PNHP

Uwe Reinhardt on rationing in Canada and the U.S.

Uwe Reinhardt on rationing in Canada and the U.S.

Does the Ryan Plan Curb Health Spending?

By Uwe E. Reinhardt
The New York Times
April 29, 2011

My post last week, on the budget plan offered by Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, ended with the observation that the plan did not propose measures to control overall health spending in the United States, “nor does that appear to have been Mr. Ryan’s objective.”

The general idea is that, using whatever financial resources are available to them, patients or their loved ones will, of necessity, engage in a benefit-cost analysis and decide whether the anticipated benefits of end-of-life care exceed its expected cost to the household in terms of what that household has to forgo to buy the extra care. This is how markets work.

Economic theory suggests that, other things being equal, rich and less rich households will come to different conclusions on this question. If less money is available over all to spend on elderly Americans, it is the lower middle class that is likely to do most of the self-rationing.

Note that the Ryan plan proposes a means test to determine the federal contribution to Medicare — the very poor elderly will receive larger federal subsidies, although the size of these subsidies remain unspecified. But the middle and lower-middle class is likely to be on its own.

For reasons that escape me, many Americans do not regard rationing scarce resources through the marketplace, by price and ability to pay, as rationing at all, reserving that term for government withholding of marginally beneficial procedures, based on formal cost-effectiveness analysis.

I do beg to differ.

I have also applied the economist’s reasoning to an analysis of styles of rationing in Canada and in the United States and would be happy to hear what readers make of that. (See link below.)

http://economix.blogs.nytimes.com/2011/04/29/does-the-ryan-plan-curb-health-spending/

Uwe Reinhardt: “Keeping Health Care Afloat – The United States Versus Canada”:
http://www.princeton.edu/~reinhard/pdfs/MILKEN%20REVIEW%20CANADA%20vs%20US.pdf

Readers’ Comments

9. Don McCanne
San Juan Capistrano, CA
April 29th, 2011

Professor Reinhardt’s discussion of rationing in the United States and Canada, available at the “an analysis” link in his article above (the “Keeping Health Care Afloat” link), is an absolute must read for those who really care about how we finance health care.

In a personal communication, Dr. Reinhardt has suggested that we have not been adequately forthcoming about the problems of rationing in Canada, especially the development of queues for non-urgent services. (“We” refers to the fact that I’m senior health policy fellow for Physicians for a National Health Program, an organization supporting single payer reform not unlike Canada’s.)

It is true that we tend to discuss the virtues of single payer while not emphasizing its deficiencies, but the virtues far outweigh the deficiencies and our message would be corrupted by including a disproportionate emphasis on the problems.

That said, we certainly do concede that rationing is an issue, but also we do, in fact, address it. First, we support separate budgeting of capital improvements with an emphasis on getting capacity right to avoid both under-utilization (queues) and over-utilization (the excesses described by John Wennberg and the Dartmouth group). Admittedly, that is always a work in progress, but merely making the effort does result in improvements in capacity.

We also support the science of queue management (how the long lines at airports were reduced after they became intolerable following 9/11). Monitoring capacity and making relatively minor adjustments as needed, along with queue management, has been very effective in avoiding excess queues in many nations.

Canada has been addressing this problem with some success. In fact, if you actually read the reports from the Fraser Institute that demonstrate excessive queues, you will see that in most instances the time intervals are very close to what the specialists believe are reasonable (joint replacement being an exception).

So what actually is the overriding problem of a system like Canada’s? It lies in the ideology of the public stewards of the health care financing system. When egalitarians who believe in government are in charge, efforts are made to attend to problems such as queues and fix them. When those who oppose government programs and prefer private markets are in charge, problems such as queues are allowed to compound for the purpose of driving support for privatization of the health care system (Alberta’s former premier, Ralph Klein, being a prime example).

So, Dr. Reinhardt, I hereby publicly confess that there are potential problems with rationing in a single payer system, but not nearly as severe as the U.S. style of rationing which causes massive suffering and death simply because we ration based on ability to pay. In fact, since all systems ration, selecting rationing that improves value in our health care purchasing might be better labeled as “beneficial rationing.”

Unfortunately, a new report released by the Commonwealth Fund this week shows that, although health insurance will be more affordable because of subsidies under the Affordable Care Act, about one-fourth of middle-income Americans who actually require significant health care will still not be able to pay for it, in spite of subsidies. Rationing by ability to pay was not eliminated by the Affordable Care Act.

Dr. Reindardt, you have also suggested that single payer works better in Canada than it would in the United States simply because Canadians are more egalitarian than we are. But look at the outrage expressed over Paul Ryan’s proposal to privatize our egalitarian Medicare program. Americans can be quite egalitarian when we have something good that works well for all of us.

http://community.nytimes.com/comments/economix.blogs.nytimes.com/2011/04/29/does-the-ryan-plan-curb-health-spending/?permid=9#comment9

Further comment: 

Uwe Reinhardt’s eight page article, “Keeping Health Care Afloat – The United States Versus Canada,” should be downloaded and saved to use as an important resource when responding to expressed concerns about rationing. It is available at the link above.

The most common reason given as to why the United States should reject a Canadian-style single payer system is that it would result in intolerable rationing. Reinhardt’s highly credible article explains in factual terms how rationing works in these two countries. Using Reinhardt’s facts, it is very difficult for me to see how anyone could have an opinion other than it is the United States and not Canada that has intolerable rationing.

Vermont Debates Universal Health Care

The Diane Rehm Show, NPR, April 27, 2011

On April 27, Dr. Robert Zarr, national board member and co-chair of the D.C. chapter of Physicians for a National Health Program, appeared on NPR’s “The Diane Rehm Show” with Vermont Gov. Peter Shumlin, NPR’s Julie Rovner, and the Cato Institute’s Michael Cannon. You can listen to the 51-minute program by clicking on this link and clicking again on “Listen.”

