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Dr. Steffie Woolhandler: Time to end medical debt, medical bankruptcy

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Dr. Steffie Woolhandler: Time to end medical debt, medical bankruptcy

The following is an unofficial, slightly edited set of excerpts from a March 4 telephone interview with Dr. Steffie Woolhandler, professor at the City University of New York School of Public Health at Hunter College, visiting professor of medicine at Harvard Medical School, and co-founder of Physicians for a National Health Program, conducted by Dr. Margaret Flowers and Kevin Zeese on their radio show “Clearing the FOG” on We Act Radio, 1480 AM, in Washington, D.C. It took place in the run-up to Strike Debt/Rolling Jubilee’s week of actions, March 16-23, which will spotlight the problems of medical debt and medical bankruptcy. The full radio show, which includes a spokesperson for Strike Debt, can be listened to here.

Dr. Margaret Flowers: Welcome, Dr. Woolhandler.

Dr. Steffie Woolhandler: Good morning. Thank you for having me.

How to people get into medical debt?

Some people get into medical debt because they have no insurance and they get sick. But the majority of people with serious medical debt have insurance, but their insurance is partial – full of gaps like copayments, deductibles and uncovered services.

So what happens is that people get sick, they try to use their insurance, and find that they’re still left holding literally thousands of dollars in unpaid medical bills.

You’ve done several research studies on health care and bankruptcy. What have those studies found?

We interviewed more than 2,000 people in federal bankruptcy court to figure out why they went into bankruptcy. In about 60 percent of all personal bankruptcies, medical bills and medical illness played a major role. Either people were uninsured and got sick, or they were insured, but found that their insurance really failed them when they had a serious illness.

More than three-quarters of people in medical bankruptcy had health insurance when they first got sick. Now, some of those people got so sick they lost their job, or they had to quit their job to take care of a sick family member. When they lost their job they lost their insurance. But even more commonly, people had insurance, usually private insurance, that they kept throughout their medical illness, but were bankrupted anyway because of gaps in coverage like copayments, deductibles and uncovered services.

What’s the trend regarding copayments, deductibles and uncovered services? Is the situation going to improve when Obamacare takes hold?

No. In fact, the federal health law will make the problem of gaps in coverage much more serious because the required insurance policies under the legislation are extremely skimpy. The so-called bronze policies, which are the cheapest policies that will meet the mandate under Obamacare, will only cover about 60 percent of your medical costs. People who buy those plans will still be responsible for 40 percent of total medical care costs. Typically, for someone with a bronze plan who got sick and tried to use their insurance, they would have at least $6,000 per person in out-of-pocket medical costs every single year they’re sick.

This is really the first time that the government has put its stamp of approval on such extremely skimpy policies. In the past, some states were trying to get consumer protections or were trying to regulate the insurance market to make the policies more generous, but Obamacare really reversed that trend with the federal government stepping in and saying we’re going to have these bronze policies that only pay 60 percent of your costs. The federal government is saying, “That’s fine with us, we think that’s OK.”

So the new federal health law has in some ways made the problem of underinsurance worse. It does improve the problem of being completely uninsured, we all know that. Approximately half of all currently uninsured people will receive coverage under Obamacare, and the other half – around 30 million people – will remain uninsured. But when we get to the problem of underinsurance, people with only partial coverage, Obamacare actually makes the situation worse.

The subsidies only kick in with the silver plan or higher. Is that true?

For whatever reason, the subsidies are only available if you purchase at the silver level, and the subsidies phase out at about 250 percent of the federal poverty level, so the subsidies disappear at a relatively low income level.

Can you speak about the impact of financial barriers to care on our health?

There’s a tremendous body of research saying that when people have no insurance, they don’t get preventive care, they don’t get primary care, and when they have a serious illness and go to the hospital they have much worse outcomes – they’re more likely to die.

There’s a growing body of evidence showing that people who have insurance, but have these skimpy policies, so-called underinsurance policies, also face really bad health consequences. When people have skimpy policies they delay getting primary care, they delay going to the hospital, and they also have worse outcomes than people who have full coverage.

We need a system where everybody has coverage for all medically necessary care, because that’s really the only way to assure people get the care they need, and it’s the only way to protect the budget of American families from the very high costs when a serious illness hits.

Do other countries have this problem of underinsurance?

Many countries have systems that cover virtually 100 percent of all medical care. In Canada, traditionally, people have 100 percent coverage of hospital costs, 100 percent coverage of doctors. Certainly in Great Britain there’s a tradition of 100 percent coverage for many people.

Some of the European countries do have copayments; however, in those countries they have much more equal income distribution so they don’t have the huge group of very poor people that we have here, or even low-income people like we have here, who just don’t have the cash in their pocket to pay a copayment.

We have a bad situation in the United States with a lot of income inequality, lots of people who are just barely getting by on their paychecks, and then health care costs, which even if you have insurance, can run into thousands and thousands of dollars out-of-pocket expenses every year.

How will Obamacare affect the middle class?

The underinsurance is actually a very big hit on working families. People are living paycheck to paycheck but are getting by, they’re making it work, and then something like appendicitis or a bad car accident will sink the family and push them into bankruptcy. So one of the things that would really improve the financial security of working families would be if insurance really covered everything.

You’ve also lived and worked in Massachusetts. How is their health law working out?

The Massachusetts health law was the model for the national plan. In Massachusetts, the new law cut the number of uninsured by approximately half, which is what is expected to happen nationally, but you still have about half of the uninsured around, lacking insurance.

The problem is that after enactment of the law, a lot of the services that were available free for the uninsured have been cut. Safety-net funding was reduced by the law. And again that’s going to happen with Obamacare. There’s about $36 billion in cuts to safety-net hospital payments under the federal
health law. There will still be uninsured people – 30 million of them after Obamacare is fully implemented – but the safety-net institutions that care for them will be starved of funds. So, while some people may be better off under Obamacare, certainly, some folks who are uninsured will be significantly worse off under the new legislation.

So basically what’s happening is that cuts are being made to public programs so as to subsidize private insurance?

