PNHP

Firms see writing on the wall

Archives for 2008

Firms see writing on the wall

Dr. Rachel Nardin
Boston Globe
Letter to the Editor
December 8, 2008

IN HER article “Lobbies backing health reforms,” Lisa Wangsness fails to explicitly note that the reason health insurance companies are participating in reform efforts this time around is that they can see the writing on the wall. Private insurers have been unable to control healthcare costs and, in fact, are a significant cause of wasted healthcare dollars because of their high administrative costs. They are increasingly unable to offer coverage that even middle-class Americans can afford, and the cost of their insurance products is hampering American businesses.

It’s remarkable that an insurance industry group’s website features an interview with a woman who says, “It’s time for the government to step in.” The American public increasingly realizes that we need real healthcare reform. We need national health insurance, which would cover everyone without deductibles or copays, be financed through payroll and income taxes, and give everyone free choice of doctor and hospital. The private insurance industry knows this would put them out of business, and they are determined to make sure it doesn’t happen.

Can single payer revive our ailing emergency departments?

Andrew D. Coates, MD, Albany Medical Center
Empire State Emergency Physicians Interim Communique (EPIC)
Published by New York State Chapter of the American College of Emergency Physicians
Vol. 26:02:08

The emergency department provides a crucial vessel for our communities, an entity into which, on a moment’s notice, each of us might need to pour all of our hopes and fears. Yet our emergency departments share night and day, the frustrating, often tragic personal and social costs of our present predicament – the progressive failure of a system dominated by private health insurance. Patient demand for ED services soars, yet the number of 24-hour EDs declines and reimbursement for ED services dissipates. Ample study demonstrates that emergency department crowding undermines quality care, but still the problem worsens. In the words of the Institute of Medicine, “the nation’s emergency medical system as a whole is overburdened, underfunded, and highly fragmented.” A 2008 study in Health Affairs finds that ED wait times have lengthened. Ironically, the largest increase in waiting time was experienced by patients for whom EDs are pathways of expedited care — those with acute myocardial infarction. These patients waited an average of only 8 minutes in 1997, but 20 minutes by 2004, a 150% increase. One out of four patients with acute MI waited 50 minutes or more before seeing a doctor by 2004. Overall, ED wait times were found to be 36% percent longer in 2004 than in 1997.

The fact that 47 million Americans had no health insurance during all of 2006, and that tens of millions more have inadequate insurance and/or shorter periods without coverage, weighs especially heavily upon the ED. Non-urgent care in the emergency room has boomed, yet this is not the root cause of crowding in the ED. Instead, bottlenecks caused by the intense needs of a few patients result in ED crowding — even one critically ill patient waiting for an ICU bed can trigger a cascade leading to a significant back-up for all patients, for hours, even days.

Sadly, where the percentage of uninsured patients tends to begreat, specialist availability tends to be most scarce, increasing the likelihood that a severely ill patient will need to go on to another hospital for inpatient care. This introduces risks of delayed care and impacts upon the care of other patients. More depressing, some doctors try to avoid being on call to the ED. But how does our system of private health insurance reward physicians and surgeons who accept the responsibility for highly acute, complex, high-risk patients during off hours? Medical and surgical resources shift away from the hospital, away from the ED, with mighty financial incentives. Witness the development of surgical care facilities outside of the hospital and hospitalists inside the hospital, further fragmenting the continuity of care. And then where will we send the patient without health insurance, who has had no doctors, for follow-up? Meanwhile hospital administrators see the ED less as a “vessel of hopes and fears for the community”, and more as a failing “cost center”– a place to cut corners in order to limit losses; a place where everyone should be kept as busy as possible. The leaders of the hospital are merely obeying the rules of a system designed to serve insurance companies, whose leaders in turn serve shareholders, not patients.

Of course too many patients — patients with health insurance! — do seek primary (non-urgent) care at the ED. For we practice in the shadow of what the American College of Physicians has called “the impending collapse of primary care
medicine.” Witness the growth of “urgent care” walk-in clinics for these paying customers. Add the observation that the percentage of uninsured in America has risen steeply — but the percentage of uninsured who seek emergency care has remained relatively flat.

Consider how in the American “system”, private insurance companies dominate payment structures. Since one or two large private insurance firms dominate every local market, and most patients in the ED have private health insurance, these companies thus hold extraordinary power over ED resources, indeed the community’s resources.

Finally, consider that state-based and other incremental reforms, SCHIP for example, have failed to reverse these trends. SCHIP could not be expanded fast enough to keep up with the children whose parents lost their employer sponsored health insurance.

