PNHP

Why pick on Wal-Mart?

Why pick on Wal-Mart?

Editorial
LA Times
March, 2 2006

WAL-MART’S RECENT DECISION to offer health coverage to more of its 1.4 million U.S. employees is a little like getting a date with a favorite crush because she feels sorry for you. Sure, you’re happy to have it, but you wish it had happened for a different reason.

The retailing behemoth is only expanding employee benefits because so many state legislatures are bullying it to do so. Two months ago, Maryland passed the Fair Share Health Care Act, which requires companies with more than 10,000 workers to spend at least 8% of their payroll on healthcare or pay the difference to the state; only Wal-Mart is affected.

More than two dozen states have threatened similar legislation. In response, Wal-Mart has said it will try to increase the number of its insured workers — currently about half are covered — by significantly reducing the waiting period for new employees to qualify for coverage and by offering bare-bones health plans for as little as $11 a month.

This kind of legislative intimidation is bad for a couple of reasons. First, it’s arbitrary and unfair. Why not go after companies with 5,000 employees? Or 50? Or ones with employees who wear funny hats and ask, “You want fries with that?” Second, employer mandates don’t work. To make up for higher healthcare costs, Wal-Mart is likely to reduce salaries or other benefits. That’s partly why Californians two years ago rejected Proposition 72, which would have forced businesses with 50 or more employees either to insure their workers or pay a fee to the state.

It’s true that Wal-Mart is the nation’s largest private employer and that its approach to healthcare can have a disproportionate effect, much like its approach to retailing does. But it’s foolish to think that Wal-Mart alone can fix the deep problems afflicting the nation’s healthcare system. Although healthcare spending is expected to jump to $4 trillion in the next decade — to 20% of the nation’s gross domestic product — the number of uninsured is increasing by more than a million people a year, and Americans are no healthier than citizens of countries that spend half what we do. That’s the definition of bad medicine.

Fortunately, the public appears to be growing so tired of the problem that national healthcare reform is all but inevitable. Proposals range from a comprehensive overhaul to minor tweaks. More moderate reforms could simply increase the number of low-income adults eligible for existing public programs. And even after President Clinton’s disastrous healthcare reform proposals a decade ago, momentum is growing again for a “single payer” government agency that would insure everyone in the country.

Whatever Americans decide, they should understand that any serious reforms will require shared sacrifice. Meanwhile, shaming Wal-Mart or any other company into covering more of its workers isn’t necessarily productive. Employers alone didn’t create the American healthcare crisis, and they alone can’t solve it.

Managed care is alive and sick

Doctors object to ultimatum on health care
By Cheryl Clark
The San Diego Union-Tribune
February 26, 2006

Dozens of doctors are protesting a Sharp physician network’s demand that their senior patients enroll in one health plan, Secure Horizons, if they want to use Sharp’s services in San Diego County.

Some 22,000 patients could be caught in the cross hairs, the doctors said.

These 45 doctors have until Tuesday to accept or reject Sharp’s ultimatum. If the physicians decide to work exclusively with Sharp, their non-Secure Horizons patients must switch to Secure Horizons or find primary-care doctors who accept their current health plan by June 1.

If the independent doctors contract exclusively with Sharp, community hospitals such as the 301-bed Paradise Valley Hospital also would suffer.

Dr. Alan Schoengold, Sharp Community Medical Group’s president, said his network “is very well aware of the ramifications” for patients, hospitals and physicians.

For doctors who face financial difficulties because they gave up non-Secure Horizons patients, Sharp will advance payment and provide loans to them.

No matter what the dissenting doctors choose, they will lose some patients. If they select Sharp, they will lose patients who want to stay with Health Net or other providers. If they opt to remain independent, they will lose their Secure Horizons patients to Sharp.

Lincoln Acres resident Ruth Wells, 87, said she recently switched from Blue Cross to Health Net, whose network includes her specialists and whose pharmacy plan covers the drugs she needs.

But when Wells was told that her physician may require her to switch to Secure Horizons, she became very upset.

“It’s not fair,” she said. “I want to see doctors in my neighborhood.”

http://www.signonsandiego.com/uniontrib/20060226/
news_1m26sharp.html

And…

Blue Cross Coverage Extended in Dispute
By Lisa Girion
Los Angeles Times
February 25, 2006

State regulators stepped in Friday to delay a showdown that threatens access for more than 175,000 Blue Cross members to three hospitals in Los Angeles County.

The state Department of Managed Health Care intervened in a long-running fee dispute that pits struggling hospital operator Centinela Freeman HealthSystem against the nation’s largest insurer, WellPoint Inc.

Centinela Freeman Chief Executive Mike Rembis said the company had hoped to go into the black this year. But, he said, that hinged on getting an adequate increase in reimbursements from Blue Cross.

Almost a quarter of Centinela Freeman patients are Blue Cross members but they provide only 9% of revenue, administrators said.

Blue Cross has asked the Department of Managed Health Care for permission to send its members to other hospitals in the event that they fail to reach a new agreement. Blue Cross members also could use Centinela Freeman hospitals but would be reimbursed at a lower, out-of-network rate.

http://www.latimes.com/business/la-fi-centinela25feb25,1,3558558.story

Comment: By Don McCanne, M.D.

Those who claim that the age of managed care is ending simply haven’t been paying attention.

Health care intermediaries continue to leverage their positions by taking choice away from patients, physicians and hospitals. Periodic contract changes create instability, negatively impacting patients’ choice of physicians and hospitals, while threatening the solvency of the providers.

The consumer-directed (CDHC) advocates claim that their model would replace managed care. But the high-deductible health plans (HDHPs) that they are touting are still managed-care preferred provider organizations (PPOs). Though these plans may allow out-of-network health care, the patients’ out-of-pocket expenses are so great that it is almost equivalent to having no coverage at all.

Adopting a single payer national health insurance system would return to patients free choice of health care providers, including the option of choosing integrated health systems such as Kaiser Permanente. The CDHC advocates want patients to participate in their health care decisions. They should start by giving them choice of their physicians and hospitals. That will never happen with PPO HDHPs which, by design, deliberately restrict choices.

Seducing the medical profession

The New York Times
Editorial
Originally published February 6, 2006

New evidence keeps emerging that the medical profession has sold its soul in exchange for what can only be described as bribes from the manufacturers of drugs and medical devices. It is long past time for leading medical institutions and professional societies to adopt stronger ground rules to control the noxious influence of industry money.

Recently, two new cases came to light that reveal the lengths to which companies will go to buy influence with doctors, pharmacists, and other medical professionals. Reed Abelson reported in The New York Times on Jan. 24 about a whistle-blowers lawsuit alleging that Medtronic had paid tens of millions of dollars to surgeons in a position to use and recommend its medical devices. In one particularly egregious example, a prominent Wisconsin surgeon received $400,000 for just eight days of consulting.

In the Times last month, Gardiner Harris and Robert Pear revealed that a Danish company paid a pharmacist, doctors assistants, and a drug store chain to switch diabetic patients to the company’s high-priced insulin products.

In the wake of past reports of industry’s influence over prescribing practices, medical and industry groups have issued guidelines defining appropriate behavior. But as an article in The Journal of the American Medical Association made clear, these guidelines are far too weak.

The influential authors called for a complete ban on all gifts, free meals, and payments for attending meetings. They urged doctors to reject free drug samples because they are a powerful incentive to use medicines that are expensive but not more effective.

These proposals are hardly onerous. Kaiser Permanente has adopted nearly all of the recommendations. Its doctors prescribe heavily marketed medicines far less frequently.

