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HEALTH CARE REFORM BREAKTHROUGH!

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HEALTH CARE REFORM BREAKTHROUGH!

The San Diego Union-Tribune
Oct. 30, 2001
“Threats expose health care problems”

By Jamie Court, Executive Director of the Foundation for Taxpayer and Consumer Rights, Kay McVay, President of the California Nurses Association, and Steve Thompson, Vice-President of the California Medical Association

“Employers believed that HMO control over medicine would reduce costs. Instead, employers have been bedeviled by the twin vices of double digit premium increases and increasing gripes from employees about obstacles to medical care. Employers concerned about the welfare of their employees face a market that allows them diminishing options for coverage, all gravitating to the lowest common denominator, and ever-increasing costs with no end in sight.

“In a deepening recession, businesses have been forced either to shift more or all of the payment burdens to their employees, making their companies less competitive and their employees more vulnerable, or have health care costs eat up their profits. Those businesses that cannot afford coverage will have far more concern for their workers’ health in the post-Sept. 11 world than ever before.”

“The time has come for employers to join physicians, nurses, hospitals and patient advocates in creating a model for health care that does not pit the private health care system against the public health system, but brings them together in a more rational way.

“The needs of the nation today demand better public controls over private health care delivery and dollars, both of which have run amok in recent years. Such public oversight over private health care could better direct resources to those in need, be they uninsured, underinsured or innocent victims of a terrorist attack. The irony is that such genuine public management of care and cost would save money. Preventing illness is the most cost effective way to treat it, and today’s mismanaged system has failed miserably on this account as well.

“Our groups have reached out to corporations with an employer survey (http://www.businesshealthsurvey.org) that seeks businesses’ views on health care. If any good in health care is to come from the rubble of Sept. 11, it will only happen when employers, doctors, nurses, patients and hospitals come together to make it happen.”

For the full article: http://pqasb.pqarchiver.com/sandiego/index.html (enter title, Threats expose health care problems, into the search box)

Comment: To understand the significance of this breakthrough in the health care reform movement, you must visit the website listed above: http://www.businesshealthsurvey.org. This is a cooperative effort of the American Small Business Alliance, the California Nurses Association, the California Medical Association, and the Foundation for Taxpayer and Consumer Rights. These are mainstream organizations representing business, consumers, nurses and physicians.

Perhaps the most important item on the website is the fact sheet, “Why Businesses Should Care About Universal Health Care.” Business owners do care. The fact sheet provides them with a rational basis for reform that will assure the health security of their employees, while providing significant benefits for the employers themselves. This page should be downloaded and distributed widely to business interests. It is available at: http://www.businesshealthsurvey.org/factsheet1.html

This May Hurt

The Washington Post
October 30, 2001

“Some Doctors Are Spurning Managed Care, Giving More Time — and a Bigger Bill — to Their Patients” by Marc Borbely

“Dorothy Faul, a librarian retired from the National Gallery of Art, received a ‘Dear Patient’ letter from her doctor in August that troubled her. Internist Jane Chretien announced that as of Sept. 1, she and Audrey Corson, her partner in Bethesda Physicians, would no longer participate in any health insurance plans.”

“But for most of her patients, the change means having to pay in full, by cash, check or credit card, at the time of service. Then it’s up to them to seek whatever reimbursement they can from their insurance company, should they choose, by submitting the itemized bill they get from their physician. Because Faul is a Medicare patient, she’ll get a bit of a break: Her visit fees will be lower and her doctors are required to continue to file claims to Medicare for her; non-Medicare patients will be given the forms to file themselves.”

“Bryan Arling and David Patterson on M Street, and Beth Unger and her 10 partners on New Mexico Avenue also accept no managed care outside of Medicare.”

“Michael Newman, another internist at 2021 K St. NW, has also never had contracts with private managed care companies, though he emphasizes that he sees Medicare patients and will continue to do so.”

http://www.washingtonpost.com/wp-dyn/articles/A8111-2001Oct29.html

Comment: So physician outrage with managed care has prompted many of them to refuse to accept contracts with private managed care companies. They are even willing to penalize their own patients with higher out-of-pocket expenses since they reject fee limits imposed by insurers, and insurers, in turn, penalize patients for receiving care from out-of-plan physicians. But isn’t it ironic that these physicians, who reject fee controls and the other restrictions imposed by health plans, still accept Medicare?

