PNHP

The Ill Winds of Free Trade

pnhpf3a

The Ill Winds of Free Trade

by Ellen R. Shaffer and Joe Brenner
Common Dreams

Elected officials are trailing voters on the critical issues of trade and health. Voters, including Republicans, increasingly oppose the current crop of trade agreements and also support raising taxes to pay for health care, according to recent polls.

It looks as if the public is prioritizing jobs and health benefits over buying cheap imports at Walmart. Trade agreements that dismantle the middle class sap all nations’ political will, and ability to protect public health. Voters are catching on that all these issues are linked.

We understand that countries don’t win or lose from deals like NAFTA. Rather, some large corporations win market share, while the majority of households lose income and services.

The corporate winners who now drive the global economy have unmoored themselves from the social contract, no longer relying on secure employment and rising standards of living to bolster consumer spending. The safety net to tide us over in troubled times has been abandoned. Weakened public institutions have also damaged health and the availability of health care.

Domestically, the shift in public opinion has not deterred unconditional cheerleading for the bottom line. The Bush administration’s best idea for fiscal austerity at the moment is to slash publicly subsidized health care coverage for kids so that for-profit insurance companies can take a swipe at them.

The private sector has declined to enroll these uninsured young malingerers, to date, and probably won’t start now. But this misguided stonewalling gives an ideological lift to the fable that market-driven health care is still a viable policy option.

Specific trade policies damage health and undermine health protections. Until this year, fast-track rules prevented Congress from amending trade agreements. Unhealthy trade policies written by corporations were virtually assured to be enacted.

* Drug companies have imposed trade rules that protect their rights to exorbitant profits while excluding many from needed life-saving drugs, by driving out competition from generics.

* The tobacco industry has stealthily used trade agreements to pry open export opportunities and to increase consumption of their lethal products.

* State, local and national measures to ban a carcinogenic gasoline additive, and to regulate internet gambling, have been delayed or overturned by powerful international trade tribunals with no expertise in health, or accountability to the U.S. court system.

* Licensing establishes both quality standards and fair treatment for health care professionals. But under the pending trade agreement with Korea, hospital chains could employ U.S. health care personnel in Korea, with no respect for local licensing rules. Other trade agreements would impose discriminatory treatment of immigrant Filipino nurses working in Japan.

What do all these policies have in common? Selected corporations benefit from policies they write, while the public is shut out. Through these agreements, corporate lobbyists are dictating public policy. Bringing public health voices to the table can provide balance to our trade policy and is long overdue. It’s also time for elected officials to catch up with the public in supporting trade deals that boost our economic security, while expanding health care to all Americans.

Kaiser Family Foundation Side-by-Side Comparisons of Presidential Candidates’ Plans

Below is a link to an on-line tool from the Kaiser Family Foundation that compares the Presidential Candidates’ Health Plans.

The summaries were created by Foundation staff and consultants, and do not include critical information about whether the plans would actually achieve the stated goals, such as expanding access or controlling costs. For critical commentary on the candidates’ health plans, see Dr. Don McCanne’s Health Policy Quote of the Day, archived at https://www.pnhp.org/news/categories/Quote%20of%20the%20Day/

Interactive Online Tool Provides Side-by-Side Comparisons of Presidential Candidate Health Care Proposals

As part of its ongoing effort to inform debate about health care issues in the 2008 presidential election, the Kaiser Family Foundation has released an interactive online tool to compare the health care proposals of presidential candidates. The tool, 2008 Presidential Candidate Health Care Proposals: Side-by-Side Summary, summarizes positions in four overall categories of access to health care coverage, cost containment, improving the quality of care and financing.

The online tool allows users to customize side-by-side comparisons by selecting as many as four candidates for comparison that can then be formatted into a printer-friendly format. Users will also be able to print out documents comparing all the Democratic candidates and all the Republican candidates.

The candidates’ summaries were prepared by Foundation staff with the assistance of Health Policy Alternatives, Inc. They are based on information appearing on the candidates’ websites and supplemented with information from candidate speeches, the campaign debates and news reports. The sources of information are identified for each candidate’s summary (with Internet links). Information will be updated regularly as the campaign unfolds.

The new tool is part of health08.org, a website operated by the Foundation providing analysis of health policy issues, regular public opinion surveys, and news and video coverage from the campaign trail. For further information on the side-by-side comparison or other health08.org efforts contact us at health08web@kff.org.

Nobel Prize in economics, and why

Three Americans to Share Nobel Prize in Economics

By Graham Bowley
The New York Times
October 15, 2007

The Nobel Prize in economics was awarded today to three Americans for their work in mechanism design theory, a branch of economics that looks at the design of institutions in situations where markets do not work properly.

