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Single-payer healthcare is the one way

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Single-payer healthcare is the one way

By Michael Kaplan
Boston Globe
December 3, 2007

Along with most residents of Massachusetts, I assumed that the Massachusetts Health Reform Law was going to allow my daughter to keep her health insurance coverage after she graduated from college. The Connector Authority specified that for two years of post- dependency status, a young adult could remain on a family policy. What a relief that was. She graduated this May and is in those early stages of becoming self-supporting.

When my wife’s employer, Berkshire Health Systems, informed us that my daughter’s coverage would end on Dec. 31 of this year, I was shocked. It turns out that the law requires only companies that pay health insurance premiums to give the extra two years of coverage. Those companies that self-insure are governed by federal law under ERISA and are not bound by this requirement. Self-insured companies pay the health insurance companies to administer the benefit, not to insure them. So our Blue Cross Blue Shield policy seems like an insurance policy, but it is not. Berkshire Health Systems insures itself, as do national companies that employ across state lines. Many large local employers are self-insured as well. These large companies do not have to pay the extra cost to cover dependents for those two more years.

Small businesses are generally not able to take on the financial risk required to self-insure, so those companies that provide insurance to employees do have to pay the extra premiums. Whatever happened to the relief that small business was supposed to get from this reform law? Ask any small business owner and you will learn that health insurance costs for employees may have risen by as much as 50 percent since this law was passed!

My daughter has been able to get two part-time jobs, but of course she has not been offered health insurance. I am told that she may qualify for Commonwealth Care that the Connector offers under the new law.

Although the Commonwealth Care subsidized insurance is not tied to employment, coverage would be lost if she either started earning above a threshold amount or moved from Massachusetts, both likely events for a young graduate. And as a consequence of the loophole exempting many big employers from covering their employees’ children for two post-college years, Commonwealth Care is likely to include more young people than expected.

This will create higher expenses for the state than originally projected, worsening the cost problem that that casts a shadow over the entire program.

Jon Kingsdale, executive director of the Connector Authority, recently said, “If we continue with double-digit inflation [in health insurance premiums] I don’t think health reform is sustainable.” However, there is nothing in the new law that works to control these sky-rocketing costs.

As a physician and healthcare activist for many years, I was aware that this reform law was not a panacea and did nothing to control the rapidly rising costs of private insurance that force both employers and their employees to pay more in premiums, with the insured also paying more in higher copayments and deductibles. While the reform widened the safety net for some poor families, this safety net will shred if there is not a massive infusion of new money from the state or federal governments.

Two important lessons can be learned. First, we need to sever the connection between healthcare and employment. People need continuous, portable coverage that is affordable, comprehensive, and equitable. Second, we cannot depend on the private insurance industry to provide this for us.

Piece-meal reform such as the new law will not work. Both employers and the public support the concept of single-payer healthcare. Big business is starting to realize that a single payer system will be the only affordable way to cover everyone. When will our politicians understand that their political futures will depend on supporting this kind of comprehensive reform?

Michael Kaplan is a family physician and a member of Physicians for a National Health Plan and the board of directors of the Universal Health Care Education Fund.

Health care: Make it affordable, available to all

The Des Moines Register’s Editorial
December 3, 2007

All the major presidential candidates have one thing in common: They’ve gotten help from taxpayers to pay for their health insurance.

Members of Congress — from Sen. Hillary Clinton to Rep. Tom Tancredo — are eligible for taxpayer-subsidized benefits. (Plus, a fully staffed physician’s office is available at the Capitol for flu shots and exams.) Current or former governors and a former mayor have benefited, too.

Having taxpayers help pay your health-insurance bills is a great deal if you can get it. Those vying to lead the country have gotten it. But some of them don’t think all Americans should have it.

Republicans in particular denounce “government-run” health care while offering ideas of questionable value, such as medical-malpractice reform. A 2004 report by the Congressional Budget Office found that malpractice costs account for less than 2 percent of health-care spending.

Or they want to offer tax credits for those who buy their own health insurance, without saying how low-income families would come up with the cash up front. Or they say that allowing consumers to “shop” for health care will drive down bills, even though it’s virtually impossible for consumers to determine how much hospitals, insurers and others charge for care.

Preaching “personal responsibility” in health care is not going to result in making insurance more affordable for Americans. These are not plans. They are misguided ideologies.

Here’s another puff of hot air: Candidates of both parties talk about transitioning to electronic medical records. Do it — it would save lives. But then they say it would save billions, without saying how they’d guarantee the money would go to consumers instead of software developers’ and providers’ bottom lines.

Democrats generally take the better approach. Their proposals include expanding Medicare, now restricted to those 65 and older, to cover more people. Or they would allow Americans to buy into a new public program or sign up for the same plan members of Congress enjoy. We have some reservations, however, about mandating that Americans buy health insurance. If the government forces people to purchase insurance, it must ensure the coverage it makes people buy is adequate. And any plan that would push people into the private sector moves the country in the wrong direction. Private is not necessarily better than public when it comes to health insurance.

