PNHP

Vermont Steps Closer To Single-Payer Health Care

Vermont Steps Closer To Single-Payer Health Care

By NPR Staff, All Things Considered
NPR, May 22, 2011

Vermont is about to accomplish something the federal government couldn’t.

Once Gov. Peter Shumlin signs a bill on May 26, the state will be on track to having a single-payer health care system.

“We’re actually trying to design the first single-payer health care system for America,” Shumlin told Guy Raz, host of weekends on All Things Considered.

“Basically what our system will do is treat health care as a right and not a privilege,” he says. “We want to design a system where health care will follow the individual, and not be a requirement of the employer, which we think will be a huge jobs creator.”

Most importantly, Shumlin says, it’ll be a publicly financed system. Everyone pays, and the state uses those “health care dollars to make us healthier, not to enrich insurance companies, inefficiency, waste, and the current fee-for-service system, which bills providers based on how much service they do.”

But don’t break out the Canada comparisons just yet.

Vermonters aren’t going to wake up to a single-payer system overnight. What’s being passed is more of a framework. They are using the Affordable Care Act, the hotly contested bill passed last year by Congress, as a bridge for the state to get there. When that bill becomes law in 2014, so will Vermont’s plan.

The basic outline looks like this: The federal government, Vermont’s state government and employers will all still pay in for health insurance. That money will then all flow through Green Mountain Care, Vermont’s official health insurance. To equalize the rates consumers pay, the state will ask the federal government for Medicaid waivers. The state government must also court national employers that do business in Vermont to put their employees on Green Mountain Care.

The bill doesn’t lay out hard specifics on how to pay for it all, which has critics nervous. A financial exploratory committee has the task of putting together a proposal due January 2013, but for now Shumlin isn’t worried. He says there are only a few different options to choose from in order to pay for a publicly financed system, like using Medicaid vouchers.

The logistics will come in time, he says. Right now, the cost of health care is swelling and Shumlin believes setting Vermont up on a single-payer system will create a more sustainable way to take care of everybody.

“We have a crisis,” he says. “What I find alarming is that so many of us are willing to pretend that everything is going to be OK if we stick with the current system. So we’re taking the bull by the horns up here in Vermont.”

If Vermont does get it right, it could see more businesses and jobs coming in. Shumlin sees this type of health insurance as a big financial ease for employers, especially small-business owners.

That’s a big economic incentive, but it wasn’t enough to save the single-payer provision of the Affordable Care Act from being axed by Congress last year. [PNHP note: the writer is almost certainly referring to the “public option,” since there was no “single-payer provision” in the draft federal legislation.] Yet Vermont might be the right size and the right political environment to be a sandbox for a single-payer system in America, and Shumlin believes it could serve as a model for other states.

“We want to figure this one out and get it right,” Shumlin says, “Then we hope that perhaps others might follow.”

http://www.npr.org/2011/05/22/136502764/vermont-steps-closer-to-single-payer-health-care

Vermont closing in on single payer

By Ezra Klein
The Washington Post, 05/09/2011

Kevin Outterson is an associate professor of health law, bioethics and human rights at Boston University, as well as a blogger at the Incidental Economist. He’s also been following the Vermont health-care reform process in some detail, and is one of fairly few people who has actually read the 141-page single-payer bill that the governor is poised to sign. Earlier this afternoon, he walked me through what he’s learned.

Ezra Klein: What is Vermont passing, exactly? My understanding is that they’re not going to sign this legislation and wake up with single-payer health care the next day. So what’s in this bill, and what does it do?

Kevin Outterson: This bill is more of a framework. For example, they left out all the financing. But it sets a planning process for a single-payer — or what they’re calling a “single-payment” — system. If you read the various reports and presentations they’ve released so far, you can get a sense of where that’s going. Their plan is to roll every payer they can into one system. It’s easy to do with state and municipal employees. They might be able to do it with the individual and small-group markets that they regulate under the terms of the Affordable Care Act. They are going to ask the Obama administration for waivers for Medicaid, so they’d get the Medicaid money and use it in this system, and they also want a waiver for Medicare, which I’m not sure anyone has ever done before. And the last group they’re trying to woo in are the large, national employers who are regulated by ERISA. Their plan is to tax these employers whether they pay in or not, and then these employers have to ask themselves, “We’re already paying this tax, why wouldn’t we just put our employees into Green Mountain Care?”

EK: So all these different players remain part of the health-care system. But now their payments run through the Vermont state government.

KO: Right. So employers would still be paying in, the Vermont state government would still pay in, the federal government would still be paying in, but all the money would then flow through Green Mountain Care, the single-payment system. And for all providers, there’d just be one contract. It’d equalize payment rates between private insurance and Medicare and Medicaid. It’ll dramatically reduce their paperwork. That’s why they’re supporting it. And Blue Cross/Blue Shield of Vermont, which is the biggest insurer in the state, supports it.

EK: Wait, Blue Cross/Blue Shield supports it? Why? Won’t this put them out of business?

KO: You would think. But this is one of those Blue Cross plans that never sold out to Anthem. They’re still nonprofit. And they’ve got 70 percent of the market in Vermont. So the theory is they would administer the payment system. But they’re not alone. The Vermont Medical Association and the Vermont hospitals are supporting this legislation. [PNHP correction: the Vermont Medical Society has taken a neutral stance on the bill.] The most vocal opponents are the state association of insurance agents, and the drug companies are about to descend in force, because there’s a lot in there the drug industry won’t like.

EK: How quickly could something like this be up and running in Vermont?

KO: They can do a single-payment system fairly quickly for the state and municipal employees and the individual and small-group exchange markets that they regulate under the ACA. So that’s the core. And it’s pretty substantial. And if they get Blue Cross in, then they get Blue Cross’s customers. Then there’s Medicaid and Medicare, which will be a long process going back-and-forth with the Center on Medicaid and Medicare Services. And then the discussion with the big employers is happening now, as Vermont can toss this tax into place pretty quickly, which will force those guys in.

EK: But there’s no financing mechanisms in the bill yet, right? That seems like a pretty big omission.

KO: Vermont has a study group that’s been working on financing for a while and that’s been negotiating with these big employers to join the party. And they need them there: If they don’t tax the big guys, they don’t have the money, and if they don’t get buy-in from the big guys and they move their offices to New Hampshire, Vermont has a problem. But let’s say you’re Wal-Mart. You might be willing to take a risk on paying a bit more in Vermont because if it works and spreads, this might fix your long-term problems nationally. If I was a national employer with 3 or 4 million lives in my care, I might be willing to invest a little money to see if Vermont can do this.

EK: That national question seems like the interesting one. In Canada, single payer began in a single province and then spread across the whole country. If Vermont pulls this off successfully, it seems like the sort of thing that, in 10 or 20 years, could lead to very large changes in America’s health-care system.