In a bellwether experiment that is headed toward disaster, Massachusetts has tried to mandate universal access by making it a crime to be uninsured. While the plan has succeeded in getting working families of meager means to sign up for state-subsidized plans, it will sink under burgeoning costs. The Massachusetts experience takes on extra significance this year, for both leading Democratic candidates center their health reform proposals on mandating the expansion of private health insurance, a notion originally put forward by Richard Nixon.

Massachusetts has been able to reduce the number of uninsured. But of the more than 340,000 new enrollees, the lion’s share receives state-subsidized coverage, including more than 55,000 new to Medicaid. Of the uninsured whose incomes are high enough to be “mandated” to pay for their own private health insurance (or else pay the state a fine), only 7% have done so. (But who can blame them, when cost of an individual plan is nearly $7,000 a year and a family plan twice as much as that?) Massachusetts now faces escalating premiums, co-pays and deductibles, a budget shortfall of at least $100 million dollars and the political impossibility of new taxes. Not only will the program fall far short of universal coverage, we may witness a collapse on the scale of TennCare, as Massachusetts discovers not only that it cannot afford to subsidize private health insurance companies, but that the system has no way to re-direct resources where they are needed, places like primary care offices and emergency departments.

Can we reform our health system in a way that recognizes the efforts already underway in our EDs, that won’t further alienate ED MDs, nurses and staff, that can begin to shift resources where our patients and communities need them most?

We need a proposal for reform that will take into account the interlocking issues of costs, quality, individual choice of physician or hospital and woeful disparities in care — in addition to the need to cover the uninsured and underinsured. It must not only be comprehensive in terms of the services provided each patient, but also in the capacity to shift resources to where they are needed. In 2008 the United States of America will spend nearly $7,800 per capita, $2.4 trillion, 16.6 % of GDP on health care. More than half of U.S. health spending already comes from government sources. And our nation spends far more per capita than any other (70% more than the median of OECD nations). More than enough resources are already in the system for a national health program. Yet health outcomes in the United States lag shamefully behind other nations.

Administrative waste accounts for at least $350 to $700 billion in the present system. Compare the Medicare overhead cost of 3% to private health insurers’ overhead which is 22%. These hundreds of billions of dollars spent on administration, advertising, handsome executive salaries and corporate profits, should be spent on health care.

The proposal by Physicians for a National Health Program has been endorsed by over 14,000 doctors. “The Proposal of the Physicians’ Working Group for Single-Payer National Health Insurance,” was published in JAMA in 2003. It starts from the ideas that (1) health care is a human right; (2) patient autonomy, the right to choose any licensed health care professional, must be protected; (3) profit-making has no place in the delivery of health care and (4) “In a democracy, the public should set overall health policies. Personal medical decisions must be made by patients with their caregivers, not by corporations or governments.”

The single payer proposal would not make our hospitals, clinics and offices government property.

HR 676, a bill in Congress, would establish a single payer health care system by expanding a greatly improved Medicare system to cover everyone. It would restore a patients’ right to choose healthcare providers and limit insurance company input into medical decisions. HR 676 would cover everyone for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental, mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care, chiropractic and long term care. It would end deductibles and co-payments and could save billions annually by reducing
overhead. It would convert for-profit health facilities to not-for-profit status, over a period of years.

When single payer financing has been studied (for example in California, Colorado, Georgia and many other states, as well as by the Congressional Budget Office in the 1990s) it emerges consistently as the only proposal with a means to reduce costs. One funding mechanism proposed recently in California would keep all existing government funding and add a 3 to 4% income tax on individuals and a 7 to 8% payroll tax on employers, with additional taxes on selfemployed business income, investment income and high incomes. For many working people and for employers who provide excellent health insurance, these taxes would be a significant savings compared with present premiums, co-pays for visits, labs and drugs, deductibles and other out-of-pocket expenses.

Under the proposal, physicians would be paid by the single payer on a fee-forservice basis or receive salaries and incentives through their institutions or physician groups, which in turn would be funded by the national health insurance program. Because doctors would not become employees of the government, but would know what to expect from the single payer, their administrative burden would be reduced.

Hospital services would be paid on a global rate based upon community needs. Community needs are the proper subject of public evaluation and debate in a democracy. The Certificate of Need process is an example of how community need defines healthcare capacity, thus limiting excess expenditure for unnecessary services and driving up healthcare utilization without improvement in quality. The certificate of need process in New York State has boasted superior cardiac surgery outcomes, compared with other States, at lower costs.

