PNHP

Back-scratching and arm-twisting win Medicare fight

Back-scratching and arm-twisting win Medicare fight

Back-scratching and arm-twisting win Medicare fight

By William M. Welch
USA TODAY

GOP leadership plays every ace on Democrats — and own party members — to

secure passage

WASHINGTON — Exhausted from a yearlong struggle, Republican congressional leaders could see their hopes for delivering a prescription-drug benefit to seniors slipping from their grasp one evening two weeks ago in a basement room of the U.S. Capitol.

In a remarkable journey that few thought would be completed this year, the decisive moments for the overhaul of Medicare passed by Congress this week may have come that Wednesday and the day after. A key Republican negotiator walked out in anger, jeopardizing President Bush’s top legislative priority. ”It looked pretty grim,” Bush’s top negotiator, Health and Human Services Secretary Tommy Thompson, recalled later.

The talks ultimately yielded the most far-reaching changes in the health program for 40 million elderly and disabled Americans since its creation in 1965. To get there, Republicans alternately catered to conservatives, compromised to win over moderates and lured the nation’s most powerful seniors’ group to their side.

It was a victory that required the patience of a heart surgeon, the boldness of a former Madison Avenue executive and the raw political muscle of a former wrestling coach. It was built over pizza and pistachio nuts, sealed with billion-dollar giveaways and, ultimately, passed by making time stand still.

The debate really began six years ago. It was then, in a joint presidential-congressional study commission, that some of the players who ultimately wrote the legislation first joined two vexing issues: providing seniors a new drug benefit and restraining Medicare for the costly retirement of the baby boom generation.

”I’ve got six years invested in this,” said Sen. John Breaux, D-La., 59, who co-chaired that commission in 1997-98. He became one of only two Democrats allowed by Republicans to join the negotiations this fall. ”I wanted to get this done before I’m on Medicare.”

The debate resumed in January, when Bush set aside $400 billion over 10 years for the drug benefit. It was only one-fourth of what seniors would spend on medicine over that period, critics said. Still, it was a big commitment, especially while the federal government was borrowing record amounts.

But there was tension between Bush and Congress over how it would work. Administration health advisers worked on a proposal, and when it leaked, congressional Republicans were horrified. The administration’s idea was to offer the drug benefit only to seniors who agreed to join managed-care plans. On Capitol Hill, both parties saw that as coercion.

House Speaker Dennis Hastert, R-Ill., moved quickly to quash the plan. He rejected the idea in a meeting with hometown newspaper reporters and editors. By spring, Bush had sent Congress merely a list of goals. He would leave it to Republicans in the House of Representatives and Senate to flesh out the details.

Piling up pistachios
The gloom was measurable two weeks ago around the long oval table in the hideaway office of Rep. Bill Thomas, R-Calif., the headstrong chairman of the House Ways and Means Committee.

The headline issue, the one seniors were clamoring for, had been settled in that same room weeks earlier: a uniquely shaped benefit to assist Americans 65 and older with the costs of medicines. Yet the fight over seemingly tangential issues was proving intractable. They had divided conservatives from centrists over Medicare’s future: whether it would continue as a government program or be run by private insurers.

Though they sent out for pizzas when the talks dragged on, a constant presence was pistachios. The small salty nuts are a leading cash crop around Bakersfield, Calif., Thomas’ home. He kept silver bowls filled with white pistachios throughout the months of negotiations. By that November evening, the shells were piling up fast.

”When the going was really heavy and controversial, we ate more pistachios,” Thompson said. ”Thomas said we were now eating 4 pounds of pistachios per meeting. It was getting pretty frayed.”

The deadlock threatened the dreams of Bush, Senate Majority Leader Bill Frist, a heart surgeon, and Hastert, a former wrestling coach. They were united by a determination to turn the issue into a singular success that could reap rewards in 2004 and, perhaps, cement Republican majorities for years to come.

Thomas had become recognized as part of the problem. Smart but overbearing, the Ways and Means chairman is one of the few members of Congress who understands how Medicare works. But his abrupt, lecturing manner alienated even allies. His Senate counterpart, Finance Committee Chairman Chuck Grassley of Iowa, got so mad at one point that he withdrew his aides from meetings.

Thomas’ strength was his mastery of arcane details. Hours were spent with him instructing colleagues on the legislation’s fine points. On that November day, Thomas felt he had reason to stew. Frustrated by more than three months without a resolution, Hastert and Frist had taken over the talks. They had concluded Thomas was incapable of closing a deal.

”It was stalemate,” Frist, R-Tenn., recounted later. ”The speaker and I made a decision to come in.”

The final four
There were four issues left:

* Competition. Thomas and his conservative allies insisted that Medicare be forced to compete with private insurers by the end of the decade. Known as ”premium support” to health technocrats, it was a concept few members of Congress could explain. But its intent was clear: Medicare recipients would no longer be guaranteed health care at a fixed cost.

* Cost controls. Conservatives demanded strict limits on Medicare spending. They feared that the drug benefit’s cost would far outstrip the $400 billion Congress and the president were allocating from now to 2013.

* Tax-free savings accounts. As a price for their support, conservatives wanted to expand tax breaks for those who save to pay their own medical expenses.

* Employer benefits. Everyone was afraid that employers would stop offering more generous drug benefits to their retired workers. AARP, which represents 35 million Americans age 50 and up, wanted financial incentives for employers to keep covering retirees.

Frist and Hastert thought that if they could solve the competition issue, the others would fall into place. They worked out a proposal to test competition in a handful of cities and regions, starting in 2010. It was not enough for conservatives, too much for liberals, but just right for the emerging center.

Thomas, however, was not in the center. Furious at being eclipsed, he stalked out of the meeting. Some feared he would head for the airport and California. Hastert began cajoling him by phone and in person, reminding him of the consequences of failure.

By the next day, Thomas relented. Negotiators returned to his office and accepted what Hastert described as a ”demonstration” of competition. Frist and Hastert let Thomas shape the details to, in his words, ”make it workable.”

The leading liberal signs on Earlier in the year, Frist had begun meeting weekly with an unlikely partner, Sen. Edward Kennedy, D-Mass. Kennedy is the Senate’s leading liberal and a fierce defender of Medicare. But he’s also a legislator, rather than an ideologue. At 71, expanding Medicare represented a potential legacy.

