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Patient trapped in health insurance rate hike

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Patient trapped in health insurance rate hike

A patient's move from one Southern California community to another nearby triggers a 25% rate hike by Anthem Blue Cross despite no change in her care

By David Lazarus
Los Angeles Times, November 13, 2012

It’s understandable that car insurance rates can change when you move. One neighborhood might have more accidents or burglaries than another.

But health insurance?

Joan Swope, 62, moved recently from Cathedral City, just down the road from Palm Springs, to nearby Palm Desert.

She informed her insurer, Anthem Blue Cross, of the change of address. A few weeks later, Anthem responded with a notice stating that, because of the move, Swope’s monthly premium on her individual policy will increase to $524 from $418.

That’s a more than 25% rate hike. For a move of less than 10 miles.

“It’s ridiculous,” Swope told me. “I’m going to the same doctor. I’m going to the same facilities and the same drugstore. Nothing has changed.”

Nothing except her ZIP Code. And in the actuarial world of insurance, that’s a sufficiently life-altering event to justify an extra $1,272 in annual payments — on top of a $5,000 deductible.

And here’s the real kick in the teeth: It’s perfectly legal.

“Health insurers are permitted under the law to charge a different price when someone relocates to a different rating region,” said Janice Rocco, California’s deputy insurance commissioner for health policy.

What that means is that insurers have carved the state into various zones based on the average cost of local doctors and hospitals. Cross from one zone into another, and your rates can skyrocket.

But what about a situation like Swope’s? She may now live in a new rating zone, but her interaction with the healthcare system is the same as it was before — same doctor, same hospitals, same druggist.

I asked Rocco if that was fair.

All she’d say was that the federal healthcare reform law empowers the state to redraw insurers’ rating regions by 2014. She said it will be up to the Legislature to do a good job of it.

Anthem acknowledged that Swope informed that company of a new billing address when she moved last year to Cathedral City from Camarillo. And the insurer said it sent her bills to a post office box in Cathedral City.

But Anthem says Swope never explicitly said that her billing address and home address were one and the same. As far as the insurer was concerned, she still lived in Camarillo, even though her bills were being sent nearly 200 miles away.

Burton Swope, Joan’s husband, said they had no such problems with any other company they do business with. All of them, including their car insurer, figured out on their own that the couple had moved.

“Any idiot could look at my wife’s medical bills and see that she was now in the Coachella Valley,” he said. “Everyone got it except Anthem.”

Kristin Binns, an Anthem spokeswoman, suggested that Swope should consider herself lucky. Her monthly rate should have increased by about 19% when she moved from Camarillo to Cathedral City, before rising again with the move to Palm Desert.

Binns indicated that Anthem won’t try to shake down Swope for any under-payments resulting from the insurer not quite understanding where she resided.

That’s nice of them. But what this really shows — as if more proof were needed — is the utter lunacy of our healthcare system.

Step over an imaginary line drawn by some insurance bean counter, and your rate can soar 25%. In what parallel universe is this considered an acceptable way to provide healthcare?

Swope’s case also highlights another outrage: Because of a disorder involving her esophagus, she won’t be able to obtain insurance from any other company until Obamacare provides that right in 2014. In the meantime, she has no choice but to accept any rate hike Anthem throws her way.

With cars, your insurance rate is based in part on your driving record, but there are also external factors beyond your control. If you live in an area that’s more prone to accidents or vehicular damage, you may pay a higher premium to reflect the higher risk.

Healthcare is healthcare. Or at least it should be. Treating a broken arm at one facility shouldn’t cost more than elsewhere. Chemotherapy at one hospital shouldn’t cost more than using the same chemicals at another.

Of course, if you move from Pacoima to Pakistan, your potential for harm is perhaps greater, and a health insurer would be justified in setting rates at a commensurate level.

But if you move from one community in Southern California to another — whether it’s 200 miles or just a few minutes away — you probably haven’t exposed yourself to any meaningful environmental change, unless you’re now living on a toxic-waste dump.

In any case, Swope’s health and her commitment to staying well are no different today than they were before either move.

“It’s highway robbery,” said her husband, who, at 66, enjoys the peace of mind afforded by government-run Medicare. “What’s my wife going to do until the reform law kicks in? Where else can she go?”

The answer is nowhere.

Swope has been insured by Anthem since 2000. In 2002, she was diagnosed with Barrett’s esophagus, a complication of acid reflux. According to WebMD, the disorder increases one’s risk of esophageal adenocarcinoma, “a serious, potentially fatal cancer of the esophagus.”

“When I was diagnosed, my doctor told me not to even think about changing insurers,” Swope said. “They won’t take me.”

The healthcare reform law will fix that. Beginning in 2014, people who don’t have coverage from an employer will be able to shop for insurance on so-called exchanges. Insurers will be barred from denying coverage to anyone with a preexisting condition.

But that’s still more than a year away. Does Swope have any recourse until then?

She and her husband have filed a grievance with Anthem. They said the insurer has yet to respond.

Rocco, the deputy insurance commissioner, said there isn’t much her office can do. Regional rates are permitted under state and federal law, she said, making it difficult for consumers to challenge such rate hikes.

And even though Swope is a hostage to Anthem because of her preexisting condition, regulators have no authority to tell the insurer to operate differently, Rocco said.

The fault, it seems, is Swope’s. She had the temerity to cross from one arbitrary insurance zone into another. That will cost her an extra $106 a month.

For nothing.

http://www.latimes.com/business/la-fi-lazarus-20121113,0,1294415.column

AFT Wisconsin endorses H.R. 676, national single-payer health care

By All Unions Committee for Single-Payer Health Care – H.R. 676

On Oct. 27, at its convention in Manitowoc, Wis., the American Federation of Teachers-Wisconsin endorsed Congressman John Conyers’ bill, H.R. 676, a national single-payer health care program that would implement Expanded and Improved Medicare for All.

“AFT-W will … mobilize our members and our community at the grassroots to encourage other members of the House to sign on as co-sponsors of H.R. 676 when introduced in the next Congress and to encourage Senators to introduce a companion bill in the Senate,” the resolution states.

The passage of this resolution was reported by Buzz Davis, AFT Wisconsin Retiree Council Executive Board Member, who stated that “the membership understands that single-payer health care is the way to go and that insurance companies should be removed from the equation.”

Davis, a retired state planner, said that taking the Medicare program and expanding it to everyone is the way to achieve quality health care for everyone at the best price.

He said that the union also stands strongly against any cuts to Social Security, Medicare, or Medicaid. “Debt during a recession is not a problem. Public spending is what needs to be done in order to put people to work,” he said. He called the current panic over the deficit “a drummed up crisis.”

He added that the union is fighting hard to rebuild in the wake of Governor Walker’s attacks on all of Wisconsin’s unions.

AFT Wisconsin, founded in 1931, is a chapter of the American Federation of Teachers. The union represents 17,000 employees working in public schools, vocational colleges, universities, and for the state.

****

H.R. 676 would institute a single-payer health care system by expanding a greatly improved Medicare to everyone residing in the United States.

H.R. 676 would cover every person for all necessary medical care including prescription drugs, hospital, surgical, outpatient services, primary and preventive care, emergency services, dental (including oral surgery, periodontics, endodontics), mental health, home health, physical therapy, rehabilitation (including for substance abuse), vision care and correction, hearing services including hearing aids, chiropractic, durable medical equipment, palliative care, podiatric care, and long-term care.

H.R. 676 ends deductibles and co-payments. H.R. 676 would save hundreds of billions annually by eliminating the high overhead and profits of the private health insurance industry and HMOs.

In the current Congress, H.R. 676 has 76 co-sponsors in addition to Conyers.

