kuehl’s bill, SB921, would create a single-payer system in California. It probably would be funded by a payroll tax that would replace current employer medical contributions and an income tax that would replace employee premiums, co-pays and other out-of-pocket expenses.
Kuehl said she’s also exploring having a statewide single-payer insurance system embrace a portion of workers’ compensation as well — an issue of particular interest to California businesses long accustomed to some of the highest workers’ comp costs in the nation.
“I read about all the strikes and labor problems, and I grind my teeth,” said Dan Hodges, chairman of Health Care for All-California, an advocacy group. “All this could be solved by SB921.“
One key issue for the legislation is how a California single-payer system would accommodate the various federal programs, including Medicare and Medicaid, which are a part of the health care landscape. Federal funding comprised about half of nearly $163 billion spent on health care in the state last year.
“There are a number of steps along the way that would have to be solved,” Kuehl acknowledged, adding that it remains unknown whether federal authorities would allow California to serve as a conduit for Medicare funds.
In any case, a Canadian-style single-payer system is not the only approach on the table to bring health coverage to the estimated 7 million Californians now lacking insurance.
Bruce Bodaken, chairman and chief executive of Blue Shield of California, advocates rejiggering the current insurance system so that everyone in the
state is covered. Among other things, he proposes requiring anyone who can
afford health insurance to buy it, and subsidizing those who can’t.
“The most practical way to achieve universal coverage is to build on the existing system but make sure everyone’s paying their fair share,” Bodaken said.
He added that his plan would have a better shot at passage than the single-payer system advocated by Kuehl, which would all but decimate private health insurers. “The political future of single-payer is no slam dunk,” Bodaken said.
The problem with the Blue Shield approach is that, while it guarantees insurers more customers, it doesn’t address inefficiencies now pushing health care costs higher.
A pair of Harvard Medical School researchers determined last week that $45
billion of the $163 billion spent on health care in California last year was eaten up by administrative expenses.
With a single-payer system in place, the researchers found, California health care spending would be reduced by almost $34 billion — enough to cover every uninsured person in the state and improve treatment for others.
In 2002, the California Health and Human Services Agency asked the Lewin Group, a prominent health care consulting firm, to evaluate nine different
proposals for expanding coverage in the state. The proposals included reforms similar to Bodaken’s plan along with establishment of a single-payer system.
The Lewin Group concluded that only a single-payer system would guarantee
universal coverage and control future costs, while also reducing health care
spending by as much as $7.6 billion per year through economies of scale.
Other states, including Massachusetts and Maine, are exploring single- payer
systems, but California is furthest along in terms of legislative activity and financial analysis. An in-depth analysis of Kuehl’s SB921 was begun by health care specialists last week as part of preparations for an Assembly vote.
The question at this point is not whether such a system would work in the state (or nationwide, for that matter). The question now is whether the political will can be found to push ahead with fundamental change that would benefit millions of California residents and thousands of businesses.
UCSF’s Grumbach says the time will come when taxpayer-backed universal coverage is seen as the only true solution to the state’s health care woes. It won’t be tomorrow, though, or the day after.
“It could take 10 years,” Grumbach said. “But the current system is so bloody awful and so many people are suffering, something eventually has to happen.”
Des Moines Register Editorial: Get everyone covered by 2010
The country can no longer ignore the uninsured.
By Register Editorial Board
01/17/2004
————————————————————————————————————————————-
In the past three years, the number of uninsured Americans has grown by 3 million people - roughly the population of Iowa - leaving 43 million Americans with no health insurance. On Wednesday, the Institute of Medicine recommended the United States find a way to get these people health insurance by 2010.
The panel, part of the National Academy of Sciences, recognizes that having a large uninsured population damages the entire country.
About 18,000 people die each year as a result of being uninsured. Nearly half the uninsured report not seeking medical care when they’re sick. Uninsured car-accident victims receive less care in the hospital and have a higher mortality rate than insured patients. Uncompensated care costs health-care providers more than $35 billion a year. Uninsured children are less likely to receive medical care, and untreated chronic conditions can affect hearing, learning ability and school performance.
One uninsured person in a family jeopardizes the financial stability of the whole family.
The list goes on and on.
A country that doesn’t take care of the health of its people will eventually feel the effects trickling down in other areas. Lost productivity. Lost wages. A strain on schools and human services. Increases in the health-insurance premiums for those fortunate enough to have insurance.
It’s a problem that has to be fixed. The institute doesn’t recommend exactly how to provide health insurance to all, but suggests the most likely way would be a universal system financed through the government.
That’s not as radical as it sounds. After all, Medicare is a universal, government-financed insurance program for people over 65, and it’s wildly popular. It spends only a small percentage of its funding on administration, unlike the wastefully expensive private industry. Yet it’s only available for one segment of America. Why not get serious about devising a way to offer similar coverage to all Americans?
Friday, January 16, 2004 (SF Chronicle)
What premiums pay for
David Lazarus
The United States squanders more money every year on health care bureaucracy than it would cost to provide medical coverage for the 43 million Americans now lacking insurance.
That’s the finding of two respected Harvard Medical School researchers, David Himmelstein and Steffie Woolhandler, in a study appearing this week in the International Journal of Health Services.
They determined that of $1.6 trillion in total health care spending last year, at least $399 billion was eaten up by administrative costs such as clerical work in hospitals and processing a vast array of insurance forms.
But if a national health care plan like Canada’s were implemented in this country, the researchers found, administrative overhead would be slashed by about $286 billion.
This amount, in turn, would be sufficient to not only provide health coverage for every uninsured American nationwide but also allow millions of underinsured people to improve their quality of care.