KO: The first thing I posted on was the incredible power of Vermont’s version of the Independent Payment Advisory Board to control costs. If they do this and they’re successful, there are a number of other states that will want to try it. It’s a 20-year time horizon, but if you think national single-payer is a political nonstarter, this is where the action is. But that’s the question: whether they can control costs. That’ll be everything.

http://www.washingtonpost.com/blogs/ezra-klein/post/vermont-closing-in-on-single-payer/2011/05/09/AFvtBmZG_blog.html

Single-payer system provides security

By Thomas P Clairmont, W. Jost Michelsen and Patricia A Locuratolo
Letters, Portsmouth (N.H.) Herald, May 22, 2011

We read with interest the article on the Leadership Seacoast event on health care costs (Herald, May 5, 2011).

Identifying smoking, drinking and inactivity as contributing factors to these costs is exactly right. Unfortunately, the state has diverted every penny of the tobacco settlement money to be used for education of children about the dangers of smoking. Now they want to reduce the price of cigarettes to encourage even more of this disease-causing habit. Closing public pools and gyms are on their list, too. And they wonder why costs are rising.

Then there was a discussion about seniors, a group which has 10,000 members turning 65 every day for the next 20 years. At the end there will be 76 million of us. Are we really going to cut Medicare benefits for those who served/saved our country in World War II? That is just not right.

Finally, there was a discussion about Accountable Care Organizations of which the Mayo Clinic said “they would not participate, because the rules as written are so onerous it would be nearly impossible for them to succeed.”

There was absolutely no mention, as usual, of a publicly financed but privately delivered approach — also called single-payer or Medicare for All. Dr. David Himmelstein of Physicians for a National Health Program said reducing administrative overhead to Canadian levels would save $400 billion annually, “more than enough to cover our uninsured.” This is what most other countries do and they cover all of their citizens at a cost of less than half of the United States.

No one mentioned our neighboring state of Vermont, where Harvard Professor William Hsiao said “our research and analysis shows a single-payer system can immediately reduce health care costs in Vermont by 8 to 12 percent and reduce health care costs by an additional 12 to 14 percent over time.” His plan would cover every Vermont citizen.

No one mentioned the work of Dr. Jack Wennberg of Dartmouth, who said “bringing health care costs down to the level of Minneapolis or Seattle would save up to 40 percent, more than enough to offset any increase in public spending that might result from extending insurance coverage to the uninsured.” It is unbelievable that cost-saving research like this goes nowhere and gets no press at all. In testimony to the Portsmouth City Council in February, we said that extrapolating the Vermont data to Portsmouth would result in savings to local taxpayers of more than $1.5 million every year.

Those of you who “don’t want the government involved in my health care” must prefer the only alternative, Wall Street Medicine. You must be especially pleased with the current results. The CEO of United Health Care made $101.96 million last year and has a net worth approaching $1 billion. All seven of the leading insurance companies had huge profits and shareholder earnings in the first three months of this year. Of course, this wasn’t enough.

The New York Times, in a feature article on New Hampshire, demonstrated increases in health care premiums for various businesses of 20 percent to 43 percent for this year. Keep in mind that inflation in 2010 was 1.6 percent.

More than 130,000 of our fellow New Hampshire citizens have no insurance.

So here is our plan for you and your children. Note that health care will not be free. For about 5 percent of your income, taken out of your paycheck or paid from your other income sources, you will get comprehensive coverage with choice of doctor and hospital, and no additional out-of-pocket costs. There will be no manuals to read, and you will never have to raise funds to cover your health care. No one will make those obscene amounts of money ever again. And you will sleep well, knowing you and your family are fully covered for life.

If this health security appeals to you and your family, then question the candidates about what they are going to do, and push them, like in every other country, toward a universal system that makes sense and will improve the health of all Americans.

Thomas P Clairmont, MD, W. Jost Michelsen, MD, and Patricia A Locuratolo, MD, are members of the Physicians for a National Health Program and practice in Portsmouth, N.H..

http://www.seacoastonline.com/articles/20110522-OPINION-105220317

The Self-Rationing of Medical Care

Letters, The New York Times, May 22, 2011

Re “Health Insurers Profit as Many Postpone Care” (front page, May 14): How more scathing an indictment could there be of the insurance industry’s commodification of the nation’s health? In a faltering economy, the health insurers have rung up record profits, rewarded shareholders with new dividends and are demanding double-digit premium increases for fear of possible higher costs.

Is health a commodity to be sold for profit, for bonuses and dividends, or is our nation’s health a responsibility of our government? Can we not now, or ever, see the need to replace this needless, costly, money-sucking, claim-denying middleman, this so-called health insurance industry, with a single-payer government-administered system?

HERBERT BENGELSDORF
Hastings-on-Hudson, N.Y., May 14, 2011

The writer is a retired psychiatrist.

S&P Medicare and Commercial Indices

US Healthcare Costs Continue to Rise, But At Declining Rates According to the S&P Healthcare Economic Indices

S&P Indices
May 19, 2011

David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:

“If you look over the last year or so of data, it is apparent that the rates of increase in health care costs continue to slow down. While there was some volatility within months, the general trend has been a slowdown across all nine of the indices we publish. Most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by 2 percentage points or more. The biggest slowdown has come from the Hospital Medicare Index, where the annual growth rate fell from +8.30% in August 2009 to +1.18% in March 2011. On the other hand, we have not seen an equal trend for the Hospital Commercial Index, where the annual growth rate peaked at +9.36% in May 2010, and is still reporting a healthy +8.36% as of March 2011. This phenomenon could be the possible result of two things: (1) costs for Medicare patients are being better contained than those covered under commercial insurance plans and (2) hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs. We see a similar differential across the Professional Services Indices, but not as severe.”

For the past several years, the trend of medical costs funded by commercial insurance plans is significantly greater than those funded by Medicare.

Click on this link for two graphs dramatically demonstrating these differences:
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245305077461&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

Comment: 

By Don McCanne, MD

We frequently see reports that attempt to explain away the findings that medical costs funded by private commercial insurance plans are significantly greater than those funded by Medicare. This report from Standard and Poor’s leaves absolutely no doubt that the difference is not only real, but it is very significant.

Just to show how different the people on Wall Street think, the Hospital Commercial Index is reported as “a healthy +8.36% as of March 2011.” Leave it to Wall Street gurus to declare that extremely high private sector (commercially insured) health care cost increases are “healthy.” You would think that businesses paying commercial rates rather than Medicare rates would take notice.

A Doctor's Push for Single-Payer Health Care for All Finds Traction in Vermont

By ABBY GOODNOUGH
The New York Times, May 21, 2011

MONTPELIER, Vt. — Many people move to Vermont in search of a slower pace; Dr. Deb Richter came in 1999 to work obsessively toward a far-fetched goal.

She wanted Vermont to become the first state to adopt a single-payer health care system, run and paid for by the government, with every resident eligible for a uniform benefit package. So Dr. Richter, a buoyant primary care doctor from Buffalo who had given up on New York’s embracing such a system, started lining up speaking engagements and meeting with lawmakers, whom she found more accessible than their New York counterparts.

