The Sacramento Bee April 23, 2001 by Greg Gordon

“Government and private studies dating to the early 1980s have found that, because HMOs draw healthier Medicare patients, taxpayers have paid those plans excessively for standard benefits.”

“The General Accounting Office found an even bigger overpayment in a study of 800,000 Medicare recipients shortly before they enrolled in 210 HMOs. Congress’ investigative arm reported last summer that HMOs had enrolled seniors who were 13.2 percent healthier and were overpaid by $3.2 billion.”

Bruce Vladeck, former head of the Health Care Financing Administration:

“This is an area in which the beliefs of many politicians are just contrary to the data. Historically, the public sector in health insurance in the United States has significantly outperformed the private sector.”

Dr. Scott McClellan, a former Stanford University economist and physician, and now Pres. Bush’s White House health care advisor:

“Even with Medicare, I think that the evidence is that private plans are cheaper.”

http://www.sacbee.com/ib/news/ib_news03_20010423.html

Comment: The current goal of the administration and the “bipartisan” conservatives in Congress is to privatize Medicare. Prescription coverage for Medicare beneficiaries is being held hostage to this agenda. We need more candor and honesty in the debate. If the issue were over increasing the efficiency and reducing waste in the Medicare program, the Medicare + Choice options would be eliminated immediately. Dr. McClellan, Sen. Breaux and Sen. Frist know the results of the studies. To state that private Medicare plans are cheaper is a blatant, unmitigated lie. It is time for them to speak the truth and state forthrightly that they believe that it is more important for the taxpayers to support the health plan industry than it is to assure that Medicare dollars will be utilized in the most efficient manner for patient care. If they really don’t believe this, then they should initiate proposals that will improve Medicare, beginning with the termination of the exorbitantly wasteful Medicare + Choice program.

The Private Sector Council has announced that Senator John Breaux (D-LA) is this year’s recipient of the Public Sector Leadership Award.

http://www.privatesectorcouncil.org/home.html

Comment: ’nuff said.

Los Angeles Times
April 24, 2001
by Matthew Miller

In response to the April 20 headline in the Washington Post, “Insurance Plan Would Help 6 Million, White House Says,” Matthew Miller creates a fictional interview of Dick Cheney by Tim Russert:

Tim Russert: But wouldn’t you agree the problem (uninsured) is bigger now, and we have more money to address it? Dick Cheney: Yes, that’s why we’re taking decisive action. Tim Russert: But how decisive is it for the 37 million uninsured your plan, by your own admission, ignores?

Comment: For a quality two minute break, it will be worth your time to read the interview that, as Matthew Miller says, “the nation needs.” It is available at:

http://www.latimes.com/print/editorials/20010424/t000034491.html

Really, take a break and enjoy this masterpiece.

Don

A CALL TO ACTION ON HEALTH CARE REFORM
Tune in to this important webcast

Health Care Reform Hearing A live webcast www.kaisernetwork.org/health_cast/

May 1 at 10:00 AM to 12 Noon, EDT

Speakers: Robert Reich, former Secretary of Labor Sen. Paul Wellstone Rep. John Conyers Dr. Marcia Angell, former editor of the New England Journal of Medicine Dr. Quentin Young, Physicians for a National Health Program Dr. Rodney Hood, National Medical Association

Rayburn House Office Building, Room 2237 Washington, D.C.

Hosts: Congressional Black Caucus Progressive Caucus

The Washington Post
April 23, 2001
by Robert B. Reich, Professor of Social and Economic Policy at Brandeis University

“A few years ago Democrats championed such things as universal health care. Now that there’s money to pay for it, they’re rooting for the smaller of two tax cuts instead.”

“Given what’s happened to the incomes of working families relative to the incomes of the people at the top, a cut that mostly benefits the people who enjoyed most of the gains of the past decade is morally repugnant. So how can Democrats support a $1.2 trillion tax cut, with almost no room for expanded health care? Why aren’t they putting universal health care on the table instead?”

