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Private equity funds are out to make money

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Private equity funds are out to make money

Health plan acquisitions target small- to medium-sized companies

By Emily Berry
American Medical News
August 9, 2010

As a newly reformed health system takes shape, private equity firms are eyeing investments in health plans.

“Private equity funds are out to make money, to invest money, and they’ve got money they want to put to work now,” said Chip Clark, partner in the provider care sector in Ernst & Young’s North America Transaction Advisory Services practice.

Investments are likely to target small- to medium-size plans that won’t elicit intense regulatory scrutiny, as well as Medicaid contractors likely to continue making money from growing Medicaid rolls and cash-strapped states, observers said.

“Sustainability is going to require companies that can operate on thinner margins with a wider portfolio of products and services,” said Paul Keckley, PhD, executive director of the Deloitte Center for Health Solutions, the health research services arm of Deloitte LLP. “A substantial amount of consolidation is very likely.”

He said private equity investors he advises are watching for good opportunities in the health care industry, including health insurance plans. A business in the midst of a wave of change isn’t necessarily a bad thing in their eyes, he said. “It’s exactly what private equity looks for: sectors that are volatile, sectors where there’s tremendous opportunity for synergy, sectors where you could pick up a pretty strong management team.”

http://www.ama-assn.org/amednews/2010/08/09/bisa0809.htm

Comment: 

By Don McCanne, MD

The Patient Protection and Affordable Care Act (PPACA) has provided expanded investment opportunities for the private equity firms. Two of the greatest opportunities include: 1) consolidation through acquisition of small and medium-size health insurance companies, and 2) takeover of Medicaid contractors in an environment of expanding programs in cash-strapped states.

As Ernst and Young’s Chip Clark says, “Private equity funds are out to make money, to invest money, and they’ve got money they want to put to work now.”

Health care money managers very understandably have always placed business first, even if it harms patients and the original sources of payments – be it individuals, employers or government. Instead of giving us a financing infrastructure that placed patients first, PPACA has greatly expanded the business opportunities for the money managers.

This theme is getting old.

Medicare: Improve it, expand it

By Johnathon S. Ross
Toledo Blade, Aug. 8, 2010

Medicare, which just turned 45, is a uniquely American program that should have been the model for health reform: no overwhelming bills, no denial of services, no limitations on what hospital patients can use or what doctor they can see.

But instead of expanding and improving Medicare, Congress has added a third floor to a house with a crumbling foundation – our private, for-profit, insurance-based system of financing health care.

As nonprofit community-service organizations, health insurers were once effective in spreading medical costs across the community. Today, private insurance is a very bad bargain.

Private insurers make money by denying claims. They cause Americans to waste enormous amounts of money on excess paperwork and bureaucracy – their own and what they inflict on hospitals, patients, and doctors like me.

An estimated 31 cents of every U.S. health-care dollar go to administration, at least half of it unnecessary. The number of administrative personnel working in health care has jumped by more than 3,000 percent over the past three decades. In the same period, the number of doctors, nurses, and other direct caregivers has grown by less than 200 percent.

Health care has been overtaken by bureaucracies stuffed with money-changers and paper-pushers, whose CEOs get astronomical salaries. Instead of delivering care, they chase the money to pay for it. In our complex, multipayer system, that is expensive work.

Rather than remedy this waste, the new health-care law creates “insurance exchanges” whose public and private bureaucrats will determine eligibility for subsidies and enforce fines against those who fail to buy insurance. Private insurers will continue to advertise and market their products, bill for premiums, establish eligibility for coverage, coordinate benefits, manage a multitude of contracts with brokers, businesses, individuals, doctors, hospitals, and other providers – and pay stockholders a high rate of return.

Each hospital and doctor must mirror this administrative mess to get paid. The new law perpetuates wasteful overhead and guarantees insurers more profits. Meanwhile, we will spend $447 billion over 10 years to subsidize the mandatory purchase of shoddy private insurance by 16 million Americans who are now uninsured.

Massachusetts and several other states have already tried insurance exchanges. They don’t control costs; Massachusetts has the highest health-care costs in the world.

Market competition just doesn’t work well in health care. Medical care isn’t an ordinary product that people want; it’s a necessity that they must have. The most expensive care is often neither optional, predictable, nor negotiable.

Under the new law, tens of millions of Americans will remain uninsured while tens of thousands will die each year because of a lack of coverage. Bankruptcy caused by medical costs will decrease by only 15 percent, because the new subsidized coverage will be so skimpy. Meanwhile, administrative complexity and waste will continue to grow.

A better alternative would build on the solid foundation of our tax-financed, low-overhead Medicare system, extending it to cover all Americans. Administrative savings would approach $400 billion a year, enough to provide comprehensive coverage to the uninsured and to improve coverage for the rest of us.

Negotiating pharmaceutical prices, as the Veterans Administration does, would lower drug costs by about 40 percent. Effective cost control also would occur through global budgeting for health facilities, negotiated fees, bulk purchasing, and rational – rather than profit-driven – allocation of capital expenditures and health resources.