“I wrote a letter to the editor, and the speaker of the House called me up to talk about it,” Dr. Richter, 56, recalled recently. “It was astounding. In New York, I couldn’t even get an appointment with my legislator.”

Twelve years later, Dr. Richter will watch Gov. Peter Shumlin, a Democrat, sign a bill on Thursday that sets Vermont on a path toward a single-payer system — the nation’s first such experiment — thanks in no small part to her persistence. Though scores of people pushed for the bill, she was the most actively involved doctor — “the backbone,” Mr. Shumlin has said, of a grass-roots effort that helped sway the Democratic Legislature to pass it this spring even as other states were suing to block the less ambitious federal health care law.

“We wouldn’t be where we are without Deb,” Mr. Shumlin said in an interview. “She’s made this her passion. And like anyone that’s making significant social change, she has qualities of persuasiveness and leadership and good judgment that are hard to find.”

As in all states, the cost of health care has increased sharply in Vermont in recent years. It has doubled here over the last decade to roughly $5 billion a year, taking a particular toll on small businesses and the middle class. All 620,000 of the state’s residents would be eligible for coverage under the new system, which proponents say would be cheaper over all than the current patchwork of insurers. A five-member board appointed by the governor is to determine payment rates for doctors, what benefits to cover and other details.

But much remains to be worked out — so much that even under the most optimistic projections the plan might not take effect until 2017. Most significantly, Mr. Shumlin still has to figure out how much it will cost and how to pay for it, possibly through a new payroll tax. Whether he will still be in charge by 2017 is among the complicating factors.

“If we had the exact same Legislature and the same governor we could get it done,” Dr. Richter said. “It’s a big if, because the opposition has a ton more money to convince people that the governor is evil and this is socialized medicine and all kinds of other scary stuff.”

The opposition will probably include insurance companies, drug makers and some employers who say there are too many unknowns. Many doctors, too, are wary of the change and what it might mean for their income. Dr. Richter said she believed a “slim majority” of the state’s 1,700 licensed physicians were supportive.

“One of the bigger worries I have is we’ve had all this hoopla and nothing’s going to happen,” she said at a coffee shop here recently on a rare quiet afternoon. “But it might also be helpful to us, because it’s going to be hard for any opposition to be steadily pushing for seven years.”

The federal health care law has complicated Vermont’s plans, requiring the state to first create a health insurance exchange to help residents shop for coverage by 2014. The state would then need a federal waiver to trade its exchange for a government-run system.

Dr. Richter said she embraced the idea of a single-payer system as a young doctor in Buffalo, where many of her patients put off crucial treatments because they were uninsured. As a medical student, she saw a patient with a life-threatening heart infection caused by an infected tooth that had gone untreated because he lacked dental insurance.

“He was in the hospital for six weeks, and I was like, ‘This makes no sense,’ ” she said.

She went to a meeting of Physicians for a National Health Program, a group that advocates for a national single-payer system, and started researching the concept. Before long she became a vocal advocate, even becoming president of the physicians’ group, and moved to Vermont.

John McClaughry, a former Republican state senator who is against the new law, said Dr. Richter meant well but did not understand the “long-term damage” it would wreak. In particular, he said the law would drive away businesses that did not want to help pay for it.

“She’ll tell you that putting in single-payer will attract businesses from all over the place,” said Mr. McClaughry, vice president of the Ethan Allen Institute, a conservative research group. “I don’t think she has any appreciation of business decisions at all.”

Since moving with her husband and two sons to a rambling old house within view of the State House, Dr. Richter has given about 400 talks on the single-payer concept, tutored lawmakers in the State House cafeteria and testified before the Legislature more times than she can remember. Once, she presented a printout of all the insurance companies her small practice in Cambridge had billed over five years.

“It was like 190 pages long,” she said. “Here we were, this tiny rural clinic having to bill all these different addresses. And all of them have different rules and reimbursements; I mean, it’s ridiculous.”

Some supporters of single-payer health care say Vermont’s law does not go far enough, mostly because it would allow at least a handful of private insurers to stay in the market indefinitely. Self-insured businesses like IBM, the state’s largest employer, could continue providing health coverage to workers under the law, though they would have to help finance the new system, possibly through a payroll tax.

Physicians for a National Health Program is among the critics, saying the law “falls well short of the single-payer reform needed.” Allowing private insurers to remain in the state will prevent meaningful savings, the group says.

Dr. Richter acknowledges that the law will not allow for “strict single-payer,” but said it still promised “health care for everybody, for less cost.”

“This is not the top of the mountain, but it’s the first time anyone has headed up the mountain,” she said. “No other place in the country has gotten this far.”

http://www.nytimes.com/2011/05/22/us/22vermont.html?_r=1&hp=&pagewanted=all

The Big (and Profitable) Business of Dying

By Marlys Harris
CBS Moneywatch: The Consumer Reporter, May 21, 2011

Taking leave of life is never good. But when the time comes, most people would like to think that they could come to an end free of pain, without needles stuck in their veins or tubes up their noses, surrounded by their families, preferably at home or in a home-like setting.

Achieving that dignified death has been the purpose of the hospice movement which got its start with Dame Cicely Saunders, a physician who founded St. Christopher’s Hospice in 1967 in a London suburb. She eventually exported the hospice concept to America via the Yale School of Nursing where she taught the holistic treatment — spiritual, medical, psychological — of dying patients. Rather than being subjected to so-called heroic measures that were often inhumane and of little benefit, terminal patients in hospice would be able to choose the end-of-life care they would receive.

Initially, small nonprofit groups, many of them composed of dedicated volunteers, provided care. Now, however, according to a study published in the summer issue of the Journal of Law, Medicine and Ethics, hospice care has evolved into “a multimillion dollar industry where the surviving nonprofits compete with for-profit providers, often publicly traded, managed by M.B.A.-trained executives, and governed by corporate boards.” Right now approximately 52 percent of hospices are for-profit, 35 percent are non-profit, and 13 percent are owned by the government.

Can this possibly be a good development? I guess I would put it on a par with for-profit prisons, which haven’t worked out so well (what with owners scrimping on medical care, food and rehabilitation), for-profit orphanages, which, thank heavens, haven’t been around since Oliver Twist, or for-profit organ sales and child adoptions, which are both outlawed. The incentives for profit, say the study’s authors, Joshua E. Perry, assistant professor in the Department of Business Law and Ethics at Indiana University’s Kelley School of Business and Robert C. Stone, an emergency medicine physician and assistant medical director at Indiana University Health Bloomington Hospital Hospice, are not necessarily on the side of the patient.

Fueling the money-making is Medicare which since 1982 has provided a hospice benefit for terminally ill patients — those whom physicians certify to have a life expectancy of 6 months or less. The government pays a set daily rate, currently about $143, regardless of the services actually provided on any given day. By 2008, according to study authors, hospice expenditures exceeded $11 billion, Medicare beneficiaries receiving hospice services (for increasingly longer periods of time) topped one million. (The National Hospice and Palliative Care Organization reports that in 2009, hospices served a total of 1.56 milion patients.) The number of hospice locations has risen to about 3,300, most of the increase coming from for-profit providers.

