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Boston University School of Public Health
Health Reform Program
October 31, 2003
61 Percent of Medicare’s New Prescription Drug Subsidy Is Windfall Profit to Drug Makers
By Alan Sager, Ph.D. and Deborah Socolar, M.P.H.

Congress has declared its commitment to keeping prescription drug prices high under any Medicare drug benefit. This report shows that these unrestrained prices-given the remarkably low real cost of producing the added volumes of pills that Medicare patients need-will bestow enormous windfall profits on prescription drug makers.

An estimated 61.1 percent of the Medicare dollars that will be spent to buy more prescriptions will remain in the hands of drug makers as added profits.

* This windfall means an estimated $139 billion dollars in increased profits over eight years for the world’s most profitable industry.

* At $17 billion annually, this means about a 38 percent rise in drug maker profit.

This is the main reason why the proposed legislation gives patients only a scanty drug benefit, with high continued cost-sharing. The gift to drug makers is also why the plan requires a high taxpayer subsidy-money borrowed from our children and grandchildren.

The legislation would explicitly prohibit Medicare itself from acting to negotiate or contain the drug prices paid under the new program.

… the plan itself is not durable because it is simply too costly.
Congress is simply deferring serious work to shape a sustainable drug industry.

http://www.bumc.bu.edu/www/sph/hs/images/Health_Reform/Medicare_Rx_bill_windfallprofit.pdf

Comment: Physicians, hospitals, laboratories and other providers under the Medicare program have regulated limits on the rates of reimbursement for services and products provided. But look at the language of H.R. 1, the House version of the Medicare prescription drug legislation:

(D) NONINTERFERENCE- In carrying out its duties with respect to the provision of qualified prescription drug coverage to beneficiaries under this title, the [Medicare Benefits] Administrator may not–

(i) require a particular formulary or institute a price structure for the reimbursement of covered outpatient drugs;

(ii) interfere in any way with negotiations between [the various types of private plans] and drug manufacturers, wholesalers, or other suppliers of covered outpatient drugs; and

(iii) otherwise interfere with the competitive nature of providing such coverage through such sponsors and organizations.

The pharmaceutical industry is the most profitable industry in all history, and this bill hands them a blank check to be honored by the taxpayers and beneficiaries. And yet the meager benefit provided will continue to keep prescription drugs out of the reach of millions of Medicare beneficiaries because of the lack of affordability.

What input do we have? Rep. Bill Thomas, who is crafting the final legislation, has excluded most of the Democratic members of the joint conference committee from the process. He is even overriding the input of his Republican co-chair, Sen. Charles Grassley. His attitude is expressed well in this quote (Morgan and Eilperin, Washington Post, Oct. 29):

“I don’t think it serves any purpose to attempt to misrepresent or slant or fabricate… to influence outside the negotiating structure. My goal is to make law, not to make myself look good.”

And from the same article:

… Thomas surprised fellow conferees by outlining a proposed agreement for
the bill. He and his staff had written it without outside consultation. “It was a total unilateral move,” one source said. Grassley reportedly was furious.

http://www.washingtonpost.com/wp-dyn/articles/A38004-2003Oct29.html
It’s time to contemplate those cherished words of Abraham Lincoln: … government of the people, by the people, and for the people…

Let’s not let Lincoln down.

Harris Interactive
Health Care News
Volume 3, Issue 16
October 27, 2003

Table 3
Should Health Care be a Public Good (Entitlement) or a Private Economic Good?

Do you think public policy should treat health care and health insurance more as an entitlement like education, police and fire protection and highways or more as a kind of product or service, like cars, house, food and clothes, or homeowners insurance where you get what you can afford and want to pay for?

65% – Entitlement
23% – As a kind of product
12% – not sure

In all western democracies, there are substantial public sector and private sector health care providers and insurers. Of course, all the other western democracies provide some form of universal health insurance. What is less well known in America is that they also allow people (with some exceptions) to buy additional health insurance and medical care with their own money.