H.R. 676 has been endorsed by 597 union organizations including 144 Central Labor Councils/Area Labor Federations and 40 state AFL-CIOs (KY, PA, CT, OH, DE, ND, WA, SC, WY, VT, FL, WI, WV, SD, NC, MO, MN, ME, AR, MD-DC, TX, IA, AZ, TN, OR, GA, OK, KS, CO, IN, AL, CA, AK, MI, MT, NE, NJ, NY, NV & MA).

For further information, a list of union endorsers, or a sample endorsement resolution, contact: Kay Tillow, All Unions Committee for Single Payer Health Care—H.R. 676, c/o Nurses Professional Organization (NPO), 1169 Eastern Parkway, Suite 2218, Louisville, KY 40217. Phone: (502) 636-1551 E-mail: nursenpo@aol.com Web: http://unionsforsinglepayer.org

Employers expanding use of higher deductibles

The Prevalence and Cost of Deductibles in Employer Sponsored Insurance:
A View from the 2012 Employer Health Benefit Survey

Kaiser Family Foundation, November 2012

The percent of covered workers enrolled in a plan with a general annual deductible has increased significantly over time.  In 2006, just over half (52%) of covered workers had a deductible for single coverage, compared with almost three-quarters (72%) in 2012. 

Overall, the average general annual deductible is $1,097 for covered workers enrolled in a single coverage plan requiring a deductible; an increase of 88% since 2006.

Deductibles are much higher for workers enrolled in HDHP/SO plans (savings options), with 25% of workers enrolled in a plan with a deductible between $1,000 and $1,400, and 25% of workers in a plan with a deductible greater than $2,500.

Although workers at small firms are no more likely to be enrolled in health coverage that includes a deductible, they typically face much higher deductibles than workers at large firms.  The average deductible for covered workers enrolled in single coverage at a small firm is nearly twice as much as the deductible for covered workers at larger firms.

Covered workers enrolled in PPO and POS plans with many higher-wage workers tend to have lower deductibles than their counterparts at firms with fewer higher-wage workers.  Covered workers in HMO, PPO and HDHP/SO plans at firms with some unionized workers have lower general annual deductibles than workers at firms without unions.

Conclusion

In addition to contributing more towards premiums, covered workers are increasingly faced with higher cost sharing.  A larger proportion of workers are required to meet a deductible prior to utilizing services and these deductibles are increasing in size.  It has become commonplace for covered workers to be enrolled in a plan with a deductible of $1,000 or more.  While many working families have sufficient savings and coverage in case of a medical emergency, the growth in workers’ contributions and cost sharing may increasingly become a financial strain on some households.

http://www.kff.org/insurance/snapshot/chcm110212oth.cfm

Comment:

By Don McCanne, MD

Ever higher deductibles have now become the standard for employer-sponsored plans. The new state exchange plans to be offered to individuals and small businesses will have to have higher deductibles as well because of their comparatively low actuarial values.

The conclusion in this report states that “the growth in workers’ contributions and cost sharing may increasingly become a financial strain on some households.” This is an overly conservative statement since innumerable studies have shown that high deductibles already do cause both financial hardship and impairment of access to appropriate health care.

A single payer system controls costs without the necessity of imposing financial barriers such as high deductibles. Let’s change to policies that take care of patients first rather than policies that shift costs from employer or government budgets to individual patients, especially since ultimately we’re all funding those budgets anyway, whether as consumers or taxpayers.

Get second opinion on Medicare Advantage plan

By Brent Schillinger, M.D.
Palm Beach Post, Nov. 10, 2012

The airwaves, the Internet and newspapers have been loaded with a lot of seasonal advertising. This is not a reference to the political ads that until Election Day seemed to be bombarding us 24/7. I’m talking about the ads urging senior citizens to sign up for a Medicare Advantage program.

The period between Oct. 15 and Dec. 7 has been designated an open enrollment period for Medicare Advantage, which is basically the new name for what used to be known as Medicare HMO plans. Medicare Advantage is a marketing strategy, which suggests that seniors who stay with traditional Medicare are at a disadvantage.

When the legislation was signed into law by President George W. Bush, the Medicare Advantage programs were basically an experiment by the private health insurance companies to say, “The private sector can offer the same benefits as Medicare, only better — and the free market will prove it.”

The Medicare Rights Center, a senior advocacy group, takes a critical position: “The idea behind the plans is to provide better services and lower out-of-pocket costs. However, it doesn’t always work that way.

“While the plans must provide a benefit ‘package’ that is at least as good as original Medicare’s and cover everything Medicare covers, the plans do not have to cover every benefit in the same way. For example, plans may pay less for some benefits, like skilled nursing facility care, and offset this by offering lower co-payments for doctor visits.”

The Medicare Advantage patient may save a bit up front, but in order to maintain profits for the private insurers, the consumer must realize there is usually a sacrifice when it comes to choices that one would have had, had he or she remained in traditional Medicare. There is a whole host of potential problems, such as:

* Care can actually end up costing more, to the patient and the federal budget, than it would under original Medicare, particularly if one suffers from a very serious medical problem;

* Some private plans are not financially stable and may suddenly cease coverage;

* One may have difficulty getting emergency or urgent care, due to rationing

* The plans only cover certain doctors, they often drop providers without cause, and then the continuity of care is broken;

* Members have to follow plan rules to get covered care;

* There always are restrictions in the choices of doctors, hospitals, and other providers, again a form of rationing that keeps profits up for the insurance company bondholders but may limit patient choice;

* It can be difficult to get care away from home;

* The extra benefits offered can turn out to be less than promised;

* The Medicare Advantage plan may ration certain high-cost medications.

In spite of the obvious problems, Congress continued to barrel along, offering incentives and allowing accounting advantages to encourage enrollment in the Medicare Advantage experiment. A recent study published in the International Journal of Health Services calculates that the private insurers have drained over $200 billion in excess payments from the Medicare budget.

How did this happen? Under the funding mechanism, the private plans are paid, on average, 9 percent to 13 percent more than traditional Medicare programs to provide the same coverage. This legislation was a bonanza for the private insurers. So what we are left with are plans that are fraught with problems but are generating profits for the insurance industry. Other than the stockholders, who could argue that paying 9 percent to 13 percent more for the same thing is sound financial thinking?

Perhaps taxpayers need to question whether they should be financing an experiment that costs billions more than it would have if people had remained in traditional Medicare. The Affordable Care Act, known as Obamacare, takes some preliminary steps to fix this flawed reimbursement formula, but only time will tell how that will play out.

For the senior consumer as well as the practicing physician, it’s a confusing state of affairs. For the doctors, learn as much as you can about the options. For the patients, start by speaking with your physician. He or she should be able to guide you in the best direction. For additional information visit www.pbcms.org.

Brent Schillinger, M.D., is president of the Palm Beach County Medical Society Services Foundation.

http://www.palmbeachpost.com/news/news/opinion/commentary-get-second-opinion-on-medicare-advantag/nS2Dd/

Real Danger of “Obamacare”: Insurance Company Takeover of Health Care

By Nomi Prins
Thoughts: Nomi Prins blog, Nov. 10, 2012

Election rhetoric shuns the big picture in favor of the bigger platitude. Now that The Show is over, we are left with the equivalent of a Sunday morning hangover following a binge of promises and lies. We leave the theatre of political spectacle on steroids for the real world of unstable economy, a globally and publicly subsidized financial sector, and increased costs of living on everything from food to education to health-care; outpacing declining median incomes. The average cost for health insurance for a family is $15,745 per year vs. a median income of $50,502, or about half post-tax take-home pay.

