Speaker – Page 1155

Federalism and Health Policy

Health Affairs
Web Exclusive
July 16, 2003
Which Way For Federalism And Health Policy?
What’s right, and what’s wrong, with the federal-state division of
responsibility for health care.
By John Holahan, Alan Weil, and Joshua M. Wiener

Abstract:

The current balance of responsibility between states and the federal government for low-income people’s health coverage has achieved a great deal. It covers many of the neediest people, supports the safety net, responds to emerging needs, and supports some experimentation. However, it leaves more than forty million people uninsured, allows excessive variation across states, places unsustainable pressure on state budgets, creates tension between the two levels of government, and yields too few benefits from experimentation. This mixed record argues for a significant simplification of and increase in eligibility for public programs, with the federal government either providing extra funds to states to meet these needs or assuming full responsibility for insuring the poor.

From the Conclusion:

The current balance of federal and state responsibilities for health insurance coverage has achieved a great deal. But it has failed to insure forty million Americans, it expands coverage in small steps only, and under it no state, much less the nation as a whole, has developed and implemented a comprehensive approach to covering the uninsured. The states are now largely playing defense against an eroding employer base of coverage and a fiscal future in which Medicaid expenditures are likely to grow faster than revenues. There is no reason to believe that the current federal structure will ever yield universal coverage or even come close. Indeed, the late 1990s may turn out to have been the high-water mark for health insurance coverage within the parameters of the current system.

Decades of experience show that major progress in covering the uninsured will require a substantial new investment by the federal government. Heavy reliance upon state financing, on top of large differences in employer coverage, is the primary reason for dramatic interstate variations in coverage and, ultimately, for the large gaps in coverage that remain. While states have substantial financial capacity, that capacity is more limited than that of the federal government; it falls with economic downturns, at precisely the same time that health care needs increase; and its funding sources are less progressive than the federal government’s are, making it harder to redistribute funds to services for low-income families.

The challenge for federalism is to devise a financing role for states that continues to prompt administrative innovation while minimizing the inequities that arise when they must bear an overwhelming fiscal burden. Our two approaches take different paths toward striking this balance. The first retains a large role for states; the second diminishes that role. Both would maximize the base of coverage and provide opportunities for moving beyond it while encouraging innovation and experimentation. Neither approach eliminates interstate variation or the inequities it implies. However, since both start from a higher coverage base, the inequities are more defensible than are those in the current system.

Proposals that require substantial new federal funding could be unrealistic in the current fiscal climate. However, without additional federal funds, the states are unlikely to sustain their current coverage levels, let alone increase them. Changing the balance of federalism involves risk. However, there is no other way to return stability and sustainability to our system so that we can build upon it to greatly reduce the number of uninsured Americans.

http://www.healthaffairs.org/WebExclusives/Holahan_Web_Excl_071603.htm

Comment: Although this article discusses federalism and health policy for low-income individuals, the general concept can apply to our entire health care system. Moderate-income individuals are now faced with inadequate benefits, excessive cost sharing, unaffordable premiums, uninsurability because of preexisting disorders, the burden of cost shifting, and all of the other inequities that characterize our system.

John Holahan and his colleagues explain why major federal funding is essential for state health care programs for low-income populations. The single payer model of reform calls for federal funding with state administration, but for everyone. The concept of federalism in health policy should be expanded to accommodate the single payer model which would address the inequities that we all currently face.

On July 20, “Federalism and Health Policy,” a book by these authors will be available from the Urban Institute Press:

http://www.uipress.org/Template.cfm?Section=Browse_by_Author&Template=/Ecommerce/ProductDisplay.cfm&ProductID=4263

"A social insurance system that sells cars to finance itself"

The New York Times
July 14, 2003
Health Costs Soaring, Automakers Are to Begin Labor Talks
By Danny Hakim

Health costs have been soaring for many employers. In other industries, businesses have generally passed along more and more of the costs to workers and retirees, if they maintain benefits at all. Not so in the auto industry, where union leaders have negotiated some of the most substantial medical benefits in the country for their members.

The Big Three and their major suppliers spend some $9,000 and up per active worker annually, according to Mercer Human Resource Consulting…

G.M.’s medical cost is equivalent to about $1,200 a car in this country.

The absence of a national health system in the United States means that the Big Three take on social responsibilities that the governments in Japan and Germany bear. Gary Lapidus, a Goldman, Sachs analyst, referred in his recent report to the Big Three as “H.M.O.’s with wheels” that only happen to make cars.

Uwe Reinhardt, a Princeton University health care economist, calls the Big Three “a social insurance system that sells cars to finance itself.”