Yes, that’s what’s going on. And it’s important to remember that the safety-net institutions are not just there for uninsured people – that’s very important, of course – but safety-net institutions also take care of patients with insurance who can’t get care in the private sector. Some who have mental illness problems, or substance abuse problems, may not be welcome in the private sector, regardless of their insurance. Those folks may have to seek care in the safety net, and those institutions have seen their funds taken away and given to private insurance under the Massachusetts law and also the Obamacare legislation.

Has the Massachusetts reform controlled costs?

Health care costs have absolutely not been controlled in Massachusetts despite the fact that then-Gov. Romney claimed that the 2006 reform would control them. Massachusetts’ health care costs are the highest in the nation and continue to rise very rapidly. In fact, it’s pretty certain that they’re the highest health care costs anywhere in the world.

How about medical bankruptcies in Massachusetts? You’ve also done research on that, correct?

Medical bankruptcy in Massachusetts still accounts for about half of all bankruptcies. That was true before the 2006 legislation went into effect and that was true after 2009, after the legislation had been around for a couple of years.

It’s pretty clear that what was done in Massachusetts didn’t impact the problem of medical bankruptcy in any significant way. And if you look at what the insurance is like in Massachusetts, it’s pretty similar to what will occur under Obamacare, that is, very high copayments and deductibles.

If you go on the Massachusetts exchange website, it’s actually called The Connector, you’ll see the cost of a policy of someone in their fifties. For someone in their fifties, the premium would be about $5,000 per year, but then that policy would come with a $2,000 deductible – so figure $7,000 out-of-pocket before the insurance pays a single penny. And then, thereafter, for the next $15,000 in spending, you, the patient, are responsible for 20 percent of the costs, year after year.

Keep in mind that the plans in Massachusetts are a little better than what we can expect under Obamacare.

You’ve been working on these problems for many years. What do you think is the solution?

A single-payer solution, sometimes called an expanded and improved Medicare for all. Everyone would be covered in a program like Medicare, only the single payer would eliminate all of the copayments and deductibles that exist in Medicare.

It’s sometimes called a single-payer system. It’s the type of system that they have in Canada and in several western European countries. You pay for the system out of taxes. Patients have complete free choice of doctor and hospital. There’s no copayments, no deductibles for covered services.

Nations with single-payer systems actually have lower health care costs than in the United States, largely because the administrative costs in a single-payer system are so much lower. If you just have one agency, something like Medicare or Social Security, paying all the doctor bills, giving budgets to hospitals, and so on, you save several hundred billion dollars a year on health care paperwork and administration and that makes the entire health care system substantially more affordable, not just for individuals, but for the government and society.

How can listeners to this program get involved?

I mostly want to echo what’s been said by some of the Strike Debt/Rolling Jubilee people. People are in debt and it’s not your fault if you’re in debt and it’s particularly not your fault if you’re in debt because of a medical problem. This is unfair. No other developed nation forces people to go into debt because they get sick. We need to be thinking of moving toward a fair, efficient, single-payer system so that no one ever has to go into debt because they have the misfortune of being sick.

Americans need Medicare for All

By Hedda Haning, M.D.
Daily Mail (Charleston, W.Va.), March 12, 2013

What’s the matter with our health care?

For the vast majority of docs, their primary concern is to take good care of their patients. But the fact is they also have to pay their expenses and earn a living.

The way things stand now, providers carry much uncompensated care on their books. Their administrative overhead — for pre-approving procedures, re-submitting denied requests, appealing, billing and collecting payments — is huge.

Let me explain about usual and customary fees.

That is the fee the doctor “usually” charges for a given procedure. Insurance companies say they want to pay the doctor’s “usual and customary fees,” but doctors have learned from experience that private insurance companies will pay about half of what the doctor bills.

Doctors solve the problem by billing double what they know will really cover their costs so as to overcome the insurance company scam. This is an old game.

The big problem is that patients suffer, because uninsured patients are responsible for the entire “usual and customary” fee, proving it is usual and customary. They aren’t allowed to scam the billing numbers as the insurance companies do.

Uninsured patients always pay more if they can afford to pay anything.

Also, in the United States, private insurance overhead is at least 30 percent, a cost passed onto the payer. To clarify: the 30 percent does not pay for care.

In the private setting, overhead pays for administration (including repeatedly denying care), advertising and profit.

Medicare has a 3 percent overhead. It’s not Medicare that will bankrupt us; it is private insurance.

Around the world, advanced countries, all having some variation of a Medicare-like system, pay half of what we do and get better care. 

Some suggest that employment will suffer in the United States if numbers of administrative personnel and costs drop because we switch to Medicare for All.

Actually we need more nurses taking care of patients in offices, hospitals, nursing homes, and helping students in school. We just have to prioritize and pay for their employment.

We need more primary care physicians. We need more mental health professionals, including school counselors. Employment will not be seriously at risk.

And just FYI, most medical providers in national health programs overseas have approximately the same income as docs do here. That is true even though we spend twice as much on health care in this country than any other developed country does.

Money wouldn’t seem to be a major issue for doctors, and most of them, particularly in primary care, want out of the “free” market.

Again, what most doctors want is to take good care of their patients; therefore, most doctors want single-payer health care or Medicare for All, as do most Americans when polled.

That means a system in which tests and treatments are not profit-driven, but rather depend on studies that show the best way to care for patients, and then provide the needed care for everyone.

I emphasize: While I am talking about public payment, the care is private. You would choose your own provider, doc or hospital.

Many folks don’t realize that the cost of drugs are tightly regulated elsewhere.  Pharmaceuticals in all other advanced countries are as good as ours, but cost a fraction of those on our market.

Somehow the pharmaceutical companies manage to make a really healthy profit even overseas. They don’t have to bankrupt Americans to make money.

By the way, our Veterans Administration system, in recent years considered the model health care provider in our country according to outcomes and patient satisfaction, bargains drug costs way down.

Can the rest of us learn something here?

Did you know that employer-sponsored health care began during World War II to make up for the wartime wage freeze? That approach was useful then, but doesn’t work for us now.

More than 46 million people are uninsured or under-insured in our country even though most of them are currently employed.

Nearly 50 percent of personal bankruptcies are related to medical expenses even though more than 50 percent of the bankrupt had medical insurance at the time the illness began.

Unfortunately, we have even heard – including in West Virginia – of corporations declaring bankruptcy primarily so they can dump employee benefits, including health care.

