PNHP

Kitzhaber's proposal doesn't go far enough

pnhpf3a

Kitzhaber's proposal doesn't go far enough

Friday, January 13, 2006
The Oregonian

Former Gov. John Kitzhaber has offered a proposal to extensively reform America’s health-care system. The plan would have the state collect Medicaid money (it does this already), Medicare money (federal insurance through Social Security) and tax savings that employers get when they pay for health insurance for their employees. He would do this by having the federal government “waive” existing restrictions on states (this could apply only to Medicaid; Medicare benefits belong to workers). The resulting pool of money ($6 billion) would support preventive care and care for “other common but often costly ailments.”

Presumably, existing services would remain (although this was not specified).

The flaws in this proposal are huge. Federal limitations in many instances serve valuable purposes. Medicare and Medicaid have very different purposes (insurance vs. welfare), structures (federal payment vs. federal/state payment) and beneficiaries (retired workers vs. the poor). Constitutionally, the federal government could not assign retirees’ Medicare benefits (earned through decades of work) to a state, nor could they constitutionally deny federal tax deductions to the employers in one state (Oregon) while extending them to the other 49 (or consider the deterrence of out-of-state or interstate employers).

Most importantly, the proposal does not increase the funding for services or expand covered people or services at a time when 43 million Americans lack health insurance.

The analogy Kitzhaber draws is to his Oregon Health Plan efforts, which were admirable and innovative. But this is different. OHP was limited to Medicaid, a federal/state program, specifically contemplating waivers. And even then, we have watched the failure of the Oregon Health Plan during the past five years. There are no state dollars in Medicare or federal taxes. The Kitzhaber proposal would require national legislation; there is no chance for a single state to lead in this way. And, as national legislation, it is far too little to address major needs.

But the critics, too, have it wrong. The proposal would not create a “single-payer” program. But it should. Our health-care failure is not that we have covered too many health services, but too few. The flaw is not that we pay too much — $1.3 trillion — but that we get too little for what we pay.

And Kitzhaber himself has it wrong in saying that health care is not as important as education or the economy. It is central to both.

In the end, Kitzhaber’s proposal is not, contrary to many commentators, nearly bold enough. We need adequate funding; national planning for health facilities and services (we had this for a decade in the 1970s and ’80s); effective cost control (especially through bulk buying of drugs, as the Veterans Administration does); a broad definition of health to address smoking, obesity and alcoholism and to offer preventive health care; and a single-payer system retaining employers and insurers as delivery mechanisms, along with state agencies to reach the uninsured and the unemployed.

Paradoxically, we are getting there a bit at a time, and have been since 1970. Contrary to Kitzhaber’s proposal, incremental steps work. In the past 35 years, we have added health care for the poor, the aged, children, veterans and workers. We have improved hospitals, doctors, insurance and drugs. We now need to pull them together, fund them adequately and make them work. If we fail, the fault will be ours.

Arthur B. LaFrance is a law professor at Lewis & Clark Law School who teaches Bioethics, Health-Care Delivery and Health, Poverty and the Law.

Bush's Turn to Health Care

Is the President Ready to Expand the Public Role?
By Sebastian Mallaby
Washington Post
Monday, January 16, 2006; A17

This time last year, President Bush was preaching Social Security reform; that got nowhere. This time six months ago, his team was thinking tax reform; it soon got cold feet. Now the new theme is health reform. “This is a big priority for the president,” Al Hubbard, the White House national economic adviser, told me Friday. “The system has got to be reformed.”

He’s right, of course. The U.S. economy as a whole is extraordinarily efficient: Since 1995 productivity has grown twice as fast as in the 1980s and 50 percent faster than in euro land. But U.S. health care is the opposite. It’s notoriously inequitable, it generates tens of thousands of fatal errors annually, and it’s unbelievably wasteful. It achieves shorter life expectancy than the British, French, German, Canadian or Japanese systems, but it eats up 16 percent of the resources in the economy, compared with between 8 and 11 percent in those other countries. The difference — 6 percent or so of economic output — suggests that the waste in the American system comes to $700 billion a year.

Back before Bush was elected, Hubbard convened a private-sector group to wrestle with this challenge. He recruited three academics — R. Glenn Hubbard of Columbia University and John F. Cogan and Daniel P. Kessler of the Hoover Institution — who continue to influence Hubbard as he ponders what Bush should say about health care in the forthcoming State of the Union address. Conveniently, the trio’s thoughts are not a secret. Their five fixes for health care have just been published as a short book.

Some look at the U.S. health mess and see a failure of the market, but the authors insist that government clumsiness prevents the market from working. Modest tort reform would free doctors from practicing expensive defensive medicine. Tougher antitrust policies would prevent price-raising alliances among hospitals. Pruning mandates on health insurers — which often reflect lobbying by doctors’ groups — might free insurers to cover only the most cost-effective procedures.

So far, so plausible: Nonpartisan health experts agree that these ideas push in the right direction. But they don’t push to the goal line, nor anywhere near it. By the authors’ own estimates, the proposals eliminate only a fraction of the waste in the American system.

Enter the authors’ really big idea — the one on which the White House is likely to build a story about its grand health-reform vision. To make the health market work, the trick is to create and then empower consumers. You create them by making individuals pay more out of pocket. And you empower them by forcing hospitals and doctors to publish information on quality and price.

The idea appeals to Al Hubbard, a bluff, no-nonsense business type with a genial, uncomplicated style. Hubbard invited me to imagine a world in which companies paid for their staffs’ groceries: Employees would load up with more food than they needed; supermarkets would seize the chance to mark up groceries; pretty soon, they wouldn’t even bother posting their prices. So it is today with medicine. You don’t know the cost of your hospital visit until a few days later, when the bill arrives.

