How does the Affordable Care Act define ACOs?

Medicare “Accountable Care Organizations”

Shared Savings Program – New Section 1899 of Title XVIII

Centers for Medicare and Medicaid Services (CMS)
Office of Legislation

Preliminary Questions & Answers

The Affordable Care Act (ACA) improves the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care. One of these key delivery system reforms is the encouragement of Accountable Care Organizations (ACOs). ACOs facilitate coordination and cooperation among providers to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs. This document provides an overview of ACOs and the Medicare Shared Savings Program.

Q: What is an “accountable care organization”?

A: An Accountable Care Organization, also called an “ACO” for short, is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.

For ACO purposes, “assigned” means those beneficiaries for whom the professionals in the ACO provide the bulk of primary care services. Assignment will be invisible to the beneficiary, and will not affect their guaranteed benefits or choice of doctor. A beneficiary may continue to seek services from the physicians and other providers of their choice, whether or not the physician or provider is a part of an ACO.

Q: What forms of organizations may become an ACO?

A: The statute specifies the following:
1) Physicians and other professionals in group practices
2) Physicians and other professionals in networks of practices
3) Partnerships or joint venture arrangements between hospitals and physicians/professionals
4) Hospitals employing physicians/professionals
5) Other forms that the Secretary of Health and Human Services may determine appropriate.

Q: What are the types of requirements that such an organization will have to meet to participate?

A: The statute specifies the following:
1) Have a formal legal structure to receive and distribute shared savings
2) Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
3) Agree to participate in the program for not less than a 3-year period
4) Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
5) Have a leadership and management structure that includes clinical and administrative systems
6) Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
7) Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.

Additional details will be included in a Notice of Proposed Rulemaking that CMS expects to publish this fall.

Q: How would such an organization qualify for shared savings?

A: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount. The benchmark for each ACO will be based on the most recent available three years of per-beneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary, and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.

Q: What are the quality performance standards?

A: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Q: Will beneficiaries that receive services from a health care professional or provider that is a part of an ACO be required to receive all his/her services from the ACO?

A: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.

Q: Will participating ACOs be subject to payment penalties if their savings targets are not achieved?

A: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.

Q: When will this program begin?

A: We plan to establish the program by January 1, 2012. Agreements will begin for performance periods, to be at least three years, on or after that date.

Further details for the shared savings program will be provided in a Notice of Proposed Rulemaking which CMS expects to publish this fall.

https://www.cms.gov/OfficeofLegislation/Downloads/AccountableCareOrganization.pdf

Link to text of Sec. 1899 (under Sec. 3022) with a brief summary (plus text and summary of Sec. 2706 – Pediatric ACO Demonstration Project):
http://www.iha.org/pdfs_documents/home/IHA_PPACAACOSummary.pdf

Comment:

By Don McCanne, MD

Since enactment of the Patient Protection and Affordable Care Act (PPACA) there has been considerable enthusiasm and hype over the provisions establishing accountable care organizations (ACOs). The purpose of today’s message is to look past the hype to see precisely what PPACA says about ACOs.

Today’s quote is the explanation of the applicable section of PPACA as provided by the Centers for Medicare and Medicaid Services (CMS). A link to the precise language of the section is also provided.

Sec. 3022 Of PPACA amends Title XVIII of the Social Security Act by adding Sec. 1899, the Shared Savings Program. The title alone provides a hint of what this really is about since it is not named Accountable Care Organizations.

Many entities already exist that can be called accountable care organizations. These include group practices, networks of individual practices, partnerships or joint ventures between hospitals and health care professionals, and hospitals employing health care professionals. Under PPACA, the Secretary of Health and Human Services (HHS) can include as ACOs any other group of providers and suppliers deemed appropriate.

What the law does is to add another administrative layer that is designed to reduce costs and promote quality. The existing entities plus any new ones formed have to meet certain requirements to qualify as an ACO, and then that allows them to participate in the shared savings program.

The specific requirements:

* Willing to become accountable for the quality, cost, and overall care of
the Medicare fee-for-service beneficiaries assigned to it

* A legal structure to receive and distribute shared savings

* A leadership and management structure that includes clinical and administrative systems

* A minimum participation of 5000 patients

* A sufficient number of primary care professionals

* Agree to participate for a minimum of three years

* Define processes to promote evidence-based medicine and patient engagement, report on quality and cost measures, and coordinate care, such as through the use of telehealth, remote patient monitoring, and other such enabling technologies

* Demonstrate patient-centerness criteria specified by the Secretary

* Measure quality of clinical processes and outcomes, patient experience of care, and utilization

This program applies to patients in the traditional fee-for-service Medicare program. Patients do not enroll in the ACOs. They are assigned by the Secretary based on utilization of primary care services. The patients may not even know that they have been assigned, as they are free to go to any providers of their choice, in or out of the ACO.

The ACOs are still paid fee-for-service by Medicare just as they always have been. That doesn’t change (though an amendment authorizes the option of a partial capitation model).

So how do ACOs achieve higher quality and lower cost?

The ACOs are not rewarded monetarily for meeting the quality standards. Their motivation to comply is to avoid being suspended from the program.

Costs are reduced by the shared savings program. A benchmark is established for each ACO “using the most recent available 3 years of per-beneficiary expenditures for parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO.” If the ACO can provide care for costs below the benchmark, the ACO then shares those savings with HHS. The benchmark is reset at the beginning of each 3 year agreement.

If the costs are above the benchmark, then the fees are still paid as usual, with no adjustments.

Think about this. The incentives continue to promote greater volume. There is no penalty for running the charges up. Is the reward for reducing the volume and intensity of services enough? Since fixed costs for the ACO are relatively unchanged, the reductions in marginal overhead expenses due to reduced volume must be greater than the amount of savings that HHS shares with the ACO in order to come out ahead. Since this is the opposite of “making it up in volume,” it is more likely that net income will be reduced. Further, since the benchmarks are reset every 3 years based on lower utilization, it is very unlikely that that the ACO could continue to ratchet down services to qualify for shared savings.

Some models of integrated health systems function well and should be encouraged as long as the goal is higher quality and greater value, while shunning policies that provide perverse incentives for greater profits by reducing beneficial health care services. But why would a well-functioning integrated health care system want to add an additional administrative layer, with additional quality-reporting requirements, just to be designated as an ACO, especially when the net result likely reduces the bottom line?

It is truly unfortunate that the fervor and hype over ACOs have provided yet one more distraction from the important task at hand. We need to replace our flawed health care financing system with one that works – a single payer national health program. That would include everyone of us in a quality system that we could pay for.

How does the Affordable Care Act define ACOs?

Medicare “Accountable Care Organizations”

Shared Savings Program – New Section 1899 of Title XVIII

Centers for Medicare and Medicaid Services (CMS)
Office of Legislation

Preliminary Questions & Answers

The Affordable Care Act (ACA) improves the health care delivery system through incentives to enhance quality, improve beneficiary outcomes and increase value of care. One of these key delivery system reforms is the encouragement of Accountable Care Organizations (ACOs). ACOs facilitate coordination and cooperation among providers to improve the quality of care for Medicare beneficiaries and reduce unnecessary costs. This document provides an overview of ACOs and the Medicare Shared Savings Program.

Q: What is an “accountable care organization”?

A: An Accountable Care Organization, also called an “ACO” for short, is an organization of health care providers that agrees to be accountable for the quality, cost, and overall care of Medicare beneficiaries who are enrolled in the traditional fee-for-service program who are assigned to it.

For ACO purposes, “assigned” means those beneficiaries for whom the professionals in the ACO provide the bulk of primary care services. Assignment will be invisible to the beneficiary, and will not affect their guaranteed benefits or choice of doctor. A beneficiary may continue to seek services from the physicians and other providers of their choice, whether or not the physician or provider is a part of an ACO.

Q: What forms of organizations may become an ACO?

A: The statute specifies the following:
1) Physicians and other professionals in group practices
2) Physicians and other professionals in networks of practices
3) Partnerships or joint venture arrangements between hospitals and physicians/professionals
4) Hospitals employing physicians/professionals
5) Other forms that the Secretary of Health and Human Services may determine appropriate.

Q: What are the types of requirements that such an organization will have to meet to participate?

A: The statute specifies the following:
1) Have a formal legal structure to receive and distribute shared savings
2) Have a sufficient number of primary care professionals for the number of assigned beneficiaries (to be 5,000 at a minimum)
3) Agree to participate in the program for not less than a 3-year period
4) Have sufficient information regarding participating ACO health care professionals as the Secretary determines necessary to support beneficiary assignment and for the determination of payments for shared savings.
5) Have a leadership and management structure that includes clinical and administrative systems
6) Have defined processes to (a) promote evidenced-based medicine, (b) report the necessary data to evaluate quality and cost measures (this could incorporate requirements of other programs, such as the Physician Quality Reporting Initiative (PQRI), Electronic Prescribing (eRx), and Electronic Health Records (EHR), and (c) coordinate care
7) Demonstrate it meets patient-centeredness criteria, as determined by the Secretary.

Additional details will be included in a Notice of Proposed Rulemaking that CMS expects to publish this fall.

Q: How would such an organization qualify for shared savings?

A: For each 12-month period, participating ACOs that meet specified quality performance standards will be eligible to receive a share (a percentage, and any limits to be determined by the Secretary) of any savings if the actual per capita expenditures of their assigned Medicare beneficiaries are a sufficient percentage below their specified benchmark amount. The benchmark for each ACO will be based on the most recent available three years of per-beneficiary expenditures for Parts A and B services for Medicare fee-for-service beneficiaries assigned to the ACO. The benchmark for each ACO will be adjusted for beneficiary characteristics and other factors determined appropriate by the Secretary, and updated by the projected absolute amount of growth in national per capita expenditures for Part A and B.

Q: What are the quality performance standards?

A: While the specifics will be determined by the HHS Secretary and will be promulgated with the program’s regulations, they will include measures in such categories as clinical processes and outcomes of care, patient experience, and utilization (amounts and rates) of services.

Q: Will beneficiaries that receive services from a health care professional or provider that is a part of an ACO be required to receive all his/her services from the ACO?

