Influence of out-of-pocket costs on physicians’ decisions

Physician Consideration of Patients’ Out-of-Pocket Costs in Making Common Clinical Decisions

By Hoangmai H. Pham, MD, MPH; G. Caleb Alexander, MD, MS; Ann S. O’Malley, MD, MPH
Archives of Internal Medicine
April 9, 2007

As insurers and employers seek to control health care spending in the post-managed care era, patient cost sharing is likely to remain a prominent tool for influencing health care utilization. How well this works depends in part on physicians’ sensitivity to their patients’ OP costs, because physicians are responsible for decisions that affect how 90% of each health care dollar is spent. We found that while most physicians reported routinely considering patients’ OP costs in clinically straightforward prescribing decisions, only half or fewer do so in more complex situations that allow greater clinical discretion.

Our survey was conducted in 2004-2005, several years after employers and insurers embarked on the current trend of “benefits buy-down” through expanding consumer copayments and deductibles. We found that, despite the attendant increases in cost-sharing burdens over that time period, most physicians did not take them into account when making common care recommendations surrounding diagnostic testing and choosing care settings.

To our knowledge, prior studies have not compared physicians’ sensitivity to patients’ OP costs for different services. The variation across different types of clinical decisions that we document is not unexpected. The wider clinical latitude involved in more complex decisions means that physicians may prioritize other considerations, such as accuracy of a test or ease of scheduling, above patients’ OP costs as they approach these types of choices. And physicians and patients are less likely to have ready access to detailed cost data for diagnostic tests or care settings than for prescription drugs.

Nevertheless, that physicians report considering patients’ OP costs less frequently in making decisions about more expensive services suggests that cost-sharing arrangements dependent on patients and physicians weighing such costs can have only limited effect on use of such services and, by extension, less impact on overall health care spending than payers might hope for.

We also found that specialists were modestly more resistant to OP costs than primary care physicians. Regardless of the mechanisms, these specialty differences compound concerns that cost sharing will have limited effects on the use of more expensive medical services.

http://archinte.ama-assn.org/cgi/content/full/167/7/663

Center for Studying Health System Change news release:
http://www.hschange.org/CONTENT/927/

Comment:

By Don McCanne, MD

This is yet one more study which demonstrates that attempting to control costs by requiring patients to pay more out-of-pocket when accessing health care has only limited impact on the more complex services which account for most of our health care spending.

Health care cost increases are a concern for all of us. But trying to slow cost increases by assessing financial penalties for accessing beneficial services only worsens the dysfunctional state of our health care system.

Eliminating administrative excesses, negotiating prices and fees, budgeting capital improvements, reinforcing our primary care infrastructure, and modifying incentives for non-beneficial or detrimental high-tech excesses are all methods of controlling costs that actually improve the function of our health care system.

We can improve health care spending, but there’s clearly a right way and a wrong way. Why do we continue to insist on doing it the wrong way?

TPMCafe on Jonathan Cohn's "Sick"

Sick: The Untold Story of America's Health Care Crisis--and the People Who Pay the Price

www.sickthebook.com

By Jonathan Cohn
TPMCafe Book Club

Health care: The case for thinking big
By Jonathan Cohn

One of the most fascinating products of researching my new book, Sick, was also one of the most depressing: the realization that we’ve been here before.

If you go back to the late 1920s and early 1930s, you’ll find a situation that looks more than vaguely familiar. As medical care was becoming more expensive, large numbers of people were finding they literally could not afford to get sick. Many of these people weren’t indigent in the narrow sense of the word. They had homes. They had jobs. And yet when they got sick, their lives unraveled. Some went into debt to pay for it. Some rationed their own care. The result was financial misery, medical hardship, or both.

That situation eventually gave birth to the insurance system we have today – a system, based primarily upon job-provided private insurance, that is now faltering as the price of medical care rises. If you read the eight stories in the book, you’ll get a sense not just of how devastating loss of insurance can be today, but also of how vulnerable to this problem even the middle class has become – just like it was nearly a century ago.

It’s this increasingly vulnerability that has provoked a new debate about universal health care – and given would-be reformers some cause for optimism. But now that this debate is unfolding, it’s brought us to yet another familiar place: The argument about what kind of system to create.

