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PNHP co-founder Dr. Steffie Woolhandler on the passage of House Bill 3962

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PNHP co-founder Dr. Steffie Woolhandler on the passage of House Bill 3962

(Excerpted from an interview with Amy Goodman, Democracy Now, November 11, 2009)

AMY GOODMAN: When the House voted on the bill, 220-to-215, what was your reaction? And can you analyze it for us?

DR. STEFFIE WOOLHANDLER: Well, we think that the Congress needs to start from scratch on this bill. The reform process in Washington has been hijacked by the private health insurance industry. If you look at the Baucus framework, which was the basis of the Senate bill—it’s on the Senate Finance Committee website. Just right-click on that document, and it turns out the author of the document was Elizabeth Fowler, who’s a former vice president of Wellpoint, the nation’s largest private insurance company, covering 35 million people. So the private insurance industry has hijacked the process. What’s come out of the House, what’s likely to come out of the Senate, is a completely inadequate bill that takes about $500 billion in taxpayer money and hands it over to the private health insurance industry.

AMY GOODMAN: I mean, explain exactly that, as people are suffering in the midst of this, you know, tremendous economic downturn, this global economic meltdown. You’re talking once again, not only with the bankers, but with the insurance company, of forcing people to buy health insurance, but to buy it from private insurers. So this is an incredible deal for the private insurers.

DR. STEFFIE WOOLHANDLER: Right. Well, the private insurers are getting millions of mandatory new customers. The taxpayers are going to give subsidies. It’s not going to make healthcare affordable, but it’s going to cost the taxpayers a lot of money to give these subsidies.

Private health insurance is a defective product. We know from our studies of bankruptcy that the majority of Americans who face medical bankruptcy start their illness with private health insurance but are bankrupted anyway by gaps in coverage, like co-payments, deductibles and uncovered services.

And under the House and Senate bills, they’ve done nothing to fix private health insurance. They’ve merely made private health insurance mandatory for middle-income working people and forcing those folks to take lots of money out of their pocket to buy this defective product.

AMY GOODMAN: And, of course, most bankruptcies in this country are caused by medical problems; they are medical bankruptcies.

DR. STEFFIE WOOLHANDLER: Right. In our studies, we found that 62 percent of all bankruptcies in the United States are due at least in part to medical illness or medical bills and that the majority of folks in medical bankruptcy started that illness with private health insurance.

AMY GOODMAN: But what about those who perhaps do even support Medicare for all or single payer who are saying, “Well, at least now you’re talking about tens of millions of people who will be insured, who weren’t otherwise”?

DR. STEFFIE WOOLHANDLER: What’s happened in the past when bills like this have passed in the states is that they run out of money very quickly, healthcare is simply unaffordable, and then you start to see the coverage expansions cut back. The subsidies shrink, the Medicaid shrinks, and then you’re back at square one, where you’ve spent a lot of money and not made any progress. And we’ve seen this over and over in the United States—in Massachusetts in 1988, in Oregon in 1992, in Washington 1993—passed bills virtually identical to what’s being passed in the House right now, and there was no durable improvement in the number of uninsured in those states. Healthcare was not affordable ten years after those bills were passed.

The problem with the House bill is it simply won’t work. And, you know, if we want to expand Medicaid, fine, we should expand Medicaid. If we want more primary care, good, let’s expand primary care. But doing it through $500 billion in subsidies to the private health insurance industry will have the effect of making the health insurance industry more powerful, making the health insurance lobby more powerful. And just as they’ve hijacked this process in Washington, it makes them more able to hijack political processes in the future.

AMY GOODMAN: And the cost of drugs? So it’s not only the mandatory—mandating that people buy health insurance from private companies, but the deal that was worked with the pharmaceutical industry in this country. Explain that.

DR. STEFFIE WOOLHANDLER: OK. Well, the deal with the pharmaceutical industry was minimal. The pharmaceutical industry gave up very little. They said for Medicare recipients who are in the doughnut hole, they would make low[er]-priced [brand-name drugs] available. That’s a very small share of the population. For the rest of us, who may be unable to afford expensive medications, we got nothing out of the pharmaceutical industry.

The pharmaceutical industry, frankly, is thrilled with this bill. And despite all their squawking, the health insurance industry is pretty happy, too. You know, Wall Street has rewarded them by driving up the value of their stocks. And I think any fair and honest reading of this bill would say that it’s a tremendous victory for the health insurance industry. And what we need to do to get to universal healthcare is start from scratch, go for that Medicare-for-all, single-payer approach.

AMY GOODMAN: And the issue of women, reproductive healthcare and abortion?

DR. STEFFIE WOOLHANDLER: Well, that is a horrendous provision in the House bill, which would essentially extend a ban on abortion to private health insurance. In the past, the Hyde Amendment applied only to people who were getting publicly funded care. But in the new bill, any insurance product that’s offered through the exchange has to—

AMY GOODMAN: And explain the exchange.

DR. STEFFIE WOOLHANDLER: Yes. The exchange would be this marketplace where you would go to buy your insurance. If you had subsidized coverage, you would have to buy your insurance through the exchange.

And any insurance plan purchased through the exchange would have to exclude coverage of abortion. So, for the first time, Congress has stepped in and said that even with your own money, with private money, it’s illegal for insurance to cover abortion. It’s a tremendous step backwards for women’s rights.

AMY GOODMAN: And do you think it will make its way through to the final bill?

DR. STEFFIE WOOLHANDLER: Well, I’m not sure about that. Certainly President Obama has weighed in to say, “Well, let’s try to return to what was there before, with just a ban on public funding of abortion,” which is bad enough. It remains unclear what’s going to happen in the Senate, whether the right-to-life folks will step in and get an anti-choice plank in the Senate bill, as well. They certainly were successful in the House. And, of course, that’s one of the many reasons that we think we need to start from scratch on a new health reform bill.

AMY GOODMAN: Steffie Woolhandler, you come from Massachusetts. That’s often held up as the model. I recently saw on CNN your former Governor Weld interviewed about his p
lan that has been adopted by all of Massachusetts. Explain the Massachusetts plan and then how we, as Americans, fit into the rest of the world when it comes to our healthcare system.

DR. STEFFIE WOOLHANDLER: OK. Well, the Massachusetts plan is considered the model for the national legislation. There’s a mandate that makes it illegal to refuse to purchase private health insurance. The fine is up to $1,068. The good thing with the Massachusetts plan was there was a big Medicaid expansion, but you didn’t need to do the mandates in order to do the Medicaid expansion.

Much of the Massachusetts plan has been wildly expensive. According to the state’s report to its bondholders, it’s cost $1.3 billion this year. The state has opted to pay for that by stealing money from safety net clinics and hospitals, so that safety net providers that care for immigrants, the mentally ill, people with substance abuse, that provide primary care, they’ve seen their funds shrunken, so that money could be handed over to purchase insurance policies. Massachusetts now has the highest healthcare costs in the history of the world.

You have to compare that to what goes on internationally. With the average per capita cost of healthcare about half those in the United States, yet people in Canada and western Europe live about two years longer. They have complete free choice of doctor and hospital. They have lower infant mortality. People in other developed nations use some form of nonprofit national health insurance to get better care for less money. And that’s why our group supports the Medicare-for-all approach.

AMY GOODMAN: So the question is where that fits in today. Finally, former President Clinton met with Senate Democrats yesterday and basically said nothing—said something is better than nothing, pass this now. What do you feel about that?

DR. STEFFIE WOOLHANDLER: Well, I think we know—we now know the outlines of what they’re going to pass. It’s not an abstract something; it’s something real. And it’s quite bad. It’s $500 billion in new subsidies to the private health insurance, millions of mandatory new customers for private health insurance.

The public plan option is incredibly puny. According to the Congressional Budget Office, fewer than 2 percent of Americans will enroll. And the premiums will actually be higher—higher—than premiums in the private sector. So the public plan option will be an expensive, tax-funded subsidy to private health insurance, because the public plan option will take the sickest patients off their hands. It’s not going to be something that’s going to generate coverage or decrease costs.

So, we know what the outlines are of the plan, and there are so many bad and harmful planks to the plan that we do need to start from scratch on health reform.

AMY GOODMAN: Since it doesn’t look like they will, will you not support what is coming out right now? Would you have voted no if you were a congressman—Congress member? Would you vote no in the Senate?

DR. STEFFIE WOOLHANDLER: Well, I’m a, you know, doctor; I’m not a politician. I feel a little bit like we’re debating whether to give aspirin or Tylenol to a patient with breast cancer. The patient needs surgery. And what’s being debated in Washington is really Tylenol or aspirin. And I had said for awhile we’d have to see the final shape of the bill, because, of course, we’d—I’d love to see more Medicaid money. Medicaid is very helpful for very poor people. It’s not perfect, but it’s much better than nothing. But I think there’s so many bad planks in the bill that this bill needs to be scratched, and we need to start over.

AMY GOODMAN: Do think this is a better deal for the health insurance industry, for the private health insurance industry in this country, than we have right now?

DR. STEFFIE WOOLHANDLER: I actually do. Their number one demand was the so-called individual mandate that would make it illegal to not have health insurance. It will become a federal crime to be uninsured. If you have private health insurance through your work, and you hate your private health insurance, tough luck, you have to keep that insurance. The mandate means you have to keep it. You can’t buy the public option. You probably won’t be able to go through the exchange. So they’ve made private health insurance mandatory, giving them hundreds of billions in new—mandatory new customers.

There’s some minimal insurance regulation, and I think more regulation is better than less regulation of insurance, but that’s going to be counterbalanced by the tremendous economic boost that will be given to the private health insurance industry through this bill. And as we know, if you have a lot of money, you can buy a lot of political influence. I think down the line we’re actually likely to be worse off in handing over so much taxpayer money to what is essentially a private health insurance industry bailout.

AMY GOODMAN: Dr. Steffie Woolhandler, I want to thank you very much for being with us, professor of medicine at Harvard University, primary care physician in Cambridge, co-founder of Physicians for a National Health Program. We’ll have a link to their study on our website at democracynow.org.

A Brief History: Universal Health Care Efforts in the US

(Transcribed from a talk given by Karen S. Palmer MPH, MS in San Francisco at the Spring, 1999 PNHP meeting)

Late 1800’s to Medicare

The campaign for some form of universal government-funded health care has stretched for nearly a century in the US On several occasions, advocates believed they were on the verge of success; yet each time they faced defeat. The evolution of these efforts and the reasons for their failure make for an intriguing lesson in American history, ideology, and character.

Other developed countries have had some form of social insurance (that later evolved into national insurance) for nearly as long as the US has been trying to get it. Some European countries started with compulsory sickness insurance, one of the first systems, for workers beginning in Germany in 1883; other countries including Austria, Hungary, Norway, Britain, Russia, and the Netherlands followed all the way through 1912. Other European countries, including Sweden in 1891, Denmark in 1892, France in 1910, and Switzerland in 1912, subsidized the mutual benefit societies that workers formed among themselves. So for a very long time, other countries have had some form of universal health care or at least the beginnings of it. The primary reason for the emergence of these programs in Europe was income stabilization and protection against the wage loss of sickness rather than payment for medical expenses, which came later. Programs were not universal to start with and were originally conceived as a means of maintaining incomes and buying political allegiance of the workers.

In a seeming paradox, the British and German systems were developed by the more conservative governments in power, specifically as a defense to counter expansion of the socialist and labor parties. They used insurance against the cost of sickness as a way of “turning benevolence to power”.

US circa 1883-1912, including Reformers and the Progressive Era:

What was the US doing during this period of the late 1800’s to 1912? The government took no actions to subsidize voluntary funds or make sick insurance compulsory; essentially the federal government left matters to the states and states left them to private and voluntary programs. The US did have some voluntary funds that provided for their members in the case of sickness or death, but there were no legislative or public programs during the late 19th or early 20th century.

