by Merton Bernstein
Health Affairs blog
April 22nd, 2009

Science does not permit ideology to foreclose inquiry; it requires facing facts and following where they and logic lead. Hence many cheered when President Barack Obama announced that science is back, that predisposition will no longer be permitted to trump reality. Everyone knew he was talking about stem cell research.

Who could have guessed that the Obama administration and key congressional players would exclude single-payer/Medicare-for-all programs from consideration even though that means ignoring the cost savings of hundreds of billions of dollars in private plans’ nonbenefit costs? Further, administration health experts advertise their focus on avoiding incentives for unnecessary treatment, but pay no mind to the expensive distortions that follow from physicians’ ownership interests in high-cost equipment and services. Odd that the scientific method does not apply to medical care where science should govern.

Snubbing And Chiding Single-Payer Advocates

Until the day before the Health Care Summit, no advocate of single-payer/Medicare-for-all had been invited to rub shoulders at the White House conference with the hordes of insurance and drug manufacturer officials and lobbyists, right-wing think-tank pundits, major employers and their organizations, and hospital executives — all deeply implicated in the design, execution, and defense of the current dysfunctional medical care insurance nonsystem — the supposed object of “reform.” An 11th hour invitation came only after a threatened demonstration by doctors, nurses, and medical students who back a single-payer proposal sponsored by 94 members of the U.S. House of Representatives. Even the legendarily unbiased Congressional Budget Office had shortly before issued two large studies of medical care, totaling about 400 pages, containing only a few cursory paragraphs about single payer/Medicare-for-all.

The president opened and closed the one-day summit with his usual splendidly composed summary of hurdles to providing medical care to all and curbing costs. He had sharp words only for “bleeding-heart liberals,” chiding them for inattention to costs although they repeatedly stress the huge savings single-payer/Medicare-for-all could deliver. It is his experts who persistently ignore those cost savings while pursuing possibly desirable but unproven methods of reducing costs. So, for example, claims are made for vast savings by health information technology (IT), such as computerization of patient records, which might reduce medical errors if a uniform nationwide system becomes operational — years hence. Similarly, it is unproven that paying health care providers based on outcomes would be feasible; with hundreds of millions of billings, assessing the efficacy of each treatment seems impossible — and impossibly costly.

Savings From Medicare-For-All

Medicare-for-all would save hundreds of billions every year. Private insurers expend enormous sums for insurer commissions, advertising, Wall-Street-scale executive compensation, and profits. In contrast, Medicare spends little or nothing on these unnecessary, unproductive activities. Health care providers and private plans struggle with thousands of different billing schedules. As the New York Times reported: “The average provider — doctors or hospitals — has between 5 and 100 reimbursement rates for the same procedure. . . . A hospital chain may have 150 rates for the same procedure.”

In contrast, Medicare districts employ only one. That helps explain why Medicare’s nonbenefit expenditures require only 4 percent of benefit outlays while private plans expend far more — on the order of 20% for publicly traded companies and as much as 31% of premium for some. We are talking real money. A recent McKinsey Quarterly article found that medical care insurer billing consumes more than $300 billion a year, costing 15 percent or more of medical outlays. Medicare-for-all would make do on a sliver of that. (Harvard Medical School economist Rashi Fein tells the story of a former colleague working at a Montreal hospital, where three people processed bills there, primarily for traveling Americans. Later he worked at Chicago’s Michael Reese Hospital, where the billing facility, jammed with clerks at computers, stretched a football field’s length in two directions.)

Understand that Medicare uses private insurers to administer its program and pays private providers to deliver care; patients select their providers, a choice many private plans limit. Medicare confines its payments to a fee schedule it promulgates after receiving the advice of the Medical Payment Advisory Commission (MedPAC), which comprises a variety of practitioners and others. That price constraint reduces costs. But the big savings come from simplified billing/payment procedures.

In addition, Medicare delivers its benefits at lower cost than means-tested programs like Medicaid and the Children’s Health Insurance Program (CHIP). Absorbing all such programs (and there are many) into Medicare would save tens of billions more and speed up providing care.

Opponents dismiss Medicare-for-all as a “one-size-fits-all” formula. Well, who among us knows how to estimate when we or a family member will need medical care? Who among us can gauge when a heart attack may strike or a drunken driver will cross the median? In this world full of uncertainty, we all share the same need for assured medical care — that’s the size Medicare-for-all fits.

