PNHP

Health Care Reform a Major Campaign Issue for Voters: New Survey

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Health Care Reform a Major Campaign Issue for Voters: New Survey

The Commonwealth Fund
March 29, 2004
Health Care Reform a Major Campaign Issue for Voters: New Survey

Percent of adults ages 19-64 with any medical bill problem or outstanding Debt (Problems paying/not able to pay medical bills, contacted by a collection agency for medical bills, had to change way of life to pay bills, or has medical debt being paid off over time)

Income less than $35,000:
62% of uninsured have problems
45% of continuously insured have problems

Income over $35,000:
57% of uninsured have problems
29% of continuously insured have problems

http://www.cmwf.org/media/releases/collins723_hisurvey_release03292004.asp

For the full report:

http://www.cmwf.org/programs/insurance/collins_biennial2003_723.pdf

Comment: For those who are still not convinced that we have a crisis in health care funding, these numbers should be an awakening. Perhaps the most shocking number is the group that is least impacted, those with incomes over $35,000 who are continuously insured. This is mainstream America. These individuals have been relatively complacent since many of them have believed that the crisis in health care coverage has not affected them. But it has. 29% of mainstream America, in spite of continuous health care coverage, have financial problems due to medical bills!

The outrageously wasteful, expensive, and ineffective private health plan industry is no longer providing us with adequate financial security for medical costs. Let’s throw them out and establish our own publicly financed and publicly administered program of health insurance. Now!

Does universal comprehensive insurance encourage unnecessary use?

Canadian Medical Association Journal
January 20, 2004
Does universal comprehensive insurance encourage unnecessary use?
Evidence from Manitoba says “no”
By Noralou P. Roos, Evelyn Forget, Randy Walld and Leonard MacWilliam

Many have argued that escalating health care costs in Canada are exacerbated by the fact that patients face no costs when they visit doctors or use hospital services. A zero price, it is said, leads to unnecessary use of the system.

Various policies focusing on reducing patient demand have been proposed to address this purported overuse – user fees and medical savings accounts being the 2 most popular. All are supposed to work by creating an incentive for people to decide whether their intended use of the health care system is really necessary. We know that user fees are effective in reducing physician visits by those with low economic status, but have little impact on physician use by the more affluent or on hospital use.

Is there any evidence that a universal health care system encourages the less affluent to see physicians more often than necessary? We have already shown that the great majority of people incur few health care expenditures while a small group incurs high expenditures. This report extends our earlier work by first examining the health and socioeconomic characteristics of those in each expenditure group. We then assess whether residents of low-income areas overuse health care services (particularly physicians) relative to their health status.

Results

Although the data suggest that the health of those with lower socioeconomic status is worse than those of higher status at every level of health care expenditure, there was no pattern of higher physician expenditures on those
whose socioeconomic status is lower.

The 70% of the population on which the province spends 10% of its health
care dollars scored well on all health indicators, and the 10% of the population on which 74% of the dollars are spent scored poorly. In each expenditure group, those with lower socioeconomic status had poorer health.

Despite their poorer health, in each expenditure group, residents of the neighbourhoods with the lowest household incomes incurred physician expenditures that were similar to those of residents of wealthier neighbourhoods.

Interpretation

Most residents of Winnipeg are healthy, infrequent users of physicians and hospitals. Those incurring high health care costs are sick by every measure used. These high-cost users are drawn from every neighbourhood and every
socioeconomic group, and their health care expenditures are driven by hospital costs. High-cost users who are residents of low-income neighbourhoods incur more hospital costs. Other research based on review of medical records has shown the acuity levels of hospitalized patients in the lowest socioeconomic group to be just as high as acuity levels of hospitalized patients in higher socioeconomic groups. Hence the greater use of hospitals by residents of low-income neighbourhoods should not be dismissed as “social admissions”; their high use is consistent with their poorer health status.

Physician visits are the one type of health care use where at least the first visit in any episode is strongly influenced by patient behaviour. The Winnipeg data confirm that physician use by low-income groups is already lower than would be expected given their health status (or physician use by high-income groups is higher than one would expect).