Contrary to all rumors, according to rankings on every health care outcome from infant mortality to life expectancy to availability of high-tech equipment, our medical care is mediocre at best. We spend much more per capita than any other developed country and our costs are rising faster.

Let me repeat: Our health care is not the best in any way!

So our current health care system is not the best for patients or doctors, and it is not good for the economy either. Health costs weigh on employers.

Few small businesses can afford to pay for health insurance for their employees these days. Even large corporations feel the sting.

A few years back, it cost at least $1,500 per car for GM to cover health care for employees.  It has to be higher now. Is it any wonder that more cars are currently made in Canada than in Michigan or the entire United States? 

And from the workers’ point of view, if they do have health insurance, they feel unable to risk it by changing jobs. They can’t take that chance either to climb the skills or wage ladder.

Our national medical bill is well over a trillion dollars and climbing.

Health care the way we do it now, private and profit driven, is what threatens our future financial stability.

And that is in spite of the fact that millions of Americans don’t have any health insurance at all.

We can simultaneously make our health care system and our economy better by changing from private health administration to Medicare for All. We have to stop being gullible, and we have to stand for care before profit.

Learn more, and help us work for change. Please join us at 7 p.m. April 25 at the University of Charleston for an open public forum on Single Payer Health Care (and a comparison with the Affordable Care Act).

Haning, a retired physician, lives in Charleston.

http://www.dailymail.com/Opinion/Commentary/201303110146

Selling Expensive Health Care Lemons

By Philip Caper, M.D.
Bangor Daily News, March 14, 2013

In 1970, a University of California economist named George Akerlof wrote a paper titled “Selling Lemons.” In it he explained that a market characterized by a large asymmetry of information between seller and buyer would also soon become characterized by a decrease in the quality of goods and dominated by crooked sellers and gullible buyers. In 2001 he won the Nobel Prize for his work.

Sad to say, I can think of no market that better fits these criteria than health care. In a March 4 Time Magazine cover story titled “The Bitter Pill: Why Medical Bills Are Killing Us,” reporter Steven Brill dissects a number of hospital bills and traces the detailed charges back to their origins. He concludes, “everyone along the supply chain – from hospital administrators (who enjoy multimillion-dollar salaries) to the salesmen, executives and shareholders of drug and equipment makers – was reaping a bonanza. The only exceptions, I found, were those actually treating the patients – the nurses and doctors.”

When you need medical care there is absolutely no way you can accurately determine ahead of time what that care will cost you. Don’t hope to get anything approaching a rational explanation for what you are charged after the fact either. The best you can hope for is that whatever insurance you have will cover most of the costs. If not, you are at the mercy of the hospital and, if you can’t pay, its collection agency.

So you can’t know much about the prices of health care. How about the appropriateness or quality of that care? Again, unless you are a doctor you have very few ways to independently judge the safety or benefits of tests, procedures or prescriptions.

And sometimes not even then. Even among well-trained and conscientious doctors, a great deal of uncertainty exists about the risks and benefits of tests and procedures they order and perform.

As the number of doctors who have become employees of profit or non-profit corporations has increased (now about 80 percent of Maine doctors and rising), they have come under pressure to increase the number of “units of service” they provide – visits, tests, procedures and prescriptions – in order to maximize the revenues and profits of the institutions that employ them.

Lately, the need for many commonly performed procedures has come under question by both government and private health care organizations. The U.S. Preventive Services Task Force has recently warned against the routine performance of some. They include mammograms for young women, hormone replacement therapy for older women, prostate cancer tests for older men and drug treatment to prevent osteoporosis. Many are now thought to do more harm than good. There are many more such examples.

Similarly, the American Board of Internal Medicine, one of the medical profession’s most important credentialing bodies, has recently launched a program called “Choosing Wisely.” Its purpose is to identify tests and procedures that are overused and to persuade doctors and patients to use fewer of them. More than 35 medical specialty societies have joined this campaign, each selecting five or more tests or procedures that they believe are significantly overused. Among these are imaging procedures such a CT scans and MRI, the use of which has exploded in frequency and cost in recent years. It is almost impossible for patients to accurately assess the need for and quality of care.

I still believe that most health care workers want to do the right thing by our patients. But our corporatized and business-oriented health care system is making it increasingly difficult.

Businesses try to optimize prices and sales in order to maximize revenues. When “consumers” (patients) have little or no information about what they’re buying, Akerlof’s prediction that maximization of profits rather than value will dominate decision-making comes true. In other words, the asymmetry of information between patients (who possess little) and health care providers and administrators (who possess a lot) makes anything like a rational market in health care services impossible.

That hasn’t stopped free market ideologues from peddling their flawed and self-serving ideas to anyone who will listen, including some uninformed and perhaps naive lawmakers. One result is legislation like Maine’s new health insurance reform law, passed two years ago.

In his Time article, Brill documents that Medicare is much more efficient and does a much better job of controlling costs than private insurance.  It seems to me that he makes a compelling case for expanding Medicare to everybody. But, in the end, he backs off of actually recommending it because, as he explained in an interview, he fears the power of a health care industry that generates huge profits and spends four times as much on lobbying as does the defense industry.

I’m not so sure he’s right about that. I believe people power can overcome corporate power, especially in states such as Maine.

The next time you hear somebody saying “let the market work in health care,” the most reasonable response would be to pat them on the head, and have a good laugh.

But our profit-driven health care system is bankrupting individuals, putting enormous stress on businesses and state and federal governments and destroying the therapeutic doctor-patient bond of trust. So I guess it’s no laughing matter.

Physician Philip Caper of Brooklin is a founding board member of Maine AllCare, a nonpartisan, nonprofit group committed to making health care in Maine universal, accessible and affordable for all. He can be reached at pcpcaper21@gmail.com.

http://bangordailynews.com/2013/03/14/opinion/selling-expensive-health-care-lemons/

Steven Brill on using single payer to "clean up the system"

Experts debate all-payer setups vs. Medicare for all

By Brett Norman
Politico, March 14, 2013

Health care prices are too damn high.

That’s the punch line to the provocative Time magazine piece “Bitter Pill” by Steven Brill, who laid out his diagnosis of the problem Wednesday at a Center for American Progress panel.