With a single, comprehensive source of health data, quality of care could be reliably measured and improved. The ability to detect fraud and billing abuse would increase. Employer health-care costs would be predictable and easier to control.

Bankruptcy and foreclosure because of medical debt would be eliminated. Americans would have true health security. None of us would be forced to choose between medical care and other necessities such as food and housing.

It’s not too late to do the right thing. The sooner we enact Medicare for all, the better off our patients and our economy will be. Polls suggest that most Americans, including physicians, support improving and expanding Medicare.

The best way to celebrate Medicare’s birthday is to build on its ability to save lives, save money, and make us all proud by becoming one of the best health systems in the world.

Johnathon S. Ross of Toledo is a past president of Physicians for a National Health Program and a member of the executive committee of the Single Payer Action Network of Ohio.

http://www.toledoblade.com/article/20100808/OPINION04/8070349

We can 'save' Medicare by expanding it

By Claudia Chaufan, M.D.
Santa Cruz Sentinel, Aug. 8, 2010

As Medicare celebrated its 45th anniversary July 30, the White House sent its present: a Deficit Commission, composed by some of the very folks who were unable, or unwilling, to see the $8 trillion housing bubble that brought the financial system to a halt. Nope. It’s no joke: these folks are now at the forefront of the campaign to “save” Medicare and the budget.

But, does Medicare need to be saved? Let’s do a little history.

When Medicare was signed into law by President Lyndon Johnson, almost overnight millions of seniors, and later disabled Americans, were able to meet their health care needs, and rates of poverty among them dramatically decreased. Eventually, Medicare added benefits, laid the foundation of studies of health care quality, and provided a model of administrative efficiency still unmatched by for-profit insurers. Today, Medicare meets the health care needs of over 45 million Americans.

To be sure, aging baby boomers will add pressure to Medicare, and the program can be improved: rather than allowing dubious “Advantage” plans, benefits in traditional Medicare could be expanded; gaps, now covered through Medigap policies, a source of profit for insurers yet a financial burden for seniors, could be eliminated; the Kafka-esque Part D could be dumped and Medicare could be allowed to use its huge purchasing power to negotiate prices directly with drug companies, rather than banned from doing so; and doctors’ payments could stop being subject to flawed accounting formulas liable to political manipulation.

But all this is a far cry from the privatizing trends pushed by Congress and President Obama, who famously has said that when it comes to the deficit, “everything is on the table,” including the two bedrocks of America’s social safety net, Social Security and Medicare.

So if everything is on the table, how about saving Medicare by expanding it to include everyone living in America? How about replacing the insane patchwork of thousands of plans and paper-pushing designed not to provide access to care, but to undermine it, with a single paying public agent? Over $400 billion could be saved with this move alone, without adding a dime to overall costs. This amount would generously cover all — not “near” all — the uninsured, and improve the coverage of a growing number of Americans who must settle for skimpy policies and unaffordable out-of-pocket costs that drag thousands to bankruptcy annually.

And whatever taxes were needed to finance Medicare-for-All would be generously offset by eliminating increasingly unaffordable out-of-pocket costs and premiums. American families and individuals would see their health care costs precipitously fall and their health care fears vanish. Imagine the change this move would unleash — Americans no longer worried that their dream jobs offer no “health benefits” and businesses finally able to compete internationally with countries guaranteeing public health care.

There is nothing to “wait and see” about the Orwellian Patient Protection and Affordable Care Act signed into law this past March. Close to a century of failed experiments with for-profit insurance for everybody but the most vulnerable among us, who are dumped on taxpayers’ shoulders, should suffice. While millions continue to suffer and die unnecessarily, we already pay for universal health care yet not get it.

Let’s not be misled by propaganda and demand our legislators support a financially sustainable and socially just, publicly funded, privately delivered, universal health care system — a single payer national health program. It’s not too late to do things right. Let’s not take no for an answer so that we can soon sing together “Happy Birthday, Medicare for All!”

Claudia Chaufan received her medical degree in Argentina and her doctorate in sociology at UC Santa Cruz. She is an assistant professor of Sociology and Health Policy at the Institute for Health and Aging at UC San Francisco and vice president of Physicians for a National Health Program — California.

http://www.santacruzsentinel.com/opinion/ci_15708814

We can ‘save’ Medicare by expanding it

By Claudia Chaufan, M.D.
Santa Cruz Sentinel, Aug. 8, 2010

As Medicare celebrated its 45th anniversary July 30, the White House sent its present: a Deficit Commission, composed by some of the very folks who were unable, or unwilling, to see the $8 trillion housing bubble that brought the financial system to a halt. Nope. It’s no joke: these folks are now at the forefront of the campaign to “save” Medicare and the budget.

But, does Medicare need to be saved? Let’s do a little history.

When Medicare was signed into law by President Lyndon Johnson, almost overnight millions of seniors, and later disabled Americans, were able to meet their health care needs, and rates of poverty among them dramatically decreased. Eventually, Medicare added benefits, laid the foundation of studies of health care quality, and provided a model of administrative efficiency still unmatched by for-profit insurers. Today, Medicare meets the health care needs of over 45 million Americans.