And, the for-profit business has been, well, amnazingly profitable. A 2005 study in the Journal of Palliative Medicine found that large hospices owned by publicly traded companies generate margins nine times higher than those of large nonprofits. “These cost savings and profit margins appear to flow primarily from business decisions relating to selective recruitment of a longer-term, increasingly non-cancerous, population of Medicare patients and the payment of lower salaries and benefits to less-skilled staff,” say study authors.

And what about quality? While Perry and Stone are cautious about drawing conclusions, others have. For example, a 2004 Medical Care study of 2,080 patients enrolled in 422 hospices across the country found that “terminally ill patients who receive end-of-life care from for-profit hospice providers receive a full range of services only half the time compared with patients treated by nonprofit hospice organizations.” Families of patients receiving care from a for-profit hospice received counseling services only [45% as often] as those in a nonprofit hospice. What’s more, for-profit hospices are only half as likely as nonprofits to provide palliative radiotherapy, which reduces pain for patients with tumors. Research from the University of California, Irvine, found that patients who stay longer at for-profit hospices receive less high-skilled nursing care-such as tracheotomy care, wound care, and suctioning or feeding tubes-because skimping on these services keeps costs down.

In fact, tumor care happens less in for-profit hospices because they take on a smaller share of cancer patients, partly because their care costs more than that of patients with other diseases. “For-profits are targeting long-term dementia patients,” says Joshua Perry. Their demise could be years in the future, but, he adds, “as long as the hospice medical director declares them terminal every 60 days, Medicare will pay.” Gaming the system boosts profits but also perhaps unfairly burdens taxpayers, adds Perry.

When you (or someone you love) is in extremis, you don’t exactly go shopping for a hospice program. “Consumers can’t evaluate a hospice like they would a cell phone or a car,” says Perry. “They are compromised, overwhelmed, in a different state of mind.” Usually, the hospital or nursing home sends in – or recommends — the hospice team. It’s unlikely that you’d know whether they are non- or for-profit. And the study authors point out that hospice providers don’t always get business on the merits. For example, VITAS Hospice Services, LLC, the largest provider of hospice services in the United States reportedly sends its patient recruiters into nursing homes equipped with pens and coffee cups for staff and then pays a commission to those recruiters who successfully sign-up patients. A rival hospice provider was indicted for allegedly paying nursing home operators $10 per day to assist in patient recruitment efforts and paying physicians $89 a month to certify patients as hospice eligible without examining the patient or reviewing medical records.

MedPAC, which advises Congress on Medicare, has recommended a change in reimbursement — though not until 2013 — that would pay more per day in the earliest and last days of a patient’s hospice care, when service needs are most intense, and less for days in-between. But that will probably do little to discourage the for-profits’ cherry-picking of patients who are likely to last the longest — leaving the non-profits to deal with the sickest patients and giving them fewer resources to do so.

I am sure that there are some for-profit hospices that do a good job with their patients. But in general, you can’t say that the interests of for-profits and their patients are aligned. “Things get very messy when profit enters the picture,” says Perry. Until new regulations or payment structures come into place to remedy that, consumers had better be asking: who owns the hospice that’s providing care for me or my family?

http://moneywatch.bnet.com/spending/blog/consumer-reporter/the-big-and-profitable-business-of-dying/1107/

S&P Medicare and Commercial Indices

US Healthcare Costs Continue to Rise, But At Declining Rates According to the S&P Healthcare Economic Indices

S&P Indices
May 19, 2011

David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s:

“If you look over the last year or so of data, it is apparent that the rates of increase in health care costs continue to slow down. While there was some volatility within months, the general trend has been a slowdown across all nine of the indices we publish. Most of the annual growth rates peaked in the late winter/early spring of 2010. Since then, most of these rates have fallen by 2 percentage points or more. The biggest slowdown has come from the Hospital Medicare Index, where the annual growth rate fell from +8.30% in August 2009 to +1.18% in March 2011. On the other hand, we have not seen an equal trend for the Hospital Commercial Index, where the annual growth rate peaked at +9.36% in May 2010, and is still reporting a healthy +8.36% as of March 2011. This phenomenon could be the possible result of two things: (1) costs for Medicare patients are being better contained than those covered under commercial insurance plans and (2) hospitals are using more procedures and services covered under commercial plans, contributing to the increase in total costs. We see a similar differential across the Professional Services Indices, but not as severe.”

For the past several years, the trend of medical costs funded by commercial insurance plans is significantly greater than those funded by Medicare.

Click on this link for two graphs dramatically demonstrating these differences:
http://www.standardandpoors.com/servlet/BlobServer?blobheadername3=MDT-Type&blobcol=urldocumentfile&blobtable=SPComSecureDocument&blobheadervalue2=inline%3B+filename%3Ddownload.pdf&blobheadername2=Content-Disposition&blobheadervalue1=application%2Fpdf&blobkey=id&blobheadername1=content-type&blobwhere=1245305077461&blobheadervalue3=abinary%3B+charset%3DUTF-8&blobnocache=true

We frequently see reports that attempt to explain away the findings that medical costs funded by private commercial insurance plans are significantly greater than those funded by Medicare. This report from Standard and Poor’s leaves absolutely no doubt that the difference is not only real, but it is very significant.

Just to show how different the people on Wall Street think, the Hospital Commercial Index is reported as “a healthy +8.36% as of March 2011.” Leave it to Wall Street gurus to declare that extremely high private sector (commercially insured) health care cost increases are “healthy.” You would think that businesses paying commercial rates rather than Medicare rates would take notice.

Donald Light responds on Intermountain and single payer

Professor Donald Light responds to yesterday’s message on Intermountain Healthcare’s success in improving quality while reducing costs (https://pnhp.org/news/2011/may/achieving-aco-goals-without-the-aco):

Hi Don,

Thanks for sending out your excellent synopsis of the new article about how Intermountain Healthcare has saved money while maintaining high quality. As an adviser to the NHS since 1991 who has published critical policy analyses in the BMJ since then of its pro-competition reforms to create a  market internal to its single-payer frame, I took advantage of your free link and read the article. Let me share some thoughts with you and colleagues.

From the first page, it becomes clear that Intermountain is much more like a single-payer health care system than the NHS, back to at least 1986,  because of its integrated and constantly improved data systems measuring costs and clinical processes that form the basis for all of its achievements. I pointed out in 1991 that it was folly for Mrs. Thatcher to allow competing hospitals to choose what they measured and how, and in 1997 I recommended to new leaders at Richmond House who were keen on integrated data that they adapt one of two fully developed integrated data systems available free on the web, one from the VHA (Veterans Health Administration) and the other from Finland. No interest was shown, and the NHS continued to pour large sums each year into contracting with international companies to develop a fresh integrated data system. Fourteen years later none yet exists, and observers have wondered if this is a boondoggle from the government to those corporations?  Intended or not, that has been the result.