However, in every other western democracy a reasonable level of health insurance is seen as a right, something to which citizens are entitled. So in every country including the United States, health care is of course both an entitlement (for some people) as well as a private economic good. The question is should it tilt more one way or the other. In other countries, it clearly tilts heavily toward being more of an entitlement. Most Americans clearly agree with most Europeans and Canadians that health care could be thought of more as an entitlement or public good than as a private economic good.

http://www.harrisinteractive.com/news/newsletters/healthnews/HI_HealthCareNews2003Vol3_Iss16.pdf

Comment: The opponents of comprehensive health care proposals frequently
argue that Americans are fundamentally different, that Americans reject the
egalitarian concept that everyone should have reasonable access to affordable health care. They contend that we are a nation of individuals, each driven to provide for his or her own individual needs. Only the rare individual who is totally incapable of being a productive individual is entitled to support through a collective government or private charity channel, they argue.

This poll and last week’s ABC News/Washington Post poll both confirm that
Americans are not fundamentally different. The majority of us do believe
that the government should ensure that everyone has access to an adequate
level of health care services.

Never again can we allow a debate to end with the argument that we are different, that we are less caring for our fellow Americans than are the people of other nations for their own. That specious argument has been refuted.

The debate must instead start with the premise that we do care. The debate now must center over the various models of comprehensive reform which might accomplish our goals.

The New York Times
October 28, 2003
Acquisition Would Create Nation’s Largest Health Insurer
By Milt Freudenheim

In a marriage of Blue Cross giants, Anthem Inc. agreed yesterday to buy WellPoint Health Networks for $16.4 billion in stock and cash, creating a company that would be the nation’s largest health insurer, with 26 million health plan members in 13 states.

Anthem and WellPoint were pioneers in converting Blue Cross plans into for-profit companies…

WellPoint’s chief executive, Leonard D. Schaeffer, who created the company on the foundation of a successful turnaround of Blue Cross of California, will hand the reins to Larry Glasscock, Anthem’s chief executive.

Mr.Glasscock, 55, will be president and chief executive of the new company, and Mr. Schaeffer, 58, a former government health care official, will be chairman.

Mr. Schaeffer’s WellPoint holdings – 3.3 million shares, according to a Securities and Exchange Commission filing last month – jumped in value by more than $70 million yesterday, to over $300 million. He would also receive $27.5 million under a change-of-control clause in his contract and about $10 million more in executive retirement benefits, according to the WellPoint proxy and other filings.

Comment: When the deal is approved, besides the payouts listed, Leonard Schaeffer will receive 3.3 million shares of the combined company, WellPoint
Inc., plus an additional $78 million in cash. His total reported gain, not including his high salary, will be $116 million in cash plus the 3.3 million shares of WellPoint Inc., valued at about $257 million, for a total of $335 million. In spite of all of the other rhetoric, this one-third of a billion dollars is precisely why Leonard Schaeffer led the conversion of California Blue Cross into a for-profit insurer, establishing WellPoint as the parent company.

Although many become angry at the thought that these are funds that should
be going to health care, several economists point out the fact that these funds come from the shareholders who own the companies. They credibly contend that Wall Street investors rather than patients are footing this bill. But what is the traditional method of establishing the price per share? It’s the price-earnings ratio. Those earnings would be patient care funds in a public insurance program. And, of course, earnings are increased by hiking prices (premiums) and by reducing expenditures (health care benefits). Leonard Schaeffer’s wealth was gained by sacrificing value that would have accrued to purchasers and patients (insurance beneficiaries).

Social insurance anyone?

ABC News
Oct. 21, 2003
Critical Condition

Excerpts from Peter Jennings interview of ABC News’ Medical Editor Dr.Tim Johnson:

Jennings: The conventional wisdom is Americans like to think that we have
the best health-care system in the world.

Johnson: And we do, certainly for people that are very rich or who have very
good health insurance and who have very good connections into the health-care system. But for too large a number, 43 million, and many who are underinsured, it is not the very best system in the world.

Jennings: So what was notable in that regard in this poll this time?