To be sure, aging baby boomers will add pressure to Medicare, and the program can be improved: rather than allowing dubious “Advantage” plans, benefits in traditional Medicare could be expanded; gaps, now covered through Medigap policies, a source of profit for insurers yet a financial burden for seniors, could be eliminated; the Kafka-esque Part D could be dumped and Medicare could be allowed to use its huge purchasing power to negotiate prices directly with drug companies, rather than banned from doing so; and doctors’ payments could stop being subject to flawed accounting formulas liable to political manipulation.

But all this is a far cry from the privatizing trends pushed by Congress and President Obama, who famously has said that when it comes to the deficit, “everything is on the table,” including the two bedrocks of America’s social safety net, Social Security and Medicare.

So if everything is on the table, how about saving Medicare by expanding it to include everyone living in America? How about replacing the insane patchwork of thousands of plans and paper-pushing designed not to provide access to care, but to undermine it, with a single paying public agent? Over $400 billion could be saved with this move alone, without adding a dime to overall costs. This amount would generously cover all — not “near” all — the uninsured, and improve the coverage of a growing number of Americans who must settle for skimpy policies and unaffordable out-of-pocket costs that drag thousands to bankruptcy annually.

And whatever taxes were needed to finance Medicare-for-All would be generously offset by eliminating increasingly unaffordable out-of-pocket costs and premiums. American families and individuals would see their health care costs precipitously fall and their health care fears vanish. Imagine the change this move would unleash — Americans no longer worried that their dream jobs offer no “health benefits” and businesses finally able to compete internationally with countries guaranteeing public health care.

There is nothing to “wait and see” about the Orwellian Patient Protection and Affordable Care Act signed into law this past March. Close to a century of failed experiments with for-profit insurance for everybody but the most vulnerable among us, who are dumped on taxpayers’ shoulders, should suffice. While millions continue to suffer and die unnecessarily, we already pay for universal health care yet not get it.

Let’s not be misled by propaganda and demand our legislators support a financially sustainable and socially just, publicly funded, privately delivered, universal health care system — a single payer national health program. It’s not too late to do things right. Let’s not take no for an answer so that we can soon sing together “Happy Birthday, Medicare for All!”

Claudia Chaufan received her medical degree in Argentina and her doctorate in sociology at UC Santa Cruz. She is an assistant professor of Sociology and Health Policy at the Institute for Health and Aging at UC San Francisco and vice president of Physicians for a National Health Program — California.

http://www.santacruzsentinel.com/opinion/ci_15708814

Rationing by inconvenience

Immigrants' Experience with Publicly Funded Private Health Insurance

The New England Journal of Medicine
August 5, 2010

To the Editor:

On October 31, 2009, Massachusetts involuntarily transferred about 30,000 legal immigrants (mostly “green card” holders) from Commonwealth Care, the state-subsidized insurance program, to a new private insurance plan. CeltiCare, a subsidiary of the out-of-state, for-profit insurer Centene, agreed to take over their care for only $1,300 per person, one third of the state’s previous cost and well below the average cost of adequate care nationally. CeltiCare excluded several hospitals (and their affiliated community health centers) that have traditionally provided safety-net care for immigrants, including Boston Medical Center and Cambridge Health Alliance (CHA), where we work.

We used internal hospital data to determine the characteristics of patients who were transferred to CeltiCare and who had formerly received their primary care at CHA. A total of 1325 patients who had visited a primary care provider at CHA during the past year were moved to CeltiCare. Of these patients, 73% speak a primary language other than English, including Portuguese (24%), Spanish (20%), and Haitian Creole (9%); 19% have hypertension, and 10% have diabetes mellitus. A psychiatric disorder has been diagnosed in at least 9%.

We then evaluated the adequacy of the provider network for these patients. During the second and third months after the switch to CeltiCare, we searched CeltiCare’s Web site for primary care providers within 5 miles of CHA’s ZIP Code. The search returned 326 providers, of whom 217 were nonduplicate adult generalists. Of these providers, 25% could not be reached at the telephone number provided. Of those available by telephone, only 37% were actually accepting new CeltiCare patients, and the average wait for an appointment was 33 days. In all, only 60 providers were accepting new CeltiCare patients, and only 38 could provide service for even one of the three major linguistic minorities.

Given these findings, we believe that patients who were switched from Commonwealth Care to CeltiCare had inadequate access to primary care 3 months into this new program. We fear that such “rationing by inconvenience” shuts patients out of care to the detriment of their health but to the benefit of CeltiCare’s bottom line. Policymakers, in Massachusetts and nationally, should reassess the role of profit-driven insurers in the provision of safety-net care.

Ruth Hertzman-Miller M.D., M.P.H.
Malgorzata Dawiskiba M.D.
Cassie Frank M.D.
Cambridge Health Alliance, Cambridge, MA

http://www.nejm.org/doi/full/10.1056/NEJMc1005451

NEJM 1989: Health Care Rationing through Inconvenience, by Gerald W. Grumet, M.D.
http://www.nejm.org/doi/full/10.1056/NEJM198908313210909

Comment: 

By Don McCanne, MD

Of all of the industrialized nations, the United States has the greatest amount of health care rationing, and we do that through a unique mechanism. We ration based on ability to pay. As this NEJM report shows, our flawed financing system also results in rationing by inconvenience. This is a unique tool used by the private insurance industry – a tool that serves the interests of the insurers, at the cost of the patients.