What is there about Medicare that causes these renegade physicians to still accept the program? Many reasons can be given, but the fact remains that these physicians who are ardently opposed to private health plans still want to participate in our equitable, more efficient, publicly administered program of health care coverage that is universal for a given segment of our society. Obviously, they find some redeeming value in Medicare. If public insurance is good enough for the severest critics of our health care system, shouldn’t it be good enough for all of us?

Universal health insurance makes business sense

November 2, 2001
By ROBERT F. SMITH
Herald Correspondent

BELLOWS FALLS — Single-payer universal health coverage could save Vermonters more than $118 million a year over current medical insurance costs and cover every Vermonter in the process, according to a new report. The study, paid for by a federal grant and prepared for the Office of Vermont Health Access by John Shells and Random Haughty of the Lewis Group, was the center of discussion Thursday night during a Health Care for All forum. The forum was organized by Windham County Democratic Reps. Michael Obuchowski and Carolyn Partridge, and was held at the New Falls Cinema in Bellows Falls.

About 75 people attended, many of them local doctors, health-care practitioners, mental health counselors and politicians. Several spoke out in favor of the single-payer universal health coverage concept, and no one disputed its value. The guest speaker was Dr. Deborah Richter, a family physician with the Cambridge, Vt., health center., who said the main problem with the U.S. health system is not that millions of citizens are uninsured or that it costs too much. The problem with the country’s health system is that it doesn’t really have a system, she said.

The U.S. has what she termed a ‘loose arrangement’ that wastes billions of dollars in administrative costs created by the vast number of different health insurance companies offering various health plans and all requiring different types and amounts of paperwork.

“It’s cheaper to pay directly for the medical costs than to pay insurance premiums,” said Richter, who is a member of Physicians for a National Health Program. “Every other industrialized country realized this long ago.”

Several health professionals agreed that administrative costs had gotten out of hand. A woman who manages a clinic said that nearly every patient the clinic serves has a different kind of insurance coverage requiring its own special paperwork, and one mental health professional said she spends half of her working time filling out forms instead of treating patients.

Richter explained that 70 percent of health care costs are spent on just 10 percent of the population, while the majority of people, 80 percent, account for only 15 percent of health care costs. Healthcare administration, which involves mainly paperwork, overhead and bureaucracy expenses, is responsible for 24 percent of all healthcare costs she said. In the past 30 years there has been a 2500 percent increase in the number of healthcare administrators, while the number of healthcare practitioners – doctors and nurses – only increased by 159 percent during the same period. The Lewin Report showed that under the current system, Vermont residents will spend $2.2 billion on health care in 2001. The report estimated that a single-payer program would provide coverage for everyone in the state � including the 51,000 estimated to be presently uninsured � and still save $118 million, mostly by reducing the administrative costs of health insurance programs.

Under a single-payer program health coverage would be paid for by a payroll or income tax. This arrangement would mean that taxpayers making less than $75,000 a year would see an average yearly decrease of more than $1,000 per family over current health insurance costs, while those earning $75,000 to $100,000 a year would see a nominal increase of about $58 over what they currently spend for insurance. Hardest hit would be families earning over $150,000 a year. Universal health coverage could cost them as much as $4,500 more per year.

Rockingham physician Dr. Matthew Peake asked Richter who in Vermont would oppose universal health care and such dramatic cuts in healthcare costs.

“Did you miss the parts about getting rid of insurance companies?” Richter replied.

She said that universal health care administered by the state would eliminate the need for insurance companies, and these companies are very wealthy and influential.

“Every poll taken shows that two-thirds of the American people are in favor of this,” Richter said. “The problem is that insurance and pharmaceutical companies have more money than we do.”

But Richter said that it is inevitable that universal insurance coverage will be adopted, and she said that she is confident Vermont will lead the way within the next five years. And while there have been problems with the program in some countries, she said that Vermont and the nation could examine all the universal coverage programs now in use around the world and find out what has worked and what hasn’t.

The bottom line for Richter was that she felt single-payer universal coverage would allow her to concentrate on medicine and not on paperwork.

“The good side of this is that I’d be able to focus on practicing medicine without having to worry if my patient could afford it,” she said.

Richter and several others at the forum agreed that the key to creating a national universal health care system was to educate the public on its benefits.

“In general, this is a better deal for businesses,” she said, “and they know it. It’s common sense, and it makes business sense.”

For more information about universal healthcare, and especially how it affects Vermont, go to http://www.vthca.org.

Embattled Columnist Christy Quits Hollywood Reporter

Reuters

LOS ANGELES, Oct. 31 — “Veteran Hollywood Reporter columnist George Christy quit the showbiz trade paper today after probes into health benefits he received from the Screen Actors Guild brought his integrity into question and ignited a management upheaval at his paper.”