Johnson: What was notable is that 62 percent of our population said that
they would favor a system of universal health insurance financed by the government, paid for by the tax payers, as opposed to the system we now
have, the employer based system where many people are uninsured. I was
stunned by that figure.

Jennings: I think conventional wisdom has it that in America, land of the free, that the marketplace is where the price is best established.

Johnson: That’s true for commodities like a car, where you can go in and make choices and you can even walk out of the showroom if you want. You can’t do that when you’re sick. You can’t do that with health care. So, for health care, you’re talking about a service and here I think the private sector has some real shortcomings. They have to spend a lot of overhead on sales and marketing and choosing the patients they’re going to serve. They shuffle a lot of paperwork.

Jennings: Now, I think that the conventional wisdom is still the single-payer system, as you and others have described it, is socialized medicine and that isn’t for the U.S.

Johnson: Socialized medicine means that the government both finances health
care and owns and operates the doctors and the hospitals.

Jennings: Like Britain?

Johnson: Like Britain. In Canada, it’s a split system. The government indeed
does collect the money and disperse it. They run the financial part of health care. But the delivery system is free. People can choose whatever doctor or hospital they want to go to. So, we have a system like that in this country. It’s called Medicare. That’s exactly what happens with Medicare. So, to call the Canadian system socialized is to call Medicare socialized. I think it’s a pejorative word and inaccurate.

Jennings: When I walk past people who know that we’re doing this series
this week and I mention the single-payer system, they just say, “Never in
America.”

Johnson: I’ve talked to elderly people who say they love Medicare but
they don’t want the government involved. They forget that the government has
a role to play in setting standards, maybe in handling the money with lower administrative costs. It would be a tragedy for the government to try to run the health-care system in terms of delivery.

Jennings: On top of which, many Americans hold it to be conventional wisdom
that private is better than public. Period.

Johnson: In fact the government does a few things well. And I’ll hold up one example in the health-care system: The NIH, the National Institutes of Health, is the shining gem of medical research in this entire world. It’s owned and run by the government. They can do some things well, especially when it comes to health care. Not everything, but some things.

Jennings: Who in the health-care industry, and by that I mean to include the
pharmaceutical companies as well, who in this industry agrees with the notion of reform that you advocate and who doesn’t ?

Johnson: Almost everybody that I know has now agreed that we have a horrendous problem with the uninsured in this country. I know of nobody who says that that’s a good thing to have 43 million uninsured. There obviously is disagreement about the solution. And it really breaks down along philosophical lines. Among those that think the marketplace can do a better job. Those that think the government at least in part can do a better job. And that’s a perennial battle. I have had health-care experts just in the past two weeks look at me and say, “I don’t care what the solution is, we have to do something about the uninsured.” It’s a national scandal.

Jennings: But we’ve tolerated the uninsured for a very long time, and still you have a large body of political opinions, much of it centered in the Republican Party, which says that we don’t wish to have a national single-payer system.

Johnson: And the Republicans in general are very much opposed to that. But at the same time, they realize that Medicare is an example of something that works in part. It needs to be reformed, we need to have a drug benefit, we need to improve the services. They’re behind the times. We need to probably spend more money, believe it or not. At least on some of the administration.

But, the same Republicans who don’t want a single-payer system would be loathe to say to our senior citizens, “We’re going to take away from you the one single-payer system we do have” – it’s called Medicare.

Jennings: We’re coming into an election year. It’s clearly a hot political subject. Do you think there is the political will in the country to compromise and provide a system with which all people of all political ideologies would agree?

Johnson: I would like to think so. I’m probably pessimistic about it, but with the latest poll results from our own poll, I’m more optimistic because all of a sudden we have a majority of people who are thinking in that direction. And that is what it’s going to take -a political majority to put pressure on Congress. I think the heart of the American people want to do something right, in terms of the, uninsured, and I think that the politicians will be dragged along.

http://abcnews.go.com/sections/WNT/DrJohnson/healthcare031021-1.html

Comment: Will the will of the majority be enough to drag the politicians along? Let’s see if democracy really does work.