The critical issue is that doctors must have the best interests of their patients at heart in prescribing drugs or recommending medical devices. Their judgment must not be clouded by financial self-interest or the desire to please industrial benefactors.

Goodbye, Europe. Hello, USA.

Alberta headed for USA-style health care system
By Diana Gibson
Parkland Institute
Originally published February 21, 2006

Ralph Klein has wasted no time challenging the election promises of Stephen Harper’s Conservative minority government.

In early February, Alberta Health Minister Iris Evans presented the first phase of Alberta’s health care reform plans to the provincial cabinet. Evans, who plans to announce additional reforms this month, acknowledged that the reforms will potentially violate the Canada Health Act.

Harper solemnly pledged to uphold the Canada Health Act, which requires, among other things, universality, comprehensiveness and public administration.

Yet Klein has announced that he is rolling out an agenda to dramatically expand private health insurance and delivery. Carefully crafted rhetoric like “third way,” “increasing access,” “medicare plus,” “increasing choice”
and “European model” is used to shroud the fact that he is talking about privatization, and taking Alberta toward a US- style, corporate health system.

There is no “third way” or “European model.” As the Supreme Court’s Justice Marie Deschamps pointed out in the Chaoulli decision, “There is no single model; the approach in Europe is no more uniform than in Canada.” There is, rather, a spectrum of health care models ranging from purely public to purely private.

Canada already has significant private-sector involvement on both the funding side (insurance) and the delivery side (private surgeries, labs and diagnostics). In fact, Canada is already farther down the path to private insurance than most European countries.

In most European countries, private insurance covers less than 10 percent of health care costs, whereas Canada is already at approximately 14 percent.

In fact, Canada is already fourth among OECD countries for private health insurance spending.

European health care is more comprehensive. Among members of the EU, health insurance tends to be more universal and more comprehensive than Canada’s, covering a wider range of benefits such as pharmaceuticals, dental care and long-term care.

If there is a trend in OECD countries, it is towards less, and not more, private funding. Between 1994 and 2004, the private share of health spending was either constant or decreased in more than half of OECD countries.

European countries protect the publicly funded system. Health care practitioners can’t be in two places at the same time. So creating a parallel, for-profit system will simply take doctors, nurses and radiologists away from the public sector, where there is already a shortage.

For this reason, many European countries have instituted regulations that protect the public sector from such erosion. Examples include requirements that doctors and even patients must opt in or out of the public system; and limits on what practitioners can charge and insurance companies can pay in the private system. For example, in Austria, private insurance can only pay 80 percent of the cost billed by professionals practising in the public
sector.

Alberta currently has a provision that doctors must opt out of the publicly funded system if they want to offer services covered by the public system on a for- profit basis. As the bulk of the work is in the publicly funded system, this presents a disincentive to doctors practising outside of the publicly funded system; they can’t do both.

Such protections are precisely what Ralph Klein is proposing be eliminated. He has already clearly said that the requirement for doctors to opt in or out will be eliminated.

There have also been hints that the protections for the public system introduced in Bill 11 will be reversed – for example, the provision that private, for-profit surgical clinics could operate but not private, for-profit hospitals.

These changes take us down an American path, not a European one.

There are other reasons to believe that Klein is taking the US path and not the European path.

First, Canada is integrating our economy with the US, not with Germany, Sweden or France – and Canada has clearly become part of a North American health care market.

Second, it is US health care corporations, not European ones, who are pushing for access to the Canadian health care system.

Not surprisingly, the US has the world’s largest health insurance industry.

The influence wielded by US health insurance corporations is reason enough to carefully scrutinize Klein’s choices.

Witness the Alberta government’s decision to hire US-owned AON Corporation to design health care options for Alberta.

This choice speaks volumes; AON will be intimately familiar with the US model.

And yes, this is the same AON whose American parent recently paid out $190 million following a probe into allegations of fraud and anti-competitive practices.

Once the door is opened to further privatization in Canada’s health care system, it will be difficult to turn back to the principle of universality – equal access to health care regardless of ability to pay.

Private interests will be heavily invested, and NAFTA’s infamous Chapter 11 may open us to lawsuits if we try to make our system public again.

We are embarking on a critical debate about the future of our health care system, a system that represents the fundamental values of equity and justice at the core of Canadian society.

Will Harper stand up for Canada? Will he stand up to Klein?

Diana Gibson is the Research Director for the Parkland Institute. She has an extensive background in public policy research and as an educator. Prior to joining Parkland, Diana worked as staff and a consultant to various community organizations, colleges, government agencies and trade unions on topics ranging from health care policy and water security to international trade.

AHIP pays for Dranove and Millenson's swift boat tickets

Medical Bankruptcy: Myth Versus Fact
This response to a widely cited paper by David Himmelstein and colleagues challenges the basis of its conclusions.
By David Dranove and Michael L. Millenson
Health Affairs
28 February 2006

The great enemy of the truth is very often not the lie-deliberate, contrived and dishonest-but the myth: persistent, persuasive and unrealistic.
-President John F. Kennedy, Commencement Address at Yale University, 11 June 1962.

It is no secret that bad health and bad debt often coincide. Unexpectedly large medical bills can impose a sizable burden on those who are already physically and economically fragile. In some cases, medical debt can contribute to a collapse of creditworthiness that forces some people to declare personal bankruptcy.

David Himmelstein and colleagues contend that this scenario is pervasive. “Medical problems contribute to about half of all bankruptcies,” they write. They warn that “solidly middle-class Americans.face impoverishment following a serious illness,” and they propose a solution: comprehensive national health insurance such as that offered in Canada and Western Europe.

Unfortunately, a closer examination of their paper suggests three reasons why their conclusions are also unrealistic.

First, they fail to provide a causal relationship to support the claim that medical spending contributes to “half of all bankruptcies” (54.5 percent).

Second, the authors’ methodology does not provide a definitive answer to the policy question they implicitly pose: how national health insurance would affect the rate of personal bankruptcy.

Lastly, their suggestion that national health insurance would greatly reduce the number of bankruptcies linked to medical spending is misleading.

According to Himmelstein and colleagues, 28.3 percent of respondents stated that illness or injury was a cause of bankruptcy. They also reported that medical bills contributed to the bankruptcy of 60 percent of this group.
Multiplying the two figures together, we conclude that 17 percent of their sample had medical expenditure bankruptcies.

Congressional Budget Office: The CBO review cites many factors that contribute to bankruptcy, including large medical bills, divorce, loss of income as a result of unemployment, and poor debt management. Even so, the CBO reports that “researchers have made little progress in judging the relative importance of the factors that lead people to file.”

Fay, Hurst, and White: They conclude that bankruptcy is the response to an accumulation of debt, not to one particular factor such as a health problem.

2005 Commonwealth Fund: The survey found that 41 percent of adults ages 19-64 had a high rate of medical bill problems or incurred medical debt. Sixty-two percent of these nonelderly adults had insurance when the problem occurred.

Domowitz and Sartain: They first reported that “high medical debt (in excess of two percent of income) has the greatest single impact of any household condition variables in raising the conditional probability of bankruptcy.” Accounting for prevalence of various sources of debt, Domowitz and Sartain found that “the largest single contribution to bankruptcy at the margin is credit card debt.” Other data on credit card payments support our previous contention that those with trouble paying all of their bills, not just medical expenses, are most vulnerable to bankruptcy.

Gross and Souleles: Gross and Souleles used multivariate regression to predict personal bankruptcies, with one of their predictors being health insurance coverage. Overall, it is difficult to draw firm conclusions from Gross and Souleles’ analysis.