“Obamacare” is the name commonly used for the Patient Protection and Affordable Care Act (PPACA) of 2010. The very moniker is indicative of how name-and-image-centric our world has become; Medicare was never called “Johnsoncare” when President Johnson signed it into law in 1965 and Johnson was not exactly a man of small-personality. At any rate, Obamacare or the PPACA ranks as one of the most misrepresented issues from the campaign, by both sides of the ever-slimming aisle.

The Tea-Party Conservative types get it embarrassingly wrong when they call it a “government takeover of health care.” Likewise, Progressive Obama-supporters are deluded in accepting it as the most sweeping healthcare reform since Medicare. (Side note: I wish the word ‘sweeping’ could be retired from politics until it actually means -sweeping.)

Here’s why. The PPACA does nothing to restructure the health insurance industry, anymore than the Dodd-Frank Act restructures the banking industry. This means everything else it attempts to do, positive or negative, will be vastly overshadowed by an industry accelerating to morph itself into a acquisition machine in order to circumvent anything that even smells like a restriction, including laws that exist and ones to come.

How? By doing the same thing energy and telecom companies did after they were deregulated in 1996, and that banks did after they were summarily deregulated (after moving that way for decades) in 1999. They are merging, consolidating, eliminating competitors, and controlling their domain. They are manufacturing power.

Investment bankers are roaming the world to exploit this hot new opportunity. That’s one reason insurance companies don’t even call themselves that anymore. Now, they are ‘managed health care’ companies. Call yourself a managed health care company, and you can buy everything from other insurance companies to hospitals to clinics to doctors. The more consolidation, the more fees bankers rake in, and the more premiums and medical reimbursements and health care procedures, each company can control.

The result of 1996 energy deregulation was a glut of crime-spawned bankruptcies like Enron. Likewise WorldCom led a pack of telecom degenerates in the production of tens of billions of dollars worth of accounting fraud. The final repeal of Glass-Steagall ignited a merge-fest of investment and commercial banks, their linkages ensuring that taxpayers, whose deposits have been protected since the New Deal, provide a safety-net upon which they can mint toxic assets loosely based on over-leveraged home mortgages, and engage in risky, speculative activity; big banks don’t go bankrupt when they fabricate values or lose big on stupid bets, they get federally subsidized in all sorts of ways.

You know who else is similarly too big to fail? The insurance industry. UnitedHealth Group, the nation’s largest health insurer covers 50% of the insurable population in over 30 states. Blue Cross-Blue Shield, covers 100 million people through a constellation of 38 sub-companies. They, and other insurance companies are growing in breadth. When companies consolidate, the result is less transparency, less competition, and more possibility for fraud and shady behavior. Every. Single. Time.

Obamacare and Accounting Fraud

By January 2014, the PPACA will require insurance companies to list their prices on competitive exchanges. In Obama-theory, this is supposed to reduce premiums via competition. But what if, say, only three companies control nearly all of the premiums? Consider the fact that it costs the same $3 to extract your money from a Chase, Bank of America or Citigroup ATM (if you don’t get it directly from the firm you bank at.) They constitute a monopoly that defies anti-trust inspection (thank you, Department of Justice.) What incentive would any of them have to charge less? None. That’s why they don’t.

Managed Health Care companies don’t just administer private, but government health insurance policies as well. The http://www.healthcare.gov website says that under the PPACA, the life of the Medicare Trust Fund will be extended to 2024 as a result of reducing waste, fraud, abuse, and slowing cost growth. President Obama promised to reduce Medicare fraud 50% by 2012 according to the site – but if he did, he forgot to mention it during the campaign period. 

To supposedly combat price hikes, the PPACA calls for a new Rate Review program, wherein insurance companies must justify premium hikes of more than 10% to a state or federal review program. Given that banks aren’t supposed to hold more than 10% of the nation’s deposits in any one institution, and three do, this isn’t a comforting constraint.

While it is positive that the PPACA requires coverage of people with pre-existing conditions and prohibits lifetime caps, it can’t control what people pay for insurance, because it doesn’t limit actual premiums, which have risen 13% on average since the Act was passed.

The medical cost ratio limitation the PPACA instills; that 80% of premiums must be used for medical care in the case of individuals and small groups, and 85% in the case of large groups) to supposedly ensure companies operate on a more efficient premium in vs. premium out basis, is a joke. Its punch line is accounting manipulation.  Call everything a medical cost; even buying another company, and the ratio is meaningless.

WellPoint got the Joke

WellPoint got that joke immediately. The largest for-profit “managed health care” company in the Blue Cross and Blue Shield Association, it began trading publicly on December 1, 2004. Depending on the state, it operates under Blue Cross and Blue Shield, Blue Cross or Anthem. 

After the PPACA was passed, in March 2010, WellPoint allegedly reclassified certain administrative costs as medical care costs in order to meet the law’s new medical loss ratio requirements (which requires insurers spend at least 80% or 85% of premiums on health care services, depending on the type of plan, individual or group respectively.)

A month earlier, WellPoint announced its Anthem Blue Cross unit would raise insurance rates for some individual policies in California up to 39%. Federal and California regulators are still investigating this, but the premium hikes remained.

WellPoint is also one of Wall Street’s favorite “managed health care” companies; cause it keeps getting bigger through acquisitions that pay hefty fees to the bankers involved. On October 23rd, WellPoint got approval from Amerigroup’s shareholders to acquire Amerigroup, a Medicaid-focused health insurer, in a $4.9 billion cash deal. The deal makes WellPoint the nation’s largest Medicaid insurer, and provides it greater access to Medicaid patients who also qualify for Medicare.

It was the largest cash deal ever, and the largest premium paid for a company in the managed health care realm. As a result, Goldman Sachs (who advised Amerigroup) and Credit Suisse (who advised WellPoint) retained their top positions in the global healthcare deal advisory league table.

The value of Amerigroup, as a company, dropped 34% within two weeks of that agreement, in stark shades of what happened when Bank of America took over Merrill Lynch in the fall of 2008.

This summer, Amerigroup and Goldman Sachs faced a shareholder lawsuit filed by the city of Monroe Employees Retirement System and Louisiana Municipal Police Employees Retirement System. It alleged that Goldman advised Amerigroup to accept WellPoint’s offer quickly, rather than seek other bids, because the bank had structured a complex, and fee-heavy derivatives transaction on the back of the deal. The insurers resolved the suit by tweaking the deal parameters. All parties denied ‘any wrongdoing.’ But where there’s smoke in complex derivatives land, there is fire.

Other Mergers

After the Supreme Court upheld the PPACA, a spate of mergers rippled through the managed health care realm, to ostensibly cope with smaller profit margins and  ‘compliance costs.’  But really, it’s because each firm wants to corner as much as possible of the market, in as many states as it can, to garner more premiums and control more disbursements and prices at the upcoming insurance ‘exchanges.’

In late August, the third largest insurance company in the US, Aetna announced it was buying Coventry Health Care for $5.7 billion. Coventry provides Medicare and Medicaid services, thus the takeover expands Aetna’s Medicare and Medicaid business. Being part of Aetna enables Coventry to grab more consumers on more state-run health insurance exchanges, reducing competition in the process. The Department of Justice is examining anti-trust issues surrounding the deal, but it’s still expected to close in mid-2013.

On October 17th, UnitedHealth Group issued $2.5 billion of bonds as part of its $4.9 billion acquisition of Brazil’s Amil Participacoes. Bank of America Merrill Lynch, Goldman Sachs, J.P. Morgan Chase & Co., Morgan Stanley, UBS and Wells Fargo Securities were lead underwriters on the deal.

They are not buying international companies in order to increase accounting transparency. Like other multinationals, they are doing so to move profits around and circumvent restrictions and tax laws. They are using cash, or raising extra debt, to do so, rather than to reduce premiums or increase disbursements to medical professionals.