The odd couple met in Kennedy’s hideaway office off a rarely traveled hallway on the Capitol’s third floor.

In June, Kennedy stunned colleagues when he and Frist cut a deal. Though some Democrats opposed it as inadequate, Kennedy’s backing brought enough Democrats to win relatively easy initial approval in the Senate.

In the House, Hastert prodded Thomas to bring his own Medicare bill through his committee. A far more conservative alternative, it won approval in the House by one vote. The table was set for the real bargaining to begin.

When the competing bills were sent to a House-Senate conference committee, Thomas refused to let House Democrats join in. Two Senate Democrats were allowed to attend: Breaux, a dealmaker, and Sen. Max Baucus, D-Mont., regarded as pliant by Republicans. Kennedy, whose support had delivered the Senate, was barred.

Thomas had a hard time forging agreement within his own party. Talks that began in August became intense in September and October. Much time was spent neutralizing potential opposition. Doctors won an increase in reimbursement rates, and the American Medical Association fell in line. Insurers, managed-care plans, home health care providers, hospitals and other groups all got provisions to boost their bottom line.

A key obstacle was winning — some said buying — rural legislators. For Grassley and Baucus, both from farm states, a top priority was higher payments for rural hospitals that feel shortchanged by Medicare payment rates. A $25 billion sweetener for rural health care was added; Grassley and Baucus announced it together in the Senate TV studio.

The ‘seal of approval’
With agreement on the long-range test of competition, the leaders worked through the weekend on the final obstacles. Political solutions emerged.

Instead of automatic Medicare cuts, they inserted a provision requiring Congress to consider action if spending targets were exceeded. It was a political fig leaf.

A trade solved two final issues. For conservatives, a $6 billion provision expanding health savings accounts was added, allowing people who buy high-deductible health insurance to put away up to $5,150 a year tax-free. In return, AARP won a provision giving employers $18 billion in subsidies to keep offering drug coverage.

With Kennedy cut out of the deal and threatening a filibuster, Frist needed to woo more Democrats. He had one ace left.

One of the first groups Frist had reached out to after taking the majority leader’s job in January was the AARP and its strategic-thinking CEO, Bill Novelli. He had met with AARP’s board of directors and legislative counsel in a private room at the Hotel Monaco, down the street from AARP’s headquarters. AARP’s leaders voiced frustration over years of delay and ideological distractions. In the months that followed, Frist called Novelli often.

By the decisive week in November, Frist was pressing for an endorsement. He phoned Novelli on Saturday, Nov. 15, to present the deal. The next day, Novelli convened a closed-door meeting of AARP’s board of directors, who flew in from around the country. This time they met at the Hyatt, several blocks from the group’s offices. The afternoon meeting stretched until 8 p.m.

Novelli wanted to throw support to the Republicans. A former advertising and marketing executive who cut his teeth on Richard Nixon’s 1972 re-election campaign, then made a fortune on Madison Avenue, Novelli claimed allegiance to neither party. He saw the endorsement as a dramatic move that would expand his group’s appeal to aging baby boomers.

When Novelli walked out of the room, he had agreement. Democrats were outraged. Protests flooded the group’s phone lines and e-mail. But Novelli didn’t flinch. In fact, he joined Frist and Hastert before TV cameras to announce the deal. Hastert called AARP’s support ”the Good Housekeeping seal of approval.”

Stopping the clock
With AARP on board, the outcome seemed assured. But there were still some surprises left.

House conservatives felt Hastert and Thomas had given up real cost restraints and limited the role of private insurers. Bush, wrapping up a trip to London, called conservatives in a bid to change minds. His top political aide, Karl Rove, phoned from Air Force One.

At 10 p.m. last Friday, about 20 conservatives met for dinner at Hunan Dynasty, near the Capitol, to escape the pressure. ”It felt a little like the Last Supper,” Rep. Mike Pence, R-Ind., said.

When the voting began around 2:30 a.m. Saturday, Pence took up a position on the back rail of the House. He was stunned as Hastert kept the 15-minute electronic vote open for nearly three hours, so GOP leaders could round up votes.

Two hours into the voting, one GOP leader told Pence that Hastert was ”out of aces.” The vote stood at 216 for, 218 against. Bush, now back in the White House, phoned conservatives in the predawn hours. GOP leaders warned of political catastrophe if the bill died.

Finally, Reps. Trent Franks of Arizona and Butch Otter of Idaho stepped forward to switch their votes, and a few other Republicans fell in line. The bill passed 220-215. The Senate followed suit three days later, 54-44.

Bush, Hastert, Frist and AARP could start planning their party.

AARP to Reap Huge Profits from Flawed Medicare Drug Bill

For Immediate Release on NOV 21st 2003
Contacts:
Quentin Young, MD (312) 782-6006
Johnathon Ross, MD (419) 536-3879
David Himmelstein MD, (617) 665-1032

AARP to Reap Huge Profits from Flawed Medicare Drug Bill

Seniors Group Makes $163 Million Annually on Insurance Sales

Statement by David U. Himmelstein, MD and Steffie Woolhandler, MD, MPH
Harvard Medical School and Physicians for a National Health Program

The American Association of Retired Persons (AARP) derives significant income from the sale of health and life insurance policies, and stands to make hundreds of millions more under the Medicare Prescription Drug bill now being debated before Congress. Yet the AARP’s financial interests in the bill have received scant attention.

The AARPs current insurance-related revenues come in several streams.

1- They receive royalties from AARP insurance policies marketed to their members by United Healthcare, MetLife and others. Last year these royalties amounted to $123.283 million.

2- They receive list access fees from insurance firms that market to their membership. In 2002, such fees totaled $10.794 million.

3- AARP receives Quality Control fees from insurers that amounted to $893,000 last year.

4- AARP also earns investment income on the premiums received from members until such premiums are forwarded to UnitedHealthcare and MetLife. In 2002, AARP earned $26.708 million in such investment income.

The table below summarizes the AARPs income for each of these categories over the past 4 years, as well as their total operating revenues, and the proportion of revenues accounted for by insurance-related items. All data are derived from the AARPs Consolidated Financial Statements. Dollar figures are given in millions.