The 1989 NEJM article by Grumet describes some of the rationing-by-inconvenience mechanisms used during the managed care revolution. Not much has changed. The Patient Protection and Affordable Care Act calls for greater regulation of the private insurance industry, but it contains only a paucity of meager safeguards against policies of inconvenience. Therefore, it will be relatively ineffective in protecting us from this unscrupulous form of rationing.

Why do we leave the private insurance industry in charge?

Quentin Young and Cory Franklin on Medicare for all

Excerpts from Pro and Con op-eds on Medicare for all

Chicago Tribune
August 4, 2010

Pro: Rx for Medicare’s birthday: Expand it

By Quentin Young

I was in active medical practice on July 30, 1965, when Medicare was signed into law by President Lyndon B. Johnson. Its impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It lacks authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems — and to bring down skyrocketing health care costs at the same time — is to improve the program and, most important, to expand it to cover every person in the United States.

That’s right: Extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on unnecessary paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them to ask Congress to enhance Medicare and to extend it to all.

Dr. Quentin Young is national coordinator of Physicians for a National Health Program.

http://www.chicagotribune.com/news/ct-oped-0805-pro-20100804,0,2770491.story

Con: Patients will end up receiving less care

By Cory Franklin

No physician in the United States has been a more articulate spokesman for the medically disenfranchised in the last half century than Quentin Young; his ideas on health care merit our attention. But he is simply mistaken that the best remedy for our health care problems is to expand Medicare to every American.

Medicare, adopted in 1965, has been a success — albeit a qualified one. Many of its advantages are indisputable, but some are oversold.

Medicare expansion raises the untested arguments of single-payer advocates — savings accrued through lower administrative costs, negotiating fees, global budgets, centralized planning and purchasing.

The biggest problem in expanding Medicare is essentially solving what economist Greg Mankiw calls the trilemma, the three problems of health care delivery — cost, access and quality. Any two might be achieved but the third necessarily suffers. Expanding Medicare could certainly improve access but no one has figured out how to prevent escalating costs or diminishing quality (e.g. less subspecialty care). The question must be asked: Under universal Medicare might the country pay more and see patients receive less?

Dr. Cory Franklin is a physician with NorthShore University HealthSystem.

http://www.chicagotribune.com/news/ct-oped-0805-con-20100804,0,5728796.story

Comment: 

By Don McCanne, MD

Supporters of Medicare for all are already familiar with the Pro position expressed so well by Quentin Young, but you may want to download the full article anyway to share it with others who may be less informed.

The full article on the Con position, written by Cory Franklin, also provides passive support for the Medicare for all position. He argues that 1) Medicare is going broke, 2) physicians are unhappy with Medicare reimbursement rates, 3) there have been many extensive technological advances in the past 45 years, 4) aging and obesity would put a strain on Medicare, 5) patients no longer pay 50 percent of total costs out of pocket, and that 6) there are unintended consequences in a massive government assumption of costs.

The reason that his arguments support Medicare for all is that he provides no alternative to address these issues other than the “untested” policies of the single payer model. In fact, the policies listed have been tested extensively in other nations and proven to be effective in both controlling costs and ensuring health care access for everyone.

A word needs to be said about the oft-repeated common wisdom that cost, access and quality are interdependent and that an improvement in one automatically results in an impairment of one or both of the others. Improve access and costs will go up and quality will go down, they say. This meme has been repeated so often that it is no longer questioned. Even Cory Franklin advances it with his statement: “Expanding Medicare could certainly improve access but no one has figured out how to prevent escalating costs or diminishing quality.”

What is the truth? As a universal program, Medicare for all would eliminate financial barriers to access for everyone. Expanded coverage would be paid for initially by the recovery of the profound administrative waste that uniquely characterizes our dysfunctional, fragmented system of financing health care. Not only would costs not increase, but single payer policies that would be put in place would slow the growth in costs to sustainable levels far into the future. A single payer system is also much more adept at identifying and incentivizing beneficial health care practices, thereby improving the quality of care delivered.

The opponents of Medicare for all are locked into the framing of the three-legged stool of cost, access and quality – reinforce one leg and the other two destabilize. We can show them how we can use Medicare for all to reinforce all three legs – proving universal access to higher quality care while controlling costs – to provide a solid, permanent structure of affordable, high quality care for everyone.

Doctors hard to find for patients in Massachusetts' first for-profit health plan: NEJM article

Researchers note troubling implications for Obama's new health law

EMBARGOED until:
Wednesday, Aug. 4, at 5 p.m. Eastern time

Contact:
Cassie Frank, M.D.
Malgorzata Dawiskiba, M.D.
Ruth Hertzman-Miller, M.D., M.P.H.
Mark Almberg, PNHP, (312) 782-6006, mark@pnhp.org

The first for-profit insurance company approved to offer government-subsidized coverage under Massachusetts’ health reform has dangerously restricted access to primary care, according to data reported in Thursday’s (Aug. 5) New England Journal of Medicine. Researchers say the findings raise troubling concerns about the Obama administration’s new health law, which is modeled after the Massachusetts plan.