The current patchwork system of health care isn’t working for the 47 million uninsured Americans and the millions more who are underinsured. Too many Americans are an appendicitis attack or a broken bone away from financial trouble. Medical debt and illness contribute to bankruptcies. And American employers are burdened with the increasing cost of health care while trying to compete in a global economy.
A candidate’s approach to health-care reform is an important consideration in the 2008 elections. Does he or she have a credible plan to insure everyone at reasonable cost?

In weighing candidates’ plans, realize a truth about this country’s hodgepodge health-care system: Public dollars already support health insurance at every turn. About a third of all Americans are covered by programs such as Medicaid, Medicare and the Veterans Administration, funded with tax dollars.

So this country already has a tax-financed system of health care. It just isn’t efficient or fair. It leaves working Americans to pay for their own care while subsidizing care for others. They’re forced to buy private insurance plans that are tangled in red tape and administrative waste.

Everyone should be able to buy into a uniform government program such as Medicare. And that brings us to Rep. Dennis Kucinich. He’s not a viable candidate in other ways, but he’s right about health care. He recognizes the need to adopt a nonprofit national system of health care that insures everyone.

That’s considered an extreme position by many Americans. But extreme is what’s needed when it comes to health-care reform. Americans should welcome a Medicare-like program for everyone.

Like Kucinich, we have long advocated a so-called “single-payer” system, in which the government is the payer for services delivered by private-sector hospitals, doctors and clinics. That’s not socialized medicine. Patients would still choose their own doctors. Yet red tape and administrative costs would be cut dramatically.

Something is seriously wrong when presidential candidates accept taxpayer-subsidized health care for themselves and push warm, fuzzy labels such as personal responsibility as a plan to fix the system for the rest of the country.

Pervasiveness of California rescissions

California fines plan for failing to reveal policy cancellation incentive

By Emily Berry
American Medical News
December 10, 2007

Health Net has agreed to pay the state of California $1 million for failing to tell the whole truth to regulators about how it rewarded its employees who canceled individuals’ health insurance. The company — and others — could face more fines in the future as the California Dept. of Managed Health Care continues to investigate insurance rescission practices.

The Dept. of Managed Health Care on two occasions asked Health Net officials whether they offered incentives to employees to cancel policies and was told incorrectly that there were no such programs, department spokeswoman Lynne Randolph said. California law does not allow insurance companies to compensate claims reviewers for decisions they make on claims.

“We are sorry for any misunderstanding with the DMHC,” Health Net CEO Jay M. Gellert said in a prepared statement.

The California Dept. of Managed Health Care is investigating various health plans over their rescission of individuals’ health coverage.

…the department fined Blue Cross of California, a WellPoint plan, $1 million in March and $200,000 in September 2006 for illegally canceling individual insurance policies. The department said Blue Cross failed to prove the applicants were intentionally deceptive — the only legal means by which a health plan may rescind coverage.

Blue Cross earlier this year settled lawsuits involving 6,000 patients whose policies had been rescinded. While the company denied any wrongdoing, in the settlement it promised to rescind coverage only if applicants “intentionally misrepresented” information.

Kaiser Foundation Health Plan has paid a total of $325,000 in fines over rescissions, though it has denied wrongdoing.

Meanwhile, the Dept. of Managed Health Care said that sometime next year it expects to wrap up its inquiries into more rescission allegations at Kaiser and at Blue Shield of California, PacifiCare and Health Net.

…other companies, including PacifiCare’s parent UnitedHealth Group, are still awaiting the state’s findings as to their own policy cancellations.

“Accurate medical underwriting helps consumers by holding down health care inflation across the individual health insurance market,” United spokesman Tyler Mason wrote in an e-mailed statement.

http://www.ama-assn.org/amednews/2007/12/10/bisc1210.htm

Comment:

By Don McCanne, MD

Although California has been in the news because of the rescission practices of its private insurers, this article demonstrates the pervasiveness of this practice.

UnitedHealth spokesman Tyler Mason’s statement that they are helping consumers by holding down health insurance inflation applies only to healthy consumers who clear their underwriting standards.

What about the consumers who really count, those who need health care? The private insurers not only leave them exposed to actual health care inflation, but they also add the impact of adverse selection, having siphoned off the healthy who are needed to dilute the costs of the sick.

Medical underwriting is not only perverse in its impact, it is also an expensive, wasteful administrative service found only in the private sector. It is a concept that does not even exist in a public insurance program since the mission of a public program is to prevent financial barriers to health care – for everyone, not just the healthy.

A Grateful Patient Reports: PNHP doctors on the health reform front

By Donna Smith
American SiCKO and HealthCare-Now Road Show team

DENVER — It hasn’t been an easy year. But as 2007 draws to a close, I can count among my political allies and new friends some of folks I would never have guessed would have given me the time of day outside of an exam or procedure room. We truly are blessed in this nation to have thousands of doctors who care enough about the practice of medicine and the delivery of health care to support real reform and to do so publicly.

