The political process in repairing a single payer system versus a fragmented system

Toronto Star
Jul. 22, 2004
Televising health summit `very risky, very bold’ move
Martin to meet provincial leaders Sept. 13 to 15
By Les Whittington

(Prime Minister Paul) Martin, who fought the recent election campaign largely on a promise to protect medicare from being eroded by private, for-profit services, revealed the date of his health-care showdown with the premiers after meeting for the first time with his newly appointed cabinet.

The written announcement of the first ministers’ meeting left no doubt about
Martin’s aims. “The major agenda item will be how to strengthen for the long
term Canada’s publicly funded, single-payer health-care system,” it said.

In a horse-trading session to be broadcast across the country from Ottawa,
Martin will seek support from restive premiers for the Liberals’ main electoral promise – a 10-year blueprint to refurbish the hard-pressed health-care program.

Much of the talk will focus on Martin’s offer of $4 billion in extra federal cash to the provinces in exchange for their help implementing a National Waiting Times Reduction Strategy.

This is envisioned by the Liberals as an “all-out drive” over the next five years to achieve significant reductions in waiting times for medical procedures in five areas: cancer, heart, diagnostic imaging (MRIs), joint replacements and sight restoration.

The federal Liberals also want provincial help with major reforms to reduce runaway medicare costs while improving access to health providers, expanding
home care and developing a national pharmacare program.

http://www.thestar.com/NASApp/cs/ContentServer?pagename=thestar/Layout/Article_Type1&c=Article&cid=1090447813703&call_pageid=968332188774&col=968350116467

Comment: Opponents of health care reform in the United States frequently claim that we don’t want to have a “mess” like they have in Canada. Canada does have a problem with queues (though often exaggerated), and they are now addressing, in an open political process, how they can best rectify this problem. Although single payer systems require continual political maintenance, they certainly do work in ensuring that everyone continues to have affordable access to health care.

Contrast that with health care in the United States, a non-system for which “mess” is a grossly inadequate descriptive term. Our fragmented system is suited to incremental measures which have failed to achieve universal coverage and access and have perpetuated mediocrity in our health care outcomes in spite of the massive infusion of funds. Until we adopt a comprehensive, universal system, we will not be able to resolve our current problems and then maintain higher standards by fine tuning our system through an open public process as is currently taking place in Canada.

Imagine the system that we would have if we exchanged our fragmented mess
for Canada’s single payer, and then infused the resources that we have already designated for health care. With the tweaking of incrementalism, our health care parameters have only worsened. But wouldn’t it be nice if we had a high quality, comprehensive system that really would require simply modest tweaking to enable it to continue to function well? That’s a mess that we could live with.

NCHC’s call for comprehensive reform

National Coalition on Health Care
July 20, 2004

Building a Better Health Care System

Principle 1 – Health Care Coverage for All

Principle 2 – Cost Management

Principle 3 – Improvement of Health Care Quality and Safety

Principle 4 – Equitable Financing

Principle 5 – Simplified Administration

Conclusion

The members of the National Coalition on Health Care are determined to work
for comprehensive reform of the American health care system. We offer these
specifications for reform as an agenda – an urgent agenda – for action. We close with two observations.

First, we would emphasize again our conviction that reform must be systemic
and system-wide. The problems of our health care system – and the principles
that guided our development of specifications for reform – are so closely
interrelated that they must all be addressed at the same time. One-dimensional reform will not work.

Consider: Unless we improve the quality of care, we will not be able to manage costs or afford universal coverage. Unless we manage costs effectively, we will not be able to achieve equitable financing or cover all Americans. And unless we assure coverage for everybody, we will be unable to make the system less complex, establish a level playing field without cost-shifting, or create a truly competitive health care marketplace.

Second, the status quo – clearly, undeniably – is not working. It leaves tens of millions of Americans with no health insurance at all. It allows costs to skyrocket year after year, putting coverage out of reach for millions of Americans and compromising the vitality of our economy and its capacity to create and sustain jobs. And it jeopardizes the safety of patients because of widespread sub- standard care.

The status quo is not acceptable. It is time – it is past time – to change it. The readers of this report can have a tremendous impact on the prospects for reform and the shape of reform. We hope that you will work with us in this important effort.

Full report:
http://www.nchc.org/materials/studies/reform.pdf

Press release:
http://www.nchc.org/news/press_releases/2004_07_20.pdf

Webcast of the briefing:

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1239.

Comment: On reading the full report it is difficult to come to any other conclusion than that a single payer, publicly funded and publicly administered insurance program offers the best option, and possibly the only realistic option, for achieving all of the Coalition’s goals. However, in order not to lose support of several coalition members, the other familiar options were included for consideration in this proposal.