The patterns of health care costs that we examined are driven by poor health and hospital expenditures. Policies aimed at reducing patient demands, such as user fees and medical savings accounts, are not likely to reduce overall costs. User fees discourage physician contact, not hospital use. Thus, user fees would discourage preventive contacts, particularly among the poor, a group in which pap smears, childhood immunizations and prenatal care are already known to be underutilized. Since the RAND study demonstrated that user fees discourage patients from seeking both appropriate and inappropriate care, their effects on even the healthy poor would be pernicious.

Physicians are the gatekeepers to hospitals, and the health status of the patient largely drives the decision to admit and, hence, expenditure patterns. Although higher income patients may be more articulate in asking for high-profile surgical treatments, overall those with the poorest health status show the highest hospital use and expenditure rates. There is scope for decreasing hospital expenditures by focusing on evidence-based medicine, physician practice patterns and hospital management. However, user fees and medical savings accounts are unlikely to contribute to this process.

http://www.cmaj.ca/cgi/content/full/170/2/209?maxtoshow=&eaf

Comment: 70% of the Winnipeg population consumes only 10% of health care costs. For this healthy sector, creating sensitivity to health care costs through user fess or health saving accounts would have a negligible impact on total health care spending since only 10% of the budget would be manipulated.

It should come as no surprise that Canada spends most of its universal health care funds on people in poor health who need health care regardless of socioeconomic status. Since the health care system should be designed to enable access for those with needs, user fees are superfluous for the affluent but would create financial barriers for low income individuals with legitimate health care needs.

This and other studies show that skyrocketing health care costs are not due to healthy people demanding unnecessary care. Consequently, user fees and health savings accounts cannot possibly have a significant impact on controlling health care costs. Reasonable solutions are possible only once the real problems are more precisely defined.

For a brief discussion of some of the true reasons for cost increases and a suggestion for more rational solutions, read PNHP’s written testimony for the House Ways and Means Committee hearing on the Trustees 2004 Report for Medicare:

https://pnhp.org/news/2004/march/pnhps_written_testim.php?page=all

HSAs in FEHBP?

The Washington Post
March 25, 2004
House Panel Hears Concerns About Offering Health Savings Accounts
By Stephen Barr

The House civil service subcommittee plunged into a debate yesterday over whether federal employees and retirees should be offered “health savings accounts” as one of their choices when buying health insurance.

Yesterday’s hearing began with an overview of the FEHBP by Dan Blair, the deputy director of OPM. But the questioning soon turned to the issue of HSAs, with Rep. Jo Ann S. Davis (R-Va.), the subcommittee chairman, asking Blair whether the option might siphon off young people from fee-for-service and other insurance plans.

Blair said OPM did not project a “mass migration” into HSAs based on FEHBP’s
experience in offering “consumer-driven options” since 2002. Consumer-driven
options provide a spending allowance for health care, a free checkup and some other preventive care. But they also are designed to encourage enrollees to hold down medical spending, because they include substantial deductibles when the spending allowance has been used up.

Only 13,151 people have enrolled in consumer-driven plans, Blair said, suggesting that HSAs, if offered, would likely start off with modest enrollment and would not undermine FEHBP’s ability to spread insurance risks across its enrollment — about 9 million Americans.

But Del. Eleanor Holmes Norton (D-D.C.) repeatedly challenged Blair and contended that young people would be drawn to the tax savings provided by
HSAs — splitting FEHBP’s “risk pool.” If that trend developed, Blair said, OPM would step in and redesign the program so that no insurance plans would
be stuck with a higher share of the ailing and sick.

http://www.washingtonpost.com/wp-dyn/articles/A22467-2004Mar24.html

Comment: How would you redesign an insurance program that has concentrated high cost individuals into a separate risk pool? Wouldn’t it be more logical to design the program so that it would prevent risk segmentation?

The Medicare Muddle

The Medicare Muddle
By PAUL KRUGMAN
Published: March 26, 2004

In advance of Tuesday’s reports by the Social Security and Medicare trustees, some credulous journalists wrote stories based on tips from advocates of Social Security privatization, who claimed that the report would offer a radically downgraded vision of the system’s future. False alarm: projections for Social Security are about the same as last year. Projections for Medicare, however, have worsened: last year the trustees predicted that the hospital insurance trust fund would last until 2026, and now they’ve moved it back to 2019.

How should we react to this news?

It has become standard practice among privatizers to talk as if there is some program called Socialsecurity and medicare. They hope to use scary numbers about future medical costs to panic us into abandoning a retirement program that’s actually in pretty good shape. But the deteriorated outlook for Medicare says nothing, one way or another, about either the sustainability of Social Security (no problem) or the desirability of private retirement accounts (a lousy idea.)