A: No. Medicare beneficiaries will continue to be able to choose their health care professionals and other providers.

Q: Will participating ACOs be subject to payment penalties if their savings targets are not achieved?

A: No. An ACO will share in savings if program criteria are met but will not incur a payment penalty if savings targets are not achieved.

Q: When will this program begin?

A: We plan to establish the program by January 1, 2012. Agreements will begin for performance periods, to be at least three years, on or after that date.

Further details for the shared savings program will be provided in a Notice of Proposed Rulemaking which CMS expects to publish this fall.

https://www.cms.gov/OfficeofLegislation/Downloads/AccountableCareOrganization.pdf

Link to text of Sec. 1899 (under Sec. 3022) with a brief summary (plus text and summary of Sec. 2706 – Pediatric ACO Demonstration Project):
http://www.iha.org/pdfs_documents/home/IHA_PPACAACOSummary.pdf

The specific requirements:

* Willing to become accountable for the quality, cost, and overall care of the Medicare fee-for-service beneficiaries assigned to it

* A legal structure to receive and distribute shared savings

* A leadership and management structure that includes clinical and administrative systems

* A minimum participation of 5000 patients

* A sufficient number of primary care professionals

* Agree to participate for a minimum of three years

* Demonstrate patient-centerness criteria specified by the Secretary

* Measure quality of clinical processes and outcomes, patient experience of care, and utilization

The ACOs are still paid fee-for-service by Medicare just as they always have been. That doesn’t change (though an amendment authorizes the option of a partial capitation model).

So how do ACOs achieve higher quality and lower cost?

The ACOs are not rewarded monetarily for meeting the quality standards. Their motivation to comply is to avoid being suspended from the program.

If the costs are above the benchmark, then the fees are still paid as usual, with no adjustments.

Rep. Ryan's roadmap for Medicare

A Roadmap for America's Future, Version 2.0

A plan to solve America’s long-term economic and fiscal crisis

By Representative Paul D. Ryan, Ranking Member, Committee on the Budget
January 2010

A Medicare Program for the 21st Century.

The entire methodology of the program must be converted away from a program that shelters providers and consumers from prices – and is therefore inefficient in restraining rising costs – into one in which beneficiaries choose the most affordable coverage that best suits their needs.

For future Medicare beneficiaries who are now under 55 or younger, the proposal creates a standard Medicare payment to be used for the purchase of private health coverage. The payment will be made directly to the health plan designated by the beneficiary (similar to the administration of the refundable health care tax credit), with the beneficiary receiving any leftover amount as a payment from the health plan, or assuming financial responsibility for any difference in the payment and the total cost of the premium.

Each Medicare beneficiary becomes eligible for the payment by enrolling in a health insurance plan. Medicare will publish an annual list of plans that are “Medicare certified.” Medicare enrollees are able to use their payment to pay for one of the Medicare certified plans, or any other plan, such as those offered by former employers or available from the private market.

For affected beneficiaries, the payment replaces all components of the current Medicare Program (Medicare fee-for-service, Medicare Part B, Medicare Advantage, and Medicare Part D). Payment amounts are income-related and risk-adjusted.

For individuals now younger than 55 only, the proposal adapts Medicare’s eligibility age to reflect Americans’ improving lifespans, raising in gradually, and in modest steps, from the current 65 to 69 years and 6 months.

The proposal would establish a mechanism that would be activated if the Medicare trustees determined that the percentage of funding from general revenues exceeded 45 percent in the prior fiscal year. …the mechanism would apply an automatic 1-percent reduction in payments for services provided in Medicare’s fee-for-service sector.

http://www.roadmap.republicans.budget.house.gov/UploadedFiles/Roadmap2Final2.pdf

And…

Statement to the Commission on Deficit Reduction

By James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Governnment/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin
June 30, 2010

You are plainly not equipped by disposition or resources to take on the true cause of deficits now and in the future: the financial crisis. Recommendations based on CBO’s unrealistic budget and economic outlooks are destined to collapse in failure. Specifically, if cuts are proposed and enacted in Social Security and Medicare, they will hurt millions, weaken the economy, and the deficits will not decline. It’s a lose-lose proposition, with no gainers except a few predatory funds, insurance companies and such who would profit, for some time, from a chaotic private marketplace.

http://www.fiscalcommission.gov/meetings/public-forum/additional/James_Galbraith.pdf

Comment:

By Don McCanne, MD

If the Republicans regain control of the House of Representatives in the election next week, as some experts predict, Rep. Paul Ryan will likely become Chairman of the Committee on the Budget. This will coincide with the release of the report from the Commission on Deficit Reduction – a report that many fear will recommend changes that would make significant cuts in the Medicare program. Clearly, Medicare is under threat.

Rep. Ryan is being touted as a brilliant wonder boy who has crafted a budget proposal, “A Roadmap for America’s Future,” that would return the government to solvency. Not only is the fundamental premise incorrect, he has introduced no new concepts, but rather a rehash of old proposals to privatize programs which the government is better suited to deliver.

His proposal for Medicare is to eliminate the government program as a defined benefit and substitute vouchers for private health plans as a defined contribution that shifts more risks to Medicare beneficiaries. He would also postpone eligibility until age 69 and a half (even he choked on 70).

He claims that the problem is that Medicare “shelters consumers from prices,” but that isn’t true. Medicare has deductibles and coinsurance that can result in considerable out-of-pocket expenses. It is the private sector plans – Medigap, retirement plans, Medicare Advantage plans – that tend to reduce the out-of-pocket spending. Most Medicare beneficiaries have such coverage, especially the Medigap plans.

Rep. Ryan is not calling for more sensitivity to health care prices; he is calling for more sensitivity to insurance premiums. By holding down the government contribution, most Medicare beneficiaries will be forced to buy plans with fewer benefits because that is all that they can afford. What a cruel and inhumane approach to financing health care. As Prof. James Galbraith says, cuts in Medicare “will hurt millions.”

Almost everyone recognizes that Medicare benefits are insufficient, and that is why so many purchase Medigap plans. But are Medigap plans a reasonable approach to expand coverage? They provide one of the worst values in private insurance coverage. They are terribly overpriced considering the benefits provided. It would be far better and overall less expensive to roll over the Medigap and Part D drug benefits into the traditional Medicare program, and then eliminate Medigap, Part D, and the Medicare Advantage plans.

We need to change the national dialogue. The current discussion is about pulling back on Medicare – the wrong discussion. We need to get the word out about what a rip-off the private sector plans are. We need to get rid of them by improving Medicare and making them unnecessary. Once we’ve done that then we need to get the word out about how our improved Medicare would be a better program for everyone.

Rep. Ryan’s roadmap for Medicare

A Roadmap for America’s Future, Version 2.0

A plan to solve America’s long-term economic and fiscal crisis

By Representative Paul D. Ryan, Ranking Member, Committee on the Budget
January 2010

A Medicare Program for the 21st Century.

http://www.roadmap.republicans.budget.house.gov/UploadedFiles/Roadmap2Final2.pdf

And…

Statement to the Commission on Deficit Reduction

By James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Governnment/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin
June 30, 2010

http://www.fiscalcommission.gov/meetings/public-forum/additional/James_Galbraith.pdf

Comment:

By Don McCanne, MD

Rep. Ryan’s roadmap for Medicare

A Roadmap for America’s Future, Version 2.0

A plan to solve America’s long-term economic and fiscal crisis

By Representative Paul D. Ryan, Ranking Member, Committee on the Budget
January 2010

A Medicare Program for the 21st Century.

The entire methodology of the program must be converted away from a program that shelters providers and consumers from prices – and is therefore inefficient in restraining rising costs – into one in which beneficiaries choose the most affordable coverage that best suits their needs.

For future Medicare beneficiaries who are now under 55 or younger, the proposal creates a standard Medicare payment to be used for the purchase of private health coverage. The payment will be made directly to the health plan designated by the beneficiary (similar to the administration of the refundable health care tax credit), with the beneficiary receiving any leftover amount as a payment from the health plan, or assuming financial responsibility for any difference in the payment and the total cost of the premium.

Each Medicare beneficiary becomes eligible for the payment by enrolling in a health insurance plan. Medicare will publish an annual list of plans that are “Medicare certified.” Medicare enrollees are able to use their payment to pay for one of the Medicare certified plans, or any other plan, such as those offered by former employers or available from the private market.

For affected beneficiaries, the payment replaces all components of the current Medicare Program (Medicare fee-for-service, Medicare Part B, Medicare Advantage, and Medicare Part D). Payment amounts are income-related and risk-adjusted.

For individuals now younger than 55 only, the proposal adapts Medicare’s eligibility age to reflect Americans’ improving lifespans, raising in gradually, and in modest steps, from the current 65 to 69 years and 6 months.

The proposal would establish a mechanism that would be activated if the Medicare trustees determined that the percentage of funding from general revenues exceeded 45 percent in the prior fiscal year. …the mechanism would apply an automatic 1-percent reduction in payments for services provided in Medicare’s fee-for-service sector.

http://www.roadmap.republicans.budget.house.gov/UploadedFiles/Roadmap2Final2.pdf

And…

Statement to the Commission on Deficit Reduction

By James K. Galbraith, Lloyd M. Bentsen, jr. Chair in Governnment/Business Relations, Lyndon B. Johnson School of Public Affairs, The University of Texas at Austin
June 30, 2010

You are plainly not equipped by disposition or resources to take on the true cause of deficits now and in the future: the financial crisis. Recommendations based on CBO’s unrealistic budget and economic outlooks are destined to collapse in failure. Specifically, if cuts are proposed and enacted in Social Security and Medicare, they will hurt millions, weaken the economy, and the deficits will not decline. It’s a lose-lose proposition, with no gainers except a few predatory funds, insurance companies and such who would profit, for some time, from a chaotic private marketplace.

http://www.fiscalcommission.gov/meetings/public-forum/additional/James_Galbraith.pdf

Tea Party Inc.: The Big Money and Powerful Elites Behind the Right Wing's Latest Uprising

By Adele M. Stan
AlterNet/The Investigative Fund at The Nation Institute, October 26, 2010

This article was reported in collaboration with The Investigative Fund at The Nation Institute.