Message: 2
Date: Wed, 22 Oct 2003 11:17:45 -0700
Subject: qotd: Video of the ABC News report on single payer

For a five-minute video of the ABC News report on single-payer reform, cut and paste the following link into the address box of your Internet browser:
rtsp://66.40.48.186/advisory/AHL/critical102103.rm
(Requires RealPlayer)

The video features Peter Jennings, Tim Johnson, Marcia Angell and Drew Altman.

ABC News
Oct. 21, 2003
Critical Condition

Excerpts from Peter Jennings interview of ABC News’ Medical Editor Dr.Tim Johnson:

Jennings: The conventional wisdom is Americans like to think that we have
the best health-care system in the world.

Johnson: And we do, certainly for people that are very rich or who have very
good health insurance and who have very good connections into the health-care system. But for too large a number, 43 million, and many who are underinsured, it is not the very best system in the world.

Jennings: So what was notable in that regard in this poll this time?

Johnson: What was notable is that 62 percent of our population said that
they would favor a system of universal health insurance financed by the government, paid for by the tax payers, as opposed to the system we now
have, the employer based system where many people are uninsured. I was
stunned by that figure.

Jennings: I think conventional wisdom has it that in America, land of the free, that the marketplace is where the price is best established.

Johnson: That’s true for commodities like a car, where you can go in and make choices and you can even walk out of the showroom if you want. You can’t do that when you’re sick. You can’t do that with health care. So, for health care, you’re talking about a service and here I think the private sector has some real shortcomings. They have to spend a lot of overhead on sales and marketing and choosing the patients they’re going to serve. They shuffle a lot of paperwork.

Jennings: Now, I think that the conventional wisdom is still the single-payer system, as you and others have described it, is socialized medicine and that isn’t for the U.S.

Johnson: Socialized medicine means that the government both finances health
care and owns and operates the doctors and the hospitals.

Jennings: Like Britain?

Johnson: Like Britain. In Canada, it’s a split system. The government indeed
does collect the money and disperse it. They run the financial part of health care. But the delivery system is free. People can choose whatever doctor or hospital they want to go to. So, we have a system like that in this country. It’s called Medicare. That’s exactly what happens with Medicare. So, to call the Canadian system socialized is to call Medicare socialized. I think it’s a pejorative word and inaccurate.

Jennings: When I walk past people who know that we’re doing this series
this week and I mention the single-payer system, they just say, “Never in
America.”

Johnson: I’ve talked to elderly people who say they love Medicare but
they don’t want the government involved. They forget that the government has
a role to play in setting standards, maybe in handling the money with lower administrative costs. It would be a tragedy for the government to try to run the health-care system in terms of delivery.

Jennings: On top of which, many Americans hold it to be conventional wisdom
that private is better than public. Period.

Johnson: In fact the government does a few things well. And I’ll hold up one example in the health-care system: The NIH, the National Institutes of Health, is the shining gem of medical research in this entire world. It’s owned and run by the government. They can do some things well, especially when it comes to health care. Not everything, but some things.

Jennings: Who in the health-care industry, and by that I mean to include the
pharmaceutical companies as well, who in this industry agrees with the notion of reform that you advocate and who doesn’t ?

Johnson: Almost everybody that I know has now agreed that we have a horrendous problem with the uninsured in this country. I know of nobody who says that that’s a good thing to have 43 million uninsured. There obviously is disagreement about the solution. And it really breaks down along philosophical lines. Among those that think the marketplace can do a better job. Those that think the government at least in part can do a better job. And that’s a perennial battle. I have had health-care experts just in the past two weeks look at me and say, “I don’t care what the solution is, we have to do something about the uninsured.” It’s a national scandal.

Jennings: But we’ve tolerated the uninsured for a very long time, and still you have a large body of political opinions, much of it centered in the Republican Party, which says that we don’t wish to have a national single-payer system.

Johnson: And the Republicans in general are very much opposed to that. But at the same time, they realize that Medicare is an example of something that works in part. It needs to be reformed, we need to have a drug benefit, we need to improve the services. They’re behind the times. We need to probably spend more money, believe it or not. At least on some of the administration.