On one extreme of the progressive political spectrum you have…

(Continued at this link)

http://bookclub.tpmcafe.com/blog/bookclub/2007/apr/10/health_care_the_case_for_thinking_big

And…

Response to Jonathan Cohn’s “case for thinking big” on health care

By Don McCanne

Okay. If we’re going to get anywhere in our discussion on how to fix our health care system, we’d better look at some numbers that will give us a better perspective of the problem.

This year, according to CMS, our projected health care spending is $2.2 trillion, or $7500 per each individual in the United States. With a median household income of about $46,000, it is easy to understand why a family of four would have difficulty paying its equal (not equitable) share of $30,000. (Before you divert the debate into the subject of apples and oranges, keep in mind that that the topic is health care reform, and the numbers are being used to demonstrate merely the magnitude of the problem.)

When there is general agreement that everyone should be covered, these numbers lead us to the insurance function of pooling risk – for all of us. Traditionally, health insurance provided for a transfer from the many who are healthy to the few with significant health care needs. Distributing costs evenly over the risk pool worked.

Something happened in the interim. Health care costs skyrocketed, but we were caught off guard because they were gradually phased in at high single or low double digit annual rates. But here we are. At $7500 per person, health care simply costs too much for average income individuals to pay their equal (again, not equitable) share of any system of universal coverage. Like it or not, we are now faced with the need to transfer not only from the healthy to the sick, but also from the wealthy to average- and lower-income individuals with health care needs.

Our current fragmented system of multiple private plans and public programs is not serving us well in this transfer function. Economists may not have a definition of unaffordability, but polls show that over 90 percent of us recognize it when we see it in our health care system.

Actually, we could resolve this problem quite readily by establishing a single national risk pool and fund it equitably through progressive tax policies. Not only would that make health care affordable for each individual, based on ability to pay, it would also establish a single payer that could use its monopsony powers to slow health care inflation to a more sustainable rate (which raises other issues that may be covered this week).

Regarding reform, there are two basic models under consideration. Either we could establish a single national health insurance program, or we could build on our current system of private plans and public programs (with many sub-variations such as employer mandate, individual mandate, Medicaid and SCHIP welfare programs, or a new Medicare-as-an-option program available to everyone).

A crucial question is how well would private plans serve us in a universal system? Well, let’s see how they are serving us now. 59 percent of us are insured through our employment, yet employer-sponsored plans are paying only 19 percent of our health care costs. Already we have a problem. Private insurers have skimmed off the healthiest sector of our society – healthy, gainfully employed individuals and their young, healthy families – and they are sticking us with the other four-fifths of our nation’s health care bill. The insurers have already defeated the insurance function of transferring funds from the many who are healthy to the few who have significant health care needs.

And how efficient are the insurers in performing this transfer function for their cream-skimmed risk pools of healthy individuals? In 2005, the six largest private insurers in the nation had an average medical-loss ratio of about 80 percent. This means that they used about 20 percent of health insurance premiums for their own intrinsic purposes – administrative functions and profits. Further, about 12 percent of premiums were used by physicians and hospitals to pay for the administrative burden of billing and insurance functions related to the private plans. So one-third of these private insurance premiums were burned up in administrative costs. Who says that the private market is always more efficient than the government?

This leads us to one of the most important questions facing those concerned about the reform process. When private insurers have abandoned their crucial function of transferring risk, and they have demonstrated their profound administrative inefficiencies, why would any policymaker insist that private insurers must be a part of any model of reform? The resources we waste on them would be far better spent on health care for the uninsured and underinsured.

http://bookclub.tpmcafe.com/blog/bookclub/2007/apr/10/response_to_jonathan_cohns_case_for_thinking_big_on_health_care

Comment:

By Don McCanne, MD

This week, TPMCafe Book Club features an ongoing discussion on health care reform led off by Jonathan Cohn, timed with release of his new book, “Sick: The Untold Story of America’s Health Care Crisis—and the People Who Pay the Price.”

The online discussion will feature such notables as Jonathan Cohn, Jacob Hacker, Ezra Klein, Matthew Holt, Roger Hickey, Diane Archer, Don McCanne and others (incomplete list). Responses of readers are welcome.

With the renewed enthusiasm for reform, this discussion is very timely and should be very informative, if not provocative. You can follow it at:

http://bookclub.tpmcafe.com/

National system would fix health care crisis

Michael Ozer
Special to the San Antonio Express-News
04/07/2007

When one examines the state of the U.S. health care system today, three things are obvious.

First is access. Forty-seven million people are uninsured, and demand for medical care has never been greater. Waiting lines are longer and emergency rooms are overflowing.