Three Harvard-affiliated physicians report that out of a list of 326 doctors identified as members of the provider network of CeltiCare, a for-profit insurer contracted by the state of Massachusetts to take over coverage of about 30,000 legal immigrants (and, more recently, low-income citizens), only 217 were non-duplicate adult primary care providers. Of these 217 doctors, 25 percent could not be reached by telephone.

Of those primary care doctors who were reachable by telephone, only 37 percent, or 60 providers, said they were accepting new CeltiCare patients. In those cases, the average wait time for an appointment was 33 days, even though the patient was described as having a chronic illness like diabetes or hypertension.

Moreover, although many of the patients who had been forced into the CeltiCare plan don’t speak English, only 38 of the doctors who were accepting new patients had any form of translation services.

The plan’s failure to provide adequate access to doctors for its members raises grave concerns not only about Massachusetts’ reform, but also about the recently enacted national reform, the researchers said. The national plan closely mirrors Massachusetts’ reform, but relies far more heavily on for-profit insurers.

The report points out that even when patients have insurance, profit-driven plans may discourage them from getting the care they need by “rationing by inconvenience.”

The data appears in a letter titled “Immigrants’ experience with publicly funded private health insurance” in the Aug. 5 print edition of the journal. It was written by two resident physicians at the Harvard-affiliated Cambridge Health Alliance and a Harvard Medical School faculty adviser, and is based on the work of a group of interns, residents and medical students from several Boston-area hospitals and medical schools.

These doctors-in-training carried out the research after they became worried when some of their sickest patients – patients with cancer, diabetes and other severe health problems – were forced from their existing insurance plan into the CeltiCare plan. They then were told that they could no longer be treated at many of their previous health clinics, forcing them to find new doctors.

The researchers identified doctors available to the CeltiCare patients using the plan’s “Find a Provider” website. They called each of the doctors’ offices within a 5-mile radius of their hospital, identifying themselves as relatives of a chronically ill, older adult who needed an appointment soon. If an appointment was offered, the researcher asked about the availability of translators.

“Trying to get an appointment was even more daunting than these numbers suggest,” said Dr. Cassie Frank, a co-author of the article. “Many clinics forced me to call several times to get an appointment. One said they only open up appointments on Monday morning, and that to have a chance of getting any appointment slot I’d have to show up an hour before the clinic opened to be first in line.”

Dr. Malgorzata Dawiskiba, another co-author, said: “The state suddenly shifted thousands of sick patients to a cut-rate plan. But instead of getting a bargain, the patients were left stranded – insured, but unable to find a doctor who could care for them. These were people whom we knew. We and our supervisors had been their doctors, sometimes for many years, and overnight they were told ‘you can’t come here anymore.'”

Dr. Ruth Hertzman-Miller, an instructor at Harvard Medical School and study co-author, commented: “The problems faced by CeltiCare’s patients may soon become much more widespread. Our legislative leaders want to require every insurer in Massachusetts to offer a plan with a restricted list of doctors and a lower price tag. But that kind of restricted coverage may be little more than a worthless piece of paper.”

###

“Immigrants’ experience with publicly funded private health insurance,” Ruth Hertzman-Miller, M.D., M.P.H.; Malgorzata Dawiskiba, M.D.; Cassie Frank, M.D. New England Journal of Medicine, Aug. 5, 2010.

Rx for Medicare's birthday: Expand it

By Quentin Young
Chicago Tribune, August 5, 2010

Medicare, one of our nation’s most cherished social programs, turned 45 last week.

I was in active medical practice on July 30, 1965, when Medicare was signed into law by President Lyndon B. Johnson. Its impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

That was only the beginning. Through the years, Medicare dramatically reduced poverty among the elderly. It added new benefits like preventive care. It reduced racial and income-based disparities. It extended its coverage to the severely disabled. It laid the basis for nationwide, comparative health studies that have improved the quality of care for everyone.

In short, Medicare, a government-sponsored program that now covers over 45 million Americans, has been a triumphant success.

However, instead of celebrating, Medicare is facing ominous rumblings from President Obama’s debt commission and not-so-veiled threats from other quarters.

“Medicare’s going broke,” its market-obsessed critics say. “It’s dragging down the economy.”

Such alarms have been sounded about every six or seven years since Medicare began, but in real life it continues to thrive. Either the economy prospers, yielding greater tax revenues, or Congress tweaks the payroll tax by a tiny fraction of a percentage point, and immediately the projected shortfall disappears. (The last adjustment was in 1985, when the rate was increased to 1.45 percent from 1.30 percent.)

While it’s true aging baby boomers will make bigger demands on Medicare, again, modest adjustments today will assure its financial solvency tomorrow.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It lacks authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems — and to bring down skyrocketing health care costs at the same time — is to improve the program and, most important, to expand it to cover every person in the United States.

