PNHP

Shumlin outlines health care plan

Shumlin outlines health care plan

By John Flowers
Addison County (Vt.) Independent, Feb. 24, 2011

MIDDLEBURY, Vt. — Gov. Peter Shumlin told Porter Medical Center officials on Tuesday to be patient in weathering what he believes will be a short-term financial storm en route to a new, single-payer health care system he said will bring long-term success and financial sustainability to the industry.

Shumlin, who took office last month, made his remarks at Porter’s annual meeting before a crowd of more than 100 hospital physicians, staff, consumers and board members who have voiced many concerns about recent state and federal health care policy that has included under-reimbursement through the Medicaid program and an ever increasing medical provider tax.

Such policy, Porter officials contend, helped create a $2 million loss for the medical center last fiscal year and the prospect of another big loss this year.

Shumlin said that in the short-term, he has little choice but to consider increases in such areas as the provider tax on hospitals and home health agencies, an assessment he said helps leverage federal Medicaid dollars. He said the state is facing a fiscal year 2012 revenue shortfall of around $176 million.

“I am trying to balance the need of balancing the budget and taking care of our most vulnerable citizens while maintaining the ability to draw down federal dollars,” Shumlin said.

Meanwhile, the governor is banking on the Legislature passing a single-payer health care plan he believes will cut medical costs, provide better service and ensure more predictable payments to providers.

That single-payer system must accomplish three things, according to Shumlin:

• Treat health acre “as a right and not a privilege.”

• Make sure that the health care follows the patient and that it not be a responsibility of the employer.

“That’s a huge jobs creator,” Shumlin said of taking the health insurance burden off employers. It is a factor the governor said could “reverse the osmosis on the bridge” of Vermonters going across the border for the tax advantages of New Hampshire.

Shumlin rejected suggestions that Vermont would see a huge influx of health care-dependent people if it adopts a single-payer system. He argued that Vermont is already a popular destination point for those seeking benefits that currently include Dr. Dynasaur, Catamount Health and the Vermont Health Access Plan.

“We’ve got the best plan in the country; it’s just that we can’t afford it,” Shumlin said.

“Small, rural hospitals will not survive,” he added of the current system. “You can’t ask (Porter President) Jim Daily and others to run a railroad in a system where you get 40 cents on the dollar from one customer, 50 cents on the dollar from another and every blue moon someone walks in the door and gives you a dollar for a dollar’s work. It doesn’t work.”

• Cost-containment. The governor suggested a few ideas to help achieve lower costs, including issuing citizens a health card that would record the medical service they received and the amount due. The card would also provide complete access to medical records. Shumlin said the medical card could save around 9 cents on each medical dollar spent by reducing the current bureaucracy involved with insurance company payments.

“This is basically using technology to contain costs and get rid of waste,” Shumlin said.

The governor also suggested the medical industry move from a fee-per-service system to one in which the provider is compensated for keeping people healthy.

“The perils are huge; I get it,” Shumlin said. “There are landmines everywhere.”

But he said the dangers of not pursuing a single-payer plan would be far worse. He said Vermont spent $2.5 billion on health care eight years ago. That sum has risen to $5 billion this year and is projected to go up by another $1.6 billion by 2015.

“The current system is just not sustainable,” Shumlin said.

He added there will be several deal-breakers for any health care bill that arrives on his desk. Shumlin said he won’t sign legislation that costs more money, that doesn’t contain health care costs, that allows insurance companies to become a hindrance to quality care, that rations services, or that perpetuates the current billing bureaucracy.

“If we can get this one right, by 2014, I am convinced we will grow jobs, grow economic opportunities,” Shumlin said.

Clearly, not everyone who listened to Shumlin’s talk in Middlebury College’s McCardell Bicentennial Hall was sold on his plan. Several Porter officials questioned Shumlin’s math and the wisdom of state government taking an even larger role in an industry upon which it has already foisted economic challenges. Porter Hospital laid off four workers earlier this month with the prospect of additional reductions in the future. Daily noted that he has been walking through the Porter campus lately with a serious eye on what the institution can do without.

But Shumlin reiterated sweeping change will be necessary to reverse an unsustainable course.

“What’s killing Porter is what’s killing every health care entity in the state,” Shumlin said. “It is the reimbursement system, it is the amount of resources we are throwing at it and that fact that Vermont businesses and individuals can’t keep up. We are all moving to higher and higher deductibles throughout insurance plans for more and more money.”

http://www.addisonindependent.com/201102shumlin-outlines-health-care-plan

Personal data breaches for 4.9 million patients

Massachusetts General Hospital settles potential HIPAA violations

U.S. Department of Health and Human Services
February 24, 2011

The General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay the U.S. government $1,000,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today.

http://www.hhs.gov/news/press/2011pres/02/20110224b.html

And…

Report details health care reform theft

By Susan R. Miller
South Florida Business Journal
February 23, 2011

As the nation moves toward growing use of electronic medical records, data vulnerability becomes increasingly evident.

A new report released on Wednesday by Kaufman, Rossin & Co., showed 4.9 million patients had their personal health information compromised as a result of 166 data breaches that occurred during the first year of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

All of the breaches occurred between Sept. 21, 2009 and Sept. 21 2010, the first year when breach incidents were publicly reported to the Secretary of the Department of Health and Human Services.

http://www.bizjournals.com/southflorida/news/2011/02/23/report-details-health-care-reform-theft.html

And…

athenahealth

An increasing majority of physicians finds that EHRs slow them down during the exam.