As subjects in Michael Moore’s film ‘SiCKO,’ my husband and I have traveled throughout the country introducing showings of the film, advocating for single-payer, universal health care, testifying before a Congressional sub-committee, helping organize local activists and meeting thousands of other Americans with health care horror stories very much like our own.

But over the course of the past several years, we have been crushed by the health care crisis in this nation — in spite of having health insurance. Being in the Moore film and fighting for change has not rectified the conditions that brought us to this time and place. We are still fighting the health care crisis.

One remarkable twist in our journey is that we now know so many U.S. physicians who support a single-payer system. We have met them from coast-to-coast, and they bravely and eloquently advocate for a just system of health care delivery in which they can truly practice medicine and still earn a decent living.

During our years of fighting the system, the doctors we knew (and who treated us) kept themselves remarkably removed from the “front office” dealings regarding money and insurance and payment. At least that’s what they wanted us to believe. We rarely had any doctor, clinic or hospital visit that was not prefaced by a financial discussion or the signing of a check or payment plan or both. Though we knew that the doctors who were in charge of these private offices, clinics, surgery centers and many hospital boards do and did set the policies followed by their office staff members, we never had a doctor talk to us about that stress and that trauma. The sterility of their inner sanctum was never pierced by such mundane issues.

Yet, our ability to get care was always determined by our ability to pay. We felt very alone in the struggle and certainly never felt supported by the folks who delivered our care and who rarely gave us more than a few moments of their time — as they all had to move quickly on to their next patients and that next source of revenue for their practices and organizations.

Then I went to Cuba with eight other Americans as a part of the filming of ‘SICKO.’ For the first time I met doctors who spent time with me and the other patients — and I watched them do the same with the Cuban patients on our floor in the Havana hospital where we stayed. The Cuban docs sat and listened to patients and family members. A Cuban pulminologist waited for me to finish my coffee before visiting with me. I was horrified about having him wait despite reassurances from other medical staff that the doctor routinely waits for patients — not the other way around. It was a difficult concept to absorb. My American patient’s brain was struggling with the thought of revenue lost as this specialist sat waiting for me.

But after my return to the U.S. and after the opening of ‘SICKO,’ I began to meet a different sort of American doctor. I learned about the Physicians for a National Health Program (PNHP), and it seemed everywhere we went, a PNHP doc was there advocating for change and listening to other providers and patients share their stories.

And these U.S. doctors seemed very comfortable with themselves and in the company of patients — they didn’t rush me or act annoyed by my story or appear threatened by the thought of a truly universal system in which all Americans have access to care.

I met PNHP co-founder David Himmelstein when I testified before a House Judiciary sub-committee in Washington, D.C.; I met Henry Kahn when I did an Air America radio show at the U.S. Social Forum in Atlanta; I met Elinor Christiansen here in Denver as an outspoken advocate and member of Health Care for All Colorado; I met Rob Stone (picture attached), an ER doc in Bloomington, Indiana, who speaks forcefully in favor of single-payer reform; I met Jim Hudson (picture attached) at the Farm in Summertown, Tennessee, and a Nashville physician for many years; and, of course, it has been one of the joys of this effort to meet Quentin Young on several stops along the way as he steadfastly supports all of the efforts physicians of the PNHP organization make to transform the U.S. system.

Suddenly, a new vision of what the U.S. system can be has been revealed to me through these amazing doctors who represent all the good that could be and who lock arms with we patients who so want change to happen and who will work to see that it does.

No, I do not want to throw out all that is best about the U.S. system, but I will demand that we celebrate those doctors, nurses and other clinicians who step up into the light and speak on behalf of our shared humanity and for the ideals that should exemplify the practice of medicine. Single-payer, universal health care honors us all — patients and practitioners — and together we can make it a reality.

As for me, I am so very honored to know so many PNHP doctors and I am absolutely reassured through their hearts and minds that my nation will have the best health care and the most just health care possible.

PNHP, along with the California Nurses Association, the National Nurse Organizing Committee and the Progressive Democrats of America, are co-sponsors of HealthCare-Now’s SiCKO Cure National Road Show, bringing the message of HR676 and single-payer, universal health care to the grassroots level.

Woolhandler and Himmelstein on competition and public funds

Competition in a publicly funded healthcare system

By Steffie Woolhandler and David U Himmelstein
BMJ
December 1, 2007

Why would anyone choose to emulate the US healthcare system? Costs per capita are about twice the Organisation for Economic Cooperation and Development average. Forty seven million people are completely uninsured. Many others with insurance face high out of pocket costs that hinder care and bankrupt more than a million annually. Mortality statistics lag behind those of most other wealthy countries, and even for the insured population, clinical outcomes and patient satisfaction are mediocre.

