News

Economic and Social Research Institute
May 2004
How Can National Policymakers Improve Health Coverage Tax Credits
Provided
under the Trade Act of 2002?
By Stan Dorn

Health Coverage Tax Credits (HCTCs) provided under the Trade Act of 2002 are
important far out of proportion to the number of qualifying individuals, fewer than 300,000 workers who lost their jobs because of international trade plus early retirees receiving pension payments from the Pension Benefit Guarantee Corporation (PBGC). HCTCs provide the country’s first test of whether the uninsured can be helped effectively by fully refundable tax credits that are paid directly to insurers when premiums are due each month.

…problems have already emerged that, earlier this month, prompted 54 Senators in both parties to support reforms that would increase the size of the credit, expedite credit payment to ease beneficiaries’ cash flow problems, offer new health plan choices to some beneficiaries, increase the number of beneficiaries receiving consumer protections, and make certain other changes.

http://www.esresearch.org/newsletter/trade_act_options.pdf

Comment: Much has been written about the fundamental policy flaws of using tax credits in an attempt to expand health care coverage. The report by Edwin Park of the Center on Budget and Policy Priorities describes some of these problems (http://www.cbpp.org/2-18-04health2.htm).

This Economic and Social Research Institute report by Stan Dorn addresses the narrower issue of the logistical difficulties in administering the tax credits under Trade Act of 2002. If you read only the two page Executive Summary of this report, you will see that the current design and various proposed solutions have created a logistical nightmare. You’ll understand why only 3.6% of those currently eligible have enrolled.

Tax credits that support our current fragmented system will drive up costs and fall far short on goals of universality and equity. We can do far better without increasing costs. A single payer system would ensure affordable access to comprehensive services for all of us. Why aren’t the Democrats and Republicans putting this model on the table? Members of both parties support these flawed tax credits. In a democracy, shouldn’t the electorate be fully informed about superior alternatives as well?

Posted by pnhp at 09:35 AM | Permalink

Breakfast Forum on International Health Care Quality Measurement Efforts Monday, June 7, 2004
7:30 am - 8:30 am, Pacific time
International Perspectives on Quality Improvement:
A Report on the Commonwealth Fund’s International Working Group on Quality Indicators

Join experts on the front lines of the international effort to establish standards for measuring the quality of health care across nations in a June 7 breakfast briefing and discussion during the AcademyHealth annual research meeting.

Members of The Commonwealth Fund’s International Working Group on Quality Indicators will outline their recently completed work, reported in the May/June issue of Health Affairs, as well as review the group’s newly released report to the health ministers of the five participating countries. That report includes detailed country-by-country data on the various quality indicators studied. The briefing and discussion will be videotaped and made available later in the day via the Fund’s Web site, www.cmwf.org.

Established in 1999, The Commonwealth Fund’s International Working Group on Quality Indicators is a critical step forward in the development of international measures of health care quality. This unique collaboration and technical exchange brought together representatives of five industrialized countries-Australia, Canada, New Zealand, the United Kingdom, and the United States-committed to the development of a set of indicators to help benchmark and compare health care system performance across countries while helping clinical leaders and policymakers identify areas for improvement.

In addition to government officials, Working Group members included leading academic experts in quality measurement, representatives from the Organization for Economic Cooperation and Development (OECD), the World Health Organization (WHO), The Nuffield Trust, the Canadian Council on Health Services Accreditation, and The Commonwealth Fund.

Program Moderator: Robin Osborn, Director, Program in International Health Policy and Practice, The Commonwealth Fund
Panelists:

* Arnold Epstein, MD, Harvard School of Public Health
* Philip Davies, Australian Department of Health and Ageing
* Colin Feek, Ministry of Health, New Zealand
* John Millar, MD, Population Health and Surveillance, Provincial Health Services Authority, Canada

Location:
Garden Salon Two
Town and Country Hotel and Resort
San Diego, CA

A continental breakfast will be served.

For more information, visit The Commonwealth Fund’s Web site, www.cmwf.org, or contact:
Olivia Ralston
212-606-3852 (office)
or@cmwf.org
Bill Silberg
212-606-3841 (office)
917-679-2743 (cell)
wms@cmwf.org
Mary Mahon
212-606-3853 (office)
917-225-2314 (cell)
mm@cmwf.org

Posted by pnhp at 02:15 PM | Permalink

Enthoven on Americans’ sense of equity

The 11th Princeton Conference:
Managing Cost and Quality Through the Health Care Delivery System:
Managing Care within Organized Delivery Systems
May 21, 2004

Question from audience:

…do you see this push for the health savings accounts, the health reimbursement accounts as being something which is likely to promote or work against the development of prepaid group practices and the image that you see (employer making a fixed dollar contribution and granting employees choice of competing plans, especially prepaid group practices)?

Alain C. Enthoven, Ph.D., Marriner S. Eccles Professor of Public & Private Management, Stanford University:

Well, I think it works against because it tends to shred the fabric of solidarity. …I think the high deductible approach is a real mistake… In fact, Kaiser Permanente is surrendering to the inevitable in introducing $1500 deductible plans because they have to because their competitors are doing it in small groups, and they’ve been losing members in small groups. But I think that the $1500 deductible idea is going to shift costs from the well to the sick. Right away those people with chronic conditions are going to be paying $1500 a year out-of-pocket that they weren’t paying before. And, I don’t know, maybe that’s another route to the single payer. You know, when enough Americans are—when their sense of equity is offended by that, then maybe a lot of them will say, well, it’s time for us to have national health insurance…

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1159

Comment: Professor Enthoven’s vision of managed competition has never really been tested adequately since every player in the age of managed care jockeyed for their own best positions, rather than cooperating in developing an ideal market of truly integrated health plans competing on quality and price. And there is no conceivable scenario in which his model ever will be adequately tested, especially since even large healthcare markets cannot support enough fully integrated and mutually exclusive health systems to establish a competitive base.

We have now moved into the age of consumerism in which healthcare costs are
contained by making patients individually sensitive to those costs. Every rational health policy expert agrees that patient cost-sharing will shift costs from the well to the sick. Certainly Professor Enthoven agrees.

It seems that, as we investigate various models of reform and recognize the deficiencies of each, we keep turning our thoughts to the possibility of adopting the single payer model. Even Professor Enthoven recognizes that our sense of equity may bring us to that.

Posted by pnhp at 08:59 AM | Permalink

Dr Alison Talbot Smith, Dr Shamini Gnani, Prof Allyson M Pollock, Sir Denis Pereira GrayBritish Journal of General Practice 01 June 2004

A key document in UK government policy making for the NHS has been evaluated by Dr Alison Talbot Smith and her co-authors Dr Shamini Gnani and Prof Allyson Pollock of UCL’s School of Public Policy, and Sir Denis Pereira Gray in the British Journal of General Practice published on 01 June 2004. The original paper purports to show that Kaiser Permanente (a US HMO or health maintenance organisation) “achieved better performance at roughly the same costs as the NHS”.

An evaluation will show that the paper has four major areas of error. Crucially like was not being compared with like. Kaiser covers around eight million people in the US, mainly the working well. In contrast the NHS provides universal coverage to around 60 million citizens including the unemployed, the poor, and older people. Richard Feachem et al, the authors of the original paper, were not able to adjust for the differences in the populations, thereby negating comparisons of bed use and costs.

Similarly Feachem et al also used an unorthodox approach to adjusting for level of service when calculating costs. They did not include the additional charges that Kaiser members incur, currently £28 for each primary care consultation, £56 to attend an accident & emergency centre, and £285 for childbirth, and they omitted the 12% of Kaiser members who take out supplementary cover for services which are not included as part of the plan (‘coinsurance’).

They also wrongly applied a double currency conversion which added no less than 40% to their calculation of the NHS’s costs. They converted pounds into dollars at the general exchange rate, and then took this dollar rate and multiplied it again by the special rate that applies to the health sector. As the chief economist for the Department of Health pointed out, “it is simply wrong to adjust for health care prices over and above adjusting for general differences in prices”. In spite of systematically inflating NHS costs and deflating Kaiser’s, the NHS still comes out ahead. Undoing it puts NHS costs at $1,102 per capita compared to Kaiser’s $1,951.

Prof Allyson Pollock and Sir Denis Pereira Gray said today:
“When the Lancet published a paper on MMR, which threatened to undermine public health programmes, the DH and other major medical journals lost no time in entering into the scientific debate. Now we have a paper being widely adopted by policy makers, the claims of which concerning Kaiser are not supported by the evidence.”

James Lancaster
Public Health Policy Unit 
School of Public Policy  
UCL  
29-30 Tavistock Square
London WC1H 9QU     
t:  44 (0)20 7679 4985 (UCL: 24985)
f:  44 (0)20 7916 8536
email: j.lancaster@ucl.ac.uk

http://www.ucl.ac.uk/spp/about/health_policy/index.php

Posted by pnhp at 01:19 PM | Permalink

Bush’s health care scam
By Robert Kuttner  |  May 27, 2004

IF THE MESS in Iraq and the high price of oil were not crowding out other election year issues, health care would top the list. Premium costs keep increasing, out-of-pocket charges keep being shifted onto consumers, and the number of uninsured is at an all-time high.

President Bush, speaking Tuesday at a Youngstown, Ohio, community health center, promised to help more uninsured Americans obtain affordable health care. But his key proposals are dubious health policy, waste taxpayer dollars, and are unlikely to increase coverage. They deserve more attention because they epitomize Bush’s utterly cynical approach to governing.

Here’s what Bush would do.

First, he relies on tax credits. A family earning $25,000 or less could receive a “refundable tax credit” (that is, a government payment) of up to $3,000 toward the purchase of health insurance. The trouble is that the average family health insurance policy provided by employers in 2003 cost $9,000, and individually purchased policies cost even more.

A family with $25,000 income, even with a $3,000 subsidy from Bush’s plan, would still have to pay $6,000 out of pocket. Families with $25,000 or less are just scraping by. How many can afford to spend almost a quarter of their total income on health insurance?

Worse, individual health insurance policies are the least efficient way to provide health coverage because they are more costly than group plans to administer. And they leave families with any history of illness vulnerable to denial of insurance on grounds of a “preexisting condition.” (About half of the uninsured have histories of serious medical problems.) So, few people currently without insurance would actually benefit from Bush’s tax credit scheme.

About two-thirds of workers earning under $25,000 already have employer-provided insurance. For them, the tax credit would be a windfall; it would not reduce the number of insured. Younger and healthier workers would opt out into low-cost individual plans, raising the cost to other workers. A study by the Kaiser Family Foundation suggests that the net effect would be a loss of employer-provided insurance.

Second, the president, working with the National Federation of Independent Businesses (the very conservative small-business lobby), proposes something called Association Health Plans. The idea is that small businesses can organize themselves into associations to purchase health insurance collectively at lower rates.

This sounds like a good idea, except that small businesses are already free to do that. The magazine that I edit, with 23 employees, has long been a member of just such an association so we can purchase affordable insurance for our staff.

The new and insidious wrinkle in the Bush proposal is that it would exempt such associations from regulations that currently prohibit discrimination against individuals based on health status. With this new provision, insurers could offer very favorable rates for health plans whose members were limited to the young and the healthy.

As younger workers bail out of larger insurance pools, middle-aged workers and their dependents, as well as those with histories of illness, would face huge rate increases. The bipartisan Congressional Budget Office has estimated that some 20 million Americans would face higher insurance costs if this proposal were enacted. Both The Wall Street Journal and Forbes magazine, not exactly lefty news organs, have published articles pointing out the serious flaws in this approach.

Why would the business federation support such a scheme? One reason is that it stands to make more than $100 million a year organizing and selling such plans.

Bush would also increase the tax benefits of so called Health Savings Accounts. Under this scheme, taxpayers can set up tax-sheltered accounts similar to IRAs and then use the proceeds to pay out-of-pocket health costs. Bush wants to expand these so they can also be used to pay premiums.

But very few low-income people use such accounts. They are beneficial mainly to people in higher tax brackets. They also create incentives for people to buy policies with very high deductibles, which defeats the goal of preventive medical care.

Taken together, Bush’s new plans would cost the Treasury more than $100 billion over 10 years in lost revenues. He proposes to make up that loss by cutting two proven programs that actually do help more people get health care — Medicaid and the State Children’s Health Insurance Program.

So this is how our president proposes to “help the uninsured.” If the United States is a democracy worthy of the name, we the voters owe it to ourselves to look beyond the photo-ops and misleading rhetoric to the real details.

Robert Kuttner’s is co-editor of The American Prospect. His column appears regularly in the Globe. 
© Copyright 2004 Globe Newspaper Company.
 