The Effects Of Conflicts Of Interest

Studies repeatedly show that medical care providers with ownership interests in labs and high-cost devices like computed tomography (CT) scan and magnetic resonance imaging (MRI) machines prescribe those services far more than those who do not own any. Medical societies should ban such conflicts of interest; if they don’t, Medicare, which attempts to curb them, should forbid them completely. That would save billions and confine providers to their proper role: treatment based on medical grounds uninfluenced by profit.

So why do the Obama medical care gurus, Senator Baucus and Senator Grassley, and the Congressional Budget Office exclude Medicare-for-all, although it would save far more than any rival plan? In large measure, that results from the propaganda war on single-payer. President Obama says that it would be impractical to try to substitute Medicare for “legacy” private plans because so many are “accustomed to” them. But “accustomed to” simply does not describe plans that are melting down, disappearing, and becoming constantly more unaffordable.

Further, Medicare does not charge higher rates for pre-existing conditions or for elderly and female patients as private plans do, thereby encouraging employers to discriminate in employment. Moreover, with everyone covered for all needed medical care, the greater part of malpractice compensation — medical repair — would be met without the delay and expenses of medical malpractice disputes and litigation.

Yet the Obama, Baucus, Grassley, CBO, and other playlists exclude consideration of Medicare-for-all. With rising discomfort with the price tag of recovery programs, those desiring comprehensive health care cannot afford to disregard a program with such enormous savings. If Medicare-for-all gets “on the table” before the Senate Finance and House Ways and Means committees, the CBO must report its vast savings and its greater efficiency and effectiveness compared with more expensive alternatives. Only by censorship — only by treating Medicare-for-all as nonexistent — can lesser alternatives be discussed with a straight face.

And censorship is not compatible with science.

by Leonard Rodberg
Portland Observer
April 1, 2009

President Barack Obama has said repeatedly that he wants “ideas that work.” In spite of this, leading Democrats are working hard on plans for health care reform that will fail.

These plans, pushed by Sen. Max Baucus and others, seek to extend coverage to everyone by mandating the purchase of private insurance, with perhaps an option to buy into a public plan. They would ease this purchase through an “insurance exchange,” while subsidizing premiums for those with low incomes.

Advocates of such plans readily acknowledge some of the key problems the country faces: the large number of uninsured, now approaching 50 million; the high cost of health insurance, with the average annual premium for an employer-purchased family policy now above $12,500, fully one-fourth of the median family income; and the continuing rise in the cost of health care itself, at two to three times the rate of inflation.

Yet their proposed solution – a multi-payer mix of private and public plans – won’t get us the health care we need.

Here’s why: Mandates cannot possibly assure that everyone is covered. A recent report by the Congressional Budget Office shows that no existing government mandate, whether to purchase auto insurance, pay income taxes or immunize children, achieves more than 85 percent success.

In Massachusetts, where a state mandate supposedly delivers “universal” health care, many thousands remain uninsured. And more than a third of those with insurance are avoiding treatment because of the cost. Insurance co-pays, deductibles, and limits on coverage still keep them from the care they need.

Multi-payer financing systems involve high marketing and administrative costs. These wasteful expenditures presently consume nearly one-third of every U.S. health care dollar. Baucus’ plan would do nothing to cure this problem, and would likely worsen it because of its added complexity. In fact, advocates of this approach acknowledge it will cost us additional tens of billions more than what we spend now.

Multi-payer systems are unable to control costs. The only way to assure cost containment is to adopt a unified financing mechanism that has the leverage to negotiate lower prices (with the pharmaceutical companies, for example) and provide the necessary budgeting and planning tools needed to save money over the long haul.

Some Democrats tout the cost-saving potential of better medical information technology and better management of chronic illness. But the Congressional Budget Office finds that these measures are as likely to increase costs as to reduce them.

Others point to the Federal Employees Health Benefit Program as a model, but this program is merely a menu of private insurance plans. Federal employees who get sick enough to use their plans face huge co-pays in even the best plan, often leaving them owing thousands of dollars to doctors and hospitals.

Moreover, such incremental reforms would do nothing to help the growing number of Americans who are underinsured. Recent studies show that 40 percent or more of us, including those with insurance, are having difficulties paying our medical bills.

Yet most leading Democrats would have us cling to our failing private health insurance system. “You can keep what you have” is the mantra, ignoring that “what we have” is continually deteriorating or, in the current economic downturn, even disappearing.