And if you’re keeping score – billion of dollars are flowing from insurance companies – NOT to reduce premiums to patients and NOT to reimburse doctors and NOT to enhance the quality of care, but to simply expand nationally and globally. Meanwhile, their CEOs are doing quite well from all that non-health care related movement.

Total compensation for the bulk of health care company CEOs rose by 14.7% in 2011 by 14.7%, or $11.1 million, to $87 million. Cigna’s CEO David Cordani made $19.1 million. UnitedHealth Group’s CEO, Stephen J. Hemsley bagged $49 million in salary, stock options, and other compensation last year. The highest-paid CEO made 94 times the average compensation level of primary care physicians. And none of them had to pick up a single scalpel in the process.

Doctors as profit centers

Not just patients, but physicians have been bled steadily from the current state of insurance company controlled health care through diminishing insurance reimbursements, electronic medical records mandates whereby they spend as much time complying with Kafkaesque controls over their decisions on performing surgeries and providing care, and debt. New doctors are graduating with an average of $250,000 in debt, which, combined with diminishing disbursement and soaring costs, will keep many, underwater. Forever.

According to Dr. Michael H. Heggeness, President of the North American Spine Society, a group of 6500 global spinal and orthopedic surgeons (at which I delivered a speech last month), “The last people, that most of the population feels sorry for are doctors, yet they are in an economic crisis of their own. In 2002, 80% were in private practice, now 70% are in hospitals because they can’t afford to make a private practice work.”

Meanwhile the more hospitals are viewed as profit centers, the more their Chairmen will cut costs to maximize returns, and not care quality. They will seeks ways to sell underperforming assets, programs or services and reduce the number of nonessential employees, burdening those that remain. No doubt the private equity community will be getting more into this game, as insurance companies buy more hospitals, doctors, clinics, and perhaps drug companies, or vice versa, and ‘restructuring’ accelerates.

And if insurance companies can manage doctors directly, they can control not just costs, but treatment – our treatment. It’s not an imaginary government takeover anyone should fear; but a very real, here-and-now insurance company takeover, to which no one in Washington is paying attention.

Nomi Prins is an independent journalist, speaker, and author of several books, including “Other People’s Money: The Corporate Mugging of America.” She is a former managing director at Goldman Sachs and and ran the international analytics group at Bear Stearns in London. She is a member of Senator Bernie Sanders’ (I-Vt) Federal Reserve Reform Advisory Council and is a senior fellow at the nonpartisan public policy think-tank,  Demos.

http://www.nomiprins.com/thoughts/2012/11/10/real-danger-of-obamacare-insurance-company-takeover-of-healt.html

Burns and Pauly take a critical look at accountable care organizations

Accountable Care Organizations May Have Difficulty Avoiding The Failures Of Integrated Delivery Networks Of The 1990s

By Lawton R. Burns and Mark V. Pauly
Health Affairs, November 2012

Abstract

Accountable care organizations are intended to improve the quality and lower the cost of health care through several mechanisms, such as disease management programs, care coordination, and aligning financial incentives for hospitals and physicians. Providers employed several of these mechanisms in forming the integrated delivery networks of the 1990s. The networks failed, however, because of heavy financial losses stemming from hospitals’ purchase of physician practices and their inability to align incentives, garner capitated contracts, and develop the infrastructure to manage risk. Although the current mechanisms underlying accountable care organizations continue to evolve, whether and how they will have an impact on quality and costs remains open to question. Care coordination and information technology are proving more complicated and expensive to implement than anticipated, providers may lack the ability to implement these mechanisms, and primary care providers are in short supply. As in the 1990s, success depends on targeting specific populations, such as people with multiple chronic conditions who need and may benefit from coordinated care.

Future Directions

What does that imply for the emergence, performance, and success of accountable care organizations? It requires a reconsideration of our earlier conjecture that the organizations will be more likely to improve quality than to lower costs. With intense financial pressure from Medicare generated by lower Medicare payments, the organizations may be forced to limit costs — and, if they cannot do so by ridding their systems of waste, perhaps to do so by achieving fewer quality improvements.

More generally, Medicare may wish to use accountable care organizations to contain costs. In effect, the organizations will be told, “Here is how much money you will get per patient, and you are not allowed to charge any more; do the best you can with that.”

This draconian incentive system will truly constitute a test of how much waste there is in the system.

http://content.healthaffairs.org/content/31/11/2407.abstract

Comment:

By Don McCanne, MD

The Affordable Care Act includes several measures supposedly to control health care spending, but analysis of the health policy literature to date suggests that none of these will have more than a negligible impact. Most hope is held out for accountable care organizations (ACOs), but this report by Burns and Pauly suggests that these new entities include many of the flaws of previous similar efforts, primarily the failed integrated delivery networks of the 1990s.

In reading their full article you will understand better why we cannot expect dramatic results from ACOs and the mechanisms that they would use such as disease management, care coordination, realignment of financial incentives, health information technology, electronic health records, computerized physician order entry, clinical decision support systems, and especially the Medicare shared savings program.

As opposed to well established integrated health systems like Kaiser Permanente, these new systems will be formed from the existing health care community. The authors explain that there is no guidebook to develop and implement a coherent system by combing the existing professionals and institutions. Efforts will require considerable money and time. New personnel such as care coordinators and information technology staff will be required. As they state, “We have seen no model of a ‘flat’ accountable care organization — one requiring no increase in numbers or layers of staffing.” And it will be difficult “to ensure that all changes are internally congruent.”

Although most agree that there is a need for reinforcement of our primary care infrastructure, the authors provide evidence that the demands of care coordination under ACOs will cause a reduction in time spent on direct patient care. One study indicated that care coordination would require an additional 3.2 weeks per year of physician time.

The successful Kaiser and Group Health models took many decades to develop. You cannot suddenly take the existing fragmented delivery system and create competing, truly integrated systems in each community. That is what was wrong with Enthoven’s managed competition model, and that is what is wrong with the incipient accountable care organization model.

The greatest risk of ACOs seems to be that Medicare will use them to help meet the political goal of “reducing entitlement spending,” sacrificing the emphasis on quality because of cost considerations, and applying pressure to ratchet down spending. The latter is particularly a problem because private health systems are not very adept at identifying and ferreting out waste, rather they reduce spending primarily by impairing access. Selectively limiting Medicare spending will further compound access problems by a reduction in the numbers of willing providers, likely diminishing public support of Medicare.

In contrast, a single payer system is designed to reduce the abundance of identifiable waste, especially administrative, while improving both quality and access. It would be fine to continue with a demonstration project studying integration of health care to see if such delivery system reform could improve quality, but we don’t want to allow that to displace the much needed financing and health system reforms of single payer. That’s where we would have the greatest return on quality, access and costs.

UNM medical student receives national award for health activism: PHOTOS

James Besante, a second-year student at the University of New Mexico School of Medicine, was recently given the Nicholas Skala Student Activist Award by a national physicians group for his health care reform advocacy efforts in New Mexico.

James Besante, a second-year student at the University of New Mexico School of Medicine, was recently given the Nicholas Skala Student Activist Award by a national physicians group for his health care reform advocacy efforts in New Mexico.

Photo: Molly Tavella, PNHP

James Besante, a second-year student at the University of New Mexico School of Medicine, was recently given the Nicholas Skala Student Activist Award by a national physicians group for his health care reform advocacy efforts in New Mexico.

Photo: Molly Tavella, PNHP

James Besante, a second-year student at the University of New Mexico School of Medicine, was recently given the Nicholas Skala Student Activist Award by Physicians for a National Health Program (PNHP) for his health care reform advocacy efforts in New Mexico.