Himmelstein, who is also a physician, said in an interview that 10 percent of revenue at his Cambridge practice now goes to an outside billing firm that handles much of his insurance work.
“That amount could be used instead to care for more patients,” he observed. “It could be used to hire additional people and fund a huge expansion of care.”
Similarly, Himmelstein estimated that at least 15 percent of his time every day is spent dealing with paperwork.
“That’s 15 percent of my time that I’d much rather spend on patients or learning more about medicine,” he said.
Private health insurers, who would be decimated by taxpayer-funded universal coverage, oppose creation of a Canadian-style system in the United States. Instead, they prefer adjusting the existing system to expand the number of people covered.
But Himmelstein and Woolhandler argue that the existing system is grossly inefficient and needs to be completely overhauled. The findings of their research may be speculative, but they say it points the way toward legitimate cost reductions.
In California, they found, nearly $163 billion was spent last year on health care. Of that total, $45 billion, or about 28 percent, went to administrative costs.
With Canadian-style universal coverage, the researchers concluded, Californians would save almost $34 billion annually on administrative overhead. This would provide more than $5,000 for each of the state’s nearly 7 million uninsured.
“As it stands,” Himmelstein said, “you could insure all uninsured people for about $1,500 per person. The administrative savings would thus leave plenty of money to upgrade coverage for others.”
The Canadian single-payer system is frequently cited as a model for how the United States might go about offering health coverage to all citizens. The Canadian system, begun nationally in 1971, guarantees all citizens access to essential medical services regardless of employment, income or health.
The system is administered regionally but overseen the federal level. It’s not perfect. A 2001 study found that patients requiring elective surgery wait an average of 16 weeks before reaching the operating table.
Investment is slow in new technologies and equipment. On the other hand, Canadian hospitals and physicians spend substantially less time on administrative chores because the single-payer system is relatively streamlined. Hospitals receive lump-sum payments each year from local authorities but have wide discretion as to how their resources are used. Paperwork is minimal.
Would Canada’s system work in the United States? Probably not without some tweaking. Experts say a U.S. universal health care system probably would require strong regulatory oversight to ensure cost controls and quality (and such oversight likely would cut into at least some of the projected savings).
Government authorities might also need more say over distribution of medical resources. Just as few communities would want or need two fire stations within a block of each other, regulators would help decide where hospitals are built to avoid wasteful duplication of expensive technologies.
“Health care shares many of the same characteristics of fire departments and police departments,” Himmelstein said. “Hospitals should be treated the same way.”
Karen Ignagni, president of AAHP-HIAA, the leading trade group for health insurers, challenged the methodology of Himmelstein and Woolhandler’s study, and said administrative costs in the report “are wildly inflated.”
Many of the expenses included in the study, she said, “actually involve activities that improve the quality of health care. It’s not just paper pushing.”
U.S. health insurers support extending coverage to all Americans, Ignagni stressed, but are “against a one-size-fits-all approach.” For its part, the drug industry’s leading trade group, Pharmaceutical Research and Manufacturers of America, also opposes creation of a single-payer health care system.
Jeff Trewhitt, a spokesman for the association, said private insurance plans offer consumers more choice and “allow pharmaceutical and biotechnology research companies to avoid innovation-stifling, government-mandated price controls.”
Harvard researcher Woolhandler responded in an interview that the insurance and drug industries have resisted change for years. “They’re extremely happy with how things are now,” she said. “For them, it’s a life-or- death struggle.”
Yet in the face of such politically powerful opposition, most experts agree it’s unlikely nationwide universal coverage will be adopted in the United States anytime soon. Then again, Canada began its system more than half a century ago on a province-by-province basis.
Health care is broken
by David Lazarus of San Francisco Chronicle
Wednesday, January 14, 2004
Businesses large and small are drowning in health-care costs, and their solution by and large is to pass the buck to cash-strapped employees.
In Southern California, about 70,000 supermarket workers have been striking for several months as their employers seek to shoulder them with a greater share of medical expenses. Similar disputes are under way in a variety of other industries.
Nearly 100,000 workers at telecom giant SBC say they’re prepared to walk off the job when their contract expires in April if the company attempts to have them pay a greater share of insurance premiums.
The nation’s largest pension fund, the California Public Employees’ Retirement System, increased health-care premiums for its 1.2 million members this year by an average 16 percent, in line with double-digit increases for nearly all insurance providers.
The U.S. health care system is clearly broken. Companies are being strangled by runaway medical expenses — SBC alone pays more than $2 billion annually in health-care costs — while employees and other members of the public are increasingly struggling to obtain adequate care at reasonable prices.
More than 43 million Americans now lack health insurance and account for as much as $130 billion in annual economic losses resulting from poor health or early death, according to the influential Institute of Medicine in Washington.
The United States needs a universal health care system, and it needs it now.
“There’s a crisis right this minute,” said Steffie Woolhandler, a physician and Harvard Medical School researcher who advocates a national health care system.
“It’s conservatively estimated that 18,000 adults die every year because they don’t have insurance,” she observed. “That means at least 1,500 people will die this month and about 50 people are dying today, as we speak.”
The situation is so grave that the Institute of Medicine, which works closely with the federal government on health issues, is expected to issue an unprecedented call today for creation of a universal insurance system by 2010.
At the same time, though, the question of universal insurance is so complex that the institute, a component of the National Academy of Sciences, is unlikely to advocate a specific plan or approach. Sources familiar with the matter say the institute is expected to instead merely encourage policy-makers to take a fresh look at expanding health coverage.
The last time universal coverage received in-depth scrutiny, under the Clinton administration, the issue became mired in complex questions of implementation and funding. It was also aggressively attacked by entrenched special interests, particularly the $300 billion insurance industry and $160 billion pharmaceutical industry.