Income from premiums InvestedInsurance-Related TotalTotal Operating Revenues Insurance-Related as % of Operating Revenues
Years 1999 2000 2001 2002
Insurance Royalties $111.3 $111.8 $115.5 $123.3
List Access Fees $8.6 $8.9 $9.3 $10.8
Quality Control Fee $0.7 $0.8 $0.7 $0.9
$4.7 $40.3 $33.1 $26.7
$125.2 $161.8 $158.6 $161.7
$412.2 $502.1 $520.0 $635.8
30.4% $32.2% $30.5% 25.4%

We believe the AARPs huge insurance business helps explain why it has endorsed a bill that threatens the future of Medicare and the health of America’s seniors. Under the proposed Medicare legislation the AARP would almost surely reap hundreds of millions of dollars in additional insurance revenues over the next decade. The Medicare bill would pump $400 billion in Federal Government money into new Medigap drug policies over the next decade. At present, the AARP’s profit from its huge insurance sales amounts to 3.9% of the insurance premiums it collects. If AARP’s partners were to capture even 10% of the new Medicare prescription drug coverage market, their premiums would amount $40 billion, and the AARPs profits would be $1.56 billion.

The Medicare prescription drug bill offers huge payoffs to the drug industry, private insurers, and some large employers. It would provide paltry benefits to Medicare recipients and take a giant step toward privatizing Medicare. In effect, the AARP leadership has shamefully agreed to sell out its members in exchange for the organization’s financial gain.

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Physicians for a National Health Program (PNHP) is a research and education organization with more than 12,000 physicians representing every state and specialty. PNHP was founded in 1987 and has physician spokespeople across the country. For a local spokesperson, call the national headquarters at 312-782-6006. Visit us online at www.pnhp.org

Seniors oppose current Medicare bill

AFL-CIO
News Release
Nov. 19, 2003
Poll: Seniors Oppose Medicare Bill in Congress

By an almost two-thirds majority, senior Americans say Congress and the White House should work for a better Medicare prescription drug plan than the one offered in a bill the House and Senate are set to vote on this week, according to a new nationwide survey. Only 19 percent of those polled say Congress should pass the current bill.

Peter D. Hart Research Associates conducted the poll of voters ages 55 years and older Nov. 18-19 for the AFLCIO after details of the bill-merged from earlier House and Senate-passed versions were released.

Respondents overwhelmingly view the drug plan unfavorably (65 percent to 26
percent)…

The poll also found 65 percent unfavorably view the bill’s increase in subsidies for private HMOs and move toward privatizing Medicare.

http://www.aflcio.org/issuespolitics/socialsecurity/medicarebasics/s11192003.cfm

Comment: Why are so many legislators supporting a bill that the people don’t want? And why don’t they craft a bill that the people do want? And why do we keep reelecting a non-responsive Congress?

Consumers Union: Drug benefit price is too high

Consumers Union
November 17, 2003

Medicare Prescription Drugs:
Conference Committee Agreement Asks Beneficiaries to Pay Too High a Price
For Modest Benefit
By Gail Shearer

Best features of the agreement:

* Provides meaningful prescription drug coverage for very low-income individuals with incomes below 150 percent of the federal poverty level, provided they can pass the bureaucratic hurdles and have very low assets.

* Provides prescription drug coverage through Medicare for those “dual eligibles” who are eligible for both Medicare and Medicaid (though many may face higher co-payments than they do now).

* Provides modest relief for the small percent of beneficiaries who have the highest (catastrophic) prescription drug needs (though they continue to face
high out-of-pocket costs).

* Provides some relief for beneficiaries who now have no prescription drug coverage, or have high-priced medigap drug coverage, but relief will be modest and many will still face very high out-of-pocket costs.

Worst features of the agreement:

* Uses a model (and even explicit language) that precludes deep discounts
for beneficiaries and assures that prescription drug expenditures will continue to spiral.

* The inadequate funding, failure to contain costs, and benefit design combine to mean that the benefit will be modest for most and skimpy for many; the benefit will not meet the public’s expectations for comprehensive coverage that is similar to what Members of Congress enjoy. Millions will face large out-of-pocket costs because of the large gap in coverage (the doughnut).

* Subjects about one quarter of Medicare beneficiaries in 2010 (possibly earlier) to pressure to leave traditional fee-for-service Medicare, where they have freedom to choose their own doctor, by forcing traditional Medicare to compete with private health plans that limit choice of doctor and can offer lower premiums because they cherry-pick the healthy.

(Private health plans’ reimbursement levels do not adequately reflect the better-than-average health status of their enrollees, boosting HMO profits.)

* Will create a crisis atmosphere in about 2010 when projections show that funding from general revenues will exceed (at a future date) 45 percent of
Medicare spending: likely to lead to cutbacks in Medicare benefits, increased cost-sharing, and increased reliance on relatively regressive financing sources.

* Creates a new tax shelter that will benefit the wealthy, to create health
savings accounts; unprecedented tax policy that will undermine the provision
of comprehensive policies by employers, drive up premiums for those who want
comprehensive coverage, and shift costs to people under 65 who have existing
health conditions.

* The model is premised on reliance on private insurance plans and private health plans to provide coverage, continuing the practice of over-paying private companies (by failing to take into account the lower costs of their enrollees), guaranteeing that special interests will come to Congress to lobby for more money (and threatening to cut back coverage otherwise).

* State governments will not be able to attain the prescription drug discounts achieved under Medicaid, since dual eligibles will be in Medicare.

* Millions of dual eligibles (including nursing home residents) will face higher copayments than they pay today, and these co-payments will increase over time.

* Variation of actual “benefits” because of secret and private formularies used by the pharmaceutical benefit managers (PBM’s). Lists of covered drugs will vary from plan to plan and from region to region. Selection of drugs for the formularies need not be based on scientific evidence, but can be based on secret deals that are hidden from the public and regulators. PBM’s will have no accountability to the public or government and their business dealings will lack transparency. Conflicts-of-interests will cost taxpayers billions of dollars.