Sixty percent of physicians agree with the statement that the EMR/EHR “slows down the doctor during patient exams.”

http://www.athenahealth.com/index.php?open=26

Comment: 

By Don McCanne, MD

Although Congress gave up on trying to provide health insurance coverage for everyone, they did try to deliver on the promises of higher quality, fewer errors, greater efficiency, increased security of patient health information, and lower costs through measures designed to expand the use of IT (information technology), especially through EMRs (electronic medical records). Are these promises being fulfilled?

Before delivering on the other promises, a health IT system must first, above all, ensure confidentiality of patient information. Today the Department of Health and Human Services released a report confirming that perhaps the most prestigious medical institution in the nation – Massachusetts General Hospital – is being fined $1,000,000 for violation of patient privacy rules. The documents were left on a subway train. Though this was not directly an IT breach, read on.

Yesterday a report was released by Kaufman, Rossin & Co., an accounting firm, that showed that, in the last year alone, almost five million patients had their personal health information compromised due to various other unrelated data breaches.

In this age of cloud computing, personal electronic data can easily be transmitted into cyberspace for all the world to see forever. Sure, the various vendors and stewards of the systems can show you their great security safeguards so there is no need to be concerned. Then how in the… did these 4.9 million patients have their personal health information compromised?

And the other IT promises? We covered this in a qotd last month (Jan. 21) in reviewing an article from PLoS Medicine. Quoting from that article:

“Our systematic review of systematic reviews on the impact of eHealth has demonstrated that many of the clinical claims made about the most commonly deployed eHealth technologies cannot be substantiated by the empirical evidence. Overall, the evidence base in support of these technologies is weak and inconsistent, which highlights the need for more considered claims, particularly in relation to the patient-level benefits, associated with these technologies. Also of note is that we found virtually no evidence in support of the cost-effectiveness claims.”

The highly touted accountable care organizations (ACOs) called for in the Patient Protection and Affordable Care Act are a variety of ill-defined health delivery organizations having only one thing in common: an integrated IT system using EMRs. Not only are these systems expensive and vulnerable to security breaches, the report from athenahealth shows that EMRs also slow down patient care. Why are we placing all our bets on ACOs?

This has all been a distraction that has diverted us from doing what we really need to do – establish affordability and universality through an improved Medicare that covers everyone. Can’t we get on with that task now?

Personal data breaches for 4.9 million patients

Massachusetts General Hospital settles potential HIPAA violations

U.S. Department of Health and Human Services
February 24, 2011

The General Hospital Corporation and Massachusetts General Physicians Organization Inc. (Mass General) has agreed to pay the U.S. government $1,000,000 to settle potential violations of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Privacy Rule, the U.S. Department of Health and Human Services (HHS) announced today.

http://www.hhs.gov/news/press/2011pres/02/20110224b.html

And…

Report details health care reform theft

By Susan R. Miller
South Florida Business Journal
February 23, 2011

As the nation moves toward growing use of electronic medical records, data vulnerability becomes increasingly evident.

A new report released on Wednesday by Kaufman, Rossin & Co., showed 4.9 million patients had their personal health information compromised as a result of 166 data breaches that occurred during the first year of the Health Information Technology for Economic and Clinical Health (HITECH) Act.

All of the breaches occurred between Sept. 21, 2009 and Sept. 21 2010, the first year when breach incidents were publicly reported to the Secretary of the Department of Health and Human Services.

http://www.bizjournals.com/southflorida/news/2011/02/23/report-details-health-care-reform-theft.html

And…

athenahealth

An increasing majority of physicians finds that EHRs slow them down during the exam.

Sixty percent of physicians agree with the statement that the EMR/EHR “slows down the doctor during patient exams.”

http://www.athenahealth.com/index.php?open=26

Although Congress gave up on trying to provide health insurance coverage for everyone, they did try to deliver on the promises of higher quality, fewer errors, greater efficiency, increased security of patient health information, and lower costs through measures designed to expand the use of IT (information technology), especially through EMRs (electronic medical records). Are these promises being fulfilled?

Before delivering on the other promises, a health IT system must first, above all, ensure confidentiality of patient information. Today the Department of Health and Human Services released a report confirming that perhaps the most prestigious medical institution in the nation – Massachusetts General Hospital – is being fined $1,000,000 for violation of patient privacy rules. The documents were left on a subway train. Though this was not directly an IT breach, read on.

Yesterday a report was released by Kaufman, Rossin & Co., an accounting firm, that showed that, in the last year alone, almost five million patients had their personal health information compromised due to various other unrelated data breaches.

In this age of cloud computing, personal electronic data can easily be transmitted into cyberspace for all the world to see forever. Sure, the various vendors and stewards of the systems can show you their great security safeguards so there is no need to be concerned. Then how in the… did these 4.9 million patients have their personal health information compromised?

And the other IT promises? We covered this in a qotd last month (Jan. 21) in reviewing an article from PLoS Medicine. Quoting from that article:

“Our systematic review of systematic reviews on the impact of eHealth has demonstrated that many of the clinical claims made about the most commonly deployed eHealth technologies cannot be substantiated by the empirical evidence. Overall, the evidence base in support of these technologies is weak and inconsistent, which highlights the need for more considered claims, particularly in relation to the patient-level benefits, associated with these technologies. Also of note is that we found virtually no evidence in support of the cost-effectiveness claims.”

The highly touted accountable care organizations (ACOs) called for in the Patient Protection and Affordable Care Act are a variety of ill-defined health delivery organizations having only one thing in common: an integrated IT system using EMRs. Not only are these systems expensive and vulnerable to security breaches, the report from athenahealth shows that EMRs also slow down patient care. Why are we placing all our bets on ACOs?

