PNHP

The future of Medicaid is not in good hands

The future of Medicaid is not in good hands

Medicaid commission draws unusual interest
By Julie Rovner
Reuters
May 13, 2005

When it comes to the Medicaid health program for the poor, the question in Washington has moved from whether to cut the program to how.

Six Republican and six Democratic senators wrote Health and Human Services Secretary Michael Leavitt earlier this week, urging that he turn the entire enterprise over to the nonpartisan Institute of Medicine.

That, however, is apparently not what the administration has in mind.
(Health and Human Services Secretary Michael) Leavitt said Wednesday he is moving “rapidly” to establish the commission, which sources say he will appoint himself rather than delegate the task to the IoM.

http://www.reuters.com/newsArticle.jhtml?type=domesticNews&storyID=8485696

And…

New Panel Will Study Medicaid With Eyes Toward Big Changes
By Robert Pear
The New York Times
May 12, 2005

The commission will have up to 15 voting members and 18 nonvoting members. The voting members will all be appointed by Michael O. Leavitt, the secretary of health and human services. Mr. Leavitt rejected bipartisan Congressional pleas for an independent commission under the auspices of the National Academy of Sciences.

http://www.nytimes.com/2005/05/12/politics/12medicaid.html

And…

Kaiser Daily Health Policy Report
May 10, 2005

Senate Majority Leader Bill Frist (R-Tenn.), speaking on the Senate floor before the budget was approved, said Leavitt will appoint the commission in a manner that “represent[s] a broad range of ideas and points of view.” He added that the commission will be “a fair and balanced forum to discuss the needs and challenges of the Medicaid system.”

http://www.kaisernetwork.org/daily_reports/rep_index.cfm?DR_ID=29943

Comment: The decision has already been made that the underfunded Medicaid program will be cut further. The process will be personally supervised by HHS Secretary Leavitt rather than being submitted to a highly credible, independent source: the Institute of Medicine. Secretary Leavitt’s decision is particularly alarming since he has a track record on his approach to reducing Medicaid spending. When he was governor of Utah, he eliminated coverage for hospitalization and specialized services.

But we have the assurances of the Senate Majority Leader, Dr. Bill Frist, that the commission will be “fair and balanced.” It is ironic that Dr. Frist chose the registered, trademark phrase of Fox News. Since “Fair and Balanced” has been reduced to a mere trademark label, it seems that this absolves Fox from being either fair or balanced.

The question is, does Dr. Frist believe that this absolves Secretary Leavitt from the responsibility of being fair and balanced? Or is he acknowledging, tongue-in-cheek, that the whole process is a farce and cannot lead to constructive change? Unfortunately, based on his own track record, it appears that Dr. Frist is supporting an unfair and imbalanced process that portends a bleak future for Medicaid patients.

The disturbing decline of primary care

Career Plans for Trainees in Internal Medicine Residency Programs
By Richard A. Garibaldi, MD, Carol Popkave, MA and Wayne Bylsma, PhD
Academic Medicine
May 2005

Primary care is in crisis. Over the past five years, there has been a significant trend among medical students to move away from internships in primary care disciplines and to select, instead, residency programs oriented to subspecialty training.

In 1998, 54% of PGY3s (in internal medicine programs) planned to practice general internal medicine compared with 27% in 2003. Strikingly, in 2003, only 19% of PGY1s (in internal medicine programs) planned to pursue careers in general medicine.

Many reasons for the decline in interest in generalist careers have been described. These include both positive features that are attracting residents to subspecialty careers and negative forces that are perceived by medical students and residents that make general internal medicine and primary care less appealing. The positive features attracting residents to subspecialty careers include the intellectual content of the subspecialty field, technologic innovations, increased prestige, controllable lifestyle, a growing demand among consumers for subspecialty care, and higher income potential. Conversely, the negative factors making primary care less appealing include the trainees’ perceptions of job dissatisfaction among primary care practitioners, lack of prestige, indebtedness, lower income potential, greater stress, bureaucracy, changing consumer preferences away from primary care, and a lack of clarity about the future of primary care practice as other types of providers enter the field.

http://www.academicmedicine.org/cgi/content/full/80/5/507

Not only has there been a shift from general internal medicine to the medical subspecialties, there has also been a dramatic decline in the number of graduating medical students selecting family medicine residencies. The graph depicted at the following link demonstrates the trends in enrollment in all primary care residencies: http://www.graham-center.org/x468.xml

Comment: The following two principles have been well documented in the health policy literature. A strong primary care infrastructure improves quality and reduces costs. Excess capacity in specialized services significantly increases costs without a commensurate improvement in population health care outcomes.

This disturbing trend in the shift of enrollees from primary care into subspecialty and surgical programs is not good news for those concerned about the continuing escalation of health care costs, which is almost everyone. Not only are specialists’ fees higher, but their practice patterns increase the intensity of services. An appropriate capacity in specialized services is certainly desirable. Many have clearly benefited from the best that our high tech system has to offer. But the United States is unique in having excess concentrations of high tech, specialized services which are over-utilized, dramatically increasing costs without a demonstrable improvement in overall medical benefit.