Win or lose, the Tea Party movement will come away from next week’s elections triumphant, having injected into the Republican Party a group of candidates pledged to the dismantling of government and wed to the religious right. Of the movement’s dozen favored candidates for U.S. Senate, all are anti-abortion, and five oppose it even in cases of rape and incest. Among their number are Colorado’s Ken Buck, who has compared homosexuality to alcoholism, and Nevada’s Sharron Angle, who wants to demolish both the Department of Education and the Environmental Protection Agency. Major GOP players, from political strategist Karl Rove to former Bush speechwriter David Frum, have fretted publicly over Tea Party extremism, with Frum complaining of the movement’s “paranoid delusions.”

But it has now become clear that these Tea Party “outsiders” are all part of an inside game, a battle for control of the Republican party.

Though billed as a people’s movement, the Tea Party wouldn’t exist without a gusher of cash from oil billionaire David H. Koch and the vast media empire of Rupert Murdoch. Many of the small donations to Tea Party candidates have been cultivated by either Fox News Channel, a property of Murdoch’s News Corporation, or the Americans for Prosperity Foundation, chaired by Koch. The movement’s major organizations are all run, not by first-time, mad-as-hell activists, but by former GOP officials or operatives.

Taken together, Americans for Prosperity, FreedomWorks (another far-right political group seeded by the Kochs) and Murdoch’s News Corp, owner of Fox News and the Wall Street Journal, form the corporate headquarters of a conglomerate one might call Tea Party, Inc. This is the syndicate that funds the organizing, crafts the messages, and channels the rage of conservative Americans at their falling fortunes into an oppositional force to President Obama and to any government solution to the current economic calamity. Groups such as Tea Party Express, Tea Party Nation, and the FreedomWorks-affiliated Tea Party Patriots; the bevy of political consultants for hire; and various allied elected officials can be understood as Tea Party, Inc.’s loosely affiliated subsidiaries. The Web sites of FreedomWorks, Americans for Prosperity and the Tea Party side projects of Fox News Channel’s Glenn Beck are linked with those of Tea Party Express and Tea Party Patriots, all of which in turn solicit support for Tea Party candidates.

The armies of angry white people with their “Don’t Tread on Me” flags, the actual grassroots activists, are not the agents of the Tea Party revolt, but its end users, enriching the Tea Party’s corporate owners just as you and I enrich Google through our clicks.

Coming Out Party

Tea Party, Inc. was on full display in our nation’s capital in late August, when Glenn Beck gathered his angry white multitudes at the Lincoln Memorial on the anniversary of Martin Luther King’s historic “I Have a Dream” speech. The tens of thousands of Tea Partiers who showed up for this political revival were mobilized by untold hours of free promotion on Murdoch’s network, while a related “Take America Back” convention, held the day before at Constitution Hall, was convened by FreedomWorks.

At that event, the crowd was treated to a trailer for a forthcoming film called Runaway Slave, narrated by Rev. C.L. Bryant, an African-American pastor from Louisiana identified as “a former NAACP radical,” who made the case that liberalism is yet another means of enslaving black people.

“[I]n the black community,” Bryant says in the film, “there’s always somebody who’s gotta keep them niggers in control.” A photo of Jesse Jackson flashed on the screen. Then one of Al Sharpton. Some images flashed by so quickly that they were barely discernable. One was of a wriggling maggot.

Before the night was out, Glenn Beck himself graced the stage, asking the crowd to “expect miracles” at the next day’s rally.

A few miles away, a more sedate crowd was jammed into a Marriott ballroom for a gala dinner that wrapped up yet another activist conference, the Defending the American Dream Summit, this one convened by the Americans for Prosperity Foundation. Striding toward the podium to the opening strains of “New York, New York” was chairman Koch. Tall and dapper in a precisely tailored dark suit, the 70-year-old stood in sharp contrast to the 2,500 middle-class women in pastel frocks and men in department-store sport coats who populated the ballroom tables.

Koch prefers to be known for the hundreds of millions he lavishes on his adopted city’s cultural institutions — the New York City Ballet, the Metropolitan Museum of Art, and the Metropolitan Opera, to name a few. But the quieter largess behind events like these, dispensed by David Koch and his brother Charles, has reshaped Washington, D.C., and our national politics. Though Americans for Prosperity, which he founded, and its foundation, whose board he chairs, have been instrumental in organizing the Tea Party movement, Koch still publicly claims to have no Tea Party ties, making tonight’s appearance notable.

“Six years ago, when we launched this organization,” he said in his uneasy and halting style, “we envisioned a grassroots organization of Americans from all walks of life banded together to advance economic freedom and prosperity by limiting government’s reach, and curbing government’s growth, reining in government spending. We envisioned an organization that would boldly and unapologetically defend the free-market economy. The Tea Party is Koch’s dream come true; the Washington summit, he told attendees, was designed to train grassroots activists in the defense of the “free-market economy” and “to send a message to the political class that these activists [are] energized and watching” its members.

The Capitol Hill Franchise

The self-appointed head of Tea Party, Inc.’s Capitol Hill division is the junior senator from South Carolina, Jim DeMint. DeMint is the top Senate recipient of donations from the Koch Industries’ PAC, reeling in $22,000 in the current election cycle for a race he stands virtually no chance of losing. The Kochs’ PAC is also the number three donor to DeMint’s PAC, the Senate Conservatives Fund, which he spends on other races.

In DeMint, the Kochs found a politician who will make no compromises on their far-right agenda, favoring tax cuts and opposing health-care reform, green energy, labor unions and regulation of any kind. Last year, DeMint received the Americans for Prosperity Foundation’s George Washington Award, bestowed upon the senator by Koch himself. Speaking at the organization’s summit in August, Koch said DeMint “has consistently stood for freedom against this big-government agenda.” In backing DeMint’s power play against leaders of the Republican establishment, particularly his challenge to the power of Senate Minority Leader Mitch McConnell, the Kochs stand poised to push those establishment leaders into the same uncompromising positions.

Echoing DeMint’s agenda are Rep. Michele Bachmann, a Minnesota Republican who, in July, founded a Tea Party Caucus in the House of Representatives, and Rep. Mike Pence, a Republican from Indiana, who is House GOP conference chairman and a charter member of the new caucus. Both are Tea Party favorites, and Bachmann is a regular speaker at Americans for Prosperity events. At the Americans for Prosperity Foundation’s RightOnline conference, held in Las Vegas in July, Pence used a luncheon address to make the case for melding the free-market Tea Party agenda with the values of the religious right, while Bachmann entertained a banquet crowd with herplan to phase out Social Security
.

FreedomWorks has its eye on a political transformation in the Senate, and is closely allied with DeMint, whose PAC is spending hundreds of thousands of dollars on behalf of many of the same Tea Party-backed Senate candidates endorsed by the FreedomWorks PAC, including Sharron Angle (currently in a tight race against Senate Majority Leader Harry Reid), Rand Paul in Kentucky, Marco Rubio in Florida, and Utah’s Mike Lee. (Bachmann’s Tea Party Caucus was announced the day after Paul, addressing FreedomWorks activists on a July 13 conference call, suggested a Tea Party caucus for the Senate.) Each of these candidacies began as primary challenges to establishment Republicans endorsed by McConnell.

In September, Huffington Post political columnist Sam Stein cited a Democratic strategist who said that by the midterms’ close, Americans for Prosperity will have spent $45 million on organizing “voter education” and get-out-the-vote activities that test the limits of legal nonprofit expenditures. Actually, Americans for Prosperity president Tim Phillips told me his plan was to raise and spend even more, though he wouldn’t name a figure. Even the lesser amount, according to tax filings, would represent a tripling of its funds since 2008.

FreedomWorks also hopes to triple its revenue, from $3 million in 2008, according to tax filings, to an anticipated $10 million this election cycle, according to Adam Brandon, the group’s communications director. In a fundraising video sent by FreedomWorks to new members, leaders announce that every dollar raised will be matched by an unnamed donor. Both Brandon and Koch Industries spokesperson Melissa Cohlmia say that FreedomWorks has received no funding from the Kochs or their foundations since 2004, so there is likely another high-roller involved. But neither FreedomWorks nor Americans for Prosperity,nor its foundation, is required by law to disclose its donors and — like advocacy organizations across the political spectrum — they don’t.

At any rate, the vast expenditures on organizing have worked in at least one way: FreedomWorks’ membership had reached nearly 1.1 million by mid-October, according to the group’s Web site ticker. Americans for Prosperity claims 1.5 million members and chapters in 31 states.

Both groups excel at training activists and spreading the word for Tea Party candidates, who have raked in a significant portion of their campaign donations from small donors, according to the Center for Responsive Politics. When Angle’s campaign announced earlier this month that it had raised a whopping $14 million since June, spokesperson Jarrod Agen told the Washington Post that 96 percent of those donations were $200 or less. (At press time, neither Angle nor the FEC had released official filings.)

One “voter education” exercise I witnessed was the dispatch of participants in July’s RightOnline conference to canvass the Las Vegas suburbs, armed with a script about Harry Reid. “Reid voted for the failed $800 billion stimulus plan that has wasted our tax dollars on more government,” it read. “Reid’s policies will make government bigger, waste more money, drive up budget deficits and kill jobs.”

The canvassers had just heard Angle, Reid’s opponent, deliver the conference’s closing speech. But as they boarded vans for their deployments, they were reminded this was, of course, a nonpartisan exercise ” since the Americans for Prosperity Foundation, a nonprofit, is forbidden from endorsing candidates.

The Money Men

The Tea Party’s two major patrons are fabulously wealthy. David Koch is heir to the fortunes of Koch Industries, described in 2008 by Fortune as the largest privately held corporation in the United States, and was ranked by Forbes as one of the world’s richest people, with an estimated personal wealth of $17.5 billion. Rupert Murdoch, founder and CEO of News Corp — ranked by Fortune as world’s second-largest entertainment company — was also rated by Forbes among the world’s wealthiest, with personal wealth of $6.3 billion.

