The Journal of the American Board of Family Practice
May-June 2003
Health Policy

Why Incremental Reforms Will Not Solve the Health Care Crisis

By Don McCanne, MD

Incremental models of reform perpetuate our flawed, fragmented system of funding health care. They perpetuate inequities both in the funding of health care and in the allocation of our health care resources. They limit choice of health care providers. None assures continuity of coverage and care. Many incremental proposals barely have an effect on the numbers of uninsured, and none of them ensure truly universal coverage. All incremental approaches substantially increase health care costs, and most current proposals assure neither financial security nor health security.

In contrast, a single payer program would provide affordable, equitable, comprehensive care for everyone.

Whether through tax policy, public programs, regulatory oversight, mandated coverage, or a combination of these and other interventions, the government will be intimately involved in our health care funding. We can no longer afford to dismiss any valid option because it is a government solution, especially in that all proposals are government solutions. We must decide how we can best use our government resources to be sure that we are receiving the greatest value for our health care investment. Limiting our consideration to various incremental solutions closes the door on the health care reform goals of equity, affordability, and efficiency, and it threatens the goals of universality, provider choice, access, and comprehensiveness. When all are readily achievable, why accept less?

For the full article: http://www.jabfp.org/cgi/content/full/16/3/257

California Senate Office of Research
May 2003
Growing Gaps in California’s Emergency Room Backup System
Prepared by Peter Hansel

In October 1998, a patient was brought by ambulance to a California hospital emergency room with symptoms of abdominal distress and shortness of breath. The ER physician suspected an abdominal condition requiring surgery. As the patient continued to deteriorate, the physician twice phoned an on-call surgeon asking that he come in immediately to examine the patient. The surgeon repeatedly refused to come in, advising that the patient be admitted for him to see in the morning. As the patient’s blood pressure and pulse rate dropped to life-threatening levels, the ER physician contacted hospital administrators in an apparent effort to compel the surgeon to come in. The patient suffered a cardiac arrhythmia and died despite a resuscitation attempt. The surgeon arrived during the resuscitation attempt.

On a Saturday night in January 2000, a middle-age man came into a California hospital emergency room with an upper gastrointestinal bleed. The ER physician on duty treated the patient, but did not have the expertise to stop the bleeding. A gastroenterologist was asked to come in and perform an emergency endoscopy. Then another, and another, and another, and another. After three hours and six refusals, no GI specialist would come to the ER and the patient was at risk of bleeding to death. Finally, the ER medical director called a GI specialist he personally knew and told him he would pay him $500 in cash if he came in. The specialist accepted, came to the ER, performed the procedure, and stopped the bleeding.

These cases, while isolated, illustrate the growing problems that are occurring with the state’s system of ensuring “on-call” emergency services – backup services provided by specialists to hospital emergency departments.

Problems with access to on-call services are primarily the result of problems with reimbursement of physician specialists who provide on-call services.

http://www.sen.ca.gov/sor/reports/REPORTS_BY_SUBJ/HEALTH/Ab2611.pdf

Comment: With all of the negative news about the deterioration of our health care system, we finally have a report that indicates that health care access improved (in this one instance). And it seems fitting that the policy implication is consistent with other current private solutions to our health care crisis. Without government intervention, emergency services can be obtained through the simple intervention of payment of a bribe. Ah, the magic of the marketplace!

Single payer insurance, anyone?

Modern Physician
May 30, 2003
Most Americans would prefer more health coverage to a tax cut, poll shows
By Leigh Page

Almost two-thirds of Americans think the federal government should extend health coverage to the uninsured, while only one-quarter would want the recently passed tax cut, according to a new poll by researchers at Stony Brook University in New York.

Among those who want an extension of coverage, more of them prefer a major effort involving a tax increase to a more moderate effort that would not, says the study, released Tuesday.

Specifically, the study of 810 adults nationwide finds that 36% of all respondents support a tax increase to expand healthcare.