Few from the health policy arena would disagree with the concept that these trends need to be reversed. But not enough is being said about how that might be accomplished. When you look at the reasons given by students for making their choices, it is difficult to imagine a simple program which might shift their interests.

But just imagine what might happen if we had a single system of funding health care. A single payer system budgets capital improvements not only to ensure adequate capacity but also to avoid the excess capacity that tends to result in excessive frequency and intensity of services. In a single payer system, health care professionals negotiate for reimbursement rates. There is no reason that negotiations could not also address some issues with the work environment. Most physicians who work within integrated health care systems find greater job satisfaction, and single payer financing is very conducive to the expansion of integrated systems of care. Also the administrators of a single source of funding would be in a position to pressure academic centers to make greater efforts to be certain that the ratio of trainees is appropriate to the needs.

Reforming the way we pay for health care certainly will not solve all of the problems that have resulted in the decline of primary care. But it would be a great start. You can accomplish much when you control the funds. Private plan administrators are accountable to their investors, but public program administrators are accountable to the taxpayers. Isn’t that much more reasonable since the taxpayers are also the patient-beneficiaries of the health care system?

Two-tiered Medicare?

Centers for Medicare & Medicaid Services
Ruling No. 05-01
May 3, 2005

TITLE: Requirements for Determining Coverage of Presbyopia-Correcting Intraocular Lenses that Provide Two Distinct Services for the Patient: (1) Restoration of Distance Vision Following Cataract Surgery, and (2) Refractive Correction of Near and Intermediate Vision with Less Dependency on Eyeglasses or Contact Lenses

In general, items or services covered by Medicare must satisfy three basic requirements: (1) they must fall within a statutorily-defined benefit category; (2) they must be reasonable and necessary for the diagnosis or treatment of illness or injury or to improve the functioning of a malformed body part; and (3) the item or service must not be excluded from coverage.

A conventional intraocular lens (IOL) is covered when implanted following cataract surgery.

Medicare specifically excludes certain items and services from coverage, including eyeglasses and contact lenses. The Congress, however, has provided an exception for one pair of eyeglasses or contact lenses covered as a prosthetic device furnished after each cataract surgery with insertion of an IOL.

CONCLUSION

The statute specifically states that one pair of conventional eyeglasses or contact lenses furnished subsequent to each cataract surgery with insertion of an IOL is covered. A single presbyopia-correcting IOL essentially provides what is otherwise achieved by two separate items: an implantable conventional IOL (one that is not presbyopia-correcting), and eyeglasses or contact lenses. Although presbyopia-correcting IOLs may serve the same function as eyeglasses or contact lenses furnished following cataract surgery, IOLs are neither eyeglasses nor contact lenses. Therefore, the presbyopia-correcting functionality of an IOL does not fall into the benefit category and is not covered. Any additional provider or physician services required to insert or monitor a patient receiving a presbyopia correcting IOL are also not covered. For example, eye examinations performed to determine the refractive state of the eyes following insertion of a presbyopia-correcting IOL are non-covered.

Regardless of site-of-service for insertion of a presbyopia-correcting IOL, the beneficiary is responsible for payment of physician services attributable to the non-covered functionality of a presbyopia-correcting IOL inserted following cataract surgery. In determining the physician service charge, the physician may take into account the additional physician work and resources required for insertion, fitting, and vision acuity testing of the presbyopia-correcting IOL compared to insertion of a conventional IOL.

The beneficiary is responsible for payment of the charges for physician services that exceeds the physician charge for insertion of a conventional IOL following cataract surgery.

http://www.cms.hhs.gov/rulings/CMSR0501.pdf

Comment: One of the more difficult issues facing Medicare administrators is deciding which technological advances should be included in the Medicare program, considering the continuing escalation of health care costs.

Everyone would agree that expensive technology that fails to provide any significant benefit should be excluded from coverage. Likewise, technology that has been proven to be beneficial, and is not inordinately expensive, should be included. The difficult decisions involve technology that is very expensive and provides only a questionably marginal benefit. Most would agree that such care might reasonably be excluded in the absence of adequate evidence-based benefit, unless you just happened to be the individual who wanted access to that service. But the line must be drawn, and this seems to be a sensible approach.

Where has the line been drawn with intraocular lenses (IOLs)? IOLs are covered when implanted in conjunction with cataract surgery, whereas eyeglasses or contact lenses are not covered for presbyopia. But there is an exception. One pair of eyeglasses or contact lenses is covered after insertion of an IOL following cataract surgery.

This ruling then goes on to make a very fine technical distinction between presbyopia-correcting IOLs and the post-cataract surgery eyeglasses/contact lenses. The IOL is covered, the eyeglasses are covered, but the functionality of the IOL that corrects presbyopia is not covered because it has been shifted from the eyeglasses to the IOL!

What is unique about this ruling is that it allows Medicare to pay an amount that a conventional IOL would cost, but it requires the patient to pay for additional costs and services for the presbyopia correction of the IOL.
Because these are excluded services, they may also be excluded from Medicare fee determinations. It can be anticipated that the additional out-of-pocket expense for the patient will be significant.