The single payer proposal would not make our hospitals, clinics and offices government property. But it would vastly empower existing quality improvement efforts by placing decisions about the allocation of health resources in the public domain. In this way, it is a transitional demand – a demand that would base future progress upon the excellent people and institutions we have now.

We know that single payer systems work in other nations, yet the United States spends much more yet lags far behind in health outcomes. We also know that the way to decrease cost is to share the risk as completely as possible, “Everybody in, nobody out.” But another crucial element of “everyone in, nobody out” we must see are the intolerable disparities in health care our system of private health insurance has cultivated in America, rural vs. urban, wealthy vs. poor, black vs. white, immigrant vs. native-born and so on. Only a federal reform will bring a starting point that is both practical and just.

Every emergency room must be staffed for the disaster that could come, not the minimum for the usual circumstances. Under a national health insurance program emergency medicine physicians and nurses would at last have the appropriate forum in which to explain to society their contribution – and to make a case for sufficient resources, including EMS networks, the need for on-call specialists, the need to expand primary care, the need to reduce wait times and improve quality. Viewed this way, the single payer alternative appears the best means for our profession to take proper social responsibility for the care of our communities.

Everyone uses the ED at one time or another. Proper resources for our EDs will improve us all. This must be recognized. A single payer program is only reform that can begin to do so.

Editor’s Note:
This essay was solicited from Dr. Coates, a strong proponent for single payer — universal access health care. It is written from the perspective of a primary care physician viewing the interaction between limited access to care and emergency medicine. There are many who believe that within 10 years, healthcare will not be structured or financed as it is presently. As we move forward, there is increasing attention being paid to universal healthcare. But there is also considerable concern regarding the consequences of single payer healthcare to a system that, for all of its failings, works well enough for many people (those with simple medical needs and who are well-insured). Yet we as emergency physicians live in a world that experiences a critical lack of access to primary care and specialty services. We also exist in a world dominated by the consequences of failure to effect healthcare changes when a change has clear advantages. To many, this appears to be the result of a system that exists to serve itself and not our population. Universal healthcare appears to successfully address these challenges in many developed countries. However, comparing the healthcare systems of the United Kingdom, Canada or France (with their culturally homogeneous populations of 30 to 50 million) with our healthcare system (servicing 300 million culturally diverse) may be problematic. There will be many voices influencing the shape of the future structure of our healthcare delivery system. It is important that each of us understand the realities of this multifaceted issue. It is also important that we speak from the standpoint of improving the health of our communities.

Sen. Daschle's "Critical"

Critical: What We Can Do About the Health-Care Crisis

By Senator Tom Daschle, with Scott S. Greenberger and Jeanne M. Lambrew
Thomas Dunne Books, February 2008
The key question for any health-care reform plan is, “How will it cover people?” Most of the world’s highest-ranking health-care systems employ some kind of “single-payer” strategy – that is, the government, directly or through insurers, is responsible for paying doctors, hospitals, and other health-care providers. Supporters say single-payer is brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration. But pure single-payer system is politically problematic in the United States, at least right now. Even though polls show that seniors are happier with Medicare than younger people are with their private insurance, opponents of reform have demonized government-run systems as “socialized medicine.”
I have strong views on what an “ideal” system would look like. But I’m not willing to sacrifice worthy improvements on the altar of perfection. I find it encouraging that the leading Democratic presidential contenders appear to share this attitude. The proposals that Obama, Clinton, and Edwards put forward would improve our current system rather than scrapping it, using the Massachusetts reform plan as a model.
The Federal Health Board
I believe a Federal Health Board should be charged with establishing the system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people.
First, it would set the rules for the expanded FEHBP, placing conditions on the private insurers wishing to participate.
Second, the Federal Health Board would promote “high-value” medical care by recommending coverage of those drugs and procedures backed by solid evidence.
A third function of the Federal Health Board would be to align incentives with high-quality care.
Finally, the Federal Health Board might also play a role in rationalizing our health-care infrastructure.
http://us.macmillan.com/critical