The poll also finds support for an expansion across the political spectrum. It says 72% of Democrats, 65% of independents and 53% of Republicans prefer action on health insurance to a tax cut. And even 27% of Republicans are willing to pay higher taxes for it.

The study also finds that 71% favor government requiring businesses to offer health insurance to all of their employees, a proposal that died in the healthcare debate in the Clinton administration. This “employer mandate” is favored by 69% of Republican, 77% of Democrat and 72% of independent respondents, it says.

http://www.modernphysician.com/news.cms?newsId=866

Comment: It appears that Americans have accepted the rhetoric that we don’t need a “tax cut for the rich” when we have unmet social needs such as inadequate health care coverage. When framed as a “tax increase,” support declines, although it does not vanish.

Rather than discussing the need for tax increases to fund health care, we should be discussing the impact of reform on total health care spending, public and private combined. Converting public and private spending into a ratio would emphasize that we don’t want to know only the public part of health care costs; we want to know the total health care costs and the respective components. Dismissing private spending from the debate while discussing the change in taxes makes no more sense than if we were to dismiss taxes from the debate and discuss exclusively the changes in private spending. If we want to know what health care is going to cost, we need to know both.

This concept has an important application to the finding that there is very strong support for an employer mandate. Even though many proposals include tax policy, the general misperception is that employer-sponsored insurance is funded predominantly by the employer and does not impact taxes. In fact, not only do tax benefits support employer-sponsored plans, but almost all economists agree that employees also fund health coverage through implicit salary concessions. The public needs to understand that they are not avoiding “tax increases” by receiving “free” health care coverage from their employers. Between taxes and salary concessions, they are paying the full tab collectively. Even worse, both the tax benefit and the salary “reductions” of employer-sponsored plans are regressive methods of funding health care. Lower-income individuals pay a disproportionately higher percentage of their income for health care than do higher-income individuals.

But a properly designed tax component (public) would tend to be more equitably funded since it would be progressive, whereas the salary component (private) would remain a regressive method of funding health care. In fact, all private health care spending is regressive since the percentage of income spent has an inverse relationship to total income. Thus a high ratio of public to private health care spending would represent a more equitable method of funding care, whereas a low ratio would represent a less equitable system.

We really do need to convert the debate into terms of total health care costs and a ratio that represents how equitable the funding really is. There will certainly still be some who believe that government and taxes must be minimized at all costs. Since it is now firmly established that the administrative excesses of our current fragmented system of private plans and public programs create more costs than a single payer system would, we can legitimately ask advocates of private funding (low ratio) whether they would prefer to pay less through an equitable system of funding health care, or pay more merely for the dubious benefit of saying that they are paying into a private system, even though to egregiously wasteful private health plan bureaucracies.

Let’s change the focus of the debate from merely concentrating on taxes to a more informative debate that identifies total costs with a ratio that represents how equitable funding would be. That debate would still include tax policy, but it would place it in a more meaningful perspective.

Modern Physician
May 30, 2003
Most Americans would prefer more health coverage to a tax cut, poll shows
By Leigh Page

Almost two-thirds of Americans think the federal government should extend health coverage to the uninsured, while only one-quarter would want the recently passed tax cut, according to a new poll by researchers at Stony Brook University in New York.

Among those who want an extension of coverage, more of them prefer a major effort involving a tax increase to a more moderate effort that would not, says the study, released Tuesday.

Specifically, the study of 810 adults nationwide finds that 36% of all respondents support a tax increase to expand healthcare.

The poll also finds support for an expansion across the political spectrum. It says 72% of Democrats, 65% of independents and 53% of Republicans prefer action on health insurance to a tax cut. And even 27% of Republicans are willing to pay higher taxes for it.