Thus enters two-tiered care within the traditional Medicare program. And we didn’t even have to go to the private Medicare Advantage options to accomplish it. Limited income patients receive outdated technology and one pair of eyeglasses to last a lifetime, whereas more affluent patients receive the latest technology which corrects their presbyopia for life.

This is a beneficial service which is not inordinately expensive. It should be completely covered by Medicare.

Now that the principle of a two-tiered Medicare program has been established, what might we anticipate? The cost of any new technological advance that is truly innovative (i.e., not a defined Medicare benefit) can be passed on to the patient, at retail prices, beyond the Medicare approved fees of the service without the new technology. Thus the wealthy will receive the benefits of the newest technology whereas those with modest resources will not: the definition of a two-tiered system.

We can get it right. With a universal social insurance program, all reasonably affordable, beneficial services can be made available to everyone with legitimate medical needs. Let’s fix Medicare, and then use it to cover everyone.

Health Care for All in Michigan

Michigan needs health care access for all:
Since a national universal system is not a reality, Michiganians must create local solutions to provide medical care for the uninsured and underinsured
Detroit News
detnews.com
Wednesday, May 11, 2005

By Irvin D. Reid

If you asked most Americans whether health care is a basic right, we emphatically would say yes. Unfortunately, this conviction has not translated itself into public policy. Citizens of this country are guaranteed many rights, but access to high-quality health care sadly is not among them.

While in most respects, this nation’s health care system is among the world’s best, millions of our citizens remain underserved — or not served at all. If you do not have money, however, the door to our health system may well be closed to you.

More than 43 million Americans are without health insurance, and this number is growing. All over this country, people who work hard every day often must choose between paying rent and buying food or obtaining health care for themselves or their families.

It is important to remember that most people who have no health insurance do have jobs. They are members of working-class families whose employers offer no health benefits, or whose expenses are such that health care must be a low priority. The inability of working men and women to obtain affordable health insurance is a consuming problem that is spreading beyond traditional minority populations.

While the lack of affordable health care is a statewide problem, it is a crisis in Detroit.

Twenty-two percent of Detroit’s residents are uninsured compared with 11 percent statewide. It gets worse if you add people who are eligible for Medicaid, the federal health care program for the poor. Then 52 percent of Detroit’s residents lack coverage or need government help compared with 22.5 percent statewide.

Only 35 percent of Detroit’s residents have commercial insurance; statewide, the figure is 63 percent.

Given recent trends in employer benefit givebacks, which affect all workers, it is likely that the health care problem of minority populations will become the problem of Americans across racial, ethnic and some economic lines. Our society continues to put a bandage on this problem when we should be taking steps to cure it.

From birth itself, urban children of color are at a disadvantage. Infant mortality rates are much higher than for whites, and blacks and Latinos are more likely to have low-birth-weight babies. An African-American infant has more than twice the risk of dying in the first year of his or her life than a baby born to a white mother. Nearly one in four Hispanic children misses at least one of the full series of vaccines against childhood diseases such as polio.

African-Americans lead the nation in heart disease, obesity, stroke, diabetes, cancers and kidney disease. African-Americans have a 60 percent greater risk of death or disability from stroke and coronary disease than whites.

Hispanics have twice the rate of diabetes as white Americans. African-Americans and Hispanics, who comprise 25 percent of the U.S. population, account for 55 percent of the reported AIDS cases.

African-American women have three times the rate of high blood pressure, and are 40 percent more likely to die from cardiovascular disease, when compared with white women. Hispanics have higher mortality rates due to cancer of the stomach and the cervix than non-Hispanic whites.

And then there is the cost of prescription drugs. Each of us has known or heard of individuals, not all of them minorities or low-income, who have postponed filling prescriptions because they simply are too expensive. Some take half the prescribed dosage to cut costs and as a result risk foregoing the benefits of their prescriptions.

When we read in the future about some brilliant new therapy or surgical technique, we should think about how many people, regardless of race, whose lives might have been saved who will not have access to it because their insurance will not cover it, or they lack insurance or they simply cannot afford it.

The issue of inadequate access to health care by the underinsured and uninsured should be addressed nationally. But with little hope of a national system of universal health care, workable local solutions must be considered.

Wayne State University medical faculty in their various roles in health delivery venues in Southeastern Michigan, primarily in the Detroit Medical Center, provided more than $150 million in uncompensated health care to local residents over a five-year period. Gov. Jennifer Granholm is supporting a provider fee for practicing physicians to relieve the financial burden on physicians who care for a disproportionate share of those on Medicaid. Hopefully, a bipartisan solution can be found soon.

We no longer can speak of civil liberties or human rights in this country without speaking of public health. Health care is either a right or it is a privilege. It is something that is yours simply by virtue of your membership in civilized human society, or it is a commodity available to those who can afford it. Most of us would say it is the former. Increasingly, it actually is the latter.