In the Progressive Era, which occurred in the early 20th century, reformers were working to improve social conditions for the working class. However unlike European countries, there was not powerful working class support for broad social insurance in the US The labor and socialist parties’ support for health insurance or sickness funds and benefits programs was much more fragmented than in Europe. Therefore the first proposals for health insurance in the US did not come into political debate under anti-socialist sponsorship as they had in Europe.

Theodore Roosevelt 1901 — 1909

During the Progressive Era, President Theodore Roosevelt was in power and although he supported health insurance because he believed that no country could be strong whose people were sick and poor, most of the initiative for reform took place outside of government. Roosevelt’s successors were mostly conservative leaders, who postponed for about twenty years the kind of presidential leadership that might have involved the national government more extensively in the management of social welfare.

AALL Bill 1915

In 1906, the American Association of Labor Legislation (AALL) finally led the campaign for health insurance. They were a typical progressive group whose mandate was not to abolish capitalism but rather to reform it. In 1912, they created a committee on social welfare which held its first national conference in 1913. Despite its broad mandate, the committee decided to concentrate on health insurance, drafting a model bill in 1915. In a nutshell, the bill limited coverage to the working class and all others that earned less than $1200 a year, including dependents. The services of physicians, nurses, and hospitals were included, as was sick pay, maternity benefits, and a death benefit of fifty dollars to pay for funeral expenses. This death benefit becomes significant later on. Costs were to be shared between workers, employers, and the state.

AMA supported AALL Proposal

In 1914, reformers sought to involve physicians in formulating this bill and the American Medical Association (AMA) actually supported the AALL proposal. They found prominent physicians who were not only sympathetic, but who also wanted to support and actively help in securing legislation. In fact, some physicians who were leaders in the AMA wrote to the AALL secretary: “Your plans are so entirely in line with our own that we want to be of every possible assistance.” By 1916, the AMA board approved a committee to work with AALL, and at this point the AMA and AALL formed a united front on behalf of health insurance. Times have definitely changed along the way.
In 1917, the AMA House of Delegates favored compulsory health insurance as proposed by the AALL, but many state medical societies opposed it. There was disagreement on the method of paying physicians and it was not long before the AMA leadership denied it had ever favored the measure.

AFL opposed AALL Proposal

Meanwhile the president of the American Federation of Labor repeatedly denounced compulsory health insurance as an unnecessary paternalistic reform that would create a system of state supervision over people’s health. They apparently worried that a government-based insurance system would weaken unions by usurping their role in providing social benefits. Their central concern was maintaining union strength, which was understandable in a period before collective bargaining was legally sanctioned.

Private insurance industry opposed AALL Proposal

The commercial insurance industry also opposed the reformers’ efforts in the early 20th century. There was great fear among the working class of what they called a “pauper’s burial,” so the backbone of insurance business was policies for working class families that paid death benefits and covered funeral expenses. But because the reformer health insurance plans also covered funeral expenses, there was a big conflict. Reformers felt that by covering death benefits, they could finance much of the health insurance costs from the money wasted by commercial insurance policies who had to have an army of insurance agents to market and collect on these policies. But since this would have pulled the rug out from under the multi-million dollar commercial life insurance industry, they opposed the national health insurance proposal.

WWI and anti-German fever

In 1917, the US entered WWI and anti-German fever rose. The government-commissioned articles denouncing “German socialist insurance” and opponents of health insurance assailed it as a “Prussian menace” inconsistent with American values. Other efforts during this time in California, namely the California Social Insurance Commission, recommended health insurance, proposed enabling legislation i
n 1917, and then held a referendum. New York, Ohio, Pennsylvania, and Illinois also had some efforts aimed at health insurance. But in the Red Scare, immediately after the war, when the government attempted to root out the last vestiges of radicalism, opponents of compulsory health insurance associated it with Bolshevism and buried it in an avalanche of anti-Communist rhetoric. This marked the end of the compulsory national health debate until the 1930’s.

Why did the Progressives fail?

Opposition from doctors, labor, insurance companies, and business contributed to the failure of Progressives to achieve compulsory national health insurance. In addition, the inclusion of the funeral benefit was a tactical error since it threatened the gigantic structure of the commercial life insurance industry. Political naivete on the part of the reformers in failing to deal with the interest group opposition, ideology, historical experience, and the overall political context all played a key role in shaping how these groups identified and expressed their interests.

The 1920’s

There was some activity in the 1920’s that changed the nature of the debate when it awoke again in the 1930’s. In the 1930’s, the focus shifted from stabilizing income to financing and expanding access to medical care. By now, medical costs for workers were regarded as a more serious problem than wage loss from sickness. For a number of reasons, health care costs also began to rise during the 1920’s, mostly because the middle class began to use hospital services and hospital costs started to increase. Medical, and especially hospital, care was now a bigger item in family budgets than wage losses.

The CCMC

Next came the Committee on the Cost of Medical Care (CCMC). Concerns over the cost and distribution of medical care led to the formation of this self-created, privately funded group. The committee was funded by 8 philanthropic organizations including the Rockefeller, Millbank, and Rosenwald foundations. They first met in 1926 and ceased meeting in 1932. The CCMC was comprised of fifty economists, physicians, public health specialists, and major interest groups. Their research determined that there was a need for more medical care for everyone, and they published these findings in 26 research volumes and 15 smaller reports over a 5-year period. The CCMC recommended that more national resources go to medical care and saw voluntary, not compulsory, health insurance as a means to covering these costs. Most CCMC members opposed compulsory health insurance, but there was no consensus on this point within the committee. The AMA treated their report as a radical document advocating socialized medicine, and the acerbic and conservative editor of JAMA called it “an incitement to revolution.”

FDR’s first attempt — failure to include in the Social Security Bill of 1935: Next came Franklin D. Roosevelt (FDR), whose tenure (1933-1945) can be characterized by WWII, the Great Depression, and the New Deal, including the Social Security Bill. We might have thought the Great Depression would create the perfect conditions for passing compulsory health insurance in the US, but with millions out of work, unemployment insurance took priority followed by old age benefits. FDR’s Committee on Economic Security, the CES, feared that inclusion of health insurance in its bill, which was opposed by the AMA, would threaten the passage of the entire Social Security legislation. It was therefore excluded.

FDR’s second attempt — Wagner Bill, National Health Act of 1939: But there was one more push for national health insurance during FDR’s administration: The Wagner National Health Act of 1939. Though it never received FDR’s full support, the proposal grew out of his Tactical Committee on Medical Care, established in 1937. The essential elements of the technical committee’s reports were incorporated into Senator Wagner’s bill, the National Health Act of 1939, which gave general support for a national health program to be funded by federal grants to states and administered by states and localities. However, the 1938 election brought a conservative resurgence and any further innovations in social policy were extremely difficult. Most of the social policy legislation precedes 1938. Just as the AALL campaign ran into the declining forces of progressivism and then WWI, the movement for national health insurance in the 1930’s ran into the declining fortunes of the New Deal and then WWII.

Henry Sigerist

About this time, Henry Sigerist was in the US He was a very influential medical historian at Johns Hopkins University who played a major role in medical politics during the 1930’s and 1940’s. He passionately believed in a national health program and compulsory health insurance. Several of Sigerist’s most devoted students went on to become key figures in the fields of public health, community and preventative medicine, and health care organization. Many of them, including Milton Romer and Milton Terris, were instrumental in forming the medical care section of the American Public Health Association, which then served as a national meeting ground for those committed to health care reform.

Wagner-Murray-Dingell Bills: 1943 and onward through the decade

The Wagner Bill evolved and shifted from a proposal for federal grants-in- aid to a proposal for national health insurance. First introduced in 1943, it became the very famous Wagner-Murray- Dingell Bill. The bill called for compulsory national health insurance and a payroll tax. In 1944, the Committee for the Nation’s Health, (which grew out of the earlier Social Security Charter Committee), was a group of representatives of organized labor, progressive farmers, and liberal physicians who were the foremost lobbying group for the Wagner-Murray-Dingell Bill. Prominent members of the committee included Senators Murray and Dingell, the head of the Physician’s Forum, and Henry Sigerist. Opposition to this bill was enormous and the antagonists launched a scathing red baiting attack on the committee saying that one of its key policy analysts, I.S. Falk, was a conduit between the International Labor Organization (ILO) in Switzerland and the United States government. The ILO was red-baited as “an awesome political machine bent on world domination.” They even went so far was to suggest that the United States Social Security board functioned as an ILO subsidiary. Although the Wagner-Murray-Dingell Bill generated extensive national debates, with the intensified opposition, the bill never passed by Congress despite its reintroduction every session for 14 years! Had it passed, the Act would have established compulsory national health insurance funded by payroll taxes.

Truman’s Support

After FDR died, Truman became president (1945-1953), and his tenure is characterized by the Cold War and Communism. The health care issue finally moved into the center arena of national politics and received the unreserved support of an American president. Though he served during some of the most virulent anti-Communist attacks and the early years of the Cold War, Truman fully supported national health insurance. But the opposition had acquired new strength. Compulsory health insurance became entangled in the Cold War and its opponents were able to make “socialized medicine” a symbolic is
sue in the growing crusade against Communist influence in America.

Truman’s plan for national health insurance in 1945 was different than FDR’s plan in 1938 because Truman was strongly committed to a single universal comprehensive health insurance plan. Whereas FDR’s 1938 program had a separate proposal for medical care of the needy, it was Truman who proposed a single egalitarian system that included all classes of society, not just the working class. He emphasized that this was not “socialized medicine.” He also dropped the funeral benefit that contributed to the defeat of national insurance in the Progressive Era. Congress had mixed reactions to Truman’s proposal. The chairman of the House Committee was an anti-union conservative and refused to hold hearings. Senior Republican Senator Taft declared, “I consider it socialism. It is to my mind the most socialistic measure this Congress has ever had before it.” Taft suggested that compulsory health insurance, like the Full Unemployment Act, came right out of the Soviet constitution and walked out of the hearings. The AMA, the American Hospital Association, the American Bar Association, and most of then nation’s press had no mixed feelings; they hated the plan. The AMA claimed it would make doctors slaves, even though Truman emphasized that doctors would be able to choose their method of payment.

In 1946, the Republicans took control of Congress and had no interest in enacting national health insurance. They charged that it was part of a large socialist scheme. Truman responded by focusing even more attention on a national health bill in the 1948 election. After Truman’s surprise victory in 1948, the AMA thought Armageddon had come. They assessed their members an extra $25 each to resist national health insurance, and in 1945 they spent $1.5 million on lobbying efforts which at the time was the most expensive lobbying effort in American history. They had one pamphlet that said, “Would socialized medicine lead to socialization of other phases of life? Lenin thought so. He declared socialized medicine is the keystone to the arch of the socialist state.” The AMA and its supporters were again very successful in linking socialism with national health insurance, and as anti-Communist sentiment rose in the late 1940’s and the Korean War began, national health insurance became vanishingly improbable. Truman’s plan died in a congressional committee. Compromises were proposed but none were successful. Instead of a single health insurance system for the entire population, America would have a system of private insurance for those who could afford it and public welfare services for the poor. Discouraged by yet another defeat, the advocates of health insurance now turned toward a more modest proposal they hoped the country would adopt: hospital insurance for the aged and the beginnings of Medicare.

After WWII, other private insurance systems expanded and provided enough protection for groups that held influence in American to prevent any great agitation for national health insurance in the 1950’s and early 1960’s. Union-negotiated health care benefits also served to cushion workers from the impact of health care costs and undermined the movement for a government program.

