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PRIVATE-PUBLIC SECTOR MIX IN THE ECONOMY

A message from Uwe Reinhardt, Ph.D., James Madison Professor of Political Economy, Princeton University:

Don:

I have just posted this message on the course website of my course in first-year economics. I’ll e-mail you Paul Krugman’s piece.

Sun, Sep 16, 2001 —

As part of this course, I shall from time to time link our course website to news articles or commentaries that are relevant to this course.

I have just posted there a commentary by my colleague Paul Krugman on the issue of the private- and public-sector mix in an economy. A vulgar theory with much political traction in this country is that “government” is a state apart from the American people, from which it follows that reducing government spending is always a good thing and that it is always better to let the private sector handle any chore rather than turning it over to that alien entity, our government. You can be very popular at country-club cocktail parties around the country by spouting this simplistic (and erroneous) theory. You can also hear it recited, time and again, by certain talking heads on TV.

In his commentary, Professor Krugman highlights the price we pay for such shoddy thinking. Properly trained economists appreciate that the private sector has a comparative advantage in the production and management of many functions, while the government is better at producing and managing other functions.

Ironically, you now hear even ultra-conservative commentators on TV demanding that airport security in this country be “federalized,” that is, be made part of the civil service. They also, of course, ask that another government agency, the US armed forces, bail us out of our current predicament. Coming this late in the game, it is a sad irony to hear such talk from government’s visceral critics.

One objective of this course is to make you more thoughtful citizens than the many vulgar “thinkers” (to use the term loosely) who believe that government is not part of us (and we part of it), but who think instead that government is an alien force that takes things away from us–either our money or our freedom. If you pay attention in this course, you will not need a major tragedy to understand the proper roles of the private and public sectors in a well-run country. We shall come back to this theme many times in this course.

Paul Krugman’s opinion article: http://www.nytimes.com/2001/09/16/opinion/16KRUG.html

Comment: Although Professor Krugman’s article discusses the role of government in relation to the tragedies of the past week, all of us concerned about health care reform will understand the extrapolations to our health care system. Although the private sector health care system functions well when accessed, a publicly administered universal health insurance program can assure that access.

Today we present two outstanding resources on pharmaceuticals and the pharmaceutical industry

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I. Alan Sager, Ph.D., Professor of Health Services and Co-Director of the Health Reform Program at Boston University School of Public Health, on September 5, 2001, provided testimony before a subcommittee of the United States Senate Committee on Commerce. His topic: “Americans would save $38 billion in 2001 if we paid Canadian prices for brand name prescription drugs.” He describes “how to win those savings and use them to protect all Americans against high drug costs without hurting drug makers or drug research.”

Alan Sager, Ph.D.:

“Together we face two challenges: making all needed medications available to all Americans at affordable prices, while building a durable financial foundation under drug research and delivery in the United States. I am convinced that we can do both of these. One reason is that we already spend enough money to do so. But not if we continue business as usual.”

The full testimony (revised) is available at: http://dcc2.bumc.bu.edu/hs/ushealthreform.htm which brings you to a page, “US Health Reform.” Under “A. Prescription Drug Reform,” “3. Testimony,” click on “AMERICANS WOULD SAVE $38 BILLION IN 2001 IF WE PAID CANADIAN PRICES FOR BRAND NAME PRESCRIPTION DRUGS.”

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II. Martin Donohoe, MD, FACP, Assistant Professor of Medicine and Senior Scholar at the Center for Ethics in Health Care at the Oregon Health Sciences University, has prepared an excellent series of slides in PowerPoint format on various aspects of the pharmaceutical industry, with special emphasis on ethical perspectives. The information provided is particularly valuable for those of us dedicated to health care reform. Dr. Donohoe has generously offered to make the series available to us. The slides are very easy to read and thus are valuable as a stand-alone information resource, not to mention their value in educational presentations. If you are interested, you can contact Dr. Donohoe at his e-mail address which appears at the end of his message below.

9/14/01

Dear Dr McCanne:

I am a member of PNHP and teach medical humanities and social justice ethics at Oregon Health and Science University in Portland; one area I often lecture on is the pharmaceutical industry (history, current practices, financial and legal issues, ethical issues, etc.) After serving on a panel at the Bioethics Summer Retreat earlier this year, a number of participants requested a copy of my PowerPoint presentation on the pharmaceutical industry. I offered to e-mail a copy of the presentation to anyone from the bioethics listserv who was interested and received over 50 responses.