Irvin D. Reid is president of Wayne State University in Detroit. Send letters to The Detroit News, Editorial Page, 615 W. Lafayette, Detroit, MI 48226, (313) 222-6417 or letters@detnews.com.

Paying for health care for illegal immigrants

Payments to Help Hospitals Care for Illegal Immigrants
By Robert Pear
The New York Times
May 10, 2005

The Bush administration announced on Monday that it would start paying hospitals and doctors for providing emergency care to illegal immigrants.

The money, totaling $1 billion, will be available for services provided from Tuesday through September 2008. Congress provided the money as part of the 2003 law that expanded Medicare to cover prescription drugs, but the new payments have nothing to do with the Medicare program.

Dr. Mark B. McClellan, administrator of the Centers for Medicare and Medicaid Services, said a hospital should not directly ask a patient “if he or she is an undocumented alien.”

The Bush administration abandoned a proposal that would have required many hospitals to ask patients if they were United States citizens or legal immigrants.

http://www.nytimes.com/2005/05/10/politics/10health.html

From CMS: Section 1011. Federal Reimbursement of Emergency Health Services Furnished to Undocumented Aliens:
http://www.cms.hhs.gov/providers/section1011/

Comment: Using federal tax funds to pay for medical care for undocumented residents is certainly highly controversial and will provoke considerable comment, much of it negative. But another perspective should be included in the debate.

California will be receiving the largest allocation of these funds, representing the magnitude of the immigrant problem within the state. When the participants in the Health Care Options Project studied the various models of reform for California, the costs of care for undocumented residents were a consideration.

The team of physicians from the University of California at San Francisco that developed one of the single payer models elected to include undocumented residents in their proposal. An independent microsimulation of their model demonstrated that truly comprehensive care could be provided for absolutely everyone, including the undocumented, while reducing health care costs for Californians by over $7 billion.

If the undocumented were excluded from coverage, the costs of these emergency services would still have to be picked up, either by cost shifting or through government subsidization. Providing affordable access to routine care and preventive services would offset at least part of the costs of expensive emergencies that could have been averted through the provision of more timely and appropriate care, not to mention reducing the costly administrative burden of a fragmented system of funding care. Besides, if establishing a single system meant that we had a more effective and less expensive system for the rest of us, would we really begrudge the fact that everyone would be included?

The physician authors of the UCSF proposal (J. Kahn, V. Lingappa, K. Farey, T. Bodenheimer, K. Grumbach, D. McCanne) believe that everyone should have affordable access to health care. It is reassuring to see that Congress and the Bush administration agree, to a certain extent, that no person should be refused care when really in need, and that the government should use public funds to help ensure access to that care.

In no way have we begun to resolve the debate over undocumented immigration. But, with the support of a conservative government, we have moved much closer to the principles that everyone should have access to health care, and that it should be funded in a more equitable manner. That’s a great leap forward on the path toward health care justice.

Pressure for Universal Health Care Builds in Detroit

Legislators Call for Government-Subsidized Health Care Plan Burns Big Three
May 9, 2005
Detroit Auto Scene
www.detroitautoscene.com

By Antonio Vasquez
Staff Reporter

U.S. Rep. John Dingell recently spoke in support of universal health care coverage during a Cover the Uninsured Week event at Campus Martius in downtown Detroit.

Out-of-control health care costs are one of those massive public policy issues affecting all Americans in different ways.

If you’re a high-ranking executive operating in a global marketplace, the high price of employer-subsidized health insurance negatively impacts your business model because foreign competitors do not bear the same financial burden.

Or if you’re a struggling restaurant worker like Charlotte Jasper of Detroit, not having any health insurance at all is a matter of life and death.

In the case of General Motors Corp., it adds roughly $1,500 in costs to every vehicle produced, whereas the costs borne by Japanese competitors such as Toyota are negligible because it’s headquartered in a country with a national health care system.

And in the case of Jasper, you nearly burn down your house after leaving the stove on because you passed out from combined symptoms of high blood pressure and diabetes that could have been controlled had you the money to afford proper treatment.

While one situation is a simple matter of economics, the other is a moral issue that ultimately determines how advanced we are as a society.

But for organizers of national Cover the Uninsured Week, both manifestations point to a growing problem deserving of more public awareness as well as the appropriate federal intervention.

In promoting over 1,600 events across the country and over 50 in Michigan alone, Cover the Uninsured Week organizers say that local and regional efforts are important, but a comprehensive, nationwide solution is what is truly needed.

Universal health care – that is providing health insurance for all regardless of position along the economic totem pole – has long been a mainstay of the Democratic Party platform, so it was no surprise that at last week’s kickoff event, the state’s top democratic policymakers were the ones clamoring for change.

U.S. Sen. Debbie Stabenow, along with U.S. Reps. John Dingell and John Conyers, gathered in downtown Detroit’s Campus Martius Park to lend their support, as did Wayne County Executive Robert Ficano, Detroit Mayor Kwame Kilpatrick, and Macomb County Board of Commissioners Chair Nancy White.

Michigan Gov. Jennifer Granholm could not attend due to a prior commitment, but she sent along a signed proclamation making the week-long event official for the state.