Photo: Mark Almberg, PNHP

Universal Health Care And ‘Patient Dumping’

By Samuel Metz, M.D.
Health Affairs, Letters, October 2012

Sara Rosenbaum and coauthors describe one hospital’s unhappy experience with “patient dumping” (Aug 2012). The primary motivation behind hospitals’ aggressively transferring emergency patients to other facilities is to rid themselves of nonpaying or low-paying patients. The authors conclude with suggested steps to enhance provisions of the Emergency Medical Treatment and Labor Act (EMTALA), intended to prevent such practices.

Not discussed in the article was one method to reduce, if not eliminate, patient dumping: a universal health care plan. Vermont enacted legislation to create a statewide universal health care program; once fully implemented, the system will render every patient a paying patient and reimburse providers equally for all patients.[1] Under these circumstances, there will be little financial gain from patient dumping.

Statewide single payer systems for publicly funded universal health care are advocated in many states, including Colorado.[2] Should Colorado be fortunate enough to pass such legislation, the procedural suggestions of Rosenbaum and colleagues would be rendered unnecessary. Indeed, EMTALA itself would be unnecessary.

NOTES

1. Hsiao WC, Knight AG, Kappel S, Done N. What other states can learn from Vermont’s bold experiment: embracing a single-payer health care financing system. Health Aff (Millwood). 2011;30(7):1232–41.

2. White CR. Background of a Colorado draft proposal for single payer health care [Internet]. Lakewood (CO): Health Care for All Colorado Foundation; [cited 2012 Aug 28]. Available from: http://healthcareforallcolorado.org/?p=955&ID=343&d=1

Health Affairs, October 2012;mar 31:2355; doi:10.1377/hlthaff.2012.0950

http://content.healthaffairs.org/content/31/10/2355.3.full.pdf+html

"Obamacare will prove to be a gold mine for astute traders and investors"

NOTE: Do not bother reading this article; simply take only three seconds to skim it. Its essence can be elucidated by reading this one sentence gleaned from the article: “Obamacare will prove to be a gold mine for astute traders and investors on the long side and the short side.”

26 ways to profit from ‘Obamacare’

By Nigam Arora
MarketWatch, November 8, 2012

Obama has been re-elected; “Obamacare” is the law of the land. It doesn’t matter if you agree or disagree with Obamacare, you might as well generate big profits from it.

Obamacare has been profitable for us. We bought Amerigroup Corp. at $22.05, and, as of this writing, the stock is at $91.44 — this is a whopping 315% return.

It wasn’t long ago when we aggressively bought Tenet Healthcare at $20.40. Yesterday THC hit a 52-week high of $27.60.

Here are 26 ways to profit from both the long and the short side.

Hospital stocks

The best way to profit on the long side from Obamacare is to buy hospital stocks as utilization rates will increase and uncollected receivables will go down.

Under Obamacare, the pool of paying patients will increase. It is estimated that currently about 30 million Americans are uninsured. The increase in the number of paying patients will be huge.

By law, hospitals have to serve all patients who show up at their emergency rooms including indigents as well as those with no insurance. Hospitals also have difficulty collecting from low income Americans who may have no insurance or are underinsured. Some hospitals aren’t able to collect as much as 30% of their billings.

The earnings of some hospitals may increase by as much as 25%.

Our favorite stock in this sector is THC. Other hospital stocks on our list buy are Community Health Systems, HCA Holdings, LifePoint Hospitals, and Universal Health Services.

Medicaid HMOs

These HMOs focus on Medicaid and other government programs and will be big beneficiaries of Obamacare.

We own AGP but it is not suitable for those not in the stock. AGP is being bought by WellPoint.

Other names on our buy list are Centene Corp., Molina Healthcare, and WellCare Health Plans.

Medicare Part D

Medicare Part D is a private plan which provides prescription drug coverage for those eligible for Medicare. Government payments received by insurance companies for this program are likely to see reductions.

Humana is our top pick to short sell, but we will wait for this stock to meet all of our six screens before acting.

Branded pharmaceuticals

In the long run, branded pharmaceuticals will be hurt. Obama will be under intense pressure to reduce rising health care costs in Medicaid and Medicare. Branded drugs are a sitting duck simply because Big Pharma sells them for far less abroad than in the United States.

Large-cap pharmaceutical stocks are in favor these days. The market participants perceive them as safe. The reasoning goes that people will always be using drugs irrespective of what happens in Europe, China or to the U.S. economy.

It doesn’t hurt that these stocks also pay high dividends. Buying high dividend stocks is the rage. However Bush tax cuts expire at the end of this year; if there is no compromise in Washington, income-tax rate on dividends will jump and high dividend stocks will give up some of their recent gains.

Secret to making money by short selling is to sell short stocks that are popular and whose fundamentals are likely to deteriorate. We are short Market Vectors Pharmaceutical.

We have recently taken profits on Lilly, but we plan to short it again.

Two other stocks to short on our list are Merck and Pfizer.

Generic pharmaceuticals

In the short run, Obamacare is positive for generic pharmaceutical companies such as Teva, Mylan, and Dr. Reddy’s Labs. In the long run, these companies will suffer as there will be intense pressure on the prices they can charge. There is an opportunity here on the long side in the medium term, but it will become a short opportunity in due course.

Medical devices

Obamacare levies a tax on medical devices. Further pressure on medical device companies such as Medtronic, Stryker, St. Jude Medical, and Zimmer Holdings to reduce prices will increase.

We plan to short sell these companies when they meet our six screens.

Testing laboratories

There will be more medical tests as more patients are insured. In the short run, implementation of Obamacare is positive for testing companies such as Quest Diagnostics and Laboratory Corp. of America.

In the long run, Obamacare is very negative for these companies because they will come under heavy pressure to reduce rates. These are some of the best ways to profit from the short side in the long-term.

Drug distributors

As more pharmaceuticals are used, the ruling is positive for drug distributors such as McKesson, Cardinal Health, and AmerisourceBergen.

Obamacare will prove to be a gold mine for astute traders and investors on the long side and the short side. The key to making money will be the timing of entries and exits using a proven method such as ZYX Change Method. If you cannot short, consider the inverse ETF RXD.

http://www.marketwatch.com/story/26-ways-to-profit-from-obamacare-2012-11-08

Comment:

By Don McCanne, MD

The SEC will affirm that shareholders of health care firms must always have priority over the patients that should benefit from their products and services. The Affordable Care Act has expanded investor ownership within our health care system. As this article states, “Obamacare will prove to be a gold mine for astute traders and investors.”

Is this what our health care system is all about?

It doesn’t have to be this way

“Obamacare will prove to be a gold mine for astute traders and investors”

NOTE: Do not bother reading this article; simply take only three seconds to skim it. Its essence can be elucidated by reading this one sentence gleaned from the article: “Obamacare will prove to be a gold mine for astute traders and investors on the long side and the short side.”

26 ways to profit from ‘Obamacare’

By Nigam Arora
MarketWatch, November 8, 2012

Obama has been re-elected; “Obamacare” is the law of the land. It doesn’t matter if you agree or disagree with Obamacare, you might as well generate big profits from it.

Obamacare has been profitable for us. We bought Amerigroup Corp. at $22.05, and, as of this writing, the stock is at $91.44 — this is a whopping 315% return.

It wasn’t long ago when we aggressively bought Tenet Healthcare at $20.40. Yesterday THC hit a 52-week high of $27.60.

Here are 26 ways to profit from both the long and the short side.

Hospital stocks

The best way to profit on the long side from Obamacare is to buy hospital stocks as utilization rates will increase and uncollected receivables will go down.