This dismal record arises, we contend, from health policies that emphasise market incentives. Even as the public share of health spending in the US has risen to 60%, investor owned firms have eclipsed the public, professional, and charitable bodies that previously managed the financing and delivery of care. The development and effect of US policies that mix public funding and private management has wider relevance because politicians in Europe and beyond are pushing analogous schemes.

Market failure

Market theorists argue that although competition increases administration, it should drive down total costs. Why hasn’t practice borne out this theory?

Investor owned healthcare firms are not cost minimisers but profit maximisers. Strategies that bolster profitability often worsen efficiency. US firms have found that raising revenues by exploiting loopholes or lobbying politicians is more profitable than improving efficiency or quality.

What’s driving privatisation?

Evidence from the US is remarkably consistent; public funding of private care yields poor results. In practice, public-private competition means that private firms carve out the profitable niches, leaving a financially depleted public sector responsible for the unprofitable patients and services. Based on this experience, only a dunce could believe that market based reform will improve efficiency or effectiveness.

Privatisation trades the relatively flat pay scales in government for the much steeper ones in private industry; the 15-fold pay gradient between the highest and lowest paid workers in the US government gives way to the 2000:1 gradient at Aetna.

Lessons for other countries

Health systems in every nation need innovation and improvement. But remedies imported from commerce consistently yield inferior care at inflated prices. Instead we prescribe adequate dosing of public funds; budgeting on a community-wide scale to align investment with health priorities and stimulate cooperation among public health, primary, and hospital care; encouragement of local innovation; explicit empowerment of patients and their families; intensive audit for improvement, not reward or blame; a system based on trust and common purpose; and leadership not by corporations but by “imaginative, inspired, capable and . . . joyous people, invited to use their minds and their wills to cooperate in reinventing the system, itself . . . because of the meaning it adds to the lives and the peace it offers in their souls.” (Quote from Donald Berwick)

http://www.bmj.com/cgi/content/full/335/7630/1126

Comment:

By Don McCanne, MD

Although this article is targeted to policymakers in other countries who currently are experimenting with American-style privatization, it actually is a good resource article for health care reformers in the United States. It is worth downloading in its entirety.

Why is it important to us? We have a window of opportunity to achieve reform. All of the Republican and most of the Democratic candidates for president support some form of competition between private health plans, with perhaps a public insurance option. As this article states, “public-private competition means that private firms carve out the profitable niches, leaving a financially depleted public sector responsible for the unprofitable patients and services.” Massive amounts of funds are directed to private market enterprises, whereas the task of financing much of our essential health care is left to the government and the taxpayers.

A discomforting reality is that health care has now become so expensive that the insurance function is no longer limited to a transfer between the many who are healthy to those with health care needs; it now also requires a transfer from the wealthy to moderate- and low-income individuals who have health care needs.

Competition of health plans provides no market motivation to provide wealthier individuals with incentives to pay more for their health care coverage than do average-income individuals. That will occur only with intervention by our own government. Even with progressive tax policies and government regulation, private plans would continue to waste considerable resources to maintain low-risk, low-cost financing pools while shifting the responsibility of actually paying for health care to other competitors, including “competing” government programs. The Medicare Advantage plans have proven that this is not mere policy theory.

The last paragraph reveals the fatal policy flaw behind the concept of an efficient government program competing with administratively-wasteful private plans. The competition is not over the ability to provide ever more financing for those requiring the greatest amount of health care, it is over the ability to segregate only the healthiest individuals into the private insurers’ own highly profitable risk pools.

Government health programs don’t compete; they directly address the health care needs of the people. Private plans do compete, but by market manipulations that enable them to contribute as little as possible to the financing of our health care needs.

Competing private plans provide the weakest links in our health care equation. Our health care infrastructure would fare well by removing these flimsy, unreliable links, and replacing them with solid reinforcement through the strength of our own government program.

Fact Check: Democrats and Insurance

By BETH FOUHY
Associated Press
November 29, 2007

NEW YORK (AP) — Hillary Rodham Clinton and Barack Obama are in a tussle over whether the government should require everyone to carry health insurance.

Arcane as it may sound, the debate has become a proxy battle over questions of leadership, judgment and who is more committed to bringing health care to all Americans.

AT ISSUE:

All the leading Democratic presidential contenders have laid out comprehensive plans that they say will reduce the cost of health care and provide coverage to the 47 million uninsured. But they part ways over the issue of an “individual mandate,” which would require everyone to have insurance just as most states require drivers to purchase auto insurance.

Clinton has made such a mandate the centerpiece of her plan, insisting that it is the only way to bring coverage to all. The New York senator would offer federal tax subsidies to help consumers pay for insurance, with the expectation that costs would come down over time as insurers begin to compete for a larger pool of consumers.

She has not yet said how she would enforce such a mandate, saying those details would be worked out in consultation with Congress.

John Edwards has also proposed an individual mandate and this week laid out the steps he would take to enforce it. Under his plan, those who refuse to participate could see their wages garnished or face penalty payments.