Now that I see that PNHP is becoming more involved in the issue of pharm co marketing, I wonder if any members (or the organization) is interested in a copy of the presentation, which contains over 100 slides and covers the economics of the industry, drug R and D and marketing (incl data on advertising to physicians and DTC advertising), the history of drug regulation in the US, policy and ethical issues facing the FDA, companies under investigation for various violations (or who have pled guilty) and why, info on the worrisome sequelae of increasing collaboration between academia and industry, guidelines re gifts and speakers/CME, etc.

I am happy to share the slides and have no proprietary interest in the presentation, and hope it can be of help to those training students, residents, and practicing MDs. I feel there is too much competition and not enough cooperation in academic medicine/medical education.

The refs are literally a 2 and ½ foot stack in my office, and I will be working on the paper over the next year. In a nutshell, most of the info comes from mainstream med jnls (eg JAMA, NEJM, Annals Int Med, J Gen Int Med), with small amounts from Public Citizen’s Health Research Group’s Health Letter, PNHP’s newsletter, or “mainstream” newspapers (e.g., NY Times).

If you think other members of this list or PNHP may be interested, please let me know and I can send them copies as an attachment. I would rather they contact me so that I can at least keep track of who is getting it and for what purpose they hope to use it. If you are interested in using me as a speaker for PNHP in some way, let me know, as I have also run a session on the single payer system, using PNHP data and slides, for our house staff.

Martin

Martin Donohoe, MD, FACP Assistant Professor of Medicine and Senior Scholar, Center for Ethics in Health Care Oregon Health Sciences University General Internal Medicine (L-475)
3181 SW Sam Jackson Park Road
Portland, OR 97225
503/494-6495 (ph) 503/494-6344 (fax)
donohoem@ohsu.edu

A Special Message from Our Friends In New York City

September 14, 2001
Relayed by Joanne Landy, MPH, MA, Executive Director, PNHP-NYC

Oliver Fein, M.D., Chair, Physicians for a National Health Program, New York Chapter:

“Dear PNHP-NYC members and friends,

“How are you? Many of us have been completely absorbed with the medical and psychological response to the World Trade Center disaster. Now, we must prepare for the aftermath. As health professionals, we are likely to experience both the physical and emotional impact among our patients and colleagues for months. As health progressives, we must seek ways to understand the roots of this week’s tragedy and propose positive ways to avert such horrors in the future. At the same time, we must continue our efforts at health system reform. In this spirit, we have decided to press forward with our September 21 protest against the pharmaceutical industry’s efforts to influence physicians (see forthcoming e-mail), to conduct our speaker’s training workshop on September 22; and, to hold our forum featuring Fitzhugh Mullan on “Big Doctoring: Primary Care-Essential but Endangered” on September 25. I hope to see you all at one or more of these events; apart from the specific agenda, it will be good to be together at a time like this.”

And the message on the September 21 protest:

A CALL TO PROTEST DRUG COMPANIES’ INFLUENCE ON DOCTORS
Plaza Hotel Friday, September 21, 6-7pm

On September 21, physicians will congregate at the Plaza Hotel in Manhattan for a gala event sponsored by Forest Pharmaceuticals, which has paid doctors $500 plus a free night with meals at the Plaza to attend a seminar that will promote its anti-depression drug Celexa. Across the country there is mounting protest against attempts by drug companies to manipulate doctors’ decisions about which drugs they prescribe. Join us in front of the Plaza at 59th St. and 5th Ave. from 6 to 7 pm for a press conference and protest demonstration.

Consider these facts:

· The pharmaceutical industry spends more on marketing than it spends on research and development (one company alone spent $136 million/year promoting just one medication – that’s more than Coca-Cola spent advertising Coke in that year).

· The pharmaceutical industry spends more on drug promotions (>$10 billion) than all U.S. medical schools spend on teaching students.

· Despite doctors’ beliefs to the contrary, studies have shown that drug company promotions, such as this event at the Plaza, do distort prescribing patterns.

· Meanwhile, millions of Americans do not have insurance to cover medications. Even Medicare doesn’t cover prescription drugs, except when you’re in a hospital. Yet, pharmaceutical costs are rising faster than the costs of doctors and hospitals. Many Americans must forgo their medicines in favor of such necessities as food and housing.

We call on the pharmaceutical industry to stop its excessive spending on marketing and to lower the price of prescription drugs.

We call on Congress to limit pharmaceutical prices for everyone by purchasing drugs in bulk, price controls, or a combination of these mechanisms, as is done in other countries throughout the world.

We call on Congress to enact a Medicare drug benefit. As a first step, we urge Congress to pass legislation that regulates pharmaceutical prices, such as the Allen-Johnson bill (HR 1400/S 699) that lowers drug prices for Medicare patients to the average price that the drugs are sold in other developed countries. This legislation is expected to reduce prices for brand-name drugs by 40 percent, and will make a Medicare drug benefit much more affordable.