There’s a weakness in this thinking. The country has moved far enough already toward out-of-pocket payments, which promise hardship for low-income people without much reduction in waste. Health is simply too complex for people to make smart, waste-reducing decisions; when you go to the hospital with screaming stomach pains, you have no idea how many tests you need — and you’re not in a fit state to embark on comparative shopping. A celebrated study by the Rand Corp. showed that out-of-pocket payments deter needed health consumption as much as wasteful consumption, confirming the point that ordinary people aren’t going to become savvy health shoppers.

But the White House is right to press hospitals and doctors for better information on price and quality. Limited state-level experiments suggest that public ratings shame the poorest performers into rethinking their procedures; doctors want to help their patients, and if they are confronted with evidence that they are failing to do so they are willing to shake themselves up. A few health plans have begun paying bonuses to hospitals and doctors that score well on quality and price measures. A recent study led by Harvard’s Meredith B. Rosenthal found that these incentives work.

So the White House is half right. If it sticks to the good bits of its program, it could help bring down health care inflation — which in turn would create more space for wage gains and would also stem the growth in the ranks of the uninsured. But this still raises a nagging question.

Beyond the imperative of restraining prices, the biggest challenges in health care are to get insurance to everyone and to create incentives for preventive treatment — even though prevention may pay off 30 years later, by which time the patient will have gone through multiple switches in health plans. The most plausible subsidizer of universal insurance is government, and the only entity with a stake in lifelong wellness is the government. Is the administration ready to see that?

mallabys@washpost.com

Business Group and PNHP both have the right prescription

The Wrong Prescription
Letter to the Editor
The Washington Post
January 16, 2006

I hope that The Post’s Jan. 10 editorial “Certificate of Need? Yes!” helps stop the plan to build another hospital in a city that does not need more hospital beds.

Almost all of the serious health care problems in the Washington area require more effective disease prevention and primary health care; better access to doctors and nurses for routine and early-stage problems; better nutritional counseling; access to affordable healthy food; and an array of health services that are either unavailable or available only on a fragmented and dysfunctional basis to low-income families.

Employers and employees pay on average more than $12,000 a year for family health coverage in the District. Unnecessary, costly additions to an expensive health care system will drive up costs more. Some employers will drop coverage as a result or move jobs out of the high-cost city. Either way, the poor and others with low incomes will suffer most.

The District has too much high-tech health care and too little good primary care. The worst step that the city could take is to waste $400 million on an unneeded hospital, which undoubtedly will cost even more than that before it is done.

Helen Darling
President
National Business Group on Health

http://www.washingtonpost.com/wp-dyn/content/article/2006/01/15/AR2006011500691.html

Comment: Health care reform is often presented as a divisive issue. In articles on the topic, the single payer model of Physicians for a National Health Program (PNHP) is often presented as a government solution which has been contrasted with private sector solutions such as those supported by the National Business Group on Health. But are private business interests and public insurance interests really incompatible when it comes to health care reform?

Without commenting on the advisability of a new district hospital for Washington (which should be based on an assessment of need), this letter by Helen Darling could have been written by a member of PNHP. Look at the points on which we agree:

* Capital improvements, such as new hospitals and bed capacity, such be based on regional planning responding to identified needs.

* Excessive, ineffective high-tech health care should not be funded.

* Our deteriorating primary care infrastructure should be dramatically reinforced, which can be done by improving resource allocation.

* Prevention should be a primary goal using public health measures such as disease prevention, better nutrition with access to affordable healthier food, earlier access to the health care delivery system, and removal of impairments in access to other health services – impairments that are partially due to the fragmentation of our public and private systems of funding care.

* Current trends are resulting in a further decline in employer-sponsored coverage and “the poor and others with low incomes will suffer most.”

What is divisive about this? We agree on these points. Now is the time for all individuals and organizations to come together on reform. This does not mean that we have to enter a process of compromise in which each side gives up maybe half of the fundamental issues they support.

The National Business Group on Health can continue to advocate for higher quality services, for error reduction, for reduction of wasteful high-tech excesses, for provider assessments designed to improve system performance and for other measures that achieve the market goals of higher quality at lower costs. PNHP can continue to advocate for universal coverage, for administrative efficiency in funding care, for improved allocation of health care resources, for an equitable system of funding the universal risk pool in which each individual or entity contributes a fair share, and for budgeting mechanisms that slow the rate of growth in health care spending. These and other important goals can be achieved without having to compromise, but rather by cooperating. Together we can achieve an equitable, affordable, high quality, comprehensive health care system that would meet the needs of every individual while fulfilling the commitment of business and government for better health care for all.

Although the following quote is on war and killing, the affirmation should help us reflect on why we should not let up in our fight for health care justice:

“Now let me say that the next thing we must be concerned about if we are to have peace on earth and good will toward men is the nonviolent affirmation of the sacredness of all human life.”

Rev. Dr. Martin Luther King, Jr.

Do we need private solutions to control queues?

Public Solutions to Health Care Wait Lists
By Michael M. Rachlis
Canadian Centre for Policy Alternatives
December 2005

Executive Summary

Waits for care are the biggest political issue facing Canadian health care. Both citizens and providers are concerned that too many waits are too long and put some patients at risk.

Canadians would do well to consider public sector solutions to the wait-times problem. The good news is that many such public solutions are at hand. Here are two of the most innovative ones:

* The health care system should establish more specialized short-stay surgical clinics within the public sector. These clinics provide the efficiencies that private clinics have capitalized on, without siphoning public dollars to shareholders.

* Lessons learned from queue-management theory should be adopted. Examples from both the public and private sectors – such as line-ups at banks and airports – show us how better coordination and flow of queues can dramatically reduce wait times.

Canadians tend to assume that, if there is a wait for health care, there isn’t enough of it. For example, many breast patients have to wait for a mammogram, then wait for an ultrasound, and then wait again for a biopsy. The Sault Ste. Marie breast health centre reduced the wait-time from mammogram to breast-cancer diagnosis by 75% by consolidating the previously separate investigations. If a woman has a positive mammogram, she often has the ultrasound, and sometimes the biopsy as well, on the same day.