But, the same Republicans who don’t want a single-payer system would be loathe to say to our senior citizens, “We’re going to take away from you the one single-payer system we do have” – it’s called Medicare.

Jennings: We’re coming into an election year. It’s clearly a hot political subject. Do you think there is the political will in the country to compromise and provide a system with which all people of all political ideologies would agree?

Johnson: I would like to think so. I’m probably pessimistic about it, but with the latest poll results from our own poll, I’m more optimistic because all of a sudden we have a majority of people who are thinking in that direction. And that is what it’s going to take -a political majority to put pressure on Congress. I think the heart of the American people want to do something right, in terms of the, uninsured, and I think that the politicians will be dragged along.

http://abcnews.go.com/sections/WNT/DrJohnson/healthcare031021-1.html

Comment: Will the will of the majority be enough to drag the politicians along? Let’s see if democracy really does work.

Message: 2
Date: Wed, 22 Oct 2003 11:17:45 -0700
Subject: qotd: Video of the ABC News report on single payer

For a five-minute video of the ABC News report on single-payer reform, cut and paste the following link into the address box of your Internet browser:
rtsp://66.40.48.186/advisory/AHL/critical102103.rm
(Requires RealPlayer)

The video features Peter Jennings, Tim Johnson, Marcia Angell and Drew Altman.

The New York Times
October 22, 2003
Workers Feel Pinch of Rising Health Costs
By Milt Freudenheim

The figures for big companies reflect a broader shift in the American economy away from mechanisms that for decades have spread the burden of health care costs onto more shoulders.

Largely because of the booming cost of prescription drugs, for example, Medicare covers less of its beneficiaries’ health care expenses than at any time since the program was established in 1965, according to Robert M.Hayes, president of the Medicare Rights Center, a patient advocacy group.

As a result, the elderly paid 22 percent of their average median income, or $3,757, for health care last year – a larger proportion than the 20 percent of income they spent before the advent of Medicare.

Comment: So now seniors are worse off than they were before Medicare was
enacted. Half of their care is paid out-of-pocket, and that one-half is now a greater percentage of their income than what they were paying in 1965 without Medicare. Insane.

We need one risk pool for everyone. The $1.66 trillion that we are spending
would provide a rich benefit package for everyone, if allocated appropriately. And Americans now, by a 2:1 ratio, would favor a universal, government-run and taxpayer-financed system.

What are we waiting for?

The Washington Post
October 19, 2003
Poll: Public Supports Health Care for All
By Will Lester

The public’s growing unease with the current health care system has built
support for a new approach that would mean care for all Americans…

By almost a 2-1 margin in this poll, 62 percent to 32 percent, Americans said they preferred a universal system that would provide coverage to everyone under a government program, as opposed to the current employer-based system.

That support drops significantly, however, if universal coverage would mean
a limited choice of doctors or longer waits for nonemergency treatment.When people were asked the question slightly differently in a poll a year ago, they were less enthusiastic. Asked if they wanted a taxpayer-funded, health care system run by the government, fewer than half said yes.

Robert Blendon, a specialist on health care public opinion at Harvard University, said the public’s worries about health care have increased this year.

“Health care is really rising as a political issue,” Blendon said. “When the economy gets bad and health care costs continue to rise, this becomes an economic issue.”

http://www.washingtonpost.com/wp-dyn/articles/A48983-2003Oct19.html

Washington Post-ABC News Poll: Health Care
October 20, 2003

3. And are you generally satisfied or dissatisfied with the total cost of health care in this country? Would you say you are very (satisfied/dissatisfied) or somewhat (satisfied/dissatisfied)?

21% – Satisfied (7% very, 14% somewhat)
78% – Dissatisfied (24% somewhat, 54% very)

37. Which of these do you think is more important: (providing health care
coverage for all Americans, even if it means raising taxes) or (holding down taxes, even if it means some Americans do not have health care coverage)?

