Shredding the Social Contract: The Privatization of Medicare
by John Geyman, 322 pp, with illus, paper, $16.95, ISBN 1-56751-376-X, Monroe, Me, Common Courage Press, 2006.

JAMA. 2006;295:1950-1951.

In Shredding the Social Contract, John Geyman examines the development of the largest social insurance program in the country\Medicare\identifies the multitude of influences that have led to the current state of the Medicare program, and suggests that national health insurance (NHI) may be the only solution to its problems.

In an investigative reporting style with generous use of quotations from policy makers, physicians, institutional providers, and beneficiaries, Geyman makes the case that Medicare’s problems pose challenges to a broad array of stakeholders. He cites research demonstrating Medicare’s impact on the federal budget and the financial health of practitioners and institutional providers; brings in information from media accounts, public documents, and scholarly journals; and offers personal accounts from beneficiaries to illustrate the obstacles that stem from hastily implementing new programs or reinterpreting existing ones. After reading these accounts, the reader comes away convinced that “fixing” Medicare will not be easy given the political, social, and economic forces molding the program’s future.

Geyman’s concern is that Medicare as an entitlement program is incrementally being eroded. The chapter on “Means Testing and Medicare” asks the question whether Medicare services should be delivered on the basis of economic need. Medicare is an entitlement program, whose benefits are to be equitably distributed to enrollees regardless of ability to pay or income level. Medicaid is a social welfare program, whose benefits are to be distributed according to means. This is an important distinction between the two programs. Yet Medicare’s prescription benefit program is being administered according to means, and thus it breaks the social contract that the US Government has with its citizens. Since a portion of Medicare is now means-tested, there may be serious consideration given to making all of Medicare means-tested, especially with the current political rhetoric predicting the insolubility of the Medicare trust funds. The inevitable question becomes, Will Social Security become the next convert to means-tested distribution of benefits?

In Geyman’s view, Medicare is being eroded in part by the economic interests of proprietary insurance and pharmaceutical companies and in part by a Congress amenable to the privatization of public services. He explains how this erosion is inherent in a system that allows private insurance companies to be fiscal intermediaries\and how it has been exacerbated by Medicare + Choice (now called Medicare Advantage), in which beneficiaries have the option to join a managed care plan that delivers Medicare services. He points out that the overhead of managed care companies administering Medicare benefits is five to nine times that of traditional Medicare. And he notes that the recently enacted prescription drug plan was designed with the pharmaceutical companies’ interests in mind, not the needs of beneficiaries. This shift toward favoring private interests is due in part to the political clout of private-sector lobbies. Their support of legislation favorable to their business interest neutralizes the interests of the middle class and outweighs the economically disadvantaged, who are socially marginalized, not inclined to vote, and in any case too poorly organized to impact legislation.

Geyman sees health care as a basic human need, not a commodity for private interests to package and sell in the marketplace. From this perspective, any reform must concentrate on the needs of the population, not the economic self-interest of managed care organizations and proprietary supplies of health care. Thus, Geyman suggests that creating NHI is the only way to repair the problems of Medicare. He suggests that a single-payer system under NHI can address the macroeconomic disadvantages of the current system. He points out that administrative overhead and profit taking account for up to 31% of the cost for direct patient care. Those without adequate insurance coverage delay seeking treatment until their condition further deteriorates and requires more costly treatment. Furthermore, incremental reforms during Medicare’s tenure have not reduced overall cost and improved access to services.

Achieving NHI will meet with resistance in the current political and economic environment. Any attempt at a universal health plan may be thwarted by political compromises that could relegate the system to proprietary interests. Furthermore, administering NHI would have the same challenges faced by Medicare. One such challenge is inherent in our federal system of governance. Each state has the authority to regulate insurance contracts and license practitioners and health facilities. Thus, states determine the supply of health care services available in a given geographic area. Would control by the states change with NHI?

Additionally, Medicare was established as a means of distributing acute, short-term medical services to the elderly, but the greatest need today is for chronic care, and that problem would still have to be solved with NHI. Furthermore, the direction of Medicare or NHI has to be resolved. Should Medicare be administered as a public program or through partnerships with proprietary interests? And whose needs should take precedence? Those of the beneficiaries or those who insure or provide health care services?