The bottom line: these piecemeal health proposals don’t really reform the system; they just add to it. They will not work. As long as our nation continues to rely on a private multi-payer insurance system, universal coverage will be unachievable and costs will remain uncontrollable.

In contrast, a unified plan modeled on our successful experience with Medicare would effectively address our problems, including containing costs. It would automatically enroll everyone. Patients would go to the doctor or hospital of their choice. The administrative cost savings of a single-payer system would amount to over $350 billion annually, enough to cover all the uninsured and to eliminate all co-pays and deductibles. Everyone would be guaranteed the same high-quality care. Polls show that such an approach – an improved and expanded Medicare-for-All – has majority support, including among physicians. But Sen. Baucus and others dismiss such talk, saying the time’s not right.

President Obama should insist that single payer be on the table. Our nation deserves nothing less.

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Leonard Rodberg is chairman of urban studies at Queens College, City University of New York, and research director of the N.Y. Metro chapter of Physicians for a National Health Program.

Saul Friedman
Gray Matters
Newsday
April 17, 2009

I was surprised during a recent conference for care- givers when several professionals, who should have known better, asked me if a “single-payer” health insurance system is “socialized medicine.”

The quick answer: No.

But the question suggests the specter of socialism that haunts efforts to bail out American financial institutions may be used to cast doubt on one of the possible solutions to the health care crisis: Medicare for All.

Webster’s online dictionary defines socialism as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.”

Britain’s socialized health care system is government-run. Doctors, nurses and other personnel work for the country’s National Health Service, which also owns the hospitals and other facilities. Other nations have similar systems, but no one has seriously proposed such a system here.

Newsweek suggested Medicare and its expansion (Part D) to cover prescription drugs smacked of socialism. But it’s nothing of the sort. Medicare itself, while publicly financed, uses private contractors to administer the benefits, and the doctors, labs and other facilities are private businesses. Part D uses private insurance companies and drug manufacturers.

In the United States, there are a few pockets of socialism, such as the Department of Veterans Affairs health system, in which doctors and others are employed by the VA, which owns its hospitals.

Physicians for a National Health Plan, a nonprofit research and education organization that supports the single-payer system, states on its Web site: “Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or ‘payer.’ In the case of health care . . . a government-run organization – would collect all health care fees, and pay out all health care costs.” The group believes the program could be financed by a 7 percent employer payroll tax, relieving companies from having to pay for employee health insurance, plus a 2 percent tax for employees, and other taxes. More than 90 percent of Americans would pay less for health care.

The U.S. system now consists of thousands of health insurance organizations, HMOs, PPOs, their billing agencies and paper pushers who administer and pay the health care bills (after expenses and profits) for those who buy or have health coverage. That’s why the U.S. spends more on health care per capita than any other nation, and administrative costs are more than 15 percent of each dollar spent on care.

In contrast, Medicare is America’s single-payer system for more than 40 million older or disabled Americans, providing hospital and outpatient care, with administrative costs of about 2 percent.

Advocates of a single-payer system seek “Medicare for All” as the simplest, most straightforward and least costly solution to providing health care to the 47 million uninsured while relieving American business of the burdens of paying for employee health insurance.

The most prominent single-payer proposal, H.R. 676, called the “U.S. National Health Care Act,” is subtitled the “Expanded and Improved Medicare for All Act.”(View it online at http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.676:) As proposed by Rep. John Conyers (D-Mich.), it would provide comprehensive medical benefits under a single-payer, probably an agency like the current Center for Medicare and Medicaid Services, which administers Medicare.

But while the benefits would be publicly financed, the health care providers would, for the most part, be private. Indeed, profit-making medical practices, laboratories, hospitals and other institutions would continue. They would simply bill the single-payer agency, as they do now with Medicare.

The Congressional Research Service says Conyers’ bill, which has dozens of co-sponsors, would cover and provide free “all medically necessary care, such as primary care and prevention, prescription drugs, emergency care and mental health services.”

It also would eliminate the need, the spending and the administrative costs for myriad federal and state health programs such as Medicaid and the State Children’s Health Insurance Program. The act also “provides for the eventual integration of the health programs” of the VA and Indian Health Services. And it could replace Medicaid to cover long-term nursing care. The act is opposed by the insurance lobby as well as most free-market Republicans, because it would be government-run and prohibit insurance companies from selling health insurance that duplicates the law’s benefits.