“Speculation centered on whether Christy, a sometime actor, was giving movie producers and others favorable mentions in his widely read column in return for being listed in film credits, thus qualifying for SAG benefits. Christy denied any wrongdoing.”

http://www.washingtonpost.com/wp-dyn/articles/A21268-2001Oct31.html

Comment: Surely this nation can devise less devious methods of accessing health care coverage. George Christy would still be sitting at his desk if we had a publicly administered program of universal health insurance.

Surgery Pharmaceutical Grant

In December, 2000, members of this list received a message from Olveen Carrasquillo, MD, MPH, Assistant Professor of Medicine and Public Health at Columbia University’s College of Physicians and Surgeons. The message requested support in expressing opposition to the acceptance by the Society of General Internal Medicine of a grant from the pharmaceutical firm, AstraZeneca, that challenged ethical boundaries. In this message, Dr. Carrasquillo expresses his gratitude for those that supported this successful effort.

Hi Don:

A few months ago you did us a big favor posting in your quote of the day our plea for help in opposing SGIM’s accepting money from Astra-Zeneca. Well it seems we have achieved a small victory. I do not know if it is appropriate to send this out in your site, but I am trying to thank all those who read the message and helped. The message is below. Thanks

Red Tape at Red Cross: Groups Now in a Tangle

An article referred to us by Dr. Reinhardt:

Don:

This article so clearly demonstrates the high social cost of pluralism relative to collective action. It is Le Vice Americain, as the French would put it.

I think your group may find this useful.

Best

Uwe

The New York Times
by David Barstow and Diana B. Henriques
October 28, 2001

Across metropolitan New York, bereaved spouses armed with spreadsheets, fax machines and stacks of application forms are pursuing what some call their new full- time jobs and what others resentfully refer to as a form of professional begging: asking charitable organizations for help.

Families that have lost loved ones in the World Trade Center attack say they have often been utterly overwhelmed by the multiplicity of charitable funds, aid organizations and government agencies. In dozens of interviews, widows and widowers described days spent bouncing from one bureaucracy to the next, struggling to navigate a maze of confusing rules, deadlines and requirements.

“We have to make five and six calls to each of these agencies to get someone who knows what they’re doing,” said Liz McLaughlin, 34, a mother of an infant son who lost her husband, Robert, a Cantor Fitzgerald trader.

Another woman, who did not want to be identified for fear of offending charity groups, said she had dealt with at least nine different United Way representatives who conducted three separate interviews involving the same basic set of questions.

“I was turned into a widow on Sept. 11 and a single mother, and now they’re turning me into a beggar,” she said.

Almost seven weeks after the attacks, there is no shortage of charity – at least $1.2 billion has been raised – and many people are working long hours trying to give it away.

In a former furniture store in Falls Church, Va., dozens of American Red Cross volunteers sit at desks decorated with tiny American flags, approving hundreds of relief checks to cover $4,500 mortgage checks, $500 car payments, funeral costs, school tuition, nannies, dental bills – often with no questions asked. Working 12- hour days, these volunteers have signed off on $35 million in relief checks for about 2,300 families. Tens of millions of dollars have been given to grass-roots agencies providing everything from grief counseling to small-business loans.

But what has not been provided is a simple, comprehensive way for families to apply for the full range of help. For families not blessed with legions of helpful friends and relatives, the experience of dealing with the hundreds of charitable agencies and funds can be maddening.

“I’m applying so many places and the paperwork is getting a little overwhelming,” said Jennifer Damaskinos, whose husband, Thomas, another Cantor Fitzgerald executive, was killed.

The Red Cross, the nation’s largest disaster relief organization, has been trying to distribute more than $530 million. But it has not yet had even the first contact with hundreds of families, and its ability to distribute aid promptly has also been undercut by internal turmoil and confusion.

Dr. Bernadine Healy, president of the Red Cross, clashed with New York officials over questions of coordination. On Friday, she announced that she would resign at year’s end, telling reporters that she had been forced out. In recent weeks, she had come under increasing criticism, in part because of her handling of charitable fund-raising.

Two weeks after the attack, the Red Cross seemed to offer the promise of sweeping, trouble-free relief. It announced a $100 million program to provide three months of living expenses to each victim’s family. Its officials confidently promised that checks would be mailed within 48 hours of a family’s filling out a simple one-page application.

In practice, though, many applications have been held up for several weeks or more, Red Cross officials concede. The delays have been caused by a variety of problems, which include the agency’s inability to verify quickly that applicants are in fact related to victims; disorganized records; ever-changing management directives; and the cyclical turnover among volunteers, with veterans often leaving unfinished files to untrained rookies.