SPONSORED BY PHYSICIANS FOR A NATIONAL HEALTH PROGRAM (New York Chapter) 2840 Broadway, #297 New York, NY 10025 pnhpnyc@igc.org www.pnhpnyc.org

Comment: We all must follow New York’s inspirational lead in moving forward with health care reform.

Individual Tax Credits Will Not Expand Health Coverage for America's Uninsured

The unrelenting shock and grief that we all share on experiencing the tragic loss of 5000 lives seems like it will never end. In a few brief moments we saw unveiled a tragedy of unfathomable proportions. People in the prime of their lives… so wrong… so terribly wrong.

The entire nation now wants to do the right thing, even if we may still be confused as to what that is. One thing that we do know is that we must pick ourselves up and move forward. We agree that no evil force can be allowed to weaken our spirit and resolve. We must continue.

The high visibility and abruptness of the tragedy shocked all Americans and brought immediate responses in support of our leadership. We want the right things done, and as soon as possible. Much more insidious and much less visible is the infinitely greater premature loss of life and suffering that is wrought simply by the ineffectiveness of our health care system in properly allocating our abundant resources. The premature death and impaired quality of life that continues to occur is diffused over time and space, and it does not create isolated images that can be broadcast instantaneously over every network simultaneously. But these tragedies are just as real, and they are much greater in the sheer numbers of lives affected. Simply because of the lack of an instantaneous media presence, these tragedies fail to provoke the outrage that Americans would demonstrate if they only understood. So endless suffering and premature death continue. So wrong… so terribly wrong. That is why we must continue to speak out on issues of health care injustice. We must right this terrible wrong.

Quote of the Day

Families USA Press Room
September 12, 2001

“Most tax-credit proposals for the purchase of individual health coverage by low-wage workers, such as the President’s proposal, provide annual tax credits approximating $1,000 per year. But, according to the report, the average premiums for a standard health plan in the 25 states (studied) for healthy, non-smoking women ages 55 and 25 are $4,734 and $2,395, respectively. Health insurance for unhealthy and/or smoking women would be much higher or would be unavailable, according to the report.”

Ron Pollack, executive director of Families USA:

“The costs of individual health insurance are far more expensive than the cash value of pending tax-credit proposals. They are like a 10-foot rope thrown to a person at the bottom of a 40-foot hole. As a result, low-wage, uninsured workers across America will either find health premiums unaffordable or will only be able to buy Swiss cheese-type policies that have more holes than cheese.”

http://www.familiesusa.org/media/press/2001/taxcredit.htm

Individual Tax Credits Will Not Expand Health Coverage for America’s Uninsured

Quote of the Day

Families USA Press Room
September 12, 2001

Ron Pollack, executive director of Families USA:

http://www.familiesusa.org/media/press/2001/taxcredit.htm

NYT Editorial

The New York Times
September 12, 2001
Editorial

“But this is an age when even revenge is complicated, when it is hard to
match the desire for retribution with the need for certainty. We suffer
from an act of war without any enemy nation with which to do battle.
The same media that brought us the pictures of a collapsing World Trade
Center shows us the civilians who live in the same places that
terrorists may dwell, whose lives are just as ordinary and just as
precious as the ones that we have lost.”

Analysis of the Costs and Impact of Universal Health Care Coverage Under a Single Payer Model for the State of Vermont

Please excuse the apparent insensitivity of the timing of the “Quote of the Day” message. I have just learned of the tragedies in New York and Washington and share with all of you our profound grief.

Don

Prepared for: The Vermont HRSA State Planning Grant, Office of Vermont Health
Access Prepared by: The Lewin Group, Inc. – John F. Shiels and Randall A. Haught
August 28, 2001

“Our analysis indicates that the single payer model would cover all Vermont residents, including the estimated 51,390 uninsured persons in the state, while actually reducing total health spending in Vermont by about $118.1 million in 2001 (i.e., five percent). These savings are attributed primarily to the lower cost of administering coverage through a single government program with uniform coverage and payment rules.”

“… the budgeting process for the single-payer program is likely to emerge as a powerful cost containment tool.”

The entire report is available at: http://www.dsw.state.vt.us/districts/ovha/AnalysisoftheCosts.pdf

Comment: Our health care system remains in turmoil primarily because we have been unable to contain costs, and all of our efforts to do so have created even greater problems and have failed to adequately address the major inequities inherent in our system. Now we have yet another study that demonstrates that we can contain costs while providing comprehensive health care coverage for everyone. How many studies do we need before the “controlling authorities” will allow us to bring the single payer concept to the negotiating tables? How many studies do we need before the media will begin to routinely include input from single payer advocates to provide balance (and color) to the articles reporting the defects in our current fragmented system, defects that single payer will cure? How many studies do we need to convince the public that it is time to dump the rhetorical lies and seriously address the real issues in health care?