Even on Medicare, don’t panic. It’s not like a private health plan that will go belly up when it runs out of money; it’s just a government program, albeit one supported by a dedicated tax. Nobody thinks America’s highways will be doomed if the gasoline tax, which currently pays for highway maintenance, falls short of the system’s needs ā€” if politicians want to sustain the system, they will. The same is true of Medicare. Rising medical costs are a very big budget issue, but 2019 isn’t a drop-dead date.

The trustees’ report does, however, give one more reason to hate the prescription drug bill the administration rammed through Congress last year. If deception, intimidation, abuse of power and giveaways to drug companies aren’t enough, it turns out that the bill also squanders taxpayer money on H.M.O.’s.

A little background: conservatives have never mounted an attack on Medicare as systematic as their effort to bully the public into privatizing Social Security. They do, however, often talk about Medicare “reform.” What this amounts to, in practice, is a drive to replace the traditional system, in which Medicare pays doctors and hospitals directly, with a system in which Medicare subcontracts that role to private H.M.O.’s.

In 1997 Congress tried to take a big step in that direction, requiring Medicare to pay per-person fees to private health plans that accepted Medicare recipients. There was much talk about the magic of the marketplace: private plans, so the theory went, would be far more efficient than government bureaucrats, offering better health care at lower cost.

What actually happened was that private plans skimmed the cream, accepting only relatively healthy retirees. Yet Medicare paid them slightly more per retiree than it spent on traditional benefits. In other words, instead of saving money by subcontracting its role to private plans, Medicare was in effect required to pay H.M.O.’s a hefty subsidy.

The only thing that kept this “reform” from being a fiscal disaster was the fact that after an initial rush into the Medicare business, many H.M.O.’s pulled out again. It turns out that private plans are much less efficient than the government at providing health insurance because they have much higher overhead. Even with a heavy subsidy, they can’t compete with traditional Medicare.

There’s a lesson in this experience. Sometimes there’s no magic in the free market ā€” in fact, it can be a hindrance. Health insurance is one place where government agencies consistently do a better job than private companies. I’ll have more to say about this when I write about the general issue of health care reform (soon, I promise!).

But whether because of ideology or because of H.M.O. campaign contributions, the people now running the country refuse to learn that lesson. As part of last year’s prescription drug bill, they tried again, offering an even bigger subsidy to private plans.

And that turns out to be an important reason for the deterioration in Medicare’s prospects: of the seven years lopped off the life of the trust fund, two are the result of increased subsidies mandated by last year’s law, mainly in the form of higher payments to H.M.O.’s.

So what did we learn this week? Social Security is in decent shape. Medicare has problems, but ill-conceived “reform” has only made those problems worse. And let’s rip up that awful prescription drug bill and start over.Ā Ā 

E-mail: krugman@nytimes.com

National Guard and Reserve troops not receiving promised health care coverage

The Daily Times
March 24, 2004
Military health plan denied Guard, Reserve
By Mike Madden, Gannett News Service

The Pentagon still isn’t giving uninsured National Guard and Reserve troops access to the military’s health care plan, almost six months after a law mandating the coverage was signed.

Pentagon officials don’t have a set schedule for getting the program ready.

But time may be running out. The legal authority for the program, intended as a demonstration, expires at the end of this year, although some lawmakers want to make it permanent.

As part of the $87 billion bill to pay for fighting and reconstruction . In Iraq, the Pentagon was supposed to let uninsured part-time troops buy into the Tricare health insurance plan.

Some supporters of the Tricare expansion wonder if the Pentagon is deliberately moving slowly. Top defense officials opposed the plan last year, balking at its cost, and oppose extending it past this year.

“I’m terribly concerned that some in the Pentagon are just running out . The clock,” said Senate Minority Leader Tom Daschle.

http://www.thedailytimes.com/sited/story/html/159447

Comment: Wouldn’t it be simpler if we all automatically received comprehensive health care coverage at birth?

Medicare Deficits: Disaster or Opportunity?

Medicare Deficits: Disaster or Opportunity?