Intermountain’s account also exhibits, as does the case of the VHA, strong, consistent leadership over many years dedicated to improving quality and reducing costs. NHS results have been mixed, with some achievements of improved quality but not as part of a “single-payer,” integrated plan to hold down costs while improving quality by reducing large clinical variations. Most important, Intermountain treats its hospital services as integrated with all services outside hospitals, as does the reformed VHA, Kaiser, Marshfield, and others. By contrast, the NHS has sharpened the divides between hospital and community or ambulatory services, and the new reforms led by Langley will entrench them further. This lies at the centre of my new critique of the single-payer NHS reforms, published in Social Science & Medicine [Social Science & Medicine 72 (2011) 821-822]. Note that we recommend the NHS turn to US examples of integrated care like Intermountain, an irony your readers will appreciate.

A key point of the Intermountain article is that reviewing “the entire continuum that patients experience,” such as “home-based, clinic-based or inpatient care” leads to a focus on population-level health rather than on health care services. Marketing shifts from selling the latest procedure to selling health gain. This becomes the key point of the article’s conclusion as it describes how the current US payment system by procedure led Intermountain to lose more than it saved as it lowered costs for high quality, and how this needs to change if the US is going to move forward. Sadly, the NHS reforms now feature pay for performance or “payment by results,” which are really payment by procedures, with little systematic measure of results. The NHS is not the only single-payer system enamoured by market-based competition as the way to make its services more cost-effective, as students learn in the course I teach at Stanford on health care systems in advanced capitalist countries. (See http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Light_Fall2010.pdf.) The evidence shows that usually competition raises costs, fragments care as providers focus on more profitable patients or procedures, and increases administrative overhead. In my opinion, this is what has happened in the English NHS. One might think a single-payer national system would focus upstream on health and prevention, and the NHS does in some meaningful ways; but its reforms of medical services work against that goal and draw money away from it towards more costly “payment by results” specialty procedures once patients get seriously ill.

Finally, Michael Dixon, a national leader of GPs, and I have urged since 2004 that the NHS reorganize clinical leadership in an integrated way, and a key sentence in the Intermountain article states that “Physicians led almost all of the changes themselves.” So far, leaders of the English NHS have shown no interest in this idea, which has been critical to the success of Kaiser, Intermountain, and the VHA. I hope these experiences over the past 20 years enable your readers to refine their thoughts about what “single-payer” means and how it works. We need a more deeply textured and fully developed of that concept than reference to how a health care system is funded.

With best regards,
Don

Donald W. Light
Lokey Visiting Professor, Stanford University
Professor, UMDNJ
http://www.med.upenn.edu/apps/faculty/index.php/g358/p31974
(See our book, The Risks of Prescription Drugs)

References for Donald Light’s message

Donald Light’s message today included this link to a syllabus for a course he teaches at Stanford on health care systems in advanced capitalist countries; it contains a large number of invaluable references:

http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Light_Fall2010.pdf

These are other references that relate more specifically to today’s message:

“Observations on the NHS reforms:  an American perspective.”  British Medical Journal 1991;303: 568-570.

“Betrayal by the Surgeons.”  Lancet  1996;347: 812-3.

“Managed Care in a New Key: Britain’s Strategies for the 1990s.”  International Journal of Health Services 1998;28:427-44.

“Is NHS Purchasing Serious?  An American Perspective.”  BMJ 1998;316:217-20.

“From Managed Competition to Managed Cooperation: Theory and Lessons from the British Experience.”  The Milbank Quarterly  1997; 75:297-341 (Lead article)

“The real ethics of rationing.”  BMJ (British Medical Journal) 1997;315:112-15.

“Managed Competition: Theory and Lessons from the British Experience.”  Pp. 322-56 in Competitive Managed Care: The Emerging Health Care System.  Edited by John Wilkerson, Kelly Devers and Ruth Given.  SanFrancisco: Jossey-Bass, 1997.

“How Waiting Lists Work and their Hidden Agenda,” Consumer Policy Review (UK) 2000;10(4):126-132

“Here We Go Again: Repeating Implementation Errors.”  BMJ (British Medical Journal) 1999;319:616-8.

“Managed Competition, Governmentality and Institutional Response in the United Kingdom,” Social Science and Medicine 2001;52(8): 1167-82.

Single-payer news on Vermont, new research, insurer greed

May 20, 2011

Dear PNHP colleagues and friends,

There’s been a flurry of activities by single-payer advocates – physicians and others – over the past several weeks. We’ll touch on only a few of them here:

1. Vermont governor to sign health reform bill May 26
2. Hoosiers rip WellPoint’s greed at shareholders meeting
3. New article sounds alarm on rise of for-profit hospice companies
4. Proposed Medicare, Medicaid cuts prompt outcry and calls for single payer
5. Sen. Sanders introduces Senate single-payer bill, S. 915
6. PNHP staff promotions announced

1. Vermont health bill to become law. Next Thursday, May 26, Gov. Peter Shumlin of Vermont will sign “An Act Relating to a Universal and Unified Health System.” The bill passed the Legislature in early May, after months of debate that included vigorous advocacy for single-payer reform by physicians and health professional students, among others. While the bill falls well short of a creating a single-payer system, as the PNHP board noted last month, its supporters claim it could lead to such a system several years down the road.

PNHP will issue a statement on the legislation next week. In the meantime, a concise summary of what the bill does and doesn’t do – and some of the obstacles it faces – appears in a story titled “Single Payer in Vermont? Well, Not Exactly.” Amednews also had a useful round-up; it’s one of several recent stories quoting PNHP leaders saying the bill’s an important first step, but only if it’s followed by steps leading to a true single-payer plan. The actual text of the bill starts on line 18 of this 213-page file.

In a somewhat related development, California’s Universal Health Care Act, S.B. 810, sponsored by state Sen. Mark Leno, passed a crucial hurdle last week when it passed out of the Senate Health Committee in a 5-3 vote. PNHP activists helped mobilize support for its passage out of committee.

2. WellPoint confronted on greed. When Karen Green Stone, a leader of Hoosiers for a Common Sense Health Care Program, PNHP’s Indiana affiliate, took the floor at the annual shareholders meeting of the giant health insurer WellPoint in Indianapolis this week, she made a blistering indictment of the company’s greed, its cruelly deceptive PR practices and the eye-popping compensation it gave to CEO Angela Braly last year.

On the CEO’s pay, Green Stone said, “Angela, it takes 285 public school teachers in Indiana who earn an average of $47,000 a year to equal your 2010 compensation package of $13.4 million. Would you kindly tell us why you are entitled to so much more than them?” Braly replied that her pay was appropriate. The dramatic exchange was picked up by the Indianapolis Business Journal. You can read the full text of Green Stone’s stirring 2-minute speech and more at PNHP’s blog. (By the way, in 2010, the combined declared profits of the five largest for-profit insurers – WellPoint, Aetna, Cigna, Humana and UnitedHealth – were $11.7 billion. The figure is expected to be even higher in 2011.)