Obama’s plan does not include an individual mandate. The Illinois senator has argued that people cannot be compelled to buy insurance until the cost of coverage is substantially reduced. He would require all children to be covered and would offer subsidies to the working poor. Over time, he says, the cost savings realized through his plan would enable everyone to afford to purchase insurance.

THE SPIN:

Clinton has sought to portray Obama as unwilling to fight for universal coverage, settling instead for a plan that could leave as many as 15 million people uninsured. Obama, in turn, has tried to depict Clinton as unrealistic and evasive on the issue.

“He has called his plan universal, then he has called it ‘virtually universal,’ but it simply does not deserve that label,” Clinton told an audience in Iowa on Wednesday. “When it comes to truth in labeling, his plan simply flunks the test.”

Obama responded to Clinton’s criticisms Wednesday, reiterating his view that people cannot be forced to buy coverage until it is made more affordable. And, he said, she has never explained how she would enforce her requirement that everyone must obtain coverage.

So until she clarifies what exactly she intends to do to enforce this mandate — is she going to fine people, is she going to take other steps to enforce it — this is more of a political point that she’s trying to make than a real point,” Obama said.

FACT CHECK:

Health policy experts generally agree that the only way to achieve truly universal coverage is to enact a “single payer” health care system that is run by the government.

While the health systems in most other wealthy industrialized nations are largely government-run, the single-payer model has been rejected as “socialized medicine” in the U.S.

Absent a single-payer system, many experts believe the individual mandate would help move the country toward universal health care but would not automatically result in everyone being covered. And Massachusetts, which last year became the first state to require its residents to carry health insurance, has vividly demonstrated its limitations.

Officials there have granted waivers to 20 percent of state residents who cannot afford coverage, even the new, lower-priced plans subsidized by the government. Hundreds of thousands more have refused to purchase coverage despite the mandate, risking a tax penalty that could be as high as $1,000 next year.

When she unveiled her health care plan in September, Clinton told The Associated Press that she was aware of the problems in the Massachusetts system but felt confident the federal government had “tools” at its disposal to address problems a state government might not.

'Sicko' viewers

By Bonnie Washuk , Staff Writer
Lewiston Sun Journal
Thursday, November 29, 2007

LEWISTON – As he talked about how medical bills ravaged his parents’ lives, Jesse Stevens of Auburn teared up. The room grew quiet. Everyone paid attention.

Bills they couldn’t afford prompted Stevens’ parents to move out of the family home and into a mobile home, Stevens said.

Nick Peddle of Gorham said his grandfather is in his 70s and still working. He can’t retire because he needs the health coverage, Peddle said.

Vivian Ocharsky of Auburn said when her husband had stomach cancer, their insurance company refused certain chemotherapy treatment that could have prolonged his life. After he died in 2000, the insurance company canceled her policy, “leaving me with nothing.” She had medical bills she couldn’t afford, contributing to her losing their home.

With insurance companies, hospitals, doctors and drug makers focused on profits instead of patients, health care has become unaffordable, not just to those without insurance but to those with it, said people who crowded into a labor union hall Tuesday night.

A full house turned out to watch Michael Moore’s documentary, “Sicko,” hosted by the Western Maine Labor Council, the Maine People’s Alliance and the Maine State Nurses Association.

After the film, the collective mood was anger. Americans should demand change from politicians, Ocharsky and Stevens said. But Stevens predicted that 99 percent of those there Tuesday night wouldn’t do anything differently Wednesday.

“Please prove me wrong,” he said.

A majority in the room did sign two petitions.

One, for H.R. 676, would create a national health insurance program. Under that legislation people are covered “cradle to grave. You get a card, you go to the doctor and you don’t get a bill,” said Peter Kellman of the Southern Maine Labor Council. The biggest way the plan is paid for is through payroll taxes, Kellman said. “Right now you pay 1.45 percent to Medicare. That goes up to 4.75, and that’s it.”

There are no insurance premiums or co-pays because there are no insurance companies, Kellman said. Now, 30 percent of health costs come from “insurance paperwork,” he said. Labor unions are collecting signatures for H.R. 676 to send to U.S. Rep. Mike Michaud, D-Maine.

The second petition demands that Maine lawmakers approve universal single-payer health care. The petition says the system is broken and a new system is needed that’s accountable and puts patients before profits.

The Maine People’s Alliance goal is to get 15,000 signatures statewide to give to Maine legislators in January. “We want to make it clear it’s not just a few hundred MPA members” hurting from unaffordable care, said MPA’s Androscoggin Valley community organizer Kate Brennan.

“Far too many people in Lewiston-Auburn are uninsured or underinsured,” Brennan said. “People are having to sell the only home they ever owned to pay their health care bills. Or people are not getting the care they need, yet facing 10 or 13 percent annual increases in their policies.”