He cited sky-high hospital executive salaries and operating margins, monopolistic and opaque pricing by providers and a fearsome lobbying force — many times larger than those of the oil and gas or defense industries — that has beaten policymakers into submission.

“The lap-doggery to the health care industry is bipartisan,” he said. The article has sent hospitals and other stakeholders to the wall in defense of the system, and it’s fueling debates in policy circles.

But while many policy experts agree with much of Brill’s diagnosis of factors that are driving up costs, there’s far less consensus on what to do about it.

Brill said the voluminous feedback he’s received since publishing the article breaks down along two lines. Conservatives believe consumers need to have more “skin in the game” — to pay more of health costs so they become more conscientious shoppers and put pressure on providers to more efficiently compete for their business. And liberals see the solution in Medicare-for-all, a single-payer system, amplifying the negotiating might the federal health care program already leverages to keep costs down.

Brill rejected the single-payer possibility as impractical in his article but now says that he is increasingly siding with that camp. “It’s sort of the cleanest way to clean up the system,” he said.

Brill believes that the federal health care law in general does little to control costs and will most likely drive up the cost of insurance because of new requirements for more robust coverage.

He gave little credence to the Beltway policy wonk goal of transforming the health care system away from paying for quantity of services provided to paying for health outcomes and the quality of care. He said similar efforts to move the legal profession away from billing by the hour and toward meeting performance benchmarks have either failed or proved more expensive.

http://www.politico.com/story/2013/03/experts-debate-all-payer-setups-vs-medicare-for-all-88835.html

Comment:

By Don McCanne, M.D.

Steven Brill provided such a convincing argument for using Medicare as a universal program to control health care spending that he now seems to be convincing himself that we should look beyond the current approach of dismissing single payer as impractical. As he says, single payer is “sort of the cleanest way to clean up the system.”

Experts debate all-payer setups vs. Medicare for all

By Brett Norman
Politico, March 14, 2013

Health care prices are too damn high.

That’s the punch line to the provocative Time magazine piece “Bitter Pill” by Steven Brill, who laid out his diagnosis of the problem Wednesday at a Center for American Progress panel.

He cited sky-high hospital executive salaries and operating margins, monopolistic and opaque pricing by providers and a fearsome lobbying force — many times larger than those of the oil and gas or defense industries — that has beaten policymakers into submission.

“The lap-doggery to the health care industry is bipartisan,” he said. The article has sent hospitals and other stakeholders to the wall in defense of the system, and it’s fueling debates in policy circles.

But while many policy experts agree with much of Brill’s diagnosis of factors that are driving up costs, there’s far less consensus on what to do about it.

Brill said the voluminous feedback he’s received since publishing the article breaks down along two lines. Conservatives believe consumers need to have more “skin in the game” — to pay more of health costs so they become more conscientious shoppers and put pressure on providers to more efficiently compete for their business. And liberals see the solution in Medicare-for-all, a single-payer system, amplifying the negotiating might the federal health care program already leverages to keep costs down.

Brill rejected the single-payer possibility as impractical in his article but now says that he is increasingly siding with that camp. “It’s sort of the cleanest way to clean up the system,” he said.

But two panel members, Ezekiel Emanuel, a senior fellow at CAP who advised the Obama administration on its health care law, and Giovanni Colella, CEO of Castlight Health, offered more market-oriented, all-payer alternatives.

Colella, whose company is dedicated to making health care costs and quality of different providers transparent and comparable, argued that better information will go a long way toward transforming the health care sector into a free market.

Emanuel argued that the public is unlikely to ever have good enough information to become selective health care consumers or, at least, is unlikely to act on that information. He pointed instead to payment reforms such as pilot projects included in the Affordable Care Act that pressure providers themselves to profit from becoming more efficient. And he said that he expects the growth of health care costs, which historically have far outpaced inflation, to level off with the growth in the rest of the economy by the end of the decade.

Brill believes that the federal health care law in general does little to control costs and will most likely drive up the cost of insurance because of new requirements for more robust coverage.

He gave little credence to the Beltway policy wonk goal of transforming the health care system away from paying for quantity of services provided to paying for health outcomes and the quality of care. He said similar efforts to move the legal profession away from billing by the hour and toward meeting performance benchmarks have either failed or proved more expensive.

“If I have to read another [former Office of Management and Budget Director Peter] Orszag article on fee-for-service, I will hang myself,” Brill said.

http://www.politico.com/story/2013/03/experts-debate-all-payer-setups-vs-medicare-for-all-88835.html#ixzz2NWPKFElV

Don't look for workplace wellness programs to produce significant cost savings

A Hospital System’s Wellness Program Linked To Health Plan Enrollment Cut Hospitalizations But Not Overall Costs

By Gautam Gowrisankaran, Karen Norberg, Steven Kymes, Michael E. Chernew, Dustin Stwalley, Leah Kemper and William Peck
Health Affairs, March 2013

This study examined the effectiveness of a program put in place by BJC HealthCare, a hospital system based in St. Louis, Missouri, that tied employees’ eligibility to participate in the system’s most generous health plan with participation in a wellness program. We found reductions in inpatient costs but similar increases in non-inpatient costs. Therefore, we conclude that although the program did cut some hospitalizations, it did not save money for the employer in the short term. This finding underscores that wellness program incentives under the Affordable Care Act are unlikely to greatly reduce health care spending over the short run.

http://content.healthaffairs.org/content/32/3/477.abstract#aff-7

And…

Wellness Incentives In The Workplace: Cost Savings Through Cost Shifting To Unhealthy Workers

By Jill R. Horwitz, Brenna D. Kelly and John E. DiNardo
Health Affairs, March 2013

The Affordable Care Act encourages workplace wellness programs, chiefly by promoting programs that reward employees for changing health-related behavior or improving measurable health outcomes. Although there may be other valid reasons, beyond lowering costs, to institute workplace wellness programs, we found little evidence that such programs can easily save costs through health improvement without being discriminatory. Our evidence suggests that savings to employers may come from cost shifting, with the most vulnerable employees — those from lower socioeconomic strata with the most health risks — probably bearing greater costs that in effect subsidize their healthier colleagues.