Leonid Hurwicz of the University of Minnesota, Eric S. Maskin of the Institute for Advanced Study in Princeton, New Jersey, and Roger B. Myerson of the University of Chicago shared the award for “having laid the foundations of mechanism design theory,” the Royal Swedish Academy of Sciences said.

Their work addresses situations in which markets work imperfectly, such as when competition is not completely free, consumers are not fully informed or people hold back private information.

The prize winners’ groundbreaking work has been pivotal in assessing how institutions perform under such conditions, and in designing the best mechanism to make sure that goals, such as optimal social welfare or maximum private profit, are reached, the academy said. The winners’ work has helped determine whether government regulation may sometimes be necessary.

http://www.nytimes.com/2007/10/15/world/16nobel.html?_r=2&hp&oref=slogin&oref=slogin

And…

Markets and Medical Care: The United States, 1993–2005

By Joseph White
The Milbank Quarterly
Volume 85, Number 3, 2007

Many studies arguing for or against markets to finance medical care investigate “market-oriented” measures such as cost sharing. This article looks at the experience in the American medical marketplace over more than a decade, showing how markets function as institutions in which participants who are self-seeking, but not perfectly rational, exercise power over other participants in the market. Cost experience here was driven more by market power over prices than by management of utilization. Instead of following any logic of efficiency or equity, system transformations were driven by beliefs about investment strategies. At least in the United StatesĆ¢ā‚¬ā„¢ labor and capital markets, competition has shown little ability to rationalize health care systems because its goals do not resemble those of the health care system most people want.

http://www.milbank.org/quarterly/8503feat.html

And…

The Presidential Candidates on Health Care

The New York Times

Selected quotes from some of the candidates:

“…market-based solutions, not government-run health care.”

“…increasing competition… empowering patients and their doctors, not government bureaucrats.”

“…encourage the private sector to seek innovative ways to bring down costs and improve the free market for health care services.”

“…letting the free-market determine health care costs.”

“…not putting more government into it… instead… bring in place market dynamics…”

http://politics.nytimes.com/election-guide/2008/issues/healthcare/index.html

Comment:

By Don McCanne, MD

Optimal social welfare? Or maximum private profit?

Milton Friedman? Or Leonid Hurwicz, Eric Maskin and Roger Myerson?

The next time someone insists that we must keep the government out of health care and allow the free market to work, stop him or her right there. Insist that he/she first read the Milbank Quarterly article by Joseph White so that you can have an informed discussion based on knowledge and understanding of the realities and complexities of marketplace and government interactions and the impact that they have on health care.

If that person refuses to abandon the fiction of an isolated marketplace utopia, then you would be wise to remove that person from your milieu so that you can move on with your important work to help bring us a health care system that provides optimal social welfare.

And while you’re at it, give some thought as to whether you want to put into control of our government one of the candidates who preaches the fiction of marketplace utopia while actually supporting the economics of maximum private profit.

Politicians ignore U.S. health fiasco

Note: Diane Francis is a well-known conservative analyst in Canada. Even the right-wing acknowledges the value of the Canadian health system.

Note: Canadian physicians working in the U.S. are just 1.1 percent of the U.S. physician workforce, which is similar to the percentage of U.S.-trained physicians working in Canada (0.8 percent) (“The Metrics of the Physician Brain Drain”, Fitzhugh Mullan, MD NEJM 10/27/05).

Corporate control of Congress prevents reform

Diane Francis
Financial Post
October 9, 2007

American health care is an oxymoron and the system represents our major trading partner’s biggest competitive disadvantage going forward.

And yet it is the 800-pound gorilla in the room that’s ignored during these presidential-election primaries and runoffs. Nobody touches the fact that this is a huge business and economic issue, besides a socio-political one.

Canadians are lucky on this one. We may have lineups and our newspapers may occasionally publish horror stories about someone left on a gurney for hours outside an emergency room.

But the U.S. system is the worst-executed in the world and its private-sector interests have convinced the government to insure the riskiest people — namely veterans, indigents and seniors — while leaving the gravy to private-sector insurers to profit from.

Government in the United States provides medical care for more than half of the population, in these high-risk subgroups. But if government covered all the population, younger and healthier, the cost per capita would decline because these would be spread over a less-expensive population of clients.

So the private sector gets to do what it wishes, which is to cover those who maximize its profits, and the governments are drubbed for the costs of Medicare, Medicaid and other programs for the needy or risky.