Soon we will have the results of yet another study, from California, the Health Care Options Project. It will be unique in that not only will single payer reform be studied, but several other models will be prepared and submitted to a microsimulation process. The process will be completed in February. Will this be another report that will demonstrate the superiority of the single payer method, only to be filed away with all of the other reports? Or, maybe this time, shouldn’t we consider sitting down and devising the strategy to convert single payer into reality?

The California Health Care Options Project site: http://www.healthcareoptions.ca.gov/

Md. plan would cover its uninsured

The Baltimore Sun
September 7, 2001

“Business, industry object to $1 billion proposal by coalition” by Diana K. Sugg

“Leaders of a statewide coalition of labor, religious and civic groups are proposing an ambitious health plan costing up to $1 billion that would provide coverage for the state’s 650,000 uninsured residents. The strategy, already under attack by business interests, would require employers to provide insurance or pay a tax, expand a government health program for children and create a buying pool so the elderly could get their medicine cheaper.”

“One business group, the Maryland Business for Responsive Government, opposes the coalition’s plans, believing the new proposal is a veiled effort to install a Canadian-style health care system.”

“Experts who closely follow similar proposals nationwide called the Maryland scheme ambitious and well-crafted. They noted that the Maryland group responded to the public distaste for a Canadian-style, single payer system by coming up with a different approach.”

Robert Blendon, a Harvard professor and frequent source of polls indicating that Americans do not want a government-run health insurance program:

“They have done more work on this to make this politically palatable than many of the other proposals around the country. But I think they’re ahead of the curve.”

http://www.sunspot.net/bal-te.md.health07sep07.story

A description of the Maryland plan is available at:

http://www.healthcareforall.com/theplan.htm

Comment: 92% of Americans believe that it is important for the President and Congress to “deal with the issue of increasing the number of Americans covered by health insurance.” We are united in this goal, but we remain divided on the means to achieve this goal. Specifically, the major division is between those that support a universal, single-payer program, such as a Medicare for All approach, and those that support incremental increases in coverage. The opposition to a single payer approach continues to be reinforced by the work of Robert Blendon and others that indicate that Americans have adopted the anti-government rhetoric of the conservatives. Although the opposition is based on rhetoric rather than on an understanding of fundamental health policy, the reality is that the rhetoric has blocked all attempts at universal coverage. Thus we continue on the path of incremental reform, primarily by expanding public programs. Yet we now have more uninsured than we did at the time of the ill-fated Clinton attempt at reform.

Some of us believe that we should be following both paths to reform. We should be making every effort to educate the public and to change the political will such that a true universal, comprehensive, efficient, ethical, and equitable program can be enacted. During this process, we also should be enacting incremental reforms as temporary, urgent measures that will reduce suffering that exists today. But because these incremental measures ignore many important, fundamental issues of health policy, they should not be accepted as definitive reform.

Maryland’s “well crafted” program is somewhat unique in that they have merged both pathways into one. They have listened to Blendon and others and have rejected proposals that would have the appearance of a Canadian single payer system. They have accepted the prevailing concept that only incremental-type measures will have political support. They will leave in place the current, fragmented system of private sector health plans. They will expand the state children’s health insurance program. And then to fulfill the goal of universal coverage, they will create the Maryland Healthcare Trust, a program to cover the remaining uninsured. Thus they are proposing the politically palatable approach of incrementalism, but they are achieving universal coverage. Thus they have finally brought together all of us that are dedicated to comprehensive health care reform. In your fantasies!

They violated the first rule of negotiation. Even before they began, they paid a very high price by abandoning important fundamental health policy principles that must be in the forefront of negotiations as we design our health care system. Just a few of the issues they gave up even before they’re out the door include cost shifting, adverse selection, risk pool equity, administrative waste of private bureaucracies, cost containment, integration of fragmented programs, evidence-based expenditure controls, etc., etc. It is ironic that they chose to ignore their own study, done by The Lewin Group, that demonstrated that a multi-payer model would cost the citizens of Maryland over a half billion dollars more for their health care than would a single payer model (www.healthcareforall.com\Lewincov.htm). Perhaps the greatest defect in their proposal is that it will not contain health care costs, perpetuating the instability characteristic of our current health care model. As such, their proposal, even if enacted, cannot possibly survive intact.

