VA Care Is Rated Superior to That in Private Hospitals
By Rob Stein
The Washington Post
January 20, 2006

The Department of Veterans Affairs medical system once epitomized poor-quality care. But after a series of changes, the system has been hailed in recent years as a model for health care reform.

Now, survey results released this week indicate that those improvements have translated into a high level of satisfaction among veterans getting treated by the rehabilitated VA.

The telephone survey, conducted in October, found inpatient care received a rating of 83 on a 100-point scale; outpatient care got a rating of 80. In comparison, a similar survey of patients receiving private care found they rated their satisfaction at 73 for inpatient care and 75 for outpatient care.

(Veterans Affairs Secretary Jim) Nicholson acknowledged that some veterans do have to wait for care, but he said the waiting time has been improving and continues to improve.

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/19/AR2006011902936.html

Comment: During discussions of national health insurance, how many times have you heard someone say that we don’t want government health care because then we would all have health care like they have at the VA?

Previous studies have shown that the quality of care in the VA system is actually higher than in the private sector, and now this study shows that patient satisfaction is also greater. It is ironic that the VA can still be used as an argument against national health insurance, but in an entirely different way. Imagine this comment: “We don’t want national health insurance that covers lower quality care in the private sector when we can have higher quality and greater patient satisfaction through a government-owned socialized medicine system as exemplified by the VA.”

Of course, you won’t hear such comments because the nation is not supportive of a public buy-out of our entire health care delivery system. They are having enough trouble accepting the concept of public insurance, as persuasive as are the arguments for a social insurance system.

One reason for the VA’s effectiveness is that it is an integrated health care delivery system, but many would prefer care in the private sector rather than in what they perceive to be a less personal, clinic-type environment. However, Kaiser Permanente, as an integrated health delivery system, has many features in common with the VA system, and yet many patients select Kaiser as their provider of choice.

If we had a national health insurance program, individuals would have the freedom to choose integrated health systems. For veterans, that should certainly include the VA. They should not be deprived of the option of higher quality and greater satisfaction with their care.

The VA does have a unique problem. Wars abruptly create new veterans, and a fixed system has limited flexible surge capacity to meet the increased demand. Queues for elective services can be a problem, though they can be moderated through modest capacity adjustments and queue management. Regardless, for those veterans who cannot afford care in the private sector, and who are stuck in a queue, a universal national health insurance program could provide them the option of obtaining their care in the private sector.

The least we could do for our veterans is to give them the additional choice of accessing the poorer quality and less satisfying care that the rest of us have.

John J. Sweeney, President of the AFL-CIO
National Press Club
January 18, 2006

… if I were President of the United States, I’d use this State of the Union speech to… challenge Congress to quit stalling and pass universal health coverage this year …

(Later in the speech…)

We need a simple national health care plan that covers everybody…

http://www.aflcio.org/mediacenter/prsptm/sp01182006.cfm

Comment: Everyone across the political spectrum supports “universal health coverage,” even though for some that means only providing everyone with the option of being able to purchase a low-cost, stripped-down plan of “basic” benefits, while excluding those who fail underwriting requirements. Individuals claiming to support universal coverage can be ignored unless they present specifics on a plan for comprehensive coverage that would automatically include absolutely everyone. The problem is that most people who speak about universal coverage really mean covering the most people we can with our fragmented system of public and private programs, recognizing that “we’ll never be able cover absolutely everyone,” often said with a wink and a nod.

What about “a simple national health care plan that covers everybody”? If this is a truly sincere statement, it says much more.

“Everybody” is much more specific than that abused term: “universal.” Presumably “everybody” really does mean everybody.

“National” means federal, as opposed to state and local programs that tend to be patchwork attempts to cover more (or sometimes less) under a shredded system. A national program presumably would be a standardized, equitable program that would cover everyone in the nation.