* Weak “federal fallback” provision means that beneficiaries in an area that
lacks true private competition of drug-only plans (i.e., with just one drug-only plan and one “integrated plan”) will not be eligible for Medicare fallback coverage. No assurance that the premium for the drug-only plan will be anywhere near the $35/month estimate. In other words, if a region has one drug-only plan, charging $70 a month, and one preferred provider plan (PPO) that severely restricts one’s choice of doctor, there would be no federal fallback plan.

* The cutoff in eligibility for low-income subsidies is very low: an individual with income above $13,000 and a couple with income above $16,300 will be ineligible for the low-income subsidy (2002 federal poverty levels).

* Millions of people with comprehensive retiree drug coverage will lose this
coverage, and will end up with a Medicare policy that is much less comprehensive. (Retiree coverage is typically comprehensive, without a “doughnut” in coverage; the proposed benefit structure, which does not count
retiree plan payments toward the catastrophic level, is likely to lead many employers to drop their retiree coverage. The conference agreement’s additional subsidies for employers is unlikely to eliminate this problem.)

* May weaken the existing quality reporting standards for private health plans, hindering consumers’ ability to make informed decisions about private health plans and undermining the premise that choice of health plan is good for consumers.

* Results in continued profitability for the pharmaceutical industry (guaranteeing larger markets without governmental pressure to restrain prices) while asking nothing for the public good in return.

It is troubling indeed that the elements on the “best list” come with caveats that mean that the good things are not as good as they should be. It is nothing short of tragic that legislation that was meant to offer relief to Medicare beneficiaries comes laden down with so many provisions that will harm Medicare beneficiaries and even threaten Medicare’s long-term aviability.

Conclusion:

Medicare beneficiaries have waited for a long-time for relief from the financial burden of high prescription drug costs, and are desperate for some relief. When Congress set aside $400 billion (over ten years) to address the problem, we understood that whatever proposal emerged would be able to address only a fraction of the problem. Because the Conferees failed to adopt a plan that curbs prescription drug expenditures, and instead developed a model that relies on an insurance industry eager to see Medicare privatized while collecting more government subsidies, Consumers Union reluctantly concludes that, on balance, Medicare beneficiaries will be severely harmed by this proposal. We urge consumers to request their Representatives and Senators go back to the drawing board to enact legislation that meets the needs of seniors and the disabled, not legislation that is shaped by special interests.

For the full report:
http://www.consumersunion.org/1117%20medicare%20report%20final.pdf

Comment: Some politicians are concerned that a “filibuster against prescription drugs for seniors” is too great of a political price to pay for defeating this highly destructive legislation. Our task will be to make certain that the political price is paid by the true villains: those who refused to allow consideration of a bona fide prescription benefit and forced the necessity of resorting to a filibuster to protect what we already do have.

Urgent! (1) Support a filibuster, (2) Demand Novelli's resignation television advertising this week, and officials said it was prepared to spend more.

Los Angeles Times
November 17, 2003
Deal Would Alter Medicare’s Core
If a compromise bill on prescription drugs passes, the government program
will become a massive subsidized insurance market.
By Vicki Kemper

As Congress prepares to vote on a final $400-billion Medicare prescription drug bill, there is one thing on which most lawmakers agree: The legislation would, over time, change the essence of the 38-year-old health insurance program for the elderly and disabled.

Now, the government sets the prices for thousands of medical services and pays the bills. But under the Medicare reform legislation, some details of which were released Sunday, the government would pay private insurance companies and managed-care plans billions of dollars in incentives to compete with traditional Medicare for the prescription drug business and general health-care needs of more than 40 million Americans.

It is that fundamental difference – Medicare as a government program versus Medicare as a huge government-subsidized health insurance market – that underlies the deep divisions between Democratic opponents of the bill and its Republican supporters.

With Republicans in control of both Congress and the House-Senate committee
that shaped the compromise legislation, it is not surprising that the GOP goal of containing Medicare costs by turning much of the program over to the private sector prevailed over Democrats’ desire to maintain Medicare as a social insurance program.

For Rep. Bill Thomas (R-Bakersfield), chairman of the House-Senate negotiating committee, the legislation is all about reducing the government’s financial burden for seniors’ health care while making Medicare sustainable over the long term and adding a major benefit.

“Over the next decade, [the bill] will also change the relationship between taxpayers and an ever more expensive program,” he said.

http://www.latimes.com/news/printedition/asection/la-na-medicare17nov17,1,5618060.story?coll=la-news-a_section

The New York Times
November 18, 2003
Medicare Plan Covering Drugs Backed by AARP
By Robert Pear and Robin Toner

AARP, the largest and most influential organization of older Americans, threw its weight behind a bill on Monday that offers drug benefits to the elderly as part of the biggest transformation of Medicare in its 38-year history.

The group will support the bill with $7 million worth of newspaper and author of the premium support proposal along with Rep. Bill Thomas and Sen. Bill Frist.
Thus the only representation that the Democrats really had was “TheGreat
Compromiser” Sen. Max Baucus. Sen. Baucus’ negotiating style is to enter
negotiations by playing all of his cards immediately, and then negotiate the
proposals that originate from the right. Since he is no match for Bill Thomas, the process ended with the approval of the agenda of the far right. With this process no outcome other than privatization of Medicare was remotely possible.

The prescription benefit alone is totally unsatisfactory because it fails to place prescription drugs under the same type of cost controls that the rest of the health care delivery system has. Affordability must be a prime consideration. Also, the bill grants private plans the control of prescription benefits. And the actual benefit provided is significantly deficient. As stand-alone legislation, it should be rejected so that Congress can move forward with a legitimate prescription program.

But, far worse, the innumerable measures included to meet Thomas’ goal of “reducing the government’s financial burden for seniors’ health care” are deliberately designed to destroy Medicare as a program of social insurance.
It reduces the government’s financial burden by shifting more of the funding
of health care back to the patient. Once fragmented by private options, the
traditional Medicare program will be severely underfunded, like Medicaid.
But the traditional program will have only about half of the benefits of Medicaid, unless they are successful in further reducing the “unaffordable” Medicare benefit package. An underfunded, stripped-down, welfare-type program for the sick and poor is not the Medicare transformation that we need or want.