There is one methodological problem that occurs in all the papers cited above, including that of Himmelstein and colleagues. They all fail to address the problem of reverse causality-that is, whether medical spending causes bankruptcy or whether financial turmoil causes medical problems (for example, because of stress). The resulting endogeneity bias will therefore overstate the extent to which medical bills cause bankruptcy.

Himmelstein and colleagues omit any reference to personal choices, such as taking on debt, even in their household interviews. In this they act more like good doctors than good economists or policymakers. For although it is good medical practice to work as hard to save the life of a careless drunk driver as a sober careful one, it is equally good economics and public policy to penalize the careless driver with higher insurance rates and possible criminal prosecution.

…weaving a medical-cost safety net that could protect virtually every person from bad behavior or bad luck might actually poke holes in the safety net for other vulnerable citizens. Good intentions are not enough. The Book of Job, far older than the Roman laws cited by Himmelstein and colleagues, teaches the hard lesson that no amount of good fortune is irreversible. Some combination of illness, job loss, and personal problems can assuredly dislodge even the most firmly rooted member of the middle class.

Unfortunately, expansive proposals to protect all of us distract from the pressing need to protect some of us, such as the forty-five million Americans with no health insurance and millions of others who are underinsured and vulnerable. “First, do no harm” is not just good advice for physicians; it should apply to those who would make health policy as well.

The authors are grateful to America’s Health Insurance Plans for supporting this research.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w74/DC1

And…

America’s Health Insurance Plans

Welcome to America’s Health Insurance Plans (AHIP), the voice of America’s health insurers. AHIP is the national association representing nearly 1,300 member companies providing health insurance coverage to more than 200 million Americans.

Our goal is to provide a unified voice for the health care financing industry, to expand access to high quality, cost effective health care to all Americans, and to ensure Americans’ financial security through robust insurance markets, product flexibility and innovation, and an abundance of consumer choice.

http://www.ahip.org/content/default.aspx?bc=31

And…

Discounting The Debtors Will Not Make Medical Bankruptcy Disappear
By David U. Himmelstein, Elizabeth Warren, Deborah Thorne, and Steffie Woolhandler
Health Affairs
28 February 2006

David Dranove and Michael Millenson seem determined to deny that financial fallout from illness pushes middle-class families into bankruptcy. Anxious to erase the headline that three-quarters of U.S. medical bankrupts had health insurance at the onset of their illnesses and the resulting spotlight on inadequate coverage and insurance cancellation practices, they ignore most of our data and misrepresent the rest. They dismiss families’ explanations of their difficulties and blame those ruined by illness for their own problems. However, the data from the bankruptcy courts are undeniable. Bankruptcies affect mainly middle-class, privately insured families, and about half are triggered, at least in part, by illnesses.

Let’s be clear: Every number, percentage, and variation in how to interpret the data that Dranove and Millenson seize upon in attempting to dismiss our work came from our manuscript. We offered detailed breakdowns of our numbers so that different readers could weigh the data. Unfortunately, these commentators manipulate the data far beyond legitimate reinterpretation.

Their central claim is that no more than 17 percent of bankruptcies are medical-far lower than the 54.5 percent figure they attribute to us (in fact, we gave a range of estimates, from 46.2 percent to 54.5 percent, in anticipation of different possible interpretations of the data). In their effort to whittle down the number of medical bankruptcies, they ignore huge chunks of the data we reported. First, they assert that only the 28.3 percent of debtors who gave “illness or injury” as the specific reason for filing for bankruptcy could possibly be classified as “medically bankrupt.” Next, they narrow this group to include only the 59.9 percent who also cited bills from medical providers as a major contributor to bankruptcy. (These latter data came from our interviews with a subset of 331 debtors, not, as Dranove and Millenson state, from our questionnaire survey of 1,771 filers.)

Thus, their calculation rests on responses to two items from our data, disregarding the hundreds of other pieces of data we collected that give a fuller and more accurate picture of the reasons for filing for bankruptcy. Moreover, they misrepresent both items.

Dranove and Millenson portray medical debtors as irresponsible deadbeats, their plight a result of bad choices analogous to those made by drunk drivers. But medical catastrophe is not a choice. And, unlike other expenses, most medical debt is not voluntary, any more than breathing is voluntary. Most medical debtors had taken the prescribed steps to protect themselves: Three-quarters had health insurance when they got sick. But for many, private coverage lapsed when they lost work because of illness. In other cases, the insurance they bought in good faith had so many holes that it left them unprotected. To families financially hard-pressed by illness, Dranove and Millenson preach acceptance of the hard message of the prophet Job. Instead of blaming ruined families, or the wrath of Jehovah, they should take a hard look at the defective products sold by their funders in the insurance industry.

To Dranove and Millenson, a safety net strong enough to cushion the impact of illness is inconceivable. Yet many other countries have implemented comprehensive health and disability coverage that does the job quite well.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w84/DC1

And…

Medical Bankruptcy: Dranove And Millenson Respond
By David Dranove and Michael L. Millenson
Health Affairs
28 February 2006

In responding to our study, David Himmelstein and colleagues state that we “seem determined to deny that financial fallout from illness pushes middle-class families into bankruptcy.” This is simply untrue. Our paper denies neither the presence of medical bankruptcies nor their serious impact on families. Rather, we carefully critique the methods they used to analyze those bankruptcies. Nothing in Himmelstein and colleagues’ response suggests that our criticism of their methodology was incorrect. They continue to offer only one direct causal measure: namely, that medical bills “contribute” to 17 percent of personal bankruptcies. The remaining anecdotes and correlations they offer do not constitute systematic empirical research, and they do not establish causation or the magnitude of the problem. Thus, it is impossible to determine from their study whether and by how much the expansion of health insurance coverage would reduce the personal bankruptcy rate.

We admit to being unprepared for the political attack-dog tone that dominates their response. One might have thought that our paper, rather than appearing after rigorous peer review, had been issued as a press release by insurance industry magnates. In fact, although our time was paid for by America’s Health Insurance Plans, our work was completely independent, and we, along with the journal’s editors, insisted on the peer-reviewed publication process. Perhaps Himmelstein and colleagues are simply taking out on us their frustration that middle-class American voters have ignored their decades-old advocacy of a Canadian-style health system.

We agree with Himmelstein and colleagues that too many vulnerable Americans are financially devastated by the cost of illness. They seem to regard with a sense of outrage our objective examination of the methods they use to establish just how many such individuals there are. We, in contrast, continue to believe that passion to right a wrong does not justify abandoning dispassionate analysis of the best way to do so.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w93/DC1

And…

Bankruptcy Is The Tip Of A Medical-Debt Iceberg
By Robert W. Seifert and Mark Rukavina
Health Affairs
28 February 2006

Medical bankruptcy, whatever its actual frequency, is an extreme example of a much broader phenomenon. Medical debt is surprisingly common, affecting about twenty-nine million nonelderly adult Americans, with and without health insurance. The presence of medical debt, even for the insured, appears to create health care access barriers akin to those faced by the uninsured. Policymakers, researchers, and medical providers should consider medical debt a risk factor for reduced health access and poorer health status. Simply reducing the number of uninsured Americans would be a hollow policy victory if the problems arising from medical debt persist.

Recent research findings cry out for new measures to assess how well our country is addressing the health care access issue. It is now documented that medical debt resulting from being uninsured or having inadequate insurance reduces access to care and undermines the financial security of American families. Thus, this debt is, in itself, a risk factor for reduced access and poorer health status.