A complete transcript of the show is available here.

Uwe Reinhardt on rationing in Canada and the U.S.

Does the Ryan Plan Curb Health Spending?

By Uwe E. Reinhardt
The New York Times
April 29, 2011

My post last week, on the budget plan offered by Representative Paul D. Ryan, Republican of Wisconsin and chairman of the House Budget Committee, ended with the observation that the plan did not propose measures to control overall health spending in the United States, “nor does that appear to have been Mr. Ryan’s objective.”

The general idea is that, using whatever financial resources are available to them, patients or their loved ones will, of necessity, engage in a benefit-cost analysis and decide whether the anticipated benefits of end-of-life care exceed its expected cost to the household in terms of what that household has to forgo to buy the extra care. This is how markets work.

Economic theory suggests that, other things being equal, rich and less rich households will come to different conclusions on this question. If less money is available over all to spend on elderly Americans, it is the lower middle class that is likely to do most of the self-rationing.

Note that the Ryan plan proposes a means test to determine the federal contribution to Medicare — the very poor elderly will receive larger federal subsidies, although the size of these subsidies remain unspecified. But the middle and lower-middle class is likely to be on its own.

For reasons that escape me, many Americans do not regard rationing scarce resources through the marketplace, by price and ability to pay, as rationing at all, reserving that term for government withholding of marginally beneficial procedures, based on formal cost-effectiveness analysis.

I do beg to differ.

I have also applied the economist’s reasoning to an analysis of styles of rationing in Canada and in the United States and would be happy to hear what readers make of that. (See link below.)

http://economix.blogs.nytimes.com/2011/04/29/does-the-ryan-plan-curb-health-spending/

Uwe Reinhardt: “Keeping Health Care Afloat – The United States Versus Canada”:
http://www.princeton.edu/~reinhard/pdfs/MILKEN%20REVIEW%20CANADA%20vs%20US.pdf

9. Don McCanne
San Juan Capistrano, CA
April 29th, 2011

Professor Reinhardt’s discussion of rationing in the United States and Canada, available at the “an analysis” link in his article above (the “Keeping Health Care Afloat” link), is an absolute must read for those who really care about how we finance health care.

In a personal communication, Dr. Reinhardt has suggested that we have not been adequately forthcoming about the problems of rationing in Canada, especially the development of queues for non-urgent services. (“We” refers to the fact that I’m senior health policy fellow for Physicians for a National Health Program, an organization supporting single payer reform not unlike Canada’s.)

It is true that we tend to discuss the virtues of single payer while not emphasizing its deficiencies, but the virtues far outweigh the deficiencies and our message would be corrupted by including a disproportionate emphasis on the problems.

That said, we certainly do concede that rationing is an issue, but also we do, in fact, address it. First, we support separate budgeting of capital improvements with an emphasis on getting capacity right to avoid both under-utilization (queues) and over-utilization (the excesses described by John Wennberg and the Dartmouth group). Admittedly, that is always a work in progress, but merely making the effort does result in improvements in capacity.

We also support the science of queue management (how the long lines at airports were reduced after they became intolerable following 9/11). Monitoring capacity and making relatively minor adjustments as needed, along with queue management, has been very effective in avoiding excess queues in many nations.

Canada has been addressing this problem with some success. In fact, if you actually read the reports from the Fraser Institute that demonstrate excessive queues, you will see that in most instances the time intervals are very close to what the specialists believe are reasonable (joint replacement being an exception).

So what actually is the overriding problem of a system like Canada’s? It lies in the ideology of the public stewards of the health care financing system. When egalitarians who believe in government are in charge, efforts are made to attend to problems such as queues and fix them. When those who oppose government programs and prefer private markets are in charge, problems such as queues are allowed to compound for the purpose of driving support for privatization of the health care system (Alberta’s former premier, Ralph Klein, being a prime example).

So, Dr. Reinhardt, I hereby publicly confess that there are potential problems with rationing in a single payer system, but not nearly as severe as the U.S. style of rationing which causes massive suffering and death simply because we ration based on ability to pay. In fact, since all systems ration, selecting rationing that improves value in our health care purchasing might be better labeled as “beneficial rationing.”

Unfortunately, a new report released by the Commonwealth Fund this week shows that, although health insurance will be more affordable because of subsidies under the Affordable Care Act, about one-fourth of middle-income Americans who actually require significant health care will still not be able to pay for it, in spite of subsidies. Rationing by ability to pay was not eliminated by the Affordable Care Act.

Dr. Reindardt, you have also suggested that single payer works better in Canada than it would in the United States simply because Canadians are more egalitarian than we are. But look at the outrage expressed over Paul Ryan’s proposal to privatize our egalitarian Medicare program. Americans can be quite egalitarian when we have something good that works well for all of us.

Comment originally published on the New York Times website

Further comment: Uwe Reinhardt’s eight page article, “Keeping Health Care Afloat – The United States Versus Canada,” should be downloaded and saved to use as an important resource when responding to expressed concerns about rationing. It is available at the link above.

The most common reason given as to why the United States should reject a Canadian-style single payer system is that it would result in intolerable rationing. Reinhardt’s highly credible article explains in factual terms how rationing works in these two countries. Using Reinhardt’s facts, it is very difficult for me to see how anyone could have an opinion other than it is the United States and not Canada that has intolerable rationing.

The quest for significance

By Sherif Emil, M.D.
Bulletin of the American College of Surgeons, April 2011

Click here for an attractive, five-page PDF version of Dr. Sherif Emil’s stirring address delivered at the University of California, Irvine, School of Medicine commencement ceremonies on June 5, 2010. He says in part: “Health care should not be a liberal or conservative issue, for disease, disability, and death do not recognize political affiliations. As a socially conservative Christian, my personal belief that health care is a fundamental human right, best guaranteed through single-payer universal health coverage, stems from my faith, and not despite it. My faith calls for personal morality, but also for societal morality — how do we treat the sick among us, the weak among us, the least among us?”