80% – Providing health care for all Americans
17% – Holding down taxes
3% – No opinion
38. Which would you prefer – (the current health insurance system in the
United States, in which most people get their health insurance from private
employers, but some people have no insurance); or (a universal health
insurance program, in which everyone is covered under a program like Medicare that’s run by the government and financed by taxpayers?)

32% – Current
62% – Universal
2% – No opinion

39. (IF UNIVERSAL, Q38) Would you support or oppose a universal health insurance program if it limited your own choice of doctors?

56% – Support
42% – Oppose
2% – No opinion

40. (IF UNIVERSAL, Q38) Would you support or oppose a universal health
insurance program if it meant there were waiting lists for some non-emergency treatments?

63% – Support
34% – Oppose
3% – No opinion

http://www.washingtonpost.com/wp-srv/politics/polls/vault/stories/data102003.html

Comment: Although generally satisfied with our healthcare system,Americans
are dissatisfied with the costs, and believe that it is important to provide
health care for all Americans. And by a two to one margin, they would prefer “a universal health insurance program, in which everyone is covered under a program like Medicare that’s run by the government and financed by taxpayers.” This is a true shift in the opinions of Americans, and can be fairly described as nothing less than a groundswell of support for a public, universal health insurance program.

Even the questions that seem to somewhat diminish support for a government-run, taxpayer-financed system would probably not do so if phrased differently. If respondents were told that a single-payer system would provide free choice of physicians as compared to limited choice in PPOs and HMOs, the support not only would not diminish, it would probably be greater.

If they were told that the United States already spends enough on health care to ensure full capacity in our system, thereby limiting excessive waiting periods for elective services, including the infinite “wait” for the uninsured, support would not diminish.

A universal program of social insurance would provide affordable,comprehensive care for everyone. This is what Americans now want.

Let’s go! We’ve got work to do!

The Seattle Times
October 14, 2003
Health care for the economy
By Kathleen O’Connor

Administrative expenses devour a 150-percent larger share of America’s health-care spending than our competitors in the Economic Group of Eight.

If we reduced this to only 25 percent more on non-care expenses than the worst of our competitors, the American economy would save $300 billion every year. That’s twice the annual tax savings claimed for the Bush tax cuts.

Much of our political establishment and many deep-pocket special interests have huge stakes in the status quo. These savings are not an abstraction. All our economic peers and competitors can do this.

But what happens when we try to discuss this? The knee-jerk “socialized medicine!” mantra. That universal coverage means “socialized medicine” is hogwash.

How long will we accept name-calling to protect the status quo? Are you better off with your health care than you were 10 years ago? Are you better off economically than you were five years ago? It’s time we changed the terms of the game.

http://seattletimes.nwsource.com/html/opinion/2001765078_kathleen14.html

Comment: It’s clearly time set ideology aside and include all models of reform in the debate. Let’s end the debate about “socialized medicine” and the “power of the marketplace,” and let’s look instead at specific policy issues and the impact that they would have on our health care system.

Kathleen O’Connor is contributing to this dialogue by sponsoring the “Build
an American Health Care System” contest (www.codebluenow.org). 109 models of reform have been submitted. Although they vary in their sophistication, they
certainly do provide a variety of approaches.

Reviewing the executive summaries of the finalists suggests that not much new territory was plowed in the field of health policy science. But such efforts do further reinforce the wisdom of the single-payer model of social insurance. Single payer does seems to be solidifying its position as the golden standard against which all other models should be compared.

Advertiser-Tribune.com
October 14, 2003
Uninsured at times is choice of consumer

Only a very small percentage of the uninsured truly have no access to health insurance and go without insurance for long periods of time. It appears that most of the uninsured simply choose not to buy insurance.

The National Center for Policy Analysis dug a bit deeper into the Census Bureau’s report. It turns out that almost half of the increase in the number of insured has occurred among households earning more than $75,000 a year, and about three-quarters of the rise is among households earning $50,000 a year.