So the United States has two medical systems: One private-sector for the well-off, where insurance companies simply pass along costs, rather than wrestle with them, as do privately owned hospitals, clinics, labs and physician practices. And another that takes care of the old, disabled, impoverished or militarily wounded.

It’s hard to imagine the human suffering that has resulted from this situation. Canadians don’t have the anxiety about health care that underlies American existence. People there don’t leave jobs, don’t start new ones or businesses because they fear losing insurance benefits.

Insurance companies, according to congressional testimony by one physician, pay doctors bonuses based on how many claims for medical care they refuse.

And yet, most of the presidential candidates duck the issue whenever possible, although it’s becoming harder now that Michael Moore’s documentary Sicko has done a good job exposing the system.

But the economic problem is overlooked by everybody. The United States is spending 15.3% of its GDP on medicine and that doesn’t include the cost of litigation over medical bills. Forecasts are costs will hit 20% of GDP by 2012. More disadvantages: – 49 million people without any insurance. The same number inadequately insured. – Despite that shortfall, the United States spends far more per capita than other OECD countries, and has worse results by measures such as lifespan or infant mortality. Estimates are medical costs will hit 20% of GDP by 2016. – Costs are high, even though the system is so poorly executed, because the rich are over-serviced and pampered and the poor under-serviced or ignored. – One estimate is that half of U.S. personal bankruptcies are because of high medical bills due to a catastrophic illness. – Congress is co-opted by pharmaceutical giants, the American Medical Association (the country’s most powerful trade union), insurance companies and ambulance-chasing lawyers.
Meanwhile, medical professionals are paid much higher salaries and fees than elsewhere in the world, which has resulted in a serious brain drain of personnel from Canada and Europe. Some 9,000 Canadian doctors now practice south of the border and thousands more nurses.

For that and many other reasons, Canadians should urge Americans to do major surgery.

More info on my blog at financialpost.com/dianefrancis

Brief Response from Dr. Robert McMurtry, Canadian orthopedic surgeon and former Dean of a medical school, to the internet hoax "letter from a Canadian friend"

Click here to read “letter from a Canadian friend” at scopes.com

By Dr. Robert McMurtry

The fake letter is so patently ridiculous and written from an right wing American view that it should be exposed.

My response in brief is that single payer works. A few points about health care in Canada.

* There is no anxiety about physician and hospital bills.

* For the first time in many years I sat at a department of surgery meeting and heard that we are not filling the OR time! Why? Because the government of Ontario has been so effective at attacking wait times.

* There are no wait times for cardiac and cancer care in Ontario.

* No one has ever been denied care for smoking and the outcomes for health care are better in Canada
than in the U.S.

* We are competing very successfully with the U.S. because of single payer health care.

* Our dollar is now worth more than the American dollar.

The only question is why profit and greed in the U.S.continue to trump compassion, efficiency and quality.

http://www.snopes.com/politics/medical/canada.asp

Blame private firms for health-provider losses

Letter to the Editor
Des Moines Register
October 15, 2007

The tone of Dr. Charles F. Hesse’s Oct. 6 letter, “Medicare-Type Insurance Penalizes Providers,” makes the good doctor appear as if he is more concerned about his bottom line than the health of his patients.

Yet Hesse’s letter would not seem so self-serving had he mentioned the reason for his ire: the Medicare Modernization Act of 2003 that, then, had the support of the American Medical Association.

Medicare payments to physicians for traditional Medicare Parts A and B have remained stagnant since 2001. This in itself is bad enough. But according to the AMA, it is Medicare Advantage plans, in which benefits and payments are administered by private health-care insurance companies, that are shortchanging both patients and physicians.

In May of this year, the AMA reported that a survey of its members found that half the patients with Medicare Advantage HMOs and PPOs were denied services typically covered by traditional Medicare. The same survey also reported that 51 percent of its doctors received lower payments from Medicare Advantage plans than from traditional Medicare.

Hesse advises Register readers to visit the American Medical Association’s Web site for “an intelligent solution to the health-care dilemma.” Among the AMA’s proposals are a national cap on medical-malpractice awards and shifting the burden of health-insurance ownership from employers to individuals. It is little different than the so-called “universal” health-care plan forwarded by Democratic presidential hopeful Hillary Clinton.

Perhaps Hesse should be asking why a private health-insurance company, answerable only to its major shareholders, is better than a single-payer health-care system which, if the government is properly functioning, is accountable to the voting public.

Bob Jewett
Des Moines

Brief Response from Dr. Robert McMurtry, Canadian orthopedic surgeon and former Dean of a medical school, to the internet hoax “letter from a Canadian friend”

Click here to read “letter from a Canadian friend” at scopes.com

By Dr. Robert McMurtry

The fake letter is so patently ridiculous and written from an right wing American view that it should be exposed.