Now, however, things are different. Calls are gradually emerging from the private sector for a radical overhaul of the existing health-care system. The U.S. auto industry, for example, estimates that it spends as much as $1,200 on employee and retiree medical benefits for every vehicle it builds.
General Motors is the largest purchaser of private health-care coverage in the country. It spent $4.5 billion in 2002 to insure 1.2 million active and retired workers. Those costs in turn are passed on to buyers of GM cars and trucks.
Bill Ford, chief executive of Ford Motor Co., has called rising health- care costs “our biggest issue.” He’s asked his company’s vice chairman, Allan Gilmour, to study proposals for a national insurance system and to share his findings with other business leaders.
“Big businesses are finally standing up and saying that they can’t compete internationally with the current system the way it is,” said Ida Hellander, executive director of Physicians for a National Health Program, a Chicago advocacy group with more than 10,000 members nationwide.
Her organization argues that a so-called single-payer system, similar to Canada’s state-backed insurance network, is the best solution for the United States. Under this system, tax dollars would fund universal coverage that would allow any American to receive treatment from any doctor at any hospital.
It’s not such a far-fetched idea. Federal and state taxes, along with tax subsidies for businesses, already account for more than 60 percent of the $1.6 trillion spent annually on health care in the United States, primarily through Medicare and Medicaid.
Physicians for a National Health Program, or PNHP, argues that existing public financing for Medicare and Medicaid should be retained. Meanwhile, a payroll tax of about 7 percent would replace all other employer expenses for medical costs, and an income tax of about 2 percent would replace employees’ current insurance premiums, co-pays, deductibles and other out-of-pocket expenses.
The organization notes that such a change would represent a savings for the vast majority of working Americans. It would be costlier for firms that do not presently offer workers medical benefits, but would extend health coverage to millions of workers now left to fend for themselves (often at the expense of other taxpayers).
Smaller companies that do provide health coverage would benefit enormously from lower rates resulting from economies of scale. Universal insurance would also be significantly less expensive for most larger companies and would put a halt to double-digit increases in premiums seen annually for the past four years.
No less important, PNHP says, universal coverage would eliminate the thorny question of medical benefits in all future negotiations between employers and employees.
“We’re already spending enough money each year to pay for a national health plan,” Hellander said. “The problem is that we’re throwing a lot of that cash down the drain.”
Published on Sunday, January 11, 2004 by the Boulder Daily Camera
Single-Payer: We’d Get More for Less
Patchwork Health-care Reform not What Most Want, or Need
by Brian Smith
Politics aside, we could all have better health care for less cost. Our current health-care system pays for universal health care but does so in an ineffective, costly manner while providing overall poor care. Unfortunately, a majority of physicians are opposed to single-payer health care, despite a majority of citizens who support it. Major health-care reform will happen only if citizens demand change.
Currently, no one can be denied health care for lack of insurance, but private providers can demand payment at time of service, while emergency providers cannot. This tends to shift uninsured patients toward expensive ER care. Since the emphasis in ER medicine is single-contact care, all eventualities must be covered, and that leads to significantly more expensive care.
A visit for a cold in a clinic setting may cost $50, while that same visit in an ER could easily exceed $500. In addition, patients without insurance tend to put off visits until they are sicker, when care is more expensive and outcomes poorer. Improving access to care, promoting preventative care, and adequately treating disease can significantly decrease cost while improving outcomes. It should be noted that unrecoverable costs of care for the underinsured are shifted to paying patients.
In 2002, health-care costs in this country exceeded $1.6 trillion. This represents approximately 15.5 percent of the U.S. GDP, in contrast to most developed countries, where costs are typically less than 10 percent GDP. A significant portion of this cost is administrative, which approaches 30 percent to 35 percent in America as opposed to 15 percent to 17 percent in the Canadian system. Private insurance overhead runs almost 12 percent vs. 3.5 percent for Medicare.
Pharmaceutical costs have spiraled out of control, with really no attempts to limit them. Currently medications account for about 15 percent of overall health costs and rising. There is no market control of these costs, and costs are set based only on what the pharmaceutical company wants to earn during the life of the drug patent. Competitive drugs are usually priced in the same ballpark. Generics are only marginally cheaper. When drugs from this country can be exported to Canada, re-prescribed and re-imported at cost savings of 20-50 percent, it is clear there is a problem.
It is important to understand the lack of market control in all aspects of medicine. The ultimate consumer, the patient, rarely has any concept of cost vs. benefit of medications, studies, care etc. Physicians write prescriptions but don’t have direct knowledge of actual costs. This lack of market control is inherent to the system of medicine and understanding that is essential to understanding the need for external controls on the system.
A quick look at the numbers involved in implementing universal health care shows it is feasible. By switching to a single-payer system, administrative costs could easily be reduced by 50 percent. Reasonable tort reform could cut malpractice costs by 50 percent, and cost controls of medications could easily realize savings of 25 percent. Overall, these measures could reduce U.S. health-care costs to about $1.35 trillion. Improved access, prevention and disease management should further reduce cost to about $1 trillion to $1.2 trillion (10 percent of the GDP).
Universal care could be funded by modestly increasing the “Medicare” tax, appropriately taxing tobacco and alcohol, incorporating a 10-percent co-payment, and combining all current health-provider systems while utilizing the current infrastructure. The current Medicare/Medicaid budget is about $420 billion. Some $200 billion in taxes on cigarettes and alcohol would help to offset the health costs associated with their use.