Although this report is quite weak on specifying the one precise model of reform that should be adopted, it is very strong in supporting no less than truly comprehensive reform now. The message is that it is time to abandon the failed policies of incremental tweaking. That is a real step forward. We should move on it.

A private health care information technology system

Health and Human Services
July 21, 2004
The Decade of Health Information Technology: Delivering Consumer-centric and Information-rich Health Care
By David J. Brailer, MD, PhD, National Coordinator for Health Information Technology

Conclusion

Health information technology provides a mechanism for refocusing care delivery around consumers without substantial regulation and industry upheaval. Information technology can result in better care (care that is higher in quality, safer, and more consumer responsive) and at the same time, more efficient (care that is appropriate, available, and less wasteful). There are very few other alternatives that can achieve both of these goals in a balanced and timely manner.

A national strategy for HIT is needed to achieve this change. This strategy should inform clinical care by introducing EHRs on a widespread basis everywhere clinicians provide treatment. It should interconnect clinicians to allow them to share data in a seamless and secure manner that protects patient privacy. It should customize health information and care so that consumers can have more control, more treatment options, and more choice of providers, including clinicians who may be at a distance. It also should improve population health by monitoring health care delivery in a simple and timely fashion so that quality, public health risks, and clinical research can be enhanced.

The changes that will accompany the application of information technology to health care will be difficult and will challenge fundamental assumptions that have been long held. However, this change is inevitable, needed, and beneficial. Actions can and should be taken to ensure that this change happens sooner rather than later, is more widespread rather than less, and also improves health care quality while addressing health care costs. The actions that are taken over the next decade will ensure that the best health care can be delivered to Americans, and that lasting and positive change in the health care industry will result.

And from the report:

Public-Private Leadership

Low adoption and use of HIT are attributable to many factors, including a
challenging marketplace and a previous lack of cohesive federal policies supporting it. Leaders across the public and private sector recognize that the adoption and effective use of HIT require a joint effort between federal, state, and local government and the private sector.

The private sector role

While the federal government plays an important role in HIT adoption, the effective use of, and value creation from, this technology lies predominantly with the private sector. The federal government will provide a vision and a strategic direction for a national interoperable health care system, but will rely on a competitive technology industry, privately operated support services, and shared investments in HIT adoption. The private sector must develop the market institutions to deliver the products and services that can transform the paper-based health care system into an electronic, consumer-centered, and quality-based system. The private sector can best ensure that HIT products are successfully implemented in ways that meet the varying needs of American health care across settings, cultures, and geographies. The private sector can also continue constant innovation in HIT and ensure that products are delivered on an affordable basis.

Federal and state governments have delegated most components of quality assurance to voluntary private organizations, including but not limited, to the JCAHO, NCQA, the National Quality Forum, residency review committees, and others. This will be true of quality and performance accountability in the future world of HIT. New market institutions need to be developed that can support clinician adoption of HIT, provide interoperability, and enhance the value realized by these investments. Close collaboration between public and private sectors can develop new methods for improving care without creating unnecessary regulation and minimizing reporting burdens on private industry.

The federal role

The federal government has substantial cause for addressing HIT adoption. Although the public is only now becoming aware of errors and mistreatments
in care delivery, the incidence and severity of errors has been known by researchers for some time. The health status of Americans is lower than it
would be if care were seamless, timely, and evidence driven. Health care
inefficiency and quality problems create economic burdens on other industries. When working Americans spend large shares of their time moving between physicians, dealing with the morbidity of improperly treated chronic illness, handling care burdens for their elderly parents, and recovering from errors and unnecessary therapies, the productivity of the American labor force, and America’s position as a global output leader, is harmed.

The federal government has numerous means of stimulating change in the health care industry, even if most of that change occurs in the private sector. While the federal government should not seek to reform health care without industry collaboration through the use of information technology, neither should it let the status quo exist simply because change will be difficult, complicated, and challenging to the industry. The DoD and VA are major federal health care delivery organizations and, increasingly, contractors for care in communities across the United States. The lessons these organizations have learned about HIT are an invaluable national asset and should be diffused through relationships with private delivery networks. Also, the Federal Employees Health Benefits Program (FEHB) contracts for care in most urban markets across the United States, and can drive positive economic change in general care delivery. Beyond finance and
contracting, the current operation of the health care industry results from a vast
patchwork of federal regulations that create many unintended inhibitory consequences for quality and efficiency.