Labor unions are promoting a single, government-run health system because unaffordable care has become a problem even for those with jobs and insurance, said Matt Schlobohm of the Western Maine Labor Council.

It used to be that unions negotiated for wages, working conditions and benefits, but now health care dominates contract talks, he said. And as union members reach retirement age, more are finding they can’t afford to retire, especially if their spouse is ill or isn’t of Medicare age, Schlobohm said.

The goal of showing “Sicko” is to educate people about the crisis and show how single-payer systems work in other countries, he said. The movie strikes a chord for anyone who can’t afford care or who’s been denied care, Schlobohm said. “It speaks to them that this is wrong.”

The Maine State Nurses Association plans to promote a single-payer system by hosting “Sicko” house parties, said organizer Cathy Jo Herlihy

Markets Have Failed in U.S. Health Care

Embargoed Until:
Thursday, November 29
7:00 PM EST

Contacts:
Steffie Woolhandler, MD, MPH (617) 665-1032 or (617) 312-2766
David Himmelstein, MD (617) 497-1268 or (617) 312-0970
Ida Hellander, MD (312) 782-6006

Create High Costs and Low Quality
Says British Medical Journal Article

Calls VA Health System “Major
Success Story in U.S. Health Policy”

Click here to read the full-text of the review.

Market-based medical reforms have failed in U.S. health care and should not be tried in Europe, according to a detailed review in the December 1 issue of the British Medical Journal (BMJ). The article, by two Harvard Medical School faculty members, is prominently featured on the BMJ website along with several responding commentaries.

The article documents that efforts to make Medicare “competitive” by contracting with private HMOs have wasted billions of tax dollars annually due to the HMOs’ high profits and overhead costs. The largest Medicare HMO reported overhead of 15% v only 3% in traditional Medicare. One HMO’s profits were so large that it paid its CEO’s $225,000 per day for five and a half years.

While Medicare HMO’s are far less efficient than the traditional Medicare program, they continue to make profits, according to the authors, by cherry picking. That is, they enroll healthier-than-average seniors, who bring hefty premiums (paid by Medicare) but cost the HMO little. HMOs have also profited by successfully lobbying Congress and winning payments that are at least 12% higher than the costs of care in traditional Medicare, and sometimes through outright fraud. These multi-billion dollar taxpayer subsidies have allowed HMOs to amass financial power which has, in turn, become a political roadblock to terminating this failed experiment in market medicine.

Similarly, the involvement of investor-owned firms in hospital, dialysis, and nursing home care has brought no “market efficiency” to healthcare. The article cites rigorous comparisons (meta-analyses) of investor-owned and non-profit health facilities which find that investor ownership is associated with worse quality among nursing homes, 19% higher costs and 2% death rates among hospitals and 9% higher death rates among outpatient kidney dialysis centers.

The advent of market medicine in the U.S. has generated immense bureaucratic and paperwork costs. The proportion of health funds devoted to administration in the U.S. has risen 50% in the past 30 years and now stands at 31% of total health spending, nearly twice the proportion in Canada which, like most other developed nations, relies on non-profit national health insurance.

The authors call the government-run Veterans Health Administration (VA) the “major success story of U.S. health policy” because it offers “more equitable care, of higher quality, at comparable or lower cost than private-sector alternatives”.

The authors argue that health care cannot meet the conditions required for effective market competition. Half of Americans live in regions too sparsely populated to support real competition. (A town’s only hospital or cardiology group cannot compete with itself). Seriously ill patient (who consume most care) cannot comparison-shop, reduce demand when prices rise, or accurately appraise quality. They necessarily rely on their doctor’s advice as to what tests and treatments to “purchase.”

The BMJ article is aimed at European reformers who have looked towards the U.S. market-oriented system as a model. “Most of the presidential candidates in both parties want to funnel even more public dollars through private insurers and continue the privatization of Medicare. But the data is very clear. For-profits provide inferior care at inflated prices.” said study author. David Himmelstein, an associate professor of medicine at Harvard. Co-author Steffie Woolhandler (also an associate professor at Harvard) added: “The U.S. health care system is failing because we have adopted a for-profit, market-driven model. Americans die younger and pay more for their care than people in nations with non-profit national health insurance. Health care should be a public service, not a business.”

#

Physicians for a National Health Program is a national organization with 14,000 physician members that supports single payer national health insurance. PNHP has chapters and spokespeople across the U.S. For local contact information, write info@pnhp.org or call 312-782-6006.

Steffie Woolhandler and David Himmelstein’s article, ” Competition in a Publicly-Funded Health Care System: The U.S. Experience,” appears in the December 2007 issue of the British Medical Journal and is available, along with the commentaries at www.bmj.com or www.pnhp.org

‘Sicko’ viewers

By Bonnie Washuk , Staff Writer
Lewiston Sun Journal
Thursday, November 29, 2007

LEWISTON – As he talked about how medical bills ravaged his parents’ lives, Jesse Stevens of Auburn teared up. The room grew quiet. Everyone paid attention.