Why did these efforts for universal national health insurance fail again?

For may of the same reasons they failed before: interest group influence (code words for class), ideological differences, anti-communism, anti-socialism, fragmentation of public policy, the entrepreneurial character of American medicine, a tradition of American voluntarism, removing the middle class from the coalition of advocates for change through the alternative of Blue Cross private insurance plans, and the association of public programs with charity, dependence, personal failure and the almshouses of years gone by.

For the next several years, not much happened in terms of national health insurance initiatives. The nation focussed more on unions as a vehicle for health insurance, the Hill-Burton Act of 1946 related to hospital expansion, medical research and vaccines, the creation of national institutes of health, and advances in psychiatry.

Johnson and Medicare/caid

Finally, Rhode Island congressman Aime Forand introduced a new proposal in 1958 to cover hospital costs for the aged on social security. Predictably, the AMA undertook a massive campaign to portray a government insurance plan as a threat to the patient-doctor relationship. But by concentrating on the aged, the terms of the debate began to change for the first time. There was major grass roots support from seniors and the pressures assumed the proportions of a crusade. In the entire history of the national health insurance campaign, this was the first time that a ground swell of grass roots support forced an issue onto the national agenda. The AMA countered by introducing an “eldercare plan,” which was voluntary insurance with broader benefits and physician services. In response, the government expanded its proposed legislation to cover physician services, and what came of it were Medicare and Medicaid. The necessary political compromises and private concessions to the doctors (reimbursements of their customary, reasonable, and prevailing fees), to the hospitals (cost plus reimbursement), and to the Republicans created a 3-part plan, including the Democratic proposal for comprehensive health insurance (“Part A”), the revised Republican program of government subsidized voluntary physician insurance (“Part B”), and Medicaid. Finally, in 1965, Johnson signed it into law as part of his Great Society Legislation, capping 20 years of congressional debate.

What does history teach us? What is the movement reacting to?

  1. Henry Sigerist reflected in his own diary in 1943 that he “wanted to use history to solve the problems of modern medicine.” I think this is, perhaps, a most important lesson. Damning her own naivete, Hillary Clinton acknowledged in 1994 that “I did not appreciate how sophisticated the opposition would be in conveying messages that were effectively political even though substantively wrong.” Maybe Hillary should have had this history lesson first.
  2. The institutional representatives of society do not always represent those that they claim to represent, just as the AMA does not represent all doctors. This lack of representation presents an opportunity for attracting more people to the cause. The AMA has always played an oppositional role and it would be prudent to build an alternative to the AMA for the 60% of physicians who are not members.
  3. Just because President Bill Clinton failed doesn’t mean it’s over. There have been periods of acquiescence in this debate before. Those who oppose it can not kill this movement. Openings will occur again. We all need to be on the lookout for those openings and also need to create openings where we see opportunities. For example, the focus on health care costs of the 1980’s presented a division in the ruling class and the debate moved into the center again. As hockey great Wayne Gretzky said, “Success is not a matter of skating to where the puck is, it is a matter of skating to where the puck will be.”
  4. Whether we like it or not, we are going to have to deal with the persistence of the narrow vision of middle class politics. Vincente Navarro says that the majority opinion of national health insurance has everything to do with repression and coercion by the capitalist corporate dominant class. He argues that the conflict and struggles that continuously take place around the issue of health care unfold within the parameters of class and that coercion and
    repression are forces that determine policy. I think when we talk about interest groups in this country, it is really a code for class.
  5. Red-baiting is a red herring and has been used throughout history to evoke fear and may continue to be used in these post Cold War times by those who wish to inflame this debate.
  6. Grass roots initiatives contributed in part to the passage of Medicare, and they can work again. Ted Marmor says that “pressure groups that can prevail in quiet politics are far weaker in contexts of mass attention — as the AMA regretfully learned during the Medicare battle.” Marmor offers these lessons from the past: “Compulsory health insurance, whatever the details, is an ideological controversial matter that involves enormous financial and professional stakes. Such legislation does not emerge quietly or with broad partisan support. Legislative success requires active presidential leadership, the commitment of an Administration’s political capital, and the exercise of all manner of persuasion and arm-twisting.”
  7. One Canadian lesson — the movement toward universal health care in Canada started in 1916 (depending on when you start counting), and took until 1962 for passage of both hospital and doctor care in a single province. It took another decade for the rest of the country to catch on. That is about 50 years all together. It wasn’t like we sat down over afternoon tea and crumpets and said please pass the health care bill so we can sign it and get on with the day. We fought, we threatened, the doctors went on strike, refused patients, people held rallies and signed petitions for and against it, burned effigies of government leaders, hissed, jeered, and booed at the doctors or the Premier depending on whose side they were on. In a nutshell, we weren’t the sterotypical nice polite Canadians. Although there was plenty of resistance, now you could more easily take away Christmas than health care, despite the rhetoric that you may hear to the contrary.
  8. Finally there is always hope for flexibility and change. In researching this talk, I went through a number of historical documents and one of my favorite quotes that speaks to hope and change come from a 1939 issue of Times Magazine with Henry Sigerist on the cover. The article said about Sigerist: “Students enjoy his lively classes, for Sigerist does not mind expounding his dynamic conception of medical history in hand-to-hand argument. A student once took issue with him and when Dr. Sigerist asked him to quote his authority, the student shouted, “You yourself said so!” “When?” asked Dr. Sigerist. “Three years ago,” answered the student. “Ah,” said Dr. Sigerist, “three years is a long time. I’ve changed my mind since then.” I guess for me this speaks to the changing tides of opinion and that everything is in flux and open to renegotiation.

Acknowledgements:

Special thanks to medical historians and PNHP colleagues Corinne Sutter-Brown and Ted Brown for background information, critical analysis, and editing.

References:

Much of this talk was paraphrased/annotated directly from the sources below, in particular the work of Paul Starr:

  1. Bauman, Harold, “Verging on National Health Insurance since 1910” in Changing to National Health Care: Ethical and Policy Issues (Vol. 4, Ethics in a Changing World) edited by Heufner, Robert P. and Margaret # P. Battin, University of Utah Press, 1992.
  2. “Boost President’s Plan”, Washington Post, p. A23, February 7, 1992.
    Brown, Ted. “Isaac Max Rubinow”, (a biographical sketch), American Journal of Public Health, Vol. 87, No. 11, pp. 1863-1864, 1997
  3. Danielson, David A., and Arthur Mazer. “The Massachusetts Referendum for a National Health Program”, Journal of Public Health Policy, Summer 1986.
  4. Derickson, Alan. “The House of Falk: The Paranoid Style in American House Politics”, American Journal of Public Health”, Vol. 87, No. 11, pp. 1836 – 1843, 1997.
  5. Falk, I.S. “Proposals for National Health Insurance in the USA: Origins and Evolution and Some Perspectives for the Future’, Milbank Memorial Fund Quarterly, Health and Society, pp. 161-191, Spring 1977.
  6. Gordon, Colin. “Why No National Health Insurance in the US? The Limits of Social Provision in War and Peace, 1941-1948”, Journal of Policy History, Vol. 9, No. 3, pp. 277-310, 1997.
  7. “History in a Tea Wagon”, Time Magazine, No. 5, pp. 51-53, January 30, 1939.
  8. Marmor, Ted. “The History of Health Care Reform”, Roll Call, pp. 21,40, July 19, 1993.
  9. Navarro, Vicente. “Medical History as a Justification Rather than Explanation: Critique of Starr’s The Social Transformation of American Medicine” International Journal of Health Services, Vol. 14, No. 4, pp. 511-528, 1984.
  10. Navarro, Vicente. “Why Some Countries Have National Health Insurance, Others Have National Health Service, and the United States has Neither”, International Journal of Health Services, Vol. 19, No. 3, pp. 383-404, 1989.
  11. Rothman, David J. “A Century of Failure: Health Care Reform in America”, Journal of Health Politics, Policy and Law”, Vol. 18, No. 2, Summer 1993.
  12. Rubinow, Isaac Max. “Labor Insurance”, American Journal of Public Health, Vol. 87, No. 11, pp. 1862 – 1863, 1997 (Originally published in Journal of Political Economy, Vol. 12, pp. 362-281, 1904).
  13. Starr, Paul. The Social Transformation of American Medicine: The rise of a sovereign profession and the making of a vast industry. Basic Books, 1982.
  14. Starr, Paul. “Transformation in Defeat: The Changing Objectives of National Health Insurance, 1915-1980”, American Journal of Public Health, Vol. 72, No. 1, pp. 78-88, 1982.
  15. Terris, Milton. “Crisis and Change in America’s Health System”, American Journal of Public Health, Vol. 63, No. 4, April 1973.
  16. “Toward a National Medical Care System: II. The Historical Background”, Editorial, Journal of Public Health Policy, Autumn 1986.
  17. Trafford, Abigail, and Christine Russel, “Opening Night for Clinton’s Plan”, Washington Post Health Magazine, pp. 12, 13, 15, September 21, 1993.

Statement of Dr. Marcia Angell introducing the U.S. National Health Insurance Act

Concurrent with the publication of the Physicians’ Proposal for National Health Insurance in the JAMA, the proposal was adapted into legislative form by Congressmen John Conyers (D-MI), Dennis Kucinich (D-OH) and Jim McDermott (D-WA).

The U.S. National Health Insurance Act (also known as the Expanded and Improved Medicare for All Act), HR 676, was introduced on February 4, 2003. The following is the statement made at the introduction ceremony by Physicians’ Working Group member and former NEJM editor Dr. Marcia Angell.

(A printable handout of this document is available by clicking here)

February 4, 2003
Washington D.C.

We are here today to introduce a national health insurance program. Such a program is no longer optional; it’s necessary.

Americans have the most expensive health care system in the world. We spend about twice as much per person as other developed nations, and that gap is growing. That’s not because we are sicker or more demanding (Canadians, for example, see their doctors more often and spend more time in the hospital). And it’s not because we get better results. By the usual measures of health (life expectancy, infant mortality, immunization rates), we do worse than most other developed countries. Furthermore, we are the only developed nation that does not provide comprehensive health care to all its citizens. Some 42 million Americans are uninsured — disproportionately the sick, the poor, and minorities — and most of the rest of us are underinsured. In sum, our health care system is outrageously expensive, yet inadequate. Why? The only plausible explanation is that there’s something about our system — about the way we finance and deliver health care — that’s enormously inefficient. The failures of the system were partly masked during the economic boom of the 1990’s, but now they stand starkly exposed. There is no question that with the deepening recession and rising unemployment, in the words of John Breaux, “The system is collapsing around us.”

The underlying problem is that we treat health care like a market commodity instead of a social service. Health care is targeted not to medical need, but to the ability to pay. Markets are good for many things, but they are not a good way to distribute health care. To understand what’s happening, let’s look at how the health care market works.
Most Americans receive tax-free health benefits from their employers, who pay insurers a portion of the premiums for health coverage. But not all employers offer benefits, and when they do, the benefits may not be comprehensive. It’s; entirely voluntary. When employers are competing for workers, they offer good benefits; when unemployment rises, they drop them.

The insurers with whom employers do business are mostly investor-owned, for-profit managed care businesses. They try to keep premiums down and profits up by stinting on medical services. In fact, the best way for insurers to compete is by not insuring high-risk patients at all; limiting the coverage of those they do insure (for example, by excluding expensive services, such as heart transplantation); and by passing costs back to patients by denying claims or as deductibles and co-payments. We are the only nation in the world with a health care system based on dodging sick people. These practices add greatly to overhead costs because they require a mountain of paperwork. They also require creative marketing to attract the affluent and healthy and avoid the poor and sick. Not surprisingly, the U. S. has by far the highest overhead costs in the world.