Under Obamacare, the pool of paying patients will increase. It is estimated that currently about 30 million Americans are uninsured. The increase in the number of paying patients will be huge.

By law, hospitals have to serve all patients who show up at their emergency rooms including indigents as well as those with no insurance. Hospitals also have difficulty collecting from low income Americans who may have no insurance or are underinsured. Some hospitals aren’t able to collect as much as 30% of their billings.

The earnings of some hospitals may increase by as much as 25%.

Our favorite stock in this sector is THC. Other hospital stocks on our list buy are Community Health Systems, HCA Holdings, LifePoint Hospitals, and Universal Health Services.

Medicaid HMOs

These HMOs focus on Medicaid and other government programs and will be big beneficiaries of Obamacare.

We own AGP but it is not suitable for those not in the stock. AGP is being bought by WellPoint.

Other names on our buy list are Centene Corp., Molina Healthcare, and WellCare Health Plans.

Medicare Part D

Medicare Part D is a private plan which provides prescription drug coverage for those eligible for Medicare. Government payments received by insurance companies for this program are likely to see reductions.

Humana is our top pick to short sell, but we will wait for this stock to meet all of our six screens before acting.

Branded pharmaceuticals

In the long run, branded pharmaceuticals will be hurt. Obama will be under intense pressure to reduce rising health care costs in Medicaid and Medicare. Branded drugs are a sitting duck simply because Big Pharma sells them for far less abroad than in the United States.

Large-cap pharmaceutical stocks are in favor these days. The market participants perceive them as safe. The reasoning goes that people will always be using drugs irrespective of what happens in Europe, China or to the U.S. economy.

It doesn’t hurt that these stocks also pay high dividends. Buying high dividend stocks is the rage. However Bush tax cuts expire at the end of this year; if there is no compromise in Washington, income-tax rate on dividends will jump and high dividend stocks will give up some of their recent gains.

Secret to making money by short selling is to sell short stocks that are popular and whose fundamentals are likely to deteriorate. We are short Market Vectors Pharmaceutical.

We have recently taken profits on Lilly, but we plan to short it again.

Two other stocks to short on our list are Merck and Pfizer.

Generic pharmaceuticals

In the short run, Obamacare is positive for generic pharmaceutical companies such as Teva, Mylan, and Dr. Reddy’s Labs. In the long run, these companies will suffer as there will be intense pressure on the prices they can charge. There is an opportunity here on the long side in the medium term, but it will become a short opportunity in due course.

Medical devices

Obamacare levies a tax on medical devices. Further pressure on medical device companies such as Medtronic, Stryker, St. Jude Medical, and Zimmer Holdings to reduce prices will increase.

We plan to short sell these companies when they meet our six screens.

Testing laboratories

There will be more medical tests as more patients are insured. In the short run, implementation of Obamacare is positive for testing companies such as Quest Diagnostics and Laboratory Corp. of America.

In the long run, Obamacare is very negative for these companies because they will come under heavy pressure to reduce rates. These are some of the best ways to profit from the short side in the long-term.

Drug distributors

As more pharmaceuticals are used, the ruling is positive for drug distributors such as McKesson, Cardinal Health, and AmerisourceBergen.

Obamacare will prove to be a gold mine for astute traders and investors on the long side and the short side. The key to making money will be the timing of entries and exits using a proven method such as ZYX Change Method. If you cannot short, consider the inverse ETF RXD.

http://www.marketwatch.com/story/26-ways-to-profit-from-obamacare-2012-11-08

Comment:

By Don McCanne, MD

The SEC will affirm that shareholders of health care firms must always have priority over the patients that should benefit from their products and services. The Affordable Care Act has expanded investor ownership within our health care system. As this article states, “Obamacare will prove to be a gold mine for astute traders and investors.”

Is this what our health care system is all about?

It doesn’t have to be this way

Dr. Weisbart writes on single payer in the AMA Journal of Ethics

A Single-Payer System Would Reduce U.S. Health Care Costs

By Ed Weisbart, MD, CPE
American Medical Association Journal of Ethics, Virtual Mentor, November 2012

Today’s fragmented system is akin to requiring each household in a community to anticipate their needs for the coming year and negotiate their own fees and scope of services with the local police and fire departments. Imagine instead how much of their budgets these life-saving community services would be obliged to devote to marketing to and negotiating with each household and the rampant disparities in service that would result. That is precisely what is happening today in health care, and it is absurdly wasteful. For police and fire departments, we have recognized that it is significantly less wasteful to give all citizens the same “coverage” for set prices and to administer it with regional coordination. Global budgeting is the only sensible strategy for such unpredictable yet universally needed services.

Conclusion

The ACA has begun the process of much needed change. Now we need to go further in reforming health care finance to enable all Americans to achieve their fundamental human right to comprehensive coverage. The rest of the modern world has run the laboratory studies for us; now is the time for us to adopt this well proven solution.

http://virtualmentor.ama-assn.org/2012/11/oped1-1211.html

Comment:

By Don McCanne, MD

Health care financing is a fundamental ethical issue, thus it is very appropriate that Ed Weisbart’s article on single payer be published in the AMA’s journal of ethics. Hopefully, the brief excerpt above will entice you to click on the link to read the entire article, and then share it with others to spread the word on the imperative of the single payer model – an improved Medicare for everyone.

The Early History of PNHP

By Steffie Woolhandler, M.D., and David Himmelstein, M.D. 

PNHP note: The two articles below describe the founding of Physicians for a National Health Program. The articles span a quarter-century – one was written shortly after the organization’s founding, the other was written in October of this year. We reproduce them here, the most recent one first, as part of the observance of PNHP’s 25th anniversary and as a contribution to understanding its continuing mission. 

We initiated PNHP in the summer of 1986 at a meeting of about 200 clinicians caring for the poor organized by Lucy Candib and Gene Bishop in New Hampshire.

Several factors led us to propose this new organization to colleagues:

1)      Fifteen years after the nationwide implementation of Canada’s Medicare program, research by us and others had recently documented the striking advantages of the single-payer approach in terms of access to care and cost efficiency.

2)      After five years of the Reagan administration assault on safety-net program, we were convinced that efforts focused on defending existing safety-net programs (e.g. Medicare and Medicaid) and institutions (public hospitals and community clinics) could not protect our patients. The public programs were (and are) woefully inadequate.

·         Medicare, despite its positive aspects, covered less than half of the total medical expenses of the elderly; privatization had started with the 1985 Medicare HMO program; and providers siphoned billions, taking advantage of the payment system that had been adopted from private insurers.

·         Medicaid patients were often unwelcome at doctor’s offices and private hospitals; and private HMOs were beginning to make incursions into this program too.

·         Clinics and public hospitals, where we ourselves practiced were chronically starved of resources and hence provided separate and unequal care for minorities, the poor and the poorly insured.


Defense of these woefully inadequate approaches meant defending substandard (if valiant) care.

3)      Advocacy for national health insurance (NHI) or a national health service (NHS), which had been a powerful force in the 1960s and 1970s, had largely died out. The scattered supporters of these different approaches, who had previously been sharply divided, seemed ready to collaborate. Moreover, experience in Canada and the U.K. challenged the traditional view that an NHS necessarily offered a more thoroughgoing reform than NHI. Canada’s single-payer NHI banned competing private insurance, mandating that all Canadians get care from a single, unified medical care system. In contrast, many wealthy Britons opted for private coverage, offering them an escape from the NHS. We chose the name “Physicians for a National Health Program” to avoid the old fights about NHI vs. NHS.

4)      We sensed a growing dissatisfaction among colleagues with the then incipient corporate domination of medicine, which was being stimulated by the emergence of HMOs and managed care. Many doctors seemed ready for an alternative.