“To be sure, lowering the debt reduces federal borrowing costs, but so what? As John Maynard Keynes pointed out 60 years ago, public indebtedness per se isn’t a problem. The underlying question is what that debt is used for. If the benefits to the public exceed the costs of borrowing from the public, it would be silly not to borrow. And with health care costs soaring and coverage declining, the benefits of universal health care are high indeed.”

http://washingtonpost.com/wp-dyn/articles/A50461-2001Apr22.html

Jeoffry Gordon’s response to Sam Baker and Uwe Reinhardt:

I read Sam Baker’s comments about the contemporary USA health system’s administrative cost structure with great interest, but the situation is far far worse than he imagines. Under old fee-for-service medicine the insurance company’s overhead was occasionally an efficient 10% (medical loss ratio of 90%). However, under HMO medicine, at least here in California by actual survey of the California Medical Association, the INSURANCE COMPANY’S overhead is 14 to 25%. Then we must add the overhead of the local IPA or PHO (contracting with the insurance company to provide and manage the care) which easily runs 8 (unbelievably low) to 30% (I ought to know having run one for 5 years). Then we must add an incremental 5% in each DOCTOR’s office for a 1/2 to full time staff person to deal with HMO paperwork and prior authorizations (I ought to know I do it every day). Thus the true administrative cost of the HMO system in California runs 27 to 60%(!) and is in fact probably about 40%. This is no kidding – only 40 to 60 cents of the premium dollar goes to medical services and their “ordinarily associated” administrative costs.

In my opinion Professor Reinhardt’s economic calculus is perfectly precise and revealing of the economic biases of contemporary economics which have distorted everything to find ways to justify the free market, competitive approach to health care. What is most sad about this situation is the fact that when I studied health economics 30 years ago (in its infancy) Nobel Prize winning economist Kenneth Arrow had already published an analysis of why the health care system could not function efficiently in an economic sense in the competitive market place. For instance health care is a “public good”; a sick patient cannot comparison shop; the doctor orders the services not the patient; the pervasive insurance system distorts the market; certain aspects of health care consumption are totally inelastic (not price sensitive); etc. All of these insights have been selectively forgotten by all the pontificating academic economists — and several generations of national leadership as well.

Jeoffry B. Gordon, MD, MPH
1947 Cable Street
San Diego, CA 92107

Chicago Tribune
April 15, 2001

George Lundberg, MD, former editor of the Journal of the American Medical Association:

“The Clinton proposal exposed the central problem of system reform. No health system reform will ever get off the ground if the people believe that they have to surrender something to make it happen. We won’t manage even a half-step forward if anyone perceives a loss.”

“… no country has achieved universal insurance voluntarily. It must be mandatory.”

http://www.chicago.tribune.com/news/opinion/perspective/article/0,2669,SAV-0104150422,FF.html

Comment: In a recent comment, we applauded Dr. Lundberg for his support of universal insurance although we disagree with his stand on several issues of health policy. Here Dr. Lundberg defines the most important hurdle on the path to reform. We must demonstrate to those that have coverage that, under a publicly administered, universal risk pool, not only will they not lose anything, they will gain more comprehensive coverage, more freedom of choice in health care, fairness in funding of their care, and the satisfaction of knowing that everyone will have
access to our health care system. Our task must be to inform the nation of the superior benefits of rational reform.

The Journal of the American Medical Association
April 18, 2001

by Alan F. Holmer, JD, of the Pharmaceutical Research and Manufacturers of America (PhRMA):

“Industry-supported conferences, seminars and symposia are helping physicians to provide the best, most appropriate, and most up-to-date health care for their patients. They help to ensure the widespread adoption of new medicines and technologies that save lives, cure disease, relieve pain, and allow individuals to lead longer, healthier and more productive lives.”

“Separating Continuing Medical Education from Pharmaceutical Marketing” By Arnold S. Relman, MD, former editor of the New England Journal of Medicine:

“The pharmaceutical industry has gone too far. It is assuming a role in continuing medical education (CME) that is inappropriate for an industry with a vested interest in selling prescription drugs. Worse, many medical education institutions not only allow the industry’s encroachments but also welcome and even solicit pharmaceutical company participation in programs that should be the profession’s sole responsibility.”

Comment: All physicians that accept pharmaceutical stipends for participating in CME programs claim that their presentation is not influenced by their sponsor, but do you really believe that the pharmaceutical firm would keep that person on their speakers’ bureau if he or she did not support the sponsor’s product? The “best” pharmaceutical for a given condition varies depending on who is speaking, but it always has a positive correlation with the sponsor for the session. Also, the “best” drug is always on patent, as the older drugs seem to lose their clinical value the day the patent runs out. And to think that hapless widows, living on Social Security, are helping to fund “free” CME for wealthy physicians whenever they have their prescriptions filled. Dr. Relman is correct when he says that “CME must be clearly separated from pharmaceutical marketing.” We need fundamental structural reform in the funding of our entire health care system.

One more quote that is apropos: At the end of a recent CME lecture I attended, the speaker said to the CME Director, “Where’s (the pharmaceutical rep); she has my check!”