Regarding the negative impact that spiraling health care costs pose to sectors such as the automotive industry, Dingell noted that American companies still manufacture the best product, but their ability to compete is hampered by the billions spent on health care for active workers, retirees, and their dependents.

In 2004, for example, GM dished out roughly $5.2 billion in health care-related expenses for about 125,000 active employees and 339,000 retirees, while Ford Motor Co. and Chrysler Group spent $2.0 billion and $1.3 billion, respectively.

On the other hand, Toyota Motor Corp. covered health insurance payments for about 64,500 active workers and less than 3,000 retirees in Japan.

In fact, according to a recent AutoWeek article, Toyota’s health care costs are so negligible they aren’t even a line item in the company’s financial statements.

“Every country with whom we compete pays for the health insurance costs of their workers,” Dingell said.

“If you look at some of those wonderful cars driving down the road, you’ll find that there is $1,500 worth of health care costs in that automobile,” he noted. “Now if you look at the slightly less wonderful foreign cars driving down the road, you’ll find there are virtually zero health insurance costs for those vehicles.

“The economics of this is very simple; this country can no longer afford to compete until and unless we address the problem of providing adequate health insurance for our people,” Dingell said.

Stabenow added: “What is the most disturbing to me … is that for the first time this year, there will be more automobiles made in Canada than in Michigan.

“That’s not because of wage differences, that’s not because of environmental regulation differences, that’s because of health care, so this is absolutely an economic issue.”

Also of concern to lawmakers is the alarming number of Americans who live without any form of insurance.

Nationally, there are roughly 45 million Americans without health care, 1.08 million of which live in Michigan, according to U.S. Census Bureau data.

The crisis is so severe that being uninsured or underinsured extends beyond the poor, even affecting those who are gainfully employed.

The Centers for Disease Control and Prevention estimate that nearly 20 million adult workers have no health coverage, including roughly 447,000 workers in Michigan.

Jasper, who shared her own personal story at the Cover the Uninsured kickoff event, is one of those Americans.

She now has the means to treat her high blood pressure and diabetes, but only because her daughter is a nurse and supplies her with free samples of costly medication Jasper would otherwise not be able to afford.

“What if people like me didn’t have a daughter who’s a nurse, who can help them?” Jasper lamented. “All I say to the world is please help us. We need it real bad.”

Stanford Medicine examines health care reform

http://mednews.stanford.edu/stanmed/2005winter/

Dear Readers,

I often wonder, what will it take for the citizens of the United States to demand quality health care for all Americans? How far will our current system of health-care delivery have to spiral out of control for America’s citizens to finally demand something better?

Our current system is so mediocre that it ranks 37th in a World Health Organization study of health-care system performance. The problem certainly isn’t that we spend too little on health care. In fact, the United States spends more on health care per capita than any other nation on the planet, more than 15 percent of our gross national product.

So what is it? Why is America’s health-care system performing so poorly on this global scale, and do we really even have a health-care system?

Consider some facts:

Health insurance premiums have reached extraordinary heights. The increasing cost has created a crisis for employers and individuals alike. Detroit’s General Motors cites soaring health-care spending as the leading factor undermining the company¹s global competitiveness. Health-care costs now account for $1,400 of each vehicle¹s price tag.

Largely because of rising costs, our uninsured population is substantial and is growing. One in 7 Americans is currently uninsured. The total is increasing at a rate of 100,000 people a month. Moreover many other citizens are suboptimally insured. According to the Institute of Medicine, lack of coverage is responsible for the deaths of 18,000 people each year.

The system’s deficiencies erode the public¹s trust in medicine. The recent debacle surrounding the availability of the flu vaccine, which revealed how tenuous our supply line for vaccines can be, surely has shaken the public’s trust. So too have the revelations of potential health hazards of drugs that the public had embraced (e.g.,COX-2 inhibitors such as Vioxx).

It’s hard to fathom why our nation, with its great financial and intellectual capital, has a health-care system that’s so far from world class. Much of the trouble comes from the belief that health care must be run like a business, as if personal health were a commodity. This notion, promoted over the past two decades by our leaders in Washington, posits that the free market will restrain costs and bring high-quality care to all. Obviously, this strategy has failed miserably.

I do not believe that modifications around the edges of our health-care quagmire are going to do it. We need sweeping change. I personally favor a single-payer model incorporating support for medical training, innovation and discovery. But I’m not convinced that our political leaders can muster the will to overcome the obstacles from special interests with stakes in supporting the status quo. This reality means other options must be considered.

Perhaps it’s at the local level where true reform must take shape. Oregon, with its inclusion of the uninsured in its Medicaid program, has been a leader in this area. California could follow suit if the legislature passes a bill, to be reintroduced this year, that would insure Californians under a single-payer plan. One thing is clear to me. We need more pioneers and innovators.

This issue of Stanford Medicine takes a look at America’s struggle for health-care reform. You’ll hear from six leading health-policy experts posing some possible solutions to the crisis. You’ll also learn about recent reforms in Medicare and Medicaid that its chief, Mark McClellan, MD, PhD, believes change the paradigm. And Jan van Lohuizen, President Bush¹s principal pollster, will share some thoughts on what Americans are thinking about health care.