Policymakers, researchers, and medical providers should all be encouraged to focus attention on this risk factor. Financial protection must be a tenet of health insurance. Requiring additional costs to be borne by the patient will likely have a detrimental effect on access, particularly for those with chronic illnesses, although low-wage workers and even middle-income families may be at risk as well.

To truly improve health care access for Americans, it is time to expand our policy vocabulary beyond insurance coverage and begin to examine the adequacy of that coverage in ensuring health access and improving health status and financial security.

http://content.healthaffairs.org/cgi/content/full/hlthaff.25.w89/DC1

Comment: By Don McCanne, M.D.

There is no disagreement on the fundamental issue here: Medical debt is pervasive, and, directly or indirectly, contributes to a significant portion of personal bankruptcies.

So what is the point of the article by Dranove and Millenson? It is clearly a blatant “swift boat” effort to discredit the messengers, and by implicit but invalid extension, to evade the message that there is a pressing need to effectively address the issue of medical debt through comprehensive reform. The opinion of the authors was purchased by an industry that is compounding the problem of medical debt, and is threatened by the single payer model which would be the most effective in insuring against financial loss in the face of medical need.

Dranove and Millenson state that “expansive proposals to protect all of us distract from the pressing need to protect some of us, such as the forty-five million Americans with no health insurance and millions of others who are underinsured and vulnerable.” They have it wrong. The private insurance industry, which leaves forty-five million Americans with no health insurance and millions of others who are underinsured and vulnerable, should not distract us from an expansive proposal that would protect all of us with an equitable, efficient, comprehensive, affordable system that would do far more to prevent medical debt than would the flawed policies of the private insurers.

Sadly, the damage is done. Whenever the issue of medical debt is raised, the opponents of national health insurance will dismiss it with the statement that the bankruptcy issue is a myth (while remaining silent on the consequences of medical debt). Those in the policy community who really do care will understand, but the public at large won’t. All that they’ll understand is the myth that private insurance provides the best protection.

Dr. Martin Luther King, Jr.'s Favorite Union Endorses HR 676

The Executive Board of 1199SEIU United Healthcare Workers East has unanimously endorsed HR 676, a bill to legislate a single payer health care system in the U.S. The union represents 275,000 members in Maryland, Washington DC, New York and Massachusetts.

Dr. Martin Luther King Jr. was an early supporter of 1199’s effort to organize low wage, largely African American and Hispanic hospital workers. He often referred to Local 1199 as his “favorite” union. In later years, both he and his wife, Coretta Scott King, supported 1199’s efforts in Baltimore, MD and Charleston, SC.

HR 676 now has 68 congressional co-sponsors in addition to John Conyers Jr. (D-MI). It would institute a single payer health care system in the U.S. by expanding a greatly improved Medicare system to every resident.

HR 676 would cover every person in the U. S. 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. HR 676 ends deductibles and co-payments. HR 676 would save billions annually by eliminating high overhead and profits of the private health insurance industry and HMOs.

Californians respond to Sacramento Bee editorial on health care reform

Letters to the editor
Our social contract

Published 2:15 am PST Sunday, February 19, 2006
Story appeared in Forum section, Page E6

Re “The new shades of gray,” Forum, Feb. 12: For a multitude of unavoidable reasons, our population is aging, becoming more treatable and costing much more to treat.

The private health-care industry is preparing for this by expanding and adding facilities and services, not out of any real concern for our health but mainly to stay financially ahead of the game. While this is good for well-funded patients, none of it will help the growing numbers (in all age groups) who are unable to finance their access to essential care.

There remains only one “big idea” worth considering: a system of government-sponsored access to essential universal health care. Further, access to essential care must remain untarnished by private industry. For this we need to bite the bullet and pay a tax, but it will be less in taxes than we pay in premiums.

Government is the only institution with a valid social contract to protect our health and welfare.

– Lawrence A. Danto, M.D. , Truckee

A single-payer solution

Re “Health care needs big ideas but gets small ones,” editorial, Feb. 12: Health care already has the big idea – the California Health Insurance Reliability Act. SB 840 by Sen. Sheila Kuehl would establish a single-payer health insurance system for all Californians.

The health care system is in critical condition. Costs are escalating higher than the rate of inflation. Prescription drug costs have grown exponentially, as advertising consumes 31 percent of costs and profits exceed 20 percent. Employers are reducing coverage and demanding that employees pay higher costs. More people, including children, are uninsured or underinsured. Public funding has been cut. Competition among health plans has failed to demonstrate effectiveness in assuring access or contain costs.

The evidence is overwhelming that “profit and greed” are driving the system.

SB 840, which has already passed the Senate, enunciates a fundamental moral principle, that health care is a basic human right. It provides for universal access, comprehensive benefits, a wellness model, and significant cost savings.

The Lewin Group has done extensive economic analysis of SB 840, and documents that everyone in California would have coverage with less money spent.

– Emanuel Gale, Sacramento

Big ideas in health care

Apparently the editorial board has not heard of SB 840, the universal health care bill by state Sens. Shiela Kuehl and Deborah Ortiz, with several coauthors in the Senate and Assembly.
This bill would provide fiscally sound, affordable health insurance to all Californians, provide every Californian the right to choose his or her own physician and control health cost inflation.

The system would be paid for by federal, state and county monies already being spent on health care and by affordable insurance premiums that would replace those now paid by employers and consumers.

This plan would eliminate waste by consolidating the functions of many insurance companies into one comprehensive insurance plan, saving California about $20 billion and reducing total health spending by $8 billion in the first year alone.

For more information about this bill, visit www.healthcareforall.org.

– Lindy Tillement, Rio Linda

Disease management strikes out

By Laura Benko
Modern Healthcare
Originally published January 23, 2006

PREMATURE DEATH
PacifiCare ends program early, CMS cites rising costs

Raising further questions about the financial value of disease management, PacifiCare Health Systems plans to terminate a Medicare demonstration project for heart-failure care almost a year early amid mounting costs.

The health insurer, which was acquired by UnitedHealth Group last month, informed the CMS that it will end its HeartPartners disease-management demonstration on Feb. 28 instead of at year-end, as originally agreed upon.

PacifiCare–the nation’s largest Medicare HMO–launched the federally sponsored demonstration in January 2004 to help the CMS determine whether closely managing the care of seniors with congestive heart failure could improve outcomes, reduce hospitalizations and cut costs among beneficiaries in the Medicare fee-for-service program.

But according to the CMS, with PacifiCare’s fees factored in, HeartPartners has actually cost Medicare more than traditional care.

“From a financial perspective, the program has not generated Medicare savings as anticipated,” said Linda Magno, director of the Medicare demonstrations group at the CMS, adding that PacifiCare has borne all the financial risk. “We can’t force a company to continue with a program if their ability to support that program changes or their financial picture changes.”

Under its original three-year contract with the CMS, Cypress, Calif.-based PacifiCare guaranteed a minimum net reduction in Medicare expenditures because of its services. That means the insurer will be required to return a portion of its fees to cover any costs incurred by Medicare above “budget neutral” through Feb. 28. How much that will be won’t be known until later this year, after all claims have been received and processed, Magno said.

The program’s early halt casts further doubt over disease management’s ability to reduce medical costs, particularly among the older and sicker Medicare population. The economic value of such programs was thrown into question in October 2004, when the Congressional Budget Office released a report concluding there was “insufficient evidence” to prove disease management could actually save money. Hospitals, too, have been experiencing mixed success with efforts to run disease-management programs for insurers (Nov. 28, 2005, p. 6).