Posted by pnhp at 10:06 AM | Permalink

Bush touts community health centers as a common-sense approach

The White House
May 25, 2004
Fact Sheet: Expanding Access to Health Care for Millions of Americans The President’s budgets are on track to fulfill his promise to open or expand 1,200 Community Health Centers to serve an additional 6.1 million Americans by 2006. The President’s budget for FY 2005 continues to fulfill this promise with a request of $1.8 billion for Community Health Centers — a 57% increase since 2001 — enabling the program to serve an additional 1.6 million individuals and open or expand over 330 more health centers.

Community Health Centers are an important part of the President’s agenda to
make America’s world-leading health care more accessible, and more affordable.

http://www.whitehouse.gov/news/releases/2004/05/20040525-5.html

Los Angeles Times
May 26, 2004
Bush Highlights Community Health Centers in 2005 Plan
By Edwin Chen and Vicki Kemper

In a campaign-style “conversation” at Youngstown State University, Bush touted neighborhood clinics, a centerpiece of his healthcare agenda, as a primary way to expand access to medical services.

The National Assn. of Community Health Centers, a nonprofit organization that represents the clinic network, welcomed Bush’s support for the centers but said still more funding was needed.

In 2002 and 2003, about 1,250 clinics applied for federal funds, but only 411 applications were approved, the group said. The association reported earlier this year that 36 million Americans lacked access to basic medical care. There are about 3,500 community health centers across the country, serving up to 13 million people, most of whom live in low-income urban neighborhoods or underserved rural areas. About 40% of those people have no health insurance, and many more are underinsured and cannot afford to meet the cost of their high deductibles and co-payments.

Most of the clinics, which provide primary medical care and basic dental services, receive little or no federal funding.

Neighborhood clinics are “a common-sense approach to making sure the healthcare system works . without centralizing the decision-making process in Washington, D.C.,” Bush said.

http://www.latimes.com/news/nationworld/nation/la-na-bush26may26,1,3004657.story

Comment: Providing federal support for community health centers is the centerpiece of President Bush’s program to “make sure the healthcare system
works.”

How well is it working? 411 of 3500 or only 12% of community health centers
have received funding under his program. $1.8 billion has been budgeted to serve 13 million individuals, or $138 per individual. Realizing that our per capita health expenditures for 2004 are $6167, it is clear that $138/year will buy very little health care, especially considering the greater needs of this sector of our society.

Sadly, it looks like President Bush’s centerpiece doesn’t even have a table to hold it up.

Posted by pnhp at 09:20 AM | Permalink

Advocates propose right to health care
Bill’s backers haven’t estimated cost or suggested funding
GARY D. ROBERTSON
Associated Press

RALEIGH - Advocates and patients strapped by medical costs urged Tuesday that state voters be given a chance to decide whether health care is a constitutional right like religious liberty, jury trials or education.

In what has become an annual tradition, Rep. Verla Insko, D-Orange, filed legislation proposing a constitutional amendment that would make health care a fundamental right in North Carolina.

The bill also would order legislators to pass a plan by 2006 that would provide “access to appropriate health care on a regular basis” to every state resident by 2010.

An estimated 1.3 million North Carolinians were without health insurance in 2002. The same year, the state was tied with Mississippi for the largest percentage growth in uninsured residents since 2000, according to the N.C. Committee to Defend Health Care.

Some workers who lost jobs at shuttered manufacturing plants during the latest economic downturn have found themselves without affordable insurance.

Sandra Bailey of Lumberton, who worked at a Guilford Mills plant for 13 years before it closed, said she can’t get health insurance. She needs medicine for a thyroid condition.

“Losing my job, not having any income and no health insurance, it’s been devastating to me,” said Bailey, one of the people who spoke at a news conference and committee meeting held Tuesday at the legislature. “You have to be well to go out in the workplace and find a job.”

Those who don’t have insurance often end up in hospital emergency rooms, where the costs end up much higher than if the patient had seen a family doctor before their condition worsened.

“The United States has the best health care in the world, but among industrialized nations we have one of the worst health care systems,” said Insko, who said she has filed similar legislation every year since 1999.

States such as California and Oregon have considered similar amendments. Maine is starting a program to insure 160,000 people without private insurance or Medicaid.

The bill doesn’t offer any explanation of how to pay for universal coverage. Private insurance premiums to cover the uninsured would likely cost billions of dollars.

Insko said pinning the proposed amendment on a single funding mechanism would generate opposition before the amendment could be debated on its merits, she said.

Posted by pnhp at 02:10 PM | Permalink

HARLOT plc:an amalgamation of the world’s two oldest professions David L Sackett, Andrew D Oxman on behalf of HARLOT plc Tired of being good but poor, the authors have amalgamated the world’s two oldest professions in a new niche company, HARLOT plc, specialising in How to Achieve positive Results without actually Lying to Overcome the Truth

We’ve been good. DLS has prohibited sponsors’ stockholders, much less employees, from seats on his data safety and monitoring boards and has enforced the banning of pharmaceutical reps from the medical wards at McMaster University. ADO has exposed problems with experts and has promulgated rigorous reviews of research to inform decisions about health care. In sum, we have established impeccable reputations for protecting the validity of randomised trials and systematic reviews, and for exposing lapses in methods, validity, therapeutic claims, and professional conduct.

To read the interesting article please click here

Posted by pnhp at 01:52 PM | Permalink

Freelance workforce vulnerable

PR Newswire
May 25, 2004
Educated, Working, Well Paid … and No Health Insurance: A Conundrum for
Growing Freelance Workforce in New York City

The 2004 Working Today Health Insurance Affordability Survey gauged the perceptions of more than 4,000 New York City-based freelancers,independent
contractors, temps, sole proprietors and others who make their living in a
range of industries, such as media, entertainment, financial services, marketing, IT and the arts.

There are upwards of one-and-a-half million independent workers in New York
City, and tens of millions around the country (up to 30% of the nation’s workforce), according to published reports.

Among the survey’s key findings:

• 84% of NYC’s freelancers say it’s difficult for them to afford health insurance.

• Nearly all (95%) of NYC freelancers without health insurance say the primary reason they lack it is because premiums of private carriers are too expensive.

• Nearly half (47%) of NYC freelancers say they had gaps in health insurance coverage, or no coverage at all, during the past two years - and the vast majority (88%) blame high costs.

• 85% of those who experienced gaps avoided medical care during these times.

Sara Horowitz, Executive Director of Working Today:

“The rapid growth of the Form-1099 labor pool represents a fundamental shift
in the economy, yet the health insurance system remains geared solely to the
W-2 employment model. Most freelancers are too rich for public assistance
programs, and too poor to afford the premiums demanded on the open market.
It’s really appalling that millions of productive members of our society are falling through the cracks in an area as basic as health care.”

http://www.prnewswire.com/cgi-bin/stories.pl?ACCT=109&STORY=/www/story/05-25-2004/0002180966&EDATE=

The full Working Today report, Educated, Employed and Uninsured
http://www.workingtoday.org/advocacy/affordabilityreport2004.pdf

Comment: Proposals strengthening employer-sponsored coverage will never
adequately address the access and affordability issues faced by the tens of millions of freelancers in our nation. And individual mandates cannot ever fill the need if coverage remains unaffordable for freelancers.

Both single payer and health service models of reform promise universal, equitable, comprehensive coverage within a framework of genuine affordability. Other models fail to adequately contain costs and fall short on comprehensiveness and equity. Do we really need yet more studies of how lousy our system of funding health care is before we move forward with reform that will work?

Most Americans would prefer a publicly-administered insurance model to a government-owned health care delivery system. Shall we keep wasting valuable
time looking at the other inferior options, or shall we move ahead with single payer reform now?

Posted by pnhp at 09:22 AM | Permalink

The Daily Mail
May 24, 2004
More pay up to beat NHS queue
By Jo Thornhill

Long waiting lists are forcing more people to turn their backs on the NHS and pay for major operations such as hip replacements and cataract surgery, according to a new report.

Research by YouGov has found that 53% of people are prepared to pay for a hip replacement operation - which can cost as much as £9,000 in a private hospital - rather than wait for free treatment from the state. It is not unusual to wait 12 months for a hip replacement operation on the NHS.

Neil Armitage, marketing director at Exeter Friendly Society, which commissioned the research, says people are often willing to give up luxuries such as a holiday or a new car to pay for treatment.

Private healthcare is expensive, but there are ways to cut costs for those who do not have health insurance and do not want to pay top prices. For example, Go Private, owned by Exeter Friendly Society, will find the cheapest deal. For an annual subscription of £34.95, it can help patients find treatment at the lowest price from private hospitals nationwide.

http://www.thisismoney.com/20040524/in78621.html

Exeter Friendly Society Limited:
http://www.exeterfriendly.co.uk/

Comment: Private markets work, for some. When unacceptable queues develop
in a government-run national health service, private market medicine allows
you to buy your way to the front of the queue… if you have the money.

Many nations have demonstrated that queues are best managed by controlling
capacity. Ensuring adequate capacity prevents excessive queues, while avoiding excess capacity prevents the waste and adverse outcomes of over-utilization.

If the wealthier, politically influential sector is allowed private access to services covered by the public program, then political support for the public program declines significantly. A chronically underfunded public program cannot ensure that there will be enough capacity to prevent excessive queues.

But then lucrative private health markets in parallel with public programs exemplify the magic of the marketplace. Even with inadequate capacity in an
under-funded health care delivery system, the private market provides timely
access that the public program can’t… if you have the money.

Fortunately, in the United States, the $1.8 trillion that we are spending on health care is enough to ensure adequate capacity for everyone. But we still need a universal, public insurance program to make it work. Turning our health care dollars over to the private plans in the marketplace just isn’t doing it.

Posted by pnhp at 10:52 AM | Permalink

Reuters
May 21, 2004
Germany downplays drive for health insurance reform

The German government dampened expectations on Friday that it was planning
the rapid overhaul of its national health system with the launch as early as next year of a “citizen insurance” for which all Germans would pay.

Health Minister Ulla Schmidt and Franz Muentefering, chairman of the ruling Social Democrats (SPD) have in the past week appeared to be driving the project forward, with a view to introducing the new insurance system next year.

The system would extend funding of national health insurance to civil servants and the self-employed as well as those on higher salaries, who have so far been able to opt for private coverage.

The proposal is one of the few government reform plans that is popular with its core voters and would spread the burden of health insurance costs, helping trim high non-wage labor costs which the industry says is a factor driving firms broad.

But the ruling SPD is set to make the citizen insurance a main campaign issue in the 2006 elections, Welt newspaper reports in its Saturday edition.

While popular with the public, the citizen insurance would cause pain for private health care insurers who stand to lose business from wealthier and self-employed people, who currently have the option of public or private health care.

Germany has the third highest spending per capita on health care after the United States and Switzerland.

http://www.alertnet.org/thenews/newsdesk/L21636410.htm

Comment: Germany’s system of funding health care is one of the world’s most
expensive, yet does not adequately address many of the inequities in health
care. “Universal coverage” is not enough. Many German leaders now seem to
recognize that adopting more principles of the single payer model is the answer to making comprehensive care affordable for everyone.

Watching nations struggle with their “successful” universal programs is instructive for us. It is evermore clear that our highly deficient system of funding care should be replaced by a single payer program.

Posted by pnhp at 10:46 AM | Permalink

RAND study on drug co-payments

JAMA
May 19, 2004
Pharmacy Benefits and the Use of Drugs by the Chronically Ill
By Dana P. Goldman, PhD, et al

Objective: To determine how changes in cost sharing affect use of the most commonly used drug classes among the privately insured and the chronically ill.

Results: Doubling co-payments was associated with reductions in use of 8 therapeutic classes. The largest decreases occurred for nonsteroidal anti-inflammatory drugs (NSAIDs) (45%) and antihistamines (44%).

Reductions
in overall days supplied of antihyperlipidemics (34%), antiulcerants (33%),
antiasthmatics (32%), antihypertensives (26%), antidepressants (26%), and
antidiabetics (25%) were also observed. Among patients diagnosed as having a
chronic illness and receiving ongoing care, use was less responsive to co-payment changes. Use of antidepressants by depressed patients declined by
8%; use of antihypertensives by hypertensive patients decreased by 10%. Larger reductions were observed for arthritis patients taking NSAIDs (27%) and allergy patients taking antihistamines (31%). Patients with diabetes reduced their use of antidiabetes drugs by 23%.

Conclusions: The use of medications such as antihistamines and NSAIDs, which are taken intermittently to treat symptoms, was sensitive to co-payment changes. Other medications-antihypertensive, antiasthmatic, antidepressant, antihyperlipidemic, antiulcerant, and antidiabetic agents-also demonstrated significant price responsiveness. The reduction in use of medications for individuals in ongoing care was more modest. Still, significant increases in co-payments raise concern about adverse health consequences because of the large price effects, especially among diabetic patients.

RAND is solely responsible for the article’s content.

http://jama.ama-assn.org/cgi/content/abstract/291/19/2344

Comment: A previous RAND study demonstrated that cost sharing by the patient results in a significant reduction in utilization of health care services when compared with patients who do not have cost sharing.