I hope you’ll find the magazine not only thought-provoking but that it will move you to take action.

With best regards,

Philip A. Pizzo, MD
Professor of Pediatrics and of Microbiology and Immunology
Carl and Elizabeth Naumann Professor
Dean, Stanford University School of Medicine

Op-Ed: Privatize NHS?

By Colin Leys Allyson Pollock
Tuesday, May 3, 2005
Globe and Mail Update

Living next door to the United States, where half of all personal bankruptcies are caused by medical expenses, Canadians know what a market in health care implies. The Canada Health Act, giving comprehensive and equal coverage to all, was modelled on European, and especially British, principles. And because it effectively bans for-profit hospitals, it gives all Canadians, including the affluent, an incentive to support Canada’s public system. The system has its flaws and imperfections, like everywhere else, but polls consistently show that the vast majority of Canadians value it highly and will defend it.

So no wonder Canadians are astonished that Britain should succumb to pressure from the U.S. government and corporations and turn the much-loved British National Health Service (NHS) into a laboratory for privatization.

For the (mainly U.S.) global health-care industry, Britain posed the ultimate challenge – how to privatize a system that was still mainly under public ownership and control, with strong political accountability. The first breakthrough was into the physical plant and infrastructure.

Back in 1948, all hospitals and most clinics were taken into public ownership. Now, through public-private partnerships (PPPs), public buildings and assets are being transferred to an unaccountable private sector. Instead of building new ones with money borrowed cheaply by the government, the British are building hospitals with money borrowed more expensively by private companies, for which the public nonetheless pays, by leasing back the buildings over 30 years.

The New Labour government of Tony Blair represents this as “extra” investment, money that would not otherwise be available, but its own backbenchers have described it as going to a loan shark. Media commentators have called it mortgaging your future – and your children’s and grandchildren’s.

Emotive stuff – but then the issues are emotive. The impact of financing PPPs, with their heavy extra costs, has been like that of a killer plague, highly contagious and catastrophic. The first wave of PPP hospital schemes required average reductions of 30 per cent in bed numbers as well as 25-per-cent reductions in nursing staff – in order to meet the extra financing costs out of the hospitals’ operating budgets.

The next stage is the privatization of clinical services. The companies bidding for PPPs are teaming up with health-care transnationals to provide clinical services – mainly routine elective surgery (such as cataracts and hip replacements), and diagnostics and radiology. Like all market actors, they operate by selecting the most profitable treatments and patients. This is why routine elective surgery is the first thing to be put into the marketplace.

There is already huge unease about the consequences. Doctors and nurses and other health professionals are beginning to mobilize against the growing role of health-care transnationals. Last month, 95 per cent of the surgeons attending the annual conference of the Association of Surgeons of Great Britain and Ireland opposed privatization and voted for expansion to take place only within the NHS. In their view, the privatization of elective surgery was already adversely affecting the quality of surgery, training standards and access.

Netcare, a large South African company now treating NHS patients, has been found to be turning away 20 per cent of the patients referred to it because of the risk they posed – cherry-picking twice over. Even so, Netcare’s complication rate is higher than that of NHS hospitals, prompting concerns about standards and quality of care.

The implications for future standards are even more serious, because the private companies don’t pay for training. Their profitability depends on operating as fast as possible on “quick and easy” cases – precisely those that trainee doctors need to train on, but which will be seen less and less in NHS hospitals.

There are major concerns, too, about costs – the private companies get five-year contracts for a guaranteed number of patients at a price per treatment 40-per-cent higher than the NHS price, and are paid regardless of how many are actually treated. Recent reports show that that they won’t achieve their contracted numbers.

The privatization of routine elective surgery is a prelude to the creation of a full health-care market, to be regulated by an independent regulator on the basis of purely financial criteria (a banker has already been appointed to the job). The present government envisages private companies providing a steadily growing share of clinical services. The U.S. health-care industry is working hard to see that future governments go further still. For example, Tony Blair’s senior health-policy adviser, and the architect of many of New Labour’s pro-market health policies, quit last year to join United Healthcare, a major U.S. HMO, as president of its European subsidiary, with a mandate to break into Europe’s publicly-financed health-care systems.

British voters are broadly opposed to the privatization policies being imposed on the NHS, but they can’t register this electorally so long as the leadership of both major parties is in thrall to business-school ideology. Canadians should learn from Britain and not let their health-care system be hijacked in the same way.

Colin Leys is emeritus professor of political studies at Queen’s University and an honorary senior research fellow at University College, London. He is the author of Market Driven Politics: Neoliberal Democracy and The Public Interest. Allyson Pollock, a physician, is director of research and development at University College Hospitals Trust, London, and professor of health policy at University College, London. She is the author of NHS plc: The Privatisation of Our Health Care.

Does insurance make health care affordable?