AARP is deservedly the most influential organization representing the interests of the seniors of this nation. William Novelli has firmly staked his position in support of private interests at the cost of AARP’s members. There are only two choices for us. Either William Novelli must resign, or he must witness the greatest exit of an organization’s membership in the history of mankind. But we really need AARP to continue its role as the credible voice of seniors. The only real option is that Novelli must go.

Destroying Medicare for a crummy prescription benefit is not a compromise.
It’s a sell-out!

Urgent! (1) Support a filibuster, (2) Demand Novelli’s resignation television advertising this week, and officials said it was prepared to spend more.

Los Angeles Times
November 17, 2003
Deal Would Alter Medicare’s Core
If a compromise bill on prescription drugs passes, the government program
will become a massive subsidized insurance market.
By Vicki Kemper

As Congress prepares to vote on a final $400-billion Medicare prescription drug bill, there is one thing on which most lawmakers agree: The legislation would, over time, change the essence of the 38-year-old health insurance program for the elderly and disabled.

Now, the government sets the prices for thousands of medical services and pays the bills. But under the Medicare reform legislation, some details of which were released Sunday, the government would pay private insurance companies and managed-care plans billions of dollars in incentives to compete with traditional Medicare for the prescription drug business and general health-care needs of more than 40 million Americans.

It is that fundamental difference – Medicare as a government program versus Medicare as a huge government-subsidized health insurance market – that underlies the deep divisions between Democratic opponents of the bill and its Republican supporters.

With Republicans in control of both Congress and the House-Senate committee
that shaped the compromise legislation, it is not surprising that the GOP goal of containing Medicare costs by turning much of the program over to the private sector prevailed over Democrats’ desire to maintain Medicare as a social insurance program.

For Rep. Bill Thomas (R-Bakersfield), chairman of the House-Senate negotiating committee, the legislation is all about reducing the government’s financial burden for seniors’ health care while making Medicare sustainable over the long term and adding a major benefit.

“Over the next decade, [the bill] will also change the relationship between taxpayers and an ever more expensive program,” he said.

http://www.latimes.com/news/printedition/asection/la-na-medicare17nov17,1,5618060.story?coll=la-news-a_section

The New York Times
November 18, 2003
Medicare Plan Covering Drugs Backed by AARP
By Robert Pear and Robin Toner

AARP, the largest and most influential organization of older Americans, threw its weight behind a bill on Monday that offers drug benefits to the elderly as part of the biggest transformation of Medicare in its 38-year history.

The group will support the bill with $7 million worth of newspaper and author of the premium support proposal along with Rep. Bill Thomas and Sen. Bill Frist.
Thus the only representation that the Democrats really had was “TheGreat
Compromiser” Sen. Max Baucus. Sen. Baucus’ negotiating style is to enter
negotiations by playing all of his cards immediately, and then negotiate the
proposals that originate from the right. Since he is no match for Bill Thomas, the process ended with the approval of the agenda of the far right. With this process no outcome other than privatization of Medicare was remotely possible.

The prescription benefit alone is totally unsatisfactory because it fails to place prescription drugs under the same type of cost controls that the rest of the health care delivery system has. Affordability must be a prime consideration. Also, the bill grants private plans the control of prescription benefits. And the actual benefit provided is significantly deficient. As stand-alone legislation, it should be rejected so that Congress can move forward with a legitimate prescription program.

But, far worse, the innumerable measures included to meet Thomas’ goal of “reducing the government’s financial burden for seniors’ health care” are deliberately designed to destroy Medicare as a program of social insurance.
It reduces the government’s financial burden by shifting more of the funding
of health care back to the patient. Once fragmented by private options, the
traditional Medicare program will be severely underfunded, like Medicaid.
But the traditional program will have only about half of the benefits of Medicaid, unless they are successful in further reducing the “unaffordable” Medicare benefit package. An underfunded, stripped-down, welfare-type program for the sick and poor is not the Medicare transformation that we need or want.

AARP is deservedly the most influential organization representing the interests of the seniors of this nation. William Novelli has firmly staked his position in support of private interests at the cost of AARP’s members. There are only two choices for us. Either William Novelli must resign, or he must witness the greatest exit of an organization’s membership in the history of mankind. But we really need AARP to continue its role as the credible voice of seniors. The only real option is that Novelli must go.

Destroying Medicare for a crummy prescription benefit is not a compromise.
It’s a sell-out!

85 Million uninsured at some point in 1996-99

Dear Colleague:

A Commonwealth Fund-supported study published in the new issue of Health Affairs finds that 85 million Americans had no health insurance at some point between 1996 and 1999–more than double the number uninsured at any one point or in any one year during this period. That’s also nearly double the 43.6 million Americans recently estimated by the Census Bureau to have been without coverage in 2002.

According to “Battery-Powered Health Insurance? Stability in Coverage of the Uninsured,” nearly two of five (38%) Americans under age 65, and more than two-thirds (68%) of those with low incomes, lacked health coverage at some point within the study timeframe. The article, together with a companion Fund Issue Brief, reveals that this larger figure is a result of “churning,” the process by which millions of people cycle on and off coverage.

Minorities were at high risk for experiencing gaps in coverage and having an extensive time without insurance. Half (50%) of African Americans and three of five (61%) Hispanics were uninsured during the 1996-99 period. Among those with low incomes, Hispanics stood out for high rates uninsured and for the number of months uninsured. Young adults were also at high risk, with over half uninsured during this time.

You can read the full text of the article on the Health Affairs site.

Related Commonwealth Fund publications include:
Staying Covered: The Importance of Retaining Health Insurance for Low-Income Families. Leighton Ku and Donna Cohen Ross. December 2002.
Building Quality into RIte Care: How Rhode Island Is Improving Health Care for Its Low-Income Populations. Sharon Silow-Carroll. January 2003.
Rethinking Recertification: Keeping Eligible Individuals Enrolled in New York’s Public Health Insurance Programs. Karen Lipson, Eliot Fishman, Patricia Boozang, Deborah Bachrach. August 2003.