Vermont's Bill: Is it Single-Payer Health Care?

A question and answer session with Dr. Ida Hellander helps demystify Vermont’s new health care bill.

Yes! Magazine
Apr 27, 2011

Q: Vermont’s Senate just passed a major health bill that many are calling a single-payer plan. Is this the case?

A: No. The best we can hope is that it’s a step in that direction.

While single-payer health reform is supported by a majority of Vermont residents, including the governor, Peter Shumlin, who ran on a single-payer platform, the present legislation in Vermont falls far short of the improved-Medicare-for-all system the state needs to assure high-quality, comprehensive, and affordable care for everyone.

Single-payer activists in Vermont and throughout the nation have been hoping that Vermont would be the first state to create a nonprofit, single-payer system of financing health care, with all the health benefits and savings such a system would bring. However, largely because of pressure brought to bear by powerful vested interests, combined with a dense thicket of federal laws and regulations obstructing state-level single-payer plans, the legislature is now mulling over a much lesser reform.

Vermont may still be first state to get there, it is just going to be a longer and harder struggle because of the federal obstacles in their way. 

Q: Why is Vermont trying to pass something now, when the Obama administration’s plan hasn’t even been implemented yet?

A: Like many other states, Vermont is facing a huge budget deficit, and rising health care costs are a major concern. If they don’t get costs under control, they know they will not be able to expand coverage to everyone. Paradoxically, the best way to control costs is to cover everyone—kicking out the private insurance middlemen and creating a single-payer health care system. The federal plan, also known as the Patient Protection and Affordable Care Act (PPACA), doesn’t do that. It still leaves 23 million Americans uninsured in 2019 and the private insurers at the center of our health system.

Q: How would you describe the bill in Vermont right now?

A: At best, the Vermont bill declares an intention, or aspiration, to establish a publicly funded “universal and unified health system” three to five years hence. It speaks of health care as a “public good,” which is positive, and calls for cost containment by reducing administrative expenses and by health system planning and budgeting. But it places its main emphasis on the state’s compliance with PPACA. 

The present bill, unlike its initial draft, doesn’t even use the words “single payer.” Of course, those words alone wouldn’t make the legislation a real single-payer system. There has to be progressive taxation to fund the program; the benefits have to be comprehensive; Medicare and Medicaid would need to be folded into the program; private insurers would have to be proscribed from offering competing basic coverage; co-pays and deductibles would have to be banned; and so forth. These measures are not in the bill.

Finally, even if all those provisions were in the legislation, the Legislature still wouldn’t be able to adopt single payer before 2017 because the federal health law won’t allow it. Senator Bernie Sanders and Governor Shumlin are lobbying President Obama to move up that date to 2014, but even three years’ delay is too long. Many states have passed “universal health care plans” only to repeal or roll them back a year or two later because costs were hard to control without a true single-payer system.

Whether the necessary provisions to create a true single-payer system in Vermont are ever enacted depends a lot on a new 5-person board set up to oversee health reform in the state—not to mention how strong the single payer movement is going forward.

Q: Are single-payer activists in Vermont discouraged?

A: Absolutely not. Single-payer activists have been working in Vermont for years to educate people about the need to treat health care as a public good—like fire protection or education—not a private commodity. They’ve clearly made headway in the battle for public opinion; the legislative process has been extremely energizing. 

This is a marathon, not a sprint. Vermonters know that, and have inspired the whole nation by the force of their demand for change. More than 200 doctors from 39 states have told us they’d seriously consider relocating to Vermont if it were to implement a single-payer system. And over 200 health-professional students from throughout the Northeast—and some from as far away as the West Coast—recently rallied at the Vermont Statehouse to say they want single payer now.

Q: Do you think that health care will ever be a human right in this country?

A: The road to a national single-payer program may wind through states like Vermont or we may pass national single-payer legislation (e.g. H.R. 676) first. The only thing for certain is that this is an important movement for anyone who cares about health care or fighting corporate control of our democracy.

I do believe that we will achieve the right to health care, just as we won the battle over abolition and women’s suffrage. But in Vermont and nationally, we need a true single-payer program to make health care universal, sustainable and affordable.

Ida Hellander, M.D. wrote this article for YES! Magazine, a national, nonprofit media organization that fuses powerful ideas with practical actions. Dr. Hellander is health policy director for Physicians for a National Health Program.

Walker’s right about Medicaid, but his reasons are wrong

Letters
Capital Times (Madison, Wis.), April 27, 2011

The only correct statement in Gov. Scott Walker’s op-ed column in The New York Times is that Medicaid is obsolete — but not for the reasons he states.

To illustrate, the following scenarios occurred in Wisconsin hospitals (not Madison). One morning while preparing to perform ear surgery on a boy, I was confronted by his anesthesiologist. As he pointed out the child’s health insurance coverage (Medicaid), he stated that “if all you are going to do is to bring this *** in here, you don’t need to come here.” Similarly, I was called to another hospital urgently to remove a coin from a child’s esophagus as none of the doctors in my specialty took “welfare” patients.

We have a dysfunctional, segregated, unjust, costly medical and dental system, which places our citizens in a perverse health insurance caste system. By providing for “more flexibility,” Walker’s system and Rep. Paul Ryan’s Medicare voucher system would ensure that the budget deficits would be reduced not by lowering costs for everyone equally, but by further eliminating the poor, the disadvantaged children, the elderly, and the too-costly from its rolls. Does your governor or doctor determine your right to equal access to health care?