Another $40 billion to cover the health-care costs associated with motor vehicle accidents could be raised either through vehicle licensing fees, fuel tax, or could be collected by auto-insurance companies. Adding current VA funding of $25 billion, worker’s comp ($80 billion) and a 10-percent co-payment for those who can afford it ($100 billion); only an additional $300 billion to $350 billion would need to be raised through a combination of payroll and income taxes to provide universal care. Keep in mind that overall this represents a cost savings while guaranteeing coverage for all and improving health care.
Universal single-payer health care is both economically feasible and desirable. With decreased societal cost and improved health, it is a win-win situation. Why physicians and politicians resist such change really has more to do with their financial interests in the current system, or fear of government-run programs, rather than interest in providing good health care for all citizens. The current system is broken, and health-care costs will continue to spiral out of control if
the government continues its patchwork approach to reform. A recent poll shows 62 percent of Americans want universal single payer health care.
It is up to you to let them know you care. Brian Smith is a Boulder physician.
Copyright 2004, The Daily Camera and the E.W. Scripps Company
Minnesota Public Radio
News
January 13, 2004
Durenberger forum likely to advocate health care for all
Minnesotans have a strong appetite for major changes in the health care system that would both lower costs and lead to universal access to care. That’s the conclusion of a state forum being led by former U.S. Sen.David Durenberger.
“Minnesotans are afraid they are going to lose their health insurance,” Durenberger said. “They are afraid they can’t switch jobs because they’re going to lose their access to health care.”
The forum’s poll, which had a margin of sampling error of plus or minus 3.5 percentage points, showed that while most Minnesotans believe the government should guarantee health coverage, they want the system itself to be run by the private sector and not the government.
Four of five Minnesotans say they would be willing to pay higher taxes to provide health care coverage to more people. More than 90 percent of poll respondents said they want the ability to choose their own doctors.
There seems to be strong support for universal insurance backed up by a willingness to pay for it,” said panelist Dr. Glen Nelson, a former surgeon and former vice chairman of Medtronic. “You could argue that, politically, the people do support universal insurance.”
http://news.mpr.org/features/2004/01/12_ap_healthforum/
Comment: It is truly remarkable how far we have come when a former Republican Senator is advocating for universal health care coverage and access, which contains costs, and is always guaranteed regardless of unrelated factors such as employment status.
We agree on almost all major issues, including the fact that the government should guarantee health coverage. The only major clarification left is defining what we mean by a system “run by the private sector and not the government.”
We are even remarkably close to agreement here. Single payer advocates support a health care delivery system run by the private sector. It is only the funding mechanism that we believe should be public. Our own publicly-owned system of universal insurance would ensure that our agreed upon goals would be achieved.
Instead of looking exclusively for more permutations and combinations of private health plans, let’s now take a serious look at funding our private health care delivery system with our own universal program of public insurance. It would achieve all of our goals.
Why Can’t America Have Universal Health Insurance?
01/14/04
By ~ David M. Fine of ‘The Mill’
During this jobless recovery, I have yet to find employment that provides health insurance. Luckily, I haven’t needed any real medical care and I don’t have kids. On the other hand, being uninsured is a risk, and unfortunately I cannot afford the $400 per month, more than my current monthly rent, to pay for health insurance.
According to most estimates I am just one of some 40 million Americans in a similar situation.
America can and should provide every American with affordable health care coverage. It is the moral thing to do. It is also the practical and sensible thing to do.
Today, almost half of all Americans either receive their health insurance from U.S. government programs - or have no insurance at all. It is a travesty that this wealthiest of wealthy nations insists on obstructing the health insurance coverage of some 40 million of its citizens because of a tired allegiance to an ostensibly “free-market” approach to delivery of health services. Let’s face it, going to the doctor or taking medicine or having surgery is not like shopping for a new car. Nor do we ever want it to be.
Yet, sadly, segments of America’s pro-profit health care system are riddled with sleazy used-car salesmen-type ventures that do nothing to improve the quality of care in this country.
One example of this is the increasing role of Pharmacy Benefit Managers (PBMs), intermediary companies which are making billions of dollars acting essentially as arbitrage agents between prescription drug companies and health plans. They buy prescription drugs in massive quantities at a huge discount and then sell them to health plans for a nice profit.
How do these companies improve the quality of care in America? They don’t, not one bit. They are supposed to reduce prescription drug costs, but really they are nothing but a parasitic drain on the U.S. healthcare system, a racket, and a boon to their shareholders.
(What’s more, in the new law signed by President Bush creating a prescription drug benefit in Medicare, the law forbids Medicare from using its leverage to negotiate cheaper drug prices with the pharmaceutical companies)
In fact, the large union AFSCME, with the help of Prescription Access Litigation, is currently suing the largest PBMs in the state of California (Medco, Express Scripts, Advance PCS, and Caremark Rx, Inc), alleging that the PBMs have actually contributed to an increase in the price of prescription drugs. The Justice Department is also suing Medco for alleged fraud.
Why do you think people are going to Canada to get their drugs these days?
“The organizations that were created to make prescription drugs more affordable are cutting inside deals with drug companies and driving up costs. It’s corporate greed like this that is chipping away at the paychecks of hard working men and women across the country,” AFSCME President Gerald W. McEntee said in a press release.
But PBMs are just one example of the problems inherent in a pro-profit health care system.
The organization Physicians for a National Health Program (PNHP) reports that a study by researchers at Harvard Medical School and Public Citizen to be published in this week’s International Journal of Health Services found that health care bureaucracy cost the United States $399.4 billion last year.
The study also found that a national health insurance program could save at least $286 billion annually on paperwork alone.
Why the enormous savings? The United States’ Kafkaesque payment system drives up administrative costs for doctors and hospitals, who must deal with hundreds of different insurance plans - at least 755 in Seattle alone - each with different coverage and payment rules, and referral networks. According to PNHP, in Canada, doctors bill a single insurance plan, using just one standard form.