The Hartford Courant
April 13, 2001
by Ramon Castellblanch

“The way to get a Medicare prescription drug benefit that does not risk Medicare hospital benefits is paying for them from the general fund budget surplus, not from the Medicare hospital fund.”

“Medicare’s problem isn’t economic or financial – there’s plenty of money in its surplus. The problem is political.”

The full article is available at www.ctnow.com, under “Editorials.”

Comment: The problem with a “unified” budget, combining Medicare and Social Security taxes with general revenues, is the shift in the source of revenues used to run our government. The excess funds paid into Medicare and Social Security are shifted into the funds for general expenses. But look at who is paying. Unlike income taxes, which are progressive, low income individuals bear the full burden of their portion of these payroll taxes. In fact, the Social Security portion is regressive since high income individuals pay a lower percentage of their total income than do moderate and low income individuals. As Congress tackles tax and budget issues, we must insist that they do not use this patently unfair mechanism of shifting funding of general expenses from our fair, progressive income tax system over to our programs of social insurance that are funded by each participant. To do so would be yet another injustice of the poor funding government services for the rich. Perhaps we should counter with the recommendation that payroll taxes be eliminated and that Medicare and Social Security be funded by general revenues (income taxes), inherently more fair because of the progressive nature. It would certainly bring to attention the real issue involved, and it would strengthen our bargaining position on behalf of preserving Medicare funds.

Don

Message from Don McCanne:

Hoag Memorial Hospital Presbyterian is a first rate hospital that, in fact, does contribute significantly to the unmet medical needs of the community. I still stand by my position that even the best of us must do much more to advance the cause of universal health care, but I sincerely regret using Hoag Hospital as a negative example merely because of a minor blemish in their ethics (using defibrillator gifts to golf courses as a marketing strategy). I feel strongly that the “good guys” have to work together on the cause of health care justice, and, in this instance, I violated my own standards by taking on one of the best.

In fairness, I am presenting the statement of Gwyn Parry, M.D., the Director of Community Medicine at Hoag Memorial Hospital Presbyterian (relayed through Felix Schwarz, Executive Director of the Health Care Council of Orange County).

****************

Subject: Hoag Hospital Date: 13 Apr 2001 From: Gwyn Parry, M.D. To: Felix Schwarz

Thank you Felix. We always appreciate the critical commentary, and you know that we agree with the need for significant improvement in the provision of health care access. As the only modern industrialized nation without a universal system of health care access and provision, we’re going to fall way behind in this competitive world throughout this century unless we bring about some major changes; and we’re going to have to speak more aggressively in asking ourselves some very searching questions about our moral and ethical commitment to our society. While I don’t engage in rhetorical argument, I would suggest that to be knowledgeable about not-for-profit hospitals, and to be able to make learned commentary, one should review the community benefit legislation: SB697. As you well know, this act of the California legislature provides the motivational standard for programs and initiatives in community benefit provided by not-for-profit hospitals, of which Hoag Memorial Hospital Presbyterian is but one. I’m sure that you can provide your readers with a copy, and a copy of your excellent analysis of hospital programs that you wrote two or three years ago. Additionally, I’d further suggest that your readers access the Community Benefit reports annually filed with the Office of Statewide Health Planning and Development and now accessible via the OSHPD website: http://oshpd.cahwnet.gov/hpp/hcbp/index.htm

Hospitals are listed in alphabetical order; by county; and by bed size. Identify the hospital in which you are interested and e-mail your request to: hppmail@oshpd.state.ca.us

Requests can also be submitted by phone or fax. We are required to annually report our programs provided for the at-risk, underserved, and while we don’t advertise them, reports include the dollar expenditures. I think your readers and correspondents might be interested in just how much effort is being put into community outreach for residents that lack resource access and service that we take for granted. On another related topic, I’ve had an opportunity to talk to several funding sources about the forum on insurance issues that you wish to conduct and you and I need to sit down at your convenience and re visit the proposal. Thanks GP

Los Angeles Times Orange County Edition
April 10, 2001

Robert J. Heath, director of golf at Pelican Hill Golf Club near Newport Beach: “This will definitely help us react in emergency situations.”

Comment: Now that Hoag Hospital has extended its outreach to meet the needs of the millionaires that frequent Orange County’s golf courses, perhaps the hospital board members can turn their attention to addressing the unmet medical needs of the uninsured servants of these millionaires.