Their proposal to cover the uninsured, the Maryland Healthcare Trust, was, in fact, very carefully crafted. As a stand alone product, it embodies many of the fundamental principles of a single payer system. In some ways, it improves on existing single payer concepts by introducing improvements in information technology, improved methods of cost containment and resource allocation, and including some of the beneficial measures introduced by the managed care industry but without the intrusion of the managed care plans. In fact, although the coverage under the trust would be limited to the uninsured, it is already being disparaged as a “Canadian-style health care system.” It is ironic that, considering all that they gave up before even starting, they are not going to escape the precise problem that they wished to avoid, being attacked as a socialistic, government run, rationing, bankrupt system like they have in Canada. They paid a terrible price to try to avoid the rhetorical lies that they will be faced with anyway.

There is another design flaw that will prove to be fatal for health care equity. They concede that both the Medicaid and the Children’s Health Insurance Program are significantly underfunded, and that funding will have to be increased in order for the program to succeed. Since these programs are for low income individuals and families, adequate levels of funding never will be provided. That’s “never,” with an “n.” Furthermore, the Maryland Healthcare Trust will be developed for the uninsured, another element with no political power. Consequently, the trust also will be chronically underfunded. It is likely that current trends, both in decreases in employer participation and in shifting of risk from health plans to beneficiaries, will move much of the “working families” into the trust. At best, mediocrity in health care will prevail, and Maryland will be locked into a deficient plan that will be highly resistant to revision because “everyone has health care coverage.”

When will health care reform advocates finally come together? When we agree that we cannot abandon health policy principles that will assure health care equity for all.

The argument for a health care system in Vermont

Whenever Vermont health care is mentioned, what is really referred to is an arrangement that does not rise to the level of a system. This arrangement is ineffective at controlling costs and incapable of seeing to it that the expenses of medical care are paid for, or of seeing to it that all Vermonters obtain needed medical care in a timely fashion. It therefore falls far short of anything that can be reasonably described as a health care system.

At the same time it is widely acknowledged that Vermont’s medical facilities and medical care are of high quality.

There are troubling signs, however. One is cost shifting. Cost shifting is a way of unburdening financial strain in one part of health care, say a hospital, by shifting it to another, say a private insurance company. Costs, once shifted, do not disappear. Ultimately, they reappear as higher private insurance premiums and higher public assessment, taxes and the like.

Virtually all of us, including the Vermont medical community, regard health care as a public good. This is especially true when we ourselves are in need of medical attention.

Most of us would say that what we want from health care, other than our free choice of doctor, are high quality medical facilities (hospitals, physicians’ practices, nursing homes, allied health facilities, etc.), some assurance that those services will be there when we need them, and affordable medical care.

For a number of years, rising costs have diverted our attention from these reasonable expectations. So much so that our discussions of health care have obscured the idea of it as a public good. Our predominant focus has been on ways to ease costs or get around them somehow.

This can lead to our losing sight of important factors in the whole picture of health care in Vermont.

1 First of all, there is a tendency to overlook the fact that at any one time in a population of 600,000 (the size of Vermont’s) a certain amount, or incidence, of disease occurs. This establishes the need for a certain amount of medical care. Health care facilities evolve in a shared relationship with the population’s needs. The relationship holds reasonably closely as long as health care is not subject to the distortions of a market place that places profits first among all considerations.

Second, it is usually forgotten that it is the sick not the healthy who define the extent and kind of medical care available. This is another way of making the point above, that the health care bears a strong relationship to the incidence of disease in the population it serves. Payments made by the sick or in their behalf by third parties, are what support health care services in Vermont. This is captured in the notion that it is the sick who keep the beds warm for those who are healthy.

Third, health care facilities that have evolved in the way described become more or less fixed-cost entities. Their operating expenses are largely fixed. Whether they are working at full capacity at any one moment is subject to the normally varying need for those services at that moment. Regardless, their fixed costs remain the same. They must be met if they expect to avoid financial stress. Financial stress usually leads to cost shifting or to measures like staff cutting that invade quality of care.

Fourth, it is seldom emphasized enough that Vermont’s medical community has always conducted itself under a strong ethic to provide care to those in need whether they can pay or not, and continues to do so. This clearly has financial repercussions when the care is not fully paid for or paid for at all.

Fifth, a crucially important fact must be kept in mind: that a small percentage (20 percent) of Vermonters are very sick and use 85 percent of the health care. But it would be mistaken to think of them as the same peop le all the time. They include accident victims and victims who suddenly become ill with life threatening diseases. The very sick should not be dismissed as too costly by the remaining 80 percent of the population who are largely healthy and use little health care. This for ethical reasons of course, but also because as stated above, they essentially define the amount and kind of medical services we have. Payments for their health care are the main financial support of the health care services that all of us expect to be available to us should we need them

# Unless these factors are taken into consideration upfront it will be difficult to remedy any perceived problems in Vermont health care. The relationships that hold among these five points are of great importance for any discussions of health care. Omitting or changing any one of them will have profound, undesirable consequences for health care.