5)      A ballot initiative in Massachusetts instructing congresspeople to support single-payer reform was the immediate trigger for our initiative. A group of Massachusetts Gray Panthers – Dave Danielson, Art Mazer and Gerry Bergman, among others – had succeeded in getting the question on the ballot. They were concerned that the Massachusetts Medical Society might openly oppose the measure and encouraged a public display of physician support for single payer.

At the New Hampshire conference, colleagues reacted enthusiastically to our proposal. Discussion centered on whether the new group should be a physicians’ organization or seek to organize a broader constituency.

Influenced by the Massachusetts Gray Panthers’ request for support from a group specifically identified as physicians, and the belief that many physicians supportive of single payer would hesitate to join a broader group, we chose the PNHP path. But we agreed that PNHP should be part of a broader “Network of Health Professionals for a National Health Program” (NHP2), and eventually “People for a National Health Program.”

Several colleagues who remain active in PNHP participated in those discussions, including Oli Fein, Howard Waitzkin, Gordy Schiff, Mardge Cohen, Henry Kahn, Jeff Scavron and Len Rodberg. (We are surely forgetting many others). Len offered to create a database program to maintain the membership list (an esoteric feat in 1986). Milton Terris volunteered to have stationary printed (including NHP2 stationery).

Following the conference, we set about enlisting colleagues willing to be listed as “Founding Members” on a membership solicitation letter that we had drafted, which outlined the essential elements of a single-payer reform. Many responded positively.

Aided by Steffie’s sister (who spent some months with us in Cambridge) we mailed membership invitations to several thousand colleagues, using lists obtained from other physician organizations. By late 1987, about 200 dues-paying members had signed up.

From the outset, there was general agreement that the group should draw up a single-payer physicians’ manifesto, with the hope that it could be published in a major journal, allowing us to increase our legitimacy and recruitment. In early 1988 we met with Arnold Relman, the editor of the New England Journal of Medicine, to explore whether he was open to publishing such an article. He made no commitment, but expressed interest.

We set about drafting an article, with extensive feedback from 28 colleagues who formed the writing group. Relman eventually accepted and published the article, which appeared on January 12, 1989.

The New England Journal’s publication of PNHP’s proposal was greeted as a “man bites dog” story by the press. Colleagues in several cities organized press conferences to reach out to the lay media. We and many other PNHP colleagues were interviewed by major media outlets, and PNHPers made appearances on national television programs including “The Today Show,” “Good Morning America” and the “Mac
Neil/Lehrer NewHour.” PNHP had arrived as an organization, and memberships flowed in by the dozens.

The surge in membership allowed us to hire a staffer to take over maintenance of the membership database and other essential tasks, and necessitated moving the organization’s office out of our home. Bob Lawrence (our department chair at the time) agreed to allow us to utilize our hospital offices to house PNHP.

From the outset, PNHP was envisaged as a membership-driven organization, focused on providing opportunities for progressive physicians to express their views in an effective manner. We were convinced that a large number of physicians each spending a modest amount of time on PNHP work could accomplish far more than a few paid staffers. Moreover, leadership that was intimately aware of the daily realities encountered in medical practice was essential to assure that PNHP remained relevant to physicians. Hence, the staff role was not to lead, but to facilitate communication among the members, and to assume many of the burdensome tasks of maintaining the organization’s infrastructure.

Another feature of PNHP that was established early on was a monthly conference call for active members to share information and ideas for effective action.  Many of the early members of PNHP went on to start local chapters, and the monthly phone call provided them with regular support and inspiration.

Our first experience with an executive director was an unfortunate one. Several months after starting work, she became convinced that adhering strictly to the single-payer message compromised our possibilities for funding. (We later learned that a foundation had let her know that watering down PNHP’s advocacy agenda would result in a substantial donation.) She asked PNHP’s newly formed board – led by Jeff Scavron, the first PNHP president – to make this change in focus, and eject us from the organization. Instead, the board unanimously endorsed our approach and dismissed the staffer.

Subsequently Judy Kaplan took over as the staffer in Cambridge, followed by Donna Pound. Both performed yeoman service, helping us to initiate the PNHP Newsletter.

Communicating with Colleagues 

 Shortly before PNHP was initiated, Malcolm Peterson (chief-of-staff at the Seattle VA) had invited us to present the case for single-payer reform at a session he chaired at the American College of Physicians annual meeting. Responding to Malcolm’s invitation, we assembled a raft of slides for the presentation, adopting a traditional, data-intensive grand rounds style. The positive response to the presentation bolstered our view that many physicians would more readily embrace the single-payer message if it were communicated in such a traditional format.

Ike Taylor, who had moved to Boston after retiring as dean of the University of North Carolina School of Medicine, helped to shape these presentations. He had sought us out after reading the New England Journal article. Ike dived into PNHP activism on many fronts, and agreed to assume the PNHP presidency.

As invitations for presentations grew, many PNHP colleagues became skilled speakers on single payer, often using the PNHP slide set, which was updated annually and widely distributed.

Further publications in the JAMA outlining PNHP’s views on quality improvement (led by Gordy Schiff); financing (in collaboration with Kevin Grumbach and Tom Bodenheimer) and long-term care (led by Charlene Harrington) fleshed out key aspects of PNHP’s program, and gained visibility for the organization.

Moving to Chicago

In 1991 a decision was made to move PNHP’s headquarters to Chicago. This decision was motivated by several factors.

  • We were planning a sabbatical year in Washington and hence would not be present at the Cambridge office.
  • We and others felt it important to broaden leadership of the organization.
  • Ron Sable, a dynamic and much loved physician who had founded the AIDS program at Cook County Hospital was stepping back from clinical work because of illness, and was available to assume the role of coordinator, supported by the very strong Chicago PNHP cohort that included Quentin Young, Gordy Schiff, and Claudia Fegan
  • Chicago made sense as the home base of a national physician organization.

Ron and Quentin skillfully built PNHP in Chicago.  Taking advantage of an opportunity to share office space with another group Quentin chaired, the Health and Medicine Policy Research Group (focused on Illinois health policy issues), the new office of PNHP opened on January 1, 1992. Ida Hellander, who was working at Sid Wolfe’s Public Citizen Health Research Group where David spent his sabbatical, was recruited to join them in leading the Chicago office.

After Ron’s death in 1993, Quentin Young stepped in to the role of national coordinator.

Quentin and Ida vastly increased PNHP’s recruiting efforts and public visibility, turned our periodic meetings from small, informal affairs into well-organized, dynamic gatherings, and greatly facilitated membership communications.  With help from Mike McCally, they secured grants from three foundations and tripled the budget.

Claudia – at that time a partner in Quentin’s practice – and Gordy both assumed an increasingly critical role in the organization, serving as PNHP Presidents, traveling speakers, and unofficially helping to oversee the Chicago office.

With Bill Clinton’s election and the 1993-1994 health reform debate, single-payer advocates swung into action. Vicente Navarro, included in the White House task force at Jesse Jackson’s insistence, remained firm in advocating single payer from the inside, and Several PNHP representatives were invited to present their case to Hillary Clinton. Once the Clinton plan was unveiled, a lively debate within PNHP resulted in a clear stance to continue single-payer advocacy, and point out the flaws in the Clinton plan – prefiguring PNHP’s position on President Obama’s reform plan.

The subsequent years brought new energy and leadership from colleagues across the nation. We are certainly omitting the names of many who played foundational roles in PNHP’s earlier years, both nationally and in building chapters around the country.