Shredding the Social Contract is easy reading for general audiences, but there is an overabundance of lengthy quotations from policy makers and scholars. Health policy experts will have little difficulty sifting through the varied sources and synthesizing the book’s essential messages. It may be more difficult for others to assess the strength of the argument made by the author. A condensed version might serve well as a catalyst to help the general public become more vigilant over the changes that are made to their entitlement program. Clearly Medicare needs fixing, and NHI would certainly be an ideal solution. The book’s implicit message, however, is that the road to NHI will be met with challenges from the stakeholders. In the meantime, Geyman’s explicit message is a wake-up call to the nation that Medicare as an entitlement program is being eroded by private interest.

Robert R. Kulesher, PhD, Reviewer
School of Allied Health Sciences
East Carolina University
Greenville, NC
kulesherr{at}ecu.edu

by Blake Fleetwood
The Huffington Post – Apr 23, 2006

Statistics don’t lie.

Figures from the World Health Organization clearly show that The United States lags behind 36 other countries in overall health system performance ranging from infant mortality, to adult mortality, to life expectancy.

20 countries in Europe and four countries in Asia have a better life expectancy than the U.S. If you are a male between the ages of 15 and 59, your chances of dying are higher in the U.S. (140 per thousand) than in Canada, 95, Costa Rica 127, Chile 134, and Cuba, 138.

The U.S. Health system looks especially dysfunctional when you consider how much money we spend per capita on healthcare — $6,000 plus per year, twice as much as any other country– and how little we get for it.

Canada spends $2,163 and boasts a life expectancy of 79.8 years, two and a half years longer than the US. Their infant mortality rate per thousand is also better than ours, as is their adult mortality rate.

Switzerland spends about 11% of its Gross Domestic Product on universal health care for all its citizens, while the U.S. (with 50 million uninsured this year) spends 15% of GDP with embarrassing results.

One grand irony, Cuba whose economy has been bankrupt for the last decade – food shortages, drug shortages, chronic unemployment, etc. — and which annually spends a miserly $185 per person on health care, has better infant and adult mortality rates than the US, and has a life expectancy nearly equal to ours.

Why has our vaunted free enterprise system – which has produced such great benefits in delivery of most goods and services — failed so completely with regard to this most fundamental need?

Simple, buyers don’t shop for health care. Sick people don’t negotiate with doctors or hospitals or drug companies. They don’t care what it costs; insurance or the government will pay. This vulnerability has been exploited and
hijacked by greedy doctors, drug companies, insurers, personal injury lawyers, HMOs, and hospitals. About 50% of health care funds never even get to doctors or hospitals — which themselves run bloated operations.

Maybe we have finally reached the “Tipping Point”. Not because people are needlessly dying, but because big business is being crippled by astronomical health costs.

US companies — with employer funded health plans — are having a hard time competing in world markets. General Motors spends more on worker health care ($1,400 per vehicle) than they spend on steel for each car they produce. “The three big auto makers are “HMOs on wheels” says Goldman Sachs analyst Gary Lapidus.

Employer funded health insurance is a relic of the past according to the growing clamor by big business. We don’t want to pay for it any more and the added costs make our products uncompetitive in world markets.

The new Massachusetts law mandating health insurance – just as the state requires auto insurance – is a bold leap into an uncertain future, but it is an ad hoc band-aid which hopefully will lead to something more.

The long-term answer is obvious. Adopt a single payer system like Canada’s. Not socialized medicine. Doctors would remain private. By cutting out the bureaucracy, needless lawsuits, and curbing greed, the US could save 50% of the monies now being squandered, more than enough to cover the 50 million uninsured, according to a General Accounting Office and Congressional Budget Office report.

Ironically, we already have a successful single-payer healthcare program. Medicare, which covers people over 65, has an administrative and overhead cost of just 2%. Compare this low figure with the $399 billion spent on administrative middleman services in the free-market sector of health care last year. The simple step of data sharing of medical records could save $140 billion per year according too a recent Federal study.