My response in brief is that single payer works. A few points about health care in Canada.

* There is no anxiety about physician and hospital bills.

* For the first time in many years I sat at a department of surgery meeting and heard that we are not filling the OR time! Why? Because the government of Ontario has been so effective at attacking wait times.

* There are no wait times for cardiac and cancer care in Ontario.

* No one has ever been denied care for smoking and the outcomes for health care are better in Canada
than in the U.S.

* We are competing very successfully with the U.S. because of single payer health care.

* Our dollar is now worth more than the American dollar.

The only question is why profit and greed in the U.S.continue to trump compassion, efficiency and quality.

http://www.snopes.com/politics/medical/canada.asp

Ideology and kids’ health

Editorial
The Berkshire Eagle
Monday, October 08

President Bush’s veto of legislation providing an overdue expansion of the State Children’s Health Insurance Program (S-CHIP) is the latest of many examples of the foolishness that can result when ideology is allowed to trump all else, including logic and fairness. Mr. Bush, who worries about creeping socialism as if was still 1957, is beyond hope, but if enough congressional Republicans can set aside the ideology that helped put them in the minority and do what is right, his veto could still be overridden later this month.

The 10-year-old S-CHIP program has done a fine job of providing health insurance coverage for children from low-income families, but because of a growing population and changing demographics, many children are now falling through the cracks. Congress wants to expand the program to include another 3.8 million children, many in middle-income families that cannot afford insurance because modest wage increases cannot keep up with the rising costs of employer-based insurance.

Mr. Bush, who is always willing to mislead when it comes to making an ideological point, asserts that children in families earning $83,000 a year will be covered by the expanded program, which as far as can be determined, is based on a proposal in New York state to extend the plan to families making 400 percent of the poverty level. The actual legislation, however, would cover families earning up to 300 percent of the poverty level, or $51,000 a year. Those families are not wealthy, and with health insurance costs climbing at roughly four times the rate as wages, they need help insuring their children.

Ideology enters the picture with the president’s insistence that the expanded S-CHIP plan will open the door to “socialized medicine.” The word “socialism” doesn’t scare people much anymore, but it isn’t accurate anyway when applied to proposals like single-payer health care, in which the government pays for health care, not patients and their families at the mercy of profit-driven insurance companies. The medicine would not be “socialized” because patients would receive the same treatment and have the same options as they do now. The difference is that working men and women would not have their paychecks gouged by insurance payments and would not risk bankruptcy if hit by a catastrophic illness.

Out on the campaign trail, the Republican presidential candidates have all backed the veto, even though in the case of former Massachusetts Governor Mitt Romney and former New York City Mayor Rudy Giuliani, this involves repudiating stands on health insurance they took as elected officials. Mr. Romney is so tied in knots by his serial flip-flopping that he now finds himself campaigning against the Massachusetts plan to provide insurance for all residents that he signed into law because it constitutes the dreaded “socialized medicine.”

Ideology should never get in the way of good government, as it has with the expansion of the children’s health insurance program. Another 20 legislators are needed to override the veto in the House, and if enough Republicans care about their constituents, and their re-election hopes, to change their votes, this expansion of a valuable program could still overcome ideology and become law.

Letter to Gov. Schwarzenegger

The California State Legislature is currently in a special session, negotiating with Gov. Schwarzenegger the terms of a compromise bill on health care reform. They are fixated on using private health plans to expand coverage, even though private insurers cannot provide a product that is reasonably comprehensive and still has premiums that are affordable for average-income families. It appears that the governor would strip the plans of the financial protection that insurance must provide in order to make the plans (but not health care) affordable, and then mandate universal coverage. The legislators seem to be insisting that the plans must be required to be comprehensive enough to prevent financial hardship for those with health care needs, but since these plans no longer would be affordable for the majority of us, the legislators would leave millions of Californians without coverage.

Following is a letter that I sent to the governor last month making the point that affordable, comprehensive health care for everyone is attainable if we truly accept his call for a post-partisan solution with shared responsibility. Although the negotiations are not public, there is no evidence that the policy discussions have extended beyond the obsolete model of private health plan financing. This letter is being distributed in hopes that others will join in the call for reform that will achieve our goal of comprehensive health care for everyone. Please share this message with others who do care.