Later that day, single-payer activists rallied outside WellPoint’s headquarters to hear speakers that included Donna Smith of National Nurses United, who wrote about it, and Dr. Rob Stone, coordinator of the Indiana group and national board member of PNHP.

3. Troubling questions on for-profit hospice care. Besides Dr. Rob Stone’s role at the WellPoint events, he was also in the news this week as the co-author of “In the Business of Dying: Questioning the Commercialization of Hospice,” in the Journal of Law, Medicine and Ethics. The article cites growing ethical and quality concerns as end-of-life hospice care, once the domain of charitable groups, has become increasingly dominated by investor-owned chains that cherry-pick patients and cut labor costs in order to maximize profits. PNHP’s news release on the article, which contains a link to the full text of the study, appears below. Also below is a commentary by Drs. Steffie Woolhandler and David Himmelstein on their recent research about Massachusetts’ medical bankruptcy rate and its implications for the federal health law.

4. Medicare under threat. The outcry over the proposal by House Speaker Rep. Paul Ryan, R-Wis., to dismantle Medicare and convert Medicaid into a block-grant program has included actions, statements and opinion pieces by PNHP chapters, leaders and activists denouncing such moves. PNHP affiliates in Wisconsin and Arizona are among the many chapters who actively worked to oppose such cuts, even as they acknowledge that both the Medicare and Medicaid programs contain serious flaws. Echoing a theme of PNHP’s, including Dr. Margaret Flowers’ testimony at the Deficit Commission last year, John Nichols of The Nation recently wrote that Medicare and other social insurance programs shouldn’t be cut, but should instead be replaced by a single-payer system, an improved Medicare for all. Rep. John Conyers Jr. made a similar argument in an op-ed yesterday. PNHP activists are encouraged to speak out and to write opinion pieces and letters to the editor on this theme.

5. Sanders introduces Senate single-payer bill. On May 10, Sen. Bernie Sanders, I-Vt., introduced his national single-payer legislation, the American Health Security Act of 2011, S. 915, into the Senate. PNHP President Garrett Adam’s comments on this welcome development can be found here. PNHP activists are encouraged to visit or otherwise contact their congressional representatives to urge them to support single-payer legislation in the House (especially Rep. Conyers’ bill, H.R. 676, which today has 55 co-sponsors) and in the Senate (S. 915). House members are scheduled to be in their home districts the week of June 6-10 and June 27-July 1.

6. PNHP staff promotions. PNHP President Dr. Garrett Adams made the following announcement this week: “The PNHP Board of Directors is very pleased to announce promotions of two of our wonderful staff members. After 20 years of dedicated and brilliant advocacy for single-payer national health insurance at PNHP, Dr. Ida Hellander finally gets her ‘dream job’ as PNHP’s new Director of Policy and Programs. For the first time, Ida now will devote herself full time to health policy for the benefit of PNHP and the single-payer movement. Matthew Petty, currently PNHP’s Administrative Director and our second-most-senior staff member, has accomplished efficiencies in the office and managed our finances extremely well. He recently brought in a large grant to PNHP. Matt will become PNHP’s new Director of Operations.”

Cordially,

Quentin Young Signature

Quentin D. Young
National Coordinator

Mark Almberg Final
Mark Almberg
Communications Director

FOR IMMEDIATE RELEASE
May 18, 2011 

Rise of for-profit hospice industry raises troubling questions, new study says

Ethical and quality concerns grow as end-of-life hospice care, once the province of charitable organizations, is increasingly dominated by investor-owned chains that cherry-pick patients and cut labor costs in order to maximize profits

A new survey of hospice care in the United States says that the rapidly growing role of for-profit companies in providing end-of-life care for terminally ill patients raises serious concerns about whose interests are being served under such a commercial arrangement: those of shareholders or those of dying patients and their loved ones.

“Under a corporate model of hospice care, there’s an inherent conflict of interest between a company’s drive to maximize profits and a patient’s need for the kind of holistic, multidisciplinary and compassionate care originally envisioned by the founders of the modern hospice movement,” said Dr. Robert Stone, an emergency medicine physician in Bloomington, Ind.

Stone, who serves as assistant medical director at a hospital hospice program at Indiana University, is co-author of “In the Business of Dying: Questioning the Commercialization of Hospice,” a newly published article in the Journal of Law, Medicine and Ethics. Joshua Perry, a professor of business law and ethics at Indiana University, is the lead author of the article.

Stone and Perry point out that the for-profit hospice industry grew by 128 percent from 2001 to 2008, while the nonprofit sector grew by only 1 percent and government-sponsored hospices increased by 25 percent. The for-profit sector now accounts for 52 percent of hospices.

“Research shows that for-profit hospices, and especially publicly traded chain providers, generate higher revenues than their nonprofit counterparts,” Stone said. “They do this in part, studies show, by selectively recruiting longer-term patients, most of whom do not have cancer, thereby gaming the Medicare payment system.” Medicare currently pays hospice providers a fixed per diem payment throughout a patient’s stay, regardless of whether services are provided on any given day, he said.

“Hospice patients’ use of services are greatest on the first day of hospice care, when services are being set up, and in the last few days of life, when round-the-clock nursing care may be required,” Stone said. “Hospices that recruit longer-term patients will be overpaid and will drain funds from the hospice program that should be going to patient care.”

Stone continued: “Typically, the for-profit companies also pay lower salaries and benefits to a less-skilled staff, and employ fewer registered nurses. This raises quality concerns.”

Such practices not only undermine the Samaritan traditions of the hospice movement, he said, but also put nonprofit hospices at a competitive disadvantage, threatening their financial survival. Nonprofits have been shown to provide a greater range of services than their for-profit counterparts, including continuous home care and bereavement services, he said.

Stone and Perry point to research documenting ethically questionable marketing practices used by for-profit hospice companies, including instances of company representatives going into nursing homes and offering free pens and coffee cups to staff and subsequently paying a commission to staff members who refer patients to them.

While more research on hospice quality needs to be done, Stone said, comparative studies of U.S. hospitals, dialysis centers and nursing homes have shown that nonprofit institutions, on average, provide a higher quality of care than do for-profits.

******

“In the Business of Dying: Questioning the Commercialization of Hospice,” Joshua E. Perry, J.D., M.T.S., and Robert C. Stone, M.D., Journal of Law, Medicine and Ethics, Summer 2011.

A copy of the manuscript of the study can be found here.

******

Physicians for a National Health Program (www.pnhp.org) is an 18,000-member organization advocating a nonprofit, single-payer national health insurance program for the United States. PNHP had no role in funding the study mentioned above. To speak with a physician/spokesperson in your area, visit www.pnhp.org/stateactions or call (312) 782-6006.

https://pnhp.org/news/2011/may/rise-of-for-profit-hospice-industry-raises-troubling-questions-new-study-says

Obama Health Law Unlikely to Stem Medical Bankruptcies

By Steffie Woolhandler and David Himmelstein
CommonDreams, May 11, 2011

When President Obama kicked off his health reform push, he highlighted our research finding that 2 million Americans suffer medical bankruptcy each year, promising to end this disgrace. Our latest figures warn that his reform won’t stanch the flow of medical debtors.