Critics charge than a single payer system would lead to a rationing of medicine and long waits. But we already ration medicine, not by need, or efficacy of the treatment, but by how much money you have. If you are rich, you can have all you want. If you are poor, unemployed, self employed, sorry. 18,000 Americans die each year for lack of care according to the Institute of Medicine.

The right says that single-payer systems have not been adequately tested. But this is an obvious pretext by for-profit interest groups. Single-payer systems have been worked for many decades in 20 countries around the world.

The facts are clear: single-payer systems work and they save money. The Germans, French, Australians, Swiss, and Canadians all benefit from universal healthcare at less than half the cost that Americans pay for an incomplete system. Our for-profit healthcare system is a gambling scheme with the explicit goal of excluding the sick.

Good luck Massachusetts. Maybe your example, big business, and growing outrage will goad the dithering federal government into action.

Someday, inevitably, America will join the civilized world and provide universal care. It should be sooner rather than later.

Via NY Transfer News Collective * All the News that Doesn’t Fit

http://www.huffingtonpost.com/blake-fleetwood/cuba-has-better-medical-c_b_19664.html

Dr. Peter Mott
Guest essayist
Rochester Democrat and Chronicle

(April 12, 2006) — If we as a nation or state try to fill in health care gaps one at a time — first to cover those with no health insurance (more than 45 million Americans), then those with partial coverage (another 50 million), we would add new costs to the ongoing ones — a huge overall increase.

Thorough studies have been made of the costs of various national or statewide health insurance options. Economists found, and the General Accounting Office confirmed, that only one would save money. A Canadian-style, single-payer plan could save $200 billion per year, while covering all citizens for all necessary health services. As in Canada, this would include preserving private hospitals and patient choice of doctors.

How does a single-payer system cut costs so dramatically? Such a system means no competing insurance corporations, no advertising, practically no billing or collecting, no stockholder profits. Usually it also means more regional health planning to avoid wasteful duplication of equipment but adding needed services. This cooperative approach is similar to the way hospitals worked together in the Rochester region during the 1960s and 1970s, making the area a model at that time.

Why isn’t the public calling for a single-payer system? Several years ago I attended a health conference in Toronto at which a full-page advertisement in the Toronto Globe and Mail was shown to participants. It listed many complaints about Canadian “Medicare” but, in small print at the bottom, it said the ad was paid for by the U.S. health insurance industry. That was typical of the propaganda we hear about Canadian health care: long waits, doctors leaving Canada. However, according to polls, the vast majority of Canadian doctors like their system, and they have had 42 years of experience since the provincial plans merged in 1964. Waiting time in Ontario did increase when the Conservative premier cut hospital budgets, fired nurses and closed hospitals to reduce costs. It is ironic that he made that effort in a province where total health costs per capita are almost half those in the United States. Moreover, total costs are rising in Canada more slowly than in America.

Here in Rochester the Interfaith Health Care Coalition has joined the New York State Health Care Campaign to push the state Senate to fund a study of our options. If such a study shows again that all options will add enormously to total costs except for the single-payer health care plan — and that kind of statewide health insurance would save billions of dollars — then only politics could prevent a simple decision. And the people should then demand to know what are those political influences, and who pays for them.

Mott, of Pittsford, is a member, Interfaith Health Care Coalition.

Apr. 2006

The prevalence of inappropriate actions in healthcare drives additional margins in the industry’s supply, delivery and financing sectors, says contributor Fred Goldstein. It is at the root of our cost explosion and our healthcare crisis, and is based on an ingrained acceptance of unethical behaviors.

I have worked in healthcare for 20 years as a hospital administrator, an HMO senior executive and, most recently, the president of a disease management company. During this time ‘fve experienced a lot of what is right with the American healthcare system. But I have also seen enough fraud, abuse and unethical behavior to sicken even the heartiest soul. This characteristic of American healthcare is far too prevalent, and it undermines our efforts to control cost, build access and–most importantly–assure quality care. In the late 1980s, I worked for two major hospital corporations that routinely “cooked” their books. At one company it was referred to as “dialing for dollars” because the divisional CFOs would call the hospital controller each month and ask for more earnings. More recently, wefve learned these facts from mainstream news sources:

Pharmaceutical companies have paid for and published studies in distinguished professional journals, but left out results that reflected poorly on their products.