This has all been a distraction that has diverted us from doing what we really need to do – establish affordability and universality through an improved Medicare that covers everyone. Can’t we get on with that task now?

Looking to cure what ails us

By Amy Bartlett
Siuslaw News (Florence, Ore.), Feb. 18, 2011

With a shared passion for health care reform, a group of Northwest physicians, calling themselves “Mad as Hell Doctors,” have been traveling the country to get the word out about changing what they term a “fragmented, broken health care ‘non-system.’”

The doctors were in Florence Tuesday for an evening of discussion, videos, and a little light-hearted music to educate the public and garner support for the Affordable Health Care for All Oregon Act, which was introduced recently in the Oregon House by Rep. Michael Debrow, and will later be introduced to the Senate by Sen. Chip Shields. Both Dembrow and Shields are Portland democrats.

The doctors, some of whom are also members of the Oregon chapter of Physicians for a National Health Program, have worked with other health care advocacy groups to draft the language for the new bill, now HB 3510, which calls for the establishment of a single-payer health system.

The campaign has been promised committee hearings in both the House and Senate, which have yet to be scheduled.

The doctors argue that single-payer coverage “would cure what ails us.”

“Single-payer is the fiscally responsible thing to do,” said Dr. Paul Hochfeld, an emergency room physician from Corvallis, who described a single-payer system as one in which “we pool all our money (which could include progressive income tax, payroll tax and other funding sources), we put everybody in the same risk pool and we provide care for everybody.”

Hochfeld said taxpayers already foot the bill for health care in this country, but many do not enjoy the benefits.

The nation is divided into different risk pools that taxpayers support, he explained: Medicare, which is a very expensive risk pool because it’s for older people; Medicaid, which is also expensive because it is for disabled and poor people; veterans; and Indian Health Service. He said the taxpayer then gives tax subsidies to the insurance companies to cover healthy people.

“The very process of dividing the country up into all these risk pools and the process of these insurance companies fighting for the lowest risk pools of the employed people, costs us about 20 to 30 percent of all of our health care dollars,” said Hochfeld. “It adds nothing to the health of people and actually complicates the lives of providers who have to spend time and money dealing with all of these insurance companies because they all have different sets of rules.”

It is estimated that physicians spend $60,000 per year handling insurance claims.

Not everyone who receives care is able to pay; hence, providers charge higher fees to make up for lost revenue. Health insurance premiums are inflated to cover the cost of the uninsured.

“You are not only paying with taxpayer money, but you are also subsidizing the uninsured through your premiums.

http://www.thesiuslawnews.com/v2_news_articles.php?heading=0&story_id=4117&page=72

Mass. Medicaid chief: Single payer may be better than ‘devil-may-be’ market

By Kyle Cheney / State House News Service
Boston Herald, Feb. 20, 2011

A senior Patrick administration health care official said Friday that a single payer system may work more effectively and efficiently than Massachusetts’s existing insurance market, a high-profile endorsement that raised eyebrows at a legislative hearing.

“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” said Terry Dougherty, director of MassHealth – the state-run Medicaid plan that insures nearly 1.3 million Massachusetts residents – when lawmakers asked for his “personal view” on a single payer system.

Dougherty’s comment, made during a budget hearing at the Boston Public Library, prompted his boss, Secretary of Health and Human Services JudyAnn Bigby, to interject: “That’s his personal opinion.”

Dougherty noted that MassHealth, by far the largest program in state government, spends just 1.5 percent of its $10-billion-a-year budget on administrative costs – compared to about 9.5 percent by the private market, according to studies by the state Division of Health Care Finance and Policy. That figure won plaudits from several lawmakers on the panel, including some who have supported implementing a statewide single payer system.

After his remarks, Dougherty told the News Service that he’s learned to appreciate “elements of single payer” during his 30 years in health care.

“It’s got to be better than this devil-may-be marketplace,” he said. “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”

A single payer system would replace the state’s patchwork of nonprofit and private insurers with a single, public insurer through which all health care dollars would flow to hospitals, doctors and other health care providers. Supporters say it would eliminate administrative waste and ensure that all residents receive adequate coverage.

But while supporters point to single payer models used by other countries and tout the idea as a cost saver, critics warn the system would result in government bureaucrats deciding what services to cover and how to pay for them, would reduce the quality of care and would disrupt relationships between doctors and patients.

Hundreds of thousands of Massachusetts residents have endorsed the approach. In fact voters in 14 House districts –including five that backed Scott Brown for U.S. Senate – voted overwhelmingly last year to support a non-binding ballot question that asked, “Shall the state representative from this district be instructed to support legislation that would establish health care as a human right regardless of age, state of health or employment status, by creating a single payer health insurance system like Medicare that is comprehensive, cost effective, and publicly provided to all residents of Massachusetts?”

A similar question passed in 10 other House districts in 2008.

Although last session 50 members of the Legislature supported a single payer model, the issue has lacked support from the upper echelons of the Legislature and the Patrick administration.

A single payer plan would scrap Massachusetts’s landmark health care system, which relies on the private insurance marketplace, and that backers have credited with helping insure about 98 percent of the population. Backers of the existing structure, while acknowledging that health care costs have continued to climb, note that the state has covered about 430,000 residents since the inception of health care reform in 2006. Individuals are required to purchase health insurance, and low-income residents without access to health care through their employers may obtain partially or fully-subsidized care through the state’s Connector Authority, an exchange that pairs consumers with private plans, or through MassHealth.