The Rexdale Community Health Centre serves 6,000 patients in a disadvantaged community in northwest Toronto. In 2003, patients faced a four-to six-week wait for appointments. The centre temporarily increased resources to clear its backlog, and now provides same-day service.

This same plan can be followed for surgical wait lists. First, map the process. At each step, assess whether capacity is sufficient to meet demand. If it is, temporarily increase resources to clear the backlog and go to just-in-time servicing. If capacity is insufficient for demand, then re-design services. If there is still unmet demand, then a bottleneck has been identified. It requires more resources.

These public solutions – specialty clinics in the public sector and application of queueing theory to surgical wait lists – are but two of many alternatives to private finance and for-profit delivery. Others include increasing surgical capacity in public hospitals and putting greater emphasis on prevention. There is no shortage of such solutions if the political will is present.

Let’s not add private problems to our health care system. We already have the public solutions at hand. Let’s put them into practice.

http://www.policyalternatives.ca/documents/
National_Office_Pubs/2005/Health_Care_Waitlists.pdf

And…

Explaining Waiting-Time Variations for Elective Surgery Across OECD Countries
By Luigi Siciliani and Jeremy Hurst
OECD Economic Studies No. 38, 2004/1

This study has added to the limited evidence on variations in waiting times across OECD countries for publicly-funded elective surgical procedures and on their possible determinants.

We have compared key statistics for the group of countries where waiting times are a major health policy concern (Australia, Canada, Denmark, Finland, Ireland, Italy, Netherlands, New Zealand, Norway, Spain, Sweden, and United Kingdom), with another group where waiting times are not a concern (Austria, Belgium, France, Germany, Japan, Luxembourg, Switzerland, and the United States). It is found that countries which do not report waiting times, on average spend more in health care, have higher capacity (measured in terms of acute care beds and doctors), and implement more frequently forms of activity-based funding for hospitals and fee-for-service systems for doctors (as opposed to salary). On the demand side, the two groups of countries do not differ markedly in need, as measured through the proportion of elderly in the total population or mortality rates, and in the degree of cost sharing (co-payments for surgery).

http://www.oecd.org/dataoecd/15/52/35028282.pdf

Comment: This and previous OECD papers have demonstrated that maintaining adequate capacity in the health care delivery system is important in avoiding excessive wait times or queues. Monitoring and adjusting capacity as appropriate prevents unnecessary queues.

The report by Michael Rachlis is important because he demonstrates that queue management need not be expensive. Sometimes modest resources must be added to expand capacity, but the amounts are negligible when considered as a percentage of the entire health care budget. His most important point is that the application of queue-management theory can correct the problems with virtually no increase in spending. A private system of funding care is not a prerequisite. The only requirement is a responsible steward with political will.

If the United States decided to include everyone in its health care system, we would have to ensure adequate capacity and apply queue-management theory. Fortunately, affordability would not be an issue since the $2 trillion that we will be spending this year is more than enough to meet those costs.

Our other option is to continue with our current, very effective method of controlling queues. We can continue to make access to health care unaffordable for a major sector of our society so those individuals don’t clog up the queue. That’s easy, and it works!

CAHI's claim of Medicare's hidden administrative costs

Medicare’s Hidden Administrative Costs: A Comparison of Medicare and the Private Sector
By Merrill Matthews, Ph.D.
The Council for Affordable Health Insurance
January 10, 2006

Executive Summary

One of the most common, and least challenged, assertions in the debate over U.S. health care policy is that Medicare administrative costs are about 2 percent of claims costs, while private insurance companies’ administrative costs are in the 20 to 25 percent range.

It is very difficult to do a real apples-to-apples comparison of Medicare’s true costs with those of the insurance industry. The primary problem is that private sector insurers must track and divulge their administrative costs, while most of Medicare’s administrative costs are hidden or completely ignored by the complex and bureaucratic reporting and tracking systems used by the government.

This study, based in part on a technical paper by Mark Litow of Milliman, Inc., finds that Medicare’s actual administrative costs are 5.2 percent, when the hidden costs are included.

In addition, the technical paper shows that average private sector administrative costs, about 8.9 percent – and 16.7 percent when commission, premium tax, and profit are included – are significantly lower than the numbers frequently cited. But even though the private sector’s administrative costs are higher than Medicare’s, that isn’t “wasted money” that could go to insuring the uninsured. In fact, consumers receive significant value for those additional dollars.

We also raise an important, although heretofore unrecognized, issue that gives Medicare an inherent advantage on administrative costs. Because of the higher cost per beneficiary, Medicare administrative costs appear lower than they really are. If the numbers were adequately “handicapped” for comparison with the private sector, they would be in the 6 to 8 percent range.

Finally, like the private sector, Medicare also has to obtain funds to pay claims. But the cost of raising that money, or borrowing it if the government doesn’t collect it from taxpayers, is excluded from Medicare administrative cost calculations. While we don’t in this paper draw any conclusions about what we shall call the “cost of capital” and its impact on Medicare’s administrative costs, we do want to highlight that those costs exist and that taxpayers, both today and in the future, must bear those costs.

http://www.cahi.org/cahi_contents/resources/pdf/
CAHI_Medicare_Admin_Final_Publication.pdf

Comment: The Council for Affordable Health Insurance (CAHI) is an association of insurance carriers advocating for market-oriented solutions to the problems of our health care system. Their bias for affordable private health insurance is at odds with our bias for affordable publicly-funded health care for everyone. They have now released a report “exposing” Medicare’s hidden administrative costs.

It is important to be aware of this report and the paper of Mark Litow of Milliman, Inc. on which this report is based. Opponents of single payer reform will use the concepts presented to dismiss the charge that private insurers are responsible for much more administrative waste than is our Medicare program.