That RAND study has been used to rationalize shifting more costs to patients in an attempt to control total health care costs by reducing demand. Further analysis of the RAND data has shown that this does reduce the utilization of beneficial services. Advocates of consumer-directed health care use their rhetoric to turn this problem of establishing financial barriers to beneficial care into a “benefit” of allowing the consumer to take charge of his or her own health care. More objective advocates of cost sharing dismiss it as a necessary tradeoff for the “more important” goal of controlling costs.

This new RAND study confirms that individuals with chronic disorders will decrease their use of drugs when co-payments are increased. The reduction is
even greater for drugs that do not specifically treat their chronic conditions but that are used to relieve distressing symptoms. Although some may contend that these drugs are unimportant, symptom relief does remain a primary goal of health care.

This study will be misrepresented in the rhetorical debate over reform. Supporters of creating price sensitivity for patients will laud this study. They will contend that co-payments cause patients to reject unnecessary prescriptions while continuing to purchase those medications that they really need. In our debates we will be confronted with this claim. We will need to either take the initiative or rephrase their misleading claim by stating that co-payments reduce the utilization of essential drugs for chronic conditions, and they reduce even more the use of drugs that can provide significant relief of pain and suffering!

There are far more effective and patient-friendly mechanisms of containing health care costs. We don’t need to adopt policies that would perpetuate pain and suffering, especially for those patients with the greatest needs.

Posted by pnhp at 09:15 AM | Permalink

Medicare’s in Good Health

Will future workers accept higher taxes to buy their grannies insulin? Or will they say, ‘Let her rot’? (I’m betting on the grannies here.)
By Jane Bryant Quinn
Newsweek

May 24 issue - The way the pessimists talk, you’d think that America couldn’t afford the future. Exhibit A is medical care for baby boomers. As they age they’ll supposedly break the bank. By 2050, we may have to pile the old and sick onto ice floes and float them off. Otherwise they’ll devour our treasure (assuming we have any, after all the deficit spending).

advertisementAnyway, that’s how you spin the story if you want Medicare chopped or dropped, as many conservatives do. They’re backing a raft of proposals to make the elderly pay more of their future medical costs.

The optimists, on the other hand, give future Medicare funding a cheerier spin. No need for ice floes, they say. Our standard of living will boom over the next 45 years. GDP will grow, grow, grow. In 2050, today’s Medicare program will indeed take a larger slice of the pie. But the pie is going to be so big that workers will be twice as prosperous as they are today, even if they’re paying a higher Medicare tax.

Before I lay out the competing plans, let me mention some things you might not know:

Boomer retirements are not the driving force behind soaring medical costs. The aging of the population will add only .5 percent a year to costs between 2000 and 2030, says economist Uwe Reinhardt of Princeton University. The true culprits are technology, prescription drugs and our preference for consuming ever more medical care.

Medicare isn’t doomed just because fewer workers will be supporting each beneficiary. By 2030, only 2.4 workers are likely to stand behind each Medicare beneficiary, down from 3.9 today. But new technologies will make those workers far more productive—raising their incomes and their ability to pay.

Medicare won’t go broke. The only trust fund in Medicare covers Part A, which pays your hospital bills. The fund is still growing, thanks to the interest earned on the Treasury securities it holds (6.2 percent last year). It’s supported largely by payroll taxes and, on paper, lasts until 2019. After that… well, I don’t even want to think of the fate of the Congress that quits paying hospital bills for the elderly.

None of the rest of Medicare has a similar trust fund to worry about. Part B, which pays doctor bills, is 25 percent funded by monthly premiums that retirees pay. The rest comes from general tax revenues. Part C covers privately managed Medicare HMOs, which the government subsidizes lavishly. The new drug benefit, Part D, will also be funded by retiree premiums plus the general taxes everyone pays.

On paper, there’s money available to pay full Medicare benefits to future retirees. But they’re competing with many other wants, such as tax cuts, farm subsidies and wars. So what are the priorities? Will future workers accept a higher payroll tax so their grannies can get insulin and hip replacements? Or will they say, “Let Granny rot—I want a tax subsidy to buy my own private rocket”? (I’m betting on the grannies here.)

Even so, Medicare has to trim its sails. For the lefties, a favorite goal is to wring more efficiency out of doctors and hospitals. For example, some states (primarily in the sun belt) spend far more per capita on Medicare patients than do other states (Wisconsin, Minnesota, Oregon). If the sun belt were weaned from its wasteful ways, Medicare would stretch a lot further than it does now. The drug companies will be pushed to cut their costs as well, says Robert Reischauer of the Urban Institute. The lefties also say, “Cut the budget deficit.” By 2030, the interest on today’s deficit will cost more than Social Security and Medicare combined, Reinhardt says.

The righties tackle spending directly, by privatizing Medicare and shifting more of the medical costs to seniors themselves. (In these scenarios, the taxpayers save money but seniors don’t.) Michael Cannon at the Cato Institute, a conservative think tank, likes Medicare personal accounts. Part of your Medicare contribution would go to an investment account to help you pay future medical bills. You’d get less from Medicare, so you’d have to cross your fingers that your personal savings would grow.

Cannon also backs “premium support,” which is basically a voucher plan. The government would pay seniors a fixed amount toward health care every year that they’d use to purchase a private plan. If the voucher isn’t large enough to buy comprehensive care, they’d have to settle for a high-deductible plan, paying the smaller bills themselves. Seniors would have to decide how much health care they could afford.

The irony is that private plans are more expensive and less efficient than traditional Medicare, which remains America’s most popular program. In a study covering the years 1970 to 2000, Marilyn Moon of the American Institutes for Research found that Medicare did a better job of containing costs than private plans did. In fact, private HMOs can’t even compete with Medicare unless they get large government subsidies. (The righties love government handouts, as long as the hands are theirs.)

Whatever we do about Medicare, we know this for sure: health-care costs won’t go away. Who will look Granny in the eye and say she’ll have to pay or do without? Especially as she approaches the voting booth.

Reporting Associate: Temma Ehrenfeld

Posted by pnhp at 03:30 PM | Permalink

An Interview with Quentin D. Young M.D.
Director, Health and Medicine Policy Research Group
By Karen Ide and Clinton Stockwell, PRAGmatics
PRAGmatics
Spring 2004
————————————————————————————————————
PRAGmatics—Will you please share with us a highlight from your long and successful career as a physician and as a human rights/health care activist?

Dr. Young—I guess my answer would be the civil rights movement medical arm. When the southern movement started activating, the medical community for human rights would show up spontaneously. We all know the climax with major changes in the legal status of Blacks in the South and the de facto status segregation in the North. The medical community was a do-good expression of liberal nurses and doctors who wanted to be part of the action. At first, we just thought we would be there like Red Cross workers and take care of people who had heat stroke or got beat up or bitten by a dog or whatever. We had people on staff down there for the long term but we also got volunteers who would come down from another part of the country, some for a week, or a month, or two. The function was to bear witness to the struggles of the people who are fighting for their rights and our presence was testimony to their legitimacy and our willingness to share their burdens. It sounds a little highfalutin, but that’s what it’s supposed to be. The doctors did turn out to have several functions. I’ll give you one example. The public demonstrations were like a Japanese opera. There would be a demonstration called to protest the exclusion of eating places or school segregation or hospital segregation. The people would turn out, mostly young people, and demonstrate. The police would tell them to disperse. They wouldn’t disperse and different things would happen—houses would get torn up—people would get arrested and taken to the hospital and taken to jail and very soon our task was evident. After the protesters were booked, we would go to the jail. A doctor with a tie and white coat, even though he was considered a “nigger lover” was treated with respect and deference by the police. We could go around and very ostentatiously say, “You’re looking really good,” and the whole point was to have a doctor see these people before they got out of jail because the specialty of the house was very often to brutalize the protestors. But a doctor there having seen them was pretty close to expert testimony, so bruises that were there the next day would clearly and unarguably be due to something that happened overnight. So that was one of the functions that was interesting to note. The whole effort was probably a high point of my career in terms of mixing my activism with medicine.

PRAGmatics—Today, March 4, has been designated “Health Care Action Day” by many activist groups across the country. Do you feel this movement is picking up steam? Do you see any prospects for its realization in this country in some form in the near future?

Dr. Young—Well, it’s definitely picking up steam. And the reason turns out to be not the good one: that do-good solitary social justice consciousness in the country, but rather, I’m sorry to say—it’s because the system is so disorganized, so chaotic, so costly, and so harmful, that it is garnering enemies. But maybe that is the obvious way that most social change takes place. Human slavery was abolished after a bloody civil war and because it was incompatible with our nation’s continuing existence. So the abolitionists and many wonderful people who had strong ideological and moral objections took great risks, gave their lives. But the vast majority who participated in the rejection of slavery did it for elementary, mundane, materialistic reasons and I think that is what is happening now, and it’s happening very fast. Today is “Universal Health Care Day.” Our group, Physicians for a National Health Program, is dedicated to that single issue—even though there is not a lot of enthusiasm for the concept of
universal health care out there. But, we know that everybody should have it. The most evil elements in the health system are the Hospital Insurance Association and the Group Health Association. These are the holding companies for the big corporate interests that are taking over. They really don’t care whether it is universal health care just as long as they control it and get the money. We are much more explicit and worry about the universal aspect because other forces are precluding explicit solutions like ours, which is single payer national health insurance, government-run, based on the tax system. We feel universal health care is no longer the best answer; it’s the only answer. There was a time when there were alternatives that might have worked, but that day is passed. We’ve had too much of a transfer of power from patients and physicians, for that matter, to giant corporate interests that are dedicated to the goal of maximizing profits, which accounts for much of the distress in the American health system.

PRAGmatics—In the U.S. as elsewhere, there is a debate as to whether quality health care is a right or a commodity. Is it possible to reconcile these opposing values, and is the goal of quality health care as a right for all people attainable?

Dr. Young—I certainly believe it’s attainable. It has been attained in certain countries that aren’t very different from us. I totally come down on the side of health care being a human right. It’s very hard for me to see a coherent, let alone a moral or decent argument against it, because illness doesn’t distribute itself according to the ability to care for yourself and be cared for. It strikes children. It strikes the poor. It strikes the most needy and most ill-protected disproportionately. That’s the correlation. Cardinal Bernardin said it best. He said, “Health care is so important to human life and dignity that it is the responsibility of society to offer access to decent health care to every person.” I was pleased that he didn’t say “every citizen” but “every person.” So the answer is that it should be considered a right guaranteed by society, which means it must be a responsibility of the government.

We’ve had a failed experiment in marketplace medicine over the last fifteen years. People forget that 20 years ago, there was no such thing as a for-profit hospital. One of the greater achievements in this country in the Tocquevillian sense of nongovernmental organizations and the American penchant for organizing to solve problems was our hospitals. They were invariably nonprofit, secular or religious entities, based on community; and, the hospital board of directors was always the elite leaders in the community.

Our argument is that the record of America’s hospitals under that circumstance was impeccable. But a lot of it wasn’t. There was a lot of legal segregation in the south and de facto segregation in the northern hospitals. However, at the end of the day, they were community-responsive and responsible, and they got great support for that great subsidy. They got low taxes. They got free services from the city. In many circumstances, Chicago for example, big urban developments surrounded them that made their environment more attractive and more functional, and it was a deal. They would in return meet community needs; around the clock emergency services, obstetrical services, specialized services for kids with mental illness or venereal disease. The government played a huge role but it was essentially a volunteer communitarian kind of thing. That has been put on the back burner during the growth of for-profit hospitals. One of the most serious consequences of the for-profit health system is that there is a significant and dangerous decline of nurses, from what was once two million. Very few people are going into nursing and many are leaving. And this is not just a luxury item.
They are the caring in the health care system. So we have to reject ommodification. We think it’s an abomination and should not be tolerated. It should be eliminated from the health care transaction. We’ve had the experiment. It’s failed. And we must stop the damage it’s doing.

PRAGmatics—What is your assessment of the recently passed Medicare legislation? Since it is not due to go into effect until January 2006, can something else be drafted to amend or replace the Medicare bill before it is enacted?

Dr. Young—It’s an abomination. It’s a terrible, terrible bill and we’re in favor of its repeal. I’m happy to see that the best leaders in Congress, starting with Jan Schakowsky, have adopted that strategy. We regrouped after it was forced across the line. Many organizations are calling for the law to be rescinded because they now have a better understanding of what the bill contains. It is a scam.

PRAGmatics—What is your opinion about the costs of prescription drugs? What should be done about that?

Dr. Young—First, we must insist that doctors do not give unnecessary drugs. An example is the use of antibiotics for the common cold—a huge multi-billion dollar event. It shouldn’t happen. This is the wasting of drugs and the creation of resistant organisms. Second, we must use many more generic drugs. The amount that we spend on brand name “aspirin-like” drugs alone is ridiculous and unnecessary. That money could be spent on drugs for far more beneficial purposes. And it will take more patient education. It takes peer review. For health reasons, I would also restrict the kind of advertising allowed for medications.