Koch Industries, with David as executive vice-president and his brother Charles as CEO, presides over a vast conglomerate of oil and gas interests, as well as holdings in timber and chemicals. Since the 1970s, the two men have funded and controlled a large network of right-wing institutions, launching the libertarian Cato Institute in 1977 and the Mercatus Institute in 1985, all of which advocate business deregulation under the rubric of “free markets.”

Both cornerstones of Tea Party Inc. — FreedomWorks and the two entities comprising Americans for Prosperity — sprang from Koch’s riches. FreedomWorks rose from the ashes of Citizens for a Sound Economy, an early Astroturf group and think tank he founded during the Reagan years to advocate for lower taxes, less regulation, and smaller government. CSE was rebranded as FreedomWorks in 2004, after a corporate-style merger with Empower America, founded by the late Republican Congressman Jack Kemp to limit government and privatize government services.

That same year, Koch rebranded CSE’s foundation as the Americans for Prosperity Foundation and founded its sibling organization, Americans for Prosperity.[i] Koch hired the politically connected Tim Phillips to serve as president of both organizations. (Phillips is a business partner of former Christian Coalition director Ralph Reed in a political consulting firm, Century Strategies, which was implicated, but never charged, in the bribery scandal that sent Jack Abramoff to prison.)

Koch and his allies built the underpinnings for a movement not quite ready to be born. The absent ingredient was rage. But by 2009, with the collapse of the economy and the election of the nation’s first African-American president, the supply chain of rage was complete, and the Tea Party came roaring to life. Rupert Murdoch gave the new movement legitimacy by means of sympathetic columns in the Wall Street Journal, boosterism from Sean Hannity and Glenn Beck and a regular media platform on Fox News Channel for Tea Party personalities and candidates. As Jane Mayer remarked in her New Yorker profile of the Kochs, the Tea Party had at last turned their private agenda into a mass movement.

The role of these groups in launching the movement is indisputable. In concert with Glenn Beck’s 912 Project, FreedomWorks did the logistical organizing for the first Tea Party march on Washington, in September 2009. Beck launched the 912 Project on his Fox News Channel show, promoted the march on his show and mobilized for it through a social networking Web site built by his production company.

Since then, the groups have been tearing through the Murdoch-Koch agenda. Americans for Prosperity says it convened, through an offshoot, some 300 rallies against health-care reform, and once the healthcare bill was passed in March, the organization quickly moved to block cap-and-trade as a means of regulating carbon emissions. In fact, at an Americans for Prosperity Foundation conference I attended in Pittsburgh in August 2009, cap-and-trade was already being introduced as the next Tea Party battle. This is a longstanding priority for Koch Industries, a major polluter heavily invested in old energy technologies. In a March 2010 report, Greenpeace said that, over the years, the Koch brothers have “quietly funneled” nearly $50 million to “climate-denial front groups that are working to delay policies and regulations aimed at stopping global warming.”

Wall Street Journal columnist Stephen Moore — a member of the newspaper’s editorial board and a former fellow at the Koch-funded Cato Institute — told the gathering of Tea Party activists he thought global warming was “the greatest hoax of the last 100 years.” He called the climate change agenda “not just evil, butcontrary to the free-market system that made this country great.”

The Media Storm

It is not unusual for op-ed pages to reflect the bias of an outlet
‘s owners. It is highly unusual, however, for news operations to engage in outright political organizing on behalf of a CEO’s agenda. Yet that’s just what certain Fox News hosts and Wall Street Journal columnists seem to be doing on behalf of Rupert Murdoch, who is opposed to regulation of any kind, hates taxes, and despises labor unions — having famously broken unions at his UK newspapers.

News Corp’s best-known personalities accomplish this by working hand in glove with the like-minded ideologues at Americans for Prosperity. Fox News hosts, along with Stephen Moore and fellow Wall Street Journal columnist John Fund, are regular speakers at conferences sponsored by the Americans for Prosperity Foundation. At the group’s 2009 RightOnline conference, a third of the plenary speakers were News Corp writers and pundits, including Moore and Fund, as well as Jim Pinkerton and Michelle Malkin, who were paid Fox commentators at the time. Fox News personality John Stossel spoke against health-care reform at three rallies sponsored by Americans for Prosperity, while Sean Hannity, host of a prime-time Fox News show, live-broadcast Americans for Prosperity’s 2009 Tax Day protest in Atlanta — and the network preempted regular programming to present it. Moore and Fund also shill for the foundation’s anti-regulatory “worker education” project, known as Prosperity101.

The door swings the other way as well. By means of his regular presence on Fox’s airwaves and column at the FoxNation Web site, Americans for Prosperity vice president Phil Kerpen was instrumental in building the case against Obama green jobs adviser Van Jones, who was ultimately forced to resign his White House post.

At last year’s RightOnline conference, I asked Americans for Prosperity president Tim Phillips if his group worked in partnership with News Corp, given the presence of so many of its personalities on the roster.

“Not at all, not at all,” he replied with a laugh. “The fact is, the Wall Street Journal’s my favorite newspaper; I love those guys. I like what they write. I look at Steve Moore and John Fund, and those are two of the smartest guys. But there’s no partnership — financially, understood, or anything else.”

News Corp enjoys a similarly friendly — if similarly informal — relationship with FreedomWorks. In early October, FreedomWorks was promoting its Take America Back campaign — a get-out-the-vote effort — with a photo of Glenn Beck standing before his iconic blackboard. The FreedomWorks’ Web site also featured an audio message from Beck: “I’ve been sayin’ it for weeks. If you care about freedom, you must get involved. If you really want to end tyranny in Washington, you must get involved. And the group you need to find out about is FreedomWorks. Take America back — FreedomWorks.org.” Just days ago, Beck’s image was used in a splash screen to solicit contributions for FreedomWorks’ PAC.

To Rupert Murdoch, Glenn Beck is much more than a broadcaster; he’s Murdoch’s lead community organizer. His show has leached revenue since the civil rights group Color of Change launched a boycott of his advertisers, reportedly chasing away at least 100. But his act is far more profitable to News Corp in another way — by creating the conditions for a stripping away of federal regulations that limit the growth of News Corp and its bottom line. And so Beck’s rants become more shrill and his claims more preposterous, whether he is stoking racial fears or recalling that old bogeyman threat of looming socialism — a theme straight out of the John Birch Society, of which the Kochs’ father, Fred, was a founding member.

The Campaigns

In Washington, D.C., Adam Brandon, FreedomWorks’ communications director, is bubbling over with excitement at the end of a long, hot July day. “I’m racking up the frequent flyer miles,” he says of his relentless weekend trips to train Tea Party activists in how to chalk up wins for candidates FreedomWorks’ PAC has endorsed.

FreedomWorks doesn’t aim to elect just any Tea Party candidate to office: as with DeMint’s Senate Conservatives Fund, its endorsements seem designed to undermine the current GOP establishment, push the party rightward and further an anti-regulatory agenda. Well before others joined in, FreedomWorks embraced far-right insurgencies, notably those of Marco Rubio and Rand Paul. Both endorsements put FreedomWorks at loggerheads with Sen. McConnell, whose candidates — including his hand-picked protg in his home state of Kentucky — were vanquished.

DeMint’s PAC spends hefty amounts on behalf of its endorsed candidates, including $447,000 for Rubio and $95,000 for Paul ($95,000). FreedomWorks matches DeMint’s cash with ground forces. The PAC runs an online “service center,” where, according to FreedomWorks president Matt Kibbe, Tea Partiers “get the tools they need to turn a protest into a sophisticated, turn-out-the-vote effort.” Those tools include walking maps, door-hangers, talking points, and “a sophisticated phone-banking system that is going to allow you to make calls in all of our targeted races.” If you’re an activist in Wisconsin, FreedomWorks can set you up to turn out voters for Rand Paul in Kentucky. Combined, these Tea Party outfits have proven that they have the potential to decide elections.

When I asked whether FreedomWorks’ endorsements were chosen in part to undermine McConnell, Brandon declined to answer directly, but his response revealed the intimate ties between his outfit and DeMint’s. DeMint has been stalwart on behalf of FreedomWorks’ positions, Brandon explained. These include opposition to healthcare and energy reform and labor unions. But DeMint needs more people like him in the Senate in order to create something of a caucus — “a new power center,” Brandon called it.

Their combined might was recently on display in Utah, where DeMint and FreedomWorks joined forces to replace incumbent Republican Senator Bob Bennett. DeMint’s PAC and FreedomWorks’ PAC each rank among the top twelve donors to Bennett’s challenger, Tea Partier Mike Lee.

In Utah, candidates must win delegates at their state party convention; primaries take place only if a run-off is needed. So FreedomWorks helped pack the convention with Tea Party-allied delegates, and Lee showed convention-goers a video endorsement by DeMint. Bennett lost his seat that day, coming in third with 26 percent of the vote. (The remainder was split between Lee and another Tea Party candidate.) Lee prevailed in the subsequent two-way primary, with more help from DeMint’s PAC, which has spent $315,000on his behalf, including $184,000 in so-called “independent expenditures,” according to FEC filings.

Suppliers and Subsidiaries

While Americans for Prosperity, FreedomWorks and News Corp run the boardroom of Tea Party, Inc., a growing number of national organizations have sprung up to provide a range of services; call them the suppliers. Some have similar names — Tea Party Patriots, Tea Party Nation, Tea Party Express — though they compete ferociously. Reed’s Faith & Freedom Coalition provides a unique service to Tea Party Inc.: the promise of delivering religious-right voters to its candidates. Like the big players, these groups, too, are run by former Republican officials or political consultants.

Tea Party Patriots, perhaps the most substantial of these groups, was born of FreedomWorks, as co-founder Jenny Beth Martin points out in a FreedomWorks video, and its state chapters do the on-the-ground organizing for FreedomWorks’ agenda. Martin, a former Republican political consultant in Georgia, coordinates the group with Mark Meckler, a Northern California attorney who previously ran an online political consultancy with GOP ties.