Second, our system of employer-financed insurance cannot meet the escalating crisis. Premiums and costs are higher than ever while coverage is increasingly skimpier.

Third, Americans have a growing desire to fix the system, and the majority seem to want a national fix. In a recent New York Times/CBS poll, nearly two-thirds of those surveyed said the government should guarantee coverage for all Americans. Half said they would be willing to pay up to $500 a year more in taxes for universal coverage.

So where does all this leave us? For one thing, it means the 2008 presidential candidates will be talking more about health care as their campaigns unfold, and, as consumers, we should try to better understand the underlying issues.

At this point, none of the major contenders has made bold proposals that would threaten the dominant role the private insurers have in our system. Most would create mandates for employers to purchase health insurance for their employees and provide tax credits for those too rich to qualify for Medicaid or the Children’s Health Insurance Program.

Unfortunately, such approaches won’t adequately address the problem. Decent coverage would increasingly become more unaffordable for more and more Americans as medical costs continue to rise.

In Massachusetts, the pioneer of the state-mandated plans, a 56-year-old making $30,000 annually will have to spend $7,164 in premium and deductible payments before insurance kicks in and still pony up 20 percent of hospital costs after that, according to Physicians for A National Health Program, or PNHP.

Such coverage is health insurance in name only. It leaves patients unable to access care and subject to financial ruin. PNHP studies show that more than a quarter of insured Americans go without needed care because of cost, and 75 percent of those bankrupted by medical bills had coverage when they got sick.

Forcing or enticing Americans to buy stripped-down health insurance may decrease the number labeled “uninsured,” but it won’t protect the physical or financial health of beleaguered families. And as costs continue to rise, employers will push more middle-class families from comprehensive plans into ones with scaled-down benefits and higher deductibles.

The only way to simultaneously expand coverage and lower costs is through single-payer national health insurance, or NHI — a plan similar to Canada’s or Britain’s, but distinctly American in its approach.

There’s already federal legislation before Congress — the United States National Health Insurance Act (HR 676). It has 78 sponsors and would expand and improve the existing Medicare system, creating a sort of “Medicare for All.” Unfortunately, none of our local legislators have signed on yet.

Arguments that NHI would hurt medical research or lessen the quality of medical care are unfounded in this nation, with the existing personnel, resources and infrastructure devoted to health care. But we could achieve tremendous savings from overhead and duplication in our system, possibly as much as $350 billion a year, according to the New England Journal of Medicine.

In fact, PNHP estimates, U.S. insurance companies spend more than a third of U.S. health care dollars on administration and marketing as they try to enroll healthier, more profitable patients and sustain their profits. This diverts money that could be devoted to patient care. In addition, a national system would facilitate long-term cost controls on the pharmaceutical industry and in other areas, thus ensuring that the new benefits are sustainable.

And while a uniquely American single-payer system is the way to go, look for the insurance and pharmaceutical industries to fight intensely to stop it.

Health care affects every American, and all of us should educate ourselves on health care reforms. Inform your congressman where you stand on the issue.

Dr. Michael Ozer is a San Antonio pediatrician and a member of Physicians for A National Health Program.

Group pushing for universal health care forms Birmingham chapter

DAVE PARKS
The Birmingham News
News staff writer
Monday, April 09, 2007

A newly reinvigorated chapter of Physicians for a National Health Program – an organization that has been pushing since the 1980s for universal health care – has formed in the Birmingham area.

Dr. J. Walden Retan, a practicing internist in the Birmingham area for the past 40 years, is president of the local chapter called Health Care for Everyone.

Retan said a local chapter of Physicians for National Health Program had existed in the past, but had been inactive in recent years. The group has reformed locally as part of an effort to influence the health care debate in the presidential campaign leading up to the 2008 election.

The group wants to extend a coverage like Medicare to everyone in the country from birth to death and eliminate premiums, co-pays and other out-of-pocket costs for health care.

“It could be paid for with an employer tax of about 5.8 percent, which is much less than what employers now pay for the insurance they provide for their employees, coupled with an income tax of 2.9 percent, which is much less than most people spend on out-of-pocket expenses … for insurance that’s available today,” Retan said.

Retan’s organization also wants to cut administrative costs of health care by eliminating private insurance companies.