The study also finds that 71% favor government requiring businesses to offer health insurance to all of their employees, a proposal that died in the healthcare debate in the Clinton administration. This “employer mandate” is favored by 69% of Republican, 77% of Democrat and 72% of independent respondents, it says.

http://www.modernphysician.com/news.cms?newsId=866

Comment: It appears that Americans have accepted the rhetoric that we don’t need a “tax cut for the rich” when we have unmet social needs such as inadequate health care coverage. When framed as a “tax increase,” support declines, although it does not vanish.

Rather than discussing the need for tax increases to fund health care, we should be discussing the impact of reform on total health care spending, public and private combined. Converting public and private spending into a ratio would emphasize that we don’t want to know only the public part of health care costs; we want to know the total health care costs and the respective components. Dismissing private spending from the debate while discussing the change in taxes makes no more sense than if we were to dismiss taxes from the debate and discuss exclusively the changes in private spending. If we want to know what health care is going to cost, we need to know both.

This concept has an important application to the finding that there is very strong support for an employer mandate. Even though many proposals include tax policy, the general misperception is that employer-sponsored insurance is funded predominantly by the employer and does not impact taxes. In fact, not only do tax benefits support employer-sponsored plans, but almost all economists agree that employees also fund health coverage through implicit salary concessions. The public needs to understand that they are not avoiding “tax increases” by receiving “free” health care coverage from their employers. Between taxes and salary concessions, they are paying the full tab collectively. Even worse, both the tax benefit and the salary “reductions” of employer-sponsored plans are regressive methods of funding health care. Lower-income individuals pay a disproportionately higher percentage of their income for health care than do higher-income individuals.

But a properly designed tax component (public) would tend to be more equitably funded since it would be progressive, whereas the salary component (private) would remain a regressive method of funding health care. In fact, all private health care spending is regressive since the percentage of income spent has an inverse relationship to total income. Thus a high ratio of public to private health care spending would represent a more equitable method of funding care, whereas a low ratio would represent a less equitable system.

We really do need to convert the debate into terms of total health care costs and a ratio that represents how equitable the funding really is. There will certainly still be some who believe that government and taxes must be minimized at all costs. Since it is now firmly established that the administrative excesses of our current fragmented system of private plans and public programs create more costs than a single payer system would, we can legitimately ask advocates of private funding (low ratio) whether they would prefer to pay less through an equitable system of funding health care, or pay more merely for the dubious benefit of saying that they are paying into a private system, even though to egregiously wasteful private health plan bureaucracies.

Let’s change the focus of the debate from merely concentrating on taxes to a more informative debate that identifies total costs with a ratio that represents how equitable funding would be. That debate would still include tax policy, but it would place it in a more meaningful perspective.

The Harris Poll
May 28, 2003

Supermarkets and packaged food companies top the list of industries which get the best marks for serving their customers.

At the bottom of the list, only 30% think tobacco companies and managed care companies do a good job, and only 40% think health insurance companies do so.

http://www.harrisinteractive.com/harris_poll/printerfriend/index.asp?PID=379

Comment: We are paying an outrageous amount for poor service from the health insurance companies. Why do so many politicians insist that tax policies be expanded to favor this superfluous and wasteful industry?

The New York Times
May 28, 2003
WHO Vows to Overhaul Health Regulations
By The Associated Press

Voicing its alarm at the spread of the SARS virus, the World Health Organization vowed to overhaul outdated international health regulations to deal more effectively with epidemics and the threat of bioterrorism.

“The current regulations are obviously insufficient in view of today’s rapid, high-volume migration, emerging infections and the threats of bio-terrorism,” said U.S. delegate David Hohman. But he stressed that the new rules should represent a “careful balance among disease containment efforts, respect for individual liberties, and a nation’s right to engage in international commerce.”