Despite the proliferation of wellness programs, drawing reliable conclusions about their financial returns on investment is difficult. Safeway credits its program with holding per capita health care costs flat from 2005 to 2009. However, employers’ reports are largely anecdotal. Some of them may attribute savings to wellness programs that could have resulted from unrelated causes, such as concurrent benefit restructuring or selection via restrictions on participation in the programs to certain job categories. A review of employer wellness studies concludes that they commonly suffer from insufficient controls, selection, and inadequate data.

http://content.healthaffairs.org/content/32/3/468.abstract

Comment:

By Don McCanne, M.D.

Workplace wellness programs were included in the Affordable Care Act partly as a means of promoting better health, but also as a means of reducing future health care spending though prevention of disease. The problem is that there is little empirical evidence that there is a potential for large cost savings from these programs. The two articles cited tend to confirm that wellness programs should not be relied upon to control future spending.

In no way does this mean that workplace wellness programs should be abandoned. Promoting health is a beneficial endeavor and should be encouraged. Rather, there are two other take-home lessons from these articles.

If financial incentives are included in wellness programs, they should be very carefully designed. The article by Jill Horwitz and her colleagues shows that savings to employers may result in the shifting of costs to employees who are more vulnerable due to their lower socioeconomic status which is associated with greater health risks. Using wellness funds for the already healthy while penalizing the more vulnerable is not wise policy.

The other lesson is that we should not pretend that wellness programs, along with the other tweaks in the Affordable Care Act, are going to bring us enough cost savings such that we can abandon efforts to enact the fundamental reforms that we need to ensure that absolutely everyone receives essential health care services under a program that we can afford.

Enacting a single payer national health program – an improved Medicare for all – is perhaps the most important step that we can take to promote wellness for all of us. Of course, there are many other public health measures that we should support, including addressing our serious socioeconomic inequities and injustices. But enacting single payer would be a great first step.

PNHP members react to Time's ‘Bitter Pill’

PNHP note: In addition to longer commentaries by Dr. James Kahn and Dr. Don McCanne on Steven Brill’s special report in Time magazine titled “Bitter Pill: Why Medical Bills are Killing Us,” many members and supporters of Physicians for a National Health Program sent in letters to the editor of the magazine. We reprint here a selection of those letters, none of which have been among the 21 letters published to date.Bitter Pill

Accurate data, flawed conclusions

In “Bitter Pill,” a well-researched and in many ways thoughtful essay, Steven Brill gets all the data right, but then draws conclusions that are surprisingly off the mark.

After providing nearly 20 pages of damning evidence — against both the excesses and inefficiencies of the private health insurance industry, and the runaway profiteering of hospitals, pharmaceutical and device manufacturers — he arrives, or appears to arrive, at the obvious point: that is, “the best way both to lower the deficit and to help save money for people” is “the single payer approach favored by liberals and used by most developed nations.” Here he is right on the mark. But then abruptly, having just provided an argument that clearly supports it, he dismisses this conclusion. He provides two reasons for backing away from single payer: first, “no doctor could hope for anything approaching the income he or she deserves (and that will encourage future doctors to want to practice).” Second, “this kind of systemic overhaul … seems unrealistic” given the extraordinary political power and influence of the health care industry.

The first assertion is factually incorrect. In fact, most doctors would earn the same under a single-payer system as they do now. The main difference in the professional life of myself and of tens of thousands of physicians like me would be freedom from the unimaginably exhausting and time-consuming demands of private insurance company rules and regulations. For those doctors whose high incomes ($1 million or more annually) result from billing for individual procedures like cardiac catheterization and joint replacements, incomes would likely suffer somewhat, but would certainly remain in the mid- to high-six figures. It’s hard to believe that as a nation, we would reject such urgently needed reforms simply to protect these multimillion-dollar salaries.

The second assertion — that it “seems unrealistic” for Medicare to be improved and expanded to include comprehensive coverage for all Americans — is logically flawed. Brill himself admits that the halfway measures he goes on to propose are similarly “unlikely to happen” given the current political power structure. Beyond this, if our society had followed his logic in 1917 or 1954, today we’d be living in a country where women were forbidden to vote and where schools were separated by race.

The injustice of our current health care system is a civil rights issue as urgent as women’s suffrage and desegregation. Now the oppressed are not only women or minorities, but all of us who find ourselves outside the 1 percent of wealth and influence. An improved and expanded Medicare for All would change this. Virtually all other developed countries know this. When will we wake up to this?

Jim Recht, M.D.
Cambridge, Mass.
The writer, a psychiatrist, is co-chair of Massachusetts PNHP.

Brill missed the elephant in the room

Mr. Brill focuses on eight hospital billing statements yet dismisses the American private insurance industry as “ho-hum.” He missed the biggest elephant in the room. The largest single expense in American medicine is the administrative costs of private insurance that would be recovered with a single payer financing plan – that’s $350 billion annually and rising. That $350 billion represents 40 percent of our premium dollars. Half are insurance industry administrative costs; the other half are physician and hospital costs to collect from insurance companies. Remember this industry denies 30 percent of all first claims, requiring physicians to spend $82,000 each to pay clerks to persist in second and third claims.

That $350 billion is more than the combined income of all American physicians; more than the nation spends on all medications; more than we spend on obesity and tobacco-related diseases – combined; and more than we need to expand care to provide complete coverage of everyone in the country.

Every other industrialized nation provides better care to more people for less money than we do, and none use a private insurance industry like ours. Replacing it with a national single payer financing agency, even with no change in hospital billing, will provide everyone in the U.S. with health care for less than spend now. Mr. Brill found the bitter pill but missed the elephant.

Samuel Metz, M.D.
Portland, Ore.
The writer, an anesthesiologist, is a member of the Oregon chapter of Physicians for a National Health Program.

Cure for ailing health system falls short

Mr. Brill’s excellent article does a wonderful job of showing just how expensive, chaotic, dysfunctional and inequitable our health care “non-system” is. However, his prescription for the cure for this “lethal” system leaves much to be desired.