“Proponents often claim that disease-management programs not only improve quality but also pay for themselves by decreasing the use of acute-care services enough to offset the costs of the additional screening, monitoring and education services,” stated the CBO report, which analyzed 57 studies of disease-management programs. Unfortunately, “Improving health outcomes and mitigating healthcare costs do not necessarily go hand in hand.”

Since then, disease-management vendors have been scrambling to build a better business case for their programs, largely at the urging of employers (Aug. 8, 2005, p. 26).

Last week, for example, the Disease Management Association of America announced plans to establish an industrywide standard for measuring financial and clinical outcomes. The not-for-profit trade group said it will work with several public and private standards-setting organizations to develop a uniform measurement methodology, which it expects to unveil in early December.

“Our experience shows disease management works, but lack of agreement on how to measure that success has hampered our ability to convince skeptics,” said association Executive Director Tracey Moorhead, adding that the new measurement tools will help “erase any doubt that disease management benefits patients and payers alike.”

Meanwhile, PacifiCare’s decision to pull the plug comes just as the CMS is kicking off a far broader–and more financially stringent–pilot project aimed at testing how disease management could improve quality and contain costs among the nation’s 40 million fee-for-service Medicare beneficiaries. Under the three-year Medicare Health Support Program, launched in August 2005, vendors and insurers in eight regions will manage about 160,000 seniors with diabetes or congestive heart failure. Each company has guaranteed a 5% savings to Medicare net of their fees.

CMS officials, however, say they aren’t reading anything into HeartPartners’ early demise. “The two programs are so very different in their designs that we’re not drawing any direct conclusions or comparisons at this time,” said Barbara Hoffman, director of chronic-care improvement programs at the CMS.

The CMS was mandated under the federal Benefits Improvement and Protection Act of 2000 to study the effects of disease-management programs on some of the nation’s costliest chronic conditions. Congestive heart failure, a progressive condition in which the heart loses pumping power, affects just 14% of Medicare beneficiaries but accounts for a full 44% of the federal program’s annual expenditures, according to the CMS.

HeartPartners was modeled after a disease-management program that PacifiCare has offered its Medicare HMO members with much success since 2001.

The program has provided daily home-monitoring of participants’ weight and symptoms, nurse follow-ups and low-cost prescription-drug coverage to keep patients’ conditions in check.

PacifiCare spokesman Tyler Mason would say only that HeartPartners was stymied by a lack of interest among patients. Under its contract with the CMS, PacifiCare has received monthly payments of up to $525 for every senior enrolled in the program.

The insurer originally expected to collect $300 million in reimbursements over the three years; lagging enrollment has left the company woefully short of those projections.

According to Mason, HeartPartners currently has about 3,750 enrollees, or just 25% of the 15,000 beneficiaries originally expected to participate. The company has served 8,500 members over the life of the program, Magno said.

“After a considerable amount of energy on our part, the interest just isn’t there,” Mason said, adding that the program’s early termination has nothing to do with PacifiCare’s new ownership.

Mason declined to specify how much money PacifiCare has lost on the program other than to say the figure isn’t “anything substantial.”

Indeed, HeartPartners is just a drop in the proverbial bucket for UnitedHealth, which expects to post operating profits of $7 billion on $70 billion in revenue this year and to enjoy up to $250 million in annual savings, thanks to its $9.2 billion purchase of PacifiCare (July 11, 2005, p. 8).

But news of HeartPartners’ pending demise came as a blow to two companies, QMed and Alere Medical, that have handled various disease-management functions for the program since its inception.

Eatontown, N.J-based QMed, which provided decision support to HeartPartners’ participating physicians, said the program’s early halt will slash its 2006 revenue by $3.5 million, or roughly 18%.

Loss of the HeartPartners program will shave 8% to 10% off Reno, Nev.-based Alere’s annual revenue, said President and Chief Executive Officer Ronald Geraty.

Alere, which became PacifiCare’s exclusive disease-management vendor in June 2005, provided the electronic home-monitoring systems for the program. “We certainly believe in the project and are very disappointed that we’re not seeing it through to completion,” Geraty said.

Still, much could be learned from HeartPartners’ two-year stint. Magno said the CMS has hired an outside firm to evaluate the results of the program “to see what changed, what worked or didn’t work, and if (savings were generated) among specific subsets of beneficiaries.”

Those subsets could include heart-failure patients who also had diabetes or coronary artery disease or beneficiaries who received certain forms of outreach over other forms. Results of the evaluation will be contained in at least one of two reports that the CMS will submit to Congress in coming months, Magno said.

HeartPartners isn’t the first disease-management program to fall short of financial expectations.

According to a randomized clinical trial conducted by the University of Texas Health Science Center at San Antonio from 1999 to 2003, patients with heart failure who took part in a disease-management program lived an average of 76 days longer but saw no reduction in hospitalizations, office visits, procedures or pharmacy spending.

Another study, which analyzed outcomes for Kaiser Permanente’s four disease-management programs from 1999 to 2002, also found substantial quality improvement but no cost savings. Both studies were published in November 2004.

Program: HeartPartners is a CMS-sponsored demonstration project in Arizona and California
Focus: Disease management for congestive heart failure
Companies involved: PacifiCare Health Systems, QMed and Alere Medical
Current enrollees: About 3,750
Expected number of participants: 15,000
Start date: Jan. 1, 2004
Original end date: Dec. 31, 2006
New end date: Feb. 28, 2006
Source: CMS

Source: Modern Healthcare, 1/23/2006, Vol. 36 Issue 4, p8, 3p

No-Fault Compensation in New Zealand

Harmonizing Injury Compensation, Provider Accountability, and Patient Safety
Commonwealth Fund, February 2006

Executive Summary

In New Zealand, patients seek compensation for medical injuries not through malpractice suits as in the United States, but rather through a no-fault compensation system. Injured patients receive government-funded compensation, in turn relinquishing the right to sue for damages arising from personal injury except in rare cases of reckless conduct.

According to Marie Bismark and Ron Paterson, the authors of “No-Fault Compensation in New Zealand: Harmonizing Injury Compensation, Provider Accountability, and Patient Safety” (Health Affairs, Jan./Feb. 2006), the country’s Accident Compensation Corporation (ACC) offers distinct advantages over the often maligned U.S. tort law system. While acknowledging that New Zealand’s ACC has yet to demonstrate substantial gains in patient safety, the study finds that the popular system has produced more-timely compensation to a greater number of patients, as well as more effective processes for resolving disputes and ensuring provider accountability.

Benefits of New Zealand’s System
“The ACC system is one of the simplest in the world for patients to navigate,” write the authors, both former Harkness Fellows. Straightforward claims are processed in weeks, with all decisions made within nine months, and a fixed award structure ensuring that similar injuries receive similar compensation. Historically, the ACC has paid out about 40 percent of claims in four categories: 1) treatment and rehabilitation, including the cost of disability aids, home modifications, and vocational retraining; 2) compensation for loss of earnings (up to 80 percent of earnings at the time of injury, up to a set maximum); 3) one-time lump-sum compensation of up to US$70,000; and 4) support for surviving spouses and children under 18.

The system, funded through general taxation and an employer levy, is remarkably affordable. To date, compensation for medical injuries has cost just $29 million—for a population of about 4 million. Reforms enacted in 2005 are expected to incur additional costs of $5 million per year.

According to the authors, several factors contribute to the system’s affordability:
* New Zealanders benefit from strong health and welfare systems that cover many of the damages typically at issue in a U.S. claim.
* Compensation awards are generally lower than under a malpractice system.
* Many entitled patients never seek compensation.
* The ACC’s low administrative costs account for only 10 percent of expenditures, compared with a typical 50 to 60 percent under a malpractice system.