America has struggled over the issue of providing National Health Insurance since Harry Truman was President. Massachusetts Senator Ted Kennedy pushed hard for a national health insurance plan back in 1970, and President Nixon was amenable to the idea, only for it to fizzle. Since then, Kennedy has pursued an incrementalist approach.
Nevertheless, the infrastructure for such a system currently exists. Our U.S. Government already accounts for almost half of all health care expenditures. In 2003 we spent $242 billion on Medicare and $162.5 billion on Medicaid, the combined expenditures of which are projected to grow by $34 billion this year. In 2004, Medicare covered more than 41 million Americans of 65 years and older, plus some Americans with disabilities and end-stage renal disease. Another 42.4 million Americans are insured by Medicaid.
SCHIP, the national health insurance program for uninsured children under 19 years of age whose parents’ income is too high to qualify for Medicaid, is projected to cost an additional $5 billion this year. In 2002, the U.S. Department of Health and Human Services estimates that 4.2 million kids were enrolled in SCHIP.
Most of the Democrat Presidential candidates are proposing some kind of expanded health coverage. Only Dennis Kucinich and Carol Moseley Braun have come out in support of a single-payer system (though Al Sharpton wants to make access to health care a “human right”). Howard Dean, a doctor, says he’ll expand Medicaid and SCHIP to cover adults at 185 percent of the poverty line, provide tax-breaks for those buying health insurance on their own, and have the federal government pay 70 percent of COBRA premiums for transitional workers.
While Dean’s proposals, if enacted, would improve health coverage in America, they wouldn’t realize the bureaucratic savings of a single-payer system, nor would it cut out drains on the system like PBMs. We’ll be increasing our federal health care expenditures, while not reaping any of the savings benefits of a national health insurance program.
Eventually, America should transform the state-based Medicaid program into an AmeriCare national health insurance program. The federal government would set the general guidelines and provide block-grants to the states, but the states would retain some independence in managing their systems, thus keeping an element of health care variety and experimentation within the nation as a whole.
America’s national health insurance plan would remain uniquely American.
For most of America’s history, people remained in their same job for life. Today, that’s changing, making our employer-based health insurance program considerably less relevant. Pegging health insurance to your job not only deprives workers of the freedom of greater job mobility but also creates undue anxiety about job loss - if you have a family, loss of your job may mean loss of family health benefits, or at the very least, back-breaking monthly payments through COBRA.
It’s long overdue that America became sensible about health coverage. America’s health system’s problems and rising costs aren’t due to government involvement but are created by a system trying to manage competition in a service industry where competition isn’t applicable. What we get are gazillions of different health plans, a bureaucratic nightmare, skyrocketing drug costs, intermittent coverage, millions of uninsured, and private companies that try to make a killing in the business without regard to providing decent care.
I think we can all agree that providing health care shouldn’t be about making a killing.
Press contacts:
Ida Hellander, M.D.; (312) 782-6006
David U. Himmelstein, M.D.; (617) 665-1032 (clinical office); (617) 497-1268 (research office)
Sidney M. Wolfe, M.D.; (202) 588-1000
Study Shows National Health Insurance Could Save $286 Billion on Health Care Paperwork: Authors Say Medicare Drug Bill Will Increase Bureaucratic Costs, Reward Insurers and the AARP
A study by researchers at Harvard Medical School and Public Citizen to be published in Fridays International Journal of Health Services finds that health care bureaucracy last year cost the United States $399.4 billion. The study estimates that national health insurance (NHI) could save at least $286 billion annually on paperwork, enough to cover all of the uninsured and to provide full prescription drug coverage for everyone in the United States.
The study was based on the most comprehensive analysis to date of health administration spending, including data on the administrative costs of health insurers, employers health benefit programs, hospitals, nursing homes, home care agencies, physicians and other practitioners in the United States and Canada. The authors found that bureaucracy accounts for at least 31 percent of total U.S. health spending compared to 16.7 percent in Canada. They also found that administration has grown far faster in the United States than in Canada.
The potential administrative savings of $286 billion annually under national health insurance could:
1- Offset the cost of covering the uninsured (estimated at $80 billion)
2- Cover all out-of-pocket prescription drugs costs for seniors as well as those under 65 (estimated at $53 billion in 2003)
3- Fund retraining and job placement programs for insurance workers and others who would lose their jobs under NHI (estimated at $20 billion)
4- Make substantial improvements in coverage and quality of care for U.S. consumers who already have insurance
Looked at another way, the potential administrative savings are equivalent to $6,940 for each of the 41.2 million people uninsured in 2001 (the most recent figure available for the uninsured at the time study was carried out), more than enough to pay for health coverage. The study found wide variation among states in the potential administrative savings available per uninsured resident. Texas, with 4.96 million uninsured (nearly one in four Texans), could save a total of $19.5 billion a year on administration under NHI, which would make available $3,925 per uninsured resident per year. Massachusetts, which has very high per capita health administrative spending and a relatively low rate of uninsurance, could save a total of $8.6 billion a year, making available$16,453 per uninsured person. California, with 6.7 million uninsured, could save a total of $33.7 billion a year, which would make available $5,016 per uninsured person. (See accompanying chart for details on other states.)
Last week, the government reported that health spending accounts for a record 15 percent of the nations economy and that health care spending shot up by 9.3 percent in 2002. Insurance overhead (one component of administrative costs) rose by a whopping 16.8% in 2002, after a 12.5% increase in 2001, making it the fastest growing component of health expenditure over the past three years. Hence the figures in the Harvard/Public Citizen Report (which was completed before release of these latest government figures) may understate true administrative costs.