2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds

March 23, 2004

Total Medicare expenditures were $280.8 billion in 2003 and are expected to increase in future years at a faster pace than either workers’ earnings or the economy overall. As a percentage of GDP, expenditures are projected to increase from 2.6 percent currently to 13.8 percent by 2078 (based on our
intermediate set of assumptions). The level of Medicare expenditures is expected to exceed that for Social Security in 2024 and, by 2078, to represent almost twice the cost of Social Security. Growth of this magnitude, if realized, would place a substantially greater strain on the nation’s workers, Medicare beneficiaries, and the Federal Budget.

The long-range financial projections for HI (Part A – Hospital Insurance) continue to show a very substantial financial imbalance. Budget. By the end of the 75-year period, scheduled taxes would be sufficient to cover only one-fourth of projected expenses. Accordingly, bringing the HI program into long-range financial balance would require very substantial increases in revenues and/or reductions in benefits.

The projections shown in this report continue to demonstrate the need for timely and effective action to address Medicare’s financial challenges- both the long-range financial imbalance facing the HI trust fund and the heightened problem of rapid growth in expenditures. We believe that solutions can and just be found to ensure the financial integrity of HI in the long term and to reduce the rate of growth in Medicare costs. Consideration of such reforms should occur in the relatively near future.

The sooner the solutions are enacted, the more flexible and gradual they can be. Moreover, the early introduction of reforms increases the time Available for affected individuals and organizations-including health care providers, beneficiaries, and taxpayers-to adjust their expectations. We believe that prompt, effective, and decisive action is necessary to address these challenges.

http://www.cms.hhs.gov/publications/trusteesreport/2004/tr.pdf

Comment: Although the specifics of this 221 page report will provoke considerable debate, the conclusion that action is necessary on Medicare is certainly warranted. But there is risk that attention will be narrowly directed to benefit reductions, tax increases, and privatization proposals involving greater beneficiary contributions.

Reform of health care funding should not be limited to the Medicare program since serious systemic flaws would not be addressed. Excess utilization is clearly linked to excess capacity in the health care delivery system. Measures such as regional planning and separate budgeting of capital improvements would slow cost escalation. But it would be impossible to control capacity for Medicare alone and leave the rest of health care delivery to the marketplace. In fact, health care costs are a problem for all of us, not just for Medicare.

We are spending 15.5% of our GDP on health care this year.That would fund comprehensive services for all of us, including more comprehensive services for Medicare beneficiaries. We do need to address the Medicare imbalance, but let’s do it by adopting a program that would provide access to affordable, comprehensive care for everyone: a single payer program of national health insurance.

Does universal comprehensive insurance encourage unnecessary use?

Does universal comprehensive insurance encourage unnecessary use? Evidence from Manitoba says “no”

Many argue that “free” medical care leads to unnecessary use of health resources. Evidence suggests that user fees do discourage physician use, at least by those of low socioeconomic status. In this study, we compare health care utilization and health among socioeconomic groups to determine whether people of low socioeconomic status see physicians more than would be expected given their health status

Read the full article at http://www.cmaj.ca/cgi/content/full/170/2/209?maxtoshow=&eaf

The Future of Medicare

Institute for Public Accuracy 915 National Press Building, Washington, D.C. 20045 (202) 347-0020
http://www.accuracy.org ipa@accuracy.org, Wednesday, March 24, 2004

Interviews Available:
* The Future of Medicare * Exxon Valdez Anniversary

ALAN SAGER, asager@bu.edu, http://www.healthreformprogram.org
DEBORAH SOCOLAR, dsocolar@bu.edu Sager and Socolar are directors of the Health Reform Program at Boston University’s School of Public Health. They released a report in October 2003 entitled “New Medicare Rx Benefit Means Big Profits for Drug Makers.”

Sager said today: “In 2003, actuaries predicted that the Medicare Trust Fund would be depleted in 2026 — 23 years ahead. Yesterday, the actuaries redicted depletion in 2019 — seven years sooner. The evidence from past years is clear that managed care privatization has cost Medicare money. So no one should be surprised that the Medicare actuaries have cited the new Medicare bill’s provisions as a cause of accelerated Medicare insolvency. A reckless belief that privatization and managed care will save money is no substitute for genuine cost controls. Since Medicare privatization and managed care won’t save money, more people need to ask why this Congress and administration keep boosting it. Other wealthy nations cover all of their citizens, live longer and — on average — spend only one-half as much per person as we do. They are far from perfect, but we can learn from them. For example, sadly, about 50 percent of the U.S. health dollar is wasted on unnecessary clinical services, administration, excess prices for drugs and other items, and outright theft.”