Not mentioned in Walker’s column: While “I Dream of Jeannie” hit the airwaves in 1965, Canada instituted its “Medicare for ALL” system. Canada’s health care system justly covers ALL citizens equally, at half our costs, with a 5-10 percent overhead, not 31 percent waste ($600 billion a year) profiting the insurance corporations.

Dr. Timothy Shaw
Fitchburg, Wis.

http://host.madison.com/news/opinion/mailbag/article_1b881fc4-6257-5cc7-850d-c3fb194f08f9.html

Maureen Engelberger: Attitude toward Medicaid should concern us all

Letters
Capital Times (Madison, Wis.), May 2, 2011

Dear Editor: I was compelled to respond to the letter written by Dr. Timothy Shaw in The Capital Times concerning Gov. Scott Walker’s proposed cuts in Medicaid. When caring doctors such as Shaw witness other medical professionals who are not willing to service a Medicaid patient, this should make all of us concerned about our current health care system.

My granddaughter was born with Rett syndrome — she didn’t have a choice. She has a very supportive family; we do everything we can to give her what she needs. She is a U.S. citizen who deserves Medicaid for her health care. I was very concerned about the “negative” remark made by the anesthesiologist, who was obviously perturbed when dealing with a Medicaid situation. If we have health care providers with that attitude, I would be concerned not only as a surgeon but as a patient. Where was that anesthesiologist when he was taking the Hippocratic Oath?

This situation makes me very concerned about where health care has gone and where it is going. I agree that the great USA should have “Medicare for ALL” in place of our current ever-rising health care insurance costs. It is obvious that Canada has gotten it right since 1965.

Maureen Engelberger
Madison

Read more: http://host.madison.com/ct/news/opinion/mailbag/article_e9a71b92-320a-5f73-a441-899556f8a539.html#ixzz1S5mp4I8I

Commonwealth Fund report on affordability is no cause for celebration

Realizing Health Reform’s Potential: Will the Affordable Care Act Make Health Insurance Affordable?

By Jonathan Gruber and Ian Perry
The Commonwealth Fund
April 2011

Abstract:

Using a budget-based approach to measuring affordability, this issue brief explores whether the subsidies available through the Affordable Care Act are enough to make health insurance affordable for low-income families. Drawing from the Consumer Expenditure Survey, the authors assess how much “room” people have in their budget, after paying for other necessities, to pay for health care needs. The results show that an overwhelming majority of households have room in their budgets for the necessities, health insurance premiums, and moderate levels of out-of-pocket costs established by the Affordable Care Act. Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law. Affordability remains a concern for some families with high out-of-pocket spending, suggesting that this is the major risk to insurance affordability.

What are necessities?

The Family Economic Self-Sufficiency Standard (FESS) considers necessary expenditures as:
• child care
• food
• housing
• taxes
• transportation
• miscellaneous (calculated as 10% of other costs).

Exhibit 3. Percent of Households That Do Not Have Room in Budget for Health Care (after paying for necessities + subsidized premium + subsidized out-of-pocket costs at the 90th percentile)

At each reported income as a percent of poverty level:
<Poverty – 17.3%
101-150 – 10.8%
151-200 – 17.5%
201-250 – 26.2%
251-300 – 24.2%
301-350 – 17.5%
351-400 – 12.5%
401-450 – 15.3%
451-500 – 12.0%
>500 – 2.5%

Affordability generally increases as incomes increase, although affordability is particularly challenging for families at 201 percent to 300 percent of poverty with high out-of-pocket expenses (90th percentile). Because the actuarial value of available plans falls from 100 percent for those below the poverty level to between 70 percent and 73 percent for those in this bracket, about one-quarter of families in this income range with very high out-of-pocket costs cannot afford health care–related costs.

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Apr/1493_Gruber_will_affordable_care_act_make_hlt_ins_affordable_reform_brief_v2.pdf

Comment: 

By Don McCanne, MD

News reports on this new Commonwealth Fund study have cheery titles such as, “Health Reform Will Make Insurance Affordable for Nearly All Families.” These titles should be extended to include, “… But Not Health Care.”

Exhibit 3 noted above reveals that up to one-fourth of those with out-of-pocket costs at the 90th percentile level will not have enough money to pay for their necessities plus subsidized premiums plus subsidized out-of-pocket costs for their care. Even 2.5 percent of individuals with high incomes (over 500 percent of the poverty level – $111,750 for a family of four) will face financial hardship should they have greater health care needs.

Also of concern is that the assumption is made that all income beyond the necessities listed would be used for health care if financial hardship were to be avoided. Presumably that would mean no money for savings, for retirement, for higher education expenses, for vacations, for entertainment, nor for thousands of other preferences you might have for your spending. Is that the standard that we want to set? That we pay out what we need merely to exist and then almost everything else goes to pay for health health care if we need it?

Other exhibits in this report show that the outlook is worse for single individuals, for those living in states with a higher cost of living, and in the future it will be worse for everyone since affordability erodes further with the passage of time.

So what accounts for the cheery headlines? It is only subsidized health insurance that is affordable for most, but even there not all. Left out of the headlines is the fact that out-of-pocket expenses are not affordable for far too many.

Because the majority of people are healthy, the report concludes, “Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law.” The celebration is for the 90 percent who may have some funds left after paying for necessities plus health care. But isn’t the purpose of health insurance to take care of that 10 percent who face financial hardship in the face of health care needs? Or even the 2.5 percent who are wealthy and need health care but can’t afford it?

A properly designed single payer system eliminates for everyone financial hardship due to health care costs. Premiums are not a problem because the entire health care system is funded through equitable tax policies. Out-of-pocket spending is not a problem because first dollar coverage applies to all essential health care services and products.

Let’s all work to expose the deceptive rhetoric that the Patient Protection and Affordable Health Care Act has made health care affordable for almost everyone, when in fact, when you need health care, every last dime is squeezed out of you and that still isn’t enough for up to one-fourth of us with significant health care needs. In the same breath, let’s let the public know that there is a way we can do it – a single payer national health program.