“It’s insane to think that a company embedded in a fierce global competition can function as a social insurance system,” he said. “It is a crazy, anachronistic idea. It’s an idea that worked in the 60’s, but lost its validity beginning in the 70’s when the car market became global.”

Comment: Only the government has the capability of establishing an affordable, equitable, and universal system of social insurance.

For an explanation of why we must replace private health plans with a system of social insurance: https://pnhp.org/publications/private_health_plans_versus_social_insurance.php

“A social insurance system that sells cars to finance itself”

The New York Times
July 14, 2003
Health Costs Soaring, Automakers Are to Begin Labor Talks
By Danny Hakim

The Big Three and their major suppliers spend some $9,000 and up per active worker annually, according to Mercer Human Resource Consulting…

G.M.’s medical cost is equivalent to about $1,200 a car in this country.

Uwe Reinhardt, a Princeton University health care economist, calls the Big Three “a social insurance system that sells cars to finance itself.”

Comment: Only the government has the capability of establishing an affordable, equitable, and universal system of social insurance.

For an explanation of why we must replace private health plans with a system of social insurance: https://www.pnhp.org/publications/private_health_plans_versus_social_insurance.php

Can we afford to increase health care spending?

Health Affairs
July/August 2003
Increased Spending On Health Care: How Much Can The United States Afford
By Michael E. Chernew , Richard A. Hirth , & David M. Cutler

Abstract

Perceptions of whether health care cost growth is affordable contribute greatly to pressures for health system reform. In this paper we develop a framework for thinking about affordability, concluding that a one-percentage-point gap between real per capita growth in health care costs and growth in GDP would be affordable through 2075. A two-percentage-point gap would only be affordable through 2039. In either case, the share of income growth devoted to health care would exceed historical norms. The value of care, which determines willingness to pay, and distributional issues are more important than our ability as a society to pay for care.

From the Results:

Despite rapidly growing real (inflation adjusted) health care expenditures, both in absolute terms and as a percentage of GDP, income growth has been sufficient to allow substantial growth in non-health care spending as well.

This is a message that can easily be lost when examining time trends in the percentage of GDP devoted to health care. Such a measure masks the overall increase in GDP over time. In fact, in each decade a relatively small share of the increase in inflation-adjusted income was devoted to health care. For example, in the 1980s (the decade that saw the highest share of income growth spent on health care), real health care spending per capita rose by nearly 70 percent, but this growth consumed only about one-quarter of the increase in real income per capita. That is, the substantial growth in health spending during the 1980s did not prevent three-quarters of real income growth from being spent on goods other than health care.

From the Discussion:

Health care spending appears once again to be on an upward trajectory. The resulting concern has generated considerable debate. Our analysis suggests that the economy could sustain a differential of one percentage point between growth of real per capita health care costs and growth of GDP well into the future. However, we believe that it is important to distinguish between spending that we cannot afford to pay for and spending that we are unwilling to pay for – a difference between unsustainable and unwilling to sustain. The former approach emphasizes a need to curb spending, whereas the latter phrasing emphasizes the extent to which the extra spending can be justified by extra value received relative to the value of non-health care services that could otherwise be consumed.

… although the rise in health care costs may be affordable at the national level, it is important to recognize the distributional consequences of rising health care costs. What is affordable on average may not be affordable to all segments of society. Rising health care costs may contribute to falling rates of health insurance coverage and reductions in access to care. The appropriate response requires discussion about the ramifications of the lack of coverage and the merits of subsidizing insurance or care for various segments of the population. Discussion of society’s willingness to pay must recognize that, in part, this will reflect the willingness of some people to pay for care used by others.

http://www.healthaffairs.org/1130_abstract_c.php?ID=http://www.healthaffairs.org/Library/v22n4/s9.pdf

Comment: Do we have the capability of increasing funding for health care? This study demonstrates that significant increases in health care funding are sustainable while still allowing substantial growth in non-health care spending as well. Yes, we can afford to increase health care spending dramatically.

The real questions are whether we value health care enough to be willing to pay for it, and whether we value health care not only for ourselves and our families but also for our fellow citizens. If we do, then distributional issues become paramount since we would have to establish an equitable system of funding care.

As a society, we can afford comprehensive health care for everyone. That is no longer in dispute. But are we ready to end the distributional barriers to care by establishing an equitable system of social insurance?

Politicians and demagoguery

The New York Times
July 8, 2003
Plans Improve Federal Workers’ Drug Benefits
By Robert Pear

The House is expected this week to pass legislation ensuring that federal employees, including members of Congress, will have prescription drug benefits better than those available through Medicare when they retire.

The new House bill says drug benefits for civilian federal retirees, who already have drug coverage, cannot be reduced to the level proposed for Medicare. An identical bill has been introduced in the Senate.