Health Insurance: Can Californians Afford It?
California HealthCare Foundation
May 3, 2005

For minimum-wage workers and the chronically ill, the cost of health insurance is increasingly unaffordable and may not be providing the financial protection for which it is intended, according to Health Insurance: Can Californians Afford It?, a new analysis from the California HealthCare foundation (CHCF). The snapshot of health insurance costs reveals, however, that the issue of affordability is not isolated to those groups.

“We have to consider that these worrisome affordability figures may be a sign of things to come for a greater number of Californians,” said Mark D. Smith, M.D., M.B.A., president and CEO of CHCF.

The snapshot compares health insurance premiums and out-of-pocket expenses to hourly wages and household spending across California and within six local markets: Fresno, Los Angeles, Sacramento, San Diego, San Francisco, and Shasta. The results show the significant financial pressure health care costs are putting on insured Californians.

“… we should recognize that even for those Californians who are insured, it can be a struggle to pay their share of premiums and out-of-pocket expenses. If health insurance becomes unaffordable, this will increase the numbers of uninsured Californians,” (said Dr. Smith).

Press release:
http://www.chcf.org/press/view.cfm?itemID=110808&archive=2005

The report (22 slides):
http://www.chcf.org/documents/insurance/HealthInsuranceAffordability.pdf

Comment: Some important numbers from the report:

The premium for Blue Cross or Blue Shield plans with more limited benefits and higher cost sharing is 66% of the entire income of minimum wage employees (or 77% if standard higher option plans were selected).

For employees with median wages, the median premium is 14% (PPO) to 17% (HMO) of wages.

For small group coverage, the employee’s contribution to the premium plus the out-of-pocket payments for a moderate PPO plan is $370 for the healthy but $5304 for the chronically ill. For limited PPO individual coverage, the premiums paid plus out-of-pocket expenses are $1128 for the healthy and $11,556 for the chronically ill. For an after tax income of $29,458, that means that the chronically ill would be paying 39% of income for this coverage.

Because of the obvious concerns about the uninsured, most efforts at reform today are directed toward patching together coverage by expanding our existing, fragmented system. But this is yet one more report that should make us question the wisdom of continuing on this path of pseudo-reform.

We are paying the insurance industry a couple hundred billion dollars to design insurance plans for us. But the plans they have produced protect their own industry from loss by passing financial risk on to those who most need the protection. This defeats the traditional concept of insurance: pooling funds to provide a source of payment for specified losses, in this case the cost of medical care. And at today’s cost of health care, such financial protection has become essential for all but the very wealthy.

What is ironic is that we do not have a lack of funds to pay for health care. The $1.9 trillion that we are already spending is enough to provide comprehensive health care services for everyone. But we are diverting a significant portion of these funds to an insurance industry that has proven that it cannot competently provide financial protection for those with significant needs. And it continues to get worse.

We would never tolerate that level of incompetence and waste in a government bureaucracy. So maybe it is time to establish our own governmental insurance bureaucracy. At least we’ll be in a position to demand, as voting taxpayers, that health care dollars be spent on health care.

Shifting from co-payments to coinsurance

Firms passing on cost of care
By Marguerite Higgins
The Washington Times
May 3, 2005

… out-of-pocket costs, which jumped 9 percent for workers at large companies last year, are expected to continue rising as businesses shift more of the health care costs onto their workers.

The cost shifting signals that insured consumers probably will see more co-payment plans, in which patients pay a set price for doctor and hospital visits, change to plans in which patients pay a percentage of the total cost of the visit, said David Guilmette, a managing director at Towers Perrin.

http://www.washtimes.com/business/20050502-094124-1088r.htm

Comment: Is there any significant difference between a patient paying out-of-pocket a $25 co-payment or 20% coinsurance?

For illustration purposes, let’s compare the impact of a plan that has a $25 co-payment for a physician visit and $250 for hospitalization, with a plan that has 20% coinsurance for both physician and hospital services.

Let’s assume that a patient visits his or her physician and that hospitalization is recommended. The total allowed charges are $43,000 (even though itemized charges before insurance discounts are applied might be $117,000). The patient with the co-payment plan pays $25 plus $250 for a total of $275. The patient with the coinsurance plan pays 20% of $43,000 for a total of $8600. Thus the simple measure of changing from co-payments to coinsurance in this case results in a 3100% increase in out-of-pocket expenses!

But wait, there’s more! Another trend today is to shift to high-deductible plans. Using the same examples, let’s assume that the co-payment plan has a deductible of $250, and the coinsurance plan has a deductible of $5000. With the co-payment plan, the deductible has been met by the co-payments and so the out-of-pocket cost is still $275. With the coinsurance plan, the patient must pay 20% of the amount over the deductible, which is $7600, plus 100% of the deductible, which is $5000, for a total out-of-pocket expense of $12,600, or a 4600% increase in out-of-pocket expenses. Innumerable studies have confirmed that out-of-pocket expenses of much less than this magnitude impair access to care and impair health outcomes, the opposite of what a rational health care system should be supporting.