“What’s unique about the proposal that our organization has been backing is that it proposes to eliminate private insurance carriers who generate on an average between 17 and 20 percent of their premium dollars being taken up in administrative costs and replacing them with a single-payer plan much as is present in Canada,” Retan said.

Health Care for Everyone is open to all interested people. For more information email healthcareforeveryone@charter.net or call 205-262-2001.

E-mail: dparks@bhamnews.com

Testimony of the Washington State Ad Hoc Coalition on the Citizens Health Care Working Group/Letter to Congressman Stark

Senate Finance Committee

Charting a Course for Health Care Reform: Moving Toward Universal Coverage

March 14, 2007

Contact:
Sarah K. Weinberg, MD
3304 81st Pl. SE
Mercer Island, WA 98040
206-236-0668
weinbergsk@msn.com

Senator Max Baucus, Chair, and Members of the Senate Finance Committee including our own Washington Senator Maria Cantwell:

Introduction

We are individuals and members of several different Washington State organizations that are committed to the creation of a high quality American health care system that is affordable and accessible to all. We came together over a year ago as an Ad Hoc Coalition in support of the Citizens Health Care Working Group (CHCWG) and its public hearing held in Seattle in February 2006. We submitted a critique and recommendations for improvement of the Interim Report last summer. We now testify before the Senate Finance Committee about the CHCWG report “Health Care That Works for All Americans”, and make further comments about implementation of reform of the American health care system.

First of all, we second the comments made by Sen. Baucus in his opening remarks. We agree that health is the first of all liberties, and that it is a responsibility of society to provide health care for all its residents. We think it is helpful to view health care as part of the essential infrastructure of our nation. Further, the use of tax dollars to guarantee the health care of American citizens is an appropriate investment in America’s future. We share Sen. Baucus’ belief that a nation-wide consensus is forming around five principles for our health care system:
1. Universal coverage – indeed an essential first step enabling the others
2. Sharing the burden – depending on employers and individuals alone is not sufficient
3. Controlling costs – only a unified system can implement evidence-based methods to control costs fairly
4. Prevention – this is a major area in which the current American system fails, with its overuse of lucrative procedures and lack of emphasis on maintenance of health
5. Sharing responsibility – everyone contributes both to paying the cost of the system and to being responsible for personal lifestyle and health care decisions.

Findings of the CHCWG

1. Strong Support for National Health Care Coverage for All Americans

The most important finding is expressed in the statement:
“Americans should have a health care system where everyone participates, regardless of their financial resources or health status, with benefits that are sufficiently comprehensive to ensure access to appropriate, high-quality care without endangering individual or family financial security.”

There was overwhelming support (94%) that there should be public policy written into law that all Americans have affordable health care. Of participants at community meetings across the nation, 68 – 98% favored guaranteeing a defined set of health care benefits to everyone. In another national poll in September 2005, 75% of U.S. adults favored health insurance that covers all Americans.

2. Financing a National Health Coverage Is Affordable

At $2 trillion per year, about $6,000 per person, or 16% of Gross Domestic Product, there is plenty of money being spent on health care in America. There was also a strong sense in the public responses that reallocation of health care dollars would provide the necessary funds for universal coverage. Nevertheless, a majority of participants in the CHCWG process were willing to pay more in taxes to ensure that all Americans are covered.

There was also strong sentiment that financing methods should be “fair”, meeting the following principles:

* No disproportionate financial burden on the sick

* Responsibility related to a household’s ability to pay

* All segments of society should contribute to funding

3. The Time to Start the Transition to National Health Coverage is NOW

The overwhelming majority of participants want the health care system change to begin now. Full implementation of national health coverage should be accomplished at least by 2012.

4. Band-Aids: Suggestions to Provide Immediate Relief from the Worst Problems of a Grossly Inadequate System

The CHCWG report devotes several pages to schemes to stabilize the failing private health insurance system and to provide help for families bankrupted by catastrophic health care costs. A few more pages were spent on supporting community health clinics as safety net providers for the poor and uninsured.

5. Preparing the Health Care Delivery System for Universal Coverage

CHCWG recommendations 3-6 all relate to this basic issue. There are several ways in which the American health care system needs to be restructured to provide the best care possible for everyone once universal coverage is established. Some of these:

* Increase the number of primary care health professionals – studies of other nations show that ready access to primary care is an essential building block for a successful, cost-effective health care system.

* Develop community-based integrated delivery systems – not just for the poor and/or uninsured. Systems like these already are delivering top quality care in the communities where they exist.