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Doctor Speaks for Universal Health care

Doctor Speaks for Universal Health care
By Richard Creaser
Derby Line Forum
Derby Line, Vermont
November 12, 2003

DERBY LINE – The workers at the Tivoly Inc. plant in Derby Line have serious concerns regarding their healthcare insurance options. Not only have costs continued to climb over the last decade, they are finding it increasingly difficult to find a carrier willing to take them on. The future of healthcare at Tivoly and in the state of Vermont were the topic of discussion at a public forum at St. Edward’s Church in Derby Line on Thursday night.

“The average age at the plant is 51 years old,” said John Kudla of Brownington. “Blue Cross wouldn’t even quote us.”

A battle over healthcare funding and insurance is brewing among legislators, and Governor Jim Douglas recently announced that he favors a plan that would attract more insurance companies back to Vermont. His plan would encourage more companies rather than a government-funded single-payer system.

The main speaker at the forum in Derby Line Thursday, Dr. Deborah Richter of the Vermont Healthcare for All (VTHCA), said workers like the people at Tivoly would be most likely to benefit from a single-payer system.

Under the current system, premiums increase and coverage continues to decline as the Tivoly workers struggle to maintain some kind of medical insurance plan, said Eric Crowe of Beebe.

“We have 110 workers on the plan plus another 15 retirees drawing from it,” said Mr. Crowe. “If we lose the plan, if we go down, they’ll be swallowed up with us.”

Escalating costs are a reaction from the insurance companies, said Dr. Richter. Competition among insurers is to secure the largest pool with the least amount of risk.

The aging workforce at the Tivoly plant represents one of the least desirable factors insurance analysts can see. Older people are simply more likely to require medical care in the near future.

As insurance premiums continue to rise and qualifying services decline, the number of people opting into their employer’s medical plan will also decline, further driving up the costs for those still enrolled. Within the next few years, particularly among the younger work force, the decision to forego insurance is likely going to increase, said Dr. Richter.

“You are going to see a rise in people taking out catastrophic policies that will keep them from losing their homes but they will have to pay the first ten or fifteen thousand dollars,” she said. “That’s where we’re headed.”

Statistics indicate that roughly 10 percent of the population uses 72 percent of healthcare resources, said Dr. Richter. This figure includes individuals with long-term healthcare needs like diabetics and people with extended medical requirements such as post-operative patients or premature babies.

Financially, it makes little sense for insurance companies to want to cover the sickest 10 percent. This has given rise to exclusions based on risk pools and other statistical data.

Dr. Richter challenges the notion that bringing in more insurance carriers will help to reduce or slow climbing premiums. She contends that such ideas are “magical thinking”.

“Bringing in more insurance companies won’t lower costs any more than bringing in more real estate agents will affect property value,” she said.

The very flexibility and number of insurance plan options is what helps contribute to rising healthcare costs, said Dr. Richter. No single billing clerk can fully understand the proper paperwork protocol for every insurance plan and every option within that plan.

“What would happen if everyone went to the corner grocery using different currencies and bought a gallon of milk at a different price?” she asked. “How many clerks would need to be behind that counter? More than one, I can tell you that.”

This complexity consumes 15 percent of healthcare dollars, she said. Administrators are using nearly one in every seven cents simply to make sure that claims are properly accounted for and remittance paid.

The simplest way to eliminate much of that bureaucracy is to move towards a single payer healthcare system. The VTHCA has championed a universal healthcare model for Vermont for several years and the movement is gaining momentum.

“Financially, economically the numbers add up,” said dr. Richter. “Now we just need the political will to put it into practice.”

Under the proposed model, Medicare and Medicaid funds would be shifted into a general pool. A 5.8 percent employer payroll tax and a 2.9 percent employee payroll tax would also be added to the general pool. That money would form the financial basis for the single payer system.

“We could support the current healthcare system, provide coverage for all Vermonters based on the money we are already spending,” she said.

Representative David Bolduc expressed his reservations about expecting government to take on the burden of managing a healthcare system.

“I have some very real concerns about becoming involved in this based on the results of other things the government has done like Act 60,” he said. “It’s probably best to keep government out of healthcare.”

Professionals in the healthcare field would handle the management of the system with oversight provided by a board advocating for the general population, replied Dr. Richter. The government’s role would be to ensure that the payments are distributed promptly and efficiently.

“Paying for things is something that the government does and does very well,” she said. “I do trust them to finance healthcare but I don’t trust them to run Fletcher Allen, the Springfield hospital or the local doctor’s office.”

Naturally, shifting away from a patchwork of private insurance companies would cause hardship in the insurance industry. Medical billing assistants would lose positions and brokers would see declines in their income.

“The damage to the health insurance industry is the unspoken result of universal healthcare,” said Dr. Richter. “There would still be a place for one agency to administer claims and someone like Blue Cross could do a good job of that.”

The public and politicians need to rethink how they perceive the healthcare system, said Dr. Richter. Healthcare needs to be viewed as a public good like fire and police protection and not as a consumer service.

The single payer model would provide the financial stability to ensure that hospitals are properly staffed and equipped in the event that you, as a taxpayer, should ever require their services.

The majority of hospital expenses, some 84 percent of healthcare costs, are fixed, making a stable financial arrangement that much more attractive to healthcare providers. The buildings require utilities and maintenance, the hospitals need beds and linens and a staff needs to be present every hour of every day regardless of how many people use them.

“These hospitals aren’t just sitting around waiting for well-insured people to get in car accidents,” said Dr. Richter.

By ensuring that health services are funded and maintained in a consistent manner, this provides users some guarantees that services will most likely still be available when they are needed, she said.

“So we would have a much deeper infrastructure under universal healthcare,” said Jim Wuertele of St. Johnsbury.

“You would be able to do this because every patient becomes, in effect, a paying customer,” said Dr. Richter.

Containing costs under a single payer system would be the next challenge. That would involve decisions based on the level and types of coverage that the universal model would cover, said Dr. Richter.

Naturally, she said, that coverage would also determine the actual cost to administer the program.

The types of services covered would, hopefully, include those services most frequently used or in demand by the majority of the population. Some services, particularly those with unverified or unknown medical value may need to be carefully considered.

“You have some practices at the fringes of medical theory like aromatherapy,” she said.