What is more, the Red Cross has not even contacted scores of families because it has failed to coordinate its own efforts to identify victims with the work of other charities trying to do the same thing. Part of the problem, though, is the refusal of New York City officials to give the Red Cross access to the list of missing and dead, which city officials said is not complete.

In Falls Church, volunteers are not even certain which families on the Red Cross list of victims have been overlooked because their record- keeping systems – assembled from scratch under intense deadline pressure – are woefully incomplete. In hundreds of cases, all the Red Cross has to work with is a victim’s name, and the agency’s volunteers are not trained or equipped to track down relatives on such scant information.

“That’s one of our downfalls – we’re not real sophisticated in how to do those things,” said Nancy Smith, a senior Red Cross administrator.

But the obstacles encountered by the Red Cross only begin to hint at the range of difficulties plaguing the broader philanthropic response – a vast and largely decentralized effort involving a tangle of established and new charities, many of them straining to manage the unprecedented volume of generosity from individual and corporate donors.

Jane S. Sibley, a Red Cross disaster aid researcher, was recently asked to compile a guide to available charity programs for a Red Cross information line. After only a few days of work, she recalled, her guide was nearly three inches thick.

Veronica Juliano has made more telephone calls than she can count to get help for her sister, her sister’s best friend and her husband’s secretary, all of whom were widowed in the disaster. The response, she said, was “frustrating and humiliating.” Calls to several charities met only with confusion, misinformation or a referral to the Federal Emergency Management Agency, which did not provide any meaningful guidance, she said.

To keep track of all the relief groups, Mrs. McLaughlin, of Pelham, N.Y., has compiled an 18-page spreadsheet. She has three binders full of applications and forms.

“You have to chase it,” Mrs. McLaughlin said of the relief money. “That’s my full-time job.”

Many families, having read about the hundreds of millions being raised, and having watched benefit concerts and telethons, now have inflated expectations. On a recent morning, for example, Paula Zahn, the CNN anchorwoman, inadvertently implied that the Red Cross was doling out six-figure relief checks as she discussed the plight of a widow who lost her 31-year-old husband. “The Red Cross hooked up with her, and now she has some $200,000 that she desperately needs to take care of her family,” Ms. Zahn said.

For the next few days, volunteers answered calls in Falls Church from victims’ families who wanted to know how they, too, could collect their $200,000 checks.

One bright spot is the Family Assistance Center at Pier 94, on the Hudson River at 55th Street. Many victims’ relatives expressed amazement at the sensitive and efficient treatment they received from a wide range of agencies, including the Red Cross, represented at the center.

“Very impressive,” said Suzanne Gabriel, whose husband was an executive chef at the World Trade Center.

As many of the widows have, Mrs. Gabriel said she felt strange applying for help. “But the Red Cross people told me, `This is a gift from the American people. They want you to have it,’ ” she said. “I got a check in the mail about 10 days later.”

But for those who lack formal documentation – marriage licenses, pay stubs, birth certificates – the process is “essentially useless,” fumed Stanley Hamilton, who runs a street ministry called Hands of Hope in Wilkes-Barre, Pa., and who has been trying to guide victims through the bureaucracy.

The rewards and the burdens of the current system are apparent to Lauren S. Davitz, a human resources professional who went to Pier 94 with a Russian-born friend, a laborer who lost his wife in the disaster. “He was down there from 10 a.m. until 12 at night, and the paperwork was overwhelming, although people really reached out to do what they could,” she said. “But he walked out with the equivalent of $6,000.”

Eliot L. Spitzer, the attorney general of New York, has tried to use the example of Oklahoma City as a model of how relief could be coordinated. After the bombing there, a large committee of public and private relief agencies met each week to decide, victim by victim, how best to distribute benefits. The agencies shared access to a single database.

Mr. Spitzer has proposed creating a similar database for the Sept. 11 victims. Last Wednesday, the Red Cross agreed to take part, and other groups have since followed suit.

Mr. Spitzer also wants to let those seeking help register with this central database over the Internet, submitting applications that could list an entire menu of needs, from mental health counseling to scholarship money. “That way the charities could reach out to people as opposed to people having to reach out to all these charities,” said Mr. Spitzer’s spokesman, Scott Brown. But the database is still far from reality. Also unresolved is the question of who will operate it.

In the meantime, resentment is accumulating.