First Single-Payer System Advances in Vermont Legislature

By Robert Lowes
Medscape, April 26, 2011

Vermont is closer to becoming the first state in the country with something akin to a single-payer healthcare system after today’s 21 to 9 vote by the state Senate to approve the plan.

The measure, which preserves a role for private insurers alongside a single giant public plan, passed easily last month in the state House. However, because the state Senate amended what it received from the state House, the bill will likely go to a legislative conference committee for a final rewording, and then back to each chamber for one more vote, which could happen next week. Vermont Governor Peter Shumlin is expected to sign the measure into law at that time.

The concept of a single-payer system — in which all citizens are insured by a single payer — seems to have won over a majority of Vermont lawmakers, but not a majority of Vermont physicians. Of roughly 600 physicians who completed a recent online survey conducted by Democratic state Rep. George Till, MD, 44.2% support the single-payer concept, and 45.6% oppose it. In addition, 28.4% say they would likely stop practicing medicine in Vermont if such a plan gets off the ground.

The survey, criticized by some as unreliable because nonphysicians were able to participate covertly, also revealed a division between primary care physicians and their specialist peers with regard to Vermont-style healthcare reform. According to the survey, almost 62% of primary care physicians back the single-payer concept, whereas 56.5% of specialists oppose it. Nationally, organized medicine split along similar lines when it came to passage of federal healthcare reform in 2010. Both in Vermont and across the country, primary care physicians generally view their financial prospects as improving under healthcare reform, whereas specialists fear the opposite.

Vermont will not be the first state where lawmakers have enacted a single-payer system — that distinction belongs to California. However, Gov. Arnold Schwarzenegger vetoed such legislation twice, so the system was never implemented in that state.

Vermont Plan Hinges on Affordable Care Act Opt-Out

Even though a single-payer system — or, rather, a hybrid version of such a system — is on the verge of becoming Vermont law, it will not become a reality for a number of years, and state officials and lawmakers must take intermediary steps to make it happen.

As a prelude to a single-payer system, the legislation gets Vermont in sync with the new federal healthcare reform law known as the Affordable Care Act (ACA). The ACA requires states to set up so-called health insurance exchanges by 2014, through which individuals and small businesses can purchase coverage, with federal subsidies for those in need. The Vermont bill establishes such a state exchange for insurance shoppers.

Under the bill, the exchange created for the ACA could turn into a single-payer plan called Green Mountain Care, which would offer coverage to all Vermont residents. As the ACA reads now, states wishing to implement their own version of healthcare reform can begin to do so in 2017, provided they obtained a federal waiver. Such states must demonstrate that their plan would extend comprehensive and affordable health coverage to just as many people as the ACA, and not increase the federal deficit. They would then receive all the federal funds they would have been otherwise entitled to under the ACA.

Vermont may not need to wait until 2017 to opt out of ACA requirements and offer Green Mountain Care to its citizens, however. A bill sponsored by Sen. Ron Wyden (D-OR) and awaiting Senate consideration would move the opt-out year up to 2014.

Vermont also will need permission from the Centers for Medicare and Medicaid Services to include Medicaid and Children’s Health Insurance Program patients in Green Mountain Care, and to administer the Medicare program for Vermont seniors, who also would be covered.

In addition to receiving these federal approvals, Vermont will need to develop a benefit package for Green Mountain Care and come up with the necessary funding. The job of designing the benefit package falls to a new entity called the Green Mountain Care Board, which is also tasked with figuring out new ways to cut healthcare costs, pay providers, and strengthen the healthcare workforce.

Physician Group Says Vermont Plan Falls Short

Vermont is on the road to creating universal coverage, but it would be home to more than just a single payer; that is, Green Mountain Care. Residents would be allowed to maintain coverage they already have, and if they switch to Green Mountain Care, they could purchase supplemental “wrap-around” plans from private insurers. In addition, Vermont would contract with a private insurer to administer Green Mountain Care.

This mix of payers is one reason why the Physicians for a National Health Plan (PNHP) says the Vermont legislation falls short of the single-payer reform it advocates. Multiple payers multiply administrative costs that are eliminated by a true single-payer plan, according to the PNHP. The organization notes that in the amendment process, Vermont lawmakers expunged the phrase “single payer” from the bill, which now refers to a “universal and unified health system.” The PNHP also faults the Vermont plan for subjecting many patients to copayments that would obstruct access to care.

The Harvard University economist whom Vermont hired to design its hybrid single-payer plan — William Hsiao, PhD — countered in a Boston Globe interview that Vermont employers and employees alike would pay less for healthcare in his system than they do now, and would enjoy improved healthcare in the process.

Dr. Hsiao brought considerable experience to his assignment in Vermont — he helped design the single-payer healthcare system in Taiwan. In this country, and particularly in its medical circles, he is best known for developing the Resource-Based Relative Value Scale that Medicare uses to put a dollar value on physician services.

http://www.medscape.com/viewarticle/741447

Republican and Democratic Plans for Medicare and Medicaid Misguided: Push for Privatization will Accelerate Costs and Deaths

By Margaret Flowers, M.D.
FireDogLake, April 27, 2011

Leadership in Washington recognizes the damage our soaring health care spending is doing to our entire economy. Although their rhetoric differs, recent budget proposals from both Republicans and Democrats mistakenly place the blame on Medicare and Medicaid. Cuts to and privatization of these important public insurances will place us on a dangerous path that will leave health care costs soaring and more patients unable to afford necessary care.

Medicare and Medicaid must be left out of the discussion entirely until leadership has the courage to address the real reasons why our health care costs are rising, the toxic environment created by investor owned insurances and the profit-driven health care industry.