This session, only 32 members signed on to the single payer proposal, although the sponsors include several high-ranking lawmakers: Rep. Stephen Kulik, vice chair of the Ways and Means Committee; Rep. Martha Walz, assistant vice chair of the Ways and Means Committee; Reps. Ellen Story and Byron Rushing, members of Speaker Robert DeLeo’s upper leadership team; and eight House committee chairs. The bill’s lead sponsors are Rep. Jason Lewis (D-Winchester) and Sen. James Eldridge (D-Acton). Last session’s lead sponsor, Rep. Matthew Patrick (D-Falmouth) was ousted at the polls by Republican David Vieira.

Benjamin Day, executive director of Mass Care, a single payer advocacy group, noted that only six of the lawmakers in the 14 House districts whose voters endorsed single payer health care signed onto the bill. He asserted that many members of state government’s health care hierarchy support single payer health care but keep it to themselves.

“Everyone is making political considerations, tactical considerations,” he said.

Day said supporters of a single payer system are eyeing Vermont, which recently elected a Democratic governor who ran on a platform that included a single payer system.

“If Vermont passes it, that will be such an incredible boon,” he said.

Day noted that Vermont has hired key players in Massachusetts’ own landmark health reform efforts, including Jonathan Gruber, a member of the Massachusetts Connector Authority board and Anya Rader Wallack, a health care consultant who previously headed the Massachusetts Medicaid Policy Institute.

Proposals to advance a single payer system have fallen in and out of favor for decades. Before he became Senate president in 2003, Robert Travaglini was the lead sponsor of a proposal to create a task force charged with recommending ways to implement single payer health care in Massachusetts, although he later endorsed the current system, which Gov. Mitt Romney signed into law in 2006.

http://news.bostonherald.com/news/politics/view/20110220medicaid_chief_single_payer_may_be_better_than_devil-may-be_market/

Study: Research costs much lower than drug companies claim

Net Median Costs per Drug $13 to $204 million, not $1.3 billion

Press Release, Feb 21, 2011

Pharmaceutical companies continue to claim that high research and development (R&D) costs make it necessary for them to charge high prices and retain long ownership of patents to recoup costs. But a new study co-authored by UVic health economist Rebecca Warburton and Donald W. Light of the University of Medicine and Dentistry of New Jersey demonstrates that high R&D estimates have been constructed by industry-supported economists to support the companies’ claims.

The widely accepted figure promoted by industry-supported economists is US$1.3 billion to discover and develop a new drug.  This estimate, however, was done on a costly subsample and then generalized to all drugs, inflating the estimate for the average new drug by about 7 fold.

TAXPAYERS CONTRIBUTIONS

The $1.3 billion estimate also does not include the substantial contributions by taxpayers through R&D-related tax write-offs. Taxpayers indirectly pay for about 39 percent of company R&D, a substantial reductions in a company’s net costs.

The industry-based figure also includes a large sum inserted for the cost of discovery, even though no one has solid figures on what those costs are. The cost of discovery can range from serendipity to 30 years of frustrating research to find a key compound. Light and Warburton conclude that cost estimates can only be done for development and not basic research.

Light and Warburton also found that independent evidence showed the $1.3 billion estimate was based on trials much larger than reported by the FDA (US Food and Drug Administration) and the National Institutes of Health. The estimate was also based on trials lasting longer than the lengths that companies reported under audit. Finally, the percent of trials that failed was higher than independent sources showed, which multiplies the costs of trials that succeed.

FOREGONE PROFITS AS “COSTS”

Half the $1.3 billion estimate is not real costs but a high estimate of profits that companies would have made if they had not developed drugs but just put their money in bonds or equities. Industry-supported economists used an estimate of those profits more than twice the return on capital conventionally used and counted this high estimate as a “cost of R&D.” “Estimated profits get converted to ‘costs’, and then companies press to get that money back as well as a good return on it,” explained Light. “This amounts to charging high prices to get profits on profits.”

Light and Warburton used the median cost because a few very expensive drugs skew the average and result in a misleading figure. They corrected for inflated numbers and multipliers. The median net corporate R&D cost per new drug was only $59.4 million, plus the unknown cost of discovery, which varies 30 fold.  This estimate is in line with audited figures submitted by companies. “We found that the net median corporate costs varied greatly, from $13 million to $204 million, depending on the kind of drug,” Light said.

GOVERNMENT PROTECTED PRICES NOT WARRANTED

“The European Parliament is increasing market protections that will delay generic competition and extend monopoly prices,” Warburton said. “Lobbyists have persuaded European leaders that companies need more time to recover billions in research costs, when R&D costs are really a fraction of the $1.3 billion average claimed.”

PRACTICAL IMPLICATIONS

This study strengthens the view that drugs companies do not need prices as high as they are to recover R&D costs, and their corporate risks are much lower than claimed. Most of their R&D products are scores of drugs with few proven advantages over existing drugs that can command higher, government-protected prices. Gross profits are spent more for marketing than research in order to maximize the number of patients taking these drugs. A large number of clinical trials are conducted for marketing and signing up lead clinicians. These form elements of The Risk Proliferation Syndrome described in a new book, The Risks of Prescription Drugs.  The result is millions of patients exposed to adverse side effects with few offsetting benefits.  Prescription drugs are now the 4th leading cause of death and result in about 2 million hospitalizations a year. They have also become a major cause of auto and trucking accidents.

The article, “Demythologizing the high costs of pharmaceutical research,” has been printed in BioSocieties, an interdisciplinary journal for the social studies of life sciences. It is available at http://www.palgravejournals.com/biosoc/journal/vaop/ncurrent/index.html, or by clicking here.