Last week, in Princeton, N.J., at a meeting of about 35 relatives of victims, there was an eruption of anger when local Red Cross representatives tried to address the support group. “Oh, they were yelled at,” Kathy Tedeschi, said a leader the group.

According to another participant, one family member called out, “When the hell are we going to get some money?”

The Red Cross representatives admitted that they were confused, but promised that they were “going to do their best,” said Bob Monetti, who attended as a representative of the Victims of Pan Am Flight 103.

“Then they got out of there.”

Copyright 2001 The New York Times Company

Comment: Just to remind you of Dr. Reinhardt’s introductory phrase, “the high social cost of pluralism relative to collective action,” a cost that is exceedingly familiar to those of us who have been working on behalf of health care equity.

Oregon Health Benefits May be Trimmed

The New York Times
October 27, 2001

“The state Health Services Commission has been working since July on a Legislature-mandated task of finding ways to expand the Oregon Health Plan to cover more of the working poor.”

“In ranking benefits, from hospital care to non-emergency ambulance transport, the commission in effect chose which services will make the cut when the Legislature draws the budgetary line next year.”

Dr. John Santa, director of the Office for Oregon Health Policy and Research:

“It comes down to an old issue. Is it better for everybody to have something than for some to have a lot and others to have nothing?”

http://www.nytimes.com/aponline/national/AP-Oregon-Health-Plan.html

Comment: It does come down to an old issue. Public programs for the medically indigent will always carry the “welfare” stigma, and, as a result, will be chronically underfunded. Oregon is famous (infamous?) for its unique approach of ranking the priority of various medical services, covering the most essential services, but using a guillotine on the remaining once the funds are depleted. As other states are struggling with the budgetary problems inherent in expansion of eligibility for Medicaid and S-CHIP services, Oregon has decided to guillotine more of the health care corpus as its solution. The services that will be excluded are not ineffective, wasteful services, but they are beneficial medical services that will no longer be accessible to this vulnerable population merely because of lack of affordability.

Once again, we already have the resources to provide comprehensive care to everyone, but we lack an effective method of allocating those resources as we continue to cling to the fragmented system of expensive, wasteful health plans, underfunded public programs, and expansion of the ranks of the uninsured. It seems that everywhere we turn, the need for a publicly administered, universal health insurance program cries out. Why aren’t we responding?

Prof. Uwe Reinhardt responds to Prof. James Robinson and his comments which included, “… the California experiment with physician organization as the heart of the health care system will have come to an end.”

Prof. Uwe Reinhardt:

I have read James’ paper. Although he is an economist by training, he seems to have adopted more the style of a journalist for this piece. Viewed through the cold prism of an economist, the California story seems relatively simple and totally unsurprising.

If memory serves me correctly, per-capita health spending, insurance premiums and charges for health services in California tended to be way above the national average during the 1970s and 1980s (as they were in Massachusetts). I recall a paper penned at that time by Steve Schroeder in which he marveled that physicians in San Francisco had little trouble earning a good living in spite of the fact that the MD-population ratio there had reached 600, more than triple the national average. There was also excess capacity in the hospital sector at that time, if memory serves me well. In fact, the supply side drove the entire California health system, without little resistance on the demand side.

Managed care was designed by its architects (Enthoven and associates) to take down this excess capacity through the power of private market forces, rather than through regulation. This had to mean (a) that some of the existing capacity (including physicians) had to be driven out of the California market altogether and (b) that downward pressure on the prices for all health services would be the chief instruments through which that excess capacity would be driven out. For physicians, this meant that even those left standing after the purge would have permanently lower incomes than they once had enjoyed.

Can anyone really be surprised that such a campaign would disillusion and frustrate a supply side that had hitherto reigned supreme, in relative fiscal luxury? Could reasonably people have expected any other outcome? Could widespread bankruptcy during the transition from excess capacity to “right-sized” California health system be avoided?

End of story, as it is perceived through the economist’s prism.

As an addendum to this story, let me mention that I find myself truly puzzled by the fiscal problems of the large multi-specialty group medical practices and IPAs in California. Specifically, I wonder what do they mean by “bankruptcy?” What does the income statement and balance sheet of a bankrupt medical group look like?

If physicians in such groups are paid something resembling a salary which that is then is booked by the group as an expense on the income statement (which means as a charge against the group’s networth), then of course such groups can easily slide into losses and, eventually, into bankruptcy. Here one envisages physicians tenaciously insisting on their traditional incomes, rather than accepting the lower incomes dictated by market forces, thus driving expenses above revenues and, eventually, the group’s liabilities above the realizable value of its assets (the economic definition of insolvency, which then leads to the legal status of bankruptcy).