More flamboyant is Tea Party Express, another name for Our Country Deserves Better, an anti-Obama PAC founded by Howard Kaloogian, the California attorney who orchestrated the recall of Gov. Gray Davis. The group has already wea
thered controversy — its spokesperson, radio talk-show host Mark Williams, was forced to exit the organization in July after authoring a demeaning satire of NAACP president Ben Jealous. But Tea Party Express has nevertheless raised $6.6 million this election, according to recent FEC data, making it, in the estimation of the New York Times, “the single biggest independent supporter of Tea Party candidates.” And the group has racked up primary victories for Tea Party insurgencies such as Christine O’Donnell in Delaware, who benefitted from $250,000 in Tea Party Express ad buys; Joe Miller in Alaska, who beat incumbent Lisa Murkowski with the aid of $550,000 from the group; and Angle, who has enjoyed nearly $1 million in “independent expenditure” advertising by the group, according to FEC filings.

“Sharron Angle, in my opinion, wouldn’t have won [the Republican primary] without the Tea Party Express,” California Republican consultant and Tea Party organizer Eric Odom told participants in this year’s RightOnline conference.

Reed’s Faith & Freedom Coalition, which seeks to unite the Tea Party and the religious right, is provides a unique service to Tea Party Inc.: delivery of religious-right voters to its candidates. On September 11, Reed brought together a few hundred activists for a strategy briefing at Washington, D.C.’s Mayflower Hotel. The event featured speakers from the GOP’s glory days, from Karl Rove to Newt Gingrich.There Reed instructed activists on how to “move the needle” when the polls are against you.

“We’re building databases of faith-based and fiscal conservatives in every key congressional race, U.S. Senate race or governor’s race, and a lot of targeted state legislative races,” Reed explained. “Those voters are going to be contacted an average of seven times.We’re gonna mail “em, we’re gonna phone “em, if we have an e-mail, we’re gonna e-mail “em, if we have a cell phone number, we’re gonna text-message them.And at the end, we’re gonna knock on their door.”

———–

Reed’s big announcement of his new Faith & Freedom Coalition took place in August 2009, at an Atlanta rally against health-care reform convened by Americans for Prosperity, the organization fronted by his old business partner, Tim Phillips. FreedomWorks chairman Dick Armey delivered the keynote address, and Fox News contributor Herman Cain made the business case against health-care reform.

Phillips couldn’t make it to Atlanta that day. He was stuck in Pittsburgh, at his RightOnline conference, rubbing elbows with the stars of Rupert Murdoch’s News Corp.”

http://www.state-journal.com/news/simple_article/4919566

Tea Party Inc.: The Big Money and Powerful Elites Behind the Right Wing’s Latest Uprising

By Adele M. Stan
AlterNet/The Investigative Fund at The Nation Institute, October 26, 2010

This article was reported in collaboration with The Investigative Fund at The Nation Institute.

But it has now become clear that these Tea Party “outsiders” are all part of an inside game, a battle for control of the Republican party.

Coming Out Party

Before the night was out, Glenn Beck himself graced the stage, asking the crowd to “expect miracles” at the next day’s rally.

The Capitol Hill Franchise

The Money Men

The Media Storm

It is not unusual for op-ed pages to reflect the bias of an outlet’s owners. It is highly unusual, however, for news operations to engage in outright political organizing on behalf of a CEO’s agenda. Yet that’s just what certain Fox News hosts and Wall Street Journal columnists seem to be doing on behalf of Rupert Murdoch, who is opposed to regulation of any kind, hates taxes, and despises labor unions — having famously broken unions at his UK newspapers.

The Campaigns

Suppliers and Subsidiaries

More flamboyant is Tea Party Express, another name for Our Country Deserves Better, an anti-Obama PAC founded by Howard Kaloogian, the California attorney who orchestrated the recall of Gov. Gray Davis. The group has already weathered controversy — its spokesperson, radio talk-show host Mark Williams, was forced to exit the organization in July after authoring a demeaning satire of NAACP president Ben Jealous. But Tea Party Express has nevertheless raised $6.6 million this election, according to recent FEC data, making it, in the estimation of the New York Times, “the single biggest independent supporter of Tea Party candidates.” And the group has racked up primary victories for Tea Party insurgencies such as Christine O’Donnell in Delaware, who benefitted from $250,000 in Tea Party Express ad buys; Joe Miller in Alaska, who beat incumbent Lisa Murkowski with the aid of $550,000 from the group; and Angle, who has enjoyed nearly $1 million in “independent expenditure” advertising by the group, according to FEC filings.

———–

Phillips couldn’t make it to Atlanta that day. He was stuck in Pittsburgh, at his RightOnline conference, rubbing elbows with the stars of Rupert Murdoch’s News Corp.”

http://www.state-journal.com/news/simple_article/4919566

Dismantling the NHS

By Stewart Player and Colin Leys
Red Pepper, Sept. 30, 2010

Behind the technicalities, what do the government’s plans for the NHS really mean? Stewart Player and Colin Leys expose the reality of the health service white paper.

The coalition government’s plans for the NHS represent the final conversion of healthcare into something to be bought, with really good care going to those who can pay for it and only a defined ‘package’ of free treatments, of declining quality, for everyone else.

What has already occurred with dentistry, physiotherapy, podiatry and other services will start happening across the board. ‘Top-ups’ and ‘co-payments’ will become standard. Some treatments will cease to be available freely on the NHS and have to be paid for – if you can afford it.

It’s already happening all over England, as staff and services are cut to meet the government’s demand for £20 billion ‘savings’ over the next five years. GPs are being told to refer many fewer patients to specialists.

NHS North London has decided to cut back on cataracts and hip and knee replacements. The government’s plans mean that this will become the norm, not just one-off cuts justified as a response to a crisis. Under the new plans, by 2014 NHS hospitals will no longer be answerable to the taxpayers who have paid for them over the years, and will no longer have the overriding aim of providing the best possible healthcare for the their local community.

By then they will all be businesses, competing with private hospitals and clinics for NHS patient income. To stay afloat financially they will have to cut costs, reduce staff, lower the ‘skill mix’, reduce levels of pay, focus on profitable treatments and neglect or even abandon high-cost and unrewarding ones in order to match the for-profit sector. There will also be many fewer of them.

The aim is to take chronic care out of hospitals and deal with it in non-hospital settings – ‘super-surgeries’ or clinics, largely owned and run by private companies. It will be a healthcare market, very like that in the US.

Competition

All hospitals, public and private, will be answerable only to the central regulator, Monitor, which is concerned only to ensure that they stay solvent and behave competitively.

They will be supervised for safety and quality by the Care Quality Commission, but the CQC is notoriously feeble: it gave mid-Staffordshire top marks when several hundred patients had been dying there from neglect.

The white paper says the CQC will become more demanding. But if in future it tells a hospital to raise its standards, and the finance director replies that the required improvements are unaffordable, what is supposed to happen? There will be no ‘bailouts’. The government’s view is that the hospital should either cut some services, or even close altogether, leaving patients to be treated by ‘better’, privately-owned hospitals – or perhaps in the same hospital, after it has been taken over by a private company.

That is the logic of the healthcare market the white paper envisages.

But closing a medical department or even a whole hospital isn’t like closing a department in a department store, or the store as a whole. There are rarely adequate alternative facilities within reach. Letting hospitals fail means chaos, anxiety and serious risks for patients and their families.

And what if the private company’s services turn out to be no better? The quality record of the privately-owned Independent Sector Treatment Centres (ISTCs), set up and subsidised at huge public expense by Alan Milburn during his time as health minister to treat NHS-funded patients, is notoriously worse than that of NHS hospitals doing similar work.

Whether it is healthcare or home care or schools, good public services for all must come in the end from a service ethic on the part of staff who are not in it for the money, and management who are not in it for shareholders (or forced to compete with companies that are run for shareholders). Outside regulation has a part to play, but without the core commitment that comes from being part of a national service that expresses the solidarity of society – in the case of health, the solidarity of all the well with all the sick – equally good services for everyone will soon be a thing of the past.

Commissioning

The proposed change that has attracted most attention is the shift of commissioning from Primary Care Trusts (PCTs) to ‘local consortia of GP practices’. This is being done on the grounds that ‘primary care professionals’ are best placed to know what is best for patients, and will engage in ‘more effective dialogue and partnership with hospital specialists’. Who could object to that?

You do wonder why PCTs haven’t previously been told to organise such a dialogue between GPs and specialists; but the more important point is that GPs can’t in fact do commissioning.

‘Commissioning’ is Department of Health-speak for purchasing, and what it means in practice is setting the terms of what exactly will be paid for: what services will be covered, how they will be delivered, by clinicians with what sorts of qualifications, following what protocols, with what limits on length of stay in hospital, prescribing what drugs and rehabilitation programmes, and so on. These so-called ‘care pathways’ are at the heart of commissioning, or buying healthcare. The payments are per-patient, at pre-agreed prices for each kind of treatment package.

And to ensure that the deal pays off, any variation from the agreed protocols must be cleared with the commissioner or purchaser. This is the meaning of the ‘managed care’ operated by America’s notorious HMOs (health maintenance organisations), in which doctors have to plead with the HMO to be allowed to go ahead with a needed treatment that the HMO says is unnecessary, in reality because it will cost more than the HMO wants to pay.

Viewers of Michael Moore’s film Sicko will remember a doctor who used to work for an HMO telling a congressional committee how she was paid a bonus according to how often she denied treatments to patients. The new ‘GP consortia’ may not go so far as to reward their staff on this basis. But they will have limited budgets, and the way they are supposed to reduce costs is precisely to involve themselves in the details of all the treatments they are going to pay for. Someone will have the job of denying something.

Two big deceptions

1 Who will really run the new GP consortia?

Some GPs are said to be keen to take on commissioning. But the work involved is essentially commercial, not medical. The new consortia will have to employ large teams of administrators, lawyers and others to negotiate, make contracts, monitor performance, send out bills, do audits, deal with disputes, and so on – as PCTs are already doing.

That is the first big deception involved in this change. It sounds as if GPs will be doing the work, when in fact the essential job of buying hospital and other services involves a vast range of tasks that practising GPs can’t possibly do, and aren’t trained to do – even if they decided to stop treating patients altogether.

In fact, the work calls for skills developed in the managed care industry in the US. The English healthcare market is going to be run on the principles developed there, not by the GPs whose ‘pivotal and trusted role’ is supposed to be central to it.