September 3, 2007

The Honorable Arnold Schwarzenegger
Governor of California
State Capitol Building
Sacramento, CA 95814

Re: Shared responsibility, the hidden tax, and affordable private health plans

Dear Governor Schwarzenegger,

You are to be commended for taking the lead in reforming health care financing for the state of California. The decades-long ideological gridlock has allowed affordable access to our very expensive health care system to deteriorate to a level that threatens almost everyone. We are spending enough to provide comprehensive, high-quality care for everyone, yet millions without insurance, and millions more who have inadequate insurance, face financial hardship as a consequence of significant illness or injury. Not only are the uninsured a major problem, our insurance system is now failing us.

An essential first step for reform is to answer your call for us to enter a post-partisan era wherein we set the rhetoric of ideology aside and address the actual policies that will be required to accomplish our common goals. You are right to insist that everyone must be provided with health insurance coverage now since any major reform enacted in the near future will likely bring an end to efforts to achieve comprehensive reform.

Your concept of shared responsibility must be a component of reform since everyone must be included, and all individuals and entities must participate equitably, based on their ability. You have acknowledged that the hidden tax that we all pay for uncompensated care is an important resource that is already a part of our health care financing, but that it should be replaced with a more equitable, transparent source of funds.

In establishing policies of shared responsibility, it is important to understand the publicĆ¢ā‚¬ā„¢s perceptions of the costs of health care today, as contrasted to the realities. Since most of us are insured by private plans, it appears to us that our primary costs include our insurance premiums (whether paid individually or as a salary reduction for employer-sponsored plans), our deductibles, copayments and coinsurance, and out-of-pocket payments for products and services not covered by our plans. But we shall see that our actual health care spending is far greater than that represented by the covered and uncovered costs through the private plans.

Although representing only a small portion of our total health care spending, it is these private plans that are becoming unaffordable for everyone. Businesses, especially small businesses, are less and less able to afford the premiums of group plans. And in order for premiums in the individual market to remain affordable, insurers are decreasing the financial protection for those who do develop health care needs. The combined costs of the premiums plus the cost sharing and other out-of-pocket expenses are now so high that coverage through private plans is no longer affordable for the average-income family. The primary flaw of the proposal for an individual mandate to purchase private insurance lies in the fact that it is impossible for the insurance industry to provide innovative products that would have both affordable premiums and adequate benefits, especially if they are to expand their essential insurance function of pooling risk.

As stated, these expensive private plans that are no longer affordable for average-income individuals represent only a minor portion of our health care spending. Private plans are sold to the largest and healthiest sector of our society: the relatively healthy workforce and their young, healthy families, and the healthy sector of the individual market that passes underwriting standards. If the private insurance industry can no longer provide us with affordable products for this large healthy sector, how could they ever create a product that brings in those with significant health care needs, and expands benefits and reduces cost sharing to a level that does not create a financial hardship for those who must access the system? Although Blue Cross of California has been criticized appropriately for its anti-consumer practices, it is the only insurer that has been forthright on this issue. Blue Cross has been very successful in keeping payment for actual health care services at a minimum, and its business model would fail if they had to include all individuals with health care needs while providing them with adequate benefits and protecting them against potential financial hardship. They know that they cannot provide such coverage at a competitive premium.

If we think that private insurance premiums and our out-of-pocket spending represent most of our health care costs, then we have really deceived ourselves. Our greatest costs are financed by a massive hidden tax. According to Princeton health economist Uwe Reinhardt, two-thirds of our health care financing is already through the tax system. Amongst the programs that are funded by the taxpayer are Medicare, Medicaid, SCHIP, Veterans Health Administration, military health care, US Public Health Service, Indian Health Service, other public hospitals and clinics, insurance programs provided by taxpayers for public employees including FEHBP and CalPERS, the tax subsidy of employer-sponsored coverage, and, of course, the hidden tax of uncompensated care shifted to the rest of us. The amount we pay for health care on a per capita basis through our tax system alone is more than other nations pay in public and private spending combined. Except for Medicare payroll taxes, most of the taxes we pay for health care are hidden since there is no transparent link for general revenue taxes, and much of the tax we pay for health care is passed on to us as overhead expenses built into the products and services that we purchase.

Professor Reinhardt also makes the point that risk pooling must not only serve its traditional role of transferring funds from the many who are healthy to the few who have significant health care needs, but now, since health care costs are so high, risk pooling must also serve the function of transferring funds from the wealthy to average- and low-income individuals with health care needs. Although some would oppose accomplishing this transfer through the tax system, it is already taking place since our relatively progressive taxes are currently being used to fund two-thirds of our health care system.