When we are challenged, our best quick response would be to use their own numbers. After they have adjusted the numbers by applying their biased assumptions, the percent of private sector administrative costs is still over three times the administrative costs of Medicare (16.7 percent and 5.2 percent, respectively). The actuality of the administrative excesses is not in dispute – only the degree of the egregiousness of the excesses.

The opponents will also point out that the percent of administrative costs for Medicare beneficiaries is lower because the per person health care costs are higher than in the relatively healthy private insurance sector. But shouldn’t the administrative spending be directed primarily toward claims processing, especially since Medicare enrollment is a low-cost, once-in-a-lifetime event? Why should a greater percentage of health care dollars be used to administer private insurance programs with a much lower rate of claims processing? The administrative costs of claims processing is related much more to the volume of claims and much less to the number of beneficiaries. Thus their “handicapped” numbers are specious.

In another section of their report they claim that administrative costs “add value.” Most of us have difficulty recognizing the value of marketing costs, medical underwriting, brokers’ fees, excessive executive compensation packages, insurer profits, and other such administrative excesses. This claim alone, that these excesses add value, should destroy the credibility of this report.

The most important component of administrative waste was totally left out of this report – the administrative burden placed on the providers of health care. The recent Health Affairs report by J. Kahn and his colleagues demonstrated that just the billing and insurance related costs of private insurance consume about 21 percent of premium dollars, in a large part due to the administrative burden of physicians and hospitals. A single, administratively-streamlined system of claims management would dramatically reduce the waste of our current fragmented system.

And what is their conclusion?

“However, the issue is not and should not be which segment, private sector insurers or government-run plans, has the lowest administrative costs. The issue should be which does the best job of providing quality health insurance coverage for the best price. When one looks at all of the money pouring into Medicare, even with the price controls imposed by the government, the answer has to be the private sector.”

And we’re leaving these guys in charge? It almost makes you want to cry.

Health spending up, but who pays?

National Health Spending In 2004: Recent Slowdown Led By Prescription Drug Spending
By Cynthia Smith, Cathy Cowan, Stephen Heffler, Aaron Catlin the National Health Accounts Team (Office of the Actuary, Centers for Medicare and Medicaid Services)
Health Affairs
January/February 2006

U.S. health care spending rose 7.9 percent to $1.9 trillion in 2004, or $6,280 per person. Health spending accounted for 16 percent of gross domestic product (GDP).

Medicare spending rose 8.9 percent to $309 billion in 2004.

Total Medicaid spending (federal plus state and local) reached $290.9 billion in 2004.

Private health insurance premiums amounted to $658.5 billion in 2004, compared with $563.5 billion in benefits paid.

The employee share of employer-sponsored and individually purchased coverage rose to $206.4 billion in 2004, while out-of-pocket spending for copayments and deductibles and for noncovered goods and services reached $235.7 billion. When payroll taxes and premiums associated with government-subsidized care such as Medicare and Medicaid are added in, aggregate household spending totaled $557.2 billion-more than one-third of PHC (personal health care) spending in 2004. Aggregate private business spending was $448.3 billion.

The trajectory of health care spending continues to be driven by new medical treatments, rising prices, and growing utilization. Medical progress has improved health care for many families, but rising costs are also a growing burden for households, businesses, and governments. Medical spending continues to rise faster than wages and faster than economic growth, and workers are paying much more in health care premiums than just a few years ago. As costs rise, the efficiency of health care spending is increasingly scrutinized, which has led to greater interest in paying for improved quality or outcomes, disease management, and consumer-directed health care. Although much of health spending may be highly valued, continued spending growth will require difficult trade-offs for businesses, households, and governments as other spending also rises. These trade-offs are more stringent for those with fewer resources.

http://content.healthaffairs.org/cgi/content/abstract/25/1/186

Comment: Although presented as a “slowdown” in spending, the 7.9 percent increase is significantly greater than the increase in cost of living, and now constitutes 16 percent of the GDP.

In looking at the source of funds, it is important to recognize a principle accepted by virtually all economists. The employer component of the Medicare payroll tax is part of the total employee compensation package; employees fund that tax through a non-itemized reduction in take-home pay. Thus the $67.4 billion Medicare tax listed as a private business source of funds should really be listed as part of the aggregate household spending. (Actually, the entire employee benefit package is a business expense, but this principle acknowledges the fact that the source of payroll taxes for social insurance programs – Medicare and Social Security – is the employee-beneficiary of the program.)

Adjusting for the employer component of Medicare payroll taxes, private business is a source of $380.9 billion of the funds for health services and supplies, and the aggregate household spending is $624.6 billion. Although employer-sponsored coverage remains a very important source of health care funding, the out-of-pocket spending by households represents a significantly greater burden imposed by health cost escalation. In addition, taxpayers fund the public portion of health spending which is $682.7 billion.

So what are we doing about the increasing burden of rising health care costs? We are shifting more of the costs to the households. Although we all feel the pain, those with health care needs who can’t afford care will feel it the most.

The tragedy is that we know how to fix our system. But… we’re not doing it. What a shame.

Medicare Reality Check

Christian Science Monitor
January 6, 2006

(CBS) It was a very tough week for low income seniors who were supposed to be covered by the new Medicare drug benefit.

“It’s not covered!”

Time after time seniors were told they indeed have insurance under the system, just not for the specific drugs they use, CBS News correspondent Wyatt Andrews reports.

“And this particular plan does not cover this drug,” pharmacist Michael Kim said.

“But I am disabled,” said Joyce Thomas.

Thomas has her new Medicare drug card. But payment was still refused.

Did they automatically enroll Thomas in the plan?

“Yes they did, yes they did,” Thomas said.

And does your new plan cover her drug?

“No it don’t,” she said.