Health care spending in the United States is the highest in the world and in some cases is two times higher than spending in other industrialized nations, which achieve nearly universal coverage with better health outcomes than the U.S. Our soaring health care costs outpace our growth in GDP, inflation and wages. By any measure it is an unsustainable situation.

If we look at the various health care models in the United States, we find that the rise in spending is lower for traditional (non-privatized) Medicare and Medicaid than it is for the private sector. Our public insurances are our most efficient insurances with administrative costs of around 3%, despite the fact that they cover our most vulnerable and least healthy populations. Administrative and marketing costs for private plans are 15% or more, and the plethora of private plans further increase cost and complexity as patients and health professionals try to navigate their arbitrary and ever-changing rules.

Medicare and Medicaid are the victims of our current fragmented and profit-driven model of paying for health care which has resulted in high prices for health services and medications.

Private health insurers are financial institutions designed to create profit by obstructing, denying and restricting access to health care. They add no value to our health and in fact their business practices have polluted health care financing causing all insurances to adopt their practices in order to ‘compete’.  They have also fragmented the health care market and thus the ability to negotiate for fair prices for goods and services leading to the highest prices for pharmaceuticals and procedures.

The commonsense solution is to eliminate wasteful and costly private health insurance and adopt a universal health care system modeled on the strengths of Medicare and given the power to negotiate for reasonable prices.

It is counterproductive to even discuss cuts to Medicare and Medicaid before addressing the fundamental reasons for rising costs. Yet, both Democrats and Republicans have focused on cuts to Medicare and Medicaid in their budget proposals.

The Ryan budget proposal, the Path to Prosperity, would fully privatize Medicare by moving to a voucher system in 2022 forcing all seniors to purchase private insurance. The vouchers are not designed to keep up with the rate at which health care costs are increasing so that over time seniors will either have to pay more out of pocket for health insurance premiums or will choose skimpier insurance plans that leave them unprotected should they have a serious illness or accident. Nearly half of Medicare enrollees have an income that is less than twice the federal poverty leveland so have little room to absorb an increased share of health care costs.

Medicaid is significantly limited under the Ryan budget proposal which plans to cut overall Medicaid spending by $800 billion over ten years and change to block grants for each state. Block grants will mean that individual states will continue to be under economic pressure to limit who and what services are covered. As fewer are covered by Medicaid, they will have to either purchase private insurance through the exchanges or either seek a waiver from or be penalized for not purchasing insurance.

The Obama administration supports cuts to Medicare through the Independent Payment Advisory Board (IPAB) which is tasked with keeping per capita Medicare spending below a target level which is set to be lower than the current rate of health care cost inflation. Rather than blatantly privatizing Medicare as called for in the Ryan proposal, the President’s plan will slowly strangle Medicare leaving seniors struggling to find physicians able to care for them.

The IPAB was actually created in the Affordable Care Act (ACA). The President’s budget proposal would increase the power of the IPAB to cut Medicare costs. Medicaid spending is also capped under the President’s budget.

Sadly, the Peoples Budget put forth by the Congressional Progressive Caucus rubberstamps the President’s approach to cutting Medicare and Medicaid spending.

Underneath cuts to Medicare and Medicaid is a dangerous trend of increasing privatization of health care in the U.S.

There is a growing trend to put more of our population into private insurances and a growing privatization of our public health insurances. Over the past few years as the number of people able to afford employer sponsored health insurance has fallen, private health insurance profits have continued to grow as they move into providing insurance to or administering plans for the Medicare and Medicaid populations.

The ACA puts more people into the private insurance market by mandating that all uninsured who do not qualify for public health insurance purchase private insurance through the exchanges starting in 2014 and subsidizes the purchase of private insurance using public dollars.

Half of the newly insured under the ACA are eventually supposed to come from an expansion of Medicaid eligibility. However, the Department of Health and Human Services has already allowed state expansions in Medicaid coverage to lapse. A recent White House Fact Sheet also supported allowing states to place their Medicaid population into priva
te insurance through the health insurance exchanges.

Privatization of health care is a failed experiment in the United States.

The United States differs from other nations in allowing investor-owned corporations to profit at the expense of human suffering and lives. After decades of experience with this unique privatized model of financing health care, the results are clear and startling.

The United States has the highest per capita health care costs, the highest prices for medical goods and services (and lower overall usage rates) and no control over health care spending. Despite attempts to patch the current health care situation, the number of uninsured and those with skimpy health insurance that leaves them unable to afford health care or at risk of medical bankruptcy continues to grow. Suffering and preventable deaths are higher in the U.S. than in other industrialized nations.

In addition, there have been no significant gains in important measures of health such as life expectancy and infant and maternal mortality rates. Our health disparities continue to grow, especially for those who have chronic conditions. And our health care workforce continues to be inadequate as health professionals quickly burn out from trying to practice in our complex and irrational health care environment.

It is time to recognize the failure of the market model of paying for health care and embrace comprehensive and effective health reform. The model for our ‘uniquely American’ solution lies in traditional Medicare, a single payer health system for those who are 65 years of age and over.  Since its inception 45 years ago, Medicare has lifted seniors out of poverty and improved their health status.

Physicians for a National Health Program advocates for an improved Medicare for all health system, one that builds on the strengths of Medicare such as its universality, administrative efficiency and the patient’s freedom to choose a health provider, and also corrects the weaknesses of Medicare such as the lack of comprehensive benefits, out of pocket costs and low reimbursement rates.

Both Democrats and Republicans are missing the point by putting the emphasis on controlling Medicare and Medicaid costs without effectively addressing the reasons for our rising health care costs. Rather than embracing the Republican rhetoric which blames our public insurances, Democrats would do well to call out the real reason for our health care spending crisis, our current fragmented and profit-driven model, and advocate for a national improved Medicare for all.