Buried in this example is a number that really does make a difference. By contracting, charges were reduced by $74,000. That number simply disappeared; no funds changed hands. Was that the right amount to adjust off? Because of all of the cost shifting that is taking place, it’s not clear. But with our own publicly funded and publicly administered system, we’ll eliminate cost shifting and we’ll get that number right. That will represent the degree of savings that our policies should be aiming for. Then we can dispense with diddling around with the institution of individual financial barriers that impair outcomes and concentrate on the more important task of ensuring access for everyone who does need care.

New York Universal Health Care Options Campaign

For release May 2, 2005

Contacts:
Mark Dunlea, Hunger Action Network, 518 434-7371
Physicians for a National Health Program – Capital District, PaulSorum@cs.com

New York Universal Health Care Options Campaign

Assembly Health Committee to Vote this Week on Universal Health Coverage Commission

Senate Republican Introduces Similar Proposal

ALBANY, NY � Members of the New York Universal Health Care Options Campaign praised recent actions in the Assembly and Senate to expand quality, affordable health care to all New Yorkers through the creation of a Legislative Commission on Health Care Coverage.

On Tuesday, the New York State Assembly Health Committee is expected to approve a Commission proposal (A6575) introduced by Assemblymember Richard Gottfried (D � Manhattan) and endorsed by forty other Assemblymembers. A related Commission bill (S4928) has been introduced by Senator Marchi (R � Staten Island).

Five years ago, the Assembly and Senate created Family Health Plus, covering over 450,000 low-income working families in New York. Last month, the General Assembly in neighboring Vermont passed a universal health care-oriented proposal dubbed �Green Mountain Health.� Earlier this year, Maine�s landmark �Dirigo� health plan took effect, providing affordable coverage to thousands of uninsured residents. Last year, Illinois passed its �Health Care Justice Act� setting underway a two-year process of public debate of health care reform, and earlier this decade, California�s �Health Care Options Project� stimulated renewed Legislative action to expand health insurance coverage.

�The recently-adopted state budget state established a new �Commission on Health Care Facilities in the 21st Century�, and charged it with making recommendations for �right-sizing� the state�s health care delivery system,� said Mark Dunlea, Associate Director of the Hunger Action Network of New York State. �What�s also needed now is a complementary process to look at the insurance side of the equation so that New Yorkers not only have places to go for quality services, but also a way to afford them.�

Many policymakers acknowledge that resolving the problem of lack of insurance is critical to the success of restructuring New York�s health care system. Many of the hospitals with the biggest financial problems are those serving the poorest communities with the highest number of uninsured patients.

Every year, 18,000 Americans die prematurely because they don�t have health insurance, according to a comprehensive report by the National Academy of Sciences� Institute of Medicine. Since they receive inadequate health care and their major illnesses are diagnosed too late, the uninsured become sicker and die sooner. For instance, uninsured women with breast cancer have a 30 to 50 percent higher risk of dying than women with health insurance.

The current system for providing medical care to the uninsured drives up healthcare costs for everyone else. When the uninsured do receive care, it is often at hospital emergency rooms and urgent care clinics�costly and inefficient places to provide primary care. Nationwide, facilities that treat the uninsured provide nearly $100 billion in healthcare services each year. To pay for unreimbursed costs, these facilities have to increase costs to public and private insurance programs, driving up rates for everyone.

Assemblyman Gottfried�s legislative commission bill, currently with 40 sponsors, calls for a series of statewide hearings, independent cost-benefit studies of various public and private sector-based approaches to providing health care to all of New York residents, and would also examine how to control health insurance costs for small businesses and the self-employed. Senator Marchi�s bill is less specific and calls for a legislative commission to assess the extent of uninsurance in the state and to develop proposals for the state to conform to provisions of Section 3 of Article 17 of the state constitution. Both the Assembly and Senate Commission bills would allocate $500,000 for the work of a commission.

�Health insurance costs are too big a crisis for too many New Yorkers, businesses, churches, school districts, and local governments for the Legislature to avoid any longer coming up with comprehensive, cost-effective solutions, added Lou Levitt, Co-convenor of Rekindling Reform. �Passing an on-time budget for the first time in two decades is merely the first step in reforming the Legislature�s operations � now it�s time to take up important policy matters, like how to best assure good health coverage to all New Yorkers. There are workable commission bills introduced by majority members in each house, and we urge leaders to now resolve any differences and move a shared bill forward before they adjourn for the year.�

Assemblyman Gottfried�s commission proposal has previously been endorsed by more than 250 organizations, including the NYS Nurses Association, NYPIRG, Physicians for a National Health Program (NY Metro), Rekindling Reform, Hunger Action Network of NYS, 1199 SEIU, Housing Works, Capital District Area Labor Federation, Community Service Society, American Medical Student Association (Albany Med and Cornell), Rochester Interfaith Health Coalition, ES2, SENSES, NASW NYS, UJA Federation of NY, Federation of Protestant Welfare Agencies, Public Health Association of NYC, Professional Staff Congress (CUNY), Congress of Senior Citizens, Metro NY Health Care for All Campaign, Western NY Health Care Campaign, NYS Health Care Campaign, Citizen Action, and SCAA.