Drs. IDA HELLANDER, QUENTIN YOUNG, (312) 782-6006, pnhp@aol.com, https://pnhp.org Hellander is executive director of Physicians for a National Health Program; Young is national coordinator for the group. They are both available for interviews about the future of Medicare.

DEAN BAKER, baker@cepr.net, http://www.cepr.net/publications/medicare_choice_plus.htm
Co-director of the Center for Economic and Policy Research, Baker said today: “The 2004 Medicare trustees report, released yesterday, provides further proof that President Bush’s drug plan was a massive giveaway to the
pharmaceutical and insurance industries…. It is important that the public be made aware that the financial problems facing Medicare are due to corruption and not demographics…. If our government is too corrupt to fix the U.S. health care system, then it should at least allow seniors to buy into the superior systems in other countries.” Baker is author of the report “Medicare Choice Plus: The Answer to the Long-Term Deficit Problem,” which outlines this proposal at the above web page.

DUNE LANKARD, cell: eyak@redzone.org, http://www.redzone.org Fifteen years ago today, the Exxon Valdez spilled millions of gallons of crude oil into Prince William Sound. Lankard (currently in D.C.) is an Eyak of the Eagle Clan and fished for salmon in the Copper River flats and Prince William Sound until the spill. Named a Time magazine “Hero for the Planet” in 1998, Lankard is the founder and executive director of the Eyak Preservation Council. He said today: “Exxon Mobil has yet to make good on their promise for an additional $100 million for the Sound if it had not recovered by now. Meanwhile, the just-released Fortune 500 list found Exxon Mobil to be the second biggest company on this list — and the one with the biggest profits.”

PAMELA MILLER, pkmiller@akaction.net, http://www.akaction.net Also currently in D.C., Miller is a biologist and director of Alaska Community Action on Toxics, an organization that focuses on environmental health and justice issues.

For more information, contact at the Institute for Public Accuracy Sam Husseini, (202) 347-0020 or (202) 421-6858

PNHP's written testimony on Medicare

United States House of Representatives Committee on Ways and Means

Hearing on Board of Trustees 2004 Reports
March 24, 2004

Written statement of Don R. McCanne, M.D., Past-President, Physicians for a National Health Program

The 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds describes the projected imbalances between the anticipated revenues and the expected growth in expenditures of the Medicare program. The Trustees call for prompt, effective, and decisive action to address this challenge.

As expected, a highly charged political debate rages over the causes of these anticipated net deficits in Medicare funding. Although we will hear much about factors such as the generous payments to Medicare Advantage plans, and the decline in tax revenues supporting the program, one factor predominates above all others: health care costs continue to escalate well beyond the level of inflation.

Health care cost increases are related to expanding and ever more expensive technological advances, along with unrestrained expansion in the capacity of our health care delivery system. We are spending more because we find more ways to spend health care dollars, and because we continue to expand the capacity that allows us to do it.

Approaching the Medicare deficit as an isolated problem will not address the fundamental cause of health cost increases. Rather, the integrity of the Medicare program would be threatened because solutions would be narrowly directed to substantially increasing revenues and/or dramatically reducing benefits. Either a reduction in benefits or an increase in cost sharing by the beneficiary would threaten to impair access to care because of lack of affordability for the individual beneficiary. The alternative of asking taxpayers to fund the increase in Medicare costs would be problematic when considering that they would also be facing the same escalating health care costs.
PAGEBREAK
We already know that regions with higher health care capacity have increased intensity of services but without a commensurate improvement in medical outcomes. Hospitals with greater bed capacity in their intensive care units provide costly and relatively inhumane end-of-life care when less expensive and more compassionate care would be provided in a hospice environment. Physician owned specialty hospitals and medical group owned imaging systems significantly increase capacity and the level of services although there is negligible data available to demonstrate improved outcomes.

Other nations have demonstrated that planning and capital budgeting of capacity can prevent excessive utilization while ensuring adequate capacity to prevent unnecessary queues. The 15.5% of our Gross Domestic Product that we are currently spending on health care is more than enough to ensure appropriate capacity plus fund the operating expenses of our system, with the proviso that we do not waste resources on some of the current excesses of our system. Although health care planning declined after prior efforts, the current level of spending has reached a threshold that now makes it imperative.