And of course, it’s obvious I want to negotiate the lowest price and I would be for price controls if they were recalcitrant. I want the multi-billion dollar trading and profiting of companies from federal tax revenue-supported research ended. This health system has what I call three running sores. One is the absence of a generous, comprehensive drug benefit. That’s a terrible thing and there’s all kinds of ways that it hurts patients, including killing them. The second one, of course, is mental health. The system operates with an idiotic limitation on mental health services on almost every contract you have—six visits a year—as if someone is going to get sick on that basis. And then you have the exclusions. And the third one and possibly the most serious one, is the failure to plan for long term care. We have a time-line in our system in terms of the seniority of the baby boomers and there’s a major central issue in terms of the nature of our society. Are we going to stockpile all of our old disabled people in institutions at great cost or are we going to find ways to have community and family surround them and make life more decent and foster communitarian reality? Those are the things that are just totally neglected among marketplace solutions for profit making. So I think the reason we say that single payer is the only solution is because there is no other way to find the many billions you need to solve these problems, and we could do it because the money is there. We would get the money by ending the 15 to 30 percent administrative costs. And if 1 percent of the total costs for administration equals $17 Billion savings, that is quite impressive. It can be saved. Other countries do it. We have done it with the Medicare system.

Quentin Young graduated from Northwestern Medical School and did his residency at Cook County Hospital in Chicago. From 1972-1981, he served as Chairman of the Department of Medicine at Cook County. From 1943-1945, he served in the U.S. Army and later in the U.S. Public Health Service.

PRAGmatics—A few years ago, Community Renewal Society was an advocate of a theme called “building healthy communities.” What needs to be done so that economically depressed and marginalized communities in urban centers, such as Chicago, can have a more acceptable standard of health?

Dr. Young—Up until now I’ve been talking exclusively about a technical solution, mainly the financing of health care. My heart is in the last question. Rudolph Virchow, the remarkable mid-19th Century physician, who is considered the founder of modern public health, modern psychology and modern pathology, understood the centrality of social conditions to health status and preached it, and his preachments have stood the test of time. What I think CRS was addressing, was a solution to the causes of ill health and that it was not only with doctors but in resolving a variety of afflictions of social problems in the oppressed or depressed poverty community. In this country this is often synonymous with situations facing racial minorities and it’s everything you can think of—clean air, decent housing, good nutrition, social stability, good education—all the good things that we know are necessary. Those are the correlates to good health. When we solve those problems, then how good a heart and lung apparatus you have or how skilled you are at operating on different organs fades because it’s the environmental stresses that are the big of health. We’re very, very enthusiastic about this. Within our physicians group, we see the importance of social justice issues in enhancing the health status of people. We see the present system with heavy emphasis on treatment and profit-making as absolutely anathema or at war with the issues we mentioned. We see many diseases that can only be susceptible to control or elimination by a public health model. We see a frightening and not as yet understood surge of life-threatening asthma in the inner city. We see new diseases all the time that don’t respond to or antibiotics and are then heightened by the bioterrorist brouhaha. We’re talking about Mad Cow, SARS and HIV/AIDS. All these things are there and more keep coming and we have to increasingly say, “What are the strategies? What are the long term strategies that can allow us to rid these threats as they come and then control them?” So I’m interpreting that this is what CRS advocated and we identify with that very closely.

PRAGmatics—Chicago recently built a new facility—Stroger Hospital. Our question is, as you look at this city with respect to others in the country, where is Chicago in terms of its symbolic and real place in delivering health care and how real is the symbol of the new public hospital with respect to health care?

Dr. Young—The answer is a good news-bad news answer. I and many others, ultimately the elite in the business community, were convinced that with the old hospital being nonfunctional for many reasons—most of them structural—what the pathway was we would take. It was very sharply divided with harsh debate, at least initially, and the hospital council, or private hospitals were saying to just give them the money and they would absorb the count. I was on several committees that examined the problem and ultimately made the case successfully that by far the best way to go was to build a new hospital. Unfortunately, the maximum bonding available would only allow the building of one with about 450 beds. You should have 3400 beds. That was the same kind of hospital you have today, but at the time they made that decision, the hospital was running with about 1200. The bad news is, although it is a marvelous state-of-the-art hospital, it is going to be overwhelmed by sheer numbers with the status quo. But it’s a great achievement. There hasn’t been a new public hospital in this country, I would say, for the last 30 years, and so to get a major one is significant. Charity in New Orleans, Philadelphia General, and other public hospitals were closed.

However, the greatest achievement is the establishment of 32 high grade solid buildings as excellent facilities in many communities and the suburbs, and that is the real safety net and certainly is a cushion against the growing need for public services. So that gives you some comfort but people still pay inordinate rates for getting prescriptions filled. So the system constantly gets overwhelmed by the limitations of the private sector. Where is Chicago relative to other cities? It’s probably better than most, but it isn’t that much better. We have this really sharp cleavage between people who are poor without insurance but are not ready for Medicare, and then Medicaid, which is designed for them, being the wild card in the budget crunched economy. Most of the states have serious budget deficits and the biggest budget item is Medicaid. It always looks tempting to the pols, and the hungrier they get the more they slash. But it doesn’t have to be this way. We have the money. We have the workforce, a health workforce that is the envy of the world in terms of scientists, doctors, technicians, nurses, and basic health workers. We have physical plants, hospitals, and all the high-tech equipment. So the system is all there. In countries like Canada or England, the problem isn’t the system, it’s the money! In the U.S., it isn’t the money, it’s the system!

In addition to his distinguished career as a physician, Dr. Young has been a leader in public health policy and medical and social justice issues for more than fifty years. In 1951 he was a founder of the Committee to End Discrimination in Chicago medical institutions. In the 1960s he served as National Chairman of the Medical Committee for Human Rights.

PNHP was founded in 1987 and has physician spokespersons across the country who advocate for a single-payer national health program see www.hmprg.org & www.pnhp.org

Posted by pnhp at 03:08 PM | Permalink

Los Angeles Times
May 18, 2004
Though Far From Poor, a Family Struggles Daily
Two incomes put the Basurto clan well above the poverty line. Yet despite frugal living, they’re middle class in name only.
By Geoffrey Mohan

(Rudy) Basurto is 48 years old. He makes about $20 an hour building cabinets
but can’t afford to buy a home in his Highland Park neighborhood. He has no health insurance, no pension plan and little savings.

Basurto’s family is far from poor, by the official measure. The federal poverty level for a family of five is $21,959. Last year, Rudy and his wife, Maryellen, together earned more than twice that: $45,000.

By the local cost of rent, by what it takes to commute to work, by the price of food at the local store, by the cost of clothing and healthcare, a family like the Basurtos would need more than $40,000 to make ends meet in Los Angeles. Families with younger children and day-care expenses would need closer to $70,000.

That estimate, called a self-sufficient income, is an emerging measure of economic health seldom used in the calculus of poverty.

Policymakers still measure progress in the war on poverty using the federal
poverty level, despite decades of quarrels over its shortcomings. Developed
in the 1960s, the poverty level is based on a food survey from 1955. It tells only how much is too little to live on, not how much is enough to get by on.

“What it means is there are a lot more people without an adequate income in
California than the federal poverty level would indicate,” said Diana Pearce, director of the Center for Women’s Welfare at the University of Washington and a pioneer in calculating self-sufficiency.

By the federal benchmark, 13% of Californians are poor, according to the Census Bureau. By the self-sufficiency standard, 30% don’t make enough to get by.

One reason why the wage-earning middle class increasingly can’t afford California is that wages, adjusted for inflation, have been stagnant for two
decades. In the same time, the percentage of income needed to pay for rent,
healthcare and child care has spiraled.

Economists call this “alligator economics,” because wages are a horizontal or falling line, while costs rise like an alligator’s upper jaw.

The Basurtos, and many thousands of others, live in that jaw.

http://www.latimes.com/news/local/la-me-middle18may18,1,1991378.story?coll=la-home-local

Comment: Our current policies on health care coverage and access fail to adequately serve those caught in the jaw of alligator economics. Numerous simulations have shown that tax credits designed to expand the current system of private plans will never ensure that everyone falling short on self-sufficiency standards would be covered. It is possible to mandate coverage through a public program for those not covered by private plans. But that is the most expensive way to ensure universal coverage, and it falls far short on equity in both funding and access. We can do much better at a significantly lower cost.

Let’s extricate health care from the jaws of alligator economics by establishing our own universal, comprehensive and equitable public program of health insurance. That would bring us much closer to the goal of self-sufficiency for everyone.

Posted by pnhp at 10:56 AM | Permalink

The Denver Post
May 16, 2004
Tough lessons for a med student
By Patrick Kneeland

Medical school admission interviews are predictable. Stressful, but predictable. The interviewer offers some questions: Why do you want to go into medicine? What would make you a good doctor? What would you do if you didn’t go into medicine? The potential student has probably considered these questions before and rattles off more-or-less rehearsed answers.

Once in a while, an unexpected question arises. It was such a question that
caught me off guard at one interview. “Is health care a right or a privilege?” a doctor asked me. “A right,” I answered.

The answer seemed straightforward. It stemmed so easily from my answer to
why I wanted to be a doctor: “To blend an interest in science with an interest in the well-being of people,” and “to use medical knowledge to improve the quality of life of patients.” Quality of life, I thought, depends on the ability to overcome the burden of illness.

In the two years since entering medical school, I have often thought about
my answer. I have turned the issue over in my head, revised my justifications and considered the ways I could have justified answering “a privilege.” My instinctual answer has proven to be infinitely complicated.

In those two years, a romanticized view of doctoring has given way to a reality of negotiating more than disease and patients: the skyrocketing costs of drugs, burdensome malpractice insurance and the numerous bottom-line interests that supercede interests in the patient’s well-being.

Despite the complexities inherent in health care, I am equally confident in my answer today as I was two years ago. If asked the question again now, I would say this:

All people deserve access to health care, and I believe that we have the opportunity to make the right to health care a reality.

We face an unnerving paradox. Every year we spend twice as much per capita
on health care as the average of other developed countries. At the same time, we rank an abysmal 37th among developed nations when outcomes such as life expectancy and infant mortality are compared. Moreover, all nations that rank above us provide health coverage for all of their citizens - a far cry from the U.S., where around 44 million people (including 8.5 million children) are uninsured. We lead the world in medical training, facilities and spending, yet we fail to provide many citizens with even basic care.

The good news is this: As we look for ways to improve health care, we do not
need necessarily to demand more financial sacrifice from the average (citizen). Instead, we can search creatively for ways to better use the resources that exist.

One proposed solution to the problem lies in a national health insurance program. Proponents cite studies that such a system would create enough savings in administrative overhead (currently one-third of health care spending) to cover everyone. Such insurance wouldn’t increase costs for most American families and would free employers from extravagant insurance costs.

There are innumerable excuses given as to why we cannot provide health insurance to all. Change is frightening. Yet the status quo is even scarier.
Let’s commit to asking not if we can, but how can we provide health insurance to everyone in this country. By putting our energy into “how,” we just might be able to get there.

(Patrick Kneeland is a second-year medical student at the University of Colorado Medical School.)

http://www.denverpost.com/Stories/0,1413,36~158~2146834,00.html

Comment: Most of us who participate in various forums on reform have heard
repeatedly the debate over whether health care is a right. Those of us who
believe that everyone should have access to affordable health care cringe
when we hear the all too common invective of the opponents of reform, “Is
food a right!?” The food fight that follows is never productive. It is sad that the discussion of the right to health care is such a highly polarized, divisive issue.

Fortunately, informed, dedicated individuals, such as medical student Patrick Kneeland, are able to look beyond this ideological debate on the right to health care, and move on to an analysis of the problems with our system and solutions that would work.

We can learn much by listening to the fresh wisdom of the Patrick Kneelands
of our nation. We need to discard this “’tis so, ‘tis not” broken record, and get on with reform.

Posted by pnhp at 08:49 AM | Permalink

Seeking insurance solutions
David Lazarus Friday, May 14, 2004

This is Cover the Uninsured Week, and it’s been an especially good week for the insurance industry.

Republican and Democratic lawmakers have come out with competing plans intended to provide health insurance for at least a portion of the roughly 44 million Americans — 16 percent of the population — now lacking coverage.

The plans tinker with the existing system and would cost taxpayers a bundle, but critics say they do little to address underlying problems that result in runaway health care costs for consumers and businesses.

They would, however, provide millions of new customers for a politically powerful, $300 billion industry that is deeply opposed to fundamental change in how Americans receive health care.

“The only winner here is the status quo,” said Ida Hellander, executive director of Physicians for a National Health Program, a Chicago advocacy group with more than 10,000 members nationwide. “These plans are simply subsidizing a sick system. They don’t solve the most serious problems.”