That’s right: Extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on unnecessary paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

Conventional wisdom suggests we should wait and see how the new health law plays out. But we’ve seen how comparable reforms have fared on the state level: They’ve invariably failed after only a few years, chiefly because they can’t control costs. Meanwhile more millions suffer.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them to ask Congress to enhance Medicare and to extend it to all.

Dr. Quentin Young is national coordinator of Physicians for a National Health Program.

http://www.chicagotribune.com/news/ct-oped-0805-pro-20100804,0,2770491.story

Rx for Medicare’s birthday: Expand it

By Quentin Young
Chicago Tribune, August 5, 2010

Medicare, one of our nation’s most cherished social programs, turned 45 last week.

I was in active medical practice on July 30, 1965, when Medicare was signed into law by President Lyndon B. Johnson. Its impact on older Americans and their families was swift and spectacular. I saw the results with my own eyes.

Almost overnight, millions of Americans age 65 and older had the doors to health care opened to them that had hitherto been closed. They streamed into our doctors’ offices seeking long-deferred and sometimes urgently needed medical attention.

Simultaneously, the specter of crushing medical debt was lifted from the shoulders of tens of millions of America’s seniors and their children. You could almost hear a collective sigh of relief.

That was only the beginning. Through the years, Medicare dramatically reduced poverty among the elderly. It added new benefits like preventive care. It reduced racial and income-based disparities. It extended its coverage to the severely disabled. It laid the basis for nationwide, comparative health studies that have improved the quality of care for everyone.

In short, Medicare, a government-sponsored program that now covers over 45 million Americans, has been a triumphant success.

However, instead of celebrating, Medicare is facing ominous rumblings from President Obama’s debt commission and not-so-veiled threats from other quarters.

“Medicare’s going broke,” its market-obsessed critics say. “It’s dragging down the economy.”

Such alarms have been sounded about every six or seven years since Medicare began, but in real life it continues to thrive. Either the economy prospers, yielding greater tax revenues, or Congress tweaks the payroll tax by a tiny fraction of a percentage point, and immediately the projected shortfall disappears. (The last adjustment was in 1985, when the rate was increased to 1.45 percent from 1.30 percent.)

While it’s true aging baby boomers will make bigger demands on Medicare, again, modest adjustments today will assure its financial solvency tomorrow.

In fact, Medicare stands like a rock in a troubled sea of waste, inefficiency and disarray in the rest of our health care system, dominated as it is by big, corporate insurers whose paramount goal is to maximize profits, often by enrolling the healthy, avoiding the sick, raising premiums and denying claims.

Medicare is not without its problems, of course. Its benefits package could be richer. It lacks authority to negotiate lower prices with drug companies. The reimbursement rate to physicians could be enhanced and stabilized, instead of depending on an annual cat-and-mouse game with Congress (the “doc fix”) over a flawed accounting formula that only erodes physician confidence in the program.

But the best way to remedy these problems — and to bring down skyrocketing health care costs at the same time — is to improve the program and, most important, to expand it to cover every person in the United States.

That’s right: Extend Medicare to everyone. By replacing our crazy-quilt, inefficient system of private health insurers with a streamlined, publicly financed single-payer program, we would reap enormous savings.

First, we would save about $400 billion annually that is presently wasted on unnecessary paperwork and bureaucracy. That’s enough money to cover everyone who is currently uninsured and to upgrade everyone else’s coverage without increasing overall U.S. health spending by a single penny.

Patients could go to the doctor and hospital of their choice. They’d be covered for all medically necessary services and medications, with no co-pays or deductibles.

Second, we’d acquire powerful cost-control tools like the ability to purchase medications in bulk, negotiate fees, develop global budgets for hospitals and coordinate capital investments. Such tools would rein in costs and help assure the program’s sustainability over the long haul.

Conventional wisdom suggests we should wait and see how the new health law plays out. But we’ve seen how comparable reforms have fared on the state level: They’ve invariably failed after only a few years, chiefly because they can’t control costs. Meanwhile more millions suffer.

It’s never too late to do the right thing. So when naysayers urge cuts to Medicare, don’t buy it. Tell them to ask Congress to enhance Medicare and to extend it to all.

Dr. Quentin Young is national coordinator of Physicians for a National Health Program.

http://www.chicagotribune.com/news/ct-oped-0805-pro-20100804,0,2770491.story

The impact of Taiwan’s single payer system on amenable mortality

The impact of universal National Health Insurance on population health: the experience of Taiwan

By Yue-Chune Lee, Yu-Tung Huang, Yi-Wen Tsai, Shiuh-Ming Huang, Ken N Kuo, Martin McKee and Ellen Nolte
BMC Health Services Research
August 4, 2010

Background

Taiwan established a system of universal National Health Insurance (NHI) in March, 1995. Today, the NHI covers more than 98% of Taiwan’s population and enrollees enjoy almost free access to healthcare with small co-payment by most clinics and hospitals. Yet while this expansion of coverage will almost inevitably have improved access to health care, however, it cannot be assumed that it will necessarily have improved the health of the population. The aim of this study was to determine whether the introduction of National Health Insurance (NHI) in Taiwan in 1995 was associated with a change in deaths from causes amenable to health care.