* Implement electronic medical records nation-wide – develop intercommunication among various systems. Information technology on this scale cannot be financed or integrated on the backs of individual physicians and hospitals.

* Fund nation-wide research to document the evidence needed for recommended diagnostic and treatment approaches for common diseases.

* Develop population-based strategies for many health services, especially support for healthy lifestyles, preventive care, and management of common chronic diseases.

* Create a transparent and independent process for defining benefits to be included in universal coverage, and for updating benefits as technology and knowledge change.

* Create a multidisciplinary system to coordinate and deliver end-of-life care.

Washington State Ad Hoc Coalition Opinions

1. Fundamental Reform: Universal Health Coverage for All Americans

We cannot emphasize strongly enough how important it is for Congress to declare its intent to design and implement a universal health coverage system that guarantees affordable health care with dignity to every American. Without this essential first step, other reforms are too expensive, unfair, or simply won’t work. The time to do this is NOW.

A multitude of national polls demonstrate that the public is strongly in favor of guaranteed health coverage, that government should make it happen, and that it should be tax-supported.

2. A Single National Health Coverage Program Will Save Enormous Sums

The CHCWG report did not dwell on the tremendous waste inherent in the current fragmented system, but a large amount of the annual $2 trillion paid for American health care is waste:
* The administrative bureaucracy of hundreds of private and public insurers plus the costs to health providers of their own bureaucracies needed to navigate the billing and collection process of the fragmented payment system costs at least 1/3 of total health care expenditures. (That’s $600 billion per year!) The administrative cost of a single national coverage plan would be less than 10% of total costs, a conservative estimate, – a savings of at least $400 billion per year.

* Without any way to control costs, the U.S. has overbuilt high technology diagnostic and treatment options, and developed too many expensive specialists, while underpaying primary care health professionals.

* Without any organized way to educate and support health professionals, nationally agreed upon evidence-based guidelines for appropriate diagnostic and treatment choices are rarely used, resulting in overuse of some, underuse of others. Unnecessary waste and avoidable suffering result from wrong decisions.

* Lack of health insurance drives millions to seek health care from the most expensive place possible – emergency rooms – when they are sick and/or scared.

* Demand driven by advertising to the general public leads to overuse of medications and devices, with resulting waste of dollars as well as unnecessary suffering from side effects of medications that were not needed in the first place.

The report does state: “…a significant portion of all health care expenditures produce no added health value.” And: “Concentrated efforts in some integrated health care systems have demonstrated care can be improved and waste eliminated.”

3. We Urge Congress to Start the Work of Preparing the Health Care Delivery System for Universal Coverage.

Lulled by the common myth that Americans have “the best health care in the world”, little attention has been given to the delivery system improvements that must be made for our health care system to work as an efficient integrated system once everyone has coverage.

The seven bullets under heading #5 above list a minimum of what is needed. Congress needs to convene another working group to review these areas, think of more problem areas, and develop solutions with funding for implementation. None of these is difficult, and we can use work already done in other nations to find the necessary solutions.

Improving American health care delivery will cost money, but investment in an improved delivery system, in combination with universal coverage, should result in substantial sustained monetary savings and improved health outcomes in the future.

4. Designing a Sufficiently Comprehensive Benefit Package

We believe it is crucial that a national health coverage plan be sufficiently comprehensive to provide good protection for all Americans from excessive out-of-pocket costs. Terms like “basic” and “core” imply skimpiness (who would want just the core of an apple, for example). Americans are not going to be willing to give up what they have now, as imperfect as it is, if they think the new system is going to have skimpy benefits. Public opinion, as tabulated by the CHCWG, is very clear: Americans want to be able to get the health care they need, when they need it, and without risking financial ruin.

The independent committee charged with the transparent, publicly accountable process for determining the benefits package must use evidence-based science demonstrating medical effectiveness as well as cost effectiveness. The process must also assure over time that the benefits package remains current and continues to be both medically effective and cost effective. The benefits must cover wellness care, preventive services, primary care, acute care, prescription drugs and devices, patient education, treatment and management of health problems – physical, mental and dental – with care decisions made by patients and their doctors together. The members of the committee and their families will get the same excellent quality care expected for all Americans.

Conclusion

We wish to re-emphasize the overwhelming support evident in all the public input to the CHCWG for a national health program, financed by taxes, covering all Americans for a sufficiently comprehensive package of health services.