In the 1990s, New Zealand addressed concerns that a no-fault system amounted to a “no accountability” system. It did so by establishing the office of the Health and Disability Commissioner, which promotes patients’ rights and provides accountability, acts as gatekeeper to disciplinary proceedings in serious cases, and ensures that complaints serve to improve health service delivery and lessons learned are widely disseminated.

Remaining Concerns About the ACC
A few other major concerns about New Zealand’s no-fault system, however, remain unresolved, the authors say. First, many observers believe the compensation levels are inadequate, particularly for patients who are not employed at the time of their injury and are unable to claim earnings-related compensation. Second, compensating treatment injuries, but not other forms of illness, can produce tensions, since ACC assistance is higher than that available through the health and welfare systems.

Finally, and most importantly, the system has not fully realized potential gains in patient safety. Thirty years after the implementation of the ACC, New Zealand hospitals are no more or less safe than those in other Western countries—falling midway between the levels recorded in Australia and the United Kingdom—two countries with similar medical practices. While the recent reforms are expected to create a culture of learning, the process of making health care safer cannot be achieved through medical and legal reform alone, say the authors.

Facts and Figures
* In the U.S. medical malpractice system, most injured patients do not qualify for compensation, because their injuries were not negligently caused.
* The most costly claims in New Zealand—as in the United States—involve neurological injury to infants: fewer than 7 percent of claims yet more than 16 percent of spending.
* Per capita health spending was $1,886 in New Zealand in 2003, compared with $5,635 in the United States.

Comparison of the United States Medical Malpractice and the New Zealand No-Fault Systems

Eligibility for compensation
US: Negligence
NZ: Treatment injury

Expert adviser
US: Appointed by parties
NZ: Appointed by ACC

Decision maker
US: Lay jury
NZ: Administrative panel

US: Time to resolve a claim
NZ: Years Weeks to months

Administrative costs
US: High (under 50%)
NZ: Low (under 10%)

Average payment
US: High
NZ: Low (average payment less than US$30,000)

Physician indemnity insurance costs
US: High
NZ: Very low (less than $1,000, regardless of specialty)

Links to quality improvement processes Theoretical deterrent effect Claims analysis informs efforts to improve patient safety

Note: ACC is the Accident Compensation Corporation.

Citation
M. Bismark and R. Paterson, No-Fault Compensation in New Zealand: Harmonizing Injury Compensation, Provider Accountability, and Patient Safety, Health Affairs, January/February 2006 25(1):278–83

Statement for the Record of Dr. Don R. McCanne to Committee on Ways and Means (March 24, 2004)

Statement for the Record of Dr. Don R. McCanne,
Physicians for a National Health Program, Chicago, Illinois

House Committee on Ways and Means
Hearing on Board of Trustees 2004 Annual Reports
March 24, 2004

The 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds describes the projected imbalances between the anticipated revenues and the expected growth in expenditures of the Medicare program. The Trustees call for prompt, effective, and decisive action to address this challenge.

As expected, a highly charged political debate rages over the causes of these anticipated net deficits in Medicare funding. Although we will hear much about factors such as the generous payments to Medicare Advantage plans, and the decline in tax revenues supporting the program, one factor predominates above all others: health care costs continue to escalate well beyond the level of inflation.

Health care cost increases are related to expanding and ever more expensive technological advances, along with unrestrained expansion in the capacity of our health care delivery system. We are spending more because we find more ways to spend health care dollars, and because we continue to expand the capacity that allows us to do it.

Approaching the Medicare deficit as an isolated problem will not address the fundamental cause of health cost increases. Rather, the integrity of the Medicare program would be threatened because solutions would be narrowly directed to substantially increasing revenues and/or dramatically reducing benefits. Either a reduction in benefits or an increase in cost sharing by the beneficiary would threaten to impair access to care because of lack of affordability for the individual beneficiary. The alternative of asking taxpayers to fund the increase in Medicare costs would be problematic when considering that they would also be facing the same escalating health care costs.

We already know that regions with higher health care capacity have increased intensity of services but without a commensurate improvement in medical outcomes. Hospitals with greater bed capacity in their intensive care units provide costly and relatively inhumane end-of-life care when less expensive and more compassionate care would be provided in a hospice environment. Physician owned specialty hospitals and medical group owned imaging systems significantly increase capacity and the level of services although there is negligible data available to demonstrate improved outcomes.

Other nations have demonstrated that planning and capital budgeting of capacity can prevent excessive utilization while ensuring adequate capacity to prevent unnecessary queues. The 15.5% of our Gross Domestic Product that we are currently spending on health care is more than enough to ensure appropriate capacity plus fund the operating expenses of our system, with the proviso that we do not waste resources on some of the current excesses of our system. Although health care planning declined after prior efforts, the current level of spending has reached a threshold that now makes it imperative.

The administrative costs of private health plans are significantly greater than those of public programs such as Medicare. But an even greater problem is the profound administrative burden placed on our health care delivery system by our fragmented system of a great multitude of private plans, large public programs, and, for some, no programs at all. In 2003 numbers, an estimated $286 billion in these administrative costs could be recovered and utilized for the deficiencies in health care coverage today. Eliminating administrative waste must be a part of our solution to rising costs.

Although our national policies protect and promote technological development, there is a pressing need to demand value for our private and public investment. Pharmaceutical firms that develop copycat drugs merely for the purpose of restarting the patent clock should no longer be disproportionately rewarded for such non-innovative efforts. Only new products with demonstrated value should be rewarded with higher prices. Also new products developed with public funding should return that investment to the taxpayer through lower prices. We should require that new technological innovations provide both significant medical benefit and value before funding them. And there is ample evidence to demonstrate that prices are much higher in the United States than in other nations. We clearly need a method of negotiating rates and prices to be sure that we are receiving a fair value for our health care investment while allowing a fair but not excessive profit for the manufacturer or provider.

To bring the level of health care cost increases down to near the rate of inflation, we need to control capacity and pay fair prices. Medicare alone cannot have a significant influence on capacity. Although Medicare does have some regulatory control over prices, acting alone inevitably results in inequitable results through cost shifting and unfairness in pricing, while failing to control global costs. And Medicare cannot further reduce administrative waste when it is adding to the administrative burden by being an additional player in our fragmented system.

Replacing our inefficient and wasteful system of funding care with a single public payer would control costs through global budgeting, planning and budgeting of capital improvements, and negotiation of rates and prices. And with the administrative savings made possible by eliminating the waste of the private bureaucracies, we could afford to fund care for everyone while controlling costs on into the infinite horizon. Instead of limiting Medicare reform considerations to revenue increases and benefit reductions, let us adopt systemic reforms that will enable the enactment of comprehensive, affordable coverage for everyone.

Medical debt is not created by deadbeats

Bankruptcy Reform’s Impact: Where are all the “deadbeats”?
National Association of Consumer Bankruptcy Attorneys
February 22, 2006

The following are key findings from a National Association of Consumer Bankruptcy Attorneys (NACBA) survey of six major credit counseling agencies that have dealt with a total of 61,335 consumers under the new federal bankruptcy law:

* Almost none of those seeking bankruptcy protection are able to repay their debts. Fewer than one out of 20 consumers (3.3 percent) were candidates for paying off what they owe under a debt management plan (DMP), with the remaining 96.7 percent requiring the same bankruptcy filing that they would have needed before the new bankruptcy law went into effect.