It is fortunate that we do have this transfer through our tax system. We already are spending $7500 per capita for health care (current national health expenditures divided by the total population). If we were each to pay our pro rata share into a single risk pool, a family of four would be paying $30,000, obviously an impossibility when the median household income is $48,000 (nationally). Although the tax transfer has reduced the impact of health care costs on average-income families, it has not prevented the costs within the private insurance risk pools to push premiums and out-of-pocket expenses to unaffordable levels. The segregated risk pools of private plans have become an obsolete method of financing health care.

In a post-partisan environment, we can dismiss the ideological debate over whether or not health care should be funded through the tax system, because we see that much of it already is. Further, since tax systems are much more equitable in the funding of health care than are private health plans, we already have accepted implicitly the doctrine of shared responsibility through our massive hidden tax programs.

What we have not achieved is value for our health care spending. Much of the waste is directly due to our very inefficient and highly ineffective, fragmented system of financing health care. The private insurers continue to sell us a profusion of administrative services while greatly compounding the waste by placing an intolerable administrative burden on the health care providers. Since the private insurers have failed to provide the market solutions that would provide us with the effective risk pooling that we need, some might consider it to be irresponsible for us to continue to finance their wasteful administrative excesses and the costs of the administrative burdens placed on the providers.

Reports from the Organization for Economic Development and Cooperation (OECD) and from the World Health Organization (WHO) address the superfluous costs of the private insurance plans.

OECD:

“Whatever the role played in a health system, private health insurance has added to total health expenditure. Most OECD countries apply less government control over private sector activities and prices, compared to public programmes and providers. Private insurers tend to have less bargaining power over the price and quantity of care as compared with public systems, particularly single-payer ones. Countries that have multiple sources of primary coverage, including those with significant private health insurance market size, tend to be those with the highest total health spending levels per capita, such as the United States, Switzerland, Germany and France.”

WHO:

“Evidence shows that private sources of health care funding are often regressive and present financial barriers to access. They contribute little to efforts to contain costs and may actually encourage cost inflation.”

If an individual mandate to purchase private insurance were to be adopted, important trade-offs would have to be accepted. All modeling simulations and the experience of other nations have demonstrated that building on the private insurance model is by far the most expensive way of reforming health care financing. Risk pools would be difficult to manage since inter-pool transfers would be required to risk-adjust the pools based on claims experience. If a simpler, separate universal pool were to be established, then it would be difficult to justify the high administrative costs of an industry that would serve little function other than claims processing. Since reasonably comprehensive plans are no longer affordable for average-income families, a complex, means-tested system of tax credits or vouchers would have to be created, which would require constant administrative readjustments because of changing income levels. It is difficult to justify adding on an administratively complex system of credits or vouchers to a private health insurance system already heavily weighted down with administrative complexity. It would be far simpler to use the equitable policies of our tax system to fund the health care system up front, and then to grant everyone unencumbered access through our own public insurance program, not burdened by means testing.

Although most but not all of us are concerned about ensuring that everyone has access to health care, the one issue on which we all do agree is that we can no longer tolerate the escalation of health care costs. From a policy perspective, public insurance addresses the cost issues most effectively by eliminating administrative excesses, and by realigning incentives to provide greater value in health care purchasing. Setting ideology aside, a decision must be made as to what role, if any, the private insurers should have in the future of our system of financing health care.

The current partisan divide on health reform is unfortunate. The Democratic proposal would leave millions of people without coverage unless they are able to find a way to raise the billions of public dollars that would be required to support the individual mandate. Those dollars would be added to the financial burden that society already bears for health care. And the Republican proposals fail to address realistically any of the major concerns in health care financing. Your post-partisan proposal calls for including everyone by effectively pooling risks, with everyone sharing responsibility equitably, and using the hidden tax to help fund health care for all of us. The adjustment that we would make to the massive tax funding that we already have would be more than offset by providing relief for businesses and individuals from the excessive premiums we are paying to the inefficient and ineffective private insurance industry.

Since there have been innumerable meetings during which various concepts have been vetted, it is tempting to claim that AB 8 merely needs to be adjusted to conform to the principles that you support, and that we are too close to reform to reopen the discussions to other options. But since we may live with these decisions for decades, it is important that we get it right. We should look again at the massive government financing that is already in place and see how that can be modified and meshed seamlessly with the expansion of coverage that we need. In this post-partisan era, it is no longer necessary to dismiss policy improvements merely because they are drawn from the single payer model.

All policies that would improve our flawed system of financing need to be on the table. A model that would automatically include everyone by establishing a single, universal risk pool that is equitably funded through the tax system is the most efficient, effective, equitable and least expensive model and should certainly be on the table with the rest of proposals. In contrast, consideration should be given to removing from the table the very expensive, highly inefficient and ineffective private insurance model that served us well in the last century but now is obsolete in our current environment of very high health care costs.