Drugs have been marketed as better than another brand when in fact there have been no head-to-head studies.

Major pharmaceutical distributors have bought drugs through middle men and, though they have been unable to determine the authenticity of the products, re-sold them.

Medical device manufacturers have knowingly distributed products with fatal flaws.

Medical device manufacturers have paid exorbitant gconsultingh fees to surgeons who decide which products their hospitals will buy for implantation into patients.

Many health plans have profited not by managing care, but by ratcheting down rates to doctors and hospitals and forcing employers to pay ever higher premiums.

Many hospitals have illegally paid doctors to increase admissions at their facilities.

Nonprofit hospitals, supposedly mission-driven, have charged uninsured patients three to four times what insurance companies pay, then sued them when they couldnft pay.

Many doctors practice medicine based on their own beliefs, feel that evidence-based medicine is too “cookbook,” and often prescribe procedures based more on financial self-interest than clinical necessity.

Many doctors, hospitals and other providers have consistently and, with little fear of penalty, stolen from Medicaid and Medicare.

Doctors often relent when patients pressure them to provide unnecessary services, even when the physicians know the procedures are inappropriate and costly.

Some “disease advocacy” associations–patients with the disease in question often look to them for unbiased advice–accept large contributions from drug companies, and then do not fully disclose details about their sponsorsf contributions or their drugsf impacts.

Healthcare corporations invest in lobbying because it works, spinning public policy and dollars disproportionately in favor of healthcarefs strongest interests.

Many healthcare executive have enjoyed extraordinary compensation while fraud and abuse occurs, and is even encouraged under their watch.

Unethical behavior exists among healthcare organizations and professionals of all types. Organizations that try to do the right thing are often outmaneuvered by those that do not. Self-interest is often hidden behind a façade of patient concern. “We do this for the patient. If you withhold our services, you will hurt the patient.” Worse, these self serving behaviors have become so common that professional outrage has been dulled. But to save healthcare, we canft just take these acts for granted.

The prevalence of inappropriate actions in healthcare drives additional margins in the industryfs supply, delivery and financing sectors. It is at the root of our cost explosion and our healthcare crisis. And, it is based on an ingrained acceptance of unethical behaviors. The recent movement toward transparency and quality reporting will shine a bright light on some of these practices, and should tone down the environment of opportunism. But many of these behaviors have been well known for years. I have little faith that, with so much money at stake, any reforms can be substantial enough to turn around the industry.

This is especially true if change does not support and engage much more participation from payers and consumers. In 2005, then-Federal Reserve Chairman Alan Greenspan spoke with MBA students at Wharton. He said, “Material success is possible in this world, and far more satisfying when it comes without exploiting others.” He also said, “In virtually all our transactions, whether with customers or with colleagues, with friends or with strangers, we rely on the word of those with whom we do business. If we could not do so, goods and services could not be exchanged efficiently.”

I am not naïve and do not expect that a plea for ethics will have much impact. I believe that a free market, with openly available information, offers a healthier path to a better society for all our citizens. Healthcare is an industry in which, perhaps above all others, we must strive for and reward integrity. However, unless we find a way back to honesty and decency in our commerce–the ethical behaviors that have been the basis of the healthiest civilizations–we wonft achieve the solutions our healthcare system needs. The common interest will continue to be exploited, our market-based system will falter and our healthcare system could well collapse.

________________________________________
Fred Goldstein is founder and president of Specialty Disease Management, a disease management firm based in Jacksonville, Fla. He may be reached at fgoldstein@specialtydisease.com.

Ottawa opposed Third Way strategy

By DAWN WALTON AND BILL CURRY
Originally Published 04/21/06

CALGARY and OTTAWA – Bowing to public pressure at home and opposition in Ottawa, Alberta has shelved its controversial health-care reforms that would have allowed doctors to collect paycheques in both the private and public systems and patients to buy private insurance.