The debate on intellectual property was the most divisive of WHO’s 10-day assembly, which ends Wednesday. It pitted the United States, which insists that patent protection is paramount in encouraging innovation and new drugs, against developing countries led by Brazil, which argued that health should be given priority over trade.

http://www.nytimes.com/aponline/international/AP-UN-Health.html

Comment: Is the quest for mega-wealth the only motivating factor that drives innovation and new drug development? Maybe we should ask the tens of thousands of dedicated employees and grantees of the National Institutes of Health.

It is instructive to see what the mission statement of NIH says about health and about trade:

The NIH mission is to uncover new knowledge that will lead to better health for everyone. NIH works toward that mission by: * conducting research in its own laboratories; * supporting the research of non-Federal scientists in universities, medical schools, hospitals, and research institutions throughout the country and abroad; * helping in the training of research investigators; and * fostering communication of medical information.

http://www.nih.gov/about/NIHoverview.html

Should our national and international health care policies be guided predominantly by intellectual property and trade issues, or by priorities of health? The NIH and the Bush administration seem to have a disconnect on these priorities.

Center for Studying Health System Change
Issue Brief No. 63
May 2003
Health Care Cost and Access Problems Intensify
Initial Findings From HSC’s Recent Site Visits
By Cara S. Lesser and Paul B. Ginsburg

Continued high-cost trends are threatening the affordability of health insurance and many consumers’ access to care. Early findings from the Center for Studying Health System Change’s (HSC) 2002-03 site visits to 12 nationally representative communities show the retreat from tightly managed care continues to shape local health care markets. Employers are aggressively shifting higher health costs to workers, and absent tight managed care controls to limit the use of care and slow payment rate increases, hospitals and physicians in many markets are competing fiercely for profitable specialty services. These developments have sparked growing skepticism about the potential for market-led solutions to the cost, quality and access problems facing the health care system today.

Few Bright Spots Ahead

Safety net improvements have been a bright spot in an otherwise grim picture of the health system. Although the economic downturn and state budget shortfalls have focused attention on cost control again, there appear to be few strategies developing in local markets that promise significant relief. Premium increases have helped plans to restore profitability, but they continue to grapple with limited influence over utilization and provider payment rates. Largely unchecked by countervailing pressure from plans, purchasers or policy makers, competition among providers for key specialty services has intensified, driving investment in specialized facilities and equipment that threatens to increase costs and aggravate the broader system capacity constraints already posing access problems.

Employers are generally at a loss about how to respond, other than by passing on more costs to employees. As a result, consumers are paying more out of pocket for health care at a time when many workers face stagnant or declining wages. Although higher cost sharing may help to reduce the use of inappropriate care, it also may cause people to delay needed care. And there are limits to the levels of cost sharing employers can impose on workers. While increasing cost sharing will depress trends in spending for a few years, many observers are skeptical about its potential to lower trends substantially over the long term. But if trends in health care spending are not reduced, the cost of health insurance will rise out of more people’s reach, threatening to increase the ranks of the uninsured.

Reflecting on changes in local health care markets today, health care executives, employers and state and local policy makers interviewed for this study have become increasingly skeptical about the ability of market-led solutions to rein in rapidly rising health care costs. Although there is not a strong sense of the alternatives, many stakeholders in local health systems have concluded that there are serious limits to the effects of competition and market-led efforts to constrain health care spending, especially given the poor experience in the 1990s with managed care.

Some remain committed to realizing the vision of managed care and integrated delivery systems, building on the lessons learned in the 1990s. Many more, however, see health care organizations as responding to the immediate pressures in their environment-to generate return for investors or to generate revenue to support a mission to provide health care, for example-in ways that are often at odds with the goals of controlling overall health care spending and protecting access to high-quality care.

http://www.hschange.com/CONTENT/559/

Comment: “Bleak” is an inadequate descriptive of the future of health care, unless, of course, we enact comprehensive reform. Continued mere tweaking of our system can only magnify the bleakness we face.