As a physician for 40 years, a Medicare recipient, a patient and an advisor for Medicare Rights helping seniors navigate the complicated terrain of today’s Medicare, I have come to a see that there is a better way to reform. I believe that a single-payer, publicly funded, privately delivered, Medicare for All is the best solution to our health care problem. Treating health care as a social need and not as a commodity from which to make a profit is the only moral path to health justice. It is also the most fiscally conservative solution. All other industrialized nations have already figured this out.

We need to learn from them.

Elizabeth Rosenthal, M.D.
Larchmont, N.Y.
The writer, a dermatologist, is a board member of the N.Y. Metro Chapter of PNHP.

Medicare for All would drive down costs

As someone who has worked on all side
s of the health care field (regulator, nonprofit, for-profit) for 30 years, I was intrigued by the Brill piece “Why Medical Bills Are Killing Us.” On the analysis of the problem, Brill was mainly on target, but he missed the mark on most of his proposed solutions. For example, hospital competition is not the answer to getting lower prices and never has been. Hospital coordination of services within a region via regulation is a far more cost effective way to minimize duplicative purchases of expensive technology, for instance. Furthermore, group purchasing of supplies, pharmaceuticals and capital equipment by large, strong hospital systems has been shown time and again to drive down vendor prices by up to 20 percent versus pricing given to small independent hospitals with no clout. I know: I supervised hundreds of these studies in every area of the country and with many providers, including Sloan-Kettering. He glosses over the real solution: a single-payer system which forces hospitals to be more efficient. Medicare for All, incorporating quality measures, would eliminate all the “chargemaster” game playing Brill decries. The inefficient providers would be paid the same as the effective ones. With higher costs, they would be driven out. Likewise for the ones with poor quality. Plus, the 20-plus percent administrative/marketing costs currently charged by private insurance companies, versus just 3 percent with Medicare, could be put back into direct care where it belongs.

Jack Bernard
Monticello, Ga.

Mere tweaks won’t solve the problem

Steven Brill, in his well-researched special report, “Bitter Pill,” built a definitive case for further improving Medicare and then providing it for everyone as a single-payer national health program. Citing the power of special interests, he then rejects that concept and leaves us with a recommendation for a few tired ideas that would only tweak our dysfunctional health care system. It is time for us to accept the fact that the only special interest that really matters is the patient.

Don McCanne, M.D.
San Juan Capistrano, Calif.
The writer is senior health policy fellow, Physicians for a National Health Program.

Medicare model points the way

Steven Brill rightly identifies the heart of our health care cost problem as wildly inflated charges as well as wasteful diversion of health care dollars to corporate profits enforced by governmental protections for corporate interests. He also rightly notes that LOWERING the age of eligibility for Medicare (making Medicare available to more people) would improve/reduce our health care costs. But then he waffles and says that he isn’t going to come right out and support “single payer,” when, of course, he has just made a case for the single-payer system we have right now that is working so well: Medicare. I’m not sure why he does this, but let me underscore again his observation that Medicare is functioning well, that it does not pay the wildly inflated charges, and that we should make the Medicare option available much more widely — ideally available to all — if we are to bring health care costs under control without simply requiring all patients to pay for everything out of pocket (as increased co-pays or as payment for coverage denied by corporate insurance plans).

Judy Bertelsen, M.D.
Berkeley, Calif.
The writer practices geriatric medicine and is a member of PNHP California.

Why not turn to ‘most logical’ solution?

Steven Brill’s “Bitter Pill: Why Medical Bills are Killing Us” describes the irrationality of the health care market and underscores its gross unfairness toward our nation’s patients, be they insured, underinsured or uninsured. However, Mr. Brill’s remedies for this mess (“tax hospital profits at 75 percent and have a tax surcharge on all non-doctor hospital salaries that exceed, say, $750,000” and “outlaw the chargemaster”) seem more contorted and less workable than what Sloan-Kettering’s chief operating officer, John Gunn, called the “most logical solution” — a single-payer system, an expanded and improved Medicare for all. The Medicare model is a much simpler, economical way of paying for care, and from the look of the shiny new hospitals in retiree-laden Florida, it’s clearly viable.

Roy Korn, M.D.
Middleburgh, N.Y.
The writer is an internist who specializes in geriatric medicine.

Time for Medicare-For-All

By Bob Balhiser
Independent Record (Helena, Mont.), Letters, March 9, 2013

Health insurance companies are parasites that add no value whatsoever to our health care system!

I have a Medicare supplement plan and my wife has a high deductible ($5,950) individual plan. The same company writes both policies. Rates for my plan are regulated by Medicare while hers are not regulated at all. Here are recent increases for both types of health insurance plans: rates for my Medicare Supplement increased 9.2 percent from 2011 to 2012, and 9 percent from 2012 to 2013. During the same time period, my wife’s private health insurance premium rose 15.5 percent and 20.7 percent respectively. We can hardly wait until she becomes eligible for Medicare so we can quit feeding this parasitic company.

The example above demonstrates why we should rid our country of private health insurers and implement a single-payer system such as Improved Medicare-For-All. Granted, opponents of single payer health care will be the first to call it “socialized medicine,” but nothing could be further from the truth. Instead, Medicare-For-All might more properly be described as “socialized health insurance” wherein private sector doctors, hospitals and pharmacies are paid by a single insurer called Medicare.

What are the potential savings from Medicare-For-All done right? Well, the U.S. pays 18 percent of Gross Domestic Product for health care, while other advanced countries with “socialized health insurance” pay an average of 11 percent GDP. That 7 percent GDP difference in our economy would amount to a savings of $1 trillion annually. So, let’s do something that should appeal to Republicans and Democrats alike. Let’s implement Medicare-For-All and apply all the savings toward national debt reduction. How’s that for a win/win solution?

Bob Balhiser resides in Helena, Mont.

http://helenair.com/news/opinion/readers_alley/time-for-medicare-for-all/article_728cc2ce-8911-11e2-a4af-001a4bcf887a.html

Analysis of Pennsylvania's single payer proposal

The Pennsylvania Health Care Plan: Impact and Implementation

By Gerald Friedman, Ph.D., Professor of Economics, University of Massachusetts – Amherst
March 5, 2013

Executive Summary

Pennsylvania is on an unsustainable economic path.  Health care costs are absorbing a growing share of personal income. Between 1991 and 2009, spending on health care in the Commonwealth increased by $60 billion, rising nearly twice as fast as state income. Little of this increased spending can be attributed to improvements in health care. Instead, the fastest growth has been in administration and billing operations… while a growing number of Pennsylvanians are without adequate health insurance or access to needed care.
 