On Tuesday, Senate Republicans unveiled their plan for using tax credits and federal funds to help low-income workers purchase insurance. It also includes government-negotiated discounts for purchases of prescription drugs.

On Wednesday, House Democrats trundled out their plan. It, too, relies heavily on tax credits, as well as spending billions to expand coverage to parents of low-income kids.

While both plans would likely help many people obtain at least rudimentary health insurance, neither achieves the goal of universal coverage.

Similarly, they wouldn’t put a halt to insurance premiums that are climbing by about 12 percent a year. Nor would they address the estimated $400 billion spent annually on administrative costs to process a vast number of insurance forms — a quarter of the $1.6 trillion in total health care spending last year.

Taxpayers foot the bill

Then there’s the sticky question of who pays for reforms comprised largely of tax breaks and subsidies. The unspoken answer, of course, is that you’ll be footing the bill — you and all other taxpayers.

“Businesses complain that they can’t keep up with rising health care costs,” Hellander said. “They should be worried about any solution that doesn’t get at the systemic reasons costs keep going up.”

But Cover the Uninsured Week isn’t about finding such solutions. The event — this is its second year — is backed by a broad array of business and labor groups eager to raise awareness about the seriousness of the health care situation. Former Presidents Jimmy Carter and Gerald Ford are the honorary co-chairs.

“We do not advocate a solution,” said Stuart Schear, organizer of Cover the Uninsured Week and spokesman for the Robert Wood Johnson Foundation, the largest U.S. philanthropic organization devoted exclusively to health care. “What we want is to place this issue at the top of the domestic agenda.”

Sen. John Kerry, the likely Democratic nominee for president, spent much of the week discussing health care at campaign rallies. But his words were drowned out by the furor over increasingly ugly events in Iraq.

President Bush’s health care platform largely mirrors the GOP proposals put forward in the Senate.

In an independent analysis of the two candidates’ approaches released last week, Emory University economist Kenneth Thorpe determined that Bush’s plan would cost taxpayers $90 billion over the next decade but provide coverage to only about 2.5 million uninsured Americans.

Kerry’s plan, meanwhile, would reach 27 million people but would cost more than $650 billion.

How plans differ

A key difference between the two platforms, Thorpe found, is that Bush’s plan would primarily affect people who already have some insurance, whereas Kerry’s plan is intended for workers with no coverage.

Karen Ignagni, president of America’s Health Insurance Plans, the leading trade group for the insurance industry, praised lawmakers for seeking this week to make health coverage more affordable.

“We’re finally seeing momentum to address this serious problem,” she said.

But Ignagni rejected any suggestion that lawmakers look not at fiddling with the existing system but instead explore a so-called single-payer system that would guarantee coverage to all citizens, similar to Canada’s state- backed insurance network.

“In Canada, you have doctors who can’t admit patients for surgery without making them wait for months,” she said. “That’s not the system we want to replicate in the United States.”

No, it’s not. Nor is it precisely the system they have up north either. Hellander at Physicians for a National Health Program noted that weeks or months of waiting for treatment in Canada is only for elective surgery for non- life-threatening conditions.

“If you have a life-threatening condition, of course you’ll be treated immediately,” she said.

Refining the system

In any case, the Canadian system is far from perfect. The United States would need to bring its own refinements to the equation to ensure both quality of care and cost controls.

Meanwhile, funding for a single-payer system is certainly within reach. Researchers at Harvard Medical School have determined that slashing administrative costs under a single-payer system would be sufficient to provide coverage for every uninsured American.

Hellander’s group advocates a payroll tax of about 7 percent to replace all other employer expenses for medical costs, and an income tax of about 2 percent to replace employees’ current insurance premiums, co-pays, deductibles and other out-of-pocket expenses.

Cover the Uninsured Week is a fine idea. This is indeed an issue that requires greater public scrutiny. But if we’re serious about solving this problem, we have to be serious about genuine solutions.

That’s not what we saw this week.

David Lazarus’ column appears Wednesdays, Fridays and Sundays. He also can be seen regularly on KTVU’s “Mornings on 2.” Send tips or feedback to dlazarus@sfchronicle.com.

Posted by pnhp at 02:52 PM | Permalink

15 Reasons Why the 2003 Medicare Law Fails Seniors

Alliance for Retired Americans, April 2004, www.retiredamericans.org

It is more about dismantling the Medicare program than providing a prescription drug benefit.
Background: The addition of a prescription drug benefit to Medicare accounts for 181 pages of the legislation; the remaining 500 pages of the law includes the measures to reform Medicare.

It is not part of any other insurance plan and creates a gap in benefit coverage.
Background: Beneficiaries will pay a monthly premium of $35 as well as a $250 deductible. The benefit will cover 75 percent of drug costs up to $2,250. While continuing to pay premiums, beneficiaries will pay 100 percent of drug costs between $2,250 and $5,100, after which the plan will kick in again and cover 95 percent of costs. Nearly one-half of Medicare beneficiaries will fall into the coverage gap or “donut hole” and will not have any assistance with their drug costs for at least part of the year.

The prescription drug benefit will be unaffordable for most seniors, particularly in future years.
Background: The Congressional Budget Office projects that after one year, the $250 deductible and the $2,250-5,100 gap both will jump 10 percent. By 2013, the eighth year of the program, the deductible and gap are projected to grow by 78 percent; seniors will pay a $445 deductible and those with the largest drug bills will be entirely responsible for more than $5,000 in drug costs.

The law does not provide the drug choices beneficiaries want.
Background: The expanded “choice” in the law will result in a great deal of confusion. For example, beneficiaries who use several medications will have to
research and compare drug plans to find the one that will cover most of their medications. Each plan will have its own list of drugs, or formulary, which is approved for use or payment. Plans are required to have two drugs per class
but not all drugs in that class, are free to design restrictive preferred drugs lists and may change these lists after a beneficiary has enrolled.

The complexity and lack of information place beneficiaries at a severe disadvantage in choosing a plan.
Background: Beneficiaries will need to research extensively to determine which plan is best for them. Nearly a quarter of Medicare beneficiaries have health problems such as hearing or cognitive impairments that make it difficult for them to make decisions. Yet the law does not allow beneficiaries to access the preferred drugs lists of the competing prescription drug plans before
enrollment. Also, the law does not provide additional monies for independent resources such as the State Health Insurance Programs (SHIPs) to provide information on the new law.

The law provides greater benefits to providers, private insurers and drug companies than it does to beneficiaries.
Background: Most health legislation usually includes increased
payments for providers such as doctors and hospitals. Remarkably, this legislation contains sizeable financial gains for private insurers and pharmaceutical companies. It is estimated that pharmaceutical companies will reap additional profits estimated at $139 billion over 10 years. In contrast, the typical Medicare beneficiary will receive approximately an $800 a year drug benefit. The law substantially increases subsidies to managed care plans. Starting in 2004, two years before the prescription drug benefit begin, managed care plans will receive $20 billion in subsidies. By 2006, the plans will be paid as much as 25 percent more than the traditional fee-for-service Medicare pays for each enrollee.

The protections and benefits for low-income individuals will likely be less than they currently have.
Background: For those who fall below 100 to 135 percent of the Federal Poverty Level (FPL), Medicare will pay the premiums and deductibles. These low-income beneficiaries will be responsible for co-payments between $1-2 for generics and $3-5 for brand drugs. However, co-pay amounts are projected to increase by about 10 percent per year, according the Congressional Budget Office (CBO).
In contrast, CBO projects Social Security checks will increase about 2.5 percent per year. The law also includes a restrictive assets test of $6,000 for individuals and $9,000 for couples. The assets test excludes a house and car but could include savings and personal property. It is estimated that the assets tests will eliminate 2.8 million low-income individuals from assistance.

Low-income individuals who are currently covered under both Medicare and Medicaid (called “dual eligibles”) will likely have to pay more for their drugs or lose access to coverage for drugs they need. The law prohibits Medicaid from supplementing (“wrapping around”) the Medicare drug benefit. Medicaid generally covers all drugs that a beneficiary receives. Under the new law, plans will be able to limit coverage to two drugs per therapeutic class.

Consequently, low-income individuals who typically live on very fixed incomes will find that the co-pays will increase at a pace that will become increasingly unaffordable and those who currently have Medicaid coverage will have less assistance than they have now. Overall, 6.4 million low-income seniors will be harmed by the Medicare Act.

The law does nothing to control prescription drug price inflation.
Background: The legislation explicitly prohibits the federal government from using its purchasing power on behalf of 40 million beneficiaries to bargain with drug companies. Drug companies lobbied for this because they prefer to deal with dozens of small plans than a single federal agency. Thus, Medicare must pay whatever drug companies want to charge. The pharmaceutical industry
consistently collects after-tax median profits from revenues at a percentage higher than any other industry and five times the profit level for the other fortune
500 companies combined.

The law would also continue the ban on reimporting safe, affordable drugs from countries such as Canada by requiring safety certification from the Secretary of Health and Human Services, which HHS has refused to do.

The federal government is prohibited from negotiating for lower prices under the new law.
Background: (same as background above - #*8)
Medicare beneficiaries will be penalized for each year they do not join a private plan.

Background: The Act imposes an unfair penalty on beneficiaries who do not sign up for the drug benefit by increasing the premium amount one percent per month for each month an individual without coverage delays enrollment. Thus, if individuals with low drug costs decide they don’t want to pay the premium for a service they won’t use and then two years later have high drug costs and join, the premiums will be 24 percent higher for the rest of their lives. This penalty is especially unfair because there will likely be a great deal of confusion during the early years of the new program.

Beneficiaries will no longer be able to buy Medigap policies that provide prescription drug benefits.
Background: Most beneficiaries enroll in Medigap plans because they need prescription drug coverage. The law prohibits the sale of any Medigap policy that would help pay for drug co-payments and deductibles when the new drug benefit becomes available.

It undermines Medicares universality by requiring wealthier beneficiaries to pay more for the first time in Medicares history.
Background: Medicare has been a successful program because of its universality. Individuals with incomes above $80,000 and couples with incomes above $160,000 will pay more of their Medicare Part B premiums. If upper income individuals have to pay more for Part B, they may choose not to participate, and Medicare may become a program for lower and middle income seniors only. Additionally, there is no guarantee that the upper income limit will not be brought down in future years when Medicare needs additional monies.

Millions of retirees with employer-provided health coverage will likely lose their coverage.
Background: The Congressional Budget Office projects that 2.7 million retirees will lose the drug coverage they currently receive through former employers who will drop such coverage when the drug benefit becomes available, even with employer subsidies.

There is no guarantee the interim drug discount card will deliver the promised savings.
Background: The drug discount cards, which will become available in May or June 2004, will cost $30 a year. It is estimated that savings will be only about 10-15 percent, approximately the same or even less than discount cards currently in use. Some low-income beneficiaries will have credit for $600 worth of drugs but will still pay 5-10 percent of the costs of each drug they buy.

Medicaid beneficiaries will not receive the $600 subsidy. Medicare beneficiaries can use only one of the discount cards at a time and must use the card they select for at least one year. The law does not set any rules about the base prices from which these discounts will occur.

Beneficiaries in rural areas will have limited options with higher costs.
Background: The law provides fallback Medicare coverage, only if there is less than two prescription drug plans available in a region. Beneficiaries, particularly in rural areas, are likely to have a choice between one high-priced, drug-only plan and one preferred provider organization, which restricts choice of doctor and imposes high costs for out-of-network care.

Posted by pnhp at 02:14 PM | Permalink

In a number of ways, the United Kingdom’s National Health Service (NHS) is a unique experiment, springing from the fusion at the end of World War II of a number of synergistic elements: a powerful desire for social change; a determination on the part of the populace not to repeat the experience of the broken promises after World War I; the presence on the table in 1945 of a plan for social service reform, including health care, a plan made, remarkably, in the middle of the war; and the arrival on the scene of a single-minded, charismatic politician who saw the establishment of a national health service as his mission.

Click here to read the article

Posted by pnhp at 01:16 PM | Permalink

The Des Moines Register
5/10/2004
U.S. has the best? Think again
We’re tops in health-care costs, but not in quality
By Register Editorial Board

Most Americans know this country spends more money per person on health
care than any other country in the world. The United States spends twice as much as Australia, England and Canada. Yet Americans seem to think this spending is OK. After all, we have the best health care in the world, right? Don’t you get what you pay for?

No.

And no.

In fact, Americans are not getting what they pay for when it comes to health care because a poorly constructed system yields poor results.

Consider three studies that made the news last week.

The Robert Wood Johnson Foundation reminded everyone what a mess the U.S.
system of health care is when its study concluded about 20 million U.S. workers are uninsured. In a few states, one in five working adults doesn’t have coverage. The United States has a system that irrationally ties health care to employment, making a job the source of coverage for millions of Americans. But apparently even having a job doesn’t guarantee health insurance.

A study published in Health Affairs, a policy journal, looked at five countries and found the quality of care in the United States is no better, even though this country spends far more money. A fragmented system was given as one of the reasons for the higher costs, and the study found the United States had the worst five-year survival rates after kidney transplants of the nations examined.