Media contacts:
Donald W. Light  at (609) 216-0071 or dlight@princeton.edu or Rebecca Warburton (Public Administration) at 250-885-8469 or rnwarbur@uvic.ca

Massachusetts' Medicaid director comments on single payer

Medicaid chief: Single payer may be better than ‘devil-may-be’ market

By Kyle Cheney
Boston Herald
February 20, 2011

A senior Patrick administration health care official said Friday that a single payer system may work more effectively and efficiently than Massachusetts’s existing insurance market, a high-profile endorsement that raised eyebrows at a legislative hearing.

“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” said Terry Dougherty, director of MassHealth – the state-run Medicaid plan that insures nearly 1.3 million Massachusetts residents – when lawmakers asked for his “personal view” on a single payer system.

Dougherty noted that MassHealth, by far the largest program in state government, spends just 1.5 percent of its $10-billion-a-year budget on administrative costs – compared to about 9.5 percent by the private market, according to studies by the state Division of Health Care Finance and Policy. That figure won plaudits from several lawmakers on the panel, including some who have supported implementing a statewide single payer system.

After his remarks, Dougherty told the News Service that he’s learned to appreciate “elements of single payer” during his 30 years in health care.

“It’s got to be better than this devil-may-be marketplace,” he said. “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”

http://news.bostonherald.com/news/politics/view/20110220medicaid_chief_single_payer_may_be_better_than_devil-may-be_market/

Comment: 

By Don McCanne, MD

It is no surprise that so many individuals are suggesting that we may be heading toward a single payer system. It is becoming more obvious that the federal reform effort and the Massachusetts plan on which it was based have proven to be the most expensive model of reform while falling short on the goals of universality, efficiency and equity, as was predicted by those of us at PNHP and others. But these words from Terry Dougherty, director of the Medicaid program for Massachusetts, are of paramount significance since he has first hand experience with one of the cornerstones of reform – expansion of the Medicaid program.

When someone who really knows what we’re actually doing within this expensive, dysfunctional model of reform says that single payer has “got to be better,” we should listen. Listen, and then act.

Massachusetts’ Medicaid director comments on single payer

Medicaid chief: Single payer may be better than ‘devil-may-be’ market

By Kyle Cheney
Boston Herald
February 20, 2011

A senior Patrick administration health care official said Friday that a single payer system may work more effectively and efficiently than Massachusetts’s existing insurance market, a high-profile endorsement that raised eyebrows at a legislative hearing.

“I like the market, but the more and more I stay in it, the more and more I think that maybe a single payer would be better,” said Terry Dougherty, director of MassHealth – the state-run Medicaid plan that insures nearly 1.3 million Massachusetts residents – when lawmakers asked for his “personal view” on a single payer system.

Dougherty noted that MassHealth, by far the largest program in state government, spends just 1.5 percent of its $10-billion-a-year budget on administrative costs – compared to about 9.5 percent by the private market, according to studies by the state Division of Health Care Finance and Policy. That figure won plaudits from several lawmakers on the panel, including some who have supported implementing a statewide single payer system.

After his remarks, Dougherty told the News Service that he’s learned to appreciate “elements of single payer” during his 30 years in health care.

“It’s got to be better than this devil-may-be marketplace,” he said. “We don’t build big buildings. We don’t have high salaries. We don’t have a lot of marketing, which makes, to some extent, some of the things that we do easier and less costly than some things that happen in the marketplace. Overall, my point is, we have individuals who work in state government in MassHealth … who are just as smart, just as tactile, just as creative as people who work in the private sector, but they work for a lot less money.”

http://news.bostonherald.com/news/politics/view/20110220medicaid_chief_single_payer_may_be_better_than_devil-may-be_market/

It is no surprise that so many individuals are suggesting that we may be heading toward a single payer system. It is becoming more obvious that the federal reform effort and the Massachusetts plan on which it was based have proven to be the most expensive model of reform while falling short on the goals of universality, efficiency and equity, as was predicted by those of us at PNHP and others. But these words from Terry Dougherty, director of the Medicaid program for Massachusetts, are of paramount significance since he has first hand experience with one of the cornerstones of reform – expansion of the Medicaid program.

When someone who really knows what we’re actually doing within this expensive, dysfunctional model of reform says that single payer has “got to be better,” we should listen. Listen, and then act.

Proposed Overture to the General Assembly of the Presbyterian Church (USA)

Recommendation

The Presbytery of Mid-Kentucky respectfully overtures the 220th General Assembly (2012) to instruct Mission Responsibility Through Investment (MRTI) to report to the General Assembly Mission Council on the corporate practices of Cigna, Aetna, Humana, WellPoint, United Health Care health insurance companies – in particular as such practices compare with and relate to previous General Assembly actions relative to health care.  The General Assembly Mission Council is authorized and encouraged to act on this information, and, as it deems appropriate, implement divestment procedures as well as encourage individual Presbyterians and congregations to divest of holdings in the said companies; and, in view of the urgency of the ongoing health care crisis, to take action within six months of the adoption of this recommendation; and to report to the 221st General Assembly (2014) on divestment actions.
 