It’s instructive to follow the health care dollar as it wends its way from employers toward the doctors and nurses and hospitals that actually provide medical services. First, private insurers regularly skim off the top a substantial fraction of the premiums — anywhere from 10 to 25 percent — for their administrative costs, marketing, and profits. The remainder is then passed along a veritable gauntlet of satellite businesses that feed on the health care industry, including brokers to cut deals, disease-management and utilization review companies, drug-management companies, legal services, marketing consultants, billing agencies, information management firms, and so on and so on. Their function is often to limit services in one way or another. They, too, take a cut, including enough for their own administrative costs, marketing, and profits. I would estimate that no more than 50 cents of the health care dollar actually reaches the providers — who themselves face high overhead costs in dealing with multiple insurers.

What are the signs of the imminent collapse of this system? Private health insurance premiums are now rising at an unsustainable rate of about 13 percent per year, and as much as 25 percent in some areas of the country. Coverage is shrinking, as more employers decide to cap their contributions to health insurance and workers find they cannot pay their rapidly growing share. And finally, with the rise in unemployment, more people are losing what limited coverage they had. This is not a system that can be tinkered with. It needs to change.

The program we are introducing today is the very soul of simplicity and efficiency, compared with our private health care system. It is a single-payer system, that is, health care funds would be distributed by a single, public entity, so that health care could be coordinated to eliminate both gaps and overlap. In many ways, our program would be tantamount to extending Medicare to the entire population. Medicare is, after all, a government-financed single-payer system embedded within our private, market-based system. It’s by far the most efficient part of our health-care system, with overhead costs of less than 3 percent, and it covers virtually everyone over the age of 65, not just some of them. Medicare is not perfect, but it is by far the most popular part of the U. S. health care system, and in my opinion its problems would be relatively easy to remedy — but that is another subject.

What are the usual objections to the sort of national program we are calling for today? They are mostly based on a number of myths.

Myth #1 is that we can’t afford a national health care system, and if we try it, we will have to ration care. My answer is that we can’t afford not to have a national health care system. A single-payer system would be far more efficient, since it would eliminate excess administrative costs, profits, cost-shifting and unnecessary duplication. Furthermore, it would permit the establishment of an overall budget and the fair and rational distribution of resources. We should remember that we now pay for health care in multiple ways — through our paychecks, the prices of goods and services, taxes at all levels of government, and out-of-pocket. It makes more sense to pay just once.

According to Myth #2, innovative technologies would be scarce under a single-payer system, we would have long waiting lists for operations and procedures, and in general, medical care would be threadbare and less available. This misconception is based on the fact that there are indeed waits for elective procedures in some countries with national health systems, such as the U. K. and Canada. But that’s because they spend far less on health care than we do. (The U. K. spends about a third of what we do per person.) If they were to put the same amount of money as we do into their systems, there would be no waits and all their citizens would have immediate access to all the care they need. For them, the problem is not the system; it’s the money. For us, it’s not the money; it’s the system.

Myth #3 is that a single-payer system amounts to socialized medicine, which would subject doctors and other providers to onerous, bureaucratic regulations. But in fact, although a national program would be publicly funded, providers would not work for the government. That’s currently the case with Medicare, which is publicly funded, but privately delivered.

As for onerous regulations, nothing could be more onerous both to patients and providers than the multiple, intrusive regulations imposed on them by the private insurance industry. Indeed, many doctors who once opposed a single-payer system are now coming to see it as a far preferable option.

Myth #4 says that the government can’t do anything right. Some Americans like to say that, without thinking of all the ways in which government functions very well indeed, and without considering the alternatives. I would not want to see, for example, the NIH, the National Park Service, or the IRS privatized. We should remember that the government is elected by the public and we are responsible for it. An investor-owned insurance company reports to its owners, not to the public.

Some people say that a single-payer system is a good idea, but politically unrealistic. That is a self-fulfilling prophecy. In my opinion, the medical profession and the public would be enthusiastic about a single-payer system if the facts were known and the myths dispelled. Yes, there would be powerful special interests opposing it and I don’t underestimate them, but with courageous leadership, such as Representative Conyers is providing, and the support of the medical profession and public, I believe there is nothing unrealistic about a National Health Insurance Program.

I want to mention one final and very important reason for enacting a national health program. We live in a country that tolerates enormous disparities in income, material possessions, and social privilege. That may be an inevitable consequence of a free market economy. But those disparities should not extend to denying some of our citizens certain essential services because of their income or social status. One of those services is health care. Others are education, clean water and air, equal justice, and protection from crime, all of which we already acknowledge are public responsibilities. We need to acknowledge the same thing for health care. Providing these essential services to all Americans, regardless of who they are, helps ensure that we remain a cohesive and optimistic country. It says that when it comes to vital needs, we are one community, not 280 million individuals competing with one another. In seeking to ensure adequate health care for all our citizens, we have an opportunity today to reassert that we are indeed a single nation.

Marcia Angell, M. D.
Senior Lecturer, Department of Social Medicine, Harvard Medical School
Former Editor-in-Chief, New England Journal of Medicine

A conservative Republican sees the light

Republicans: Get out of the way of progress

Letters
North County Times
November 13, 2009

I am a retired lifelong conservative Republican, planning to change my registration to Independent. Why? Because of obstructionist practices of the Republicans, such as Saturday night’s vote in the House. Only one Republican voted for the House Bill 3962. All the rest played strict partisan politics.

We need change in our broken health insurance system in America. The best change would be a switch to single-payer — but in the interest of making progress, I implore my Representative, Darrell Issa, to stop playing partisan politics.

I also implore my senators, Dianne Feinstein and Barbara Boxer, to vote in favor of health care reform in the upcoming Senate votes. Again, single-payer is the best way to go, but any change from the present system will be welcome.

We have the most expensive health care system in the world, but our health outcomes are well down among developed nations. Why do our politicians not respond to their constituents? Are some in the pockets of the insurance and pharmaceutical companies? Do the wishes of majorities not count with them?

Edgar Grube
Oceanside

http://www.nctimes.com/news/opinion/letters/article_a335d2e8-dfa1-54bb-8b48-612690807f79.html

And…

Estonia: health care reforms

European Federation of Public Service Unions

In Estonia public health insurance is a social insurance and relies on the principle of solidarity. The purposes of health insurance are to: cover the costs of health services provided to insured people, prevent and cure diseases, finance the purchase of medicinal products and medicinal technical aids and provide benefits for temporary incapacity for work and other benefits. The health insurance is organised by the Health Insurance Fund (EHIF), which covers the costs of health services required by people in the event of illness, regardless of the amount of social tax paid in respect of the person concerned. The Fund uses the social tax paid for the working population also to cover the cost of health services provided to people who have no income from work activities. Employers are required to pay social tax for all people employed, at a rate of 33% of the taxable amount, of which 20% is allocated for pension insurance and 13% for health insurance.

http://www.epsu.org/a/2242

Comment:

By Don McCanne, MD

How about that! A conservative Republican who has decided that single payer is the best way to go. Wow!

So how did he arrive at his conclusions on single payer?

I must confess that Ed Grube is a close personal friend of mine. When we met many years ago, he described himself as being to the right of Genghis Khan, whereas I was to the left of Norman Thomas. We had no pretenses that we could change each others ideology, so we dispensed with the useless rhetoric.

We frequently escaped with our mates on camping trips in spectacular locations, free of the cares of our very busy lives back home. During our hikes the ladies would enjoy the things that really count – the flowers, the vistas, the fauna, etc. – whereas Ed and I would discuss government, free markets, regulation, and other topics that were inappropriate when you are in paradise. But men… you know.

I think that both of us were surprised on how much we agreed, particularly on regulation. We could see the terrible injustices resulting from the move to deregulation, especially since 1980. Recent events have only further solidified our views.

Being the compulsive that I am, I couldn’t leave out the topic of health care reform. Since we had dispensed with silly ideology disputes, we could discuss reform quite rationally. He agreed that the status quo was totally unacceptable, and that there are some very legitimate arguments that support public financing of a private health care delivery system. I agreed that we could have health care justice without the requirement of a government owned health care delivery system.

With the downturn in the economy, Ed decided to shut down his business and retire – a wise decision, except that he was too young to qualify for Medicare. I don’t need to go into this part of the story except to say that he certainly recognized the injustices of overzealous medical underwriting and age discrimination. More than ever he could see the advantages of a single payer system.

But there is more to this story. I am not going to pretend that my smooth talking converted a conservative Republican into a single payer supporter, although I may have given him some of the substrate to frame his thoughts. No, it was much more than that.

Ed, who is Estonian by heritage, met the love of his life – Juta – while visiting the land of his roots. After marriage, they lived together in Estonia long enough to be able to recognize the sharp contrasts on moving back to California. Amongst the most notable differences are our health care systems.

“In Estonia public health insurance is a social insurance and relies on the principle of solidarity.” Juta simply takes that as a given. And now, so does Ed – or at least he passionately believes that it should be a given.

America's Affordable Health Choices Act Implementation Timeline

Summary of the provisions of the House bill and when they go into effect (pre-amendments)

Coverage expansions don’t start until 2013

Prepared by the Committees on Ways & Means, Energy & Commerce, and Education & Labor
October 29, 2009

http://www.politico.com/pdf/PPM41_hcr_timeline.pdf

2010

INSURANCE MARKET REFORMS ENDS HEALTH INSURANCE RESCISSIONS: Prohibits abusive practices whereby health insurance companies rescind existing health insurance policies when a person gets sick as a way of avoiding covering the costs of enrollees’ health care needs.

NEW LIMITS ON PRE-EXISTING CONDITION EXCLUSIONS: Prior to the bill’s complete prohibition on pre-existing condition exclusions beginning in 2013, reduces the window that plans can look back for pre-existing conditions from 6 months to 30 days and shortens the period that plans may exclude coverage of certain benefits. It also prohibits insurers from limiting or denying coverage based on acts stemming from domestic violence.

BAN ON LIFETIME LIMITS: Prohibits insurance companies from placing lifetime caps on coverage.

IMMEDIATE SUNSHINE AGAINST INSURER PRICE GOUGING (RATE REVIEW): Discourages excessive price increases by insurance companies through review and disclosure of insurance rate increases.

ENACTS ADMINISTRATIVE SIMPLIFICATION: Begins adopting and implementing administrative simplification requirements to reduce paperwork, standardize transactions, and greatly diminish the administrative burdens and associated costs in today’s health care system.

ENSURING VALUE (MEDICAL LOSS RATIO): Specifies that health plans spend a minimum of 85 percent of premium dollars on medical care, while making sure that such a change doesn’t further destabilize the current individual health insurance market.

INCREASE DEPENDENT AGE FOR POLICIES THROUGH AGE 26: Allows those through age 26 not otherwise covered to remain on their parents’ policies at their parents’ discretion.

COBRA EXTENSION: Allows individuals to keep their COBRA coverage until the Exchange is up and running. [NOTE: This is separate from the Recovery Act provisions that provide premium assistance for selected groups.]

ENSURING RECONSTRUCTIVE SURGERY FOR CHILDREN: Requires plans to pay for reconstructive surgery for children with deformities.

LIMITATION ON POST-RETIREMENT REDUCTIONS OF RETIREE HEALTH BENEFITS: Prohibits employers from reducing retirees’ health benefits after those retirees have retired, unless the reduction is also made to benefits for active participants.

GRANTS TO STATES FOR IMMEDIATE HEALTH REFORM INITITATIVES: Builds on an existing grant program to enhance incentives for states to move forward with a variety of health reform initiatives prior to 2013.