It is supported by most labor unions and thousands of health professionals, including Dr. Quentin Young, the Rev. Martin Luther King’s physician when he lived in Chicago and Obama’s longtime friend. But Young, an organizer of the physicians group, is disappointed that Obama, once an advocate of single-payer, has changed his position and had not even invited Young to the White House meeting on health care.

We’ll talk soon about Obama’s alternative to single payer.

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http://www.newsday.com/news/health/ny-bzsaul1812648142apr17,0,721971.column

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The following text contains the testimony of Dr. David Himmelstein at a hearing on “Ways to Reduce the Cost of Health Insurance for Employers, Employees and their Families” organized by Health, Employment, Labor and Pensions Subcommittee of the House Committee on Education and Labor on April 23 in Washington.

April 23, 2009

Mr. Chairman, members of the Committee. My name is David Himmelstein. I am a primary care doctor in Cambridge, Massachusetts, and associate professor of medicine at Harvard. I also serve as national spokesperson for Physicians for a National Health Program. Our 16,000 physician members support nonprofit, single-payer national health insurance because of overwhelming evidence that lesser reforms will fail.

Health reform must address the cost crisis for insured as well as uninsured Americans. My research group found that illness and medical bills contributed to about half of all personal bankruptcies in 2001, and even more than that in 2007. Strikingly, three-quarters of the medically bankrupt were insured. But their coverage was too skimpy to protect them from financial collapse.

A single-payer reform would make care affordable through vast savings on bureaucracy and profits. As my colleagues and I have shown in research published in the New England Journal of Medicine, administration consumes 31 percent of health spending in the United States, nearly double what Canada spends. In other words, if we cut our bureaucratic costs to Canadian levels, we’d save nearly $400 billion annually — more than enough to cover the uninsured and to eliminate co-payments and deductibles for all Americans.

By simplifying its payment system, Canada has cut insurance overhead to 1 percent of premiums — one-twentieth of Aetna’s overhead — and eliminated mounds of expensive paperwork for doctors and hospitals. In fact, while cutting insurance overhead could save us $131 billion annually, our insurers waste much more than that because of the useless paperwork they inflict on doctors and hospitals.

A Canadian hospital gets paid like a fire department does in the U.S. It negotiates a global budget with the single insurance plan in its province, and gets one check each month that covers virtually all costs. They don’t have to bill for each Band-Aid and aspirin tablet. At my hospital, we know our budget on January 1, but we collect it piecemeal in fights with hundreds of insurers over thousands of bills each day. The result is that hundreds of people work for Mass General’s billing department, while Toronto General employs only a handful — mostly to send bills to Americans who wander across the border. Altogether, U.S. hospitals could save about $120 billion annually on bureaucracy under a single payer system.

And doctors in the U.S. waste about $95 billion each year fighting with insurance companies and filling out useless paperwork.

Significantly, these massive potential savings on bureaucracy can only be achieved through a single payer reform. A health reform plan that includes a “public plan option” might realize some savings on insurance overhead. However, as long as multiple private plans coexist with the public plan, hospitals and doctors would have to maintain their costly billing and internal cost tracking apparatus. Indeed, my colleagues and I estimate that even if half of all privately insured Americans switched to a public plan with overhead at Medicare’s level, the administrative savings would amount to only 9 percent of the savings under single payer.

While administrative savings from a reform that includes a Medicare-like public plan option are modest, at least they’re real. In contrast, other widely touted cost control measures are completely illusory. A raft of studies shows that prevention saves lives, but usually costs money. The recently completed Medicare demonstration project found no cost savings from chronic disease management programs. And the claim that computers will save money is based on pure conjecture. Indeed, in a study of 3,000 U.S. hospitals that my colleagues and I have recently completed, the most computerized hospitals had, if anything, slightly higher costs.

My home state of Massachusetts recent experience with health reform illustrates the dangers of believing overly optimistic cost control claims. Before its passage, the reform’s backers made many of the same claims for savings that we’re hearing today in Washington. Prevention, disease management, computers, and a health insurance exchange were supposed to make reform affordable. Instead, costs have skyrocketed, rising 23 percent between 2005 and 2007, and the insurance exchange adds 4 percent for its own administrative costs on top of the already high overhead charged by private insurers. As a result, 1 in 5 Massachusetts residents went without care last year because they couldn’t afford it. Hundreds of thousands remain uninsured, and the state has drained money from safety-net hospitals and clinics to keep the reform afloat.