The administrative costs of private health plans are significantly greater than those of public programs such as Medicare. But an even greater problem is the profound administrative burden placed on our health care delivery system by our fragmented system of a great multitude of private plans, large public programs, and, for some, no programs at all. In 2003 numbers, an estimated $286 billion in these administrative costs could be recovered and utilized for the deficiencies in health care coverage today. Eliminating administrative waste must be a part of our solution to rising costs.
PAGEBREAK
Although our national policies protect and promote technological development, there is a pressing need to demand value for our private and public investment. Pharmaceutical firms that develop copycat drugs merely for the purpose of restarting the patent clock should no longer be disproportionately rewarded for such non-innovative efforts. Only new products with demonstrated value should be rewarded with higher prices. Also new products developed with public funding should return that investment to the taxpayer through lower prices. We should require that new technological innovations provide both significant medical benefit and value before funding them. And there is ample evidence to demonstrate that prices are much higher in the United States than in other nations. We clearly need a method of negotiating rates and prices to be sure that we are receiving a fair value for our health care investment while allowing a fair but not excessive profit for the manufacturer or provider.

To bring the level of health care cost increases down to near the rate of inflation, we need to control capacity and pay fair prices. Medicare alone cannot have a significant influence on capacity. Although Medicare does have some regulatory control over prices, acting alone inevitably results in inequitable results through cost shifting and unfairness in pricing, while failing to control global costs. And Medicare cannot further reduce administrative waste when it is adding to the administrative burden by being an additional player in our fragmented system.

Replacing our inefficient and wasteful system of funding care with a single public payer would control costs through global budgeting, planning and budgeting of capital improvements, and negotiation of rates and prices. And with the administrative savings made possible by eliminating the waste of the private bureaucracies, we could afford to fund care for everyone while controlling costs on into the infinite horizon. Instead of limiting Medicare reform considerations to revenue increases and benefit reductions, let us adopt systemic reforms that will enable the enactment of comprehensive, affordable coverage for everyone.

Don McCanne, M.D.
Home address:
33781 Avenida Calita
San Juan Capistrano, CA 92675-4905
Telephone 949-493-3714
Fax 949-493-7985
don@mccanne.org

Physicians for a National Health Program
29 E. Madison St., #602
Chicago, IL 60602
Telephone 312-782-6006
Fax 312-782-6007
pnhp@aol.com
www.pnhp.org

PNHP’s written testimony on Medicare

United States House of Representatives Committee on Ways and Means

Hearing on Board of Trustees 2004 Reports
March 24, 2004

Written statement of Don R. McCanne, M.D., Past-President, Physicians for a National Health Program

The 2004 Annual Report of the Boards of Trustees of the Federal Hospital Insurance and Federal Supplementary Medical Insurance Trust Funds describes the projected imbalances between the anticipated revenues and the expected growth in expenditures of the Medicare program. The Trustees call for prompt, effective, and decisive action to address this challenge.

As expected, a highly charged political debate rages over the causes of these anticipated net deficits in Medicare funding. Although we will hear much about factors such as the generous payments to Medicare Advantage plans, and the decline in tax revenues supporting the program, one factor predominates above all others: health care costs continue to escalate well beyond the level of inflation.

Health care cost increases are related to expanding and ever more expensive technological advances, along with unrestrained expansion in the capacity of our health care delivery system. We are spending more because we find more ways to spend health care dollars, and because we continue to expand the capacity that allows us to do it.

Approaching the Medicare deficit as an isolated problem will not address the fundamental cause of health cost increases. Rather, the integrity of the Medicare program would be threatened because solutions would be narrowly directed to substantially increasing revenues and/or dramatically reducing benefits. Either a reduction in benefits or an increase in cost sharing by the beneficiary would threaten to impair access to care because of lack of affordability for the individual beneficiary. The alternative of asking taxpayers to fund the increase in Medicare costs would be problematic when considering that they would also be facing the same escalating health care costs.
PAGEBREAK
We already know that regions with higher health care capacity have increased intensity of services but without a commensurate improvement in medical outcomes. Hospitals with greater bed capacity in their intensive care units provide costly and relatively inhumane end-of-life care when less expensive and more compassionate care would be provided in a hospice environment. Physician owned specialty hospitals and medical group owned imaging systems significantly increase capacity and the level of services although there is negligible data available to demonstrate improved outcomes.