The authors of the International Journal of Health Services study attributed the high U.S. administrative costs to three factors. First, private insurers have high overhead in both nations but play a much bigger role in the United States. Second, The United States fragmented payment system drives up administrative costs for doctors and hospitals, who must deal with hundreds of different insurance plans (for example, at least 755 in Seattle alone), each with different coverage and payment rules, referral networks, etc. In Canada, doctors bill a single insurance plan, using a single simple form, and hospitals receive a lump sum budget, much as a fire department is paid in the United States. Finally, the increasing business orientation of U.S. hospitals and insurers has expanded bureaucracy.
The Medicare drug bill that Congress passed last month will only increase bureaucratic spending because it will funnel large amounts of public money through private insurance plans with high overhead.
The recent Medicare bill means a huge increase in administrative waste and a big payoff for the AARP,” said study author Dr. David Himmelstein, an associate professor of medicine at Harvard and former staff physician at Public Citizens Health Research Group. “At present, Medicare’s overhead is less than 4 percent. But all of the new Medicare money $400 billion & will flow through private insurance plans whose overhead averages 12 percent. So insurance companies will gain $36 billion from this bill. And the AARP stands to make billions from the 4 percent cut it receives from the policies sold to its members.
Dr. Steffie Woolhandler, a study author, associate professor of medicine at Harvard and a founder of Physicians for a National Health Program, said that. &Hundreds of billions are squandered each year on health care bureaucracy, more than enough to cover all of the uninsured, pay for full drug coverage for seniors and upgrade coverage for the tens of millions who are underinsured. U.S. consumers spend almost twice as much per capita on health care as Canadians who have universal coverage and live two years longer. The administrative savings of national health insurance make universal coverage affordable.
Dr. Sidney Wolfe, director of Public Citizens Health Research Group added:This study, documents the state-by-state potential administrative savings achievable with national health insurance. These enormous sums could be used to provide health care for the more than 43 million uninsured people in the United States and drug coverage for seniors. These data should awaken governors and legislators to a fiscally sound and humane way to deal with ballooning budget deficits. Instead of cutting Medicaid and other vital services, officials could expand services by freeing up the $286 billion a year wasted on administrative expenses. In the current economic climate, with unemployment rising, we can ill afford massive waste in health care. Radical surgery to cure our failing health insurance system is sorely needed.
Dr. Himmelstein described the real-world meaning of the difference in administration between the United States and Canada by comparing hospitals in the two nations. Several years ago, he visited Toronto General Hospital, a 900-bed tertiary care center that offered an extensive array of high-tech procedures, and searched for the billing office. It was hard to find, though; it consisted of a handful of people in the basement whose main job was to send bills to U.S. patients who had come across the border. Canadian hospitals do not bill individual patients for their care and so have no need to keep track of who receives each Band-Aid or an aspirin.
A Canadian hospital negotiates its annual budget with the provincial health plan and receives a single check each month to cover virtually all of its expenses,& Himmelstein said. It need not fight with hundreds of insurance plans about whether each day in the hospital was necessary, and each pill justified. The result is massive savings on hospital billing and bureaucracy.
Doctors in Canada face a similarly simple billing system. Every patient has the same insurance. There is one simple billing form with a few boxes on it. Doctors check the box indicating what kind of visit they provided to the patient (i.e., how long and whether any special procedures were performed) and send all bills to one agency.
Himmelstein returned to Boston and visited Massachusetts General Hospital, which was similar to Toronto General in size and in the range of services provided. Himmelstein was told that Massachusetts Generals billing department employed 352 full-time personnel, not because the hospital was inefficient, but because this department needed to document in detail every item used for each patient and fight with hundreds of insurance plans about payment.
U.S. doctors face a similar billing nightmare, Himmelstein said.” They deal with hundreds of plans, each with different rules and regulations, each allowing physicians to prescribe a different group of medications, each dictating that doctors refer patients to different specialists.”
The U.S. system is a paperwork nightmare for doctors and patients, and wastes hundreds of billions of dollars.
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Dr. Woolhandler and Dr. Himmelstein are co-founders of Physicians for a National Health Program, an organization with over 12,000 members advocating for single-payer national health insurance in the United States. PNHP was founded in 1987 and has physician spokespeople across the country. For a local spokesperson, call the national headquarters at 312-782-6006. Visit us online at www.pnhp.org.
Public Citizen is a non profit, member supported, consumer advocacy organization founded by Ralph Nader in 1971. Public Citizen fights for safe foods, drugs and medical devices; for greater consumer control over personal health decisions; and for universal access to quality health care.
Copies of the articles appearing in the January issue of the International Journal of Heath Services (listed below) will be available in .pdf format at www.pnhp.org starting on Wednesday, January 14, 2004 at 3pm. Advance copies for the press can be obtained by calling Joseph Shin at 312-782-6006.
1. Health Care Administration in the United States and Canada: Micromanagement, Macro Costs.
2. Administrative Waste in the U.S. Health Care System in 2003: The Cost to the Nation, the States, and the District of Columbia, with State-Specific Estimates of Potential Savings.
Click here to view the IJHS Data tables by State
Click here to view pdf format of IJHS State by State Study
Click here to view pdf format of IJHS US vs. Canada Study
The Commonwealth Fund
January 2004
Mirror, Mirror on the Wall: Looking at the Quality of American Health
Care through the Patient’s Lens
By Karen Davis, Ph.D., et al
U.S. health care leaders often say that American health care is the best in the world. However, recent studies of medical outcomes and mortality and morbidity statistics suggest that the United States-despite spending more per capita on health care and devoting to it a greater percentage of its national income than any other country-is not getting commensurate value for its money. The Commonwealth Fund’s cross-national surveys of patients’ experiences in and views of their health care systems offer the opportunity to assess U.S. performance relative to other countries through the patients’ perspective-a dimension often missing from other international comparisons.