Circumcision is another practice that is not medically necessary but is still widely practiced, said Dr. Richter. If people wanted to cover it under the plan, each operation would cost the program about $200.

“If I were looking at the budget and there was somewhere that needed cutting…” she said to many chuckles.

The final determination on what procedures were covered and which were not is something that should be democratically determined. The institution of democratic determination would provide a single payer model with something the current healthcare system lacks: public accountability.

Dr. Richter presented the two sides of the issue of whether or not to include a co-pay on the universal plan. For the very poorest of people, even a small co-pay can deter them from seeking medical assistance early on.

“But this would not deter them to the point where they die of a treatable condition because they were afraid of how much the procedure would cost their family,” she said.

At the same time, a co-pay could discourage casual abuses of the system.

“It would discourage unnecessary care,” said Dr. Richter. “You would be less likely to go to the doctor for stupid things like a cold or diaper rash if you had to pay every time you went.”

The shift to a single payer system would also provide some real economic benefits to offset some of the harm to the insurance industry. Businesses would benefit from the model in two ways.

The first would see a significant decline in the money employers pay to maintain healthcare coverage for their workers.

The second would be assurances that all of their employees do have access to some form of medical care.

“Don’t you think business would rather pay a 5.8 percent payroll tax than 8 percent of wages to cover the employer contribution to an insurance premium?” said Dr. Richter.

The payroll tax will hurt some small businesses, particularly those who currently offer minimal or no medical coverage.

The benefits for employees will be just as real as the benefits for employers, especially for people like the workers at Tivoly.

“If the hundred guys under my watch had that extra $50 a week to spend, that would be quite a bit of extra money back into the community,” said Mr. Crowe.

Mr. Bolduc commended Dr. Richter for her presentation but encouraged the forum’s participants to remain open to all sides of the debate.

“You made some very good points here tonight but my job as a legislator is to listen to all sides before making a judgment,” he said.

“I can learn a lot from the negative side if people feel it’s worth arguing against,” agreed Mr. Wuertele.

If a single payer model or some variant of it is going to be used, people need to approach their legislators and bring the issue to Montpelier, said Dr. Richter.

“This is something that needs to go before the House in January,” she said. “If we lose, we won’t go away.”

Import Canadian Prices, Not Drugs (Don McCanne)

Los Angeles Times
November 10, 2003
Import Canadian Prices, Not Drugs

Re “Open Door to Drug Imports,” editorial, Nov. 6: We don’t need to import
drugs from Canada. Instead, we need to import Canadian drug prices.

Medicare already has in place mechanisms to control the fees and prices of
physicians, hospitals, laboratories and other providers of health-care services and products. Although it is not a perfect process, rates are set to cover expenses and provide a fair profit. The system prevents excessive payments to providers.

If a bona fide prescription benefit were to be added to the Medicare program, the same fair rules would be applied to the pharmaceutical firms. Drugs are an essential element of modern health care. It’s time to include them in Medicare under a similar regulatory process that would ensure affordability.

Our system of funding Medicare has not prevented the development of newer
medical technology. Likewise, it will not prevent the development of newer
pharmaceutical agents. The drug companies will always strive to earn their
share of the $1.66 trillion that we are already spending on health care.

Don McCanne MD

San Juan Capistrano

*

The solution is not importing prescriptions but mandating fair-pricing practices. If a manufacturer can sell at reduced prices to Canadian pharmacies, the same prices should be available to pharmacies in the U.S.

Everyone is complaining about rising health-care costs, which stem from high
drug costs, yet we turn our heads when the solution is so clear. In order to
keep health insurance rates down, we have to keep drug prices down. This means that the manufacturers must be accountable for fair and equitable
pricing.

Importation is a simple fix to some, without attempting to solve the problem. We have to lower the cost of medications by making the pricing the same for Canada and the U.S. Only when this happens will the costs of health care be controlled.

Charles S. Franklin

Pharmacist, La Quinta

http://www.latimes.com/news/opinion/letters/la-le-mcanne10.1nov10,1,3511530.story?coll=la-news-comment-letters

Comment: Virtually everyone agrees that access to health care is not complete unless patients have access to affordable prescription drugs. Politicians recognize this and promised us in the last election that prescription coverage would be included as a benefit under Medicare.

But we are seeing that participants in the political process can use a popular
mandate to advance their own nefarious ends.

If they were sincere on what we thought was their promise, we would already
see significant benefits. Most importantly, Medicare beneficiaries would now
have affordable access to prescription drugs. Also, the pharmaceutical industry would join the rest of the health care industry in being required to accept the fair pricing that only a regulatory environment can assure.

The free market has served to drive prices up to the maximum tolerated rather than bringing prices down through patient-friendly forces of competition. Furthermore, including prescription coverage would reduce the pressure for Medicare beneficiaries to move into private plans that have provided less value to the taxpayers than has the traditional Medicare program.

But, tragically, the process has moved to behind closed doors with only the
ideologues invited in (plus the token presence of Sen. Baucus). Their goals
are to protect the free-market pricing of the pharmaceutical firms, but,
more importantly, to use this political opportunity to inflict near-fatal blows to Medicare, a program they hate primarily because it is a “government” program.

Through strategic leaks, we know what is happening behind those closed doors. The actual prescription benefit is largely a sham. Very few will benefit from the coverage. The administration of the benefit will be primarily by private middlemen rather than through the publicly-administered, traditional Medicare program. Measures are being included which prohibit the government from providing any regulatory input that might prevent the pharmaceutical firms from charging the maximum that the market will bear. Medicare premiums will be means-tested which will give the affluent a financial incentive to leave the traditional Medicare program. The intent is to then require the traditional program, with a concentration of high-cost, low-income enrollees, to compete with the private plans. This would result in the death spiral of the traditional program.

The political debate now centers around the privatization issue. Sen. Kennedy threatens to prevent its passage if the competition proposal is included. The House ideologues threaten to oppose it if competition is not included. Lost in this is the actual prescription coverage. It is grossly inadequate. But Sen. Kennedy believes that it should be passed because it will open the door to a program that can be repaired later. But he will not do this at the cost of destroying Medicare as a program of social insurance.