*********

Physicians for a National Health Program: 

Report from the United States 

By Steffie Woolhandler and David U. Himmelstein

International Journal of Health Services, 1987

A new organization called Physicians for a National Health Program (PNHP) is mobilizing physician support for a universal, comprehensive public system of health care for the United States. Recent changes in power relations within medicine (the so-called proletarianization of physicians) are prodding many physicians to abandon their traditional reactionary role in health policy. PNHP is working with elderly, labor, community, and health care activist groups to put a national health program (NHP) back on the U.S. health policy agenda. In this article, five key features of an NHP needed to simultaneously assure access, control costs, and minimize bureaucracy are noted.

Physicians have long been a bulwark of conservatism in U.S. health policy. Organized medicine has opposed virtually every initiative to extend access
to services and democratize health care decision-making. As corporate control increasingly threatens the preeminent position of physicians (1), a significant portion of the medical profession appears ready to break with this tradition of reaction. Physicians for a National Health Program (PNHP) is a new organization attempting to crystallize and direct the growing discontent of physicians into support for a national health program (NHP).

An NHP is the only stable solution to the widely perceived crisis in U.S. health care. There is overwhelming evidence that an NHP could provide universal access to high quality care and control costs. In contrast, current health policies have failed to contain costs and have exacerbated problems in both access to and quality of care. Health care costs (corrected for overall inflation) have risen more rapidly over the past six years than during the last half of the 1970s. This escalation occurred despite, or perhaps because of, the growing preoccupation of policy makers with cost control through competitive strategies, health maintenance organizations (HMOs), prospective reimbursement, and the like. Meanwhile the number of people without health insurance increased 43 percent between 1978 and 1985, and both physicians and hospital social workers report feeling pressured to discharge patients from hospitals prematurely.

While cost control initiatives have failed to control costs, they are rapidly changing power relations within health care. These recent initiatives have shared a common thread – they offer financial incentives for hospitals, HMOs, and insurers to control physicians and patients. Much of the recent cost increase is attributable to the growing administrative structure required to operate health care as a profit-making capitalist industry and enforce inequality in access to medical services. Administration consumes at least 22 percent of U.S. health spending, in contrast to 6 percent in the United Kingdom and 8 percent in Canada (2). U.S. physicians increasingly confront hospital, insurance company, and other corporate bureaucracies that dictate the parameters of medical care. Marx’s classic description of the evolution of an industry appears germane. The power of physicians as independent petit bourgeois medical producers is rapidly giving way before the onslaught of corporate control (3).

The U.S. public has long supported an NHP (4), a support that was reaffirmed by the 67 percent majority of the Massachusetts electorate who voted for the National Health Program Referendum in November of 1986. Surprisingly, 56 percent of physicians also favor some form of NHP, though three-quarters of doctors are convinced that most of their colleagues oppose such reform (5). Unfortunately, politicians, wary of threatening insurance companies and other elements of the medical-industrial complex, persist in dismissing an NHP as utopian and unpopular. In this context, we are convinced that physicians can help place an NHP on the political agenda. There will undoubtedly be considerable struggle over the precise form of an NHP in the United States, and aspects of many proposals will threaten the self­interest of physicians. However, we believe that the following features are both crucial to progress in health care and attractive to many physicians.

1. Coverage must be universal and comprehensive, including coverage of preventive, curative, mental health, occupational, and rehabilitative care. This could assure access to care, avoid a two-class system, and minimize administrative expense. Allowing balance billing, competing private insurance, or out-of-pocket payments negates these advantages.

2. Hospitals should be paid on an annual lump sum basis for operating expenses. This would minimize incentives for both undercare (since hospitals could not retain a surplus) and overcare (since excess services would not generate additional income). Lump sum budgeting also streamlines administration since billing is eliminated.

3. Payment for capital costs must be separated from hospital operating costs and physician fees. If hospitals can buy new buildings and equipment with surplus funds from their yearly budgets, they have a strong incentive to skimp on care. Real health planning becomes impossible since rich hospitals can continue to expand, while areas without sufficient resources will remain underserved. Similarly, paying physicians for capital such as office-based computed tomography (CT) scanners encourages unnecessary purchase and use of such expensive equipment.

4. Private insurance companies should be excluded from any NHP. Public administration is cheaper, and allows much more democratic control of key policy decisions. Private insurance firms have incentives to increase costs and bureaucracy since these result in higher income. Reimbursement decisions are important public policy and must be recognized as such.

5. Public accountability should be encouraged, but should not be confused with bureaucratic dominance a la diagnosis related groups (DRGs). Detailed administrative oversight of clinical practice (e.g., how many EKGs should be allowed for a patient with a myocardial infarction) should be discouraged. Such oversight costs as much as it saves, and is unnecessary if financial incentives for or against the use of technology and services are minimal.

The Canadian NHP meets many of these criteria, and offers a concrete, though flawed, point of reference in mobilizing support for an NHP in the United States. We recognize that Canadian health care remains largely a sickness care system, dominated by a bourgeois medical model, antagonistic to “alternative” providers, basically insufficient in its approach to social and environmental problems, and riven by class inequalities among
health workers. Nonetheless, Canada has achieved a surprising degree of equality in access to health services, without excessive costs. The Canadian working class is no longer threatened with the termination of coverage in case of unemployment, strikes, or disability. We have found the real-life experience of the Canadian NHP vital in countering the powerful disinformation campaign against public medicine, and in answering the hundreds of what-if questions that arise in discussion of an NHP. The early, enthusiastic response to PNHP confirms that many physicians are prepared to embrace the concept of an NHP.

The Canadian experience demonstrates that monopsony government payment for health care can assure considerable public control of health resources and personnel despite private ownership and practice. In contrast, the British National Health Service owns most health facilities and employs most personnel, but coexists with a private sector. This allows for two-class care, as well as the underfunding of the public sector since the well-to-do can seek care elsewhere. The Canadian experience also suggests a possible strategy for overcoming political obstacles to an NHP. The Canadian NHP originated in Saskatchewan, where a socialist provincial government introduced a province-wide health insurance plan. The spark from Saskatchewan spread rapidly across the prairie resulting in a universal, comprehensive health care program throughout Canada within five years. Statewide demonstration projects in states with relatively progressive regimes might provide a similar springboard for winning a nationwide program in the United States.

PNHP is actively pursuing outreach to the physician community through presentations at conferences, grand rounds, and public forums. The decision to organize a physicians’ group followed several months of discussion. PNHP’s founders felt that a broader group could not attract many sympathetic physicians who are not already activists. PNHP is seen as a part of a Network of Health Professionals for a National Health Program, which can amplify the voices of existing organizations like the Coalition for a National Health Service, and the National Association for Public Health Policy. We are already working jointly with elderly and community organizations to formulate proposals for statewide demonstration programs in Massachusetts and a few other states.

To join PNHP or obtain information on our activities, write: Physicians for a National Health Program, Center for National Health Program Studies, Department of Medicine, The Cambridge Hospital, 1493 Cambridge Street, Cambridge, MA 02139. [PNHP note: PNHP’s current address is Physicians for a National Health Program, 29 E. Madison St., Suite 1412, Chicago IL 60602.]

References

1. McKinlay, J. B., and Arches, J. Towards the proletarianization of physicians. Int. J. Health Serv. 15(2): 161-196, 1985.

2. Himmelstein, D.U., and Woolhandler, S. Socialized medicine: A solution to the cost crisis in health care in the United States. Int. J. Health Serv. 16(3): 339-354, 1986.

3. Himmelstein, D.U., and Woolhandler, S. Medicine as industry: The health sector in the U.S. Monthly Rev. 35(11): 13-25, 1984.

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International Journal of Health Services, Volume 17, Number 4, 1987.

© 1987, Baywood Publishing Co., Inc. http://baywood.com

doi: 10.2190/C343-W933-786Q1R3T