Bills they couldn’t afford prompted Stevens’ parents to move out of the family home and into a mobile home, Stevens said.

Nick Peddle of Gorham said his grandfather is in his 70s and still working. He can’t retire because he needs the health coverage, Peddle said.

Vivian Ocharsky of Auburn said when her husband had stomach cancer, their insurance company refused certain chemotherapy treatment that could have prolonged his life. After he died in 2000, the insurance company canceled her policy, “leaving me with nothing.” She had medical bills she couldn’t afford, contributing to her losing their home.

With insurance companies, hospitals, doctors and drug makers focused on profits instead of patients, health care has become unaffordable, not just to those without insurance but to those with it, said people who crowded into a labor union hall Tuesday night.

A full house turned out to watch Michael Moore’s documentary, “Sicko,” hosted by the Western Maine Labor Council, the Maine People’s Alliance and the Maine State Nurses Association.

After the film, the collective mood was anger. Americans should demand change from politicians, Ocharsky and Stevens said. But Stevens predicted that 99 percent of those there Tuesday night wouldn’t do anything differently Wednesday.

“Please prove me wrong,” he said.

A majority in the room did sign two petitions.

One, for H.R. 676, would create a national health insurance program. Under that legislation people are covered “cradle to grave. You get a card, you go to the doctor and you don’t get a bill,” said Peter Kellman of the Southern Maine Labor Council. The biggest way the plan is paid for is through payroll taxes, Kellman said. “Right now you pay 1.45 percent to Medicare. That goes up to 4.75, and that’s it.”

There are no insurance premiums or co-pays because there are no insurance companies, Kellman said. Now, 30 percent of health costs come from “insurance paperwork,” he said. Labor unions are collecting signatures for H.R. 676 to send to U.S. Rep. Mike Michaud, D-Maine.

The second petition demands that Maine lawmakers approve universal single-payer health care. The petition says the system is broken and a new system is needed that’s accountable and puts patients before profits.

The Maine People’s Alliance goal is to get 15,000 signatures statewide to give to Maine legislators in January. “We want to make it clear it’s not just a few hundred MPA members” hurting from unaffordable care, said MPA’s Androscoggin Valley community organizer Kate Brennan.

“Far too many people in Lewiston-Auburn are uninsured or underinsured,” Brennan said. “People are having to sell the only home they ever owned to pay their health care bills. Or people are not getting the care they need, yet facing 10 or 13 percent annual increases in their policies.”

Labor unions are promoting a single, government-run health system because unaffordable care has become a problem even for those with jobs and insurance, said Matt Schlobohm of the Western Maine Labor Council.

It used to be that unions negotiated for wages, working conditions and benefits, but now health care dominates contract talks, he said. And as union members reach retirement age, more are finding they can’t afford to retire, especially if their spouse is ill or isn’t of Medicare age, Schlobohm said.

The goal of showing “Sicko” is to educate people about the crisis and show how single-payer systems work in other countries, he said. The movie strikes a chord for anyone who can’t afford care or who’s been denied care, Schlobohm said. “It speaks to them that this is wrong.”

The Maine State Nurses Association plans to promote a single-payer system by hosting “Sicko” house parties, said organizer Cathy Jo Herlihy

Listen to Dr. Don McCanne on KPFK

Click here to listen to PNHPā€™s Senior Health Policy Fellow Dr. Don McCanne on KPFKā€™s Morning Review discussing single-payer national health insurance and the health care reform plans of the leading Presidential candidates. (Run time: 15m 51s | 14.5Mb | Mp3)

Genentech bumps $40 drug with $2000 version

U.S. senator chides Genentech plan

By David Morrill
Contra Costa Times
November 29, 2007

A U.S. senator said Genentech’s plan to restrict availability of its Avastin drug so doctors might be forced to use the more expensive medicine Lucentis to treat an eye disease will cost taxpayers $1 billion to $3 billion annually.

The South San Francisco-based biotech company’s decision “is of great concern to me,” U.S. Sen. Herb Kohl, D-Wis., said in letters to the U.S. Centers for Medicare and Medicaid Services and the Food and Drug Administration made public Wednesday.

Avastin is one of Genentech’s blockbuster cancer drugs. It treats patients with colon and lung cancer and is being studied worldwide in about 300 clinical trials for more than 20 tumor types.

But Avastin is also in the offices of eye doctors across the country, where it is being used to treat a major cause of vision loss, called neovascular age-related macular degeneration, or AMD.

The company’s superstar drug is going head-to-head with a drug called Lucentis that was approved last year by the U.S. Food and Drug Administration for AMD. Lucentis is also owned by Genentech.

The quandary is more than just two drugs that could potentially be used to fight the same eye disease. Lucentis costs about $2,000 per monthly dosage; Avastin could cost about $40.

Although it’s not stopping the off-label use of Avastin, Genentech did announce in October a move that some fear will make it harder for physicians to prescribe the medication.