* 97% view the health system as in crisis or having major difficulties
* 94% believe affordable health care should be a matter of public policy, by law
* 90% think health care should cover a level of benefits for everyone.

We think numbers like these represent a consensus. Does Congress have the political will to enact a national health program supported by a consensus of public opinion? We look forward to your leadership and trust that you will make comprehensive health care reform and a commitment to a healthy future for all Americans top priorities in 2007.

Supporting Organizations

(in alphabetical order)
Alliance for Retired Americans – Puget Sound
Alliance for Retired Americans – Washington
Health Care for All – Washington
Health Care That Works (6th Congressional District)
Lutheran Public Policy Office of Washington
Northwest Federation of Community Organizations
Northwest Health Law Advocates
Physicians for a National Health Program – Western Washington
United for National Health Care (2nd Congressional District)
Service Employees International Union 1199NW
Washington Community Action Network

Letter to Congressman Stark

Physicians for a National Health Program

Western Washington Chapter

8424 California Ave SW, Seattle, Washington, 98136
Phone: 206 9377154
Email: pnhp.westernwashington@comcast.net
WebSite: www.pnhpwesternwashington.org

Congressman Pete Stark, Chairman
House Ways & Means Subcommittee on Health
239 Cannon House Office Building
Washington, DC 20515-0513

RE: Request for hearings on comprehensive health care reform

March 16th 2007

Dear Congressman Stark,

On behalf of Physicians for a National Health Program, Western Washington Chapter, we would like to respectfully request hearings on how to achieve quality, affordable health care for everyone in our country.

We congratulate you for the leadership you have shown in previous Congresses in sponsoring or co-sponsoring legislation for comprehensive health care reform, including The AmeriCare Health Care Act (HR 5886), The American Health Security Act (HR 1200), and The United States National Health Insurance Act (HR 676). We know that for years such legislation has been denied the opportunity for discussion in Congressional hearings. At last, the time has come to renew a serious national discussion on how to solve the health care crisis.

As you plan Health Subcommittee hearings, we urge you to include a review of the 2006 Report of the Citizens Health Care Working Group (CHCWG). The Medicare Modernization Act of 2003 was amended to create a Citizens’ Health Care Working Group to “engage in an informed national public debate” on health care with the American public. In 2006, nearly 30,000 demographically diverse people participated in community meetings and in-depth on-line polling. This was a remarkable, unprecedented process, spurred by widespread grass-roots participation across the country.

The CHCWG Report has some very good points and some important deficiencies. For example, it reflects the views of most participants in recommending that by 2012 “it should be public policy, established in law, that all Americans have affordable health care coverage.” At the same time, it shies away from its own finding that more than 70% of participants in the CHCWG process favored creating a National Health Plan financed by tax payers that guarantees all Americans health insurance coverage.

We are disappointed but not surprised that the Bush administration, on March 14th, rejected the key recommendations of the CHCWG Report. This action underscores the importance of Congressional hearings to further discuss the CHCWG recommendations and to implement viable solutions to the current health care crisis.
Hearings on the CHCWG Report were held this week in the Senate Finance Committee and are supposed to be held by four other committees, including Ways and Means. We believe such hearings could provide a good platform for discussion of how we can achieve quality, affordable health care for all. Our organization and many others with whom we partnered in the CHCWG process would be eager to offer testimony.

As you are well aware, the health care system in this country is unraveling with dire consequences for our economy, our moral fabric, our sense of community, and our human dignity. The current treatment of health as a market commodity denigrates our humanity and subverts our sense of the common good. While millions of Americans are struggling with the ill effects of market-driven medicine, we are committed to raising awareness that another way is possible. Change in our health care system is not only desirable it is imperative and we believe the time for change is now.

There are new signs almost every day that more and more Americans are ready to tackle this crisis. Employers, labor, health care professionals, consumer groups, faith-based communities, advocacy groups, and state and local governments are increasingly vocal about the need to find ways to provide health care for all. This is a dramatic shift compared to just a year ago.

We are grateful for your courageous leadership and we know that you will place the health of the American people as a top priority in the 110th Congress. We look forward to working with Congressman McDermott and your Subcommittee in pursuit of our common goal.

TPMCafe on Jonathan Cohn’s “Sick”

Sick: The Untold Story of America’s Health Care Crisis–and the People Who Pay the Price

www.sickthebook.com

By Jonathan Cohn
TPMCafe Book Club

Health care: The case for thinking big
By Jonathan Cohn

One of the most fascinating products of researching my new book, Sick, was also one of the most depressing: the realization that we’ve been here before.