This also happened to Doris Strong. And to Robert Elum.

“This plan doesn’t cover my prescription,” Elum said.

When we visited Grubbs pharmacy, two blocks from the U.S. Capitol, not one senior citizen we tracked had a prescription filled smoothly. The problem is that many low-income seniors who used to be on Medicaid got randomly switched to the new Medicare system ā€” a system of private insurance companies that may or may not cover their drugs.

Pharmacist Michael Kim also blames was insurance company meltdowns that brought denial after denial.

“There are several companies that we tried calling and the message on their machine just says: we’re so overloaded, please call back at another time,” Kim said.

So if you’re a senior citizen having trouble with your prescriptions, the best thing you can do right now is come to the pharmacy prepared.

Here’s what to do. If you have your new Medicare card, be sure to bring it. If not, bring the letter that confirmed your coverage. If, like Joyce, your drugs aren’t covered, call 1-800-MEDICARE and ask the counselor to switch you to a better plan.

Medicare officials tell CBS News these are all first-week shakedown problems that should be solved soon.

States Intervene After [Medicare] Drug Plan Hits Snags

By Robert Pear
New York Times
January 8, 2006

WASHINGTON, Jan. 7 – Low-income Medicare beneficiaries around the country were often overcharged, and some were turned away from pharmacies without getting their medications, in the first week of Medicare’s new drug benefit. The problems have prompted emergency action by some states to protect their citizens.

Although there are no hard numbers, concerns expressed by state officials and complaints from pharmacists suggest a widespread pattern of problems.

At least four states – Maine, New Hampshire, North Dakota and Vermont – acted this week to make sure poor people received the drugs they were promised but could not obtain through the federal Medicare program.

Gov. Jim Douglas of Vermont, a Republican, said the state would pay drug claims for low-income people until the federal government fixed problems in the new program, known as Part D of Medicare. Michael K. Smith, the state’s secretary of human services, said, “The federal system simply is not working.”

On Thursday, the Vermont Legislature passed a bill declaring, “There is a public health emergency due to the federal implementation of Medicare Part D, which has resulted in serious operational problems, causing Vermonters to be turned away at the pharmacy without the drugs they need.”

Many factors contributed to the initial chaos. Some people who enrolled in Medicare drug plans did not have any proof of coverage. Pharmacists could not get the information needed to verify eligibility for drug benefits and low-income subsidies. Insurance companies and their pharmacy benefit managers were swamped with calls, so pharmacists often had to wait an hour or more on telephone help lines.

Federal officials promised improvements, but state officials were growing impatient.

In Maine, Gov. John Baldacci, a Democrat, agreed to pay drug claims to provide medications for those in need. Since Tuesday, the state has incurred $2 million of expenses for Medicare beneficiaries.

On Friday, Gov. John Hoeven of North Dakota, a Republican, said he had to act because “some low-income elderly and disabled individuals can’t get their prescriptions filled through their Medicare drug plans.”

In New Hampshire, Gov. John Lynch, a Democrat, signed an executive order authorizing the state to pay drug claims that he said should have been covered by Medicare. Republican leaders of the state legislature called a special session to provide the money. The start of the Medicare drug program “has been a nightmare for many of our citizens,” Governor Lynch said.

“Many are being charged unaffordable co-payments for prescription drugs – co-pays much higher than they are supposed to be. Too many of them are leaving pharmacies without their prescriptions.”

Thomas T. Noland Jr., a spokesman for Humana Inc., a major national insurer, said that some problems were “to be expected in a new program with lots of new enrollment taking effect all at once.”

Cynthia G. Tudor, a senior Medicare official, told insurers on Wednesday that they must “immediately make improvements” to “ensure that all beneficiaries get their prescriptions filled at the point of sale.”

In a memorandum to insurers, Ms. Tudor said she had received “numerous reports” that they were “inappropriately denying some scripts,” or claims. In many cases, she said, insurers are not providing the data that pharmacies need to file claims and get paid.

Dr. Mark B. McClellan, administrator of the federal Centers for Medicare and Medicaid Services, said on Saturday that he was working closely with states to address their concerns and to help individual patients. “We are filling close to a million prescriptions a day, including hundreds of thousands for low-income beneficiaries,” Dr. McClellan said. “Many, many people are getting the prescriptions they need.”

But in an interview on Friday, Stan Rosenstein, the Medicaid director in California, said: “We are hearing more and more complaints. A significant number of people are not getting their prescriptions. That has us very troubled.”

Drug benefits are delivered by private insurers under contract to Medicare. The federal government is supposed to compute the subsidy available to each low-income beneficiary. But Michael Polzin, a spokesman for Walgreens drug stores, said that, in many cases, that information had not been shared with insurers or pharmacists.

Under Medicare rules, each drug plan is supposed to have a transition policy, providing a temporary supply – typically 30 days – of any prescription that a person was previously taking. But customer service representatives at Medicare’s toll-free telephone number said they knew nothing of this requirement, and beneficiaries said it had been virtually impossible to take advantage of it.

Nationwide, 6.2 million low-income people receive both Medicare and Medicaid. About 1.1 million of them live in California. They tend to have many chronic illnesses and high drug costs. Cheryl Meronk, manager of the health insurance counseling program in Orange County, Calif., said she was referring people to hospital emergency rooms because they had been unable to get urgently needed medications through Medicare.

Under the standard Medicare drug benefit, which took effect on Jan. 1, the patient pays a $250 deductible and 25 percent of the next $2,000 in annual drug costs.

Over the last year, Medicare officials repeatedly assured poor people that they would receive extra help, so they would not have to pay any deductible and their co-payments would not exceed $5 a prescription.

But Carol A. Herrmann-Steckel, commissioner of the Alabama Medicaid Agency, said that Medicare beneficiaries with very low incomes had often been required to pay the full $250 deductible and co-payments far exceeding $5. “One beneficiary borrowed the money,” she said. “Another charged the $250 on a credit card because she was in such dire need of the medicine.”