* The vast majority of Americans seeking bankruptcy protection are victims of unfortunate circumstances, not imprudent spenders seeking to cancel their debts. Four out of five consumers (79 percent) seen by credit counseling agencies are suffering from debt “caused by circumstances beyond their control (e.g., loss of a job, medical expenses, death, divorce or other change in marital status, increased minimum payments on credit cards, predatory lending, and so on). Only about one in five of the respondents (21 percent) were identified as suffering from debt due to “circumstances within their control”. The credit counselors included in this group all of those individuals who did not deliberately seek to accumulate excessive debt and, instead, through creditor blandishments and lack of financial sophistication, “got in over their heads” as finance charges and other fees mounted over a period of years. Thus, the masses of expected deadbeats who were supposed to be identified under the new law and forced into debt management plans have not materialized.

Testimony of Elizabeth Warren, U.S. Senate Judiciary Committee:

“Overwhelmingly, American families file for bankruptcy because they have been driven there – largely by medical and economic catastrophe – not because they want to go there.”

http://nacba.com/news/022206NACBAbankruptcyreformstudy.pdf

Comment: By Don McCanne, M.D.

The bankruptcy reform legislation was a solution designed to address a fictional problem. Had the bankruptcy issues been carefully defined, the resulting legislation would have had virtually no resemblance to what was produced.

This issue is important to health care reform advocates for two important reasons.

Specifically, our flawed insurance system is resulting in medical debt that has compounded the problem of personal debt. When the cause of medical debt is correctly defined, the solution would have been to reinforce the insurance system so that it would prevent financial hardship in the face of medical need.

More generally, we are now seeing a drive toward a solution based on the fiction that much medical spending is unnecessary, spending that would not occur if individuals were personally sensitive to the costs. Thus the solution proposed results in the increase of medical debt for individuals with greater health care needs. The real problem is that beneficial health care services are becoming less and less affordable, affecting disproportionately those with greater needs. The appropriate solution is to adopt a system that prevents financial hardship while reducing waste through improved resource allocation. This, of course, is precisely what the single payer model of national health insurance is designed to do.

More about medical debt soon. Stay tuned.

Vanquishing the American Dream

By Jim Hightower, Hightower Lowdown
AlterNet.org
Posted January 24, 2006.

As General Motors shuts down well-paid middle-class jobs, the old slogan ‘What’s good for G.M. is good for America’ no longer applies.

People like Robert Paulk and Jerry Roy are the heart of corporations like General Motors. Paulk, 58, and Roy, 49, are longtime, highly skilled hourly employees who’ve been working-class proud of being part of GM. Over the years, they’ve known their share of the hard labor, heavy lifting, and stress that come with being an autoworker, but they’ve stayed loyal, taken great pride in their work, and kept increasing their skills and productivity, doing their part to help General Motors become the largest car seller in the world — and helping GM’s investors pocket years of profits.

The job has been good to Paulk and Roy, too. Under the contracts negotiated by the United Auto Workers, Paulk, his wife, and their two teenagers have been able to enjoy a slice of middle-class comfort. Likewise, Roy, a third-generation GM worker, has done well enough to afford a modest but pleasant house on a lake near Flint, Mich., where his job is.

The Paulks and Roys represent a common story that can be told by millions of Americans of their generation. It’s the story of our country’s “social contract” — an implicit agreement between working stiffs like them and corporations like GM. This is a remarkable success story, embodying our nation’s egalitarian ideals and our commitment to the common good. In practice, America’s historic social contract has established within our huge, diverse and fragile society something essential: a stable middle class. While the Constitution and Bill of Rights are the legal glue of our nation, this contract is the social glue — it binds us as one people, giving tangible evidence that “we’re all in this together.” Those who produced this democratic advance were not the founders back in 1776, but our parents and grandparents — and doing so did not come easily for them.

In the 1920s and ’30s, working families in industry after industry openly rebelled against the rampant corporate greed, workplace abuses and political corruption of the day. As they organized, marched, and held sit-ins and strikes, they were bludgeoned, shot and often killed by corporate bosses, Pinkerton goons, police and even the National Guard. It was a hellacious period of bloody labor war, deep social unrest and spreading political upheaval. Finally, fearing for the very survival of capitalism, corporate chieftains began to signal to union leaders that they were ready to negotiate for labor peace and a new social order.

The ensuing bargain was straightforward: Corporations would get labor, loyalty and productivity in exchange for assuring job and retirement security. From the New Deal until the mid-1980s, unions, corporations and government hammered out a series of explicit agreements, rules and laws that gave legal structure to this implicit contract. The result was a new balance of power that made ordinary people like autoworkers the first decently paid, decently treated working class in the world.

Work was still hard and demanding, but the development of our social contract meant that, for the first time, tens of millions could find the American dream within their reach. By no means would you be a millionaire, but you could buy a modest home, have health care for your family, take a vacation and not have to fear retirement — in other words, have the work ethic fairly rewarded. Such a contract also enabled working folks like Paulk and Roy to feel positive about America’s commitment to the common good, to pride themselves as being a valued part of the economy and the larger community, and to have hope for the next generation. Such feelings are more than touchy-feely niceties — they determine whether people support the social order. This is why the feelings of workaday folks like Paulk and Roy are a crucial baromenter of America’s well-being, and why today’s corporate and political elite had better begin tuning in to them. “We’re all worried. Everybody is worried,” Paulk says of GM’s workers. “There are a lot of people that are really mad. They think this is the thing that revolutions are made of.”

The thing

What has the majority of America’s working families worried, angry and in a mood to revolt is that the Powers That Be have unilaterally decided to walk away from the social contract, and in so doing, to kiss off our country’s middle class. The evidence of their abandonment is everywhere:

* Cut-backs, take-backs and downsizings have become routine corporate practice, even in a time of soaring corporate profits.

* Wages have been deliberately depressed (now not even keeping up with inflation), while workers have dramatically increased the productivity, profitability and competitiveness of their corporations.

* While CEOs slash wages, cut health care and eliminate pensions for workers, they wallow in extravagant pay packages for themselves, get Cadillac health coverage for life and grab rich pensions they haven’t earned.

* Not only are most manufacturing corporations shifting their investments and middle-class jobs offshore (mostly to China), but the high-tech industry is also abandoning the American middle class, shifting even its professional work to low-paid countries (mostly to India).

* Corporate money has bought the White House and Congress (including too many moneysoaked Democrats), so Washington has been aggressively dismantling the framework of rules and laws that allowed labor to achieve some fairness in the workplace.

* The courts and regulatory agencies have been stacked with former corporate minions who are consistently ruling against worker rights and protections.

* Wall Street’s powerhouse investors are now demanding that every corporation and the overall American economy be organized on the low-wage, no-benefit, antiunion model of Wal-Mart.

* The media establishment (itself corporate) has obligingly adopted the corporate spin that the day of unionism is long gone, that workers must learn to accept insecurity and a lowered lifestyle, that the social contract is simply too much of a burden on corporations and governments in this age of global competitiveness, and that, for success, tomorrow’s workers “must take on the responsibility” to identify and acquire — “on their own” — “the emerging skill sets” that will be “valued in the marketplace” (believe it or not, this glob of gobbledygook actually came out of the mouth of an IBM executive, quoted approvingly in the New York Times).