On one extreme of the progressive political spectrum you have…

(Continued at this link)

http://bookclub.tpmcafe.com/blog/bookclub/2007/apr/10/health_care_the_case_for_thinking_big

And…

Response to Jonathan Cohn’s “case for thinking big” on health care

By Don McCanne

Okay. If we’re going to get anywhere in our discussion on how to fix our health care system, we’d better look at some numbers that will give us a better perspective of the problem.

http://bookclub.tpmcafe.com/blog/bookclub/2007/apr/10/response_to_jonathan_cohns_case_for_thinking_big_on_health_care

Comment:

By Don McCanne, MD

With the renewed enthusiasm for reform, this discussion is very timely and should be very informative, if not provocative. You can follow it at:

http://bookclub.tpmcafe.com/

Australia's Medicare and private plans

The private life of health care

By Ruth Pollard and Mark Metherell
The Sydney Morning Herald
April 6, 2007

In just 10 years, the health system many were dreading has arrived. Spurred by the Federal Government’s campaign to push Australians into private health insurance and exacerbated by difficulties in finding care in public hospitals, the balance has tipped in favour of private hospitals. Our system is now a genuinely two-tiered model: the wealthy and privately insured get timely health care and the rest, unless they are critically ill, can wait.

In the past decade, a clear division of labour has evolved: public hospitals are now dominant in emergency surgery and medicine, while private hospitals rule in elective surgery, accounting for 55.7 per cent of all operations.

“Since 1982-83, Australia’s hospital system has witnessed a massive shift of activity to the private sector,” Bill Nichol, an assistant director in the federal Department of Health, writes in the study.

“The private sector’s role has increased to dominant player” in several categories of care, including eye, cancer, ear, nose and throat and the male and female reproductive systems, Nichol says.

The worrying thing is that many seem to have thrown up their arms in despair, a kind of “Oh, well” about the death of equity in the health system.

Bruce Armstrong, the director of research at the Sydney Cancer Centre and a professor of public health at the University of Sydney, believes there has been no attempt to prevent a two-tier health system from developing.

“Equity is a real issue â€¦ a proportion of the Australian population which is not inconsequential is not going to get that care because if you go to a private hospital you need private health insurance and even then, there [are] always going to be gap payments.”

A disturbing trend to emerge despite the establishment of Medicare in 1983 is the widening disparity between the well-off and the poor in mortality rates from avoidable diseases. The Australian way of death means the prosperous are significantly less likely to die from avoidable disease than those on low incomes.

In 1986 the rate of death from “avoidable” causes such as treatable and preventable conditions like heart disease among the have-nots was 50 per cent higher than for the haves. By 2002 that difference had stretched to a twofold gap, according to research published in the International Journal of Epidemiology.

The report concludes that “advantaged people have obtained a disproportionate benefit of health care, contributing to widening relative health inequalities”.

“A universal health-care system does not guarantee equality in health-care-related outcomes,” says the article, whose lead author was Rosemary Korda of the National Centre for Epidemiology and Population Health at the Australian National University.

The Health Minister, Tony Abbott, having presided over multibillion-dollar infusions into the private sector through Medicare payments to private doctors and the private insurance rebate, acknowledges states are bearing a larger share of public hospital costs.

But he says that if there is an equity problem, it’s for state governments to fix. “It may sound like I am playing the blame game, but state governments are responsible for public hospitals,” Abbott says.

He would welcome further growth in private insurance, which he suggests many more people could afford given that more than 1 million people on incomes of less than $20,000 pay for cover.

“No doubt having private health insurance confers additional benefits [like avoiding public waiting lists], but you do have to pay for it,” Abbott says.

It was inevitable that we would end up at this point, says Professor Jeffrey Braithwaite, the director of the Centre for Clinical Governance Research at the University of NSW.

“This is a health system responding to policy measures – those measures are the caps in the public hospital system and the incentives provided in the private system,” he says.