Then there was the especially troubling study conducted by Rand Corp. This took the most comprehensive look yet at the quality of health care in this country. What did researchers find? Patients get about half the care recommended for conditions from heart disease to diabetes, regardless of where in the United States they live.

Imagine that. This country spends more than $1 trillion a year on health care, and patients are only getting half the care they need. Americans ought to feel like a shopper who pays too much for a product that turns out to be a lemon. But the U.S. system isn’t just a waste money; it costs people their lives.

How does the United States fix the system?

It doesn’t need to spend more. It needs to spend wisely. Health-care dollars
in this country are gobbled up by red tape. Money that could be spent directly on helping people is eaten up in the administrative costs and high profit margins of a fragmented and gap-riddled system.

The best system in the world, huh?

http://desmoinesregister.com/apps/pbcs.dll/article?AID=/20040510/OPINION03/405100303/1035/OPINION

Health Affairs: How Does The Quality Of Care Compare In Five Countries?:
http://content.healthaffairs.org/cgi/content/abstract/23/3/89

Rand Corporation: The First National Report Card on Quality of Health Care in America:
http://www.rand.org/publications/RB/RB9053/

Health Affairs: Medicare Spending, The Physician Workforce, And Beneficiaries’ Quality Of Care (An alarming report that finds that “states with higher Medicare spending have lower-quality care.”):z
http://content.healthaffairs.org/cgi/content/abstract/hlthaff.w4.184v1

Comment: Read them and weep. Then get to work on fixing our system! Now!

Posted by pnhp at 10:44 AM | Permalink

Background: President Bush signed the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 (P.L. 108-173) on December 8, 2003. The Act’s prescription drug benefit begins January 1, 2006. Until then, beneficiaries will be offered drug discount cards, which are scheduled to become available on June 1, 2004.

Basics: Drug discount cards will be offered by Medicare-endorsed private companies for an annual fee of up to $30. Estimated savings range between 10-15% of the retail price. Those with incomes up to $12,569 for an individual or $16,862 for a couple in 2004 will get the cards for free and receive a $600 credit embedded in the card, but they will still have co-pays of 5-10 percent per prescription. In Illinois, Senior Care recipients are not eligible for the low-income subsidies, including the $600 credit, since they already have prescription drug coverage.

Click here to view the article Medicare Approved” Rx Drug Discount Cards

Click here to view the article The Medicare Drug Deal

Posted by pnhp at 12:26 PM | Permalink

Health Care Policy Roundtable
Press Release
May 10, 2004
Four Million Uninsured Workers to be Given Access to Affordable Health Care
by Coalition of Fortune 500 Companies

More than 50 Fortune 500 companies have joined forces to give an estimated
four million uninsured working Americans access to affordable health insurance coverage.

Specifically, members of the Affordable Health Care Solutions Coalition have
agreed to pool their affiliated uninsured workers and dependents to create a
single group currently estimated at four million people nationwide. They include:

• part-time employees;
• contract and temporary workers;
• independent agents, consultants, and vendors;
• pre-65 retirees who do not have group options;
• employees currently in a waiting period;
• COBRA participants who have exhausted their 18-month coverage; and
• students who are no longer eligible under their parents’ health care
  plan.

The coalition will then seek bids from health plans, ultimately selecting one that will offer health insurance coverage at a lower cost than what is currently available in the individual insurance market and with fewer barriers to entry.

“We are aiming to work with one health plan to create a series of coverage
choices at different prices that can be tailored to fit a wide range of budgets, from low-income part-time workers to highly compensated full-time
independent contractors not covered by a company plan,” explained Greg A.
Lee, senior vice president, human resources, for Sears, Roebuck & Company
and chairman of the Affordable Health Care Solutions Coalition.

http://www.hcpr.org/press/2004/pr_051004.asp

Executive Summary of the Leadership Action Plan on the Uninsured:
http://www.hcpr.org/docs/2004/Executive_Summary.pdf

Comment: The Health Care Policy Roundtable, representing many of the nation’s largest corporations, has acknowledged that the nation is facing a crisis in health care costs and coverage. The members recognize that this unstable situation will result in change, and they have decided to take a leadership role in crafting change that presumably would have the least negative impact on their corporations. Without intervention, surely the government would take over.

The current proposal purports to be a solution to obtaining coverage for sectors of our population who face affordability and underwriting barriers to coverage. They propose creating a single group to provide access to the better coverage and lower costs of group plans.

There are a couple of major problems with their proposal. The insurance coverage will have to be paid by the individuals themselves or perhaps by former employers or small business owners. Adverse selection will likely reduce or eliminate any negotiating advantage in premium pricing, and the insurance products will still be unaffordable for the overwhelming majority of these individuals, even without adverse selection.

Recognizing this affordability issue, they propose creating “a series of coverage choices at different prices that can be tailored to fit a wide range of budgets.” An affordable premium is not of much value if the insurance product purchased is so devoid of benefits that it does not provide financial security for those who have or may develop significant health care needs.

A proposal for unaffordable premiums and inadequate benefits is yet another
non-starter. We will not have health care reform until we accept the fundamental principle that risk must be distributed equitably through a common pool, and that pool must be funded in an equitable manner.

If the Health Care Policy Roundtable wants to serve as a moral voice in leading the nation to health care reform, then they’d better go back to their table and draw up plans for a universal, comprehensive, equitably funded system. In fact, they don’t even have to do the work. We’ll hand them the proposal.

Posted by pnhp at 11:27 AM | Permalink

HSAs encourage tax evasion

The Journal Gazette
Sep. 5, 2004
New health accounts allow more individual control
By Sherry Slater

Another advantage of HSAs is the ease of paying those expenses. But that ease could tempt participants to skirt the rules. HSA participants can get checks or a debit card tied to the account and use them for co-pays to doctors’ offices or drugstores. The payment methods aren’t labeled as tied to HSAs, however, and clerks aren’t expected to make decisions about which items can legally be purchased with HSA money. The participant should collect all receipts in case of an audit, said (actuary David) Peppler.

“If they never audit you, you can get away with it,” he said. “I’m sure it must be a troubling thing for the Treasury Department because people can cheat on these and (the government will) get less tax revenue.”

http://www.fortwayne.com/mld/journalgazette/business/9589353.htm

Comment: Regardless of whether HSAs (health savings accounts) function as
personal accounts to pay medical bills, or function as retirement accounts for those who have minimal health care needs, these accounts will be highly visible to and under the control of the individual account owner. Is that a problem?

HSAs are very similar to IRAs (individual retirement accounts) with the added advantage that HSAs can be used for health care costs. IRAs are established by individuals who wish to provide a more secure retirement for themselves and who have enough disposable income to fund them. When funds are removed from either type of account for other than their intended purposes, taxes plus penalties are assessed. But a major difference between the two is that withdrawals from IRAs are automatically reported to the IRS, whereas withdrawals from HSAs are not.

Many individuals with IRAs do find reasons to withdraw their funds and pay the taxes and penalties. Such reasons may include business or investment opportunities for which funds may not otherwise be available. Or they may be
withdrawn because of financial difficulties such as an unexpected interval of unemployment or significant financial losses in other personal ventures. Regardless, merely because the funds are there, they will frequently be withdrawn in spite of the tax and penalty consequences.

Now consider the HSAs. Owners of these accounts have in their position a checkbook or debit card that will allow access to their funds with no individual reports generated as to their use. Since it is unlikely that the IRS will demand full accounting of every single HSA expenditure, there is a significant probability that these tax-favored funds can be spent without any oversight as to where they are directed.

In this age in which credit card addiction has caused financial ruin for tens of millions of families, what will be the attitude towards these HSAs? The money is just sitting there not being used. And it’s not really borrowing because it doesn’t have to be paid back. And in the unlikely event that you are caught, the penalty will be that you will be asked merely to pay the taxes you owed anyway with perhaps an additional penalty for late payment. Under these circumstances, many individuals believe that it would be foolish to report distributions that are not used for health care services.

Policies which provide an open and unambiguous invitation for you to violate
the law are bad policies. As HSAs are invaded by their owners, there will be
rampant tax evasion. Failure to pay taxes is a crime against your fellow Americans who are then footing your share of the national tax bill. To provide temptation without risk of significant punishment encourages this crime against your fellow citizens. This, in turn, diminishes your respect for yourself and for our national institutions.

Undoubtedly some would consider this to be nit-picking. But providing temptation with a low risk of being caught is a real issue. Form 1099-INT was established because too many Americans did not report their interest income. Would we need to set up a Form 1099-HSA to report every distribution from HSA accounts? Wouldn’t it be a far better policy to never expose individuals to temptation in the first place?

There are innumerable reasons to eliminate HSAs; this is only one more. Legislation abolishing HSAs can authorize the conversion of existing HSAs
into IRAs. Then we can get on with more noble task of establishing policies that would ensure that everyone has affordable access to comprehensive health care. Then we would have a real basis for respecting ourselves and our national institutions.

Posted by pnhp at 10:33 AM | Permalink

Chicago Tribune
May 8, 2004
Voice of the People
Medicine prices
By Ida Hellander, MD, Executive director; Quentin Young, MD, National
coordinator; Physicians for a National Health Program

Chicago — This is regarding “The high price of drugs” (Editorial, May 2). It’s true that reimportation of drugs from Canada is “no long-term solution,” but it’s equally shortsighted to keep Medicare from negotiating drug prices with the pharmaceutical giants.

In fact, that’s the only long-term solution to ensuring that all Americans receive both lifesaving medications and value for their tax dollars. We don’t need to import drugs from Canada; we need to import Canadian drug prices. There is no reason to expose us to the costs and risks of physically exporting and then reimporting drugs when our sole intent is to bring our drug prices closer to those of Canada.

We need to negotiate with pharmaceutical firms, demanding that they provide much greater value for their products. Much of their research is wasted on products that are designed to restart the patent clock.

And then they waste funds on intensive marketing to convince physicians and the public that these more expensive products should be purchased when they are often no better than existing, but less profitable, generic products.

Medicare currently negotiates rates for physicians, hospitals, laboratories and other health-care providers. The process may not be perfect and needs continual fine-tuning, but the results are that we receive greater value for our Medicare investment. There is absolutely no reason that the pharmaceutical industry should be exempted from this process.

The claim that negotiated prices would bring an end to innovation and research is totally without merit. There is absolutely no way that the global pharmaceutical industry is going to walk away from its share of the $1.8 trillion that we are currently spending on health care. The growth in medical technology continues unabated even though profits on their products are limited by rate setting of both government and private insurance programs.

Pharmacy benefit managers are no substitute for Medicare using its purchasing power on behalf of seniors. PBMs don’t drive the best bargains for consumers; they switch patients’ medications to boost profits—their own. Some PBMs are under investigation for taking tens of millions of dollars in “rebates” from pharmaceutical companies in exchange for increasing sales of “preferred” brands (regardless of their cost). Do they pass on the savings? Do pigs fly?

Americans are already spending more than enough to provide comprehensive health care for everyone, including full access to beneficial drugs. But we need to eliminate the waste in our system. If we had a single, universal insurance system, such as Medicare for All, we would be in a position to sit down with the pharmaceutical firms and demand that they provide us with real value for our health-care investment.

http://www.chicagotribune.com/news/opinion/letters/chi-0405080062may08,1,1798244.story?coll=chi-newsopinionvoice-hed

Posted by pnhp at 09:45 AM | Permalink

The Fraser Institute
May 2004
How Good is Canadian Health Care? 2004 Report
By Nadeem Esmail and Michael Walker with Sabrina Yeudall

Conclusion

This study has attempted to provide answers to a series of questions that are important to resolve if Canada is to make the correct choices as it amends its health care policies. The study is strictly comparative and examines a wide number of factors for the member countries of the OECD in arriving at the answers to the questions posed.

Taking this empirical approach to health care provides clear direction for health care reform in Canada.

• Canada and Iceland have the most expensive health care systems amongst the
  industrialized nations that have comprehensive, universal access to health
  care.

• Canada ranks first in only one of seven health care outcome categories and does not rank first in any of access to care, supply of technologies, or supply of physicians.

• No country in the industrialized world other than Canada outlaws a parallel private health care system for their citizens.

• All four countries that out-perform Canada on the cumulative rank for mortality amenable to health care, potential years of life lost, mortality from breast cancer, and mortality from colorectal cancer have private health care alternatives to the public system and some form of user fees at the point of access; none spends more than Canada after age adjustment.

The comparative evidence is that the Canadian health care model is inferior to others in place in the OECD. It produces inferior access to physicians and technology, produces longer waiting times, is less successful in preventing death from preventable causes, and costs more than any of the other systems that have comparable objectives. The models that produce superior results and cost less than Canada’s monopolistic, single-insurer, single-provider system have user fees; alternative, comprehensive, private insurance; and private hospitals. Canada should follow the example of these superior health care models.

http://www.fraserinstitute.ca/shared/readmore.asp?sNav=pb&id=658

Comment: This new report from The Fraser Institute is important because it will be distributed widely and used intensively by the opponents of both national health insurance in the United states and of the Canadian medicare system. It is important to understand the report and to be able to respond to it.