IMPROVED BENEFITS CREATES REINSURANCE FOR EARLY RETIREES: Creates a new temporary reinsurance program to help offset the cost of coverage for companies that provide early retiree health benefits for those ages 55-64.

IMMEDIATE HELP FOR THE UNINSURED (INTERIM HIGH-RISK POOL): Creates a $5 billion fund, modeled after the President’s plan, to finance an immediate, temporary insurance program for those who are uninsurable because of pre-existing conditions.

NEW LONG-TERM CARE PROGRAM (CLASS ACT): Creates a new, voluntary, public long-term care insurance program to help purchase services and supports for people who have functional limitations. Benefits are a daily or weekly cash benefit to help people with functional limitations purchase the services and supports needed to maintain personal and financial independence. CLASS would supplement, not supplant, traditional payers of long-term care (e.g. Medicaid and/or private long term care insurance).

ESTABLISHES THE HEALTH BENEFITS ADVISORY COMMITTEE: Establishes within 60 days of enactment the Health Benefits Advisory Committee-led by the Surgeon General and made up of health care experts, health care providers and patients-provides recommendations on the essential benefits package to the Secretary of HHS for approval.

PUBLIC HEALTH IMPROVEMENTS INCREASES FUNDING FOR COMMUNITY HEALTH CENTERS: Provides increased funding for community health centers that will allow them to double the number of patients served over the next five years.

IMPLEMENTS NEW PREVENTIVE HEALTH SERVICES PROGRAM IN COMMUNITIES: Provides immediate funding for preventive services at the community and local level to address public health problems such as obesity, tobacco use, and diabetes.

EXPANDS PRIMARY CARE, NURSING AND PUBLIC HEALTH WORKFORCE: Increases access to primary care by sustaining the current efforts to increase the size of the National Health Service Corps. Primary care and nurse training programs are also immediately expanded to increase the size of the primary care and nursing workforce. Ensures that public health challenges are adequately addressed.

EMPLOYER WELLNESS PROGRAMS: Establishes a grant program for employers to promote healthy behaviors among their employees.

MEDICARE AND MEDICAID IMPROVEMENTS BEGINS TO FILL IN THE MEDICARE PART D DRUG DONUT HOLE: Provides for a 50% discount on brand-name drugs in the Part D donut hole, and immediately shrinks the size of the donut hole by $500 in 2010. The donut hole continues to be narrowed over the coming years until it is fully eliminated by 2019.

IMPROVES PREVENTIVE HEALTH COVERAGE IN MEDICARE & MEDICAID: Eliminates cost sharing for preventive services to encourage wider use of preventive care for Medicare beneficiaries. Requires State Medicaid programs to cover preventive services recommended to the Secretary of HHS based on evidence, such as tobacco cessation counseling for pregnant women.

ALLOWS STATES TO COVER LOW-INCOME INDIVIDUALS WITH HIV: Gives States the option of extending Medicaid coverage to HIV-positive individuals and provides enhanced federal matching payments for the costs of care.

INCREASES REIMBURSEMENT FOR PRIMARY CARE IN MEDICAID: Brings reimbursement for primary care services in Medicaid up to Medicare levels with 100% federal funding (phased in over several years).

PROVIDES FOR 12-MONTH CONTINUOUS ELIGIBILITY IN CHIP: Provides continuity of care for children by requiring that states provide 12-month continuous eligibility for children in the CHIP program

CREATES MEDICARE ACCOUNTABLE CARE ORGANIZATIONS AND MEDICAL HOME PILOT PROGRAMS: Requires the Secretary to set specific benchmarks for expansion of these programs and to test them in a variety of settings and geographic regions. If the initial pilots prove successful, the Secretary is directed to continue expanding them on a large-scale basis.

2011

ELIMINATES BARRIERS TO ENROLLMENT IN MEDICARE LOW-INCOME SUBSIDY FOR PART D DRUG PROGRAM: Eases burdens on enrollment so more low-income beneficiaries can get the financial help they need to make health care affordable.

NEW PROTECTIONS IN MEDICARE ADVANTAGE: Limits cost-sharing for services in Medicare Advantage plans to no more than cost-sharing in traditional Medicare, and provides for bonus payments to high-quality plans.

ESSENTIAL BENEFITS: In preparation for reform, the Health Benefits Advisory Committee reports their recommended essential benefits package to the Secretary of HHS for adoption. Additional federal funds to states with high unemployment. Assists States in maintaining access to Medicaid services during the recession by extending the current Recovery Act increase in federal Medicaid payments to states with high unemployment rates.

2012

IMPROVES LOW-INCOME PROTECTIONS IN MEDICARE: Increases the assets test limits in the Part D drug program and Medicare Savings Programs to ensure that more low-income beneficiaries get the financial help they need to make their health care affordable.

EXTENDS MONTHS OF COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR KIDNEY TRANSPLANT PATIENTS: Lifts the current 36-month limitation on Medicare coverage of immunosuppressive drugs for kidney transplant patients who would otherwise lose this coverage on or after January 1, 2012.

2013

HEALTH INSURANCE REFORMS: Implements comprehensive health insurance reforms that prohibit insurance companies from engaging in discriminatory practices that enable them to refuse to sell or renew policies due to an individual’s health status. In addition, insurance companies can no longer exclude coverage for treatments based on pre-existing health conditions. The legislation also limits their ability to charge higher rates due to health status, gender, or other factors, and permits premiums to vary only by age (no more than 2:1), geography and family size.

HEALTH INSURANCE EXCHANGE: Opens the Health Insurance Exchange to individuals without other coverage and to small employers with 25 or fewer employees. This new venue will enable people to comparison shop for standardized health packages. It facilitates enrollment and administers affordability credits so that people of all incomes can obtain affordable coverage.

PUBLIC HEALTH INSURANCE OPTION: Creates a new public health insurance plan option that is available only within the Health Insurance Exchange. It competes on a level playing field against private health plans and will inject competition into the many parts of our country without a competitive health insurance market. Because it doesn’t operate at the behest of investors, it will be able to offer stiff competition to private insurers-forcing them to compete on cost and quality for the first time.

AFFORDABILITY CREDITS: Makes Health Insurance Affordability Credits available through the Exchange to ensure people can obtain affordable coverage. Credits are available for people with incomes above Medicaid eligibility and below 400% of poverty who are not eligible for or offered other acceptable coverage. They apply to both premiums and cost sharing to ensure that no families face bankruptcy due to medical expenses.

INDIVIDUAL RESPONSIBILITY: Requires individuals to obtain acceptable health insurance coverage or pay a penalty of 2.5% of their income that is capped at the cost of the average cost of qualified coverage.

EMPLOYER RESPONSIBILITY: Employers are required to offer coverage to their workers and their workers’ families with minimum contributions and meet standards for that coverage or pay a penalty of 8% of their payroll to help offset the cost of their workers obtaining coverage through the Exchange. Employers have a grace period and are not required to meet the benefit standards until 2018.

PROTECTS SMALL BUSINESS: Small businesses with annual payrolls below $500,000 are exempt from requirements to offer or contribute to coverage, including the 8% payroll contribution for failure to provide health benefits to their workers. The 8% requirement is phased in for small businesses with an annual payroll between $500,000 and $750,000.

SMALL BUSINESS TAX CREDITS: Provides certain lower-wage small businesses that choose to provide health coverage with a new tax credit worth up to 50% of the amount paid by a small employer for employee health coverage. The credits are available on a rolling basis for the first two years that an employer offers qualified coverage.

EXPANDS MEDICAID ELIGIBILITY: Expands Medicaid to 150% of poverty to ensure that people obtain affordable health care in the most efficient and appropriate manner. The expansion is fully federally funded in 2013 and 2014; thereafter states pay 9% and the federal government pays 91%.

PROTECTS THE HEALTH OF NEWBORN BABIES: Provides temporary Medicaid coverage for up to 60 days for babies who are born without proof of other health coverage.

2014

INITIATES AN AFFORDABILITY TEST FOR EMPLOYER-SPONSORED COVERAGE: Opens the Health Insurance Exchange to individuals who have an offer of employer-sponsored coverage, but for whom that coverage would be unaffordable because the premium would absorb more than 12% of their family income. People who meet this test will be able to enter the Exchange and are eligible for affordability credits based on their incomes.

HEALTH INSURANCE EXCHANGE EXPANDS: Opens the Health Insurance Exchange to small businesses with 50 or fewer employees.

ENSURING VALUE IN MEDICARE ADVANTAGE (MEDICAL LOSS RATIO): Requires Medicare Advantage plans to spend a minimum of 85 percent of premium dollars on medical care.

2015

EXPANDS HEALTH INSURANCE EXCHANGE: Opens the Health Insurance Exchange to small businesses with 100 or fewer employees and provides the Health Choices Commissioner the authority, from 2015 forward, to continue expanding the Exchange to larger employers as the system is ready to handle increased capacity.

2018

EMPLOYERS OUTSIDE THE EXCHANGE ARE REQUIRED TO MEET ESSENTIAL BENEFITS PACKAGE: The grace period ends for employer-sponsored plans to meet the health insurance standards. All employer-sponsored coverage and health insurance offered within the Exchange is required to meet benefit and contribution standards.

Healthcare-NOW Statement on HR 3962

Dear Healthcare-NOW! Supporter:

On Saturday, November 7, 2009, the House passed H.R. 3962, the Affordable Health Care for America Act, to much celebration by the Democratic party. Healthcare-NOW!’s view, however, is that the House bill is a gift to the insurance industry at the further expense of the people of this nation.

The bill’s advocates claim it will cover an additional 36 million people, subsidize the cost of insurance for families up to 400% above the poverty level, increase Medicaid coverage to 150% above the poverty level, close the Medicare donut hole by 2019, place a surcharge on individuals making more than $500,000 and couples making more than $1,000,000, will end rescissions and pre-existing conditions.

What the Democrats fail to mention is the bill leaves millions of people uninsured, allows medical bankruptcies to persist, criminalizes and fines the uninsured, increases the number of underinsured, does nothing to contain the sky rocketing costs, blocks women from their reproductive rights, transfers massive public funds to private insurance companies strengthening their control over care, protects pharmaceutical companies’ superprofits at patient expense, fails to reclaim the 31% of waste in our system, expands Medicaid without regard to the state budget crises, discriminates based on immigration status and age, and sets up several levels of care covering less for those without the ability to pay. Those who have coverage will increasingly find care unaffordable and will go without. The whole system will inevitably fail from being fiscally unsustainable.

So is the House bill better than nothing?

“I don’t think so,” writes Marcia Angell, M.D., former editor of the New England Journal of Medicine. “It simply throws more money into a dysfunctional and unsustainable system, with only a few improvements at the edges, and it augments the central role of the investor-owned insurance industry. The danger is that as costs continue to rise and coverage becomes less comprehensive, people will conclude that we’ve tried health reform and it didn’t work. But the real problem will be that we didn’t really try it. I would rather see us do nothing now, and have a better chance of trying again later and then doing it right.”

Given that the bill does nothing to contain or reduce rising costs or end the private health insurance industry’s dominance, we hoped that the Progressive Caucus would stand strong. But they did not. All but two of H.R. 676’s cosponsors voted for H.R. 3962 — Rep. Eric Massa [D-NY] and Rep. Kucinich [D-OH].

Rep. Massa stated, “At the highest level, this bill will enshrine in law the monopolistic powers of the private health insurance industry, period. There’s really no other way to look at it.”

Despite telling single-payer advocates that Congressman Weiner’s single-payer amendment could not go to vote because it would open the floodgates for regressive amendments on abortion and immigrant access, the Democratic leadership allowed votes on both. Prior to the vote on H.R. 3962, the Stupak Amendment passed that will prevent women receiving tax subsidies from using their own money to purchase private insurance that covers abortion and in many cases will prevent low-income women from accessing abortion entirely.