But if physicians, like the general partners in any other partnership, were paid out of the residual left after all of the group’s expenses for items other than physician time have been met, then “bankruptcy” would have to mean that there was no annual residual to pay physicians anything at all–that revenues did not even cover non-physician expenses. Is that, then, what happened in California? I rather doubt it. My hunch is that physicians expensed their take-home pay and charged it against the group’s networth, which then led to “bankruptcy.”.

Now, remember: The whole idea of managed care was to depress the prices of health services (and with it the incomes of health professionals) enough to drive a sufficient number of them out of the California market, thus reducing that market’s excess capacity. This is how markets work everywhere else. Thus the “bankruptcies” we now see should have been fully expected.

To my mind, the central lesson from the California experience is that the idea of integrated health-care delivery systems that are paid by full capitation and, therefore, must assume the full financial risk for the health care of the insured will cause enormous fiscal stress on the supply side of the market if that capitation is set by competitive market forces in a market beset by excess capacity.

It is so, because in such a market the capitation rates will be driven below the full cost of the kind of care that patients expect, even if that care is efficiently produced. The market approach in this context could work only if all participants on the excess-ridden supply side of the market had the stomach cheerfully to eat the harsh medicine dished out by private market forces, including bankruptcy and being driven out of the market altogether. In the early 1990s, the majority of Americans either supported that idea or acquiesced in it. They chanted “Let the government get off our backs!” Evidently, and not surprisingly, once faced with the brutal working of the private market, this country’s health-care providers do not have the stomach to take that harsh medicine nor, in the end, does the public and the regulators who represent that public.

Finally, I agree with James that, in the short run, California will try to get out of the current turmoil in the health care market by going the PPO route, which means shoving a much larger fraction of the cost of health care on to the shoulders of patients themselves and, thus, moving ever more clearly towards an income-based health system. In that system, tightly controlled HMOs are likely to have a comeback, perhaps even multi-specialty medical groups specializing in care for the lower-income strata. It may be argued that such a system is un-American, that this is not in keeping with our cultural norms. But our national defense in these scary times is income-based as well, and everyone seems to find that just ducky. (Not surprisingly, economists find the volunteer army “efficient.”)

Best,

UER

Health Plans and Physician Organizations in California: Mutual Dependence or Mutually Assured Destruction?

California HealthCare Foundation

October 2001

By James C. Robinson, Ph.D., Professor of Health Economics, School of Public Health, University of California, Berkeley

“Implications for the California Experiment”

“The HMO product in California shows the signs of serious financial, intellectual, and managerial underinvestment. Instability among physician organizations, disaffection among practicing physicians, dissatisfaction among enrollees, and regulatory enthusiasm among politicians reflect a long and serious neglect of organizational relationships. The contemporary skepticism and antipathy presage mutually assured destruction if a sense of partnership cannot be renewed. If the financial instability of the medical groups leads to widespread bankruptcies, the health plans will shift to PPO products and rely on consumer cost-sharing rather than provider integration to control cost growth. Similarly, if the contemporary enthusiasm among purchasers for open-access products leads to a renunciation by health plans of capitation and medical management, most medical groups and all the IPAs will fragment into their component physician practices. Either way, the California experiment with physician organization as the heart of the health care system will have come to an end.”

For the full report: http://admin.chcf.org/documents/chcf/SolvencyRobinsonArticle.pdf

Comment: These are not hypotheticals, as Professor Robinson seems to imply. This process is well underway now. But Professor Robinson apparently has telegraphed his true opinion by the topic he has selected for the forthcoming Leadership Academy of the California Medical Association. His topic? “The End of Managed Care.”

Hearing on the Federal Employee Health Benefits Program (FEHBP)

United States House of Representatives
Government Reform Committee
Civil Service and Agency Organization Subcommittee
October 16, 2001

Representative Danny Davis: Mr. Moffit, I believe that you mentioned the fact that we need to get some new blood, or we needed to mix the demographics, that we needed different composition. And then I noted that Delegate Norton mentioned the fact that 58 is an average age (in the FEHBP program).

Robert Moffit, Director of Domestic Policy Studies at the Heritage Foundation: Right.

Rep. Davis: Are you suggesting in any way that we need to place more emphasis on fact, or in the end, the age of the population group that we’re dealing with, or that we need to do something to shift part of that age group out of the program?

Dr. Moffit: No. Congressman, I — what I’m saying is basically expand the program, and I think Mrs. Norton actually put her finger on it. You know, we want to be careful how we do this. A suggestion that I made in my formal testimony is to expand it to people who do have a direct relationship with the federal government, and that group are young military families who are enrolled right in the military health care system. You’re talking between five and six million people.