Using data from two recent surveys conducted in five English-speaking nations-Australia, Canada, New Zealand, the United Kingdom, and the United States-this report ranks the countries in terms of patients’ reports on care experiences and ratings on various dimensions of care.
Based on these surveys of patients, the U.S. rarely outperforms the other nations surveyed; on most measures of the quality of care, it ranked last or second-to-last. Among the five countries surveyed, the U.S. performed particularly poorly on measures of equity and meeting the health care needs of its vulnerable populations. The U.S. also ranked last on patient erceptions of safety, efficiency, and effectiveness (measured in terms of ability to adhere to recommended care). Only on timeliness for admission to hospitals or for elective surgery did the U.S. rank highest among the five nations. In terms of timeliness for other services, including ready access to physicians, the U.S. was not the leader. New Zealand outperformed the U.S. in terms of providing prompt access to primary care physicians and specialists.
These results indicate a consistent relationship between how a country performs in terms of equity and how patients then rate performance on other dimensions of quality: the lower the performance score for equity, the lower the performance on other measures. This suggests that, when a country fails to meet the needs of the most vulnerable, it will be judged most harshly by its citizens. Rather than disregarding its performance on equity as a separate and lesser concern, the U.S. should devote far greater attention to seeing that the health system works well for all Americans. These findings raise fundamental questions about the current trend in the U.S. to increase patients’ out-of-pocket costs, and about the lack of action on the growing numbers of uninsured and underinsured. The U.S. needs to make a major commitment to improving health insurance coverage and quality of care.
If it fails to act, not only will the U.S. standing among health systems continue to erode, but there will be a predictable rise in public dissatisfaction and significant economic and human costs.
http://www.cmwf.org/programs/international/davis_mirrormirror_683.pdf
Comment: So we have “the best health care system in the world”… except for its performance. Well, at least we still rank first in one category…we spend the most.
The New York Times
January 9, 2004
Sick State Budgets, Sick Kids
By Bob Herbert
While headlines continue to tell us how great the economy is doing, states across the U.S. are pulling the plug on desperately needed health coverage for low-income Americans, including about a half-million children.
Even as the Bush administration continues its bizarre quest for ever more tax cuts, the states, which by law have to balance their budgets, are cutting vital social programs so deeply that tragic consequences are inevitable.
It seems extremely strange that in the United States of America, the richest, most powerful nation in the history of the world, we are going backward in the 21st century in our ability to provide the most fundamental kinds of health care to ordinary people, including children.
Maybe the nation itself needs a doctor. Shoving low-income people, including children, off the health care rolls at a time when the economy is allegedly booming is a sure sign of some kind of sickness in the society.
http://www.nytimes.com/2004/01/09/opinion/09HERB.html
The New York Times
January 10, 2004
Governor Seeks Big Cuts in California’s Spending Plan
By John M. Broder
Gov. Arnold Schwarzenegger presented his first budget on Friday, a $76 billion spending plan for the state of California that includes significant cuts in health care, public education and payments to local governments.
Mr. Schwarzenegger acknowledged that the reductions would be painful to many
of the poorest Californians but said that he was forced by “irresponsible”
spending under Gov. Gray Davis and the Democratic-dominated Legislature
to make those cuts.
“We will not raise taxes,” Mr. Schwarzenegger said. “Higher taxes will punish working families. It will kill jobs and drive businesses away. It will stall the recovery we need to pay for essential programs.”
The governor’s plan cuts spending by more than $4.6 billion, with the largest reduction, roughly $2.7 billion, coming from health and human services programs. The proposal limits the number of new children enrolled in health programs. It also raises deductibles and co-payments for recipients of Medi-Cal, the state’s name for the Medicaid program, and cuts payments to medical providers.
Anthony Wright, executive director of Health Access California, a consumer group, said: “Under this proposal, hundreds of thousands of children and others would be denied basic care, and millions of Californians would have to pay more to get basic health services. The governor is putting the burden of this crisis on low- and moderate-income families, rather than restoring the tax brackets for himself and other wealthy Californians, so they can share in the solution.”
http://www.nytimes.com/2004/01/10/national/10CALI.html?hp
For the Health and Human Services portion of the California state budget: http://www.dof.ca.gov/HTML/Budgt04-05/BudgetSum04/HHS_w.pdf (If you elect to read this document, please equip yourself with a box of Kleenex… No, two boxes.)
Comment: Instead of cutting spending for essential health and human services programs for the most vulnerable (and cuts in education, and local services such as police, fire, and trauma centers), why doesn’t Gov.
Schwarzenegger eliminate the “irresponsible” spending of Gov. Davis and the Democrats? Although he hasn’t changed the rhetoric that helped to elect him, it appears that the “irresponsible” spending was, in fact, a fiction.
Is it really more responsible to continue to protect Gov. Reagan’s tax cuts for the rich, rationalizing it by the discredited Laffer curve? Is this what the voters really asked for? I hope not, but I’m no longer certain.
Don
Health Affairs
January/February 2004
Health Spending Rebound Continues In 2002
By Katharine Levit (and colleagues from the Office of the Actuary, Centers for Medicare and Medicaid Services)
U.S. health care spending climbed to $1.6 trillion in 2002, or $5,440 per person. Health spending rose 8.5 percent in 2001 and 9.3 percent in 2002, contributing to a spike of 1.6 percentage points in the health share of across domestic product (GDP) since 2000 (to 14.9% in 2002).