Other nations have demonstrated that planning and capital budgeting of capacity can prevent excessive utilization while ensuring adequate capacity to prevent unnecessary queues. The 15.5% of our Gross Domestic Product that we are currently spending on health care is more than enough to ensure appropriate capacity plus fund the operating expenses of our system, with the proviso that we do not waste resources on some of the current excesses of our system. Although health care planning declined after prior efforts, the current level of spending has reached a threshold that now makes it imperative.

The administrative costs of private health plans are significantly greater than those of public programs such as Medicare. But an even greater problem is the profound administrative burden placed on our health care delivery system by our fragmented system of a great multitude of private plans, large public programs, and, for some, no programs at all. In 2003 numbers, an estimated $286 billion in these administrative costs could be recovered and utilized for the deficiencies in health care coverage today. Eliminating administrative waste must be a part of our solution to rising costs.
PAGEBREAK
Although our national policies protect and promote technological development, there is a pressing need to demand value for our private and public investment. Pharmaceutical firms that develop copycat drugs merely for the purpose of restarting the patent clock should no longer be disproportionately rewarded for such non-innovative efforts. Only new products with demonstrated value should be rewarded with higher prices. Also new products developed with public funding should return that investment to the taxpayer through lower prices. We should require that new technological innovations provide both significant medical benefit and value before funding them. And there is ample evidence to demonstrate that prices are much higher in the United States than in other nations. We clearly need a method of negotiating rates and prices to be sure that we are receiving a fair value for our health care investment while allowing a fair but not excessive profit for the manufacturer or provider.

To bring the level of health care cost increases down to near the rate of inflation, we need to control capacity and pay fair prices. Medicare alone cannot have a significant influence on capacity. Although Medicare does have some regulatory control over prices, acting alone inevitably results in inequitable results through cost shifting and unfairness in pricing, while failing to control global costs. And Medicare cannot further reduce administrative waste when it is adding to the administrative burden by being an additional player in our fragmented system.

Replacing our inefficient and wasteful system of funding care with a single public payer would control costs through global budgeting, planning and budgeting of capital improvements, and negotiation of rates and prices. And with the administrative savings made possible by eliminating the waste of the private bureaucracies, we could afford to fund care for everyone while controlling costs on into the infinite horizon. Instead of limiting Medicare reform considerations to revenue increases and benefit reductions, let us adopt systemic reforms that will enable the enactment of comprehensive, affordable coverage for everyone.

Don McCanne, M.D.
Home address:
33781 Avenida Calita
San Juan Capistrano, CA 92675-4905
Telephone 949-493-3714
Fax 949-493-7985
don@mccanne.org

Physicians for a National Health Program
29 E. Madison St., #602
Chicago, IL 60602
Telephone 312-782-6006
Fax 312-782-6007
pnhp@aol.com
www.pnhp.org

California Medical Association and single payer

California Medical Association
House of Delegates
March 13-15, 2004

The delegates adopted a health care financing reform policy (Report B-1-04)…

Report B-1-04
CMA Health Care Financing Reform Policy

Recommendation 7:

That in order for CMA to consider supporting a single payer health reform proposal, the following criteria must be in place:

1. Physicians must be permitted to balance bill their usual and customary rates.

2. A scientific, apolitical body must make benefit/coverage decisions.

3. Pluralistic delivery system options must be retained (e.g., pre-paid
group practices, FFS).

4. A mechanism for addressing fraud.

5. Patients allowed to “buy up” – to purchase additional coverage outside the ‘single’ plan.

6. A mechanism to address capital investment and infrastructure building.

7. Medically appropriate co-payments on a sliding scale must be incorporated
to discourage excessive utilization.

http://www.calphys.org/html/bb522.asp

Comment: Single payer advocates certainly would have problems with some of
the qualifying criteria listed, including balance billing, financial penalties for accessing beneficial services, and the suggestion that buying to the front of the queue might be permitted through “buy up” coverage. But we must recognize that it is truly remarkable that the California Medical Association has officially advanced its position on single payer to one of considering support.

We should work within organized medicine to be certain that single payer continues to be included in the evaluation of all options for reform. As the
general concepts for reform are better understood, we can continue to work
to improve the policy details.