“Simple” is a term that you don’t hear from most individuals speaking about universal coverage. That is likely because their proposals are complex modifications of our fragmented system, such as the touted consumer-directed health plans that actually reduce coverage. On the other hand, “simple” is a term used by advocates of reform who would replace our complex, highly inefficient and wasteful system of administering health care funds with a simple, publicly-administered single payer system. Could that be what John Sweeney meant?

There is no doubt that John Sweeney’s words were chosen very carefully for this important speech before the National Press Club. As to the meaning behind his words, we anxiously await signals to see if AFL-CIO’s actions will quickly evolve beyond their current efforts to merely target a few large employers.

The Wrong Prescription
Letter to the Editor
The Washington Post
January 16, 2006

I hope that The Post’s Jan. 10 editorial “Certificate of Need? Yes!” helps stop the plan to build another hospital in a city that does not need more hospital beds.

Almost all of the serious health care problems in the Washington area require more effective disease prevention and primary health care; better access to doctors and nurses for routine and early-stage problems; better nutritional counseling; access to affordable healthy food; and an array of health services that are either unavailable or available only on a fragmented and dysfunctional basis to low-income families.

Employers and employees pay on average more than $12,000 a year for family health coverage in the District. Unnecessary, costly additions to an expensive health care system will drive up costs more. Some employers will drop coverage as a result or move jobs out of the high-cost city. Either way, the poor and others with low incomes will suffer most.

The District has too much high-tech health care and too little good primary care. The worst step that the city could take is to waste $400 million on an unneeded hospital, which undoubtedly will cost even more than that before it is done.

Helen Darling
President
National Business Group on Health

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/15/AR2006011500691.html

Comment: Health care reform is often presented as a divisive issue. In articles on the topic, the single payer model of Physicians for a National Health Program (PNHP) is often presented as a government solution which has been contrasted with private sector solutions such as those supported by the National Business Group on Health. But are private business interests and public insurance interests really incompatible when it comes to health care reform?

Without commenting on the advisability of a new district hospital for Washington (which should be based on an assessment of need), this letter by Helen Darling could have been written by a member of PNHP. Look at the points on which we agree:

* Capital improvements, such as new hospitals and bed capacity, such be based on regional planning responding to identified needs.

* Excessive, ineffective high-tech health care should not be funded.

* Our deteriorating primary care infrastructure should be dramatically reinforced, which can be done by improving resource allocation.

* Prevention should be a primary goal using public health measures such as disease prevention, better nutrition with access to affordable healthier food, earlier access to the health care delivery system, and removal of impairments in access to other health services – impairments that are partially due to the fragmentation of our public and private systems of funding care.

* Current trends are resulting in a further decline in employer-sponsored coverage and “the poor and others with low incomes will suffer most.”

What is divisive about this? We agree on these points. Now is the time for all individuals and organizations to come together on reform. This does not mean that we have to enter a process of compromise in which each side gives up maybe half of the fundamental issues they support.

The National Business Group on Health can continue to advocate for higher quality services, for error reduction, for reduction of wasteful high-tech excesses, for provider assessments designed to improve system performance and for other measures that achieve the market goals of higher quality at lower costs. PNHP can continue to advocate for universal coverage, for administrative efficiency in funding care, for improved allocation of health care resources, for an equitable system of funding the universal risk pool in which each individual or entity contributes a fair share, and for budgeting mechanisms that slow the rate of growth in health care spending. These and other important goals can be achieved without having to compromise, but rather by cooperating. Together we can achieve an equitable, affordable, high quality, comprehensive health care system that would meet the needs of every individual while fulfilling the commitment of business and government for better health care for all.

Although the following quote is on war and killing, the affirmation should help us reflect on why we should not let up in our fight for health care justice:

“Now let me say that the next thing we must be concerned about if we are to have peace on earth and good will toward men is the nonviolent affirmation of the sacredness of all human life.”

Rev. Dr. Martin Luther King, Jr.