Dr. Margaret Flowers is a pediatrician who serves as Congressional Fellow for Physicians for a National Health Program (www.pnhp.org).

http://my.firedoglake.com/mflowersmd/2011/04/27/republican-and-democratic-plans-for-medicare-and-medicaid-misguided-push-for-privatization-will-accelerate-costs-and-deaths/

Commonwealth Fund report on affordability is no cause for celebration

Realizing Health Reform’s Potential: Will the Affordable Care Act Make Health Insurance Affordable?

By Jonathan Gruber and Ian Perry
The Commonwealth Fund
April 2011

Abstract:

Using a budget-based approach to measuring affordability, this issue brief explores whether the subsidies available through the Affordable Care Act are enough to make health insurance affordable for low-income families. Drawing from the Consumer Expenditure Survey, the authors assess how much “room” people have in their budget, after paying for other necessities, to pay for health care needs. The results show that an overwhelming majority of households have room in their budgets for the necessities, health insurance premiums, and moderate levels of out-of-pocket costs established by the Affordable Care Act. Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law. Affordability remains a concern for some families with high out-of-pocket spending, suggesting that this is the major risk to insurance affordability.

What are necessities?

The Family Economic Self-Sufficiency Standard (FESS) considers necessary expenditures as:
• child care
• food
• housing
• taxes
• transportation
• miscellaneous (calculated as 10% of other costs).

Exhibit 3. Percent of Households That Do Not Have Room in Budget for Health Care (after paying for necessities + subsidized premium + subsidized out-of-pocket costs at the 90th percentile)

At each reported income as a percent of poverty level:
<Poverty – 17.3%
101-150 – 10.8%
151-200 – 17.5%
201-250 – 26.2%
251-300 – 24.2%
301-350 – 17.5%
351-400 – 12.5%
401-450 – 15.3%
451-500 – 12.0%
>500 – 2.5%

Affordability generally increases as incomes increase, although affordability is particularly challenging for families at 201 percent to 300 percent of poverty with high out-of-pocket expenses (90th percentile). Because the actuarial value of available plans falls from 100 percent for those below the poverty level to between 70 percent and 73 percent for those in this bracket, about one-quarter of families in this income range with very high out-of-pocket costs cannot afford health care–related costs.

http://www.commonwealthfund.org/~/media/Files/Publications/Issue%20Brief/2011/Apr/1493_Gruber_will_affordable_care_act_make_hlt_ins_affordable_reform_brief_v2.pdf

News reports on this new Commonwealth Fund study have cheery titles such as, “Health Reform Will Make Insurance Affordable for Nearly All Families.” These titles should be extended to include, “… But Not Health Care.”

Exhibit 3 noted above reveals that up to one-fourth of those with out-of-pocket costs at the 90th percentile level will not have enough money to pay for their necessities plus subsidized premiums plus subsidized out-of-pocket costs for their care. Even 2.5 percent of individuals with high incomes (over 500 percent of the poverty level – $111,750 for a family of four) will face financial hardship should they have greater health care needs.

Also of concern is that the assumption is made that all income beyond the necessities listed would be used for health care if financial hardship were to be avoided. Presumably that would mean no money for savings, for retirement, for higher education expenses, for vacations, for entertainment, nor for thousands of other preferences you might have for your spending. Is that the standard that we want to set? That we pay out what we need merely to exist and then almost everything else goes to pay for health health care if we need it?

Other exhibits in this report show that the outlook is worse for single individuals, for those living in states with a higher cost of living, and in the future it will be worse for everyone since affordability erodes further with the passage of time.

So what accounts for the cheery headlines? It is only subsidized health insurance that is affordable for most, but even there not all. Left out of the headlines is the fact that out-of-pocket expenses are not affordable for far too many.

Because the majority of people are healthy, the report concludes, “Fewer than 10 percent of families above the federal poverty level do not have the resources to pay for premiums and typical out-of-pocket costs, even with the subsidies provided by the health reform law.” The celebration is for the 90 percent who may have some funds left after paying for necessities plus health care. But isn’t the purpose of health insurance to take care of that 10 percent who face financial hardship in the face of health care needs? Or even the 2.5 percent who are wealthy and need health care but can’t afford it?

A properly designed single payer system eliminates for everyone financial hardship due to health care costs. Premiums are not a problem because the entire health care system is funded through equitable tax policies. Out-of-pocket spending is not a problem because first dollar coverage applies to all essential health care services and products.

Let’s all work to expose the deceptive rhetoric that the Patient Protection and Affordable Health Care Act has made health care affordable for almost everyone, when in fact, when you need health care, every last dime is squeezed out of you and that still isn’t enough for up to one-fourth of us with significant health care needs. In the same breath, let’s let the public know that there is a way we can do it – a single payer national health program.

How would Marcus Welby, M.D. fare in an ACO?

Family Physician Can’t Give Away Solo Practice

By Gardiner Harris
The New York Times
April 22, 2011

Handsome, silver-haired and likable, Dr. (Ronald) Sroka is indeed a modern-day Marcus Welby, his idol. He holds ailing patients’ hands, pats their thickening bellies, and has a talent for diagnosing and explaining complex health problems.

A former president of the Maryland State Medical Society, Dr. Sroka has practiced family medicine for 32 years in a small, red-brick building just six miles from his childhood home, treating fishing buddies, neighbors and even his elementary school principal much the way doctors have practiced medicine for centuries. He likes to chat, but with costs going up and reimbursements down, that extra time has hurt his income. So Dr. Sroka, 62, thought about retiring.

He tried to sell his once highly profitable practice. No luck. He tried giving it away. No luck.