Rationale

WHEREAS The Presbyterian Church (USA) has consistently called for fundamental reform of United States healthcare systems and in 2008 “endorse[d] in principle the provision of single-payer universal health care reform…as the program that best responds to the moral imperative of the gospel”; (a)         

WHEREAS The Presbyterian Church (USA) and its predecessors has long concerned itself with national health care policy, seeking to promote healthier individuals in a healthier society.  “For over 60 years, Presbyterian Church (USA) General Assemblies have been calling for reform of the U.S. health system, urging the establishment of a national medical plan that will ensure health coverage for all persons residing in the United States.” – 2009 Communication of the PC(USA) Washington Office;

WHEREAS The Presbyterian Church (USA), in its healthcare policy statements, has repeatedly pointed to issues of quality, equity and accessibility; (b)

WHEREAS these statements are based on several crucial theological points; and implicit in these is the conviction that health care is a human right – a conviction that is voiced in the Universal Declaration of Human Rights, in the International Covenant on Economic, Social and Cultural Rights, and in the World Religious Summit meeting in Winnipeg, Manitoba in June, 2010;(c)

WHEREAS such statements, including the 2008 General Assembly endorsement of a single-payer policy, are meant to inform and guide its total mission, and are meant to be reflected in the actions and pronouncements of the constituent parts of the Presbyterian Church;

WHEREAS one instrument for implementation of its mission is church investment policy with the corresponding option to divest from those companies that actively oppose its mission goals; (d)

WHEREAS violation of a basic human right, such as the right to health care,  is one of several criteria by which corporate behavior may be evaluated; [See MRTI priority issues work plan and historical involvements relative to both health care and human rights at its web page – http://gamc.pcusa.org/ministries/mrti/]

WHEREAS since the primary mission of for-profit insurance companies is to make a profit for their investors and since they are not themselves providers, by definition they decrease rather than increase access to health care;

AND WHEREAS for-profit health insurance companies consciously and deliberately oppose the above health care principles and policy goals of the PCUSA in order to fulfill their for-profit mission; (e)

AND WHEREAS the actions of for-profit health insurance companies have brought untold suffering and hardship in both the private and public spheres and have obstructed the development of healthier individuals in a healthier society; (f) 

AND WHEREAS health care reform legislation enacted by the U.S. Congress in 2010 only strengthens the decision-making role of for-profit health insurance companies in matters affecting individuals’ access to health care; (g)
AND WHEREAS the Presbyterian Church has no obligation to support such companies through investment but, to the contrary, has a moral obligation to withdraw financially from them to the extent that they are detrimental to the goal of equal access to health care;
AND WHEREAS for-profit health insurance companies produce no product for the public good but instead increase exposure to the financial ruin of individuals and the society as a whole;

Therefore: [see above recommendation]

FOOTNOTES/BACKGROND ATTACHMENTS

(a) Full text of the 2008 General Assembly resolution:
That the General Assembly:  1. Endorse in principle the provision of single-payer universal health care reform in which health care services are privately provided and publicly financed.  2. Direct the General Assembly Council, through appropriate offices including the National Health Ministries, the Washington Office, and the Presbyterian Health, Education and Welfare Association (PHEWA) to advocate for, educate about, and otherwise pursue the goal of obtaining legislation that enacts single-payer, universal national health insurance as the program that best responds to the moral imperative of the gospel: monitoring progress toward this goal and reporting back to the next two General Assemblies (2010 and 2012).  3. Direct the Stated Clerk of the General Assembly to send a copy of this resolution to the appropriate committee chairs of the U.S. Congress and to the Washington and United Nations offices of the PC(USA).  4. Direct that $25,000 from the Mission budget of the PC(USA) be sent to the PACT Network of PHEWA for the purpose of holding ten regional, one-day seminars supporting single payer universal health care reform, moneys to be allocated on a first-come, first-served basis. 
 

(b) Accessibility: “We believe that all people possess inherit worth as children of God, and that God’s promise extends to all.  Health coverage must be available to all persons living in the United States, regardless of income, race or ethnicity, geography, age, gender, employment status or health status” – G.A. Minutes, 1994, p.574 and 2002, p.634;  Equity:  “Because the right to acquire adequate health care springs out of our worth as living human beings, rather than out of any particular merit or achievement belonging to some but not to others, adequate health care should be defined equally for all people.” – G.A. Minutes, 1976, pp. 203-207;  Responsible Financing: “Since society has an interest in the health of its people, those individuals and organizations who can pay should help to finance the care of those individuals and families who cannot pay.  While concerns for the costs of health care are appropriate, these concerns must continually be balanced against the objectives of adequate, quality care for all.  The sacrifice of access and quality at the shrine of cost containment is too high a price to pay and should not be tolerated.” – G.A. Minutes, 1991, p. 817 and 1988, p. 525.

In August, 2009, the Stated Clerk of the General Assembly, responding to #3 (above), wrote: “Jesus Christ, who has reconciled us to God, healed all kinds of sickness (Mt. 4:23) as a sign of God’s rule.  Isaiah speaks God’s word to say ‘No more shall there be … “an infant that lives but a few days, or an old person who does not live out a lifetime”(Isa. 65:20a).  We, as Reformed Christians, witness to Jesus Christ in word, but also in deed.  As followers of our Great Physician Jesus, we have a moral imperative to work to assure that everyone has full access to health care. … The U.S. spends nearly twice as much per capita than any other coun
try on health care, but we rank poorly in the thirty-seven categories of health status measured by the World Health Organization.  The rise in childhood obesity, asthma, diabetes, and other chronic diseases indicates that the overall health status of people of this country is declining.  We are warned by the prophets not to heal the wounds of God’s people lightly; yet in 2006 the aggregate profits of the health insurance companies in the United States were $68 billion.  During that same year more than 15,000 families were forced into bankruptcy because of medical expenses. … Our federal government already operates efficiently and with low overhead the health delivery programs of Medicare and Medicaid; and yet at the same time insurance companies spend nearly one-third of every premium dollar on marketing and other administrative costs and in fact, several such companies spend less than 60 percent of premium dollars they receive on health services.  The American College of Physicians, the nation’s second largest physician group, has endorsed a single-payer healthcare system.  Only a single-payer system of national health care coverage (privately provided; publicly financed; not socialized medicine) can save what is estimated to be $350 billion wasted annually on medical bureaucracy and redirect those funds to expanded coverage.”