The Pennsylvania Health Care Plan (PHCP) would put the state on a sustainable path by controlling health care costs while giving all citizens access to quality health care. It would establish a single-payer system to finance health care — paying for all necessary medical care including hospital care, visits to doctors / nurses, occupational and physical therapy, prescription drugs, medical devices, medically necessary nursing home care and home health care. By reducing administrative costs and anti-competitive market practices, the PHCP could save $33 billion in 2014, almost 23% of existing medical spending. These savings would allow the expansion of coverage to all Pennsylvania residents while still saving over $17 billion, or $1,335 per person.
 
The PHCP would be funded by a 10% payroll tax paid by employers and a 3% levy on income paid by recipients. The shift from insurance premiums and out-of-pocket expenses to taxes linked with income would lower health care spending for over 80% of Pennsylvanians.

Businesses and local governments would also benefit, saving on payroll costs as well as the premiums paid to cover the “administrative costs” associated with private health insurance. By lowering payroll costs, the PHCP would make Pennsylvania businesses more competitive, producing an additional 120,000 – 200,000 new jobs.

(Legislation to be introduced March 19 in the Pennsylvania Senate as SB 400)

http://healthcare4allpa.org/wp-content/uploads/2013/03/EISExecutiveSummary.pdf

Full report (38 pages)
http://healthcare4allpa.org/wp-content/uploads/2013/03/EconomicImpactStudy3513.pdf

Comment:

By Don McCanne, M.D.

Another single payer study… another result that makes single payer the imperative. Are we slow learners? Or what?

Pa. study proves single payer will save $17 billion annually and cover everybody in state

By Chuck Pennacchio
OpEd News, March 11, 2013

A single-payer health care plan will save Pennsylvania families, businesses and tax payers $17 billion annually while providing comprehensive health care to all, according to an economic impact study released today.

Commissioned by Health Care for All PA, a statewide non-profit organization, the study was conducted by University of Massachusetts – Amherst professor of economics Gerald Friedman, Ph.D.

It compares the cost of the current for-profit health insurance model in Pennsylvania under which provider choice is limited and health services are rationed by health insurance companies to that of a consumer-driven health care system which gives people freedom to choose their own doctors, hospitals and health care providers.

The legislation to create this single-payer system will be re-introduced in the Pennsylvania Senate (Senate Bill 400) on March 19 by Senator Jim Ferlo. The name of this state-based, consumer-driven health care system will be The Pennsylvania Health Care Plan.

Some of the important advantages of The Pennsylvania Health Care Plan are:

* Comprehensive coverage for every resident of Pennsylvania, including dental, vision, mental health and prescription drug services;

* Eliminates the need for hospitals to absorb the cost of care for the uninsured;

* Reduces bureaucracy for private physicians resulting in reduced administrative costs and improved compensation for private physicians;

* Reduces or eliminates health insurance over-costs for small business, allowing for more job creation, greater reinvestment of profits, and reduced workers’ compensation costs.

* Radically reduces the total cost of health care to levels more consistent with costs in the rest of the industrialized world.

A one-page Executive Summary along with the full text of the Economic Impact Study is available here.

Please spread the word. Contact your friends and legislators. Help us with donations for advertising and speaker transportation costs. Health care for all IS possible in Pennsylvania, but only if we demand it.

Read the entire study here.

Chuck Pennacchio is executive director of Health Care for ALL PA.

http://www.opednews.com/articles/Study-proves-that-single-p-by-Chuck-Pennacchio-130311-711.html

New York: Gottfried, Perkins introduce universal health care bill

By Clara A. Smith
The Legislative Gazette (Albany, N.Y.), March 11, 2013

Assemblyman Richard Gottfried and Sen. Bill Perkins have unveiled a bill that, if adopted, would create a new single-payer health plan called New York Health.

The health plan, designed to provide widespread health care for all New Yorkers, would provide health coverage regardless of employment, wealth, age, income or any other factor. The plan would replace private insurance coverage with universal coverage for all New Yorkers.

“Health care should be a right, not a privilege,” said Gottfried, the Assembly Health Committee chair. “Coverage should be driven by the needs of patients, not insurance companies and stockholders. You and your doctor work to keep you healthy. New York Health will pay the bill.”

Coverage for health care would be publicly funded under the new health plan and would include a benefits package more inclusive than most health plans currently offered. Instead of patients and employers paying deductibles, premiums and co-pays, coverage would be funded through a graduated tax on income, based on ability to pay, according to the sponsors of the legislation.

“There would be two basic sources of revenue; one would be a payroll tax that would be paid primarily by employers that would be on all payroll income and progressively graduated so that higher wage and [salary] earning employees would pay a higher percentage than lower,” Gottfried said at a press event announcing the introduction of the bill. “The second revenue source would be a surcharge on the state income tax on taxable interest dividends, capital gains … that is important because our wealthiest earners in our society, their wealth doesn’t come from a salary, it comes from interest in dividends and capital gains.”

Perkins, in a letter advocating for the bill that was sent to fellow Senate members, describes current federal health care as having made improvements over the years but unfortunately still gives insurance companies too much control of “our health and our wallets.” He said that currently patients and their doctors are forced to figure out what is covered under insurance companies while trying to get reimbursed.

“Health care should be about health, not profit,” Perkins said at the press event. “For some this may be a new issue, but this issue has been around for years and it’s time has come. In fact, it has more than come. I have always advocated that your health is your wealth and I am proud to sponsor this bill.”

The bill, (A.5389/S.2078) notes that all New Yorkers would be covered for “medically necessary services,” such as preventative, specialist and primary care; mental health; dental; reproductive health care; medical supply costs and prescription drugs.

“Right now, five New Yorkers die every day due to lack of health care and many go bankrupt from medical bills. That is unacceptable and inhumane,” said Laurie Wen, executive director of Physicians for a National Health Program. “A universal, publicly financed health care system would save lives [and] money. It’s a win-win situation for patients, physicians and our economy.”