Beverly R. Churchwell, an aide to the Alabama commissioner, said: “Some Medicare beneficiaries have not been able to get their medications. They are being turned away at the pharmacy.”

John J. Morris, 42, of Ware, Mass., who has diabetes and multiple sclerosis, signed up for a Medicare drug plan on Nov. 16. The insurer told him his co-payments would not exceed $5, he said, but at the pharmacy this week, he was told he had to pay $23 for each of three drugs.

“I could not afford it,” Mr. Morris said, “so I was not able to get my insulin or my M.S. drug.”

In Oregon, Sandy K. Hata, a field manager for the State Department of Human Services, said: “We’ve had calls from people in tears who could not get their medications. These people were being asked to pay a $250 deductible and hundreds of dollars in co-payments.”

Jane-ellen A. Weidanz, the Medicare project manager at the Oregon Department of Human Services, said, the $250 deductible “is hitting people very hard,” adding: “People are very angry and very upset. They are yelling at us. They feel that we lied to them. They feel Medicare lied to them. They feel they cannot trust anything we say about this program.”

Texas reported a similar problem. Low-income beneficiaries are “being charged incorrect (high) co-payments,” the state’s Health and Human Services Commission said in an e-mail message to the Dallas office of the federal Medicare agency.

In Oklahoma, low-income Medicare beneficiaries were often charged the $250 deductible. “They are being treated as if they were in a higher income bracket,” said Mike Fogarty, chief executive of the Oklahoma Health Care Authority. “It’s a common problem.”

Steven E. Hahn, a spokesman for AARP, which offers a drug plan insured by UnitedHealth Group, said he knew that some low-income people had had difficulty getting medications. “We are taking this very seriously,” he said. “This is a global problem, a systemwide problem, for all plan sponsors.”

Elizabeth L. Stone, 86, who lives alone in an apartment in Manchester, N.H., is enrolled in both Medicare and Medicaid, has arthritis and a thyroid ailment and is in a wheelchair. She tried to use the new Medicare benefit to fill a prescription this week, but failed.

“I did not get any medication,” Ms. Stone said. “People at the pharmacy would not give it to me because they do not know how they will be reimbursed.”

Another low-income beneficiary, Terence J. Stevens, 65, of Lakeland, Fla., said he signed up for the drug plan on Nov. 15, the first day on which enrollment was allowed. His plan tried to charge him a $47 co-payment for a drug to treat irregular heartbeats and high blood pressure. Mr. Stevens said he was unable to pay and did not get the drug.

In Alabama, William M. Beasley, a pharmacist and a Democratic member of the State House of Representatives, said, “I have had more difficulty trying to process claims for Medicare recipients than I’ve had with any other insurer in 43 years as a pharmacist.”

Stable physician Medicare participation may represent anunstable system

Physician Acceptance of New Medicare Patients Stabilizes in 2004-05
By Peter J. Cunningham, Andrea Staiti, Paul B. Ginsburg
Center for Studying Health System Change
January 2006

Despite an earlier Medicare payment rate reduction, the proportion of U.S. physicians accepting Medicare patients stabilized in 2004-05, with nearly three-quarters saying their practices were open to all new Medicare patients, according to a new study by the Center for Studying Health System Change (HSC).

Only 3.4 percent of physicians reported that their practices were completely closed to new Medicare patients in 2004-05, also statistically unchanged from 2000-01.

In fact, Medicare beneficiaries’ access to primary care physicians increased between 2000-01 and 2004-05, reversing an earlier decline. Among privately insured patients, trends in physician access are similar to those for Medicare patients, suggesting that overall health system dynamics have played a larger role in physician decisions about accepting Medicare patients than have Medicare payment policies.

Implications

… physicians likely consider Medicare payment rates in the context of what they receive from other payers, especially private insurers. In this context, Medicare payment as a percentage of private insurer payments has increased substantially in the past 10 years, from about 71 percent on average in 1996 to 81 percent in 2003. And Medicare fees are still much more generous than Medicaid fees, despite the fact that Medicaid fees increased relative to Medicare between 1998 and 2003-from 64 percent of Medicare in
1998 to 69 percent in 2003.

Given rapidly rising private insurance premiums, private payers’ pressure to keep physician payment rate increases to a minimum is likely to continue. In addition, continued decreases in the number of privately insured Americans, along with increases in the number of people with Medicaid or who are uninsured, may make it increasingly difficult for physicians to substitute higher paying privately insured patients for Medicare patients.

Perhaps the greater risk is not that stagnant Medicare payment levels will reduce Medicare beneficiaries’ access to physicians, but that continued financial pressure from all payers and declining incomes will compel physicians to limit patients that generate the least revenue, especially Medicaid and uninsured patients.

http://www.hschange.org/CONTENT/811/#ib5

Comment: We frequently hear that we will see a mass exodus of physicians from the Medicare program because of the failure of Medicare rates to keep up with the increase in overhead expenses (and expected profits) for physician practices. We haven’t seen that exodus, and that may be due to the fact that private insurers have slowed their rate increases even more than Medicare, reducing the price differential that might motivate physicians to replace Medicare patients with privately insured patients. Also, with the decline in employer-sponsored coverage, there are fewer privately insured patients to fill the void that would be created by eliminating Medicare patients.

Ironically, the market response of the private insurance industry has protected access for patients in the public Medicare program, obviously benefiting Medicare patients. So how could this be bad news? With both Medicare and the private insurers placing greater restraints on the profit potential of patients, physicians must maximize the utilization of their time and resources. That would normally be desirable except for one major factor. They are forced to reduce their time allotment for charitable services provided to uninsured patients and for the uncompensated portion of costs of providing care to Medicaid patients. Access for these individuals is already significantly impaired and can only grow worse with current trends.