At the outset, the report attempts to set an erudite tone by providing a series of calculations, complete with Greek letter symbols, indicating that an adjustment of Canada’s health expenditures based on the age of their population results in the conclusion that Canada (tied with Iceland) has the most expensive health care system amongst the industrialized (OECD) nations that have universal access to health care. For purposes of this conclusion, the United States was conveniently excluded on the basis that it does not have a universal system.

A careful examination of the seemingly complex but very simple calculations
demonstrates that Canada’s costs were adjusted upwards because they would
have spent more if more Canadians were over age 65. This ignores the fact
that this increased spending is fictional and does not warrant their conclusion that Canada is the “highest spender.”

Another flaw is that they made the assumption that everyone over 65 suddenly requires a more intensive level of services. It is really only at the end of life when there is an abrupt increase in costs for a significant number of patients. And Canadians, being egalitarian, have accepted that each person is entitled to one but only one end to his or her life. It doesn’t matter at what age that occurs. There is no reason to falsify the level of spending based on such specious logic.

That should be adequate to completely destroy the credibility of this report. But then the report does include some well established economic theory that seems to lend some credibility to the report, even though the extrapolations by the authors are not warranted. But there are other major problems with this report.

The authors draw the conclusion that the “Canadian health care model is inferior to others in place in the OECD.” To reach this conclusion, citing numerous previously published reports, they compared Canada’s performance to other OECD nations with comprehensive, universal health systems. They used Canada’s ranking in these studies. Since these are all industrialized nations with comprehensive systems, an average rank should be evidence of success of the system. In most of the lists, Canada was in the upper half.

In fact, the cumulative rank was fifth, relatively high on the list of OECD nations. The conclusion that the Canadian model is inferior is refuted by the evidence included in their report.

The most outrageous conclusion of their report is that Canada should introduce user fees, private hospitals, and alternative, comprehensive, private insurance since these are features of superior systems. Not only is their data inadequate to establish the fact that other nations have superior systems, but they also failed to provide any cause and effect relationship between quality systems and privatization and cost sharing. The failure to provide any credible support to their conclusion unfortunately reduces their paper to the equivalent of gobbledygook.

Posted by pnhp at 09:37 AM | Permalink

The Washington Post
May 6, 2004
Letter to the Editor
Rebates, Not Kickbacks

Steven Pearlstein’s April 28 Business column, “Kickbacks Hit Where It Hurts,” mischaracterized the settlement reached by Medco Health Solutions and a multistate task force of state attorneys general and the Justice Department.

The suggestion that Medco “agreed to settle charges that it got more than $400 million in kickbacks from Merck in 2001” is incorrect. Although we receive rebates — that fact is disclosed to our clients — it was never an issue and it was not a “charge.” In fact, in their news conference the attorneys general said they did not want to interfere with the process of obtaining rebates, as rebates lower costs. The agreement is specific to disclosures around rebates.

The rebates received from Merck — or any of the other 70 or so pharmaceutical manufacturers with whom we negotiate for rebates and discounts — are not “kickbacks.” Government clients often directly negotiate with pharmaceutical manufacturers to receive rebates.

This practice is not unique to pharmacy benefits managers: Rebates are even an integral part of the prescription drug benefits program for Medicare that Congress recently enacted. Rebates are recognized by our clients, our competitors, and even attorneys general and the Department of Justice, as critical tools in reducing drug costs for the hundreds of clients and millions of members we serve nationwide.

DAVID B. SNOW Jr.
Chairman, President and Chief Executive
Medco Health Solutions
Franklin Lakes, N.J.

http://www.washingtonpost.com/wp-dyn/articles/A5845-2004May5.html

And…

Wharton School of the University of Pennsylvania Strategic Management

Medco Health Solutions, the largest pharmacy benefits management company in the United States, last week settled lawsuits brought by state and federal authorities by agreeing to stop switching patients over to more expensive drugs not prescribed by their doctors (these drugs were favored by Medco because of private “rebate” agreements with drug manufacturers). Medco also pledged to begin disclosing its rebate practices to employers, doctors and patients.

http://knowledge.wharton.upenn.edu/index.cfm?fa=viewArticle&id=978

And…

The American Heritage Dictionary

rebate: A deduction from an amount to be paid or a return of part of an amount given in payment.

kickback: A return of a percentage of a sum of money already received, typically as a result of pressure, coercion, or a secret agreement.

http://www.bartleby.com/61/

Comment: A strong case can be made that private rebates not fully disclosed are, in fact, kickbacks. Some may consider this to be a nitpicking, semantic argument. But what should alarm us all is that Medco’s Snow trivializes their abusive practices, for which they are being punished, by suggesting that the patients and employers who were cheated actually benefited because the kickbacks were really only rebates (with disclosure issues regarding the nefarious substitution of higher cost drugs for lower cost drugs).

David Snow should be issuing a public apology for the egregious abuses of his company. Instead he releases a statement implying that the only blame lies with others who use the pejorative term, “kickback,” when Medco was actually following sound business practices through the rebate program.

This seemingly trivial dispute has major policy implications. The Medicare bill prohibits the government from being the direct purchaser of drugs, but instead requires that middlemen, such as pharmacy benefit managers like Medco, maintain control of the pharmaceutical benefit. Not only do they add middlemen administrative costs, but they also expose us to the compromised ethics of unrepentant executives who believe that kickbacks awarded for making lucrative drug substitutions are actually good business practices since, really, they’re only “rebates.”

Posted by pnhp at 02:27 PM | Permalink

Baltimore Sun, Business
VA buys drugs cheaply, many veterans benefit
Medicare? Since the VA gets the best prices on medicines, the Bush administration is being urged to adopt a VA-style program for Medicare.
By Cyril T. Zaneski, Sun Staff
Originally published May 5, 2004

America’s best discount drugstore is run by the federal government.

The Department of Veterans Affairs throws the weight of federal buying power and a law mandating discounts on medicine into price negotiations with drug manufacturers.

“We’re the big gorilla,” said George T. Patterson, executive director and chief operating officer of the VA Office of Acquisition and Materiel Management. “We get the drop-dead best prices in the world.”

The VA drug benefit is a life preserver for vets like Vernon Chapin, 76, a retired plumber and Army veteran from Lutherville. Chapin pays a total $56 a month for eight prescriptions to keep his blood pressure, diabetes and other health woes in check. Other veterans who have service-related illnesses or injuries get free medicine for those ailments.

“I shudder to think what would happen to me without the VA,” Chapin said. “I’d be making a choice between eating and taking my drugs.”

The VA’s muscular approach to drug purchasing is the envy of private employers and insurers struggling with rocketing prescription prices that are the highest in the world. The VA, by contrast, pays roughly half of U.S. retail pharmacy prices.

VA volume buying power - the agency negotiates for itself, the Department of Defense, the Public Health Service and the Coast Guard - is the model for Maryland and other states forming multistate pools to leverage better drug prices for Medicaid recipients and state employees. It is also the model favored by congressional Democrats and consumer advocates for the massive new Medicare drug program.

A group of Senate Democrats, including Barbara Mikulski of Maryland, called on the Department of Health and Human Services last week to adopt a VA-style program for Medicare. The Medicare benefit crafted by Republicans and signed into law by President Bush last year bars the department from using Medicare’s 41 million beneficiaries to leverage lower prices from drug companies. The law instead turns to private companies to cut deals with manufacturers. The benefit, which starts in 2006, carries a $530 billion price tag for its first decade.

“Rather than using the purchasing power of Medicare’s 41 million beneficiaries, the new law fragments the population, diluting the ability to negotiate lower prices,” the senators wrote HHS Secretary Tommy Thompson. “This is not only a waste of limited taxpayer resources, it is also a cruel betrayal of Medicare beneficiaries who are struggling with astronomical drug bills.”

The administration opposed efforts to give Medicare negotiating power akin to the VA’s for fear that its huge volume would become a national price control and deprive pharmaceutical companies of cash needed for drug research and development.

The VA represents a much smaller buying pool. While there are 24.5 million veterans, only 6.1 million of them were treated at VA medical centers last year, with 4.5 million getting prescriptions. The VA filled about 200 prescriptions last year, spending about $3 billion a year on drugs, up from $750 million in 1991.

Some worry that the VA’s successful drug program is in danger of being swamped by growing numbers of veterans seeking refuge from rising prices of medication elsewhere.

Tens of thousands of veterans who face spiraling copayments and premiums in their private health plans are lining up for the VA drug benefit. If enough are allowed to tap the benefit - as they were promised when they joined the military - some fear they could sink VA’s shaky overall health care budget.

About 20 percent of the veterans who use the VA each year do so solely because of its drug benefits, according to an agency survey. But nearly 90 percent of the approximately 164,000 veterans who sought enrollment to the VA system last year wanted the drug benefit above all, according to the VA inspector general. Those veterans are barred from the system by an agency decision in January 2003 to save money by closing its doors to “high-income” applicants who make more than $25,000 a year and do not have service-related health problems.

Edward L. Clark, an Army veteran from Greencastle, Pa., is among those blocked from the system. Clark, 57, sought VA benefits when his income from selling telecommunications equipment went into a tailspin and he could no longer afford $500 a month for private insurance. “Now I’m going to take my chances without insurance or medication,” he said. “If I get sick, I’ll go to an emergency room.”

With both Democrats and Republicans vying for the votes of veterans in this election year, Congress is considering legislation that would help veterans such as Clark by opening the VA drugstore to more veterans.

The effort to expand access to the benefit has raised two questions. The first is whether to lift a VA rule requiring veterans who want the prescription benefit to be examined by a VA physician, even though the patient may have valid script from his own doctor. The cost of the re-examinations totaled $1.3 billion in 2001, the inspector general reported.

“This policy, in effect, denies veterans their pharmaceutical benefit,” Dr. Conelio R. Hong of Norwich, Conn., told the House Veterans Affairs’ health subcommittee in March. Veterans make “medically unnecessary” appointments and then wait months to see a VA doctor, Hong said. The wait is long enough that many drop off the list, he said.

Then there is a question of how the federal government will pay for providing drugs to more veterans. Taxpayers and VA patients roughly split the VA average prescription cost - $13 for a month’s supply of pills at the VA pharmacy. Veterans pay a $7 co-pay; taxpayers pay the rest. Some worry that widening access to the benefit will lure millions more veterans and stress the agency’s ability to provide health care.

“An expansion of pharmaceutical benefits would increase demand on the system. An increase in demand would necessitate shifting scarce resources away from treating veterans,” Carl William Blake, associate legislative director of the Paralyzed Veterans of America, told the House panel.

“Now is not the time, when the VA is not being given the resources it needs to meet the needs of veterans and service members who are returning from Iraq and Afghanistan, to force the VA to treat fewer veterans or charge them more for services.”

But Richard “Rick” Jones, national legislative director for another veterans’ advocacy group, AMVETS, maintains that all vets have a right to the benefit. AMVETS and other groups are backing a proposal that would allow veterans to fill prescriptions written by their own doctors if they cover the VA cost of the medication, which is usually half the price of drugs at retail pharmacies and less than discounts offered by Canadian Internet drug stores.

“It would fulfill a promise made to all who have performed service honorably to the nation,” Jones said. “And it would grant access to the benefit without hurting other vets.”

The VA draws its purchasing power from Public Law 102-585 - passed by Congress and signed by President George H.W. Bush in 1992, an election year. The law assures discounts for the VA.

“At the end of each year, we find out about sales from across the commercial sector, average the price of each drug and deduct 20 percent from that,” said Patterson, a registered pharmacist who heads the operation that administers over 1,500 contracts for over $10 billion worth of medical and surgical products. Patterson’s office buys more than $6 billion worth of pharmaceuticals a year for the “big four” - the VA, DOD, the Coast Guard and Public Health Service.

“And we often negotiate prices even lower than the 20 percent discount,” he said. “The law is a big hammer.”

Congress passed the law in response to a VA budget crunch caused by rising drug prices, Patterson said. “Our good friends in the pharmaceutical industry started raising our prices off the planet, and Congress acted,” Patterson said.

The law was just the start of VA efforts to save money on drug purchasing. To further boost its purchasing power, the agency moved in the late 1990s to a single national preferred drug list, or formulary. Previously, each of 172 VA hospitals had its own drug list.

The VA also focuses heavily on prescribing generic drugs. Sixty-five percent of the drugs prescribed by VA physicians are generic. They account for only 8 percent of the agency’s total drug bill. Brand name drugs - 35 percent of the agency’s prescriptions - account for 92 percent of the tab.