The change will also mean that GPs will be nominally responsible for the
£20 billion of service cuts that are already starting to be made. How trusted will they still be after that? That remains to be seen.

2 The cost of commissioning

The second big deception is that focusing on who does the commissioning prevents a crucial question from being asked: that is, why do commissioning at all?

Running health services as a market is far more costly than running them as a public service. The Department of Health commissioned a study of the NHS’s administrative costs. Based on 2003 data, the authors found that administration absorbed about 14 per cent of the total budget, up from 5 per cent in the 1970s before the marketisation process began.

The department sat on the report for five years. It only came to light in 2010, by which time ‘payment by results’ (payment for every individual completed hospital ‘episode’) and other major additional market elements had also been introduced. The share of administrative costs is now probably more like 18 per cent or more.

The ideologues behind the Tory plan maintain that competition makes healthcare providers more efficient. But the evidence from the US suggests the opposite.

There is a good reason why this is so. Good healthcare is above all a matter of having enough, highly-trained staff; yet employing fewer, cheaper staff is the only way to make money out of it.

In reality, the plan to turn the National Health Service into a healthcare market does not rest on rational arguments but material interests. Any realistic strategy to resist the Tory plans must start out from that fact: the plans are not really new, but are the culmination of a decade-long campaign by the private health industry to get its hands on the NHS budget.

How otherwise could the white paper have been produced so fast – a mere two months after a general election during which none of its far-reaching proposals was even mentioned (let alone made an electoral commitment) by either of the two parties now in office? It’s hard to imagine that even the overall shape, let alone the detail, of the white paper, was put together in two months. So where did it come from?

The HMO/market model: how its foundations were laid

The reality is that successive Labour health secretaries, working closely with the private sector, had already constructed almost the entire edifice of a healthcare market. The Tory plan merely speeds up the final stage and makes it more clearly visible.

The idea that New Labour planned to replace the NHS with a US-style market, complete with HMOs, may come as a shock to some readers. But the fact is that HMOs have been the inspiration behind practically every element of the ‘system reforms’ pursued by New Labour since 2000.

One HMO in particular, California-based Kaiser Permanente, the largest HMO in the US, has been intimately involved in shaping the Department of Health’s strategic thinking. New Labour’s ‘reforms’ have been worked out in constant discussions with and visits to Kaiser. This includes the conversion of NHS trusts into independent businesses (foundation trusts); the introduction of ISTCs; payment by results; giving NHS work to private hospitals and clinics and encouraging NHS patients to choose them; changes in NHS staff contracts; and, not least, the development of HMO-style commissioning.

The US example

These changes have been introduced in a largely piecemeal fashion, concealing their overall intent. But when looked at with reference to the Kaiser model the various elements assume their true significance.

A defining feature of the US healthcare market and its HMOs is its complexity, with myriad forms of organisation and bureaucracy fragmenting provision, and with thousands of different ‘plans’ (i.e. insured packages of care) confusing customers, concealing profits and adding hugely to costs. It was precisely to avoid this expensive dog’s dinner that the NHS was created. But the basic structure is clear enough.

An HMO like Kaiser receives insurance premium income from its ‘enrollees’ (and for over-65s, from the US state’s Medicare programme), and then ‘manages care’ for them through three basic ‘arms’: 1) It owns hospitals and primary care/ambulatory facilities; which are 2) staffed by physicians, who, while nominally independent, are tied into an exclusive relationship with 3) the company’s insurance arm.

How do the New Labour/coalition plans correspond to the US model?
• At the level of infrastructure, hospitals are being progressively removed from public ownership – all NHS trusts are to become foundation trusts and are then to become ‘social enterprises’ owned by their staff, not the taxpayer. Meanwhile privately-owned facilities are subsidised (sweetheart deals for ISTCs, charitable status given to Nuffield hospitals, etc).

Some struggling NHS hospitals will close, while others, such as Hinchingbrooke in Cambridgeshire, will be handed over to private companies to be run for profit. Mark Britnell, who was the Department of Health’s head of commissioning under New Labour and is now lucratively installed in the private sector, says Hinchingbrooke is ‘only the tip of the iceberg’ and anticipates perhaps 20–30 more such transfers over the next year.

ISTCs, too, provide ready-made privately-owned venues for ambulatory and short-term secondary care, while some 150 private hospitals and clinics in the ‘Extended Choice Network’ that are already available to NHS patients under the ‘choice’ agenda form the nucleus of an expanded network of private suppliers.

• In terms of staffing, the Kaiser model calls for market relationships with independent teams of consultants, primary care physicians and nurses. In order to develop these, staff must be disengaged from the NHS and redeployed into the above-mentioned teams.

The main initial lever to bring this about will be the significant numbers of hospital doctors who become redundant under the cuts programme. At the same time, GPs already have a semi-independent status and can more readily be included in such teams, which have already been emerging in parts of the country. While such teams may initially have some autonomy, it is unlikely that they will be able to compete with the major providers in the long term; it is more likely that most will end up working for one or other of them, on the Kaiser model.

• The third arm of the HMO model, the insurance function, will be the work of the new commissioning consortia, advised by – or, more likely, progressively outsourcing the work to – private health insurance companies, and some American HMOs. There are also indications in the white paper that patient choice of GP will in due course extend to choice of commissioning consortium – since all GPs will be required to belong to one, so free choice of GP means free choice of commissioner – and that the consortia and hospitals will become free to compete on price and not just on ‘quality’ as they do now.

It is likely that competing healthcare ‘plans’ will eventually be a feature of the market here too, as consortia begin to compete for patient income.

The insiders

Pushing through these changes is a tight-knit ‘policy community’, comprising a number of leading private sector figures, some doctors and some health policy think-tanks, working closely with a group of strategists within the Department of Health. Among the latter, a highly influential figure has been Professor Chris Ham, who was for some years head of the Department of Health’s strategy unit and is now director of the King’s Fund. Ham has been a long-term champion of Kaiser, organising a series of v
isits to the company’s California headquarters and being instrumental in setting up a number of ‘Kaiser beacon’ projects within the NHS to introduce and ‘normalise’ Kaiser’s aims and methods among NHS managers.

Even more emblematic is Dr Penny Dash. After working briefly for Kaiser in the 1990s, Dash was appointed head of strategy and planning in the Department of Health, and co-authored the NHS Plan of 2000, which initiated the marketisation process.

Since then she has served on the board of Monitor, led Lord Darzi’s recent review of health services in London, and is currently vice chair of the King’s Fund.

But it is Dash’s function as placewoman for the global consultancy giant, McKinsey, that is probably most significant. McKinsey has been described as the gold standard for the provision of corporate strategy advice to the Fortune 500 companies, and as ‘global thought leaders’ in the areas of strategy and operations management. The company has played a central role in ‘system reform’ in the NHS under New Labour, and Dash is now a partner in their London office.

One of her initiatives, the Cambridge Health Network, is essentially a McKinsey front for exchanges between private health corporations, financial institutions and the Department of Health. Sponsors of the Network include some very big game: Halliburton, General Electric, and Perot Systems, as well as our very own GlaxoSmithKline, BUPA, Assura (now owned by Virgin), Mott McDonald and Carillion. McKinsey has been in many ways a key architect of the reforms that have prepared the way for the coalition. It was also, not coincidentally, McKinsey who came up with the figure of £20 billion that is now starting to be cut from the NHS.

Resisting the destruction of the NHS

As everyone recognises, successful resistance to the Tories’ plans to cut back public services permanently will call for a mass mobilisation with exceptional levels of solidarity, organisation and commitment. But, as Gregor Gall has recently pointed out, the defeat of the poll tax – the last time anything on this scale was successfully attempted – is not a good analogy with the situation we face now.

The poll tax affected everyone; its injustice was massive and obvious; and it required people to co-operate by registering and paying the tax, which they could and did refuse to do in vast numbers. None of these conditions applies to the complex, uneven, protracted process of dismantling the NHS that the Tories intend to push through.

Yet the injustice that will flow from the loss of the NHS will be massive. It will change the face of English society more profoundly than the poll tax. And it will be for all practicable purposes irreversible – unless we stop it now, all of us resisting in whatever way we can.

******

Summary: what the coalition’s plans means for the NHS
• Hospitals that ‘fail’ will be left to go bankrupt and close, or be handed over to be run by private companies.
• GP ‘consortia’ will run the service, in theory. But doctors don’t have the time or skills to do the large amount of administration required – and these are the contracts the private health companies are after.
• There will be £20 billion of cuts. On top of that, the more complex the market system gets, the more money will be spent on administration instead of medical care.
• The consortia will end up trying to reduce costs by denying certain treatments. And if they are to make money, they will do it by employing fewer, cheaper staff.
• In place of a public service we will have a profit-driven healthcare market.

******

Who’s taking over the NHS?

The main actors in the new GP consortia

The earlier attempt to encourage GPs to take on commissioning roles through ‘practice-based commissioning’ has been widely acknowledged to be a failure, mainly because most doctors prefer to focus on patients. This allows the 14 major US and UK health corporations, consultancy firms and insurers that currently make up the ‘Framework for Procuring External Support for Commissioning’ (FESC) to step in and play an increasingly central role in allocating the bulk of NHS finances. The FESC functions include population risk assessment, procurement and performance management, and data harvesting – but it is in service redesign that their impact will be most felt.

So who are these companies?

Aetna (US); Axa PPP (UK); BUPA (UK); CHKS (UK); Dr Foster (UK); Health DialogServices Corporation (US); Humana (US); KPMG LLP (US); McKesson (US); McKinsey (US); Navigant Consulting (US);Tribal (UK); UnitedHealth Europe (US); and WG Consulting (UK).

How these companies profit from the ‘revolving door’ in senior health personnel
• At KPMG, the former Department of Health head of commissioning Mark Britnell now leads the company’s European Health Division. Britnell also has close ties with Dr Foster, having previously been one of its non-executive directors.

• UnitedHealth now employs Blair’s former top health adviser Simon Stevens. It also has the former head of the Department of Health’s commercial directorate, Channing Wheeler, who, alongside Britnell, set up the FESC before being recalled to the US to face the securities and exchange commission on charges of illegally backdating share options at the time of 9/11.