Under a single payer system, physicians would be granted the right to negotiate adequate rates that would cover their costs and provide fair profits. As a transparent process, it would be fair for physicians and fair for taxpayers who fund the system.

Why would taxpayers agree to fair compensation for physicians? When they are sick, they don’t want to try to obtain care from an overworked, underpaid malcontent who doesn’t have the time to see them. They want the field of medicine to continue to attract some of the most qualified candidates that society has to offer. Our fragmented system of funding care has placed that goal at risk.

Is state by state Fair Share Health Care the answer?

AFL-CIO President John Sweeney Remarks on Fair Share Health Care Campaign
AFL-CIO
January 5, 2006

…AFL-CIO unions are taking bold steps and paving the way — state-by-state and piece-by-piece — towards health care reform through our landmark Fair Share Health Care campaign in some 30 states.

AFL-CIO unions have been working hard on this landmark legislation since early last summer. And we are proud to announce our final product.

Our Fair Share Health Care legislation would set a minimum standard for health care; it requires large employers to pay their fair share for health care (defined as a percentage of total wages) or pay into a state fair share health care fund that can be used to provide or subsidize health care for uninsured workers in the state.

The bottom line is that our health care system is broken — but it didn’t just split open. Big companies like Wal-Mart are pulling it apart and profiting at taxpayers’ expense.

Health care is a basic need of every family. It’s nothing short of immoral that big, rich companies are shirking their responsibilities to their employees — we’re talking about mothers and fathers who are pushed to tears because they can’t take their children to the doctor. And it’s happening every day.

To make matters worse, those companies that DO provide insurance are increasingly shifting the cost onto workers and cutting back on the benefits they provide…

http://www.aflcio.org/mediacenter/prsptm/sp01052006.cfm

And…

Governor Schwarzenegger’s 2006 State of the State Address
Office of the Governor of the State of California
January 5, 2006

His complete, unedited comments on health care reform in California:

Health care. I ask myself, what’s the quickest way that we can help the greatest number of people with the spiraling health care costs? I believe in the free market. I believe in free trade. I mean we buy food from overseas. We buy cars from overseas. Why not prescription drugs? So I call upon the federal government to permit the safe importation of prescription drugs. I say, let the free market work.

http://www.governor.ca.gov/state/govsite/gov_htmldisplay.jsp?sCatTitle=Speeches&sFilePath=/govsite/selected_speeches/
20060105_StateoftheState.html&sTitle=2006&iOID=73545

Comment: This year we will surpass $2 trillion in health care expenditures – more than enough to provide high quality, comprehensive health care services for absolutely everyone. We already know that we can easily accomplish this by dumping our fragmented, highly flawed system of funding health care and adopting a single-payer national health insurance program. Yet we listen to others when they tell us that this might be the ideal, but we can’t do it because it’s not feasible. So we turn to incremental measures.

What will the Fair Share Health Care approach do to improve health care coverage and access? Targeting large employers in thirty states sounds like a massive expansion, but the large target actually is comparatively small: Wal-Mart. Wal-Mart employs about 1.2 million individuals, and many of them are already insured. Even if Fair Share legislation passed in every state, the net impact on covering the 46 million uninsured would be almost negligible.

There is another very serious flaw in this proposal. Our fragmented system of funding care has left us incapable of controlling the seemingly-eternal explosion in health care costs. Legislators and the policy community have thrown in the towel and instead have turned to efforts to make health care premiums affordable. Without a lid on actual costs, premiums can be controlled only by reducing coverage, increasing cost sharing through patient access fees, and using devious methods to exclude from coverage those with greater health care needs.

It can be anticipated that the compromise with Wal-Mart will be to allow consumer-directed products, with affordable premiums, that fail to provide financial security for those who will need to access the health care system. Other employers are looking for a way out, and they’ll gladly jump on that train. The only losers will be the patients who need care and the health care providers whom they can no longer afford.

While waiting for comprehensive reform to become politically feasible, we generally have supported incremental measures that do expand affordable access and coverage. We are now staring at a runaway locomotive heading toward us. Although a few more may be covered, the increasing momentum of cost shifting to those with needs will further diminish affordable access for average-income Americans. The Fair Share campaign will merely stoke the fires, driving us to the cliff. Once we’re over the cliff, the feasibility of comprehensive reform will be obvious, but do so many really have to suffer for us to finally act?

If the AFL-CIO continues to support inadequate incremental measures, the day of reckoning will be delayed further. Will the AFL-CIO help take control of that runaway locomotive by supporting national health insurance, or would they prefer to sit down with Gov. Schwarzenegger and other state governors and discuss measures that would allow the free market to work?

Many in poll want feds, state to step up in health care

By Amanda J. Crawford
The Arizona Republic
Jan. 4, 2006

Jessa Johnson was sick for a couple of weeks. She figured it was probably some kind of virus. But without health insurance, the 23-year-old Gilbert resident could not afford to see a doctor and find out.

“I need to be healthy,” Johnson said as she recovered by spending a pleasant afternoon at the Phoenix Zoo with her boyfriend. “But I need money to live.”

Johnson is not alone in her concerns about the cost of health care and the American health care system. The Arizona Republic poll completed in mid-December indicated that 39 percent of registered voters surveyed statewide worry about their ability to afford the health care or prescription drugs they need this year. Many more, 81 percent, believe it is time that the state or federal government step in and create a universal health care system that ensures everyone has access to medical care.

Chris Philbin, 26, of southeast Phoenix, like many of the voters surveyed, is not concerned about his ability to afford health care in the next year because he has health insurance through his job at Lowe’s Home Improvement. But Philbin strongly believes the nation needs to find a way to insure everyone even if it means he would personally have to chip in for it.