“The real question is, is this the health system that we want, that people desire?”

http://www.smh.com.au/news/national/the-private-life-of-health-care/2007/04/05/1175366414296.html?page=fullpage#

Australian Health Review – Abstract (Nichol):
http://www.aushealthreview.com.au/publications/articles/issues/ahr_31_1_0407/ahr_31_1_s004.asp

International Journal of Epidemiology – Abstract (Korda et al):
http://ije.oxfordjournals.org/cgi/content/abstract/dyl282v1

Comment:

By Don McCanne, MD

Australia’s experiment with a public Medicare program and private insurance plans has provided a very important policy lesson for the United States: Establishing policies that encourage the purchase of private insurance while simultaneously limiting the funding of public insurance will inevitably result in a two-tiered system. More affluent individuals will have the best care money can buy, whereas those remaining in an underfunded public program will have impaired access and impaired health outcomes. Keep in mind that impaired health outcomes means chronic suffering and death.

The private Medicare Advantage insurance options in our Medicare program are intended to reproduce this same two-tiered system in the United States. Currently the Medicare Advantage plans are provided with more taxpayer funds so that they can attract individuals by providing better benefits. Once the private plans are well established, the government can start reducing the funding of both the traditional program and the private plans. But the private plans will be able to continue to offer greater benefits merely by increasing premiums and cost sharing. Thus more affluent individuals will select the private plans whereas individuals with more modest means will be relegated to the underfunded public program. Without a surge in political activism, this outcome is inevitable.

There is an even more important lesson from the Australian experience. We now have a consensus that we must reform health care in America. The two main options are to either establish an equitable national health insurance program, or build on the current fragmented system to achieve universality. Numerous attempts at patching our current system have fallen short, so some politicians and policymakers are now supporting a public Medicare-like program as a safety-net alternative. Because health care costs are a leading concern of virtually everyone, efforts will be made to keep the funding of the Medicare-like option to a minimum. Imagine a minimally funded program that attracts people with low incomes and with significant health care needs; talk about stretching resources. Anyone who can buy their way out of that program will. Like Australia, a two-tiered system would be inevitable.

As Professor Braithwaite says, “The real question is, is this the health system that we want, that people desire?”

Insured, but claim can be denied for recreational injury

Legislation to Protect Health Insurance Benefits for Motorcyclists Introduced in Congress

Business Wire
April 2, 2007

U.S. Congressmen Michael C. Burgess, M.D. (R-TX) and Bart Stupak (D-MI) have introduced bipartisan legislation to stop insurance companies from denying payments for injuries incurred while participating in certain legal recreational and transportation activities, such as motorcycling and riding all-terrain vehicles (ATV). Identical legislation has been introduced in the Senate by Senators Susan Collins (R-ME) and Russ Feingold (D-WI).

The legislation (H.R. 1076, S. 616) would close a loophole created by the Department of Health and Human Services’ regulations implementing the Health Insurance Portability and Accountability Act (HIPAA) of 1996. As written and implemented, the regulations provide that an employer may not refuse health care coverage to an employee on the basis of participation in recreational activities, but may deny health care benefits if the employee is injured while participating in these activities.

The current regulations would allow health insurers to deny payment for injuries sustained by motorcyclists and ATV riders despite the fact that the individual carried health insurance. This clearly contradicts the intent of the regulation, which was meant to ensure nondiscrimination in health care coverage. This legislation would reinstate the original intent and close the loophole that unfairly discriminates against motorcyclists, ATV riders and other recreationists.

http://insurancenewsnet.com/article.asp?n=1&neID=20070402290.2_1d780008c2416e26

Comment:

By Don McCanne, MD

Think about this for a minute. Private insurers have found a loophole that would allow them to refuse to pay for medical care for an individual for whom they have provided coverage and collected premiums. They don’t even have to refund the premiums. They merely make an arbitrary judgement that their insured shouldn’t have engaged in hazardous recreation, and decide that they shouldn’t have to pay for care for injuries that result from those activities.

Where next? Reject claims for sexually transmitted diseases? Obviously they result from very hazardous activities. And lung cancer or emphysema in smokers? Or HIV infection in individuals with chemical dependencies? Or pregnancy – which, of course, is preventable? Or obesity, diabetes or heart disease in individuals who placed themselves at greater risk by falling short of engaging in an optimal level of exercise?

Looking for loopholes to get out of paying claims for legitimate medical services is a behavior unique to the private insurance industry. That would never happen with Medicare; nor would it happen with a national health insurance program that covered everyone.

Why do we continue to reward the private insurance industry so handsomely for excessive administrative services designed to defeat the very reason for their existence – paying for health care? More importantly, why are we even listening to policymakers who insist in including these thieves in their models of reform?

Australia’s Medicare and private plans