“The House of Representatives has dealt the worst blow to women’s fundamental right to self-determination in order to buy a few votes for reform of the profit-driven health insurance industry,” writes Terry O’Neill, President of National Organization for Women. “We must protect the rights we fought for in Roe v. Wade. We cannot and will not support a health care bill that strips millions of women of their existing access to abortion.”

Healthcare-NOW! fought to win a fair and open debate on healthcare reform including the merits of a single-payer system. This has not yet happened, but the advocacy for this system has greatly impacted the debate in meaningful ways.

We need to continue to build the grassroots movement for single-payer, not-for-profit, national healthcare. We look forward to much brain-storming at our upcoming national strategy conference in St. Louis this weekend, and the opportunity to move forward with renewed energy, creative ideas, and resolve.

Meanwhile, we have the opportunity NOW to continue to support the Sanders’ Single-Payer Amendment to be introduced in the U.S. Senate, Congressman Kucinich’s efforts to get the state single-payer amendment back in when the House and Senate bills are reconciled, and the efforts of the Mobilization for Health Care for All.

Thanks for all that you do,

Healthcare-NOW! National Staff

America’s Affordable Health Choices Act Implementation Timeline

Summary of the provisions of the House bill and when they go into effect (pre-amendments)

Coverage expansions don’t start until 2013

Prepared by the Committees on Ways & Means, Energy & Commerce, and Education & Labor
October 29, 2009

http://www.politico.com/pdf/PPM41_hcr_timeline.pdf

2010

INSURANCE MARKET REFORMS ENDS HEALTH INSURANCE RESCISSIONS: Prohibits abusive practices whereby health insurance companies rescind existing health insurance policies when a person gets sick as a way of avoiding covering the costs of enrollees’ health care needs.

NEW LIMITS ON PRE-EXISTING CONDITION EXCLUSIONS: Prior to the bill’s complete prohibition on pre-existing condition exclusions beginning in 2013, reduces the window that plans can look back for pre-existing conditions from 6 months to 30 days and shortens the period that plans may exclude coverage of certain benefits. It also prohibits insurers from limiting or denying coverage based on acts stemming from domestic violence.

BAN ON LIFETIME LIMITS: Prohibits insurance companies from placing lifetime caps on coverage.

IMMEDIATE SUNSHINE AGAINST INSURER PRICE GOUGING (RATE REVIEW): Discourages excessive price increases by insurance companies through review and disclosure of insurance rate increases.

ENACTS ADMINISTRATIVE SIMPLIFICATION: Begins adopting and implementing administrative simplification requirements to reduce paperwork, standardize transactions, and greatly diminish the administrative burdens and associated costs in today’s health care system.

ENSURING VALUE (MEDICAL LOSS RATIO): Specifies that health plans spend a minimum of 85 percent of premium dollars on medical care, while making sure that such a change doesn’t further destabilize the current individual health insurance market.

INCREASE DEPENDENT AGE FOR POLICIES THROUGH AGE 26: Allows those through age 26 not otherwise covered to remain on their parents’ policies at their parents’ discretion.

COBRA EXTENSION: Allows individuals to keep their COBRA coverage until the Exchange is up and running. [NOTE: This is separate from the Recovery Act provisions that provide premium assistance for selected groups.]

ENSURING RECONSTRUCTIVE SURGERY FOR CHILDREN: Requires plans to pay for reconstructive surgery for children with deformities.

LIMITATION ON POST-RETIREMENT REDUCTIONS OF RETIREE HEALTH BENEFITS: Prohibits employers from reducing retirees’ health benefits after those retirees have retired, unless the reduction is also made to benefits for active participants.

GRANTS TO STATES FOR IMMEDIATE HEALTH REFORM INITITATIVES: Builds on an existing grant program to enhance incentives for states to move forward with a variety of health reform initiatives prior to 2013.

IMPROVED BENEFITS CREATES REINSURANCE FOR EARLY RETIREES: Creates a new temporary reinsurance program to help offset the cost of coverage for companies that provide early retiree health benefits for those ages 55-64.

IMMEDIATE HELP FOR THE UNINSURED (INTERIM HIGH-RISK POOL): Creates a $5 billion fund, modeled after the President’s plan, to finance an immediate, temporary insurance program for those who are uninsurable because of pre-existing conditions.

NEW LONG-TERM CARE PROGRAM (CLASS ACT): Creates a new, voluntary, public long-term care insurance program to help purchase services and supports for people who have functional limitations. Benefits are a daily or weekly cash benefit to help people with functional limitations purchase the services and supports needed to maintain personal and financial independence. CLASS would supplement, not supplant, traditional payers of long-term care (e.g. Medicaid and/or private long term care insurance).

ESTABLISHES THE HEALTH BENEFITS ADVISORY COMMITTEE: Establishes within 60 days of enactment the Health Benefits Advisory Committee-led by the Surgeon General and made up of health care experts, health care providers and patients-provides recommendations on the essential benefits package to the Secretary of HHS for approval.

PUBLIC HEALTH IMPROVEMENTS INCREASES FUNDING FOR COMMUNITY HEALTH CENTERS: Provides increased funding for community health centers that will allow them to double the number of patients served over the next five years.

IMPLEMENTS NEW PREVENTIVE HEALTH SERVICES PROGRAM IN COMMUNITIES: Provides immediate funding for preventive services at the community and local level to address public health problems such as obesity, tobacco use, and diabetes.

EXPANDS PRIMARY CARE, NURSING AND PUBLIC HEALTH WORKFORCE: Increases access to primary care by sustaining the current efforts to increase the size of the National Health Service Corps. Primary care and nurse training programs are also immediately expanded to increase the size of the primary care and nursing workforce. Ensures that public health challenges are adequately addressed.

EMPLOYER WELLNESS PROGRAMS: Establishes a grant program for employers to promote healthy behaviors among their employees.

MEDICARE AND MEDICAID IMPROVEMENTS BEGINS TO FILL IN THE MEDICARE PART D DRUG DONUT HOLE: Provides for a 50% discount on brand-name drugs in the Part D donut hole, and immediately shrinks the size of the donut hole by $500 in 2010. The donut hole continues to be narrowed over the coming years until it is fully eliminated by 2019.

IMPROVES PREVENTIVE HEALTH COVERAGE IN MEDICARE & MEDICAID: Eliminates cost sharing for preventive services to encourage wider use of preventive care for Medicare beneficiaries. Requires State Medicaid programs to cover preventive services recommended to the Secretary of HHS based on evidence, such as tobacco cessation counseling for pregnant women.

ALLOWS STATES TO COVER LOW-INCOME INDIVIDUALS WITH HIV: Gives States the option of extending Medicaid coverage to HIV-positive individuals and provides enhanced federal matching payments for the costs of care.

INCREASES REIMBURSEMENT FOR PRIMARY CARE IN MEDICAID: Brings reimbursement for primary care services in Medicaid up to Medicare levels with 100% federal funding (phased in over several years).

PROVIDES FOR 12-MONTH CONTINUOUS ELIGIBILITY IN CHIP: Provides continuity of care for children by requiring that states provide 12-month continuous eligibility for children in the CHIP program

CREATES MEDICARE ACCOUNTABLE CARE ORGANIZATIONS AND MEDICAL HOME PILOT PROGRAMS: Requires the Secretary to set specific benchmarks for expansion of these programs and to test them in a variety of settings and geographic regions. If the initial pilots prove successful, the Secretary is directed to continue expanding them on a large-scale basis.

2011

ELIMINATES BARRIERS TO ENROLLMENT IN MEDICARE LOW-INCOME SUBSIDY FOR PART D DRUG PROGRAM: Eases burdens on enrollment so more low-income beneficiaries can get the financial help they need to make health care affordable.

NEW PROTECTIONS IN MEDICARE ADVANTAGE: Limits cost-sharing for services in Medicare Advantage plans to no more than cost-sharing in traditional Medicare, and provides for bonus payments to high-quality plans.

ESSENTIAL BENEFITS: In preparation for reform, the Health Benefits Advisory Committee reports their recommended essential benefits package to the Secretary of HHS for adoption. Additional federal funds to states with high unemployment. Assists States in maintaining access to Medicaid services during the recession by extending the current Recovery Act increase in federal Medicaid payments to states with high unemployment rates.

2012

IMPROVES LOW-INCOME PROTECTIONS IN MEDICARE: Increases the assets test limits in the Part D drug program and Medicare Savings Programs to ensure that more low-income beneficiaries get the financial help they need to make their health care affordable.

EXTENDS MONTHS OF COVERAGE OF IMMUNOSUPPRESSIVE DRUGS FOR KIDNEY TRANSPLANT PATIENTS: Lifts the current 36-month limitation on Medicare coverage of immunosuppressive drugs for kidney transplant patients who would otherwise lose this coverage on or after January 1, 2012.

2013

HEALTH INSURANCE REFORMS: Implements comprehensive health insurance reforms that prohibit insurance companies from engaging in discriminatory practices that enable them to refuse to sell or renew policies due to an individual’s health status. In addition, insurance companies can no longer exclude coverage for treatments based on pre-existing health conditions. The legislation also limits their ability to charge higher rates due to health status, gender, or other factors, and permits premiums to vary only by age (no more than 2:1), geography and family size.

HEALTH INSURANCE EXCHANGE: Opens the Health Insurance Exchange to individuals without other coverage and to small employers with 25 or fewer employees. This new venue will enable people to comparison shop for standardized health packages. It facilitates enrollment and administers affordability credits so that people of all incomes can obtain affordable coverage.

PUBLIC HEALTH INSURANCE OPTION: Creates a new public health insurance plan option that is available only within the Health Insurance Exchange. It competes on a level playing field against private health plans and will inject competition into the many parts of our country without a competitive health insurance market. Because it doesn’t operate at the behest of investors, it will be able to offer stiff competition to private insurers-forcing them to compete on cost and quality for the first time.

AFFORDABILITY CREDITS: Makes Health Insurance Affordability Credits available through the Exchange to ensure people can obtain affordable coverage. Credits are available for people with incomes above Medicaid eligibility and below 400% of poverty who are not eligible for or offered other acceptable coverage. They apply to both premiums and cost sharing to ensure that no families face bankruptcy due to medical expenses.

INDIVIDUAL RESPONSIBILITY: Requires individuals to obtain acceptable health insurance coverage or pay a penalty of 2.5% of their income that is capped at the cost of the average cost of qualified coverage.

EMPLOYER RESPONSIBILITY: Employers are required to offer coverage to their workers and their workers’ families with minimum contributions and meet standards for that coverage or pay a penalty of 8% of their payroll to help offset the cost of their workers obtaining coverage through the Exchange. Employers have a grace period and are not required to meet the benefit standards until 2018.

PROTECTS SMALL BUSINESS: Small businesses with annual payrolls below $500,000 are exempt from requirements to offer or contribute to coverage, including the 8% payroll contribution for failure to provide health benefits to their workers. The 8% requirement is phased in for small businesses with an annual payroll between $500,000 and $750,000.

SMALL BUSINESS TAX CREDITS: Provides certain lower-wage small businesses that choose to provide health coverage with a new tax credit worth up to 50% of the amount paid by a small employer for employee health coverage. The credits are available on a rolling basis for the first two years that an employer offers qualified coverage.

EXPANDS MEDICAID ELIGIBILITY: Expands Medicaid to 150% of poverty to ensure that people obtain affordable health care in the most efficient and appropriate manner. The expansion is fully federally funded in 2013 and 2014; thereafter states pay 9% and the federal government pays 91%.