National Coalition on Health Care
May 19, 2003
Charting the Cost of Inaction
By Henry Simmons, MD, MPH, FACP and Mark A. Goldberg

What will happen if we do nothing to reform the health care system – nothing to secure health coverage for all Americans, nothing to contain or constrain surging costs, nothing to improve the quality of care?

First, in the absence of reform, health insurance premiums will rise rapidly. When we consider premium trends in real terms – that is, net of increases in the Consumer Price Index – the rate of rise is steeper.

Second, looking ahead, we expect premiums to continue to increase by leaps and bounds. The Coalition projects that the average annual premium for employer-sponsored family health coverage will surge to $14,545 in 2006.

Third, in the absence of reform, the number of uninsured Americans will climb rapidly over the next several years. …we now project that the number of uninsured Americans will reach 51.2 to 53.7 million in 2006.

Fourth, most Americans are apprehensive – and, as we have shown, realistically so – about the future affordability of health care.

Fifth, any reckoning of the potential budgetary impact of reform would be one-sided and incomplete without taking into account the potential effects of effective cost containment. The National Coalition on Health Care has long believed that the savings from cost containment, in a comprehensive package of health care reform, could more than offset the cost if securing universal coverage.

Lastly, and not just for that reason, time makes a difference. …the longer our nation waits to reform its health care system – to achieve universal coverage, contain costs, and improve the quality of care – the more reform will ultimately cost. Reform makes economic sense; delaying reform does not.

http://www.nchc.org/materials/studies/Cost_of_Inaction_Full_Report.pdf

Comment: At the press briefing on the release of this report, virtually all panel members, representing a broad spectrum of interests, agreed that a government solution is required. The video and the transcript of the briefing are available at:

http://www.kaisernetwork.org/health_cast/hcast_index.cfm?display=detail&hc=875

The Boston Globe
5/21/2003
Democrats must offer bolder health plans
By Robert Kuttner

With one exception, the health plans released by the Democratic presidential contenders are a set of little plans. They leave the current system largely intact and use subsidies and tax credits to reduce the number of uninsured — as if the whole system were not broken.

What is the nature of the health care crisis? For starters, coverage is eroding, even for the insured. There’s a squeeze on corporate profits in a climate of rising health costs. So health costs are being shifted from plan to individual, with the result that many people go without needed treatments that the plan won’t cover and that they can’t afford out of pocket.

The number of people without insurance is also increasing. Smaller businesses won’t provide insurance. More people are self-employed. And as bigger businesses increase the employee share costs, many lower-paid workers decline the insurance because they can’t afford it.

If we leave intact the present system, with its wasteful fragmentation, billing, underwriting, and insurance company profits, there is only one big place to reap savings — by withholding more care as nonessential and by avoiding the sick.

The best solution here is national health insurance. We already have it for one segment of the population, through Medicare. The program is easy to understand, and even fits on a bumper sticker: ”Medicare for all.”

Face it: Even incremental proposals by Democrats will be attacked as too costly and entailing too much government. They might as well do it right.

http://www.boston.com/dailyglobe2/141/oped/Democrats_must_offer_bolder_health_plans+.shtml

Comment: Why is this a partisan issue? Democrats are interested in ensuring access to affordable, comprehensive health care for everyone, or at least they should be. Republicans are interested in sound business principles which reduce administrative waste and contain costs, or at least they should be.

The one exception alluded to in Kuttner’s article that is not a “little plan” is the single payer proposal of Rep. Dennis Kucinich. It is the only proposal that offers the solutions that both Democrats and Republicans are seeking, even though the specific objectives may not be the same. But should a proposal that would successfully address the concerns or one political persuasion be rejected merely because it also addresses the concerns of the opposing party?

It is true that rhetorical disputes over abstract ideology continue to defeat rational proposals. But when we have an opportunity to adopt reform that provides a meeting ground for those advocating for a sound business approach to reform and for those advocating for health care justice, isn’t it time to set aside the superficiality of rhetorical debate, especially when so many lives are at stake?