Dr. Sroka’s fate is emblematic of a transformation in American medicine. He once provided for nearly all of his patients’ medical needs — stitching up the injured, directing care for the hospitalized and keeping vigil for the dying. But doctors like him are increasingly being replaced by teams of rotating doctors and nurses who do not know their patients nearly as well. A centuries-old intimacy between doctor and patient is being lost, and patients who visit the doctor are often kept guessing about who will appear in the white coat.

The share of solo practices among members of the American Academy of Family Physicians fell to 18 percent by 2008 from 44 percent in 1986. And census figures show that in 2007, just 28 percent of doctors described themselves as self-employed, compared with 58 percent in 1970. Many of the provisions of the new health care law are likely to accelerate these trends.

“There’s not going to be any of us left,” Dr. Sroka said.

Indeed, younger doctors — half of whom are now women — are refusing to take over these small practices. They want better lifestyles, shorter work days, and weekends free of the beepers, cellphones and patient emergencies that have long defined doctors’ lives. Weighed down with debt, they want regular paychecks instead of shopkeeper risks.

http://www.nytimes.com/2011/04/23/health/23doctor.html

Comment: 

By Don McCanne, MD

Having been a general practitioner (as family physicians were called in those days) even before Marcus Welby ventured onto our television screens, I identify closely with the model of the traditional, altruistic physician as exemplified by the fictional Marcus Welby and the real-life Ronald Sroka. In this day of a push toward integrated health care systems, as exemplified by accountable care organizations (ACOs), what role would us relics of Hippocratic medicine rightfully assume?

We don’t have to speculate on this since that question is already being answered. Although we are in a transitional phase, there is widespread recognition that we need to reinforce our primary care infrastructure. Patient-centered medical homes, community health centers, primary care divisions of multi-specialty centers, and non-profit health maintenance organizations organized as fully integrated health systems are some of the models that have established primary care as a central coordinating element in health care delivery.

Even Medicare has recognized this need and has moved funds from over-priced technology to under-priced primary care. We are beginning to see additional funds being directed to pay for care coordination under primary care.

But it isn’t just about money. When I was in practice, I simply accepted the fact that we were so busy that we had to extend office hours into evenings and weekends, and we had to renounce the luxury of sleep because of delivering babies in the middle of the night and assisting in emergency surgeries at all hours of the day and night. My sanity was preserved by rotating call with my brother, so that I had every other night and every other Sunday off call.

More than money, younger physicians are especially concerned about life-style issues. They don’t accept the grindstone that we were on, and I don’t blame them. But they don’t have to. The integrated delivery systems of today and the future offer not only much more freedom for lifestyle choices, they also offer practice environments that allow greater access to specialized and supportive services that improve both the quality of the practice experience and the quality of the care that patients receive.

So where do ACOs fit into all of this? Likely time will show that this was a fairly nebulous concept – a wish that by working together physicians and hospitals could reduce spending while improving quality – but the concept lacks a defining structure. But isn’t that what these integrated systems are already doing, and were doing before the term “accountable care organization” was even coined? So we already have the promise of ACOs without the bureaucratic boondoggle required in the Patient Protection and Affordable Care Act. We should expand these systems whether or not we label them ACOs.

So what would Dr. Welby do today? We can answer that because Dr. Welby is alive and well and replicated throughout today’s medical school graduates, and those graduates are turning once again to primary care. The future of health care is in the good hands of these dedicated women and men who still cherish our Hippocratic values.

****

In the article, David J. Rothman, president of the Institute on Medicine as a Profession at Columbia College of Physicians and Surgeons, was quoted as follows: “Those of us who think about medical errors and cost have no nostalgia — in fact, we have outright disdain — for the single practitioner like Marcus Welby.” His followup statement released in response to the article is reassuring, defusing somewhat his unfortunate rhetoric:

“The quotation attributed to me in the April 24th New York Times story on primary care does not reflect the opinion, views or policy of the Institute on Medicine as a Profession. Nor does it accurately reflect my views. I have far too much respect for the medical profession, including solo practitioners, to make such offensive and derogatory statements. Rather, what I was trying to convey in a lengthy interview with the reporter (Gardner Harris) was my observations on what was being said and thought among a subset of health policy experts. However controversial or even misguided these views may be, they are seen as an aspect of the movement away from solo practitioners. It was not my intention to support or endorse this position but to call attention to it.

“To understand the principles that IMAP stands for, please read our agenda and mission. They contain descriptions of our programs promoting professionalism, including physician education and advocacy well as managing conflict of interest and strengthening evidence based medical practice.

“All of us concerned with medicine as a profession recognize that the decline of solo practice and the rise of group practice represent a crucial development that must be closely analyzed. We must consider how professionalism can best be maintained and strengthened under new types of delivery systems. Disparaging comments, whether wrongly attributed to me or to others, only serve to undercut constructive thinking and innovative policies.”

http://www.imapny.org/about_imap/news__announcements/4-25-11

The Special Doctor-Patient Relationship

Letters
The New York Times, April 25, 2011

Re “Patients Are Not Consumers” (column, April 22): Bravo to Paul Krugman. As a physician for 44 years, I have seen the sick person seeking medical care transformed from a patient to a consumer and, like Mr. Krugman, I have been sickened by this.

Raised in a family of doctors, I was fed on medical ethics. Vulnerable patients rely on the ethical principles of their physicians. They should never have to fear that their physician will look at them only as consumers of the commodity called health care: fair game from whom the largest possible payment should be extracted.

Most physicians are motivated first by the desire to do good, to help their patients, not by greed. We will do more to help the situation by appealing to their ethical principles rather than to their business prowess.

It is time for us to join the rest of the industrialized world and treat health care as a social need instead of as a commodity. A Medicare-for-all national health plan would transform the patient back to what he is: a person in need of care, not a “consumer.” The Independent Payment Advisory Board created under the new health care law would fit such a plan.

ELIZABETH R. ROSENTHAL
Larchmont, N.Y., April 22, 2011