When it was announced that Tom Daschle was Barack Obama’s choice to be Secretary of Health and Human Services, it was also announced that he would not only be an administrator, but also he would lead the team that is crafting the definitive health care reform proposal for the Obama administration. That is why Sen. Daschle’s book, “Critical,” is important to us. It provides us with the views of the person who will be working with Congress to reform our health care system.
The fundamentals of his proposal are essentially the same as those proposed by Barack Obama, Max Baucus, and most of the other Democrats who have been advocating for reform. He would continue employer-sponsored coverage, expand public programs, and provide an FEHBP-type program, including a Medicare-like option. He would attempt to achieve universal coverage through an individual mandate with financial assistance for lower-income individuals.
Daschle also includes other concepts that are making the political rounds, such as information systems, community health centers, quality measurements, and “shared responsibility.”
One essential reform that seems to be missing from his proposal is the need to reinforce our primary care infrastructure, providing everyone with a medical home. Maybe that could be extrapolated from his call for rationalizing our health care infrastructure, but, if so, it is of such great importance that he should advocate for it explicitly.
What is relatively unique in Daschle’s proposal is the recommendation for a Federal Health Board, based on a model similar to the Federal Reserve System. One of the more important functions would be to provide oversight of the private insurance industry in his multi-payer system, a role that would be unnecessary in a single payer system. The other functions he describes can easily be or already are provided by existing agencies, though introduction of a single payer system would certainly be accompanied with appropriate bureaucratic reform.
Although he recommends that this board be quasi-independent, insulated from political influence, there is still risk that ideological extremists could gain control. Think of the failure of the Federal Reserve System to provide adequate oversight of our financial system, contributing to our current financial meltdown. That might not have occurred if free-market ideologues such as Alan Greenspan had not been in charge of the Federal Reserve. The Supreme Court is also insulated from political interference, yet obviously it too is controlled by ideologues, over whom we have no control. Imagine if we had a Federal Health Board composed of those individuals who, through the Medicare Modernization Act, damaged our public Medicare program. If they had been in control of such a board, we could have been much further down the road toward their goal of a totally privatized Medicare system.
Most troubling is Sen. Daschle’s conclusions on single payer. He describes it as the model used by the “world’s highest-ranking health care systems.” He acknowledges, without dispute, that supporters say that it is “brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration.” Yet he rejects it merely because it is “politically problematic.” He would sacrifice the “ideal” system because he is “not willing to sacrifice worthy improvements on the altar of perfection.”
It certainly is true that opportunities for enacting beneficial policies can be missed when the politics are not in alignment. But it is also true that bringing the politics into alignment can eliminate the opportunity to enact ideal policies. For success in achieving a high-performance health care system, we shouldn’t sacrifice policy; we should change the politics.

Why Does U.S. Health Care Cost So Much? (Part III: An Aging Population Isn't the Reason)

By Uwe E. Reinhardt
New York Times
December 5, 2008

Graphs courtesy of Uwe Reinhardt.

Not a conference on health care goes by without someone’s asserting that the aging of our population is a major driver of the annual growth in health spending. It sounds intuitively appealing if one contemplates the following two graphs, which are regularly trotted out on such occasions.

The first graph depicts what is commonly described as the “Baby Boom Tsunami.” The second depicts age-specific health spending per capita in 1999, relative to the spending of Americans in the age group 35 to 44, which is set to 1. These age-specific relative spending profiles do not change much over time for a given country, and they do not much differ among industrialized nations. They show that after age 60 or so, health spending per capita rises sharply with age.

Yet, research around the world has shown that the process of the aging of the population by itself adds only a very small part — usually about half a percentage point — to the annual growth in per-capita health spending in industrialized societies, which tends to range between 5 and 8 percent, depending on the country and the period in question. The bulk of annual spending growth can be explained by overall population growth (about 1.1 percent per year), increases in the prices of health care goods and services, and the availability of ever more new, often high-cost medical products and treatments used by all age groups.

Because this proposition is so counterintuitive, readers may wish to consult two recent research papers on the topic, one penned by the present author, and the other penned by other researchers.

These papers are based on American data. Similar studies have appeared also for Canada, Australia and many other countries in the Organization for Economic Cooperation and Development. Indeed, it may surprise readers that knowing the percentage of a nation’s population that is over age 65 cannot help one explain cross-national differences in health spending per capita, as is shown in the graph further on. As the graph shows, the per-capita health spending of nations is virtually independent of the age structure of its population.

Why, then, is the aging of the population such a small driver of annual increases in health spending? The answer can be found in the last graphical display of this commentary. That graph contains the same data as the first graph in this commentary, but the vertical axis is scaled as it should be scaled: from 0 percent to 100 percent. Letting it run from 12 percent to 22 percent stretches the vertical axis and creates the image of the famous Baby Boom Tsunami. It is a form of lying with statistics.

As this graph illustrates, the aging of our population is a very gradual process and does not come even close to resembling a tsunami. It is at best a demographic ripple.