PROTECTS THE HEALTH OF NEWBORN BABIES: Provides temporary Medicaid coverage for up to 60 days for babies who are born without proof of other health coverage.

2014

INITIATES AN AFFORDABILITY TEST FOR EMPLOYER-SPONSORED COVERAGE: Opens the Health Insurance Exchange to individuals who have an offer of employer-sponsored coverage, but for whom that coverage would be unaffordable because the premium would absorb more than 12% of their family income. People who meet this test will be able to enter the Exchange and are eligible for affordability credits based on their incomes.

HEALTH INSURANCE EXCHANGE EXPANDS: Opens the Health Insurance Exchange to small businesses with 50 or fewer employees.

ENSURING VALUE IN MEDICARE ADVANTAGE (MEDICAL LOSS RATIO): Requires Medicare Advantage plans to spend a minimum of 85 percent of premium dollars on medical care.

2015

EXPANDS HEALTH INSURANCE EXCHANGE: Opens the Health Insurance Exchange to small businesses with 100 or fewer employees and provides the Health Choices Commissioner the authority, from 2015 forward, to continue expanding the Exchange to larger employers as the system is ready to handle increased capacity.

2018

EMPLOYERS OUTSIDE THE EXCHANGE ARE REQUIRED TO MEET ESSENTIAL BENEFITS PACKAGE: The grace period ends for employer-sponsored plans to meet the health insurance standards. All employer-sponsored coverage and health insurance offered within the Exchange is required to meet benefit and contribution standards.

New Evidence of Pharma’s Sweetheart Deal

By Jonathan Cohn
Senior Editor
The New Republic
November 10, 2009

Critics have complained that a drug industry got a sweetheart deal when it struck a bargain with the White House and Senate Finance Committee over health care reform.

There’s new reason to think those critics were right.

It comes from an October forecast by IMS Health, a respected global research and consulting firm. The report, which IMS distributed to clients and which a source provided, projects that the drug industry will see average annual growth of 3.5 percent between 2008 and 2013.

Back in March, IMS had projected no growth at all during that same five-year stretch. In fact, it projected the drug business would actually contract slightly–with negative annual growth of 0.01 percent.

What changed? A major factor, according to IMS, was the emerging details of health care reform.

Health reform, as currently envisioned, wouldn’t merely bring coverage to the uninsured. It would also fill in the “donut hole” in Medicare Part D–the gap in coverage that leaves beneficiaries with serious health problems paying for hundred if not thousands of dollars in out-of-pocket prescription costs.

In addition, because it will take several years to close the donut hole, reform relies on voluntary discounts from the pharmaceutical industry to make drugs more affordable in the intervening years. But those discounts would apply only to name-brand drugs, not generics.

Put it all together, and you have more demand for name-brand drugs. As a result, IMS believes, pharmaceutical companies would be able to raise their prices–enough to boost revenue significantly: “If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”

Exactly what this would mean in actual dollar terms isn’t clear. But from some back-of-the-envelope calculations, it appears that IMS thinks revenues for the makers of name-brand drugs could grow by hundreds of billions of dollars over the next ten years. (To be clear, this is a very rough guess, based on extrapolations from the report’s tables–and I have not run it by experts.)

That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee.

The deal–details of which came to light in reports by the New York Times and Huffington Post–was pretty straightforward. The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.

To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.

Of course, the projections from IMS–like any such projections–are full of uncertainty. That’s why there are so many “coulds” and “mights’ in the explanation above.

And even if the drug industry is getting a sweetheart deal, the political reality remains what it was all along. As I noted in my recent article on the drug deal, the drug industry has enormous leverage in Congress: When relatively liberal congressional committees tried limit the exclusivity period for biological drugs, industry lobbyists beat back the effort easily.

Given the tight squeeze in Congress–remember, even the House passed reform with only a tiny, five-vote margin–it’s entirely possible that declaring war on the drug lobby would have undermined the whole reform effort.

Then again, the House version of reform does seek greater concessions from the drug industry than the Senate Finance bill does. And the two chambers’ bills must eventually be reconciled in conference committee.

The drug industry will complain about any efforts to alter their deal. But the IMS projection suggests they’ll be just fine.

Note: Calls and emails to IMS were not returned.

New Evidence of Pharma's Sweetheart Deal

By Jonathan Cohn
Senior Editor
The New Republic
November 10, 2009

Critics have complained that a drug industry got a sweetheart deal when it struck a bargain with the White House and Senate Finance Committee over health care reform.

There’s new reason to think those critics were right.

It comes from an October forecast by IMS Health, a respected global research and consulting firm. The report, which IMS distributed to clients and which a source provided, projects that the drug industry will see average annual growth of 3.5 percent between 2008 and 2013.

Back in March, IMS had projected no growth at all during that same five-year stretch. In fact, it projected the drug business would actually contract slightly–with negative annual growth of 0.01 percent.

What changed? A major factor, according to IMS, was the emerging details of health care reform.

Health reform, as currently envisioned, wouldn’t merely bring coverage to the uninsured. It would also fill in the “donut hole” in Medicare Part D–the gap in coverage that leaves beneficiaries with serious health problems paying for hundred if not thousands of dollars in out-of-pocket prescription costs.

In addition, because it will take several years to close the donut hole, reform relies on voluntary discounts from the pharmaceutical industry to make drugs more affordable in the intervening years. But those discounts would apply only to name-brand drugs, not generics.

Put it all together, and you have more demand for name-brand drugs. As a result, IMS believes, pharmaceutical companies would be able to raise their prices–enough to boost revenue significantly: “If this bill is implemented,” the report concludes on page 138, “an increase in prices on new drugs can be expected.”

Exactly what this would mean in actual dollar terms isn’t clear. But from some back-of-the-envelope calculations, it appears that IMS thinks revenues for the makers of name-brand drugs could grow by hundreds of billions of dollars over the next ten years. (To be clear, this is a very rough guess, based on extrapolations from the report’s tables–and I have not run it by experts.)

That brings us back to the deal that the Pharmaceutical Researchers and Manufacturers of America, which represents those companies, made with the White House and Senate Finance Committee.

The deal–details of which came to light in reports by the New York Times and Huffington Post–was pretty straightforward. The industry agreed to embrace health care reform and, later on, launched a massive advertising campaign to promote the cause. In exchange, the White House and Senate Finance–which had been asking various industries to pledge concessions that would help pay for the cost of coverage expansions–promised not to seek more than $80 in reduced payments to drug makers.

To an industry as big and profitable as the drug makers, giving up $80 billion over ten years wouldn’t seem like much of a sacrifice–a point critics started making right away. But if IMS is right, the drug industry wouldn’t even be giving up $80 billion, in any meaningful sense of the term. If anything, it’d be making more money. Maybe quite a lot of it.

Of course, the projections from IMS–like any such projections–are full of uncertainty. That’s why there are so many “coulds” and “mights’ in the explanation above.

And even if the drug industry is getting a sweetheart deal, the political reality remains what it was all along. As I noted in my recent article on the drug deal, the drug industry has enormous leverage in Congress: When relatively liberal congressional committees tried limit the exclusivity period for biological drugs, industry lobbyists beat back the effort easily.

Given the tight squeeze in Congress–remember, even the House passed reform with only a tiny, five-vote margin–it’s entirely possible that declaring war on the drug lobby would have undermined the whole reform effort.

Then again, the House version of reform does seek greater concessions from the drug industry than the Senate Finance bill does. And the two chambers’ bills must eventually be reconciled in conference committee.

The drug industry will complain about any efforts to alter their deal. But the IMS projection suggests they’ll be just fine.

Note: Calls and emails to IMS were not returned.

Drug Deal

How Big Pharma extorted the White House

By Jonathan Cohn
Senior Editor
The New Republic
August 25, 2009

‘We’ll have the negotiations televised on C-SPAN,” then-presidential candidate Barack Obama explained, “so that people can see who is making arguments on behalf of their constituents, and who are making arguments on behalf of the drug companies or the insurance companies.”

Those were heady times. It was September 2008, at a town hall in Virginia, where Obama was offering a preview of how he intended to conduct his presidency. He would change the way Washington works, make it transparent, and, in so doing, deliver what the American public needed–starting with affordable health insurance. But, just a few months later, Obama’s team was doing exactly what he said his administration wouldn’t do: negotiating behind closed doors. The subject, sure enough, was health reform. The partner was the drug industry. By June, they had a deal.

Exactly who agreed to what has been the subject of some controversy, even among parties to the negotiation. But the basics are not really in dispute. The drug industry promised to endorse reform, including initiatives that would reduce its bottom line by up to $80 billion over ten years. In return, the administration–and one of its key Senate allies–agreed to stop at $80 billion, at least as far as the drug industry was concerned.

It’s the kind of quid pro quo that generally raises eyebrows, as more than one conservative was quick to note: “The press and congressional Dems would have gone nuts if we had tried anything remotely like this,” said Tevi Troy, who was a health care official in the Bush administration. And, in fact, a few congressional Democrats have gone nuts. “We have all been focused on the debate in Congress, but perhaps the deal has already been cut,” Representative Raul Grijalva, co-chairman of the Congressional Progressive Caucus, told The New York Times, which first broke the story. Beyond Capitol Hill, the reaction from liberals was even harsher. “When an industry gets secret concessions out of the White House in return for a promise to lend the industry’s support to a key piece of legislation, we’re in big trouble,” former Labor Secretary Robert Reich wrote on his blog. “That’s called extortion.”

Extortion is a harsh word, but not an inaccurate one. By almost any reckoning, the drug industry demanded–and got–a sweetheart deal in exchange for its support. But were Obama and his allies wrong to go along with it? Not necessarily–at least, not if they really wanted to pass health reform. Good government and good policy make for great speeches. But, in the real world, they’re not always so compatible.

The lineage of the deal with PhRMA, the drug-industry trade group, traces back to before Obama was even elected president. In the fall of 2008, representatives of the entire health care industry–pharmaceutical manufacturers, insurers, doctors, hospitals, device-makers–began holding regular meetings with key staff on Capitol Hill. The two senators leading the discussions, Ted Kennedy and later Max Baucus, made no secret of their mission. Instead of trying to fight these industries head on, they hoped to come up with a consensus version that at least some of the industries could live with, if not support outright. Once Obama took office, the conversation turned more concrete. Obama and his allies wanted to wring savings out of the health care system, in order to finance coverage expansions, and, over the long run, make medical care less expensive. Which industries, they asked, were prepared to help–to sacrifice some short-term earnings in order to make reform possible?

The drug industry was first in line, according to several sources familiar with the discussions. But its list of demands was long. It strongly opposed letting the federal government negotiate directly with drug companies over price, the way governments in other countries do; it didn’t want to give the government rebates on drugs it purchased for Medicare recipients; and it didn’t want to let Americans buy cheaper drugs overseas. All three positions ran counter to Democratic Party orthodoxy. (Later, the industry made clear its opposition to a public insurance option, as well.) Pressed to give up something, the drug-industry officials indicated that they would be willing to put up with several other changes designed to reduce its revenues–like giving the government a larger rebate on drugs purchased for Medicaid recipients–but only to the extent they reduced revenues by $50 billion over ten years. Anything more, they said, was unacceptable.
Neither the staff of Baucus’s Senate Finance Committee, which had been leading the discussion with PhRMA, nor officials from the administration, who had since joined the talks, were thrilled with this offer, according to people with close knowledge of the negotiations. For one thing, the administration and Baucus believed the drug industry would ultimately make money from reform, since more people with insurance coverage was bound to mean more people buying drugs. (PhRMA countered these arguments with a dubious analysis arguing that reform would not mean much new business, partly because most of the newly insured would be relatively healthy and thus need few drugs.) Obama and his allies also thought $50 billion over ten years just wasn’t a lot of money, particularly for an industry that has consistently ranked among the most profitable in the country. They had a bigger number in mind–something closer to $100 billion.