The ideologues seem to be willing to take a stand, challenging Sen.Kennedy
and colleagues to block it in the Senate. They can then take the issue to
the voters, claiming that it’s the Democrats who denied Medicare beneficiaries of their prescription benefit.

The issues are complex. But the voters need to understand them. Candidates
must be confronted with a public that demands to know whether they support a
bona fide prescription program or if they are using this issue to take a
sword to the Medicare beast.

Medicare might be a beast, but it’s our beast.(Since this message has great urgency, please consider distributing it to those who do care about our Medicare program.)

Don McCanne

Import Canadian Prices, Not Drugs

Los Angeles Times
November 10, 2003
Import Canadian Prices, Not Drugs

Re “Open Door to Drug Imports,” editorial, Nov. 6: We don’t need to import drugs from Canada. Instead, we need to import Canadian drug prices.

Medicare already has in place mechanisms to control the fees and prices of physicians, hospitals, laboratories and other providers of health-care services and products. Although it is not a perfect process, rates are set to cover expenses and provide a fair profit. The system prevents excessive payments to providers.

If a bona fide prescription benefit were to be added to the Medicare program, the same fair rules would be applied to the pharmaceutical firms. Drugs are an essential element of modern health care. It’s time to include them in Medicare under a similar regulatory process that would ensure affordability.

Our system of funding Medicare has not prevented the development of newer medical technology. Likewise, it will not prevent the development of newer pharmaceutical agents. The drug companies will always strive to earn their share of the $1.66 trillion that we are already spending on health care.

Don McCanne MD

San Juan Capistrano

*

The solution is not importing prescriptions but mandating fair-pricing practices. If a manufacturer can sell at reduced prices to Canadian pharmacies, the same prices should be available to pharmacies in the U.S.

Everyone is complaining about rising health-care costs, which stem from high drug costs, yet we turn our heads when the solution is so clear. In order to keep health insurance rates down, we have to keep drug prices down. This means that the manufacturers must be accountable for fair and equitable pricing.

Importation is a simple fix to some, without attempting to solve the problem. We have to lower the cost of medications by making the pricing the same for Canada and the U.S. Only when this happens will the costs of health care be controlled.

Charles S. Franklin

Pharmacist, La Quinta

http://www.latimes.com/news/opinion/letters/la-le-mcanne10.1nov10,1,3511530.story?coll=la-news-comment-letters

Comment: Virtually everyone agrees that access to health care is not complete unless patients have access to affordable prescription drugs. Politicians recognize this and promised us in the last election that prescription coverage would be included as a benefit under Medicare. But we are seeing that participants in the political process can use a popular mandate to advance their own nefarious ends.

If they were sincere on what we thought was their promise, we would already see significant benefits. Most importantly, Medicare beneficiaries would now have affordable access to prescription drugs. Also, the pharmaceutical industry would join the rest of the health care industry in being required to accept the fair pricing that only a regulatory environment can assure.

The free market has served to drive prices up to the maximum tolerated rather than bringing prices down through patient-friendly forces of competition. Furthermore, including prescription coverage would reduce the pressure for Medicare beneficiaries to move into private plans that have provided less value to the taxpayers than has the traditional Medicare program.

But, tragically, the process has moved to behind closed doors with only the ideologues invited in (plus the token presence of Sen. Baucus). Their goals are to protect the free-market pricing of the pharmaceutical firms, but, more importantly, to use this political opportunity to inflict near-fatal blows to Medicare, a program they hate primarily because it is a “government” program.

Through strategic leaks, we know what is happening behind those closed doors. The actual prescription benefit is largely a sham. Very few will benefit from the coverage. The administration of the benefit will be primarily by private middlemen rather than through the publicly-administered, traditional Medicare program. Measures are being included which prohibit the government from providing any regulatory input that might prevent the pharmaceutical firms from charging the maximum that the market will bear. Medicare premiums will be means-tested which will give the affluent a financial incentive to leave the traditional Medicare program. The intent is to then require the traditional program, with a concentration of high-cost, low-income enrollees, to compete with the private plans. This would result in the death spiral of the traditional program.

The political debate now centers around the privatization issue. Sen.Kennedy threatens to prevent its passage if the competition proposal is included. The House ideologues threaten to oppose it if competition is not included. Lost in this is the actual prescription coverage. It is grossly inadequate. But Sen. Kennedy believes that it should be passed because it will open the door to a program that can be repaired later. But he will not do this at the cost of destroying Medicare as a program of social insurance.

The ideologues seem to be willing to take a stand, challenging Sen. Kennedy
and colleagues to block it in the Senate. They can then take the issue to
the voters, claiming that it’s the Democrats who denied Medicare beneficiaries of their prescription benefit.

The issues are complex. But the voters need to understand them. Candidates must be confronted with a public that demands to know whether they support a
bona fide prescription program or if they are using this issue to take as word to the Medicare beast.

Medicare might be a beast, but it’s our beast.(Since this message has great urgency, please consider distributing it to those who do care about our Medicare program.)

Don McCanne

Norwegian international health card

The Norway Post
9 November 2003
New national health card

Next year, 4.5 million Norwegians may be issued a new, international health card which will guarantee immediate help in all countries of the European Economic Area (EEA).

The new card will replace form E-111, which Norwegians are adviced to carry
when travelling in Europe, confirming that you are a member of the Norwegian
Social Security System. Otherwise you may have to pay for your treatment, if
you should get sick.

The EU decided last year to replace form E-111 with a new “plastic card”, and the Norwegian health authorities have decided to introduce the new card from June next year.

To simplify the introduction, and make the system better known, the authorities are now considering issuing the card to all Norwegian citizens, regardless of whether they are planning an immediate trip abroad, or not.

The new card will not make the usual travel insurance obsolete, as the travel insurance also covers lost luggage, or free home travel in case of illness.

http://www.norwaypost.no/content.asp?cluster_id=23777&folder_id=1

Comment: The World Health Organization ranks the United States 72nd on the
performance of our health care system based on our level of health, below
all industrialized nations and below many third world nations.

Just imagine. If we had a universal system of social insurance that improved the allocation of our health care resources, we could also be considering joining with other nations in ensuring that health security is always guaranteed. But lacking a rational system, what country would want to enter an agreement with us?