For example, if medical care were limited to only those capable of paying in full, it would require a complete reversal of the medical community’s ethics.

Even if the medical community could be convinced, which is highly unlikely, limiting care to those capable of paying would affect what kind and how many medical facilities would continue in Vermont.

The same problem arises if medical care is confined to the 80 percent of us who are mostly healthy. If this happened, the impact on medical facilities would be even more drastic. Without the very sick 20 percent, medical facilities would shrink dramatically because the money wouldn’t be there to support them and because the patients wouldn’t be there to require their services.

Changes to any of the five conditions listed above will impact negatively on Vermont health care. What may look like cost-saving proposals must be weighed against the social costs to Vermonters and the non-monetary costs to Vermont’s medical care facilities.

These conditions can be modified to some small extent. But finally they must be accepted by any plan to alter Vermont health care, lest we permanently damage our social fabric in Vermont and the medical care facilities we have.

It is our contention that the fundamental problem in Vermont health care is structural. It originates in how we pay for medical care not the medical care itself or who gets it.

Our medical facilities are roughly adequate for the medical needs of Vermonters. Our ways of paying the largely fixed costs of these facilities, however, are not adequate to meet their financial needs.

In other words, Vermont’s health care arrangement provides medical care to virtually all Vermonters. The extent and kind of its medical facilities has evolved from the incidence of disease in the entire Vermont population. Yet our ways of paying for medical care do not make provision for all Vermonters. Nor do they cover full medical costs in many instances. This strains the financial stability of our health care.

The structural problem is, there is no structure.

The elements of health care are not structured into a system capable of assuring us that our medical care will continue to be good, will be there when we need it, or that it will be affordable. These are the minimum requirements a health care system is created to address.

Every other country in the industrialized world has recognized these factors. Consequently, they all have health care systems. Some are more successful than others. Some have the government delivering the health care, but most have private delivery. They differ in many aspects, but all have four common features.

Applied to Vermont this would mean: A system requires paying all necessary medical for all Vermonters, because the health care facilities service all Vermonters, not just some. A system requires overall stewardship to make it work, and because health care is for all Vermonters, not just some, that means public stewardship. A system requires systematic, budgeted financing, and because health care is for all Vermonters, not just some, that means public financing. A system requires accountability to its clientele, and because its clientele are all Vermonters, that means public accountability. A system requires cost containment mechanisms within a global budget.

On the other hand, a system does not require changes in how medical care is delivered, that is, in its private delivery by doctors of our choice. Nor does it require changes in medical care services themselves.

The paper discusses in detail how budget mechanisms work to control costs and some ways to publicly finance health care. Systems in other countries are referred to and compared to ours. Reasons for our unnaturally high health care costs per person are given. All systems save large amounts of money over what we spend per person, and this is confirmed by a recent study demonstrating how one kind of health care system would save Vermont over one hundred million dollars.

For more information or for a copy of the white paper “Building a Health Care System in Vermont” please contact :

Deborah Richter, MD. PO Box 1467 Montpelier, VT 05601 802-224-9037 drich70480@AOL.COM

More Women Are Losing Insurance Than Men

The New York Times
August 31, 2001
by Tamar Lewin

“Over the last five years, the number of uninsured women has grown three times faster than the number of uninsured men, according to a new study by the Commonwealth Fund.”

“Lack of insurance is a serious problem for women, the report said, because women’s health needs are greater than men’s: women are more likely than men to have chronic illnesses, more likely to have mental health problems and more likely to make regular use of prescription drugs.”

“Older married women, aged 55 to 65, are 40 percent more likely to be uninsured than older married men, in part because their husbands meet Medicare’s age 65 coverage requirement and they do not. As couples near the age of Medicare eligibility, women married to older men are at especially high risk of being uninsured.”

Karen Davis, President of the Commonwealth Fund:

“It’s ironic, and not right that as women get older, and reach the age range where they’re most likely to be providing care to disabled family members, they’re also most likely to be having trouble making sure their own health care needs are met.”

http://www.nytimes.com/2001/08/31/national/31INSU.html

Comment: Again, 92% of Americans believe that it is important for the President and Congress to “deal with the issue of increasing the number of Americans covered by health insurance.” And yet they continue to follow policies that are supported by the 2% that believe it is “not at all important.” Why?

(Note: There will be no “Quote of the Day” for the next ten days.)