• BUPA has the services of former health secretary Patricia Hewitt in her role as advisor to the private equity company Cinven, which recently bought out BUPA’s entire hospital portfolio.

• Tribal’s director of its healthcare division, Matthew Swindells, was chief information officer of the Department of Health and a special adviser to Patricia Hewitt. The company can also call upon Phyllis Shelton, who jumped ship from the Department of Health, where she worked as the lead for measurement on the integrated care organisation programme. Prior to this, she was the founder and managing director of the UK arm of HealthDialogue.

• McKesson’s UK chairman is Lord Carter. As chairman of the NHS’s competition panel, he is well situated to ensure that decisions on mergers and procurement – including those on commissioning – will follow the privatisation route.

• McKinsey has the Department of Health’s former head of strategy, Penny Dash. Some idea of Dash’s influence on the commissioning front can be seen in the fact that, in her guise as vice-chair of the King’s Fund, she led a recent briefing for PCTs to cut back on commissioning of what she considered to be ‘low-value’ medical procedures. Sure enough, in June this year, NHS North London proposed cutting back on ‘low priority treatments’.

http://www.redpepper.org.uk/Dismantling-the-NHS

An unsuitable case for treatment

By Jonathon Tomlinson

Henry is just one of GP Jonathon Tomlinson’s patients. But through what is happening to him we can see what is happening to the health service – and it isn’t what his doctor ordered

Little clots of blood float around the cloudy pink liquid in the jam jar Henry’s placed on the desk in front of me. The medical student beside me has in mind half a dozen possible, mostly serious causes of frank haematuria (visible blood in the urine) and I can see her jotting them down. Like too many men, Henry was hoping ‘things would sort themselves out’ for several weeks, and only after his wife noticed the blood-stained toilet bowl could she cajole him to come in.

Nevertheless, what Henry really wants to talk about is his son, just out of prison on a methadone script and looking for rehab. I was hoping to discuss Henr
y’s worsening renal failure – a consequence of his uncontrolled diabetes and high blood pressure. His wife wants to talk about his depression and worsening memory. The jar of bloody urine stands on the desk momentarily stalling any conversation while we sit waiting to see who will speak first and about what. Nine minutes remain of the ten-minute consultation.

General practice has developed during the past 60 years of the NHS to allow GPs a monopoly over the provision of primary healthcare. Because of this we are able to develop lasting therapeutic relationships with our patients that can extend over lifetimes and generations. It is possible for me to look after Henry and his wife for the rest of their lives, guiding Henry through what will, quite soon, be his final illness, his wife through her bereavement and their son through his drug detox and subsequent relapse.

The long-term relationships that GPs have with our patients result in continuity of care. This allows us not only to manage ongoing ill health, but also to be prepared for serious illnesses. How Henry might react to a diagnosis of prostate or bladder cancer and how we might then manage it cannot be understood without knowing about how he has managed (or failed to manage) his diabetes; how his wife aids him and helps with his medication and appointments; how his depression affects his behaviour and how the chaos and distress their son brings affects them all. A familiarity with the latest guidelines for managing haematuria is essential, but negotiation and adaptation are essential if I am able to help Henry.

I’ve decided to focus on the bloody urine for now, but take time to arrange to see his son 15 minutes before my Thursday afternoon surgery (I’ll be glad of an excuse to miss the end of the meeting in which various imaging corporations pitch their services.) I send an email to our practice nurse to ask if she can fit him into the next diabetic clinic before bringing the conversation around to the jar in front of us. Six minutes remain.

I test the urine sample and decant some into specimen pots to check for cancer cells and infection. I ask about other symptoms and perform a physical examination. My ten minutes are up, but he still needs a referral. At the heart of the coalition government’s ideology is ‘patient choice’, so instead of referring Henry to the local hospital, I am obliged to spend valuable time guiding him through a range of private and voluntary providers offering services for his bloody urine.

Meaningful choice needs to be informed and considered, but Henry doesn’t know what most of the 14 tablets a day he takes are for, he can’t recall whether his blood pressure is too high or too low and he only comes to appointments if his wife reminds him on the day. Usually when I ask him why he has come to see me, he says, ‘I don’t know, you’re the doctor!’ In so many ways he is like my own father who, despite being considerably more affluent and educated, is equally ignorant of his treatment, happy to trust his GP and my mother ‘to worry about all that’.

The new commissioning organisation has made the job a little easier by restricting us to a short-list of ‘approved, value-for-money providers’. The provider I believe to be in Henry’s best interests – the local hospital – is not approved but may be ‘negotiable’. Negotiation will involve spending valuable time writing letters trying to convince the commissioners that because of Henry’s depression, diabetes, renal failure and long history of missing appointments he needs to have his care there.

Unfortunately I later discover that the urology department has been ‘decommissioned’ for being too ‘inefficient’. The ‘one-stop’ heamaturia clinic has become ‘two-stop’ because a private company has the contract for day surgery and the cystoscopies (bladder scopes) are being done at another hospital, while the local operating theatres are concentrating on more profitable gynaecology. I no longer know what is in Henry’s best interests.

What Henry wants, and more importantly needs, is to be looked after, but he’s told he must ‘take responsibility and choose’. As his advocate I must help him choose and also fight to keep the services he needs. As his GP my days may be numbered. More efficient providers will move in to provide convenient care for young healthy people who will choose not to spend time waiting to see a doctor whose clinics run late because of complicated patients like Henry. Instead of waiting, they will register with Virgin, or any number of competing providers who know healthcare is most profitable when the patients aren’t really sick.

http://www.redpepper.org.uk/An-unsuitable-case-for-treatment

Non-binding ballot measure pushes 'Medicare For All'

By Edward B. Colby
Dedham (Mass.) Transcript, Oct. 25, 2010

DEDHAM, Mass. — Leo Stolbach says he’s working to advance a single-payer health insurance system for Massachusetts because he sees what’s happening to patients now.

“Patients are getting shortchanged. And this fallacy that we have the best health care in the world, that’s wrong. It isn’t. And we’re paying twice as much for not having the best health care in the world,” says Stolbach, a semi-retired medical oncologist, who lives at NewBridge on the Charles.

On the ballot Nov. 2 is Question 4, a non-binding question that asks voters in the 11th Norfolk District whether they want to instruct their state representative, Paul McMurtry, “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?”

So-called “Medicare For All” would provide consumers free choice of doctors and hospitals; universal, comprehensive care for life; control costs; and help job growth, according to Mass-Care, the group which is pushing the measure. Establishing a single-payer system is the mission of Mass-Care, which was formed in 1995. It has been an uphill fight.

The main goal of the ballot question is merely to get the Massachusetts Health Care Trust bill out of committee and onto the floor of the House, Stolbach says: “Each year we testify for it, and it doesn’t get out of committee.”

In 2008, Mass-Care had a similar ballot question in 10 legislative districts – and it passed in all of them.

This year it is in 14. Two hundred signatures are needed to get the question on the ballot in each district; Stolbach said he gathered 126 just at NewBridge. He also went to supermarkets and “stood in front of the Community Theatre.”

Its owner and Dedham’s representative, McMurtry, says that since he was elected one of his priorities has been to support affordable, quality health care.

He says of Question 4, “If that’s what the majority would want, then again I would look at additional information and make an educated decision should the matter come before us,” in the Legislature.

McMurtry says that though the state and nation have begun to address their health care concerns, “it’s certainly not a perfect system, and there’s always room for improvement and added efficiencies.”

Stolbach says the current system is “significantly wasteful.”

“It looks at health care in a way that says ‘how can we maximize our profits?’ rather than how can we best deliver care,” he says. “Physicians are paid to do certain things, and not necessarily to take the best care of the patient. And that’s the problem with the fee-for-service (system) that we’ve got.”

Stolbach’s last positions were as director of hematology and oncology at Saint Vincent Hospital in Worcester and as a professor of medicine at UMass Medical School. He is not seeing patients anymore, but is still involved in research projects, teaching, and medical record reviews.

He doesn’t like to use the term single-payer, explaining, “A lot of politicians have painted single-payer falsely. They claim that it’s socialized medicine.”

In doing so, they lump together Britain, which has socialized medicine, and Canada, which does not, says Stolbach. He worked as the head of oncology at the largest hospital in Ottawa for three years, when he had an appointment at the University of Ottawa. “I saw how well a single-payer system can work.”

Meantime, the U.S. health care system is far down the list in terms of outcomes, while the percentage of America’s gross domestic product that goes toward health care keeps going up. “The present system is not sustainable” because of the rising costs, including double-digit premium increases each year, Stolbach says.

That includes Massachusetts’ comprehensive health care law, signed by Governor Mitt Romney in 2006, he says: “The difficulty with it is it’s still being run by insurance companies. You can see that these increases are not sustainable.”

Massachusetts had one of the lowest uninsured rates in the country before the comprehensive law took effect, of about 8 to 10 percent, yet is having budget problems now as it tries to provide coverage based on the law, Stolbach says. Texas has about 27 percent uninsured, according to him.

“If we here in Massachusetts are a billion dollars in the hole, then what’s going to happen to these other states if they have a similar kind of program to ours?” he asks.

Under single-payer health care, the Massachusetts Health Care Trust board would represent consumers and providers. Providers would negotiate with the health care trust for patient care, and collect premiums, “but the system would be a lot simpler. It wouldn’t require patients to only go see a doctor in their network, for instance,” Stolbach points out.

He says advocates still have yet to work out exactly how a single-payer system in Massachusetts would be paid for, but that all of the analyses show that the new system will cost businesses and patients less.

“It’s a complicated issue,” he says. “I’m not saying that single-payer will take care of all of the problems, but it certainly will cost less because of administrative costs and overhead.”

http://www.dailynewstranscript.com/news/x102606675/Question-4-Non-binding-ballot-measure-pushes-Medicare-For-All

Non-binding ballot measure pushes ‘Medicare For All’

By Edward B. Colby
Dedham (Mass.) Transcript, Oct. 25, 2010

DEDHAM, Mass. — Leo Stolbach says he’s working to advance a single-payer health insurance system for Massachusetts because he sees what’s happening to patients now.