In sum, a single-payer reform would make universal, comprehensive coverage affordable by diverting hundreds of billions of dollars from bureaucracy to patient care. Lesser reforms — even those that include a public plan option — cannot realize such savings. While reforms that maintain a major role for private insurers may seem politically expedient, they are economically and medically nonsensical.

Saul Friedman
Gray Matters
Newsday
April 17, 2009

I was surprised during a recent conference for care- givers when several professionals, who should have known better, asked me if a “single-payer” health insurance system is “socialized medicine.”

The quick answer: No.

But the question suggests the specter of socialism that haunts efforts to bail out American financial institutions may be used to cast doubt on one of the possible solutions to the health care crisis: Medicare for All.

Webster’s online dictionary defines socialism as “any of various economic and political theories advocating collective or governmental ownership and administration of the means of production and distribution of goods.”

Britain’s socialized health care system is government-run. Doctors, nurses and other personnel work for the country’s National Health Service, which also owns the hospitals and other facilities. Other nations have similar systems, but no one has seriously proposed such a system here.

Newsweek suggested Medicare and its expansion (Part D) to cover prescription drugs smacked of socialism. But it’s nothing of the sort. Medicare itself, while publicly financed, uses private contractors to administer the benefits, and the doctors, labs and other facilities are private businesses. Part D uses private insurance companies and drug manufacturers.

In the United States, there are a few pockets of socialism, such as the Department of Veterans Affairs health system, in which doctors and others are employed by the VA, which owns its hospitals.

Physicians for a National Health Plan, a nonprofit research and education organization that supports the single-payer system, states on its Web site: “Single-payer is a term used to describe a type of financing system. It refers to one entity acting as administrator, or ‘payer.’ In the case of health care . . . a government-run organization – would collect all health care fees, and pay out all health care costs.” The group believes the program could be financed by a 7 percent employer payroll tax, relieving companies from having to pay for employee health insurance, plus a 2 percent tax for employees, and other taxes. More than 90 percent of Americans would pay less for health care.

The U.S. system now consists of thousands of health insurance organizations, HMOs, PPOs, their billing agencies and paper pushers who administer and pay the health care bills (after expenses and profits) for those who buy or have health coverage. That’s why the U.S. spends more on health care per capita than any other nation, and administrative costs are more than 15 percent of each dollar spent on care.

In contrast, Medicare is America’s single-payer system for more than 40 million older or disabled Americans, providing hospital and outpatient care, with administrative costs of about 2 percent.

Advocates of a single-payer system seek “Medicare for All” as the simplest, most straightforward and least costly solution to providing health care to the 47 million uninsured while relieving American business of the burdens of paying for employee health insurance.

The most prominent single-payer proposal, H.R. 676, called the “U.S. National Health Care Act,” is subtitled the “Expanded and Improved Medicare for All Act.”(View it online at http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.676:) As proposed by Rep. John Conyers (D-Mich.), it would provide comprehensive medical benefits under a single-payer, probably an agency like the current Center for Medicare and Medicaid Services, which administers Medicare.

But while the benefits would be publicly financed, the health care providers would, for the most part, be private. Indeed, profit-making medical practices, laboratories, hospitals and other institutions would continue. They would simply bill the single-payer agency, as they do now with Medicare.

The Congressional Research Service says Conyers’ bill, which has dozens of co-sponsors, would cover and provide free “all medically necessary care, such as primary care and prevention, prescription drugs, emergency care and mental health services.”

It also would eliminate the need, the spending and the administrative costs for myriad federal and state health programs such as Medicaid and the State Children’s Health Insurance Program. The act also “provides for the eventual integration of the health programs” of the VA and Indian Health Services. And it could replace Medicaid to cover long-term nursing care. The act is opposed by the insurance lobby as well as most free-market Republicans, because it would be government-run and prohibit insurance companies from selling health insurance that duplicates the law’s benefits.

It is supported by most labor unions and thousands of health professionals, including Dr. Quentin Young, the Rev. Martin Luther King’s physician when he lived in Chicago and Obama’s longtime friend. But Young, an organizer of the physicians group, is disappointed that Obama, once an advocate of single-payer, has changed his position and had not even invited Young to the White House meeting on health care.

We’ll talk soon about Obama’s alternative to single payer.

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http://www.newsday.com/news/health/ny-bzsaul1812648142apr17,0,721971.column