The Double-Edged Helix

By Kathleen Kennedy Townsend
Lieutenant Governor of Maryland

Originally published in the Washington Monthly, November 1997

Advances in genetic testing reveal yet another reason we need national health insurance; genetic discrimination could prevent a person from getting disability insurance.

A 20-year Veteran of the postal service loses his vision because of a genetic disorder known as Leber’s Optic Atrophy. No longer able to work, he applies for and receives disability benefits. But upon a routine review, the supervising government agency cuts off his benefits: Though he had no symptoms when he started as a mailman and, in fact, did not even know of his condition until its onset, the agency says his genetic predisposition for the disease represents a pre-existing condition.

A health insurer denies coverage to a five-year-old boy with a genetic predisposition to heart disease but no symptoms whatsoever. Deducing his condition from the medicine his doctor prescribes to prevent the onset of disease, the insurer says his genetic code disqualifies him for insurance.

A three-year-old boy is diagnosed with MPS syndrome, a genetic disease that causes severe damage to bones, joints, and tissue. The family’s private health insurer promptly informs the boy’s parents that it is canceling the boy’s policy. Diagnosed or not, it says, any genetic disease is pre-existing because the genetic cause has been with the boy since conception.

Welcome to the dark side of the genetic revolution. As with the other great advances in knowledge and technology–the invention of dynamite and the discovery of the atom, for instance–genetic research’s enormous potential for good is shadowed by an equally immense potential for harm.

Genetic research is marching forward, uncovering the roots of more and more diseases, and inspiring hope that they may one day be curable. But at the same time, the extraordinary medical benefits are clouded by the fact that gene research now offers insurance companies new ways to trim their expenses by denying coverage to those most in need of insurance.

The promise and peril of the genetic revolution were never in sharper relief than this past summer, when scientists announced they had traced the root of colon cancer to a gene mutation found primarily in Jews of Eastern European descent. The medical implications, of course, are breathtaking Those who carry the gene mutation can get regular colonoscopies to detect the disease in its early, treatable stages. But the same information that may save lives may be used by insurance companies to raise premiums, deny applicants, or cancel coverage for those who carry the colon cancer gene.

The fact that the gene mutation for colon cancer occurs almost exclusively in Jews begs a haunting question: Could being Jewish soon be a handicap to finding good health insurance?

In many ways this is just a new revision of an old problem. Insurance companies have always looked for better ways to weed out those who may one day fall ill and, consequently, need expensive treatment. In the ’70s, insurance companies raised rates on African-Americans because of the risk of sickle-cell anemia. At the outset of the AIDS epidemic, some health insurers refused coverage to people who lived in what were known to be gay neighborhoods.

Though the opportunities for genetic discrimination are now limited to those diseases known to be inherited, the chances for abuse will multiply along with our understanding of the science. Before long, scientists will uncover the genetic roots to more and more diseases, and it will be more possible than ever–for ourselves, our doctors, and our insurance companies–to predict who will come down with what illness.

This poses an extremely thorny public policy question: How do we pursue genetic information and the benefits for individual health while preventing its misuse? That is, how can we ensure that patients enjoy the full benefits of genetic research without fear that their DNA code may be used to deny them insurance?

We need an answer soon. Our understanding of DNA accelerates with every new discovery. But there is something darkly reassuring about its direction. Before long, we will all be uninsurable. Somewhere in our genetic makeup there will likely be some defect, some risk to turn an actuary’s knees to jelly.

Therein lies reason to be optimistic. Because every American faces the same challenge–genetic diseases are not subject to geographical or economic distinctions–every American has an equal stake in finding a solution.

The country took a giant step toward meeting this challenge when President Clinton proposed legislation that would make it illegal for employers and health and life insurers to discriminate in any way on the grounds of genetic information. If the bill passes, insurers will not be able to raise rates or deny coverage to anyone on the basis of their genetic code, whether that information is determined from a DNA test or a family-history questionnaire. Nor would employers be able to fire or not hire a qualified employee because they fear picking up the tab for a genetic illness down the road. The legislation would eliminate the most blatant form of discrimination.

But it is not a final answer to the challenge posed by the genetic dawn, as the president himself has said. An insurance company does not need a DNA test to keep applicants with questionable genes off their rolls. If an insurer wanted to keep those with genetic predispositions for, say, hemophilia off their rolls, they might merely eliminate coverage for clinics that specialize in treating the disease. They could also place a $ 500-per-year cap on blood transfusion services. Someone who suspects that they or their children may develop hemophilia would naturally want to shop elsewhere.