Public Solutions to Health Care Wait Lists
By Michael M. Rachlis
Canadian Centre for Policy Alternatives
December 2005

Executive Summary

Waits for care are the biggest political issue facing Canadian health care. Both citizens and providers are concerned that too many waits are too long and put some patients at risk.

Canadians would do well to consider public sector solutions to the wait-times problem. The good news is that many such public solutions are at hand. Here are two of the most innovative ones:

* The health care system should establish more specialized short-stay surgical clinics within the public sector. These clinics provide the efficiencies that private clinics have capitalized on, without siphoning public dollars to shareholders.

* Lessons learned from queue-management theory should be adopted. Examples from both the public and private sectors – such as line-ups at banks and airports – show us how better coordination and flow of queues can dramatically reduce wait times.

Canadians tend to assume that, if there is a wait for health care, there isn’t enough of it. For example, many breast patients have to wait for a mammogram, then wait for an ultrasound, and then wait again for a biopsy. The Sault Ste. Marie breast health centre reduced the wait-time from mammogram to breast-cancer diagnosis by 75% by consolidating the previously separate investigations. If a woman has a positive mammogram, she often has the ultrasound, and sometimes the biopsy as well, on the same day.

The Rexdale Community Health Centre serves 6,000 patients in a disadvantaged community in northwest Toronto. In 2003, patients faced a four-to six-week wait for appointments. The centre temporarily increased resources to clear its backlog, and now provides same-day service.

This same plan can be followed for surgical wait lists. First, map the process. At each step, assess whether capacity is sufficient to meet demand. If it is, temporarily increase resources to clear the backlog and go to just-in-time servicing. If capacity is insufficient for demand, then re-design services. If there is still unmet demand, then a bottleneck has been identified. It requires more resources.

These public solutions – specialty clinics in the public sector and application of queueing theory to surgical wait lists – are but two of many alternatives to private finance and for-profit delivery. Others include increasing surgical capacity in public hospitals and putting greater emphasis on prevention. There is no shortage of such solutions if the political will is present.

Let’s not add private problems to our health care system. We already have the public solutions at hand. Let’s put them into practice.

http://www.policyalternatives.ca/documents/
National_Office_Pubs/2005/Health_Care_Waitlists.pdf

And…

Explaining Waiting-Time Variations for Elective Surgery Across OECD Countries
By Luigi Siciliani and Jeremy Hurst
OECD Economic Studies No. 38, 2004/1

This study has added to the limited evidence on variations in waiting times across OECD countries for publicly-funded elective surgical procedures and on their possible determinants.

We have compared key statistics for the group of countries where waiting times are a major health policy concern (Australia, Canada, Denmark, Finland, Ireland, Italy, Netherlands, New Zealand, Norway, Spain, Sweden, and United Kingdom), with another group where waiting times are not a concern (Austria, Belgium, France, Germany, Japan, Luxembourg, Switzerland, and the United States). It is found that countries which do not report waiting times, on average spend more in health care, have higher capacity (measured in terms of acute care beds and doctors), and implement more frequently forms of activity-based funding for hospitals and fee-for-service systems for doctors (as opposed to salary). On the demand side, the two groups of countries do not differ markedly in need, as measured through the proportion of elderly in the total population or mortality rates, and in the degree of cost sharing (co-payments for surgery).

http://www.oecd.org/dataoecd/15/52/35028282.pdf

Comment: This and previous OECD papers have demonstrated that maintaining adequate capacity in the health care delivery system is important in avoiding excessive wait times or queues. Monitoring and adjusting capacity as appropriate prevents unnecessary queues.

The report by Michael Rachlis is important because he demonstrates that queue management need not be expensive. Sometimes modest resources must be added to expand capacity, but the amounts are negligible when considered as a percentage of the entire health care budget. His most important point is that the application of queue-management theory can correct the problems with virtually no increase in spending. A private system of funding care is not a prerequisite. The only requirement is a responsible steward with political will.