Thank you for your sincere personal efforts to achieve health care reform that will serve all Californians. Your post-partisan leadership should help to bring us reform that is based on sound policy science rather than on simple partisan rhetoric.

Sincerely,

Don R. McCanne, M.D.
San Juan Capistrano, CA
don@mccanne.org

Don McCanne is senior health policy fellow for Physicians for a National Health Program (www.pnhp.org).

Ideology and kids' health

Editorial
The Berkshire Eagle
Monday, October 08

President Bush’s veto of legislation providing an overdue expansion of the State Children’s Health Insurance Program (S-CHIP) is the latest of many examples of the foolishness that can result when ideology is allowed to trump all else, including logic and fairness. Mr. Bush, who worries about creeping socialism as if was still 1957, is beyond hope, but if enough congressional Republicans can set aside the ideology that helped put them in the minority and do what is right, his veto could still be overridden later this month.

The 10-year-old S-CHIP program has done a fine job of providing health insurance coverage for children from low-income families, but because of a growing population and changing demographics, many children are now falling through the cracks. Congress wants to expand the program to include another 3.8 million children, many in middle-income families that cannot afford insurance because modest wage increases cannot keep up with the rising costs of employer-based insurance.

Mr. Bush, who is always willing to mislead when it comes to making an ideological point, asserts that children in families earning $83,000 a year will be covered by the expanded program, which as far as can be determined, is based on a proposal in New York state to extend the plan to families making 400 percent of the poverty level. The actual legislation, however, would cover families earning up to 300 percent of the poverty level, or $51,000 a year. Those families are not wealthy, and with health insurance costs climbing at roughly four times the rate as wages, they need help insuring their children.

Ideology enters the picture with the president’s insistence that the expanded S-CHIP plan will open the door to “socialized medicine.” The word “socialism” doesn’t scare people much anymore, but it isn’t accurate anyway when applied to proposals like single-payer health care, in which the government pays for health care, not patients and their families at the mercy of profit-driven insurance companies. The medicine would not be “socialized” because patients would receive the same treatment and have the same options as they do now. The difference is that working men and women would not have their paychecks gouged by insurance payments and would not risk bankruptcy if hit by a catastrophic illness.

Out on the campaign trail, the Republican presidential candidates have all backed the veto, even though in the case of former Massachusetts Governor Mitt Romney and former New York City Mayor Rudy Giuliani, this involves repudiating stands on health insurance they took as elected officials. Mr. Romney is so tied in knots by his serial flip-flopping that he now finds himself campaigning against the Massachusetts plan to provide insurance for all residents that he signed into law because it constitutes the dreaded “socialized medicine.”

Ideology should never get in the way of good government, as it has with the expansion of the children’s health insurance program. Another 20 legislators are needed to override the veto in the House, and if enough Republicans care about their constituents, and their re-election hopes, to change their votes, this expansion of a valuable program could still overcome ideology and become law.

Physician makes case for single-payer health care

By Larry Mitchell
The Enterprise Record
10/14/2007
Chico, California

To Dr. Don McCanne, the remedy for California’s health-care crisis is obvious.

“Let’s give up this concept that belongs in the last century of individual private plans,” he told about 100 people who came to hear him speak in the Chico City Council chambers Thursday evening.

McCanne said the solution is a single-payer system: private health insurance would disappear and the government — California or the whole nation — would act as an insurer, collecting premiums and paying for medicine, doctors, hospitals and other health-care services.

Trying to fix the present system the way the leading Democratic presidential candidates and Gov. Schwarzenegger propose doing, makes no sense, said McCanne, a senior health policy fellow for Physicians for a National Health Program, an organization advocating the single-payer system.

McCanne, who worked as a family-practice doctor in Orange County for three decades, said the $2.2 trillion America spends every year on health care “will provide high-quality care for everyone if we spend it right.”

He claimed insurance companies use 20 percent of the money they collect for “administration,” which includes such things as profit, paying their employees, lobbying and advertising. When you add the 12 percent of their income that doctors and hospitals spend dealing with insurance plans, you have 32 percent of the health-care dollar going for “administration.”

“Most of it is waste,” McCanne said.

“We are being soaked, and we don’t even recognize it.”

However, Nicole Evans, spokeswoman for the California Association of Health Plans, which represents 40 health plans that represent 21 million Californians, said McCanne’s figures were outdated. She said more recent data show administration, at most, accounts for 20 percent of the health-care dollar (see Dr. Don McCanne’s response to Nicole Evans below).