The Washington Post July 6, 2003 Medicare Bills Don’t Mimic Model Coverage Not as Comprehensive as Federal Employees’ By Ceci Connolly

In the recent debate over Medicare drug coverage, Sen. Mark Dayton (D-Minn.) challenged senators to match their words with deeds. He offered an amendment requiring lawmakers to lower their drug coverage to the level provided in the final Medicare legislation.

“I would rather bring everyone else up,” he said, “but what is fair for them is fair for us.”

The Senate approved his amendment 93 to 3. But within a day, several senators told the newspaper Roll Call it was a symbolic vote that would be overturned in negotiations with the House.

Explained Sen. Rick Santorum (R-Pa.): “Most members saw this as demagoguery. And we weren’t going to condone it publicly by taking it seriously. So we all voted for it.”

http://www.washingtonpost.com/wp-dyn/articles/A13558-2003Jul5.html

Comment: Sometimes it is embarrassing to see how obscene democracy-in-action can be. Shouldn’t we seriously consider replacing many of our current politicians with true advocates of democracy?

Aaron and Butler agree on federalism?

The Washington Post
July 6, 2003
Four Steps to Better Health Care
By Henry J. Aaron and Stuart M. Butler

For at least 20 years, commentators have bewailed the lack of adequate health insurance among growing numbers of Americans. For an even longer time, analysts and experts have warned that health care costs were rising unsustainably. Yet no consensus has formed on what to do about these twin adversities. Conservatives propose encouraging individuals to buy private health insurance and placing more reliance on market forces. Liberals continue a struggle initiated during the New Deal to provide publicly financed health coverage. Neither has persuaded the other.

The result: a political standoff that has blocked an honest evaluation of any major approach and has left everyone frustrated. Meanwhile, the ranks of the uninsured swell, health costs soar, and states and businesses cut benefits.

It seems clear to us that the political logjam in Washington will continue unless we take a different approach. We believe that approach involves exploiting the unique strength of American federalism. Specifically, we urge Congress to authorize individual states to carry out any of a broad range of strategies to reduce the number of uninsured people within their borders. And Congress ought to reward states with grants sized according to their progress toward agreed targets.

… we are certain that health policy cannot improve unless it moves off dead center, where it has been stuck for a generation as more Americans have lost coverage and costs have exploded.

Henry J. Aaron is senior fellow in economic studies at the Brookings Institution. Stuart M. Butler is vice president for domestic policy studies at the Heritage Foundation.

http://www.washingtonpost.com/wp-dyn/articles/A10659-2003Jul4.html

Comment: Using American federalism as a model of reform is certainly not a new concept. In recent years it has been supported by members of the academic community, including Theodore Marmor and Jonathan Oberlander, and by politicians, including Paul Wellstone and John Tierney.

Like every other political solution, details matter. Can this serve as an avenue for reform which would truly bring together individuals with views as diverse as Brookings’ Henry Aaron and Heritage’s Stuart Butler? Is their concept of a state-federal approach a model of consensus on which most of us can agree, or is it just another “strange bedfellows” attempt to twist rhetoric into creating the appearance of an acceptable compromise? Well, let’s look at the four steps that they propose.

(1) Congress would specify goals, which would include reducing the number of uninsured people over several years. … Congress would have to define a minimum level of coverage to classify a person as “insured.” … such standards should sustain the Medicaid entitlement… Defining what constitutes insurance for others — those not entitled to Medicaid and lacking private or public health coverage — would be controversial and difficult, because reasonable people disagree passionately on whether good insurance must provide comprehensive coverage or simply less-expensive catastrophic protection, with individuals being subject to price incentives for other costs. … One way of avoiding a political impasse on this issue might be to allow some variation in basic benefits among states, provided the plans are of equivalent value.

(2) … Congress would pass a “federal policy toolbox” of options that would be available to states. This menu would include tax credits to individuals for the purchase of group insurance or to businesses for mandatory employment-based coverage; Medicaid or other public program expansions; individual mandates; plans that focus on children or the near-elderly; so-called association plans; or an expansion of the Federal Employees Health Benefits Program to nonfederal workers.

(3) … states willing to participate could choose one or more items from this menu or propose their own strategies that they found suitable to the needs and preferences of state voters, within the minimum federal standards. Single-payer plans could be tested on a limited scale, avoiding a clash over the law governing large corporate plans.

(4) Congress would commit in advance to provide grants to each participating state in addition to current federal funding, based on the state’s progress toward the agreed goals.

So is this a consensus or a compromise? Unfortunately, it is neither. It is a capitulation to the conservative policymakers who are currently in charge of the nation’s policy agenda.

First, allowing “variation in basic benefits” would result in both financial insecurity and impaired access for those with the greatest needs, defeating the very purpose of insurance.