If the United States decided to include everyone in its health care system, we would have to ensure adequate capacity and apply queue-management theory. Fortunately, affordability would not be an issue since the $2 trillion that we will be spending this year is more than enough to meet those costs.

Our other option is to continue with our current, very effective method of controlling queues. We can continue to make access to health care unaffordable for a major sector of our society so those individuals don’t clog up the queue. That’s easy, and it works!

Medicare’s Hidden Administrative Costs: A Comparison of Medicare and the Private Sector
By Merrill Matthews, Ph.D.
The Council for Affordable Health Insurance
January 10, 2006

Executive Summary

One of the most common, and least challenged, assertions in the debate over U.S. health care policy is that Medicare administrative costs are about 2 percent of claims costs, while private insurance companies’ administrative costs are in the 20 to 25 percent range.

It is very difficult to do a real apples-to-apples comparison of Medicare’s true costs with those of the insurance industry. The primary problem is that private sector insurers must track and divulge their administrative costs, while most of Medicare’s administrative costs are hidden or completely ignored by the complex and bureaucratic reporting and tracking systems used by the government.

This study, based in part on a technical paper by Mark Litow of Milliman, Inc., finds that Medicare’s actual administrative costs are 5.2 percent, when the hidden costs are included.

In addition, the technical paper shows that average private sector administrative costs, about 8.9 percent – and 16.7 percent when commission, premium tax, and profit are included – are significantly lower than the numbers frequently cited. But even though the private sector’s administrative costs are higher than Medicare’s, that isn’t “wasted money” that could go to insuring the uninsured. In fact, consumers receive significant value for those additional dollars.

We also raise an important, although heretofore unrecognized, issue that gives Medicare an inherent advantage on administrative costs. Because of the higher cost per beneficiary, Medicare administrative costs appear lower than they really are. If the numbers were adequately “handicapped” for comparison with the private sector, they would be in the 6 to 8 percent range.

Finally, like the private sector, Medicare also has to obtain funds to pay claims. But the cost of raising that money, or borrowing it if the government doesn’t collect it from taxpayers, is excluded from Medicare administrative cost calculations. While we don’t in this paper draw any conclusions about what we shall call the “cost of capital” and its impact on Medicare’s administrative costs, we do want to highlight that those costs exist and that taxpayers, both today and in the future, must bear those costs.

http://www.cahi.org/cahi_contents/resources/pdf/
CAHI_Medicare_Admin_Final_Publication.pdf

Comment: The Council for Affordable Health Insurance (CAHI) is an association of insurance carriers advocating for market-oriented solutions to the problems of our health care system. Their bias for affordable private health insurance is at odds with our bias for affordable publicly-funded health care for everyone. They have now released a report “exposing” Medicare’s hidden administrative costs.

It is important to be aware of this report and the paper of Mark Litow of Milliman, Inc. on which this report is based. Opponents of single payer reform will use the concepts presented to dismiss the charge that private insurers are responsible for much more administrative waste than is our Medicare program.

When we are challenged, our best quick response would be to use their own numbers. After they have adjusted the numbers by applying their biased assumptions, the percent of private sector administrative costs is still over three times the administrative costs of Medicare (16.7 percent and 5.2 percent, respectively). The actuality of the administrative excesses is not in dispute – only the degree of the egregiousness of the excesses.

The opponents will also point out that the percent of administrative costs for Medicare beneficiaries is lower because the per person health care costs are higher than in the relatively healthy private insurance sector. But shouldn’t the administrative spending be directed primarily toward claims processing, especially since Medicare enrollment is a low-cost, once-in-a-lifetime event? Why should a greater percentage of health care dollars be used to administer private insurance programs with a much lower rate of claims processing? The administrative costs of claims processing is related much more to the volume of claims and much less to the number of beneficiaries. Thus their “handicapped” numbers are specious.

In another section of their report they claim that administrative costs “add value.” Most of us have difficulty recognizing the value of marketing costs, medical underwriting, brokers’ fees, excessive executive compensation packages, insurer profits, and other such administrative excesses. This claim alone, that these excesses add value, should destroy the credibility of this report.