Physicians need the help of specialized groups, called compounding pharmacies, to break down initial allotments of Avastin. The amount of the drug needed for eye injections is much smaller than what is required to treat cancer.

Genentech announced that as of January, these specialized pharmacies will no longer be able to purchase the product from wholesale distributors.

Some have asked Genentech to conduct a study comparing the effectiveness of Lucentis and Avastin in treating AMD, but the company has no plans to do so.

“For Genentech, we think our resources would be better spent to continue to do research in unmet patient needs,” said Krysta Pellegrino, spokeswoman for Genentech. “We believe that we’ve already shown that Lucentis is the right treatment for this eye disease.”

http://www.contracostatimes.com/news/ci_7588959?nclick_check=1

For more on this controversy:
http://www.allaboutvision.com/conditions/lucentis-vs-avastin.htm

Comment:

By Don McCanne, MD

Isn’t the marketplace beautiful?

Genentech found that the primary competition for its $2000 drug (Lucentis brand of ranibizumab) was its own expensive product for colon and lung cancer (Avastin brand of bevacizumab).

The pricing of drugs is not based simply on their development and production costs but rather is based more on what the market will bear. The ability of compounding pharmacists to greatly dilute the dose of Avastin to levels appropriate for treatment of the retina resulted in a plummeting of the price per dose compared to that of Lucentis.

As any successful business would do, Genentech made a decision to destroy its own competition with itself by prohibiting the legal sale of Avastin to the compounding pharmacists.

Since markets always result in lower costs through price competition, we certainly would not want the government to interfere through regulatory oversight. But since Genentech does not actually compete with itself it is able to set the highest prices attainable. And it is certainly understandable that Genentech does not want to do a head-to-head comparison study between its $2000 drug and its $40 drug.

The good news is that “U.S. government funds will be used to compare effectiveness and safety of the two different treatments. National Eye Institute (NEI) officials announced in October 2006 that they will launch their own clinical trials comparing outcomes of both Lucentis and Avastin as macular degeneration treatments.” (See allaboutvision link above.)

The likely bad news will be that, once again, our tax dollars will fund the research for private industry, and, if Avastin passes muster, Genentech will surely release it as a product specifically reformulated for retinal use, at a bargain price of $1900 per dose.

Isn’t our uniquely American health care system great?

Medicare out-of-pocket spending

How Much 'Skin In The Game' Do Medicare Beneficiaries Have? The Increasing Financial Burden Of Health Care Spending, 1997--2003

By Patricia Neuman, Juliette Cubanski, Katherine A. Desmond and Thomas H. Rice
Health Affairs
November/December 2007

Rising health costs and an aging population present critical policy challenges. This paper examines the financial burden of out-of-pocket health spending among Medicare beneficiaries between 1997 and 2003. Over this period, median out-of-pocket spending as a share of income increased from 11.9 percent to 15.5 percent. In 2003, the 25 percent of beneficiaries with the largest burden spent at least 29.9 percent of their income on health care, while 39.9 percent spent more than a fifth of their income on health care. Results suggest that sustained increases in out-of-pocket spending could make health care less affordable for all but the highest-income beneficiaries.

http://content.healthaffairs.org/cgi/content/full/26/6/1692

Comment:

By Don McCanne, MD

Hmmm. Most of us are grateful that our seniors have Medicare coverage so that they don’t have to face financial hardship in the event of medical need. But is that assumption valid?

About 40 percent of Medicare beneficiaries spend more than 20 percent of their incomes on health care. For most of them that does constitute a financial hardship that is severe enough such that some will decline beneficial health care services simply because they can’t afford to pay for them.

Advocates of consumer-directed health care support increasing sensitivity to health care costs through higher premiums, deductibles, copayments, coinsurance, donut holes and whatever other patient cost-sharing techniques that can be devised. But Medicare beneficiaries don’t need more lessons on the high costs of their health care. What they need is more affordable access to that care.

Providing financial disincentives to receiving beneficial health care services and products is the exact opposite of what our Medicare policies should be.

Do the nonelderly have a similar problem with a high percentage of out-of-pocket spending on health care? Since most seniors have lower incomes composed of social security benefits and retirement accounts, it would be expected that the out-of-pocket spending on health care would be higher as a percentage of total income for them than it would be for the nonelderly who have higher salaries and wages. And that is true.

Although about 40 percent of Medicare beneficiaries spend more than 20 percent of their incomes on health care, only 7.3 percent of nonelderly adults do likewise.

Wait a minute. 7.3 percent of nonelderly adults spend more than 20 percent of their incomes on health care? That’s close to 20 million people. And for a large percentage of them, having to spend over 20 percent of their incomes on health care does constitute a financial hardship.

Most other nations provide comprehensive health care to everyone at a much lower cost without the need to burden patients with excessive cost sharing. With what we are already spending on health care, certainly we could do as well.