Second, the “federal policy toolbox” contains primarily a list of options strongly supported by conservative organizations such as the Heritage Foundation. They are mechanisms that perpetuate inequities in health care and fail to control the administrative excesses and other waste in our system.

Third, the token acknowledgement that a single payer plan could be tested is an empty promise since the restrictions (limited scale testing, and exempting ERISA-protected plans) do not meet, in any way, the definition of a single payer plan. Testing the model proposed would certainly result in a failed experiment. But then applying the false label of “single payer,” and then dismissing the single payer concept forever, would certainly help to advance the agenda of the conservatives.

Even the fourth element of their proposal, federal funding, risks underfunding of health care if the concept of “grants” were to be interpreted as “block grants,” allowing the federal government to reduce its participation to a defined contribution model.

Just because Aaron is willing to use the federalist model to let the conservatives take control of the reform process, does this mean that Marmor, Oberlander, Wellstone, and Tierney are wrong? Absolutely not! Single payer reform may very well be initiated on the state level, just as Canada established the first single payer program in a single province (Saskatchewan). Any state that decides to adopt a single payer system would require, at a minimum, that federal tax funds already dedicated to health care would need to be folded into the state health care budget. That would require enabling federal legislation, a federalist approach.

Two pathways to single payer reform are possible. Much preferred would be a single, national program that would provide everyone with affordable, comprehensive care. Even though we have been at a political impasse for decades, we must not let up on our efforts for real reform. In fact, we must intensify them. But in the meantime, we can also continue our efforts to establish single payer systems within individual states. We will need a federal-state partnership, and even the conservatives support the concept that states should have control over their own matters, including health care.

Legislation supporting a federal-state partnership should require that federal funds be used appropriately to ensure universal coverage with an adequate benefit package, but it should not prohibit the state from allocating those funds in a manner that reduces administrative waste and improves equity. A bona fide single payer program must be allowed as an option for the individual states, if not a mandate.

Lessons From the North; The Canadian Experience

How Not To Fix Medicare

The New York Times
July 2, 2003
By JACOB S. HACKER

Today we remember Medicare’s establishment in July 1965 as a ringing affirmation of the ideal of social insurance. Less well remembered is how close Washington came to creating a very different system. Not long before Medicare’s passage, the Kennedy administration seemed on the verge of a compromise with Senator Jacob Javits, the moderate Republican from New York. Senator Javits and his allies wanted to give private insurance a leading place in the new program so government could play a smaller role — an idea opposed by liberal Democrats and organized labor. The opposition won out, and the private insurance idea seemed consigned to the dustbin of history.

At least it was until last week, when both the House and Senate passed bills that would give private health plans a huge new stake in Medicare as well as provide prescription drug benefits. With pressure from President Bush to pass legislation, Congress stands on the threshold of the biggest overhaul of Medicare since its inception. But unless crucial aspects of the Senate and House measures are rethought, such an overhaul will come at the peril of America’s elderly and disabled.

If this warning seems apocalyptic, that’s only because most Americans are under the impression that the measures on the table are centrist compromises that would protect everyone’s interests. In reality, neither the Senate nor the House legislation would achieve this. And while the Senate bill is indeed an attempt at compromise, albeit a deeply flawed one, the House bill is a radical measure directly at odds with Medicare’s longstanding aims. It threatens to cripple the program for generations to come.

Bluntly put, the House legislation is a ruse. The bill delivers a prescription drug benefit, but this benefit is simply the attractive window dressing for the legislation’s ultimate aim: fundamentally revamping Medicare to create a competitive system based on private health plans. Consider the bill’s major features. Private health insurers would be given increased government payments so that they could sweeten their benefits to lure the elderly and the disabled out of the traditional Medicare program. Beneficiaries choosing private plans with lower premiums would get a rebate from the government; those choosing plans with higher premiums would have to pay more. In 2010, the traditional program would be forced to compete with private plans. From then on, the amount that beneficiaries paid for Medicare would be set not by law, but by market forces.

This might sound like a great way to encourage consumer choice — until one realizes that the cost of alternative insurance options would be mainly determined by the health of those enrolled. Since the least healthy enrollees would most likely stay in traditional Medicare rather than brave the private market, the program’s premiums would likely rise substantially. This would encourage healthier beneficiaries to seek lower premiums in the private sector, leaving only the sickest behind.

The problems don’t end there, nor are they confined to the House bill. Neither the House nor Senate legislation, for example, provides what the majority of Americans want: a drug benefit within Medicare itself. Instead, beneficiaries would be forced to turn first to private insurers, which would be able to set their own premiums for drug coverage. (The Senate bill allows for a drug benefit directly through Medicare only if a beneficiary does not have access to more than one private drug insurance plan in his region.)