Methods

Identification of discontinuities in trends in mortality considered amenable to health care and all other conditions (non-amenable mortality) using joinpoint regression analysis from 1981 to 2005.

Results

Deaths from amenable causes declined between 1981 and 1993 but slowed between 1993 and 1996. Once NHI was implemented, the decline accelerated significantly, falling at 5.83% per year between 1996 and 1999. In contrast, there was little change in non-amenable causes (0.64 percent per year between 1981 and 1999). The effect of NHI was highest among the young and old, and lowest among those of working age, consistent with changes in the pattern of coverage. (This result is consistent with our expectations as 77% of the working age population were already covered by the pre-existing social insurance; thus they were inevitably going to be affected less by the introduction of NHI.) NHI was associated with substantial reductions in deaths from circulatory disorders and, for men, infections, whilst an earlier upward trend in female cancer deaths was reversed.

Conclusions

NHI was associated in a reduction in deaths considered amenable to health care; particularly among those age groups least likely to have been insured previously.

Policy Implications

These findings have implications for other countries that do not have universal health insurance coverage. The implementation of NHI in Taiwan was associated with a sustained reduction in deaths from causes amenable to health care, which surpassed the underlying decline in other causes. It is reasonable to expect that the introduction of universal coverage elsewhere might also have beneficial effects.

Looking ahead, while the Taiwanese NHI has succeeded in terms of cost (3.4% of GDP), satisfaction (77.5% satisfied in 2007), low administrative cost (1.49%), and equitable financial burden, the system is not without problems. For example, as a publicly-managed program, it is difficult to insulate it from political interference, a factor that has contributed to a continuing financial deficit. Thus, the existing budget may be inadequate to sustain the current level of performance.

http://www.biomedcentral.com/1472-6963/10/225/abstract

Full article (provisional):
http://www.biomedcentral.com/content/pdf/1472-6963-10-225.pdf

United States has worst rate of amenable mortality:
https://www.pnhp.org/news/2008/january/united_states_has_wo.php

Comment: 

By Don McCanne, MD

Taiwan’s 1995 introduction of a single payer system of universal National Health Insurance provides us with a natural experiment on the impact of single payer reform on health outcomes. The results are dramatic. The rate in reductions of deaths due to disorders that are amenable to health care were nine times the reductions in deaths from non-amenable causes. Nine times!

The United States should be especially interested in these results since, in a study of nineteen industrialized nations, we have the worst rate of amenable mortality (link above). We have over 100,000 excess deaths per year due to disorders amenable to health care.

Will the Patient Protection and Affordable Care Act (PPACA) erase this blemish on our health care system? Most of our dysfunctional financing system will remain in place. Some will receive care under an expansion of Medicaid, but as a chronically underfunded program with insufficient numbers of willing providers, access problems are inevitable. Others will receive care under the private plans in the insurance exchanges, but financial barriers to access will remain because of the low actuarial values of the plans and inadequate subsidies. There is little reason to believe that the tweaks of PPACA will have much impact on amenable mortality.

After enacting a single payer system, Taiwan not only greatly reduced amenable mortality, but it was done at a fraction of our spending, with great patient satisfaction, with extremely low administrative costs, and with a financing system that is equitable. Maybe Taiwan needs to spend more, but just think of what we could have with the amount that we are already spending. Besides, saving 100,000 lives a year seems to be a worthy policy goal.

The impact of Taiwan's single payer system on amenable mortality

The impact of universal National Health Insurance on population health: the experience of Taiwan

By Yue-Chune Lee, Yu-Tung Huang, Yi-Wen Tsai, Shiuh-Ming Huang, Ken N Kuo, Martin McKee and Ellen Nolte
BMC Health Services Research
August 4, 2010

Background

Taiwan established a system of universal National Health Insurance (NHI) in March, 1995. Today, the NHI covers more than 98% of Taiwan’s population and enrollees enjoy almost free access to healthcare with small co-payment by most clinics and hospitals. Yet while this expansion of coverage will almost inevitably have improved access to health care, however, it cannot be assumed that it will necessarily have improved the health of the population. The aim of this study was to determine whether the introduction of National Health Insurance (NHI) in Taiwan in 1995 was associated with a change in deaths from causes amenable to health care.

Methods

Identification of discontinuities in trends in mortality considered amenable to health care and all other conditions (non-amenable mortality) using joinpoint regression analysis from 1981 to 2005.

Results

Deaths from amenable causes declined between 1981 and 1993 but slowed between 1993 and 1996. Once NHI was implemented, the decline accelerated significantly, falling at 5.83% per year between 1996 and 1999. In contrast, there was little change in non-amenable causes (0.64 percent per year between 1981 and 1999). The effect of NHI was highest among the young and old, and lowest among those of working age, consistent with changes in the pattern of coverage. (This result is consistent with our expectations as 77% of the working age population were already covered by the pre-existing social insurance; thus they were inevitably going to be affected less by the introduction of NHI.) NHI was associated with substantial reductions in deaths from circulatory disorders and, for men, infections, whilst an earlier upward trend in female cancer deaths was reversed.