Furthermore, current population projections have the fraction of elderly in the United States population peak at around 20 percent. Along with Canada and Australia, we shall be for a very long time the youngest nation in the O.E.C.D. Only in 2025 will the American population be as “old” as many European populations are already today.

As the song goes, relative to other nations we shall be “forever young”!

Uwe E. Reinhardt is an economist at Princeton.

http://economix.blogs.nytimes.com/2008/12/05/why-does-us-health-care-cost-so-much-part-iii-an-aging-population-isnt-the-reason/

Sen. Daschle's "Critical"

Critical: What We Can Do About the Health-Care Crisis

By Senator Tom Daschle, with Scott S. Greenberger and Jeanne M. Lambrew
Thomas Dunne Books, February 2008

The key question for any health-care reform plan is, “How will it cover people?” Most of the world’s highest-ranking health-care systems employ some kind of “single-payer” strategy – that is, the government, directly or through insurers, is responsible for paying doctors, hospitals, and other health-care providers. Supporters say single-payer is brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration. But pure single-payer system is politically problematic in the United States, at least right now. Even though polls show that seniors are happier with Medicare than younger people are with their private insurance, opponents of reform have demonized government-run systems as “socialized medicine.”

I have strong views on what an “ideal” system would look like. But I’m not willing to sacrifice worthy improvements on the altar of perfection. I find it encouraging that the leading Democratic presidential contenders appear to share this attitude. The proposals that Obama, Clinton, and Edwards put forward would improve our current system rather than scrapping it, using the Massachusetts reform plan as a model.

The Federal Health Board

I believe a Federal Health Board should be charged with establishing the system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people.

First, it would set the rules for the expanded FEHBP, placing conditions on the private insurers wishing to participate.

Second, the Federal Health Board would promote “high-value” medical care by recommending coverage of those drugs and procedures backed by solid evidence.

A third function of the Federal Health Board would be to align incentives with high-quality care.

Finally, the Federal Health Board might also play a role in rationalizing our health-care infrastructure.

http://us.macmillan.com/critical

Comment:

By Don McCanne, MD

When it was announced that Tom Daschle was Barack Obama’s choice to be Secretary of Health and Human Services, it was also announced that he would not only be an administrator, but also he would lead the team that is crafting the definitive health care reform proposal for the Obama administration. That is why Sen. Daschle’s book, “Critical,” is important to us. It provides us with the views of the person who will be working with Congress to reform our health care system.

The fundamentals of his proposal are essentially the same as those proposed by Barack Obama, Max Baucus, and most of the other Democrats who have been advocating for reform. He would continue employer-sponsored coverage, expand public programs, and provide an FEHBP-type program, including a Medicare-like option. He would attempt to achieve universal coverage through an individual mandate with financial assistance for lower-income individuals.

Daschle also includes other concepts that are making the political rounds, such as information systems, community health centers, quality measurements, and “shared responsibility.”

One essential reform that seems to be missing from his proposal is the need to reinforce our primary care infrastructure, providing everyone with a medical home. Maybe that could be extrapolated from his call for rationalizing our health care infrastructure, but, if so, it is of such great importance that he should advocate for it explicitly.

What is relatively unique in Daschle’s proposal is the recommendation for a Federal Health Board, based on a model similar to the Federal Reserve System. One of the more important functions would be to provide oversight of the private insurance industry in his multi-payer system, a role that would be unnecessary in a single payer system. The other functions he describes can easily be or already are provided by existing agencies, though introduction of a single payer system would certainly be accompanied with appropriate bureaucratic reform.

Although he recommends that this board be quasi-independent, insulated from political influence, there is still risk that ideological extremists could gain control. Think of the failure of the Federal Reserve System to provide adequate oversight of our financial system, contributing to our current financial meltdown. That might not have occurred if free-market ideologues such as Alan Greenspan had not been in charge of the Federal Reserve. The Supreme Court is also insulated from political interference, yet obviously it too is controlled by ideologues, over whom we have no control. Imagine if we had a Federal Health Board composed of those individuals who, through the Medicare Modernization Act, damaged our public Medicare program. If they had been in control of such a board, we could have been much further down the road toward their goal of a totally privatized Medicare system.

Most troubling is Sen. Daschle’s conclusions on single payer. He describes it as the model used by the “world’s highest-ranking health care systems.” He acknowledges, without dispute, that supporters say that it is “brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration.” Yet he rejects it merely because it is “politically problematic.” He would sacrifice the “ideal” system because he is “not willing to sacrifice worthy improvements on the altar of perfection.”