Because drug costs are risky and expensive to cover, few insurers seem eager to sign up for this complex and untested idea. But even if private plans emerged, the likely result would be chaos as insurance companies continually dropped coverage and altered their benefits — which is precisely what has happened to millions of Medicare beneficiaries enrolled in private H.M.O.’s over the past five years.

Perhaps these risks would be tolerable if the standard drug benefit authorized by the bills were generous. It is not. Both bills feature an upfront deductible of $250 or more, require significant co-payments above that amount and force beneficiaries to pay a huge amount out of pocket before catastrophic protection kicks in. As a result, an elderly woman with $6,000 in total drug costs would end up paying more than $4,000 of her own money under the Senate bill, and even more under the House legislation.

A recent study by Consumers Union underscores the meagerness of the benefit. According to the report, beneficiaries with average drug costs and no private coverage will spend roughly $2,300 this year. If either the Senate or House bill takes effect in 2007, they will pay at least $2,500. In other words, Medicare beneficiaries would spend more, not less, on prescription drugs after Congress came to the rescue.

The real solution is no secret: make the drug benefit a part of Medicare and, yes, spend more money on it. The $400 billion over 10 years that Republicans have pledged for drug coverage may sound like a lot, but it’s just a fraction of the nearly $2 trillion in pharmaceutical expenses that beneficiaries are expected to incur over the next decade. Of course, a larger benefit would cost more. But, in the end, somebody is going to pay; the question is how the burden is distributed. The whole point of social insurance is to spread the responsibility across rich and poor, sick and healthy, rather than letting the burden fall on individuals and their families alone.

At a minimum, defenders of Medicare should insist that a prescription drug bill truly is a prescription drug bill — and not a vehicle for tearing down the existing system. If history is indeed any guide, Congress needs to resolve all these issues before rushing a compromise bill to the president’s desk. In 1965, Medicare advocates thought they could wait until after the legislation was passed to revise the measure and expand coverage for the nonelderly. Of course, that never happened. In 2003, more than 40 million Americans remain uninsured. If today’s Medicare advocates allow themselves to be steamrollered, they will be living with the fallout for decades.

Not coincidentally, perhaps, none of this will become clear until after the 2004 election. Republicans may ride a prescription drug benefit back into office. But the bills on the table now are mainly a prescription for resentment and dashed expectations — and, most fearful of all, for the unraveling of the social compact that has made Medicare an integral part of American social policy for nearly 40 years.

Jacob S. Hacker, assistant professor of political science at Yale University and a fellow at the New America Foundation, is author of “The Divided Welfare State: The Battle Over Public and Private Social Benefits in the United States.”

National Health Insurance Is the Obvious Prescription

I have practiced medicine in Chicago for more than 50 years, but these days, I spend much of my time advocating for health-care reform. Like Presidents Harry Truman and John Kennedy, I propose that we adopt national health insurance, administered via the government, as with Medicare and Social Security. In policy wonk circles, this sort of reform is known as “single-payer.”

Because there is broad consensus that the present system is broken and costs are unbearable, my essential argument is as follows: We already have all the necessary resources to provide care for everyone, including the 42 million people who are presently uninsured. We also have the means, right now, to assure coverage for prescription drugs, home care for the aging and disabled, and parity in mental health care. What are these resources? First, money. We will spend $1.6 trillion on health care this year, nearly $6,000 per capita, which is twice as much as any other nation. We have abundant facilities and high-tech capability–overly abundant some would say.

Second, we have the knowledge. We have a superbly trained health force of nearly 10 million people, including 600,000 physicians and more than 2 million registered nurses.

The problems in our health system arise from a national penchant to treat health care as a commodity and to blindly pursue a free-market strategy despite the obvious differences between, say, health care and DVD players. In theory, supply meets demand, and vigorous competition increases efficiency and effectiveness. In practice, more than 18,000 people die every year for lack of coverage while costs are skyrocketing and Enron-like scandals are becoming the norm in for-profit health care.

Our health resources hemorrhage into private-insurance bureaucracy (25 cents of every dollar), shocking executive salaries, and, most recently, billions in fines for civil and criminal violations. For example, HCA Inc., the world’s largest for-profit hospital chain, has paid $1.7 billion to various government agencies for defrauding Medicare and Medicaid. HCA, incidentally, was founded by the father and brother of Senate Majority Leader Bill Frist, whose HCA holdings exceed $26 million. Is there a conflict here?

Other nations’ success

Because national health insurance works well for the 20-odd wealthy, industrialized nations of the world–Taiwan’s program adopted in the mid-1990s is the most recent success–it is useful to examine what the obstacles are to single-payer reform in the U.S.