Felix Schwarz, Executive Director of Health Care Council of Orange County, responding to my comments about Hoag Hospital’s gift of defibrillators to ten golf courses:

“In defense of Hoag — they provide outstanding support to the Share Our Selves (SOS) free medical and dental clinic, and to the Costa Mesa Senior Center. The Hoag Foundation and the hospital have contributed generously to the Health Care Council’s support — I can think of a great many targets in Orange County who have done little or nothing for the working poor while raking in obscene profits from the health care non-system, but Hoag is not one of them. Giving defibrillators to golf courses would not be high up on my list of urgent health care needs in this county, but, on balance, I wish we had more Hoags!”

Comment: Felix is correct. Hoag Memorial Hospital Presbyterian is one of the finest hospitals in Orange County. They have provided more charitable services than our for-profit hospitals, but they have hardly made a dent in the need that exists. Orange County is one of the most affluent counties in the nation, and yet 90,000 of our children have no insurance. Hoag Hospital, representing the best of our health care system, should play a leadership role in advocating for health care justice for all. Hoag Hospital and the millionaire patients served by it have the status and wealth to move the agenda for health care reform. Yet they remain inert. I’m sorry Felix. Although they represent the finest that we have, they’re still not good enough, and I’m going to continue to whack them and the rest of our leaders that are failing to support reform that will bring everyone under the health care umbrella.

Don McCanne

ABCNEWS.com
4/9/01

Poll: 52% – Don’t cut taxes, spend more on health care for the uninsured 30% – Cut taxes, keep health spending the same 10% – Cut taxes, cut health spending

The percentages that support spending more on health care for the uninsured rather than cutting taxes, by annual family income level: 67% – income less than $25,000 52% – income $25,000-$50,000 49% – income $50,000-$100,000 37% – income more than $100,000

http://abcnews.go.com/sections/US/DailyNews/budget_poll010409.html

Comment: Does affluence foster inhumanity? Or are the inhumane more effective at achieving affluence? Either way, it’s sad.

Don

The New York Times
April 10, 2001

Health By Robin Toner

“The department’s (Health and Human Services) discretionary spending (outside the entitlement programs like Medicare and Medicaid) would grow by 5 percent under the Bush proposal, an increase of $2.7 billion over the 2001 fiscal year’s. The National Institutes of Health was the major winner in this ‘redirection of resources,’ as the budget called the shifting of money among programs.”

Ron Pollack, Executive Director of Families USA:

“The president’s budget proposal literally shortchanges Americans’ health care by providing too little support and reaching too few people.”

Tommy G. Thompson, Secretary of Health and Human Services:

“What’s more important than finding a cure for cancer? What’s more important than finding a cure for Alzheimer’s?”

Comment: What’s more important? Applying the knowledge and resources that we do have to improve the health of the American people that are funding the National Institutes of Health (NIH).

Much of the blame for runaway health care costs in America rests with the special privileged position that we have given our health care technology and pharmaceutical industries. Through the NIH, the taxpayers fund much of the research that is used by these industries to develop new products. These products are granted patent protections, and yet have not been subjected to the same degree of cost controls that the providers of health care are now facing. Many of the products, such as copycat drugs and scanners with more colorful images, have not demonstrated their value but have significantly added to costs.

In shifting health care dollars from care for the less fortunate in our society to the NIH, the administration is tacitly supporting their friends in the technological and pharmaceutical industries with free, taxpayer funded research. The taxpayers have a vested interest in this research and should directly benefit in the form of a return on our investment through lower costs and rational spending. Each other nation controls drug costs; we should as well. Although we need to fund new research, we should not fund the market applications until real value is demonstrated by pilot studies. We also need to recognize that increasing expenditures in technology reduces expenditures in other sectors. Since we are near the limit of what we will tolerate in health care expenditures, we need to place these industries under an implicit global budget. This would be automatic if we were to establish a publicly administered, universal risk pool. Only then could we be assured that everyone benefits from the public funding of health care research.

http://www.nytimes.com/2001/04/10/politics/10WRAP.html

Response to Uwe Reinhardt by Philip Pollner, M.D. & Nancy Wooten, Ph.D. April 10, 2001

Dear Dr. Reinhardt:

We were saddened to read your email letter <2_27_01.htm> “To my Gentle Critics,” (February 27, 2001). You argue that “We can never have a health care system that balances the dignity and freedom sought by doctors and patients with society’s desire to have the system operated with some larger constraints. We can never have it, not under our system of governance. There is nothing that you or your patients can do about it. Your voices do not count, and you are powerless and must get used to it.”

Dr. Reinhardt, perhaps your dismal opinion regarding the prospect for reform reflects your disappointment and despair with what seems a futile process at this point in time, but coming from a revered ally and a respected scholar this conveys a sense of hopelessness and surrender to many of us who have been committed for years to the attainment of health care for all Americans. Worse, at a time when we are facing both conflict and challenge in trying to improve the health care system, your commentary lends neither new ideas, strategies, encouragement nor moral support – any of which would be at least helpful as we try to keep the faith.