It certainly is true that opportunities for enacting beneficial policies can be missed when the politics are not in alignment. But it is also true that bringing the politics into alignment can eliminate the opportunity to enact ideal policies. For success in achieving a high-performance health care system, we shouldn’t sacrifice policy; we should change the politics.

Coverage mandate will fail as a health-care reform plan

By Rose Ann DeMoro
The Philadelphia Inquirer
Mon, Dec. 8, 2008

It’s time for Congress to stop getting carried away with financial bailouts for big industries, especially when it comes to some of the most-profitable and least-responsible companies: the health-insurance giants.

Two major trade lobbies, America’s Health Insurance Plans and the Blue Cross-Blue Shield Association, have announced that they would be willing to end their disgraceful practice of excluding people from coverage based on their health or age. In exchange, they want the federal government to force uninsured Americans to buy private insurance.

That would be exactly the wrong direction for health-care reform. Proposing mandatory coverage as the solution overlooks the one-fourth of insured Americans who are rationing their own medical care because they can’t afford to pay the bills. One in eight late-stage cancer patients turns down recommended care because of the cost, according to a recent report in USA Today.

And let’s not forget the insured patients who are denied needed treatments that their insurers don’t want to pay for.

A mandate for individuals turns the challenge of health-care reform on its head. It would be a massive bailout for one of the most merciless industries in America – and one that’s already rolling in cash. The 18 biggest insurers reported $16 billion in profit last year.

Now, in exchange for promising the coverage they should have provided all along, these insurers are demanding additional billions of dollars in profit from people who would face fines or other penalties if they didn’t hand over the cash.

The insurance giants’ proposal came in concert with one by Sen. Max Baucus (D., Mont.), the chairman of the influential Senate Finance Committee, who wants to make an individual mandate part of health-care reform. There is speculation that Sen. Ted Kennedy (D., Mass.), the other leading Senate voice on health-care reform, is considering including an individual mandate in whatever measure emerges from his Health, Education, Labor and Pensions Committee.

Mandatory coverage also was a component of Sen. Hillary Clinton’s health-care proposal when she sought the Democratic presidential nomination. Barack Obama wisely opposed the idea during the primaries.

A coverage mandate is the centerpiece of the Massachusetts health-care law that many see as Kennedy’s model. But the mandate is an unpopular disaster in Massachusetts; in California, public opposition to it helped kill a similar proposal.

Coupled with Massachusetts’ failure to rein in insurance price-gouging, the state’s mandate forces the typical middle-aged adult to spend more than $6,000 out of pocket on premiums and deductibles before medical expenses are covered.

No wonder the insurers like it. Tony Soprano would, too.

Ultimately, any reform plan that relies on such a mandate to establish “universal” coverage will fail.

Without restraints on skyrocketing insurance premiums and out-of-pocket costs, many families will face further economic distress, with little additional health security to show for it. And without tough regulatory oversight of insurers, patients will continue to endure inhumane denials of care.

The most effective way to fix our broken health-care system would look like Medicare, but improved and expanded to cover everyone. A single-payer, Medicare-for-all bill sponsored by Rep. John Conyers (D., Mich.) had more than 90 co-sponsors in the last Congress – more than any other reform bill. It is expected to be reintroduced early next year.

Such a program is the only way to control costs through negotiated fee schedules, global budgets, bulk purchasing, a huge cut in administrative waste, and other measures. And it’s the only way to wrest control of our health from the insurers.

Rose Ann DeMoro directs the California Nurses Association/ National Nurses Organizing Committee

For more information, see www.guaranteedhealthcare.org.

Sen. Daschle’s “Critical”

Critical: What We Can Do About the Health-Care Crisis

By Senator Tom Daschle, with Scott S. Greenberger and Jeanne M. Lambrew
Thomas Dunne Books, February 2008

The key question for any health-care reform plan is, “How will it cover people?” Most of the world’s highest-ranking health-care systems employ some kind of “single-payer” strategy – that is, the government, directly or through insurers, is responsible for paying doctors, hospitals, and other health-care providers. Supporters say single-payer is brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration. But pure single-payer system is politically problematic in the United States, at least right now. Even though polls show that seniors are happier with Medicare than younger people are with their private insurance, opponents of reform have demonized government-run systems as “socialized medicine.”

I have strong views on what an “ideal” system would look like. But I’m not willing to sacrifice worthy improvements on the altar of perfection. I find it encouraging that the leading Democratic presidential contenders appear to share this attitude. The proposals that Obama, Clinton, and Edwards put forward would improve our current system rather than scrapping it, using the Massachusetts reform plan as a model.