The full report (178 pages):
http://www.hhs.gov/onchit/framework/hitframework.pdf

Press release:
http://www.hhs.gov/news/press/2004pres/20040721a.html

Comment: The private, competitive market has produced for us computers that are powerful yet inexpensive. Software that is used widely is quite inexpensive, and that in the public domain is essentially free after the initial development costs. With inexpensive computers and software developed in the public domain, the cost of an integrated health care IT (information technology) system should be quite modest. And the return in error reduction and administrative efficiency would far more than offset any real costs.

The Veterans Administration is far ahead of the rest of the nation in developing and utilizing an integrated IT system. And this has been developed in the public (government!) sector. Many other nations with universal health care systems have also introduced integrated IT systems primarily through the public sector.

What has the magic of the competitive marketplace produced in the way of an
integrated IT system to this date? High costs, very poor penetration, and system failures! Competitive market theory dictates that we should be leading the world with a high quality health care IT system at a low cost. What went wrong?

First of all, a fragmented system of multiple private plans, public programs and uninsurance does not provide an infrastructure that is very conducive to an integrated IT system. A single payer system, or, at minimum, a highly regulated system of universal coverage through multiple plans, would provide a framework that would ensure adaptability of an integrated IT system. Of course, a single, publicly administered system would be much preferred for an integrated IT system.

But the greatest difficulty with private IT solutions lies in the very nature of these marketplace models. Their goals are, above all, to maximize profits and to maximize the market price of their shares. To achieve those goals, corporate behavior varies from that of a public entity that has a simpler goal of establishing an effective and efficient high quality system that serves the heath care system and its patients well. The public system does not have to be concerned about being a successful business enterprise, but the private model does.

What might the private sector do that doesn’t serve our interests well? They will produce products that command the highest prices that the market will bear. They will design the products to provide a continuing revenue stream. Once gaining a significant share of the market, they will design incompatibility with other systems in an attempt to garner the entire market. They will design obsolescence into their systems to ensure future markets for their new innovative products. They will partner with and perhaps acquire other related entities that can expand profit potentials through greater control of components of the health care system which their products can influence. Although these are good business practices, they are terrible policies for our health care system.

But without market incentives, wouldn’t innovation be suppressed? We have market innovations now, and they have not resulted in the IT developments
that we desperately need. Public innovations have been effective in developing systems in other nations and in the VA that are already working. If private entrepreneurs can develop innovations that could benefit a public system, there is no reason that they couldn’t be sold to the government to place in the public domain. But they should be priced to reflect costs plus a fair one-time profit. We really don’t need more superfluous profit centers in our health care system.

The health information technology report released today should alarm us all.
Although we all agree on the importance of an integrated IT system, the Bush
administration is limiting the role of the government to being an enabler that encourages the private sector to develop a successful business model. Rather than higher quality at a lower cost, we’ll end up with mediocrity at a much higher cost, wasting even more of our health care dollars.

We desperately need strong leadership from our government in developing a
health care IT system that will serve us all well. But based on the current leadership that has failed to address even the fundamental issue of adequate
health care coverage for all, it is unlikely that we’ll see any enlightened leadership on this in the near future. But that said, “Watch this swing!”

NCHC’s call for comprehensive reform

National Coalition on Health Care
July 20, 2004

Building a Better Health Care System

Principle 1 – Health Care Coverage for All

Principle 2 – Cost Management

Principle 3 – Improvement of Health Care Quality and Safety

Principle 4 – Equitable Financing

Principle 5 – Simplified Administration

Conclusion

The members of the National Coalition on Health Care are determined to work
for comprehensive reform of the American health care system. We offer these
specifications for reform as an agenda – an urgent agenda – for action. We close with two observations.

First, we would emphasize again our conviction that reform must be systemic
and system-wide. The problems of our health care system – and the principles
that guided our development of specifications for reform – are so closely
interrelated that they must all be addressed at the same time. One-dimensional reform will not work.

Consider: Unless we improve the quality of care, we will not be able to manage costs or afford universal coverage. Unless we manage costs effectively, we will not be able to achieve equitable financing or cover all Americans. And unless we assure coverage for everybody, we will be unable to make the system less complex, establish a level playing field without cost-shifting, or create a truly competitive health care marketplace.

Second, the status quo – clearly, undeniably – is not working. It leaves tens of millions of Americans with no health insurance at all. It allows costs to skyrocket year after year, putting coverage out of reach for millions of Americans and compromising the vitality of our economy and its capacity to create and sustain jobs. And it jeopardizes the safety of patients because of widespread sub- standard care.

The status quo is not acceptable. It is time – it is past time – to change it. The readers of this report can have a tremendous impact on the prospects for reform and the shape of reform. We hope that you will work with us in this important effort.