Furthermore, insurers can treat people with genetic flaws differently without giving reasons why. A medical director of a large insurance company in Canada described how this might work for the Human Genome Project’s Ethical, Legal, and Scientific Implications Task Force on Genetic Information and Insurance. As quoted in an article by Brandeis Professor Deborah A. Stone, the medical director said: “If a woman has a family history of breast cancer, I’ll ignore the breast cancer. I won’t rate her for the breast cancer, but I’ll scrutinize her record extra carefully. I’ll rate her for hypertension. I’ll hope there is something else I can find in the record to rate her on. I’ll tell her I rated her on hypertension. I won’t tell her I rated her higher than someone else with the same hypertension.”

As despicable as this sounds, it isn’t difficult to understand where insurers are coming from. Health insurers, we must remember, are businesses. They exist to make money, not to care for us when we get sick. If they determine with more accuracy who is going to get sick and who will not, they make more money. To them, the genetic revolution is a dream come true, and one way or another, they will make it work for them.

The real difficulty, therefore, doesn’t lie in the genetic information and who has access to it, but in the practice of underwriting itself–that is, in the right of insurance companies to deny someone coverage or set different rates for health reasons. After all, why is it unfair to deny health insurance because someone carries the breast cancer gene, but okay to deny coverage to someone who has chronic back problems because a drunk driver once crashed into her car? In either case, we penalize people–often with the gravest of consequences–for circumstances beyond their control.

So long as matters of life and death are left to the blind and often cruel logic of the marketplace, injustices will occur. Gene research only presents more opportunities, thus making it more common. As the research progresses, it becomes ever clearer that the country must ensure that every American has access to affordable health care coverage.

Right now, it is time for the nation and its political leaders to take a second look at national, universal health insurance so that no American will have to fear that his or her genes will be used against them.

Most politicians consider this suggestion the equivalent of asking Napoleon to take a second crack at Russia. Who can blame them? But they may want to consider a 1995 Harris poll that showed that 85 percent of Americans fear that they may one day be the victim of genetic discrimination. Last time I checked, that was enough to win any election.

Quality of Care Lower in For-Profit Nursing Homes than in Non-Profits

University of California/Harvard Study Finds Investor-owned Homes Skimp on Nursing, Frequently Cited for Deficient Care

A study published in today’s American Journal of Public Health (Full article in Adobe PDF format) finds that investor-owned nursing homes are much more likely to be cited for deficient quality than non-profit homes. The study analyzed data from 1998 government inspections of 13,693 nursing homes, virtually every nursing home in the U.S.

Inspectors cited investor-owned facilities for deficient care 46.5% more frequently than non-profits (and 43.0% more frequently than public nursing homes.) Investor-owned homes also had significantly higher rates of severe quality problems, situations in which patients were actually harmed by poor quality. Quality was particularly poor at facilities owned by nursing home chains.

Nurse staffing was also lower at investor-owned homes. Licensed nurse (Registered Nurse or Licensed Practical Nurse) staffing per patient at investor-owned facilities was 31.7% lower than at non-profits and 22.8% lower than at public facilities; nurses’ aide staffing was 11.9% and 16.0% lower respectively.

Almost two-thirds of all U.S. nursing homes are investor-owned, though tax-dollars pay for more than four-fifths of all nursing home bills. Periodic public scandals in the past have raised concerns that for-profit facilities may be skimping on care in order to make a profit, but the UC/Harvard study is the first nationwide study to document that investor-owned homes deliver worse quality care.

The research is the latest of a series of studies documenting that for-profit health providers compromise quality. For instance, investor-owned HMOs are known to deliver lower quality care than non-profits; investor-owned hospitals are more expensive, and have death rates 6% higher than their non-profit counterparts; and investor-owned kidney dialysis clinics have 21% higher death rates than non-profit facilities paid identical amounts.

“Nursing home advocates, discharge planners and the public need to be aware of the lower quality in investor-owned facilities and take this into account when selecting a nursing home.” said Professor Charlene Harrington of the University of California, San Francisco.

“When investor-owned chains understaff their facilites and underpay their workers, the chain makes money but quality suffers” said Dr. Steffie Woolhandler, Associate Professor of Medicine at Harvard and one of the authors of the study. “For the 1.6 million Americans who reside in nursing homes, the quality of care largely determines the quality of life. Nursing homes care for many people too frail, too sick, and too powerless to choose or even protest their care. It is immoral to put such vulnerable patients at the mercy of profit-hungry firms.”

“Our decade-old experiment with market medicine is a failure,” said study co-author Dr. David U. Himmelstein of Harvard, who also serves as National Spokesperson for Physicians for a National Health Program. “It’s time to end our race to the bottom in health care and implement national health insurance, including universal coverage for high quality long term care.”

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