The most important component of administrative waste was totally left out of this report – the administrative burden placed on the providers of health care. The recent Health Affairs report by J. Kahn and his colleagues demonstrated that just the billing and insurance related costs of private insurance consume about 21 percent of premium dollars, in a large part due to the administrative burden of physicians and hospitals. A single, administratively-streamlined system of claims management would dramatically reduce the waste of our current fragmented system.

And what is their conclusion?

“However, the issue is not and should not be which segment, private sector insurers or government-run plans, has the lowest administrative costs. The issue should be which does the best job of providing quality health insurance coverage for the best price. When one looks at all of the money pouring into Medicare, even with the price controls imposed by the government, the answer has to be the private sector.”

And we’re leaving these guys in charge? It almost makes you want to cry.

National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending
By Cynthia Smith, Cathy Cowan, Stephen Heffler, Aaron Catlin the National Health Accounts Team (Office of the Actuary, Centers for Medicare and Medicaid Services)
Health Affairs
January/February 2006

U.S. health care spending rose 7.9 percent to $1.9 trillion in 2004, or $6,280 per person. Health spending accounted for 16 percent of gross domestic product (GDP).

Medicare spending rose 8.9 percent to $309 billion in 2004.

Total Medicaid spending (federal plus state and local) reached $290.9 billion in 2004.

Private health insurance premiums amounted to $658.5 billion in 2004, compared with $563.5 billion in benefits paid.

The employee share of employer-sponsored and individually purchased coverage rose to $206.4 billion in 2004, while out-of-pocket spending for copayments and deductibles and for noncovered goods and services reached $235.7 billion. When payroll taxes and premiums associated with government-subsidized care such as Medicare and Medicaid are added in, aggregate household spending totaled $557.2 billion-more than one-third of PHC (personal health care) spending in 2004. Aggregate private business spending was $448.3 billion.

The trajectory of health care spending continues to be driven by new medical treatments, rising prices, and growing utilization. Medical progress has improved health care for many families, but rising costs are also a growing burden for households, businesses, and governments. Medical spending continues to rise faster than wages and faster than economic growth, and workers are paying much more in health care premiums than just a few years ago. As costs rise, the efficiency of health care spending is increasingly scrutinized, which has led to greater interest in paying for improved quality or outcomes, disease management, and consumer-directed health care. Although much of health spending may be highly valued, continued spending growth will require difficult trade-offs for businesses, households, and governments as other spending also rises. These trade-offs are more stringent for those with fewer resources.

http://content.healthaffairs.org/cgi/content/abstract/25/1/186

Comment: Although presented as a “slowdown” in spending, the 7.9 percent increase is significantly greater than the increase in cost of living, and now constitutes 16 percent of the GDP.

In looking at the source of funds, it is important to recognize a principle accepted by virtually all economists. The employer component of the Medicare payroll tax is part of the total employee compensation package; employees fund that tax through a non-itemized reduction in take-home pay. Thus the $67.4 billion Medicare tax listed as a private business source of funds should really be listed as part of the aggregate household spending. (Actually, the entire employee benefit package is a business expense, but this principle acknowledges the fact that the source of payroll taxes for social insurance programs – Medicare and Social Security – is the employee-beneficiary of the program.)

Adjusting for the employer component of Medicare payroll taxes, private business is a source of $380.9 billion of the funds for health services and supplies, and the aggregate household spending is $624.6 billion. Although employer-sponsored coverage remains a very important source of health care funding, the out-of-pocket spending by households represents a significantly greater burden imposed by health cost escalation. In addition, taxpayers fund the public portion of health spending which is $682.7 billion.

So what are we doing about the increasing burden of rising health care costs? We are shifting more of the costs to the households. Although we all feel the pain, those with health care needs who can’t afford care will feel it the most.

The tragedy is that we know how to fix our system. But… we’re not doing it. What a shame.