In support of the above resolution at the 2008 General Assembly, our denominations Advisory Council on Social Witness Policy stated: “Commissioners may wish to reflect on whether the highest ever numbers of uninsured Americans (not including undocumented immigrants) and the data on increasing life expectancy among Americans confirm the need for a forthright new advocacy by the church.”

(c) From The Universal Declaration of Human Rights, Article 25: (1) Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control. (2) Motherhood and childhood are entitled to special care and assistance.  All children, whether born in or out of wedlock, shall enjoy and same social protection.” From the Covenant on Economic, Social and Cultural Rights, Article 12: “The States Parties to the present Covenant recognize the right of everyone to the enjoyment of the highest attain able standard of physical and mental health.” From the report of the World Religious Summit (June, 2010): “All countries must to their part…and put in place poverty reduction policies that ensure everyone has access to basic rights such as nutritious food, safe water, health care, education and economic opportunity.”

(d) “The Presbyterian Church (USA) believes that church investment is more that a practical question. It is also ‘an instrument of mission and includes theological, social and economic considerations.’ This belief flows from our understanding of the stewardship of God’s resources entrusted to the church.  Thus, ‘we confess that the Lord is really the acknowledged Master of our entire life – moral, physical and material.’” – MRTI, A Christian Call to Faith-Based Investing

(e) For-profit health insurance companies opposition to health care as a human right:           
Vis-à-vis patients:

  1. By company policies and positions designed to support shareholder profits and exorbitant salaries of management personnel through denying coverage or denying funding of the treatment of patients, and by providing financial incentives to their employees to do so.

Vis-à-vis providers and patients:

  1. By interfering in the doctor-patient relationship and preventing providers from treating patients on the basis of their informed clinical judgment through denial of treatment as well as the application of financial penalty and censure for “excessive-treatment.”
  2. By constant upward pressure on patient premiums, deductibles and co-pays while applying downward pressure on provider reimbursement. (See Secretary Sebellius’ February, 2010 report, “Insurance Companies Prosper, Families Suffer – Our Broken Health Insurance System”.)

Vis-à-vis legislation:

  1. By spending hundreds of millions of patient and taxpayer generated dollars to lobby in Washington and in state capitals, effectively buying unrepresentative power and influence to thwart efforts toward making affordable, comprehensive access for all a reality.
  2. By donating directly and indirectly additional hundreds of millions of patient premium and taxpayer generated dollars to the election campaigns of candidates of both political parties in order to assure that legislators support maintenance of their power. 
  3. By undermining democratic processes through the infusion of billions of dollars into the deliberative process at every turn to override the well-documented majorities of citizens, physicians and nurses that prefer an improved “Medicare for all” solution to our health care crisis.

Vis-à-vis insurance company employees and investors:

  1. By putting them in the morally and ethically untenable position of making the viability of their employment and investment dependent on subordinating the health care of millions to the profit-making of a few.

Vis-à-vis employers and their employees:

  1. By making them less competitive in the global market place by the addition of exorbitant employee health care costs (that also discourage entrepreneurial initiatives on their part).
  2. By being forced to reduce coverage for employees and their families in order to remain competitive in the domestic market as well.
  3. By reducing the motivation to bring on new hires even when it would be advantageous to do so because of associated health care costs.

(f) Untold suffering:

  1. In the form of tens of thousands of deaths annually due to lack of accessibility to adequate health care.
  2. In the form of workers inability to change jobs or move to jobs in other locations due to lack of portability of coverage.
  3. In the form of pressure to understaff hospitals due to the instability of hospital revenue from for-profit insurance payments and forced early discharges, making those institutions themselves an increased threat to the health of patients from medical mistakes, increased infection rates and unmet patient needs.
  4. In the form of lack of quality in overall health system performance. According to the World Health Organization the U.S. is ranked #37 in the world. In WHO’s 2000 report, the U.S. ranked 30th in preventable deaths before age five – a terrible testimony to how poor the quality of our health system is.
  5. In the form of driving patients, both insured and uninsured, into bankruptcy and poverty due to health care costs.
  6. In the form of fear, demoralization and distraction in the hearts and minds of millions of Americans due to financial ruin if they become injured or ill; suffering from untreated preventable diseases; suffering from diseases diagnosed too late; needless premature death and disability with all its pernicious effects on not just individuals but families, communities and our entire population.

(g) Recently passed health care reform legislation:

Until the 1990’s the U.S. health insurance market was dominated by non-profit companies with essentially charitable missions.  From 1990-2005 the industry underwent major consolidation and the near-eliminating of not-for-profits.  This trend will continue under the Affordable Care Act.  No other country has for-profit health insurance compani
es like the U.S.  The only way for these companies to make a profit for their shareholders is to find ways not to pay for the care of the sick.  This is the basic flaw in for-profit health insurance. Nor do they further medical research or innovation.  They add no social value to justify their profits and the negative effects they inflict on the entire medical system.

Legislative committees approve copays for Medi-Cal

Calif. Assembly, Senate Budget Committees Pass Spending Plans

California Healthline
February 22, 2011

On Friday, California’s Assembly Committee on Budget and Senate Budget and Fiscal Review Committee passed nearly identical state budget plans.