An “aggressive” work-force policy to bring more health-care workers to Alberta cities and rural areas to alleviate waiting lists will be adopted rather than allowing patients to pay for certain services to speed access, the province announced yesterday.

“The most important thing is to build a stronger public health-care system where an Albertan’s ability to pay will never influence the type of care or the design of care that they can receive,” Health Minister Iris Evans told reporters in Calgary after an all day caucus meeting.

Both Prime Minister Stephen Harper and federal Health Minister Tony Clement had expressed concern in recent weeks that Alberta’s proposed reforms, which Premier Ralph Klein had dubbed the Third Way, could violate the Canada Health Act — something Ottawa could address by withholding transfer payments.

Mr. Klein took the federal government to task yesterday, saying it offered no alternatives. He said those who opposed the province’s plan had confused the public about what it would mean.

“It has always been expedient to be the protector of medicare as we know it today,” he said.

Alberta will move ahead with a Health Care Assurance Act this spring, which is a framework for future health-care legislation. It will also call for more consultation with Albertans, which could revive the debate, Ms. Evans said.

But that may not happen for another year as Alberta’s Progressive Conservative Party prepares to pick a new leader this fall.

Mr. Klein said he is disappointed he will not be able to see the matter through because he will be out as premier by the end of the year.

“It’s being postponed, but someone is going to have to deal with it,” he said. When asked what advice he had for those who take up the torch for medicare reform, he replied, “Good luck.”

Ms. Evans insisted that the Third Way is not dead. “Far from being dead, it’s alive, and we have created an opportunity for Albertans to give us even more feedback,” she said.

Ms. Evans, who met with Mr. Clement this week, said he left the door “slightly ajar” for more discussions about potential reforms.

Mr. Clement could not be reached yesterday, but an official in the Prime Minister’s Office said Mr. Harper had made Ottawa’s position clear on the Third Way proposal.

“The Prime Minister was clear in a private meeting he had with Premier Klein that anything Alberta wishes to propose to reform health care is great as long as it respects the Canada Health Act,” he said.

The change of heart was hailed as a victory by those opposed to the Third Way.

The province received more than 4,000 letters and 2,000 calls on the reforms — the vast majority of them expressing concern about two-tier medicine and the prospect of paying for services.

“This is clearly a defeat for the government,” said Alberta’s New Democratic Leader Brian Mason. “. . . I think Iris Evans pushed very hard for this legislation. The Premier pushed for the legislation and the people of Alberta pushed back.”

Harvey Voogd, co-ordinator of the Friends of Medicare, which has been lobbying against the Third Way, said dramatic reforms died when Mr. Klein’s party embarrassed him with only 55 per cent support of his leadership.

Karl Belanger, the press secretary to federal NDP Leader Jack Layton, expressed cautious optimism: “It sounds like it could come back in a year, so we will keep pushing for a fully public health-care system.”

Mr. Layton had demanded a federal law banning doctors from operating in both the public and private systems as the price for his continued support of the Liberal government last fall. When a deal could not be reached, the NDP joined the Bloc Québécois and the Conservatives and triggered a federal election.

A spokesperson for federal Liberal Leader Bill Graham was pleased with the decision, adding that innovation in health must take place within the framework of a universal health-care system.

Ms. Evans said Alberta is still looking for ways to cut costs to its health-care spending, which currently eats up more than a third of the province’s budget, but acknowledges that focusing on recruitment could cost the province even more.

The province figures it will spend $10.3-billion on health care in 2006-07, which is $735-million or 7.7 per cent more than the government expected it would spend during the last fiscal year.

Since 1995-96, health spending in Alberta has grown by an average of 10 per cent a year. Now, itboasts among the country’s highest per capita spending for health care.

Alberta Health and Wellness hopes to rein in costs over three years through reforms, but it expects another 7.7 per cent hike in program spending in 2007-08, before it cuts the spending increase to 3.7 per cent in fiscal 2008-09.