In 2008, Mass-Care had a similar ballot question in 10 legislative districts – and it passed in all of them.

Its owner and Dedham’s representative, McMurtry, says that since he was elected one of his priorities has been to support affordable, quality health care.

Stolbach says the current system is “significantly wasteful.”

He doesn’t like to use the term single-payer, explaining, “A lot of politicians have painted single-payer falsely. They claim that it’s socialized medicine.”

“If we here in Massachusetts are a billion dollars in the hole, then what’s going to happen to these other states if they have a similar kind of program to ours?” he asks.

http://www.dailynewstranscript.com/news/x102606675/Question-4-Non-binding-ballot-measure-pushes-Medicare-For-All

Getting less care for more money

The price problem that health-care reform failed to cure

By Alec MacGillis
The Washington Post
October 24, 2010

The health-care law of 2010… sets us on the road to universal health insurance.

But the Democrats’ effort to sell the law to the public may be undermined by what even some ardent supporters consider its biggest shortfall. The overhaul left virtually untouched one big element of our health-care dilemma: the price problem. Simply put, Americans pay much more for each bit of care — tests, procedures, hospital stays, drugs, devices — than people in other rich nations.

Health-care providers in the United States have tremendous power to set prices. There is no government “single payer” on the other side of the table, and consolidation by hospitals and doctors has left insurers and employers in weak negotiating positions.

“We spend fewer per capita days in the hospital compared with other advanced countries, we see the doctor less frequently, and we swallow fewer pills,” said Jon Kingsdale, who oversaw the implementation of Massachusetts’s 2006 health-care law. “We just pay a lot more for each of those units than other countries.”

The 2010 law does little to address this. Its many cost-control provisions are geared toward reducing the amount of care we consume, not the price we pay. The law encourages doctors and hospitals to join “accountable care organizations” that have financial incentives to limit unnecessary care; it beefs up “comparative effectiveness research” to weed out inefficient treatments; and it will eventually tax the most expensive insurance plans to restrain consumers’ superfluous use of health care.

Such measures could reduce redundant tests, emergency room visits and hospital readmissions, which would help control the costs of Medicare, where the government sets rates. But they are less likely to lower prices outside Medicare and stem the growth of private insurance rates.

The main reason for this is politics. Remember how drawn-out the health-care battle was? It started in the spring of 2009 and was waged for a full year. The bill’s proponents in the White House and in Congress had some inkling of how tough the fight with the insurance companies would be. Taking on hospitals, doctors, and drug and device manufacturers as well — the people you’d face in a showdown over prices — might have been fatal.

So there was no price fight. It is one of those fine political ironies: The law derided as socialism may have had an easier time winning favor from a skeptical public if it was, well, a little more socialist.

Politicians wanted to avoid a confrontation over providers’ prices. So a different policy argument took hold: The real reason everything cost so much was the overuse of health care, not the actual prices of treatment.

This argument came primarily from Dartmouth College researchers who had amassed data showing wide disparities in Medicare spending among different regions. Hospitals in the lower-spending areas, mostly in the Upper Midwest and the Northwest, seized on the study to argue that the key to controlling costs was to reward providers like them.

The theory caught fire at the White House. It gave President Obama and his then-budget guru Peter Orszag a way to talk about costs without taking on doctors and hospitals; instead, the White House could simply differentiate between providers that offer “value” and those that don’t.

But the Dartmouth rankings, and the concept they supported, did a “disservice” to the debate, said Robert Berenson of the Urban Institute. For one thing, he and others say, the figures overstate regional differences in Medicare spending, which shrink when socioeconomic factors are taken into account. Second, rates of Medicare spending are not necessarily representative of health-care spending for people under 65. Some of the places that do well in the Dartmouth rankings charge high prices for non-Medicare patients — and were, not surprisingly, among those pushing hardest against a public option.

More broadly, the skeptics argue that merely providing care in smaller quantities will not sufficiently lower costs. They note that Americans already have shorter hospital stays and fewer doctors’ visits than people in other advanced countries. What sets us apart is our high prices for these health-care “units” — a finding trumpeted in a landmark 2003 paper by Princeton’s Uwe Reinhardt and others titled “It’s the Prices, Stupid.” The price problem is only getting worse, researchers and antitrust investigators have found, because of consolidation among providers, and it could be exacerbated by goading them to form even bigger networks.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102203394.html

Comment:

By Don McCanne, MD

Many have commented on the fact that the Patient Protection and Affordable Care Act (PPACA) did little to address one of the most important drivers of the reform process – our unique problem of the outrageous costs of health care. We spend far more per capita on health care than any other nation. This article by Alec MacGillis is singled out as recommended reading on this topic, as he is one of the most credible and well-informed journalists who closely observed the reform process.

The important lesson that MacGillis provides us here is that we do not use more health care than other nations, we simply pay much more for it.

Yet reform was based on the principle that we need to cut back on health care excesses that don’t even exist except to a limited extent in some of those regions identified by the Dartmouth researchers as areas of higher utilization. When you consider that we use less care per capita than other nations, it’s clear that efforts to ferret out this marginal waste will have very little impact on our total national health expenditures, though eliminating any waste is certainly beneficial.

The real problem is the amount that we pay for health care, yet very little in PPACA will ameliorate that problem. What could provide relief?

Alec MacGillis provides a strong hint: “Health-care providers in the United States have tremendous power to set prices. There is no government ‘single payer’ on the other side of the table.”

As Margaret Flowers and others have been shouting out all along: “We want a seat at the table!”

Getting less care for more money

The price problem that health-care reform failed to cure

By Alec MacGillis
The Washington Post
October 24, 2010

The health-care law of 2010… sets us on the road to universal health insurance.

But the Democrats’ effort to sell the law to the public may be undermined by what even some ardent supporters consider its biggest shortfall. The overhaul left virtually untouched one big element of our health-care dilemma: the price problem. Simply put, Americans pay much more for each bit of care — tests, procedures, hospital stays, drugs, devices — than people in other rich nations.

Health-care providers in the United States have tremendous power to set prices. There is no government “single payer” on the other side of the table, and consolidation by hospitals and doctors has left insurers and employers in weak negotiating positions.

“We spend fewer per capita days in the hospital compared with other advanced countries, we see the doctor less frequently, and we swallow fewer pills,” said Jon Kingsdale, who oversaw the implementation of Massachusetts’s 2006 health-care law. “We just pay a lot more for each of those units than other countries.”

The 2010 law does little to address this. Its many cost-control provisions are geared toward reducing the amount of care we consume, not the price we pay. The law encourages doctors and hospitals to join “accountable care organizations” that have financial incentives to limit unnecessary care; it beefs up “comparative effectiveness research” to weed out inefficient treatments; and it will eventually tax the most expensive insurance plans to restrain consumers’ superfluous use of health care.

Such measures could reduce redundant tests, emergency room visits and hospital readmissions, which would help control the costs of Medicare, where the government sets rates. But they are less likely to lower prices outside Medicare and stem the growth of private insurance rates.

The main reason for this is politics. Remember how drawn-out the health-care battle was? It started in the spring of 2009 and was waged for a full year. The bill’s proponents in the White House and in Congress had some inkling of how tough the fight with the insurance companies would be. Taking on hospitals, doctors, and drug and device manufacturers as well — the people you’d face in a showdown over prices — might have been fatal.

So there was no price fight. It is one of those fine political ironies: The law derided as socialism may have had an easier time winning favor from a skeptical public if it was, well, a little more socialist.

Politicians wanted to avoid a confrontation over providers’ prices. So a different policy argument took hold: The real reason everything cost so much was the overuse of health care, not the actual prices of treatment.

This argument came primarily from Dartmouth College researchers who had amassed data showing wide disparities in Medicare spending among different regions. Hospitals in the lower-spending areas, mostly in the Upper Midwest and the Northwest, seized on the study to argue that the key to controlling costs was to reward providers like them.

The theory caught fire at the White House. It gave President Obama and his then-budget guru Peter Orszag a way to talk about costs without taking on doctors and hospitals; instead, the White House could simply differentiate between providers that offer “value” and those that don’t.

But the Dartmouth rankings, and the concept they supported, did a “disservice” to the debate, said Robert Berenson of the Urban Institute. For one thing, he and others say, the figures overstate regional differences in Medicare spending, which shrink when socioeconomic factors are taken into account. Second, rates of Medicare spending are not necessarily representative of health-care spending for people under 65. Some of the places that do well in the Dartmouth rankings charge high prices for non-Medicare patients — and were, not surprisingly, among those pushing hardest against a public option.

More broadly, the skeptics argue that merely providing care in smaller quantities will not sufficiently lower costs. They note that Americans already have shorter hospital stays and fewer doctors’ visits than people in other advanced countries. What sets us apart is our high prices for these health-care “units” — a finding trumpeted in a landmark 2003 paper by Princeton’s Uwe Reinhardt and others titled “It’s the Prices, Stupid.” The price problem is only getting worse, researchers and antitrust investigators have found, because of consolidation among providers, and it could be exacerbated by goading them to form even bigger networks.

http://www.washingtonpost.com/wp-dyn/content/article/2010/10/22/AR2010102203394.html

The important lesson that MacGillis provides us here is that we do not use more health care than other nations, we simply pay much more for it.

The real problem is the amount that we pay for health care, yet very little in PPACA will ameliorate that problem. What could provide relief?

Alec MacGillis provides a strong hint: “Health-care providers in the United States have tremendous power to set prices. There is no government ‘single payer’ on the other side of the table.”

As Margaret Flowers and others have been shouting out all along: “We want a seat at the table!”

Comment:

Medicare “Accountable Care Organizations”

A plan to solve America’s long-term economic and fiscal crisis

Statement to the Commission on Deficit Reduction

Comment:

A Roadmap for America’s Future, Version 2.0

A plan to solve America’s long-term economic and fiscal crisis

Statement to the Commission on Deficit Reduction

Comment:

A Roadmap for America’s Future, Version 2.0

A plan to solve America’s long-term economic and fiscal crisis

Statement to the Commission on Deficit Reduction

An unsuitable case for treatment

Comment:

The price problem that health-care reform failed to cure

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