Young military families are healthy. Their national representatives have testified before Congress that they would like to be in the Federal Employee Health Benefits Program. But, the central value of it would be that it would improve the actuarial profile of the pool. As a result, it would stabilize…

http://www.kaisernetwork.org/health_cast/uploaded_files/10.16.01_FEHBP_transcript.pdf

Comment: This hearing got off to a poor start when Chairman Dave Weldon attempted to prevent DC Delegate Eleanor Holmes Norton from presenting an opening statement with the comment, “… witnesses fly in from faraway places and sit and listen to members,” to which she responded, “… most of the witnesses here are flown in from the Office of Personnel Management and other far-flung parts of the District of Columbia.” Things only became worse with bumbling testimony on flawed policy concepts such as the need to end the tremendous “overutilization” in the program by making federal employees sensitive to costs by changing to catastrophic coverage.

The FEHBP is the largest health benefits program in the nation. It is facing the same problem as all other programs: the skyrocketing costs in health care. The size of this program and the great variety of plans offered have provided the testing grounds for controlling costs through private health plans. It has been a miserable failure. Robert Moffit suggests that we salvage this private sector solution (FEHBP) by diluting the risk pool with young, healthy military dependents, a proposal which, not coincidentally, furthers the agenda of the Heritage Foundation by privatizing the coverage of this group as well (the military dependents). But this will still do nothing to slow escalating health care costs. Mr. Moffit is correct when he suggests improving the risk pool, but we really need to adopt the ultimate risk pool, the one that includes everyone. And we need to eliminate the wasteful and ineffective health plans and replace them with a single, publicly administered, universal health insurance program, a model can effectively contain costs through global budgeting.

Critical Condition

San Francisco Chronicle
October 23, 2001
by Victoria Colliver

“With the recent surge in layoffs, many of the unemployed find themselves having to choose between paying for health care insurance or something as basic as rent.”

“Many workers have the option of COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act. The 1986 law allows employees to continue their coverage for about 18 months, during which they usually pay the entire premium plus a 2 percent administrative fee — a pricey option considering that most employers subsidize much of their employees’ premiums.”

“With employer group plans costing as much as $2,650 per year on average for an individual and more than $7,000 for a family annually, the burden on laid-off workers to pick up the tab while they are searching for a new job can be a frustrating, back-breaking task.”

“In the Bay Area, the problem is exacerbated by the large number of employees who aren’t entitled to COBRA because they worked for dot-com companies that simply closed up shop.”

Gail Shearer, director of health policy analysis for Consumers Union:

“If you’re losing your income, chances are you’re not going to be able to come up with the $7,000 you need to cover your family’s health insurance needs.”

http://www.sfgate.com/cgi-bin/article.cgi?file=/chronicle/archive/2001/10/23/BU240187.DTL

Comment: Several members of Congress are attempting to enact legislation that would provide subsidies for the COBRA program in order to enable the continuation of health care coverage for the increasing numbers of unemployed individuals. Because COBRA benefits are of limited duration, and because they are not available for former employees of failed businesses, and because the premium payments are shifted from the employer to the now-unemployed former employee, they are an inadequate solution to the problem. COBRA benefits are very expensive and are considered by many to be unaffordable for our government considering our tight budgetary constraints. At best, federal assistance will be only partial, leaving the unemployed with a very large bill for health insurance premiums, which in turn means that they will remain unaffordable for most of those who have lost their incomes.

Although we must support congressional efforts to shore up the COBRA program, we must likewise recognize the severe inadequacies of these proposals. Inevitably, much of the imperative costs will be shifted to public programs such as Medicaid, while many simply will be deprived of essential health care services. Once again, it is abundantly clear that it would be much more rational, equitable, and humane to enact a program of publicly administered, universal health care coverage. The need is more urgent than ever.

Gail Shearer and Susanna Montezemolo of Consumers Union have prepared an excellent report on this topic, “A Pink Slip Away… Why Congress Should Subsidize Health Insurance Coverage for Laid-Off Workers.” The report is available at:

http://www.consumersunion.org/health/cobra/cobra.htm

Health Costs' Harsh Reality

The Washington Post
October 21, 2001
by Bill Brubaker

“A survey of 200 large employers released last week found that workers will pay an average of 14 percent more for company-provided health benefits next year. That’s almost four times the rate of inflation. And it follows increases of 12 percent for 2001 and 8 percent for 2000, according to the Watson Wyatt Worldwide consulting firm, which conducted the survey.”