The Federal Health Board

I believe a Federal Health Board should be charged with establishing the system’s framework and filling in most of the details. This independent board would be insulated from political pressure and, at the same time, accountable to elected officials and the American people.

First, it would set the rules for the expanded FEHBP, placing conditions on the private insurers wishing to participate.

Second, the Federal Health Board would promote “high-value” medical care by recommending coverage of those drugs and procedures backed by solid evidence.

A third function of the Federal Health Board would be to align incentives with high-quality care.

Finally, the Federal Health Board might also play a role in rationalizing our health-care infrastructure.

http://us.macmillan.com/critical

Comment:

By Don McCanne, MD

When it was announced that Tom Daschle was Barack Obama’s choice to be Secretary of Health and Human Services, it was also announced that he would not only be an administrator, but also he would lead the team that is crafting the definitive health care reform proposal for the Obama administration. That is why Sen. Daschle’s book, “Critical,” is important to us. It provides us with the views of the person who will be working with Congress to reform our health care system.

The fundamentals of his proposal are essentially the same as those proposed by Barack Obama, Max Baucus, and most of the other Democrats who have been advocating for reform. He would continue employer-sponsored coverage, expand public programs, and provide an FEHBP-type program, including a Medicare-like option. He would attempt to achieve universal coverage through an individual mandate with financial assistance for lower-income individuals.

Daschle also includes other concepts that are making the political rounds, such as information systems, community health centers, quality measurements, and “shared responsibility.”

One essential reform that seems to be missing from his proposal is the need to reinforce our primary care infrastructure, providing everyone with a medical home. Maybe that could be extrapolated from his call for rationalizing our health care infrastructure, but, if so, it is of such great importance that he should advocate for it explicitly.

What is relatively unique in Daschle’s proposal is the recommendation for a Federal Health Board, based on a model similar to the Federal Reserve System. One of the more important functions would be to provide oversight of the private insurance industry in his multi-payer system, a role that would be unnecessary in a single payer system. The other functions he describes can easily be or already are provided by existing agencies, though introduction of a single payer system would certainly be accompanied with appropriate bureaucratic reform.

Although he recommends that this board be quasi-independent, insulated from political influence, there is still risk that ideological extremists could gain control. Think of the failure of the Federal Reserve System to provide adequate oversight of our financial system, contributing to our current financial meltdown. That might not have occurred if free-market ideologues such as Alan Greenspan had not been in charge of the Federal Reserve. The Supreme Court is also insulated from political interference, yet obviously it too is controlled by ideologues, over whom we have no control. Imagine if we had a Federal Health Board composed of those individuals who, through the Medicare Modernization Act, damaged our public Medicare program. If they had been in control of such a board, we could have been much further down the road toward their goal of a totally privatized Medicare system.

Most troubling is Sen. Daschle’s conclusions on single payer. He describes it as the model used by the “world’s highest-ranking health care systems.” He acknowledges, without dispute, that supporters say that it is “brilliantly simple, ensures equity by providing all people with the same benefits, and saves billions of dollars by creating economies of scale and streamlining administration.” Yet he rejects it merely because it is “politically problematic.” He would sacrifice the “ideal” system because he is “not willing to sacrifice worthy improvements on the altar of perfection.”

It certainly is true that opportunities for enacting beneficial policies can be missed when the politics are not in alignment. But it is also true that bringing the politics into alignment can eliminate the opportunity to enact ideal policies. For success in achieving a high-performance health care system, we shouldn’t sacrifice policy; we should change the politics.

Why Does U.S. Health Care Cost So Much? (Part III: An Aging Population Isn’t the Reason)

By Uwe E. Reinhardt
New York Times
December 5, 2008

Graphs courtesy of Uwe Reinhardt.

Not a conference on health care goes by without someone’s asserting that the aging of our population is a major driver of the annual growth in health spending. It sounds intuitively appealing if one contemplates the following two graphs, which are regularly trotted out on such occasions.

The first graph depicts what is commonly described as the “Baby Boom Tsunami.” The second depicts age-specific health spending per capita in 1999, relative to the spending of Americans in the age group 35 to 44, which is set to 1. These age-specific relative spending profiles do not change much over time for a given country, and they do not much differ among industrialized nations. They show that after age 60 or so, health spending per capita rises sharply with age.

Yet, research around the world has shown that the process of the aging of the population by itself adds only a very small part — usually about half a percentage point — to the annual growth in per-capita health spending in industrialized societies, which tends to range between 5 and 8 percent, depending on the country and the period in question. The bulk of annual spending growth can be explained by overall population growth (about 1.1 percent per year), increases in the prices of health care goods and services, and the availability of ever more new, often high-cost medical products and treatments used by all age groups.