Despite the discounts, the VA never has difficulty getting drugmakers to sell their products to the agency, Patterson said. One reason that VA is so attractive to drug companies is that VA medical centers offer the drug manufacturers a pool of young doctors - a coveted group that promises a long-term use of the products.

The other is that the federal government is a well-heeled customer. “The business is coveted,” Patterson said. “It’s good clean business. We pay our bills.”

——————————————————————————-

Examples of how VA saves money on drugs

Drug name, VA price, Costco.com, Canadameds.com

Wellbutrin SR (150 mg), $61.77 (60 pills), $97.99 (50 pills), $69.77 (60 pills)

Zocor (40 mg), $20.22 (30 pills), $125.27 (30 pills), $82.32 (30 pills)

Pravachol (40 mg), $150.47 (90 pills), $278.59 (100 pills), $80.32 (30 pills)

Viagra (100 mg), $144.15 (30 pills), $163.27 (18 pills), N/A

Copyright © 2004, The Baltimore Sun

Click here to view the article at BaltimoreSun.com.

Posted by pnhp at 02:01 PM | Permalink

USA TODAY, Editorial/Opinion
5/4/2004
Follow Canada’s example
By Quentin Young

Forget about importing Canadian drugs. We need to import Canadian drug prices.

How does Canada and most other developed nations get 40% to 80% discounts on brand-name drug prices? The same way the Department of Veterans Affairs does: It uses its purchasing power to negotiate lower prices. This is a healthy use of market forces to secure the best deal.

Each of these nations has universal health coverage. In contrast, Americans are saddled with a screwy for-profit insurance system and suffer the world’s highest out-of-pocket health costs, and drug purchases top the list.

High drug prices have serious consequences for the sick. Prescriptions go unfilled. Patients cut pills in half to make them “last longer.” The undertreatment of diabetes and hypertension leads to amputations, strokes, heart failure and other devastating complications. The hundreds of dollars a month needed to treat chronic conditions are big factors in personal bankruptcy.

In addition to harming many patients, high drug costs batter businesses, which bear much of the cost of workers’ medications. There is increasing disgust by business leaders with drug firms’ exorbitant profits, which are four-fold higher than those of every other sector of the economy. Overpriced drugs raise costs for U.S. industry, compromising our international competitiveness.

The drug industry is dominated by a handful of giant global corporations that spend more on marketing than research and, year after year, make at least as much in profits. The claim that they need high prices to cover high research costs is bogus. The government has guaranteed their profits by extending their 20-year patents and protecting them from real competition.

Medicare negotiates prices with physicians, hospitals, laboratories and other health care providers. The drug companies, however, are exempted from this process in the new Medicare drug bill, ensuring that drug prices will continue to skyrocket.

The U.S. health system is in disarray. The economic mess, epitomized by the drug-cost crisis, makes a convincing case for a single-payer national health insurance system. Such reform would make prescribed drugs an ensured benefit and drive down expenditures by allowing the government to bargain for the best prices and highest quality.

Quentin Young, M.D., is national coordinator of Physicians for a National Health Program (www.pnhp.org).

http://www.usatoday.com/news/opinion/editorials/2004-05-04-oppose_x.htm

Editorial opinion of USA TODAY (concluding remarks):

Two in three Americans favor lifting the ban on reimporting drugs, an Associated Press poll in February found. Still, taking advantage of foreign price controls amounts to putting a Band-Aid on a deep wound.

Letting the free market work is a better remedy for making prescription drugs more affordable for all Americans.

http://www.usatoday.com/news/opinion/editorials/2004-05-04-our-view_x.htm

For an article on the federal buying power of the VA (“America’s best discount drugstore is run by the federal government.”):

http://www.baltimoresun.com/business/bal-bz.vadrugs05may05,0,902614.story?coll=bal-business-headlines

Comment: The United States has much more of a “free market” in pharmaceuticals than any other nation, and everyone agrees that the market has been very ineffective in providing affordable access to drugs for tens of millions of patients with significant health care needs. You almost feel embarrassment for the editorial staff of USA TODAY when you read that they propose the really dumb solution of allowing the continuation of the market model that utilizes measures designed to excessively benefit the pharmaceutical industry while avoiding its responsibilities to a major segment of the nation’s patients.

In negotiations with a single-payer national health insurance program, pharmaceutical firms would be assured of fair profits and adequate funds for research. We need their industry, but we don’t need their excesses. Let’s set up our own public insurance program and then negotiate with them. They’ll get a fair deal, and we will too.

Posted by pnhp at 02:15 PM | Permalink

USA Today, Editorial/Opinion
5/5/04
Follow Canada’s example
By Quentin Young

Forget about importing Canadian drugs. We need to import Canadian drug prices.

How does Canada and most other developed nations get 40% to 80% discounts on brand-name drug prices? The same way the Department of Veterans Affairs does: It uses its purchasing power to negotiate lower prices. This is a healthy use of market forces to secure the best deal.

Each of these nations has universal health coverage. In contrast, Americans are saddled with a screwy for-profit insurance system and suffer the world’s highest out-of-pocket health costs, and drug purchases top the list.

High drug prices have serious consequences for the sick. Prescriptions go unfilled. Patients cut pills in half to make them “last longer.” The undertreatment of diabetes and hypertension leads to amputations, strokes, heart failure and other devastating complications. The hundreds of dollars a month needed to treat chronic conditions are big factors in personal bankruptcy.

In addition to harming many patients, high drug costs batter businesses, which bear much of the cost of workers’ medications. There is increasing disgust by business leaders with drug firms’ exorbitant profits, which are four-fold higher than those of every other sector of the economy. Overpriced drugs raise costs for U.S. industry, compromising our international competitiveness.

The drug industry is dominated by a handful of giant global corporations that spend more on marketing than research and, year after year, make at least as much in profits. The claim that they need high prices to cover high research costs is bogus. The government has guaranteed their profits by extending their 20-year patents and protecting them from real competition.

Medicare negotiates prices with physicians, hospitals, laboratories and other health care providers. The drug companies, however, are exempted from this process in the new Medicare drug bill, ensuring that drug prices will continue to skyrocket.

The U.S. health system is in disarray. The economic mess, epitomized by the drug-cost crisis, makes a convincing case for a single-payer national health insurance system. Such reform would make prescribed drugs an ensured benefit and drive down expenditures by allowing the government to bargain for the best prices and highest quality.

Quentin Young, M.D., is national coordinator of Physicians for a National Health Program (www.pnhp.org).

Click here to view the article at USAToday.com.

Posted by pnhp at 01:45 PM | Permalink

Click here to download the .PDF version of this article

Costs & Competition
U.S. Health Care Spending In An International Context
Uwe E. Reinhardt, Peter S. Hussey and Gerard F. Anderson

Using the most recent data on health spending published by the Organization for Economic Cooperation and Development (OECD), we explore reasons why U.S. health spending towers over that of other countries with much older populations. Prominent among the reasons are higher U.S. per capita gross domestic product (GDP) as well as a highly complex and fragmented payment system that weakens the demand side of the health sector and entails high administrative costs. We examine the economic burden that health spending places on the U.S. economy. We comment on attempts by U.S. policy-makers to increase the prices foreign health systems pay for U.S. prescription drugs.

Health Affairs, Vol 23, Issue 3, 10-25
Copyright © 2004 by Project HOPE
DOI: 10.1377/hlthaff.23.3.10

Posted by pnhp at 03:05 PM | Permalink

Health Affairs
May/June 2004
U.S. Health Care Spending In An International Context
Why is U.S. spending so high, and can we afford it?
By Uwe E. Reinhardt, Peter S. Hussey and Gerard F. Anderson

From the ‘Abstract’:

Using the most recent data on health spending published by the Organization for Economic Cooperation and Development (OECD), we explore reasons why U.S. health spending towers over that of other countries with much older populations. Prominent among the reasons are higher U.S. per capita gross domestic product (GDP) as well as a highly complex and fragmented payment system that weakens the demand side of the health sector and entails high administrative costs. We examine the economic burden that health spending places on the U.S. economy.

From the section ‘Pricing Low-Income Americans Out Of Health Care’:

This prospect (projected premium for family coverage of over $20,000 one decade from now) puts U.S. policymakers at a crossroads.

One approach would be to persuade the upper half of families in the nation’s income distribution to help purchase adequate health insurance for families in the lower third. One may call it the “universal health insurance” road. It would, of course, involve added taxes and transfers flowing through government budgets, which would bring with them additional government regulation, especially if the aim were to structure the U.S. health system as a one-tier system in which sick people have roughly the same health care experiences regardless of their own ability to pay.

The alternative option would be to embrace as official policy, both in employment-based health insurance and in public insurance programs, a multi-tier health system in which a person’s health care experience would be allowed to vary by his or her ability to pay for health care. In such a system families in the upper half of the income distribution would have a noticeably superior health care experience than families in the lower half would have. This is certainly already the case for U.S. families with good health insurance and those without it.

The emerging political battle at this crossroads is unlikely to be styled in stark terms such as “rationing by income class” or “one-class” versus “two-class” medicine. Instead, it will be styled as a debate over “market competition versus government regulation”; as a simple, technocratic quest for greater “efficiency”; or as the dubious dichotomy of “rationing versus markets,” even though textbooks in economics instruct the reader that market prices are just another way of rationing scarce commodities, on the basis of ability and willingness to pay. At its core, then, the debate over health care, in the United States as elsewhere, is less a pure macroeconomic issue than an exercise in the political economy of sharing.

http://content.healthaffairs.org/cgi/content/abstract/23/3/10?etoc

Comment: This article answers the questions posed in only 16 pages. It should be downloaded and retained as a resource that can be used to dismiss the myths on affordability while defining precisely the actual economic issues that we are facing.

Download this article now. It should be read in its entirety and retained as an essential reference in your health policy library.

Posted by pnhp at 02:45 PM | Permalink

Martha Livingston, Ph.D., Associate Professor of Health and Society, SUNY College at Old Westbury, responds to the message on the insurance industry effectively classifying female gender as a preexisting disorder:

I’m going to bring this to my last women’s health class of the semester tonight; what better way to illustrate the points we’ve been making all semester?

Years ago I had a button, which I’m planning to have duplicated, that says:

“Life: a preexisting condition spread by sexual contact which is invariably fatal.”

Posted by pnhp at 02:28 PM | Permalink

The Hartford Courant
April 22, 2004
ConnectiCare Joining Gender Trend
By Diane Levick

ConnectiCare plans to start charging thousands of women higher health insurance rates than men - a difference ranging from 3 to 40 percent - in an effort to even up the score with competitors.

Anthem Blue Cross and UnitedHealth Group already use gender rates for small employers here, and it is not known yet whether other managed care companies will follow suit.

The impact of gender rates alone on a small employer depends on the make-up of the workforce. An employer with a predominantly female workforce could end up paying more than under the old system. A business with mostly male workers who are young to middle-aged would pay less than if unisex rates
were applied.

… ConnectiCare and other insurers who don’t gender-rate could attract a disproportionate share of employers with more women than men - the higher cost groups.

Employers, though, could still buy ConnectiCare insurance with unisex rates through the Connecticut Business and Industry Association’s Health Connections program (CBIA).

ConnectiCare’s decision is “marketing genius” because it still allows access to its unisex rates through CBIA, said Bob Feen, president of The Benefits Group Inc. in Cheshire, which sells health insurance and other employee benefits.

With the choice of accessing ConnectiCare directly or through CBIA, small employers and their benefits brokers “can pick which model works best for them,” Feen said.

http://www.ctnow.com/business/hc-connecticare0422.artapr22,0,6833223.story

Market decisions by private insurance interests can never lead to an equitable, affordable, universal system of funding care. We desperately need to establish our own public system of social insurance.

Posted by pnhp at 02:17 PM | Permalink

JAMA
April 21, 2004
Reinvention of Health Insurance in the Consumer Era
By James C. Robinson, PhD, MPH

The new products and policies will test the limits of US individuals’ willingness to assign responsibility for financing health care to those individuals who use it and exempt those who do not.

On the positive side, a shift in decision-making responsibility from the employer to the employee and from the insurer to the enrollee will create a social consciousness of the imperative to establish priorities as to who will receive which services now, which later, and which never. A greater sense of personal responsibility among patients for their own health and health care will attenuate some forms of cost inflation and support the prevention and treatment of many chronic conditions. But individual patients require financial subsidies, valid information, and empathetic support if they are to grapple successfully with the difficult challenges of illness and medicine. During the long term, the insurance industry will need to combine its contemporary focus on consumers with a commensurate focus on physicians, administrative simplicity, and the social pooling of risk if it is successfully to balance limited resources and unlimited expectations in health care.

http://jama.ama-assn.org/cgi/content/full/291/15/1880

Comment: Success will require “administrative simplicity” and “the social pooling of risk.” But those will never come from the insurance industry. We’ll have to accomplish those by adopting our own public program of universal insurance.

Posted by pnhp at 02:07 PM | Permalink