Full report:
http://www.nchc.org/materials/studies/reform.pdf

Press release:
http://www.nchc.org/news/press_releases/2004_07_20.pdf

Webcast of the briefing:

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=1239.

Comment: On reading the full report it is difficult to come to any other conclusion than that a single payer, publicly funded and publicly administered insurance program offers the best option, and possibly the only realistic option, for achieving all of the Coalition’s goals. However, in order not to lose support of several coalition members, the other familiar options were included for consideration in this proposal.

Although this report is quite weak on specifying the one precise model of reform that should be adopted, it is very strong in supporting no less than truly comprehensive reform now. The message is that it is time to abandon the failed policies of incremental tweaking. That is a real step forward. We should move on it.

WebMD
July 19, 2004
HIPAA Implementation: The Case for a Rational Roll-Out Plan

HIPAA Administrative Simplification, as it is currently being implemented,is increasing complexity and cost for health care providers and payers.

Introducing WebMD

WebMD Envoy conducts more HIPAA transactions than any other private entity. In total, WebMD processes more than 3.0 billion transactions on an annualized basis for 300,000 physicians, hospitals, dentists, labs and pharmacies, submitting to more than 1,500 payer connections.

The HIPAA Promise: Administrative Simplification

As envisioned by Congress, codified by law and embraced by the industry, HIPAA Administrative Simplification would reduce administrative costs by increasing efficiency through the exchange of electronic communications between providers and payers. As HHS noted in the preamble to the final Transaction Rule, “The lack of standardization makes it difficult and expensive to develop and maintain software. Moreover, the lack of standardization minimizes the ability of health care providers and health plans to achieve efficiency and savings.” At the core of the HIPAA promise is the commitment to reduce administrative costs by defining standards for electronic transactions so that all participants in the electronic health care marketplace would speak the same language and use the same practices.

Instead of negotiating the details of more than 400 claim forms,providers would fill out just one form that would be accepted by all payers. The information payers sent back to providers would be equally uniform. The simplicity brought about by standardization was expected to encourage more providers to switch from paper to electronic transactions.

The HIPAA statute specifies that the standards adopted “shall be consistent with the objective of reducing the administrative costs of providing and paying for health care.” Congress reiterated this objective in the statute three times, and the Department clearly stated that “[t]he purpose of [the Transaction Rule] is to improve the . efficiency and effectiveness of the health care system.” Consistent with Congress’s clear intent that Administrative Simplification reduce administrative costs, standard electronic health care communication must be implemented in a manner that is consistent with and satisfies this objective.

Missing the HIPAA Mark

The simplification envisioned by HIPAA has not materialized and the statutory HIPAA goals of reducing administrative costs and increasing efficiency are in jeopardy.

Transaction Format – Lack of Uniformity

The standards and implementation specifications are extremely complicated and thousands of pages long. Multiple versions of a HIPAA standard claim have emerged as each payer defines for itself what constitutes a “HIPAA-compliant” claim. Payers have published more than 600 different “companion documents” setting forth their individual interpretations and implementation of the government guidelines. That number is expected to grow to one thousand. The standards, as currently being implemented, are increasing the complexity, and therefore the costs of electronic transactions.

Getting HIPAA back on Track: HHS Leadership

HHS must take action to facilitate the successful implementation of Administrative Simplification. Industry efforts to implement Administrative Simplification have resulted in complex standards, expensive and inefficient implementation and uncertainty in the market place. A few strategic actions by the Department can leverage the remarkable forces and resources of the health care industry to achieve the objectives of Administrative Simplification.

Implement full complement of HIPAA transactions

It is widely recognized in the industry that only through implementation of all the covered transactions will administrative efficiencies, and therefore savings, be realized. CMS has an important leadership role to play in making this HIPAA objective a reality. We recommend that, as a payer, CMS focus its implementation efforts on the complete set of HIPAA transactions. To these ends, the Medicare contingency plan should address the full set of transactions, not simply HIPAA formatted claims. Other payers will follow Medicare’s example and diversify efforts to ensure a balanced implementation initiative that recognizes HIPAA is more than just submitting claims.

Conclusion

CMS action is vital to ensuring that the HIPAA objectives of cost savings and increased efficiency are achieved. The success or failure of HIPAA implementation will have significant implications for the success or failure of the National Health Information Infrastructure.

http://www.corporate-ir.net/media_files/IROL/11/116708/HIPAApaper1.pdf

Comment: Imagine if we had a single, publicly administered payer instead. The conclusion that we need a government agency to take action to implement the National Health Information Infrastructure would be the same. But the administrative nightmare of attempting to bring into efficient compliance our fragmented system of funding care would be nothing more than a bad dream.