Not only is the present system way too expensive for what it provides but it’s extremely inefficient, McCanne said. “This fragmented system of thousands of plans physicians and hospitals have to deal with puts a tremendous burden on them.”

He said it makes much better sense “to put all funds in one pool, fund it equitably and pay for health care out of that.”

His appearance in Chico was sponsored by several groups: the League of Women Voters of Butte County; the California Nurses Association; and the Butte Healthcare Coalition, a local organization that has been pushing a single-payer system for years.

Many leading Democratic politicians want to try to fix the current system, and Republicans tend to “blame the victims,” saying things like if people wouldn’t get so fat, health care wouldn’t cost so much, McCanne said.

He noted the Legislature passed Sen. Sheila Kuehl’s single-payer bill, but the governor vetoed it. She’s holding the bill in abeyance, trying to keep it alive, he said.

McCanne said states like Massachusetts and Hawaii, which have tried to make private insurance cover everyone, have only run into more problems.

The people indicate they want action on the health-care crisis, and it’s clear that single payer is the answer, he said.

But Evans insisted single payer is not the solution. The biggest problem today is that medical costs are rising between two and three times faster than other types of inflation, she said. “Single-payer health care doesn’t do anything to address that.”

She said the rising costs are due to many factors, such as the shortage of doctors and nurses, hospitals’ growing expenses, drug costs, and a large population that is getting older and less healthy.

McCanne noted that the number of uninsured people in America rose by 2.2 million last year to a total of 47 million, according to the U.S. Census. A fact sheet from the California Nurses Association says the uninsured receive less preventive care, are diagnosed at more advanced disease stages and get less medicine and fewer surgical interventions for their medical problems than people with health insurance.

One of the best things about a single-payer system is that it would cover everyone, McCanne said. “Health care is a right. I think most of us health-care providers feel that way.”

Staff writer Larry Mitchell can be reached at 896-7759 or lmitchell@chicoer.com.

BACKGROUND: In a single-payer system of health care, private insurance would be abolished and the state or federal government would pay private hospitals and doctors to care for everyone.

WHAT’S NEW: Dr. Don McCanne, representing Physicians for a National Health Program, spoke in Chico this week on the benefits he believes would come from a single-payer system.

WHAT’S NEXT: For area health-care providers, a local chapter of the California Physicians Alliance has been formed. Its aim is to promote a single-payer system for the state.

Don McCanne responds to Nicole Evans’ statement that his figures on administrative costs are outdated:

The total administrative cost of our entire health care system is about 31 percent of our health care spending, which some claim is an outdated estimate. However, I was referring to the portion of premiums paid to private insurers that is consumed in administrative services, which also happens to be about 32 percent. In either instance, the numbers are still valid.

A January 2004 update of prior studies on the total administrative costs of our entire health care system demonstrated that they are about 31 percent of the entire costs. Nothing has changed in the past three years to alter that estimate. Insurers have actually increased the often intrusive administrative services that they provide. Changing to a single payer national health insurance program would recover a significant portion of those costs.

Press release on that study:
https://pnhp.org/news/2004/january/national_health_insu.php

My comments on the percentage of health insurance premiums being consumed by administrative services were based, in part, on a study of billing and insurance related (BIR) costs. Excluding other administrative costs, the portion of the premium consumed by BIR functions alone was 8 percent for private insurers, 14 percent for physician offices, and 7 to 11 percent for hospitals, for a total of 20 to 22 percent. Insurers also spend an additional 9.9 percent for other administrative functions. Thus the percent of premiums used for administration is about 30 to 32 percent, and that does not include insurers’ profits.

Brief excerpts from this study (with my comment on the BIR portion):
https://pnhp.org/news/2005/november/landmark_study_much.php

Although the insurance industry tends to dismiss their administrative costs as an insignificant portion of our health cost burden, they do have to report their medical loss ratios to the SEC. These reports do show that they retain an average of about 20 percent for administration and profit, but, of course, that does not include the administrative burden placed on the health care providers (another 12 percent).

Medical loss ratios of largest insurers for 2005:
https://pnhp.org/news/2006/march/medicalloss_ratios_.php
Note the first paragraph of my comment.

Also, Nicole Evans’ comment that single payer does not address rising medical costs is untrue. Besides the administrative savings, a single payer system would realign incentives to improve our rapidly deteriorating primary care infrastructure while reducing wasteful spending on non-beneficial high-tech excesses. Systems with a strong primary care base provide higher quality care at a lower cost. Health care prices are much higher in the United States, and a single payer system would use negotiation to achieve greater value. Negotiation would include fair profits but would reduce wasteful spending (such as pharmaceutical marketing and patent abuses).