“Corporate executives say they have no choice but to scale back benefits and pass on costs because of the sharp rise in insurers’ rates.”

Darnella Layne, 45, a cafeteria worker at Xavier University in Cincinnati:

“I couldn’t afford the premiums this year and I won’t be able to afford them next year. Last year they told me I’d have to pay almost $200 a month for a plan that insured me and my 17-year-old son. I earn $8.87 an hour and they take out a lot of taxes. It’s pitiful: If I bought that health plan I’d barely have a paycheck left.”

http://www.washingtonpost.com/ac3/ContentServer?articleid=A24859-2001Oct20&pagename=article

Comment: It is really happening. Health care costs are skyrocketing, and both employers and the insurance industry are passing those costs on to the individual employee, beneficiary, patient, consumer, or whatever label is used for the hapless, average American that is bearing the brunt of health care inflation. If the executives of our nation’s businesses and insurance companies believe that they can’t afford to absorb the increases in health care costs, just wait and see what happens when the disposable income of the average individual is consumed by this shift in health care costs. And at four times the rate of inflation!? Disaster is imminent.

Clearly there is great urgency in the need to reinforce the infrastructure of our public health system, based on the shocking realities of recent tragic events. Impairing access by making health care unaffordable would have more insidious but much greater consequences for the health of the people of our nation, not to mention causing the financial breakdown of our health care delivery system once patients are no longer able to access it. The urgent legislation that we need to fund our public health infrastructure MUST include provisions for publicly administered, universal health insurance if we are to assure the integrity and accessibility of our health care delivery system.

Personal note: With humbleness and great pride, I have been honored by Physicians for a National Health Program by being selected to serve as their president, effective in January. I fully intend to continue these messages, but I anticipate more interruptions because of conflicting commitments. Working with the dedicated individuals at PNHP has been one of the most rewarding experiences of my life. Through their efforts in analyzing and developing health policy based on ethics and equity, they have provided the beacon that will lead us to health care justice for all. It is a great honor, and indeed a pleasure, to be part of that team.

Don

Health Costs’ Harsh Reality

The Washington Post
October 21, 2001
by Bill Brubaker

“A survey of 200 large employers released last week found that workers will pay an average of 14 percent more for company-provided health benefits next year. That’s almost four times the rate of inflation. And it follows increases of 12 percent for 2001 and 8 percent for 2000, according to the Watson Wyatt Worldwide consulting firm, which conducted the survey.”

“Corporate executives say they have no choice but to scale back benefits and pass on costs because of the sharp rise in insurers’ rates.”

Darnella Layne, 45, a cafeteria worker at Xavier University in Cincinnati:

“I couldn’t afford the premiums this year and I won’t be able to afford them next year. Last year they told me I’d have to pay almost $200 a month for a plan that insured me and my 17-year-old son. I earn $8.87 an hour and they take out a lot of taxes. It’s pitiful: If I bought that health plan I’d barely have a paycheck left.”

http://www.washingtonpost.com/ac3/ContentServer?articleid=A24859-2001Oct20&pagename=article

Comment: It is really happening. Health care costs are skyrocketing, and both employers and the insurance industry are passing those costs on to the individual employee, beneficiary, patient, consumer, or whatever label is used for the hapless, average American that is bearing the brunt of health care inflation. If the executives of our nation’s businesses and insurance companies believe that they can’t afford to absorb the increases in health care costs, just wait and see what happens when the disposable income of the average individual is consumed by this shift in health care costs. And at four times the rate of inflation!? Disaster is imminent.

Clearly there is great urgency in the need to reinforce the infrastructure of our public health system, based on the shocking realities of recent tragic events. Impairing access by making health care unaffordable would have more insidious but much greater consequences for the health of the people of our nation, not to mention causing the financial breakdown of our health care delivery system once patients are no longer able to access it. The urgent legislation that we need to fund our public health infrastructure MUST include provisions for publicly administered, universal health insurance if we are to assure the integrity and accessibility of our health care delivery system.

Personal note: With humbleness and great pride, I have been honored by Physicians for a National Health Program by being selected to serve as their president, effective in January. I fully intend to continue these messages, but I anticipate more interruptions because of conflicting commitments. Working with the dedicated individuals at PNHP has been one of the most rewarding experiences of my life. Through their efforts in analyzing and developing health policy based on ethics and equity, they have provided the beacon that will lead us to health care justice for all. It is a great honor, and indeed a pleasure, to be part of that team.

Don