Most important, when viewed from the perspective of history your statement on the prospects for ultimate victory loses credence. Time and again we have witnessed what was considered to be unimaginable goals or unexpected institutional and legislative metamorphoses become reality. Who, for example, would have thought in 1982 as the Cold War raged that a decade later the Soviet Union would cease to exist, that the Berlin Wall would be toppled and the two Germanys would reunite? What black person in the 1970s living in Johannesburg would have dared to dream that apartheid would be abolished and representative government established in South Africa by the 1990s? Few men or women alive in nineteenth century America could imagine that there would ever be a Constitutional amendment guaranteeing women the right to vote, or foresee that there would be federal and multistate statutes enforcing the abolition of child labor. Nearly any observer in 1910 would have thought it impossible “not under our system of governance” that black Mississippians would be free from fear of lynching, be free to vote, and have gained in general their civil rights. In each of these examples, institutional, cultural, legal and diverse other barriers existed, powerful or wealthy interests were in place to halt change, yet profound change did come for many reasons including the hard, patient and persistent energies of activists who fortunately did not subscribe to your fatalism.

History speaks for itself; these are facts and not fantasies – although fantasies they seemed to be at some point in time. Dr. King once said, “Every time I look into the pages of history, change was never initiated by protocol, it was initiated by dreamers.” We understand that the journey ahead is difficult, but we persevere, as we know such “dreams” over time can be shaped into reality. The indecency of the American health care system, the suffering of those without health or health care, is the constant reminder to us that the struggle is a critical one, worthy of keeping the faith even when prospects seem dim. As a prominent spokesperson, we need your understanding, commitment and support as we continue to fight for justice and equality in health care.

In another echo from history, Frederick Douglass perhaps expressed it best when he wrote in 1853, “If there is no struggle, there is no progress. Power concedes nothing without a demand. It never did and it never will.”

Your gentle critics,

Philip Pollner, M.D. Nancy Wooten, Ph.D. National Leadership Coalition for Health Care Newark, Delaware

Prof. Uwe Reinhardt responds to Drs. Pollner and Wooten April 10, 2001

Dear Dr. Pollner and Wooten:

Many thanks for your response to my dismal letter. It is hard to disagree with your historical sweep. It happened, and major things are likely to happen in the future. Empires rose and fell. For all I know, we will be a Chinese colony in 2100. (China and India actually have enough people to occupy the U.S.)

You know, of course, the old joke about Congressman Claude Pepper’s ascent to heaven. He asked God whether there would ever be universal health insurance in America. Whereupon God answered: “Probably, yes. But not in my lifetime.” In that sense, of course, you are right. It may come. How soon is another question. Boot up theatlantic.com, and read David Brooks’ article on “Our Future Leaders,” an essay based on a month’s sojourn at Princeton. Perhaps you see hope for the underclass in that essay. I see the opposite.

I come at the topic the way I do these days not to discourage progress, but instead to annoy the opponents of universal coverage. In case you have not seen it, I attach a paper delivered to the US Chamber of Commerce a while ago. These days I say the crudest things about the poor to my students and to my audiences, mainly to shock people. I am holding up a mirror to these people to tell them: this is the kind of people you are.

Tomorrow I shall lecture on the income distribution in my freshman class. I’ll make the point that our extraordinarily wide income distribution can be maintained only by tightly controlling the lower end of the income distribution. We do this by jailing more people per capita than any other industrialized nation (possibly excluding Russia) and by spending, in California, more on jails than on education. That is the kind of people we are. I say this in a natural tone, without raising my voice, as if that were reasonable, just perhaps, possibly to arouse at least one student under 400.

As I point out in my speeches and in the attached paper, the uninsured are, by and large, disposable people whose income is low (which means that we consider their social contribution low). Because we do not have to be nice to these people to have them work like hell for us in taxicabs, restaurants etc., we are not nice to them. We can, economically, take them for granted, and so we do.

I think 30 years of pretending that by good cheer and hoping we shall solve this problem have not yielded any fruit. Perhaps anger will. I am angry and disgusted.

You can keep on struggling. I would not want to discourage you. I’ll keep on annoying the good Judeo-Christians. It’s just another form of that struggle.

I also attach a homework assignment that you may find interesting. I bet you it moved no soul in my class.

Best regards,

UER

<2001ec102ps5ANSX.doc>Homework assignment.doc

uschambe.doc