“I would gladly give up 10 percent of my paycheck to have free health care like they do in Canada – free prescriptions, everything,” Philbin said as he strolled through the zoo with his fiancĆ©e and their 2-year-old son. Philbin, a registered Republican, said it’s not right that Americans without insurance sometimes have to skip care and could die due to not having access to medical care. “We should take care of them,” he said.

In Arizona, nearly 1 million residents were without health insurance in 2004, according to the Census Bureau. And more than 1 million residents now get their health insurance through the Arizona Health Care Cost Containment System, or AHCCCS, the state Medicaid program that provides free or low-cost health insurance to low-income families at a cost to state and federal taxpayers of more than $5 billion per year.

With health care costs soaring and many employers scaling back job-based benefits, health insurance has, by many accounts, become one of the most significant issues facing Arizona and the nation as a whole. When the Arizona Legislature reconvenes next week, health care is anticipated to be the subject of several bills.

Rep. Phil Lopes, a Tucson Democrat, for example, plans to introduce a bill to create a universal health care system in Arizona. The legislation would lay out a plan to provide public insurance coverage for all residents who have been here longer than a year, funded by employers, Medicaid, Medicare and other payers in the current system. Modeled after a plan that has been pursued in New Mexico for more than a decade, the legislation would lay out the basic structure of the program, which would keep doctors, hospitals and other providers private, Lopes said. And it would establish a commission to iron out the details and implement the program.

“I think it is government’s role to step in when the private market fails to provide basic necessities that our residents need,” Lopes said. He said that many health insurance innovations that relied on the private market over the past few decades, including the move toward managed care, have failed to keep costs in check in the long run or expand coverage. Lopes, House minority leader, acknowledges that such an unusual and ambitious plan could be hard sell to Arizona’s conservative Legislature.

Still, he said: “I am committed to doing what I can. And I am convinced this is the best way to go.” Noting the support for universal coverage in The Republic’s poll, he added, “How often is it that 81 percent of people say that we need to do something?”

On the other side of the aisle, Rep. Russell Pearce, a Mesa Republican who is chairman of the House Appropriations Committee, said he wants to curb the amount of money that the state spends on health care. He wants to eliminate some public programs that provide low-cost insurance for the working poor, such as KidsCare Parents, and make all AHCCCS recipients pay significant co-pays to get care, which he said would put accountability in the system. He also wants to lower the income limits so that fewer people qualify for AHCCCS. That would require a ballot referendum to overturn Proposition 204, the measure passed by voters in 2000 to open AHCCCS to all residents below the poverty line.

“(Medicaid) is a runaway train and absolutely cannot be sustained the way it is going. It is a drain on taxpayers,” Pearce said, noting that the program eats away at the state’s General Fund. “I was raised poor, and we never took a penny from government. . . . This is not about being coldhearted but recognizing that moms and dads that work hard are paying for someone else’s health care. These bleeding-heart socialists have no respect for taxpayers.”

But Pearce may have trouble finding voter support for his plans. Only 8 percent of poll respondents agreed that the state should save money by lowering the income limits of AHCCCS and excluding more families from coverage.

On the contrary, nearly half (46 percent) of respondents said they thought that the state should spend more money on AHCCCS, raise the income limits and open up the program to more families without insurance. One-third of respondents thought it should be left as it is.

Carnelina Vaccaro, 62, of Tucson, has good benefits herself because she is a federal government retiree. But she says that she knows many people aren’t so lucky, and she worries about people who are uninsured or have trouble affording health care.

“There are so many people who need assistance,” Vaccaro said while having lunch at La Cocina restaurant in downtown Tucson. She said she thinks the United States needs to “take a look at the kind of coverage they have in Europe.”

In the meantime, she thinks expanding existing programs like AHCCCS to more low-income workers could help, especially because the state is anticipating a budget surplus this year.

“I think it should be expanded,” she said. “There are too many people who don’t have health care. Help out Arizona families.”

Sample State Resolution

Sample Resolution In Support of Single-Payer Introduced in the Kentucky Legislature:

A CONCURRENT RESOLUTION endorsing the National Health Insurance Act.
WHEREAS, every person in Kentucky and in the United States deserves access to affordable, quality health care; and
WHEREAS, there is a growing crisis in health care in the United States of America, manifested in rising health care costs, increased premiums, out-of-pocket spending, decreased international business competitiveness, and massive layoffs; and
WHEREAS, approximately 582,000 Kentuckians lacked health insurance in 2004; and
WHEREAS, those insured now often experience unacceptable medical debt and sometimes life-threatening delays in obtaining health care; and
WHEREAS, one-half of all personal bankruptcies are due to illnesses or medical bills; and
WHEREAS, the increasing expense of Medicaid and the rising cost of insuring state employees and teachers can best be met not by limiting benefits, but by expanding them under a national, publicly-funded health insurance program; and
WHEREAS, the complex bureaucracy arising from our system of fragmented, for-profit, multi-payer system of health care financing consumes approximately thirty percent (30%) of United States health care spending; and
WHEREAS, researchers from Harvard University found that this bureaucracy consumed more than $4 billion of Kentucky’s health care spending in 2003, which equals $8,216 per uninsured Kentucky resident, and these expenditures are enough to provide comprehensive coverage to everyone in Kentucky; and
WHEREAS, United States Representative John Conyers has introduced H.R. 676, the United States National Health Insurance Act, in the United States House of Representatives for the 109th Congress, and this act would provide a universal, comprehensive, single-payer system of high quality national health insurance;
NOW, THEREFORE,
Be it resolved by the House of Representatives of the General Assembly of the Commonwealth of Kentucky, the Senate concurring therein:

Section 1. The Kentucky General Assembly respectfully urges the United States Congress to enact the United States National Health Insurance Act sponsored by Representative Conyers.
Section 2. The Clerk of the House of Representatives is directed to transmit a copy of this Resolution to the President of the United States and the members of the Kentucky Congressional Delegation.