… one thing is certain from the Census Bureau data: There is not really a “crisis” of insured…

http://www.advertiser-tribune.com/edit/story/1014202003_edtedit1014.asp

And…

National Center for Policy Analysis
Brief Analysis
October 7, 2003
Uninsured by Choice: Update

From 1993 to 2002 the number of uninsured people in households with annual
incomes above $75,000 increased by 114 percent. The number of uninsured in households with annual incomes from $50,000 to $75,000 increased by 57 percent.

By contrast, the number of uninsured people in households with incomes
under $25,000 fell by 17 percent.

http://www.ncpa.org/pub/ba/ba460/

Comment: The numbers of uninsured have continued to increase. With the decline in employer-sponsored and individual coverage, the problem would be much worse if it were not for an increase in enrollment in public programs for low-income individuals, especially Medicaid and S-CHIP. By carefully selecting data from the Census Bureau report, NCPA has used correct figures in changes of the rate of coverage to deceive readers into believing that most of the problem lies within high income households. The spurious conclusion is that most of the uninsured are individuals with high incomes who are uninsured by choice. The absolute numbers totally refute this conclusion.

NCPA is a favorite source for conservative journalists. But they are dishonest. They use technically accurate but highly-selected numbers, and present them in a manner that appears to have drawn conclusions that are not warranted by a more comprehensive analysis of the complete data. Reading their brief on the uninsured would lead you to believe that the problem of uninsurance is primarily one of personal choice, but they didn’t quite state that. But as you read articles based on NCPA’s brief, it seems that the authors believe that these conclusions were clearly stated in their
report.

As we reform health care, it is essential that we understand the true nature of the problems. Presenting data that deliberately create false conclusions is really no different than lying. The methods of NCPA should disqualify them as a credible source of health care information.

American Medical News
Oct. 20, 2003
Plans offer prizes to push patients to healthy living
By Robert Kazel

Some health plans are offering rewards ranging from CD-ROMs and exercise
equipment to movie tickets and hotel discounts in exchange for their members’ willingness to shape up, slim down or engage in other health-conscious activities.

PacifiCare Health Systems, the Cypress, Calif.-based managed care plan with
more than 3 million members, this month is rolling out a points-based rewards program intended to boost enrollment in such activities as smoking acessation or weight-loss programs. The rewards program is free and open to all HMO, PPO and POS members.

Members who participate in the program, called HealthCredits, can choose
among 16 programs to earn varying degrees of points that can be redeemed for
prizes or discounts on wellness-related merchandise or services. Additionally, random drawings award other prizes such as treadmills and mountain bikes.

“For so long we’ve been successful at developing educational programs and
incentives for physicians to practice evidence-based medicine, and now we
have what I like to call a reciprocal program for consumers,” said Sam Ho,
MD, PacifiCare’s chief medical officer.

John La Puma, MD, an internist and weight loss specialist in Santa Barbara,
Calif., said tapping patients’ desires to get merchandise and participate in
contests as a way to make wellness programs attractive makes sense.

“It may seem too much like Publishers Clearing House, but those people do
have a terrific track record of attracting participants,” he said. “I think
it’s a strategy whose time has come and will produce benefits for both [the
plan and members]. Americans love games, they love the idea of winning
prizes and they love competing. Thinking outside the box, even if it reminds
one of a game show, is necessary because traditional thinking has failed for
so long.”

http://www.ama-assn.org/sci-pubs/amnews/pick_03/bisc1020.htm
Comment: Does anyone really believe that prizes are adequate motivation
to change fundamental lifestyles?

More importantly, does anyone want their health premium dollar to be paying
for gifts of exercise equipment and mountain bikes? PacifiCare is a provider
of federally funded plans such as Secure Horizons, a Medicare + Choice
option, and options under the Federal Employees Health Benefits Plans. That
means that tax funds will be used to help pay for these prizes.

We would never accept this nonsense in a publicly-administered program of
social insurance such as our traditional Medicare program. So why do we turn
our health care dollars over to the private sector and allow them to make
these ridiculous decisions?

Let’s dump the “game shows” and the other wasteful practices of the
private health plans. We’ll receive far better health care value with our own
publicly-funded and publicly-administered program of social insurance.