The Affordable Care Act (ACA) passed by Congress in March 2010 was modeled after Massachusetts’ 2006 health reform plan – a plan that’s now been up and running for more than three years. So Massachusetts offers a preview of what to expect when the ACA is fully implemented in 2014.

Unfortunately, medical bankruptcies haven’t dropped much – if at all – in Massachusetts. When we surveyed bankruptcy filers there in August 2009, 53 percent cited illness or medical bills as a cause of their bankruptcy, a percentage that’s statistically indistinguishable from the 59 percent figure we found in
early 2007. Indeed, because the total number of bankruptcies soared in 2009, the actual number of medical bankruptcies increased from 7,504 in 2007 to 10,093 in 2009.

Why are so many people still suffering medical bankruptcies despite Massachusetts’ health reform? While only 4 percent of the state’s residents remain uninsured, much of the new coverage is so skimpy that serious illness leaves families with crushing medical bills.

For instance, the cheapest (and most commonly purchased) coverage available to a 56-year-old Bostonian through the state’s health insurance exchange costs $5,616. Yet, if you’re sick the policy doesn’t start paying bills until you’ve paid a $2,000 deductible. And even after that you’re responsible for 20 percent of the next $15,000 in medical expenses.

Little wonder that many insured families hit by illness are pushed over the edge financially by the double whammy of lost income and medical bills; 89 percent of Massachusetts families who suffered medical bankruptcy had coverage.

The insurance required under the federal ACA is no better than Massachusetts’ bare-bones plans. And as employers emulate this inadequate coverage, the race to the bottom leaves an increasing number of Americans UNDER-insured. Public workers are just the latest group to see their coverage downsized. What used to be called “health insurance” is now labeled “Cadillac coverage” – and reserved for those who drive Mercedes.

Because the ACA left private insurers in charge, it can’t offer Americans real protection against financial disaster due to illness. Too much is squandered on insurers’ overhead and the bloated bureaucracy they impose on patients, doctors and hospitals. Hence, even if reform works as planned, millions of families will continue to purchase private insurance in good faith, only to discover, too late, that it’s a defective product – an umbrella that melts in a downpour.

And the administration is weakening the modest consumer protections the bill imposed on private plans. It’s waived the minimum coverage standards for 1,040 plans covering 2.6 million Americans, including thousands of McDonald’s workers whose insurance covers only $2,000 in medical expenses annually. (The worker pays a premium of $728 for this faux coverage.) Meanwhile, insurers in Maine have already been exempted from the ACA’s paltry requirement that they spend at least 80 percent of premiums on medical care, with eight more states in line for similar exemptions.

While the ACA can’t live up to its “affordable care” moniker, a single-payer reform could save $400 billion annually on administrative costs, enough to offer every American first-dollar, comprehensive coverage. While U.S. insurers fight tooth and nail against the 20 percent limit on overhead, Canada’s single-payer program runs for 1 percent. (U.S. Medicare’s overhead is 3 percent.) Bureaucratic savings are a key reason why Canada can cover everyone and provide care at least as good as that received by insured Americans, while spending half as much per capita as we do.

We’ve lectured at seminars attended by hundreds of U.S. bankruptcy judges, where our medical bankruptcy findings are greeted by nods of recognition and an avalanche of heart-wrenching anecdotes confirming our statistical findings. The reaction was quite different at a bankruptcy seminar in Toronto early this year. None of the Canadian judges in the room could recall a single case.

Dr. Steffie Woolhandler is a co-founder of Physicians for a National Health Program. She is professor of public health at the City University of New York and visiting professor of medicine at Harvard Medical School. She is also a primary care physician at Cambridge Hospital in Cambridge, Mass. She worked in 1990-91 as a Robert Wood Johnson Foundation health policy fellow at the Institute of Medicine and the U.S. Congress. Dr. Woolhandler is a frequent speaker and has written extensively on health policy. Dr. Woolhandler is a principal author of many PNHP articles published in the JAMA, the New England Journal of Medicine, and other professional journals. She has also testified before Congress numerous times.

Dr. David Himmelstein is a co-founder of Physicians for a National Health Program, co-edits PNHP’s newsletter and is a principal author of PNHP articles published in the JAMA and the New England Journal of Medicine in conjunction with Dr. Steffie Woolhandler. He is professor of public health at the City University of New York and associate professor of medicine at Harvard Medical School. He serves as the chief of the division of social and community medicine at Cambridge Hospital where he practices primary care internal medicine, and also serves as co-director of the Center for National Health Program Studies at Cambridge Hospital/Harvard Medical School.

http://www.commondreams.org/view/2011/05/11-6

GOP plan is a non-starter

By Rep. John Conyers Jr.
The Bellingham (Wash.) Herald, May 19, 2011

Medicare is arguably one of the nation’s most successful and cherished public insurance programs. The program covers 47 million elderly and disabled Americans, and helps pay for hospital, physician visits and prescription drugs. It is truly hard to argue with success.

The traditional Medicare program, coupled with a supplemental private insurance policy, covers most of our seniors’ medical bills, with far less co-pays and out-of- pocket costs than private insurance.

Therefore, proposals to privatize Medicare — like Rep. Paul Ryan’s — have been met with such fierce opposition, because it was revealed in the national media that privatization meant much higher out-of-pocket costs for seniors. National polls have shown strong general support for maintaining Medicare or even increasing funding for it.

However, Medicare costs are projected to increase from $519 billion per year in 2010 to $929 billion in 2020.

The simplistic argument we often hear from conservatives is that Medicare is a costly federal government program because all federal government programs are inefficient and therefore costly. According to their line of reasoning, privatization is the only way to save money.

The truth is that there are several other ways to strengthen Medicare, but there has been a false debate in the nation regarding the rising costs of Medicare.

This may be partly due to not understanding a fundamentally key concept regarding current health care policy — there are no effective cost-containment mechanisms in place to control the private market costs of prescription drug costs, corporate hospitals and medical technology which are the main drivers of Medicare costs.

Research by respected economist Dean Baker shows that the federal government and Medicare beneficiaries would save $600 billion between 2006 and 2013 if Medicare were allowed to directly negotiate prices with pharmaceutical manufacturers.

One study by Families USA found that the Veterans Administration was able to negotiate substantially lower prices for the top 20 drugs used by seniors, compared to private Medicare part D plans.

It would only make sense for there to be bipartisan support for Medicare to be able to use the full faith and credit of the federal government and be able to negotiate down the rising costs of prescription drugs.