The continued acceleration in health care spending growth has posed financial challenges for government, businesses, and individuals alike. Compared with economic growth of 3.6 percent, growth in health spending of 9.3 percent pressures employers to cut other spending increases, possibly through reducing jobs, wage gains, or health benefits or through Shifting more costs to employees. State and federal governments face the same dilemma of costs rising more rapidly than revenues, leading every state to scrutinize discretionary Medicaid benefits as the number eligible for coverage continues to grow.
Factors fueling growth in health spending are already showing signs of dissipating in 2003. Preliminary data indicate that hospital use has eased and that wage growth in the health sector has decelerated slightly. Furthermore, Medicare givebacks have expired, and states have begun plans to curtail Medicaid spending growth. Finally, as consumers share more of the increases in cost, the value of health services will be more closely weighed against other purchases, underscoring the considerable value of some services and the discretionary nature of others.
http://content.healthaffairs.org/cgi/content/full/23/1/147
Comment: Can the health care consumer really distinguish between services that are of considerable value and those that are more discretionary? In a life-threatening emergency, services are rendered without significant consumer input, even though the financial consequences for the patient may be severe.
But what about decisions regarding management of serious chronic disorders such as diabetes, hypertension, congestive heart failure, or hyperlipidemia? For the great multitude of individuals who have negligible disposable income, the consumer decisions become a choice of essentials such as housing and food, versus adequately managing a disorder that may have minimal symptoms at present, but, in time, may have a major detrimental impact on the individual’s health status. The health care consumer may perceive these expenses to be discretionary, when, in reality, reducing spending now may result in disability and premature death. No truly humane policymaker for health care provider can ever consider these expenses to be being discretionary.
Perhaps the most common example of an “unnecessary” discretionary service is the C-T or MRI scan “demanded” by the patient. Even though medical decisions are ultimately made by the patient, it is the responsibility for the physician to see that the patient’s decision is an informed one. If the scan is unnecessary, the physician has an obligation to inform the patient of that fact in explaining why he or she is not ordering it. Sometimes the claim is made that a scan may be necessary to “prevent a lawsuit.” But if the patient’s symptoms indicate that a scan could detect a problem that might have adverse consequences, then it is an indicated test. But if the test is clearly not indicated, that alone is adequate evidence to defend against accusations of malpractice for not ordering the test. It is the physician’s obligation to avoid wasting resources on services that are not indicated.
Nevertheless, excessive discretionary services are a problem. But they are related to excess capacity and to a dependence on use of specialized services for problems that would be more appropriately provided on a primary care level. Rather than being left to a flawed decision process of patient-consumers, reduction of this waste will need to be made by comprehensive planning decisions, both controlling capacity and allocating our resources appropriately, thereby ensuring an adequate primary care Base with an appropriate level of high-tech care.
The other important method of improving spending is to eliminate the profound administrative waste by reforming our method of funding care. We need structural reform that will improve health care spending, rather than consumer-directed financial barriers to necessary services.
Reducing spending on essential health services through policies that create the deception that these costs are “discretionary,” and unaffordable anyway, is simply inhumane.
January 7, 2004
William Schwied, MD, MPH, founder of People for a National Health Program (PNHP), in his acceptance speech as Leisure Worlder of the Month:
“I will close with a global approach to dreams and goals: Nurturing and enriching the lives of all peoples in need; and creating a world without poverty, greed, human suffering, inequality, and war.”
Comment: I am personally eternally grateful to Bill, initially for his presentation of the single payer proposal in grand rounds at our hospital a decade ago, and for his continuing support since. He has provided inspiration to me, encouraging me to continue to pursue a life of activism on behalf of health care for everyone.
Don McCanne
Orlando Sentinel
January 5, 2004
Editorial
Give green light to fines
A legislative proposal to provide badly needed money to hospital trauma centers by increasing the traffic fine for red-light runners deserves support.
This approach could be a winner for Orlando Regional Medical Center and other hospitals that are struggling to come up with money to keep their trauma centers running.
http://www.orlandosentinel.com/news/opinion/orl-edped053010504jan05,1,2446659.story?coll=orl-opinion-headlines
Comment: Let’s get serious! We desperately need a rational system of funding all health care. Negligible tweaks just won’t do it.
The Argus
January 2, 2004
Sign ups for health insurance scheduled
OAKLAND — If you’re low-income and need no- to low-cost health insurance for both children and adults, mark Jan. 10 on your calendar.
That’s the day the Alameda County Social Services Agency will sign up children, families and senior citizens 65 and older for state and county health plan programs.
(Medi-Cal program specialist Belinda) Llaguno said applicants should bring a
birth certificate, marriage certificate or valid picture identification; proof of immigration status, Social Security card, proof of address (such as a utility bill), proof of income (such as wage stubs), child care receipts, vehicle registration, current bank statement and proof of other assets (such as life insurance).
http://www.theargusonline.com/Stories/0,1413,83~1971~1866160,00.html
Comment: Could you imagine being asked for this amount of documentation before being enrolled in either an employer-sponsored plan or an individual
private health plan? Yet those least able to afford health care coverage are
being subjected to this humiliating and burdensome process that denies these
individuals the right to privacy that the rest of us expect.
The obvious reason for extensive documentation is to establish that income and assets meet a level of poverty that would warrant public assistance for health care. Yet the rest of us are not required to establish a level of income and assets that would qualify us as being able to afford the payments for private insurance.
Health care coverage should be automatic for everyone, from the moment of birth, regardless of income or assets. Adopting a universal program of social insurance would end this unnecessary, humiliating process by including everyone in an equitably-funded system.