Our American system is employment-based, and business and labor unions won’t forgo this arrangement. Well, guess what? Last fall a remarkable statement was released by the Big Three automakers in Canada. It said, in part, “The [Canadian] public health-care system significantly reduces total labor costs for automobile manufacturing firms, compared to the cost of equivalent private insurance services purchased by U.S.-based automakers; these health insurance savings can amount to several dollars per hour of labor worked. Publicly-funded health care thus accounts for a significant portion of Canada’s overall labor cost advantage in auto assembly, versus the U.S., which in turn has been a significant factor in maintaining and attracting new auto investment to Canada.”

On this side of the border, William Clay Ford Jr., the chairman of Ford Motor Co., said that the rising cost of health benefits is the “biggest issue on our plate that we can’t solve. Health care is out of control. It’s a system that’s broke.”

Further, noting that the U.S. is the only major industrialized country with an employer-based health-care system, Ford said the ever-rising costs of health care put U.S. companies at a competitive disadvantage.

As for labor, the U.S. president of the United Auto Workers, Ron Gettelfinger, asserted in April, “We need a universal, comprehensive, single-payer health-care program to cover every man, woman and child in the United States. You can’t fix the health-care crisis in American at any one bargaining table with any one employer or within any one industry.”

At long last it seems that business and labor are getting the message. Because rising costs, the source of their enlightenment, are only going to worsen, the enormous strength of business and labor may well be moving toward applying political pressure for reform.

Facts dispute certain notions

Despite the American people’s disdain for “government medicine,” the nation’s experience with “government medicine” has largely been favorable: The National Institutes of Health account for our success in biomedical research. Our Centers for Disease Control safeguard the public’s health. Medicare is a lifeline for 33 million seniors. Our public hospitals, such as Cook County, serve millions of the most vulnerable. The American people reject taxes for health insurance schemes. The ideologues have been successful in making new tax levies politically taboo, even when they would eliminate spending for insurance premiums and reduce total health-care spending.

Americans are already paying more per capita in taxes and tax credits for health care than any other nation. The public should recognize that, in addition to other problems, our health system is a colossal rip-off. We pay for national health insurance, but because the resources are squandered, we don’t get it.

Common belief is that national health insurance is not feasible in America. At bottom, this turns out to mean that its powerful opponents in the insurance, drug and medical industry cannot be overcome.

Well, maybe.

But history records the ability of our people to overcome seemingly insurmountable realities, such as human slavery and denial of legal status to American women.

National health insurance deserves bipartisan support: There are just as many uninsured Republicans as Democrats. It would, in the end, make us a healthier and more unified people.

Private Medicare plans increase costs

The Commonwealth Fund
Policy Brief
Lessons from Medicare+Choice for Medicare Reform
By Geraldine Dallek, Brian Biles, and Lauren Hersch Nicholas

Lesson 7: Private plans are not less costly than traditional Medicare

The major goal of Medicare reform based on private plans is to use competition to control the growth in overall Medicare costs. The experience from M+C suggests that private plans do not save Medicare money and that, to the contrary, they can increase program costs.

The reasons why M+C (Medicare+Choice) private plans have not succeeded in reducing total Medicare costs include:

* Enrollees in M+C managed care plans have historically been healthier than those who remain in fee-for-service Medicare, and risk-adjusted Medicare payment does not fully compensate for this pattern.

* To attract M+C plans in more rural and non-metropolitan areas, Medicare has increased payments for M+C plans above the level it pays in these areas for traditional Medicare. While this has not led to increased participation by Medicare HMOs, increased rural payments translate into higher Medicare costs for PFFS (private fee-for-service) plan contracts.

* The newer private plans – PFFS plans and demonstration PPOs (preferred provider organizations) – contract in areas where M+C payment rates are higher than traditional Medicare rates.

* Medicare administrative costs average approximately 2 percent, while administrative costs in private plans in employer groups generally exceed 10 percent. In particular, private plans have costs associated with marketing and, in the case of for-profit plans, a return for investors.

New, less-structured PFFS and PPO plans, with broader provider networks and fewer cost containment features, may be even less able than are current M+C HMO plans to limit total costs through reductions in price, rates of hospitalization, and use of specialized services.

The lesson from M+C suggests that it is difficult for private plans to reduce total costs of care from the level of the traditional Medicare program. It is even more difficult for private plans to offer additional benefits, cover marketing and administrative costs, and make a profit while pricing their products below the costs of the Medicare fee-for-service program.

Conclusion

In 1997, it was predicted that 34 percent of Medicare beneficiaries would be enrolled in M+C private plans by 2005. Instead, 11 percent of the Medicare population is enrolled in M+C plans in 2003, down from 16 percent in 1998. Policy experts also projected that M+C plans would expand to all parts of the country, educated beneficiaries would begin to make informed choices based on costs and quality, and competition among plans would reduce overall costs to the Medicare program and to beneficiaries alike.