A breakthrough finally came when Obama and his allies indicated they wanted to fill in the “donut hole”–the gap in coverage for seniors who opt for Medicare drug coverage. At that point, the drug industry volunteered to sell its name-brand drugs at a discount to consumers, worth about $30 billion over ten years. It wasn’t much of a sacrifice for the industry; the discounts would come almost entirely out of new drug sales, not existing ones. But it helped seal the deal.

It took a while for the terms of the arrangement to get out. The initial White House announcement, issued this June, was bland and vague: It merely indicated that PhRMA was giving up $80 billion in revenue to make reform possible. But, in August, PhRMA president Billy Tauzin–apparently nervous that House liberals were pressing for reforms that would reduce drug-industry profits more deeply–gave more details to The New York Times. The deal, he made clear, was to limit drug-industry exposure: Reform would not reduce pharmaceutical profits by more than $80 billion. White House Deputy Chief of Staff Jim Messina subsequently confirmed that that was the administration’s understanding, as well. Additional details subsequently appeared in The Huffington Post and The Atlantic, although different sources offered slightly different versions of what Baucus and the White House promised.

While some conservatives were unhappy that PhRMA conceded anything–in an open letter, House Minority Leader John Boehner recently accused Tauzin of “appeasing” the administration and its allies–it was on the left where dismay was most vocal. But, inside the administration and on Capitol Hill, even those critical of the deal’s terms say it may have been necessary, given PhRMA’s clout. As proof, they point to what happened when two congressional committees– Senator Kennedy’s Health, Education, Labor, and Pensions (HELP) and Representative Henry Waxman’s Energy and Commerce–took up their own versions of reform in July. In the HELP deliberations, several Democrats joined with Republicans to reject a proposal that would have let people buy drugs from Canada and Mexico. During the Energy and Commerce Committee mark-up, a similarly bipartisan coalition voted to give the makers of biological drugs the right to sell their wares exclusively for twelve years–more than the administration and Waxman thought necessary. In both cases, PhRMA got exactly what it wanted. Says one senior congressional staffer working on health legislation, “No matter how much high-handed talk there is [in Congress] of reining in PhRMA, in the end, they always get their way.”

To be sure, the administration and its allies did get something more than tens of billion toward the cost of health care reform. They also got the drug industry’s advertising support, which is no small thing at a time when the right has been running roughshod over reform. PhRMA’s proreform advertising may be generic and, in the final analysis, not particularly helpful. But, the plan’s defenders argue, it’s still better than ads amplifying lies about “death panels.” Besides, it’s not as if the administration and its allies can’t seek more concessions from PhRMA later on–a possibility the White House itself seemed to encourage, after the August Times report, by pointing out that the deal was only about health care reform legislation and not future acts of Congress.

Making some initial compromises in the hopes of revisiting them later is not a far-fetched idea. The people who engineered the original Medicare Act promised that the program would pay doctors their “usual and customary fees.” They also handed responsibility for administering payments over to the Blue Cross plans, which had close ties to the hospitals. This helped pacify both physicians and hospitals (although the American Medical Association fought Medicare to the end). Years later, as Medicare’s price tag soared, the federal government reduced physician and hospital payments, effectively bringing to the program the sort of cost control that ideally would have been there in the first place. It wasn’t the cleanest, most open way to pass and then modify legislation. But that’s what it took to get the program up and running. Four decades later, passing comprehensive health reform may require the same kind of unpleasant compromises. As one disappointed congressional staffer puts it, the drug-industry bargain “is offensive–and brash, and tacky, and very PhRMA.” But, the staffer added, “the legislative process is messy.”

Simple, Fair, and Affordable

Pro: Single-Payer Health Care

John A. Day, Jr., M.D.
American Journal of Respiratory and Critical Care Medicine
Volume 180 pp. 920-922, (2009)

With the election of Barack Obama as our 44th President and the installation of a new United States Congress has come renewed attention to health care reform. Appropriately, there is a sense of urgency regarding the 47 million Americans without health insurance and the millions more underinsured, and to make matters worse, it is inevitable that both numbers will increase due to rising unemployment. In response to this crisis, most health care reform proposals attempt to guarantee at least some health coverage for all Americans. Yet nearly all proposals achieve this aim in large part through the current private insurance system. It is well worth asking: exactly what value does the insurance industry bring to health care in this country? And if it contributes little of consequence, is there another way?

Using the private insurance industry to achieve universal coverage would require that all financially able U.S. residents or their employers purchase health insurance. Americans unable to afford health insurance, the poorest and potentially the sickest among us, would be covered by the government–most likely by incorporating them into a public insurance system, although a government subsidy (in all or in part) could be used instead to purchase private insurance coverage. If, as seems likely, a current or future public insurance program is used for this purpose, then this construct amounts to a massive preemptive bailout of health insurers. These private entities would profit by adding relatively healthy young people to their rolls, while potentially bankrupting the public systems that are charged with paying for the care of these unprofitable patients.

Health insurance as a commodity is particularly unsuited to the so-called “wisdom of the market.” Private insurers are dutybound to maximize profits for their shareholders, and profits are best achieved by minimizing risk through cherry-picking the healthiest enrollees and denying payment for services whenever possible (1). These goals are clearly not in the best interest of individuals seeking reliable health insurance coverage, enrollees who require ongoing or complicated care, or the taxpayers subsidizing care for those denied coverage.

Furthermore, health care reimbursement funneled through a private insurance industry does not necessarily lead to improved health. Thirty-one percent of United States health spending goes toward bureaucracy (2). Such remarkable inefficiency is directly attributable to the overhead and profit of the health insurance industry (3) and wasted clerical time, as providers must deal with a multitude of different insurers and health plans.

In contrast, Canada only spends about 17% on total system administration (2). Nor does having private insurance necessarily mean access to affordable, quality health care. Large premium hikes have made it increasingly difficult for businesses to offer, and individuals to buy, comprehensive insurance. Instead, a profusion of high-deductible, high co-pay plans, along with plans offering extremely limited coverage, have put even insured patients at risk. This issue was nicely demonstrated in a 2005 study, which showed that three-quarters of the 750,000 American families entering into bankruptcy proceedings each year due to illness or medical bills actually had health insurance coverage at the time (4).

In the opinion of many, ending our reliance on the private insurance industry and adopting a single-payer health care system in the United States has long been the clear solution to these problems. Why is a single-payer health care system the best and only realistic solution to the crisis of the uninsured and underinsured?

The answer is simplicity, inclusiveness (everyone is in, no one is left out), breadth of service, equality, preservation of the current private delivery system, and, perhaps most of all, affordability. Multiple state and federal studies show that by eliminating the overhead associated with private insurance and negotiating prices with drug companies, it is possible to offer lifetime coverage to everyone in the country for an amount similar to that which we currently pay for coverage of only part of our population (5). Health insurance would be uncoupled from employment, so that individuals who lost or changed jobs would keep the same coverage, regardless of age, preexisting conditions, or state of residence. No one would be without health insurance, accomplishing in the simplest way possible the overall goal of health reform–improving access to health care for all Americans.

Funding for a single-payer health care system would come from a combination of payroll tax for employers (about 7% of payroll, or less than the amount typically paid for employee health care coverage) and an increase in the federal tax on income (an increment of about 2%, or less than most people currently pay for out-of-pocket health care expenses). Patients would be free to choose any physician or hospital in the country, as opposed to the current system, in which patient choice is frequently limited to providers within the various health plan networks. Because, under the current system, most employers offer only one or two health plans, it is frequently the case that employers, not patients, in effect determine our choice of doctors, hospitals, and other health care providers. Providers of patient care would see significant reductions in paperwork, having to interact with only one health plan instead of the seemingly endless number of plans and subplans with which we now deal. A single-payer system would also facilitate comprehensive health planning, which could include regional disease management programs, strategies aimed at solving physician shortage issues, collective adoption of a unified electronic medical record, and a cohesive approach to the distribution of innovative health care technologies (6).

Given the social, clinical, and economic benefits of single-payer health care, the only barrier would seem to be that of political feasibility. Indeed, adoption of a single-payer health care system will be challenging in today’s economic climate and in a country seemingly dedicated to a free-market ideology. Yet many current social programs faced similar political obstacles at the time of adoption, including Social Security and Medicare.

Ironically, today it is the disbanding of these programs that would be considered not politically feasible. Although some major stakeholders (mainly the insurance and pharmaceutical industries) may be unalterably opposed to single-payer health care, the most important and relevant stakeholders are the American people and their health care providers. It is becoming evident that these factions increasingly support a single-payer system: 65% of the United States population and 59% of American physicians voiced this opinion in recent polls (7, 8). Finally, while there are major cost concerns regarding the proposed increased role for the private insurance industry in covering just some of the uninsured, a single payer system would cover all comprehensively (something no other proposed system can claim) at a cost no higher than we are currently spending, and potentially significantly less, if the experience of other industrialized nations is any guide. The time for true universal health coverage is now, and the best path to universal coverage is through single-payer health insurance.

John A. Day, Jr., M.D.
Day Kimball Hospital
Putnam, Connecticut
and
University of Massachusetts Medical School
Worcester, Massachusetts

Conflict of Interest Statement: The author does not have a financial relationship with a commercial entity that has an interest in the subject of this manuscript.

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Am J Respir Crit Care Med Vol 180. pp 920–922, 2009
Internet address: www.atsjournals.org

Lack of health care killed 2,266 US veterans last year: study

Agence France Presse (AFP) News
Nov. 11, 2009

WASHINGTON — The number of US veterans who died in 2008 because they lacked health insurance was 14 times higher than the US military death toll in Afghanistan that year, according to a new study.

The analysis produced by two Harvard medical researchers estimates that 2,266 US military veterans under the age of 65 died in 2008 because they lacked health coverage and had reduced access to medical care.

That figure is more than 14 times higher than the 155 US troop deaths in Afghanistan in 2008, the study says.

Released as the United States commemorates fallen soldiers on Veterans Day, the study warns that even health care provided by the Veterans Health Administration (VA) leaves many veterans without coverage.

The analysis uses census data to isolate the number of US veterans who lack both private health coverage and care offered by the VA.

“That’s a group that’s about 1.5 million people,” said David Himmelstein, an associate professor of medicine at Harvard Medical School and co-founder of Physicians for a National Health Program who co-authored the study.

Himmelstein and co-author Stephanie Woolhandler, also a Harvard medical professor, overlaid that figure with another study examining the mortality rate associated with lack of health insurance.

“The uninsured have about a 40 percent higher risk of dying each year than otherwise comparable insured individuals,” Himmelstein told AFP.

“Putting that all together you get an estimate of almost 2,300 — 2,266 veterans who die each year from lack of health insurance.”

Only some US veterans have access to medical care through the VA and coverage is apportioned on the basis of eight “priority groups.”

“They range from things like people who were prisoners of war, who have coverage for life, or who have battle injuries and therefore have coverage for their injuries for life,” said Himmelstein.

Veterans who fall below an income threshold that is determined on a county-by-county basis can qualify for care, but many veterans are “working poor” and fall just above the bracket.

“The priority eight group, the lowest priority, are veterans above the very poor group who have no other reason to be eligible and that group is essentially shut out of the VA,” according to Himmelstein.

The study comes as the US Senate weighs health care reform legislation and whether to offer government health insurance.

Himmelstein warns that congressional proposals could still leave veterans uncovered and favors a national health care program similar to those in Britain and Canada.

http://www.google.com/hostednews/afp/article/ALeqM5iXSJa5eFMuXF2Uxwptns_JOxRcMA