Because this proposition is so counterintuitive, readers may wish to consult two recent research papers on the topic, one penned by the present author, and the other penned by other researchers.

These papers are based on American data. Similar studies have appeared also for Canada, Australia and many other countries in the Organization for Economic Cooperation and Development. Indeed, it may surprise readers that knowing the percentage of a nation’s population that is over age 65 cannot help one explain cross-national differences in health spending per capita, as is shown in the graph further on. As the graph shows, the per-capita health spending of nations is virtually independent of the age structure of its population.

Why, then, is the aging of the population such a small driver of annual increases in health spending? The answer can be found in the last graphical display of this commentary. That graph contains the same data as the first graph in this commentary, but the vertical axis is scaled as it should be scaled: from 0 percent to 100 percent. Letting it run from 12 percent to 22 percent stretches the vertical axis and creates the image of the famous Baby Boom Tsunami. It is a form of lying with statistics.

As this graph illustrates, the aging of our population is a very gradual process and does not come even close to resembling a tsunami. It is at best a demographic ripple.

Furthermore, current population projections have the fraction of elderly in the United States population peak at around 20 percent. Along with Canada and Australia, we shall be for a very long time the youngest nation in the O.E.C.D. Only in 2025 will the American population be as “old” as many European populations are already today.

As the song goes, relative to other nations we shall be “forever young”!

Uwe E. Reinhardt is an economist at Princeton.

http://economix.blogs.nytimes.com/2008/12/05/why-does-us-health-care-cost-so-much-part-iii-an-aging-population-isnt-the-reason/

HMS Sees Inequity in Organ Donations

Uninsured patients 20 times more likely to donate an organ than to receive one

By DANIELLE J. KOLIN
The Crimson
Contributing Writer
12/5/2008

Americans who lack health insurance are about 20 times more likely to donate a liver or kidney than to receive one, according to a new study by researchers at Harvard Medical School.

The findings, published in the latest issue of the International Journal of Health Services, show that 17 percent of organ donors did not have health insurance in 2003, while only 0.8 percent of organ recipients were uninsured.

“It’s a way of highlighting how unfair what goes on in our health care system is,” said Medical School Professor David U. Himmelstein, one of the study’s authors. “It’s immoral what we’re doing. Everybody should have insurance.”

The lead author of the study, Andrew A. Herring, was a third-year student at the Medical School when he treated a 25-year-old uninsured day laborer suffering from cardiomyopathy. When the patient died from lack of a heart transplant, Herring was inspired to explore the role of insurance coverage in whether or not a patient can receive an organ.

“People donate irrespective of their insurance,” said Herring, who is now doing a residency in emergency medicine in Oakland, Calif. “They donate from an altruistic sense of wanting to help someone else. Out of respect for that motive, the health care system needs to reflect the same altruism, which means allocation of organs irrespective of ability to pay.”

The authors made their conclusions by analyzing data from the 2003 National Inpatient Sample, a random representative sample of hospital stays.

The doctors emphasized that the discrepancy between organs received by the uninsured and the insured does not reflect the “values or intentions of the transplant community.”

“The vast majority of transplant surgeons want to give organs to those who get the greatest benefit from them, but the system around them is failing them,” Herring said.

According to the study, the discrepancy is due to the expensive post-surgical care required after organ transplantation. For successful organ transplantation, the patient must undergo long-term immunosuppressive therapy. If the patient is unable to pay–and uninsured patients seldom are–the transplantation is less likely to succeed.

Himmelstein and the paper’s third author, Medical School Professor Stephanie J. Woolhandler, are the co-founders of Physicians for a National Health Program, an organization dedicated to supporting a universal, single-payer national health system.

“My hope is that papers like this are part of a growing consensus that a universal health care system is necessary,” Herring said.

Himmelstein said that the study represents additional evidence to support such a health care system, and he criticized President-elect Barack Obama’s health insurance reform proposals for not going far enough because it continues to rely on private health insurance companies.

“Unfortunately, what’s being proposed by President-elect Obama and the leading Democrats is very disappointing,” Himmelstein said. “We know that it won’t work.”

Programs similar to the Democratic proposal have been tried at least five times previously at the state level, Himmelstein said, and have always failed.

“It makes good politics but it’s economically nonsensical to say we’ll rely on the private health insurance industry,” Himmelstein said.

http://www.thecrimson.com/article.aspx?ref=525740