None of these predictions has occurred. Instead, the M+C program has fostered broad dissatisfaction by private plans, providers, and elderly and disabled beneficiaries. Rather than steady growth, the program has undergone a period of persistent instability and a decline in enrollment.

The history of M+C is a cautionary tale. It offers important lessons for consideration in any new program to expand the use of private plans in Medicare.

http://www.cmwf.org/programs/medfutur/dallek_mclessonsforreform_pb_658.pdf

Comment: How many times have we heard this? Private Medicare plans, whether Medicare + Choice, PPOs, or private fee-for-service plans, all increase costs over the traditional Medicare program. Politicians who make claims to the contrary are simply lying. Call them on it, and demand that they explain the real reasons for supporting private plans. Failing that, fire them in the next election.

Paralyzed Doc Struggles to be Useful

BALA CYNWYD, Pa. (AP) – June 25, 2003 — It is Dr. Bob LeBow’s sad fate to be trapped on four wheels when he spent so much of his life unbridled on two.

He rode his bike all over the world – in Bolivia, where he served in the Peace Corps.; to the villages of Swaziland and the heights of Tibet; down the rural backroads of Idaho, where he helped build a remarkable medical clinic.

Tested by tragedy, he became a national advocate of universal health insurance. He distilled all his passion into a book that told about patients who suffered because they could not afford a doctor’s care, or a pharmacist’s remedies.

The book was published last July. A week later, his bike betrayed him.

Now he lives at his son’s home in the Philadelphia suburbs, a quadriplegic caught up in the same health care system he railed against. Encumbered by his wheelchair, connected to a ventilator, he is depressed by the prospect of a life in which he cannot be of use to others.

But that is impossible, say the people who know and love him. They say Bob LeBow still touches lives as he did 32 years ago, when he, his wife and two sons arrived in Nampa, Idaho.

There, a charismatic young man named Terry Reilly had set out to tutor the children of migrant farm workers – and ended up opening a health clinic, instead.

The problem, Reilly found, was that his students were often too sick to make progress. So he secured a $271,000 federal grant for the new Community Health Clinics.

LeBow had returned from the Peace Corps and had earned a master’s degree in public health when he heard about Nampa through an old classmate. He was enticed by rural life, and by the opportunity to treat the needy.

Dr. Bob was soft-spoken to the point of mumbling; he had a kind face, with a perpetual five o’clock shadow and glasses often slightly askew. His sweaters always seemed to have holes at the elbows. He hated meetings and often fell asleep during them (though he had an uncanny ability to awaken and contribute when his turn came). In his time off, LeBow traveled to developing countries as a consultant to help build their health care systems. He was mentor to dozens of doctors. He emphasized the importance of preventive medicine, of expanded access to care, of treating patients with dignity and respect.

Dr. Jonathan Bowman, the clinic’s assistant medical director, recalls LeBow’s message to doctors: “You’re actually part of the therapeutic process. You’re helping people get better by showing them you care.”

He practiced what he preached, and patients adored him.

“He was sensitive to the mind, body and spirit. He listened carefully,” said LeBow’s office mate, Dr. Laura Tirrell.

Rosie Reilly recalls how her husband and LeBow “just bounced ideas off each other … and there was nothing that was not doable.”

They delivered babies. They opened an in-house pharmacy. They hired a health educator. They established programs for victims of sexual abuse, for teenagers, for the elderly. They opened more satellite clinics. They improvised – when floors sagged, they used jacks to prop them up.

By 1986, Terry Reilly was a rising political figure; he served a term in the state Senate, a Democrat elected from a Republican stronghold, and he wanted to be lieutenant governor.

He was campaigning on April 10 when the single-engine plane taking him from Coeur d’Alene to Idaho Falls plummeted into a hillside, killing him and two others.

Three months before, on Jan. 10, Bob and wife Gail’s younger son, Tommy, was driving just a mile from home when his car hit a patch of black ice and skidded into a telephone pole. The “soul mate” who had joined Bob on so many bike trips was 16. “Tommy’s death crystalized for me a goal which I had more or less unconsciously strived for before: to alleviate suffering as much as possible. Now it became a conscious personal goal,” Bob LeBow would write in a newspaper column seven years later. First, he testified in favor of a mandatory seat-belt law in Idaho (Tommy wasn’t wearing one); it passed narrowly. Then, he ran for the Legislature – three times, unsuccessfully.

Universal health insurance was his great issue. He had seen too much suffering – a 64-year-old woman with diabetes and high blood pressure who only took her medication twice or three times a week, because it was all she could afford; a farmworker who could not afford a $100 payment to a specialist, and went home, only to be diagnosed months later with tuberculosis.