Conclusions

NHI was associated in a reduction in deaths considered amenable to health care; particularly among those age groups least likely to have been insured previously.

Policy Implications

These findings have implications for other countries that do not have universal health insurance coverage. The implementation of NHI in Taiwan was associated with a sustained reduction in deaths from causes amenable to health care, which surpassed the underlying decline in other causes. It is reasonable to expect that the introduction of universal coverage elsewhere might also have beneficial effects.

Looking ahead, while the Taiwanese NHI has succeeded in terms of cost (3.4% of GDP), satisfaction (77.5% satisfied in 2007), low administrative cost (1.49%), and equitable financial burden, the system is not without problems. For example, as a publicly-managed program, it is difficult to insulate it from political interference, a factor that has contributed to a continuing financial deficit. Thus, the existing budget may be inadequate to sustain the current level of performance.

http://www.biomedcentral.com/1472-6963/10/225/abstract

Full article (provisional):
http://www.biomedcentral.com/content/pdf/1472-6963-10-225.pdf

United States has worst rate of amenable mortality:
https://pnhp.org/news/2008/january/united_states_has_wo.php

Comment: 

By Don McCanne, MD

Taiwan’s 1995 introduction of a single payer system of universal National Health Insurance provides us with a natural experiment on the impact of single payer reform on health outcomes. The results are dramatic. The rate in reductions of deaths due to disorders that are amenable to health care were nine times the reductions in deaths from non-amenable causes. Nine times!

The United States should be especially interested in these results since, in a study of nineteen industrialized nations, we have the worst rate of amenable mortality (link above). We have over 100,000 excess deaths per year due to disorders amenable to health care.

Will the Patient Protection and Affordable Care Act (PPACA) erase this blemish on our health care system? Most of our dysfunctional financing system will remain in place. Some will receive care under an expansion of Medicaid, but as a chronically underfunded program with insufficient numbers of willing providers, access problems are inevitable. Others will receive care under the private plans in the insurance exchanges, but financial barriers to access will remain because of the low actuarial values of the plans and inadequate subsidies. There is little reason to believe that the tweaks of PPACA will have much impact on amenable mortality.

After enacting a single payer system, Taiwan not only greatly reduced amenable mortality, but it was done at a fraction of our spending, with great patient satisfaction, with extremely low administrative costs, and with a financing system that is equitable. Maybe Taiwan needs to spend more, but just think of what we could have with the amount that we are already spending. Besides, saving 100,000 lives a year seems to be a worthy policy goal.

Threat of destabilization of the private insurance market

Covering New Ground in Health System Shift

By Robert Pear
The New York Times
August 2, 2010

Administration officials are eager to demonstrate and deliver what they see as the benefits of the new law (Patient Protection and Affordable Care Act). But they face a delicate task: they do not want to destabilize or disrupt the existing market in a way that makes insurance less available or more expensive to consumers.

For the moment, President Obama has the upper hand. Congress gave him sweeping power to regulate the industry for the benefit of consumers. Administration officials said they would be tough on the industry, but, for the law to succeed, they need large numbers of insurance companies to compete in the new regulated marketplace.

Sabrina Corlette, a research professor at the Health Policy Institute of Georgetown University, said: “In 2014, we can say good riddance to bottom-feeder insurance plans, which have built a business around selling policies to healthy young people. They often provide inadequate coverage when people get sick. But if these plans pull out of the market before 2014, we want to be sure that viable alternatives are available.”

http://www.nytimes.com/2010/08/03/health/policy/03insurance.html?hp

Comment: 

By Don McCanne, MD

“…bottom-feeder insurance plans, which have built a business around selling policies to healthy young people (and which) often provide inadequate coverage when people get sick…” That quotation describes the products being sold in the individual insurance market by WellPoint, the largest insurer in the nation.

Imagine WellPoint improving those plans so that they do provide adequate benefits, with a choice of physicians and hospitals, without excessive cost sharing, and that they would include everyone regardless of preexisting conditions. Imagine the premiums that they would have to charge. Then imagine many companies developing similar quality insurance products to create a robust market of plan choices within the insurance exchanges.

Keep imagining because these products will have to exist only in our minds since the private insurance industry will never again be able to make them a reality if they are going to cover everyone with premiums we can afford.

For those who have employer-sponsored plans that seem to be working, keep in mind that these plans have cherry picked the large but highly select group of the inexpensive healthy workforce and their young healthy families. Also keep in mind that the employee cost of these plans is not only the payroll deduction, but also the forgone wage increases that pay for the employer contribution, and now to be added are the taxes that will be paid to support the subsidies for those who purchase their plans through the exchanges. Nobody is getting off cheap.

If the Obama administration is going to “regulate the industry for the benefit of consumers,” then they can’t help but “destabilize or disrupt the existing market in a way that makes insurance less available or more expensive to consumers.”

Why should we worry about a destabilized market of private plans, when our real concern is how are we going to pay for the health care that any of us might need? The obvious solution would be to replace the private plans with a single payer national health program – an improved Medicare for all. The fate of the private insurers should be the least of our concerns.