According to Forbes magazine, hospital charges represent about one-third of total health care spending — $718 billion altogether. Twenty-four hospitals in this country with more than 200 beds make an operating margin of 25 percent or more — a profit margin that compares favorably to drug giants like Pfizer, and easily beats the operating profit margin that General Electric reported in 2009.

We can no longer continue to have America’s hospitals make these kinds of large profit margins, when the health of our senior citizens and the fiscal health of our nation are at stake. It will take much needed political courage to address the root causes of rising Medicare costs — a Wall Street-dominated health care system.

America must transition to a non-profit improved Medicare-For-All program, if we are to have any chance of realistically containing overall health care costs. That’s why I have reintroduced H.R. 676, the Expanded and Improved Medicare For All Act, that would provide for a single-payer health care system, providing all Americans with health care coverage.

Japan, Taiwan and countries in Europe have been able to effectively contain their health care costs for decades through their very successful universal health care systems — without waiting lines, rationed care and out-of-control taxes.

America can learn invaluable lessons from other nations on how to control health care costs, and the time has come to be open minded about their success and honest about our need to change course from our corporate-dominated and inefficient health care system.

Rep. John Conyers Jr., D-Mich., is the ranking member of the House Judiciary Committee. Readers may write to him at 2426 Rayburn House Office Building, Washington, D.C. 20515.

http://www.bellinghamherald.com/2011/05/19/2021040/gop-plan-is-a-non-starter.html#ixzz1Mu7Pcms2

Donald Light responds on Intermountain and single payer

Professor Donald Light responds to yesterday’s message on Intermountain Healthcare’s success in improving quality while reducing costs (https://pnhp.org/news/2011/may/achieving-aco-goals-without-the-aco):

Hi Don,

Thanks for sending out your excellent synopsis of the new article about how Intermountain Healthcare has saved money while maintaining high quality. As an adviser to the NHS since 1991 who has published critical policy analyses in the BMJ since then of its pro-competition reforms to create a  market internal to its single-payer frame, I took advantage of your free link and read the article. Let me share some thoughts with you and colleagues.

From the first page, it becomes clear that Intermountain is much more like a single-payer health care system than the NHS, back to at least 1986,  because of its integrated and constantly improved data systems measuring costs and clinical processes that form the basis for all of its achievements. I pointed out in 1991 that it was folly for Mrs. Thatcher to allow competing hospitals to choose what they measured and how, and in 1997 I recommended to new leaders at Richmond House who were keen on integrated data that they adapt one of two fully developed integrated data systems available free on the web, one from the VHA (Veterans Health Administration) and the other from Finland. No interest was shown, and the NHS continued to pour large sums each year into contracting with international companies to develop a fresh integrated data system. Fourteen years later none yet exists, and observers have wondered if this is a boondoggle from the government to those corporations?  Intended or not, that has been the result.

Intermountain’s account also exhibits, as does the case of the VHA, strong, consistent leadership over many years dedicated to improving quality and reducing costs. NHS results have been mixed, with some achievements of improved quality but not as part of a “single-payer,” integrated plan to hold down costs while improving quality by reducing large clinical variations. Most important, Intermountain treats its hospital services as integrated with all services outside hospitals, as does the reformed VHA, Kaiser, Marshfield, and others. By contrast, the NHS has sharpened the divides between hospital and community or ambulatory services, and the new reforms led by Langley will entrench them further. This lies at the centre of my new critique of the single-payer NHS reforms, published in Social Science & Medicine [Social Science & Medicine 72 (2011) 821-822]. Note that we recommend the NHS turn to US examples of integrated care like Intermountain, an irony your readers will appreciate.

A key point of the Intermountain article is that reviewing “the entire continuum that patients experience,” such as “home-based, clinic-based or inpatient care” leads to a focus on population-level health rather than on health care services. Marketing shifts from selling the latest procedure to selling health gain. This becomes the key point of the article’s conclusion as it describes how the current US payment system by procedure led Intermountain to lose more than it saved as it lowered costs for high quality, and how this needs to change if the US is going to move forward. Sadly, the NHS reforms now feature pay for performance or “payment by results,” which are really payment by procedures, with little systematic measure of results. The NHS is not the only single-payer system enamoured by market-based competition as the way to make its services more cost-effective, as students learn in the course I teach at Stanford on health care systems in advanced capitalist countries. (See http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Li….) The evidence shows that usually competition raises costs, fragments care as providers focus on more profitable patients or procedures, and increases administrative overhead. In my opinion, this is what has happened in the English NHS. One might think a single-payer national system would focus upstream on health and prevention, and the NHS does in some meaningful ways; but its reforms of medical services work against that goal and draw money away from it towards more costly “payment by results” specialty procedures once patients get seriously ill.

Finally, Michael Dixon, a national leader of GPs, and I have urged since 2004 that the NHS reorganize clinical leadership in an integrated way, and a key sentence in the Intermountain article states that “Physicians led almost all of the changes themselves.” So far, leaders of the English NHS have shown no interest in this idea, which has been critical to the success of Kaiser, Intermountain, and the VHA. I hope these experiences over the past 20 years enable your readers to refine their thoughts about what “single-payer” means and how it works. We need a more deeply textured and fully developed of that concept than reference to how a health care system is funded.

With best regards,
Don

Donald W. Light
Lokey Visiting Professor, Stanford University
Professor, UMDNJ
http://www.med.upenn.edu/apps/faculty/index.php/g358/p31974
(See our book, The Risks of Prescription Drugs)

References for Donald Light’s message

Donald Light’s message today included this link to a syllabus for a course he teaches at Stanford on health care systems in advanced capitalist countries; it contains a large number of invaluable references:

http://www.kaiseredu.org/~/media/Files/EDU/Syllabus%20Library%20Files/Light_Fall2010.pdf

These are other references that relate more specifically to today’s message:

“Observations on the NHS reforms:  an American perspective.”  British Medical Journal 1991;303: 568-570.

“Betrayal by the Surgeons.”  Lancet  1996;347: 812-3.

“Managed Care in a New Key: Britain’s Strategies for the 1990s.”  International Journal of Health Services 1998;28:427-44.

“Is NHS Purchasing Serious?  An American Perspective.”  BMJ 1998;316:217-20.

“From Managed Competition to Managed Cooperation: Theory and Lessons from the British Experience.”  The Milbank Quarterly  1997; 75:297-341 (Lead article)

“The real ethics of rationing.”  BMJ (British Medical Journal) 1997;315:112-15.

“Managed Competition: Theory and Lessons from the British Experience.”  Pp. 322-56 in Competitive Managed Care: The Emerging Health Care System.  Edited by John Wilkerson, Kelly Devers and Ruth Given.  SanFrancisco: Jossey-Bass, 1997.

“How Waiting Lists Work and their Hidden Agenda,” Consumer Policy Review (UK) 2000;10(4):126-132

“Here We Go Again: Repeating Implementation Errors.”  BMJ (British Medical Journal) 1999;319:616-8.

“Managed Competition, Governmentality and Institutional Response in the United Kingdom,” Social Science and Medicine 2001;52(8): 1167-82.