This was his message, told to voters, told at meetings across the Northwest, told in his capacity as president of Physicians for a National Health Program, told in his book, “Health Care Meltdown”: The current health care system is an expensive failure that serves only the insurance companies and pharmaceutical and health-care industries.

To those who said that his solution – taxpayer-financed national health insurance – meant health care would be rationed, he retorted that it already WAS rationed. The poor were the ones who were denied medicine.

Last July 25, the book was finished, and he carried a copy for an old friend as he rode his bike to work. He was about three miles from home when the brake calipers got caught in the front wheel, sending him flying.

He was wearing a helmet, of course, but he landed face first, breaking his neck. When he stopped breathing, his brain was denied oxygen, and was injured as well.

LeBow’s recovery took him from Boise to Craig Hospital in Denver and finally to Bala Cynwyd, where Ted, his wife Jennifer and their three daughters have turned their home into a hospital for one man.

Bob LeBow had plenty of insurance. But even so, it may not be enough. In less than a year, his care (24 hours a day, seven days a week) has eaten up more than half of the million-dollar lifetime cap on his health insurance.

He is in rehab now. He is learning to use his chin to play computer games, and to draw with a pen in his mouth. These may seem to be small steps, but 10 months ago doctors saw a man whose heart had stopped repeatedly, who couldn’t swallow, who struggled with a few words; this, they said, is probably as good as it will get.

“It’s been very tough,” Bob LeBow says. Sometimes, he’s depressed. “I’d like to live as long as I can be of use to somebody,” he says.

Otherwise, “I’d rather just check out.”

But his spirits are raised by the success of “Health Care Meltdown.” Twelve thousand copies have been sold, and Alan C. Hood & Co. will publish a hardback edition in mid-July.

He has been buoyed, as well, by a loving celebration in Nampa.

Staffers of what is now known as Terry Reilly Health Services were devastated by the accident. They could not bring themselves to touch LeBow’s desk, to move his papers.

Dr. Erwin Teuber, the clinic’s executive director, thought his staff needed to turn the page. For one thing, the clinic needed LeBow’s desk – it has grown to a $9.3 million a year operation, treating more than 18,000 patients in 10 locations.

– So in late May, 150 people congregated at the clinic’s newly christened Dr. Bob LeBow Conference Room. With Bob on the phone, they sang “Happy Birthday” (he would turn 63 on June 16). They presented him with the first Bob LeBow Community Health Award.

And they spoke excitedly of the first Bob LeBow Classic Bike Tour.

On June 14, 232 cyclists pedaled across the Idaho countryside, to clinics LeBow helped build, past fields and mountains he had traversed so many times. Their purpose was his dream: to fund health care for the poor.

More than 2,100 miles away, Gail LeBow put the No. 1 race number at the foot of Bob’s bed, tangible evidence that though he can no longer ride a bike, he can still move mountains.

Ten drug companies have more profits than the other 490 Fortune 500 companies combined

Public Citizen
Press Release
June 23, 2003
Drug Industry Employs 675 Washington Lobbyists, Many with Revolving-Door Connections, New Report Finds

Profits registered by the 10 drug companies on the list (Fortune 500) were equal to more than half the $69.6 billion in profits netted by the entire roster of Fortune 500 companies – when all losses are subtracted from all gains.

“The drug industry contends that it needs high prices to finance the discovery of new, innovative drugs,” Clemente said (Frank Clemente, director of Public Citizen’s Congress Watch). “But a closer look shows that drug-makers make far more money in profits than they spend on research and development.”

http://www.citizen.org/pressroom/release.cfm?ID=1469

Comment: Most of the Republicans in the House and Senate are making every effort to be certain that the traditional Medicare program will not be allowed to provide coverage for prescription drugs (except for a fallback provision in the Senate for rural regions without willing plans, though the House leadership has stated that even this is unacceptable). Coverage would be provided exclusively by private insurance plans, whether as an isolated drug plan or as part of an HMO or PPO.

The Republicans contend that including prescription coverage in the traditional Medicare program would lead to price controls of drugs. But other Medicare providers, including physicians, hospitals, laboratories, and home health agencies already have their fees and prices controlled by Medicare. Why should prescription drugs be the exception?

The explosion in physician fees and hospital charges after the introduction of Medicare led to the switch from usual, customary and reasonable fees to the enactment of mechanisms to control Medicare costs. In recent years we have seen an explosion in drug costs, with truly outrageous profits.

The Republicans are correct. Including drugs in the traditional Medicare program would result in negotiated prices – but fair prices. Isn’t it now time to modernize Medicare by including prescription drugs and making them affordable?

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