All New Yorkers under the plan would choose a primary care practitioner or other provider of their choice to “provide care coordination.” This move is meant to help patients get the care and follow-up attention they need so they can successfully navigate the new health plan system.

“New Yorkers — as individuals, employers and taxpayers — have experienced a rapid rise in the cost of health care and coverage in recent years,” as stated in a sponsor memo submitted by Perkins. “This increase has resulted in a large number of people without health coverage.

“Businesses have also experienced extraordinary increases in the costs of health care benefits for their employees. An unacceptable number of New Yorkers have no health coverage and many more are severely underinsured.”

In 2009, The New York State Department of Health and Department of Insurance, based on a study by the Urban Institute, released a report that declared single-payer plans the “most cost-effective way to provide health care to all New Yorkers.”

“Single-payer health care is just, simple, clear and efficient,” Dr. Paul Sorum of Albany Medical Center said at the press event. “We ask the state legislature and the governor to save the physicians and patients of New York state to allow the physicians to take care of patients not insurance companies, to be a beacon for the rest of the country, to lead us into universal single-payer health care.”

If passed, this bill would be the second of its kind enacted in the United States. Vermont, in 2011, enacted legislation called “Green Mountain Care” that is set to create the first functional single-payer health care system within the next several years.

Gottfried clarified at the event that if the bill is passed it will take a few years for New York to get the proper systems ready to implement the plan ready.

The bill is currently co-sponsored by 83 other legislators.

http://www.legislativegazette.com/Articles-Top-Stories-c-2013-03-11-82933.113122-Gottfried-Perkins-introduce-universal-health-care-bill.html

Would busting up our consolidated health care market lower prices?

No Competition: The Price Of A Highly Concentrated Health Care Market

By Diane Archer
Health Affairs Blog, March 6, 2013

As health care costs swell, the private insurance system that covers most working Americans is in crisis. Americans are paying higher and higher premiums for increasingly threadbare coverage, and employers are getting out of the business of providing health care altogether. Rising costs cannot be attributed purely to improving technology or increasing operating costs for providers, because Medicare has controlled per capita spending more effectively than commercial insurers that provide employer-sponsored coverage.

Rather, commercial insurers cannot contain costs because the pricing mechanism for medical services is broken. When it comes to health care, competition simply isn’t working.

Prices in the private sector are out of control. On average, private insurers pay 25 percent more than Medicare for physician services and 30 percent more for hospital care. What’s more, both public and private sector payment rates for doctors in America are far and away the highest in the world, and research suggests that these high rates are among the principal reasons health care is so much more expensive in this country than elsewhere.

These international gaps are much wider in the private sector. For instance, private payments for an office visit in the United States cost 70 percent more than those abroad, while public payments are 27 percent higher.

Rather than being influenced by competition, health care prices are largely set by insurers and providers with monopoly power to maximize profits. Big hospital chains and provider groups dominate most local markets and extract extremely high rates from dominant insurers, which are motivated by fear of losing market share if they fail to attract these providers to their networks.

Commercial health plans have little bargaining power when they negotiate prices with monopolistic providers. In fact, even insurance industry lobbyists admit that private health plans cannot hold down the cost of health care. Insurers choose instead to adapt to this non-competitive environment.

So what is to be done?

The Patient Protection and Affordable Care Act (“ACA”) will for the first time guarantee the overwhelming majority of Americans access to good coverage, a huge step forward.  But it expands coverage mostly by relying on the dysfunctional private insurance market. There is no evidence that the newly created exchanges will exert any downward pressure on prices, given the experience of private plans to date.

Congress needs to recognize that players in the private health care marketplace will continue to set excessive rates until they are stopped. These exorbitant rates are not only hurting working people, they are also driving up Medicare costs and imposing a massive burden on taxpayers and the federal government. Doctors and hospitals are conditioned to expect higher and higher rates and demand higher payments from public programs.

Congress has three options to rein in runaway prices: It can use Medicare-style techniques to set rates or rate ceilings in the commercial marketplace, including in the new health insurance exchanges, just as every other developed nation does. It can give people under 65 the choice of a public health insurance plan that works like Medicare, competes against the private health plans, and brings down costs. Or it can do both.

Over the long-term, the federal government might be able to address the broken pricing mechanism by enforcing antitrust laws more aggressively than before to break up monopolies in health care markets. But it is worth remembering that even heavily regulated insurance markets – such as Medicare Advantage or the exchange system in Massachusetts – have not been particularly successful at controlling costs. The simple fact is that the array of existing incentives for commercial insurers does not tend to drive down prices. Given the direction of commercial insurance, relying on the current version of “competition” is destined to jeopardize access to health care for millions of working Americans while driving public spending upward.

http://healthaffairs.org/blog/2013/03/06/no-competition-the-price-of-a-highly-concentrated-health-care-market/

Comment:

By Don McCanne, M.D.

The increase in anti-competitive consolidation of hospitals and physician groups is thought to be contributing to our high health care spending, especially since private insurers have been very feeble price negotiators in this concentrated market. Does that mean that we need the government trust busters to step in to introduce more competition in health care?

As Noble laureate Kenneth Arrow demonstrated a half century ago, there are many reasons that merely busting up consolidated health systems could never lead to a functioning competitive market in health care. Besides, the cost escalation has always been with us, long before the more intense consolidation efforts began. As far as the wish to achieve lower prices through competition, we can forget about competing hospitals, competing physician groups, competing accountable care organizations, and, especially, competing private insurance plans.

As far as what we should do, Diane Archer suggests either extending Medicare’s administered pricing function to private insurers as well, or providing a Medicare-like plan that competes with the private insurers, or both.

During the debate over the “public option,” we explained how merely adding another insurance option, even though government-run, to our highly dysfunctional, fragmented system of financing health care would have very little impact on achieving our goals of universality, equity, efficiency, and affordability.

Although government-administered pricing has been effective for Medicare, using it for private insurers also would fall short of these goals since the dysfunctional system would still remain in place. Even combining price controls and a public plan option together would still be inadequate, for the same reasons.

So what should we do? Instead of continuing to apply patches to our current system, we should replace it with an improved Medicare that makes health care affordable for all of us. There would be no need for public option plans, nor for government rate setting of private insurance, if we got rid of the overpriced and inefficient market of private health plans.