Changes to Medi-Cal

Both budget committees approved a plan to establish mandatory copayments for Medi-Cal beneficiaries, which would reduce state spending by about $584 million, according to a Senate analysis.

The plan calls for copays of:
$3 and $5 for some prescription drugs;
$5 for physician and dentist visits;
$50 for emergency department visits; and
A maximum of $200 for hospital stays.

The plan also calls for the state to reduce Medi-Cal payments to health care providers by the amount of the copays.

Health care providers have expressed concern that they will face higher costs if Medi-Cal beneficiaries are unable to afford the higher copays.

http://www.sacbee.com/2011/02/20/3416369/browns-countdown-day-42-medi-cal.html

Comment: 

By Don McCanne, MD

Although California has been at the bottom of the states in Medicaid payment rates, the state legislative committees recently passed another 10 percent cut in those rates. Now they have also approved legislation to reduce rates further by the amount of these copayments, amounts that will surely be absorbed by the providers since the Medicaid population lives in poverty or near-poverty and will not be able to pay these copayments. That’s understandable when you consider that the federal poverty level for 2011 is an annual income of $10,890 for an individual.

Yet the Patient Protection and Affordable Care Act will greatly expand the Medicaid population. The losses faced in the Medi-Cal program cannot be made up by an increase in volume. The additional load displaces privately insured patients, and the losses to the providers increase. The physicians who refuse to see Medi-Cal patients thrive, whereas those overloaded with Medi-Cal patients are threatened with insolvency. Let me emphasize that, based on my own personal experience, this is no exaggeration.

As a welfare program representing a population without an adequate political voice, Medicaid will always be underfunded. Simple common decency dictates that we should eliminate this program and replace it and the rest of the dysfunctional financing system with an improved Medicare for all program that serves everyone well.

Economist confirms need for single-payer system

By Peter Hirschfeld
Times Argus (Barre-Montpelier, Vt.), Feb. 19, 2011

MONTPELIER — Three weeks after unveiling a draft version of his single-payer health care proposal, Harvard economist William Hsiao returned to the Legislature Friday to submit a final copy that reaches exactly the same conclusion.

Hsiao’s draft report drew comments and criticisms from nearly 200 people. Their input did little to change the final recommendations, in which Hsiao says Vermont should use a payroll tax to fund a single-payer system that provides basic health care benefits to every resident of the state.

“Vermonters as well as people outside Vermont have sent us more than 170 comments. It kept us busy and sleepless for a couple weeks but we really benefited from these comments,” Hsiao told the House Committee on Health Care Friday afternoon. “Let me come to the bottom line: Our conclusions and recommendations did not change.”

Hsiao, commissioned by the Legislature to produce the $300,000 report, said many of the comments voiced skepticism over the financial savings he projects in the single-payer framework. Hsiao says the state would save $580 million in the first year of implementation, largely as a result of administrative efficiencies that result from the elimination of multiple insurance plans. He proposes plowing $400 million of those savings into improvements in health care infrastructure.

Hsiao assured lawmakers that the savings forecast in his nearly 200-page report are conservative.

“Our approach was to underestimate savings but also to overstate costs. Our basic premise is we do not want to mislead the Vermont Legislature and governor to do something that’s highly risky,” Hsiao said. “So if things did not work out so perfectly, you still have a margin there, and you would not face a fiscal crisis.”

For proponents of a single-payer system, Hsiao’s findings cement their commitment to pursuing a reform path that leads to publicly financed, universal care.

“Even after asking people to criticize the report in every way possible, his final recommendation doesn’t have a change in direction,” said Rep. Mike Fisher, a Lincoln Democrat.

But the path toward single-payer remains fraught with political land mines. Large businesses, including IBM, have already voiced their distaste to any health-care system that imposes a mandatory payroll tax on employers. Opposition has been particularly strong from self-insured companies, whose health plans are protected by federal law from influence by state regulations.

Hsiao proposes overcoming federal restrictions on self-insured companies by assessing a payroll tax on those employers regardless of whether their employees enroll in the state-offered benefits.

“So it’s up to employers and workers, who may not want to have double insurance,” Hsiao said.

Critics say the strategy uses the state’s broad taxing authority to strong-arm companies into submission.

Hsiao proposed the payroll tax. But the Legislature and Gov. Peter Shumlin, who began work last week on a health care bill that lays the foundation for a single-payer system in three to six years, have opted to disregard the issue of funding altogether. For now at least, lawmakers and Shumlin say the state needs to focus on cost-containment and health-care design, leaving issues of how to pay for it for later down the road.

Rep. George Till, a Jericho Democrat and practicing obstetrician, said Friday that it will be difficult to move the debate forward without broaching the issue of funding early on. Till said his concerns were confirmed by Hsiao, who on Friday said that health care delivery and health care financing need to go hand in hand.

“I don’t see how the business community buys in without knowing the financing mechanism and the financing amounts,” Till said. “And I don’t understand how the provider community buys in without knowing what they’re going to get paid.”

Rep. Mark Larson said financing the system will be an important conversation, but one that must wait until the state has a better handle on precisely how the new health care system will operate.

Larson said the biggest obstacle to health care reform is people’s fear of change, a sentiment echoed Friday by Hsiao.

“I think there’s a level of distrust and fear out there that this won’t work,” Larson said.

Larson though said the status quo — health-care expenditures are expected to rise by more than $1.2 billion over the next three years — will be far more devastating to businesses and health care providers than anything proposed in the Hsiao report.