What’s good for GM …

The middle class is not simply “vanishing” (as some well-paid scribes of the establishment media so blithely put it) — the middle class is being vanquished! The auto industry, for example, which once took pride in its work force and in being America’s economic engine for a shared prosperity, has now launched a particularly gruesome assault. Late last year, just before the holidays, General Motors (whose president once famously declared that what’s good for GM is good for America) announced that it was closing 12 of its U.S. plants, eliminating 30,000 hourly jobs and whacking a billion dollars a year out of the health-care benefits it owes to its blue-collar workers and retirees. Two weeks later, GM announced that it was going to triple the number of cars it makes in low-wage India.

At about the same time, Delphi Corporation went even further. A division within GM until it was spun off in 1999, Delphi is the nation’s largest supplier of dashboards, brakes, doors, power trains and other components assembled by auto companies, hauling in more than $28 billion a year in sales. It announced last October that it plans to close some of its 31 U.S. plants, terminate its health-care plan and life-insurance coverage for blue-collar retirees, reduce pension payments, and — get this — force its 34,000 hourly workers to take a two-thirds cut in their wages. Skilled workers there, who make as high as $30 an hour, would be knocked down to as low as $10 an hour. Asserting that the middle-class wages and benefits earned by autoworkers are unaffordable luxuries these days, millionaire executives have begun the Wal-Martization of automaking. This is not just another industry, and the severing of the social contract by GM and Delphi is not just another in a long string of corporate downsizings. This is one of our nation’s premier industries, a symbol of America’s economic vitality and can-do spirit and a pacesetter for our entire economy.

In 1914, only a year after he opened his first assembly line, Henry Ford stunned the manufacturing world by more than doubling the hourly wage of workers on the line. At $5 a day, he explained, they could afford to buy a Ford. Moreover, James Couzens, Ford’s corporate treasurer at the time and the man credited with the $5-a-day idea, said: “We want those who have helped us to produce this great institution and are helping to maintain it to share our prosperity.”

Ninety-one years later, the managerial heirs to Ford and Couzens are disowning any corporate commitment to shared prosperity as they arbitrarily abrogate the good-faith contracts negotiated with autoworkers. Today’s industry executives are cutting off the top rungs of America’s middle-class ladder, lowering the best-paid jobs to a level where employees will no longer have the income to buy the products they make.

In the name of “competitiveness” with third-world countries, these executives are creating a poorer, less secure — and angry — working class in our country, stealing the American Dream from millions of people. Their actions raise a number of Big Questions for the future of our society:

Around what shall we gather? Learned from early childhood, the importance of fairness and sharing is central to our becoming social beings. Indeed, these were the basic values behind the social contract, which pledged that loyalty, productivity, cooperation and quality work would be fairly rewarded. But these values are nowhere in sight when GM dumps 30,000 loyal workers whose productivity record, according to the very CEO who did the dumping, “has been dramatic,” doubling in the past 10 years. These values are also absent when GM shuts down 12 facilities, including two that were ranked among the industry’s best in quality and another at GM’s Tennessee Saturn plant that was renowned as a model of labor-management cooperation. GM has now emphatically declared that those virtues are no longer to be honored. If our society can no longer gather around the shared economic values of loyalty, productivity, cooperation, quality and fairness, then what? The only answer being offered by the elites is “survival of the strongest,” but that’s the law of the jungle, not a social ethic.

Why shouldn’t workers be well paid? The CEOs (and the compliant media) keep hammering autoworkers as the “aristocrats” of labor, claiming that their wages and benefits are excessive and must be slashed so that U.S. auto manufacturers can become competitive again. A New York Times reporter, in a tone of tongue-clucking criticism, noted that GM’s American employees are earning far more than autoworkers “in countries like Mexico and China.” Well, gosh — I would hope so! Isn’t getting ahead part of the American ethic? What’s wrong with a blue-collar factory worker making $30,000 or even $60,000 a year, plus health care and a good pension? That’s success — for the workers and for America — and it ought to be held up as a model for a well-run economy, not a target of derision. Oh, by the way, how ludicrous is it for the pay of middle-class workers to be attacked by CEOs hauling away millions of dollars each and living in platinum cocoons?

What about the abject failures in the executive suite? Top management has become highly creative at blaming, reducing and stealing from its work force. If management put a tenth of that creativity into designing cars that the buying public might actually want, there would be no need for the massive cutbacks we’re getting. Contrast Detroit’s performance with the competition. Toyota, for example, makes cars here in America, paying wages and benefits comparable to Detroit’s. But its high-quality, good-mileage, reliable cars are selling — American consumers are snapping up Toyotas faster than the company can roll them out. Far from cutting back, Toyota and other foreign competitors are opening new plants in America, while the geniuses running GM are trying to shrink their way to prosperity. U.S. auto chieftains do not keep up with market demands or design quality cars. Instead, they run top-heavy corporate structures, engage in fraud (much of Delphi’s present financial troubles come from its three-year, Enron-like accounting scandal that cost investors more than $1 billion), launch new “turnaround” schemes every few months, rely on money-losing discounts to move inventory and dump money into silly advertising campaigns to try to cover up their production failures. Then, with revenues down, they demand more cutbacks for the blue-collar workers while merrily giving everyone in the executive suite promotions and raises.

Doesn’t this cry out for a national health-care program? A constant refrain from the auto companies is that the soaring cost of health care is crushing their bottom line. For example, GM honchos wail loudly that covering their autoworkers and retirees adds $1,500 to the cost of each car. The only answer, they say, is to slash or even eliminate this protection for working families. But wait — before our country callously agrees to yank the health-care rug out from under the middle class, let’s consider fundamentally reforming our bloated, bureaucratic, exorbitantly expensive, inadequate and unjust health-care system. Again, check the competition: Japan has a national health program that doesn’t leave its population dependent on whether an employer wants to or can afford to cover employees. No matter what their job is (or if they don’t have a job), the Japanese people have the security of health coverage. Thus Toyota’s workers enjoy health care without the cost being added to the price of the cars they make.

With a national health program for America, not only would GM improve its competitiveness by some $1,500 per car, but our nation would also be made stronger by replacing the inefficiencies and greed of the massive corporate structure (insurance giants, HMOs, drug peddlers, etc.) separating us patients from our doctors. America spends far more per person on health care than do Japan and other countries with a national plan — and they get superior care. It’s time for the auto bosses to show leadership. Rather than retreating on the social contract, they should use their political and media clout to advance a national health-care program that’ll truly be good for the country — and for General Motors.

A dangerous betrayal

Today’s corporate leadership is playing with fire. The elites are so focused on enriching themselves — knocking down the workaday majority’s wages and benefits in order to grab more of the nation’s wealth, for example, and getting Bush to keep piling on the tax giveaways for the rich at the expense of everyone else — that they have become blind to the looming threat that their avarice poses to the social order and to their own well-being. Until recently, the Wal-Mart model has been taking advantage of low-skilled, low-income workers, but moving that model upward to autos, steel, high-tech, and other industries ensnares highly skilled middle-income workers. There’s a big difference between holding people down and knocking them down. Middle-class working families are people who’ve had a slice of the American pie — and for them to be told now that their slice will be taken from them and their children is not merely to shred the social contract and throw it in their faces, but to dissolve the social glue that holds our big, sprawling, brawling country together. It’s the betrayal of the middle class. And, as Robert Paulk put it, “This is the thing that revolutions are made of.” The elites who are so smugly dismissing middle-class wages and benefits as “excessive” will not be able to build walls and gates high enough to stem the tide of anger coming at them.

From The Hightower Lowdown, edited by Jim Hightower and Phillip Frazer, January 2006.

Jim Hightower is the author of “Let’s Stop Beating Around the Bush” (Viking Press). He publishes the monthly Hightower Lowdown; for more information about Jim, visit jimhightower.com.